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 1934 For the quarterly period ended December 31, 2009 o Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period __________ to __________ Commission File Number: 333-140438

For the quarterly period ended September 30, 2009

o Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

For 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~~Registrant’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 o 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 (§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). o [ ] Yes o [ ] 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.

o Large accelerated filer Accelerated filer	o Non-accelerated filer
x Smaller reporting company	o Accelerated filer

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o 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: 3332,~~032~~025,~~602~~300 common stock shares as of ~~December~~February 519, ~~2009~~ 2010.

Table of Contents

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION
Item 1:	Condensed Consolidated Financial Statements	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 4T:	Controls and Procedures	79
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	811
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	812
Item 3:	Defaults Upon Senior Securities	912
Item 4:	Submission of Matters to a Vote of Security Holders	912
Item 5:	Other Information	912
Item 6:	Exhibits	913

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. ~~Financial~~Condensed Consolidated Financial Statements

Our unaudited financial statements included in this Form 10-Q are as follows:
F-1	Condensed Consolidated Balance Sheets as of ~~September~~December 3031, 2009, ~~2008~~ and March 31, 2009 (Unaudited);
F-2	Condensed and Consolidated Statements of Operations (unaudited) for the ~~six~~nine and ~~three~~six months ended ~~September~~December 3031, 2009 and 2008
F-3	Condensed and Consolidated Statements of Cash Flows (unaudited) for the ~~six~~nine months ended ~~September~~December 3031, 2009 and 2008
F-5	Notes to Unaudited Condensed and Consolidated 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 ~~September~~December 3031, 2009 are not necessarily indicative of the results that can be expected for the full year.

Table of Contents

BLUE EARTH SOLUTIONS, INC.

Condensed Consolidate Balance Sheets

ASSETS
	December 31,			March 31,
	September 30,						March 31,
	2009			2009
	2009			2008			2009
	(unaudited)			(unaudited)
	(unaudited)			(unaudited)			(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	340,457		$	2,637,702		$	50,695
Cash	$	300,316		$	50,695
Accounts receivable 2009 net of $17,000 allowance		~~912~~960,~~213~~307			110,~~503~~907			~~10,907~~
Prepaid expenses		1920,~~211~~169			~~103~~41,~~967~~421			~~41,421~~
Inventory		~~273~~211,~~886~~332			62231,~~917~~153			~~231,153~~
Investments		144,204			-			-
Total Current Assets		1,492,124			334,176
Total Current Assets		1,689,971			2,806,089			334,176
PROPERTY AND EQUIPMENT, net		5,050,298			4,098,283
PROPERTY AND EQUIPMENT, net		5,268,808			2,460,916			4,098,283
OTHER ASSETS
OTHER ASSETS
Investments		9,492,522			8,206,990
Investments		1,447,269			-			-
Goodwill		339,514			-
Depository funds		8,234,332			8,538,958			8,206,990
Loan receivable related party		432,974			-
Goodwill		339,514			-			-
Deposits & deposits on equipment		2,828,680			2,877,619
Deposits & deposits on equipment		2,828,680			2,813,619			2,877,619
TOTAL ASSETS	$	19,636,112		$	15,517,068
TOTAL ASSETS	$	19,808,574		$	16,619,582		$	15,517,068
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	2,940,975		$	1,399,145
Accounts payable and accrued expenses	$	2,761,457		$	1,344,797		$	1,399,145
Accounts payable and accrued expenses - Related Parties		960,587			152,508
Accounts payable and accrued expenses - Related Parties		627,653			6,897			152,508
Notes payable		35,729			-
Notes payable		35,729			-			-
Notes payable - related parties		5,687,002			462,500
Notes payable - related parties		5,382,171			20,000			462,500
Total Current Liabilities		9,624,293			2,014,153
Total Current Liabilities		8,807,009			1,371,694			2,014,153
LONG-TERM LIABILITIES
LONG-TERM LIABILITIES
Notes payable		1,217,749			1,049,000
Notes payable		1,238,199			1,049,000			1,049,000
Total Liabilities		10,842,041			3,063,153
Total Liabilities		10,045,208			2,420,694			3,063,153
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY
Preferred stock, Series A, $0.001 par value, 10,000,000
Preferred stock, Series A, $0.001 par value, 10,000,000
shares authorized, -0- shares issued and outstanding		-			-
shares authorized, -0- shares issued and outstanding		-			400			-
Preferred stock, Series B, $0.001 par value, 5,000,000
Preferred stock, Series B, $0.001 par value, 5,000,000
shares authorized, -0- shares issued and outstanding		-			-
shares authorized, -0- shares issued and outstanding
Preferred stock, Series C, $0.001 par value, 5,000,000
Preferred stock, Series C, $0.001 par value, 5,000,000
shares authorized, 14,130 shares
shares authorized, 14,130 shares
issued and outstanding		14			14
issued and outstanding		14			14			14
Common stock, $0.001 par value, 100,000,000 shares
Common stock, $0.001 par value, 100,000,000 shares
authorized, 33,532,602 and 32,025,300 shares
authorized, 33,532,602 and 32,025,300 shares
issued and outstanding, respectively		33,532			32,025
issued and outstanding, respectively		33,082			26,013			32,025
Unrealized (Loss) on Available For Sales Securities		(1,527,219	)		-
Unrealized (Loss) on Available For Sales Securities		(1,308,527	)		-			-
Additional paid-in capital		14,992,815			15,052,300
Additional paid-in capital		15,275,865			14,739,807			15,052,300
Accumulated deficit		(4,705,071	)		(2,630,424	)
Accumulated deficit		(4,237,067	)		(567,346	)		(2,630,424	)
Total Stockholders' Equity		8,794,071			12,453,915
Total Stockholders' Equity		9,763,366			14,198,888			12,453,915
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	19,636,112		$	15,517,068
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	19,808,574		$	16,619,582		$	15,517,068
		-			-			-

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

F-1

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BLUE EARTH SOLUTIONS, INC.

Condensed Consolidated Statements of Operations

(unaudited)

	For the Three Months Ended							For the ~~Six~~Nine Months Ended
	September, 30							September, 30
	December 31,							December 31,
		2009			2008			2009			2008
REVENUES		$	12,~~997~~692,~~095~~660		$	45,~~282~~937		$	24,~~020~~713,~~995~~655		$	1420,~~516~~453
COST OF SALES			12,~~737~~213,~~576~~647			23,~~592~~051			13,~~828~~933,~~769~~053			36,~~935~~986
Gross Profit			~~259~~479,~~519~~013			12,~~690~~886			~~192~~780,~~226~~602			1013,~~581~~467
OPERATING EXPENSES
Depreciation expense			7,899			13,750			8,348			32,083
Warrant expense			-			985,936			-			985,936
General and administrative			1,046,606			435,014			1,522,689			575,896
Salaries & wages			239,193			339,241			814,294			498,164
Total Operating Expenses			1,054,505			448,764			1,531,037			607,979
Contract settlement			-			-			250,000			-
LOSS FROM OPERATIONS			(794,986	)		(447,074	)		(1,338,811	)		(597,398	)
Inventory write off			30,000			-			206,325			-
Acquisition expense			-			-			180,000			-
Commissions & fees			75,920			-			118,711			-
General and administrative			305,427			313,104			603,901			762,160
Total Operating Expenses			650,540			1,638,281			2,173,231			2,246,260
LOSS FROM OPERATIONS			(171,527	)		(1,635,395	)		(1,392,628	)		(2,232,793	)
OTHER INCOME (EXPENSES)
Interest income			2335,~~894~~409			50103,~~075~~342			91126,~~248~~657			50153,~~075~~417
Loss on sales of assets			(132,815	)		-			(137,957	)		-
Interest expense			(88,028	)		(12,238	)		(127,930	)		(27,678	)
Interest (expense) Related Party			(151,500	)		(3,000	)		(161,404	)		(3,000	)
Interest expense Related Party			(302,942	)		-			(464,346	)		-
Interest (expense)			(19,696	)		(12,440	)		(39,902	)		(12,440	)
Loss on settlement			(58,626	)		-			(196,583	)		-
Total Other Income (Expenses)			(~~280~~414,~~116~~186	)		3491,~~635~~104			(~~248~~662,~~014~~201	)		34125,~~635~~739
NET (LOSS) BEFORE INCOME TAXES			(1585,~~075,102~~714	)		(~~412~~1,~~439~~544,291	)		(12,~~586~~054,~~825~~829	)		(~~562~~2,~~763~~107,054	)
Income taxes			-			-			19,817			-
NET (LOSS)		$	(1585,~~075,102~~714	)	$	(~~412~~1,~~439~~544,291	)	$	(12,~~606~~074,~~642~~646	)	$	(~~562~~2,~~763~~107,054	)
BASIC AND DILUTED (LOSS) PER COMMON SHARE			(0.0302	)	$	(0.0205	)	$	(0.0506	)	$	(0.0309	)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING			3133,~~850~~532,~~986~~602			2529,~~286~~016,300			32,~~091~~194,~~252~~410			1922,~~190~~397,~~867~~975

The accompanying notes are an integral part of these financial statements

F-2

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BLUE EARTH SOLUTIONS, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

	For the Six Months Ended
	For the Nine Months Ended
	September 30,
	December 31,
	2009			2008
OPERATING ACTIVITIES
Net loss	$	(12,~~606~~074,~~642~~646	)	$	(~~562~~2,~~763~~107,054	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities
Write off of discontinued inventory		176,325			-
Amortization and Depreciation		354,242			62,490
Cash Used in Operating Activities:
Write off of discontinued inventory		206,325			-
Depreciation expense		215,204			32,083
Loss on sale of disposal of fixed assets		5,643			-
Shares issued for services		(14,736	)		30,650
Realized Loss on Available For Sale Securities		9,205			-
Loss on sale of assets
Share issuance for liabilities		175,000			-
Unrealized (Loss) on Available For Sale Securities		(1,308,527	)		-
Share issuance for acquisition		180,000
Loss on settlement of contract		132,314			-
Share retirement		(80,750	)		-
Cashless exercise of warrants		65,572			-
Shares issued for services		-			64,550
Fair value of warrants granted		-			985,936
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses		22,210			(105,522	)
(Increase) decrease in accounts receivable		183,600			(1,257	)
(Increase) decrease in accounts receivable		(2,034,306	)		(1,503	)
(Increase) decrease in prepaid expenses		28,252			(115,266	)
(Increase) decrease in depository accounts		(27,342	)		(8,538,958	)
(Increase) decrease in inventory		5,496			(185,686	)
(Increase) decrease in inventory		(411,058	)		(62,917	)
(Increase) decrease in deposits		48,939			-
Increase (decrease) in accounts payable
and accrued expenses		2(185,~~631,462~~653	)		1366,~~152,128~~038
Net Cash Used in Operating Activities		(2,308,471	)		(8,056,802	)
(Increase) decrease in - related party accruals		808,079			-
Net Cash Used in Operating Activities		(187,321	)		(930,249	)
INVESTING ACTIVITIES
Sale of Equipment		261,145			-
Cash acquired from business acquisitions		689,000			-
Purchase of property and equipment, net		(3,341,874	)		(3,710,646	)
(Increase) decrease in investments		(111,690	)		(8,135,897	)
Investments in avaiable for sale securities		(144,204	)		-
Issuance of loan receivable from related party		(432,974	)		-
Accrued Dividends		(565,200	)		-
Purchase of property and equipment, net		(111,296	)		(5,236,835	)
Acquisition of American Marketing		6,719,060			-
Proceeds from sale of property and equipment		28,641			-
Investment in securities		(1,200,000	)		-
Purchase of Available For Sale securities		(250,000	)		-
Net Cash Provided by Investing Activities		1,728,927			(3,710,646	)
Proceeds from sale of investments		140,795			-
Net Cash (Used)/Provided by Investing Activities		(47,524	)		(13,372,732	)
FINANCING ACTIVITIES
Repayment of notes payable		-			(200,000	)
Proceeds from related party borrowings		524,988			-
Settlement of contract Net		214,950			-
Repayments of notes payable		(40,522	)		(200,000	)
Borrowings of notes payable		~~654,356~~-			20,000
Issuance of preferred shares for cash		-			14,570,000
Net Cash Provided by Financing Activities		~~869~~484,~~306~~466			14,390,000
NET DECREASE IN CASH		289,762			2,622,552
NET INCREASE/( DECREASE) IN CASH		249,621			87,019
CASH AT BEGINNING OF PERIOD		50,695			15,150
CASH AT END OF PERIOD	$	~~340~~300,~~457~~316		$	2102,~~637,702~~169
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest	$	3958,~~258~~483		$	-27,678
Income taxes	$	19,817		$	-
NON CASH FINANCING & INVESTING ACTIVITIES:
Stock issued for the purchase of AMS	$	630,000
Net consideration given for AMS acquisition, net of cash acquired	$	(1,028,514	)	$	-
Goodwill
Property purchased for notes payable	$	-		$	1,049,000
Settlement of contract Net

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

F-3

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BLUE EARTH SOLUTIONS, INC.

Condensed Consolidated Statements of Stockholders' Equity

(unaudited)

												~~Deficit~~										Deficit
												~~Accumulated~~										Accumulated
									Unrealized	Additional		During the
																			Additional			During the
	~~Preferred Stock~~	Preferred Stock			~~Common Stock~~				~~Gain~~Common ~~or loss~~Stock	~~Paid-In~~		~~Development~~				Unrealized			Paid-In			Development
	~~Shares~~	Shares	~~Amount~~		~~Shares~~Amount		~~Amount~~		Shares		~~Capital~~		~~Stage~~Amount		~~Total~~	Gain or loss			Capital			Stage			Total
Balance, February 5, 2008	-		$	-	-	$	-	$	-	$	-	$	-	$	-
Balance, March 31, 2009			14,130			14				32,025,300				32,025			-			15,052,300			(2,630,424	)		12,453,915
Common shares issued to founders	-			-	7,000,000		7,000				(6,850)		-		150
Common shares returned and cancelled			-			-				(425,000	)			(425	)		-			425			-			-
Series A preferred shares
Cash-less exercise of warrant			-			-				49,302				49			-			65,523			-			65,572
issued to founders	400,000			400	-		-				(400)		-		-
Dividends on preferred stock			-			-				-				-			-			(847,800	)		-			(847,800	)
Series B preferred shares issued in a
Canceled Common shares issued for
private placement at $10 per share	36,500			37	-		-				364,963		-		365,000
services at $6.13 per share			-			-				(17,000	)			(17	)		-			(80,733	)		-			(80,750	)
Net loss from inception
Acquisition of American Marketing & Sales (AMS)			-			-				1,000,000				1,000			-			449,000			-			450,000
through March 31, 2008	-			-	-		-				-		(4,583)		(4,583)
Shares issued to AMS shareholders			-			-				400,000				400			-			179,600			-			180,000
Balance, March 31, 2008	436,500			437	7,000,000		7,000		-		357,713		(4,583)		360,567
Settlement of contract										500,000				500			-			174,500						175,000
Recapitalization	-			-	20,759,300		20,759		-		7,099		-		27,858
Unrealized Loss on investments held for resale																	(1,527,219	)								(1,527,219	)
Common shares returned and cancelled	-			-	(3,200,000)		(3,200)		-		3,200		-		-
Net loss for the nine months ended
Series B preferred shares issued in a
through December 31, 2009			-			-				-				-			-			-			(2,074,647	)		(2,074,647	)
private placement at $10 per share	44,000			44	-		-		-		439,956		-		440,000
Balance, December 31, 2009			14,130		$	14				33,532,602			$	33,532		$	(1,527,219	)	$	14,992,815		$	(4,705,071	)	$	8,794,071
Series 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	-			-	17,000		17		-		80,733		-		80,750
Series C preferred shares issued in a
private placement at $1,000 per share	14,130			14	-		-		-		14,129,986		-		14,130,000
Dividends on preferred stock	-			-	-		-		-		(945,355)		-		(945,355)
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		-		985,936
Net loss for the twelve months ended
through March 31, 2009	-			-	-		-		-		-		(2,625,841)		(2,625,841)
Balance, March 31, 2009	14,130			14	32,025,300		32,025		-		15,052,300		(2,630,424)		12,453,915
Common shares returned and cancelled	-			-	(425,000)		(425)		-		425		-		-
Cash-less exercise of warrant	-			-	49,302		49		-		65,523		-		65,572
Dividends on preferred stock	-			-	-		-		-		(565,200)		-		(565,200)
Canceled Common shares issued for
services at $6.13 per share	-			-	(17,000)		(17)		-		(80,733)		-		(80,750)
Acquisition of American Marketing & Sales (AMS)	-			-	1,000,000		1,000		-		449,000		-		450,000
Shares issued to AMS shareholders	-			-	400,000		400		-		179,600		-		180,000
Settlement of contract					500,000		50		-		174,950				175,000
Unrealized Loss on investments held for resale									(1,308,527)
Net loss for the nine months ended
through Septmber 30, 2009	-			-	-		-		-		-		(1,606,642)		(1,606,642)
Balance, September 30, 2009	14,130		$	14	33,532,602	$	33,082	$	(1,308,527)	$	15,275,865	$	(4,237,066)	$	11,071,894

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

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BLUE EARTH SOLUTIONS, INC. & SUBSIDIARY

Notes to to the Condensed Consolidated Financial Statements

For The Nine Months Ended ~~September~~December 3031, 2009

NOTE 1 - –CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying interim, unaudited and condensed consolidated financial statements of ~~have~~Blue ~~been~~Earth Solutions, Inc., a Delaware corporation (“BESN” or the “Company”), ~~prepared~~reflect bythe condensed consolidated financial statements of the Company ~~without~~and ~~audit~~its wholly-owned subsidiary, American Marketing & Sales, Inc. (“AMS”). In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of of operations and cash flows at ~~September~~December 3031, 2009 and for all periods presented have been made. The ~~company~~Company acquired ~~American Marketing and Sales (~~AMS) on July 1, 2009 (~~see~~as more fully described in Note 912). The numbers in the Company’s Statement of Operations includes ~~only~~ AMS’ operations only since July 1, 2009. None of the historical numbers have been restated with AMS activity.

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 unaudited financial statements for its fiscal year ending March 31, 2009 ~~financial statements~~. The results of operations for the period ended ~~September 30~~December 31, 2009 are not necessarily indicative of the operating results for the full ~~years~~ year.

NOTE 2 - GOING CONCERN

The Company’s financial statements are prepared using generally accepted accounting principles, ~~applicable~~which tocontemplates the continuation of the Company as a going concern. At ~~which~~December ~~contemplates~~31, ~~the~~2009 ~~realization~~current ofliabilities exceeded current assets by $8,132,169 and ~~liquidation~~for ofthe ~~liabilities~~nine inmonths ended December 31, 2009, the Company ~~normal~~had ~~course~~negative cash flows from operations in the amount of ~~business~~$187,321. ~~The~~These matters raise substantial doubt about the Company’s ability ~~has~~to ~~limited~~continue ~~revenues~~as a going concern. However, the accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and ~~has~~liquidation ~~generated~~of ~~losses~~liabilities in ~~from~~the ~~operations~~normal course of business.

In ~~order~~ order to continue as a going concern and achieve a profitable level of operations, the Company will ~~need~~, among other things, need additional capital resources and ~~to develop~~ a consistent ~~source~~revenue ~~of revenues~~source. Management’s plans include developing and marketing a practical, economical, and environmentally safe means of disposing of and recycling certain polystyrene and ~~expended~~expanded 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~~may ~~be necessary if~~result from the ~~Company~~substantial isdoubt ~~unable~~surrounding our ability to continue as a going concern.

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation:

The accompanying consolidated financial statements present the consolidation of the financial statements of ~~Blue~~BESN ~~Earth Solutions, Inc~~ and its wholly owned ~~subsidiary~~ ~~American Sales and Marketing~~subsidiary, ~~Inc~~ AMS. All ~~Intercompany~~intercompany transactions or balances have been eliminated in consolidation.

Use of Estimates

~~The~~Management ~~preparation~~uses ofestimates ~~financial~~and ~~statements~~assumptions in ~~conformity~~preparing ~~with~~financial ~~accounting~~statements ~~principles~~in accordance with generally accepted inaccounting ~~the~~principles. Those ~~United~~estimates ~~States~~and assumptions ofaffect ~~America~~the ~~requires~~reported ~~management~~amounts toof ~~make estimates~~assets and ~~assumptions~~liabilities, ~~that~~as ~~affect~~well as the ~~reported~~disclosure ~~amounts~~ of contingent 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.

Cash and Cash Equivalents:

Cash and cash equivalents consists principally of currency on hand, demand deposits at commercial banks, and liquid investment funds having a maturity of three months or less at the time of purchase.

Inventory:

The Company’s inventory is stated at the lower of cost or market value. Cost is determined using the first in, first out method. Unusual losses resulting from lower of cost or market adjustments or losses on firm purchase commitments, if any, are disclosed, and if material, separately stated from cost of goods sold in the statement of operations.

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BLUE EARTH SOLUTIONS, INC. & SUBSIDIARY

Notes to to the Condensed Consolidated Financial Statements

For The Nine Months Ended ~~September~~December 3031, 2009

~~Investments~~Cash:

AtCash ~~September~~consists ~~30,~~principally ~~2009~~of currency on hand, ~~the~~demand ~~Company~~deposits ~~has~~at ~~invested~~commercial $1banks,~~591,473~~ and ~~(after~~liquid ~~adjustment~~investment ~~for market~~funds ~~value~~having a maturity of three months or less at ~~September~~the time 30of purchase. Sat December 31, 2009.. ~~The~~substantially ~~funds~~all ~~are~~of ~~invested~~the cash is required, as a result of the AMS acquisition, to be used for working capital ~~follows;~~within the operations of AMS.

~~· $1,450,899 in stocks.~~Inventory:

·The Company’s ~~$14,228~~inventory is stated at the lower of cost or market value. Cost is determined using the first in, afirst ~~money~~out method. Unusual losses resulting from lower of cost or market ~~account~~adjustments or losses on firm purchase commitments, if any, are disclosed, and if material, separately stated from cost of goods sold in the statement of operations.

· $25,688 in municipal bonds that yield 5.5% interest and mature on July 1, 2010.

· $100,658 in a long term-certificate of deposit (CD) yields interest of 1.85% and matures on July 27, 2010.

The Company has not determined yet whether it will hold the bonds, stocks and certificate of deposit to maturity, and has therefore classified them as available-for-sale securities and has valued them to current market prices at September 30, 2009. The unrealized loss totaled $1,380,527 net and is classified in the Stockholders’ Equity section of the balance sheet.

Property and Equipment:

Property and equipment are stated at cost. Depreciation and amortization are determined using the straight-line method over estimated useful lives ranging from three to twenty five years.

Fair Value of Financial Instruments:

InFair ~~September~~value ~~2006,~~is ~~the~~defined ~~Financial~~as ~~Accounting~~the ~~Standards~~price ~~Board~~that ~~(FASB)~~would ~~introduced~~be ~~a framework~~received ~~for~~to ~~measuring~~sell ~~fair~~an ~~value~~asset ~~and~~or ~~expanded~~paid ~~required disclosure about fair~~to ~~value~~transfer ~~measurements~~a ofliability ~~assets~~in ~~and~~an ~~liabilities.~~orderly ~~The~~transaction ~~Company~~between ~~adopted~~market ~~the~~participants ~~standard~~at ~~for~~the ~~those~~measurement ~~financial~~date. The ~~assets~~fair ~~and~~value ~~liabilities~~hierarchy asdistinguishes ~~of the beginning of the 2008~~between ~~fiscal~~(1) ~~year~~market ~~and~~participant ~~the~~assumptions ~~impact~~developed ofbased ~~adoption~~on ~~was~~market ~~not~~data ~~significant.~~obtained ~~FASB Accounting~~from ~~Standards~~independent ~~Codification~~sources (~~ASC~~observable inputs) ~~820 “Fair Value Measurements~~ and ~~Disclosures”~~ (~~ASC 820~~2) ~~defines~~an ~~fair~~entity’s ~~value~~own ~~as the exchange price that would be received for an~~assumptions ~~asset~~about ormarket ~~paid~~participant toassumptions ~~transfer~~based aon ~~liability~~the ~~(an~~best ~~exit~~information ~~price)~~available in the ~~principal~~circumstances or(unobservable ~~most advantageous~~inputs). ~~market~~The ~~for~~fair ~~the~~value ~~asset~~hierarchy orconsists ~~liability~~of three inbroad anlevels, ~~orderly~~which ~~transaction~~gives ~~between market participants on~~ the ~~measurement~~highest ~~date.~~priority ~~ASC~~to ~~820~~unadjusted ~~also~~quoted ~~establishes a fair~~prices ~~value~~in ~~hierarchy~~active ~~which~~markets ~~requires~~for anidentical ~~entity~~assets toor ~~maximize~~liabilities ~~the~~(Level ~~use~~1) ~~of observable inputs~~ and ~~minimize~~ the ~~use~~lowest priority ofto unobservable inputs ~~when~~(Level ~~measuring fair value~~3). The ~~standard describes~~ three levels of ~~inputs~~the fair ~~that~~value ~~may~~hierarchy beare ~~used~~described ~~to measure fair value~~below:

o Level 1—Unadjusted -quoted ~~Quoted~~ prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

o Level 2 - 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability; either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

o Level 3—Inputs ~~- Unobservable inputs~~ that are ~~supported~~both bysignificant ~~little or no market activity, therefore requiring an entity~~ to ~~develop its own assumptions about~~ the ~~assumptions~~ ~~that~~fair ~~market~~value ~~participants~~measurement ~~would~~and ~~use in pricing~~unobservable.

Fair value estimates discussed herein are based upon certain market ~~assumptions~~assumption and pertinent information available to management as of ~~September 30, 2009. The~~December ~~Company uses the market approach to measure fair value for its Level 1 financial assets and liabilities~~31, ~~which includes cash equivalents of~~ ~~$340,357 at September 30,~~ 2009. The ~~market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The~~ respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, ~~trade~~accounts ~~receivables~~receivable, ~~and related party payables,~~ accounts payable and accrued ~~liabilities~~expenses. ~~Fair~~ The ~~values~~fair ~~were~~value ~~assumed~~of tothe ~~approximate~~Company’s ~~carrying~~note ~~values~~payable ~~for~~is ~~these~~estimated ~~financial instruments~~based ~~since~~on ~~they~~current ~~are~~rates that ~~short~~would ~~term~~be inavailable ~~nature~~for ~~and~~debt ~~their~~of ~~carrying~~similar ~~amounts approximate~~terms ~~fair~~which ~~values~~is ornot ~~they~~significantly different ~~are~~than ~~receivable~~its orstated ~~payable on demand~~value.

The Company’s investments are categorized as $1972,~~341,473~~781 in Level 1 and $~~250~~8,~~000~~519,741 in Level 3.

On ~~July~~ April 1, 2009, the Company ~~entered~~applied ~~into~~ASC 820 for all non-financial assets and liabilities measured at fair value on a ~~Convertible~~non-recurring ~~Note~~basis. ~~Agreement~~The asapplication ~~part~~did not have an impact on the Company’s financial position or results of operations. The Company’s non-financial assets measured at fair value on a non-recurring basis include goodwill and other intangible assets. In a business combination, the ~~AMS~~non-financial ~~purchase~~assets ~~Agreement~~and ~~(Note~~liabilities 6)of the acquired company would be measured at fair value in accordance with ASC 820. The requirements of ASC 820 include using an exit price based on an orderly transaction between market participants at the measurement date assuming the highest and best use of the asset by market participants. The Company would use a market, income or cost approach valuation technique to perform the valuations. Since the Company performs its annual impairment analyses of goodwill and indefinite-lived intangible assets in the fourth quarter of each fiscal year and since no impairment trigger event occurred during the first nine months of 2009, the application of ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis did not have an impact on the Company’s financial position or results of operations. However, there may be an impact during 2009 on the Company’s financial position and results of operations when the Company performs an impairment analysis of goodwill and indefinite-lived intangible assets due to the difference in fair value methodology required under ASC 820. The carrying value of cash, accounts receivable, accounts payable and accrued expenses, and notes payable are assumed to approximate fair value because of the relatively short maturity of these instruments.

On April 1, 2009, the Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The application did not have an impact on the Company’s financial position or results of operations. The Company’s non-financial assets measured at fair value on a non-recurring basis include goodwill and other intangible assets. In a business combination, the non-financial assets and liabilities of the acquired company would be measured at fair value in accordance with ASC 820. The requirements of ASC 820 include using an exit price based on an orderly transaction between market participants at the measurement date assuming the highest and best use of the asset by market participants. The Company would use a market, income or cost approach valuation technique to perform the valuations. Since the Company performs its annual impairment analyses of goodwill and indefinite-lived intangible assets in the fourth quarter of each fiscal year and since no impairment trigger event occurred during the first quarter of 2009, the application of ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis did not have an impact on the Company’s financial position or results of operations. However, there may be an impact during 2009 on the Company’s financial position and results of operations when the Company performs an impairment analysis of goodwill and indefinite-lived intangible assets due to the difference in fair value methodology required under ASC 820. The carrying value of cash, accounts receivable, accounts payable and accrued expenses, and notes payable are assumed to approximate fair value because of the relatively short maturity of these instruments. However, since the Company has been unable to pay its liabilities as they became due, significant discounts that cannot be estimated may be appropriate for liabilities

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BLUE EARTH SOLUTIONS, INC. & SUBSIDIARY

Notes to to the Condensed Consolidated Financial Statements

For The Nine Months Ended ~~September~~December 3031, 2009

Concentrations of Credit Risk:

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash. The Company maintains its cash accounts with several commercial banks. ~~Cash balances are insured by the Federal Deposit Insurance Corporation, up to $250,000 per financial institution.~~

Revenue Recognition:

Blue Earth Solutions, Inc.:

The Company recognizes revenue upon the rendering of services and shipment of finished goods to customers.

~~American Market & Sales, Inc.~~AMS:

The Company recognizes revenue from product sales in accordance with Staff Accounting Bulletin No. 104, which requires recognition when persuasive evidence of an arrangement exists, the price is fixed or determinable, delivery has occurred, and payment is reasonably assured. The Company has determined that these criteria have been met upon shipment, and recognizes revenue at that point. Pursuant to SFAS No. 5, (ASC Topic 450), “Accounting for Contingencies,” the Company has examined collection history, financial conditions of clients, and general economic conditions and determined that an allowance of $17,000 ~~would~~is be adequate.

~~Cost of~~Recent ~~Revenue~~Accounting Pronouncements:

Subsequent Events

In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through December 24, 2009, the date the financial statements were issued.

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BLUE EARTH SOLUTIONS, INC. & SUBSIDIARY

Notes to the Financial Statements

For The Nine Months Ended September 30, 2009

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements

Statement of Financial Accounting Standards ("SFAS") SFAS No. 165 (ASC Topic 855), "Subsequent Events," SFAS No. 166 (ASC Topic 810), "Accounting for Transfers of Financial Assets-an Amendment of FASB Statement No. 140," SFAS No. 167 (ASC Topic 810), "Amendments to FASB Interpretation No. 46(R)," and SFAS No. 168 (ASC Topic 105), "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles-a replacement of FASB Statement No. 162," were recently issued. SFAS No. 165, 166, 167, and 168 have no current applicability to the Company or their effect on the financial statements would not have been significant.

Accounting Standards Update ("ASU") ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures - Overall, ASU No. 2009-13 (ASC Topic 605), Multiple-Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASU's No. 2009-2 through ASU No. 2009-15, which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.

Segment Information:

ASC ~~Topic~~ Topic 280 (SFAS No. 131) requires public enterprises to report certain information about operating segments, including products and services, geographic areas of operations, and major customers. ~~American Marketing and Sales, Inc. (~~AMS) is considered a separately reportable business segment that meets the ’Single Industry Dominance’ test, which eliminates the segment disclosure requirements if the segment accounts for 90% or more of the combined revenue, reported profit, and assets. The revenues, profits, and assets reported in the consolidated financial statements are primarily those of AMS.

NOTE 4 – INVENTORY

Blue Earth Solutions,’ Florida inventory is comprised of chemicals for the recycling of polystyrene and finished pellets awaiting shipment, and is comprised of the following:

	September 30, 2009		March 31, 2009
	December 31, 2009		March 31, 2009
Raw materials	$	1110,~~209~~172	$	231,153
Finished goods		811,~~672~~425		-
Work in process		-		-
Total	$	1921,~~881~~597	$	231,153

AMS produces caterware for the food service industry via an intense heat injection molding process using Polystyrene/Polypropylene recycled resins. The raw materials and finished goods are produced and held by two thirdF-party manufacturing plants, from where they are shipped to customers across the nation. AMS does not enter into long-term contracts and generally experiences a high inventory turnover ratio while maintaining minimal quantities on-hand in the warehouses. AMS ‘s inventory is as follows:7

	September 30, 2009		March 31, 2009*
Raw materials	$	2,100	$	4,560
Finished goods		186,935		587,033
Work in process		64,970		176,309
Total	$	254,005	$	767,902

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*BLUE ~~For~~EARTH ~~information~~SOLUTIONS, ~~purposes~~INC. ~~only~~& ~~not included in March 31, 2009~~SUBSIDIARY

Notes to the Condensed Consolidated Financial Statements

For The Nine Months Ended December 31, 2009

AMS produces caterware for the food service industry via an intense heat injection molding process using Polystyrene/Polypropylene recycled resins. The raw materials and finished goods are produced and held by two third-party manufacturing plants, from where they are shipped nationwide to customers. . AMS does not enter into long-term contracts and generally experiences a high inventory turnover ratio while maintaining minimal quantities on-hand in the warehouses. AMS’ inventory is:

	December 31, 2009		March 31, 2009 year end*
Raw materials	$	500	$	4,560
Finished goods		124,939		587,033
Work in process		64,296		176,309
Total	$	189,735	$	767,902

* For information purposes only-- not included in March 31, 2009 Balance Sheets

NOTE 5 – DEPOSITS AND DEPOSITS ON EQUIPMENT

During the normal course of business, the Company has made deposits for various vendors such as utility companies, which it refers to as operating deposits; these operating deposits are fully refundable. In addition, the Company has made deposits on equipment that would further enhance the Company’s Blue Line system. These deposits on equipment are not refundable, however should the Company not ultimately purchase the equipment enhancements, the entire balance of the deposit on equipment would need to be written off. While delayed, the Company still intends to purchase the equipment enhancements either for use or potential resale. At December 31, 2009, the Company had total deposits and deposits on equipment as noted:

	Balance at December 31, 2009
Operating Deposits	$	16,615
Deposits on Equipment	$	2,812,065
Total Deposits and Deposits on Equipment	$	2,828,680

NOTE 6 – SERIES C PREFERRED STOCK AND DEPOSITORY FUNDS HELD FOR INVESTMENT

On August 29, 2008, the Company completed and closed a private offering of newly-created Series C Preferred Stock at an offering price of $1,000 per share in a private placement. The Company 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 a $700,000 promissory note. Of the proceeds, funds of $8,500,000 (the “Funds”) were deposited in an offshore fund account. There is a dispute as to the control and dispositions of the Funds, which management is currently investigating. The Agreement between the Company and the offshore funds provides: (a) for an investment return that the Company will earn on the Funds; (b) that the Company agrees to wait to withdraw $8,000,000 of the Funds until one of several stated conditions are met; such conditions are (i) if the Company’s Series C Preferred Stock is converted to common shares and that these shares are registered and maintain a price in excess of $6.25 per share for 30 consecutive days; or (ii) if the Company should have a change of control event; and (c) that the Company was and is entitled to withdraw the earnings, less the investment fees, generated by the Funds, without restriction.

The Funds were classified as a current asset at March 31, 2009 because they were considered by management to be a liquid asset. During the quarter ended June 30, 2009, the Company attempted to withdraw some of the Funds, but the offshore fund account’s management resisted its release. The Company is reviewing legal & other steps to get the Funds released. In the interim, the Company is re-classifying the Funds as a non-current asset in all periods until such time that the Funds are released, if ever.

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BLUE EARTH SOLUTIONS, INC. & SUBSIDIARY

Notes to to the Condensed Consolidated Financial Statements

For The Nine Months Ended ~~September~~December 3031, 2009

~~NOTE 5~~Note –7 ~~SERIES C PREFERRED STOCK AND DEPOSITORY FUNDS~~– INVESTMENTS

OnAt ~~August~~December 2931, ~~2008,~~2009 the Company ~~completed~~had and closed a private offering of newly-created Series C Preferred Stock at an offering price of $1,000 per share in a private placement. The Company sold a total of 14,130 shares for total gross proceeds of $14,130,000, including $13,430,000 in cash and the ~~cancelation~~ offollowing the $700,000 promissory note (see Form 8K filed August 13, 2008). Of the proceeds, $8,500,000 was deposited in a fund in an offshore account. There is a dispute as to the control and dispositions of the Funds which management is currently exploring. The Agreement details the investment return that the Company will earn on the Funds. Additionally, pursuant to the Agreement, the Company agreed to wait to withdraw $8,000,000 of the Funds until one of several stated conditions were met. The Company was and is entitled to withdraw the earnings, less the investment fees, generated by the Funds without restriction.investments:

The Funds were classified as a current asset at March 31, 2009 because they were considered by management to be a liquid asset. During the quarter ended March 31, 2009, the Company was unsuccessful issuing bonds in a depressed bond market, which put a strain on the Company to meet its operating expenses. During the quarter ended June 30, 2009, the Company attempted to withdraw some of the Funds, but met resistance from the fund management with respect to the release of the Funds. The Company is taking steps to get the Funds released. In the interim, the Company is re-classifying the Funds as a non-current asset in all periods until such time that the Funds are released.

	Fair Value at
	December 31, 2009
Investment Type:
Depository Funds Held	$	8,269,741
Common Stock 748,293 shares of NTUR $1.30/share	$	972,781
Common Stock 1,250,000 shares of Corporate Merchant Solutions	$	250,000
Total Investments Held	$	9,492,522

~~NOTE~~Fair value of the Depository Funds was determined by the balance of the cash in the account at December 31, 2009. As more fully described in Note 6, there –is ~~NOTES~~a ~~PAYABLE~~dispute ~~RELATED~~as ~~PARTIES~~to the control and dispositions of the Funds, which management is currently investigating.

AtFair ~~March~~value ~~31,~~of ~~2009,~~NTUR ~~the~~was ~~Company~~determined ~~had~~by athe ~~total~~closing price of ~~$462,500~~the in related ~~party~~common ~~notes~~stock on ~~payable. During~~December ~~the~~31, ~~six~~2009; ~~months~~as ~~ended~~of ~~September~~February 3018, ~~2009,~~2010 the ~~Company received~~closing anprice ~~additional~~of ~~$220,167~~the inNTUR ~~advances,~~was $1.10. Management ~~resulting~~views inthe aprice ~~balance~~decline of ~~$682,657 at~~the ~~September~~shares ~~30,~~of ~~2009. The~~these investments ~~notes~~as ~~payable~~temporary ~~are~~in ~~interests~~nature, ~~bearing~~however, ~~secured~~ byour ~~the~~investment ~~assets~~in of the ~~Company~~common ~~and~~stock described ~~are~~above ~~due~~is ~~and~~subject ~~payable~~to ~~upon~~specific ~~demand.~~risks ~~The notes~~applicable ~~bear~~to ~~interest~~the atcompanies 8%and generally to ~~12%~~various ~~per~~market ~~annum~~risks.

AsOn July ~~part~~29, ~~of the purchase of AMS~~2009, the Company ~~entered~~invested ~~into a~~ $5250,~~450,~~000 ~~note~~in ~~secured by~~a ~~the~~privately ~~assets~~held ~~and~~business ~~stock of AMS and payable to the former stockholders of AMS.~~venture, ~~The~~Corporate ~~note~~Merchant ~~accrues~~Solutions, ~~interest~~(“CMS”) atin 6%exchange ~~and~~for ~~the entire note balance~~1, ~~including accrued interest~~250,000 isshares ~~due and payable on December 7, 2010. During the term~~ of the ~~extended~~Company’s ~~Note,~~common ~~the former stockholders shall have the right to convert the principal and interest then due~~stock, ~~into Blue Earth (restricted~~ with ~~piggy-back registration~~a ~~rights)~~par ~~common~~value ~~shares at the price~~ of $~~6 per share~~0.20. CMS ~~The note~~ is ~~subject~~ to a ~~market~~credit card ~~interest~~processing ~~rate-discount~~venture ofin ~~$750,486~~its ~~which~~early ~~will~~stages ~~be amortized over the life~~ of ~~the note~~growth. ~~Accrued~~The ~~interest~~Company’s ~~totaled $82,422 and the amortized~~management ~~discount~~believes ~~totaled~~that ~~$215,713~~its ~~for~~investment ~~the~~in ~~three~~CMS ~~months~~is ~~ended~~fairly ~~September~~valued ~~30,~~at ~~2009~~December ~~both~~31, ~~are included in accounts payable and accrued expenses~~2009.

NOTE 7 8 – NOTE ~~LONG-TERM~~RECEIVABLE ~~NOTES~~RELATED ~~PAYABLE~~PARTIES

~~On August 6, 2008,~~During the ~~Company~~nine ~~purchased~~months ~~real~~ended ~~property~~December ~~and~~31, ~~improvements~~2009 itthe ~~uses~~Company asentered ~~its headquarters~~into ~~for~~ a unsecured ~~total~~Note ~~purchase~~Receivable ~~price~~with ofthe ~~$1.7 million. The Company executed~~ a ~~mortgage, backed~~related inparty ~~favor of the seller of that property,~~ in the ~~principal~~ amount of $1432,~~049~~974,~~000,~~ ~~due~~which inbears ~~three years, with~~ interest ~~only~~at ~~payments~~a ~~due~~rate ~~monthly until maturity in the amount~~ of $6~~,119. The~~% ~~mortgage~~per ~~was~~annum ~~personally guaranteed~~and byis ~~the~~payable ~~Company’s Chief Executive Officer and her~~on ~~spouse~~demand.

~~In May~~NOTE ~~2007,~~9 ~~The Company entered into a note payable with Flagship Bank of~~– ~~Leominster,~~NOTES MAPAYABLE ~~for~~RELATED $400,000. The note accrues interest at prime less .75% (approximately 6.5%), carries monthly payments that annually total of $93,918, and matures in May 2012. The Company is current on its payments, so there was no accrued interest at September 30, 2009 or 2008. Future maturities as of September 30, 2009 are as follows:PARTIES

Dec. 31,	Payments		Principal		Interest
2009		49,110		35,729		13,381
2010		93,918		83,183		10,735
2011		93,918		88,754		5,164
2012		37,979		37,560		419
Totals		274,925		245,226		29,699

As part of the purchase of AMS, the Company entered into a $5,450,000 note secured by the assets and stock of AMS and payable to the former stockholders of AMS. The note accrues interest at 6% and the entire note balance, including accrued interest, is due and payable on December 7, 2010. During the term of the note, the former stockholders shall have the right to convert the principal and interest then due, into Blue Earth’s restricted common shares with piggy-back registration rights at the price of $6 per share. The note is subject to a market interest rate-discount of $750,486, which will be amortized over the life of the note. The balance of the unamortized interest-rate discount is $483,905 at December 31, 2009. At December 31, 2009 accrued interest totaled $82,422 and the amortized discount totaled $215,713 for the three months ended December 31, 2009.

NOTE 8 – STOCKHOLDERS’ EQUITY

During the six months ended September 30, 2009, the Company accrued Preferred Series C cumulative dividends of $565,200, which was recorded as a reduction in additional paid-in capital. The Company also issued 49,302 common shares pursuant to warrants exercised via $65,572 in services rendered. Also during the quarter, 442,000 common shares were returned to the Company and cancelled pursuant to the cancellation of the underlying contract. The company also issued 500,000 shares to settle a contract with a vendor. The AMS acquisition (see note 9) had an effect on Common Stock of 1,400,000 shares and a net increase in Common stock and Paid in Capital of $747,711.

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BLUE EARTH SOLUTIONS, INC. & SUBSIDIARY

Notes to to the Condensed Consolidated Financial Statements

For The Nine Months Ended ~~September~~December 3031, 2009

~~NOTE~~During 9the ~~–ACQUISITION~~nine months ended December 31, 2009, in addition to the aforementioned note above for the purchase of AMS, the Company received an additional $157,787 in advances, resulting in a total note payable balance of $5,687,002 at December 31, 2009. The notes payable are interest bearing, secured by the assets of the Company and are due and payable upon demand. Excluding the note payable on the AMS sale, which bears interest at 6% per annum as noted above, the remaining notes bear interest at various rates between 8% and 12% per annum.

~~On July~~NOTE 1,10 ~~2009, the Company completed the purchase of AMS., which is in the~~– ~~plastic~~LONG-TERM ~~injection~~NOTES molding business. The company has not completed its financial evaluation of all the assets of AMS, we are still evaluating the value of the revenue stream (existing customers), this evaluation is expected to be completed in the next six months. AMS’s operations complement the Company’s business plan, which is the recycling of expended polystyrene products back into plastic pellets that can be used in the injection molding industry. The acquisition was made pursuant to the following terms:PAYABLE

· On ~~March 18~~August 6, ~~2009~~2008, ~~Datameg~~the ~~Corporation,~~Company apurchased ~~Delaware~~real ~~corporation~~property ~~("Seller")~~and ~~entered~~improvements ~~into~~it auses ~~Stock~~as ~~Purchase~~its headquarters ~~Agreement~~for ~~and~~a total purchase ~~money~~price ~~promissory~~of ~~note~~$1.7 ~~Assignment~~million. ~~and~~The ~~Assumption~~Company ~~Agreement~~executed ~~incident~~a mortgage, tobacked ~~its~~in ~~proposed~~favor ~~sale~~ of ~~its~~the ~~wholly~~seller ~~owned~~of ~~subsidiary~~that property, ~~American~~in ~~Marketing~~the &principal amount ~~Sales~~of $1,049,000, ~~Inc.~~due in August, a2011, ~~Massachusetts~~with ~~corporation.~~interest ~~The~~only ~~sale~~payments ~~was~~due monthly ~~subject~~until tomaturity in the ~~consent~~amount of a$6,119. The ~~majority~~mortgage ofwas personally ~~Datameg~~guaranteed by the Company’s ~~shareholders,~~Chief ~~which~~Executive ~~consent~~Officer ~~was~~and ~~obtained~~her spouse.

·In ~~Assets~~May ~~acquired~~2007, ~~were~~The Company entered into a note payable with Flagship Bank for $4400,~~116,~~000. The ~~including~~note accrues interest at prime less .75% (approximately 2.5%), carries monthly payments that annually total of $88,628, and matures in May 2012. The Company is current on its payments, so there was no accrued interest at December 31, 2009 or 2008. Future maturities as of December 31, 2009 are as follows:

Dec. 31,	Payments		Principal		Interest
2010		88,628		81,500		7,128
2011		88,628		85,032		3,596
2012		38,674		37,946		728
Totals		215,930		204,478		11,452

NOTE 11 – STOCKHOLDERS’ EQUITY

During the quarter ended December 31, 2009 there were no changes in the number of issued and outstanding shares of the Company’s preferred or common shares outstanding.

For the nine months ended December 31, 2009, the Company accrued Preferred Series C cumulative dividends of $565,200, which was recorded as a reduction in additional paid-in capital. The Company also issued 49,302 common shares pursuant to warrants exercised via $65,572 in services rendered. Also during the nine months ended December 31, 2009, 442,000 common shares were returned to the Company; 425,000 shares were returned in conjunction with the AMS acquisition; 17,000 shares were returned from the settlement with a vendor. The Company also issued 500,000 shares to settle a contract with a vendor. The AMS acquisition (as more fully described in Note 12) had an effect on Common Stock of 1,400,000 shares and a net increase in Common stock and Paid in Capital of $630,000.

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BLUE EARTH SOLUTIONS, INC. & SUBSIDIARY

Notes to the Condensed Consolidated Financial Statements

For The Nine Months Ended December 31, 2009

NOTE 12 –ACQUISITION

On July 1, 2009, the Company completed the purchase of AMS, which is in the plastic injection molding business. The Company has not completed its financial evaluation of all the assets of AMS and is still evaluating the value of AMS’ revenue stream based on its existing customers, which is expected to be completed in the next six months. AMS’ operations complement the Company’s business plan, which is the recycling of expended polystyrene products back into plastic pellets that can be used in the injection molding industry. The acquisition was made pursuant to the following terms:

●

On March 18, 2009, Natural Blue Resources, Inc., a Delaware corporation(formerly known as Datameg Corporation) ("NTUR") entered into a Stock Purchase Agreement and purchase money promissory note Assignment and Assumption Agreement incident to its proposed sale of its wholly owned subsidiary, American Marketing & Sales, Inc., a Massachusetts corporation (“AMS”). The sale was subject to the consent of a majority of the NTUR’s shareholders, which consent was obtained.

●	Assets acquired were $3,998,000, including:

o	$689,000 Cash

o	$1,133,000 Net Trade Receivables

o	$192,000 Inventory

o $1,~~695~~577,000 Property Plant & Equipment

o	$400,000 Investments

o	$7,000 Other

·● Liabilities acquired were $1,438,000

o	$1,193,000 Accounts Payable & Accrued Expenses

o	$245,000 Bank Loan

· Leonard J. Tocci is the representative of the Principal Shareholders (Leonard J. Tocci, Lynel J. Tocci, Leanne J. Whitney, and Linnea J. Clary) who are the former AMS owners and are now owners of the 150,000 ~~Datameg~~NTUR shares in escrow from their sale of American Marketing to ~~Datameg~~NTUR ~~Corporation~~ in December 2007. The Principal Shareholders also hold a purchase money note ("Note") secured by all of the assets of American Marketing concerning an election to return the 150,000 ~~Datameg~~NTUR shares in favor of full payment of the purchase money note. As of ~~September~~December 3031, 2009, the principal and interest due on the Note is approximately $5.,600,000 consisting of $5.,400,000 in principal and $200,000 of interest.

~~F-10~~● The purchase of AMS was made pursuant to a Stock Purchase Agreement. The Stock Purchase Agreement contained, among other things, representations, warranties and covenants of the aforementioned parties to the AMS agreement. Blue Earth Solutions is allowed to make additional draws from available cash of AMS for the purpose of meeting additional operating capital with respect to new customers secured by the Company for AMS after the closing of the Agreement.

~~Table~~ ● Among other terms, NTUR received 1 million restricted common shares of ~~Contents~~the Company with piggyback registration rights in exchange for the transfer of AMS shares to the Company. NTUR delivered to the Principal Shareholders from escrow 150,000 NTUR common shares in exchange for (1) a complete release of NTUR and its directors and officers from further liability upon the Note and otherwise (2) the Principal Shareholders’ written consent to the assumption of the Note by the Company (3) the Company's written assumption of the Note and (4) the Principal Shareholder’s and the Company’s agreement to extend the term of the Note for one year.

~~BLUE EARTH~~● ~~SOLUTIONS~~For their assumption of the additional loans from AMS on the Note, ~~INC~~the &Company ~~SUBSIDIARY~~was issued 500,000 unregistered NTUR common shares at the Closing.

Notes to the Financial Statements

For The Nine Months Ended September 30, 2009

NOTE 9 – ACQUSITION (CONTINUED)

· The purchase of American Marketing & Sales, Inc. was made pursuant to a Stock Purchase Agreement. The Stock Purchase Agreement contained, among other things, representations and warranties of the aforementioned Parties and covenants of the Companies. Blue Earth Solutions is allowed to make additional draws from available cash of AMS for the purpose of meeting additional operating capital with respect to new customers secured by the Company for AMS after the closing of the Agreement.

· Among other terms, Datameg received 1 million (restricted with piggy-back registration rights) common shares of the Company in exchange for the transfer of American Marketing shares to the Company. Datameg delivered to the Principal Shareholders from escrow 150,000 Datameg common shares in exchange for (1) a complete release of Datameg and its directors and officers, etc. from further liability upon the Note and otherwise (2) the Principal Shareholders’ written consent to the assumption of the Note by the Company (3) the Company's written assumption of the Note and (4) the Principal Shareholder’s and the Company’s agreement to extend the term of the Note for one year.

· For their assumption of the additional loans from American Marketing & Sales, Inc. on the Note, the Company was issued 500,000 unregistered Datameg common shares at the Closing.

· The Principal Shareholders released their security interest in NetSymphony Corporation stock and returned the stock certificate to Datameg.

· In consideration of their aforementioned acts and consents, the Company delivered to the Principal Shareholders 400,000 (restricted with piggy-back registration rights) common shares of the Company common shares.

The 500,000 shares of Datameg’s common stock issued to the Company had a value of $4.50 per share ($2,250,000 total value). Just prior to the sale, the Datameg also issued to AMS an additional 120,000 shares of common stock at $4.70 for total value of $564,000. The 1,000,000 shares issued by the Company to Datameg had a fair market value of $450,000 on the closing date, and represent a 3% ownership in the Company.

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BLUE EARTH SOLUTIONS, INC. & SUBSIDIARY

Notes to the Condensed Consolidated Financial Statements

For The Nine Months Ended December 31, 2009

●	In consideration of their aforementioned acts and consents, the Company delivered to the Principal Shareholders 400,000 (restricted with piggy-back registration rights) common shares of the Company common shares.

On July 1, 2009 the 500,000 shares of NTUR’s common stock issued to the Company had a value of $4.50 per share ($2,250,000 total value). The 1,000,000 shares issued by the Company to NTUR had a fair market value of $450,000 on the closing date, and represents a 3% ownership in the Company.

NOTE 13- NET LOSS PER COMMON SHARE

As required by ASC Topic 260 (SFAS No. 128), the following is a reconciliation of the basic and diluted loss per share calculations for the periods presented:

BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE:

	For the Quarter Ending						For the Nine Months Ended
Basic EPS	December 31,						December 31,
	2008			2009			2008			2009
Net loss per share,
Continuing operations	$	(0.02	)	$	(0.05	)	$	(0.06	)	$	(0.09	)
Net earnings/(loss) per share
Discontinued operations		-			-			-			-
Total Net Loss per share	$	(0.02	)	$	(0.05	)	$	(0.06	)	$	(0.09	)
Weighted average Common
shares outstanding		33,532,602			29,016,300			32,194,410			22,397,975

	For the Quarter Ending						For the Nine Months Ended
Diluted EPS	December 31,						December 31,
	2008			2009			2008			2009
Net loss per share,
Continuing operations	$	(0.02	)	$	(0.05	)	$	(0.06	)	$	(0.09	)
Net earnings/(loss) per share
Discontinued operations		-			-			-			-
Total Net Loss per share	$	(0.02	)	$	(0.05	)	$	(0.06	)	$	(0.09	)
Weighted average Common
shares outstanding		33,532,602			29,016,300			32,194,410			29,016,300

At December 31, 2009, the Company had no options issued or outstanding. During the year ended March 31, 2009, the Company had issued 483,000 for third party consulting services. These warrants were expensed when issued and were exercisable within 60 days of the grant date, which was September 29, 2008 and has since expired.

NOTE 14 – SUBSEQUENT EVENTS

On January 15, 2010 the Company reached a tentative settlement with Graybar, an electrical supplier which had filed a construction lien for services performed at the Company’s headquarters by a third party vendor in the amount of $17,170. The settlement calls for monthly payments, which includes principal and interest at the rate of 7.25% per annum, for one year at which time the balance of the lien will be fully paid.

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

Blue Earth Solutions, Inc. is hereafter referred to as “we”, “our” or “us”.

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~~including that: (a) our entire operations and ability to continue as a going concern are contingent upon obtaining adequate financing and/or obtaining a consistent revenue source; (b) our ability to predict results or the actual effect of future plans or strategies is inherently uncertain~~. Factors~~; ~~which~~(c) ~~could~~we ~~have a~~are ~~material~~subject ~~adverse~~to ~~affect~~intense oncompetition ~~our~~with ~~operations~~companies that have far superior financial, operational, and ~~future~~personnel ~~prospects~~resources onthan awe ~~consolidated~~do as well as ~~basis~~superior brand ~~include,~~name ~~but~~recognition; ~~are~~(b) ~~not~~our ~~limited~~operations are subject to conditions beyond our control, including: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, new ~~competition~~technologies developed by our competitors, and changes in generally accepted accounting principles.; (d) ~~These~~our ~~risks~~ability ~~and~~to successfully execute our ~~uncertainties~~business ~~should~~plan ~~also~~is beheavily ~~considered~~dependent inupon ~~evaluating~~our ~~forward-looking~~ability ~~statements~~to secure plastic materials ~~and~~to ~~undue~~recycle; ~~reliance~~(e) ~~should~~we ~~not~~are besubject ~~placed~~to onthe ~~such~~“penny ~~statements. We~~stock rules” provided for in the ~~undertake~~Securities noEnforcement ~~obligation~~Penny Stock Act of 1990, which may lead to ~~update~~difficulties in selling our common stock shares and/or ~~revise~~in ~~publicly~~establishing ~~any~~an ~~forward-looking~~active market for ~~statements~~our stock; (f) we may encounter potential environmental liability from regulatory actions or private litigation, ~~whether~~which aswill aincrease ~~result~~our ofcosts, ~~new~~and otherwise ~~information~~may negatively affect our financial condition; (g) changes in environmental regulations and environmental enforcement policies may potentially subject us to increased costs and potential liability and thereby adversely affect our operations; (h) our production process has not yet, and may never achieve expected production volumes; (i) we have experienced losses since our inception and we expect to continued losses in the near future; ~~events~~we ormay never ~~otherwise.~~become profitable; and ~~Further~~(j) ~~information~~our ~~concerning~~plans to sell our ~~business~~assets and certain of our liabilities, ~~including~~which are subject to a non-binding term sheet and letter of ~~additional~~intent, ~~factors~~are ~~that~~subject ~~could~~to ~~materially~~certain ~~affect~~risks: ~~our~~(1) the essence of the proposed transaction (as summarized under Note 1 to the financial ~~results,~~statements) is that we ~~included~~are ~~herein~~buying back some or all of the assets that we already purchased from the entity that sold it to us; and (2) closing of the transaction, i.e. the sale of AMS’ assets, will result in the elimination of over 90% of our ~~other~~current ~~filings~~revenue source ~~with~~and the ~~SEC~~ability to execute our proposed business plan reflected below.

The above risks and uncertainties should be considered in evaluating forward-looking statements. Undue reliance should not be placed on such forward-looking statements. We undertake no obligation to publicly update or revise 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 in this Form 10-Q and in our other SEC filings

Plan of Operation

Overview

As of ~~September~~December 3031, 2009, we conduct our recycling operations from our facility at 13511 Granville Ave., Clermont, Florida,. ~~utilizing~~We use our Blue Line System ~~system~~(“Blue Line”), which primarily uses established recycling technologies and methods~~. Compared~~ to ~~our~~recycle ~~Styrosolve™~~expanded ~~system,~~polystyrene ~~the~~(otherwise ~~Blue~~known ~~Line~~and ~~creates~~referred to herein ~~less~~as ~~waste,~~“EPS”). We ~~converts~~stopped ausing ~~higher~~our ~~percentage~~Styrosolve™ ofsystem ~~expanded~~during ~~polystyrene,~~the ~~(otherwise~~third ~~known~~quarter asof ~~EPS)~~2009, ~~into~~which ~~useable~~we ~~crystal~~previously ~~polystyrene~~used ~~pellets,~~to ~~reduces~~process ~~energy~~pellets. We are ~~consumption,~~presently ~~requires~~dismantling nothat ~~chemical~~system; ~~inputs~~however, ~~occupies~~we ~~less~~have ~~square~~experienced ~~footage~~delays, and is ~~less~~continue ~~labor~~to ~~intensive~~anticipate delays in our dismantlement process. Some equipment ~~The~~from ~~Blue~~this ~~Line~~dismantling ~~system~~process ismay ~~presently~~be ~~operating and producing~~utilized ~~pellets~~in ~~that~~our ~~are~~operations, ~~being~~and the ~~sold~~balance onof athe ~~commercial~~equipment ~~basis~~will be liquidated.

Although we anticipated beginning recycling operations on a full commercial scale during the quarter ended September 30, 2008, we have experienced unexpected delays due to our abandonment and dismantling of the Styrosolve™ system that we previously used to process pellets and replacing it with the Blue Line system. During the quarter ended September 30, 2009, we began dismantling the Styrosolve™ operation, but we not know when that dismantling process will be completed. Some equipment from this dismantling process may be utilized in our operations, as accounted for in the necessary reserves and adjustments in our financial statements.

We have received a third-party claim alleging that the seller of the Styrosolve™ patents did not have the legal right to sell them to us; however, we believe that we have clear title to the patents and we are presently investigating this claim.

American Marketing and Sales, Inc. D/B/A INNOVATIVE DESIGNS, our Wholly Owned Subsidiary

AMS has developed and introduced a line of environmentally friendly, injection-molded Green Line food-packaging/cater ware products. We have twenty-five (25) Green Line products, including various size trays, party platters, and serving bowls with lids. These non-toxic products qualify for the Green label because they are manufactured from Federal Food and Drug Administration approved polypropylene and polystyrene resins that contain up to 40 percent recycled plastic content. . American Marketing also produces office products, including desk top organizers, letter trays, legal letter trays, pencil holders, paper clip and card holders, magazine holders, and telephone and draw organizers.

Plan for other Products and Services

Assuming we obtain sufficient funding or generate sufficient revenues, we plan to expand American Marketing’s sales operations, particularly in its office product line.

In addition to our recycling operations, we produce, market and distribute six other products on a limited basis, including Tire Muscle®, Dumpster Ease, Diaper Ease, Nu-silver, Nu-Brass, and Nu-Chrome, which represent products such as a tire fix, odor eliminator in commercial dumpsters, and polish enhancing formulas. We intend to continue producing small amounts of these products for existing customers while seeking other companies or individuals that may wish to purchase the rights to these products.

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We created the Blue Line as a more effective system to the now abandoned Styrosolve™ system.

Compared to the Styrosolve™ system, Blue Line:

·	Creates less waste;

·	Converts a higher percentage of expanded polystyrene into useable crystal polystyrene pellets;

·	Reduces energy consumption;

·	Requires no chemical inputs;

·	Occupies less square footage; and

·	Is less labor intensive.

Blue Line is presently operating and producing pellets, which we are selling to our customers.

During the quarter ending December 31, 2009, we continued recycling of polystyrene using Blue Line. In addition, we added new products to recycle, including carpeting and assorted soft goods associated with hotel renovations

We have received a third-party claim alleging that the seller of the Styrosolve™ patents did not have the legal right to sell the patents to us; however, we believe that we have clear title to the patents and we are presently investigating this claim.

American Marketing and Sales, Inc. D/B/A Innovative Designs, our Wholly Owned Subsidiary

Plan for other Products and Services

During the fourth quarter of our fiscal year we plan to test market expansion of the Green office product line.

In addition to our recycling operations, we produce, market and distribute six other products on a limited basis, including Tire Muscle®, Dumpster Ease, Diaper Ease, Nu-silver, Nu-Brass, and Nu-Chrome, which represent products such as a tire fix, odor eliminator in commercial dumpsters, and polish enhancing formulas. However, we do not view this as a substantial part of our future operations since we only intend to continue producing small amounts of these products for existing customers while seeking other companies or individuals that may wish to purchase the rights to these products.

Marketing Plan & Sales Strategy

Our goal is to ~~become~~ ~~an industry~~expand ~~leader~~our in polystyrene recycling. ~~We have~~business and to become ~~involved~~ in ~~other~~industry ~~types of~~leader ~~materials,~~in ~~such~~this ~~as other plastics, carpet, cardboard, and fabrics~~field. Our initial marketing efforts will focus on acquiring EPS for recycling and re-sale as pellets, which are used for producing plastic products that are labeled “produced with recycled materials.” We will attempt to develop an infrastructure that will enable us to acquire scrap EPS from the construction and packaging industries, local and state governments, military bases and vessels, and the food services industry. Our management will be responsible for presenting the fiscal and environmental benefits of utilizing our products and services to industry decision makers. We inhave ~~the~~also recycled other ~~foregoing~~types ~~industries~~of materials, such as other plastics, carpet, cardboard, and fabrics. We will continue to investigate other materials to recycle, which complement our strategy to compete.

We ~~intend~~will continue to use Internet-based and traditional media to increase public awareness of our brand name and processes and our attempted sales to large organizations. We ~~also~~have ~~intend~~introduced ~~to introduce~~ our technologies and processes in the recycling industry through our attendance at trade groups and meetings, promotional events, seminars, national conferences and other organizations, including the International Expanded Polystyrene Recycling ~~Association~~ Association (“INEPSA”) and the Alliance of Foam Packaging Recyclers (“AFPRA”) , and ~~those~~ generally to events attended by ~~organizations that generate~~ aother ~~large~~organizations, ~~amount~~which ofgenerate scrap EPS and other materials that will be in need of our products and services.

We intend to work with landfills serving the areas around our processing center and transfer stations. By intercepting EPS bound for the landfill, our goal is to extend the landfill’s life by reducing BPS’s environmental impact. Similarly, we will attempt to provide EPS recycling on a residential level in communities where there is an existing residential recycling pick-up program. We will attempt to partner with those companies that are already collecting paper, aluminum, and glass products, which allow them to add EPS to their list of recyclable material and providing additional scrap EPS for us to process.5

~~In addition~~Table to acquiring scrap EPS to recycle into Pellets, we sell those Pellets. Our executive management will attempt to establish contacts within the industry by establishing relationships, arrangements and agreements with companies that manufacture products from polystyrene. As such, we will promote a mutual public relations arrangement, where these companies will be able to promote their products as both recycled and recyclable and we will promote sale of ~~our pellets.~~Contents

~~With American Marketing,~~We we will continue to ~~sell~~work with landfills serving the areas around our ~~catering~~processing center and ~~food~~transfer ~~service~~stations. ~~products~~By tointercepting EPS bound for the landfill, our goal is ~~large~~to ~~user~~extend ~~stores~~the ~~and~~landfill’s ~~big~~life ~~box~~by ~~markets~~reducing EPS’s environmental impact. We ~~also~~Similarly, we ~~have~~will ~~started~~attempt to ~~begin marketing~~provide ~~our~~EPS ~~recycled~~recycling ~~office~~on ~~product~~a ~~line~~residential ~~into~~level ~~big~~in ~~box~~communities where ~~settings,~~there asis ~~well~~an asexisting ~~develop~~residential recycling pick-up program. We will ~~relationships~~attempt to partner with ~~sales~~those companies that are already collecting paper, aluminum, and ~~marketing~~glass ~~representatives~~products, ~~who~~which ~~will~~allow them ~~sell~~to ~~our~~add EPS to their list of recyclable material, which provides additional ~~products on~~scrap aEPS ~~commission~~for ~~only~~us ~~basis~~to process.

In addition to acquiring scrap EPS to recycle into Pellets, we are able to sell those Pellets. Our management establishes contacts by forging relationships, arrangements and agreements with companies that manufacture products from polystyrene to promote a mutually-beneficial public relations arrangement -- these companies will be able to promote their products as both recycled and recyclable and we will promote the sale of our pellets.

American Marketing will continue to sell their catering and food service products to large user stores and big box markets.

Sales Personnel

As of ~~September~~December 3031, 2009, we ~~have~~will ~~hired~~continue to ~~and~~use ~~deployed~~the ~~one~~services ~~sales~~of ~~person~~our ~~to focus on foam~~executive ~~collection~~management into ~~the~~sell ~~Central~~our ~~Florida~~services ~~area~~and products. We have contracted with independent marketing representatives to sell and distribute Tire Muscle, Dumpster Ease and other proprietary formulas and polishes. InAt ~~addition~~the current time, we ~~will~~ ~~continue to~~do ~~use~~not ~~the~~need ~~services~~additional ofsales ~~our~~support; ~~executive~~however, ~~management~~should ~~to sell~~ our ~~services~~ ~~and products. Should our~~ services and products expand and sales increase, we plan to employ additional regional sales representatives to promote and sell our recycling services to governments, companies, and the general public. ~~Each sales representative will be responsible for soliciting, selecting and securing accounts on a regional territorial basis.~~ We intend to provide service and support to our sales representatives, including advertising and sales materials. American Marketing currently deals with twelve (12) manufacturing sales representatives, which are divided into a food packaging and services and retail house ware table and party ware groups.

Governmental Regulation

We are unaware of and do not anticipate having to expend significant resources to comply with any non-environmental governmental regulations. We are subject to applicable laws and regulations in the jurisdictions where we will sell our products, which laws and regulations are generally applicable to business operations, such as business licensing requirements, income taxes and payroll taxes. In general, the collection, recycling, and sale of polystyrene in the United States are not subject to special non-environmentally related regulatory and/or supervisory requirements.

Compliance with Environmental Laws

Our business is subject to strict supervision and regulation by state and ~~federal~~ federal governmental environmental authorities, including the U.S. Environmental Protection Agency (“EPA”) and state counterparts., Wewhich ~~will~~we ~~comply~~intent ~~with~~to comply ~~all EPA and other requirements~~with, including ~~those~~regulations pertaining to receiving and mixing chemicals.

Critical Accounting Policies

Our significant accounting policies are described in Note 1 of the Financial Statements.

Results of Operations for the ~~Six~~Nine Months Ended ~~September~~December 3031, 2009, and 2008

WeAs more ~~acquired~~fully ~~American~~described ~~Marketing~~in the Notes to the Financial Statements, Note 12, the Company acquired AMS on July 1, 2009, which accounts for the increases ~~noted~~ noted below.

WeThe Company had revenues of $24,~~020~~713,~~995~~665 and $1420,~~516~~453 for the ~~six~~ nine month periods ending December ~~September 30~~31, 2009 and 2008~~, respectively, representing an increase of $2,006,479~~. Sales for the ~~six~~nine months ended ~~September~~December 3031, ~~2009~~ 2009 were primarily generated from our newly acquired company, ~~American~~ ~~Marketing~~AMS. ~~We sold pellets, densified logs, and transportation charges; other sales were from sales of our non-recycling related products, primarily Dumpster Ease.~~

5Blue Earth Solutions Florida, a wholly owned subsidiary of the Company (“BES Florida”) predominantly sold pellets as a by-product of the recycling process, known as purgings. In addition, we received fees for the collection and transportation of other recycled materials and other sales of our non-recycling related products, primarily Dumpster Ease & Tire Muscle.

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Costs of Sales for the same 2009 and 2008 comparable periods were $13,~~828~~933,~~769~~053 and $36,~~935, representing~~986. anThese ~~increase~~increased ofcosts ~~$1,824,834. This~~are ~~increase is~~ primarily attributable to ~~American~~ ~~Marketing~~AMS’s ~~costs associated with its~~ sales costs. ~~American~~AMS ~~Marketing~~ contributes a positive gross margin while ~~Blue Earth Solutions~~ ~~Florida (“~~BES Florida”, ~~a wholly owned subsidiary of the Company)~~ is producing a negative gross margin (costs exceed revenue).

~~We are attempting to lower our operating costs.~~ Operating Expenses were $12,~~531~~173,~~037~~231 and $~~607~~2,~~979~~246,260 for the ~~six~~nine month periods ending December ~~September 30~~31, 2009 and 2008, respectively, representing ana ~~increase~~decrease of $73,029 or 3.3%, on sales that have increased by $~~923~~4,~~058~~693,202. ~~This increase~~For isthe ~~attributable~~same 2009 and 2008 comparable periods, the Operating Expenses include charges to inventory for obsolescence and breakage in the ~~increased~~amount of $206, 325 and $0, respectively; ~~expenses~~settlements weon ~~have~~contracts ~~assumed~~for ~~from~~$250,000 ~~American~~and ~~Marketing’s operations.~~$0, ~~For~~respectively; acquisition expenses ~~each~~of ~~period~~$180,000 ~~Operating~~and ~~Expenses~~$0, ~~consists~~respectively and commissions of ~~Depreciation~~$118,711 and ~~General~~$0, respectively. In the nine months ended December 31, 2008 the Company had issued and expensed Warrants in the amount of $985,936 as fair value for ~~Administrative~~third ~~Expenses~~party consultant services; there were no such expenses in the nine months ended December 31, 2009.

Other Income (Expenses) was $(~~248~~662,~~014~~201) of expense and income of $34125,~~635~~ 739, representing an expense increase of $~~282~~787,~~649~~940 in the ~~six~~ nine months ended ~~September~~December 3031, 2009 compared to the ~~six~~comparable ~~months~~period ended December ~~September 30~~31, 2008~~. This~~, ~~was~~ primarily attributable to accrued interest expense on the assumed note we acquired as part of the ~~American Marketing~~AMS acquisition. In addition we recorded a $196,583 loss on the sale of assets related with our Styrosolve™ system, and experienced reduced interest income on lower investment balances.

We recorded a net loss of $1(2,~~606~~074,~~642~~646) and $~~562~~(2,~~763~~107,054) for the ~~six~~nine months ended ~~September~~December 3031, 2009 and 2008, respectively. The loss in 2009 is primarily attributable to our ~~overall~~inability ~~six~~to ~~(6)~~generate ~~months~~sufficient ofgross ~~activities, whereas~~margin ~~American~~to ~~Marketing~~offset as our operating ~~wholly~~expenses ~~owned~~and ~~subsidiary~~increased ~~has conducted operations~~interest ~~for~~expenses ~~only three~~on higher note payable ~~months~~balances.

We anticipate ~~our~~that operating expenses will increase as we ~~undertake~~execute our plan of operations., ~~The~~which ~~increase~~are ~~will be~~ attributable to the continued ~~development~~product ofand services ~~our~~development ~~products~~ and ~~services~~the legal, accounting, and ~~professional~~auditing fees associated with our being a Securities and Exchange Commission reporting company..

Results of Operations for the Three Months Ended ~~September~~December 3031, 2009, 2008

We ~~generated~~ generated revenue of $12,~~997~~692,~~095~~660 and $45,~~282~~ 937 for the three months ended ~~September~~December 3031, 2009 and ~~September 30,~~ 2008~~, respectively, representing a $1,992,813 increase~~. Revenues in the three months ended ~~September~~December 3031, 2009 were primarily generated from our newly acquired ~~company~~subsidiary, ~~American Marketing~~ AMS. BES Florida predominantly sold pellets, and a by-product of the ~~densified~~recycling ~~logs~~process known as purgings. In addition, we received fees for the collection and transportation ~~charges,~~of other recycled materials and other sales were from sales of our non-recycling related products, primarily Dumpster Ease & Tire Muscle.

Cost of Sales for the same three ~~(3)~~ month comparable time periods are $12,~~737~~213,~~576~~647 and $23,~~592, an increase of $1,734,984~~051. The Cost of Sales is primarily attributable to ~~American Marketing~~AMS’s costs associated with their sales. The Gross Profit for the three months ended ~~September~~December 3031, 2009 and 2008 ~~was~~is $~~259~~479,~~519~~013 and ~~$1,690,~~ ~~respectively, representing a~~ $~~257~~2,~~829 increase~~886. This profit increase is attributable to ~~American Marketing~~AMS’s operations. ~~Blue~~ BES ~~Earth Solutions Florida~~ continues to attempt to lower its costs.

Operating Expenses were $1650,~~054,505~~540 and $~~448764~~1,638,281 for the three months ended ~~September~~December 3031, 2009 and 2008, respectively, representing aan $~~605~~987,741 ~~increase~~decrease, which is attributable to the ~~increased~~costs ~~expenses~~of ~~from~~warrants ~~American Marketing’s operations.~~that ~~For~~were ~~each~~issued ~~period,~~in ~~Operating~~the ~~Expenses~~prior ~~consisted of~~year ~~Depreciation,~~in ~~and General and Administrative~~the ~~Expenses.~~amount ~~Other~~of ~~Income~~$985,936; ~~(Expenses)~~offset ~~was~~by ~~$280,116~~a ofcharge ~~expense~~to ~~and~~write ~~$34,635~~off ofobsolete ~~income~~inventory during ~~for~~ the three months ended ~~September~~December 3031, 2009, ~~representing~~and ~~an increase~~2008 ofin ~~$314,751 over~~ the ~~earlier~~amount ~~September~~of $30,000 ~~2008 three month~~and ~~period. This~~$0, ~~increase is primarily attributable to accrued interest expense on the assumed note we acquired as part of the American Marketing acquisition~~respectively.

~~We recorded~~Other aIncome ~~net~~(Expenses) ~~loss~~was of $1(414,~~075,102~~186) of expense and $~~412~~91,~~439~~104 of income for the three months ended ~~September~~December 3031, ~~2009~~ ~~and 2008~~2009, ~~respectively,~~ representing an ~~increased~~increase ~~loss~~ of $~~662~~505,~~663. This loss~~290 isover ~~primarily attributable~~the ~~to BES Florida.~~earlier WeDecember ~~anticipate our~~31, ~~operating~~2008 ~~expenses~~three ~~will~~month period. This increase asis primarily weattributable ~~undertake~~to ~~our~~accrued ~~plan~~interest ofexpense ~~operations, which~~on ~~will~~the beassumed ~~primarily~~note ~~attributable~~we acquired toas ~~the~~part ~~continued~~of ~~development~~the ofAMS ~~our products~~acquisition, ~~and~~a ~~services~~loss ~~and~~on the ~~professional~~sale ~~fees~~of ~~associated~~assets related with our ~~being~~Styrosolve™ ~~a Securities~~system, and ~~Exchange~~reduced ~~Commission~~interest ~~reporting~~income ~~company~~on lower investment balances.

We recorded a net loss of $(585,714) and $ (1,544,291) for the three months ended December 31, 2009 and 2008, respectively. This loss is primarily attributable to BES Florida. We anticipate our operating expenses will increase as we undertake our plan of operations, which will be primarily attributable to the continued development of our products and services and the professional fees associated with our being a Securities and Exchange Commission reporting company.

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Liquidity and Capital Resources

As of ~~September~~December 3031, 2009, we have a working capital deficit of $78,~~117~~132,~~038~~169, which is composed of $1,~~689~~492,~~971~~124 in current assets less $89,~~807~~624,~~009~~293 of current liabilities. For the nine months ended December 31, 2009 and 2008 the Company generated cash flows in the amount of $249,621 and $87,019, respectively.

~~Operating~~The net ~~activities~~cash which was used: in Operating activities was $187,321 and $930,249 for the nine months ended December 31, 2009 and 2008 respectively.

·o ~~$2,409,259~~The ~~and~~primary ~~$8,056.802~~uses ~~for~~in ~~the~~Operating ~~six~~Activities ~~months~~for ~~ended~~the ~~September~~comparable ~~30,~~ 2009 and 2008 ~~respectively.~~nine month periods were:

o· ~~The~~Net ~~primary~~losses ~~uses~~of in$2,074,646 ~~Operating~~and ~~Activities~~$2,107,054, ~~were:~~respectively

§· ~~Net~~A ~~losses~~decrease ofin ~~$1,606,642~~Accounts Payable and Accrued Expenses of $~~562~~185,~~763, respectively~~653

§· ~~Unrealized~~and ~~loss~~an increase of $1366,~~450~~038,~~000~~ respectively

§· A decrease in ~~Accounts~~Inventory ~~Receivable~~ of $~~233~~5,~~976~~496 and an increase of $1185,~~503~~686, respectively

§· ~~Depository~~A ~~Accounts~~decrease ~~increased~~in Prepaid Expenses of $2728,~~342~~252 and an increase of $8115,~~538,958, respectively~~266

.o The primary sources in Operating Activities for the comparable 2009 and 2008 nine month periods were:

~~Investing activities~~· ~~provided;~~A decrease in related party loans of $808,079 and $0, respectively

· ~~$1,484,356~~Issuance ~~and~~of ~~$3,710,646~~warrants ~~for~~of ~~the~~$0 ~~six months ended September 30, 2009~~ and ~~2008~~$985,936, respectively

o· ~~The~~A ~~primary~~decrease ~~uses~~ in ~~Investing~~Accounts Receivable of ~~Activities~~$183,600 ~~were:~~and an increase of $1,257, respectively

§The ~~Assumption~~net cash ofwhich ~~notes~~was used by Investing activities was $547,~~229~~524 and $13,~~114~~372,732 ~~offset~~for ~~by;~~the nine months ended December 31, 2009 and 2008 respectively.

·o ~~Investment~~The primary uses in ~~AMS~~Investing ~~$2,111,000~~Activities for the comparable 2009 and 2008 nine month periods were:

· ~~Goodwill~~The purchase of Property, Plant and Equipment of $~~329~~111,~~514~~296 and $5,236,835, respectively

· ~~Investment~~A increase in ~~securities~~Investments of $~~800~~111,~~000~~690 and $8,135,897, respectively

6· Investment of Available for Sale investments of $250,000 and $0, respectively

·	Issuance of loan receivable of $432,974 and $0, respectively

o	The primary sources in Investing Activities for the comparable 2009 and 2008 nine month periods were:

·	Cash acquired from business acquisitions of $689,000 and $0, respectively

·	Proceeds from the sale of investments of $140,795 and $0, respectively

The net cash which was provided by Financing activities was $484,466 and $14,390,000 for the nine months ended December 31, 2009 and 2008 respectively.

o	The primary sources in Financing Activities for the comparable 2009 and 2008 nine month periods were:

·	The issuance of Preferred Shares of $0 and $14,570,000, respectively

·	The proceeds from related party borrowings of $524,988 and $0, respectively

o	The primary use in Financing Activities for the comparable 2009 and 2008 nine month periods were:

·	Repayments of Notes Payable of $40,522 and $200,000, respectively

On August 29, 2008, we completed and closed a private offering of newly-created Series C Preferred Stock at an offering price of $1,000 per share. We sold 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 that we disclosed in our Form August 13, 2008 Form 8K. From the $14,130,000 total gross proceeds, $8,500,000 was deposited in an offshore fund account that details an investment return to be earned upon the funds. At present, there remains a dispute about the control and dispositions of these funds, which management is continuing to investigate. Additionally, the Agreement provides that we agree to wait to withdraw $8,000,000 of the funds until one of several stated conditions are met. We are entitled to withdraw the earnings, less the investment fees, generated by these funds without restriction. During the quarter ended September 30, 2009, we attempted to withdraw some of the funds, but the fund management refused to release them. We have consulted with our legal counsel to determine the appropriate legal steps to take regarding this manner. The Company reports the funds as a non-current asset, unless they are released, if ever.

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~~Financing~~Our ~~Activities~~financial ~~provided~~condition will be negatively affected if we encounter any difficulties associated with the Funds, as follows: (a) difficulties with the control and disposition of the Funds; (b) incurring substantial or total losses from the investment of the funds; (c) the fund administrator refusing to return our funds; and/or (d) incurring substantial litigation costs associated with litigating a matter in an overseas jurisdiction and enforcing claims and judgments in a foreign jurisdiction.

§Currently, our sources of cash are limited to our current cash reserves. Cash on hand was $~~408~~300,~~133~~316 ~~and~~as ~~$14~~of December 31,~~390~~ 2009,~~000~~ substantially all of which is restricted for use in the ~~six~~operations ~~months~~of ~~ended~~AMS. Our ~~September~~current 30business is operating on a negative cash flow basis and we do not have sources of debt financing available to us. Our continued operation is contingent upon our obtaining additional financing and establishing a consistent source of revenues. We intend to fund operations through debt and/or equity financing arrangements, ~~2009~~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. We do not anticipate that we will have access to debt financing under terms acceptable to us in the foreseeable future. There are also no assurances that our existing business will be successful in generating positive cash flow sufficient to sustain them and ~~2008~~allow for their continued development. If our attempts to raise additional capital are unsuccessful, then ~~respectively~~implementation of our business plan may be delayed.

On August 29, 2008, we completed and closed a private offering of newly-created Series C Preferred Stock at an offering price of $1,000 per share.. We sold 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 that we disclosed in our Form 8K filed with the Securities and Exchange Commission on August 13, 2008. From the $14,130,000 total gross proceeds, $8,500,000 was deposited in an offshore fund account that details an investment return to be earned upon the funds. As a result, there remains a dispute about the control and dispositions of these funds, which management is currently investigating. Additionally, the Agreement provides that we agree to wait to withdraw $8,000,000 of the funds until one of several stated conditions are met. We are entitled to withdraw the earnings, less the investment fees, generated by these funds without restriction. During the quarter ended September 30, 2009, we attempted to withdraw some of the funds, but the fund management refused to release them. We are taking steps to get these funds released and negotiations to sell the fund and its related dividend debts are ongoing, although there is no assurance whatsoever that we will be successful in that proposed sale. These funds were classified as a current asset at March 31, 2009 because management considered them to be a liquid asset. We have re-classified the funds as a non-current asset until such time that they are released, if ever. Should we encounter any of the following pertaining to the above-described investment, our financial condition will be negatively affected: (a) difficulties pertaining to the control and disposition of those funds; (b) incurring substantial losses from the investment of the funds; (c) the fund administrator refusing to return our funds; (d) incurring substantial litigation costs associated with litigating a matter in an overseas jurisdiction; and (e) difficulties associated with litigating and enforcing claims in a foreign jurisdiction..

During the quarter ended March 31, 2009, we attempted to issue bonds, the proceeds of which we were going to use for expansion purposes; however, the bond market collapsed and we were unable to successfully sell these bonds, which put a strain on our ability to meet our working capital and halted our expansion plans.

As of September 30, 2009, we had minimal cash resource. Our continued operations and possible future success is contingent upon our 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. If our attempts to raise additional capital are unsuccessful, then implementation of our business plan may be delayed.

Off Balance Sheet Arrangements

As of ~~September~~December 3031, 2009, there were no off balance sheet arrangements.

Going Concern

Our financial statements are prepared using generally accepted accounting principles ~~applicable~~which contemplates the continuation of the Company as a going concern. At December 31, 2009 current liabilities exceeded current assets by $8,132,169 and for the nine months ended December 31, 2009, we had negative cash flows of $187,321. These matters raise substantial doubt about our ability to continue as a going concern. However the accompanying consolidated financial statements have been prepared on a going concern basis, 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~~revenue ~~of revenues~~source. Management’s plans include developing ~~and~~ and marketing a practical, economical, and environmentally safe means of ~~disposing~~ disposing of and recycling certain polystyrene and ~~expended~~expanded polystyrene products.

Our ~~auditors have indicated that our~~ ability to continue as a going concern is dependent upon our ability to successfully accomplish ~~the~~our plan ~~described~~of inoperations ~~the preceding paragraph~~ and ~~eventually~~ attain profitable operations. The accompanying financial statements do not include any adjustments that ~~might~~may ~~be necessary~~result iffrom wethe ~~are~~substantial ~~unable~~doubt surrounding our ability to continue as a going concern.

Item 4T. 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 ~~September~~December 3031, 2009. This evaluation ~~was~~ 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 ~~September~~December 3031, 2009, our disclosure controls and procedures are not effective. DoDue to expansion and lack of sufficient personnel certain controls and procedures have ~~not~~ been ~~adequate~~ ~~and we have taken immediate action to rectify the matter~~inadequate. ~~We have hired one new person in our accounting department so that we can have the checks and balances necessary to provide adequate control procedures.~~

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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 ~~management~~did ~~does~~ not ~~expect~~use ~~that~~a ~~our~~formal ~~disclosure~~framework ~~controls~~to ~~and~~conduct ~~procedures~~the orrequired ~~our internal~~evaluation ~~control~~of ~~over financial reporting will necessarily prevent all fraud and~~the ~~material~~effectiveness ~~error. Our disclosure controls and procedures are designed to provide reasonable assurance~~ of ~~achieving~~ our ~~objectives~~internal ~~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~~over ~~must~~financial ~~reflect~~reporting ~~the fact that there are resource constraints~~since, ~~and~~in the ~~benefits of controls must be considered relative to their~~ ~~costs.~~view ~~Because~~ of ~~the inherent limitations in all control systems~~management, nocomparison ~~evaluation of~~with ~~controls~~a ~~can~~formal ~~provide~~framework ~~absolute~~was ~~assurance~~unwarranted ~~that all control issues and instances~~because of ~~fraud,~~(1) ~~if any, have been detected. These inherent limitations include~~ the ~~realities~~small ~~that~~size ~~judgments~~of inour ~~decision-making~~current ~~can~~operations ~~be faulty,~~ and ~~that breakdowns~~(2) ~~can~~our ~~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~~structure ~~any~~consists ~~system~~ of ~~controls~~only ~~also~~our isprincipal ~~based~~executive inofficer ~~part~~and ~~upon~~principal ~~certain~~financial ~~assumptions about the~~officer ~~likelihood~~which ofenables ~~future~~management ~~events,~~to ~~and there can~~ be noaware ~~assurance~~of ~~that any design will succeed in achieving its stated goals under~~ all ~~potential future conditions~~transactions. ~~Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.~~

7Because of our limited financial and personnel resources, there is currently a material weakness in our financial reporting, including:

·	We have an insufficient quantity of dedicated resources and experienced personnel involved in reviewing and designing internal controls. As a result, a material misstatement of the interim and annual financial statements could occur and not be prevented or detected on a timely basis.
·	We have not achieved the optimal level of segregation of duties relative to key financial reporting functions.
·	We do not have an audit committee or an independent audit committee financial expert. While not being legally obligated to have an audit committee or independent audit committee financial expert, it is the management’s view that to have an audit committee, comprised of independent board members, and an independent audit committee financial expert is an important entity-level control over our financial statements.
·	We have not achieved an optimal segregation of duties for executive officers of the Company.

A material weakness is a deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) auditing standard 5) or combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has determined that a material weakness exists due to a lack of segregation of duties, resulting from the Company’s limited resources and personnel.

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PART II – OTHER INFORMATION

Item 1. 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.

Katz and Iovino v. Blue Earth Solutions, Inc.

On December 22, 2008, we filed an action in the Eighth Judicial District Court in and for Clark County, Nevada (Case no. 08-A-578406-B) against several persons, including a 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 our Series A Preferred Stock by Harvey Katz and Claudia Iovino into common stock inon or about October 2008, and the later public resale by Katz, Iovino, and Caicedo of some of those shares and / or other common stock held by the defendants. The complaint alleges 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 the Defendants. Our complaint seeks both damages and injunctive relief. We 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, among other things, 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. On January 12, 2008, the court held a hearing on our preliminary injunction motion. On January 16, 2009, the court entered a preliminary injunction which, among other things, 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 filed an Answer and Counterclaim on January 29, 2009, an Answer and Amended Counterclaim on February 9, 2009 and a Second Amended Counterclaim on March 17, 2009 seeking unspecified damages. The defendants have not appeared at court dates and as far as we know do not have council representing them. We continue to vigorously prosecute our claims and defend against Katz and Iovino’s counterclaims.

~~Food Control Solutions, Inc. v. Blue Earth Solutions, Inc.~~11

OnTable ~~July 9, 2009, Food Control Solutions, Inc. (“Food Control”) filed an action against us for a breach~~ of contract against us regarding the fabrication, installation, and start up of our Polystyrene Processing Plant. This action was filed in the Circuit Court of the Fifth Judicial Court in Lake County, Florida. Food Control and sought damages of $86,549 plus interest of $50,320. On October 29, 2009, we settled the action with Food Control and gave them some of the assets that were purchased in return for the payables that were still owed to them. We have reserved a loss for this transaction of $132,314 at September 30, 2009. There are some assets left pertaining to this transaction that we are attempting to sell to help offset some of this loss.Contents

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

WeIn ~~issued~~June, 2009, we issued 1,000,000 shares of our common stock to Datameg Corporation, a Delaware corporation (“Datameg”), in exchange for our receipt of all of the American Marketing’s issued and outstanding stock, a then subsidiary of Datameg. In the acquisition, we also assumed a promissory note in the amount of $5,450,000 between American Marketing and Datameg’s former shareholders stemming from Datameg’s purchase of American Marketing. In exchange for the note assignment to us, , we issued various share amounts totaling 400,000 shares to the following note holders:

a.	Lynel J. Tocci 100,000 shares	~~100, 000 shares~~
b.	\Leanne J. Whitney 100,000 shares	~~100,000 shares~~

c.	Linnea J. Clary 100,000 shares
d.	John Roncone, Sr 20,000 shares

e.	Leonard J. Tocci 80,000 shares

We issued the above shares in reliance upon the exemption from registration provided by Securities Act Section 4(2). These provisions exempt transactions by an issuer not involving any public offering.

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Item 3. Defaults upon Senior Securities

We have a related party loan with the General Partner of JEC Family LP, ~~JEC~~ JEC Corp. James Cohen, Sr., is the President ~~and~~of ,JEC Corp. and our Chief Executive Officer’s spouse as well as the father of James Cohen, Jr., our Vice President and Director. From August 2008 to ~~September~~December 31, 2009, JEC Family LP loaned us $~~627~~665,~~657~~907, which accrues interest at 8% annually. The loan is collateralized by the building we own at 13511 Granville Ave, Clermont, Florida 34711. As of ~~September~~December 3031, 2009, the accrued interest on the loan is $2538,~~711~~442, $2134,~~677~~175 of which represents delinquent payments. We have not made any interest or principal payments on the ~~$627,657~~ outstanding balances. Additionally, as of ~~September~~ 30December 31, 2009, we may owe late fee penalties of $1,500 because we failed to make required interest payments. We are obligated to make interest and principle payments from May 15, 2009 until April 15, 2011. We are technically in default under the note terms, although we have received no default notice from the related party note holder.

Item 4. 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 ~~September~~ 30December 31, 2009.

Item 5. Other Information

Purchase of American Marketing & Sales, Inc.

On March 17, 2009, we entered into a Stock Purchase Agreement (the “Agreement”) with Datameg Corporation, a Delaware corporation (“Datameg”) to purchase American Marketing,, a Massachusetts corporation (“AMS”) from Datameg providing for the purchase of all of AMS’s outstanding securities, as reported in our March 31, 2009 Form 8-K filing with the Securities and Exchange Commission.

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On June 24, 2009, our Board of Directors consented to satisfying all of our remaining obligations under the Agreement, and on June 30, 2009, we completed the AMS purchase, which is now our wholly-owned subsidiary.

In October 2009, the Company negotiated a non-binding term sheet with Natural Blue Resources, Inc. (“NTUR”), a Delaware corporation, and secured a non-binding letter of intent to sell of all its assets and transfer certain of its liabilities to NTUR. NTUR was formerly known as Datameg Corporation and is the former parent company of AMS. In connection therewith, the Company received a cash advance in the amount of $100,000, which it has invested in a Certificate of Deposit, and is reflected in the Company’s cash balance at December 31, 2009. Pursuant to the terms of the letter of intent, if a closing of such transaction has not occurred by March 31, 2010, the Company will execute a secured promissory note to evidence the advance, which note will bear interest at the rate of 10% per annum from the date of the note and be due and payable in full on June 29, 2010. The term sheet also contemplates an exchange of all of the Company’s outstanding preferred stock for a yet to be created class of preferred stock of NTUR.

Departure of Directors

Resignation of Douglas G. Vaught as our Director

On January 18, 2010, Douglas G. Vaught, our Director since February 4, 2009, resigned as a member of our Board of Directors. Mr. Vaught’s resignation as our Director was not regarding any matter pertaining to our operations, policies, or practices. Mr. Vaught has served as our Vice President of Operations since September 1, 2008 and will continue to serve in that capacity.

Resignation of Paul Pelosi as our Director

On January 11, 2010, Paul Pelosi, our Director since November 28, 2008, resigned as a member of our Board of Directors and as a member of our Audit Committee. Mr. Vaught’s resignation as our Director was not regarding any matter pertaining to our operations, policies, or practices.

Change in Independent Registered Public Accounting Firm

In October, 2009, the Company changed its Independent Public Accounting Firm to Cross, Fernandez and Riley. The appointment of a new Independent Public Accounting firm was necessary as the Company’s prior Independent Public Accounting Firm had been deregistered.

Item 6. Exhibits

Exhibit Number	Description of Exhibit
31.1	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 2002
31.2	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 2002
32.1	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 and
	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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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:	December 24, 2009
Date: February 21, 2010	By:	/s/ Patricia Cohen
	By: /S/ Patricia Cohen Patricia Cohen Title: Chief Executive Officer and Director
		Patricia Cohen
		Chief Executive Officer and Director

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