UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
DC 20549
 
 _________________
 
 FORM
10Q
 _________________
 
 
 (Mark
One)
 
 [ X
] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the quarterly period ended
September 30, 2008
 
 [ ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 
 For the transition period from
__________ to ___________
 
 
 
 NAVIDEC
FINANICAL SERVICES, INC.
 _______________________________________________________
 (Exact
name of registrant as specified in its charter)
 
 
 Colorado
              
              000-51139
              
              13-4228144(State
      of Incorporation)
              
              (Commission
      File Number)
              
              (IRS
      Employer Identification No.)
 
 
 2000
South Colorado Blvd., Suite 200, Denver, Colorado 80222
 _______________________________________________
 (Address
of principal executive offices)
 
 303-222-1000
 __________________________
 (Registrant's
Telephone number)
 
 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  past 12 months (or for
such  shorter  period that
the  registrant  was required  to
file  such  reports),  and  (2)  has  been  subject  to
the  filing requirements for the past 90 days. Yes
[X]     No [  ]
 
 Indicate
by check mark whether the registrant is a large accelerated file, an accelerated
filer, a non-accelerated filer, or a smaller reporting company.  See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
 
  Large
accelerated filer
[  ]                                                                                                           Accelerated
filer [  ]
 Non-accelerated
filer [  ] (Do not
check if a smaller reporting
company)     Smaller reporting company
[X]
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).Yes [  ]     No [
X ]
 
 Indicate
the number of share outstanding of each of the issuer's classes of common stock,
as of the latest practicable date.
 
 As of
September 30, 2008, there were 9,024,583 shares of the registrant’s common stock
issued and outstanding.
 
 
  
  
 Table of Contents
 
 PageItem
      1
              Financial
      Statements (Unaudited)
              1Consolidated Balance Sheets
                September 30, 2008 and December 31, 2007
              1Consolidated Statements of Operations
                Three and Nine months ended September 30, 2008 and
      2007
              2Consolidated Statements of Cash Flows – Nine months
      ended September 30, 2008 and 2007
              3Consolidated Statement of Changes in Stockholders’
      Equity - September 30, 2008
              4Notes to Consolidated Financial
    Statements
              5Item
      2
              Management’s Discussion and Analysis of Financial
      Condition
                and Results of Operations
              18Item
      3
              Quantitative and Qualitative Disclosures About Market
      Risk
              22Item
      4
              Controls and Procedures
              23Item
      4T
              Controls and Procedures
              23PART
      II – OTHER INFORMATIONItem
      1
              Legal Proceedings
              25Item
      2
              Unregistered Sales of Equity Securities and Use of
      Proceeds
              25Item
      3
              Defaults
      Upon Senior Securities - none
              25Item
      4
              Submission of Matters to a Vote of Security
      Holders
              25Item
      5
              Other Information
              25Item
      6
              Exhibits
              26SIGNATURES
              26Exhibit
      31.1
              
              27Exhibit
    32
              
              28
 
  
  PART
I
 
 ITEM
1.  FINANCIAL STATEMENTS
 
 NAVIDEC
FINANCIAL SERVICES, INC. AND SUBSIDIARIES
 Consolidated Balance Sheets
 (In
Thousands)
 September
      30,
              
              
              December
      31,2008
              
              
              2007(Unaudited)
              
              
              (Audited)ASSETSCurrent
      AssetsCash
      and cash equivalents
              
              $
              704
              
              
              $
              1,424S/T
      Mortgages receivable - net of allowance of $807 on September 30, 2008 and
      $0 December 31, 2007
              
              
              4,556
              
              
              
              2,204S/T
      Note receivable - Jaguar Group LLC - net of allowance of $1,407 on
      September 30, 2008 and $0 on December 31, 2007 (Notes 1,
4)
              
              
              -
              
              
              
              1,100Accrued
      interest receivable
              
              
              112
              
              
              
              46Advances
      receivable
              
              
              6
              
              
              
              5Total
      Current Assets
              
              
              5,378
              
              
              
              4,779Property,
      equipment and software, net
              
              
              105
              
              
              
              39Other
      AssetsNote
      receivable - Aegis/Grizzle - (Note 4)
              
              
              450
              
              
              
              450Investment
      - BPZ Energy - (Note 5)
              
              
              -
              
              
              
              3,354Investment
      - Boston Property (Note 5)
              
              
              2,587
              
              
              
              1,279Real
      estate owned - net of impairment of $198  and depreciation of
      $13 on September 30, 2008 and $0 on December 31, 2007 (Note
    5)
              
              
              2,144
              
              
              
              360Other
      assets
              
              
              22
              
              
              
              15Total
      Other Assets
              
              
              5,203
              
              
              
              5,458TOTAL
      ASSETS
              
              $
              10,686
              
              
              $
              10,276LIABILITIES
      & STOCKHOLDERS' EQUITYLiabilitiesCurrent
      LiabilitiesAdvances
      repayable - related party
              
              $
              -
              
              
              $
              15Accounts
      Payable
              
              
              550
              
              
              
              -Short
      term borrowings  (Note 7)
              
              
              1,219
              
              
              
              285Accrued
      taxes and liabilities
              
              
              636
              
              
              
              102Total
      Current Liabilities
              
              
              2,405
              
              
              
              402Stockholders'
      EquityCommon
      stock, $0.001 par value, 100,000,000 shares
              
              
              9
              
              
              
              9authorized,
      9,024,583 and 8,924,583 shares issuedand
      outstanding at September 30, 2008 andDecember
      31, 2007, respectivelyAdditional
      paid-in capital
              
              
              7,456
              
              
              
              7,552Treasury
      stock
              
              
              -
              
              
              
              (150
              )Unrealized
      gain on securities
              
              
              -
              
              
              
              2,149Retained
      earnings
              
              
              816
              
              
              
              314Total
      Stockholders' Equity
              
              
              8,281
              
              
              
              9,874TOTAL
      LIABILITIES & STOCKHOLDERS' EQUITY
              
              $
              10,686
              
              
              $
              10,276
 
 The
accompanying notes to consolidated financial statements are an integral part of
these statements.
  Table of Contents
 Page
1
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  NAVIDEC
FINANCIAL SERVICES, INC. AND SUBSIDIARIES
 Consolidated Statements of Operations
 (In
Thousands)
 Unaudited
 
 For
      the Three Months Ended
              
              
              For
      the Nine Months EndedSeptember
      30,
              
              
              September
      30,2008
              
              
              2007
              
              
              2008
              
              
              2007RevenueSales
              
              $
              221
              
              
              $
              97
              
              
              $
              675
              
              
              $
              484Interest
      revenues
              
              
              33
              
              
              
              -
              
              
              
              202
              
              
              
              -Cost
      of Sales
              
              
              (476
              )
              
              
              (98
              )
              
              
              (667
              )
              
              
              (445
              )Gross
      Profit
              
              
              (222
              )
              
              
              (1
              )
              
              
              210
              
              
              
              39Operating
      Expenses:General
      and administrative
              
              
              1,203
              
              
              
              236
              
              
              
              3,726
              
              
              
              727Depreciation
      and amortization
              
              
              23
              
              
              
              -
              
              
              
              26
              
              
              
              4Total
      operating expenses
              
              
              1,226
              
              
              
              236
              
              
              
              3,752
              
              
              
              731Loss
      from operations
              
              
              (1,448
              )
              
              
              (237
              )
              
              
              (3,542
              )
              
              
              (692
              )Other
      income (expense)Gain
      on sale of investments
              
              
              (10
              )
              
              
              2,484
              
              
              
              5,412
              
              
              
              3,551Other
      (loss) or Gain
              
              
              11
              
              
              
              -
              
              
              
              11
              
              
              
              50Net
      rental income
              
              
              13
              
              
              
              -
              
              
              
              20
              
              
              
              -Miscellaneous
      non-operating expense
              
              
              (199
              )
              
              
              -
              
              
              
              (269
              )
              
              
              -Interest
      income
              
              
              21
              
              
              
              15
              
              
              
              44
              
              
              
              56Interest
      expense
              
              
              (40
              )
              
              
              -
              
              
              
              (66
              )
              
              
              -Total
      other (expense) income
              
              
              (204
              )
              
              
              2,499
              
              
              
              5,152
              
              
              
              3,657Net
      (Loss) Income before minority interest and income tax
              
              
              (1,652
              )
              
              
              2,262
              
              
              
              1,610
              
              
              
              2,965Minority
      InterestMinority
      interest in consolidated subsidiary
              
              
              -
              
              
              
              -
              
              
              
              (24
              )
              
              
              (8
              )Net
      (Loss) Income before taxes
              
              
              (1,652
              )
              
              
              2,262
              
              
              
              1,586
              
              
              
              2,957Income
      TaxesProvision
      for income tax (benefit)
              
              
              (112
              )
              
              
              -
              
              
              
              1,084
              
              
              
              -Net
      (Loss) Income
              
              $
              (1,540
              )
              
              $
              2,262
              
              
              $
              502
              
              
              $
              2,957Earnings
      Per Share:Basic
              
              $
              (0.17
              )
              
              $
              0.25
              
              
              $
              0.06
              
              
              $
              0.33Diluted
              
              $
              (0.17
              )
              
              $
              0.25
              
              
              $
              0.06
              
              
              $
              0.23Weighted
      Average Shares Outstanding:Basic
              
              
              9,025
              
              
              
              8,983
              
              
              
              9,025
              
              
              
              8,983Diluted  (Note
      2)
              
              
              16,489
              
              
              
              12,998
              
              
              
              16,489
              
              
              
              12,998
 
 
 The
accompanying notes to consolidated financial statements are an integral part of
these statements.
  Table of Contents
 Page
2
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  NAVIDEC
FINANCIAL SERVICES, INC. AND SUBSIDIARIES
 Consolidated Statements of Cash Flows
 (In
Thousands)
 Unaudited
 
 For
      the Nine Months EndedSeptember
      30,2008
              
              
              2007Cash
      Flows from Operating Activities:Net
      Income
              
              $
              502
              
              
              $
              2,957Adjustments
      to reconcile net income to net cash used in operating
      activities:Depreciation
      expense
              
              
              26
              
              
              
              4Gain
      on sale investments
              
              
              (5,412
              )
              
              
              (3,551
              )Increase
      in reserves and impairments
              
              
              2,412
              
              
              
              -Gain
      on settlement of debt
              
              
              -
              
              
              
              (50
              )Minority
      interest
              
              
              24
              
              
              
              8Changes
      in operating assets and liabilities:(Increase)
      decrease in accounts receivable
              
              
              (1
              )
              
              
              23Increase
      in accrued interest
              
              
              (66
              )
              
              
              (39
              )(Increase)
      decrease in prepaid expenses and other assets
              
              
              (7
              )
              
              
              102(Increase)
      decrease in short term loans receivable
              
              
              (2,352
              )
              
              
              898(See
      Supplemental Information below)Increase
      in accounts payable
              
              
              550
              
              
              
              -Increase
      (decrease) in accrued liabilities and other
              
              
              519
              
              
              
              (60
              )Net
      Cash (Used) Provided by Operating Activities
              
              
              (3,805
              )
              
              
              292Cash
      Flows from Investing Activities:Investments
      (increased) decreasedBoston
      real estate
              
              
              (1,308
              )
              
              
              -Other
      real estate (See Supplemental Information below)
              
              
              -
              
              
              
              -(Increase)
      in fixed assets
              
              
              (79
              )
              
              
              (2
              )Proceeds
      from sale of equity investments
              
              
              3,538
              
              
              
              1,068Net
      Cash Provided by Investing Activities
              
              
              2,151
              
              
              
              1,066Cash
      Flows from Financing Activities:Increase
      (decrease) in short term borrowings
              
              
              934
              
              
              
              -Post-merger
      proceeds from exercise of BPZ Options
              
              
              -
              
              
              
              1,220Net
      Cash Provided by Financing Activities
              
              
              934
              
              
              
              1,220Net
      (Decrease) Increase in Cash & Cash Equivalents
              
              
              (720
              )
              
              
              2,579Beginning
      Cash & Cash Equivalents
              
              
              1,424
              
              
              
              179Ending
      Cash & Cash Equivalents
              
              $
              704
              
              
              $
              2,758Supplemental
      Disclosure of Cash Flow InformationNon-cash
      exchange of receivable from parent company
              
              $
              1,995
              
              
              $
              -Cash
      paid for Interest
              
              $
              66
              
              
              $
              -Cash
      paid for Income Taxes
              
              $
              350
              
              
              $
              -Increase
      in Additional Paid In Capital due to stock options issued
              
              $
              64
              
              
              $
              -
 The
accompanying notes to consolidated financial statements are an integral part of
these statements.
 
  Table of Contents
 Page
3
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 NAVIDEC
FINANCIAL SERVICES, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
 For
the Nine Months Ended September 30, 2008
 (In
thousands - except number of shares)
 (Unaudited)
 
 Voting
              
              
              Additional
              
              
              Unrealized
              
              
              Treasury
              
              
              Retained
              
              
              TotalCommon
      Stock
              
              
              Paid-in
              
              
              Gain
              
              
              Stock
              
              
              Earnings
              
              
              Stockholders'Shares
              
              
              Amount
              
              
              Capital
              
              
              
              
              
              
              
              
              (Deficit)
              
              
              EquityBalances,
      Dec 31, 2005
              
              
              7,950,048
              
              
              $
              8
              
              
              $
              9,413
              
              
              $
              825
              
              
              $
              -
              
              
              $
              (3,509
              )
              
              $
              6,737Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (464
              )
              
              
              (464
              )Gain
      on marketable securities
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              658
              
              
              
              
              
              
              
              
              
              
              
              658Balances,
      December 31, 2006
              
              
              7,950,048
              
              
              $
              8
              
              
              $
              9,413
              
              
              $
              1,483
              
              
              $
              -
              
              
              $
              (3,973
              )
              
              $
              6,931Net
      income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              4,287
              
              
              
              4,287Options
      exercised
              
              
              1,000,000
              
              
              
              1
              
              
              
              49
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              50BPZ
      transaction
              
              
              33,397
              
              
              
              
              
              
              
              2
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2Private
      placement
              
              
              10,000Remove
      BPZ warrants
              
              
              
              
              
              
              
              
              
              
              (1,912
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,912
              )Treasury
      stock - Armijo settlement
              
              
              (68,862
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (150
              )
              
              
              
              
              
              
              (150
              )Gain
      on marketable securities
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              666
              
              
              
              
              
              
              
              
              
              
              
              666Balances,
      December 31, 2007
              
              
              8,924,583
              
              
              $
              9
              
              
              $
              7,552
              
              
              $
              2,149
              
              
              $
              (150
              )
              
              $
              314
              
              
              $
              9,874Net
      income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              502
              
              
              
              502Options
      exercised
              
              
              100,000
              
              
              
              -
              
              
              
              5
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              5Gain
      on marketable securities
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (2,149
              )
              
              
              
              
              
              
              
              
              
              
              (2,149
              )Options
      Vested (Note 8)
              
              
              
              
              
              
              
              
              
              
              60
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              60Adjust
      for minority interest
              
              
              
              
              
              
              
              
              
              
              (11
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (11
              )Reclass
      of Treasury Stock
              
              
              
              
              
              
              
              
              
              
              (150
              )
              
              
              
              
              
              
              150
              
              
              
              
              
              
              
              -Balances
      - September 30, 2008
              
              
              9,024,583
              
              
              $
              9
              
              
              $
              7,456
              
              
              $
              -
              
              
              $
              -
              
              
              $
              816
              
              
              $
              8,281
 
 The
accompanying notes to consolidated financial statements are an integral part of
these statements.
 
  Table of Contents
 Page
4
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 NAVIDEC
FINANCIAL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For
the Nine Months Ended September 30, 2008 and 2007
 (Unaudited)
 
 NOTE
1 - ORGANIZATION
 
 Navidec
Financial Services, Inc. ("NFS" or “Company") was incorporated in December 2002,
as a wholly owned subsidiary of Navidec Inc. ("Old Navidec").  In
September 2004, Old Navidec consummated a reverse merger agreement with BPZ
Energy, Inc. a Texas corporation established in 2001 ("BPZ") whereby Old Navidec
transferred all of its asset, liabilities and historical operations into NFS and
Old Navidec changed its name to BPZ Energy Inc.  Also pursuant to the
merger agreement, Old Navidec affected a one share of NFS for one share of Old
Navidec spin off to the shareholders of record of Old Navidec.
 
 NFS is
now a holding company that is in the business of creating or acquiring a
controlling interest in development stage enterprises with the expectation of
further developing the enterprise and then taking the enterprise
public.
 
 On
September 11, 2003, Old Navidec purchased an 80% interest in Northsight Mortgage
Group, LLC ("NMG"), an Arizona mortgage broker.  NFS received the 80%
interest in NMG as part of the merger agreement with BPZ.  On May 4,
2005, the Company formed Navidec Mortgage Holdings, Inc., a Colorado corporation
("NMH"), as a subsidiary of NFS and received 2,000,000 common shares of
NMH.  On November 11, 2007, NMH amended its articles of incorporation
in order to change its name to Northsight, Inc. ("Northsight").
 
 On
October 12, 2007, NFS exchanged its 80% interest in NMG for 3,000,000 common
shares of Northsight to bring the total common shares of Northsight owned by NFS
to 5,000,000 shares. On October 12, 2007, Northsight then purchased the
remaining 20% minority interest in NMG from the minority member for 100,000
shares of Northsight. As a result of this transaction, NFS owns 98% of
Northsight and the former minority member of NMG owns 2% of
Northsight.
 
 On July
9, 2008, the Board of Directors of Navidec declared two dividend distributions
for its shareholders as of September 8, 2008. On October 2, 2008, Navidec
modified the record date and “ex-dividend” date to be the date that a
Registration Statement on Form S-1 for the dividend securities is declared
effective by the Securities and Exchange Commission.
 
 The first
dividend is a distribution of two Navidec Warrants to purchase common shares of
Navidec, $.001 par value, for each share of Navidec. The Units consist of an “A”
Warrant, exercisable at $2.00 per share until July 1, 2013, and a “B” Warrant
exercisable at $4.00 per share until July 1, 2013.
 
 The
second dividend is distribution of a Unit of Northsight, Inc ("Northsight"). The
Units will be distributed one Unit of Northsight for each 2.27336 shares of
Navidec.  Navidec currently owns 20,000,000 Units of
Northsight.  Navidec will
distribute  4,000,000  Units to
its  shareholders,  resulting  in
Navidec  owning 16,000,000
Unit  after  the  dividend  distribution.   The
Northsight Units to be distributed will consist of one share of Northsight, a
Northsight “A” Purchase Warrant, exercisable at $2.00 per share until July 1,
2013, and a “B” Purchase Warrant exercisable at $4.00 per share until July 1,
2013.
  Table of Contents
 Page
5
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 Starting
in July 2007, NFS began lending money to Northsight to enable Northsight to make
short term, first deed of trust secured loans to borrowers who are purchasing
deeply discounted or foreclosed residential real estate in Arizona and
Colorado.   During the year ended December 31, 2007, NFS had lent
Northsight approximately $5,826,000.  The loans to Northsight yield
12% and are callable on demand by NFS.  As of September 30, 2008, NFS
had approximately $4,556,000 (net of allowance of $807,000) and as of December
31, 2007 had $2,204,000 in short term bridge loans outstanding.  Short
term bridge loans outstanding grew by 107% in the nine months ended September
30, 2008 compared to December 31, 2007 balances.
 
 Southie
Development, LLC (Southie) was formed in January 2008 and is wholly-owned by
NFS. The purpose of Southie is to develop residential real estate for resale and
to own and manage residential real estate acquired via default of real estate
loans owned by NFS.  Once a real estate loan defaults and NFS obtains
title to the collateral, NFS transfers the property to Southie for development
and management.   As part of the management and development of
the properties transferred to it, Southie honors any existing residential
leases, will potentially expend monies for rehabilitation of the property with
the goal of selling the property in a short time period, usually less than one
year.  However, if the Company deems the property to be a good longer
term investment, they might hold the property for longer periods.
 
 The
Company purchased a home in South Boston on December 4, 2007 (Thomas Park) and
began improving the property with the intent to construct three condominium
units for resale. The purchase price was $1,200,000 plus closing costs. As of
May 19, 2008, the Company acquired a $1,200,000 line with Mt. Washington
Cooperative Bank for the development of Thomas Park. The line is due November
19, 2009, monthly interest only payments, with a prime plus 2% interest rate and
an interest rate floor of 7%.  As of September 30, 2008, the balance
owed on this line was $908,000.  As of September 30, 2008, the Company
had invested $2,587,000 less the bank line of $908,000. The Company estimates
that construction will be completed by January 2009.
 
 Jaguar
Group Investments, LLC
 
 In
February 2008, our subsidiary, Northsight entered into a joint venture agreement
with Jaguar Group, LLC.  The purpose of this joint venture was to
provide wholesale financing loan products to the real estate mortgage
industry.
 
 Northsight
was to purchase 50% equity and voting interest in Jaguar Investment Group, LLC
(Jaguar) and the remaining 50% was to be owned by Jaguar Group,
LLC.  Each equity interest was to be purchased for $4 million dollars
each, to be in the form of cash, real estate equity, and/or any form of
consideration agreed by both members.  The joint venture was never
funded due to Jaguar Group, LLC’s inability to fund its portion.
 
 On
September 29, 2008, Northsight filed a lawsuit, in the Boulder County District
Court, against Jaguar Group, LLC, John R. Reinholdt II and the Estate of John R.
Reinholdt Sr. (Defendants) for non-payment of a $1,100,000 loan made by the
Company to Jaguar.  The lawsuit also demands immediate payment of
other receivables in the amount of $307,000 owed by Jaguar to the Company. 
The lawsuit alleges breach of the security and purchase agreements, fraud, civil
theft, and conversion.
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6
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 
 NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 INTERIM
PRESENATION
 
 The
unaudited  consolidated financial  statements  and
related notes for the nine months ended September 30, 2008,
presented  herein  have
been  prepared  by the  management  of
NFS and its subsidiaries  pursuant  to
the  rules  and  regulations  of
the  Securities  and Exchange
Commission.  Accordingly, certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to such rules and
regulations.  Operating results for the nine months ended September
30, 2008 are not necessarily indicative of the results that may be expected for
the full year.  It is suggested that these unaudited consolidated
financial statements be read in conjunction with the December 31, 2007 audited
consolidated financial statements.
 
 In the
opinion of management, all adjustments (consisting only of normal recurring
adjustments), which are necessary for a fair presentation of operating results
for the interim period presented have been made.
 
 PRINCIPLES
OF CONSOLIDATION
 
 The
accompanying consolidated financial statements include the accounts of NFS and
its subsidiary, Northsight, Inc., Northsight Mortgage formerly known as Navidec
Mortgage Holdings, Inc., and Southie Development, LLC. NFS owns 98% of
Northsight and the former minority member or Northsight Mortgage Group, LLC owns
2% of Northsight, Inc.  NFS owns 100% of Southie Development,
LLC.  All significant inter-company balances and transactions have
been eliminated in consolidation.
 
 RECLASSIFICATION
 
 To make
the Consolidated Statement of Operations comparable, certain 2007 expenses were
reclassified.  For the nine months ending September 30, 2007, the
reclassification from General and Administration to Cost of Sales was
$445,000.  For the three months ending September 30, 2007, the
reclassification from General and Administration to Cost of Sales was
$98,000.
 
 USE OF
ESTIMATES
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States requires management to make estimates
and assumptions.  These estimates and assumptions affect the reported
amounts of assets and  liabilities,  disclosure of
contingent  assets and  liabilities at the date of
the  financial  statements  and
the  reported  amounts of  revenues  and
expenses during the reported period. Actual results could differ materially from
those estimates.
 
 CASH AND
CASH EQUIVALENTS
 
 For
purposes of reporting cash flows, NFS considers cash and cash equivalents to
include highly liquid investments with original maturities of 90 days or less.
Those are readily convertible into cash and not subject to significant risk from
fluctuations in interest
rates.  The  recorded  amounts  for
cash  equivalents
approximate  fair  value  due  to  the  short-term  nature  of  these  financial
instruments.
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 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 CONCENTRATION
OF CREDIT RISK
 
 Financial
instruments that potentially subject NFS to significant concentrations of credit
risk include cash equivalents, notes receivable and trade accounts
receivable.  The Company maintains its cash and investment balances in
the form of bank demand deposits, money market accounts, commercial papers and
short-term notes with financial institutions that management believes to be of
high credit quality.  Accounts receivable are typically unsecured and
are derived from transactions with and from customers primarily located in the
United States.
 
 NFS
performs ongoing evaluations of its clients' financial condition and generally
does not require collateral, except for billings in advance of work
performed.  Management reviews accounts receivable periodically and
reduces the carrying amount by a valuation allowance that reflects management's
best estimate of amounts that may not be collectible.  Allowances, if
any, for uncollectible accounts receivable are determined based upon information
available and historical experience.  There was no allowance at
December 31, 2007.
 
 During
the quarter ended June 30, 2008, management felt, based on prevailing market
conditions, that it was necessary to establish a
reserve.   During the quarter ended June 30, 2008, a reserve of
approximately $853,000 was established for short term notes receivable and a
reserve of approximately $198,000 was established for the real estate owned by
Southie.
 
 During
the quarter ended September 30, 2008, the reserve accounts were reviewed and
adjusted.  As a result of the review the real estate owned reserve was
decreased by $46,000 for a balance of $807,000 at September 30,
2008.
 
 During
the quarter ended September 30, 2008, as a result of the lawsuit filed against
Jaguar, the Company increased their reserves to the full amount of the note and
account receivables owed by Jaguar, which is $1,407,000.
 
 Other
financial instruments that potentially subject the company to concentrations of
credit risk consist principally of cash and cash equivalents. At September 30,
2008 and December 31, 2007, the Company had approximately $390,000 and
$1,145,000, respectively, of cash or cash equivalents in financial institutions
in excess of amounts insured by agencies of the U.S. Government.
 
 No sales
to unaffiliated customers represented 10% or more of the Company’s revenue for
the nine months ended September 30, 2008.
 
 INVESTMENTS
 
 Investments
in publicly traded equity securities over which NFS does not exercise
significant influence are recorded at market value in accordance with Financial
Accounting Statement (“FAS”) No. 115, "Accounting for Certain Investments in
Debt and Equity Securities", which requires that all applicable investments be
classified as trading securities, available for sale securities or
held-to-maturity securities. The Company has investments treated as
available-for-sale securities that are restricted from sale in the open market
under Section 144 and have limited trading volume.  There can be no
assurance that we will realize the recorded value of this investment due to the
size of the investment and its limited trading volume.  Comprehensive
income includes net income or loss and changes in equity from the market price
variations in stock and warrants held by the Company.
 
 Investments
in non-publicly traded equity securities or non-marketable equity securities are
stated at the lower of cost or estimated realizable value.
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8
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 FAIR
VALUE OF FINANCIAL INSTRUMENTS
 
 The
carrying value of cash and cash equivalents, trade receivables and payables
approximated their fair value because of their short-term nature. Investments in
debt securities are recorded at their amortized cost, which approximates fair
value because of their short-term maturity.  Investments in marketable
equity securities are recorded at fair value based upon quoted market
prices.  Investments in non-marketable equity securities are based
upon recent sales of similar securities by the investees and approximated their
carrying value. The Company’s borrowings approximate their carrying amounts
based upon interest rates currently available to the Company.
 
 REVENUE
RECOGNITION
 
 Mortgage
Revenues
 
 The
Company primarily recognizes its operating revenue through its subsidiary,
Northsight, Inc., by charging origination fees from borrowers and earning
interest and penalty fees on outstanding loan balances.  Northsight
recognizes fee and interest income on bridge, asset and conventional mortgage
loans after mortgage loan transactions close.  Northsight accrues
interest and penalty interest income at the end of each
quarter.  Mortgage revenues were $675,000 for the nine months ended
September 30, 2008 ($221,000 for the three months ended September 30,
2008).
 
 Interest
Revenues
 
 Revenues
from interest are recorded at the time they are earned, thus the revenues shown
are for interest actually received and the accruals for that which is due to the
Company. Interest revenues for the nine months ended September 30, 2008 were
approximately $202,000 ($33,000 for the three months ended September 30,
2008).
 
 INCOME
TAXES
 
 Provision
for income taxes represents actual or estimated amounts payable on tax return
filings each year. Deferred tax assets and liabilities are recorded for the
estimated future tax effects of temporary differences between the tax basis of
assets and liabilities and amounts reported in the accompanying balance sheets,
and for operating loss and tax credit carry forwards.  The change in
deferred tax assets and liabilities for the period measures the deferred tax
provision or benefit for the period.  Effects of changes in enacted
tax laws on deferred tax assets and liabilities are reflected as adjustment to
the tax provision or benefit in the period of enactment.
 
 At June
30, 2008, the Company had an accrued income tax liability of approximately
$740,000 related primarily to profits generated on the sale of stock assets.
During the three months ended September 30, 2008, the Company estimated a credit
against the previously reserved income taxes of $112,000, leaving an accrued
income tax liability of $628,000 at September 30, 2008.
 
 STOCK
BASED COMPENSATION
 
 Beginning
January 1, 2006, the Company adopted the provisions of and accounts for
stock-based compensation in accordance with Statement of Financial Accounting
Standards (SFAS) No. 123 – revised 2004 (SFAS 123R), Share-Based Payment, which
replaced SFAS No. 123 (SFAS 123), Accounting for Stock-based
Compensation, and supersedes APB Opinion No. 25 (APB 25), Accounting for Stock Issued to
Employees.  Under the fair value recognition provisions of this
statement, stock-based compensation cost is measured at the grant date based on
the fair value of the award and is recognized as expense on a straight-line
basis over the requisite service period, which generally is the vesting
period.  The Company elected the modified-prospective method, under
which prior periods are not revised for comparative
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9
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  purposes.  The
valuation provisions of SFAS 123R apply to new grants and to grants that were
outstanding as of the effective date and are subsequently modified.
  All
options granted prior to the adoption of SFAS 123R and outstanding during the
periods presented were fully-vested at the date of adoption.
 
 NET
INCOME (LOSS) PER SHARE
 
 Basic net
income (loss) per share is computed by dividing net income (loss) available to
common shareholders for the period by the weighted average number of common
shares outstanding for the period. Diluted net income (loss) per share is
computed by dividing the net income (loss) for the period by the weighted
average number of common and potential common shares outstanding during the
period.
 
 The
dilutive effect of approximately 6,479,843 options and warrants at September 30,
2008, has not been included in the determination of diluted earnings per share
since, under FAS-128 they would anti-dilutive.
 
 COMPREHENSIVE
INCOME (LOSS)
 
 Comprehensive
income (loss) includes net income or loss and changes in equity from the market
price variations in the BPZ stock held by the Company.  During the
three months ended September 30, 2008, there were no remaining shares of BPZ to
sell, and for the nine months ending September 30, 2008 the remaining shares of
BPZ were sold representing a gain of approximately $5,381,000.  The
Company sold other securities for a net gain of $31,000, for a total gain of
$5,412,000 for nine months ending September 30, 2008.
 
 RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS
 
 In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities (SFAS No. 159). SFAS No. 159 permits
entities to choose to measure, on an item-by-item basis, specified financial
instruments and certain other items at fair value. Unrealized gains and losses
on items for which the fair value option has been elected are required to be
reported in earnings at each reporting date. SFAS No. 159 is effective for
fiscal years beginning after November 15, 2007, the provisions of
which are required to be applied prospectively. We believe that SFAS 159 should
not have a material impact on our financial position or results of
operations
 
 In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations, or
SFAS No. 141R. SFAS No. 141R will change the accounting for business
combinations. Under SFAS No. 141R, an acquiring entity will be required to
recognize all the assets acquired and liabilities assumed in a transaction at
the acquisition-date fair value with limited exceptions. SFAS No. 141R will
change the accounting treatment and disclosure for certain specific items in a
business combination. SFAS No. 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008.
Accordingly, any business combinations we engage in will be recorded and
disclosed following existing GAAP until January 1, 2009. We expect SFAS
No. 141R will have an impact on accounting for business combinations once
adopted but the effect is dependent upon acquisitions at that time. We are still
assessing the impact of this pronouncement.
 
 In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements—An Amendment of ARB No. 51, or
SFAS No. 160”. SFAS No. 160 establishes new accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. SFAS No. 160 is effective for fiscal years
beginning on or after December 15, 2008. We believe that SFAS 160 should
not have a material impact on our financial position or results of
operations.
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10
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
  In March
2008, the FASB issued Statement No. 161, “Disclosures about Derivative
Instruments and Hedging Activities—an amendment of FASB Statement No. 133”
(SFAS 161). The Statement requires companies to provide enhanced disclosures
regarding derivative instruments and hedging activities. It requires companies
to better convey the purpose of derivative use in terms of the risks that such
company is intending to manage. Disclosures about (a) how and why an entity
uses derivative instruments, (b) how derivative instruments and related
hedged items are accounted for under SFAS No. 133 and its related
interpretations, and (c) how derivative instruments and related hedged
items affect a company’s financial position, financial performance, and cash
flows are required. This Statement retains the same scope as SFAS No. 133
and is effective for fiscal years and interim periods beginning after
November 15, 2008. The Company does not expect the adoption of SFAS 161 to
have a material effect on its results of operations and financial
condition.
 
  In May
2008, the FASB issued FASB Staff Position (FSP) No. APB 14-1 “Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)” (FSP APB 14-1). FSP APB 14-1
requires the issuer of certain convertible debt instruments that may be settled
in cash (or other assets) on conversion to separately account for the liability
(debt) and equity (conversion option) components of the instrument in a manner
that reflects the issuer’s non-convertible debt borrowing rate. FSP
APB 14-1 is effective for fiscal years beginning after December 15,
2008 on a retroactive basis and will be adopted by the Company in the first
quarter of fiscal 2009. The Company does not expect the adoption of FSP APB 14-1
to have a material effect on its results of operations and financial
condition.
 
 In June
2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted
in Share-Based Payment Transactions are Participating Securities.” This FSP
provides that unvested share-based payment awards that contain nonforfeitable
rights to dividends or dividend equivalents (whether paid or unpaid) are
participating securities and shall be included in the computation of earnings
per share pursuant to the two-class method. The FSP is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. Upon adoption, companies are required
to retrospectively adjust earnings per share data (including any amounts related
to interim periods, summaries of earnings and selected financial data) to
conform to provisions of this FSP. The Company does not anticipate the adoption
of FSP EITF 03-6-1 will have a material impact on its results of operations,
cash flows or financial condition.
 
 There
were various other accounting standards and interpretations issued in 2008 and
2007, none of which are expected to have a material impact on the Company’s
financial position, operations or cash flows.
 
 NOTE
3 - INVESTMENT IN BPZ
 
 Upon
consummation of the merger transaction between Old Navidec and BPZ, BPZ issued
604,246 shares of its common stock to NFS.  These shares were issued
in consideration of NFS's assumption of all of the pre-merger business assets
and liabilities of Old Navidec.  These shares qualify as "marketable
securities" as that term is defined by SFAS 115 (and as further defined in
Footnote 2 to that Statement).  Under this definition, if the equity
security is restricted for sale by a governmental or other contractual
requirement, but the holder of the security has the power to cause such
requirement of restriction to be met in a manner that the security would
reasonably be expected to qualify for sale within one year, the security is not
considered restricted for the purposes of SFAS 115.  As such, we are
required to record our investment in these securities at their fair
value.
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11
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 The
Company's "investments in BPZ" of 300,000 shares were valued at $3,354,000 on
December 31, 2007.  The Company held no shares of BPZ at September 30,
2008.
 
 
 NOTE
4 – NOTES RECEIVABLE
 
 Notes
Receivable – General
 
 During
the year ended December 31, 2007, the Company entered a transaction with a
former officer of the Company, Mr. Robert Grizzle.  In exchange for
Mr. Grizzle’s shares in the Company, on May 3, 2007, Mr. Grizzle executed a note
payable to the Company in the amount of $450,000. The note caries an 8% interest
rate and is secured by 1,000,000 Aegis common shares, 1,500,000 Aegis preferred
shares, 220,000 shares of the Company's common stock and 200,000 options to
purchase shares of the Company's common stock at $0.05 per share held by Mr.
Grizzle.  The note is a limited recourse note whereby Mr. Grizzle is
personally responsible for one half the original principal and interest. The
balance owed is secured by Mr. Grizzle’s Aegis common and preferred shares and
the Company’s common stock. Further, the note provides that at the earlier of
one year from the date that the common stock of the Company is publicly traded
and his shares are registered for resale under an effective registration
statement filed by the Company or December 31, 2009.  On September 30,
2007, Mr. Grizzle resigned as the Chief Operating Officer and the Chief
Financial Officer of the Company.  On October 17, 2008, the Company
filed with the SEC an S-8 registration statement registering Mr. Grizzle’s
shares.
 
 On
December 13, 2007, Northsight, Inc. (formerly Navidec Mortgage Holdings, Inc.)
entered into a loan agreement with Welend Associated Group, LLC, a Colorado
limited liability company and Jaguar Group, LLC, (Jaguar) a Colorado limited
liability company, each with joint and severable liability, in the amount of
$1,100,000. The note carries an interest rate of 0% and has a maturity date of
six months from the date of the note. As consideration for making the loan to
Jaguar, the Company received the ability to utilize Jaguar’s line funding
capabilities through third party lenders.  Security for the note is a
first security interest in the equity of the debtor’s warehouse line of credit
with Colorado State Bank.  As of September 30, 2008 there is an
additional receivable from Jaguar for approximately $307,000 which represents
loans funded by NFS but not yet funded by Jaguar.  Further, as of
September 30, 2008, there is $62,000 in a note payable to Jaguar.
 
 On
September 29, 2008, Northsight filed a lawsuit, in the Boulder County District
Court, against Jaguar Group, LLC, John R. Reinholdt II and the Estate of John R.
Reinholdt Sr. (Defendants) for non-payment of a $1,100,000 loan made by the
Company to Jaguar.  The lawsuit also demands immediate payment of
other receivables in the amount of $307,000 owed by Jaguar to the Company. 
The lawsuit alleges breach of the security and purchase agreements, fraud, civil
theft, and conversion.
 
 During
the quarter ended September 30, 2008, as a result of the lawsuit filed against
Jaguar, the Company increased their reserves to the full amount of the note and
account receivables owed by Jaguar, which is $1,407,000.
 
 
 Mortgages
Receivable
 
 In July
2007, Northsight, Inc. (formerly Navidec Mortgage Holdings, Inc.), a 98% owned
subsidiary of the Company, began making short term loans to purchasers of
residential properties who purchase their property as part of or after the
repossession in a foreclosure proceeding.  As of September 30, 2008,
the Company had made approximately $4,556,000 (net of allowance of $807,000) in
such loans.  The loans are made primarily to good credit borrowers and
are secured by a first mortgage on the purchased properties.  The
average numbers of days outstanding for the loans are less than 90 days, and the
primary
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12
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  takeout
on the loans is long term financing through secondary sources such as the
Federal National Mortgage Association.
 
 In
September 2008, the Company transferred the ownership of the short term loans
from Northsight, Inc. to the Company.  Due to this transfer, the
Company funds and owns the loans.  There is no longer an intercompany
transfer of funds.
 
 Summary
of Receivables
 
 Note
      From
              Due
              Principal
      Amount
              Annual
      Interest rate
              Accrued
      Interest
              SecurityRobert
      Grizzle
              Oct
      17, 2009
              $450,000
              8%
              $51,000
              Shares
      and options in Navidec and AegisWelend-Jaguar
              June
      13, 2008
              $1,100,000
              0%
              $-0-
              Junior
      security in residential mortgagesVarious
      short term home mortgages
              Various
      and on-gong
              $5,363,000
              9.95%
      to 14%
              $61,000
              First
      mortgage
 
 
 NOTE
5 – INVESTMENTS
 
 In
December 2007, Northsight, Inc. (a 98% owned subsidiary of the Company)
purchased a 3 unit property in Boston, Massachusetts, known as Thomas Park. The
objective is to rehabilitate the property and then sell it.  During
the quarter ending June 30, 2008, this property was transferred to Southie
Development, LLC (a 100% owned subsidiary of the Company). As of September 30,
2008, the Company and subsidiaries had invested a total of approximately
$2,587,000 in the property.  Part of this investment is funded by a
$1,200,000 line of credit from Mt. Washington Cooperative Bank, of which
$908,000 was due on this line as of September 30, 2008.
 
 On
December 20, 2007, Northsight repossessed a property with a value of $360,000
securing one of its short term loans due to non-payment. During the nine months
ended September 30, 2008, the Company took title to properties with a value of
$1,995,000 for non-payment.  The Company has expended fix up costs on
these properties and have added the cost to their valuation.  All of
these properties are held as real estate owned and some provide rental income to
Southie. The properties may be held to rent or may be sold in the
future.  At September 30, 2008, the valuation of these real estate
owned properties is $2,355,000 less a reserve of $198,000 and accumulated
depreciation on the rental properties of $13,000, for a net balance of
$2,144,000. It is management’s belief that the carrying value of these
properties is less than the fair market value.
 
 
 NOTE
6 – SHORT TERM BORROWINGS
 
 Effective
August, 2007 the Company’s subsidiary Northsight, Inc. arranged for a bank line
of credit.  During the three months ended March 31, 2008, the
subsidiary had drawn a total of approximately $155,000 against a total line of
$3,000,000.  During the nine months ended September 30, 2008, the
Company paid the outstanding amount owed on the line.  The line
expired on August 31, 2008 and the Company did not renew the line of
credit.
 
 In May
2008, Northsight arranged for a construction line of credit for $1,200,000, due
November 2009.  Proceeds from this line are used strictly for the
renovation of the Thomas Park property in Boston with the intent to
resale.  As for September 30, 2008, the balance outstanding was
$908,000.  See also Note 5.  This construction line is due
November 19, 2009 with interest only payments at prime +2%, with a floor at
7%.  The line contains the general covenants which management believes
are in full compliance.
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13
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 
 The
Company also owes notes payable to Jaguar of $312,000 for purchase of real
estate properties, for a total of approximately $1,219,000 in short term
borrowings as of September 30, 2008.
 
 
 NOTE
7 - SUBSIDIARIES
 
 The
accompanying consolidated financial statements include the accounts of NFS and
its subsidiary, Northsight, Inc. (formerly called Navidec Mortgage Holdings,
Inc), Northsight’s subsidiary Northsight Mortgage Group, LLC. of Phoenix,
Arizona, and its subsidiary, Southie Development, LLC. All significant
inter-company balances and transactions have been eliminated in
consolidation.
 
 The
Company currently operates in the mortgage services sector.  During
the nine months ended September 30, 2008, the revenues for the mortgage services
and brokerage business were approximately $748,000 ($221,000 for the three
months ended September 30, 2008). During the three months ended September 30,
2008, we incurred a loss from operations of $1,448,000.  During the
nine months ended September 30, 2007, we incurred a loss from operations of
approximately $3,542,000.
 
 Northsight
is focused on the Arizona and Colorado mortgage markets and is primarily engaged
in the business of marketing and brokering mortgages secured by real estate with
an emphasis on providing credit worthy individuals with interim financing for
the purchase of repossessed or auctioned residential properties.
 
 Operating
results for each of the segments of the Company are as follows:
 
 
 For
      the Nine Months Ended
              
              
              For
      the Nine Months EndedSeptember
      30, 2008
              
              
              September
      30, 2007(Data
      in thousands)
              
              
              (Data
      in thousands)Navidec
              
              
              Northsight,
              
              
              Southie,
              
              
              Navidec
              
              
              Northsight,
              
              
              Southie,Financial
              
              
              Inc.
              
              
              LLC.
              
              
              Financial
              
              
              Inc.
              
              
              LLC.Services
              
              
              
              
              
              
              
              
              ServicesRevenueSales
              
              $
              129
              
              
              $
              725
              
              
              $
              23
              
              
              $
              -
              
              
              $
              484
              
              
              $
              -Cost
      of Sales
              
              
              -
              
              
              
              667
              
              
              
              -
              
              
              
              -
              
              
              
              445
              
              
              
              -Gross
      Profit
              
              $
              129
              
              
              $
              58
              
              
              $
              23
              
              
              $
              -
              
              
              $
              39
              
              
              $
              -Total
      Operating Expenses
              
              $
              3,247
              
              
              $
              488
              
              
              $
              17
              
              
              $
              568
              
              
              $
              162
              
              
              $
              -Other
      Income/(Expense)Gain
      on sale of investments
              
              
              5,412
              
              
              
              -
              
              
              
              -
              
              
              
              3,551
              
              
              
              -
              
              
              
              -Other
      income/(expense)
              
              
              (57
              )
              
              
              (22
              )
              
              
              (205
              )
              
              
              90
              
              
              
              7
              
              
              
              -Total
      Other Income/(Expense)
              
              $
              5,355
              
              
              $
              (22
              )
              
              $
              (205
              )
              
              $
              3,641
              
              
              $
              7
              
              
              $
              -Income
      Taxes (credit)
              
              
              1,254
              
              
              
              (170
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      Income (Loss)
              
              $
              983
              
              
              $
              (282
              )
              
              $
              (199
              )
              
              $
              3,073
              
              
              $
              (116
              )
              
              $
              -
 
 
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14
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  NOTE
8 - EQUITY TRANSACTIONS
 
 COMMON
STOCK
 
 During
the nine months ended September 30, 2008, the Company issued 100,000 shares of
its common stock in connection with the exercise of an option.
 
 STOCK
OPTIONS
 
 During the nine months ended September
30, 2008, a shareholder of the Company exercised options exercisable for 100,000
shares of the Company’s restricted common stock at $0.05 per share.
 
 During
the nine months ended September 30, 2008, the Company awarded 400,000 options at
$2.00/share, vesting over three years with a 10 year term to a director and a to
an employee.   These awards were in two different
grants.  The option for 250,000 shares to a director vests 1/3 of
shares immediately (83,333 shares), 1/3 in one year (83,333 shares) from the
date of issuance and 1/3 in two years (83,334 shares).   The
second option for 150,000 shares vests 1/3 in 12 months from the date of
issuance, 1/3 in 24 months and 1/3 in 36 months.  Under FAS 123R, the
grant and vesting of 83,333 shares caused payroll expense to increase $60,500
with an offset to Additional Paid In Capital.  A Black-Scholes
computation was made using a volatility of 81%.
 
 The
aggregate intrinsic value of outstanding fully-vested options as of September
30, 2008 was approximately $535,000.
  A summary
of the option plan is as follows:
  2008Shares
              
              
              Weighted
      Average
                Exercise
      PriceOutstanding,  January
      1, 2008
              
              
              3,681,510
              
              
              $
              1.18Granted
              
              
              400,000
              
              
              
              2.00Cancelled
              
              
              -
              
              
              
              -Expired
              
              
              -
              
              
              
              -Exercised
              
              
              (100,000
              )
              
              
              -Outstanding,
      September 30, 2008
              
              
              3,981,510
              
              
              $
              1.26Options
      Exercisable , September 30, 2008
              
              
              3,664,843
              
              
              $
              1.20
 
 WARRANTS
 
 At
September 30, 2008, the following warrants to purchase common stock were
outstanding:
  Number
      of common
                shares
      covered by warrants
              
              
              Exercise
      Price
              
              Expiration
      Date1,332,500
              
              
              $
              4.00
              
              August
      20101,332,500
              
              
              
              2.00
              
              August
      2010150,000
              
              
              
              1.00
              
              July
      20102,815,000
 
 
 During
the nine months ended September 30, 2008 the Company did not issue any
warrants.
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15
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 On July
9, 2008, The Board of Directors of Navidec declared two dividend distributions
for its shareholders as of September 8, 2008, record date. One distribution is
to the Company’s Shareholders of common stock and warrants in the Company’s
subsidiary Northsight.  The other distribution is
warrants.  Each common share of Navidec receives an “A” Warrant to
purchase one share of the Company’s common stock for $2 and a “B” Warrant to
purchase one share of the Company’s common stock for $4.  Both
warrants expire July 1, 2013. On October 2, 2008, Navidec has modified the
record date and “ex-dividend” date to be the date that a Registration Statement
on Form S-1 for the dividend securities is declared effective by the Securities
and Exchange Commission.
 
 
 NOTE
9 - COMMITMENTS AND CONTINGENCIES
 
 OPERATING
LEASES
 
 In August
2005, the Company along with its subsidiary, Northsight entered into an office
lease for the Phoenix operations for a payment of $6,697, plus pass throughs,
per month.  The lease expires July 31, 2010.
 
 In
February 2008, the Company along with its subsidiary, Northsight opened offices
at 2000 S. Colorado Blvd, Suite 200, Denver, Colorado. The lease for this office
is approximately $4,701 per month plus pass throughs. The lease has a term of
approximately 3 years.
 
 The
amounts due at base rate are as follows:
 
 Period
              
              Amount
      DueOctober
      1 – December 31 2008
              
              $
              34,0002009
              
              $
              137,0002010
              
              $
              105,0002011
              
              $
              12,000
 
 DEFINED
CONTRIBUTION PLAN
 
 NFS has a
401(k) profit sharing plan (the “Plan").  Subject to limitations,
eligible employees may make voluntary contributions to the Plan. The Company
may, at its discretion, make additional contributions to the Plan. The Company
did not contribute during the quarter ended September 30, 2008.
 
 
 NOTE
10 – RELATED PARTY TRANSACTIONS
 
 The
Company rents part of the CEO’s private home for the CEO’s office for $1,750 per
month.  There is no long term commitment for this
payment.
 
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16
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 NOTE
11 – SUBSEQUENT EVENTS
 
 The
Company Shareholders convened the annual meeting on November 6, 2008, at 10:00
a.m. at the Company’s offices.  At such meeting, resolutions regarding
the following matters were approved by a majority of the
shareholders:
 
 -
              The
      following individuals were re-elected to serve on the Company’s Board of
      Directors:
 o
              John
      McKowen
 o
              Henry
      Farkas
 o
              Jolee
      Henry
 -
              The
      independent registered public accountants were appointed the Company’s
      auditors for the coming year.
 
 
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17
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 
 The
following discussion should be read in conjunction with our unaudited financial
statements and notes thereto included herein. In connection with, and because we
desire to take advantage of, the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, we caution readers regarding certain
forward looking statements in the following discussion and elsewhere in this
report and in any other statement made by, or on our behalf, whether or not in
future filings with the Securities and Exchange
Commission.  Forward-looking statements are statements not based on
historical information and which relate to future operations, strategies,
financial results or other developments. Forward looking  statements
are necessarily based upon estimates and assumptions that are
inherently  subject to
significant  business,  economic and competitive
uncertainties and  contingencies,  many of which are beyond
our control and many of which,  with  respect to
future  business  decisions,  are subject to
change. These uncertainties and contingencies can affect actual results and
could cause actual results to differ materially from those expressed in any
forward looking statements made by, or on our behalf.  We disclaim any
obligation to update forward-looking statements.
 
 OVERVIEW
 
 NFS is a
holding company that is in the business of creating or acquiring a controlling
interest in development stage enterprises with the expectation of further
developing the enterprise and then taking the enterprise public.
 
 NFS owns
98% of its subsidiary, Northsight, Inc.
(“Northsight”).   Northsight is focused on the Arizona (through
its subsidiary Northsight, Mortgages Group, LLC) and Colorado mortgage markets
and is primarily engaged in the business of marketing and brokering mortgages
secured by real estate with an emphasis on providing credit worthy individuals
with interim financing for the purchase of repossessed or auctioned residential
properties.
 
 In
February 2008, our subsidiary, Northsight entered into a joint venture agreement
with Jaguar Group, LLC.  Northsight purchased 50% equity and voting
interest in Jaguar Investment Group, LLC (“Jaguar Investment Group”) and the
remaining 50% is owned by Jaguar Group, LLC.  Each equity interest was
purchased for $4 million dollars, in the form of cash, real estate equity,
and/or any form of consideration agreed by both members.   The
joint venture is to provide whole sale financing loan products to the real
estate mortgage industry.
 
 In
January 2008, the Company formed Southie Development, LLC (Southie) as a
wholly-owned subsidiary of NFS. The purpose of Southie is to develop residential
real estate for resale and to own and manage residential real estate acquired
via default of real estate loans owned by NFS.  Once a real estate
loan defaults, NFS transfers the property to Southie for development and
management.   As part of the management and development of the
properties transferred to it, Southie honors any existing residential leases,
will potentially expend monies for rehabilitation of the property with the goal
of selling the property in a short time period, usually less than one
year.
 
 On July
9, 2008, The Board of Directors of Navidec declared two dividend distributions
for its shareholders as of September 8, 2008, record date.
 
 The first
dividend is a distribution of two Navidec Warrants to purchase common shares of
Navidec, $.001 par value, for each share of Navidec. The Units consist of an A
Warrant, exercisable at $2.00 per share until July 1, 2013, and a B Warrant
exercisable at $4.00 per share until July 1, 2013.
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18
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 The
second dividend is distribution of a Unit of Northsight, Inc ("Northsight"). The
Units will be distributed one Unit of Northsight for each 2.27336 shares of
Navidec.  Navidec currently owns 20,000,000 Units of
Northsight.  Navidec will
distribute  4,000,000  Units to
its  shareholders  resulting  in
Navidec  owning
16,000,000  after  the  dividend  distribution.   The
Northsight Units to be distributed will consist of one share of Northsight, a
Northsight A Purchase Warrant, exercisable at $2.00 per share until July 1,
2013, and a B Purchase Warrant exercisable at $4.00 per share until July 1,
2013.
 
 The
record date and ex-dividend date will be determined based on the date that a
Registration Statement on Form S-1 for the dividend securities is declared
effective by the Securities and Exchange Commission.
 
 On
September 29, 2008, Northsight filed a lawsuit, in the Boulder County District
Court, against Jaguar Group, LLC, John R. Reinholdt II and the Estate of John R.
Reinholdt Sr. (Defendants) for non-payment of a $1,100,000 loan made by the
Company to Jaguar.  The lawsuit also demands immediate payment of
other receivables in the amount of $307,000 owed by Jaguar to the Company. 
The lawsuit alleges breach of the security and purchase agreements, fraud, civil
theft, and conversion.
 
 On
November 6, 2008, the Company held the annual meeting of its
shareholders.  At such meeting a majority of the shareholders approved
resolutions appointing Messrs. McKowen and Farkas and Ms. Henry to the Board of
Directors.  In addition, the nomination of the Company’s independent
registered public accountants was approved.
 
 On July
31, 2008, President Bush signed into law a package of housing legislation called
the Federal Housing and Economic Recovery Act that is largely focused on
safeguarding Fannie Mae and Freddie Mac.  While it still is too early
to gauge the impact of this legislation on the Company, management believes it
would have no material negative impact, and could assist in mortgage operations
going forward.
 
 RESULTS OF
OPERATIONS
 
 For
the Three Months Ended September 30, 2008 compared to the Three Months Ended
September 30, 2007
 
 During
the three months ended September 30, 2008, we recognized sales of approximately
$254,000. During the three months ended September 30, 2008, sales consisted of
$221,000 from mortgage services and $33,000 from interest
revenues.  During the three months ended September 30, 2007, we
recognized sales of $97,000.  The increase of $157,000 was a result of
the development of a new bridge loan program that enables purchasers to acquire
discounted residential real estate.
 
 During
the three months ended September 30, 2008, we incurred $476,000 in cost of
sales.  During the period ended September 30, 2007, we incurred
$98,000 cost of sales.
 
 During
the three months ended September 30, 2008, we recognized a gross profit margin
loss of $222,000 compared to $1,000 for the three months ended September 30,
2007.  The decrease of $221,000 was a result of increased underwriting
standards for our mortgage loan activity.
 
 During
the three months ended September 30, 2008, we incurred total operating expenses
of $1,226,000 compared to $236,000 during the three months ended September 30,
2007.  The increase of $990,000 is a result of increasing a reserve
against the Jaguar receivables.  This reserve increased $984,000
during the three months ended September 30, 2008.  During the three
months ended September 30, 2008, we incurred general and administrative expense
of $1,203,000 compared to $236,000 during the three months ended September 30,
2007.
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19
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 During
the three months ended September 30, 2008, we recognized a net loss of
$1,540,000 compared to net income of $2,262,000 during the three months ended
September 30, 2007.  The increase of the loss was largely the result
of increased Jaguar reserve of $984,000 during the three months ended September
30, 2008, and gains from the sale of investments during the three months ended
September 30, 2007.
 
 For
the Nine Months Ended September 30, 2008 compared to the Nine Months Ended
September 30, 2007
 
 During
the nine months ended September 30, 2008, we recognized sales of
$877,000.  During the nine months ended September 30, 2008, we
recognized $675,000 in revenues from Northsight’s mortgage activities and
$202,000 in interest revenues.  During the nine months ended September
30, 2007, we recognized sales of $484,000, solely from Northsight’s mortgage
activities.  The increase of $395,000 was a result of the development
of a new bridge loan program that enables purchasers to acquire discounted
residential real estate.
 
 During
the nine months ended September 30, 2008, we incurred $667,000 in cost of
sales.  During the period ended September 30, 2007, we incurred
$445,000 in cost of sales.
 
 During
the nine months ended September 30, 2008, we recognized a gross profit margin of
$210,000 compared to $39,000 for the nine months ended September 30,
2007.  The increase of $171,000 was a result of increased mortgage
activity.
 
 During
the nine months ended September 30, 2008, we incurred total operating expenses
of $3,752,000 compared to $731,000 during the nine months ended September 30,
2007.  The increase of $3,021,000 is result of establishing a loan
loss reserve of $2,467,000 and a redirection of Northsight’s mortgage operations
to include an emphasis on short term bridge loans and the opening of
Northsight’s offices in Colorado and focus on the Colorado
market.  During the nine months ended September 30, 2008 we incurred
general and administrative expense of $3,726,000 compared to $727,000 during the
nine months ended September 30, 2007.
 
 During
the nine months ended September 30, 2008, we recognized net income of $502,000
compared to $2,957,000 during the nine months ended September 30,
2007.  The decrease of $2,431,000 was largely a result of the
$2,467,000 in loan loss reserves and the provision for income tax of $1,084,000
offset by additional gains from sale of investments of $5,412,000 for the nine
months ended September 30, 2008 compared to a gain of $3,551,000 for the nine
months ended September 30, 2007.  During the three months ended March
31, 2008, we sold 150,000 shares of BPZ for cash of approximately $2,385,000 and
during the three months ended June 30, 2008 we sold 184,813 shares of BPZ for a
gain of $3,207,000.  Proceeds were used to expand Northsight’s
mortgage operations, create our bridge loan product and increase our bridge loan
portfolio.
 
 LIQUIDITY
 
 At
September 30, 2008, we had total current assets of $5,378,000, consisting of
cash of $704,000, net mortgage receivables of $4,556,000, accrued interest
receivable of $112,000, and an advance receivable of $6,000.  At
September 30, 2008, we had total current liabilities of $2,405,000, consisting
of an accounts payable of $550,000, short term borrowings of $1,219,000 and
accrued taxes and liabilities of $636,000.  Current assets exceed
current liabilities by $2,973,000.
 
 Net cash
used by operating activities during the nine months ended September 30, 2008 was
$3,805,000, compared to net cash provided in operating activities during the
nine months ended September 30, 2007 of $292,000. During the nine months ended
September 30, 2008, the net cash provided represented net income of $526,000,
adjusted for the non-cash item of depreciation expense of $26,000, a gain on the
sale of investments of $5,412,000, and impairments of $2,412,000.  We
also had an increase in accounts
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20
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  receivable
of $1,000; increase in accrued interest of $66,000; increase of prepaid and
other assets of $7,000; increase of short term loans receivable of $2,352,000;
increase of accounts payable of $550,000, and increase in other accrued
liability of $519,000.
 
 During
the nine months ended September 30, 2007, the net cash used represented net
income of $2,957,000 adjusted for certain non-cash items consisting of
depreciation expense of $4,000, a gain on the sale of investments of $3,551,000,
gain on settlement of debt for $50,000, and a minority interest of
$8,000.  We also had a decrease in accounts receivable of $23,000;
increase in accrued interest of $39,000; decrease of prepaid and other assets of
$102,000; decrease of short term loans receivable of $898,000, and decrease in
other accrued liability of $60,000.
 
 During
the nine months ended September 30, 2008, we provided $2,151,000 in cash in
investing activities.  We invested $79,000 in fixed assets, $1,308,000
in real estate in Boston, Massachusetts, and received $3,538,000 from the
proceeds of sale of equity investments.
 
 During
the nine months ended September 30, 2007, we received cash of $1,068,000 from of
the sale of equity investments less $2,000 from the purchase of fixed assets,
for a net gain of $1,066,000.
 
 During
the nine months ended September 30, 2008, net cash provided from financing
activities was $934,000.  We increased our short term borrowings by
$934,000.  During the nine months ended September 30, 2007, we
recognized $1,220,000 from the post-merger proceeds from exercise of BPZ
options.
 
 CRITICAL
ACCOUNTING POLICIES
 
 NFS has
identified the policies below as critical to NFS business operations and the
understanding of NFS results from operations.  The impact and any
associated risks related to these policies on the Company's business operations
is discussed throughout Management's Discussion and Analysis of Financial
Conditions and Results of Operations where such policies affect NFS reported and
expected financial results.  For a detailed discussion on the
application of these and other accounting policies, see Note 2 in the Notes to
the Consolidated Financial Statements beginning on page F-6 of this
document.  Note that the Company's preparation of this document
requires NFS to make estimates and assumptions that affect the reported amount
of assets and liabilities, disclosure of contingent assets and liabilities at
the date of NFS financial statements, and the reported amounts of revenue and
expenses during the reporting period.  There can be no assurance that
actual results will not differ from those estimates.
 
 REVENUE
RECOGNITION
 
 NFS
follows very specific and detailed guidelines in measuring revenue; however,
certain judgments may affect the application of NFS revenue
policy.  Revenue results are difficult to predict, and any shortfall
in revenue or delay in recognizing revenue could cause NFS operating results to
vary significantly from quarter to quarter and could result in future operating
losses.
 
 REVENUES
BUSINESS DEVELOPMENT SERVICES
 
 Revenue
from NFS business development services is generally derived from time and
materials contracts and is recognized as the work is
completed.  Revenue recognition for time and materials contracts is
not significantly impacted by judgments and estimates.  Within the
business development division a small amount of the work is performed based on
fixed price agreements.  When this occurs the projects are generally
of a short duration and revenue is recognized when the project is
completed.
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21
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 REVENUES
FROM MORTGAGE SERVICES
 
 Revenues
from mortgage brokerage operations are generally related to transaction-based
fees and are recognized at the consummation of the transactions, generally when
mortgage transactions close.
 
 In July
2007 Navidec Mortgage Holdings, Inc., a wholly owned subsidiary of the Company,
in conjunction with Northsight Mortgage, and 80% owned subsidiary of the Company
began making short term loans to purchasers of residential properties who
purchase their property as part of or after the repossession in a foreclosure
proceeding.  As of September 30, 2008, the Company had made $4,556,000
(net of allowance of $807,000) in such loans that have yet to be placed outside
the Company in a permanent loan takeout.  The loans are secured by
first deeds of trust on residential real estate properties.
 
 As of
September 30, 2008, the Company also holds $452,000 in escrow for the benefit of
the property owners recognized under accounts payable.  This is
recognized as a reduction on the total amount of short term loans, for a net
short term mortgage receivable of $4,104,000. This balance includes a reserve
for uncollectible of $807,000.
 
 RESERVES
FOR BAD DEBT
 
 NFS
receivables are recorded net of an allowance for doubtful accounts which
requires management to estimate amounts due which may not be
collected.  This estimate requires consideration of general economic
conditions, overall historical trends related to the Company's collection of
receivables, customer specific payment history, and customer specific factors
affecting their ability to pay amounts due.  Management routinely
assesses and revises its estimate of the allowance for doubtful
accounts.
 
 For the
quarter ending September 30, 2008, NFS established a reserve against bad debts
as follows:
 
 Reserve
      for short term mortgages receivables
              
              $
              807,000Reserve
      for Real Estate Owned
              
              $
              198,000Reserve
      for amounts owed from Jaguar
              
              $
              1,407,000
 
 GOODWILL
AND INTANGIBLE ASSETS
 
 Intangible
assets are amortized on a straight-line basis over their estimated useful
lives.  Goodwill is evaluated quarterly to determine if its value has
been impaired.  On September 11, 2003, Old Navidec entered into a
purchase agreement with Northsight and its sole member that provided for the
transfer of 80% of the issued and outstanding membership units of Northsight to
Old Navidec resulting in the realization of $190,000 of
goodwill.  This membership interest was transferred to NFS pursuant to
the terms of the merger agreement.  Management determined that
Goodwill should be written off as an asset on its books during the nine months
ended September 30, 2008.
 
 ITEM 3.  QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.
 
 NFS is
exposed to the impact of interest rate changes and change in the market values
of the Company's investments. Based on NFS's market risk sensitive instruments
outstanding  as of September 30,
2008,  as  described  below,  it has
determined  that there was no  material  market
risk  exposure to the  Company's consolidated financial
position, results of operations, or cash flows as of such date. NFS does not
enter into derivatives or other financial instruments for trading or speculative
purposes.
 
 INTEREST
RATE RISK – At September 30, 2008, the Company's exposure to market rate risk
for changes in interest rates relates primarily to its mortgage services
business.  NFS has not used derivative financial instruments in its
credit facilities. A hypothetical 10% increase in the Prime rate would not be
significant to the Company’s financial position, results of operations, or cash
flows.
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22
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 
 INVESTMENT  RISK  -  In  addition  to  the  Company's   investments  in
securities  of BPZ,  from  time  to
time  NFS
has  made  investments  in  equity
instruments in companies for business and strategic purposes. These investments,
when held, are included in other long-term assets and are accounted for under
the cost method since ownership is less than twenty percent (20%) and NFS does
not assert significant influence.
 
 INFLATION
-- NFS does not believe that inflation will have a material impact on its future
operations.
 
 ITEM 4.  CONTROLS AND PROCEDURES
 
 Disclosures
Controls and Procedures
 
 We have
adopted and maintain disclosure controls and procedures (as such term is defined
in Rules  13a 15(e) and 15d-15(e)  under the
Securities  Exchange Act of
1934,  as  amended  (the  "Exchange  Act"))  that
are  designed  to ensure  that
information  required to be disclosed in our reports  under
the Exchange Act, is recorded,  processed,  summarized and
reported within the time periods  required
under  the  SEC's  rules and forms  and
that the  information  is  gathered  and
communicated to our management, including our Chief Executive Officer (Principal
Executive Officer) and Principal Financial Officer, as appropriate, to allow for
timely decisions regarding required disclosure.
 
 As
required by SEC Rule 15d-15(b), Mr. McKowen, our Chief Executive Officer and
Principal Accounting Officer, carried out an evaluation under the supervision
and with the participation of our management, of the effectiveness of the design
and operation of our disclosure controls and procedures pursuant to Exchange Act
Rule 15d-14 as of the end of the period covered by this report.  Based
on the foregoing evaluation,  Mr. McKowen has concluded that our
disclosure controls and
procedures  are  effective  in  timely  alerting  them
to  material  information required  to
be  included  in  our  periodic  SEC  filings  and
to  ensure  that information  required to be
disclosed in our periodic SEC filings is accumulated and communicated to our
management,  including our Chief
Executive  Officer,  to
allow  timely  decisions  regarding  required  disclosure  as
a  result  of  the deficiency in our internal
control over financial reporting discussed below.
 
 ITEM 4T. CONTROLS AND PROCEDURES
 
 Management’s
Quarterly Report on Internal Control over Financial Reporting.
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control
over financial reporting is designed 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. Our internal control over financial reporting includes
those policies and procedures that:
  (i)
              pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect the transactions and dispositions of our
      assets;
  (ii)
              provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that our receipts and expenditures are being
      made only in accordance with authorizations of our management and
      directors; and
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 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 (iii)
              provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of our assets that could have
      a material effect on our financial
statements.
 
 Our
management, with the participation of the President, evaluated the effectiveness
of the Company's internal control over financial reporting as of September 30,
2008. In making this assessment, our management used the criteria set forth by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control -- Integrated Framework. Based on this evaluation, our
management, with the participation of the President, concluded that, as of
September 30, 2008, our internal control over financial reporting was not
effective due to material weaknesses in the system of internal
control.
 
 Specifically,
management identified the following control deficiencies:
 
 (1) The Company has not properly
segregated duties as a few individuals initiate, authorize, and complete all
transactions. The Company has not implemented measures that would prevent the
individuals from overriding the internal control system. The Company does not
believe that this control deficiency has resulted in deficient financial
reporting because the Chief Financial Officer is aware of his responsibilities
under the SEC's reporting requirements and personally certifies the financial
reports.
 
 (2) The Company has installed
accounting software that does not prevent erroneous or unauthorized changes to
previous reporting periods and does not provide an adequate audit trail of
entries made in the accounting software.
 
 Accordingly,
while the Company has identified certain material weaknesses in its system of
internal control over financial reporting, it believes that it has taken
reasonable steps to ascertain that the financial information contained in this
report is in accordance with generally accepted accounting principles and
believes that the consolidated financial statements included in this report
fairly present, in all material respects, our consolidated financial position
and results of operations as of and for the period ended September 30,
2008.
 .
 Remediation
of Material Weakness
 
 As our
current  financial  condition  allows,  we
are in the process of  analyzing  and developing our
processes for the establishment of formal policies and procedures with
necessary  segregation of duties,  which will establish
mitigating controls to compensate for the risk due to lack of segregation of
duties.
 
 Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
 
 This
quarterly report does not include an attestation report of the Company’s
registered public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management’s report in this annual report.
 
 There was
no change in our internal control over financial reporting that occurred during
the fiscal quarter ended September 30, 2008, that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
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24
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 
 PART
II. OTHER INFORMATION
 
 ITEM 1.  LEGAL PROCEEDINGS
 
 
 On
September 29, 2008, Northsight filed a lawsuit, in the Boulder County District
Court, against Jaguar Group, LLC, John R. Reinholdt II and the Estate of John R.
Reinholdt Sr. (Defendants) for non-payment of a $1,100,000 loan made by the
Company to Jaguar.  The lawsuit also demands immediate payment of
other receivables in the amount of $307,000 owed by Jaguar to the Company. 
The lawsuit alleges breach of the security and purchase agreements, fraud, civil
theft, and conversion.
 
 ITEM 2.  CHANGES IN SECURITIES
 
 During
the period of July 1, 2008 through September 30, 2008, the Company did not make
any sales of its unregistered securities.
 
 ITEM
3.  DEFAULTS UPON SENIOR SECURITIES
 
 NONE
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
 
 The
Company Shareholders convened the 2007 annual meeting on November 6, 2008 10:00
a.m. at the Company’s offices.  At such meeting, the following
resolutions were passed by a majority of the shareholders:
 -
              The
      following were re-elected to serve on the Company’s Board of
      Directors:
 o
              John
      McKowen
 o
              Henry
      Farkas
 o
              Jolee
      Henry
 -
              The
      independent registered public accountants were appointed the auditors for
      the coming year.
 
 
 ITEM 5.  OTHER INFORMATION
 
 On
November 5, 2008, Schumacher and Associates of Denver, Colorado were engaged as
the Company’s independent registered public accountants after the dismissal of
the Company’s independent registered public accountants, Jaspers + Hall, PC on
October 28, 2008.
 
 ITEM 6. EXHIBITS
 
 Exhibits.  The
following is a complete list of exhibits filed as part of this Form
10-Q.  Exhibit numbers correspond to the numbers in the Exhibit Table
of Item 601 of Regulation S-K.
 
 Exhibit 31
              Certification
      of Chief Executive Officer pursuant to Section 302 of  the
      Sarbanes-Oxley ActExhibit 32
              Certification
      of Principal Executive Officer pursuant to Section 906  of the
      Sarbanes-Oxley Act
 
 
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25
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 
 SIGNATURES
 
 
 Pursuant
to the requirements of Section 12 of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
 
 
 NAVIDEC
      FINANCIAL SERVICES, INC.(Registrant)Dated:
      November 13, 2008
              By:
      /s/ John McKowenJohn
      McKowen, President & Chief Accounting Officer
 
 
 
 
 
 
 
 
 
 
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26
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  
 
 Exhibit 31.1
 
 CERTIFICATION
OF PERIODIC REPORT
 
 I, John
McKowen, certify that:
 
 1.
              I
      have reviewed this quarterly report on Form 10-Q of September 30,
      2008;
 
 2.
              Based
      on my knowledge, this 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
      report;
 
 3.
              Based
      on my knowledge, the financial statements, and other financial information
      included in this report, fairly present in all material respects the
      financial condition, results of operations and cash flows of the
      registrant as of, and for, the periods presented in this
      report;
 
 4.
              The
      registrant’s other certifying officer 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)) 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 registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this 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 registrant’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 registrant’s internal control over
      financial reporting that occurred during the registrant’s most recent
      fiscal quarter (the registrant’s 4th
      quarter in the case of an annual report) that has materially affected, or
      is reasonably likely to materially affect, the registrant’s internal
      control over financial reporting;
and
 
 5.
              The
      registrant’s other certifying officer and I have disclosed, based on our
      most recent evaluation of internal control over financial reporting, to
      the registrant’s auditors and the audit committee of the registrant’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 registrant’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 registrant’s internal control
      over financial reporting.
 
 
 
 Date:   November
13, 2008
 
 /s/ John
McKowen
 ,
 Chief
Executive Officer, President
 & Principal Accounting
Officer
 
 
 
 
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27
 Navidec
Financial Services, Inc. September 30, 2008 10 Q
  EXHIBIT 32
 
 CERTIFICATION
PURSUANT TO
 18 U.S.C.
1350,
 AS
ADOPTED PURSUANT TO
 SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
 
 
 In
connection with the Quarterly Report of Navidec Financial Service, Inc. on Form
10-Q for the period ended September 30, 2008, as filed with
the  Securities  and Exchange Commission on the date hereof
(the "Report"), I, John R. McKowen, Chief Executive  Officer of
the  Company,  certify,  pursuant  to 18
U.S.C.  1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
 
 The
Report fully complies with the requirements of Section 13(a) or 15(d) of
the
 Securities
Exchange Act of 1934; and
 
 The
information contained in the Report fairly presents,  in
all  material respects, the financial condition and results of
operations of the Company.
 
 
 
 Date:
November 13, 2008
 
 
 
 By:      /s/
John R. McKowen
 ----------------------------------
 John
R. McKowen
 Chief
Executive Officer, Principal Accounting Officer