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          December 31, 2004
                              --------------------------------------------------

                                       OR

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

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 ___

Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years.

N/A

Check whether the Registrant filed all documents required to be filed by Section
12, 13 and 15(d) of the Exchange Act after the distribution of securities under
a plan confirmed by a court.

Yes___ No___

                      Applicable only to corporate issuers

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


Class                                        Outstanding as of February 18, 2005

$0.001 par value                             23,829,544

Transitional Small Business Disclosure Format (check one)

Yes___ No_X_
<PAGE>


                         KOLORFUSION INTERNATIONAL, INC.

                                   I N D E X

<TABLE>
<CAPTION>
                                                                                               Page
                                                                                               ----
PART I              FINANCIAL INFORMATION

<S>                 <C>                                                                        <C>
    Item 1.             Financial Statements (Unaudited)

                           Condensed Balance Sheets
                             December 31, 2004 (Unaudited) and
                             June 30, 2004 (Audited)                                              1

                           Condensed Statements of Operations
                             Three and six months ended December 31, 2004 and
                             2003 (Unaudited)                                                     2

                           Condensed Statements of Cash Flows
                             Six months ended December 31, 2004 and 2003 (Unaudited)              3

                           Selected Notes to Condensed Financial Statements (Unaudited)         4-6

    Item 2.             Management's Discussion and Analysis of Financial Condition and
                        Results of Operations                                                   6-9

    Item 3.             Controls and Procedures

PART II                    OTHER INFORMATION
                    Item 1. Legal Proceedings
                    Item 2. Changes in Securities and Use of Proceeds
                    Item 3. Defaults Upon Senior Securities
                    Item 4. Submission of Matters to a Vote of Security Holders
                    Item 5. Other Information
                    Item 6. Exhibits and Reports on Form 8-K

                    SIGNATURES                                                                10-11
</TABLE>

<PAGE>


                          Part I. FINANCIAL INFORMATION
                                  ---------------------
                          Item I. FINANCIAL STATEMENTS
                                  --------------------

                         KOLORFUSION INTERNATIONAL, INC.


                            CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                            DECEMBER 31,         JUNE 30,
                                                                               2004               2004
                                 ASSETS                                  -----------------  -----------------
                                                                            (UNAUDITED)         (AUDITED)
<S>                                                                      <C>               <C>
CURRENT ASSETS:
    Cash and cash equivalents                                            $          60,303  $         138,940
    Trade accounts receivable, net of allowance for doubtful accounts
      of $10,000
    December 31, 2004 and June 30, 2004                                            135,745            331,065
    Inventories                                                                    254,827            393,015
                                                                         -----------------  -----------------

             Total current assets                                                  450,875            863,020
                                                                         -----------------  -----------------
OTHER ASSETS:
    Patents, less accumulated amortization
        December $2,830,952; June $2,707,868                                       861,578            984,662
    Other                                                                           47,270            103,270
                                                                         -----------------  -----------------
                                                                                   908,848          1,087,932

LEASEHOLD IMPROVEMENTS AND EQUIPMENT, NET                                          131,718            142,357
                                                                         -----------------  -----------------
                                                                         $       1,491,441  $       2,093,309
                                                                         =================  =================
                LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
    Accounts payable                                                     $         315,921  $         383,339
    Deferred revenue                                                               215,094            259,694
    Current portion of long-term debt                                              638,613            794,383
    Accrued expenses                                                                19,581             52,381
    Accrued expenses due stockholders                                              622,240            575,740
                                                                         -----------------  -----------------
             Total current liabilities                                           1,811,449          2,065,537
                                                                         -----------------  -----------------
LONG-TERM DEBT, net of current portion                                             454,298            476,785
DEFERRED REVENUE                                                                   327,735            380,282

STOCKHOLDERS' DEFICIT:
    Preferred stock, $.001 par value, 10,000,000 shares authorized,
        none issued or outstanding
    Common stock, $.001 par value, 100,000,000 shares authorized,
        December 23,829,544; June 23,799,544 shares issued and
        outstanding                                                                 23,830             23,800
    Additional paid-in capital                                                  10,074,451         10,059,481
    Accumulated deficit                                                        (11,200,322)       (10,912,576)
                                                                         -----------------  -----------------


                                                                                (1,102,041)          (829,295)
                                                                         -----------------  -----------------
                                                                         $       1,491,441  $       2,093,309
                                                                         =================  =================
</TABLE>


           See Notes to Condensed Financial Statements.


                                                         1

<PAGE>


                         KOLORFUSION INTERNATIONAL, INC.


                       CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED                   SIX MONTHS ENDED
                                                    DECEMBER 31,                        DECEMBER 31,
                                             2004              2003                2004               2003
                                             ----              ----                ----               ----
<S>                                          <C>               <C>                 <C>                <C>
Revenues                                    $423,921          $581,248           1,321,037         $1,190,106

Expenses:

    Cost of sales                            238,346           297,056             825,683            604,402
    Selling, general and
      administrative expenses                327,536           417,114             763,041            823,880
                                          ----------         ---------          ----------         ----------
             Operating loss                ($141,961)        ($132,922)          ($267,687)         ($238,176)

Other income (expense)                         2,126            58,097               4,606             52,198
Interest Expense                             (10,106)               --             (24,665)                --
                                          ----------         ---------          ----------         ----------
             Loss before income taxes      ($149,941)         ($74,825)          $(287,746)         ($185,978)
Income taxes                                      --                --                  --                 --
                                          ----------         ---------          ----------         ----------
             Net  loss                     ($149,941)         ($74,825)          $(287,746)         ($185,978)
                                          ==========         =========          ==========         ==========
 Net  (loss) per common share -
   basic and diluted                         $ (0.01)              $--             $ (0.01)           $ (0.01)
                                          ==========         =========          ==========         ==========
Weighted average outstanding shares
- basic and diluted                       23,809,544        23,294,144          23,804,544         23,262,477
                                          ==========        ==========          ==========         ==========
</TABLE>



                                       2


<PAGE>


                         KOLORFUSION INTERNATIONAL, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                   Six Months Ended December 31, 2004 and 2003
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                               2004               2003
                                                                         -----------------  -----------------
<S>                                                                      <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                             $        (287,746) $        (185,978)
    Adjustments to reconcile net loss to net
      cash provided by (used in) operating activities:
       Common stock issued to employees for services                                15,000                 --

      Depreciation and amortization                                                139,552            141,445
      Loss on sale of Prop/Equip                                                                        1,891
      Decrease (increase) in trade accounts receivable                             195,320            (93,507)

      Decrease (increase) in inventories                                           138,188            (14,138)
      Decrease in other assets                                                      56,000             72,000
      Increase (decrease) in accounts payable                                      (67,418)            58,178
      Decrease in deferred revenue                                                 (97,147)          (100,880)

      Decrease in accrued expenses                                                 (32,800)            (8,353)
      Increase in accrued expenses due stockholders                                 46,500             32,115
                                                                         -----------------  -----------------
        Net cash provided by (used in) operating activities                        105,449            (97,227)
                                                                         -----------------  -----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of leasehold improvements and equipment                              (5,829)                 --
                                                                         -----------------  -----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Payments on long-term debt                                                   (178,257)            (56,275)
    Net proceeds from issuance of common shares                                        --              81,000
                                                                         -----------------  -----------------
        Net cash used in financing activities                                    (178,257)            (24,725)
                                                                         -----------------  -----------------

        Decrease in cash and cash equivalents                                     (78,637)            (72,502)

Cash and cash equivalents:
    Beginning                                                                     138,940              73,772
                                                                         -----------------  -----------------


    Ending                                                               $         60,303   $           1,270
                                                                         =================  =================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:




                   Cash payments for interest                           $          24,665   $          20,924
                                                                         =================  =================
</TABLE>


                See Notes to Condensed Financial Statements.


                                        3

<PAGE>

                         KOLORFUSION INTERNATIONAL, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1. Unaudited Condensed Financial Statements:

      The condensed balance sheet as of December 31, 2004, the statements of
      operations for the three and six month periods ended December 31, 2004 and
      2003, 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 period ended December 31, 2004 are not necessarily
      indicative of the results that may be expected for the fiscal year ending
      June 30, 2005. 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, 2004 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, 2004 audited financial statements. The results of
      operations for the period ended December 31, 2004 are not necessarily
      indicative of the operating results for the full year.

Note 2. 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.
      All stock options were vested as of June 30, 2004 and no additional stock
      options have been issued during fiscal 2005. 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.

      In December 2004, FASB issued SFAS No. 123 (revised 2004), "Share-Based
      Payment", that focuses primarily on accounting for transactions in which
      an entity obtains employee services in share-based payment transactions.
      This statement replaces SFAS No. 123, "Accounting for Stock-Based
      Compensation," and supersedes APB Opinion No. 25, "Accounting for Stock
      Issued to Employees." Beginning with our quarterly period that begins
      January 1, 2006, we will be required to expense the fair value of employee
      stock options and similar awards. As a public company, we are allowed to
      select from two alternative transition methods, each having different
      reporting implications. The impact of SFAS No. 123R on the Company has not
      been determined at this time.



                                        4

<PAGE>


                         KOLORFUSION INTERNATIONAL, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)


Note 3. 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, 2004 and 2003 and $123,086 for each of the
      six months ended December 31, 2004 and 2003. Patent amortization expense
      will be approximately $246,170 for each of the next three years and
      $123,068 the fourth year.

Note 4. Debt:

      The Company, on October 17, 1995, purchased certain U.S. and Canadian
      patent rights from an individual as part of an assignment agreement
      granted at a total price of twenty-five million French francs. The
      agreement was collateralized by patent rights. The Company had not made
      the required payments on this agreement as of June 30, 2002 and, as a
      result, the entire amount due had been classified as a current liability.
      In June 2001, the Company entered an agreement in principle with the
      individual whereby the individual would receive 1,000,000 French francs,
      1,000,000 shares of Company common stock, and a five year consulting
      agreement calling for monthly payments of 58,333 French francs in exchange
      for a settlement of the payable related to the October 1995 agreement and
      certain patent rights and other exclusive rights. The Company believes the
      individual will not provide any bona fide services pursuant to the
      agreement.

      In fiscal 2003, the Company hired a French lawyer in order to enforce the
      agreement in principle that was signed in June 2001. Therefore, the
      Company recorded the debt restructuring during the year ended June 30,
      2003.



                                        5

<PAGE>

                         KOLORFUSION INTERNATIONAL, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

      As of December 31, 2004, this agreement continues to be in process of
      being enforced by the Company and represents a significant estimate made
      by management.

Note 5. Stockholders' Deficit:

      During the six months ended December 31, 2004, stockholders' deficit
      changed for net loss of $287,746. In addition, the Company issued 30,000
      shares that were valued at $15,000 to employees.

Note 6. 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 and has a working capital
      deficit of over $1.3 million at December 31, 2004. 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. The Company plans on expanding its business with new accounts
      in many categories, including outdoor product manufacturers, household and
      building products. Management believes that existing customers will
      continue to expand their use of the Company's process. There can be no
      assurances the Company will be able to obtain capital on acceptable terms.

      In order to ensure that the Company has sufficient cash flow to meet its
      requirements for the next twelve months, the Company plans to obtain
      additional outside financing or lines of credit. The Company is currently
      seeking to finalize an equity placement of $500,000 and an additional
      equity placement of $1,000,000-2,000,000 during the next 12 months to
      support its plans for future growth and working capital needs.

Note 7: 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
     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 carry-forwards of
     approximately $6,700,000 of which no benefit has been recorded as of
     December 31, 2004. The net operating loss carry-forwards expire at various
     times from 2013 to 2023.

Note 8: Deferred Revenue

     The Company records sales when products are shipped, collection is
     probable, and the fee is fixed or determinable. License and royalty revenue
     is recognized upon completion of the earnings process. All revenue invoiced
     in excess of revenue recognized is recorded as deferred revenue. Deferred
     revenue at December 31, 2004 and June 30, 2004 was $542,829 and $639,976,
     of which the majority relates to the license and royalty agreement signed
     with a third party in August 2002.

Note 9: Major Customers

     For the three months ended December 31, 2004, two unaffiliated customers
     accounted for approximately 41.2% of total revenues. For the six months
     ended December 31, 2004 four unaffiliated customers accounted for 93.9% of
     total revenues.


ITEM 2.   MANAGEMENT'S DISCUSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS

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.

General

       Kolorfusion International, Inc., a Colorado corporation (the "Company")
currently trades on the Over-the-Counter Bulletin Board under the symbol "KOLR."



                                       6

<PAGE>


       The Company was created to develop and market a system for transferring
color patterns to metal, wood, glass and plastic products. "Kolorfusion" is a
process that allows the transfer of colors and patterns into coated metal, wood
and glass and directly into a plastic surface that can be any shape or size. The
creation of a pattern to be a part of a product's surface is designed to enhance
consumer appeal, create demand for mature products, achieve product
differentiation and customization and as a promotional vehicle. The Company
currently has customers such as Polaris - all terrain vehicles, Garrity -
flashlights, Daisy - air guns, Gerber - hand tools, Tru-Glo - bow sights, Allied
Wheel Company - steel wheel rims, Sunrise Medical - wheelchairs, MasterLock -
padlocks, and other customers. The Company entered a Strategic Marketing
Alliance Agreement with DuPont Engineered Resins Division during the quarter for
the promotion by Dupont of the Company's process for adding value to the resins
manufactured and sold by Dupont to its OEM's customers. Other applications are
anticipated by the management as the Company is currently working with other
manufacturers in various markets.

Results of Operations

     REVENUE: During the three-month period ended December 31, 2004, the Company
generated $423,921 in gross revenues compared to $581,248 in gross revenues
during the three-month period ended December 31, 2003 (an decrease of $157,327).
Revenues for the six months ended December 31, 2004 were $1,321,037 as compared
to the six months ended December 31, 2003 of $1,190,106 (an increase of
$130,931). The increase in gross revenues is due to the increase in new
customers.

     COST OF SALES: Cost of sales totaled $238,346 and $825,683, or 56% and 63%
of total revenue for the three and six months ended December 31, 2004, compared
to $297,056 and $604,402, or 51% and 51% of total revenue for the same periods
in fiscal 2004. The mix of sales and the related gross margins affect the
overall margin, since some revenues like license fees have no direct cost of
sales. Management of the Company anticipates that the profit margin will
increase as the Company increases its customer base and lowers the cost of
processing and materials.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and
administrative expenses totaled $327,536 and $763,041 for the three and six
months ended December 31, 2004, compared to $417,114 and $823,880 for the same
periods in fiscal 2004. The 21% and 7% net reduction in expenses for the
quarterly and year-to-date periods in 2005 was the result of a reduction The
Company's decrease in SG&A for the comparable period is a result of the Company
not participating in trade shows during the six months ended December 31, 2004.

      As a result of the above, the Company's net loss for the three and
six-month period ended December 31, 2004 was approximately $149,941 or $0.01 per
share and ($287,746) or $0.01 per share, respectively. The Company provided
$105,449 in positive operating cash flow for the six months ended December 31,
2004, as compared to a negative operating cash flow of $97,227 during the six
months ended December 31, 2003.

Liquidity and Capital Resources

           The Company has historically had more expenses than income in each
year of its operations. The accumulated deficit from inception to December 31,
2004 was $11,200,322 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 is seeking to finalize an equity placement of
$500,000 and an additional equity of placement of $1,000,000-2,000,000 during
the next twelve months to support its plans for future growth and working
capital needs.

     At December 31, 2004, the Company's current assets were $450,875 and its
current liabilities were $1,811,449, which resulted in a working capital deficit
of $1,360,574. At December 31, 2004, the Company's total assets were $1,491,441
consisting of: (i) $60,303 in cash; (ii) $135,745 in net trade accounts
receivable; (iii) $254,827 in inventory; (iv) $861,578 patents (less accumulated
amortization); (v) $131,718 in leasehold improvements and equipment; and (vi)
$47,270 in other assets.


                                       7

<PAGE>


    At December 31, 2004, the Company's total liabilities were $2,593,482
consisting of: (i) $315,921 in accounts payable; (ii) $542,829 in current and
long-term deferred revenue; (iii) $1,092,911 in current and long-term debt; (iv)
$19,581 in accrued expenses; (v) $622,240 in accrued expenses due stockholders.

     During the six-month period ended December 31, 2004, net cash flows
provided by operating activities was $105,449, consisting primarily of a net
loss of ($287,746), which was adjusted by $139,552 to reconcile the non-cash
expense of depreciation and amortization and a decreases in trade accounts
receivable of $195,320, inventory of $138,188 and deferred revenue of $97,147.

     During the six-month period ended December 31, 2004, net cash flows used in
investing activities was $5,829 for the purchases of leasehold improvements and
equipment.

     During the six-month period ended December 31, 2004, net cash flows used in
financing activities was $178,257 for payment on long-term debt.

      The Company's future success and viability are dependent on the Company's
ability to develop, provide and market its products and services, and the
continuing ability to generate capital financing. Management is optimistic that
the Company will be successful in its business operating and capital raising
efforts; however, there can be no assurance that the Company will be successful
in generation of substantial revenue or raising additional capital. The failure
to generate substantial revenues or raise additional capital may have a material
and adverse effect upon the Company and its stockholders.

     The Company entered into an agreement in June of 2001 with the holder of
the patent where the holder would receive 1,000,000 French Francs, 1,000,000
shares of the common stock of the Company, and a 5 year consulting agreement for
58,333 French Francs per month, in exchange for the debt. The Company believes
the individual will not provide any bona fide services pursuant to the
agreement. The Company retained a French attorney to enforce the agreement. In
the event that there is a restructuring of the agreement, which the Company
feels is remote, it would not have a significant impact on the liquidity of the
Company.

        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. The primary source of liquidity in the future will be increased
sales accounts in many categories, including outdoor product manufacturers,
household and building products. Additionally, existing customers continue to
expand the use of the Company's process resulting in higher revenues. In the
event that sales do not increase the Company may have to seek additional funds
through equity sales or debt. Additional equity sales could have a dilutive
effect. 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 net 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 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, 2004) 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 requires all companies to include a discussion to
address, among other things, liquidity, off-balance sheet arrangements,
contractual obligations and commercial commitments.


                                       8

<PAGE>

        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 and the liability for the stock
bonus plan. Actual amounts could differ from these estimates.

        Inventory Valuation

        As noted in Note 1 (of Form 10KSB for the year ended June 30, 2004) 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).

        Revenue Recognition and Deferred Revenue

        As noted in Note 1 (of Form 10KSB for the year ended June 30, 2004) to
the Financial Statements, license and royalty revenue is recognized upon
completion of the earnings process. The Company recognizes sales when products
are shipped, collection is probable and the fee is fixed or determined. The
Company ensures that the transactions comply with the seven conditions and six
considerations contained in Accounting and Auditing Release No. 108 of the
Securities & Exchange Commission (SEC) and SEC Staff Accounting Bulletin (SAB)
101, as amended by SAB 104. All revenue invoiced in excess of revenue recognized
is recorded as deferred revenue.

        Estimate

        As noted in Note 4 to the financial statements, the debt restructuring
represents a significant estimate made by management. It is at least reasonably
possible that a change in the estimate may occur in the near term.

        Patent Rights

        At noted in Note 1 (of Form 10KSB for the year ended June 30, 2004) to
the Financial Statements, the cost of the patent rights is 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.




                                       9


<PAGE>


ITEM 3. CONTROLS AND PROCEDURES


      An evaluation was conducted under the supervision and with the
participation of the Company's President and Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures as at December 31, 2004. Based on that evaluation, Mr. Nagel
concluded that the Company's disclosure controls and procedures were effective
as of such date to ensure that information required to be disclosed in the
reports that the Company files or submits under the Securities Exchange Act of
1934, as amended, is recorded, processed, summarized and reported within the
time period specified in Commission rules and forms. Such officers also confirm
that there was no change in the Company's internal control over financial
reporting during the three-month period ended December 31, 2004 that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.




                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

        The Company is not aware of any legal proceeding, which is pending or
threatened to which the Company is a party or of which its property is subject.


ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS


None.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES


None.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


None.


ITEM 5. OTHER INFORMATION


None.


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<PAGE>


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


      (a)       Exhibits:
                ---------

                31.1  Certification of Chief Executive Officer pursuant to
                      Securities Exchange Act of 1934, Rule 13a-14(a) or
                      15d-14(a).

                31.2  Certification of Chief Financial officer pursuant to
                      Securities Exchange Act of 1934, Rule 13a-14(a) or
                      15d-14(a).


                32.1  Certification of Chief Executive Officer pursuant to
                      Securities Exchange Act of 1934, Rule 13a-14(b) or
                      15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant
                      to Section 906 of the Sarbanes-Oxley Act of 2002.

                32.2  Certification of Chief Financial Officer pursuant to
                      Securities Exchange Act of 1934, Rule 13a-14(b) or
                      15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant
                      to Section 906 of the Sarbanes-Oxley Act of 2002.


      (b)   One Form 8-K was filed during the three months ended December 31,
            2004, advising of the change of accounting firms.





                                    SIGNATURE

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

                                       KOLORFUSION INTERNATIONAL, INC.


Date: Feb 18, 2005                     By: /s/ Stephen Nagel
                                          --------------------------------------
                                          President and Chief Financial Officer



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