Quest Resource Holding Corp - Quarter Report: 2008 September (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form 10-Q
Quarterly
Report Pursuant to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
For the
Quarterly Period Ended September 30, 2008
Commission File Number 333-152959
[Missing
Graphic Reference]
(Exact
name of registrant as specified in its charter)
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Nevada
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51-0665952
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(State
or other jurisdiction of
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(I.R.S.
Employer
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incorporation
or organization)
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Identification
No.)
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BlueStar Financial Group,
Inc.
1761
Washington Way, Suite 205
Richland,
Washington 99352
(509)
781-0137
(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 to such filing
requirements for the past 90 days.
Yes x
No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
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Large
accelerated filer o
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting company x
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(Do
not check if a smaller reporting company)
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Indicate
by check mark whether the registrant is a shell Company (as defined in
Rule 12b-2 of the Exchange Act).
Yes o
No x
7,400,000 shares
of Common Stock, par value $0.001, were outstanding on November
10, 2008.
BLUESTAR
FINANCIAL GROUP, INC.
INDEX
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Page
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Number
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PART I - FINANCIAL
INFORMATION
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Item
1 – Financial Statements -Unaudited
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Balance Sheets
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F-1
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Statements of Operations
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F-2
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Statements of Cash Flows
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F-3
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Notes to Financial Statements
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F-4-12
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Item 2 – Management’s Discussion and Analysis of
Financial Condition
and Results of Operations
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1
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Item 3 – Quantitative and Qualitative
Disclosure About Market Risk
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2
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Item 4 – Controls and
Procedures
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2
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PART II – OTHER
INFORMATION
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2
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Item 1 - Legal
Proceedings
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2
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Item 2 – Unregistered Sales of
Equity Securities and Use of Proceeds
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2
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Item 3 - Defaults upon Senior
Securities
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2
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Item 4 – Submission of Matters to a Vote
of Security Holders
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2
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Item 5 - Other
Information
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2
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Item 6 – Exhibits and Reports
on Form 8-K
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2
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Signatures
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3
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PART
I ― FINANCIAL INFORMATION
Item
1. Financial
Statements.
BLUESTAR
FINANCIAL GROUP, INC.
(A
Development Stage Company)
Unaudited
Financial Statements
For
the Three Months Ended September 30, 2008 and the
Period
from July 12, 2002 (Inception) to September 30, 2008
BLUESTAR
FINANCIAL GROUP, INC.
(A
Development Stage Company)
Unaudited
Financial Statements
For
the Three Months Ended September 30, 2008 and the
Period
from July 12, 2002 (Inception) to September 30, 2008
TABLE
OF CONTENTS
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Page(s)
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Balance
Sheets as of September 30, 2008 and June 30, 2008
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F-1
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Statements
of Operations for the three months ended September 30, 2008 and
2007
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and
the period of December 20, 2006 (Inception) to September 30,
2008
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F-2
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Statements
of Cash Flows for the three months ended September 30, 2008 and
2007
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and
the period of July 12, 2002 (Inception) to September 30,
2008
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F-3
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Notes
to the Unaudited Financial Statements
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F-4-11
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BLUESTAR
FINANCIAL GROUP, INC.
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||||||||
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(A
Development Stage Company)
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Balance
Sheets
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September
30, 2008
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June
30, 2008
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(unaudited)
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ASSETS
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Current
assets
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Cash
and cash equivalents
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$ | 500 | $ | 500 | ||||
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Prepaid
Expenses
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1,800 | 2,400 | ||||||
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Total
current assets
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2,300 | 2,900 | ||||||
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Total
assets
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$ | 2,300 | $ | 2,900 | ||||
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LIABILITIES
AND STOCKHOLDERS' EQUITY
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||||||||
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Total
liabilities
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- | - | ||||||
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Stockholders'
Equity
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||||||||
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Common
stock, $.001 par value; 60,000,000 shares authorized, 7,400,000 shares
issued and outstanding
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7,400 | 7,400 | ||||||
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Additional
paid in capital
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- | - | ||||||
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Deficit
accumulated during the development stage
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(5,100 | ) | (4,500 | ) | ||||
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Total
stockholders' equity
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2,300 | 2,900 | ||||||
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Total
liabilities and stockholders' equity
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$ | 2,300 | $ | 2,900 | ||||
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See
accompanying notes to financial statements
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F-1
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BLUESTAR
FINANCIAL GROUP, INC.
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(A
Development Stage Company)
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Statement
of Operations (unaudited)
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For
the period from July 12, 2002 (inception) to September 30,
2008
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Three
months ended September 30,
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2008
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2007
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Revenue
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$ | - | $ | - | $ | - | ||||||
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Expenses
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Professional
fees
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600 | - | 5,100 | |||||||||
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Total
expenses
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600 | - | 5,100 | |||||||||
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Net
loss
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$ | (600 | ) | $ | - | $ | (5,100 | ) | ||||
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Basic
and diluted loss per common share
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$ | (0.00 | ) | $ | (0.00 | ) | ||||||
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Weighted
average shares outstanding
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7,400,000 | - | ||||||||||
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See
accompanying notes to financial statements
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F-2
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BLUESTAR
FINANCIAL GROUP, INC.
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(A
Development Stage Company)
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Statements
of Cash Flows (unaudited)
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For
the period from July 12, 2002 (inception) to September 30,
2008
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Three
months ended September 30,
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2008
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2007
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Cash
flows from operating activities
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Net
loss
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$ | (600 | ) | $ | - | $ | (5,100 | ) | ||||
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Adjustments
to reconcile net loss to net cash used in operating
activities
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Common
stock issued for services
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- | - | 2,400 | |||||||||
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Changes
in operating assets and liabilities
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Prepaid
expenses
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600 | (1,800 | ) | |||||||||
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Net
cash used in operating activities
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- | - | (4,500 | ) | ||||||||
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Net
cash used in investing activities
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- | - | - | |||||||||
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Cash
flows from financing activities
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Proceeds
from sale of stock
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- | - | 5,000 | |||||||||
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Net
cash provided by financing activities
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- | - | 5,000 | |||||||||
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Increase
in cash
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- | - | 500 | |||||||||
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Cash
at beginning of period
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500 | 500 | - | |||||||||
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Cash
at end of period
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$ | 500 | $ | 500 | $ | 500 | ||||||
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Supplemental
disclosure of non-cash investing and financing activities:
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Issuance
if 5,000,000 shares of common stock for professional and consulting
services
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$ | - | $ | - | $ | 5,000 | ||||||
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Supplemental
Cash Flow Information:
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Cash
paid for interest
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$ | - | $ | - | $ | - | ||||||
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Cash
paid for income taxes
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$ | - | $ | - | $ | - | ||||||
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See
accompanying notes to financial statements
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F-3
BLUESTAR
FINANCIAL GROUP, INC.
(A
Development Stage Enterprise)
Notes
to Unaudited Financial Statements
For
the Three Months Ended September 30, 2008 and 2007 and the
Period
from July 12, 2002 (Inception) to September 30, 2008
NOTE A –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary
of significant accounting policies of BlueStar Financial Group, Inc. (A
Development Stage Enterprise) (the Company) is presented to assist in
understanding the Company’s financial statements. The accounting policies
presented in these footnotes conform to accounting principles generally accepted
in the United States of America and have been consistently applied in the
preparation of the accompanying financial statements. These financial statements
and notes are representations of the Company’s management who are responsible
for their integrity and objectivity. The Company has not realized revenues from
its planned principal business purpose and is considered to be in its
development state in accordance with SFAS 7, “Accounting and Reporting by
Development State Enterprises.”
Organization, Nature of
Business and Trade Name
BlueStar
Financial Group, Inc. (“BSFG” or the “Company”) was incorporated in the
state of Nevada on July 12, 2002 under the same name. The Company’s founder
initially intended to establish a management and consulting business. The board
of directors of the Company subsequently decided that the Company should pursue
other opportunities and a change of control of the Company occurred on October
30, 2007. No business was conducted by the Corporation from inception on July
12, 2002 until a change of control occurred on October 30, 2007. The Company is
a development stage enterprise and has as a principal business objective of
working toward establishing “small ticket” equipment leases within a small niche
of the equipment leasing market. The Company intends to provide cost effective
“small ticket items” leasing to small and middle market companies primarily
within the hospitality, spa and resort communities. Items such as audio visual,
computer systems, laundry and health spa equipment are a few of the types of
equipment contemplated by the Company that will be made available for lease to
credit worthy companies.
Basis of
Presentation
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 at the date of the financial statements and the reported amounts of
revenue and expenses during the reported period. Actual results could differ
from those estimates. Management further acknowledges that it is solely
responsible for adopting sound accounting practices, establishing and
maintaining a system of internal accounting control and preventing and detecting
fraud. The Company’s system of internal accounting control is designed to
assure, among other items, that (1) recorded transactions are valid; (2) all
valid transactions are recorded and (3) transactions are recorded in the period
in a timely manner to produce financial statements which present fairly the
financial condition, results of operations and cash flows of the company for the
respective periods being presented.
F-4
BLUESTAR
FINANCIAL GROUP, INC.
(A
Development Stage Enterprise)
Notes
to Unaudited Financial Statements
For
the Three Months Ended September 30, 2008 and 2007 and the
Period
from July 12, 2002 (Inception) to September 30, 2008
NOTE A –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Stockholders’ Equity: Common
stock
The
authorized common stock of the Company consists of 60,000,000 shares with par
value of $0.001. On October 30, 2007, the Company authorized the
issuance of 7,400,000 shares of its $.001 par value common stock at $0.001 per
share in consideration of $5,000 in cash and $2,400 in services. As of September
30, 2008, the shares were issued and outstanding.
Net loss per common
share
Net loss
per share is calculated in accordance with SFAS No. 128, “Earnings Per
Share.” The weighted-average number of common shares
outstanding during each period is used to compute basic loss per
share. Diluted loss per share is computed using the weighted averaged
number of shares and dilutive potential common shares
outstanding. Dilutive potential common shares are additional common
shares assumed to be exercised.
Basic net
loss per common share is based on the weighted average number of shares of
common stock outstanding during 2008 and since inception. As of
September 30, 2008 and since inception, the Company had 7,400,000 common shares
outstanding. As of September 30, 2008 and since inception, the
Company had no dilutive potential common shares.
Basic Loss Per
Share
The
computations of basic loss per share of common stock are based on the weighted
average number of shares outstanding at the date of the financial statements.
There are no common stock equivalents outstanding.
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Three
months ended September 30,
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2008
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2007
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Net
loss
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$ | (600 | ) | $ | - | |||
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Weighted
shares outstanding (basic and diluted)
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7,400,000 | |||||||
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Loss
per common share
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$ | (0.00 | ) | $ | (0.00 | ) | ||
F-5
BLUESTAR
FINANCIAL GROUP, INC.
(A
Development Stage Enterprise)
Notes
to Unaudited Financial Statements
For
the Three Months Ended September 30, 2008 and 2007 and the
Period
from July 12, 2002 (Inception) to September 30, 2008
NOTE A –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Provision for Income
Taxes
Deferred
taxes are provided on a liability method whereby deferred tax assets are
recognized for deductible temporary differences and operating loss and tax
credit carry forwards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely that 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 enactment.
Net
deferred tax assets consist of the following components from Inception on July
12, 2002 to September 30, 2008:
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2008
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Net
operating loss carry forward
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$ | 5,100 | ||
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Valuation
allowance
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(5,100 | ) | ||
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Net
deferred tax asset
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$ | - | ||
The
income tax provision differs from the amount of income tax determined by
applying the U.S. federal income tax rate of 34% to pretax income from
continuing operations for the periods ended September 30, 2008 due to the
following:
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Since
Inception
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Book
loss
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$ | 5,100 | ||
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Common
stock issued for services
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2,400 | |||
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Valuation
allowance
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- | |||
| $ | 7,500 | |||
At
September 30, 2008, the Company had an operating loss carry forward of $5,100
that can be used as an offset against future taxable income. No tax benefit has
been reported in the September 30, 2008 financial statements since the potential
tax benefit is offset by a valuation allowance of the same amount.
Due to
the change in ownership provisions of the Tax Reform Act of 1986, net operating
loss carry-forwards for Federal income tax reporting purposes are subject to
annual limitations. Should a change in ownership occur, net operating
loss carry forwards may be limited as to use in the future.
F-6
BLUESTAR
FINANCIAL GROUP, INC.
(A
Development Stage Enterprise)
Notes
to Unaudited Financial Statements
For
the Three Months Ended September 30, 2008 and 2007 and the
Period
from July 12, 2002 (Inception) to September 30, 2008
NOTE A –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Use of
Estimates
The
preparation of financial statements in 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
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. A change in managements’ estimates or assumptions
could have a material impact on BlueStar Financial Group, Inc.’s financial
condition and results of operations during the period in which such changes
occurred.
Actual
results could differ from those estimates. BlueStar Financial Group, Inc.’s
financial statements reflect all adjustments that management believes are
necessary for the fair presentation of their financial condition and results of
operations for the periods presented.
Fair Value of Financial
Instruments
As at
September 30, 2008, the fair value of cash and accounts and advances
payable, including amounts due to and from related parties, approximate carrying
values because of the short-term maturity of these instruments.
Recent Accounting
Pronouncements
In May
2008, FASB issued Financial Accounting Standards No. 163, “Accounting for Financial Guarantee
Insurance Contracts - an interpretation of FASB Statement No. 60.”
Diversity exists in practice in accounting for financial guarantee
insurance contracts by insurance enterprises under FASB Statement No. 60,
Accounting and Reporting by Insurance Enterprises. That diversity results in
inconsistencies in the recognition and measurement of claim liabilities because
of differing views about when a loss has been incurred under FASB Statement No.
5, Accounting for Contingencies.
This
Statement requires that an insurance enterprise recognize a claim liability
prior to an event of default (insured event) when there is evidence that credit
deterioration has occurred in an insured financial obligation. This Statement
also clarifies how Statement 60 applies to financial guarantee insurance
contracts, including the recognition and measurement to be used to account for
premium revenue and claim liabilities. Those clarifications will increase
comparability in financial reporting of financial guarantee insurance contracts
by insurance enterprises. This Statement requires expanded disclosures about
financial guarantee insurance contracts. The accounting and disclosure
requirements of the Statement will improve the quality of information provided
to users of financial statements. This Statement is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and all
interim periods within those fiscal years.
F-7
BLUESTAR
FINANCIAL GROUP, INC.
(A
Development Stage Enterprise)
Notes
to Unaudited Financial Statements
For
the Three Months Ended September 30, 2008 and 2007 and the
Period
from July 12, 2002 (Inception) to September 30, 2008
NOTE A –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting
Pronouncements (continued)
In May
2008, FASB issued Financial Accounting Standards No. 162, “The Hierarchy of Generally
Accepted Accounting Principles.” This Statement identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States (the GAAP hierarchy). This Statement is effective 60 days
following the SEC's approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles. This
pronouncement has no effect on this Company’s financial reporting at this
time.
In March
of 2008 the Financial Accounting Standards Board (FASB) issued SFAS No. 161,
“Disclosures about Derivative
Instruments and Hedging Activities—an amendment of FASB Statement No.
133, “Accounting for
Derivatives and Hedging Activities.” SFAS No. 161 has the same
scope as Statement No. 133 but requires enhanced disclosures about (a) how and
why an entity uses derivative instruments, (b) how derivative instruments and
related hedged items are accounted for under Statement No. 133 and its related
interpretations, and (c) how derivative instruments and related hedged items
affect an entity’s financial position, financial performance, and cash flows.
SFAS No. 161 is effective for financial statements issued for fiscal years
and interim periods beginning after November 15, 2008, with early application
encouraged. The statement encourages, but does not require, comparative
disclosures for earlier periods at initial adoption. SFAS No. 161 has no
effect on the Company’s financial position, statements of operations, or cash
flows at this time.
In
December, 2007, the FASB issued SFAS No. 160, “Non-controlling interests in
Consolidated Financial Statements, an amendment of ARB No. 51.” SFAS
No. 160 applies to “for-profit” entities that prepare consolidated financial
statements where there is an outstanding non-controlling interest in a
subsidiary. The Statement requires that the non-controlling interest be
reported in the equity section of the consolidated balance sheet but identified
separately from the parent. The amount of consolidated net income
attributed to the non-controlling interest is required to be presented, clearly
labelled for the parent and the non-controlling entity, on the face of the
consolidated statement of income. When a subsidiary is de-consolidated,
any retained non-controlling interest is to be measured at fair value.
Gain or loss on de-consolidation is recognized rather than carried as the
value of the retained investment. The Statement is effective for fiscal
years and interim periods beginning on or after December 15, 2008. It
cannot be adopted earlier but, once adopted, is to be applied retroactively.
This pronouncement has no effect on this Company’s financial reporting at
this time.
In
December 2007, the FASB issued SFAS No.141 (revised 2007), “Business Combinations” (“SFAS
141(R)”) and SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements” (“SFAS 160”). These standards aim to
improve, simplify, and converge internationally the accounting for business
combinations and the reporting of noncontrolling interests in consolidated
financial statements. The provisions of SFAS 141 (R) and SFAS 160 are effective
for the fiscal year beginning April 1, 2009. The adoption of SFAS 141(R)
and SFAS 160 has not impacted the Company’s financial statements.
F-8
BLUESTAR
FINANCIAL GROUP, INC.
(A
Development Stage Enterprise)
Notes
to Unaudited Financial Statements
For
the Three Months Ended September 30, 2008 and 2007 and the
Period
from July 12, 2002 (Inception) to September 30, 2008
NOTE A –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting
Pronouncements (continued)
None of
the above new pronouncements has current application to the Company, but may be
applicable to the Company’s future financial reporting.
Long-lived
Assets-Technology
The
Company’s technology is recorded at its cost. The Company continually monitors
events and changes in circumstances that could indicate carrying amounts of
long-lived assets may not be recoverable. When such events or changes in
circumstances are present, the Company assesses the recoverability of long-lived
assets by determining whether the carrying value of such assets will be
recovered through undiscounted expected future cash flows. If the total of the
future cash flows is less than the carrying amount of those assets, the Company
recognizes an impairment loss based on the excess of the carrying amount over
the fair value of the assets. Assets to be disposed of are reported at the lower
of the carrying amount or the fair value less costs to sell.
Concentration of
Risk
Cash –
The Company at times may maintain a cash balance in excess of insured limits. At
June 30, 2008, the Company has no cash in excess of insured limits.
Revenue
Recognition
The
Company recognizes revenues when payments are billed to the customer and
according to the terms of the contract. From inception to September 30, 2008,
the Company has not recognized any revenues.
Property and
Equipment
Property
and equipment are carried at cost. Expenditures for maintenance and repairs are
charged against operations. Renewals and betterments that materially extend the
life of the assets are capitalized. When assets are retired or otherwise
disposed of, the cost and related accumulated depreciation are removed from the
accounts, and any resulting gain or loss is reflected in income for the
period.
F-9
BLUESTAR
FINANCIAL GROUP, INC.
(A
Development Stage Enterprise)
Notes
to Unaudited Financial Statements
For
the Three Months Ended September 30, 2008 and 2007 and the
Period
from July 12, 2002 (Inception) to September 30, 2008
NOTE A –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment
(continued)
Depreciation
is computed for financial statement purposes on a straight-line basis over
estimated useful lives of the related assets. The estimated useful lives of
depreciable assets are:
|
Estimated
Useful Lives
|
|
|
Office
Equipment
|
5-10
years
|
|
Copier
|
5-7 years
|
|
Vehicles
|
5-10
years
|
For
federal income tax purposes, depreciation is computed under the modified
accelerated cost recovery system. For audit purposes, depreciation is computed
under the straight-line method.
Accounts
Receivable
Accounts
receivable are carried at the expected net realizable value. The allowance for
doubtful accounts is based on management's assessment of the collectability of
specific customer accounts and the aging of the accounts
receivables. If there were a deterioration of a major customer's
creditworthiness, or actual defaults were higher than historical experience, our
estimates of the recoverability of the amounts due to us could
be overstated, which could have a negative impact on
operations.
Cash and Cash
Equivalents
For
purposes of the statement of cash flows, the Company considers all short-term
debt securities purchased with maturity of three months or less to be cash
equivalents.
NOTE B –
GOING CONCERN
The
Company’s financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going concern
which contemplates the realization of assets and liquidation of liabilities in
the normal course of business. However, the Company does not have
significant cash or other current assets, nor does it have an established source
of revenues sufficient to cover its operating costs and to allow it to continue
as a going concern. The Company intends to raise additional capital when
required to produce crude oil from tar sands. When and if these activities
provide sufficient revenues it would allow it to continue as a going
concern. In the interim the Company is working toward raising operating capital
through the private placement of its common stock or debt
instruments.
F-10
BLUESTAR
FINANCIAL GROUP, INC.
(A
Development Stage Enterprise)
Notes
to Unaudited Financial Statements
For
the Three Months Ended September 30, 2008 and 2007 and the
Period
from July 12, 2002 (Inception) to September 30, 2008
NOTE B –
GOING CONCERN (CONTINUED)
The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plan described in the preceding paragraph
and eventually attain profitable operations. The accompanying financial
statements do not include any adjustments that may be necessary if the Company
is unable to continue as a going concern.
NOTE C
- SIGNIFICANT EVENTS
From
Inception on July 12, 2002 to September 30, 2008, the Company has issued
7,400,000 shares of its common stock for $5,000 cash and $2,400 in services
valued at $0.001 per share for a total consideration of $7,400.
NOTE D -
RELATED PARTY TRANSACTIONS
The
Company neither owns nor leases any real or personal property. An
officer or resident agent of the corporation provides office services without
charge. Such costs are immaterial to the financial statements and
accordingly, have not been reflected therein. The officers and
directors for the Company are involved in other business activities and may, in
the future, become involved in other business opportunities. If a
specific business opportunity becomes available, such persons may face a
conflict in selecting between the Company and their other business
interest. The Company has not formulated a policy for the resolution
of such conflicts.
NOTE E -
WARRANTS AND OPTIONS
There are
no warrants or options outstanding to acquire any additional shares of common
stock of the Company
F-11
Item 2. Management's Discussion and
Analysis of Financial Condition and Plan of Operations.
FORWARD
LOOKING STATEMENTS
This
report contains forward-looking statements that involve risk and uncertainties.
We use words such as "anticipate", "believe", "plan", "expect", "future",
"intend", and similar expressions to identify such forward-looking statements.
Investors should be aware that all forward-looking statements contained within
this filing are good faith estimates of management as of the date of this filing
and actual results may differ materially from historical results or our
predictions of future results.
General
BlueStar
Financial Group, Inc. (the “Company”) is a development stage company that was
incorporated on July 12, 2002, in the state of Nevada. The Company intends to
enter into the small ticket segment of the equipment leasing industry. The
Company has never declared bankruptcy, it has never been in receivership, and it
has never been involved in any legal action or proceedings. Since becoming
incorporated, BlueStar has not made any significant purchase or sale of assets,
nor has it been involved in any mergers, acquisitions or consolidations and the
Company owns no subsidiaries. The fiscal year end is June 30th. The
Company has not had revenues from operations since its inception and/or any
interim period in the current fiscal year.
Plan
of Operation
As of
September30, 2008, we have
$500 of cash available. We have no current
liabilities. From the date of inception (July 12, 2002) to
September30, 2008 the Company has recorded a net loss of $5,100
of which were expenses relating to the initial development of the
Company, filing its Registration Statement on Form SB-2, and expenses relating
to maintaining Reporting Company status with the SEC. In order to
survive as a going concern over the Company will require additional capital
investments or borrowed funds to meet cash flow projections and carry forward
our business objectives. There can be no guarantee or assurance that we can
raise adequate capital from outside sources to fund the proposed business.
Failure to secure additional financing would result in business failure and a
complete loss of any investment made into the Company.
The
Company filed a registration statement on Form S-1 on August 12, 2008, which was
deemed effective on August 21, 2008. Since this time the Company has
sold no shares of common stock to the public. All proceeds derived from the
offering will be utilized by the Company to fund its initial development
including administrative costs associated with maintaining its status as a
Reporting Company as defined by the Securities and Exchange Commission (“SEC”)
under the Exchange Act of 1934 as amended. The Company plans to
continue to focus efforts on selling their common shares through this offering
in order to continue to fund its initial development and fund the expenses
associated with maintaining a reporting company status.
In
addition, over the course of the next 45 to 60 days, management intends to focus
efforts on obtaining a quotation for its common stock on the Over the Counter
Bulletin Board (“OTCBB”). Management believes having its common stock
quoted on the OTCBB will provide it increased opportunity to raise additional
capital for its proposed business development. However, there can be
no guarantee or assurance the Company will be successful in filing a Form 211
application and obtaining a quotation. To date there is no public
market for the Company’s common stock. There can be no guarantee or assurance
that a public market will ever exist for the common stock. Failure to create a
market for the Company’s common stock would result in business failure and a
complete loss of any investment made into the Company.
Product
Research and Development
The
Company does not anticipate any costs or expenses to be incurred for product
research and development within the next twelve months.
Employees
There are
no employees of the Company, excluding the current President and Director, Mr.
Vorhees and the Company does not anticipate hiring any additional employees
within the next twelve months.
1
Off-Balance
Sheet Arrangements
As of the
date of this Quarterly Report, the Company does not have any off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on the Company's financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources that are material to investors. The term "off-balance sheet
arrangement" generally means any transaction, agreement or other contractual
arrangement to which an entity unconsolidated with the Company is a party, under
which the Company has (i) any obligation arising under a guarantee contract,
derivative instrument or variable interest; or (ii) a retained or contingent
interest in assets transferred to such entity or similar arrangement that serves
as credit, liquidity or market risk support for such assets.
Item
3. Quantitative
and Qualitative Disclosures about Market Risk.
Not
Applicable
Item
4. Controls and Procedures
The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting, as required by
Sarbanes-Oxley (SOX) Section 404 A. The Company's internal control over
financial reporting is a process designed under the supervision of the Company's
Chief Executive Officer and Chief Financial Officer to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of the Company's financial statements for external purposes in accordance with
U.S. generally accepted accounting principles.
As of
September30, 2008 management assessed the effectiveness of the Company's
internal control over financial reporting based on the criteria for effective
internal control over financial reporting established in SEC guidance on
conducting such assessments. Based on that evaluation, they concluded that,
during the period covered by this report, such internal controls and procedures
were not effective to detect the inappropriate application of US GAAP rules as
more fully described below. This was due to deficiencies that existed in the
design or operation of our internal control over financial reporting that
adversely affected our internal controls and that may be considered to be
material weaknesses.
The
matters involving internal controls and procedures that the Company's management
considered to be material weaknesses under the standards of the Public Company
Accounting Oversight Board were: (1) lack of a functioning audit committee and
lack of a majority of outside directors on the Company's board of directors,
resulting in ineffective oversight in the establishment and monitoring of
required internal controls and procedures; (2) inadequate segregation of duties
consistent with control objectives; (3) insufficient written policies and
procedures for accounting and financial reporting with respect to the
requirements and application of US GAAP and SEC disclosure requirements; and (4)
ineffective controls over period end financial disclosure and reporting
processes. The aforementioned material weaknesses were identified by the
Company's Chief Financial Officer in connection with the review of our financial
statements as of September30, 2008 and communicated the matters to our
management.
Management
believes that the material weaknesses set forth in items (2), (3) and (4) above
did not have an affect on the Company's financial results. However, management
believes that the lack of a functioning audit committee and lack of a majority
of outside directors on the Company's board of directors, resulting in
ineffective oversight in the establishment and monitoring of required internal
controls and procedures can result in the Company's determination to its
financial statements for the future years.
We are
committed to improving our financial organization. As part of this commitment,
we will create a position to segregate duties consistent with control objectives
and will increase our personnel resources and technical accounting expertise
within the accounting function when funds are available to the Company: i)
Appointing one or more outside directors to our board of directors who shall be
appointed to the audit committee of the Company resulting in a fully functioning
audit committee who will undertake the oversight in the establishment and
monitoring of required internal controls and procedures; and ii) Preparing and
implementing sufficient written policies and checklists which will set forth
procedures for accounting and financial reporting with respect to the
requirements and application of US GAAP and SEC disclosure
requirements.
Management
believes that the appointment of one or more outside directors, who shall be
appointed to a fully functioning audit committee, will remedy the lack of a
functioning audit committee and a lack of a majority of outside directors on the
Company's Board. In addition, management believes that preparing and
implementing sufficient written policies and checklists will remedy the
following material weaknesses (i) insufficient written policies and procedures
for accounting and financial reporting with respect to the requirements and
application of US GAAP and SEC disclosure requirements; and (ii) ineffective
controls over period end financial close and reporting processes. Further,
management believes that the hiring of additional personnel who have the
technical expertise and knowledge will result proper segregation of duties and
provide more checks and balances within the department. Additional personnel
will also provide the cross training needed to support the Company if personnel
turn over issues within the department occur. This coupled with the appointment
of additional outside directors will greatly decrease any control and procedure
issues the company may encounter in the future.
2
We will
continue to monitor
and evaluate the effectiveness of
our internal controls and procedures and our internal controls over
financial reporting on an ongoing basis and
are committed to
taking further action and implementing
additional enhancements or improvements, as necessary and as funds
allow.
Changes
in Internal Controls.
There
were no significant changes in the Company's internal controls or, to the
Company's knowledge, in other factors that could significantly affect these
controls subsequent to the date of their evaluation.
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings
The
Company is not a party to any pending legal proceedings, and no such proceedings
are known to be contemplated.
No
director, officer, or affiliate of the Company and no owner of record or
beneficial owner of more than 5.0% of the securities of the Company, or any
associate of any such director, officer or security holder is a party adverse to
the Company or has a material interest adverse to the Company in reference to
pending litigation.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item
3. Defaults Upon Senior Securities
None.
Item
4. Submission of Matters to Vote of Security Holders
None.
Item
5. Other Information
None.
Item
6. Exhibits
|
|
(a)
Exhibits furnished as Exhibits
hereto:
|
|
|
|
|
Exhibit No.
|
Description
|
|
|
31.1
|
Certification
of Paul Voorheespursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
|
|
32.1
|
Certification
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
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.
|
BlueStar
Financial Group, Inc.
|
||
|
Date:
November
10, 2008
|
By:
|
/s/Paul
Voorhees
|
|
Paul
Voorhees
|
||
|
Chief
Financial Officer, Treasurer and Clerk
|
||
|
(principal
financial and accounting officer)
|
||
|
Date:
November
10, 2008
|
By:
|
/s/Paul
Voorhees
|
|
Paul
Voorhees
|
||
|
President
and Chief Executive Officer
|
||
3
|
31.1
|
Certification
of Paul Voorhees pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
CERTIFICATION
PURSUANT
TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the accompanying Quarterly Report on Form 10-Q of BlueStar
Financial Group, Inc. (the "Company") for the quarter ended September30,
2008, as filed with the Securities and Exchange Commission on the date
hereof, the undersigned, in the capacity and date indicated below, hereby
certifies that:
1. I
have reviewed this quarterly report on Form 10-Q of BlueStar Financial
Group, Inc.;
2.
Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3.
Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the Company as of, and for, the periods presented in this
quarterly report;
4.
The Company's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
(b)
designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
(c)
evaluated the effectiveness of the Company's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation;
and
(d)
disclosed in this report any change in the Company's internal control over
financial reporting that occurred during the Company's most recent fiscal
quarter (the Company's fourth fiscal quarter in the case of an annual
report) that has materially affected or is reasonably likely to materially
affect, the Company's internal control over financial reporting;
and
5.
The Company's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the Company's auditors and the audit committee of Company's board of
directors (or persons performing the equivalent functions):
(a)
all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Company's ability to
record, process, summarize and report financial information;
and
(b)
any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal control
over financial reporting.
Date: August
___,
2008 By: /s/ Paul
Voorhees
-----------------------------------------
Paul
Voorhees, President, Chief Executive Officer,
Principal
Financial and Accounting Officer,
Director,
Secretary and Treasurer
|
||
|
32.1
|
Certification
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
CERTIFICATION
PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I,
Paul Voorhees, Chief Executive Officer and Chief Financial Officer of BlueStar
Financial Group, Inc. (the "Company") certify that:
1.
I have reviewed the quarterly report on Form 10-Q of BlueStar Financial Group,
Inc.;
2.
Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report; and
3.
Based on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the Company as of,
and for, the period presented in this quarterly report.
Date: August ___,
2008
/s/ Paul
Voorhees
___________________
Paul
Voorhees,
Chief
Executive Officer
Chief
Financial Officer