UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended September 30, 2013

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

	For the transition period from __________ to ______________

000-53614
(Commission File Number)

BLUFOREST INC.
(Exact name of registrant as specified in its charter)

Nevada	26-2294927
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Ave. Republica del Salvador y Shyris Edificio Onix piso 10-C, Quito Ecuador	N/A
(Address of principal executive offices)	(Zip Code)

593 9 376-2435
(Registrant’s telephone number, including area code)

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

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

Yes [X] No [ ]

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

Yes [ X ] 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. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[ ]	Accelerated filer	[X ]

Non-accelerated filer	[ ]	Smaller reporting company	[ ]
(Do not check if a smaller reporting company)

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

Yes [ ] No [X]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes [ ] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS

103,627,000 common shares outstanding as of November 18, 2013

(Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.)

BLUFOREST INC.

(FORMERLY GREENWOOD GOLD RESOURCES, INC.)

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	8

Item 4.	Controls and Procedures	9

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	9

Item 1A.	Risk Factors	10

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15

Item 3.	Defaults Upon Senior Securities	15

Item 4.	Mine Safety Disclosures	15

Item 5.	Other Information	15

Item 6.	Exhibits	16

	SIGNATURES	17

PART I

ITEM 1. FINANCIAL STATEMENTS

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 210 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the nine month period ended September 30, 2013, and are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2013. For further information refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

	Page
Unaudited Consolidated Financial Statements

Unaudited Consolidated Balance Sheets	F-1

Unaudited Consolidated Statements of Operations	F-2

Unaudited Consolidated Statements of Cash Flows	F-3

Notes to Unaudited Consolidated Financial Statements	F-4 to F-20

BLUFOREST INC.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

(Stated in US Dollars)

	September 30, 2013 (Unaudited)			December 31, 2012 (Audited)
ASSETS
Current
Cash	$	838		$	1,187
Other receivable		13,513			13,780
Damage deposit		2,911			3,010
Prepaid Expenses		701			714
Total Current Assets		17,963			18,691

Equipment, net		1,653			2,437
Property for developing carbon assets (Note 5)		698,875,000			698,875,000
Securities available for sale		10,500			66,000

Total Assets	$	698,905,116		$	698,962,128

LIABILITIES
Current
Accounts payable and accrued liabilities	$	1,232,573		$	925,951
Accounts payable - related parties		737,222			739,565
Advances payable		855,203			870,570
Advances payable – related parties		96,003			20,069
Deferred revenue		743,000			743,000
Discontinued operations		239,471			385,497
Total Current Liabilities		3,903,472			3,684,652

STOCKHOLDERS’ DEFICIT
Capital stock –
Authorized:
$0.001 par value, 400,000,000 common shares authorized;
103,627,000 and 3,474,000 common shares issued and outstanding at September 30, 2013 and December 31, 2012		103,627			3,474
Additional Paid-in Capital		999,818,334			974,666,003
Other comprehensive income (loss)		(621,122	)		(585,267	)
Accumulated deficit during the exploration stage		(1,193,801	)		(1,188,696	)
Accumulated deficit during the development stage		(303,105,394	)		(277,618,038	)
Total Stockholders’ Equity (Deficit)		695,001,644			695,277,476	)
Total Liabilities and Stockholders’ Equity (Deficit)	$	698,905,116		$	698,962,128

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

F-1

BLUFOREST INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)

For the three and nine month period ended September 30, 2013 and 2012

and for period from inception to September 30, 2013

(Stated in US Dollars)

(Unaudited)

													Cumulative results
													From March 26, 2008
	Three Months Ended						Nine Month Ended						(date of inception) to
	September 30,						September 30,						September 30,
	2013			2012			2013			2012			2013

Revenue	$	-		$	-		$	-		$	-		$	-

Operating Expenses
Impairment of identified intangible asset		-			-			-			75,000,000			75,000,000
Depreciation		257			267			784			508			1,561
Professional fees		100,079			78,539			325,859			150,757			840,422
Consulting fees		249,977			589,072			825,522			1,338,956			2,700,603
General and administrative expenses		30,498			52,946			84,975			210,324			323,746
Loss from continuing operations		(380,811	)		(720,824	)		(1,237,140	)		(76,700,545	)		(78,866,332	)

Other income (expense)
Loss on shares issued to settle debt		(94,500	)		-			(24,194,500	)		(199,940,000	)		(224,134,500	)
Interest expense		(19,092	)		(7,788	)		(55,716	)		(22,432	)		(104,562	)
Loss before discontinued operations		(494,403	)		(728,612	)		(25,487,356	)		(276,662,977	)		(303,105,394	)
Loss from discontinued operations		(189	)		(2,004	)		(5,105	)		(25,014	)		(1,193,801	)

Net Loss	$	(494,592	)	$	(730,616	)	$	(25,492,461	)	$	(276,687,991	)	$	(304,299,195	)

Comprehensive loss
Net loss	$	(494,592	)	$	(730,616	)	$	(25,492,461	)	$	(276,687,991	)	$	(304,299,195	)
Unrealized gain (loss) on securities		(46,500	)		-			(55,500	)		-			(649,500	)
Foreign translation gain (loss)		(15,976	)		(21,424	)		19,645			(12,019	)		28,378
Comprehensive loss	$	(557,068	)	$	(752,040	)	$	(25,528,316	)	$	(276,700,010	)	$	(304,920,317	)

Net loss per share – basic and diluted
Continuing operations	$	(0.00	)	$	(0.01	)	$	(0.28	)	$	(3.71	)
Discontinued operations	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Weighted average shares outstanding – basic and diluted		103,566,674			127,192,883			94,349,026			75,124,834

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

F-2

BLUFOREST INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine month period ended September 30, 2013 and 2012

and for period from inception to September 30, 2013

(Stated in US Dollars)

(Unaudited)

							Cumulative results
	Nine Month ended September 30,						From March 26, 2008 (date of inception) to
	2013			2012			September 30, 2013
Cash flows from operating activities
Net loss	$	(25,492,461	)	$	(276,687,991	)	$	(304,299,195	)
Add: loss (income) from discontinued operations		5,105			25,014			1,193,801
Adjustments to reconcile non-cash items to cash used by operations:
Stock based compensation		7,984			7,904			15,888
Impairment of property		-			75,000,000			75,000,000
Loss on stock issued to settle debt		24,194,500			199,940,000			224,134,500
Depreciation		784			508			1,561
Adjustments to reconcile net loss to cash used by operations:
Other receivables		(190	)		(12,810	)		(13,970	)
Bank indebtedness		-			(15	)		(15)
Accounts payable and accrued liabilities		438,375			353,396			1,435,429
Accounts payable – related parties		768,213			472,348			1,507,778
Damage deposit		-			(3,050	)		(3,010	)
Prepaid expenses		-			(739	)		(414	)
Net cash provided by (used in) continuing operations		(77,690	)		(905,435	)		(1,027,647	)
Net cash provided by (used in) discontinued operations		-			(7,954	)		(292,795	)
Net cash provided by (used in) operating activities		(77,690	)		(913,389	)		(1,320,442	)

Cash flows from Investing Activities
Purchase of equipment		-			(3,214	)		(3,214	)
Net cash provided by (used in) continuing operations		-			(3,214	)		(3,214	)
Net cash provided by (used in) discontinued operations		-			-			-
Net cash provided by (used in) investing activities		-			(3,214	)		(3,214	)

Cash flows from Financing Activities
Short term loan		-			476,026			870,570
Advances from related parties		76,597			581,069			277,021
Repayment advances from related parties		-			(180,356	)		(180,356	)
Shares issued from private placement		-			60,000			102,575
Net cash provided by (used in) continuing operations		76,597			936,739			1,069,810
Net cash provided by (used in) discontinued operations		-			-			245,206
Net cash provided by (used in) financing activities		76,597			936,739			1,315,016

Effects of foreign exchange		744			(12,020)			9,478

Increase (decrease) in cash during the period		(349)			8,116			838
Cash, beginning of period		1,187			-			-
Cash, end of period	$	838		$	8,116		$	838

Supplemental disclosure of cash flow information:
Cash paid for:
Interest	$	-		$	-		$	-
Income taxes	$	-		$	-		$	-

Non-cash transactions:
Stock options granted for consulting fees		-			7,904			7,904
Stock issued for acquisition of properties		-			773,875,000			773,875,000
Stock issued for debt settlements		900,000			200,000,000			200,900,000
Deferred revenue, reduction to accounts payable		-						83,000
Deferred revenue , acquisition of trading securities		-						660,000
Non cash transactions provided by discontinued operations		150,000			65,000			898,498
	$	1,050,000		$	973,947,904		$	976,424,402

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

F-3

BLUFOREST INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

Note 1 – Organization and summary of significant accounting policies

Organization and nature of business

Bluforest Inc. (formerly: Greenwood Gold Resources, Inc.) (the “Company”) was incorporated in the State of Nevada on March 25, 2008. The Company, previously an Exploration Stage Company became a Development Stage Company on March 30, 2012. A Development Stage Company, is defined by ASC 915-10 “Accounting and Reporting by Development Stage Enterprises”. During the quarter ended March 31, 2012, through various agreements described below under “Note 5 – Purchase of Acquisition Agreement and Commitments”, the Company revised its business plan, which formerly had been to acquire, explore and develop mineral properties, to focus on the area of carbon offsets marketing. The offsets will be validated and verified for sale to companies, organizations, foundations, and other entities that, for regulatory, branding, policy and corporate social responsibility reasons, wish to offset their carbon footprints to support climate change mitigation efforts. The Company’s current focus will be on the prevention of deforestation and degradation of forested lands as well as reforestation, working with entities that strive to provide benefits to indigenous people in the local areas of our project scope. As a result of this change in business and corporate focus, the Company discontinued its mineral exploration operations and became a Development Stage Company.

On February 15, 2011, the Company approved a 20:1 forward split of the Company’s stock. Following this split, the Company’s authorized capital increased to 1,500,000,000 common shares with a par value of $0.001 per share and the outstanding shares of the Company’s capital stock increased to 126,555,000.

On June 9, 2011, the Board of Directors and the shareholders holding a majority of the total issued and outstanding shares of common stock of the Company approved a decrease in the authorized capital of the Company from one billion five hundred million (1,500,000,000) shares of common stock to four hundred million (400,000,000) shares of common stock, par value $0.001.

On February 6, 2012, the Board of Directors of the Company and the controlling shareholder of the Company approved the reverse split of the issued and outstanding shares of the Company on the basis of 1 share for every 500 shares then issued and outstanding. The record date for the reverse split was set at February 20, 2012, and the Effective Date approved by FINRA was determined to be March 23, 2012.

On February 14, 2012, the Company, authorized the execution of an acquisition agreement (the “ORE Acquisition Agreement”) between the Company and Oceanview Real Estate Company Ltd., a private company organized under the laws of Canada (“ORE”), pursuant to which the Company was to acquire all of ORE’s right, title and interest in and to real property located in Ecuador, known as the Hacienda Juval, consisting of approximately 80,197 hectares (the “Property”). Pursuant to Section 2.1(f) of the ORE Acquisition Agreement, ORE represented and warranted that it had marketable title to the Property and pursuant to Section 4.2, at closing, ORE was to deliver to the Company such documents as may be required to transfer the Property to the Company and any related contracts or agreements in regard to the Property. ORE did not deliver such documents to the Company and, therefore, the Company and ORE rescinded the ORE Acquisition Agreement.

On March 19, 2012, the Company incorporated Bluforest Canada Ltd. (“Bluforest”) as a wholly owned subsidiary of the Company. Currently, the majority of the operations of the Company are planned to be undertaken by the Company from its principal offices in Ecuador. On May 8, 2012, the Company’s Board of Directors and shareholders holding a majority of the issued and outstanding shares of the Company approved the change of name from Greenwood Gold Resources Inc. to Bluforest Inc. to better reflect the new business operations of the Company. FINRA received all necessary documentation and announced the name change of the Company to “Bluforest Inc.” to take effect on June 5, 2012.

F-4

BLUFOREST INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

Note 1 – Organization and summary of significant accounting policies - continued

Organization and nature of business- continued

On March 22, 2012, FINRA advised the Company that they have finalized their review of the reverse split proposed on February 6, 2012, and that the Effective Date for the reverse split is March 23, 2012.

On March 30, 2012, the Company entered into a purchase of acquisition agreement (“Purchase of Acquisition Agreement”) with Global Environmental Investments Limited, a Belize corporation (“GEIL”), regarding a property known as “El Juval” (the “Property”) which encompasses approximately 105,000 hectares of property in Ecuador. Previously, GEIL had entered into an acquisition agreement (the “Acquisition Agreement”) with Fundacion Nelson Velasco Aguirre, a foundation established pursuant to the law of Ecuador (“NVA”) under which agreement NVA transferred control of the Property to GEIL. NVA held title and maintained legal ownership of the Property but permitted control over the Property to pass to GEIL through a voting trust agreement dated March 16, 2012 (the “Voting Trust Agreement”) among NVA, GEIL and Fred Nikoo, as voting trustee. On June 15, 2012, the Company appointed Amanda Miller as the voting trustee on behalf of the Company in the place of Mr. Nikoo.

In consideration of the assignment of the Voting Trust Agreement by GEIL to the Company, GEIL and/or its designees were issued 2,500,000 post reverse split shares of restricted common stock of the Company, representing a controlling interest of approximately 75%, thus effecting a change in control of the Company. The Property is located in the province of Monora Santiago on the border between this province and the provinces of Azuay, Canar and Chimborazo. El Juval is located in the center of the Andean region of Ecuador; therefore the area of El Juval corresponds to the higher sections of the Cordillera Oriental (Eastern side of the Andes. Approximately 70% of the area of El Juval belongs to the territory of Sangay National Park, making it a suitable location for carbon offsets marketing.

On June 27, 2012, the Company authorized the execution of that certain acquisition agreement (the “Acquisition Agreement”) between the Company and Ecuador Farms S.A., Develfarms, an Ecuadorian corporation (“Ecuador Farms S.A.”), regarding property known as Hacienda Forestal San Agustin (“The Property”) consisting of approximately 30,000 Hectares. See note 5 for full details related to Ecuador Farms S.A.

On February 28, 2013 BluForest Inc ("BLUF") and the Commonwealth of Northern Ecuador ("MNE") executed an agreement that develops a program to reduce emissions from deforestation and forest degradation (REDD +) covering the whole territory of the Commonwealth (the "Program"). Pursuant to the contract BLUF was to make an advance payment of $ 600,000, which would be recovered through the sale of carbon credit certificates in the future. This advance would be provided no later than 30 working days after signing the contract if the MNE was able to provide verification which allows the Manicommunidad the right to sell the Carbon Credits.

As the result of these transactions we are a carbon offsets marketing company. We control 135,000 hectares of Ecuadorian forest for the production of carbon assets. Initially, we intend to sell carbon offsets through our website to voluntary markets where no verification is required. A carbon offset is a reduction in emissions of carbon dioxide or greenhouse gases made in order to compensate for or to offset an emission made elsewhere. [Source: World Resources Institute]. Carbon offsets are measured in metric tons of carbon dioxide-equivalent and may represent six primary categories of greenhouse gases: carbon dioxide, methane, nitrous oxide, perfluorocarbons, hydrofluorocarbons and sulfur hexafluoride. One carbon offset represents the reduction of one metric ton of carbon dioxide or its equivalent in other greenhouse gases.

F-5

BLUFOREST INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

Note 1 – Organization and summary of significant accounting policies - continued

On December 4, 2012, The Board of Directors and Major Shareholders of the Company have approved a 30 to 1 reverse split of the Company's outstanding common stock. The aforementioned transaction will require approval from FINRA prior to taking effect. The reverse split were approved by FINRA on January 23, 2013, and effected on that date. The effect of this reverse split has been retroactively applied to the common stock balances at March 31, 2013 and December 31, 2012, and reflected in all common stock activity presented in these financial statements.

Discontinued Operations

The Company’s former business plan was to acquire, explore and develop mineral properties. Effective March 30, 2012, the Company discontinued these operations and prior periods have been restated in the Company’s consolidated financial statements and related footnotes to conform to this presentation.

Note 2 - Going concern

We have negative working capital, and have incurred substantial losses since inception, and have not yet generated revenues, though we have recorded deferred income during the year as a result of the presale of carbon tax credits. We are in the Development Stage and while the Company is currently working to monetize certain assets acquired to allow revenues to be generated from the sale of carbon offsets, there are a number of steps to be undertaken prior to being able to realize any revenue from these operations, including but not limited to: (1) obtaining local and national authorization and/or permitting as may be required to meet the necessary criteria to market carbon offsets; (2) industry standard certifications that validate and verify the nature and value of carbon offsets to allow sale of these offsets to global markets; (3) location of a suitable market for the sale of the offsets once verified; (4) raising of additional capital to undertake the Company’s existing business plan; (4) retention of personnel, consultants and management to undertake the Company’s current business plan. These factors and other factors, which may as yet be unidentified, create substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.

The present ability of the Company to continue as a going concern is dependent on the Company generating cash from the sale of its common stock and/or obtaining debt financing and attaining future profitable operations. Management’s immediate plans include selling its equity securities and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can be no assurance the Company will be successful in these efforts.

Note 3 – Summary of Significant Accounting Polices

Fiscal Year End

The Company’s fiscal year end is December 31.

F-6

BLUFOREST INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

Note 3 – Summary of Significant Accounting Polices (continued)

Basis of presentation

These consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The consolidated financial statements of the Company include the Company and its wholly-owned subsidiary, BluForest Canada Ltd. All material intercompany balances and transactions have been eliminated in consolidation.

Estimates

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition, and revenues and expenses for the years then ended. Actual results may differ significantly from those estimates. Significant estimates made by management include, but are not limited to, the assumptions used to calculate stock-based compensation, derivative liabilities, debt discounts and common stock issued for assets, services or in settlement of obligations.

Cash and Cash Equivalents

For purposes of reporting within the statements of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

Development Stage

The Company is in the development stage and has had no revenue. A development stage company is one in which all efforts are devoted substantially to establishing a new business and even if planned principle operations have commenced, revenues are insignificant.

Foreign Currency Translation

The functional currency of BluForest Canada Ltd, the Company’s wholly owned subsidiary, is the Canadian Dollar. The Company uses the United States dollar as its reporting currency. All transactions initiated in Canadian Dollars are translated to U.S. Dollar in accordance with ASC 830-10-20 “Foreign Currency Translation” as follows:

·	Revenue and expense items at the average rate of exchange in effect on the transaction date;
·	Non-monetary assets and liabilities at historical exchange rates, unless such items are carried at market, in which case they are translated at the exchange rate in effect on the balance sheet date; and
·	Monetary assets and liabilities at the exchange rate at the balance sheet date.

Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ equity (deficit) as a component of comprehensive income (loss). Therefore, translation adjustments are not included in determining net income but reported as other comprehensive income.

For foreign currency transactions, the Company translates these amounts to the Company’s functional currency at the exchange rate effective on the invoice date. If the exchange rate changes between the time of purchase and the time actual payment is made, a foreign exchange transaction gain or loss results which is included in determining net income for the period.

No significant realized exchange gains or losses were recorded to September 30, 2013.

F-7

BLUFOREST INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

Note 3 – Summary of Significant Accounting Polices- continued

Property and Equipment

Property and equipment are recorded at cost. Depreciation and amortization on property and equipment are determined using the straight-line method over the three to five year estimated useful lives of the assets.

Revenue Recognition

The Company recognizes revenue from the sale of Certified Emission Reductions Credits (CER’s) and Verified Emission Reduction Credits. (VER). Revenue from the sale of CER’s and VER’s are recognized in the year they are available and the company has a firm sales contract and collection is reasonable assured.

The pre-sales of credits may occur when a customer reserves the right to buy credits that will be available or certified in a future year upon the execution of a firm sale contract for eligible credits. Amount received for the pre-sale are recorded as deferred revenue until the credits can be delivered.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash, receivables, payables, and due to related party. The carrying amount of cash, receivables and payables approximates fair value because of the short-term nature of these items. The carrying amount of the notes payable approximates fair value as the individual borrowings bear interest at market interest rates.

Securities Available for Sale

Trading securities as of September 30, 2013 was comprised of 3,000,000 shares of Global Resource Energy Inc. (Ref Note 6 – deferred revenue) which were in exchange for the pre-purchase of the CER’s on November 12, 2012. The Company recorded the value of the 3M shares received as of November 12, 2012 of $660,000. Since the shares hold is readily determinable, the recorded carrying value is reviewed each reporting period and adjusted to the underlying market price.

Income Taxes

The Company accounts for income taxes in accordance with Accounting Standards Codification (“ASC”) Topic 740, Income Taxes, which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.

Related Parties

Parties are considered to be related to the Company if the parties that, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions shall be recorded at fair value of the goods or services exchanged.

F-8

BLUFOREST INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

Note 3 – Summary of Significant Accounting Polices- continued

Stock-based Compensation

Stock-based compensation is accounted for using the Equity-Based Payments to Non-Employees Topic of the FASB ASC, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. The Company determines the value of stock issued at the date of grant. It also determines at the date of grant, the value of stock at fair market value or the value of services rendered (based on contract or otherwise) whichever is more readily determinable.

Loss per Common Share

The Company computes loss per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.

Impairment of Property for Developing Carbon Credit

Assets acquired for developing carbon assets are assessed annually for impairment of value, or upon a change in circumstances which in management’s estimation, may result in a change to the carrying value of the recorded assets, and a loss is recognized at the time of the impairment by providing an impairment allowance. Impairments are measured by the amount by which the carrying value exceeds its fair value. Impairment of these properties is based on the facts and circumstances surrounding each identified asset based on management’s evaluation. Management’s evaluation follows a multi-step process where (1) recoverability of the carrying value of the asset is reviewed to determine if there is sufficient value recoverable to support the capitalized value at the report date; and, (2) If assets fail the recoverability test, impairment testing is conducted, including the evaluation of various criteria such as: prior history of successful operations; existing (if any) and future projected cash flows ; appraisal reports or evaluations from which management can prepare future cash flow analyses; the Company’s ability to monetize the asset(s) under evaluation; and, Management’s intent regarding future development.

Recent Accounting Pronouncements

The Company reviews new accounting standards as issued. No new standards had any material effect on these financial statements. The accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these consolidated financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these consolidated financial statements as presented and does not anticipate the need for any future restatement of these consolidated financial statements because of the retro-active application of any accounting pronouncements issued subsequent to December 31, 2012 through the date these financial statements were issued.

F-9

BLUFOREST INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

Note 4 – Fair Value Measurement

An asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at September 30, 2013 and December 31, 2012.

Level 1 inputs - over the counter stock exchange

The following tables represent the Company’s financial instruments measured at fair value on a recurring basis at September 30, 2013 and December 31, 2012 for each of the fair value hierarchy levels.

		Fair Value		Gain (loss)
	Cost ($)	Dec 31, 2012 ($)	Sept 30, 2013 ($)	Dec 31, 2012 ($)	Sept 30, 2013 ($)
Securities available for sale – Level 1 input	660,000	66,000	10,500	(594,000)	(55,500)

The unrealized loss in the amount of $55,500 and $594,000 has been included in other accumulated comprehensive income at September 30, 2013 and December 31, 2012, respectively.

Note 5 – Property for Developing Carbon Assets

The following table summarizes the movements in each group of property acquired for developing carbon assets during the period ended September 30, 2013 and December 31, 2012:

	Property One			Property Two		Total
December 31, 2011	$	-		$	-	$	-
Additions		600,000,000			173,875,000		773,875,000
Impairment expenses		(75,000,000	)		-		(75,000,000	)
Balance, December 31, 2012	$	525,000,000		$	173,875,000	$	698,875,000

Balance, September 30, 2013	$	525,000,000		$	173,875,000	$	698,875,000

(1)

Purchase of Acquisition Agreement – Property One (1)

On March 30, 2012, the Company entered into a purchase of acquisition agreement (“Purchase of Acquisition Agreement”) with Global Environmental Investments Limited, a Belize corporation (“GEIL”), regarding the Property (as defined above), which at the date of the Purchase of Acquisition Agreement includes an additional 25,000 hectares so that it encompasses a total of approximately 135,000 hectares. On March 16, 2012, GEIL had entered into an acquisition agreement (the “Acquisition Agreement”) with Fundacion Nelson Velasco Aguirre, a foundation established pursuant to the law of Ecuador (“NVA”). In accordance with the Acquisition Agreement, NVA transferred control of the Property to GEIL. NVA held title and maintained legal ownership of the Property but permitted control over the Property to pass to GEIL through a voting trust agreement dated March 16, 2012 (the “Voting Trust Agreement”) among NVA, GEIL and Fred Nikoo, as voting trustee. Effective June 15, 2012, Amanda Miller replaced Fred Nikoo as Voting Trustee.

F-10

BLUFOREST INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

Note 5 – Property for Developing carbon assets – Continued

(1)

Purchase of Acquisition Agreement – Property One (1 ) (continued)

Therefore, in accordance with the terms and provisions of the Purchase of Acquisition Agreement, GEIL sold all of the rights and interests held by GEIL pursuant to the Acquisition Agreement to the Company in respect of the Property, which now consists of approximately 135,000 hectares.

In consideration of the assignment by GEIL to the Company, GEIL and/or its designees received 2,500,000 post-reverse split shares of restricted common stock of the Company representing approximately 75% of the total issued and outstanding shares of the Company, thus effecting a change in control. In accordance with ASC 805 (formerly FAS 141 (R)) the company recorded the value of the property for developing carbon assets, the Voting Trust over the Property (the “Assets”), on the transaction date, of March 30, 2012 (the “Valuation Date”), at the fair market value of the Company’s common stock based on a closing price of $240.00 per share, for a total value of $600,000,000. At the Valuation Date the Company considered several factors including (1) an appraisal report on the Property as prepared by M. Paúl Tufiño, a respected authority in the valuation of such environmentally based assets as the Property which provides for a minimum recoverable value of $5,000 USD per hectare or approximately $525,000,000; (2) a future discounted cash flow analysis prepared by management based on criteria applicable to the monetization of the Asset including certification allowing for the sale of VER and REDD carbon offsets, the carbon offset market and values realizable for the sale of carbon offsets globally, the Property’s available hectares, deforestation rate and the available carbon tax credits per hectare as considered acceptable by Industry. The discounted future cash flow analysis extends over a period of 25 years discounted at a rate of 10% and provides a minimum realizable value of approximately $540,000,000. As a result of this review, Management determined to impair the asset in order to reflect the value of the third party appraisal report received on the Property, and accordingly has provided for an impairment allowance of $75,000,000 on the Valuation Date, leaving a capitalized value of $525,000,000 which has been recorded on the balance sheet as Property for Developing carbon assets.

In further accordance with the terms and provisions of the Purchase of Acquisition Agreement, the Company entered into a three year consultant agreement (the “Mainland Consultant Agreement”) with Mainland Investment Ltd. (“Mainland”). The Mainland Consultant Agreement provides for Mainland to provide financial, advisory, marketing and investor relations services and the Company to pay to Mainland an annual compensation of $1,000,000 and grant 1,000,000 stock options exercisable at $1.00 per share for each year of the agreement for a total of 3,000,000 stock options.

Lastly, under the agreement the Company was required to: (i) cause the settlement of debt in the approximate amount of $60,000 due and owing to that certain creditors, as reflected on the financial statements of the Company as of September 30, 2011 (the “$60,000 Debt”) by the issuance of 833,333 post reverse split shares of common stock; and (ii) within ninety days, the Company is required to pay the approximate amount of $152,148 due and owing to Branislav Jovanovic, a former officer and director by a cash payment to Mr. Jovanovic.

During the year ended December 31, 2012, the Company issued the 2,500,000 post reverse split shares to GEIL, and 833,333 post reverse split shares to settle the $60,000 debt. The amount payable to Mr. Jovanovic is in dispute and has become the subject of a court action and therefore remains outstanding.

F-11

BLUFOREST INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

Note 5 –Purchase of Acquisition Agreement, Acquisition Agreement and Commitments – Continued

(2)

Purchase of Acquisition Agreement – Property Two (2 )

In accordance with the terms and provisions of the Acquisition Agreement, Ecuador Farms S.A. sells, conveys, assigns and transfers to the Company as follows: (i) 100% of Ecuador Farms S.A.’s rights, title and interest in and to the timber, substances and the rights to receive from the Property all benefits thereto, and associated with those rights associated for the use intended by the Company, namely for the development of the Property as a carbon development project for the purpose of generating carbon assets that may be traded on a public market. This includes, for greater certainty and any and all agricultural developments that may be produced from the Property including, without limitation, carbon assets; (ii) 100% of the right, title and interests of Ecuador Farms S.A.in all presently existing and pooling and/or communization agreements, declarations, and/or orders and the properties covered or included in the units (including, without limitation, units formed under orders, rules, regulations or other official acts of any federal, state or other authority having jurisdiction, voluntary unitization agreements, designations, and/or declarations, and any working interest units created under operating agreements or otherwise), which relate to the Property; (iii) 100% of the right, title and interests of Ecuador Farms S.A.. in all presently existing and valid agreements, including sales and sales related contracts, operating agreements and other agreement and contracts which relate to the Property or which relate to the exploration, development, operation or maintenance of the Property or the treatment, storage, transaction or marketing of production from or allocated to the Property; and (iv) 100% of the right, title and interests of Ecuador Farms S.A. in and to all materials, supplies, machinery, equipment, improvements and other personal property and fixtures relating to the Property, and all wells, wellhead equipment, pumping units, flow lines, tanks, buildings, injection facilities, salt water disposal facilities, compression facilities, fathering systems and other equipment, all easements, rights-of-way, surface leases and other surface rights, all permits and licenses and all other appurtenances, used or held for use in connection with or related to the exploration, development, operation or maintenance of any of the Property.

In exchange for the right of the Company to own the Property outright, the consideration shall be One hundred and Seventy Three Million, Eight Hundred and Seventy Five Thousand Dollars USD ($173,875,000), which payment shall be paid by the Company to Ecuador Farms S.A. and/or its designees through the issuance of 891,667 post reverse split shares of newly issued restricted common stock of the Company valued at the market value on the date of issue of $195.00 per share. The stock certificates shall be held in escrow by the Escrow Agent until the definitive transfer of the Property by Ecuador Farms S.A. to the Company shall occur and the Company shall provide its written authorization to the Escrow Agent to release the stock certificates to Ecuador Farms S.A. and/or its designees. In the event the Property is not definitively transferred by Ecuador Farms to the Company as set out in paragraph 5(g) subparagraphs (i), (ii), (iii) and (iv) of the Acquisition Agreement, the Escrow Agent shall return the share certificates to the transfer agent for cancellation and the 891,667 post reverse split shares shall be returned to treasury. In that event, the Agreement shall then be deemed null and void. The shares remain in escrow as of December 31, 2012 until the definitive transfer of the Property by Ecuador Farms S.A. occurs.

F-12

BLUFOREST INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

Note 6 – Deferred Revenue

(a)

On November 12, 2012, the Company entered a Certified Emission Reductions Pre-sale and Purchase Agreement (“CERSPA”) with Global Resource Energy Inc. (“GBEN”). Under the agreement, GBEN pre-purchase of 66,000 CERs from the Company. Total purchase price of $660,000 was paid in the form of 3,000,000 restricted shares of GBEN. We recorded the pre-sale of $660,000 as deferred revenue presented on the balance sheets as of September 30, 2013 and December 31, 2012.

(b)

On December 24, 2012, the Company entered a Certified Emission Reductions Pre-sale and Purchase Agreement (“CERSPA”) with Mainland Investments Ltd. (“Mainland”). Under the agreement, Mainland pre-purchase of 8,300 CERs from the Company for the purchase price of $83,000. In consideration of the purchase, Mainland agrees to apportion $83,000.00 of the amount owed to it by the Company. We recorded the pre-sale of $83,000 as deferred revenue presented on the balance sheets as of September 30, 2013 and December 31, 2012.

Note 7 – Discontinued Operations

As a result of the Purchase of Acquisition Agreement on March 30, 2012 (ref: Note 5 – Purchase of Acquisition Agreement and Commitments), the Company changed its business focus from mining (exploration stage) to marketing of carbon offsets (development stage). Accordingly, the Company has reported discontinued operations on its statement of operations, classified as follows:

	Nine Month ended September 30, 2013		Nine Month ended September 30, 2012		From March 26, 2008 (date of inception) to September 30, 2013
Discontinued Operating Expenses
Professional fees	$	-	$	2,500	$	336,668
Mineral property costs		-		-		14,034
Salaries and benefits		-		10,000		135,500
General and administrative expenses		-		454		72,475
Loss on mineral property		-		5,000		619,498
Interest expense		5,105		7,060		15,626
Total Discontinued Operations	$	5,105	$	25,014	$	1,193,801

Results from Discontinued Operations reported above include amounts due to Mr. Branislav Jovanovic, our Past President and former controlling stockholder. On February 15, 2012, the Company received the resignation of Mr. Jovanovic as its sole officer and director and appointed of Charles Miller as the President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer and a member of the Board of Directors. Concurrently the Company agreed to cause the outstanding debt in the approximate amount of $152,148 due and owing to Branislav Jovanovic, as at January 31, 2012, to be settled in full within 90 days of his resignation. Presently the full amount of the outstanding debt remains unpaid as certain portions are in dispute and expected to undergo an arbitration proceeding.

F-13

BLUFOREST INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

Note 8 – Equipment

Equipment is recorded at cost. Depreciation of equipment is provided using the straight-line method over the assets estimated useful lives of approximately 3 to 5 years. Equipment, as of September 30, 2013 and December 31, 2012, consisted of the following:

	Estimated Useful Lives	September 30, 2013		December 31, 2012

Computer Equipment	3 Years	$	3,214	$	3,214
Accumulated depreciation			(1,561)		(777)
		$	1,653	$	2,437

Depreciation expense for the six month period ended September 30, 2013 was $784 (September 30, 2012 - $508).

Note 9 – Advances Payable

The following table provides details of the Company’s short-term loans as of September 30, 2013:

	Discontinued Operations			Advances Payable				Accounts Payable (Accrued Interest on Advances)
Balance, December 31, 2012		109,002			870,570		(c)-(e)		39,617
Reclassified to discontinued liabilities from accounts payable		60,000
Debt settled with shares		(150,000)	(a)
Accrued interest		5,105							51,356	(c)-(e)
Foreign exchange on advances					(15,367	)
Balance, September 30, 2013	$	24,107		$	855,203			$	90,973

(a)

On May 31, 2011, the Company received funds in the amount of $150,000 pursuant to verbal private placement agreements. The Company issued 2,000 shares pursuant to those verbal agreements during June, 2011; however, as no subscription agreements were received, the Company returned those shares to the transfer agent for cancellation. On November 22, 2011, the investor decided to transfer the amount of $150,000 to a short-term loan. On January 25, 2013, the Company agreed to settle debt in full by issuance to the certain Creditor and his assignees an aggregate of 25,000,000 shares of common stock. 25,000,000 shares were valued at fair market value of $0.25 per share on the agreement date, and accordingly we recorded $6,100,000 as loss on the debt settlement.

(b)	As at September 30, 2013, the Company owed $9,385 in short term loans to non-related parties. The amounts owing are unsecured, bear interest at 8% per annum, and are due on demand, which amount is reflected on the balance sheets as discontinued operations

(c)

As at September 30, 2013, the Company owed $4,023 in short term loans to non-related parties. The amounts owing are unsecured, bear interest at 8% per annum, and are due on demand, which amount is reflected on the balance sheets as advances payable. On March 11, 2013, the Company received the office notice from the creditor to request the payment in full.

F-14

BLUFOREST INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

Note 9 – Advances Payable – Continued

(d)

As at September 30, 2013, the Company owed $450,467 (CAD$464,250) in short term loans to non-related parties. The amounts owing are unsecured, bear interest at 8% per annum, and are due on demand, which amount is reflected on the balance sheets as advances payable. On March 11, 2013, the Company received the office notice from the creditor to request the payment in full.

(e)

As at September 30, 2013, the Company owed $400,713 in short term loans to James Donihee, the former sole officer and director of the Company’s wholly-owned subsidiary, BluForest Canada Ltd. and the formerly President and a director of the Company. The amounts owing are unsecured, bear interest at 8% per annum, and are due on demand, which amount is reflected on the balance sheets as advances payable.

Note 10 - Common Stock

On January 25, 2013, the Company agreed to 25,000,000 shares of common stock to a Creditor and/or his assignees (ref Note 7 – short term loan) in settlement of $150,000. The Company valued these common shares at the fair market value which was $0.25 per share on the date the Company and the Creditors agreed to the debt settlement which was $0.006 per share or $150,000.

On January 25, 2013, the Company agreed to 75,000,000 shares of common stock to a Charles Miller, the President of the Company and/or his assignees in settlement of accounts payable – related parties in the amount of $750,000. The Company valued these common shares at the fair market value which was $0.25 per share on the date the Company and the Creditors agreed to the debt settlement which was $0.01 per share or $750,000.

On August 6, 2013, the Company agreed to issue 150,000 shares of common stock to certain vendors in settlement of $150,000. The Company valued these common shares at the fair market value of $1.63 per share on the date of the agreements and recorded a loss on settlement of $94,500.

The total issued and outstanding shares are 103,627,000 as of September 30, 2013.

Note 11 – Stock options

On March 15, 2012, the Company entered into a three year consulting agreement (the “Mainland Consulting Agreement”) with Mainland Investments Ltd. (“Mainland”). The Mainland Consulting Agreement requires Mainland to provide to the Company, financial, advisory, and marketing and investor relation services and the Company is required to pay to Mainland annual compensation of $1,000,000 and grant to Mainland a total of 3,000,000 stock options, with 1,000,000 options granted for each year of the contract exercisable at $1.00 per share.

The following table summarizes information concerning stock options outstanding as of September 30, 2013:

	Shares		Weighted Average Grant Date Fair Value
Unvested, at December 31, 2012	$	2,000,000	$	1.00
Granted		-
Vested		1,000,000		1.00
Forfeited		-
Unvested, at September 30, 2013	$	1,000,000	$	1.00

The Company recognized stock-based expense as consulting fees of $7,984 during the nine month period ended September 30, 2013 (September 30, 2012- $7,904). Unrecognized compensation expense related to outstanding stock options as of September 30, 2013 was $7,997 which to be recognized in 2014.

F-15

BLUFOREST INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

Note 11 – Stock options – Continued

Valuation Assumptions

The Company uses the Black-Scholes option-pricing model (“Black-Scholes model”) to determine the fair value of stock options as of the grant date. The fair value of stock options under the Black-Scholes model requires management to make assumptions regarding projected employee stock option exercise behaviors, risk-free interest rates, volatility of the Company’s stock price and expected dividends.

The following table presents the range of the weighted average fair value of options granted and the related assumptions used in the Black-Scholes model for stock option grants made during the year ended December 31, 2012:

	Options Granted
	2012
Fair value of options granted	$	0.008
Assumptions used:
Expected life (years) (a)		3 - 5
Risk free interest rate (b)		0.510% - 1.040	%
Volatility (c)		369.50	%
Dividend yield (d)		0.00	%

	a)	Expected life: The expected term of options granted is determined using the “shortcut” method allowed by SAB No.107. Under this approach, the expected term is presumed to be the mid-point between the vesting date and the end of the contractual term.

	b)	Risk-free interest rate: The rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected life of the options.

	c)	Volatility: The expected volatility of the Company’s common stock is calculated by using the historical daily volatility of the Company’s stock price calculated over a period of time representative of the expected life of the options.

	d)	Dividend yield: The dividend yield rate is not considered in the model, as the Company has not established a dividend policy for the stock.

On June 20, 2013 the Company filed 2013 Stock Compensation Plan (“Plan”) for employees, consultants, directors, and other persons associated with the Company and any of the Company’s subsidiaries, whom the Board wishes to incite, up to 10,000,000 shares of its common stock (“Shares”). Effective as of July 16, 2013, we amended its Plan to decrease the number of Shares that is available for issuance thereunder by 9,800,000 Shares that remain unsold. As a result, the Registration Statement now covers a maximum of 200,000 Shares.

F-16

BLUFOREST INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

Note 12 – Related party transactions

The following table provides details of the Company’s related party transactions during the nine month period ended September 30, 2013:

	Consulting fees
	nine months ended September 30,
		2013		2012
CEO/CFO		$	750,000	$	500,000

Advances payable – related parties		Balance, December 31, 2012				Additions				Balance, September 30, 2013
CEO/CFO		$	20,069			$	76,934			$	96,003

Accounts payable – related parties		Balance, December 31, 2012				Consulting fee, Expense, Accrued interest				Debt Settlement				Balance, September 30, 2013
CEO/CFO		$	718,926			$	768,296			$	(750,000	)		$	737,222

NOTE 13 – Income Tax

We follow applicable FASB Codification regarding Accounting for Income Taxes. Deferred income taxes reflect the net effect of (a) temporary difference between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carryforwards. No net provision for refundable Federal income tax has been made in the accompanying statement of loss because no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating loss carryforward has been recognized, as it is not deemed likely to be realized.

The provision (benefit) for income taxes for the period ended September 30, 2013, December 31, 2012 by applying the statutory income tax rate was as follows:

	September 30,			December 31,
	2013			2012
Deferred tax provision (benefit) attributable to:
Deferred income tax provision (benefit) at statutory rate	$	(279,800	)	$	(28,472,500	)
Federal income tax expense (benefit)		(8,412,400	)		(68,445,800	)
State income tax expense (benefit), net of federal benefit		(816,500	)		(6,643,300	)
Subtotal		(9,508,700	)		(103,561,600	)
Less: reverse valuation allowance		9,508,700			103,561,600
Deferred tax assets	$	-		$	-

F-17

BLUFOREST INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

NOTE 13 – Income Tax - Continued

The composition of the Company’s deferred tax assets as at September 30, 2013 and December 31, 2012 is as follows:

	September 30,			December 31,
	2013			2012
Deferred tax assets:
Net operating loss carry forward	$	25,492,461		$	277,645,056
Less: Accrued officer compensation		(750,000	)		(739,226	)
Unrealized loss on investment		-			(594,600
Impairment loss		-			(75,000,000
Less: Valuation allowance		(24,742,461	)		(201,311,230	)
Total deferred tax asset	$	-		$	-

The potential income tax benefit of these losses has been offset by a full valuation allowance.

As at September 30, 2013, the Company had estimated non-capital losses for tax purposes of $227,198,645, which may be carried forward to offset future years’ taxable income. These losses will expire as follows:

Year of Expiry	Taxable Losses
2028		30,756
2029		16,359
2030		49,030
2031		1,048,809
2032		201,311,230
2033		24,742,461
	$	227,198,645

All tax years from inception are open to examination by the Internal Revenue Services.

Note 14 – Commitments and Contingencies

Legal Issues:

(i)	Branislav Jovanovic

In June, 2012 the company’s former President, Branislav Jovanovic of Calgary, Alberta, Canada commenced arbitration proceedings against the company with such proceedings filed with the International Centre for Dispute Resolution in Las Vegas, NV. The statement of claim filed by the plaintiff in the arbitration proceedings alleged unpaid sums of approximately $150,000 USD. The company replied and filed a Statement of Defence in the arbitration proceedings on July 28, 2012. The company filed a statement of defence and asserted, amongst other things, that the arbitration proceedings should be terminated. By way of a direction issued by the International Centre for Dispute Resolution on September 25, 2012 the arbitration was terminated and the claim was dismissed due to inaction by the Plaintiff in prosecuting his claim.

F-18

BLUFOREST INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

Note 14 – Commitments and Contingencies (continued)

Legal Issues (cont’d):

(i)	Branislav Jovanovic (cont’d)

On July 30, 2012 the company commenced legal proceedings in the Alberta Court of Queen’s Bench in Calgary, Canada against Branislav Jovanovic. In the claim the company alleged that Mr. Jovanovic had submitted false expense claims and made other demands for reimbursement for expenses claimed to have been incurred for the company at the time that he was the sole director and officer. At the time, in April, 2011 Mr. Jovanovic caused the company to pay him for these claims with the issuance of stock to himself and other family members. The amount sought to be repaid was approximately 70,000 shares and at the time the action was commenced, the value of those shares was approximately $300,000 USD. On October 4, 2012 the company sought and obtained a temporary injunction from the Alberta Court of Queen’s Bench in Calgary, Canada, stopping Mr. Jovanovic from trading those shares for a period. After the Court granted an extension to late October, 2012, the temporary injunction expired. The action is moving forward into document discovery this year.

The day after the initial injunction was granted by the Court in Alberta, Canada, and on October 5, 2012 Mr. Jovanovic started a new lawsuit in US Federal Court in Las Vegas NV seeking an unquantified claim against the company in debt for a sum claimed to exceed $75,000 USD. The company believes that the demand is the same claim Jovanovic sought unsuccessfully in his arbitration proceedings. In November, 2012 the company applied in Federal Court to dismiss the Plaintiff’s complaint and on January 8, 2013 the Court did so and dismissed the entire action. In issuing the order, Judge Hicks ruled that the exclusive jurisdiction for the parties’ dispute was Alberta, Canada where the company’s action was filed.

Currently, all claims by or on behalf of Branislav Jovanovic against the company have been dismissed. The company expects to continue to press forward with its action to require Mr. Jovanovic to account to the company for his actions and explain his activities. Any assessment of the action is premature at this time.

(ii)	George Sharp Claim

On April 16, 2013 a California resident named George Sharp filed suit against the company and its director and former directors of matters that related to the promotional activities once conducted by management when the company was known as Greenwood Gold Resources Inc. BluForest is filed a statement of defence against these claims and will press forward with its defence against these allegations. . Mr. Sharp announced his addition of BluForest Inc. independent consultant Jim Can as a defendant to this lawsuit.

On Friday, October 25, 2013, BluForest CEO Charles Miller and BluForest Advisor Jim Can were granted a ruling by presiding Judge Joel M. Pressman on the Motion to Quash Services of Summons. Mr. Miller and Mr. Can were successfully removed in the lawsuit brought against BluForest et al.

The Company will continue move to dismiss this action and undertake any other defenses vigorously. Any assessment of the action is premature at this time

Commitments

On August 12, 2013 BluForest signed an LOI and entered into discussions with Global Fuel Limited (“Global Fuel”) based in London, England, for the pre-purchase two Tons of Carbon Credit per Hectare per Year owned by BluForest Inc., commencing September 2013.

F-19

BLUFOREST INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

Note 14 – Commitments and Contingencies (continued)

Under the terms of the LOI, BluForest will assign a first priority lien to the property held in assets of BluForest Inc. in Ecuador known as "Hacienda Juval" consisting of 105,000 Hectares as indicated on the Balance Sheets of BluForest registered in Ecuador. Global Fuel Limited has examined the appraisals and audits of BluForest Inc and concur with the value stated therein of the aforementioned property.

The LOI with Global Fuel is structured such that a prepayment of $12,000,000 by Global Fuel will be made for the delivery of the Carbon Credits and will be for a period not to exceed 24 months. At that time Global Fuel expects the estimated 210,000 tonnes of Carbon Credits to have been, Validated, Verified, Certified and ready for market. If, for whatever reason, the Credits are not delivered as agreed to Global Fuel will consider the agreement in default and move to have the prepayment funds reclassified as a loan to BluForest.

In the event that BluForest "Fails to Deliver" the afore mentioned Carbon Credits or "Repay" the above sums at an interest rate calculated from the one month LIBOR ARM Index plus a margin of 2% with a floor rate of 5.75%, as defined in the General Security Agreement, Global Fuel Limited then may move to attach the herein mentioned assets in priority, without dispute. The company is continuing to undertake due diligence and will announce the signing of a definitive agreement in the event that one is signed.

Note 15 – Subsequent Events

The Company has evaluated subsequent events from the balance sheet date through the date that the financial statements were issued and determined that there were no events to disclose.

F-20

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion of our financial condition and results of operations should be read in conjunction with the Financial Statements and Notes thereto in Item I, and the Company’s 10-K Annual Report for the fiscal year ended December 31, 2012 and other publicly available financial information. This discussion contains forward-looking statements and involves numerous risks and uncertainties. Our actual results may differ materially from those contained in any forward-looking statements.

OVERVIEW

We are a carbon offsets marketing company. Initially, we intend to sell carbon offsets through our website to voluntary markets where no verification is required. A carbon offset is a reduction in emissions of carbon dioxide or greenhouse gases made in order to compensate for or to offset an emission made elsewhere. Source: World Resources Institute. Carbon offsets are measured in metric tons of carbon dioxide-equivalent and may represent six primary categories of greenhouse gases: carbon dioxide, methane, nitrous oxide, perfluorocarbons, hydrofluorocarbons and sulfur hexafluoride. One carbon offset represents the reduction of one metric ton of carbon dioxide or its equivalent in other greenhouse gases.

Once we are able to complete the verification process, we will sell verified carbon offsets through other markets. We intend to market and sell Verified Emission Reduction (VER) and Reduced Emissions from Deforestation and Degradation (REDD) carbon offsets through global restoration projects. The offsets will be validated and verified for sale to companies, foundations, and other entities that, for branding, policy and corporate social responsibility reasons, wish to offset their carbon footprints to support climate change mitigation efforts. Our focus is on reforestation, ideally with generators, who provide work opportunities and benefits to the indigenous people.

How do we get to certification:

The certification process commences with the development of a baseline assessment which determines the rate of deforestation typically experienced across the geographical area foreseen by the project. Upon completion of the baseline analysis, the Project Design Document (PDD) is initiated and completed by a certified agency / company that will create a general description of the project activity; determine the duration of the project activity / Crediting period; detail the planned monitoring method methodology; and develop the certified estimate of the greenhouse gas emissions. Subsequent to completion of the PDD, the carbon credits are certified and verified using the United Nations protocol and are available to be placed on the certified carbon credit markets.

How long does it take and who does it:

It is anticipated that the entire certification process will take from 6 – 9 months employing either of several firms undertaking such work including but not limited to Carbon Decisions International (CDI) based in Costa Rica or Icontec International based in Columbia.

What part does the Government Play:

The Ecuadorian government is highly supportive of the work being conducted and is actively involved in developing the baseline data regarding deforestation. Currently the main relationships unfold with the municipal governments to complete the agreements which are then endorsed by the federal government. The Minister of the Environment is well informed and highly supportive of the progress being created as a result of this United Nations sanctioned process. No significant challenges are currently foreseen as a result of the strong relationships which have been forged over time.

RESULTS OF OPERATIONS

Three Month Period Ended September 30, 2013 Compared to Three Month Period Ended September 30, 2012

We generated no revenue for the three month periods ended September 30, 2013 and September 30, 2012, respectively.

During the three month period ended September 30, 2013, we incurred operating expenses from continuing operations of $380,811 as compared to $720,824 incurred during the three month period ended September 30, 2012, a decrease of $340,013. The decrease in operating expenses was primarily attributable to the following items: (i) Professional fee increase of $21,540; (ii) Consulting fee decrease of $339,095; and (iii) Decrease in general and administrative expenses of $22,447. General and administrative expenses generally include corporate overhead, financial and administrative contracted services, and marketing costs. Professional fees include accounting and tax service fees, and legal fees.

During the three month period ended September 30, 2013, we incurred a net loss from continuing operations of $494,403, including interest expenses of $19,092 and loss on shares to settle debt of $94,500.

Nine Month Period Ended September 30, 2013 Compared to Nine Month Period Ended September 30, 2012

We generated no revenue for the nine month periods ended September 30, 2013 and September 30, 2012, respectively.

During the nine month period ended September 30, 2013, we incurred operating expenses from continuing operations of $1,237,140 as compared to $76,700,545 incurred during the nine month period ended September 30, 2012, a decrease of $75,463,405. The decrease in operating expenses was primarily attributable to the following items: (i) Professional fee increase of $175,102; (ii) Consulting fee decrease of $513,434; (iii) Decrease in general and administrative expenses of $125,348; and (iv) impairment of property for developing carbon offsets was $75,000,000 in the nine months period ended September 30, 2012. General and administrative expenses generally include corporate overhead, financial and administrative contracted services, and marketing costs. Professional fees include accounting and tax service fees, and legal fees.

During the nine month period ended September 30, 2013, we incurred a net loss from continuing operations of $25,487,356, including interest expenses of $55,716 and loss on shares to settle debt of $24,194,500.

	Nine months ended September 30, 2013		Nine months ended September 30, 2013		From March 26, 2008 (date of inception) to September 30, 2013
Discontinued Operating Expenses
Professional fees	$	-	$	2,500	$	336,668
Mineral property costs		-		-		14,034
Salaries and benefits		-		10,000		135,500
General and administrative expenses		-		454		72,475
Loss on mineral property		-		5,000		619,498
Interest expense		5,105		7,060		15,626
Total Discontinued Operations	$	5,105	$	25,014	$	1,193,801

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2013, our current assets were $17,963 as compared to $18,691 as at December 31, 2012 and our current liabilities were $3,903,472 ( $3,684,652 as at December 31, 2012) , resulting in a working capital deficit of $3,885,509 as at September 30, 2013, ($3,665,961) as at December 31, 2012). We had total assets of $698,905,116 as at September 30, 2013 as compared to total assets of $698,962,128 for the fiscal year ended December 31, 2012. Current liabilities were comprised of: (i) $1,232,573 in accounts payable and accrued liabilities ($925,951 – December 31, 2012); (ii) $737,222 in accounts payable – related parties ($739,565 – December 31, 2012); (iii) $855,203 for advances payable ($870,570 as of December 31, 2012) and (iv) $96,003 for advances payable – related parties ($20,069 – December 31, 2012). Current liabilities from discontinued operations totaled $239,471 as at September 30, 2013 as compared to $385,497 as at the fiscal year ended December 31, 2012.

As of the date of this Quarterly Report, we have yet to generate any revenues from our business. However, we expect to have revenues during fiscal year 2013, as we develop the market for our carbon offsets.

We estimate that in the next twelve months we will require a minimum of $8,000,000 of which we will expend approximately $3,000,000 for operations, 1,000,000 for certifications (PDD) and $4,000,000 for acquisitions. This will enable us to obtain certifications for our carbon offsets, and to pursue other projects that will allow us to maximize revenues. We expect that by the second quarter of the next fiscal year we will commence generating revenues from our projects. This budget does not include any funds for the acquisition of any additional projects.

We are a development stage company and are in the early stages of developing our business plan. As of the date of this report, we have acquired properties but not generated any revenues from them and are just commencing operations under our new business initiative. As a result, we have generated significant operating losses since our formation and expect to incur substantial losses and negative operating cash flows until such time as we certify our properties and commence the sale of accredited carbon offsets. Our ability to continue may prove more costly than we currently anticipate and we may incur significant additional costs and expenses. These conditions could further impact our business and may have an adverse effect on our financial position, results of operations and/or cash flows.

We cannot sustain our operations from existing working capital as we have not generated any revenues and there can be no assurance at this time that we can generate significant revenues from operations.

We will require additional working capital, as we currently have inadequate capital to fund all of our business strategies, which could severely limit our operations. Subsequent to our fiscal year ended December 31, 2012, our officers and directors have advanced loans for operations and we have determined to undertake an offering of our common stock to raise approximately $8,000,000 in capital, as indicated above. There can be no assurance that any financing will be available or accessible on reasonable terms, either by way of an equity financing or debt. If we cannot raise any additional funding we may either have to suspend operations until we do raise the funds, or cease operations entirely.

We anticipate that additional funding will be in the form of issuance of debt and/or equity financing from the sale of our common stock. However, we have no assurance that we will be able to raise sufficient funds from the sale of our common stock to pay all of our anticipated expenses. Management has been exploring a number of options to meet our obligations and future capital requirements, including the possibility of equity offering, debt financing, and business combination but has not entered into any agreement for any of the foregoing.

Proposed Program

Subject to having sufficient capital, which we have not yet raised, we intend to proceed with a proposed work program as recommended by a consulting scientist to be retained by us. We intend to initiate a Project Development Documents (PDDs) and baseline which will allow us to compile data and profile the Properties.

Engage Consultants

We are looking to engage consulting firms that specialize in overseeing the design and implementation of greenhouse gas reduction/sustainability plans, and managing the generation of carbon and renewable energy and energy efficiency credits. Through these consultants we hope to determine the eligibility, feasibility and marketing channels available to sell carbon offsets generated by our business operations. We have not yet entered into any formal agreements with any consultants.

Initiate Calculations

We are currently calculating the carbon offset potential of our initial projects by growth and yield data. The carbon potential will be used to calculate revenues while costs will be determined by verification of price, overhead and monitoring costs.

Sale of Non-Verified Offsets

We do currently intend to sell verified offsets; however, it does remain a viable option to sell non-verified offsets via our website to generate revenue before we have the project verified. We do plan to verify the offsets as soon as practicable as verified offsets command a premium.

Verification

We will obtain a review by a third party verifier. The verification process is required only once per project. Depending on the size and location of the project the monitoring requirements may vary slightly. The reasons for variation are due to access, species diversity, and forest risks including pests, pathogens and fire. In a forest-based carbon offsetting project all the credits are procured and registered for sale once the project have been verified.

Sale of Offsets

Once the carbon offsets have been verified we will have the ability to sell verified carbon offsets associated with the project either directly through our website or with resellers in the industry, or directly to corporations that may wish to purchase carbon credits to offset their emissions. Currently, we do not have sufficient funds to carry out our PDD program and will need to raise additional capital from a public offering, a private placement or loans.

We anticipate that additional funding will be in the form of issuance of debt and/or equity financing from the sale of our common stock. However, we have no assurance that we will be able to raise sufficient funds from the sale of our common stock to pay all of our anticipated expenses. We have in the past raised funds required for operations by way of advances and loans from our controlling shareholder and our officer and director, however, there can be no assurance that he will continue to provide the required funds to continue operations.

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements that will have a current or future effect on our financial condition and changes in financial condition.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have various market risk exposures that arise from our ongoing business operations. Market risk is the potential economic loss that may result from adverse changes in the fair value of financial instruments. Our financial results are impacted by changes in interest rates, certain foreign currency exchange rates and sale prices.

Foreign Currency Exchange Rate Risk

We have sales and offices in Ecuador and business in other countries in the world. As a result, we make conduct business transactions denominated in various currencies, including the U.S. dollar, the British pound, the Euro, and the Canadian dollar. The direct effect of foreign currency fluctuations on sales has not been material because our sales are primarily denominated in U.S. dollars. However, if the U.S. dollar strengthens relative to other currencies, such strengthening could have an indirect effect on our sales. A weaker U.S. dollar could have the opposite effect. However, the precise indirect effect of currency fluctuations is difficult to measure or predict because our sales are influenced by many factors in addition to the impact of such currency fluctuations.

Interest Rate Risk

Our primary exposure to interest rate risk results from our outstanding debt obligations. The level of fees and interest charged on short term borrowings are based upon 8% per annum. These short term borrowings allow us to create certainty related to the future cash flows as it relates to fluctuations and the impact they have on interest payments on our variable rate debt.

We believe that our exposure to market risk related to interest rate fluctuations for cash and cash equivalents is not significant.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is 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 by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of September 30, 2013, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Please refer to our Annual Report on Form 10-K/A as filed with the SEC on April 18, 2013, for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.

Changes in Internal Control over Financial Reporting

Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are investigating the expenses presented by a former officer as to propriety and proper recording. The amount due to him, which includes the questioned expenses, is listed as disputed in the Form 10-Q. The amounts in question will not a material effect on the financial statements."

In June, 2012 Mr. Jovanovic commenced arbitration proceedings against the company with such proceedings filed with the International Centre for Dispute Resolution in Las Vegas, NV. The statement of claim filed by the plaintiff in the arbitration proceedings alleged unpaid sums of approximately $150,000 USD. The company replied and filed a Statement of Defence in the arbitration proceedings on July 28, 2012. The company filed a statement of defence and asserted, amongst other things, that the arbitration proceedings should be terminated. By way of a direction issued by the International Centre for Dispute Resolution on September 25, 2012 the arbitration was terminated and the claim was dismissed due to inaction by the Plaintiff in prosecuting his claim.

On April 16, 2013 a California resident named George Sharp filed suit against the company and its director and former directors of matters that related to the promotional activities once conducted by management when the company was known as Greenwood Gold Resources Inc. BluForest is filing a statement of defence against these claims and will press forward with its defence against these allegations. Any assessment of the action is premature at this time.

ITEM 1A. RISK FACTORS

An investment in our securities should be considered highly speculative due to various factors, including the nature of our business and the present stage of our development. An investment in our securities should only be undertaken by persons who have sufficient financial resources to afford the total loss of their investment. In addition to the usual risks associated with investment in a business, the following is a general description of significant risk factors which should be considered. You should carefully consider the following material risk factors and all other information contained in this Annual Report before deciding to invest in our common stock. If any of the following risks occur, our business, financial condition and results of operations could be materially and adversely affected. Additional risks and uncertainties we do not presently know or that we currently deem immaterial may also impair our business, financial condition or operating results.

Risks Relating to our Company

No history of Cash Revenues.

Our Company has a limited operating history, is in the development stage and has a history of operating losses. If our business plan is not successful and we are not able to operate profitably, then our stock may become worthless and investors may lose all of their investment in our Company.

We will not receive revenues from operations until we initiate sales of undeveloped carbon assets followed by further development of our projects and sale of certified carbon assets.

We have made advance sales of carbon assets totaling $743,000.

We are at risk to changes in domestic and international carbon policy.

The supply and demand fundamentals of carbon offsets are determined by governments and international consortiums and are beyond our control. Our ability to continue operations will be dependent on the level of adoption and observance of the Kyoto Protocol, the post Kyoto Protocol environment and other initiatives aimed at reducing greenhouse gas emissions. Changes in government and corporate priorities as a result of government deficits, domestic industries or as a result of changes in the prevailing views concerning the impact of greenhouse gases on climate change could adversely affect the observance of the Kyoto Protocol, the adoption of successor protocols, and corporate initiatives.

If we are unable to identify and contract with sufficient and suitable carbon offset generators our business will fail

In order to achieve our business model we need to contract with organizations that generate a substantial amount of carbon offsets. If we are unable to contract with suitable generators our business will fail.

If we are unable to find a suitable buyer for carbon offsets our business will fail.

The carbon offsets we initially intend to sell are voluntary. Buyers of voluntary credits are not bound to purchase due to government regulations or international agreements. Buyers of voluntary credits purchase because they believe it is the socially responsible thing to do or in order to increase corporate image. The market for voluntary credits is still in the development stages, however several jurisdictions have implemented mandatory emissions controls (ex. Australia).

Our officers and directors have experience in the forest restoration and carbon industry.

Our current officer and board of director has experience in the industry of ecosystem restoration and carbon credit validation.

If prices of forest-based carbon offsets drop substantially our business could fail.

The principle factors affecting our revenues are factors which affect the price of carbon offsets and are beyond our control. The actual market price of carbon offsets fluctuates drastically. If prices were to fall substantially we will adapt our business model to be profitable.

We are at risk to changes in regulations and verifications that could negatively affect our profitability.

The processes by which carbon offsets are created and verified are subject to change and beyond our control. Governments, lobby groups, private firms, and Environmental Non-Government Organizations "ENGO's" all work to create a more efficient and accountable system to bring carbon offsets available for market and to assure validity. As the industry matures the regulatory environment will as well. These changes could become more demanding in terms of time and costs and negatively affect our profitability.

We are subject to currency fluctuations that could negatively affect our profitability.

Our profitability may be adversely affected by fluctuations in the rate of exchange of the U.S. dollar and other currencies we may do business in. The Company at this time does not expect to hedge against currency fluctuations and changes in exchange rates are beyond our control.

We operate in a competitive industry and will compete against other companies that could negatively affect our profitability.

The carbon credit industry is a competitive industry. We will compete with numerous other participants in the search for, and the acquisition of, properties and in the marketing of the sale of carbon offsets. Our competitors will include companies that have substantially greater financial resources, staff and facilities than those of the Company.

Projects will be at risk of fire, pests and diseases.

Our assets will be made up of the environmental rights attached to carbon stocks in forests. Forests are at risk to damage from fire, pests and diseases. The Company will implement strategies including fuels management, species composition management and pathogen assessments as part of routine monitoring procedures but often forces of nature are outside the control of the company and could require the company to incur losses in order to replace lost carbon stocks.

We may not be able to obtain additional financing.

As at the date of filing, we had limited cash on hand and a working capital deficit. As such, we will require substantial additional financing in order to continue as a going concern. We have not generated any revenue from operations to date. The specific cost requirements needed to maintain operations will depend upon the restoration projects currently owned and those we are able to procure. Specific costs include but are not limited to the following:

·	Travel and project selection

·	Feasibility studies

·	Consultants Registration and Validation Project Implementation

·	Measurement and Monitoring Marketing Sale Efforts

The amount of each of the specific costs described above will vary based on the project size, type and location. Reforestation projects have higher costs than do REDD projects due to the need to physically prepare and plant the site.

In order to expand our business operations, we anticipate that we will have to raise additional funding. If we are not able to raise the capital necessary to fund our business expansion objectives, we may have to delay the implementation of our business plan. If sufficient financing is not available or obtainable, we may not be able to continue as a going concern and investors may lose a substantial portion or all of their investment.

Our officers and directors do not own any shares and operations may be influenced by our controlling shareholders.

Charlie Miller, our sole officer and director holds 39,166,000 is the single largest shareholder represents approximately 37.85%, however he does not have controlling, voting shares of the company at this time and a proxy is required to be approved or declined for any changes.

It is possible that there may be indigenous people claims against small portions of our property, which could result in us incurring additional expense.

It is conceivable that indigenous peoples could raise claims against elements of our properties. Should this occur, it is highly likely that we would experience additional expenses arising from claims against our assets.

We are subject to new corporate governance and internal control reporting requirements, and our costs related to compliance with, or our failure to comply with existing and future requirements, could adversely affect our business.

We may face new corporate governance requirements under the Sarbanes-Oxley Act of 2002, as well as new rules and regulations subsequently adopted by the SEC and the Public Company Accounting Oversight Board. These laws, rules, and regulations continue to evolve and may become increasingly stringent in the future. In particular, under rules proposed by the SEC on August 6, 2006, we are required to include management’s report on internal controls as part of our annual report pursuant to Section 404 of the Sarbanes-Oxley Act. We strive to continuously evaluate and improve our control structure to help ensure that we comply with Section 404 of the Sarbanes-Oxley Act. The financial cost of compliance with these laws, rules, and regulations is expected to remain substantial. We cannot assure you that we will be able to fully comply with these laws, rules, and regulations that address corporate governance, internal control reporting, and similar matters. Failure to comply with these laws, rules and regulations could materially adversely affect our reputation, financial condition, and the value of our securities.

Risks Relating to an Investment in our Securities

Because of the early stage of development and the nature of our business, our securities are considered highly speculative.

Our securities must be considered highly speculative, generally because of the nature of our business and the early stage of its development. There is little likelihood that we will generate any revenues or realize any profits in the short term. Any profitability in the future from our business will be dependent upon our ability to monetize our carbon tax credits. Since we have not generated any revenues, we will have to raise additional monies through the sale of our equity securities or debt in order to continue our business operations.

We may, in the future, issue additional common shares that would reduce investors’ percent of ownership and may dilute our share value.

Our Articles of Incorporation authorize the issuance of up to 400,000,000 common shares, $0.001 par value. The future issuance of common shares may result in substantial dilution in the percentage of our common shares held by our then existing stockholders. We may value any common shares issued in the future on an arbitrary basis. The issuance of common shares for future services or acquisitions or other corporate actions may have the effect of diluting the value of the common shares held by our investors, and might have an adverse effect on any trading market for our common shares.

Market for penny stock has suffered in recent years from patterns of fraud and abuse and our stock has been volatile.

Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include: (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons; (iv) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and, (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequential investor losses.

Our management is aware of the abuses that have occurred historically in the penny stock market. The occurrence of these patterns or practices could in the future increase the volatility of our share price.

Our common shares are subject to the “penny stock” rules of the SEC, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

The SEC has adopted regulations that generally define a “penny stock” to be any equity security other than a security excluded from such definition by Rule 3a51-1 under the Securities Exchange Act of 1934, as amended. For the purposes relevant to our Company, it is any equity security that has a market price of less than $5.00 per share, subject to certain exceptions.

Our common shares are currently regarded as a “penny stock”, since our shares are not listed on a national stock exchange or quoted on the NASDAQ Market within the United States, to the extent the market price for its shares is less than $5.00 per share. The penny stock rules require a broker-dealer to deliver a standardized risk disclosure document prepared by the SEC, to provide a customer with additional information including current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the customer's account, and to make a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser's written agreement to the transaction.

To the extent these requirements may be applicable, they will reduce the level of trading activity in the secondary market for the common shares and may severely and adversely affect the ability of broker-dealers to sell the common shares.

FINRA sales practice requirements may also limit a stockholders ability to buy and sell our stock.

In addition to the penny stock rules promulgated by the SEC, which are discussed in the immediately preceding risk factor, FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the ability to buy and sell our stock and have an adverse effect on the market value for our shares.

There is currently no active market for our common shares and unless an active market develops shareholders may not be able to sell their shares at a profit or at all.

Although, we are a reporting company and our common shares are quoted on the OTCBB, currently under the symbol “BLUF”, there is currently no active market for our common stock and an active trading market may not develop or, if it does develop, may not be maintained. Failure to develop or maintain an active trading market will have a generally negative effect on the price of our common stock, and you may be unable to sell your common stock or any attempted sale of such common stock may have the effect of lowering the market price and therefore your investment could be a partial or complete loss.

Our common stock may experience extreme rises or declines in price, and you may not be able to sell your shares at or above the price paid.

Our common stock may be highly volatile and could be subject to extreme fluctuations in response to various factors, many of which are beyond our control, including (but not necessarily limited to) (i) the trading volume of our shares; (ii) the number of securities analysts, market-makers and brokers following our common stock; (iii) changes in, or failure to achieve, financial estimates by securities analysts; (iv) actual or anticipated variations in quarterly operating results; (v) conditions or trends in our business industries; (vi) announcements by us of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; (vii) additions or departures of key personnel; (viii) sales of our common stock; and (ix) general stock market price and volume fluctuations of publicly-traded and particularly, microcap companies.

Investors may have difficulty reselling shares of our common stock, either at or above the price they paid for our stock, or even at fair market value. The stock markets often experience significant price and volume changes that are not related to the operating performance of individual companies, and because our common stock is thinly traded it is particularly susceptible to such changes. These broad market changes may cause the market price of our common stock to decline regardless of how well we perform as a company. In addition, there is a history of securities class action litigation following periods of volatility in the market price of a company’s securities. Although there is no such shareholder litigation currently pending or threatened against the Company, such a suit against us could result in the incursion of substantial legal fees, potential liabilities and the diversion of management’s attention and resources from our business. Moreover, and as noted below, our shares are currently traded on the OTCBB and, further, are subject to the penny stock regulations. Price fluctuations in such shares are particularly volatile and subject to manipulation by market-makers, short-sellers and option traders.

We have not and do not intend to pay any cash dividends on our common shares and, consequently, our stockholders will not be able to receive a return on their shares unless they sell them.

We intend to retain any future earnings to finance the development and expansion of our business. We have not, and do not, anticipate paying any cash dividends on our common shares in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them.

A decline in the price of our common stock could affect our ability to raise further working capital, adversely impact our ability to continue operations and may cause us to go out of business.

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, or convertible debt instruments, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors to not choose to invest in our stock. If we are unable to raise the funds we require for all our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer, we may not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to go out of business.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On August 6, 2013, the Company agreed to issue 150,000 shares of common stock to vendors in settlement of $150,000. The Company valued these common shares at the fair market value of $1.63 per share on the date of the agreements and recorded a loss on settlement of $94,500.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The Company does not have any senior securities as of the date of this Form 10-Q.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5. OTHER INFORMATION

Commitment

ITEM 6. EXHIBITS

The following exhibits are filed as part of this Quarterly Report:

Exhibit Number	Description
3.1	Articles of Incorporation	Incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on July 18, 2008
3.1(1)	Certificate of Change to Articles of Incorporation filed with the Nevada Secretary of State	Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on February 17, 2011
3.1(2)	Certificate of Amendment to Articles of Incorporation filed with the Nevada secretary of State regarding the decrease in authorized capital	Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on June 16, 2011
3.2	Bylaws	Incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on July 18, 2008
10.1	Option Agreement between the Company and Candorado	Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on February 22, 2011
10.2	Option Agreement between the Company and Robert Rosenblat dated October 27, 2011	Incorporated by reference to our Form 10-K filed with the Securities and Exchange Commission on April , 2012.
10.3	Acquisition Agreement between the Company and Ocean View Real Estate Company Ltd.	Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on February 22, 2012
10.4	Purchase and Acquisition Agreement dated March 30, 2012, between the Company and Global Environmental Investments Ltd.	Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on April 11, 2012.
14.1	Code of Ethics	Incorporated by reference to our Form 10-K filed with the Securities and Exchange Commission on March 31, 2009
99.9	Appraisal dated January 1, 2012 regarding the Property prepared by Msc. Paul Tufino M. Corporacion, SIMBIOE	Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on April 11, 2012.
31..1	Section 302 Certification – Principal Executive Officer	Filed herewith
31.2	Section 302 Certification – Principal Financial Officer	Filed herewith
32.1	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
101.INS	XBRL Instance Document	To be filed by amendment
101SCH	XBRL Taxonomy Extension Schema Document	To be filed by amendment
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	To be filed by amendment
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	To be filed by amendment
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	To be filed by amendment
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	To be filed by amendment

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

	BLUFOREST INC. (FORMERLY GREENWOOD GOLD RESOURCES, INC.)

Date: November 18, 2013	By:	/s/ Charles Miller
	Name:	Charles Miller
	Title:	Chief Executive Officer (Principal Executive Officer) Chief Financial Officer (Principal Financial Officer)

Bluforest Inc. 10-Q