SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

    [X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
                                   Act of 1934

                      For Quarter Ended: September 30, 2004

                                       OR

     [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

                         Commission File No. 000-3084133

                                 BLUETORCH  INC.
                                 ---------------

             (Exact name of registrant as specified in its charter)


         Nevada                                             90-0093439
----------------------------                        ------------------------
 (State  of  Incorporation)                            (I.R.S.  Employer  I.D.)



                         12607 Hidden Creek Way, Suite S
                              Cerritos,  CA  90703
                            Telephone (562) 623-4040
          (Address and telephone number of principal executive offices
                        and principal place of business)

                                        1

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 a 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  [ ]

As  of  November  17, 2004, the registrant had a total of  358,397,254 shares of
common  stock  issued  and  outstanding.



                                TABLE OF CONTENTS

PART  I           FINANCIAL  INFORMATION                                  PAGE

Item  1:          Financial  Statements                                      3
Item 2:           Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                        9
Item  3:          Quantitative  and  Qualitative  Disclosures
                  About Market Risk                                         10
0Item  4:         Controls  and  Procedures                                 11


PART  II          OTHER  INFORMATION

Item  1:          Legal  Proceedings                                        11
Item  2:          Changes in Securities, Use of Proceeds and
                  Issuer Purchases of Equity  Securities                    11
Item  3:          Defaults  Upon  Senior  Securities                        11
Item  4:          Submission  of  Matters  to  a  Vote  of
                  Security  Holders                                         12
Item  5:          Other  Information                                        12
Item  6:          Exhibits                                                  12

SIGNATURES                                                                  12

















































                                       2

PART  I          FINANCIAL  INFORMATION

ITEM  1:         FINANCIAL  STATEMENTS

<TABLE>
<CAPTION>
                                              BLUETORCH  INC.

                                         CONDENSED  BALANCE  SHEETS


<S>                                                               <C>                   <C>

                                                                   SEPTEMBER 30, 2004    DECEMBER 31, 2003
                                                                   ------------------  -------------------
                                                                          (Unaudited)
ASSETS

  Investments in portfolio companies                                       $1,363,253             $559,405
  Cash                                                                              -                  517
  Property & equipment, net                                                    29,902                    -
  Deposits                                                                      5,557                    -
                                                                      ---------------  -------------------

                                                                           $1,398,712             $559,922
                                                                      ===============  ===================

LIABILITIES  AND  STOCKHOLDERS'  EQUITY

Current liabilities
  Bank overdraft                                                              $15,702                   $-
  Accounts payable                                                            127,102              106,156
  Loans payable, related parties                                                    -               26,000
                                                                      ---------------  -------------------

          Total current liabilities                                           142,804              132,156
                                                                      ---------------  -------------------

Stockholders' equity
  Preferred series B, $.001 par value; 610,000 shares authorized;
    190,000 shares issued and outstanding                                         190                  480
  Preferred series C, $.001 par value; 10,000,000 shares authorized;
    9,560,000 shares issued and outstanding                                     9,560               10,000
  Common stock, $.001 par value; 950,000,0000 shares authorized;
    331,491,363 and 190,372,632 shares issued and
    outstanding at June 30, 2004 and December 31, 2003, respectively          331,491               54,277
  Common stock subscriptions receivable                                     (162,600)            (112,500)
  Additional paid in capital                                                7,418,865            5,844,055
  Accumulated deficit                                                     (6,341,598)          (5,368,546)
                                                                      ---------------  -------------------

          Total stockholders' equity                                       1,255,908              427,766
                                                                      ---------------  -------------------

                                                                           $1,398,712             $559,922
                                                                      ===============  ===================
The accompanying notes form an integral part of these financial statements.

</TABLE>


























                                        3

<TABLE>
<CAPTION>


                                            BLUETORCH  INC.
                                 CONDENSED  STATEMENTS  OF  OPERATIONS
                                             (Unaudited)

<S>                                  <C>              <C>              <C>               <C>
                                     Three Months     Three Months     Nine Months      Nine Months
                                         Ended            Ended            Ended            Ended
                                     Sept. 30, 2004   Sept. 30, 2003   Sept. 30, 2004   Sept. 30, 2003
                                     ---------------  ---------------  ---------------  ---------------
Income.                              $             -  $             -  $             -  $             -
                                     ---------------  ---------------  ---------------  ---------------

Expenses -
  General and administrative               (170,958)        (688,639)        (673,052)      (2,219,840)

  Loss on investments in portfolio         (300,000)                -        (300,000)                -
     companies

  Cost associated with cancellation
     of options                                   -                -                 -      (2,784,600)
                                     --------------   --------------   ---------------  ---------------
          Total expenses                   (470,958)        (688,639)        (973,052)      (5,004,440)
                                     ---------------  ---------------  ---------------  ---------------

Net loss                             $     (470,958)  $     (688,639)  $     (973,052)  $   (5,004,440)
                                     ===============  ===============  ===============  ===============

Basic and diluted - loss per share.  $        (0.00)  $        (0.00)  $        (0.00)   $       (0.03)
                                     ===============  ===============  ===============  ===============

Weighted average common shares -
  basic and diluted                      273,853,984      182,325,574      242,131,495      175,599,031
                                     ===============  ===============  ===============  ===============

The accompanying notes form an integral part of these financial statements.
</TABLE>

<TABLE>
<CAPTION>


                                               BLUETORCH  INC.

                             SCHEDULE  OF  INVESTMENTS  IN  PORTFOLIO  COMPANIES
                                                (Unaudited)

                                             SEPTEMBER 30, 2004

<S>                                <C>             <C>             <C>        <C>            <C>
                                    Description     Percent                      Fair
Company                             of Business     Ownership         Cost       Value        Affiliation


Unboxed Distribution, Inc          Extreme Sports     100%         $917,576    $800,711  (1)   Yes
                                   Apparel


Total Sports Distribution, Inc     Extreme Sports     100%         $373,677    $190,542  (1)   Yes
                                   Apparel

Island Tribe Inc.                  Extreme Sports      51%         $372,000    $372,000  (1)   Yes
                                   Apparel                         ----------  ----------

Investments in Portfolio Companies                                 $1,663,253  $1,363,253
                                                                   ==========  ==========


<FN>


     (1)  Fair  value  was  determined  by  the  Company's  Board  of  Directors  based  on  the  actual
          cost  of  investment  less  an  appropriate  write  down  of  inventory  of  the  subsidiary  companies.
          See  also  Note  2  for  further  explanation  on  the  Company's  methods  of  determining  fair  values.


The  accompanying  notes  form  an  integral  part  of  these  financial  statements.
</TABLE>




                                        4

<TABLE>
<CAPTION>


                                     BLUETORCH   INC.

                               STATEMENTS  OF  CASH  FLOWS

                     FOR  NINE  MONTHS  ENDED  SEPTEMBER  30,  2004  AND  2003
                                       (Unaudited)


<S>                                                            <C>           <C>

                                                                      2004          2003
                                                               -----------  ------------

Cash flows from operating activities:
  Net loss                                                      $(973,052)  $(5,004,440)

  Adjustments to reconcile net loss to net cash used in
  operating activities:

     Costs associated with converting stock at a discount                -       166,101
     Depreciation and amortization expense                           9,131             -
     Forgiveness of notes payable                                 (14,000)             -
     Stock Issued for employee compensation/services                     -       368,662
     Stock Issued for debt conversion costs                              -        78,750
     Series C Preferred shares issued in exchange for services           -       367,500
     Notes and loans payable issued for services                         -       220,048
     Costs associated with cancellation of options                       -     2,784,600
     Loss on investments in portfolio companies                    300,000       530,000


Changes in operating assets and liabilities:

      Prepaid royalties                                                  -      (45,000)
      Deposits                                                     (5,557)             -
      Bank overdraft                                                15,702             -
      Accounts payable                                              20,946        99,463
      Loans payable                                               (12,000)             -
      Deposits payable                                                   -      (10,000)
                                                               -----------  ------------

          Net cash used in operating activities                  (658,830)     (444,316)
                                                               -----------  ------------

Cash flows from investing activities:
     Purchases of equipment                                       (39,033)             -
     Payments advanced to portfolio investment companies         (731,848)             -
                                                               -----------  ------------

          Net cash used in investing activities                  (770,881)             -
                                                               -----------  ------------

Cash flows from financing activities:
    Proceeds from issuance of common stock                       1,403,849       437,332
    Purchase of Series B preferred stock                          (30,000)             -
    Issuance of convertible debentures                                   -        25,000
    Legal  and  other  expense  associated  with stock issuance      5,345             -
    Stock  issued  for  redemption  on  Series  B                   50,000             -
                                                               -----------  ------------

          Net cash provided by financing activities,             1,429,194       462,332
                                                               -----------  ------------

Net increase in cash                                                 (517)        18,016
Cash - beginning of period                                             517           912
                                                               -----------  ------------

Cash - end of period                                            $        -  $     18,928
                                                               ===========  ============


The accompanying notes form an integral part of these financial statements.
</TABLE>

                        NOTES TO THE FINANCIAL STATEMENTS

(1)  DESCRIPTION  OF  BUSINESS

                            ORGANIZATION AND BUSINESS

Mercury Software, a Nevada corporation, was incorporated on January 29, 1997 and
its  name was changed to MedEx Corp. on June 24, 2002. Aussie Apparel Group Ltd.

                                        5

("Aussie  Apparel"  or "the Company"), a Nevada corporation, was incorporated on
August  26,  2002. In October 2002, MedEx Corp. issued an aggregate of 6,500,000
(pre-stock  split) shares of its common stock to the shareholders of the Company
in  connection  with  the merger of the Company with MedEx Corp., whose name was
then  changed  to  "Aussie  Apparel  Group  Ltd"  on October 21, 2002. Since the
shareholders  of  the Company became the controlling shareholders of MedEx after
the  exchange,  the Company was treated as the acquirer for accounting purposes.
Accordingly,  the  financial  statements  as  presented  here are the historical
financial  statements  of the Company and include the transactions of MedEx only
from  the  date  of  acquisition,  using  reverse  merger  accounting.

The  Company's  name  was  changed  to  Bluetorch  Inc.  ("Bluetorch") effective
November  3,  2003.

On  June  19,  2003, the Company became a "Business Development Company" ("BDC")
pursuant  to  applicable  provisions  of the Investment Company Act of 1940 (the
"Investment  Company  Act").

Until  June  19,  2003  the Company was a development stage enterprise under the
provisions  of  Statement of Financial Accounting Standards ("SFAS") No. 7. Upon
commencing  their operations as a BDC, the Company no longer qualified under the
guidelines  of  SFAS  No.  7.

Based  on  the Company's integration and management strategies, the Company will
operate  on a non-consolidated basis. Operations of the portfolio companies will
be  reported  at the subsidiary level and only the appreciation or impairment of
these  investments  will  be  included  in  the  Company's financial statements.

                         CONDENSED FINANCIAL STATEMENTS

The  accompanying financial statements have been prepared by the Company without
audit.  In the opinion of management, all adjustments (which include only normal
recurring  adjustments) necessary to present fairly the financial position as of
September 30, 2004, and the results of operations and cash flows 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 Sates 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 December 31,
2003,  audited  financial statements on Form 10-K. The results of operations for
the  periods ended September 30, 2004 and 2003 are not necessarily indicative of
the  operating  results  for  the  full  years

                                  GOING CONCERN

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. As of September 30,
2004,  the  Company  has  generated no revenues and has incurred losses totaling
$6,341,598 for the period from August 26, 2002 (inception) through September 30,
2004.  As  of  September  30,  2004, the Company has negative working capital of
$142,804.  The negative working capital combined with the losses since inception
raises  substantial  doubt  about  the  Company's ability to continue as a going
concern.  These  financial statements do not include any adjustments relating to
the  recoverability and classification of recorded asset amounts, or amounts and
classification  of  liabilities  that  might  be necessary should the Company be
unable  to  continue  as  a  going  concern.

Management plans to take the following steps that it hopes will be sufficient to
provide  Bluetorch  Inc.  with  the  ability  to  continue  in  existence:

                                     REVENUE

On  September  8, 2003, one of the Company's subsidiaries, Unboxed Distribution,
Inc.  ("Unboxed"), signed an agreement to license (with an option to purchase in
2006)  the Bluetorch trademark for apparel and certain other product categories.
Unboxed  began  limited  shipments to retail of Bluetorch branded apparel in the
first quarter of 2004 with a limited product line of domestically produced young
men's  embroidered  and/or  screened  t-shirts.

Bluetorch  Inc.  has  been working to acquire additional trade names. On October
21,  2003,  the  Company's  other  subsidiary,  Total  Sports Distribution, Inc.
("Total  Sports") finalized an agreement to license (with an option to purchase)
the  True  Skate  Apparel  ("TSABrand")  trademark.

Management  anticipates  that  Total  Sports  will generate revenue from apparel
sales  as  a  result  of  its  licensing  agreement  for  the Airwalk trademark.

The Company has recently entered into sales agency agreements for selling of the
Company's  multiple  brands.

In accordance with a Stock Purchase Agreement dated August 20, 2004, the Company

                                        6

purchased,  via  the  issuance of its restricted common stock, a 51% interest in
Island  Tribe  Inc.  ("Island  Tribe"),  an innovative surf apparel company. The
value  of  this investment is $372,000, with 30,000,000 restricted common shares
in  Bluetorch  Inc.  being issued at a per-share price of $0.0124. The effective
date  of  this  transaction  is  August  1,  2004.

                                    FINANCING

On  June 19, 2003, Bluetorch Inc. filed an Offering Circular that authorized the
Company  to  raise  up  to  $3,000,000  via  sale  of  its common stock. Through
September  30,  2004, the Company has raised $2,267,057 against this limit. This
sum  includes  both  cash proceeds and conversion of debt. On June 24, 2004, the
Company filed a new Offering Circular that authorizes the Company to raise up to
$5,000,000 via sale of its common stock.

On  October 18, 2004 and on November 1, 2004 the Company filed amendments to the
June  24,  2004  Offering Circular, reducing the minimum offering share price to
$0.004  and  $0.0035,  respectively.  In  addition,  these amendments included a
reduction  in  the  authority  to  raise  capital from $5,000,000 to $2,500,000.
Subsequent  to  June  30,  2004  and  through November 17, 2004, the Company has
raised  $487,600  against  this  limit.  This  leaves  $2,012,400  available for
Bluetorch  management  to  pursue  from  the  equity  markets.

Management  will also endeavor to utilize debt financing (subsidiary receivables
and/or  inventory  financing)  to  generate  additional  working  capital.

CONCLUSION

Management  is  projecting that revenues will be generated in the next 12 months
due  to  the  quadrupling  of  the  collective  product lines as compared to the
collective  first  half  product  line. Management is anticipating that the cash
generated  from  the  projected  revenue,  combined  with  cash  raised  from  a
combination  of  equity  and  debt  financing,  will  allow  Bluetorch  and  its
subsidiaries,  Unboxed,  Total  Sports  and  Island Tribe Inc., to continue as a
going concern through December 31, 2005. Whereas the Company believes it will be
successful  with  its  plans,  due to market factors and economic conditions, no
assurance can be given that financing will be available on favorable terms or at
all.

(2)  INVESTMENTS

On  August  21,  2003,  the Company formed Unboxed for the purpose of owning and
operating  the  Bluetorch  license  agreement.

On  October  21, 2003, the Company formed Total Sports for the purpose of owning
and  operating  the  True  Skate  Apparel  brand  ("TSABrand)".

As  noted  above,  the  Company purchased a 51% interest in Island Tribe, a surf
apparel  company. The consideration for this investment was $372,000, consisting
of  30,000,000  restricted  common  shares  in  Bluetorch Inc. being issued at a
per-share price of $0.0124. The effective date of this transaction was August 1,
2004. Over the next 4 years, this purchase agreement provides for the Company to
receive  an  additional  24%  ownership  of  Island  Tribe  Inc.  The Company is
obligated  to  pay certain royalties/commissions on future sales of Island Tribe
product.

Unboxed  and  Total Sports are wholly-owned subsidiaries while Island Tribe is a
51%  owned  subsidiary  ("Investments")  of  the  Company  and  these  portfolio
companies  are  focused  on  providing  apparel  to  the  action sports markets,
including  surfing,  wakeboarding  and  skateboarding.  The  Investments plan to
develop high tech garments for athletes and participants in these sports as well
as designing more casual lifestyle clothing aimed at a wider range of consumers.
The  portfolio companies plan to begin manufacturing and marketing under various
brand  names and will market apparel to high end sporting goods stores, mid-tier
department  stores,  as  well  as  specialty  chains.  The TSABrand name will be
marketed to specialty shops and to high end sporting goods and specialty chains.

As  required  by the SEC's Accounting Series Release ("ASR") 118, the investment
committee  of the Company is required to assign a fair value to all investments.
To  comply  with  Section  2(a)(41)  of the Investment Company Act and Rule 2a-4
under the Investment Company Act, it is incumbent upon the board of directors to
satisfy  themselves  that  all  appropriate  factors  relevant  to  the value of
securities  for  which  market  quotations  are  not readily available have been
considered  and  to  determine  the method of arriving at the fair value of each
such security. To the extent considered necessary, the board may appoint persons
to  assist  them  in  the  determination  of  such value, and to make the actual
calculations  pursuant to the board's direction. The board must also, consistent
with  this responsibility, continuously review the appropriateness of the method
used in valuing each issue of security in the Company's portfolio. The directors
must  recognize  their  responsibilities  in this matter and, whenever technical
assistance  is requested from individuals who are not directors, the findings of
such individuals must be carefully reviewed by the directors in order to satisfy
themselves  that  the  resulting  valuations  are  fair.

                                        7

No  single standard for determining "fair value in good faith" can be laid down,
since  fair  value  depends upon the circumstances of each individual case. As a

general  principle,  the  current  "fair  value" of an issue of securities being
valued  by  the board of directors would appear to be the amount which the owner
might  reasonably  expect  to receive for them upon their current sale. Methods,
which  are  in  accord  with  this  principle,  may,  for example, be based on a
multiple  of  earnings,  or  a  discount  from market of a similar freely traded
security,  or yield to maturity with respect to debt issues, or a combination of
these  and other methods. Some of the general factors which the directors should
consider in determining a valuation method for an individual issue of securities
include:
1) the fundamental analytical data relating to the investment; 2) the nature and
duration  of restrictions on disposition of the securities; and 3) an evaluation
of the forces which influence the market in which these securities are purchased
and  sold.  Among the more specific factors which are to be considered are: type
of  security,  financial  statements, cost at date of purchase, size of holding,
discount  from market value of unrestricted securities of the same class at time
of  purchase,  special  reports  prepared  by  analysis,  information  as to any
transactions  or  offers  with  respect  to  the  security,  existence of merger
proposals  or tender offers affecting the securities, price and extent of public
trading  in  similar securities of the issuer or comparable companies, and other
relevant  matters.

The  board  has  arrived  at the following valuation method for its investments.
Where  there  is not a readily available source for determining the market value
of  any  investment, either because the investment is not publicly traded, or is
thinly traded, and in absence of a recent appraisal, the value of the investment
shall  be  based  on  the  following  criteria:

1.  Total  amount  of  the Company's actual investment ("AI"). This amount shall
include  all  loans,  purchase  price of securities and fair value of securities
given  at  the  time  of  exchange.
2.  Total  revenues  for  the  preceding  twelve  months  ("R").
3.  Earnings  before  interest,  taxes  and  depreciation  ("EBITD")  .
4.  Estimate  of  likely  sale  price  of  investment  ("ESP").
5.  Net  assets  of  investment  ("NA").
6.  Likelihood  of  investment  generating  positive  returns  (going  concern).

The  estimated  value  of  each  investment  shall  be  determined  as  follows:

-  Where no or limited revenues or earnings are present, then the value shall be
the  greater  of the investment's a) net assets, b) estimated sales price, or c)
total  amount  of  actual  investment.
-  Where  revenues  and/or  earnings  are  present,  then the value shall be the
greater of one time (1x) revenues or three times (3x) earnings, plus the greater
of  the  net  assets  of  the  investment  or  the  total  amount  of the actual
investment.
-  Under  both  scenarios, the value of the investment shall be adjusted down if
there  is  a  reasonable expectation that the Company will not be able to recoup
the investment or if there is reasonable doubt about the investment's ability to
continue  as  a  going  concern.

The  Company's  board  of  directors  has  determined  the carrying value of its
Investment  Portfolio,  in  accordance  with  the Company's valuation policy, at
September  30,  2004 to be the actual investment, less an appropriate write-down
of  inventory  of  $300,000,  held  by  Unboxed  and  Total  Sports.

The investment in Unboxed is valued at $800,711 at September 30, 2004, comprised
of  the following: Warrants issued and cash paid to acquire the licensing rights
of  $418,326  and  $45,000 respectively, inventory of $38,219, pre-paid expenses
$9,185 and advances from Bluetorch of $289,981. This value represents a decrease
of  $42,862  from  the  value  at  June  30,  2004.

As  of  September  30, 2004, Total Sports is valued at $190,542 comprised of the
following:  cash  paid  to acquire the licensing rights of $99,688, inventory of
$59,893,  trade show booths of $15,000, pre-paid expenses of $9,184, deposits of
$4,498  and  advances from Bluetorch of $2,279. This value represents a decrease
of  $126,939  from  the  value  at  June  30,  2004.

(3)  EQUITY

During  the  nine months ended September 30, 2004, the Company issued 97,286,111
shares  of  common  stock  for  cash  per  its  Offering  Circulars.

The  Company also issued 30,000,000 restricted common shares for the purchase of
a  51%  interest  in Island Tribe Inc., valued at $372,000. The number of shares
issued  was  based  on a formula whereby Island Tribe was to receive $372,000 of
the  Company's  restricted  common  stock.

The  common  stock  subscriptions  receivable  of  $162,600  in the accompanying
condensed  balance  sheet  at  September 30, 2004 consists of amounts receivable
from  investment  banking  companies  related  to the purchase of common shares.


                                        8

A  former  employee  returned 450,000 Series C preference shares and the Company
retired  these  shares.

During  September 2004, 10,000 shares of Preferred Series C stock were issued in

connection  with  the  issuance  of  1,111,111  shares of common stock for total
proceeds  of  $10,000.

(4)  SUBSEQUENT  EVENTS
                               EQUITY TRANSACTIONS

Subsequent  to  September 30, 2004 and through November 17, 2004 the Company has
issued  31,875,000  common shares in exchange for $120,000 cash, while 4,969,109
common  shares  have  been  returned  to  the  Company  and  retired.

In  November the Company issued a Convertible Debenture in a principal amount of
$187,500,  convertible  into  common  shares  of  the Company in an amount up to
53,571,430  shares.

Subsequent  to  September  30,  2004  and through November 17, 2004, the Company
received  cash  totaling  $142,600  relating  to  common  stock  subscriptions
receivable.

ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF  OPERATIONS

This  information  statement  contains  forward-looking  statements.  For  this
purpose,  any  statements contained herein that are not statements of historical
fact  may be deemed to be forward-looking statements. These statements relate to
future  events  or  to  our future financial performance. In some cases, you can
identify  forward-looking  statements  by terminology such as "may," "predicts,"
"should,"  "expects,"  "plans,"  "anticipates,"  "believes,"  "estimates,"
"potential,"  or  "continue"  or  the negative of such terms or other comparable
terminology. These statements are only predictions. Actual events or results may
differ  materially.  There  are  a number of factors that could cause our actual
results  to  differ  materially  from  these  indicated  by such forward-looking
statements.  These  factors  include  but are not limited to economic conditions
generally  and  in  the  industries  in  which  Bluetorch  Inc  may participate,
competition  within Bluetorch Inc.'s chosen industry, including competition from
much larger competitors, technological advances and failure by Bluetorch Inc. to
successfully  develop  business  relationships.

Although  we  believe  that  the  expectations  reflected in the forward-looking
statements  are  reasonable,  we  cannot  guarantee  future  results,  level  of
activity, performance or achievements. Moreover, we do not assume responsibility
for  the  accuracy  and  completeness of such forward-looking statements. We are
under  no duty to update any of the forward-looking statements after the date of
this  information  statement  to  conform such statements to actual results. The
foregoing  management's  discussion  and  analysis should be read in conjunction
with  the  Company's  financial  statements  and  the  notes  herein.

                   CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our  Management's  Discussion and Analysis of Financial Condition and Results of
Operations  section discusses our financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United States
of America. The preparation of these financial statements 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
revenues  and  expenses  during  the  reporting  periods.  On an on-going basis,
management will evaluate its estimates and judgments, including those related to
revenue  recognition,  accrued expenses, financial operations, and contingencies
and  litigation.  Management will base its estimates and judgments on historical
experience and on various other factors that are believed to be reasonable under
the circumstances, the result of which form the basis for making judgments about
the  carrying  value of the assets and liabilities that are not readily apparent
from  other  sources.  Actual  results  may  differ  from  these estimates under
different  assumptions  or conditions. The most significant accounting estimates
inherent  in the preparation of our financial statements include estimates as to
the  appropriate  carrying value of certain assets and liabilities which are not
readily  apparent  from  other sources, such as the investments in our portfolio
companies  and  deferred  tax  asset  valuation.  These  accounting policies are
described  at relevant sections in this discussion and analysis and in the notes
to  the  financial  statements included in our quarterly report on Form 10-Q for
the  quarter  ended  September  30,  2004.

                              RESULTS OF OPERATIONS

For  the  nine  months  ended  September  30,  2004, the Company has incurred an
operating  loss  of  $973,052.  The loss primarily represents expenses including
payroll  of  $174,228,  consulting  fees  for  investment  banking  and investor
relations  of  $131,017,  professional  fees  incurred  for legal and accounting
services  of  $134,159  and  a  $300,000  reduction in the carrying value of the
investments  in  portfolio  companies  resulting from an inventory write-down in
Unboxed  Distribution, Inc. and Total Sports Distribution, Inc. Also included in

                                        9
the  loss  are  interest  and  penalties of $50,000 related to the retirement of
260,000  shares  of  Preferred  Series  B  stock.

The  loss  for the nine months to September 30, 2004 is substantially lower than
for  the  nine  months  ended  September  30,  2003,  primarily due to the costs
recognized  in  2003  for the cancellation of options and a reduction in general
operating  expenses.

The  loss for the three months to September 30, 2004 is lower than for the three
months  ended  September  30,  2003,  primarily  due  to  a decrease in payroll.
                         LIQUIDITY AND CAPITAL RESOURCES

Our  assets  were  security deposits of $5,557 for the Company's headquarters in
Cerritos, California and investments in portfolio companies of $1,363,253; total
assets  at  September  30,  2004  were  $1,398,712,  as  compared to $559,922 at
December 31, 2003. At September 30, 2004, our total liabilities of $142,804 were
represented  by  a  bank overdraft of $15,702 and $127,102 of accounts payable &
accruals;  total  liabilities  at  December  31,  2003  were  $132,156.

The  investments  in our portfolio companies increased from $559,405 at December
31,  2003  to  $1,363,253  at  September 30, 2004. This increase was principally
attributed  to  the  acquisition  of  51%  of  Island  Tribe Inc. and additional
advances  by  the  Company.

The  general  and administrative expenses have reduced considerably from 2003 to
2004,  due  to the 2003 numbers including start-up costs, larger salary expenses
and  significant  financing  expenses.

                  PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS

As  we discussed in our recent 10-K/A filing, 2003 and part of 2004 was a period
of  restructuring  for Bluetorch Inc., including the formation and investment in
our  subsidiary  companies. Paramount in this process was the replacement of the
original  portfolio  of  brands  with  three new brands. As a result, we created
Unboxed  Distribution,  Inc., which now wholesales and markets Bluetorch branded
apparel. Total Sports Distribution, Inc. was established to market and wholesale
both True Skate Apparel (TSABrand) and Airwalk branded apparel. In addition, the
Company  acquired  a  51%  interest  in  Island  Tribe  Inc.  in  August  2004.

Unboxed  shipped  its first Bluetorch apparel product of young men's t-shirts to
retailers  in  the  first  quarter of 2004. As a result, the number of Bluetorch
styles  available  for  shipment to retailers will more than triple in the third
and  fourth  quarters versus the first quarter of 2004. Unboxed anticipates that
this  will  generate  a  greater  volume  of  buying  per  retail  account.

The  Company  and  its  three  investment  portfolio  companies  are continually
reviewing  their  brands  and evaluating the most positive strategies to deliver
these  brands  to  the appropriate markets. As part of this on-going assessment,
management has decided to slightly amend its strategy in order to achieve a more
balanced mix of brands across the various market tiers. It is expected that this
approach  may  delay 2004 revenues but will provide improved sales opportunities
for  2005.

Bluetorch  will continue to look for and possibly make additional investments in
new  brands  on  behalf  of  its  existing subsidiaries and/or any new potential
subsidiary  in  2004  and  beyond.

Failure  to  successfully  develop  our  portfolio  companies  would  hinder the
Company's  ability  to  increase  the  size  of our operations and realize asset
appreciation.  If  we  are  not able to generate additional revenues adequate to
cover  increased  operating  costs,  our  business  may  ultimately  fail.

We  have  a  cash  deficit  of  $15,702  as of September 30, 2004. Subsequent to
September  30,  2004, the Company received proceeds of $120,000 from the sale of
its  securities.  In the opinion of management, available cash is not sufficient
to  fund  current  operations.  However,  management believes that it can obtain
adequate  capital  via  issuance  and  sale  of  its  securities.


ITEM  3:  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

Our  business  activities  contain  elements  of risk. We consider the principal
types  of risk to be portfolio valuations and fluctuations in interest rates. We
consider  the  management  of  risk  essential  to  conducting  our  business.
Accordingly, our risk management systems and procedures are designed to identify
and analyze our risks, to set appropriate policies and limits and to continually
monitor  these  risks  and  limits  by  means  of  reliable  administrative  and
information  systems  and  other  policies  and  programs.

As  a  Business Development Company, we invest in illiquid securities, including
debt  and  equity  securities, of primarily private companies and non-investment
grade  CMBS. Our investments are generally subject to restrictions on resale and
generally  have no established trading market. We value substantially all of our
investments at fair value as policy. There is no single standard for determining
fair  value  in  good  faith.  As a result, determining fair value requires that

                                       10
judgments  be  applied to the specific facts and circumstances of each portfolio
investment  while  employing  a  consistently  applied valuation process for the
types  of  investments.

We  determine  fair  value  to  be  the  amount for which an investment could be

exchanged  in  an  orderly  disposition over a reasonable period of time between
willing parties other than in a forced or liquidation sale. Our valuation policy
considers  the  fact  that  no  ready market exists for substantially all of the
securities  in  which  we  invest. Our valuation policy is intended to provide a
consistent basis for determining the fair value of the portfolio. We will record
unrealized  depreciation  on investments when we believe that an equity security
is  doubtful,  or  when  the  enterprise value of the company does not currently
support  the  cost  of our debt or equity investment. Conversely, we will record
unrealized  appreciation if we believe that the underlying portfolio company has
appreciated in value and, therefore, our equity security has also appreciated in
value.  The  values of the investments in public securities are determined using
quoted  market  prices  discounted for restrictions on resale. Without a readily
ascertainable market value and because of the inherent uncertainty of valuation,
the  fair  value  of  our  investments  determined in good faith by the board of
directors may differ significantly from the values that would have been used had
a  ready  market  existed  for  the  investments,  and  the differences could be
material.

In addition, the illiquidity of our investments may adversely affect our ability
to  dispose  of  debt  and  equity  securities at times when it may be otherwise
advantageous  for  us  to  liquidate  such  investments. In addition, if we were
forced to immediately liquidate some or all of the investments in the portfolio,
the  proceeds  of  such liquidation would be significantly less than the current
value  of  such  investments.

Because  we  may  borrow  money  to  make investments, our net investment income
before net realized and unrealized gains or losses, or net investment income, is
dependent  upon the difference between the rate at which we borrow funds and the
rate at which we invest these funds. As a result, there can be no assurance that
a  significant  change in market interest rates will not have a material adverse
effect  on  our  net investment income. In periods of rising interest rates, our
cost  of  funds would increase, which would reduce our net investment income. We
use  a  combination of long-term and short-term borrowings and equity capital to
finance  our  investing  activities.

ITEM  4:  CONTROLS  AND  PROCEDURES

                EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

As  of  the  end  of  the  period  covered  by  this report, the Company's Chief
Executive  Officer  and the Chief Financial Officer carried out an evaluation of
the  effectiveness  of  the  design  and  operations of the Company's disclosure
controls  and  procedures.  The Company's disclosure controls and procedures are
designed  to  ensure that information required to be disclosed by the Company in
its  periodic  SEC  filings  is recorded, processed and reported within the time
periods  specified in the SEC's rules and forms. Based upon that evaluation, the
Chief  Executive  Officer  and  the  Chief  Financial Officer concluded that the
Company's disclosure controls and procedures are effective in alerting them on a
timely  basis to material information relating to the Company, as required to be
included  in  the  Company's  periodic  SEC  filings.


                          CHANGES IN INTERNAL CONTROLS

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their  evaluation,  except  for  the  change  in  our  chief  financial officer.




PART  II     OTHER  INFORMATION


ITEM  1:  LEGAL  PROCEEDINGS
          None


ITEM  2:  CHANGES  IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY
          SECURITIES

          During  the  quarter  ended  September  30,  2004,  the  Company
          issued an aggregate  of  87,986,111  shares  of  its  common  stock.


ITEM  3:  DEFAULTS  UPON  SENIOR  SECURITIES
          None


                                       11

ITEM  4:  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS
          None


ITEM  5:  OTHER  INFORMATION
          None

ITEM  6:  EXHIBITS
          None



SIGNATURES

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.

BLUETORCH  INC.




        November  17,  2004                 By:/s/  Bruce  MacGregor
                                            ----------------------------
                                            Bruce  MacGregor,  President