UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
DC 20549
 
 FORM
10-Q
 
 [X]
                        Quarterly
      Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934For
      the quarterly period ended December 31,
      2008[  ]
                        Transition
      Report pursuant to 13 or 15(d) of the Securities Exchange Act of
      1934For
      the transition period __________ to__________Commission
      File Number:  333-140438
 
 Blue Earth Solutions,
Inc.
 (Exact
name of small business issuer as specified in its charter)
 
 Nevada
                        26-1909139(State
      or other jurisdiction of incorporation or
    organization)
                        (IRS
      Employer Identification
No.)
 
 13511 Granville Ave., Clermont, Florida,
      34711(Address
      of principal executive offices)
 
 352-729-0150(Issuer’s
      telephone number)_______________________________________________________________(Former
      name, former address and former fiscal year, if changed since last
      report)
 Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such 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 [X] Yes
[  ] No
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.
 
 [ ]
      Large accelerated filer Accelerated filer
              [ ]
      Non-accelerated filer[X]
      Smaller reporting company
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). [ ] Yes   [X] No
 
 State the
number of shares outstanding of each of the issuer’s classes of common stock, as
of the latest practicable date: 32,019,300 common shares as of December 31,
2008.
  
 
 TABLEOF
      CONTENTS
                        PagePART I – FINANCIAL
      INFORMATIONItem 1:
                        Financial Statements
                        3Item 2:
                        Management’s Discussion and Analysis of Financial Condition and
      Results of Operations
                        4Item 4T:
                        Controls and Procedures
                        9PART II – OTHER INFORMATIONItem 1:
                        Legal Proceedings
                        10Item 2:
                        Unregistered Sales of Equity Securities and Use of
      Proceeds
                        10Item 3:
                        Defaults Upon Senior Securities
                        11Item 4:
                        Submission of Matters to a Vote of Security
      Holders
                        11Item 5:
                        Other Information
                        11Item 6:
                        Exhibits
                        11
  2
  PART
I - FINANCIAL INFORMATION
 
 Item1.     Financial Statements
 
 Our
      unaudited financial statements included in this Form 10-Q are as
      follows:F-1
              Balance Sheets as of December 31, 2008
      (unaudited);F-2
              Statements of Operations for the three and nine months ended
      December 31, 2008 and period from February 5, 2008 (Inception) to December
      31, 2008 (unaudited);F-3
              Statement of Stockholders’ Equity for period from February 5,
      2008 (Inception) to December 31, 2008 (unaudited);F-4
              Statements of Cash Flows for the three and nine months ended
      December 31, 2008 and period from February 5, 2008 (Inception) to December
      31, 2008 (unaudited);F-5
              Notes to Unaudited Financial
  Statements;
 
 
 These
unaudited financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim
financial information and the SEC instructions to Form 10-Q.  In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included.  Operating results for the interim
period ended December 31, 2008 are not necessarily indicative of the results
that can be expected for the full year.
  3
 
 BLUEEARTH SOLUTIONS, INC.
 (A
Development Stage Company) Balance
Sheets
 ASSETSDecember
      31
                                                                2008
                                                            March
      31,
                                                                2008(unaudited)
                                                            
                                                            (audited)CURRENT
      ASSETSCash
      and cash equivalents
                                                            $
                                                            102,169
                                                            
                                                            $
                                                            15,150Depository
      funds
                                                            
                                                            8,135,897
                                                            
                                                            
                                                            -Accounts
      receivable
                                                            
                                                            1,257
                                                            
                                                            
                                                            -Prepaid
      expenses
                                                            
                                                            109,223
                                                            
                                                            
                                                            -Inventory
                                                            
                                                            185,686
                                                            
                                                            
                                                            -Total
      Current Assets
                                                            
                                                            8,534,232
                                                            
                                                            
                                                            15,150PROPERTY
      AND EQUIPMENT, net
                                                            
                                                            6,768,762
                                                            
                                                            
                                                            545,417OTHER
      ASSETSDeposits
                                                            
                                                            6,043
                                                            
                                                            
                                                            -TOTAL
      ASSETS
                                                            $
                                                            15,309,037
                                                            
                                                            $
                                                            560,567LIABILITIES AND STOCKHOLDERS'
      EQUITYCURRENT
      LIABILITIESAccounts
      payable and accrued expenses
                                                            $
                                                            725,303
                                                            
                                                            $
                                                            -Notes
      payable - related parties
                                                            
                                                            20,000
                                                            
                                                            
                                                            200,000Total
      Current Liabilities
                                                            
                                                            745,303
                                                            
                                                            
                                                            200,000LONG-TERM
      LIABILITIESNotes
      payable - related parties
                                                            
                                                            1,049,000
                                                            
                                                            
                                                            -Total
      Current Liabilities
                                                            
                                                            1,794,303
                                                            
                                                            
                                                            200,000STOCKHOLDERS'
      EQUITYPreferred
      stock, Series A, $0.001 par value, 10,000,000 shares
      authorized, -0- and
                                                              400,000shares
      issued and outstanding
                                                            
                                                            -
                                                            
                                                            
                                                            400Preferred
      stock, Series B, $0.001 par value, 5,000,000 shares
      authorized, -0- and
                                                              36,500
      shares issued and outstanding, respectively
                                                            
                                                            -
                                                            
                                                            
                                                            37Preferred
      stock, Series C, $0.001 par value, 5,000,000 shares
      authorized, 14,130 and
                                                                no
      shares issued and outstanding, respectively
                                                            
                                                            14
                                                            
                                                            
                                                            -Common
      stock, $0.001 par value, 100,000,000 shares authorized,
      32,019,300 and
                                                              7,000,000
      shares issued and outstanding, respectively
                                                            
                                                            32,019
                                                            
                                                            
                                                            7,000Additional
      paid-in capital
                                                            
                                                            15,594,338
                                                            
                                                            
                                                            357,713Deficit
      accumulated during the development stage
                                                            
                                                            (2,111,637)
                                                            
                                                            
                                                            (4,583)Total
      Stockholders' Equity
                                                            
                                                            13,514,734
                                                            
                                                            
                                                            360,567TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                                                            $
                                                            15,309,037
                                                            
                                                            $
                                                            560,567
 The
accompanying notes are an integral part of these financial
statements.
 F-1
 
 BLUEEARTH SOLUTIONS, INC.
 (A
Development Stage Company)
 For
      the Three Months Ended December 31, 2008
                                                                                    
                                                                                    For
      the Nine
                                                                                            Months
      Ended
                                                                                            December 31,
    2008
                                                                                    
                                                                                    From
      Inception
                                                                                              on February 5, 2008 Through
                                                                                              December 31,
      2008REVENUES
                                                                                    $
                                                                                    5,937
                                                                                    
                                                                                    $
                                                                                    20,453
                                                                                    
                                                                                    $
                                                                                    20,453COST
      OF SALES
                                                                                    
                                                                                    3,051
                                                                                    
                                                                                    
                                                                                    6,986
                                                                                    
                                                                                    
                                                                                    6,986Gross
      Profit
                                                                                    
                                                                                    2,886
                                                                                    
                                                                                    
                                                                                    13,467
                                                                                    
                                                                                    
                                                                                    13,467OPERATING
      EXPENSESDepreciation
      expense
                                                                                    
                                                                                    30,407
                                                                                    
                                                                                    
                                                                                    62,490
                                                                                    
                                                                                    
                                                                                    67,073Warrant
      consulting expense
                                                                                    
                                                                                    985,936
                                                                                    
                                                                                    
                                                                                    985,936
                                                                                    
                                                                                    
                                                                                    985,936General
      and administrative
                                                                                    
                                                                                    621,938
                                                                                    
                                                                                    
                                                                                    1,197,834
                                                                                    
                                                                                    
                                                                                    1,197,834Total
      Operating Expenses
                                                                                    
                                                                                    1,638,281
                                                                                    
                                                                                    
                                                                                    2,246,260
                                                                                    
                                                                                    
                                                                                    2,250,843LOSS
      FROM OPERATIONS
                                                                                    
                                                                                    (1,635,395)
                                                                                    
                                                                                    
                                                                                    (2,232,793)
                                                                                    
                                                                                    
                                                                                    (2,237,376)OTHER
      INCOME (EXPENSES)Interest
      income
                                                                                    
                                                                                    103,342
                                                                                    
                                                                                    
                                                                                    153,417
                                                                                    
                                                                                    
                                                                                    153,417Interest
      expense
                                                                                    
                                                                                    (12,238)
                                                                                    
                                                                                    
                                                                                    (27,678)
                                                                                    
                                                                                    
                                                                                    (27,678)Total
      Other Income (Expenses)
                                                                                    
                                                                                    91,104
                                                                                    
                                                                                    
                                                                                    125,739
                                                                                    
                                                                                    
                                                                                    125,739NET
      LOSS BEFORE INCOME TAXES
                                                                                    
                                                                                    (1,544,291)
                                                                                    
                                                                                    
                                                                                    (2,107,054)
                                                                                    
                                                                                    
                                                                                    (2,111,637)Income
      taxes
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    -NET
      LOSS
                                                                                    $
                                                                                    (1,544,291)
                                                                                    
                                                                                    $
                                                                                    (2,107,054)
                                                                                    
                                                                                    $
                                                                                    (2,111,637)BASIC
      LOSS PER COMMON SHARE
                                                                                    $
                                                                                    (0.05)
                                                                                    
                                                                                    $
                                                                                    (0.09)WEIGHTED
      AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
                                                                                    
                                                                                    29,016,300
                                                                                    
                                                                                    
                                                                                    22,397,975
 The
accompanying notes are an integral part of these financial
statements.
 F-2
 
 BLUEEARTH SOLUTIONS, INC.
 (A
Development Stage Company)
 Statements
of Stockholders' Equity
 (unaudited)
 Preferred
      Stock
                                                                                                  
                                                                                                  Common
      Stock
                                                                                                  
                                                                                                  Additional
                                                                                                      Paid-In
                                                                                                  
                                                                                                  Deficit
                                                                                                          Accumulated
                                                                                                          During the
      DevelopmentShares
                                                                                                  
                                                                                                  Amount
                                                                                                  
                                                                                                  Shares
                                                                                                  
                                                                                                  Amount
                                                                                                  
                                                                                                  Capital
                                                                                                  
                                                                                                  Stage
                                                                                                  
                                                                                                  TotalBalance,
      February 5, 2008
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  $
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  $
                                                                                                  -
                                                                                                  
                                                                                                  $
                                                                                                  -
                                                                                                  
                                                                                                  $
                                                                                                  -
                                                                                                  
                                                                                                  $
                                                                                                  -Common
      shares issued to founders
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  7,000,000
                                                                                                  
                                                                                                  
                                                                                                  7,000
                                                                                                  
                                                                                                  
                                                                                                  (6,850)
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  150Series
      A preferred shares issued to founders
                                                                                                  
                                                                                                  400,000
                                                                                                  
                                                                                                  
                                                                                                  400
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  (400)
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -Series
      B preferred shares issued in a private placement at $10 per
      share
                                                                                                  
                                                                                                  36,500
                                                                                                  
                                                                                                  
                                                                                                  37
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  364,963
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  365,000Net
      loss from inception through March 31, 2008
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  (4,583)
                                                                                                  
                                                                                                  
                                                                                                  (4,583)Balance,
      March 31, 2008
                                                                                                  
                                                                                                  436,500
                                                                                                  
                                                                                                  
                                                                                                  437
                                                                                                  
                                                                                                  
                                                                                                  7,000,000
                                                                                                  
                                                                                                  
                                                                                                  7,000
                                                                                                  
                                                                                                  
                                                                                                  357,713
                                                                                                  
                                                                                                  
                                                                                                  (4,583)
                                                                                                  
                                                                                                  
                                                                                                  360,567Recapitalization
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  20,759,300
                                                                                                  
                                                                                                  
                                                                                                  20,759
                                                                                                  
                                                                                                  
                                                                                                  7,099
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  27,858Common
      shares returned and cancelled
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  (3,200,000)
                                                                                                  
                                                                                                  
                                                                                                  (3,200)
                                                                                                  
                                                                                                  
                                                                                                  3,200
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -Series
      B preferred shares issued in a private placement at $10 per
      share
                                                                                                  
                                                                                                  44,000
                                                                                                  
                                                                                                  
                                                                                                  44
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  439,956
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  440,000Series
      B preferred shares converted to common
                                                                                                  
                                                                                                  (80,500)
                                                                                                  
                                                                                                  
                                                                                                  (81)
                                                                                                  
                                                                                                  
                                                                                                  1,449,000
                                                                                                  
                                                                                                  
                                                                                                  1,449
                                                                                                  
                                                                                                  
                                                                                                  (1,368)
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -Common
      shares issued for services at $6.13 per share
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  11,000
                                                                                                  
                                                                                                  
                                                                                                  11
                                                                                                  
                                                                                                  
                                                                                                  64,539
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  64,550Series
      C preferred shares issued in a private placement at $1,000 per
      share
                                                                                                  
                                                                                                  14,130
                                                                                                  
                                                                                                  
                                                                                                  14
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  14,129,986
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  14,130,000Dividends
      on preferred stock
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  (387,123)
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  (387,123)Series
      A preferred shares converted to common stock
                                                                                                  
                                                                                                  (400,000)
                                                                                                  
                                                                                                  
                                                                                                  (400)
                                                                                                  
                                                                                                  
                                                                                                  6,000,000
                                                                                                  
                                                                                                  
                                                                                                  6,000
                                                                                                  
                                                                                                  
                                                                                                  (5,600)
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -Fair
      value of warrants granted
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  985,936
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  985,936Net
      loss for the nine months ended through December 31,
      2008
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  (2,107,054)
                                                                                                  
                                                                                                  
                                                                                                  (2,107,054)Balance,
      December 31, 2008
                                                                                                  
                                                                                                  14,130
                                                                                                  
                                                                                                  $
                                                                                                  14
                                                                                                  
                                                                                                  
                                                                                                  32,019,300
                                                                                                  
                                                                                                  $
                                                                                                  32,019
                                                                                                  
                                                                                                  $
                                                                                                  15,594,338
                                                                                                  
                                                                                                  $
                                                                                                  (2,111,637)
                                                                                                  
                                                                                                  $
                                                                                                  13,514,734
 The
accompanying notes are an integral part of these financial
statements.
 F-3
 
 BLUEEARTH SOLUTIONS, INC.
 (A Development Stage Company) Statements of Cash Flows (unaudited)
 For
      the Nine
                                                                          Months
      Ended
                                                                          December 31,
    208
                                                                  
                                                                  From
      Inception
                                                                            onFebruary 5, 2008
                                                                            Through
                                                                            December 31,
      2008OPERATING
      ACTIVITIESNet
      loss
                                                                  $
                                                                  (2,107,054)
                                                                  
                                                                  $
                                                                  (2,111,637)Adjustments
      to Reconcile Net Loss to NetCash
      Used in Operating Activities:Depreciation
      expense
                                                                  
                                                                  62,490
                                                                  
                                                                  
                                                                  67,073Shares
      issued for services
                                                                  
                                                                  64,550
                                                                  
                                                                  
                                                                  64,550Fair
      value of warrants granted
                                                                  
                                                                  985,936
                                                                  
                                                                  
                                                                  985,936Changes
      in operating assets and liabilities:(Increase)
      decrease in prepaid expenses
                                                                  
                                                                  (115,266)
                                                                  
                                                                  
                                                                  (115,266)(Increase)
      decrease in accounts receivable
                                                                  
                                                                  (1,257)
                                                                  
                                                                  
                                                                  (1,257)(Increase)
      decrease in depository accounts
                                                                  
                                                                  (8,135,897)
                                                                  
                                                                  
                                                                  (8,135,897)(Increase)
      decrease in inventory
                                                                  
                                                                  (185,686)
                                                                  
                                                                  
                                                                  (185,686)Increase (decrease) in accounts payableand accrued
      expenses
                                                                  
                                                                  366,038
                                                                  
                                                                  
                                                                  366,038Net
      Cash Used in Operating Activities
                                                                  
                                                                  (9,066,146)
                                                                  
                                                                  
                                                                  (9,066,146)INVESTING
      ACTIVITIESPurchase
      of property and equipment
                                                                  
                                                                  (5,236,835)
                                                                  
                                                                  
                                                                  (5,586,835)Net
      Cash Used in Investing Activities
                                                                  
                                                                  (5,236,835)
                                                                  
                                                                  
                                                                  (5,586,835)FINANCING
      ACTIVITIESRepayment
      of notes payable
                                                                  
                                                                  (200,000)
                                                                  
                                                                  
                                                                  (200,000)Borrowings
      of notes payable
                                                                  
                                                                  20,000
                                                                  
                                                                  
                                                                  20,000Issuance
      of common shares for cash
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  150Issance
      of preferred shares for cash
                                                                  
                                                                  14,570,000
                                                                  
                                                                  
                                                                  14,935,000Net
      Cash Provided by Financing Activities
                                                                  
                                                                  14,390,000
                                                                  
                                                                  
                                                                  14,755,150NET
      INCREASE IN CASH
                                                                  
                                                                  87,019
                                                                  
                                                                  
                                                                  102,169CASH
      AT BEGINNING OF PERIOD
                                                                  
                                                                  15,150
                                                                  
                                                                  
                                                                  -CASH
      AT END OF PERIOD
                                                                  $
                                                                  102,169
                                                                  
                                                                  $
                                                                  102,169SUPPLEMENTAL
      DISCLOSURES OF CASH
      FLOW INFORMATIONCASH
      PAID FOR:Interest
                                                                  $
                                                                  27,678
                                                                  
                                                                  $
                                                                  27,678Income
      taxes
                                                                  $
                                                                  -
                                                                  
                                                                  $
                                                                  -NON
      CASH FINANCING ACTIVITIES:Property
      purchased for notes payables
                                                                  $
                                                                  1,049,000
                                                                  
                                                                  $
                                                                  1,249,000
  The
accompanying notes are an integral part of these financial
statements.
 F-4
 BLUEEARTH SOLUTIONS, INC.
 (A
Development Stage Company)
 Notes to
the Financial Statements
 NOTE 1 -
CONDENSED FINANCIAL STATEMENTS
 
 The
accompanying financial statements have been prepared by the Company without
audit.  In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows at December 31, 2008 and for all
periods presented have been made.
 
 Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted. It is suggested that
these condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's March 31, 2008 audited
financial statements.  The results of operations for the period ended
December 31, 2008 are not necessarily indicative of the operating results for
the full years.
 
 NOTE 2 -
GOING CONCERN
 
 The
Company’s financial statements are prepared using generally accepted accounting
principles applicable to a going concern which contemplates the realization of
assets and liquidation of liabilities in the normal course of
business.  The Company has limited revenues and has generated losses
from operations.
 
 In order
to continue as a going concern and achieve a profitable level of operations, the
Company will need, among other things, additional capital resources and to
develop a consistent source of revenues.  Management’s plans include
developing and marketing a practical, economical and environmentally safe means
of disposing of and recycling certain polystyrene and expended polystyrene
products.
 
 The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plan described in the preceding paragraph
and eventually attain profitable operations.  The accompanying
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
 
 NOTE 3 –
SIGNIFICANT ACCOUNTING POLICIES
 
 Use of
Estimates
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ
from those estimates.
 
 
 F-5
 BLUE
EARTH SOLUTIONS, INC.
 (A
Development Stage Company)
 Notes to
the Financial Statements
 NOTE 3 –
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Inventory
 The
Company’s inventory is comprised of chemicals for the recycling of
polystyrene.
 
 As of
December 31, 2008 inventory consisted of the following:
  Raw
      materials
                                                      $
                                                      176,617Finished
      goods
                                                      
                                                      9,069Work
      in process
                                                      
                                                      -Total
                                                      $
                                                      185,686
  Recent Accounting
Pronouncements
 
 In
June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities,
(“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in
share-based payment transactions are participating securities prior to vesting,
and therefore need to be included in the computation of earnings per share under
the two-class method as described in FASB Statement of Financial Accounting
Standards No. 128, “Earnings per Share.” FSP EITF 03-6-1 is effective for
financial statements issued for fiscal years beginning on or after
December 15, 2008 and earlier adoption is prohibited. We are not required
to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF 03-6-1 would have
material effect on our consolidated financial positionand results of
operations if adopted.
 
 In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163,
“Accounting for Financial
Guarantee Insurance Contracts-and interpretation of FASB Statement No.
60”.SFAS
No. 163 clarifies how Statement 60 applies to financial guarantee insurance
contracts, including the recognition and measurement of  premium
revenue and claims liabilities. This statement also requires expanded
disclosures about financial guarantee insurance contracts. SFAS No. 163 is
effective for fiscal years beginning on or after December 15, 2008, and interim
periods within those years. SFAS No. 163 has no effect on the Company’s
financial position, statements of operations, or cash flows at this
time.
 
 In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162,
“The Hierarchy of Generally
Accepted Accounting Principles”.SFAS No. 162 sets forth
the level of authority to a given accounting pronouncement or document by
category. Where there might be conflicting guidance between two categories, the
more authoritative category will prevail. SFAS No. 162 will become effective 60
days after the SEC approves the PCAOB’s amendments to AU Section 411 of the
AICPA Professional Standards. SFAS No. 162 has no effect on the Company’s
financial position, statements of operations, or cash flows at this
time.
 
 F-6
 BLUE
EARTH SOLUTIONS, INC.
 (A
Development Stage Company)
 Notes to
the Financial Statements
 
 NOTE 4 –
EQUITY TRANSACTIONS
 
 On May
16, 2008, the Company entered into an Agreement and Plan of Merger (the “Merger
Agreement”) with Blue Earth Solutions, Inc., a privately held Delaware
corporation (“Blue Earth Delaware”), and Blue Earth Acquisition, Inc.
(“Acquisition Sub”), the Company’s newly formed wholly-owned Nevada subsidiary.
In connection with the closing of this merger transaction, Blue Earth Delaware
merged with and into Acquisition Sub (the “Merger”) on May 16, 2008, with the
filing of articles of merger with the Nevada and Delaware secretaries of
state.  Subsequently, on May 16, 2008, the Company merged with the
Acquisition Sub in a short-form merger transaction under Nevada law in which the
Company was the surviving entity and, in connection with this short form merger,
changed our name to Blue Earth Solutions, Inc., effective May 16, 2008. Blue
Earth Delaware is the surviving entity for accounting purposes.
 
 In
addition, pursuant to the terms and conditions of the Merger
Agreement:
 
 Each
share of Blue Earth Delaware common stock issued and outstanding immediately
prior to the closing of the Merger was converted into the right to receive three
shares of our common stock. As a result, the shareholders of Blue Earth Delaware
received 21,000,000 newly issued shares of the Company’s common stock. Each
share of Blue Earth Delaware Series A Preferred Stock issued and outstanding
immediately prior to the closing of the Merger was converted into the right to
receive one share of the Company’s newly created Series A Preferred Stock. As a
result, the Series A Preferred shareholders of Blue Earth Delaware received
400,000 newly issued shares of the Company’s Series A Preferred Stock. Each
share of Blue Earth Delaware Series B Preferred Stock issued and outstanding
immediately prior to the closing of the Merger was converted into the right to
receive one share of the Company’s newly created Series B Preferred Stock. As a
result, the Series B Preferred shareholders of Blue Earth Delaware received
80,500 newly issued shares of the Company’s Series B Preferred
Stock.  Following the closing of the merger, in a separate
transaction, the Company’s former Chief Executive Officer and sole director
agreed to cancel and return all 3,200,000 shares of his common stock into
treasury.
 
 On August
29, 2008 the Company completed an offering of its Series C Preferred Stock at an
offering price of $1,000 per share in a private placement.  The
Company a total of 14,130 shares for total gross proceeds of $14,130,000,
including $13,430,000 in cash and the cancelation of the $700,000 promissory
note owed to JDC Group, Inc., incurred on August 6, 2008.  JDC Group,
Inc. is a Florida corporation controlled by James Cohen, Jr., a member of the
board of directors. The Series C Preferred Stock carries rights and
preferences senior to those of the common stock and to the rights of the Series
A Preferred Stock and Series B Preferred Stock.
 
 The
Series C Preferred Stock votes with the common stock at a rate of 100 votes for
every share of Series C Preferred Stock.  Each share of the Series C
Preferred Stock is entitled to a cumulative dividend of $80 per share, payable
annually on December 31 of each year, prorated to the date of issuance for
partial years.  If the
 
 NOTE 4 –
EQUITY TRANSACTIONS (CONTINUED)
 
 Company
has funds legally available to pay the dividend, but fail to do so by January 31
of the following year, then the missed dividend increases to $104 per share
payable in cash or, at the option of the Series C Preferred shareholder, the
common stock valued at the average closing price for the twenty trading days
after December 31 just passed.  The dividend on the Series C Preferred
Stock must be paid prior to the payment of any dividends to the holders of our
Series A Preferred Stock, the Series B Preferred Stock, or our common
stockholders.  The Series C Preferred Stock also carries a $1,000 per
share liquidation preference, which must be paid prior to any amounts paid upon
liquidation of the company to the holders of the Series A Preferred Stock, the
Series B Preferred Stock, or the common stockholders.
 
 Effective
September 29, 2008, the Company converted the entirety of its issued and
outstanding Series B Preferred Stock, consisting of 80,500 shares, into
1,449,000 shares of its restricted common stock and warrants to purchase an
additional 483,000 shares of its common stock exercisable on or before December
31, 2020, at a strike price of $1.33 per share.
 
 During
the nine months ended December 31, 2008 the Company issued 5,000 shares of its
common stock for services valued at $6.13 per share.
 
 Effective
October 21, 2008, the entire 400,000 shares of the Company’s Series A Preferred
Stock were converted to 6,000,000 shares of the Company’s common
stock.
 F-7
  Item2.     Management’s Discussion and
Analysis of Financial Condition and Results of Operations
 
 Forward-Looking
Statements
 
 Certain
statements, other than purely historical information, including estimates,
projections, statements relating to our business plans, objectives, and expected
operating results, and the assumptions upon which those statements are based,
are “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of
1934.   These forward-looking statements generally are identified
by the words “believes,” “project,” “expects,” “anticipates,” “estimates,”
“intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will
continue,” “will likely result,” and similar expressions.  We intend
such forward-looking statements to be covered by the safe-harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, and are including this statement for purposes of complying with
those safe-harbor provisions.  Forward-looking statements are based on
current expectations and assumptions that are subject to risks and uncertainties
which may cause actual results to differ materially from the forward-looking
statements. Our ability to predict results or the actual effect of future plans
or strategies is inherently uncertain.  Factors which could have a
material adverse affect on our operations and future prospects on a consolidated
basis include, but are not limited to: changes in economic conditions,
legislative/regulatory changes, availability of capital, interest rates,
competition, and generally accepted accounting principles. These risks and
uncertainties should also be considered in evaluating forward-looking statements
and undue reliance should not be placed on such statements.  We
undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or
otherwise.  Further information concerning our business, including
additional factors that could materially affect our financial results, is
included herein and in our other filings with the SEC.
 
 Business
Overview
 
 Since May
16, 2008, we now own and pursue as our primary line of business the development
and commercialization of the StyroSolveTM system, a closed-loop process (our
“Process”) for collecting and recycling polystyrene foam products (”EPS”), as
well as StyroSolveTM, a proprietary solvent (our “Solvent”) used in the Process
to reduce expanded polystyrene to a gel. We then further process the resulting
gel through extruders, resulting in commercial quality plastic pellets, which
can be sold to manufacturers for use in the production of a wide variety of
plastic products. We now conduct operations from our facility at 13511 Granville
Ave., Clermont, FL, 34711.
 
 Our
emphasis is on recycling waste EPS products. Because they tend to be bulky,
cumbersome and generally difficult to discard, few other companies are pursuing
the recycling of these products as their business plan. We believe that our
Process provides a greater economic return and a more complete and
ecologically-friendly strategy for addressing EPS recycling when compared with
existing methods of recycling EPS.  In addition to EPS recycling using
our Process, we also have installed a line of recycling equipment using
traditional EPS recycling methods and technology at our Clermont
facility.
  4
 
 As of
December 31, 2008, we have entered into agreements for the collection of waste
recyclable materials with approximately eleven (11) providers and we continue to
collect this waste recyclable material for processing at our initial facility in
Clermont, Florida.  As of December 31, 2008, we have commenced the
operation of two of our lines of EPS recycling equipment on a pre-production
basis, but have not yet begun production on a full commercial
scale.
 
 We had
anticipated beginning recycling operations on a full commercial scale during the
quarter ended September 30, 2008, at our Clermont facility, but experienced
unexpected delays. We may or may not be able to overcome the challenges that
arise and conduct operations successfully on a scale necessary to achieve
profitable operations. Therefore, this must be considered an unproven technology
and a high-risk business plan.
 
 Anticipated
Expenses in the next twelve months
 
 Over the
next twelve months, we intend to extend our operations beyond our Clermont
Florida plant to processing centers in Memphis, TN, Atlanta, GA, Dallas TX,
Houston, TX, Fort Smith AK, Jacksonville, FL and locations within the states of
California, Oregon, Washington, Nevada, Arizona, Colorado and Utah. We intend to
continue to seek municipal bond offerings through the communities where we plan
to build processing centers in order to finance these efforts. Should we be
unsuccessful in obtaining municipal bond financing, our business plan may be
delayed.
 
 We
anticipate that the approximate expenses associated with the cost of opening and
operating each processing center for twelve months will be as
follows:
 
 Processing
Center
 
 Item
                                            Average
      Cost of OpeningBuilding
      and improvements
                                            $
      3,069,188Processing
      Line One
                                            $
      2,369,500Processing
      Line Two
                                            $    755,000Equipment,
      electrical, etc common two both lines
                                            $    440,000Material
      Handling Equipment
                                            $      98,600Recycling
      equipment
                                            $      25,500Transportation
      equipment
                                            $    900,000Miscellaneous
      Maintenance and Safety Equipment
                                            $      14,500Office
      Furniture
                                            $      21,750Operational
      and production Technology
                                            $    742,800Start
      up expenses
                                            $    416,950Total
                                            $
      8,853,788
 
 We also
expect to incur approximately $1,190,000 per year in other expenses including:
executive salaries totalling $825,000 annually; office supplies, phones, and
miscellaneous expenses totalling $90,000 annually; marketing and public relation
costs of $125,000 annually, including three staff members; and legal and
accounting fees totalling $250,000 annually.
  5
 
 Including
the above, we anticipate that we will require approximately $9,000,000 per
location in order to fully implement our business plan in the next twelve
months.  As funding is made available through municipal bonds, we plan
on opening additional locations.  Should we generate revenue through
operations or financing other than municipal bonds, we plan on opening
additional locations. Based on the Clermont processing center, we intend to use
that as a model to aid us both in replicating the operations in other
metropolitan areas throughout the United States, and in raising additional
capital through municipal bond financing and other methods to fund this
expansion if we determine that such expansion is warranted and such financing is
required. We have already begun the process of seeking capital through municipal
bond financing in several communities. We do not presently have sufficient
capital to fully proceed with this expansion plan.  In connection with
raising this additional capital, we will incur appropriate accounting and legal
fees. Should our revenues be sufficient to cover the costs of any such
expansion, we will not seek additional financing.
 
 Plan
for other Products and Services
 
 In
addition to our recycling operations, we produce six other products on a very
limited basis, including Tire Muscle®, Dumpster EaseTM, Diaper EaseTM, Nu-silver,
Nu-Brass, and Nu-Chrome.  These products have a limited customer base
currently and have not been heavily marketed or distributed. We intend to
increase marketing of these product lines and feel they will be contributors to
the company.
 
 Marketing
Plan & Sales Strategy
 
 Our goal
is to become the industry leader in the recycling of EPS. Our initial marketing
efforts will focus on acquiring EPS for recycling and re-sale as Pellets. We
will continue our efforts to build relationships that will aid us in acquiring
scrap EPS from the construction industry, the packaging industry, local and
state governments, military bases and vessels, and the food services
industry.
 
 We also
intend to increase public awareness of our company and our Process to create
public support for our services. We intend to use Internet-based and traditional
media to accomplish this. If the general public supports our efforts for
environmental reasons, we feel that the likelihood of large organizations
utilizing our services will increase significantly. We also intend to work
closely with trade groups, including the International Expanded Polystyrene
recycling Association (“INEPSA”) and the Alliance of Foam Packaging Recyclers
(“AFPRA”) to introduce the technology to the industry. By coordinating our
public awareness campaigns with theirs, we feel we can educate a broader
audience regarding the recycling of EPS in general, and regarding our services
in particular.
 
 We also
plan on attending relevant national events and conferences. There are events and
conferences managed by national institutions and organizations to promote their
respective industries. We plan to attend a number of events attended by the
organizations mentioned above that generate a large amount of scrap EPS. These
events will include trade meetings, promotional events, seminars, and
conferences, which are heavily attended by decision-makers within those
industries, in order to further expose our services.
  6
 
 We intend
to work with landfills serving the areas around our processing center and
transfer stations. By intercepting EPS bound for the landfill, we believe that
we can extend the life of the landfill and reduce the environmental impact of
EPS. Similarly, we will work to provide EPS recycling on a residential level in
communities where there is already a residential recycling pick-up program in
place. In such cases, we will attempt to partner with those companies that are
already picking up recyclables, allowing them to add EPS to their list of
recyclable material and providing additional scrap EPS for us.
 
 In
addition to acquiring scrap EPS to recycle into Pellets, we will need to sell
the Pellets, which we will produce. The market for polystyrene pellets, however,
is open and well-established. While we plan to expend as much effort as we deem
necessary to sell our Pellets, demand within the plastics manufacturing industry
is such that we do not anticipate any difficulties in selling our Pellets.
Polystyrene pellets are the similar regardless of the supplier and prices are
relatively fixed. Our executive management will work to establish contacts
within the industry to ensure that we are able to participate in this market in
a profitable manner. By working closely with companies that manufacture products
from polystyrene, we will also be able to provide a public relations boost to
these partners, as they will be able to promote their products as both recycled
and recyclable. These types of partnerships should further ensure a steady
market for our Pellets.
 
 Sales
Personnel
 
 As of
December 31, 2008, we have hired and deployed one sales person to focus on foam
collection in the Central Florida area. We have been contracting independent
marketing representatives to sell and distribute Tire Muscle, Dumpster Ease and
other proprietary formulas and polishes.  In addition, we will
continue to use the services of our executive management to sell our
services and products. As the area in which our services and products are
offered expands, however, we plan to employ additional regional sales
representatives to promote and sell our recycling services to governments,
companies, and the general public. These sales representatives will be
responsible for soliciting, selecting and securing accounts within a particular
regional territory.  We may or may not continue this pay policy depending
on the territory in the country.  We expect to provide service and support
to our sales representatives, including advertising and sales
materials.
 
 Results
of Operations for the Three Months Ended December 31, 2008 and Period from
February 5, 2008 (Date of Inception) until December 31, 2008
 
 Revenue
of $5,937and $20,453 was generated for the three months ended December 31, 2008
and nine months ended December 31, 2008 and the period from February 5, 2008
(Date of Inception) until December 31, 2008 respectively. The revenue consisted
of our non-recycling related products, primarily Tire Muscle® and Dumpster
EaseTM. Cost of Sales of $3,051 and $6,986 was incurred for the same periods
respectively. Operating Expenses were $1,638,281, $2,246,260 and $2,250843 for
the three months ended December 31, 2008, the nine months ended December 31,
2008 and the period from February 5, 2008 (Date of Inception) until December 31,
2008 respectively.  For each period, Operating Expenses consisting
entirely of Depreciation Expense, and General and Administrative Fees which per
partially offset by interest income of $103,342 and $153,417 for the same
periods respectively. Included in operating expenses for each period was
$985,936 for the fair value of warrants granted to consultants.
  7
 
 The
Company recorded a net loss of $1,544,291, $2,107,054 and $2,111,637 for the
three months ended December 31, 2008, the nine months ended December 31, 2008
and the period from February 5, 2008 (Date of Inception) until December 31, 2008
respectively. Excluding the fair value of the warrants granted to consultants
the loss would have been of $558,355, $1,121,118 and $1,125,701 for the three
months ended December 31, 2008, the nine months ended December 31, 2008 and the
period from February 5, 2008 (Date of Inception) until December 31, 2008
respectively.
 
 We
anticipate our operating expenses will increase as we undertake our plan of
operations. The increase will be attributable to the continued development of
our Products and Services, and the professional fees associated with our
becoming a reporting company under the Securities Exchange Act of
1934.
 
 Liquidity
and Capital Resources
 
 As of
December 31, 2008, working capital was $7,788,929 which was composed of
$8,534,232 in current assets less $745,303 of current liabilities.
 
 Operating
activities used $9,066,146 in cash for the nine months ended December 31, 2008
and for the period from February 5, 2008 (Date of Inception) until December 31,
2008. The primary uses in Operating Activities were for the $8,135,897 increase
in the depository account, net losses of $2,107,054 and $2,111,637 respectively.
Investing activities used $5,236,835 and $5,586,838 in cash for the nine months
ended December 31, 2008 and for the period from February 5, 2008 (Date of
Inception) until December 31, 2008 respectively. Funds were used to purchase
property and equipment. Financing Activities generated $14,390,000 and
$14,755,150 in cash for the nine months ended December 31, 2008,
and  for the period from February 5, 2008 (Date of Inception) until
December 31, 2008 respectively.
 
 As of
December 31, 2008, there was cash in the amount of $102,169, which we believe is
not sufficient cash to operate and achieve implementation of our full business
plan. The success of our business plan is contingent upon us obtaining
additional financing and establishing a consistent source of revenues. We intend
to fund operations through debt and/or equity financing arrangements, which may
be insufficient to fund our capital expenditures, working capital, or other cash
requirements. We do not have any formal commitments or arrangements for the
sales of stock or the advancement or loan of funds at this time. There can be no
assurance that such additional financing will be available to us on acceptable
terms, or at all.
 
 Off
Balance Sheet Arrangements
 
 As of
December 31, 2008, there were no off balance sheet arrangements.
  8
 
 Going
Concern
  Our
financial statements are prepared using generally accepted accounting principles
applicable to a going concern which contemplates the realization of assets and
liquidation of liabilities in the normal course of business.  We have
limited revenues and have generated losses from operations.
 
 In order
to continue as a going concern and achieve a profitable level of operations, we
will need, among other things, additional capital resources and to develop a
consistent source of revenues.  Management’s plans include developing
and marketing a practical, economical and environmentally safe means of
disposing of and recycling certain polystyrene and expended polystyrene
products.
 
 Our
auditors have indicated that our ability to continue as a going concern is
dependent upon our ability to successfully accomplish the plan described in the
preceding paragraph and eventually attain profitable operations.  The
accompanying financial statements do not include any adjustments that might be
necessary if we are unable to continue as a going concern.
 
 Item4T.     Controls and
Procedures
 
 We
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of December 31, 2008.  This evaluation was
carried out under the supervision and with the participation of our Chief
Executive Officer Patricia Cohen, and our Chief Financial Officer, Paul
Slusarczyk.  Based upon that evaluation, our Chief Executive Officer
and Chief Financial Officer concluded that, as of December 31, 2008, our
disclosure controls and procedures are effective.  There have been no
changes in our internal controls over financial reporting during the quarter
ended December 31, 2008.
 
 Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.
 
 Limitations on the
Effectiveness of Internal Controls
 
 Our
management does not expect that our disclosure controls and procedures or our
internal control over financial reporting will necessarily prevent all fraud and
material error. Our disclosure controls and procedures are designed to provide
reasonable assurance of achieving our objectives and our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and
procedures are effective at that reasonable assurance level.  Further,
the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within the Company have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
internal control. The design of any system of controls also is based in part
upon certain assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions. Over time, control may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate.
 
 9
 
 PART
II – OTHER INFORMATION
 
 Item1.     Legal Proceedings
 
 Except as
described below, we are not a party to any pending legal proceeding, nor are we
aware of any pending legal proceeding to which any of our officers, directors,
or any beneficial holders of 5% or more of our voting securities are adverse to
us or have a material interest adverse to us.
 
 On
December 22, 2008, the Company filed an action in the Eighth Judicial District
Court in and for Clark County, Nevada, at case no. 08-A-578406-B, against
several persons, including former director and 5% shareholder Harvey Katz, and
former employee Claudia Iovino, Iovino’s husband, a shareholder Caicedo
Resources LLC and brokerage firms Glendale Securities, Citigroup Global Markets,
Smith Barney, and Penson Financial Services.  Our complaint alleged
multiple causes of action arising out of the conversion of the Company’s Series
A Preferred Stock by Katz and Iovino into common stock in or about October 2008,
and the subsequent public resale by Katz, Iovino, and Caicedo of some of those
shares and / or other common stock held by the defendants.  The
gravamen of the Company’s complaint was that the shares of common stock held by
the Defendants, including the shares resulting from the conversion of the Series
A Preferred Stock, could not be publicly resold by Defendants.  The
Company’s complaint sought both damages and injunctive relief.  The
Company moved for both a temporary restraining order and a preliminary
injunction enjoining further sales of the securities and freezing the proceeds
of all sales consummated thus far.
 
 On
December 22, 2008, the court issued a temporary restraining order which, inter alia, barred further
sales of those shares by all defendants and temporarily freezing all proceeds of
sales already consummated.  Defendants Katz and Iovino responded and
objected to the TRO and any preliminary injunction on several grounds, including
that SEC Rule 144 permitted the public resale of the securities in
question.  After the end of the reporting period, on January 12, 2008,
the court held a hearing on the Company’s motion for a preliminary
injunction.  On January 16, 2009, the court entered a preliminary
injunction which, inter alia, enjoined any further sale of the securities until
the earlier of a full trial on the merits or May 20, 2009, but returned the
proceeds of prior sales of the securities at issue to the
defendants.
 
 Defendants
Katz and Iovino have moved to dismiss certain claims brought by the Company in
its complaint, have answered the Company’s complaint, and have filed
counterclaims seeking unspecified damages.  The Company intends to
vigorously defend the pending motions and the counterclaims.
 
 Item2.     Unregistered Sales of Equity
Securities and Use of Proceeds
 
 During
the three month period ended December 31, 2008, we engaged in the
following:
 
 Series
A Preferred Stock Conversion
 
 Effective
October 21, 2008 the entirety of our issued and outstanding Series A Preferred
Stock was converted into 6,000,000 shares of our common stock.
  10
 
 Series
C Preferred Stock Issuance
 
 On August
29, 2008 we completed and closed a private placement of our newly created Series
C Preferred Stock at an offering price of $1,000 per share.  We sold a
total of 14,130 shares for total gross proceeds of $14,130,000, including
$13,430,000 in cash and the cancelation of the $700,000 promissory note owed to
JDC Group, Inc., incurred on August 6, 2008.  We filed a Current
Report on Form 8-K on September 4, 2008, disclosing this private
placement.
 
 Item3.     Defaults upon Senior
Securities
 
 None
 
 Item4.     Submission of Matters to a Vote
of Security Holders
 
 No
matters have been submitted to our security holders for a vote, through the
solicitation of proxies or otherwise, during the quarterly period ended December
31, 2008.
 
 Item5.     Other Information
 
 None.
 
 Item6.      Exhibits
 
 ExhibitNumber
                        Description
      of Exhibit31.1
                        Certification of Chief Executive Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200231.2
                        Certification of Chief Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200232.1
                        Certification of Chief Executive Officer and Chief
      Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of
  2002
 
 11
  SIGNATURES
 
 In
accordance with the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
 
 Blue
      Earth Solutions, Inc.Date:
              February 17,
      2009By:      
      /s/ Patricia
      Cohen
                Patricia
      Cohen
                Title:Chief
      Executive Officer and
Director