UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
OF 1934

                 For the quarterly period ended March 31, 2009

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

            For the transition period from __________ to ___________

                        Commission File Number 333-135852


                              BLUGRASS ENERGY, INC.
                          (Formerly Coastal Media Inc.)
              (Exact name of small business issuer in its charter)

             Nevada                                        20-4952339
             -------                                       ----------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

                           3751 Appain Way, Suite #75
                            Lexington, KY 40517-5929
                           --------------------------
                    (Address of principal executive offices)

                                 (859) 552-6036
                                 --------------
                               (Telephone Number)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

                  Yes  [X]                      No  [ ]

Indicate by check mark whether the registrant has submitted  electronically  and
posted on its corporate Web site, if any, every  Interactive  Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter)  during the  preceding 12 months (or for such shorter  period that
the registrant was required to submit and post such files). 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   [ ]        Smaller reporting company [X]

<PAGE>

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

                  Yes  [ ]                    No  [X]


There were 54,000,000 shares of Common Stock outstanding as of May 15, 2009.


<PAGE>



PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements       (Unaudited)                           Page

         Balance Sheets - March 31, 2009 and June 30, 2008 (Audited)       F-1

         Statements of Operations  -
                  Three and Nine months ended March 31, 2009 and
                  2008 and From May 19, 2006(Inception) to March
                  31, 2009                                                 F-2

         Statements of Cash Flows -
                  Nine months ended March 31, 2009 and 2008 and
                  From May 19, 2006 (Inception) to March 31, 2009          F-3

         Notes to the Financial Statements                                 F-4

Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations                                 1

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

Item 4. Controls and Procedures                                             3

Item 4T.  Controls and Procedures                                           4

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings -Not Applicable                                  4

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds        4
                  -Not Applicable

Item 3.  Defaults Upon Senior Securities - Not Applicable                   5

Item 4.  Submission of Matters to a Vote of Security Holders
                  - Not Applicable                                          5

Item 5.  Other Information - Not Applicable                                 5

Item 6.  Exhibits                                                           5

SIGNATURES                                                                  6


<PAGE>

<TABLE>
<CAPTION>

Item 1.  Financial Statements


                                 Blugrass ENERGY, INC.
                            (Formerly Coastal Media, Inc.)
                             (A Development Stage Company)
                                    BALANCE SHEETS


                                                                            March 31,          June 30,
                                                                               2009              2008
                                                                          ---------------   ---------------
                                                                           (Unaudited)        (Audited)
<S>                                                                       <C>               <C>

Assets
        Current Assets:
               Cash                                                                $ 549          $ 14,227
                                                                          ---------------   ---------------
        Total Current Assets                                                         549            14,227
                                                                          ---------------   ---------------

        Fixed Assets:
               Office Equipment                                                    3,424             3,424
                                                                          ---------------   ---------------
        Total Other Assets                                                         3,424             3,424
                                                                          ---------------   ---------------

Total Assets                                                                     $ 3,973          $ 17,651
                                                                          ===============   ===============


Liabilities and Stockholders' Deficit
        Current liabilities
               Accounts payable                                                 $ 28,002               $ -
               Accounts payable, related party                                       207               200
               Accrued interest payable                                            6,562                 -
               Convertible notes payable                                         416,666                 -
                                                                          ---------------   ---------------
        Total Current Liabilities                                                451,437               200

Stockholders' Equity
        Common stock, $0.001 par value; 75,000,000 shares
          authorized, 54,000,000 shares issued and outstanding
          at March 31, 2009 and June 30, 2008, respectively                       54,000            54,000
        Additional paid-in capital                                                (4,000)           (4,000)
        Deficit accumulated during the development stage                        (497,464)          (32,549)
                                                                          ---------------   ---------------
               Total Stockholders' Equity                                       (447,464)           17,451
                                                                          ---------------   ---------------

Total liabilities and stockholders' equity                                       $ 3,973          $ 17,651
                                                                          ===============   ===============
</TABLE>


See the notes to these financial statements.


                                         F-1

<PAGE>

<TABLE>
<CAPTION>

                                       BLUEGRASS ENERGY, INC.
                                   (Formerly Coastal Media, Inc.)
                                    (A Development Stage Company)
                                      STATEMENTS OF OPERATIONS
                                             (Unaudited)

                                                   For The Three Months Ended           For the Nine Months Ended      May 19, 2006
                                                            March 31,                            March 31,            (Inception) to
                                                    2009                2008             2009             2008        March 31, 2009
                                                 --------------   --------------    -------------    -------------    --------------
<S>                                              <C>              <C>               <C>              <C>              <C>

Revenue:                                                   $ -              $ -              $ -              $ -               $ -
                                                 --------------   --------------    -------------    -------------    --------------

Operational expenses:
         Leasing fees                                   44,223                -          360,823                -           360,823
         Depreciation expense                                -                -                -                -               747
         Professional fees                              64,299            4,600           73,747            4,600            89,247
         General and administrative expenses            14,235            2,568           23,783            6,053            40,085
                                                 --------------   --------------    -------------    -------------    --------------

                 Total operational expenses            122,757            7,168          458,353           10,653           490,902
                                                 --------------   --------------    -------------    -------------    --------------

Other Expense:
         Interest expense                               (4,686)               -           (6,562)               -            (6,562)
                                                 --------------   --------------    -------------    -------------    --------------
                                                        (4,686)               -           (6,562)               -            (6,562)

Net loss                                            $ (127,443)        $ (7,168)      $ (464,915)       $ (10,653)       $ (497,464)
                                                 ==============   ==============    =============    =============    ==============

Per share information

Net loss per common share
         Basic                                   $           *    $           *                *     $          *
         Fully diluted                                       *                *                *                *
                                                 ==============   ==============    =============    =============

Weighted average number of common
         stock outstanding                          54,000,000       54,000,000       54,000,000       54,000,000
                                                 ==============   ==============    =============    =============

         * Less than $(0.01) per share.
</TABLE>


See the notes to these financial statements.

                                      F-2

<PAGE>

<TABLE>
<CAPTION>

                                   BLUGRASS ENERGY, INC.
                              (Formerly Coastal Media, Inc.)
                               (A Development Stage Company)
                                  STATEMENT OF CASH FLOWS
                                        (Unaudited)

                                                                                                           May 19, 2006
                                                                       For the Nine Months Ended          (Inception) to
                                                                               March 31,                     March 31,
                                                                        2009               2008                2009
                                                                   ---------------    ---------------   --------------------
<S>                                                                <C>                <C>               <C>

Cash Flows from Operating Activities:
        Net Loss                                                       $ (464,915)         $ (10,653)            $ (497,464)
Adjustments to reconcile net loss to
         net cash used by operating activities:
        Depreciation                                                            -                  -                    747
Adjustments to reconcile net loss to net cash used
        in operating activities:
        Increase in accounts payable                                       28,002                  -                 28,002
        Increase in accounts payable, related party                           (43)               200                    207
        Increase in accrued interest payable                                6,562                  -                  6,562
                                                                   ---------------    ---------------   --------------------

Net Cash Used by Operating Activities                                    (430,394)           (10,453)              (461,946)
                                                                   ---------------    ---------------   --------------------

Cash Flows from Investing Activities
        Purchase of office equipment                                            -             (3,662)                (4,171)
                                                                   ---------------    ---------------   --------------------
Net Cash Used in Investing Activities                                           -             (3,662)                (4,171)
                                                                   ---------------    ---------------   --------------------

Cash Flows from Financing Activities:
        Proceeds from convertible promissory notes                        416,666                  -                416,666
        Proceeds from issuance of common stock                                  -                  -                 50,000
                                                                   ---------------    ---------------   --------------------

Net Cash Provided by Financing Activities                                 416,666                  -                466,666
                                                                   ---------------    ---------------   --------------------

Net Increase (decrease) in Cash                                           (13,728)           (14,115)                   549

Cash and Cash Equivalents - Beginning of Period                            14,277             30,844                      -
                                                                   ---------------    ---------------   --------------------

Cash and Cash Equivalents - End of Period                                   $ 549           $ 16,729                  $ 549
                                                                   ===============    ===============   ====================


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
        Cash paid for interest expense                                        $ -                $ -                    $ -
                                                                   ===============    ===============   ====================
        Cash paid for income taxes                                            $ -                $ -                    $ -
                                                                   ===============    ===============   ====================
</TABLE>


See the notes to these financial statements.


                                      F-3

<PAGE>

<TABLE>
<CAPTION>


                                  (A Development Stage Company)
                                STATEMENT OF STOCKHOLDER'S EQUITY
                      From May 19, 2006 (Inception) through March 31, 2009
                                           (Unaudited)

                                                                                            Deficit accum
                                                                            Additional        During
                                             Common Stock                    paid-in         Development
                                           Number of shares    Amount        Capital           Stage           Totals
                                          -----------------  -----------   -------------   --------------   --------------
<S>                                       <C>                <C>            <C>            <C>              <C>

Balance - May 19, 2006                                  -           $ -             $ -              $ -              $ -
  Stock issued for cash $0.005 per share        2,000,000         2,000           8,000                -           10,000
  Net loss                                              -             -               -             (551)            (551)
                                          ----------------   -----------   -------------   --------------   --------------
Balance - June 30, 2006                         2,000,000         2,000           8,000             (551)           9,449
                                          ----------------   -----------   -------------   --------------   --------------

  Stock issued for cash $0.025 per share        1,600,000         1,600          38,400                -           40,000
  Net loss                                              -             -               -          (18,131)         (18,131)
                                          ----------------   -----------   -------------   --------------   --------------
Balance - June 30, 2007                         3,600,000         3,600          46,400          (18,682)          31,318
                                          ----------------   -----------   -------------   --------------   --------------

  Net loss                                              -             -               -          (13,867)         (13,867)
                                          ----------------   -----------   -------------   --------------   --------------
Balance - June 30, 2008                         3,600,000         3,600          46,400          (32,549)          17,451
                                          ----------------   -----------   -------------   --------------   --------------

  Forward stock split                          50,400,000        50,400         (50,400)               -                -
  Net loss                                              -             -               -         (464,915)        (464,915)
                                          ----------------   -----------   -------------   --------------   --------------
Balance - March 31, 2009                       54,000,000      $ 54,000        $ (4,000)      $ (497,464)      $ (447,464)
                                          ================   ===========   =============   ==============   ==============
</TABLE>

See the notes to these financial statements.

                                                      F-4



<PAGE>

                              Blugrass ENERGY, INC,
                          (Formerly Coastal Media Inc.)
                         (An Development Stage Company)
                          Notes to Financial Statements
                                 March 31, 2009
                                   (Unaudited)


NOTE 1.   ORGANIZATION AND DESCRIPTION OF BUSINESS

Coastal Media Inc. (the Company) was incorporated under the laws of the State of
Nevada on May 19, 2006. On October 1, 2008,  the Company  amended its Article of
Incorporation  to change its name from  Coastal  Media Inc. to Blugrass  Energy,
Inc.  The  Company  was  formed  to  engage in the  business  of  manufacturing,
marketing, distributing and selling its marine DVDs.

The  Company  is in the  development  stage.  Its  activities  to date have been
limited to capital formation, organization and development of its business plan.
The Company has commenced limited start up operations.

On October 1, 2008, the Company effected a forward stock split of the issued and
outstanding  shares  of  common  stock on a fifteen  for one  basis.  Authorized
capital remained at 75,000,000 common shares and par value remained at $.001 per
share.  After the forward  split the Company had  54,000,000  shares  issued and
outstanding.

In  addition,   on  October  1,  2008,  the  Company  amended  its  Articles  of
Incorporation  to change its name from "Coastal Media Inc." to "Blugrass  Energy
Inc.." As a result of the name of the change,  the Company's  trading symbol was
changed to "BLUG."


NOTE 2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a.   Basis of Accounting

The Company's  financial  statements  are prepared  using the accrual  method of
accounting. The Company has elected a June 30 year-end.

b.   Interim Presentation

In the opinion of the  management  of the Company,  the  accompanying  unaudited
financial statements include all material adjustments,  including all normal and
recurring  adjustments,  considered  necessary to present  fairly the  financial
position and  operating  results of the Company for the periods  presented.  The
financial  statements and notes do not contain certain  information  included in
the Company's  financial  statements for the year ended June 30, 2008. It is the
Company's  opinion  that  when  the  interim  financial  statements  are read in
conjunction with the June 30, 2008 Audited Financial Statements, the disclosures
are adequate to make the information  presented not misleading.  Interim results
are not necessarily indicative of results for a full year or any future period.

c.   Basic Earnings per Share

In February 1997, the FASB issued  Statement of Financial  Accounting  Standards
("SFAS")  No.  128,  "Earnings  Per Share",  which  specifies  the  computation,
presentation  and  disclosure  requirements  for  earnings  (loss) per share for
entities with publicly held common stock. SFAS No. 128 supersedes the provisions
of APB No. 15, and requires the  presentation of basic earnings (loss) per share
and diluted earnings (loss) per share. The Company has adopted the provisions of
SFAS No. 128 effective May 19, 2006 (date of inception).

                                      F-5

<PAGE>

                              Blugrass ENERGY, INC,
                          (Formerly Coastal Media Inc.)
                         (An Development Stage Company)
                          Notes to Financial Statements
                                 March 31, 2009
                                   (Unaudited)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Basic net loss per share  amounts is computed  by  dividing  the net loss by the
weighted average number of common shares outstanding. Diluted earnings per share
are the same as basic  earnings  per share due to the lack of dilutive  items in
the Company.

d.   Cash Equivalents

The Company considers all highly liquid  investments  purchased with an original
maturity of three months or less to be cash equivalents.

e.  Use of Estimates and Assumptions

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates. In accordance with FASB 16 all
adjustments are normal and recurring.

f.   Income Taxes

Income  taxes are  provided in  accordance  with SFAS No. 109,  "Accounting  for
Income  Taxes."  A deferred tax asset or liability is recorded for all temporary
differences   between  financial  and  tax  reporting  and  net  operating  loss
carryforwards. Deferred tax expense (benefit) results from the net change during
the year of deferred tax assets and liabilities.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management,  it is more likely than not that some portion of all of the deferred
tax assets will be realized.  Deferred tax assets and  liabilities  are adjusted
for the effects of changes in tax laws and rates on the date of enactment.

g.   Property and equipment

Property  and  equipment  are  stated  at cost  less  accumulated  depreciation.
Depreciation  is  provided  principally  on the  straight-line  method  over the
estimated  useful lives of the assets,  which are  generally 3 to 27 years.  The
amounts  of  depreciation  provided  are  sufficient  to charge  the cost of the
related assets to operations  over their  estimated  useful lives.  Upon sale or
other disposition of a depreciable property,  cost and accumulated  depreciation
are removed from the accounts and any gain or loss is reflected in other income.

The  Company  periodically  evaluates  whether  events  and  circumstances  have
occurred that may warrant  revision of the estimated useful life of fixed assets
or  whether  the  remaining  balance of fixed  assets  should be  evaluated  for
possible  impairment.  The Company uses an estimate of the related  undiscounted
cash  flows  over the  remaining  life of the fixed  assets in  measuring  their
recoverability.


NOTE 3.   GOING CONCERN

The  accompanying  financial  statements are presented on a going concern basis.
The Company had limited  operations during the period from May 19, 2006 (date of
inception)  to  March  31,  2009 and  generated  a net  loss of  $497,464.  This
condition raises  substantial doubt about the Company's ability to continue as a
going concern.  Although the Company is currently in the  development  stage and
has minimal  expenses,  management  does not believe that the company's  current
cash of $544 will be sufficient to cover the expenses they will incur during the
next twelve months in even a limited operations scenario.

                                      F-6

<PAGE>

                              Blugrass ENERGY, INC,
                          (Formerly Coastal Media Inc.)
                         (An Development Stage Company)
                          Notes to Financial Statements
                                 March 31, 2009
                                   (Unaudited)

NOTE 4.   ACCOUNTS PAYABLE, RELATED PARTY

During the nine months  ended  March 31,  2009,  an officer and  director of the
Company personally paid accounts payable totaling $1,461. During the nine months
ended March 31, 2009, $1,504 was repaid. At March 31, 2009, $207 is outstanding.
These funds are due on demand.

The Company neither owns nor leases any real or personal  property.  The Company
has been paying Jon Suk, a former  director,  $50 per month for use of his boat.
The officers and directors of the Company may, in the future, become involved in
other business opportunities as they become available,  they may face a conflict
in selecting  between the Company and their other  business  opportunities.  The
Company has not formulated a policy for the resolution of such conflicts.

NOTE 5.  CONVERTIBLE PROMISSORY NOTES

During the nine  months  ended  December  31,  2008,  in  exchange  for funds of
$416,666,  the Company executed 6% unsecured  convertible  commercial promissory
notes.  The promissory  notes are due on February 27, 2009. The promissory notes
are  exchangeable  for a total of  466,666  shares of the  Company's  restricted
common stock.  During the nine months ended March 31, 2009, the Company  accrued
interest of $6,562 in connection with the promissory notes.


NOTE 6.  INCOME TAXES

                                                        As of March 31, 2009
                                                  ------------------------------

  Deferred tax assets:
  Net operating tax carryforwards                    $       497,464
  Tax Rate                                                        34%
                                                  ------------------------------
  Gross deferred tax assets                                  169,138
  Valuation allowance                                       (169,138)
                                                  ------------------------------

  Net deferred tax assets                            $          -0-
                                                  ==============================

Realization of deferred tax assets is dependent upon  sufficient  future taxable
income during the period that deductible temporary differences and carryforwards
are expected to be available to reduce  taxable  income.  As the  achievement of
required  future taxable income is uncertain,  the Company  recorded a valuation
allowance.

As of March 31, 2009,  the Company has a net  operating  loss  carryforwards  of
approximately  $497,464.  Net operating loss  carryforward  expires twenty years
from the date the loss was incurred.

NOTE 7.  STOCKHOLDERS' EQUITY

Transactions,  other than  employees'  stock  issuance,  are in accordance  with
paragraph  8 of  SFAS  123,  "Share-Based  Payment."  Thus  issuances  shall  be
accounted  for  based  on  the  fair  value  of  the   consideration   received.
Transactions  with  employees'  stock issuance are in accordance with paragraphs
(16-44) of SFAS 123.  These  issuances  shall be accounted for based on the fair
value of the consideration  received or the fair value of the equity instruments
issued, or whichever is more readily determinable.

On October 1, 2008, the Company effected a forward stock split of the issued and
outstanding  shares  of  common  stock on a fifteen  for one  basis.  Authorized
capital remained at 75,000,000 common shares and par value remained at $.001 per
share.  After the forward  split the Company had  54,000,000  shares  issued and
outstanding.

                                      F-7

<PAGE>

                              Blugrass ENERGY, INC,
                          (Formerly Coastal Media Inc.)
                         (An Development Stage Company)
                          Notes to Financial Statements
                                 March 31, 2009
                                   (Unaudited)


As of March 31, 2009, the Company had  54,000,000  shares of common stock issued
and outstanding.

During the nine  months  ended  March 31,  2009,  the  Company did not issue any
shares of its common stock.


















                                      F-8

<PAGE>


Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.


Forward-Looking Statements
--------------------------

This  Quarterly  Report on Form 10-Q contains  forward-looking  statements.  Any
statements  contained  herein that are not statements of historical  fact may be
deemed to be forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act. The words "believes,"  "anticipates," "plans," "seeks,"
"expects,"   "intends"   and   similar   expressions   identify   some   of  the
forward-looking  statements.  Forward-looking  statements  are not guarantees of
performance or future results and involve risks,  uncertainties and assumptions.
The  factors  discussed  elsewhere  in this Form 10-Q could  also  cause  actual
results  to  differ   materially   from  those   indicated   by  the   Company's
forward-looking  statements.  The Company  undertakes  no obligation to publicly
update or revise any forward-looking statements.

Business and Plan of Operations
-------------------------------

Our  original  business  plan which we  commenced  in June 2006 was to operate a
cruising  guides  website  and  produce  and sell  multimedia  DVD for  pleasure
boating.  While we have vigorously pursued our business plan it is apparent that
we cannot continually incur operating losses in the future and have decided that
we can no longer  continue  with our  business  operations  as  detailed  in our
original  business  plan  because of a lack of  financial  results and a lack of
available financial resources.

We have spent the last year looking for other potential  business  opportunities
that might be available  to the Company and have decided to focus our  attention
on opportunities in the oil and gas industry.

As part of our efforts to search for new potential business opportunities in the
oil  and  gas  industry,  on  October  1,  2008,  we  amended  our  articles  of
incorporation  to changes our name from Coastal Media,  Inc. to Blugrass Energy,
Inc. In  connection  with our name  change,  our  trading  symbol was changed to
"BLUG."  In addition,  on October 1, 2008,  we effected a 15 for 1 forward stock
split of our issued and outstanding  common stock.  As a result,  our authorized
capital did not increase and remains at 75,000,000  shares of common stock.  Our
issued and  outstanding  common stock  increased  from  3,600,000 to  54,000,000
shares of common stock.

We expect  that our current  cash  balance of $549 on March 31,  2009,  will not
allow us to complete the next 6 months without  additional  funds,  in a limited
operations scenario.  Our director has verbally agreed to loan the company funds
to  continue   operations  in  a  limited  scenario  until  sales  will  support
operations.  We currently have no plans to hire additional employees in the next
twelve months unless sales are sufficient to cover the cost.

Results of Operations
---------------------

For the Three  Months  Ended March 31, 2009  compared to the Three  Months Ended
March 31, 2008

We are still in our development stage and have no revenues to date.

We  incurred  operating  expenses  of  $122,757  and $4,686 for the three  month
periods ended March 31, 2009 and 2008, respectively. The increase of $118,071 is
a result of the  increase  of the $44,223 in  licensing  fees and an increase of
$59,699 in professional fees and the $11,667 general and administrative expenses
over the prior  period.  The  increase in our  operating  expenses for the three
months ended March 31, 2009, was a result of work in connection  with compliance
with filing requirements.


                                       1
<PAGE>

During the three  months  ended  March 31,  2009,  we  recognized  a net loss of
$127,443  compared to a net loss of $7,168 for the three  months ended March 31,
2008.  The  increase  of  $120,275  was a result  of the  $118,071  increase  in
operational  expenses as discussed  above  combined with the $4,686  increase in
interest expenses.

For the Nine Months Ended March 31, 2009 compared to the Nine Months Ended March
31, 2008

We are still in our development stage and have no revenues to date.

We  incurred  operating  expenses  of  $453,353  and  $10,653 for the nine month
periods ended March 31, 2009 and 2008, respectively. The increase of $442,700 is
a result of the increase of the  $360,823 in  licensing  fees and an increase of
$69,147 in professional fees and the $17,730 general and administrative expenses
over the prior  period.  The  increase in our  operating  expenses  for the nine
months ended March 31, 2009, was a result of work in connection  with compliance
with filing requirements and payments in connection with oil and gases leases.

During  the nine  months  ended  March 31,  2009,  we  recognized  a net loss of
$464,915  compared to a net loss of $10,653 for the nine months  ended March 31,
2008.  The  increase  of  $454,262  was a result  of the  $442,700  increase  in
operational  expenses as discussed  above  combine  with the $6,562  increase in
interest expenses.

Liquidity and Capital Resources

At March 31,  2009,  we had total  assets of $3,973,  of which $549 was cash and
$3,424 were fixed assets. At March 31, 2009, we had total current liabilities of
$451,437,  consisting of accounts payable of $28,002, accrued interest of $6,562
and $416,666 in convertible promissory notes.

During  the nine  months  ended  March 31,  2009,  we used cash of  $430,394  in
operations.  During the nine months  ended March 31,  2008,  we used  $10,453 in
operations.  During the nine months ended March 31, 2009, net losses of $464,915
were not adjusted for any non-cash items. During the nine months ended March 31,
2008, net losses of $10,653 were not adjusted for any non-cash items.

During the nine months ended March 31, 2009, we did not have any cash flows from
investment  activities.  During the nine months  ended March 31,  2008,  we used
$3,662 in investment activities.

During the nine months ended March 31, 2009,  in exchange for funds of $416,666,
the Company executed 6% unsecured  convertible  commercial promissory notes. The
promissory  notes  are due on  February  27,  2009.  The  promissory  notes  are
exchangeable  for a total of 466,666 shares of the Company's  restricted  common
stock. During the nine months ended March 31, 2009, the Company accrued interest
of $6,562 in connection with the promissory notes.

During the nine months ended March 31, 2008, we did not receive or use any funds
in our financing activities.

Our auditors have expressed their doubt about our ability to continue as a going
concern unless we are able to generate profitable operations.

Off-Balance Sheet Arrangements

We do not have any off-balance  sheet  arrangements  that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial  condition,  revenues or expenses,  results of operations,  liquidity,
capital expenditures or capital resources that is material to investors.


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<PAGE>

Need for Additional Financing

We do not have capital  sufficient to meet our cash needs.  We will have to seek
loans or equity placements to cover such cash needs. Once exploration commences,
our needs for additional financing is likely to increase substantially.

No commitments to provide  additional  funds have been made by our management or
other stockholders.  Accordingly,  there can be no assurance that any additional
funds will be  available  to us to allow it to cover our expenses as they may be
incurred.

ITEM 3.  QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have adopted and maintain disclosure controls and procedures (as such term is
defined in Rules 13a 15(e) and 15d-15(e)  under the  Securities  Exchange Act of
1934,  as  amended  (the  "Exchange  Act"))  that are  designed  to ensure  that
information  required to be disclosed in our reports  under the Exchange Act, is
recorded,  processed,  summarized and reported within the time periods  required
under  the  SEC's  rules and forms  and that the  information  is  gathered  and
communicated to our management, including our Chief Executive Officer (Principal
Executive Officer) and Principal Financial Officer, as appropriate, to allow for
timely decisions regarding required disclosure.

As required by SEC Rule 15d-15(b),  Ms. Schaffer our Chief Executive Officer and
Principal  Accounting  Officer,  carried out an evaluation under the supervision
and with the participation of our management, of the effectiveness of the design
and operation of our disclosure controls and procedures pursuant to Exchange Act
Rule  15d-14 as of the end of the period  covered by this  report.  Based on the
foregoing  evaluation,  Ms. Schaffer has concluded that our disclosure  controls
and  procedures  are were not  effective  in timely  alerting  them to  material
information  required to be included in our  periodic  SEC filings and to ensure
that  information  required  to be  disclosed  in our  periodic  SEC  filings is
accumulated and  communicated  to our management,  including our Chief Executive
Officer,  to allow timely decisions regarding required disclosure as a result of
the deficiency in our internal control over financial reporting discussed below.

ITEM 4T. CONTROLS AND PROCEDURES

Management's Quarterly Report on Internal Control over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal
control over financial  reporting for the company in accordance  with as defined
in Rules  13a-15(f) and 15d-15(f)  under the Exchange Act. Our internal  control
over financial  reporting is designed to provide reasonable  assurance regarding
the  reliability  of  financial  reporting  and  the  preparation  of  financial
statements  for  external   purposes  in  accordance  with  generally   accepted
accounting  principles.  Our internal control over financial  reporting includes
those policies and  procedures  that are based on the framework set forth in the
Internal  Control-Integrated  Framework  issued by the  Committee of  Sponsoring
Organizations of the Treadway  Commission (COSO).  Based on its evaluation under
this framework,  management  concluded that our internal  control over financial
reporting was not effective as of March 31, 2009.

Management's  assessment  of  the  effectiveness  of the  registrant's  internal
control over financial reporting is as of the period ended March 31, 2009. Based

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<PAGE>

on the evaluation, management concluded that there is a material weakness in our
internal control over financial reporting.  Management  identified the following
material weaknesses:

     Insufficient  Resources:  We have an  inadequate  number of personnel  with
     requisite expertise in the key functional areas of finance and accounting.

     Inadequate Segregation of Duties: We have an inadequate number of personnel
     to properly implement control procedures.

     Lack of Audit  Committee  & Outside  Directors  on the  Company's  Board of
     Directors:  we do not have a  functioning  audit  committee  or any outside
     directors on the  Company's  Board of Directors,  resulting in  ineffective
     oversight in the establishment and monitoring of required internal controls
     and procedures.

A  material  weakness  is  a  control  deficiency,  or  combination  of  control
deficiencies,  in ICFR  such  that  there  is a  reasonable  possibility  that a
material  misstatement of our annual or interim financial statements will not be
prevented or detected on a timely  basis by  employees  in the normal  course of
their assigned functions.

Remediation of Material Weakness

As discussed in  Management's  Annual Report on Internal  Control over Financial
Reporting,  as of June 30, 2008, there were material  weaknesses in our internal
control over financial  reporting.  As our current  financial  condition allows,
management is committed to improving its internal controls and will (1) continue
to use third party  specialists to address  shortfalls in staffing and to assist
the Company  with  accounting  and finance  responsibilities,  (2)  increase the
frequency of  independent  reconciliations  of  significant  accounts which will
mitigate the lack of segregation of duties until there are sufficient  personnel
and (3) may consider appointing outside directors and audit committee members in
the future.

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

This quarterly  report does not include an  attestation  report of the Company's
registered  public  accounting  firm regarding  internal  control over financial
reporting.  Management's  report was not subject to attestation by the Company's
registered  public accounting firm pursuant to temporary rules of the Securities
and Exchange  Commission  that permit the Company to provide  only  management's
report in this quarterly report.

There  was no change in our  internal  control  over  financial  reporting  that
occurred  during the fiscal  quarter ended March 31, 2009,  that has  materially
affected,  or is reasonably  likely to materially  affect,  our internal control
over financial reporting.

                           PART II - OTHER INFORMATION

Item 1.    Legal Proceedings.

Blugrass Energy, Inc. is not currently involved in any legal proceedings, and we
are not aware of any pending or potential legal actions.


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<PAGE>


Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.

There were no sales of unregistered securities during the period covered by this
report.

Item 3.  Defaults Upon Senior Securities.

There were no defaults upon senior  securities during the period covered by this
report.

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

There were no matters  submitted to a vote of security holders during the period
covered by this report.

Item 5.  Other Information.

There was no information  required to be disclosed on Form 8-K during the period
covered by this report.

Item 6.  Exhibits.

Exhibits.  The  following is a complete  list of exhibits  filed as part of this
Form 10-Q.  Exhibit  numbers  correspond  to the numbers in the Exhibit Table of
Item 601 of Regulation S-K.

     Exhibit 31.1  Certification of Chief Executive  Officer pursuant to Section
                   302 of the Sarbanes-Oxley Act

     Exhibit 31.2  Certification of Chief Financial  Officer pursuant to Section
                   302 of the Sarbanes-Oxley Act

     Exhibit 32.1  Certification  of  Principal  Executive  Officer  pursuant to
                   Section 906 of the Sarbanes-Oxley Act

     Exhibit 32.1  Certification  of  Principal  Financial  Officer  pursuant to
                   Section 906 of the Sarbanes-Oxley Act




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<PAGE>



                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

May 14, 2009                        Blugrass Energy, Inc. (Registrant)

                                    By: /s/ Leslie A. Schaefer
                                        ------------------------------
                                        Leslie A. Schaefer, Director, President
                                        and Chief Executive Officer, Chief
                                        Financial Officer and Principal
                                        Accounting Officer













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