U.S.
SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q/A


Amendment No. 1





x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
the quarterly period ended March 31, 2010





o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from





Commission
File No. 000-52202





FOUR
STAR HOLDINGS, INC.


(Exact
name of small business issuer as specified in its charter)





Florida
            26-1427633(State
      or other jurisdiction of incorporation Or organization)
            (I.R.S.
      Employer Identification No.)





100
Four Star Lane


Odenville, Alabama
35120


(Address
of Principal Executive Offices)





(205) 640-3726


(Issuer’s
telephone number)





Dragon’s
Lair Holdings, Inc.


(Former
name, address and fiscal year, if changed since last report)





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





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act.





[ 
]  Large accelerated
filer                                                                                     [ 
]  Accelerated filer


[ 
]  Non-accelerated
filer                                                                                
     [X]  Smaller reporting
company





APPLICABLE
ONLY TO CORPORATE ISSUERS:





State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of March 31, 2010:  22,234,228 shares of common stock.




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act):   Y es x  No o





Transitional
Small Business Disclosure Format (Check One) Yes o No  x








Table of Contents





TABLE OF CONTENTS
 
 PagePART
      I – FINANCIAL INFORMATIONItem 1.      Financial
      Statements
                3Item 2.     Management’s Discussion and
      Analysis of Financial Condition
                4Item 3.       Quantitative and Qualitative Disclosures About Market
      Risk.
                5Item
      4T.    Controls and
      Procedures
                5PART
      II – OTHER INFORMATIONItem 1.Legal Proceedings
                7Item
      2.Changes in Securities
                7Item 3.Defaults Upon Senior Securities
                7Item 4.Submission of Matters to a Vote of Security
      Holders
                7Item 5.Other Information
                7Item 6.Exhibits and Reports on Form 8-K
                8SIGNATURE
                9
  
 - 2
-
 Table of Contents





Item 1.    Financial Information





BASIS
OF PRESENTATION


The
accompanying unaudited financial statements are presented in accordance with
generally accepted accounting principles for interim financial information and
the instructions to Form 10-Q and item 310 under subpart A of Regulation S-B. In
the opinion of management, all adjustments (consisting only of normal occurring
accruals) considered necessary in order to make the financial statements not
misleading, have been included.  Operating results for the quarter
ended March 31, 2010 are not necessarily indicative of results that may be
expected for the year ending December 31, 2010.   The
unauditedinterim
condensed financial statements, which have been reviewed by Douglas A.
Labrozzi, an independent registered certified public accountant, in
accordance with standards established by the Public Company Accounting Oversight
Board, as indicated in their report are included herein, which does not express
an opinion on those statements.





FINANCIAL
STATEMENTS





FOUR
STAR HOLDINGS, INC.





Table
of Contents




PAGEREPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
              F-1BALANCE
      SHEETS
              F-2STATEMENTS
      OF OPERATIONS
              F-3STATEMENTS
      OF CASH FLOWS
              F-4FOOTNOTES
      TO FINANCIAL STATEMENTS
              F-5







- 3
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 Table of Contents




Report of
Independent Registered Public Accountant
  
 To the
Shareholders
 Four Star
Holdings, Inc.
 Odenville,
AL 35120
   I have
reviewed the accompanying balance sheets of Four Star Holdings, Inc. as of March
31,2010 and
2009, and for the three-month periods then ended. These interim financial
statements are the responsibility of the Company's
management.
  I
conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an
opinion.
  Based on
my review, I am not aware of any material modifications that should be made to
the accompanying interim financial statements for them to be in conformity with
U.S. generally accepted accounting principles.
   /s/ Douglas A. Labrozzi,
CPA
 Douglas
A. Labrozzi, CPA
 Miami,
FL
 July 14,
2010







F -
1
 Table of Contents


FOUR
      STAR HOLDINGS, INC.CONSOLIDATED
      BALANCE SHEETSASSETSMarch
      31,
            
            
            December
      31,2010
            
            
            2009(Unaudited)CURRENT
      ASSETS:Cash
            
            $
            -
            
            
            $
            137Accounts
      receivable
            
            
            44,872
            
            
            
            -Due
      from related parties
            
            
            875,048
            
            
            
            -Inventories:
            
            
            
            
            
            
            402Real
      estate held for sale
            
            
            3,389,566
            
            
            
            -Land
      held for development
            
            
            6,480,836
            
            
            
            -Total
      Current Assets
            
            
            10,790,322
            
            
            
            539FIXED
      ASSETS:Equipment,
      net of accumulated depreciation
            
            
            889,724
            
            
            
            345OTHER
      ASSETS:License,
      net
            
            
            660
            
            
            
            660Loan
      origination fees, net of accumulated amortization
            
            
            40,888
            
            
            
            -Total
      other assets
            
            
            41,548
            
            
            
            660Total
      Assets
            
            $
            11,721,594
            
            
            $
            1,544LIABILITIES AND SHAREHOLDERS'
      EQUITYCURRENT
      LIABILITIES:Accounts
      payable & accrued expenses
            
            $
            60,863
            
            
            $
            7,000Long
      Term Liabilities:Notes
      payable
            
            
            5,834,248
            
            
            
            -Deferred
      tax liability
            
            
            1,387,179
            
            
            
            -Total
      long term liabilities
            
            
            7,221,427
            
            
            
            -Total
      Liabilities
            
            
            7,282,290
            
            
            
            7,000SHAREHOLDERS'
      EQUITY:Preferred
      stock (50,000,000 authorized;par
      value $.001; none issued and outstanding)
            
            
            -
            
            
            
            -Common
      stock (100,000,000 shares authorized;no
      par value; 22,234,228 and 8,001,078 issued and outstanding,
      respectively)
            
            
            4,533,347
            
            
            
            88,587Accumulated
      deficit
            
            
            (94,043
            )
            
            
            (94,043
            )Total
      Shareholders' Equity (Deficit)
            
            
            4,439,304
            
            
            
            (5,456
            )Total
      Liabilities and Shareholders' Equity
            
            $
            11,721,594
            
            
            $
            1,544




The
accompanying notes are an integral part of these financial
statements








F -
2
 Table of Contents


FOUR
      STAR HOLDINGS, INC.CONSOLIDATED
      STATEMENTS OF OPERATIONSMarch
      31,
            
            
            March
      31,2010
            
            
            2009UnauditedNet
      Sales
            
            $
            163,148
            
            
            $
            -Cost
      of Sales
            
            
            116,575
            
            
            
            -Gross
      Profit
            
            
            46,573
            
            
            
            -Expenses:Amortization
            
            
            2,813
            
            
            
            60Depreciation
            
            
            2,596
            
            
            
            25General
      and Administrative
            
            
            80,516
            
            
            
            17,430Total
            
            
            85,925
            
            
            
            (17,515
            )Loss
      before other income (expense):
            
            
            (39,352
            )
            
            
            (17,515
            )Other
      income - commission
            
            
            2,215
            
            
            
            -Interest
      expense
            
            
            (94,305
            )
            
            
            -Total
      other expense, net
            
            
            (92,090
            )
            
            
            -Net
      (loss) before Income Taxes
            
            
            (131,442
            )
            
            
            (17,515
            )Provision
      for Income Taxes
            
            
            -
            
            
            
            -Net
      loss
            
            $
            (131,442
            )
            
            $
            (17,515
            )Basic
      and diluted net loss per common share
            
            $
            (0.0076
            )
            
            $
            (0.0022
            )Weighted
      average number of common shares outstanding
            
            
            17,386,048
            
            
            
            7,901,078





The
accompanying notes are an integral part of these financial
statements.






F -
3
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FOUR
      STAR HOLDINGS, INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWSMarch
      31,
            
            
            March
      31,2010
            
            
            2009UnauditedOPERATING
      ACTIVITIES:Net
      loss
            
            $
            (131,442
            )
            
            $
            (17,515
            )Adjustments
      to reconcile net income to net cashused
      in operating activities:Issuance
      of common stock for services
            
            
            60,829
            
            
            
            -Increase
      in amortization
            
            
            2,813
            
            
            
            60Increase
      in depreciation
            
            
            2,596
            
            
            
            25Changes
      in operating assets and operating liabilities:Accounts
      receivable
            
            
            (44,872
            )
            
            
            -Due
      from related parties
            
            
            (875,048
            )
            
            
            -Changes  in
      inventory:Real
      estate held for sale
            
            
            (3,389,566
            )
            
            
            -Land
      held for development
            
            
            (6,480,836
            )
            
            
            -Loan
      origination fees
            
            
            (38,075
            )
            
            
            -Accounts
      payable and accrued expenses
            
            
            60,863
            
            
            
            -Deferred
      tax liability
            
            
            1,387,179
            
            
            
            -Net
      cash used in operating activities
            
            
            (9,445,559
            )
            
            
            (17,430
            )INVESTING
      ACTIVITIES:Increase
      in Equipment
            
            
            (882,628
            )
            
            
            -Net
      cash used in investing activities
            
            
            (882,628
            )
            
            
            -FINANCING
      ACTIVITIES:Increase
      in notes payable
            
            
            5,834,248
            
            
            
            -Stock
      issued for investment in Ridgefield Development
Corporation
            
            
            4,417,772
            
            
            
            -Stock
      issued for investment in Four Star Realty
            
            
            26,984
            
            
            
            -Net
      cash provided by financing activities
            
            
            10,279,004
            
            
            
            -NET
      DECREASE IN CASH
            
            
            (49,183
            )
            
            
            (17,430
            )CASH
      BEGINNING BALANCE
            
            
            49,183
            
            
            
            66,613CASH
      ENDING BALANCE
            
            $
            -
            
            
            $
            49,183SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Taxes
      paid
            
            $
            -
            
            
            $
            -Interest
      paid
            
            $
            94,305
            
            
            $
            -





The
accompanying notes are an integral part of these financial
statements.











F -
4
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FOUR
STAR HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


(Unaudited)





March
31, 2010





NOTE
1 – BASIS OF PRESENTATION





The
accompanying unaudited interim financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission for the presentation of interim financial information, and include
all the information and footnotes required by generally accepted accounting
principles for complete financial statements.  The audited financial
statements for the period December 31, 2009 and the year then ended were filed
on February 5, 2010 with the Securities and Exchange Commission are hereby
referenced.  In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included.  Operating results for the three month period ended
March 31, 2010 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2010.





NOTE
2 - DESCRIPTION OF BUSINESS




Description of
Business





Dragon’s
Lair Holdings, Inc., a Florida corporation, was incorporated on October 4, 2007,
and conducts its operations through its operating subsidiaries. Our Company was
a provider of personal care products by means of a network of direct sales
consultants.  Our business strategy was to provide quality products,
operate at a profit, and enable our direct sales consultants to operate at a
profit.





On
December 14, 2009, Bobby Smith, Jr., (100% owner of Four Star Investment, Inc.),
and Frances Mize (a single person) together consummated the purchase of
5,928,235 shares of common stock of Dragon’s Lair Holdings, Inc. from Talles
Investments, Inc., Michel Lemoine, Yamit Lemoine, H. Bradley Ress, Steve
Kravitz, Joseph R. Pierre-Louis, and Island Capital Management, LLC, which
constituted 74.1 percent (74.1%) of the issued and outstanding shares of common
stock of Dragon’s Lair Holdings, Inc., for an aggregate cash purchase price in
the amount of $325,000.  The source of the funds for the purchase
price for the shares of common stock of the Company was from Four Star
Investments, Inc., an Alabama corporation, which is wholly owned by Bobby Smith,
Jr.  As a result of the transactions, (i) Bobby R. Smith, Jr. owns
individually 43.7 percent (43.7%) of the issued and outstanding common stock of
the Company and has the sole power to vote and dispose of the such shares (ii)
Frances Mize owns individually 30.4 percent (30.4%) of the issued and
outstanding common stock of Dragon’s Lair Holdings, Inc. and has the sole power
to vote and dispose of the such shares.





On
February 10, 2010, Dragon’s Lair Holdings, Inc. changed its name to Four Star
Holdings, Inc., (hereinafter known as the “Company”). The Company is a real
estate acquisition and development entity that invests in companies that operate
as real estate developers and home builders in order to (i) maximize cash flows,
(ii) create value within the organizations and (iii) eventually sell at a
profit.


Ridgefield
Development Corporation and Four Star Realty, LLC, an Alabama corporation and an
Alabama limited liability company, incorporated and organized on September 17,
2003 and January 1, 2006 respectively, were acquired on March 31, 2010 by the
Company.  (See Note 6). As of March 31, 2010, the company structure is
set forth in the following chart:











FOUR
      STAR HOLDINGS, INC.
              a
      Florida corporation









F -
5
 Table of Contents




RIDGEFIELD
      DEVELOPMENT CORPORATION
              An
      Alabama corporation
              (100%
      Owned Subsidiary)





FOUR
      STAR REALTY, LLC
              An
      Alabama limited liability company
              (100%
      Owned Subsidiary)


Our
principal executive office is located at 100 Four Star Lane, Odenville,
AL  35120.  Our telephone number is (205)-640-7821, and our
company website is www.4StarHoldings.com.  Our
fiscal year ends on December 31st.





Basis of
Presentation





The
accompanying consolidated financial statements have been prepared by the
Company. The Company’s consolidated financial statements are prepared in
accordance with generally accepted accounting principles in the United States of
America (“US GAAP”). The consolidated financial statements of the Company
include the Company and its subsidiaries. All material inter-company balances
and transactions have been eliminated.








NOTE
3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Cash and Cash
Equivalents





The
Company considers all highly liquid debt instruments with original maturities of
three months or less to be cash equivalents. As of March 31, 2010, the Company
has no cash equivalents.





Use of
Estimates





The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.





Inventories





Inventories
are stated at cost unless the inventory within a community is determined to be
impaired, in which case the impaired inventory is written down to fair value.
Inventory costs include land, land development and home construction costs, real
estate taxes, deposits on land purchase contracts and interest related to
development and construction. Construction overhead and selling expenses are
expensed as incurred. Real estate held-for-sale is classified as inventories
until delivered. Land, land development, amenities and other costs are
accumulated by specific area and allocated to homes within the respective areas.
The Company reviews its inventory for indicators of impairment by evaluating
each community during each reporting period. The inventory within each community
is categorized as real estate held-for-sale or land held for development based
on the development state within respective phases.






F -
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 Table of Contents






Revenue
Recognition





Revenues
from fixed-price contracts are recognized on the completed contract method. This
method is used because the typical contract is completed in three months or
less, and financial position and results of operations do not vary significantly
from those that would result from use of the percentage-of-completion method. A
contract is considered complete when all costs except insignificant items have
been incurred and the installation is operating according to specifications or
has been accepted by the customer.





Contract
costs include all direct material and labor costs and those indirect costs
related to contract performance, such as indirect labor, supplies, tools,
repairs, and depreciation costs. General and administrative costs are charged to
expense as incurred. Provisions for estimated losses on uncompleted contracts
are made in the period in which such losses are determined.





Earnings (Loss) Per
Share





The
Company computes earnings per share in accordance with the Accounting Standards
Codification (“ASC”) 260 “Earnings Per Share” which was previously Statement of
Accounting Standards No. 128, “Earnings per Share” (“SFAS No. 128”). Under
the provisions of SFAS No. 128, basic earnings per share is computed by dividing
the net income (loss) for the period by the weighted average number of common
shares outstanding during the period. Diluted earnings per share is computed by
dividing the net income (loss) for the period by the weighted average number of
common and potentially dilutive common shares outstanding during the
period.  There were no potentially dilutive common shares outstanding
during the period.





Income
Taxes





The
Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, “Accounting for Income Taxes.” Under the asset and
liability method of Statement 109, deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled.





Fair Value of Financial
Instruments





The
Company considers that the carrying amount of financial instruments, including
accounts payable, approximates fair value because of the short maturity of these
instruments.





Share Based
Payments





In
December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment,” which
replaces SFAS No. 123 and supersedes APB Opinion No. 25. Under SFAS No. 123(R),
companies are required to measure the compensation costs of share-based
compensation arrangements based on the grant-date fair value and recognize the
costs in the financial statements over the period during which employees or
independent contractors are required to provide services. Share-based
compensation arrangements include stock options and warrants, restricted share
plans, performance-based awards, share appreciation rights and employee share
purchase plans. In March 2005, the SEC issued Staff Accounting Bulletin No. 107,
or “SAB 107”. SAB 107 expresses views of the staff regarding the interaction
between SFAS No. 123(R) and certain SEC rules and regulations and provides the
staff's views regarding the valuation of share-based payment arrangements for
public companies. SFAS No. 123(R) permits public companies to adopt its
requirements using one of two methods. On April 14, 2005, the SEC adopted a new
rule amending the compliance dates for SFAS 123(R). Companies may elect to apply
this statement either prospectively, or on a modified version of retrospective
application under which financial statements for prior periods are adjusted 1on
a basis consistent with the pro forma disclosures required for those periods
under SFAS 123.





Effective
commencing on the year ended December 31, 2007, the Company has fully adopted
the provisions of SFAS No. 123(R) and related interpretations as provided by SAB
107. As such, compensation cost is measured on the date of grant as the fair
value of the share-based payments. Such compensation amounts, if any, are
amortized over the respective vesting periods of the option grant.






F -
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 Table of Contents





Recent Accounting
Pronouncements





FASB
Accounting Standards Codification





(Accounting
Standards Update (“ASU”) 2009-01)





In
June 2009, FASB approved the FASB Accounting Standards Codification (“the
Codification”) as the single source of authoritative nongovernmental GAAP. All
existing accounting standard documents, such as FASB, American Institute of
Certified Public Accountants, Emerging Issues Task Force and other related
literature, excluding guidance from the Securities and Exchange Commission
(“SEC”), have been superseded by the Codification. All other non-grandfathered,
non-SEC accounting literature not included in the Codification has become
non-authoritative. The Codification did not change GAAP, but instead introduced
a new structure that combines all authoritative standards into a comprehensive,
topically organized online database. The Codification is effective for interim
or annual periods ending after March 15, 2009, and impacts the Company’s
financial statements as all future references to authoritative accounting
literature will be referenced in accordance with the Codification. There have
been no changes to the content of the Company’s financial statements or
disclosures as a result of implementing the Codification during the quarter
ended March 31, 2010.   As a result of the Company’s
implementation of the Codification during the quarter ended March 31, 2010,
previous references to new accounting standards and literature are no longer
applicable. In the current quarter financial statements, the Company will
provide reference to both new and old guidance to assist in understanding the
impacts of recently adopted accounting literature, particularly for guidance
adopted since the beginning of the current fiscal year but prior to the
Codification.





In
June 2009, the FASB revised the authoritative guidance for consolidating
variable interest entities, which changes how a company determines when an
entity that is insufficiently capitalized or is not controlled through voting
(or similar rights) should be consolidated. The determination of whether a
company is required to consolidate an entity is based on, among other things, an
entity’s purpose and design and a company’s ability to direct the activities of
the entity that most significantly impact the entity’s economic performance. The
Company is currently evaluating the impact the adoption of this guidance will
have on its consolidated financial statements.





In
January 2010, the FASB issued ASU 2010-06, “Improving Disclosures about
Fair Value Measurements,” which requires additional disclosures about transfers
between Levels 1 and 2 of the fair value hierarchy and disclosures about
purchases, sales, issuances and settlements in the roll forward of activity in
Level 3 fair value measurements. This guidance was effective for the Company in
the current quarter, except for the Level 3 activity disclosures, which are
effective for fiscal years beginning after December 15, 2010. The adoption
of this guidance, which is related to disclosure only, will not have a material
impact on the Company’s consolidated financial position, results of operations
or cash flows.





Subsequent
Events





(Included
in Accounting Standards Codification (“ASC”) 855 “Subsequent Events”, previously
SFAS No. 165 “Subsequent Events”)





SFAS
No. 165 established general standards of accounting for and disclosure of
events that occur after the balance sheet date, but before the financial
statements are issued or available to be issued (“subsequent events”). An entity
is required to disclose the date through which subsequent events have been
evaluated and the basis for that date. For public entities, this is the date the
financial statements are issued. SFAS No. 165 does not apply to subsequent
events or transactions that are within the scope of other GAAP and did not
result in significant changes in the subsequent events reported by the Company.
SFAS No. 165 became effective for interim or annual periods ending after
June 15, 2009 and did not impact the Company’s financial statements. The
Company evaluated for subsequent events through the issuance date of the
Company’s financial statements. No recognized or non-recognized subsequent
events were noted.






F -
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Determination of the Useful
Life of Intangible Assets





(Included
in ASC 350 “Intangibles – Goodwill and Other”, previously FSP SFAS No. 142-3
“Determination of the Useful Lives of Intangible Assets”)





FSP SFAS
No. 142-3 amended the factors that should be considered in developing
renewal or extension assumptions used to determine the useful life of a
recognized intangible asset under previously issued goodwill and intangible
assets topics. This change was intended to improve the consistency between the
useful life of a recognized intangible asset and the period of expected cash
flows used to measure the fair value of the asset under topics related to
business combinations and other GAAP. The requirement for determining useful
lives must be applied prospectively to intangible assets acquired after the
effective date and the disclosure requirements must be applied prospectively to
all intangible assets recognized as of, and subsequent to, the effective date.
FSP SFAS No. 142-3 became effective for financial statements issued for
fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years. The adoption of FSP SFAS No. 142-3 did not impact the
Company’s financial statements.





Non-controlling
Interests





(Included
in ASC 810 “Consolidation”, previously SFAS No. 160 “Non-controlling Interests
in Consolidated Financial Statements an amendment of ARB No. 51”)





SFAS
No. 160 changed the accounting and reporting for minority interests such
that they will be recharacterized as non-controlling interests and classified as
a component of equity. SFAS No. 160 became effective for fiscal years
beginning after December 15, 2008 with early application prohibited. The
Company implemented SFAS No. 160 at the start of fiscal 2009 and no longer
records an intangible asset when the purchase price of a non-controlling
interest exceeds the book value at the time of buyout. Any shortfall resulting
from the early buyout of non-controlling interests will continue to be
recognized as a benefit in partner investment expense up to the initial amount
recognized at the time of buy-in. Additionally, operating losses can be
allocated to non-controlling interests even when such allocation results in a
deficit balance (i.e., book value can go
negative).  Minority interest expense is no longer separately reported
as a reduction to net income on the consolidated income statement, but is
instead shown below net income under the heading “net income attributable to
non-controlling interests.” The adoption of SFAS No. 160 did not have any
other material impact on the Company’s financial statements.





Consolidation of Variable
Interest Entities – Amended





(To be
included in ASC 810 “Consolidation”, SFAS No. 167 “Amendments to FASB
Interpretation No. 46(R)”)





SFAS
No. 167 amends FASB Interpretation No. 46(R) “Consolidation of
Variable Interest Entities regarding certain guidance for determining whether an
entity is a variable interest entity and modifies the methods allowed for
determining the primary beneficiary of a variable interest entity. The
amendments include: (1) the elimination of the exemption for qualifying
special purpose entities, (2) a new approach for determining who should
consolidate a variable-interest entity, and (3) changes to when it is
necessary to reassess who should consolidate a variable-interest entity. SFAS
No. 167 is effective for the first annual reporting period beginning after
November 15, 2009, with earlier adoption prohibited. The Company will adopt
SFAS No. 167 in fiscal 2010 and does not anticipate any material impact on
the Company’s financial statements.





Management
does not believe that any other recently issued, but not yet effective,
accounting standards or pronouncements, if currently adopted, would have a
material effect on the Company’s financial statements.






F -
9
 Table of Contents





NOTE
4 - EQUITY TRANSACTIONS





On
October 4, 2007 (inception), Dragon’s Lair Holdings issued 975,000 shares of
common stock for the purchase of the license to manufacture, distribute and
sell, the Sore-Eez Chinese herbal liniment, its initial product, from Yamit
Lemoine.  The value of the license was determined to be the legal
costs to create the license, which was $1,200, as there were no other
out-of-pocket costs for the license or the development of the
recipe.





On
November 4, 2007, Dragon’s Lair Holdings, Inc. issued 5,000,000 shares of common
stock to an investor for cash in the amount of $11,100.





On
December 31, 2007, Dragon’s Lair Holdings, Inc. issued 63,278 shares of common
stock to an investor for cash in the amount of $633.





On March
27, 2008, Dragon’s Lair Holdings, Inc. issued 100,000 shares of common stock to
directors for services rendered at a value of $4,008.





On
December 11, 2008, Dragon’s Lair Holdings, Inc. completed its public offering
pursuant to its Form S-1 Registration Statement of 6,780 shares of Series A
Convertible Preferred Stock, which were converted into 1,762,800 shares of
common stock and provided aggregate offering proceeds in the amount of
$67,800.





On April
1, 2009, Dragon’s Lair Holdings, Inc. issued 100,000 shares of common stock to
its transfer agent for services rendered at a value of $3,846.





On
December 14, 2009, Bobby Smith Jr. and Frances T. Mize purchased 74.1% of the
issued and outstanding stock of Dragon’s Lair holdings, Inc. exchanging
beneficial ownership to these persons.





On
February 10, 2010, the Company issued 2,075,000 restricted shares for consultant
services.





On
February 10, 2010, the Company issued an aggregate of 12,000,000 shares of
common stock of the Company, of which six (6) million were issued to each of
Frances Mize and Bobby R. Smith, Jr. to cover extraordinary expenses incurred
and paid on behalf of the Company and for future and probable
acquisitions.





On
February 10, 2010, the Company executed an agreement to issue an aggregate of
200,000 shares of common stock to Joseph L. Pittera, attorney for the Company,
for services rendered.





On March
15, 2010, the Company issued 158,150 restricted shares for IT consulting
services.





NOTE
5 - CONCENTRATION OF CREDIT RISK





Financial
instruments that potentially subject the Company to concentrations of credit
risk consist principally of cash deposits. Accounts at each institution are
insured by the Federal Deposit Insurance Corporation (“FDIC”). At March 31,
2010, the Company had no amounts in excess of the FDIC insured
limit.






F -
10
 Table of Contents





NOTE
6 – BUSINESS COMBINATIONS





On March
31, 2010, the Company acquired 100% of the outstanding common shares of
Ridgefield Development Corporation, (“Ridgefield”) from Ridgefield’s former
majority shareholders (“the shareholders”). Ridgefield is a real estate
development company in Odenville, Alabama, and the acquisition is expected to
increase the Company’s brand awareness and market share in the area. The
business combination was a tax-free reorganization under Section 368(a) of the
Internal Revenue Code.




Consideration
paid by the Company included the issuance of 1,477,516 shares of Company common
stock. The fair value assigned to the consideration is as follows:






The fair
value of $4,417,772 for the 1,477,516 shares issued by Company as consideration
paid for Ridgefield was determined on the basis of the closing market price of
Company’s common shares on the acquisition date.




The
transaction was accounted for using the acquisition method required by Topic
805, Business
Combinations. The assignment of the total consideration as of the date of
the acquisition is as follows:




Buildings,
      net
            
            
            872,737Real
      estate held for sale
            
            
            3,389,566Land
            
            
            6,480,836Other
      assets
            
            
            918,847Accounts
      payable and accrued expenses
            
            
            (22,787
            )Deferred
      income tax liability
            
            
            (1,387,179
            )Notes
      payable
            
            
            (5,834,248
            )Total
      fair value
            
            $
            4,417,772






F -
11
 Table of Contents





Fair
valuation methods used for the identifiable net assets acquired in that
acquisition make use of quoted prices in active markets and discounted cash
flows using current interest rates.





Seasonality




Historically,
the homebuilding industry has experienced seasonal fluctuations; therefore, the
operating results for the period ended March 31, 2010 is not necessarily
indicative of the results that may be expected for the fiscal year ending
December 31, 2010.







On March
31, 2010, the Company acquired 100% of the membership interests of Four Star
Realty, LLC (“Realty”) in a stock-for-membership interests exchange. The Company
issued 9,026 shares for all interests held by the members of Realty. The
transaction was a tax-free reorganization under Section 368(b) of the Internal
Revenue Code. Realty is a licensed real estate brokerage located in Odenville,
Alabama, and the acquisition is expected to increase the Company’s brand
awareness and market share in the area.











F -
12
 Table of Contents






FINANCIAL
STATEMENTS
 
 FOUR
STAR REALTY, LLC
 
 Table
of Contents
  PAGEREPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                F-1BALANCE
      SHEETS
                F-2STATEMENTS
      OF OPERATIONS
                F-3STATEMENTS
      OF CASH FLOWS
                F-4FOOTNOTES
      TO FINANCIAL STATEMENTS
                F-5
   F -
1
 Table of Contents




Independent Auditor’s
Report
 
 
 To the
Members
 Four Star
Realty, LLC
 100 Four
Star Lane
 Odenville,
AL 35120
 
 We have
audited the accompanying balance sheets of Four Star Realty, LLC as of December
31, 2008 and 2009, and the related statements of operations, changes in members’
equity, and cash flows for the years ended December 31, 2008 and 2009. These
financial statements are the responsibility of Four Star Realty, LLC management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
 
 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. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, 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 financial statements referred to above present fairly, in all
material respects, the financial position of Four Star Realty, LLC as of
December 31, 2008 and 2009, and the results of its operations and its cash flows
for the years ended December 31, 2008 and 2009 in conformity with generally
accepted accounting principles.
 
 Labrozzi
& Co., P.A.
 Miami,
Florida
 January
21, 2010
   F -
2
 Table of Contents
 
 
 FOUR
      STAR REALTY, LLCBALANCE
      SHEETSDecember
      31, 2008 and 2009ASSETSPro
      forma2009
              
              
              2008
              
              
              2009Cash
      and cash equivalents
              
              $
              15,340
              
              
              $
              16,195
              
              
              $
              15,477Due
      from members
              
              
              25,505
              
              
              
              15,000
              
              
              
              25,505Inventories
              
              
              -
              
              
              
              -
              
              
              
              402License,
      net
              
              
              -
              
              
              
              -
              
              
              
              660Property,
      plant, and equipment, net of accumulated
    depreciation
              
              
              18,161
              
              
              
              24,236
              
              
              
              18,506TOTAL
      ASSETS
              
              $
              59,006
              
              
              $
              55,431
              
              
              $
              60,550LIABILITIES
      AND MEMBERS' EQUITYPayroll
      liabilities
              
              $
              2,963
              
              
              $
              1,119
              
              
              $
              2,963Accounts
      Payable
              
              
              
              
              
              
              
              
              
              
              7,000Due
      to member
              
              
              5,071
              
              
              
              3,000
              
              
              
              5,071Commission
      payable
              
              
              12,129
              
              
              
              14,422
              
              
              
              12,129TOTAL
      LIABILITIES
              
              
              20,163
              
              
              
              18,541
              
              
              
              27,163Members'
      equity
              
              
              38,843
              
              
              
              36,890
              
              
              
              33,387TOTAL
      LIABILITIES AND MEMBERS' EQUITY
              
              $
              59,006
              
              
              $
              55,431
              
              
              $
              60,550
 
 
 
 F -
3
 Table of Contents
  
 STATEMENTS
      OF OPERATIONS and CHANGES IN MEMBERS' EQUITYYears
      Ended December 31, 2008 and 2009Pro
      forma2009
              
              
              2008
              
              
              2009RevenueCommission
      income
              
              $
              818,277
              
              
              $
              1,049,817
              
              
              $
              818,277Cost
      of sales-commssions
              
              
              627,575
              
              
              
              800,122
              
              
              
              627,575Gross
      profit
              
              
              190,702
              
              
              
              249,695
              
              
              
              190,702General
      and administrative expensesAdvertising
      and marketing, net of reimbursements
              
              
              44,502
              
              
              
              73,466
              
              
              
              44,502Amortization
              
              
              -
              
              
              
              -
              
              
              
              240Depreciation
              
              
              6,075
              
              
              
              6,080
              
              
              
              6,175Insurance
              
              
              3,530
              
              
              
              5,321
              
              
              
              3,530Miscellaneous
              
              
              14,090
              
              
              
              24,537
              
              
              
              14,090Salaries
      and wages
              
              
              43,282
              
              
              
              62,024
              
              
              
              43,282Repairs
      and maintenance
              
              
              2,275
              
              
              
              3,071
              
              
              
              2,275Professional
      fees
              
              
              33,031
              
              
              
              10,790
              
              
              
              33,031Rent
              
              
              23,000
              
              
              
              42,000
              
              
              
              23,000Supplies
              
              
              5,962
              
              
              
              8,279
              
              
              
              5,962Utilities
              
              
              13,002
              
              
              
              13,906
              
              
              
              13,002Other
      General & Administrative Costs
              
              
              -
              
              
              
              -
              
              
              
              71,271Total
      expenses
              
              
              188,749
              
              
              
              249,474
              
              
              
              260,360Net
      income
              
              $
              1,953
              
              
              $
              221
              
              
              $
              (69,658
              )MEMBERS'
      EQUITY DECEMBER 31, 2008
              
              $
              36,8902009
      NET INCOME
              
              
              1,953MEMBERS'
      EQUITY DECEMBER 31, 2009
              
              $
              38,843
 
  
 F -
4
 Table of Contents
  
 FOUR
      STAR REALTY, LLCSTATEMENTS
      OF CASH FLOWSYears
      Ended December 31, 2008 and 20092009
              
              
              2008Cash
      Flows from Operating ActivitiesNet
      income from operations
              
              $
              1,953
              
              
              $
              221Adjustments
      to reconcile net income to net cashused
      in operating activities:Depreciation
              
              
              6,075
              
              
              
              6,080Changes
      in operating assets and operating liabilities:Note
      receivable-related party
              
              
              (10,505
              )
              
              
              (15,000
              )Payroll
      liabilities
              
              
              1,844
              
              
              
              (758
              )Due
      to member
              
              
              2,071
              
              
              
              (9,081
              )Commissions
      payable
              
              
              (2,293
              )
              
              
              14,422Net
      cash used in operating activities
              
              
              (855
              )
              
              
              (4,116
              )Cash
      Flows from Investing ActivitiesCash
      paid for equipment
              
              
              -
              
              
              
              (1,888
              )Net
      cash used in investing activities
              
              
              -
              
              
              
              (1,888
              )Net
      change in cash and cash equivalents
              
              
              (855
              )
              
              
              (6,004
              )Cash
      and cash equivalents - beginning of year
              
              
              16,195
              
              
              
              22,199Cash
      and cash equivalents - end of year
              
              $
              15,340
              
              
              $
              16,195Supplemental Disclosure of Cash Flow
      Information:Cash
      paid for interest
              
              $
              -
              
              
              $
              -Cash
      paid for taxes
              
              $
              -
              
              
              $
              -
  
  F -
5
 Table of Contents
  
 NOTE 1 -
DESCRIPTION OF ORGANIZATION
  Organization. Four
Star Realty, LLC (the “Company”) was formed on January 3, 2006 under the laws of
the state of Alabama. The Company is engaged to perform all acts and lawful
transactions relating to real estate business including sale, purchase,
management, operation, construction, refurbishing and trading in plots of land
for construction, real estate of all categories, owned either by the company or
by related or other third parties.
 
 Basis of accounting.
The financial statements are prepared using the accrual basis of
accounting.  Revenues are recognized when services are rendered and
expenses are recognized in the period in which they were incurred. The basis of
accounting conforms to accounting principles generally accepted in the United
States of America.
 
 NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLCIES
  Use of estimates. The
preparation of financial statements in conformity with generally accepted
accounting principles (GAAP) requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
 
 Cash and cash
equivalents. The Company considers all highly liquid investments with
original maturities of three months or less to be cash equivalents. There were
no cash equivalents at December 31, 2009.
 
 Revenue recognition.
The Company recognizes revenue in accordance with Statement of Accounting Standards
No. 66, Accounting for Real Estate Sales. The Company recognizes revenue
from real estate sales under the full accrual method. Under the full accrual
method, profit may be realized in full when real estate is sold, provided
(1) the profit is determinable and (2) the earnings process is
virtually complete (the Company is not obligated to perform significant
activities after the sale to earn the profit). The Company recognizes revenue
from  real estate sales transactions on the closing
date.
  Impairment and Disposal of
Long-Lived Assets. The Company evaluates the carrying value of its
long-lived assets under the provisions of SFAS No. 144, “Accounting for the
Impairment or Disposal of Long-Lived Assets”. Statement No. 144
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted future
cash flows estimated to be generated by those assets are less than the assets’
carrying amount. If such assets are impaired, the impairment to be recognized is
measured at the
   F -
6
 Table of Contents
   NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLCIES (Continued)
  amount by
which the carrying amount of the assets exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying value or fair
value, less costs to sell.
  Income taxes: The Company has elected
partnership status for income tax purposes. Accordingly, a provision for income
taxes has not been established.
 
 New
accounting pronouncements:
  Fair Value
Measurements
  In
September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements".  SFAS No. 157 provides guidance for using fair
value to measure assets and liabilities. SFAS No. 157 addresses the requests
from investors for expanded disclosure about the extent to which companies
measure assets and liabilities at fair value, the information used to measure
fair value and the effect of fair value measurements on earnings. SFAS No. 157
applies whenever other standards require (or permit) assets or liabilities to be
measured at fair value, and does not expand the use of fair value in any new
circumstances. SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and was adopted by the Company in
the first quarter of fiscal year 2006. The Company is unable at this time to
determine the effect that its adoption of SFAS No. 157 will have on its results
of operations and financial condition.
  In
February 2008, the FASB issued Staff Position (“FSP”) 157-2,
“Effective Date of FASB Statement No. 157”. This FSP delays the
effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed at fair value on a
recurring basis (at least annually) to fiscal years beginning after
November 15, 2008, and interim periods within those fiscal years. The
impact of adoption was not material to the Company’s financial condition or
results of operations.
  Accounting for Uncertainty
in Income Taxes
  In July
2006, the FASB issued FASB
Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes – an
interpretation of FASB Statement No. 109". FIN 48 clarifies that
accounting for uncertainty in income taxes recognized under SFAS No. 109
"Accounting for Income Taxes". FIN 48 prescribes a recognition threshold and
measurement attribute for financial statement recognition measurement of a tax
position taken or expected to be taken in a tax return and also provides
guidelines on various related matters such as derecognition,
    F -
7
 Table of Contents
   NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLCIES (Continued)
  measurement
and classification of income tax uncertainties, interest and penalties, and
disclosure. FIN 48 also includes guidance concerning accounting for income tax
uncertainties in interim periods and increases the level of required disclosures
associated with any recorded income tax uncertainties. The differences between
the amount recognized in the statement of financial position prior to the
adoption of FIN 48 and the amounts reported after adoption are to be accounted
for as a cumulative-effect adjustment recorded to the beginning balance of
retained earnings. FIN 48 was effective beginning in fiscal year 2007 and did
not have a material effect on the Company's financial position, results of
development stage activities or liquidity.
  Considering the Effects of
Prior Year Misstatements
  In
September 2006, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 108
(SAB No. 108) "Considering the Effects of Prior Year Misstatements When
Qualifying Misstatements in Current Year Financial Statements". SAB No.
108 provides interpretive guidance on how the effects of the carryover or
reversal of prior year misstatements should be considered in qualifying a
current year misstatement. The SEC staff believes that registrants should
qualify errors using both a balance sheet and income statement approach and
evaluate whether either approach results in qualifying a current year
misstatement that, when all relevant quantitative and qualitative factors are
considered, is material. The provisions of SAB No. 108 were effective for the
Company's fiscal year ending December 31, 2006. The adoption of SAB No. 108 did
not have a material impact on the Company's financial
statements.
  Business
Combinations
  In
December 2007, the FASB issued SFAS No. 141(R) “Business
Combinations”.  This Statement replaces the original SFAS No.
141.  This Statement retains the fundamental requirements in
Statement 141 that the acquisition method of accounting (which Statement
No. 141 called the purchase method) be used for all business combinations and
for an acquirer to be identified for each business combination. The objective of
this SFAS No. 141(R) is to improve the relevance, and comparability of the
information that a reporting entity provides in its financial reports about a
business combination and its effects. To accomplish that, SFAS No. 141(R)
establishes principles and requirements for how the
acquirer:
  1.
              Recognizes
      and measures in its financial statements the identifiable assets acquired,
      the liabilities assumed, and any non-controlling interest in the
      acquiree.
  
 
 F -
8
 Table of Contents
 
 
 NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLCIES (Continued)
  2.
              Recognizes
      and measures the goodwill acquired in the business combination or a gain
      from a bargain purchase. the beginning of the first annual reporting
      period beginning on or after December 15, 2008 and may not be applied
      before that date.
  The
Company is unable at this time to determine the effect that its adoption of SFAS
No. 141(R) will have on its results of operations and financial
condition.
  Fair Value Option for
Financial Assets and Financial Liabilities
  In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities – Including an amendment of FASB
Statement No. 115”, which becomes effective for the Company on February
1, 2008, permits companies to choose to measure many financial instruments and
certain other items at fair value and report unrealized gains and losses in
earnings. Such accounting is optional and is generally to be applied instrument
by instrument. The Company does not anticipate that the election, of this
fair-value option will have a material effect on its financial condition,
results of operations, cash flows or disclosures.
 
 NOTE 3 -
PROPERTY PLANT & EQUIPMENT
  Amounts
and expected lives of property plant & equipment are as
follows:
 Amounts
                
                Expected useful
  livesComputer
      equipment
                
                $
                3,881
                
                3-5
      yearsFurniture
                
                
                21,447
                
                5-7
      yearsTelephone
      equipment
                
                
                12,050
                
                5-7
      yearsTotal
      depreciable PP&E
                
                
                37,378Less:
      Accumulated depreciation
                
                
                (19,217
                )Net
      depreciable PP&E
                
                
                18,161Total
      net PP&E
                
                $
                18,161
 Depreciation
expense for December 31, 2008 and 2009 was $6,080 and $6,075
respectively.
   F -
9
 Table of Contents
   NOTE 4-
DUE FROM MEMBERS
  During
2009, the Company made loans to the members of the Company. The balance of the
outstanding receivable as of December 31, 2009 is $25,505.
 
 NOTE- 5
DUE TO MEMBER
 
 The
managing member loaned the Company money for operations. During 2009, the
managing member paid expenses on behalf of the Company in the amount of $2,071.
Balances due as of December 31, 2008 and 2009 were $3,000 and $5,071
respectively.
 
 NOTE- 6
OPERATING LEASE AGREEMENT
 
 The
following is a schedule by years of future minimum rental payments
required under operating leases that have initial or remaining
noncancelable lease terms in excess of one year as of December 31,
2009:
 
 Year
ending December 31,:
  2010
                
                $
                24,0002011
                
                $
                24,0002012
                
                $
                24,0002013
                
                $
                24,0002014
                
                $
                24,000
       NOTE- 7
LITIGATION
 
 During
2008, the Company was involved in one pending matter in the Circuit Court of St.
Clair County, Alabama, styled Jennifer Englett, et al. vs. Four
Star Realty, LLC, et al., CV 08-30.  According to the pleadings
in the case, Jennifer Englett,(the “Plaintiffs”) have asserted claims arising from construction defects
in their homes. The Company was the exclusive listing agent for the sale of the
homes and as such has been named as a defendant in the
lawsuit.  According to the Company’s counsel, based on the evidence
and testimony to date, it appears the Plaintiffs will have a difficult time
prevailing on any claims directed at the Company and he anticipates moving for
summary judgment against the Plaintiffs as soon as all depositions have been
recorded.
  
 
 F -
10
 Table of Contents
 
  FINANCIAL
STATEMENTS
 
 RIDGEFIELD
DEVELOPMENT, CORPORATION
 
 Table
of Contents
  PAGEREPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                  F-1BALANCE
      SHEETS
                  F-2STATEMENTS
      OF OPERATIONS
                  F-3STATEMENTS
      OF CASH FLOWS
                  F-4FOOTNOTES
      TO FINANCIAL STATEMENTS
                  F-5
 
  F -
1
 Table of Contents
  Independent
Auditor’s Report
 
 
 To the
Shareholders
 Ridgefield
Development, Corporation
 100 Four
Star Lane
 Odenville,
AL 35120
 
 We have
audited the accompanying balance sheets of Ridgefield Development, Corporation
as of December 31, 2008 and 2009, and the related statements of operations,
changes in shareholders’ equity, and cash flows for the years 2008 and 2009 then
ended. These financial statements are the responsibility of Ridgefield
Development, Corporation management. Our responsibility is to express an opinion
on these financial statements based on our audit.
 
 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. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, 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 financial statements referred to above present fairly, in all
material respects, the financial position of Ridgefield Development, Corporation
as of December 31, 2008 and 2009, and the results of its operations and its cash
flows for the years 2008 and 2009 then ended in conformity with generally
accepted accounting principles.
 
 
 Labrozzi
& Co., P.A.
 Miami,
Florida
 February
27, 2010
 
 
 F -
2
 Table of Contents
 
  
 RIDGEFIELD
      DEVELOPMENT, CORPORATIONBALANCE
      SHEETSDecember
      31, 2008 and 2009ASSETS
                
                
                
                
                
                
                
                Pro-forma2009
                
                
                2008
                
                
                2009Current
      assets:Cash
                
                $
                -
                
                
                $
                14,318
                
                
                $
                137Accounts
      receivable
                
                
                42,872
                
                
                
                47,457
                
                
                
                42,872Inventories
                
                
                -
                
                
                
                -
                
                
                
                402Total
      current assets
                
                
                42,872
                
                
                
                61,775
                
                
                
                43,411Non-current
      assetsLoan
      closing costs, net of accumulated amortization
                
                
                29,072
                
                
                
                40,325
                
                
                
                29,072Due
      from related party
                
                
                617,164
                
                
                
                620,164
                
                
                
                617,164Accounts
      Receivable
                
                
                11,424
                
                
                
                11,424
                
                
                
                11,424Notes
      receivable-related parties
                
                
                225,960
                
                
                
                144,150
                
                
                
                225,960Capitalized
      interest
                
                
                1,189,497
                
                
                
                908,197
                
                
                
                1,189,497Real
      estate held for sale
                
                
                1,466,649
                
                
                
                1,418,874
                
                
                
                1,466,649Land
      held for development
                
                
                2,973,369
                
                
                
                2,973,369
                
                
                
                2,973,369License
      - net of accumulated amortization
                
                
                
                
                
                
                
                
                
                
                660Property,
      plant & equipment, net of accumulated
    depreciation
                
                
                505,014
                
                
                
                515,397
                
                
                
                505,359Total
      non-current assets
                
                
                7,018,149
                
                
                
                6,631,900
                
                
                
                7,019,154TOTAL
      ASSETS
                
                $
                7,061,021
                
                
                $
                6,693,675
                
                
                $
                7,062,565LIABILITIES
      AND SHAREHOLDERS' EQUITYLiabilities:Accounts
      Payable
                
                $
                -
                
                
                $
                -
                
                
                $
                7,000Accrued
      property tax
                
                
                11,947
                
                
                
                13,627
                
                
                
                11,947Due
      to related party
                
                
                14,810
                
                
                
                
                
                
                
                14,810Line
      of credit
                
                
                5,735,662
                
                
                
                5,245,957
                
                
                
                5,735,662TOTAL
      LIABILITIES
                
                
                5,762,419
                
                
                
                5,259,584
                
                
                
                5,769,419Shareholders'
      equity:Common
      stock
                
                
                1,000
                
                
                
                1,000
                
                
                
                89,587Retained
      earnings
                
                
                1,297,602
                
                
                
                1,433,091
                
                
                
                1,203,559Total
      shareholders' equity
                
                
                1,298,602
                
                
                
                1,434,091
                
                
                
                1,293,146TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY
                
                $
                7,061,021
                
                
                $
                6,693,675
                
                
                $
                7,062,565
    F -
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 Table of Contents
   RIDGEFIELD
      DEVELOPMENT, CORPORATIONSTATEMENTS
      OF OPERATIONS AND CHANGES IN SHAREHOLDERS' EQUITYYears
      Ended December 31, 2008 and 2009Pro-forma2009
                
                
                2008
                
                
                2009RevenueSales
                
                $
                20,011
                
                
                $
                212,047
                
                
                $
                20,011Cost
      of  sales
                
                
                17,479
                
                
                
                58,256
                
                
                
                17,479Gross
      profit
                
                
                2,532
                
                
                
                153,791
                
                
                
                2,532Operating
      expensesEmpty
      lot fees
                
                
                12,165
                
                
                
                10,991
                
                
                
                12,165Environmental
      fees
                
                
                17,670
                
                
                
                13,415
                
                
                
                17,670Repairs
                
                
                16,762
                
                
                
                8,070
                
                
                
                16,762Total
      operating expenses
                
                
                46,597
                
                
                
                32,476
                
                
                
                46,597Non-operating
      expenses:Amortization
      expense
                
                
                11,253
                
                
                
                11,253
                
                
                
                11,493Bad
      debt expense
                
                
                -
                
                
                
                22,777
                
                
                
                0Depreciation
                
                
                10,384
                
                
                
                10,384
                
                
                
                10,484Insurance
                
                
                3,902
                
                
                
                3,264
                
                
                
                3,902Interest
                
                
                2,010
                
                
                
                25,253
                
                
                
                2,010Marketing
                
                
                -
                
                
                
                5,500
                
                
                
                0Miscellaneous
                
                
                10,597
                
                
                
                2,866
                
                
                
                10,597Professional
      fees
                
                
                52,968
                
                
                
                2,625
                
                
                
                52,968Property
      taxes
                
                
                49,593
                
                
                
                61,862
                
                
                
                49,593Utilities
                
                
                2,120
                
                
                
                4,991
                
                
                
                2,120Warranty
      costs
                
                
                872
                
                
                
                15,769
                
                
                
                872Other
      General & Administrative Costs
                
                
                
                
                
                
                
                
                
                
                71,271Total
      non-operating expenses
                
                
                143,699
                
                
                
                166,544
                
                
                
                215,310Net
      operating loss
                
                
                (187,764
                )
                
                
                (45,229
                )
                
                
                (259,375
                )Other
      income (expense)Timber
      income
                
                
                16,775
                
                
                
                8,997
                
                
                
                16,775Rental
      income
                
                
                35,500
                
                
                
                44,735
                
                
                
                35,500Other
      expenses
                
                
                -
                
                
                
                (1,497
                )
                
                
                -Net
      other income
                
                
                52,275
                
                
                
                52,235
                
                
                
                52,275Net
      income (loss)
                
                $
                (135,489
                )
                
                $
                7,006
                
                
                $
                (207,100
                )SHAREHOLDERS'
      EQUITY DECEMBER 31, 2008
                
                $
                1,434,0912009
      NET LOSS
                
                
                (135,489
                )SHAREHOLDERS'
      EQUITY DECEMBER 31, 2009
                
                $
                1,298,602
  
 
 F -
4
 Table of Contents
 
 
 
 RIDGEFIELD
      DEVELOPMENT, CORPORATIONSTATEMENTS
      OF CASH FLOWSYears
      Ended December 31, 2008 and 20092009
              
              
              2008Cash
      Flows from Operating ActivitiesNet
      income (loss) from operations
              
              $
              (135,489
              )
              
              $
              7,006Adjustments
      to reconcile net income to net cashused
      in operating activities:Amortization
      expense
              
              
              11,253
              
              
              
              11,253Depreciation
      expense
              
              
              10,384
              
              
              
              10,384Provision
      for bad debts
              
              
              -
              
              
              
              22,777Gain
      on sale of fixed assets-buildings
              
              
              -
              
              
              
              8,997Changes
      in operating assets and operating liabilities:Accounts
      receivable
              
              
              4,585
              
              
              
              (64,252
              )Due
      from Twelve Oaks Properties
              
              
              3,000
              
              
              
              10,077Notes
      receivable-related parties
              
              
              (81,810
              )
              
              
              (26,297
              )Capitalized
      interest
              
              
              (281,300
              )
              
              
              (237,415
              )Real
      estate held for sale
              
              
              (47,775
              )
              
              
              891,685Land
      held for development
              
              
              -
              
              
              
              (1,469,397
              )Accounts
      payable
              
              
              -
              
              
              
              250Due
      to related party
              
              
              14,810
              
              
              
              -Accrued
      property tax
              
              
              (1,680
              )
              
              
              13,627Accrued
      interest
              
              
              -
              
              
              
              (62,000
              )Net
      cash used in operating activities
              
              
              (504,022
              )
              
              
              (883,305
              )Cash
      Flows from Investing Activities:Proceeds
      from sales of fixed assets-buildings
              
              
              -
              
              
              
              385,000-Net
      cash provided by investing activities
              
              
              -
              
              
              
              385,000Cash
      Flows from Financing Activities:Draws
      on line of credit
              
              
              489,704
              
              
              
              857,000Payments
      on line of credit
              
              
              -
              
              
              
              (475,000
              )Net
      cash provided by financing activities
              
              
              489,704
              
              
              
              382,000Net
      change in cash and cash equivalents
              
              
              (14,318
              )
              
              
              (116,305
              )Cash
      and cash equivalents - beginning of year
              
              
              14,318
              
              
              
              130,623Cash
      and cash equivalents - end of year
              
              $
              -
              
              
              $
              14,318Supplemental Disclosure of Cash Flow
      Information:Cash
      paid for interest
              
              $
              283,300
              
              
              $
              314,592Cash
      paid for taxes
              
              $
              49,593
              
              
              $
              61,682
   
 F -
5
 Table of Contents
 
 
 
 NOTE 1 -
DESCRIPTION OF ORGANIZATION
  Organization.
Ridgefield Development Corporation, (the “Company”) was formed on October 10,
2003 under the laws of the state of Alabama. The Company was formed to secure a
1400 acre property (the “Development”) in order to develop the property into
neighborhoods of affordable homes with amenity packages found only in much more
expensive neighborhoods. The Development consists of constructing the
infrastructure and improvements for a residential development in Odenville,
Alabama.
  Project
construction operations are conducted through the Company’s affiliates who share
the same ownership. The Company creates each project such that it will generate
income from the placement of the construction loan through its affiliates and/or
the capital appreciation of the facility upon sale. Affiliates and management of
the Company will develop the construction and permanent financing for the
benefit of the Company.
  The
Development currently consists of four residential neighborhoods; Acton Meadows,
a starter home community consisting of starter homes in the $130,000’s;
Brookhaven, a multi-price point neighborhood starting in the low $100,000’s to
the upper $200,000’s; Hidden Ridge, a ridge top neighborhood with larger lots as
well as a small townhome site and Ridgefield, a mid-priced neighborhood with
full size lots and a price range from $170,000 to $210,000.
  Basis of accounting.
The financial statements are prepared using the accrual basis of
accounting.  Revenues are recognized when services are rendered and
expenses are recognized in the period in which they were incurred. The basis of
accounting conforms to accounting principles generally accepted in the United
States of America.
 
 NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLCIES
  Use of estimates. The
preparation of financial statements in conformity with generally accepted
accounting principles (GAAP) requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
 
 Cash and cash
equivalents. The Company considers all highly liquid investments with
original maturities of three months or less to be cash equivalents. There were
no cash equivalents at December 31, 2009.
   F -
6
 Table of Contents
 
 NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLCIES (Continued)
  Revenue recognition.
The Company recognizes revenue in accordance with Statement of Accounting Standards
No. 66, Accounting for Real Estate Sales, under the full accrual method.
Under the full accrual method, profit may be realized in full when real estate
is sold, provided (1) the profit is determinable and (2) the earnings
process is virtually complete (the Company is not obligated to perform
significant activities after the sale to earn the profit). The Company
recognizes revenue from its real estate sales transactions on the closing
date.
  Impairment and Disposal of
Long-Lived Assets. The Company evaluates the carrying value of its
long-lived assets under the provisions of SFAS No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets”. Statement No. 144 requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted future cash flows
estimated to be generated by those assets are less than the assets’ carrying
amount. If such assets are impaired, the impairment to be recognized is measured
at the amount by which the carrying amount of the assets exceeds the fair value
of the assets. Assets to be disposed of are reported at the lower of the
carrying value or fair value, less costs to sell.
 
 Income taxes: The
Company has elected subchapter S status for income tax purposes. Accordingly, a
provision for income taxes has not been established.
 
 New accounting
pronouncements
  Fair
Value Measurements
  In
September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements".  SFAS No. 157 provides guidance for using fair
value to measure assets and liabilities. SFAS No. 157 addresses the requests
from investors for expanded disclosure about the extent to which companies
measure assets and liabilities at fair value, the information used to measure
fair value and the effect of fair value measurements on earnings. SFAS No. 157
applies whenever other standards require (or permit) assets or liabilities to be
measured at fair value, and does not expand the use of fair value in any new
circumstances. SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and was adopted by the Company in
the first quarter of fiscal year 2008. The Company is unable at this time
to
   F -
7
 Table of Contents
  
 NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
  determine
the effect that its adoption of SFAS No. 157 will have on its results of
operations and financial condition.
  In
February 2008, the FASB issued Staff Position (“FSP”) 157-2, “Effective Date of FASB Statement
No. 157”. This FSP delays the effective date of SFAS No. 157 for all
nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value on a recurring basis (at least annually)
to fiscal years beginning after November 15, 2008, and interim periods
within those fiscal years. The impact of adoption was not material to the
Company’s financial condition or results of operations.
 
 Accounting for Uncertainty
in Income Taxes
 
 In July
2006, the FASB issued FASB Interpretation No. 48 (FIN 48),"Accounting for Uncertainty in
Income Taxes – an interpretation of FASB Statement No. 109". FIN 48
clarifies that accounting for uncertainty in income taxes recognized under SFAS
No. 109 "Accounting for Income Taxes". FIN 48 prescribes a recognition threshold
and measurement attribute for financial statement recognition measurement of a
tax position taken or expected to be taken in a tax return and also provides
guidelines on various related matters such as de-recognition, measurement and
classification of income tax uncertainties, interest and penalties, and
disclosure. FIN 48 also includes guidance concerning accounting for income tax
uncertainties in interim periods and increases the level of required disclosures
associated with any recorded income tax uncertainties. The differences between
the amount recognized in the statement of financial position prior to the
adoption of FIN 48 and the amounts reported after adoption are to be accounted
for as a cumulative-effect adjustment recorded to the beginning balance of
retained earnings. FIN 48 was effective beginning in fiscal year 2007 and did
not have a material effect on the Company's financial position or
liquidity.
 
 Considering the Effects of
Prior Year Misstatements
 
 In
September 2006, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 108 (SAB No. 108)"Considering the Effects of Prior
Year Misstatements When Qualifying Misstatements in Current Year Financial
Statements". SAB No. 108 provides interpretive guidance on how the
effects of the carryover or reversal of prior year
misstatements
   F -
8
 Table of Contents
  NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
  should be
considered in qualifying a current year misstatement. The SEC staff believes
that registrants should qualify errors using both a balance sheet and income
statement approach and evaluate whether either approach results in qualifying a
current year misstatement that, when all relevant quantitative and qualitative
factors are considered, is material. The provisions of SAB No. 108 were
effective for the Company's fiscal year ending December 31, 2006. The adoption
of SAB No. 108 did not have a material impact on the Company's financial
statements.
 
 Business
Combinations
  In
December 2007, the FASB issued SFAS No. 141(R)“Business Combinations”.
This Statement replaces the original SFAS No. 141. This Statement retains the
fundamental requirements in Statement 141 that the acquisition method of
accounting (which Statement No. 141 called the purchase method) be used for
all business combinations and for an acquirer to be identified for each business
combination. The objective of this SFAS No. 141(R) is to improve the relevance,
and comparability of the information that a reporting entity provides in its
financial reports about a business combination and its effects. To accomplish
that, SFAS No. 141(R) establishes principles and requirements for how the
acquirer:
  A.)
              Recognizes
      and measures in its financial statements the identifiable assets acquired,
      the liabilities assumed, and any non-controlling interest in the
      acquiree.
  B.)
              Recognizes
      and measures the goodwill acquired in the business combination or a gain
      from a bargain purchase. the beginning of the first annual reporting
      period beginning on or after December 15, 2008 and may not be applied
      before that date.
  The
Company is unable at this time to determine the effect that its adoption of SFAS
No. 141(R) will have on its results of operations and financial
condition.
 
 
 Fair Value Option for
Financial Assets and Financial Liabilities
  In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of FASB Statement No.
115”, which becomes effective for the Company on February 1, 2008, and
permits companies to choose to measure many financial instruments and certain
other items at fair value and report unrealized
   F -
9
 Table of Contents
  NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
  gains and
losses in earnings. Such accounting is optional and is generally to be applied
instrument by instrument. The Company does not anticipate that the election, of
this fair-value option will have a material effect on its consolidated financial
condition, results of operations, cash flows or disclosures.
 
 NOTE 3-
NOTES RECEIVABLE-RELATED PARTIES
  At
December 31, 2009, “Notes receivable-related parties” in the balance sheet
consisted of notes receivable from affiliated entities of which the shareholders
of the Company are also the shareholders/members. The notes are due on demand
and are uncollateralized. The notes receivable carry interest at rates ranging
at 5% per annum. The aggregate receivable balances have been classified as
noncurrent assets because they are not expected to be collected within one year
from the balance sheet date. Below is a breakdown of the companies and the
respective balances as of December 31, 2009:
  Company
              
              AmountB&B
      Smith Construction, Inc.
              
              $
              35,000Four
      Star Investments, LLC
              
              
              125,960Four
      Star Properties, LLC
              
              
              50,000Bobby
      Smith, Jr.
              
              
              15,000Total
              
              $
              225,960
  NOTE
4-CAPITALIZED INTEREST
 
 For the
year ended December 31, 2009 the Company has recognized $283,300 in
interest expense that was capitalized and $2,010 interest expensed directly to
the Statement of Operations. Project interest expense is recorded on the balance
sheet or statement of operations depending on the status of the
project(s).
  NOTE 5-
LAND HELD FOR DEVELOPEMENT AND REAL ESTATE HELD FOR SALE
  Land
acquisition costs are capitalized as “Land Held for Development”. Project costs
that are clearly associated with the development and construction of a real
estate project are capitalized as a cost of that project. Costs are allocated to
individual projects by the specific identification method. Interest costs are
capitalized while development is in progress. When a project is completed it is
reclassified as “Real Estate Held for Sale” until it is sold. Once a project is
sold, the capitalized costs are reclassified as “Cost of Sales” to offset real
estate sales in the Statement of Operations.
   F -
10
 Table of Contents
 
 NOTE 6 -
PROPERTY PLANT & EQUIPMENT
  Amounts
and expected lives of property plant & equipment are as
follows:
  Amounts
                
                Expected useful
  livesReal
      estate building
                
                $
                339,618
                
                39
      yearsEquipment
      building
                
                
                140,062
                
                39
      yearsLand
                
                
                50,000Total
      land and depreciable PP&E
                
                
                529,680Less:
      Accumulated depreciation
                
                
                (24,666
                )Net
      land and depreciable PP&E
                
                
                505,014Total
      net PP&E
                
                $
                505,014
  Depreciation
expense for December 31, 2009 was $10,384.
 
 NOTE 7-
LINE OF CREDIT-UNION STATE BANK
  The
Company has available a revolving line of credit with Union State Bank for
$5,500,000. The line of credit expired in August 2009. Borrowings under the line
of credit bear interest at fixed rate of 8.25% per annum.  The
outstanding balance on the line of credit was $5,435,945 at December 31, 2009.
The note is personally guaranteed by the shareholders.
  The
Company has available a revolving line of credit with Covenant Bank for
$300,000. Borrowings under the line of credit bear interest at fixed rate of
5.25% per annum and mature August 5, 2010.  The outstanding balance on
the line of credit was $299,717 at December 31, 2009. The note is personally
guaranteed by the shareholders.
  
 F -
11
 Table of Contents





Item 2.Management’s Discussion and Analysis of Financial
Conditions and




Results
of Operations





Plan of
Operation





Dragon’s
Lair Holdings, Inc., a Florida corporation, was incorporated on October 4, 2007,
and conducts its operations through its operating subsidiaries. Our Company was
a provider of personal care products by means of a network of direct sales
consultants.  Our business strategy was to provide quality products,
operate at a profit, and enable our direct sales consultants to operate at a
profit.





On
December 14, 2009, Bobby Smith, Jr., (100% owner of Four Star Investment, Inc.),
and Frances Mize (a single person) together consummated the purchase of
5,928,235 shares of common stock of Dragon’s Lair Holdings, Inc. from Talles
Investments, Inc., Michel Lemoine, Yamit Lemoine, H. Bradley Ress, Steve
Kravitz, Joseph R. Pierre-Louis, and Island Capital Management, LLC, which
constituted 74.1 percent (74.1%) of the issued and outstanding shares of common
stock of Dragon’s Lair Holdings, Inc., for an aggregate cash purchase price in
the amount of $325,000.  The source of the funds for the purchase
price for the shares of common stock of the Company was from Four Star
Investments, Inc., an Alabama corporation, which is wholly owned by Bobby Smith,
Jr.  As a result of the transactions, (i) Bobby R. Smith, Jr. owns
individually 43.7 percent (43.7%) of the issued and outstanding common stock of
the Company and has the sole power to vote and dispose of the such shares (ii)
Frances Mize owns individually 30.4 percent (30.4%) of the issued and
outstanding common stock of Dragon’s Lair Holdings, Inc. and has the sole power
to vote and dispose of the such shares.





On
February 10, 2010, Dragon’s Lair Holdings, Inc. changed its name to Four Star
Holdings, Inc., (hereinafter known as the “Company”). The Company is a real
estate acquisition and development entity that invests in companies that operate
as real estate developers and home builders in order to (i) maximize cash flows,
(ii) create value within the organizations and (iii) eventually sell at a
profit.





Ridgefield
Development Corporation and Four Star Realty, LLC, an Alabama corporation and an
Alabama limited liability company, incorporated and organized on September 17,
2003 and January 1, 2006 respectively, were acquired on March 31, 2010 by the
Company.





Results of
Operation





For the
quarter ended March 31, 2010, the registrant recognized a net loss of $131,442
and a net
loss of $17,515 for the quarter ended March 31, 2009 . Some general
and administrative expenses during the year were accrued. Expenses for the year
were comprised of costs mainly associated with the business combination between
Four Star Holdings, Inc., Ridgefield Development Corporation and Four Star
Realty, LLC, legal, accounting and office expenses.






- 4
-
 Table of Contents





Liquidity and Capital
Resource





The
company will rely upon
the  issuance  of  common  stock  and  additional  capital  contributions  from
shareholders  to  fund  administrative expenses
pending full implementation of the Company’s business model.





Critical Accounting
Policies





Four Star
Holding’s financial statements and related public financial information are
based on the application of accounting principles generally accepted in the
United States (“GAAP”). GAAP requires the use of estimates; assumptions,
judgments and subjective interpretations of accounting principles that have an
impact on the assets, liabilities, revenue and expense amounts reported. These
estimates can also affect supplemental information contained in our external
disclosures including information regarding contingencies, risk and financial
condition.  We believe our use if estimates and underlying accounting
assumptions adhere to GAAP and are consistently and conservatively applied. We
base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances. Actual results may
differ materially from these estimates under different assumptions or
conditions. We continue to monitor significant estimates made during the
preparation of our financial statements.




Item 3.  Quantitative and Qualitative
Disclosures About Market
  Not
Applicable.


Item 4T.Controls and Procedures





(a)
            Evaluation
      of disclosure controls and
procedures.





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting for the Company. Internal control over
financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under
the Securities Exchange Act of 1934 (Exchange Act) as a process designed by or
under the supervision of, our chief executive officer and chief financial
officer and affected by our Board of Directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles and includes those policies and
procedures that:





Pertain
to the maintenance of records in reasonable detail to accurately and fairly
reflect the transactions and dispositions of our assets





Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in  accordance with authorizations of our management
and directors: and





Provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company’s assets that could have a
material effect on the financial statements.






- 5
-
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Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.





Management
assessed the effectiveness of the Company’s Internal Control over financial
reporting as of March 31, 2010. In making this assessment, management used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission in this Internal Control-Integrated Framework.


In light
of the fact that we filed the 10-Q without labeling the filing as “not reviewed”
we have re-reviewed our internal control systems for assuring the completeness
and accuracy of our filings. To ensure our future compliance with all SEC
regulations, we have formalized and implemented a new procedure whereby all of
the minutes of our board of directors and audit committee meetings will be
forwarded to our SEC counsel. He will review those minutes and advise management
as to the filings or other steps necessary to comply with SEC
regulations.
  With this
addition, management re-assessed the effectiveness of our Internal Control over
financial reporting. In making this assessment, management used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission in
this Internal Control-Integrated Framework.
  Based on
our re-assessment, we believe that, as of June 30, 2010 our internal control
over financial reporting are effective.
  Evaluation
of Disclosure Controls and Procedures




We
maintain disclosure controls and procedures (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) that are designed to ensure that information
required to be disclosed in the reports we file or submit under the Exchange Act
is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to our management, including our chief executive officer and
chief financial officer, as appropriate to allow timely decisions regarding
disclosure.  In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.





Our
management, with the participation of our chief executive officer and chief
financial officer, have evaluated the effectiveness of our disclosure controls
and procedures as of March 31, 2010.  Based on their evaluation, our
chief executive officer and chief financial officer have concluded that, as of
March 31, 2010, our disclosure controls and procedures were
effective.





(b)            Changes in internal
controls.





There
have not been any changes in the Company’s internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the quarter ended March 31, 2010 that have materially
affected, or are reasonably likely to materially affect, the Company’s internal
control over financial reporting.








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PART
II - OTHER INFORMATION





Item 1.  Legal Proceedings.





The
Company is party to one lawsuit which was filed on May 6, 2010 in the United
States District Court for the Northern District of Alabama, Middle Division as
case number CV-10-PT-1183-M.





The
Plaintiffs in the lawsuit are Cirrus Acquisition and Development Corporation, a
Nevada corporation, and Cirrus Global Capital Management, Inc., a Nevada
corporation, Cirrus Holdings, Inc., and Richard Woods.  The Plaintiffs
sued the following Defendants: Four Star Companies, Inc., a Florida corporation
and its subsidiaries, including but not limited to Twelve Oaks Properties, Inc.,
Ridgefield Development, SBE, Inc., Four Star Realty, Four Star Investments,
B&B Smith Construction, and Four Star Land Ventures; Dragon’s Lair Holdings,
Inc., a Florida corporation; Four Star Holding Company, Inc. a Florida
corporation; Bobby Smith, Jr. individually and in his capacity as officer,
director and principal of Four Star Companies, Inc., Dragon’s Lair Holdings,
Inc.; Fran Mize, individually and in her capacity as officer, director and
principal of Four Star Companies, Inc., Dragon’s Lair Holdings, Inc., and Four
Star Holdings, Inc.





The
lawsuit alleges that the Plaintiffs are owed Four Star Holdings, Inc. common
stock and cash in payment for financial brokerage services
rendered.  The Company disputes the quality and effectiveness of such
services and expects that the matter will be resolved in its favor.




During 2008, Four Star Realty, LLC was involved
in one pending matter in the Circuit Court of St. Clair County, Alabama, styled
Jennifer Englett, et al. vs.
Four Star Realty, LLC, et al., CV 08-30.  According to the
pleadings in the case, Jennifer Englett,(the
“Plaintiffs”) have asserted claims arising from construction defects in their
homes. The Company was the exclusive listing agent for the sale of the homes and
as such has been named as a defendant in the lawsuit.  According to
the Company’s counsel, based on the evidence and testimony to date, it appears
the Plaintiffs will have a difficult time prevailing on any claims directed at
the Company and he anticipates moving for summary judgment against the
Plaintiffs as soon as all depositions have been recorded.


Item 2.   Changes in
Securities.





None





Item 3. Defaults Upon Senior
Securities.





None





Item 4. Submission of Matters to a Vote of Security
Holders.





None




Item 5.Other Information.
 
 On
January 1, 2010, the board of directors appointed Alvin A. Rhoney, Age: 58, to
serve as the Chief Financial Officer.
 
 Mr.
Rhoney has 30 years of results oriented, business and financial management
experience. He is a former partner with a large international C.P.A. firm where
he was responsible for audits and management advisory services (MAS) for his
clients. The depth and breadth of his audit and MAS experience spans virtually
every business entity.
 
 During
the past 15 years he has worked as an Interim CFO for a wide variety of
businesses throughout the United States, most notably, the largest privately
held mining manufacturer in the world. He designs and installs customized
systems, procedures, and controls to strengthen internal controls and increase
profit.
 
 Mr.
Rhoney holds a degree in business administration from Niagara University, New
York. He is a New York State Certified Public Accountant and a Certified
Management Consultant.




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There are
no family relationships between Mr. Rhoney and any other of our directors or
executive officers.
 
 Mr.
Rhoney has never had any material direct or indirect interest in any of our
transactions or proposed transactions.


The
Company did not timely file an 8-K in connection with the acquisitions related
to the business combinations of Ridgefield Development Corporation and Four Star
Realty, LLC. These transactions are incorporated by reference in this filing
including audited financial statements for the prior two years containing
pro-forma information required by Regualation S-X
03-05.




On March
8, 2010, Four Star Holdings entered into a contract with Crucible Capital Group,
Inc. ( a New York corporation) which provides Crucible with the exclusive right
to be its consultant, financial advisor, and agent in connection with private
equity financing, debt facilities, and credit facilities all arranging for
financing and/or lines of credit up to approximately $45,000,000.  The
initial term of the agreement is one hundred eighty (180) days and shall renew
monthly, subject to all other terms and conditions.  The agreement may
be terminated by the Company or Crucible at any time upon thirty (30) days prior
written notice.




On
February 12, 2010, a professional services agreement between IBP Advisors, LLC,
(a Texas limited liability company) and the Company was executed for software
implementation and training services in connection with the purchase of
specialized home-building software. The agreement is effective through December
31, 2010 and is cancelable with seven (7) days written
notice.




On
February 4, 2010, the Company executed an agreement with the Law Offices of
Joseph L. Pittera( a California professional services firm) to provide legal
services in connection with the preparation of a variety of legal documents on a
monthly basis including but not limited to: Legal Opinions, Merger and
Acquisition Agreements, Registration Statements, and other corporate and
securities work.




On
February 3, 2010, the Company executed an agreement with Private Resources, LLC,
(a Wyoming corporation) to provide financial advisory, growth services, board
advisory assembly, brand recognition, market maker support, FINRA filing
support, press release strategies, institutional debt/equity funding, and
general business consulting.




The above
transactions have been, or will be included in an 8-K filing with the new
independent registered auditing firm.





Item 6.   Exhibits and Reports on Form
8-K





(a) Exhibits




21.1    List of Subsidiaries





32.1  
Certification pursuant to Section 302 of Sarbanes Oxley Act of
2002





32.2   Certification pursuant to Section 302 of
Sarbanes Oxley Act of 2002





32.2    Certification pursuant to Section 906 of
Sarbanes Oxley Act of 2002





(b) Reports
on Form 8-K





8-K filed February 10, 2010 regarding
items 2.01, 5.03, 8.01 and 9.01





8-K filed February 16, 2010 regarding
items 1.01, 3.02 and 9.01








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SIGNATURES





In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.








FOUR
STAR HOLDINGS, INC.








Date: 
July 16, 2010





/s/ Bobby R. Smith,
Jr.


Bobby R.
Smith, Jr.


Chief
Executive Officer










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