Welund Fund Form 10-QSB For Quarter Ended March 31, 2005

Check whether the issuer (1) has 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.

Welund Fund, Inc. has included its unaudited condensed balance sheets as of March 31, 2005 and December 31, 2004 (the end of our most recently completed fiscal year), and unaudited condensed statements of operations and cash flows for the three months ended March 31, 2005 and 2004, and for the period from July 16, 2002 (date of inception) through March 31, 2005, together with unaudited condensed notes thereto. In the opinion of management of Welund Fund, Inc., the financial statements reflect all adjustments, all of which are normal recurring adjustments, necessary to fairly present the financial condition, results of operations, and cash flows of Welund Fund, Inc. for the interim periods presented. The financial statements included in this report on Form 10-QSB should be read in conjunction with the financial statements of Welund Fund, Inc. and the notes thereto for the year ended December 31, 2004 included in our annual report on Form 10-KSB.

	March 31,			December 31,
	2005			2004
ASSETS

Current Assets
Cash	$	20,537		$	-
Current maturities of auto loans receivable		60,260			-
Subscriptions receivable		83,000			-
Total Current Assets		163,797			-

Auto loans receivable, less current maturities		47,097			-

Total Assets	$	210,894		$	-

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current Liabilities
Accounts payable	$	10,746		$	2,869
Payable to officer/shareholder		10,215			4,675
Total Current Liabilities		20,961			7,544

Shareholders' Equity (Deficit)
Common stock, $0.0001 par value; 20,000,000 shares authorized; 3,090,000 and 2,240,000 shares issued and outstanding or subscribed		309			224
Additional paid in capital		199,915			-
Deficit accumulated during the development stage		(10,291	)		(7,768	)
Total Shareholders' Equity (Deficit)		189,933			(7,544	)

Total Liabilities and Shareholders' Equity (Deficit)	$	210,894		$	-

						For the Period from
						July 16, 2002
	For the Three Months Ended					(date of inception)
	March 31,					through
	2005			2004		March 31, 2005

General and administrative expense	$	2,523		$	-	$	10,291

Net Loss	$	(2,523	)	$	-	$	(10,291	)

Basic Loss Per Common Share	$	-		$	-

Weighted-Average Common Shares Outstanding		2,265,626			2,240,000

						For the period from
						July 16, 2002
	For the Three Months Ended					(date of inception)
	March 31,					through
	2005			2004		March 31, 2005
Cash Flows From Operating Activities
Net loss	$	(2,523	)	$	-	$	(10,291	)
Adjustments to reconcile net loss to net cash used in operating activities
Issuance of common stock for services		-			-		124
Changes in assets and liabilities:
Increase in payable to officers/shareholders		540			-		5,315
Accounts payable		377			-		3,246
Net Cash Used In Operating Activities		(1,606	)		-		(1,606	)

Cash Flows From Investing Activities
Purchase of auto loans receivable		(107,357	)		-		(107,357	)
Net Cash Used In Investing Activities		(107,357	)		-		(107,357	)

Cash Flows From Financing Activities
Proceeds from the sale of common stock		129,500			-		129,500
Net Cash Provided By Financing Activities		129,500			-		129,500
Net Increase In Cash		20,537			-		20,537
Cash At Beginning Of Period		-			-		-
Cash At End Of Period	$	20,537		$	-	$	20,537

Organization, Nature of Operations and Change in Control — Welund Fund, Inc. ("the Company") was incorporated in the State of Delaware on July 16, 2002 to serve as a vehicle to effect a merger, exchange of capital stock, asset acquisition or other business combination with a domestic or foreign private business. The Company is in the development stage and, as of December 31, 2004, had not yet commenced any formal business operations. Since July 16, 2002, the Company’s activities have primarily related to the Company's formation and the seeking of investment or merger opportunities. On June 9, 2004, an entity acquired 100% of the stock of the Company from the former sole shareholder of the Company for $90,000. At this time, control of the Company was transferred to the new shareholder who appointed a new board of directors. The change of control did not constitute a business combination or reorganization, and consequently, the assets and liabilities of the Company continued to be recorded at historical cost. As further described in Notes (B) and (C) to the financial statements, the Company completed a placement of 950,000 shares of common stock for $225,000, net of offering costs and purchased a pool of sub-prime auto loans from an affiliate of the Company’s president for $107,357.

Condensed Interim Financial Statements - The accompanying unaudited condensed financial statements of Welund Fund, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-QSB. Accordingly, these financial statements do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the Company’s annual financial statements and the notes thereto, included in the Company’s annual report on Form 10-KSB. In the opinion of the Company’s management, the accompanying unaudited condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to fairly present the Company’s financial position as of March 31, 2005, its results of operations and cash flows for the three months ended March 31, 2005 and 2004, and for the period from July 16, 2002 (date of inception), through March 31, 2005. The results of operations for the three months ended March 31, 2005, may not be indicative of the results that may be expected for the year ending December 31, 2005.

Business Condition - The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles which contemplate continuation of the Company as a going concern. However, the Company’s shareholders’ deficit, operating losses, working capital deficiency and lack of operations, raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management’s plans include raising additional funds to meet its ongoing expenses through shareholder loans or private placement of its equity securities. There is no assurance that the Company will be successful in raising additional capital, or if successful, on terms favorable to the Company. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Basic Loss Per Share - Loss per share amounts are computed by dividing net loss by the weighted-average number of common shares outstanding during each period. At March 31, 2005 and 2004, there were no potentially dilutive common stock equivalents outstanding.

On March 24, 2005, the Company opened a private offering of its stock for sale at $0.25 per share. Through March 31, 2005, the Company had subscriptions to sell 850,000 shares of common stock for $212,500, of which $129,500 was paid in March 2005 and the remaining subscription receivable of $83,000 was collected in April 2005. During April 2005, an additional 100,000 shares of common stock were sold, resulting in a total of 950,000 shares of common stock being sold for $225,000, net of offering costs. Total cost of the offering was $12,500, which was charged against additional paid in capital. The offering closed April 30, 2005.

On March 30, 2005, the Company purchased a pool of sub-prime auto loans with a pay-off balance of $126,302 from an affiliate of the Company’s primary shareholder, officer, and director for $107,357. The purchase price was 85% of the loan pool’s pay-off balance. The discount of $18,945 on the purchase of the loans will be amortized over the term of the loans using a method which approximates the effective yield method. The seller of the pool is required to repurchase loans that become 90 days delinquent. As such, no allowance for uncollectible loans is needed. The average loan has a principal balance of approximately $4,708 with an average annual percentage interest rate of approximately 21.54%. The remaining terms of the loans range from 6 to 46 months. The Company has contracted with Accredited Adjusters, LLC, a related party, to service and administer the loans for a monthly fee equal to ½% of the outstanding principal balance. Accredited Adjusters is an affiliate of the Company’s primary shareholder, officer, and director.

Since the inception of the Company, certain expenses of the Company have been paid by the principal shareholder of the Company. The Company does not own any any real or personal property. Office services have been provided without charge by the officer and director of the Company. Such costs had not been significant to the financial statements and accordingly, have not been reflected therein. Commencing March 1, 2005, the Company began paying rent in the amount of $1,800 per month to an affiliate of the officer and director for the use of certain office space. At March 31, 2005, the amount owed to the officer/shareholder is $10,215.

This discussion and analysis is designed to be read in conjunction with the Management’s Discussion and Analysis set forth in Welund Fund’s Form 10-KSB for the fiscal year ended December 31, 2004. As used herein, “we,” “our,” “us” and the like refer to Welund Fund, Inc.

This report and other information made publicly available from time to time may contain certain forward-looking statements and other information relating to the Company and its business that are based on the beliefs of management and assumptions made concerning information then currently available to management. Such statements reflect the views of management at the time they are made and are not intended to be accurate descriptions of the future. The discussion of future events, including the business prospects of the Company, is subject to the material risks listed below under "Risk Factors" and assumptions made by management.

The material risks that we believe are faced by the Company as of the date of this report are set forth below. This discussion of risks is not intended to be exhaustive. The risks set forth below and other risks not currently anticipated or fully appreciated by the management could adversely affect the business and prospects of the Company. These risks include:

While the Company has recently purchased a loan pool and has commenced operations it still must be considered a start up venture and the Company faces all of the risks inherent in the start-up of a new business and does not have a historical basis on which to evaluate whether or not its business can be successful. Furthermore the company will need to expand its operations to produce results which would be meaningful to a public company. There is no assurance that the Company can complete such an expansion.

The Company is heavily dependent upon the skill, talents, and abilities of its president, Robert Freiheit. Mr. Freiheit will be primarily responsible for the decisions concerning the implementation of a business model. Mr. Freiheit will not devote his full business time to the Company and will continue to be engaged in outside business activities. The Company will be dependent upon the business acumen and expertise of management and the applicability of their backgrounds to the business decisions required to be made on behalf of the Company.

There is no existing trading market for the Common Stock and it is unlikely that one will develop in the foreseeable future. The shares of Common Stock may be subject to the Penny Market Reform Act of 1990 (the “Reform Act”). In October 1990, Congress enacted the Reform Act to counter fraudulent practices common in penny stock transactions. If the shares are determined to be subject to the Reform Act, this may also adversely affect the ability to sell shares in the future.

The directors of the Company currently hold voting and dispositive power over an aggregate of 2,240,000 shares of Common Stock, which represents a majority of the currently issued and outstanding common stock. Since action by the stockholders on most matters, including the election of directors, only requires approval by a vote of the majority of shares voted on the mater, the current directors and executive officers of the company will be able to significantly influence if not control the election of directors of the Company and the outcome of other matters submitted to the stockholders for consideration.

Should one or more of these or other risks materialize, or if the underlying assumptions of management prove incorrect, actual results may vary materially from those described in the forward-looking statements. We do not intend to update these forward-looking statements, except as may occur in the regular course of our periodic reporting obligations.

The Company plans to collect the initial loan pool purchased and rely on its contracted servicers to assist in such collection. Because the servicer only gets paid out of collection, the Company does not need to provide additional cash to conduct the operation. To the extent that principal balances are collected, we would purchase new loans. We do desire to greatly expand this business which would require the raising of additional capital. The Company is currently relying on Robert Freiheit and his affiliates to seek and obtain such capital. There is no assurance, however, that such capital will be obtained, or if obtained, can be done so on terms favorable to current shareholders. Affiliates of Robert Freiheit have more loans available for purchase and a preliminary view of the Sacramento market indicates there are third parties who could also be a significant source of loan pools.

In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment (SFAS 123R), which addresses the accounting for share-based payment transactions in which a company receives employee services in exchange for either equity instruments of that company or liabilities that are based on the fair value of that company’s equity instruments, or that may be settled by issuance of such equity instruments. SFAS 123R eliminates the ability to account for share-based compensation transactions using the intrinsic value method as prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and requires that such transactions be accounted for using a fair value-based method and recognized as expense in the statement of operations. SFAS 123R is effective beginning January 1, 2006. The adoption of SFAS 123R will not have a material effect on the Company as the Company does not currently have stock options or any other share-based payment arrangement outstanding.

In December 2004, the FASB issued Statement of Financial Accounting Standards No. 153 (SFAS 153), Exchanges of Nonmonetary Assets - An Amendment of APB Opinion No. 29. SFAS 153 amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The Company does not expect this pronouncement to have a material impact on our financial statements.

In accordance with Section 302 of the Sarbanes-Oxley Act of 2002 and the Securities Exchange Act of 1934 Section 13a-15(e) or Section 15d-15(e), we implemented disclosure controls and procedures pursuant to which management under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out, as of the end of the quarter ended March 31, 2005, a review and evaluation of the effectiveness of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer has concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by Welund Fund, Inc. in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms.

Between March 24, 2005 and April 30, 2005, the Company conducted a private offering of its stock for sale at $0.25 per share. The offering was made on a best-efforts basis, and included a maximum offering of 1,600,000 shares and a minimum offering of 400,000 shares. During the offering, the Company sold 950,000 shares of common stock for aggregate gross proceeds of $237,500. On March 30, 2005, $107,357 of the proceeds from the offering was used to purchase a pool of sub-prime auto loans, as further described below in Item 5. The remainder of the proceeds from the offering are being held for future investment and operating costs. The sale and issuance of the common stock was exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2) of the Securities Act, as not being a public offering.

On March 30, 2005, the Company purchased a pool of sub-prime auto loans with a pay-off balance of $126,302 from Village Auto, LLC, an affiliate of the Company’s primary shareholder, officer, and director for $107,357. The purchase price was 85% of the loan pool’s pay-off balance. The seller of the pool is required to repurchase loans that become 90 days delinquent. The average loan has a principal balance of approximately $4,708 with an average annual percentage interest rate of approximately 21.54%. The remaining terms of the loans range from 6 to 46 months. The Company has contracted with Accredited Adjusters, LLC, a related party, to service and administer the loans for a monthly fee equal to 1/2% of the outstanding principal balance. Accredited Adjusters is an affiliate of the Company’s primary shareholder, officer, and director.

Exhibit Number	SEC Reference Number	Title of Document	Location
1	(10)	Purchase and Servicing Agreement between Welund Fund, Inc. and Village Auto, LLC, dated March 30, 2005	This filing

2	(31)	Rule 13(a) - 14(a)/15(d) - 14(a) Certification	This filing

3	(32)	Section 1350 Certification	This filing

Delaware	20-1470649
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)


	WELUND FUND, INC.

Dated: May 23, 2005	By:	/s/ Robert Freiheit
		Robert Freiheit, President and Chief Executive Officer
		(Principal Executive Officer)