**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**Form
      10-KSB**


(Mark
      One)





x
            ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934





**For
      the fiscal year ended September 30, 2005**





 ̈
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934





For
      the
      transition period from _______________ to _______________.




**Commission
      file number: 000-08835**





**Bluestar
      Health, Inc.**


(Name
      of
      small business issuer in its charter)





**Colorado**
            **84-0736215**(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)**19901
                Southwest Freeway, Suite 209****Sugar
                Land, TX**
            **77479**(Address
                of principal executive offices)
            (Zip
                Code)





**Issuer’s
      telephone number (281) 207-5485**





Securities
      registered under Section 12(g) of the Exchange Act:





**Common
      stock, par value $0.001**


(Title
      of
      class)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days.  Yes x No  ̈ .





Check
      if
      there is no disclosure of delinquent filers pursuant to Item 405 of Regulation
      S-B is not contained in this form, and no disclosure will be contained, to
      the
      best of registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any amendment
      to
      this Form 10-KSB. x





State
      issuer’s revenues for its most recent fiscal year.  The
      issuer had revenues of $361,506 for the year ended September 30,
      2005.





State
      the
      aggregate market value of voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, or the average bid and asked prices of such common equity, as of a
      specified date within the past 60 days. (See definition of affiliate in rule
      12b-2 of the Exchange Act.) $582,060 as of January 30, 2006.




State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date. As of January 24, 2006, there were 13,750,504
      shares of common stock, par value $0.001, issued and outstanding.





**DOCUMENTS
      INCORPORATED BY REFERENCE**





If
      the
      following documents are incorporated by reference, briefly describe them and
      identify the part of the form 10-KSB (e.g., Part I, Part II, etc.) into which
      the document is incorporated: (1) any annual report to security holders; (2)
      any
      proxy or information statement; and (3) any prospectus filed pursuant to rule
      424(b) or (c) of the Securities Act of 1933 (“Securities Act”). The listed
      documents should be clearly described for identification purposes (e.g., annual
      report to security holders for fiscal year ended December 24, 1990).
      None.





Transitional
      Small Business Disclosure Format (check one):





Yes  ̈ No x













**Bluestar
      Health, Inc.**





**TABLE
      OF CONTENTS**








PART
                I
            1ITEM
                1 - DESCRIPTION OF BUSINESS
            1ITEM
                2 - DESCRIPTION OF PROPERTY
            5ITEM
                3 - LEGAL PROCEEDINGS
            5ITEM
                4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                HOLDERS
            6PART
                II
            7ITEM
                5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
                MATTERS
            7ITEM
                6 - MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
                OPERATION
            10ITEM
                7 - CONSOLIDATED FINANCIAL
                STATEMENTS
            16ITEM
                8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                ACCOUNTING AND FINANCIAL DISCLOSURE
            16ITEM
                8A - DISCLOSURE CONTROLS AND
                PROCEDURES
            16ITEM
                8B - OTHER INFORMATION
            17PART
                III
            18ITEM
                9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
                CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
                ACT
            18ITEM
                10 - EXECUTIVE COMPENSATION
            19ITEM
                11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
            21ITEM
                12 - CERTAIN RELATIONSHIPS AND RELATED
                TRANSACTIONS
            23ITEM
                13 - EXHIBITS
            23ITEM
                14 - PRINCIPAL ACCOUNTANT FEES AND
                SERVICES
            24




*Table
            of Contents*





**PART
      I**





This
      Annual Report includes forward-looking statements within the meaning of the
      Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based
      on management’s beliefs and assumptions, and on information currently available
      to management. Forward-looking statements include the information concerning
      our
      possible or assumed future results of operations set forth under the heading
      “Management’s Discussion and Analysis of Financial Condition or Plan of
      Operation.” Forward-looking statements also include statements in which words
      such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,”
“consider” or similar expressions are used.





Forward-looking
      statements are not guarantees of future performance. They involve risks,
      uncertainties and assumptions. Our future results and shareholder values may
      differ materially from those expressed in these forward-looking statements.
      Readers are cautioned not to put undue reliance on any forward-looking
      statements.





**ITEM
      1 - DESCRIPTION OF BUSINESS**





**Business
      Development**





We
      were
      incorporated on April 26, 1977 as Taurus Oil Corporation. We have changed our
      name several times to reflect changes in our business, most recently on August
      12, 2004, when we changed our name from Taurus Entertainment Companies, Inc.
      to
      Bluestar Health, Inc.





On
      June
      12, 2003, we entered into a Stock Exchange Agreement with Alfred Oglesby, our
      current sole officer and director, whereby Oglesby exchanged all of his stock
      in
      Bluestar Physical Therapy, Inc., a Texas corporation, for 9,650,000 shares
      of
      our common stock, representing 94.5% of our outstanding common stock at the
      time. Bluestar became our wholly-owned subsidiary.





On
      November 5, 2003, we entered into an Asset Purchase Agreement for all of the
      assets used to operate a physical therapy and rehabilitation clinic in Florida.
      However, on August 24, 2004, as a result of a series of material breaches of
      the
      acquisition agreement by the seller, we rescinded the acquisition in its
      entirety.





On
      June
      16, 2004, we acquired all of the assets used to operate two physical therapy
      and
      rehabilitation clinics in Jackson, Mississippi. At the time, these two clinics
      were our only operations. These two clinics provided post-operative
      care and treatment for a variety of orthopedic related disorders and
      sports-related injuries, on an outpatient basis through the use of physical
      medicine, which required a licensed medical doctor to be present during all
      phases of a patient’s treatment. In May 2005, we closed the two clinics in order
      to restructure the clinics. Our plan for the restructuring was to shift the
      clinics away from providing physical therapy through the use of physical
      medicine, which requires a licensed medical doctor, to clinics that provided
      physical therapy and treated orthopedic-related disorders and sports-related
      injuries, but through physical therapy utilizing physical therapists rather
      than
      licensed medical doctors and physical medicine. At the time we closed the
      clinics for restructuring we planned to re-open both clinics in the fall of
      2005
      or early 2006. However, in August 2005, Hurricane Katrina devastated much of
      the
      area around our two clinics. Neither of the clinics suffered physical damage,
      however, the storm depleted the area of potential employees, patients, and
      other
      resources necessary to successfully operate the clinics. As of September 30,
      2005, there was no timeframe to re-open the clinics and we were looking at
      businesses in other industries for a potential acquisition or merger.





1
 *Table
            of Contents*





On
      October 21, 2005, we filed a Current Report on Form 8-K announcing that on
      October 17, 2005, we entered into a Reorganization and Purchase Agreement by
      and
      among Bluestar, Alfred Oglesby, our sole officer and a director, and Blue Cat
      Holdings, Inc., a Texas corporation wholly owned by Oglesby, on the one hand,
      and Gold Leaf Homes, Inc., a Texas corporation, and Tom Redmon, the sole
      shareholder of Gold Leaf, on the other hand, whereby (i) we were going to
      acquire all of the issued and outstanding common stock of Gold Leaf from Redmon
      in exchange for 37,000,000 shares of our common stock, and (ii) sell
      substantially all of our assets to Blue Cat as consideration for amounts owed
      to
      Oglesby and in exchange for (a) Blue Cat’s assumption of Bluestar’s liabilities
      and (b) Blue Cat’s indemnification of Bluestar for present and future
      liabilities related to said purchased assets. This transaction has not closed
      and is currently being renegotiated, potentially as an asset purchase rather
      than an acquisition.





Based
      on
      the circumstances described above we may not ever re-open the clinics. Due
      to
      our closing of the clinics we did not have any operations after May 2005, and
      do
      not anticipate having any revenues until either we re-open the clinics, acquire
      additional clinics, or acquire a business in a different industry.





Our
      common stock is currently quoted on the OTC Bulletin Board of the National
      Association of Securities Dealers, Inc. (“NASDAQ OTCBB”) under the symbol
      BLSH.





**Business
      of Issuer**





*Overview*





We
      are a
      healthcare management company with operations in the areas of physical therapy
      and preventative care. We operate through one subsidiary, PT Centers, Inc.
      Until
      May 2005, we operated two
      outpatient physical therapy and rehabilitation clinics, one in Jackson,
      Mississippi and one in Canton, Mississippi. As noted above, we closed the
      clinics in May 2005, for the purpose of restructuring their business to
      non-medical based physical therapy clinics. However, in August 2005, Hurricane
      Katrina devastated much of the area around our clinics and have put into
      question whether we will ever re-open the two clinics. We are also in
      negotiations to purchase a business in another industry, or at least the assets
      of that business, which would change our core business to one outside of the
      physical therapy area. However, because that transaction has not closed and
      because we did operate the two clinics until May 2005, this overview of our
      fiscal year ended September 30, 2005, discusses the physical therapy
      business.





*Principal
      Products and Services and Their Markets*





Prior
      to
      closing the two clinics for restructuring, our principal service was outpatient
      physical therapy treatments, primarily for patients following an injury,
      surgery, or other event. These services included pre- and post-operative
      orthopedic, spinal, occupational, and sports-related injuries. These services
      were provided using physical medicine, which required a medical doctor to be
      present during all phases of a patient’s treatment.





2
 *Table
            of Contents*





*Distribution*





All
      of
      our services were offered through our two clinics in Mississippi. We only
      offered physical therapy services at the clinics at the time we closed them
      but
      we had hoped to start offering either preventive or cosmetic care, or both,
      as
      well if the clinics had re-opened.





*Competition*





The
      healthcare industry generally, and the physical and occupational therapy
      businesses in particular, are highly competitive and undergo continual changes
      in the manner in which services are delivered and in which providers are
      selected. Competitive factors affecting our business include quality of care,
      cost, treatment outcomes, convenience of location, and relationships with and
      ability to meet the needs of referral and payor sources. Our clinics competed
      directly or indirectly with the physical and occupational therapy departments
      of
      acute care hospitals, physician-owned therapy clinics, other private therapy
      clinics and chiropractors.





Of
      these
      sources, we believe acute care hospital outpatient therapy clinics and private
      therapy clinic organizations were our primary competitors. Consolidation in
      the
      therapy industry happens frequently through the acquisition of physician-owned
      and other privately-owned therapy practices.





*Suppliers*





We
      do not
      purchase goods or services in material amounts from any particular
      suppliers.





*Customers*





When
      our
      clinics were open our customers were individual patients in need of physical
      therapy treatments following an injury, surgery, or other event. The customers
      were usually referred to us by their primary care physician.





*Intellectual
      Property*





We
      have
      no registered trademarks or service marks.





*Government
      Approvals and Regulations*





There
      are
      number of federal, state and local regulations that govern healthcare services.
      Some states into which we may expand have laws requiring facilities employing
      health professionals and providing health-related services to be licensed and,
      in some cases, to obtain a certificate of need (that is, demonstrating to a
      state regulatory authority the need for and financial feasibility of new
      facilities or the commencement of new healthcare services). Based on our
      operating experience to date, we believe that our business as presently
      conducted does not require certificates of need or other facility approvals
      or
      licenses. However, if we had therapists they would be required to be licensed.
      Failure to obtain or maintain any required certificates, approvals or licenses
      could have a material adverse effect on our business, financial condition and
      results of operations.





3
 *Table
            of Contents*





Regulations
      Controlling Fraud and Abuse. Various federal and state laws regulate the
      relationships between providers of healthcare services and physicians. These
      laws include Section 1128B(b) of the Social Security Act (the “Fraud and Abuse
      Law”), under which civil and criminal penalties can be imposed upon persons who
      pay or receive remuneration in return for referrals of patients who are eligible
      for reimbursement under the Medicare or Medicaid programs. We believe that
      our
      billing procedures and business arrangements are in compliance with these
      provisions. However, the provisions are broadly written and the full extent
      of
      their application is not currently known. In 1991, the Office of the Inspector
      General (“OIG”) of the United States Department of Health and Human Services
      issued regulations describing compensation arrangements that fall within a
“Safe
      Harbor” and, therefore, are not viewed as illegal remuneration under the Fraud
      and Abuse Law. Failure to fall within a Safe Harbor does not mean that the
      Fraud
      and Abuse Law has been violated; however, the OIG has indicated that failure
      to
      fall within a Safe Harbor may subject an arrangement to increased scrutiny.
      Our
      business of managing physician-owned physical therapy facilities is regulated
      by
      the Fraud and Abuse Law and falls outside the scope of the Safe Harbors.
      Nonetheless, we believe that these arrangements comply with the Fraud and Abuse
      Law, even though federal courts provide little guidance as to the application
      of
      the Fraud and Abuse Law to these arrangements. If our management contracts
      are
      held to violate the Fraud and Abuse Law, it could have a material adverse effect
      on our business, financial condition and results of operations. In February
      2000, the OIG issued a special fraud alert regarding the rental of space in
      physician offices by persons or entities to which the physicians refer patients.
      The Fraud and Abuse Law prohibits knowingly and willfully soliciting, receiving,
      offering or paying anything of value to induce referrals of items or services
      payable by a federal healthcare program. The OIG is concerned that in these
      arrangements, rental payments may be disguised kickbacks to the
      physician-landlords to induce referrals.





Stark
      II.
      Provisions of the Omnibus Budget Reconciliation Act of 1993 (the “Stark Law”)
      prohibits referrals by a physician for “designated health services” to an entity
      in which the physician or family member has an investment interest or other
      financial relationship, with several exceptions. The Stark Law covers management
      contracts with physician groups and any financial relationship between Bluestar
      and referring physicians, including any financial transaction resulting from
      a
      clinic acquisition. This law also prohibits billing for services rendered from
      a
      prohibited referral Several states have enacted laws similar to the Stark Law,
      but these state laws cover all patients (not just Medicare and Medicaid). Many
      federal healthcare reform proposals in the past few years have expanded the
      Stark Law to cover all patients as well. As with the Fraud and Abuse Law, we
      consider the Stark Law in planning our clinics, marketing and other activities,
      and believe that our operations are in compliance with applicable law. If we
      fail to comply with the Stark Law our financial results and operations would
      be
      adversely affected. Penalties for violation include denial of payment for the
      services, significant civil monetary penalties, and exclusion from the Medicare
      and Medicaid programs.





HIPAA.
      In
      an effort to further combat healthcare fraud, Congress included several
      anti-fraud measures in the Health Insurance Portability and Accountability
      Act
      of 1996 (“HIPAA”). HIPAA created a source of funding for fraud control to
      coordinate federal, state and local healthcare law enforcement programs, conduct
      investigations, provide guidance to the healthcare industry concerning
      fraudulent healthcare practices, and establish a national data bank to receive
      and report final adverse actions. Additionally, HIPAA mandates the adoption
      of
      standards regarding the exchange of electronic healthcare information in an
      effort to ensure the privacy and security of patient information and standards
      relating to the privacy of health information and security of electronic health
      information. Compliance with the standards for the exchange of electronic
      healthcare information were required as of October 16, 2003. Compliance with
      the
      standards relating to privacy of protected health information were required
      as
      of April 14, 2003. Finally, we must comply with HIPAA standards for the security
      of electronic health information by April 21, 2005. Sanctions for failing to
      comply with HIPAA include criminal penalties and civil sanctions. We cannot
      predict what effect, if any, the expanded enforcement authorities will have
      on
      our business. We believe that our operations comply with HIPAA
      requirements.





4
 *Table
            of Contents*





Other
      Regulatory Factors. As political, economic and regulatory influences are
      fundamentally changing the healthcare industry in the United States, Congress,
      state legislatures and the private sector will continue to review and assess
      alternative healthcare delivery and payment systems. Potential alternative
      approaches include mandated basic healthcare benefits, controls on healthcare
      spending through limitations on the growth of private health insurance premiums
      and Medicare and Medicaid spending, the creation of large insurance purchasing
      groups, and price controls. Legislative debate is expected to continue in the
      future and market forces are expected to demand reduced costs. We cannot predict
      what impact the adoption of any federal or state healthcare reform measures
      or
      future private sector reform may have on our business.





*Research
      and Development*





We
      have
      not spent any material amount of time or money on research and development,
      and
      do not anticipate doing so in the future.





*Employees*





As
      of
      September 30, 2005, we had two employees at the corporate level, including
      our
      sole officer and director, Alfred Oglesby. With the closing of the two clinics
      we did not employ any employees through the clinics after May 2005. Currently,
      we only have one employee, Mr. Oglesby.





**ITEM
      2 - DESCRIPTION OF PROPERTY**





Our
      main
      office is located in Sugar Land, Texas, where we lease approximately 500 square
      feet of office space.





**ITEM
      3 - LEGAL PROCEEDINGS**





On
      August
      27, 2004, Bluestar
      Physical Therapy, a Division of Bluestar Health Inc., filed suit seeking
      rescission of the transaction by which Bluestar Physical Therapy acquired
      HealthQuest Inc.  The suit alleges fraudulent inducement and first material
      breach of the contract by HealthQuest and Dr. Peter Lord, the President and
      Chief Executive Officer of HealthQuest, which rendered the continued performance
      under the agreement impossible.  The suit is Cause No. 2004-47308; *Bluestar
      Physical Therapy, a Division of Bluestar Health Inc. v. HealthQuest Inc. and
      Peter Lord* ;
      filed
      in the 152 nd Judicial
      District Court of Harris County, Texas.  Healthquest answered with a
      general denial and discovery in the case is ongoing.





In
      the
      ordinary course of business, we are from time to time involved in various
      pending or threatened legal actions. The litigation process is inherently
      uncertain and it is possible that the resolution of such matters might have
      a
      material adverse effect upon our financial condition and/or results of
      operations. However, in the opinion of our management, matters currently pending
      or threatened against us are not expected to have a material adverse effect
      on
      our financial position or results of operations.





5
 *Table
            of Contents*





**ITEM
      4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS**





There
      have been no events that are required to be reported under this
      Item.





6
 *Table
            of Contents*





**PART
      II**





**ITEM
      5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**





Our
      common stock is currently quoted on the NASDAQ OTCBB, under the symbol “BLSH”
and has traded under that symbol since August 20, 2004. Prior to August 20,
      2004, our common stock was traded under the symbol “TAUR.” Our common stock is
      only traded on a limited or sporadic basis and should not be deemed to
      constitute an established public trading market. There is no assurance that
      there will be liquidity in the common stock.





Below
      is
      a table indicating the range of high and low bid price for the common stock
      for
      each quarterly period within the most recent two fiscal years, as reported
      by
      The NASDAQ Stock Market, Inc. The information reflects prices between dealers,
      and does not include retail markup, markdown, or commission, and may not
      represent actual transactions.


**Fiscal
                    Year**
                
                
                
                **Prices****Ended
                    September 30,**
                
                **Period**
                
                **High**
                
                
                
                **Low**2004
                
                
                First
                    Quarter
                
                $
                1.30
                
                
                
                
                $
                0.00Second
                    Quarter
                
                $
                1.20
                
                
                
                
                $
                0.55Third
                    Quarter
                
                $
                0.60
                
                
                
                
                $
                0.29Fourth
                    Quarter
                
                $
                0.55
                
                
                
                
                $
                0.252005
                
                
                First
                    Quarter
                
                $
                0.70
                
                
                
                
                $
                0.25Second
                    Quarter
                
                $
                0.27
                
                
                
                
                $
                0.13Third
                    Quarter
                
                $
                0.25
                
                
                
                
                $
                0.10Fourth
                    Quarter
                
                $
                0.20
                
                
                
                
                $
                0.09Close
                    on January 30, 2006
                
                
                
                
                $
                0.12


The
      Securities Enforcement and Penny Stock Reform Act of 1990 requires additional
      disclosure relating to the market for penny stocks in connection with trades
      in
      any stock defined as a penny stock. The Commission has adopted regulations
      that
      generally define a penny stock to be any equity security that has a market
      price
      of less than $5.00 per share, subject to a few exceptions that we do not meet.
      Unless an exception is available, the regulations require the delivery, prior
      to
      any transaction involving a penny stock, of a disclosure schedule explaining
      the
      penny stock market and the risks associated therewith.





**Holders**





As
      of
      September 30, 2005 and January 24, 2006 there were 13,607,094 and 13,750,504
      shares, respectively, of our common stock issued and outstanding and held by
      approximately 1,390 holders of record.





**Dividend
      Policy**





We
      have
      not paid any dividends on our common stock and do not expect to do so in the
      foreseeable future. We intend to apply our earnings, if any, in expanding our
      operations and related activities. The payment of cash dividends in the future
      will be at the discretion of the Board of Directors and will depend upon such
      factors as earnings levels, capital requirements, our financial condition and
      other factors deemed relevant by the Board of Directors.





7
 *Table
            of Contents*





**Securities
      Authorized for Issuance Under Equity Compensation Plans**





On
      September 29, 2004, our Board of Directors approved the Bluestar Health, Inc.
      2004 Non-Qualified Stock Grant and Option Plan (the “2004 Plan”). The Plan
      offers selected employees, directors, and consultants an opportunity to acquire
      our common stock, and serves to encourage such persons to remain employed by
      us
      and to attract new employees. The Plan allows for the award of stock and
      options, up to 1,200,000 shares of our common stock. During the year ended
      September 30, 2005, we issued a total of 1,156,590 shares of our common stock
      under the plan to consultants of ours. The total value of this stock was
      $510,113. During the year ended September 30, 2004, no stock, or options to
      acquire shares of our common stock, were issued under the Plan.





In
      August
      2003, Bluestar adopted a Stock Option and Grant plan (the “2003 Plan”) for
      employees, officers, directors and consultants which authorized the issuance
      of
      650,000 shares of common stock. The Plan is administered by the Board of
      Directors. The Board of Directors has the exclusive power to select the
      participants in the Plan, to establish the terms of the options granted to
      each
      participant, and to make all determinations necessary or advisable. The
      following shares were issued under the plan as of September 30,
      2004:





(1)  500,000
      shares from March 18, 2003 through September 30, 2003 for consulting services
      at
      a value of $225,300.


(2)  148,000
      shares for the year ended September 30, 2004 for consulting services at a value
      of $106,550.





As
      of
      September 30, 2005, the information for the 2004 Plan and the 2003 Plan combined
      is as follows:


**Plan
                  C****ategory**
              **Number
                  of Securities to be issued upon exercise of outstanding options,
                  warrants
                  and rights**
                **(a)**
              **Weighted-average
                  exercise price of outstanding options, warrants and rights**
                **(b)**
              **Number
                  of securities remaining available for future issuance under equity
                  compensation plans (excluding securities reflected in column (a))**
                **(c)****Equity
                  compensation plans approved by security holders**
              -
                  0
                  -
              $0
              -
                  0
                  -**Equity
                  compensation plans not approved by security
                  holders**
              -
                  0
                  -
              $0
              45,410**Total**
              -
                  0
                  -
              $0
              45,410





**Recent
      Sales of Unregistered Securities**





There
      have been no events that are required to be reported under this
      Item.





8
 *Table
            of Contents*





**Purchases
      of Equity Securities by the Small Business Issuer and Affiliated
      Purchasers**





There
      have been no events that are required to be reported under this
      Item.





9
 *Table
            of Contents*





**ITEM
      6 - MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**





**Overview**





We
      own
      and operate licensed outpatient physical therapy clinics. On November 5, 2003,
      we entered into an asset purchase agreement for all of the assets used to
      operate a physical therapy and rehabilitation clinic in Florida. However, on
      August 24, 2004, as a result of a series of material breaches of the acquisition
      agreement by the seller, we rescinded the acquisition in its entirety. Since
      that transaction was rescinded in its entirety it was excluded from our
      financial statements for all applicable periods. Therefore, prior to May 2005,
      our operations consisted entirely of two clinics which we acquired on June
      16,
      2004. The clinics were located in Jackson, Mississippi and Canton, Mississippi.
      These two clinics provided post-operative care and treatment for a variety
      of
      orthopedic related disorders and sports-related injuries, on an outpatient
      basis
      through the use of physical medicine, which required a licensed medical doctor
      to be present during all phases of a patient’s treatment. In May 2005, we closed
      the two clinics in order to restructure the clinics. Our plan for the
      restructuring was to shift the clinics away from providing physical therapy
      through the use of physical medicine to clinics that provided physical therapy
      and treated orthopedic-related disorders and sports-related injuries, but
      through physical therapy utilizing physical therapists rather than physical
      medicine. At the time we closed the clinics for restructuring we planned to
      re-open both in the fall of 2005 or early 2006. However, in August 2005,
      Hurricane Katrina devastated much of the area around our two clinics. Neither
      of
      the clinics suffered structural damage, however, the storm depleted the area
      of
      potential employees, patients, and other resources necessary to successfully
      operate the clinics. As of September 30, 2005, there was no timeframe to re-open
      the clinics and we were looking at businesses in other industries for a
      potential acquisition or merger. Due to closing the clinics in May 2005, we
      did
      not have any revenues during the three months ended September 30, 2005.





For
      the
      below comparisons to the fiscal year and fiscal quarter ended September 30,
      2004, we have backed out all amounts that were attributable to the clinic we
      purchased from Healthquest, Inc., since we rescinded that transaction.





**Year
      Ended September 30, 2005 Compared to the Year Ended September 30,
      2004**




**Results
      of Operations**





Introduction





We
      had
      revenues of $361,506 for the year ended September 30, 2005, compared to revenues
      of $302,349 for the year ended September 30, 2004. All of our revenues for
      both
      periods are from the two operating clinics we acquired in June 2004 and began
      operating in August 2004.





Revenues,
      Expenses and Loss from Operations





Our
      revenues, general and administrative expenses, value of stock issued for
      services, interest expense, and net loss for the year ended September 30, 2005,
      as compared to the period ended September 30, 2004, are as follows:





10
 *Table
            of Contents*





Year
                ended September 30, 2005
            
            Year
                ended September 30, 2004
            
            Percentage
                ChangeRevenues
            
            $
            361,506
            
            $
            302,349
            
            
            20
            %General
                and administrative
            
            
            691,367
            
            
            451,654
            
            
            53
            %Stock
                Issued for services
            
            
            510,112
            
            
            240,022
            
            
            112
            %Depreciation
            
            
            8,260
            
            
            2,065
            
            
            300
            %Impairment
            
            
            167,926
            
            
            -
            
            
            N/AInterest
                expense
            
            
            (15,222
            )
            
            (15,647
            )
            
            3
            %Net
                loss
            
            
            (1,031,381
            )
            
            (407,039
            )
            
            (153
            %)





Revenues





Our
      revenues were slightly higher this year when compared to last year due to the
      fact we operated the two clinics for approximately eight months during the
      year
      ended September 30, 2005, compared to only three months during the year ended
      September 30, 2004. In May 2005, we closed the clinics for restructuring and
      now
      do not know if we will re-open the clinics, therefore, we have not generated
      revenues since May 2005, and will not generate revenues in the future unless
      we
      re-open the clinics or acquire another business. We are in negotiations to
      acquire a residential homebuilder, but the transaction has not closed.





General
      and Administrative Expenses





Our
      general and administrative expenses were approximately 50% higher this year
      compared to the previous year due to the increased time we operated the clinics
      in the year ended September 30, 2005, compared to September 30, 2004. Although
      we have closed the clinics we will still incur some general and administrative
      expenses associated with running our corporate office.





Stock
      Issued for Services





Due
      to
      our lack of operations and revenue for much of the year ended September 30,
      2005, we issued stock for services. The value of this stock was higher than
      the
      year ended September 30, 2004, due to the fact we did operate the clinics for
      eight months during the year ended September 30, 2005, compared to three months
      in the year ended September 30, 2004, and we had to pay for the costs associated
      with that time of running the clinics.





Depreciation





For
      the
      year ended September 30, 2005, we had a depreciation of $8,260, compared to
      $2,065 one year earlier. The $8,260 of depreciation was primarily attributable
      to the fact that the year ended September 30, 2005, reflects a full year of
      operations, while the year ended September 30, 2004, only reflects three
      months of operations since June 2004, and the acquisition of the
      clinics.





11
 *Table
            of Contents*





Impairment





Due
      to
      closing the two clinics in May 2005, and the fact the two clinics are still
      closed, partly due to the effects of Hurricane Katrina in the region where
      the
      clinics are located, our management decided to write off the value of goodwill
      that was attributed to the acquisition of the two clinics. This impairment
      in
      value of $137,000 was recorded in the quarter ended June 30, 2005, and this
      is
      the impairment in value indicated for the year ended September 30, 2005. As
      of September 30, 2005 management decided to write off the physical assets of
      $30,926 associated with these operations to $0.00 based on the uncertainty
      of
      re-opening these facilities.





Interest
      Expense





Our
      interest expense is related to three debt instruments. The
      first
      debt instrument is a $70,000 principal amount note that is from our original
      acquisition of Bluestar Physical Therapy, Inc. Our principal shareholder, Mr.
      Alfred Oglesby, has personally guaranteed the note and pledged 3,000,000 shares
      of his Bluestar common stock as collateral. Under new revised terms for this
      note, the new monthly payments are $1,557.11 per month for the next 60 months,
      beginning in October, 2004 and continuing through September 1, 2009. We
      are in
      negotiations with the holder of this note payable regarding extending the
      repayment terms of the note since no payments have been made under the revised
      plan. The
      second debt instrument is a bank line of credit of our subsidiary, PT Centers,
      Inc., which is guaranteed by a related party, Oglesby & Londergan Financial
      Services, and totaled $47,593 as of September 30, 2005. The third obligation
      is
      a vehicle loan, which totaled $11,258 as of September 30, 2005. We are in
      default on this loan. No demands have been made as of the date
      hereof.




Net
      Loss





Our
      net
      loss increased significantly this year compared to last year. This increase
      in
      our net loss this year is primarily attributable to the increase in our general
      and administrative expenses, the stock issued for services, and the impairment
      in value, all of which are discussed above. Since we closed the clinics and
      have
      not re-opened them or acquired any operating business, we will continue to
      operate at a significant loss.





**Three
      Months Ended September 30, 2005 Compared to the Three Months Ended September
      30,
      2004**




**Results
      of Operations**





Introduction





For
      the
      three months ended September 30, 2005, we did not have any revenues, compared
      to
      $302,349 for the three months ended September 30, 2004. We had a net loss of
      $(143,215) for the three months ended September 30, 2005, compared to $(79,539)
      for the three months ended September 30, 2004.





Revenues
      and Net Loss





Our
      revenues, general and administrative expenses, interest expense, and net loss
      for the three months ended September 30, 2005, as compared to the three months
      ended September 30, 2004, are as follows:





12
 *Table
            of Contents*





Three
                months ended September 30, 2005
            
            Three
                months ended September 30, 2004
            
            Percentage
                ChangeRevenues
            
            $
            0
            
            $
            302,349
            
            
            N/AGeneral
                and administrative
            
            
            106,465
            
            
            133,654
            
            
            (20
            %)Interest
                expense
            
            
            (3,760
            )
            
            (6,147
            )
            
            (39
            %)Net
                loss
            
            
            (143,215
            )
            
            (79,539
            )
            
            80
            %





Our
      revenues of $0 for the three-month period ended September 30, 2005, were
      significantly less than our revenues for the same period one year ago. This
      is
      due to the fact we did not operate the two clinics for the three months ended
      September 30, 2005, compared to the same period one year earlier, when the
      three
      months ended September 30, 2004 was our first quarter operating the two clinics.
      We do not expect to have any revenues until we either re-open the clinics or
      acquire an existing business that already has revenues. Our general and
      administrative expenses were also lower during the most recent three month
      period when compared to the same period one year ago ($106,465 versus $133,654)
      due to the fact we did not operate the clinics during the most recent
      three-month period. We estimate that our general and administrative expenses
      of
      approximately $100,000 for a three-month period with no operations is fairly
      indicative of future quarters when we don’t have operations. The interest
      expense is primarily attributable to the note payable that was issued in the
      transaction between Alfred Oglesby and the Company, whereby Alfred Oglesby
      became our majority shareholder. Our net loss increased significantly due to
      the
      fact we had revenues during the three-month period ended September 30, 2005,
      compared to the same period one year ago.





**Liquidity
      and Capital Resources**





Introduction





We
      have
      not operated profitably, and do not anticipate doing so in the near future.
      With
      the closing of the two clinics we did not have operations in the fourth quarter
      and did not generate any revenue; however, we anticipate we will continue to
      seek to raise capital through a variety of sources to fund operations until
      such
      time as we might start operating the clinics or acquire a business or assets
      that have operations. To date, we have relied primarily on funds from our
      majority stockholder, and anticipate continuing to do so until we have
      operations again.





Our
      cash,
      total current assets, total assets, total current liabilities, and total
      liabilities as of September 30, 2005 and June 30, 2005 are as
      follows:





September
                30, 2005
            
            June
                30, 2005
            
            ChangeCash
            
            $
            38
            
            $
            507
            
            $
            (469
            )Total
                current assets
            
            
            38
            
            
            507
            
            
            (469
            )Total
                assets
            
            
            38
            
            
            33,498
            
            
            (33,460
            )Total
                current liabilities
            
            
            398,014
            
            
            294,090
            
            
            103,924Total
                liabilities
            
            
            458,120
            
            
            348,365
            
            
            109,755





13
 *Table
            of Contents*





Cash
      Requirements





Currently,
      our cash requirements consist primarily of general and administrative expenses
      maintaining our status as a public company, and certain debt payments that
      come
      due.





Sources
      and Uses of Cash





*Operations*





We
      did
      not generate revenues this quarter due to the closing of the two physical
      therapy clinics. We do not anticipate re-opening the clinics in the near future,
      if ever. We are in negotiations to acquire a business outside the physical
      therapy industry, and if successful may be able to generate revenues through
      the
      operation of that business.





*Financing*





Prior
      to
      beginning to operate the two clinics we funded expenses primarily through
      advances from our majority shareholder. Until we can raise additional capital
      and/or increase the revenues from the clinics to get cash flow positive, we
      anticipate we will continue to take advances from our majority shareholder
      to
      fund our operations. We do not currently have any specific plans as to how
      we
      will raise the necessary capital or increase the revenues from the clinics.
      As
      of September 30, 2005, our majority stockholder has advanced us a total of
      $154,630, and other related parties, Oglesby & Londergan Financial Services,
      have advanced us a total of $31,034. These advances are non-interest bearing,
      due on demand with the understanding they will be repaid as cash becomes
      available.





Debt
      Instruments, Guarantees, and Related Covenants





We
      have
      three primary debt obligations. The first obligation is a $70,000 principal
      amount note that is from our original acquisition of Bluestar Physical Therapy,
      Inc. Our principal shareholder, Mr. Alfred Oglesby, has personally guaranteed
      the note and pledged 3,000,000 shares of his Bluestar common stock as
      collateral. Under new revised terms for this note, the new monthly payments
      are
      $1,557 per month for the next 60 months, beginning in October, 2004 and
      continuing through September 1, 2009. We are in negotiations with the holder
      of
      this note payable regarding extending the repayment terms of the note since
      no
      payments have been made under the revised plan. The second obligation is a
      bank
      line of credit of our subsidiary, PT Centers, Inc., which is guaranteed by
      a
      related party, Oglesby & Londergan Financial Services, and totals $47,593.
      The third obligation is a vehicle loan and we are in default on this loan,
      which
      totaled $11,258 as of September 30, 2005. No demands have been made as of the
      date hereof.





**Critical
      Accounting Policies**





The
      discussion and analysis of the Company’s financial condition and results of
      operations are based upon its consolidated financial statements, which have
      been
      prepared in accordance with accounting principles generally accepted in the
      United States. The preparation of these financial statements requires the
      Company to make estimates and judgments that affect the reported amounts of
      assets, liabilities, revenues and expenses.





14
 *Table
            of Contents*





*Revenue
      Recognition*




Our
      revenue recognition policy is objective in that we recognize revenue when
      services are performed. Accordingly, there are no estimates or assumptions
      that
      have caused deviation from our revenue recognition policy.





*Accounting
      for Stock-Based Compensation*




We
      account for stock-based compensation based on the provisions of Accounting
      Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” as
      amended by the Financial Accounting Standards Board Interpretation No. 44,
      “Accounting for Certain Transactions Involving Stock Compensation.” These rules
      state that no compensation expense is recorded for stock options or other
      stock-based awards to employees that are granted with an exercise price equal
      to
      or above the estimated fair value per share of the company’s common stock on the
      grant date. We adopted the disclosure requirements of Statement of Financial
      Accounting Standards No. 123, “Accounting for Stock-Based Compensation,” which
      requires compensation expense to be disclosed based on the fair value of the
      options granted at the date of the grant.





In
      April
      2005, the SEC announced the adoption of a new rule that amends the compliance
      dates for SFAS No. 123 (revised 2004), Share-Based Payment (Statement No.
      123(R)). Under Statement No. 123(R), the Company would have been required to
      implement the standard as of the beginning of the first interim or annual period
      that begins after June 15, 2005, or in the interim reporting period ending
      September 30, 2005. The SEC’s new rule allows the Company to implement Statement
      No. 123(R) at the beginning of its second quarter, and accordingly, the Company
      will begin to reflect the adjustment to earnings for the impact of this
      accounting pronouncement in the interim reporting period ending March 31, 2006.





In
      July
      2002, the FASB issued Statement of Financial Accounting Standards No. 146 (“SFAS
      146”), “Accounting for Costs Associated with Exit or Disposal Activities,” which
      nullifies EITF Issue No. 94−3, “Liability Recognition for Certain Employee
      Termination Benefits and Other Costs to Exit an Activity (including Certain
      Costs Incurred in a Restructuring).” SFAS 146 requires that costs associated
      with an exit or disposal activity be recognized only when the liability is
      incurred (that is, when it meets the definition of a liability in the FASB’s
      conceptual framework). SFAS 146 also establishes fair value as the objective
      for
      initial measurement of liabilities related to exit or disposal activities.
      SFAS
      146 is effective for exit or disposal activities that are initiated after
      December 31, 2002. The Company adopted SFAS in the second quarter of fiscal
      2003.





**Off-balance
      Sheet Arrangements**





We
      have
      no off-balance sheet arrangements that are reasonably likely to have a current
      or future effect on our financial condition, changes in financial condition,
      revenues or expenses, results of operations, liquidity, capital expenditures
      or
      capital resources that is deemed by our management to be material to
      investors.





15
 *Table
            of Contents*





**ITEM
      7 - CONSOLIDATED FINANCIAL STATEMENTS**





Index
                to Consolidated Financial StatementsReport
                of Independent Registered Public Accounting Firm
            F-1Consolidated
                Balance Sheet as of September 30, 2005
            F-2Consolidated
                Statements of Operations for the years ended September 30, 2005 and
                2004
            F-3Consolidated
                Statement of Stockholders Equity for the years ended September 30,
                2005
                and 2004
            F-4Consolidated
                Statement of Cash Flows for the years ended September 30, 2005 and
                2004
            F-5Notes
                to Consolidated Financial Statements
            F-6
                - F-11





**ITEM
      8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
      ACCOUNTING AND FINANCIAL DISCLOSURE**





There
      have been no events that are required to be reported under this
      Item.





**ITEM
      8A - CONTROLS AND PROCEDURES**





As
      required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the
      end
      of the period covered by the annual report, being September 30, 2005, we have
      carried out an evaluation of the effectiveness of the design and operation
      of
      our company’s disclosure controls and procedures. This evaluation was carried
      out under the supervision and with the participation of our company’s
      management, including our company’s president and our company’s chief financial
      officer. Based upon that evaluation, our company’s president and our company’s
      chief financial officer concluded that our company’s disclosure controls and
      procedures are effective as at the end of the period covered by this report.
      There has been no significant changes in our company’s internal controls or in
      other factors, which could significantly affect internal control subsequent
      to
      the date we carried out our evaluation.





Disclosure
      controls and procedures and other procedures that are designed to ensure that
      information required to be disclosed in our reports filed or submitted under
      the
      Securities Exchange Act of 1934 is recorded, processed, summarized and reported,
      within the time period specified in the Securities and Exchange Commission’s
      rules and forms. Disclosure controls and procedures include, without limitation,
      controls and procedures designed to ensure that information required to be
      disclosed in our reports filed under the Securities Exchange Act of 1934 is
      accumulated and communicated to management including our president and secretary
      as appropriate, to allow timely decisions regarding required
      disclosure.





16
 *Table
            of Contents*





**ITEM
      8B - OTHER INFORMATION**





All
      information required to be filed on a Form 8-K during the three months ended
      September 30, 2005, was filed with the Commission on a Form 8-K. For a
      description of our Form 8-Ks filed during this three-month period see Item
      13(b), below.





17
 *Table
            of Contents*





**PART
      III**





**ITEM
      9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
      PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT**





**Directors
      and Executive Officers**





The
      following table sets forth the names and ages of our directors and executive
      officers as of January 30, 2006, the principal offices and positions held by
      each person, and the date such person became a director or executive officer.
      Our executive officers are elected annually by the Board of Directors. The
      directors serve one-year terms until their successors are elected. The executive
      officers serve terms of one year or until their death, resignation or removal
      by
      the Board of Directors. Unless described below, there are no family
      relationships among any of the directors and officers.





Name
            
            Age
            
            Position(s)Alfred
                Oglesby
            
            37
            
            President,
                CFO, CAO, Secretary, and Director





**Alfred
      Oglesby** formed
      Bluestar Physical Therapy, Inc. in March 2003. From 2000 through 2002, Mr.
      Oglesby was an investor in several private physical therapy clinics in the
      Southwest. From 1998 through 2000, Mr. Oglesby served as a Director and a
      Registered Investment Advisor at Oglesby & Londergan, based in Houston,
      Texas. From 1996 through 1998, Mr. Oglesby served as a Registered Investment
      Advisor at Waddell & Reed Financial Services, based in Houston, Texas. Prior
      to 1996, Mr. Oglesby played professional football for the Miami Dolphins and
      the
      New York Jets of the National Football League (“NFL”) where he became acquainted
      with the benefits of physical therapy. Mr. Oglesby attended the University
      of
      Houston and is a member of the University of Houston’s Board of Directors. Mr.
      Oglesby is also a member of the Board of Directors of the Urban
      League.





**Compliance
      with Section 16(a) of the Securities Exchange Act of 1934**





Section
      16(a) of the Securities Exchange Act of 1934 requires the Company’s directors
      and executive officers and persons who own more than ten percent of a registered
      class of the Company’s equity securities to file with the SEC initial reports of
      ownership and reports of changes in ownership of Common Stock and other equity
      securities of the Company. Officers, directors and greater than ten percent
      shareholders are required by SEC regulations to furnish the Company with copies
      of all Section 16(a) forms they file.





To
      the
      Company’s knowledge, none of the required parties are delinquent in their 16(a)
      filings.





**Board
      Meetings and Committees**





During
      the fiscal year ended September 30, 2005, the Board of Directors took written
      action on numerous occasions. The written actions were by unanimous
      consent.





We
      presently have no executive committee, nominating committee or audit committee
      of the Board of Directors.





18
 *Table
            of Contents*





Code
      of Ethics





We
      have
      not adopted a written code of ethics, primarily because we believe and
      understand that our officers and directors adhere to and follow ethical
      standards without the necessity of a written policy.





**ITEM
      10 - EXECUTIVE COMPENSATION**





The
      Summary Compensation Table shows certain compensation information for services
      rendered in all capacities for the fiscal years ended September 30, 2005 and
      2004. Other than as set forth herein, no executive officer’s salary and bonus
      exceeded $100,000 in any of the applicable years. The following information
      includes the dollar value of base salaries, bonus awards, the number of stock
      options granted and certain other compensation, if any, whether paid or
      deferred.





**Annual
                Compensation**
            
            **Long
                Term Compensation****Awards**
            
            **Payouts****Name
                and****Principal
                Position**
            
            **Year**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Other
                Annual****Compensation**
              **($)***
            
            **Restricted
                Stock****Awards**
              **($)**
            
            **Securities
                Underlying Options SARs**
              **(#)**
            
            **LTIP
                Payouts**
              **($)**
            
            **All
                Other****Compensation**
              **($)**Alfred
                Oglesby, Director, President, CFO CAO, and Secretary
            
            
            2005
            
            
            -
                0 -
            
            
            -
                0 -
            
            
            -
                0 -
            
            
            -
                0 -
            
            
            -
                0 -
            
            
            -
                0 -
            
            
            -
                0 -2004
            
            
            -
                0 -
            
            
            -
                0 -
            
            
            -
                0 -
            
            
            -
                0 -
            
            
            -
                0 -
            
            
            -
                0 -
            
            
            -
                0 -








**OPTION/SAR
                GRANTS IN LAST FISCAL YEAR**
              **(Individual
                Grants)****Name**
            **Number
                of Securities****Underlying****Options/SARs
                Granted**
              **(#)**
            **Percent
                of Total****Options/SARs
                Granted****to
                Employees In Fiscal**
              **Year**
            **Exercise
                or Base Price**
              **($/Sh)**
            **Expiration
                Date**Alfred
                Oglesby
            N/A
            N/A
            N/A
            N/A











**AGGREGATED
                OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR**
              **AND
                FY-END OPTION/SAR VALUES****Name**
            **Shares
                Acquired On****Exercise**
              **(#)**
            **Value
                Realized**
              **($)**
            **Number
                of Unexercised****Securities
                Underlying****Options/SARs
                at FY-End**
              **(#)**
              **Exercisable/Unexercisable**
            **Value
                of Unexercised****In-The-Money****Option/SARs****at
                FY-End**
              **($)**
              **Exercisable/Unexercisable**Alfred
                Oglesby
            N/A
            N/A
            N/A
            N/A





19
 *Table
            of Contents*





**Non-Qualified
      Stock Grant and Option Plans**





On
      September 29, 2004, our Board of Directors approved the Bluestar Health, Inc.
      2004 Non-Qualified Stock Grant and Option Plan (the “2004 Plan”). The Plan
      offers selected employees, directors, and consultants an opportunity to acquire
      our common stock, and serves to encourage such persons to remain employed by
      us
      and to attract new employees. The Plan allows for the award of stock and
      options, up to 1,200,000 shares of our common stock. During the year ended
      September 30, 2005, we issued a total of 1,156,590 shares of our common stock
      under the plan to consultants of ours. The total value of this stock was
      $510,112. During the year ended September 30, 2004, no stock, or options to
      acquire shares of our common stock, were issued under the Plan.





In
      August
      2003, Bluestar adopted a Stock Option and Grant plan (the “2003 Plan”) for
      employees, officers, directors and consultants which authorized the issuance
      of
      650,000 shares of common stock. The Plan is administered by the Board of
      Directors. The Board of Directors has the exclusive power to select the
      participants in the Plan, to establish the terms of the options granted to
      each
      participant, and to make all determinations necessary or advisable. During
      the
      year ended September 30, 2005, 148,000 shares for consulting services at a
      value
      of $106,550.





As
      of
      September 30, 2005, the information for the 2004 Plan and the 2003 Plan combined
      is as follows:


**Plan
                  Category**
              **Number
                  of Securities to be issued upon exercise of outstanding options,
                  warrants
                  and rights**
                **(a)**
              **Weighted-average
                  exercise price of outstanding options, warrants and rights**
                **(b)**
              **Number
                  of securities remaining available for future issuance under equity
                  compensation plans (excluding securities reflected in column (a))**
                **(c)****Equity
                  compensation plans approved by security holders**
              -
                  0
                  -
              $0
              -
                  0
                  -**Equity
                  compensation plans not approved by security
                  holders**
              -
                  0
                  -
              $0
              45,410**Total**
              -
                  0
                  -
              $0
              45,410





**Compensation
      of Directors**





Our
      director does not receive any compensation for serving as a
      director.




20
 *Table
            of Contents*





**ITEM
      11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT AND RELATED STOCKHOLDER MATTERS**





The
      following table sets forth, as of January 24, 2006, certain information with
      respect to the Company’s equity securities owned of record or beneficially by
      (i) each Officer and Director of the Company; (ii) each person who owns
      beneficially more than 5% of each class of the Company’s outstanding equity
      securities; and (iii) all Directors and Executive Officers as a
      group.





Common
                StockTitle
                of Class
            
            Name
                and Address ofBeneficial
                Owner
            
            Amount
                and Nature of Beneficial Ownership
            
            Percentof
                Class(1)Common
            
            Alfred
                Oglesby(2)(3)
            
            9,510,000
            
            69.2%StockCommon
            
            Frank
                Wiley
            
            950,000
            
            6.9%Stock
            
            c/o
                Alfred Oglesby19901
                Southwest Freeway, Suite 209Sugar
                Land, TX 77479All
                Officers and Directors as a Group (1 Person)
            
            9,510,000
            
            69.2%





(1)
            Unless
                otherwise indicated, based on 13,750,504 shares of common stock
                outstanding. Shares of common stock subject to options or warrants
                currently exercisable, or exercisable within 60 days, are deemed
                outstanding for purposes of computing the percentage of the person
                holding
                such options or warrants, but are not deemed outstanding for purposes
                of
                computing the percentage of any other person.





(2)
            Unless
                otherwise indicated, the address of each director is c/o Bluestar
                Health,
                Inc., 19901 Southwest Freeway, Suite 209, Sugar Land, Texas
                77479.





(3)
            Indicates
                a Director of the Company.





The
      issuer is not aware of any person who owns of record, or is known to own
      beneficially, five percent or more of the outstanding securities of any class
      of
      the issuer, other than as set forth above. The issuer is not aware of any person
      who controls the issuer as specified in section 2(a)(1) of the Investment
      Company Act of 1940. There are no classes of stock other than common stock
      issued or outstanding. There are currently warrants outstanding to acquire
      333,334 shares of our common stock at $0.15 per share, and other than as set
      forth herein, there are no options, warrants, or other rights to acquire common
      stock outstanding. The Company does not have an investment advisor.





21
 *Table
            of Contents*





On
      October 21, 2005, we filed a Current Report on Form 8-K announcing that on
      October 17, 2005, we entered into a Reorganization and Purchase Agreement by
      and
      among Bluestar, Alfred Oglesby, our sole officer and a director, and Blue Cat
      Holdings, Inc., a Texas corporation wholly owned by Oglesby, on the one hand,
      and Gold Leaf Homes, Inc., a Texas corporation, and Tom Redmon, the sole
      shareholder of Gold Leaf, on the other hand, whereby (i) we were going to
      acquire all of the issued and outstanding common stock of Gold Leaf from Redmon
      in exchange for 37,000,000 shares of our common stock, and (ii) sell
      substantially all of our assets to Blue Cat as consideration for amounts owed
      to
      Oglesby and in exchange for (a) Blue Cat’s assumption of Bluestar’s liabilities
      and (b) Blue Cat’s indemnification of Bluestar for present and future
      liabilities related to said purchased assets. This transaction has not closed
      and is currently being renegotiated, potentially as an asset purchase rather
      than an acquisition.





22
 *Table
          of Contents*




**ITEM
      12 - CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS**





There
      have been no events that are required to be reported under this
      Item.




**ITEM
      13 - EXHIBITS**


**(a)**
              **Exhibits**
 
 2.1
                  (1)
              
              Asset
                  Purchase Agreement dated March 9, 20042.2
                  (1)
              
              Bill
                  of Sale dated March 9, 20042.3
                  (1)
              
              Assignment
                  and Assumption Agreement3.1
                  (2)
              
              Restated
                  Articles of Incorporation of Taurus Petroleum, Inc.3.2
                  (3)
              
              Articles
                  of Amendment to the Articles of Incorporation of Taurus Petroleum,
                  Inc.3.3
                  (2)
              
              Bylaws
                  of Taurus Oil Corporation4.1
                  (4)
              
              2004
                  Non-Qualified Stock Grant and Option Plan10.1
                  (3)
              
              Consulting
                  Agreement dated March 16, 2003 with Peter Wokoun10.2
                  (3)
              
              Consulting
                  Agreement dated March 24, 2004 with Elorian Landers10.3
                  (3)
              
              Consulting
                  Agreement dated March 24, 2004 with Rod Watkins10.4
                  (1)
              
              Unsecured
                  Subordinated Promissory Note dated June 14, 200431.1
              
              Rule
                  13a-14(a)/15d-14(a) Certification of Chief Executive
                  Officer31.2
              
              Rule
                  13a-14(a)/15d-14(a) Certification of Chief Financial
                  Officer32.1
              
              Chief
                  Executive Officer Certification Pursuant to 18 USC, Section 1350,
                  as
                  Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002.32.2
              
              Chief
                  Financial Officer Certification Pursuant to 18 USC, Section 1350,
                  as
                  Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002.





(1)
            Incorporated
                by reference from our Current Report on Form 8-K dated July 1, 2004
                and
                filed with the Commission on July 2,
                2004.





(2)
            Incorporated
                by reference from our Annual Report on Form 10-KSB for the year ended
                September 30, 1998, filed with the Commission on January 20,
                1999.





(3)
            Incorporated
                by reference from our Quarterly Report on Form 10-QSB for the quarter
                ended June 30, 2004, filed with the Commission on August 25,
                2004.





23
 *Table
            of Contents*





(4)
            Incorporated
                by reference from our Form S-8 Registration Statement dated September
                29,
                2004 and filed with the Commission on October 1,
                2004.


**(b)**
              **Reports
                  on Form 8-K**




We
      did
      not file any Current Reports on Form 8-K during the three months ended September
      30, 2005.





**ITEM
      14 - PRINCIPAL ACCOUNTANT FEES AND
      SERVICES**





**Audit
      Fees**





During
      the fiscal years ended September 30, 2005 and 2004, Malone
      & Bailey, PLLC, CPA billed
      us $0 and $19,000, respectively, and Lopez,
      Blevins, Bork & Associates, LLP billed
      us
      $17,000 and $11,500, respectively, in fees for professional services for the
      audit of our annual financial statements and review of financial statements
      included in our Form 10-KSBs and Form 10-QSBs.





**Audit
      - Related Fees**





During
      the fiscal years ended September 30, 2005 and 2004, Malone
      & Bailey, PLLC, CPA, and Lopez,
      Blevins, Bork & Associates, LLP did not bill us any fees for assurance and related services related to the performance of the audit or review
      of our financial statements.





**Tax
      Fees**





During
      the fiscal years ended September 30, 2005 and 2004, Malone
      & Bailey, PLLC, CPA, and Lopez,
      Blevins, Bork & Associates, LLP did not bill us any fees for professional services for tax planning and preparation.





**All
      Other Fees**





During
      the fiscal years ended September 30, 2005 and 2004, Malone & Bailey, PLLC,
      CPA, and Lopez,
      Blevins, Bork & Associates, LLP  did
      not
      bill us for any other fees.





Of
      the
      fees described above for the fisc al
      year
      ended September 30, 2005 and 2004, 100% were approved by the Board of Directors
      of the Company as there was not an Audit Committee in place at the time of
      the
      approvals.





24
 *Table
            of Contents*





**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





Bluestar
                Health, Inc., a Colorado corporation/s/
                Alfred e. OglesbyBy:
            Alfred
                E. OglesbyIts:
            PresidentDate:
            February
                1, 2006








In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.








/s/
                Alfred E. OglesbyBy:
            Alfred
                E. OglesbyIts:
            President,
                Chief Financial Officer, Chief Accounting Officer, Secretary, and
                DirectorDate:
            February
                1, 2006




25
 *Table
            of Contents*





**BLUESTAR
      HEALTH, INC.**







**Consolidated
      Financial Statements as of**


**September
      30, 2005**


**And
      Report of Independent Registered**


**Public
      Accounting Firm**





*Table
            of Contents*





**BLUESTAR
      HEALTH, INC.**





**TABLE
      OF CONTENTS**




**Page**REPORT
                OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            F-1CONSOLIDATED
                FINANCIAL STATEMENTS:Consolidated
                Balance Sheet at September 30, 2005
            F-2Consolidated
                Statements of Operations for the years ended September 30, 2005 and
                2004
            F-3Consolidated
                Statements of Stockholders’ Equity (Deficit) for the years ended September
                30, 2005 and 2004
            F-4Consolidated
                Statements of Cash Flows for the years ended September 30, 2005 and
                2004
            F-5NOTES
                TO CONSOLIDATED FINANCIAL STATEMENTS
            F-6
                - F-11




*Table
            of Contents*





REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








To
      the
      Board of Directors


Bluestar
      Health, Inc


Houston,
      Texas





We
      have
      audited the accompanying consolidated balance sheet of Bluestar Health, Inc.
      as
      of September 30, 2005, and the related consolidated statements of operations,
      stockholders’ equity (deficit), and cash flows for each of the two years then
      ended. These financial statements are the responsibility of the Company’s
      management. Our responsibility is to express an opinion on these financial
      statements based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the consolidated financial position of Bluestar
      Health, Inc. as of September 30, 2005, and the results of its operations and
      its
      cash flows for each of the two years then ended, in conformity with accounting
      principles generally accepted in the United States of America.





The
      accompanying consolidated financial statements have been prepared assuming
      that
      Bluestar Health, Inc. (Bluestar) will continue as a going concern. As discussed
      in Note 2 to the consolidated financial statements, Bluestar has incurred losses
      of $1,031,381 for the year ending September 30, 2005 and $407,039 for the year
      ending September 30, 2004. Bluestar has no current source of revenue. Bluestar
      will require additional working capital to develop its business until Bluestar
      either (1) achieves a level of revenues adequate to generate sufficient
      cash flows from operations; or (2) obtains additional financing necessary
      to support its working capital requirements. These conditions raise substantial
      doubt about Bluestar’s ability to continue as a going concern. Management’s
      plans in regard to this matter are also described in Note 2. The accompanying
      financial statements do not include any adjustments that might result from
      the
      outcome of these uncertainties.








Lopez,
      Blevins, Bork & Associates, LLP





Houston,
      Texas


January
      25, 2006





*Table
            of Contents*





***Bluestar
      Health, Inc.***





**CONSOLIDATED
      BALANCE SHEET**


**September
      30, 2005**








**ASSETS****CURRENT
                ASSETS:**Cash
            
            $
            38Total
                assets
            
            $
            38**LIABILITIES
                AND SHAREHOLDERS’ DEFICIT****CURRENT
                LIABILITIES:**Current
                maturities of long term debt
            
            $
            21,152Short
                term bank line of credit
            
            
            47,593Accounts
                payable
            
            
            84,966Accrued
                expenses
            
            
            58,639Advances
                from related parties
            
            
            185,664Total
                current liabilities
            
            
            398,014**LONG
                TERM DEBT**
            
            
            60,106**TOTAL
                LIABILITIES**
            
            
            458,120**COMMITMENTS
                & CONTINGENCIES****SHAREHOLDERS’
                DEFICIT**Common
                stock, $.001 par value, 20,000,000 shares authorized,13,607,094
                shares issued and outstanding
            
            
            13,607Additional
                paid in capital
            
            
            1,550,533Accumulated
                deficit
            
            
            (2,022,222
            )Total
                shareholders’ deficit
            
            
            (458,082
            )Total
                liabilities and shareholders’ deficit
            
            $
            38




***See
      accompanying summary of accounting policies and notes to financial
      statements.***





-
            2
            -
 *Table
            of Contents*





***Bluestar
      Health, Inc.***





**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**Years
      Ended September 30, 2005 and 2004**








2005
            
            2004REVENUES
            
            $
            361,506
            
            $
            302,349OPERATING
                EXPENSES:GENERAL
                & ADMINISTRATIVE
            
            
            691,367
            
            
            451,654NON
                CASH STOCK FOR SERVICES
            
            
            510,112
            
            
            240,022DEPRECIATION
            
            
            8,260
            
            
            2,065IMPAIRMENT
            
            
            167,926
            
            
            -1,377,665
            
            
            693,741OPERATING
                LOSS
            
            
            (1,016,159
            )
            
            (391,392
            )INTEREST
                EXPENSE
            
            
            (15,222
            )
            
            (15,647
            )NET
                LOSS
            
            $
            (1,031,381
            )
            $
            (407,039
            )NET
                INCOME PER SHARE:Basic
                and diluted
            
            $
            (.08
            )
            $
            (.04
            )WEIGHTED
                AVERAGE SHARES OUTSTANDING:Basic
                and diluted
            
            
            13,311,463
            
            
            11,170,531


***See
        accompanying summary of accounting policies and notes to financial
        statements.***


-
            3
            -
 *Table
            of Contents*





***Bluestar
      Health, Inc.***





**CONSOLIDATED
      STATEMENT OF STOCKHOLDER'S EQUITY (DEFICIT)**


**Years
      Ended September 30, 2005 and 2004**








Common
                stock
            
            Additional
                paid in
            
            AccumulatedShares
            
            Amount
            
            capital
            
            Deficit
            
            TotalBalance,
                September 30, 2003
            
            
            10,708,004
            
            
            10,708
            
            
            375,487
            
            
            (583,802
            )
            
            (197,607
            )Issuance
                of common stock for acquisitions
            
            
            1,150,000
            
            
            1,150
            
            
            378,350
            
            
            
            
            
            379,500Issuance
                of common stock for services
            
            
            378,000
            
            
            378
            
            
            239,644
            
            
            
            
            
            240,023Issuance
                of common stock for cash
            
            
            62,500
            
            
            63
            
            
            24,938
            
            
            
            
            
            25,000Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (407,039
            )
            
            (407,039
            )Balance,
                September 30, 2004
            
            
            12,298,504
            
            
            12,299
            
            
            1,018,419
            
            
            (990,841
            )
            
            39,877Issuance
                of common stock for services
            
            
            1,156,590
            
            
            1,156
            
            
            508,956
            
            
            
            
            
            510,112Issuance
                of common stock for cash
            
            
            152,000
            
            
            152
            
            
            23,158
            
            
            
            
            
            23,310Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,031,381
            )
            
            (1,031,381
            )Balance,
                September 30, 2005
            
            
            13,607,094
            
            $
            13,607
            
            $
            1,550,533
            
            $
            (2,022,222
            )
            $
            (458,082
            )


***See
        accompanying summary of accounting policies and notes to financial
        statements.***




-
            4
            -
 *Table
            of Contents*





***Bluestar
      Health, Inc.***





**STATEMENTS
      OF CASH FLOW**


**Years
      Ended September 30, 2005 and 2004**








2005
            
            2004**CASH
                FLOWS FROM OPERATING ACTIVITIES**:Net
                loss
            
            $
            (1,031,381
            )
            $
            (407,039
            )Adjustments
                to reconcile net loss to cash used in operating
                activities:Stock
                issued for services
            
            
            510,112
            
            
            240,023Impairment
            
            
            167,926
            
            
            -Depreciation
            
            
            8,259
            
            
            2,065Changes
                in current assets and liabilities:Accounts
                receivable
            
            
            83,186
            
            
            (2,846
            )Prepaid
                expenses and other current assets
            
            
            -
            
            
            12,160Accounts
                payable and other current liabilities
            
            
            51,079
            
            
            40,459Net
                cash used in operating activities
            
            
            (210,819
            )
            
            (115,178
            )**CASH
                FLOWS FROM INVESTING ACTIVITIES:**Acquisition
                of Canton Rehabilitation Services, Inc.
            
            
            -
            
            
            98,049Acquisition
                of Mississippi Central Rehabilitation, Inc
            
            
            -
            
            
            59,466Net
                cash provided by investing activities
            
            
            -
            
            
            157,515**CASH
                FLOWS FROM FINANCING ACTIVITIES**:Advances
                from related parties
            
            
            (12,226
            )
            
            91,354Funds
                from short term bank line of credit
            
            
            47,593
            
            
            -Net
                borrowings (payments) on long term debt
            
            
            (3,809
            )
            
            (2,702
            )Issuance
                of common stock
            
            
            23,310
            
            
            25,000Net
                cash provided by financing activities
            
            
            54,868
            
            
            113,652**Net
                Change in Cash**
            
            
            (155,951
            )
            
            155,989**CASH**,
                beginning of year
            
            
            155,989
            
            
            -**CASH**,
                end of year
            
            $
            38
            
            $
            155,989**SUPPLEMENTAL
                CASH FLOW INFORMATION**:Interest
                paid
            
            $
            2,553
            
            $
            6,197Taxes
                paid
            
            $
            -
            
            $
            -


***See
        accompanying summary of accounting policies and notes to financial
        statements.***


-
            5
            -
 *Table
            of Contents*





***Bluestar
      Health, Inc.***





**NOTES
      TO FINANCIAL STATEMENTS**








NOTE
        1 - NATURE
        OF
        OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Nature
      of
      business





Bluestar
      Health, Inc. (Bluestar) is a healthcare management company with operations
      in
      the areas of physical therapy and preventative care. We operate through two
      subsidiaries, Bluestar Physical Therapy, Inc. and PT Centers of Texas, Inc.
      We
      currently own and operate two outpatient physical therapy and rehabilitation
      clinics, one in Jackson, Mississippi and the other in Canton,
      Mississippi.





In
      May
      2005, Bluestar decided to restructure its operations and convert the two
      existing facilities from physical medicine operations into physical therapy,
      prevention and wellness operations. Substantially all the assets, liabilities,
      revenues and expenses reflected in the financial statements relate to these
      facilities. During this restructuring, a natural disaster hit the region in
      August and the needed capital and resources to complete the restructuring were
      not available. To date, the Company still has the facilities closed down and
      there are not any revenues being generated.





Principles
      of consolidation





All
      significant intercompany accounts and transactions have been eliminated in
      consolidation.





Use
      of
      Estimates





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and disclosure of
      contingent assets and liabilities at the date of the financial statements and
      the reported amount of revenues and expenses during the reporting period. Actual
      results could differ from those estimates.





Cash
      and
      Cash Equivalents





Cash
      and
      cash equivalents include cash and all highly liquid financial instruments with
      purchased maturities of three months or less.





Goodwill





The
      Company adopted Statement of Financial Accounting Standards No. 142 (“SFAS
      142”), “Goodwill and Other Intangible Assets.” SFAS 142 requires that goodwill
      be tested for impairment at the reporting unit level (operating segment or
      one
      level below an operating segment) on an annual basis and between annual tests
      in
      certain circumstances. The performance of the test involves a two-step process.
      The first step of the impairment test involves comparing the fair value of
      the
      Company’s reporting units with the reporting unit’s carrying amount, including
      goodwill. The Company generally determines the fair value of its reporting
      units
      using the expected present value of future cash flows, giving consideration
      to
      the market comparable approach. If the carrying amount of the Company’s
      reporting units exceeds the reporting unit’s fair value, the Company performs
      the second step of the goodwill impairment test to determine the amount of
      impairment loss. The second step of the goodwill impairment test involves
      comparing the implied fair value of the Company’s reporting unit’s goodwill with
      the carrying amount of that goodwill.





-
            6
            -
 *Table
            of Contents*





***Bluestar
      Health, Inc.***





**NOTES
      TO FINANCIAL STATEMENTS**








Property
      and Equipment





Property
      and equipment is stated at cost with depreciation calculated using the
      straight-line method over the estimated useful lives. The Company has estimated
      the useful lives of all assets at five years as of September 30, 2005. When
      assets are retired or otherwise removed from the accounts, any resulting gain
      or
      loss is reflected in income for the period. The cost of maintenance and repairs
      is charged to expense as incurred, and significant renewals and improvements
      are
      capitalized.





Revenue
      Recognition





Revenues
      are recognized as services are provided to patients.





Allowance
      for Doubtful Accounts





Earnings
      are charged with a provision for doubtful accounts based on a current review
      of
      the collectibility of accounts. Accounts deemed uncollectible are applied
      against the allowance for doubtful accounts.





Income
      Taxes





Income
      taxes are computed using the asset and liability method. Under the asset and
      liability method, deferred income tax assets and liabilities are determined
      based on the differences between the financial reporting and tax bases of assets
      and liabilities and are measured using the currently enacted tax rates and
      laws.
      A valuation allowance is provided for the amount of deferred tax assets that,
      based on available evidence, are not expected to be realized.





Advertising





Advertising
      costs are charged to expense in the period incurred. The Company incurred
      advertising costs of $0 and $20,650 in the years ended September 30, 2005 and
      2004, respectively.





Basic
      Loss Per Share





Basic
      loss per share has been calculated based on the weighted average number of
      shares of common stock outstanding during the period.





Reclassifications





Certain
      amounts in the 2004 financial statements have been reclassified to conform
      to
      the 2005 financial statement presentation.





Recent
      Accounting Pronouncements





In
      April
      2005, the SEC announced the adoption of a new rule that amends the compliance
      dates for SFAS No. 123 (revised 2004), Share-Based Payment (Statement No.
      123(R)). Under Statement No. 123(R), the Company would have been required to
      implement the standard as of the beginning of the first interim or annual period
      that begins after June 15, 2005, or in the interim reporting period ending
      September 30, 2005. The SEC’s new rule allows the Company to implement Statement
      No. 123(R) at the beginning of its second quarter, and accordingly, the Company
      will begin to reflect the adjustment to earnings for the impact of this
      accounting pronouncement in the interim reporting period ending March 31, 2006.





-
            7
            -
 *Table
            of Contents*





***Bluestar
      Health, Inc.***





**NOTES
      TO FINANCIAL STATEMENTS**








In
      July
      2002, the FASB issued Statement of Financial Accounting Standards No. 146 (“SFAS
      146”), “Accounting for Costs Associated with Exit or Disposal Activities,” which
      nullifies EITF Issue No. 94−3, “Liability Recognition for Certain Employee
      Termination Benefits and Other Costs to Exit an Activity (including Certain
      Costs Incurred in a Restructuring).” SFAS 146 requires that costs associated
      with an exit or disposal activity be recognized only when the liability is
      incurred (that is, when it meets the definition of a liability in the FASB’s
      conceptual framework). SFAS 146 also establishes fair value as the objective
      for
      initial measurement of liabilities related to exit or disposal activities.
      SFAS
      146 is effective for exit or disposal activities that are initiated after
      December 31, 2002. The Company adopted SFAS in the second quarter of fiscal
      2003.




NOTE
        2 -
        GOING CONCERN AND IMPAIRMENT





In
      May
      2005, Bluestar decided to restructure its operations and convert the two
      existing facilities from physical medicine operations into physical therapy,
      prevention and wellness operations. Substantially all the assets, liabilities,
      revenues and expenses reflected in the financial statements relate to these
      facilities. During this restructuring, a natural disaster hit the region in
      August 2005 and the needed capital and resources to complete the restructuring
      were not available. To date, the Company still has the facilities closed down
      and there are not any revenues being generated. Based on this change in
      operations, management decided to write off the value of goodwill that had
      been
      acquired in the original purchase. This impairment in value of $137,000 was
      recorded in the quarter ended June 30, 2005. At September 30, 2005, management
      is unsure when they will be able to re-open these facilities; they have also
      chosen to write down the value of the physical assets associated with these
      operations to $0.





Bluestar
      does not have any current means of generating revenues. Bluestar is also
      currently seeking to acquire additional facilities from various third parties.
      However, there is no assurance that a definitive agreement can be reached or
      that sufficient financing resources will be available to conclude any
      acquisitions. These factors raise substantial doubt about the ability of
      Bluestar to continue as a going concern. The financial statements do not include
      any adjustments that might result from the outcome of this
      uncertainty.





Bluestar
      has incurred losses of $1,031,381 for the year ending September 30, 2005, and
      $407,039 for the year ending September 30, 2004. Bluestar’s financial statements
      are prepared using the generally accepted accounting principles applicable
      to a
      going concern, which contemplates the realization of assets and liquidation
      of
      liabilities in the normal course of business. However, at September 30, 2005,
      Bluestar has no current source of revenue. Without realization of additional
      capital, it would be unlikely for Bluestar to continue as a going
      concern.





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            -
 *Table
            of Contents*





***Bluestar
      Health, Inc.***





**NOTES
      TO FINANCIAL STATEMENTS**








NOTE
        3 -
        FURNITURE AND EQUIPMENT





Furniture
      and equipment consisted of the following as of September 30, 2005:





Furniture
                and office equipment
            
            $
            11,250Transportation
                equipment
            
            
            30,00041,250Less:
                accumulated depreciation
            
            
            (10,324
            )30,926Less:
                Write down of asset value due to closing the facilities
            
            
            (30,926
            )Net
                assets as of September 30, 2005
            
            $
            -




NOTE
        4 -
        ADVANCE FROM RELATED PARTIES





The
      majority stockholder paid expenses on behalf of Bluestar or advanced Bluestar
      a
      total of $154, 630 as of September 30, 2005. Additional funds were advanced
      to
      Bluestar by related parties totaling $31,034. These advances are non-interest
      bearing, due on demand, and are to be repaid as cash becomes
      available.




NOTE
          5 -
          LONG-TERM DEBT


Bluestar
      has a note payable in the amount of $70,000 that is from the original
      acquisition of the company. The note bears interest at 18% and was due August
      15, 2003. Bluestar was unable to meet the August 15, 2003 due date and obtained
      an extension of the due date to February 17, 2004. At September 30, 2004, the
      balance of the note was $86,350, which includes accrued interest totaling
      $16,350.





In
      November 2004, the note was modified and extended. The new principal amount
      of
      the note shall be $70,000 which shall accrue interest at the rate of twelve
      percent (12%) per annum. The new maturity date shall be September 1, 2009.
      The
      new agreement calls for 60 monthly payments of $1,557 beginning October 1,
      2004,
      and continuing through September 1, 2009. At September 30, 2005, there have
      not
      been any payments made towards the note so the balance due on the note at
      September 30, 2005, is $70,000 plus accrued interest of $8,400.





The
      Company has a note payable with Merchant & Farmers Bank with monthly
      payments totaling $605 including interest of 8.5%, secured by a vehicle. The
      balance due at September 30, 2005 was $11,258. The future maturities are as
      follows:





Future
      maturities of these notes are as follows:





Year
                Ending September 30,2006
            
            $
            21,1522007
            
            
            21,1782008
            
            
            18,6852009
            
            
            20,24381,258Less:
                current portion
            
            
            (21,152
            )$
            60,106




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            of Contents*


***Bluestar
        Health, Inc.***
 
 **NOTES
        TO FINANCIAL STATEMENTS**
 
 
 NOTE
        6 -
        INCOME TAXES
 
 Bluestar
        Health, Inc. follows Statement of Financial Accounting Standards Number 109
        (SFAS 109), “Accounting for Income Taxes.” Deferred income taxes reflect the net
        effect of (a) temporary difference between carrying amounts of assets and
        liabilities for financial purposes and the amounts used for income tax reporting
        purposes, and (b) net operating loss carryforwards. No net provision for
        refundable Federal income tax has been made in the accompanying statement
        of
        loss because no recoverable taxes were paid previously. Similarly, no deferred
        tax asset attributable to the net operating loss carryforward has been
        recognized, as it is not deemed likely to be realized.
 
 The
        provision for refundable Federal income tax consists of the following:
 
 September
                  30, 2005Refundable
                  Federal income tax attributable to:Current
                  Operations
              
              $
              351,000Less,
                  Change in valuation allowance
              
              
              (351,000
              )Net
                  refundable amount
              
              $
              -
 
 The
        cumulative tax effect at the expected rate of 34% of significant items
        comprising our net deferred tax amount is as follows:
 
 September
                  30, 2005Deferred
                  tax asset attributable to:Net
                  operating loss carryover
              
              $
              688,000Less,
                  Change in valuation allowance
              
              
              (688,000
              )Net
                  deferred tax asset
              
              $
              -
 
 Bluestar
        Health has not yet realized income as of the date of this report, and no
        provision for income taxes has been made. At September 30, 2005, Bluestar
        Health, Inc. had an unused net operating loss carryover approximating $2,020,000
        that is available to offset future taxable income; it expires beginning in
        2021.
 
 NOTE
        7 -
        COMMON STOCK
 
 In
        September 2004, Bluestar Health, Inc (Bluestar) adopted a Non Qualified Stock
        Grant and Option plan (the “2004 Plan”) for employees, officers, directors and
        consultants which authorized the issuance of 1,200,000 shares of common stock.
        The 2004 Plan is administered by the Board of Directors. The Board of Directors
        has the exclusive power to select the participants in the 2004 Plan, to
        establish the terms of the options granted to each participant, and to make
        all
        determinations necessary or advisable.
 
 During
        the year ended September 30, 2005, a total of 1,156,590 shares of stock were
        issued to consultants at a value of $510,112. During the year ended September
        30, 2004, Bluestar did not issue any shares of common stock under this
        plan.
  -
            10
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 *Table
            of Contents*
  ***Bluestar
        Health, Inc.***
 
 **NOTES
        TO FINANCIAL STATEMENTS**
 
 
 During
        the year ended September 30, 2005, Bluestar issued 152,000 shares of its
        common
        stock, in exchange for $23,310 in cash.
 
 In
        August
        2003, Bluestar adopted a Stock Option and Grant plan (the “2003 Plan”) for
        employees, officers, directors and consultants which authorized the issuance
        of
        650,000 shares of common stock. The Plan is administered by the Board of
        Directors. The Board of Directors has the exclusive power to select the
        participants in the Plan, to establish the terms of the options granted to
        each
        participant, and to make all determinations necessary or advisable. During
        the
        year ended September 30, 2004, a total of 148,000 shares of stock were issued
        to
        consultants at a value of $106,550.
 
 NOTE
        8 -
        EXIT ACTIVITIES
 
 In
        May
        2005, Bluestar decided to restructure its operations and convert the two
        existing Mississippi facilities from physical medicine operations into physical
        therapy, prevention and wellness operations. Substantially all the assets,
        liabilities, revenues and expenses reflected in the financial statements
        relate
        to these facilities. During this restructuring, a natural disaster hit the
        region in August 2005 and the needed capital and resources to complete the
        restructuring were not available. To date, the Company still has the facilities
        closed down and there are not any revenues being generated. Although it is
        management’s intention to re-open these facilities, to date that has not
        happened. Based on this change in operations, management decided to write
        off
        the value of goodwill that had been acquired in the original purchase. This
        impairment in value of $137,000 was recorded in the quarter ended June 30,
        2005.
        At September 30, 2005, management is unsure when they will be able to re-open
        these facilities; they have also chosen to write down the value of the physical
        assets associated with these operations by $30,926 to $0 in the fourth quarter.
 
 An
        analysis of exit costs and amounts relating the exit activities are as
        follows:
 
 September
                  30, 2005
              
              September
                  30, 2004Operating
                  ExpensesGeneral
                  & Administrative
              
              $
              58,200
              
              $
              -Impairment
              
              
              167,926
              
              
              -Total
                  Exit Costs Recorded
              
              $
              226,126
              
              $
              -
 
 Beginning
                  Balance 9/30/2004
              
              Period
                  Costs
              
              Payments
              
              Ending
                  Balance 9/30/2005Accrued
                  Exit Expenses:Terminated
                  Lease Costs
              
              $
              -
              
              $
              58,200
              
              $
              -
              
              $
              58,200Total
                  Accrued Exit Expenses
              
              $
              -
              
              $
              58,200
              
              $
              -
              
              $
              58,200
 
 -
            11-
 *Table
            of Contents*
 ***Bluestar
          Health, Inc.***
 
 **NOTES
          TO FINANCIAL STATEMENTS**
 NOTE
        9 -
        COMMITMENTS AND CONTINGENCIES
 
 In
        December, 2004 Bluestar signed a two year lease for their office in Jackson,
        MS
        at a cost of $2,500 per month. The office was vacated on May 1, 2005, for
        restructuring and as of September 30, 2005, the company has accrued $58,200
        to
        account for the lease exit obligations.
 
 The
        Company has leases for both the office space and the clinic spaces. Total
        rent
        expense for these leases were approximately $55,000 for the year ended September
        30, 2005, and $26,000 for the year ended September 30, 2004.
 
 NOTE
        10 -
        SUBSEQUENT EVENTS (UNAUDITED)
 
 In
        October 2005, Bluestar issued 143,410 shares of stock to consultants which
        will
        be expensed based on the value of the stock on the dated issued.
 
 On
        November 2, 2005, Bluestar Health announced that they had signed a definitive
        agreement to acquire Magnolia, Texas based Gold Leaf Homes. However, this
        transaction has not closed and is currently being renegotiated, potentially
        as
        an asset purchase rather than an acquisition.
 
 Gold
        Leaf
        Homes is a 9 year old residential home builder that builds homes in the price
        range from $130,000 to over $1,000,000 in the state of Texas.
  -12-