8-K/A 1 doc1.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): JUNE 16, 2004 BLUESTAR HEALTH, INC. (Exact name of registrant as specified in its charter) COLORADO 000-08835 84-0736215 (State or other (Commission (I.R.S. Employer jurisdiction of incorporation) File Number) Identification No.) 19901 SOUTHWEST FREEWAY, SUITE 209 SUGAR LAND, TEXAS 77479 (Address of principal executive offices) (zip code) (281) 207-5484 (Registrant's telephone number, including area code) TAURUS ENTERTAINMENT COMPANIES, INC. (Former name or former address, if changed since last report.) ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS On June 16, 2004, Bluestar Health, Inc. (the "Company"), through its wholly-owned subsidiary, PT Centers, Inc., a Texas corporation, completed the acquisition of all of the assets of two businesses known as the Mississippi Central Clinic ("Central") and the Canton Rehabilitation Clinic ("Canton") (the Central and Canton Assets together are the "Acquired Assets"). Central and Canton operate as two physical therapy and rehabilitation centers in Jackson, Mississippi. The Company intends to continue operating the centers under their existing names. As consideration for the Acquired Assets, the Company issued 1,150,000 shares of common stock, restricted in accordance with Rule 144 of the Securities Act of 1933, to the two sellers of the clinics (600,000 on July 14, 2004, and 550,000 shares on July 29, 2004) (collectively the "Purchase Price"). The sellers are unrelated parties to the Company and its affiliates, and the Purchase Price was determined by arms-length negotiations. The Company filed a Current Report on Form 8-K dated June 16, 2004, with the Commission on July 2, 2004, to report this transaction. The purpose of this amended filing is to enclose the financial statements as required. 2 A. FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. Mississippi Central Clinic Unaudited Financial Statements --------------------------------------------------------- for interim period ended June 30, 2004. --------------------------------------- 3

6 MISSISSIPPI CENTRAL REHABILITATION, INC. Notes to unaudited Interim Financials NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited interim financial statements of Mississippi Central Rehabilitation, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained elsewhere in this Form 8-K filing. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year 2003 as reported elsewhere in this filing, have been omitted. 7 Mississippi Central ClinicAudited Financial Statements as of December 31, 2003. ------------------------------------------------------------------------------- 8 INDEPENDENT AUDITOR'S REPORT Board of Directors Mississippi Central Rehabilitation, Inc. Jackson, Mississippi We have audited the accompanying balance sheet of Mississippi Central Rehabilitation, Inc. as of December 31, 2003, and the related statements of operations, shareholders' equity, and cash flows for each of the two years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mississippi Central Rehabilitation, Inc. as of December 31, 2003, and the results of its operations and its cash flows for each of the two years then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Lopez, Blevins, Bork & Associates, L.L.P. LOPEZ, BLEVINS, BORK & ASSOCIATES, L.L.P. Houston, Texas September 15, 2004 9

See accompanying summary of accounting policies and notes to financial statements. 10

See accompanying summary of accounting policies and notes to financial statements. 11

See accompanying summary of accounting policies and notes to financial statements. 12

See accompanying summary of accounting policies and notes to financial statements. 13 MISSISSIPPI CENTRAL REHABILITATION, INC. Note 1 - Nature of Operations and Summary of Significant Accounting Policies Mississippi Central Rehabilitation, Inc. (the Company) was incorporated in November 1999 under the laws of the state of Mississippi. The Company was created to provide rehabilitation services to persons suffering from physical stress due to injury or age. The Company operates from one office located in Jackson, Mississippi. The Company services the general public and business clients mainly concentrated in the surrounding area, but is licensed to conduct business throughout the state of Mississippi. Cash and Cash Equivalents - The Company considers all highly liquid investments -------------------------- purchased with an original maturity of three months or less to be cash and cash equivalents. As of December 31, 2003, the Company held no investments in financial institutions in excess of federally insured limits. Property and Equipment - Property and equipment is stated at cost with ------------------------ depreciation calculated using the straight-line method over the estimated useful lives. The Company has estimated the useful lives of all assets at five years as of December 31, 2003. When assets are retired or otherwise removed from the accounts, any resulting gain or loss is reflected in income for the period. The cost of maintenance and repairs is charged to expense as incurred, and significant renewals and improvements are capitalized. Revenue Recognition - Revenues are recognized as services are provided to -------------------- patients. Allowance for Doubtful Accounts - Earnings are charged with a provision for ---------------------------------- doubtful accounts based on a current review of the collectibility of accounts. Accounts deemed uncollectible are applied against the allowance for doubtful accounts. Income Taxes - The liability method is used in accounting for income taxes. ------------- Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using anticipated tax rates and laws that will be in effect when the differences are expected to reverse. The realizability of deferred tax assets are evaluated annually and a valuation allowance is provided if it is more likely than not that the deferred tax assets will not give rise to future benefits in Mississippi's tax returns. Management has analyzed the differences between book and tax depreciation which consists of depreciation, and has determined that the amount of deferred tax difference is negligible. Under these conditions, management has made no provision for deferred tax liabilities. Advertising - Advertising costs are charged to expense in the period incurred. ----------- The Company incurred advertising costs of $4,498 and $5,568 in the years ended December 31, 2003 and 2002, respectively. Use of Estimates - The preparation of financial statements in conformity with ------------------ accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and See accompanying summary of accounting policies and notes to financial statements. 14 MISSISSIPPI CENTRAL REHABILITATION, INC. disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Note 2 - Furniture and Equipment Furniture and equipment consisted of the following as of December 31, 2003:

Note 3 - Income Taxes The components of income tax expense (benefit) for the years ended December 31, 2003 and 2002 were as follows:

Note 4 - Commitments and Contingencies The Company has a lease for office space on a month to month basis. In addition, the Company leases an apartment on a twelve month lease. Total rent expense for this lease was approximately $28,000 and $26,000 for each of the years ended December 31, 2003 and 2002, respectively. Note 5 - Related-Party Transactions The Company has employment agreements with its' two shareholders. Under the terms of these agreements, portions of net profits are paid to the shareholders based on amounts to be agreed upon by vote. These amounts and the timing of distribution are solely at the discretion of the two shareholders of record. See accompanying summary of accounting policies and notes to financial statements. 15 MISSISSIPPI CENTRAL REHABILITATION, INC. The shareholders of record own and operate a management company. The Company has entered into a management agreement with this management company to provide management services. The Company paid discretionary management fees to this related party of $184,000 and $165,950 in the years ended December 31, 2003 and 2002, respectively. Note 6 - Subsequent Events Effective July 16, 2004, the Company sold all assets and the majority of the liabilities to Bluestar Health, Inc. ("Bluestar"), a U.S. public company. The Company's stockholders' received 575,000 shares of Bluestar common stock. 16 Canton Rehabilitation Clinic Unaudited Financial Statements ----------------------------------------------------------- for interim period ended June 30, 2004. --------------------------------------- 17

20 CANTON REHABILITATION SERVICES, INC. Notes to unaudited Interim Financials NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited interim financial statements of Canton Rehabilitation Services, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained elsewhere in this Form 8-K filing. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year 2003 as reported elsewhere in this filing, have been omitted. 21 Canton Rehabilitation Clinic Audited Financial Statements as of December 31, ---------------------------------------------------------------------------- 2003. ----- 22 INDEPENDENT AUDITOR'S REPORT Board of Directors Canton Rehabilitation Services, Inc. Canton, Mississippi We have audited the accompanying balance sheet of Canton Rehabilitation Services, Inc. as of December 31, 2003, and the related statements of operations, shareholders' equity, and cash flows for each of the two years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Canton Rehabilitation Services, Inc. as of December 31, 2003, and the results of its operations and its cash flows for each of the two years then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Lopez, Blevins, Bork & Associates, L.L.P. LOPEZ, BLEVINS, BORK & ASSOCIATES, L.L.P. Houston, Texas September 15, 2004 23

See accompanying summary of accounting policies and notes to financial statements. 24

See accompanying summary of accounting policies and notes to financial statements. 25

See accompanying summary of accounting policies and notes to financial statements. 26

See accompanying summary of accounting policies and notes to financial statements. 27 Note 1 - Nature of Operations and Summary of Significant Accounting Policies Canton Rehabilitation Services, Inc. (the Company) was incorporated in 2001 under the laws of the state of Mississippi. The Company was created to provide rehabilitation services to persons suffering from physical stress due to injury or age. The Company operates from one office located in Canton, Mississippi. The Company services the general public and business clients mainly concentrated in the surrounding area, but is licensed to conduct business throughout the state of Mississippi. Cash and Cash Equivalents - The Company considers all highly liquid investments -------------------------- purchased with an original maturity of three months or less to be cash and cash equivalents. As of December 31, 2003, the Company held no investments in financial institutions in excess of federally insured limits. Property and Equipment - Property and equipment is stated at cost with ------------------------ depreciation calculated using the straight-line method over the estimated useful lives. The Company has estimated the useful lives of all assets at five years as of December 31, 2003. When assets are retired or otherwise removed from the accounts, any resulting gain or loss is reflected in income for the period. The cost of maintenance and repairs is charged to expense as incurred, and significant renewals and improvements are capitalized. Revenue Recognition - Revenues are recognized as services are provided to -------------------- patients. Allowance for Doubtful Accounts - Earnings are charged with a provision for ---------------------------------- doubtful accounts based on a current review of the collectibility of accounts. Accounts deemed uncollectible are applied against the allowance for doubtful accounts. Income Taxes - The liability method is used in accounting for income taxes. ------------- Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using anticipated tax rates and laws that will be in effect when the differences are expected to reverse. The realizability of deferred tax assets are evaluated annually and a valuation allowance is provided if it is more likely than not that the deferred tax assets will not give rise to future benefits in Canton's tax returns. The provision for federal income taxes is $6,969 and $0 for the years ended December 31, 2003 and 2002, respectively. Management has analyzed the differences between book and tax depreciation, and has determined that the amount of deferred tax difference is negligible. Under these conditions, management has made no provision for deferred tax liabilities. Advertising - Advertising costs are charged to expense in the period incurred. ----------- The Company incurred advertising costs of $13,440 and $4,003 in the years ended December 31, 2003 and 2002, respectively. Use of Estimates - The preparation of financial statements in conformity with ------------------ accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported See accompanying summary of accounting policies and notes to financial statements. 28 amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Note 2 - Furniture and Equipment Furniture and equipment consisted of the following as of December 31, 2003:

Depreciation expense for the years ended December 31, 2003 and 2002 totaled $6,976 and $6,489, respectively. Note 3 - Long-Term Debt The Company has a note payable with Merchant & Farmers Bank with monthly payments totaling $605 including interest of 8.5%, secured by an automobile. The balance due at December 31, 2003 was $20,038 with future maturities as follows:

Note 4 - Commitments and Contingencies The Company has a lease for office space on a month to month basis. Total rent expense for this lease was $19,200 for each of the years ended December 31, 2003 and 2002. Note 5 - Related-Party Transactions The Company has employment agreements with its' two shareholder. Under the terms of these agreements, portions of net profits are paid to the shareholders based on amounts to be agreed upon by vote. These amounts and the timing of distribution are solely at the discretion of the two shareholders of record. See accompanying summary of accounting policies and notes to financial statements. 29 The shareholders of record own and operate a management company. The Company has entered into a management agreement with this management company to provide management services. The Company paid discretionary management fees to this related party of $115,000 and $218,400 in the years ended December 31, 2003 and 2002, respectively. Note 6 - Subsequent Events Effective July 16, 2004, the Company sold all assets and the majority of the liabilities to Bluestar Health, Inc. ("Bluestar"), a U.S. public company. The Company's stockholders' received 575,000 shares of Bluestar common stock. See accompanying summary of accounting policies and notes to financial statements. 30 B. PRO FORMA FINANCIAL INFORMATION. BLUESTAR HEALTH, INC. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma condensed consolidated financial statements give effect to the Bluestar Health, Inc.'s ("Bluestar") acquisition of Mississippi Central Rehabilitation, Inc. ("Mississippi") and Canton Rehabilitation Services, Inc. ("Canton"). The unaudited pro forma condensed consolidated balance sheet as of June 30, 2004 assumes that the acquisitions were consummated on June 30, 2004, and the unaudited pro forma condensed consolidated statement of operations for the year ended September 30, 2003 and for the six months ended June 30, 2004 assumes that the acquisitions occurred on January 1, 2003. On July 16, 2003, Bluestar issued 1,150,000 shares of its common stock in exchange for all assets and certain liabilities of Mississippi and Canton. This transaction was accounted for using the purchase method of accounting and resulted in Goodwill totaling approximately $137,000. The pro forma adjustments included in the following unaudited condensed consolidated pro forma financial statements represent a preliminary determination of the purchase price allocation based on available information, and there can be no assurance that the actual adjustments will not differ significantly from such pro forma adjustments. The unaudited pro forma condensed consolidated financial statements are not necessarily indicative of the results that would have occurred if the acquisition had been consummated as of the indicated dates or of the results that may occur in the future. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical consolidated financial statements of Bluestar, together with the related notes thereto. 31

34 BLUESTAR HEALTH, INC. NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS The following pro forma adjustments to the unaudited pro forma financial statements give effect to the acquisition of Mississippi Central Rehabilitation, Inc. and Canton Rehabilitation Services, Inc. by Bluestar Health, Inc. Bluestar issued 1,150,000 shares of common stock valued at $379,500 using the stock price on the date issued. The pro forma adjustments are as follows: (1) To reflect the increase in goodwill related to the acquisitions. The fair value of the net assets acquired was approximately $243,000 with the remaining amount of the purchase price allocated to goodwill. 35 EXHIBITS ITEM NO. DESCRIPTION -------- ----------- 2.1* Asset Purchase Agreement dated March 9, 2004 2.2* Bill of Sale dated June 14, 2004 2.3* Unsecured Subordinated Promissory Note dated June 14, 2004 2.4* Assignment and Assumption Agreement * Incorporated by reference from our Current Report on Form 8-K dated June 16, 2004 and filed with the Commission on July 2, 2004. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: September 28, 2004 Bluestar Health, Inc., a Colorado corporation /s/ Alfred Oglesby ------------------------- By: Alfred Oglesby Its: President 36

TAURUS ENTERTAINMENT COMPANIES INC 8-K/A