Business Context and Reporting Period
Company: Bluestar Financial Group, Inc. (Note: Input metadata referenced "Quest Resource Holding Corp," but the filing text identifies the registrant as Bluestar Financial Group, Inc.)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: December 31, 2009
Status: Development Stage Company / Shell Company
Business Overview: Founded in 2002, the company originally focused on equipment leasing but has pivoted strategy due to economic downturns. On November 11, 2009, the company entered into an agreement to acquire YouChange, Inc., aiming to transition into the "Green Tech" sector to address e-waste through recycling and re-commerce.
Key Financial Metrics
| Metric | Three Months Ended Dec 31, 2009 | Six Months Ended Dec 31, 2009 | Inception to Dec 31, 2009 |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Net Loss | $(7,088) | $(10,111) | $(71,888) |
| Cash and Cash Equivalents | $3 | $3 | $3 |
| Total Assets | $102,302 | $102,302 | $102,302 |
| Total Liabilities | $16,790 | $16,790 | $16,790 |
| Stockholders' Equity | $85,512 | $85,512 | $85,512 |
| Notes Receivable | $87,299 | $87,299 | $87,299 |
Liquidity: The company holds only $3 in cash. Liquidity is heavily dependent on the collection of notes receivable ($87,299) and related party payables ($15,400).
Material Changes vs. Prior Period
- Expenses: Professional fees increased significantly from $600 in the three months ended Dec 31, 2008, to $7,088 in the same period in 2009. Total expenses for the six months ended Dec 31, 2009, were $10,111 compared to $1,200 in the prior year period.
- Receivables: Notes receivable decreased slightly from $94,520 (June 30, 2009) to $87,299 (Dec 31, 2009), indicating some collection activity.
- Liabilities: Related party payables increased from $13,900 to $15,400, and accounts payable increased from $250 to $1,390.
- Strategy Shift: The company moved from a traditional leasing model to a planned acquisition in the "Green Tech" sector, a material change in business direction not present in the prior period.
Guidance, Outlook, Risks, and Contingencies
Management Commentary and Outlook
Management states the company requires approximately $25,000 in additional capital or collections to meet anticipated expenses over the next twelve months and maintain reporting status. Without this funding, the company may be forced to cease operations. The company anticipates closing the acquisition of YouChange, Inc. by the end of the third quarter of Fiscal 2010.
Risks and Contingencies
- Going Concern: The auditor has expressed substantial doubt regarding the company's ability to continue as a going concern due to a lack of revenue and accumulated losses.
- Legal Dispute: There is an ongoing dispute with Delos Stock Transfer regarding the alleged misappropriation of approximately $15,000 from an escrow account. This amount is recorded as "Due from consultant."
- Capital Needs: The company has no independent operating history and relies entirely on future financing or asset collection to survive.
- Management Experience: Management acknowledges a lack of technical experience in the leasing sector, which poses a risk to future operations.
Investor Verification Checklist
- Cash Position: Verify the current cash balance of $3 and the status of the $87,299 in notes receivable to assess immediate solvency.
- Acquisition Status: Confirm the status of the proposed acquisition of YouChange, Inc. and whether the transaction has closed.
- Legal Dispute: Investigate the outcome of the dispute with Delos Stock Transfer regarding the $15,000 escrow funds.
- Capital Raise: Determine if the company has secured the estimated $25,000 required for operations over the next 12 months.
- Shell Status: Note the company's classification as a shell company and the implications for liquidity and trading volume.