SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

THE SECURITIES EXCHANGE ACT OF 1934

PEGASUS TEL, INC.

(Exact name of registrant as specified in its charter)

Registrant's telephone number including area code (203) 404-0450

(Former Name or Former Address, if changed since last report)

Common Stock, $0.0001 par value

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 x Yes oNo

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) x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company)

Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes o No x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes o No o

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 3,510,496,677 shares of common stock issued and outstanding as of ~~May 14,~~August 20, 2012.

INFORMATION REGARDING FORWARD-LOOKING DISCLOSURE

This quarterly report on Form 10-Q contains forward-looking statements. Statements in this report that are not historical facts, including statements about management’s beliefs and expectations, constitute forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined under Item 1A, Risk Factors, in our most recent annual report on Form 10-K, and any updated risk factors we include in our quarterly reports on Form 10-Q and other filings with the SEC. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.

Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following:

Investors should carefully consider these factors and the additional risk factors outlined in more detail under Item 1A, Risk Factors, in our 2011 Annual Report on Form 10-K and other filings with the SEC.

PEGASUS TEL, INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~JUNE 30, 2012

		Table of Content
	PEGASUS TEL, INC. AND SUBSIDIARY
	(A Development Stage Company)
	CONSOLIDATED BALANCE SHEET

Preferred Stock, Series C Convertible, Par value $0.0001, Authorized 10,000,000 shares Issued 1,000,000 shares at June 30, 2012

Preferred Stock, Series D Convertible, Par value $0.0001, Authorized 10,000,000 shares Issued 2,436,453 shares at June 30, 2012

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

		Table of Content
	PEGASUS TEL, INC. AND SUBSIDIARY
	(A Development Stage Company)
	CONSOLIDATED STATEMENTS OF OPERATIONS
	(Unaudited)

							Cumulative Since
							February 19, 2002				For the Three			For the Period from			Cumulative Since
	For the Three Months Ended						Inception of				Months			February 1, 2012			February 1, 2012
	March 31,						Development				Ended			to			Inception of
	2012			2011			Stage				June 30, 2012			June 30, 2012			Development Stage
Revenues	$	405		$	898		$	74,065			$	473		$	473		$	473
Costs of Services		(690	)		(792	)		(69,790	)			(690	)		(690	)		(690	)

Gross Margin		(285	)		106			4,275				(217	)		(217	)		(217	)

Expenses
Accounting		258			5,258			119,321				22,040			22,040			22,040
General and Administrative		50			1,534			51,813				3,365			3,370			3,370
Legal		2,848			23,098			120,737				-			-			-
Outside Services												13,457			13,457			13,457
Related Party Bookkeeping		-			1,150			20,328		Related Party Bookkeeping
Stock for Services		-			-			17,479,384				-			-			-
Operating Expenses		3,156			31,040			17,791,581				38,862			38,867			38,867

Operating Income (Loss)		(3,440	)		(30,934	)		(17,787,305	)			(39,079	)		(39,084	)		(39,084	)

Other Income (Expense)
Finance Charge		-			-			(1,706,000	)			-			-			-
Interest Expense		(758	)		(5,922	)		(47,975	)			(878	)		(1,636	)		(1,636	)

Net Loss Before Taxes		(4,198	)		(36,856	)		(19,541,280	)			(39,957	)		(40,720	)		(40,720	)

Income and Franchise Tax		-			(481	)		(2,765	)			-			-			-

Net Loss	$	(4,198	)	$	(37,337	)	$	(19,544,045	)		$	(39,957	)	$	(40,720	)	$	(40,720	)

Loss per Share, Basic &
Diluted	$	(0.00	)	$	(0.00	)
Loss per Share, Basic & Diluted											$	(0.00	)	$	(0.00	)

Weighted Average Shares
Outstanding		3,510,496,677			20,215,136
Weighted Average Shares Outstanding												3,510,496,677			3,510,496,677

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

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

		Table of Content
	PEGASUS TEL, INC. AND SUBSIDIARY
	(A Development Stage Company)
	CONSOLIDATED STATEMENTS OF CASH FLOWS
	(Unaudited)

Cumulative Since
February 19, 2002
For the Three Months Ended Inception of
March 31, Development
2012 2011 Stage
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss for the Period $ (4,198 ) $ (37,337 ) $ (19,544,045 )
Adjustments to reconcile net loss to net cash
provided by operating activities:
Stock for Services - 17,479,384
Debt conversion 1,706,000
      Depreciation and Amortization - - 12,600
Changes in Operating Assets and Liabilities
     Decrease (Increase) in Accounts Receivable 252 (120 ) (135 )
     Increase (Decrease) in Accounts Payable 258 (3,164 ) 35,066
     Increase in Related Party Accounts Payable - 1,150 26,439
     Increase in Interest Payable 758 5,922 46,920
Increase (Decrease) in Intercompany Dues - 56,684
Net Cash Used in Operating Activities (2,930 ) (33,549 ) (181,087 )

CASH FLOWS FROM INVESTING ACTIVITIES:
     Cash acquired from Blue Bull Ventures acquisition 24,136 24,136
     Purchase of Property and Equipment - - (11,600 )
Net cash provided by Investing Activities 24,136 - 12,536

CASH FLOWS FROM FINANCING ACTIVITIES:
     Preferred Stock issued for cash 1,000 - 1,180
     Payments on Related Party Notes - - (445 )
     Proceeeds from Related Party Notes 2,850 33,323 193,157
Net Cash Provided by Financing Activities 3,850 33,323 193,892

Net (Decrease) Increase in Cash 25,056 (226 ) 25,341
Cash at Beginning of Period 285 289 -
Cash at End of Period $ 25,341 $ 63 $ 25,341

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
`
Cash paid during the year for:
  Interest $ - $ - $ 1,055
  Franchise and Income Taxes $ - $ 481 $ 2,765

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Accounts Payable Satisfied through Contributed Capital
  and Property and Equipment $ - $ - $ 56,684

							Cumulative
							Since
	For the Three			For the Period			February 1,
	Months			From			2012
	Ended			February 1, 2012			Inception of
	June 30,			to			Development
	2012			June 30, 2012			Stage
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss for the Period	$	(39,957	)	$	(40,720	)	$	(40,720	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Changes in Operating Assets and Liabilities
Decrease (Increase) in Accounts Receivable		135			135			135
Increase (Decrease) in VAT Receivable		(2,663	)		(2,663	)		(2,663	)
Increase (Decrease) in Accounts Payable		2,565			2,570			2,570
Increase (Decrease) in VAT Payable		2,410			2,410			2,410
Increase in Interest Payable		878			1,636			1,636
Net Cash Used in Operating Activities		(36,632	)		(36,632	)		(36,632	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired from Pegasus in reverse merger		1,210			1,210			1,210
Investment in Kingstart Int'l		(121,569	)		(121,569	)		(121,569	)
Net cash provided by Investing Activities		(120,359	)		(120,359	)		(120,359	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Overdrawn Cash		1,097			1,097			1,097
Contributed Capital		22,700			22,700			22,700
Proceeds from Notes Payable		126,710			126,710			126,710
Proceeeds from Related Party Notes		6,484			6,484			6,484
Net Cash Provided by Financing Activities		156,991			156,991			156,991

Net (Decrease) Increase in Cash		-			-			-
Cash at Beginning of Period		-			-			-
Cash at End of Period	$	-		$	-		$	-

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest	$	-		$	-		$	-
Franchise and Income Taxes	$	-		$	-		$	-


SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
NONE.

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

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

		~~Table of Content~~
	~~PEGASUS TEL, INC. AND SUBSIDIARY~~
	(~~A Development Stage Company)~~
	~~CONSOLIDATED STATEMENTS OF~~ ~~STOCKHOLDERS' EQUITY~~
	~~(Unaudited)~~

Deficit Accumulated Since
February 19, 2002 Total
Inception of Stockholders'
Preferred Stock Common Stock Paid in Development Equity
Shares Par Value Shares Par Value Capital Stage Deficiency

Balance at February 19, 2002 - $ - - $ - $ - $ - $ -

Net Loss - - - - - (25,809 ) (25,809 )
Balance at December 31, 2002 - - - - - (25,809 ) (25,809 )

December 31, 2003, Stock
Issued as Intercompany Dues - - 1,000 1 999 - 1,000
Forward Stock Split 5,100 to 1 - - 5,099,000 509 (509 ) - -
Net Loss - - - - - (15,704 ) (15,704 )
Balance at December 31, 2003 - - 5,100,000 510 490 (41,513 ) (40,513 )

Net Loss - - - - - (6,508 ) (6,508 )
Balance at December 31, 2004 - - 5,100,000 510 490 (48,021 ) (47,021 )

Net Loss - - - - - (11,067 ) (11,067 )
Balance at December 31, 2005 - - 5,100,000 510 490 (59,088 ) (58,088 )

December 31, 2006, Capital
Contributed - - - - 56,684 - 56,684
Net Loss - - - - - (16,596 ) (16,596 )
Balance at December 31, 2006 - - 5,100,000 510 57,174 (75,684 ) (18,000 )

Net Loss - - - - - (65,711 ) (65,711 )
Balance at December 31, 2007 - - 5,100,000 510 57,174 (141,395 ) (83,711 )

August 15, 2008, Spin-Off
Completed and all Common
Stock not Distrubuted
to the Shareholders was
Cancelled - - (2,884,864 ) (288 ) 288 - -
August 15, 2008 Issued
Convertible Preferred Class
A Stock for Cash 1,800,000 180 - - - - 180
August 18, 2008, Convertible
Preferred Class A Stock
Converted to Common Stock (1,800,000 ) (180 ) 18,000,000 1,800 (1,620 ) - -
Net Loss - - - - - (40,882 ) (40,882 )
Balance at December 31, 2008 - - 20,215,136 2,022 55,842 (182,277 ) (124,413 )

Net Loss for the year - - - - - (38,593 ) (38,593 )
Balance at December 31, 2009 - - 20,215,136 2,022 55,842 (220,870 ) (163,006 )

Net Loss for the year - - - - - (49,392 ) (49,392 )
Balance at December 31, 2010 - - 20,215,136 $ 2,022 $ 55,842 $ (270,262 ) $ (212,398 )

Common Stock issued for services - - 2,579,281,541 257,928 17,221,456 - 17,479,384
Common Stock issued for debt reduction - - 611,000,000 61,100 1,798,900 - 1,860,000
300,000,000 30,000 120,000      (150,000) -
Net loss for the year - - - - - (19,269,585 ) (19,269,585 )
Balance at December 31, 2011 - $ - 3,510,496,677 $ 351,050 $ 19,196,198 $  (150,000) $ (19,539,847 ) $ (142,599 )

Preferred C shares issued for cash 1,000,000 100 900 1,000
Preferred D shares issued for Blue Bull 2,436,453 244 23,892 24,136
Net loss for the quarter (4,198 ) (4,198 )
Balance at March 31, 2012 3,436,453 $ 344 3,510,496,677 $ 351,050 $ 19,220,990 $  (150,000) $ (19,544,045 ) $ (121,661 )

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

		Table of Content
	PEGASUS TEL, INC. AND SUBSIDIARY
	(A Development Stage Company)
	CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of accounting policies for Pegasus Tel, Inc. is presented to assist in understanding the Company's financial statements. The accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements.

Interim Financial Statements

The unaudited financial statements as of ~~March 31,~~June 30, 2012 and the three and six months then ended, reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to fairly state the financial position and results of the operations for all three and six months. Operating results for interim periods are not necessarily indicative of the results which can be expected for full years.

Basis of Presentation

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented

Nature of Operations and Going Concern

The accompanying financial statements have been prepared on the basis of accounting principles applicable to a “going concern”, which assume that Pegasus Tel., Inc. (hereto referred to as the “Company”) will continue in operation for at least one year and will be able to realize its assets and discharge its liabilities in the normal course of operations.

~~Several conditions and events cast doubt about the Company’s ability to continue as a “going concern.”~~ The Company ~~has incurred net losses of approximately $(19,544,045) for the period from February 19, 2002 (inception) to March 31, 2012, has an accumulated deficit, has recurring losses,~~ has minimal revenues and requires additional financing in order to finance its business activities on an ongoing basis. The Company is actively pursuing alternative financing and has had discussions with various third parties, although no firm commitments have been obtained. In the interim, shareholders of the Company have committed to meeting its operating expenses. Management believes that actions presently being taken to revise the Company’s operating and financial requirements provide them with the opportunity to continue as a “going concern”.

These financial statements do not reflect adjustments that would be necessary if the Company were unable to continue as a “going concern”. While management believes that the actions already taken or planned, will mitigate the adverse conditions and events which raise doubt about the validity of the “going concern” assumption used in preparing these financial statements, there can be no assurance that these actions will be successful.

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		Table of Content
	PEGASUS TEL, INC. AND SUBSIDIARY
	(A Development Stage Company)
	CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued

If the Company were unable to continue as a “going concern,” then substantial adjustments would be necessary to the carrying values of assets, the reported amounts of its liabilities, the reported revenues and expenses, and the balance sheet classifications used.

On March 21, 2012, the Company signed an acquisition agreement with Total-Invest International B.V. (sole owner of Blue Bull Ventures B.V.) to buy 100% of the outstanding stock of Blue Bull Ventures B.V. In consideration for 100% of the issued and outstanding capital stock of Blue Bull Ventures B.V. the Company issued 2,436,453 series D preferred shares. Blue Bull Ventures B.V. was created on February 1, 2012 and at the date of acquisition the only asset was approximately $23,700 (€18.250) in a bank account.

For accounting purposes, the shares exchange has been treated as a reverse merger since the acquired entitiy now forms the basis for operations and the transaction resulted in a change of control. Accordingly, a new reporting entity was created and Blue Bull Ventures B.V. is treated as the successor issuer for reporting purposes. The accompanying financial statements have been prepared to reflect the assets, liabilities and operations of Blue Bull Ventures and Pegasus Tel, Inc. For equity purposes, the shares issued to acquire Blue Bull Ventures (2,436,453 series D preferred shares) have been shown to be issued and outstanding since inception, with the previous outstanding (3,510,496,677 common shares and 1,000,000 series C preferred shares) treated as a new issuance as of the date of the merger. The additional paid-in capital and retained deficit shown are those of the new reporting entity.

Organization and Basis of Presentation

On February 19, 2002, Pegasus Tel, Inc., a Delaware company, was formed as a wholly owned subsidiary of American Industries.

On March 28, 2002, American Industries, Inc. and Pegasus Tel, Inc. entered into an agreement with Pegasus Communications, Inc., a New York corporation, to acquire 100% of the outstanding shares of Pegasus Communications, Inc. in exchange for 72,721,966 shares of common stock of American Industries, Inc. Pegasus Tel, Inc. continued as the surviving corporation and Pegasus Communications, Inc. was merged out of existence.

On March ~~12,~~21, 2012 the Company consummated an acquisition agreement to purchase 100% of the outstanding shares of Blue Bull Ventures B.V. for the issuance of 2,436,453 shares of preferred stock series D (referenced in note 12).

The Company is in the development stage, and has not commenced planned principal operations. The Company has a December 31 year end.

Nature of Business

The Company is a merchant banking firm working through its wholly owned subsidiary Blue-Bull Ventures BV, a Dutch company operating from Amsterdam, the Netherlands, with entrepreneurs, corporations and professional investors to deliver exceptional merger advisory, financings, valuation and consulting services to small-market public and private technology and business services companies and family-owned businesses. The Company ~~is primarily in the business of providing the use of outdoor payphones,~~strives to provide their clients with advise with frank insight into their businesses and providing telecommunication services. In addition to the principal operations, the Company plans to expand operations through its acquired subsidiary Blue Bull Ventures B.V. (reference note 12). The Company intends to engage in global investment banking, business consulting and business development business.unbiased advice on growth opportunities.

Principles of Consolidation

The consolidated financial statements include the accounts of Pegasus Tel, Inc. and its wholly-owned subsidiary Blue Bull Ventures B.V., a Dutch corporation, that was acquired on March 21, 2012. All significant intercompany accounts and transactions have been eliminated.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of 90 days or less to be cash equivalents to the extent the funds are not being held for investment purposes.

Revenue Recognition

The Company derives its primary revenue from the sources described below, which includes Dial Around revenues, coin collections, telephone equipment repairs, and sales. Other revenue generated by the company includes sales commissions.

Coin revenues are recorded in an equal amount to the coins collected. Revenues on commissions and telephone equipment and sales are realized on the date when the telephone repair services are provided or the telecommunication supplies are received by the customer. Dial Around revenues are earned when a customer uses the Company’s payphone to gain access to a different long distance carrier than is already programmed into the phone. The Dial Around revenue is recognized when the billing and collection agent of the Company, APCC, calculates and compensates the Company for the use of the payphone on a quarterly basis by billing the actual party’s long distance carrier that received the calls. The date of the Dial Around revenue recognition is determined when this compensation is collected and deposited into the Company’s bank account.

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		Table of Content
	PEGASUS TEL, INC. AND SUBSIDIARY
	(A Development Stage Company)
	CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued

The Company recognizes revenues in accordance with the Securities and Exchange Commission Staff Accounting Bulletin (SAB) number 104, "Revenue Recognition." SAB 104 clarifies application of U. S. generally accepted accounting principles to revenue transactions. The Company recognizes revenue when the earnings process is complete. That is, when the arrangements of the goods are documented, the pricing becomes final and collectability is reasonably assured. An allowance for bad debt is provided based on estimated losses. For revenue received in advance for goods, the Company records a current liability classified as either deferred revenue or customer deposits. As of ~~March 31,~~June 30, 2012, there was no deferred revenue.

Allowance for Doubtful Accounts

The Company recognizes an allowance for doubtful accounts to ensure accounts receivable are not overstated due to un-collectability. Bad debt reserves are maintained for all customers based on a variety of factors, including the length of time the receivables are past due, significant one-time events and historical experience. An additional reserve for individual accounts is recorded when the Company becomes aware of a customer’s inability to meet its financial obligation, such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial position. If circumstances related to customers change, estimates of the recoverability of receivables would be further adjusted. As of ~~March 31,~~June 30, 2012, the Company has determined an allowance for doubtful accounts is not necessary.

Concentration of Credit Risk

The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company had cash and cash equivalents of ~~$25,341 and $289~~$(1,097) as of ~~March 31, 2012 and December 31, 2011.~~June 30, 2012. Total cash at ~~March 31,~~June 30, 2012 includes ~~$24,136~~a cash deficit of ~~cash~~$(2,374) held by Blue Bull Ventures B.V., the Company’s 100% owned subsidiary.

Accounts Receivable

Accounts Receivable consists of Local Service revenue and Commission Revenue. ~~The Accounts Receivable was $135 and $387 as~~As of ~~March 31,~~June 30, 2012, ~~and December 31, 2011 respectively.~~the Company has determined there is no accounts receivable.

Pervasiveness of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles required management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign Currency Translation

The Company considers the EURO (“€”) to be its functional currency for its wholly owned subsidiary Blue Bull Ventures BV. Assets were translated into US dollars (“US$”) as of March 21, 2012, the date of acquisition exchange rate of €1.00 to US$ 1.3225 and as of April 27, 2012, the date of acquisition of the 19.9% interest in Dailyal BV exchange rate of €1.00 to US$ 1.3229 (see note 14). At the end of the June 30, 2012 quarter the translation of the Blue Bull Ventures B.V. results are done at an exchange rate of €1.00 to US$1.2671.

Loss per Share

Basic loss per share has been computed by dividing the loss for the period applicable to the common stockholders’ by the weighted average number of common shares outstanding during the period.

~~Financial Instruments~~

The Company’s financial assets and liabilities consist of cash, accounts receivable, and accounts payable. Except as otherwise noted, it is management’s opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The fair values of these financial instruments approximate their carrying values due to the short-term maturities of these instruments.

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		Table of Content
	PEGASUS TEL, INC. AND SUBSIDIARY
	(A Development Stage Company)
	CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued

Financial Instruments

Income Taxes

The Company accounts for income taxes under the provisions of ASC 740 (formerly SFAS No. 109, “Accounting for Income Taxes”). ASC 740 requires recognition of deferred income tax assets and liabilities for the expected future income tax consequences, based on enacted tax laws, of temporary differences between the financial reporting and tax bases of assets and liabilities.

Recent Accounting Standards

In December 2011, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820) – Improving Disclosures about Fair Value Measurements. This ASU affects all entities that are required to make disclosures about recurring and nonrecurring fair value measurements under FASB ASC Topic 820, originally issued as FASB Statement No. 157, Fair Value ~~Measurements~~.Measurements. The ASU requires certain new disclosures and clarifies two existing disclosure requirements. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years.

In January 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2011-01 (ASU 2011-01) Receivables (Topic 310): Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20. ASU 2011-01 temporarily delay the effective date of the disclosures about troubled debt restructurings. The effective date of the new disclosures about troubled debt restructurings for public entities and the guidance for determining what constitutes a troubled debt restructuring will then be coordinated. Currently, the guidance is anticipated to be effective for interim and annual period ending after June 15, 2011. The Company does not expect the provisions of ASU 2011-01 to have a material effect on its financial position, results of operations or cash flows.

NOTE 2 - INCOME TAXES

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net deferred tax assets consist of the following components as of December 31, 2011 and 2010:

	2011			2010
Net Operating Losses	$	114,700		$	88,740
Valuation Allowance		(114,700	)		(88,740	)
	$	-		$	-

		Table of Content
	PEGASUS TEL, INC. AND SUBSIDIARY
	(A Development Stage Company)
	CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

NOTE 2 - INCOME TAXES Continued

The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the period ended December 31, 2011 and 2010 due to the following:

	2011			2010
Book Income	$	(6,551,659	)	$	(16,660	)
Other nondeductible expenses		6,525,659			-
Valuation Allowance		26,000			16,660
	$	-		$	-

At December 31, 2011, the Company had net operating loss carryforwards of approximately $337,000 that may be offset against future taxable income from the year 2012 to 2031. No tax benefit has been reported in the December 31, 2011 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal Income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years.

NOTE 3- DEVELOPMENT STAGE COMPANY

The Company has not begun principal operations and as is common with a development stage company, the Company will have recurring losses during its development stage. The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other material assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. In the interim, shareholders of the Company have committed to meeting its minimal operating expenses.

NOTE 4 – UNCERTAIN TAX POSITIONS

Effective January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The adoption of the provisions of FIN 48 did not have a material impact on the company’s financial position and results of operations. At January 1, 2011, the company had no liability for unrecognized tax benefits and no accrual for the payment of related interest.

Interest costs related to unrecognized tax benefits are classified as “Interest expense, net” in the accompanying statements of operations. Penalties, if any, would be recognized as a component of “Selling, general and administrative expenses”. The Company recognized $0 of interest expense related to unrecognized tax benefits during 2011 and 2010. In many cases the company’s uncertain tax positions are related to tax years that remain subject to examination by relevant tax authorities.

With few exceptions, the company is generally no longer subject to U.S. federal, state, local or non-U.S. income tax examinations by tax authorities for years before 2007. The following describes the open tax years, by major tax jurisdiction, as of January 1, 2011:

~~United States (a)~~

~~2007– Present~~

United States (a) 2007– Present

(a) Includes federal as well as state or similar local jurisdictions, as applicable.

~~NOTE 5 - COMMITMENTS~~

As of March 31, 2012, all activities of the Company have been conducted by corporate officers from either their homes or business offices. Currently, there are no outstanding debts owed by the company for the use of these facilities and there are no commitments for future use of the facilities.

		Table of Content
	PEGASUS TEL, INC. AND SUBSIDIARY
	(A Development Stage Company)
	CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

NOTE 65 - ~~COMMON STOCK TRANSACTIONS~~COMMITMENTS

~~On December 31, 2003, the Company issued 1,000 shares of common stock in exchange for cash valued at $1,000.~~

~~On September 21, 2006, the Company filed an Amended Certificate~~As of Incorporation and the par value of the common stock was changed to $0.0001 per share. This change is retro-active and therefore changes the 1,000 share of Common Stock issued on December 31, 2003 to the par value of $0.0001 per share.

On May 15, 2007, the Company filed an Amended Certificate of Incorporation and there was forward stock split 5,100 to 1. This change is retro-active and therefore changes the 1,000 shares of Common Stock issued on December 31, 2003 to 5,100,000 shares of Common Stock. The par value remains at $ .0001 per share.

~~On August 18, 2008, Sino Gas International Holdings, Inc., a Utah corporation (“Sino”) (OTCBB: SGAS), consummated a distribution of shares~~June 30, 2012, all activities of the Company ~~a then wholly-owned subsidiary~~have been conducted by corporate officers from either their homes or business offices. Currently, there are no outstanding debts owed by the company for the use of ~~Sino to Sino’s stockholders of record as of August 15, 2008. The Ratio of Distribution was one (1) share of common stock of Pegasus~~these facilities and there are no commitments for every twelve (12) shares of common stock of Sino (1:12). Fractional shares were rounded up to the nearest whole-number. An aggregate of 2,215,136 shares of Pegasus common stock were issued to an aggregate of 167 Sino stockholders. The distributed shares of Pegasus common stock are “restricted securities” (as defined in Rule 144future use of the Securities Act of 1933, as amended (the “Securities Act”)), and were issued pursuant to Section 4(2) of the Securities Act due to the fact that the distribution did not involve a public offering of securities. Sino cancelled all the Pegasus Common Stock not distributed to the shareholders. The amount cancelled was 2,884,864 shares of Common Stock.facilities.

On March 23, 2009, Pegasus filed a Form 15 (File No. 000-52628) with the Securities and Exchange Commission pursuant to which the Company de-registered its class of Common Stock under the Securities Exchange Act of 1934, as amended.

On October 15, 2009, the Company filed a Form S-1 Registration Statement with the Securities and Exchange Commission to register the Common Stock under the Securities Exchange Act of 1934, as amended, and on December 28, 2009 the Company’s Registration Statement went effective.

On July 21, 2010 John F. Passalaqua resigned as Director and Secretary of Pegasus Tel and Joseph C. Passalaqua was appointed as Director and Secretary. A stock purchase agreement was filed stating that Joseph C. Passalaqua purchased 2,702,386 shares of Pegasus Tel. common stock from John F. Passalaqua for $20,000.

On March 30, 2011, the members of the board of directors (the “Board”) of Pegasus Tel, Inc. (the “Company”) approved by unanimous written consent, and the stockholders of the Company holding a majority in interest of the Company’s voting equity, approved by written consent, the appointment of Mr. Anthony DiBiase as Chief Executive Officer and as a member of the Board, effective as of March 30, 2011. Also on that date of March 30, 2011, Pegasus Tel, Inc. (the “Company”), entered into a Common Stock Purchase Agreement (the “Agreement”) with two shareholders (collectively, the “Majority Shareholders”) who together hold a majority of the issued and outstanding shares of the Company’s common stock immediately prior to the consummation of the Sale (as defined herein), and a subscriber for shares of the Company’s common stock (the “Buyer”). Subject to certain conditions set forth in the Agreement, when the Company has received payment in full of $390,000, the Company will issue, and the Buyer shall receive, 79,784,864 shares of the Company’s common stock, par value $.0001 per share (the “Shares”), which, at the time of issuance, will constitute 79.78% of the issued and outstanding shares of the Company’s common stock. Pursuant to the Agreement, and upon final payment of the purchase price, the Majority Shareholders shall also receive such number of shares of common stock of the Company as shall constitute 9.9% of the issued and outstanding shares of common stock of the Company on a fully diluted basis. On November 23, 2011, this agreement was terminated. No shares were issued.

On April 4, 2011, Flash Funding, Inc. entered into a Debt Purchase Agreement to purchase $184,623 of debt held in promissory notes in Pegasus Tel. that are owed to Cobalt Blue LLC, Joseph Passalaqua, and Mary Passalaqua for $58,000 to the related parties.

		~~Table of Content~~
	~~PEGASUS TEL, INC. AND SUBSIDIARY~~
	(~~A Development Stage Company)~~
	~~CONSOLIDATEDNOTES TO FINANCIAL STATEMENTS~~

NOTE 6 - ~~COMMON~~ STOCK TRANSACTIONS ~~Continued~~

~~On April 6, 2011, 8,000,000 shares were issued to the Company’s president for services valued at market which was $.08 per share, resulting in expense of $640,000.~~

On April 6, 2011, Flash Funding, Inc. converted $25,000 of the debt purchased as outlined in the Debt Purchase Agreement into 2,000,000 shares of Pegasus Tel. Common stock. The market price of the stock was $.08 which resulted in a finance charge of $135,000.

On May 2, 2011, Flash Funding, Inc. converted $2,000 of the debt purchased as outlined in the Debt Purchase Agreement into 2,000,000 shares of Pegasus Tel. Common Stock. The market price of the stock was $.07 on that day resulting in a finance charge of $138,000.

~~On June 8, 2011, 2,000,000 shares were issued to convert debt of $2,000. The market price on that day for the stock closed at $.008 resulting in a $14,000 finance fee.~~

~~On June 10, 2011 40,000,000 shares were issued to the Company’s president for services valued at market of $.006 per share, resulting in expense of $240,000.~~

~~On June 23, 2011, 5,000,000 shares were issued resulting in debt reduction of $5,000. The closing price of the stock that day was $.0088 which resulted in a finance cost of $39,000.~~

On June 30, 2011, the Company increased its authority to issue 20,000,000,000 shares. Total common shares authorized increased to 19,990,000,000 shares at $.0001 par value and total preferred stock authorized remained at 10,000,000 shares at $.0001 par value.

On July 12, 2011, 200,000,000 shares were issued to Flash Funding Inc. for the debt reduction of $100,000 in convertible notes payable. The closing price of the stock that day was $0.007 which resulted in a finance expense of $1,300,000.

~~On July 14, 2011, 2,400,000,000 shares were issued to Anthony Dibiase for services valued at market of $.0069 per share, resulting in an expense of $16,560,000.~~

On September 22, 2011, 200,000,000 shares were issued to Flash Funding Inc. for the debt reduction of $10,000 in convertible notes payable. The closing price of the stock that day was $0.00025 which resulted in a finance cost of $40,000.

~~On September 29, 2011, 131,281,541 shares were issued to Belmont Partners LTD, for consulting services valued at market of $.0003 per share, resulting in an expense of $39,384.~~

On October 20, 2011, 200,000,000 shares were issued to Flash Funding Inc. for the reduction of $10,000 in notes payable. The closing price of the stock that day was $0.00025 which resulted in a finance cost of $40,000.

On November 16, 2011, 300,000,000 shares were issued to Flash Funding Inc. for $150,000, as part of a stock purchase agreement. As of December 31, 2011, a stock subscription receivable of $150,000 has been recorded. On February 24, 2012, a stop order has been place by the Company on these shares because they have not been paid for.

~~Additional Disclosure~~During the period from February 1, 2012 to June 30, 2012, the Company had the following issuances of stock:

The previous period (7/1/11-9/30/11) Notes to Financial Statements noted, “On July 28, 2011 200,000,000 shares were issued to Flash Funding, Inc. to settle the $76,750 note payable to Spire. The fair market value of the stock at issuance is $.0059 per share, resulting in a finance expense of $1,180,000.” The Spire note payable was acquired as part of the Encounter Technologies, Inc. purchase agreement. That agreement was rescinded on March 21, 2012. These shares have been rescinded and the corresponding entries have been reversed. (See Note 11).

		~~Table of Content~~
	~~PEGASUS TEL, INC. AND SUBSIDIARY~~
	(~~A Development Stage Company)~~
	~~CONSOLIDATED~~ N~~OTES TO FINANCIAL STATEMENTS~~

~~NOTE 7 - PREFERRED STOCK TRANSACTIONS~~

On August 5, 2008, Pegasus filed a Certificate of Designations, Powers, Preferences and Rights (the “Certificate of Designation”) with the Secretary of State of the State of Delaware thereby designating 2,000,000 shares of preferred stock as Series A Convertible Preferred Stock, $0.0001 (the “Series A Preferred Stock”). The Certificate of Incorporation of Pegasus authorizes the designation and issuance of an aggregate of ten million (10,000,000) shares of preferred stock in one or more series with all rights and privileges determined by the Board of Directors of Pegasus. Prior to the filing of the Certificate of Designation, there were no shares of preferred stock designated or issued. Pursuant to the Certificate of Designation, a copy of which is filed as an exhibit hereto, each share of Series A Preferred Stock may be converted at any time by Pegasus or the holders thereof into ten (10) fully-paid and non-assessable shares of Pegasus Common Stock.

On August 15, 2008, Pegasus issued an aggregate of 1,800,000 shares of Series A Preferred Stock to an aggregate of 17 individuals pursuant to a Securities Purchase Agreement for $0.0001 per share of Series A Preferred Stock. Pegasus issued the Series A Preferred Stock pursuant to Section 4(2) of the Securities Act due to the fact that it did not involve a public offering of securities. The shares of Series A Preferred Stock are “restricted securities” (as such term is defined in Rule 144 of the Securities Act.

On August 18, 2008 and pursuant to the Series A Preferred Stock Certificate of Designation and Securities Purchase Agreement, Pegasus converted an aggregate of 1,800,000 shares of Series A Preferred Stock into an aggregate of 18,000,000 shares of Pegasus common stock. Pegasus issued the common stock pursuant to Section 4(2) of Securities Act due to the fact that it did not involve a public offering of securities. The shares of common stock are “restricted securities.”

On June 13, 2011 the Company amended its certificate of designation for preferred shares and created out of the 10,000,000 shares authorized 7,000,000 shares designated as “preferred B” and 1,000,000 as “preferred C” with a par value of $0.0001.

~~The preferred B shares have a conversion feature rate of 1:1,711.156.~~

~~The series C preferred stock has voting rights of 350 times that number of votes on all matters submitted to shareholders and can be converted into 10 times the amount of common shares.~~

On March 12, 2012, the Company issued an aggregate of 1,000,000 shares of Series C Preferred Stock to Total-Invest B.V. a Dutch limited liability company located in Amsterdam in the Netherlands pursuant to a Securities Purchase Agreement for $0.0001 per share of Series C Preferred Stock which are convertible to 10 common shares for each Series C Preferred Stock outstanding. The shares were sold for $1,000.

On March 21, 2012, the Company signed an acquisition agreement with Total-Invest International B.V. (sole owner of Blue Bull Ventures B.V.) to buy 100% of the outstanding stock of Blue Bull Ventures B.V. In consideration for 100% of the issued and outstanding capital stock of Blue Bull Ventures B.V. the Company issued 2,436,453 series D preferred shares which are convertible to 20,000 common shares for each Series D Preferred Stock outstanding. Blue Bull Ventures B.V. was created on February 1, 2012 and at the date of acquisition the only asset was approximately $23,700 in a bank account.

~~Additional Disclosure~~

Prior to executing the reverse merger, the Company issued an aggregate of 1,000,000 shares of Series C Preferred Stock to Total-Invest B.V. a Dutch limited liability company located in Amsterdam in the Netherlands pursuant to a Securities Purchase Agreement for $0.0001 per share of Series C Preferred Stock which are convertible to 10 common shares for each Series C Preferred Stock outstanding. The shares were sold for $1,000. These shares have been treated as shares issued as of the merger date since Blue Bull Ventures is the surviving company for reporting purposes.

Prior to executing the reverse merger, the Company 3,510,496,677 shares of common stock issued and outstanding. These shares have been treated as shares issued as of the merger date since Blue Bull Ventures is the surviving company for reporting purposes. On March 21, 2012, the Company issued 3,510,496,677 shares of common stock to the previous shareholders of Pegasus Tel, Inc.

As of June 30, 2012, the company had a stock subscription receivable for $150,000. Prior to the executing the reverse merger, the Compay had issued 300,000,000 for $150,000 as part of a stock purchase agreement. These shares are included in the 3,510,496,677 total shares outstanding. On February 24, 2012, a stop order was placed by the Company on these shares because they have not been paid for.

The ~~previous period (7/1/11-9/30/11) Notes~~series C preferred stock has voting rights of 350 times that number of votes on all matters submitted to ~~Financial Statements noted, “On June 6, 2011~~shareholders and can be converted into 10 times the amount of common shares.

On April 9, 2012, the Company ~~acquired certain assets~~canceled the Amendment to Article IV of its Certificate of Incorporation, titled Article IV-A, which declared a 4% forward stock split of its outstanding shares as of September 28, 2011.

On May 9, 2012, the Company filed a Schedule 14A with the Securities and ~~liabilities~~Exchange Commission requesting a Special Meeting of ~~Encounter Technologies,~~the Shareholders to take place on June 11, 2012 to amend the Certificate of Incorporation to reflect a change of name to Blue Bull Ventures, Inc. ~~for 6,995,206~~, to effect a 20,000 to 1 reverse split of all outstanding shares and a reduction of ~~series B preferred stock. The total assumed liabilities were $321,250.” The agreement was rescinded on March 21, 2012. These preferred~~the authorized common shares ~~have been rescinded and canceled. (See Note 11).~~
from 19,990,000,000 to 90,000,000.

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		Table of Content
	PEGASUS TEL, INC. AND SUBSIDIARY
	(A Development Stage Company)
	CONSOLIDATEDNOTES TO FINANCIAL STATEMENTS

NOTE 87 – ACCOUNTS PAYABLE- RELATED PARTY

The Company had a related party accounts payable balance as of ~~March 31,~~June 30, 2012 ~~and December 31, 2011~~ in the amount of ~~$15,766 and~~ $15,766. The balances are comprised of $15,542 due to Lyboldt-Daly, Inc. for bookkeeping expenses and $224 due to shareholder advances.

NOTE 98 –NOTES PAYABLE

	March 31, 2012		December 31, 2011		June 30, 2012

Note Payable- Flash Funding, Inc.		30,623		30,623		30,623
Note Payable- Cobalt Blue LLC		18,762		15,912		19,861
Accrued interest		46,920		46,162		47,978

	$	96,305	$	92,697	$	98,282

On May 13, 2011, Cobalt Blue LLC advanced the Company $15,912. This note is accruing simple interest at 18% per annum and is payable in full on demand. ~~As of March 31, 2012, the Company owed a total principal balance of $15,912 related to this note and has accrued $2,523 in simple interest.~~

On February 29, 2012, Cobalt Blue LLC advanced the Company $2,850. This note is accruing simple interest at 18% per annum and is payable in full on demand.

On April 3, 2012, Cobalt Blue LLC advanced the Company $835. This note is accruing simple interest at 18% per annum and is payable in full on demand.

On June 21, 2012, Cobalt Blue LLC advanced the Company $264. This note is accruing simple interest at 18% per annum and is payable in full on demand.

As of ~~March 31,~~June 30, 2012, the Company owed a total principal balance of ~~$2,850~~$19,861 related to ~~this note~~these notes and has accrued ~~$44~~$3,445 in simple interest.

Note Payable- Flash Funding, Inc.

On April 4, 2011 Flash Funding, Inc. entered into a Debt Purchase Agreement to purchase $184,623 of debt held in promissory notes in Pegasus Tel. that are owed to Cobalt Blue LLC, Joseph Passalaqua, and Mary Passalaqua. The acquired note has an annual simple interest rate of 18%, payable on demand.

On April 6, 2011 Flash Funding, Inc. converted $25,000 of the debt purchased into 2,000,000 shares of common stock.

On May 2, 2011 Flash Funding, Inc. converted $2,000 of the debt purchased into 2,000,000 shares of common stock.

On June 8, 2011 Flash Funding, Inc. converted $2,000 of the debt purchased into 2,000,000 shares of common stock.

On June 23, 2011 Flash Funding, Inc. converted $5,000 of the debt purchased into 5,000,000 shares of common stock.

On July 12, 2011 200,000,000 shares were issued to Flash Funding Inc. for the debt reduction of $100,000.

On September 22, 2011 200,000,000 shares were issued to Flash Funding Inc. for the debt reduction of $10,000.

On October 20, 2011 200,000,000 shares were issued to Flash Funding Inc. for the reduction of $10,000.

At ~~March 31,~~June 30, 2012 ~~and December 31, 2011,~~, $30,623 was due on this note.

Note Payable- Dubarry by Blue Bull Ventures BV

On April 1, 2012, Blue Bull Venture, BV signed a one year 8% interest note with Mr. Dubarry.

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		Table of Content
	PEGASUS TEL, INC. AND SUBSIDIARY
	(A Development Stage Company)
	CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

~~NOTE 10 – SPIN OFF~~

As reported by Pegasus Tel, Inc., Delaware corporation (“Pegasus”), on Form 8-K (File No. 000-5268) filed with the Securities and Exchange Commission on August 27, 2008, on August 18, 2008, Sino Gas International Holdings, Inc., a Utah corporation (“Sino”) (OTCBB: SGAS), declared a dividend and issued shares of Pegasus to Sino’s stockholders of record as of August 15, 2008 (“Spin-off”). The ratio of distribution of the Pegasus shares was one (1) share of common stock of Pegasus for every twelve (12) shares of common stock of Sino (1:12). Fractional shares were rounded up to the nearest whole-number. An aggregate of 2,215,136 shares of Pegasus common stock were issued to an aggregate of 167 Sino stockholders. The Pegasus common stock issued in distribution are “restricted securities” (as defined in Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”)), and were issued pursuant to Section 4(2) of the Securities Act due to the fact that the distribution did not involve a public offering.

On August 5, 2008, Pegasus filed a Certificate of Designations, Powers, Preferences and Rights (the “Certificate of Designation”) with the Secretary of State of the State of Delaware thereby designating 2,000,000 shares of preferred stock as Series A Convertible Preferred Stock, $0.0001 (the “Series A Preferred Stock”). The Certificate of Incorporation of Pegasus authorizes the designation and issuance of an aggregate of ten million (10,000,000) shares of preferred stock in one or more series with all rights and privileges determined by the Board of Directors of Pegasus and without stockholder approval. Prior to the filing of the Certificate of Designation, there were no shares of preferred stock designated or issued. Pursuant to the Certificate of Designation, each share of Series A Preferred Stock may be converted at any time by Pegasus or the holders thereof into ten (10) fully-paid and non-assessable shares of Pegasus Common Stock.

On August 15, 2008, Pegasus issued an aggregate of 1,800,000 shares of Series A Preferred Stock to an aggregate of 17 individuals pursuant to a Securities Purchase Agreement for $0.0001per share of Series A Preferred Stock. Pegasus issued the Series A Preferred Stock pursuant to Section 4(2) of the Securities Act due to the fact that it did not involve a public offering of securities. The shares of Series A Preferred Stock were restricted securities.

On August 18, 2008, and pursuant to the Certificate of Designation, Pegasus converted an aggregate of 1,800,000 shares of Series A Preferred Stock into an aggregate of 18,000,000 shares of Pegasus common stock. Pegasus issued the common stock pursuant to Section 4(2) of Securities Act due to the fact that it did not involve a public offering of securities. The shares of common stock are restricted securities.

NOTE ~~11 -~~9 – RESCINDED PURCHASE AGREEMENT

On March 21, 2012 the Company and Encounter Technologies, Inc. signed a rescission agreement which canceled their previous purchase agreement entered into on June 6, 2011 (amended on July 14, 2011). All consideration relating to the agreement has been returned to the original parties resulting in both parties being in the same position prior to the agreement. This includes the cancelation and rescission of 6,995,206 shares of preferred stock series B. The Company reversed all Encounter Technologies, Inc. assets and liabilities which were included in the previous interim period financial statements.

NOTE 1210 - ACQUISITION AGREEMENT

		~~Table of Content~~
	~~PEGASUS TEL, INC. AND SUBSIDIARY~~
	(~~A Development Stage Company)~~
	~~CONSOLIDATEDNOTES TO FINANCIAL STATEMENTS~~

NOTE 1311 - CHANGE OF CONTROL

A change of control of the Company occurred on March 12, 2012 when Total-Invest acquired from Mr. Joseph C. Passalaqua, the former majority stockholder of the Company, 2,448,000,000 restricted shares of common stock for future services, par value $0.0001 per share of the Company that Mr. Passalaqua acquired from Mr. Anthony Dibiase on March 8, 2012. Mr. Passalaqua acquired the shares from Mr. Dibiase as part of a “Release Agreement” dated March 8, 2012 between Mr. Passalaqua and Mr. Dibiase, whereby the 2,448,000,000 shares issued to Mr. Dibiase during 2011 were returned to Pacific Stock Transfer Company, the escrow agent.

NOTE 1412 – ~~SUBSEQUENT EVENTS~~INVESTMENTS

On April 9, 2012, the Company canceled the Amendment to Article IV of its Certificate of Incorporation, titled Article IV-A, which declared a 4% forward stock split of its outstanding shares as of September 28, 2011.

On April 27, 2012, the Company’s subsidiary Blue Bull Ventures, B.V. acquired a 19.9% interest in Dailyal BV, a Dutch limited liability company. Blue Bull Ventures acquired the interest in Dailyal BV in return for an investment of $2,117 (€1.600), a loan of $119,061 (€90.000) and a $132,290 (€100.000) in direct investment from independent sources that Blue Bull secured for Dailyal BV. Dailyal (~~www.dailyal.nl~~)(www.dailyal.nl) is an internet platform with 13 high quality 100% natural health products (dietary supplements) that are offered under the brand name Dailyal. All these 13 products are manufactured under ISO 22000:2005 quality standard with a food safety certificate. Dailyal is targeting for the high end market. The range of Dailyal products is projected to be available online in various countries.

On ~~May 9,~~July 24, 2012, the Company filed a Schedule 14A with the Securities and Exchange Commission requesting a Special Meeting of the Shareholders to take place on June 11, 2012 to amend the Certificate of Incorporation to reflect a change of name toCompany’s subsidiary Blue Bull Ventures, ~~Inc.,~~B.V. acquired a 19.8% interest in Kingstart International BV, a Dutch limited liability company. Blue Bull Ventures acquired the interest in Dailyal BV in return for a future line of credit to ~~effect a 20,000~~enable Kingstart to ~~1 reverse split of all outstanding shares and a reduction of the authorized common shares from 19,990,000,000~~sell to ~~90,000,000.~~its products through Groupon.

FORWARD LOOKING INFORMATION

This section and other parts of this Form 10-Q quarterly report includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, that involves risks and uncertainties. All statements other than statements of historical facts, included in this Form 10-Q that address activities, events, or developments that we expect or anticipate will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strength, goals, expansion and growth of our business and operations, plans, references to future success, reference to intentions as to future matters, and other such matters are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors that we believe are appropriate in the circumstances. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks, uncertainties, and other factors, many of which are beyond our control.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, we do not assume responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this report to conform such statements to actual results.

BASIS OF PRESENTATION

The unaudited financial statements of Pegasus Tel, Inc., a Delaware corporation (“Pegasus”, “Pegasus Tel.”, “the Company”, “our”, or “we”) for the three months ended ~~March 31,~~June 30, 2012, should be read in conjunction with the notes thereto. In the opinion of management, the unaudited financial statements presented herein reflect all adjustments (consisting only of normal recurring adjustments) necessary for fair presentation. Interim results are not necessarily indicative of results to be expected for the entire year.

We prepare our financial statements in accordance with U.S. generally accepted accounting principals, which require that management make estimates and assumptions that affect reported amounts. Actual results could differ from these estimates.

Certain statements contained below are forward-looking statements (rather than historical facts) that are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

DESCRIPTION OF BUSINESS

The Company was incorporated under the laws of the State of Delaware on February 19, 2002 to enter into the telecommunication business. On March 21, 2012, the Company changed its direction when it acquired in a reverse merger Blue Bull Ventures B.V., a Dutch limited liability company that provides venture capital from European private equity and institutional investors as well as advisory and management resources to emerging companies throughout the world, primarily in Europe, including providing financial advice and resources on mergers, acquisitions, restructuring, financing and capital raising from Total-Invest for 2,436,453 Series D Preferred Stock of the Company.

On March 28, 2002, American Industries, Inc. and the Company entered into an agreement with Pegasus Communications, Inc., a New York corporation, to acquire 100% of the outstanding shares of Pegasus Communications, Inc. in exchange for 72,721,966 shares of common stock of American Industries, Inc. The Company continued as the surviving corporation and Pegasus Communications, Inc. was merged out of existence.

On September 21, 2006, the Company filed Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware increasing its authorized capital to 110,000,000 shares, of which 100,000,000 shares were designated as Common Stock, par value $0.0001 per share, and the remaining 10,000,000 as Preferred Stock, par value $0.0001 per share. The designations and the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption of such shares shall be determined by the Board of Directors from time to time, without stockholder approval.

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On May 7, 2007, the Company filed a Registration Statement on Form 10-SB (File No.: 0-52628), or the Registration Statement, with the U.S. Securities and Exchange Commission (the "SEC") to register the Company's common stock under Section 12(g) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Registration Statement went effective on July 6, 2007 through the operation of law 60 days after its initial filing. On March 23, 2009, we filed with the SEC a Form 15 to deregister our common stock under Section 12(g) of the Exchange Act and to terminate our status as a reporting company under the Exchange Act.

On May 15, 2007, the Company filed an Amended Certificate of Incorporation with the Secretary of State of the State of Delaware to effectuate a forward stock split 5,100 to 1. This change is retro-active and therefore changes the 1,000 shares of common stock issued on December 31, 2003 to 5,100,000 shares of common stock. The par value remained at $.0001 per share.

On August 5, 2008, the Company filed a Certificate of Designations, Powers, Preferences and Rights (the “August 2008 Certificate of Designation”) with the Secretary of State of the State of Delaware thereby designating 2,000,000 shares of preferred stock as Series A Convertible Preferred Stock, $0.0001 (the “Series A Preferred Stock”). The Certificate of Incorporation of the Company authorizes the designation and issuance of an aggregate of ten million (10,000,000) shares of preferred stock in one or more series with all rights and privileges determined by the Board of Directors of the Company. Prior to the filing of the August 2008 Certificate of Designation, there were no shares of preferred stock designated or issued. Pursuant to the Certificate of Designation, each share of Series A Preferred Stock may be converted at any time by the Company or the holders thereof into ten (10) fully-paid and non-assessable shares of the Company's Common Stock.

On August 15, 2008, the Company issued an aggregate of 1,800,000 shares of Series A Preferred Stock to an aggregate of 17 individuals pursuant to a Securities Purchase Agreement for $0.0001per share of Series A Preferred Stock. The Company issued the Series A Preferred Stock pursuant to an exemption under Section 4(2) of the Securities Act due to the fact that it did not involve a public offering of securities. The shares of Series A Preferred Stock were “restricted securities” (as such term is defined in the Securities Act).

On August 18, 2008, Sino Gas International Holdings, Inc., a Utah corporation, or Sino, (OTCBB: SGAS), our former parent company, distributed to its stockholders of record as of August 15, 2008, 100% of the issued and outstanding common stock of Pegasus. The ratio of distribution was one (1) share of common stock of our Company for every twelve (12) shares of common stock of Sino (1:12). Fractional shares were rounded up to the nearest whole-number. An aggregate of 2,215,136 shares of our Company's common stock were issued pursuant to the distribution to an aggregate of 167 Sino stockholders. The Company's common stock issued were and remain “restricted securities” (as defined in Rule 144 of the Securities Act of 1933, as amended).

On August 18, 2008 and pursuant to the August 2008 Certificate of Designation, the Company converted an aggregate of 1,800,000 shares of Series A Preferred Stock into an aggregate of 18,000,000 shares of the Company's common stock. The Company issued the common stock pursuant to Section 3(a)(9) of the Securities Act due to the fact that the securities were exchanged upon conversion of the Series A Preferred Stock held by existing security holders and there was no commission or other remuneration paid or given directly or indirectly for soliciting such exchange.

On March 23, 2009, the Company filed a Form 15 (File No. 000-52628) with the SEC pursuant to which the Company de-registered its class of Common Stock under the Securities Exchange Act of 1934, as amended.

On October 15, 2009, the Company filed a Form S-1 Registration Statement with the SEC and on December 28, 2009 the Company’s Registration Statement went effective.

On February 8, 2011, the Company signed and filed on February 10, 2011 a Certificate of Designations, Powers, Preferences and Rights (the “February 2011 Certificate of Designation”) with the Secretary of State of the State of Delaware thereby cancelled the 2,000,000 Series A Preferred Stock and designated 10,000,000 shares of preferred stock as Series B Convertible Preferred Stock, $0.0001 (the “Series B Preferred Stock”). The Certificate of Incorporation of the Company authorizes the designation and issuance of an aggregate of ten million (10,000,000) shares of preferred stock in one or more series with all rights and privileges determined by the Board of Directors of Pegasus. Prior to the filing of the February 2011 Certificate of Designation, there were 2,000,000 shares of preferred stock designated or issued which were herby cancelled. Pursuant to the February 2011 Certificate of Designation, each share of Series B Preferred Stock may be converted at any time by Pegasus or the holders thereof into 1.49025 post-reverse fully-paid and non-assessable shares of the Company's Common Stock.

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On June 13, 2011, the Company signed and filed an Amendment to Certificate of Designations, Powers, Preferences and Rights (the “Amended Certificate of Designation”) with the Secretary of State of the State of Delaware thereby and designating 7,000,000 shares of preferred stock as Series B Convertible Preferred Stock, $0.0001 (the “Amended Series B Preferred Stock”). The Certificate of Incorporation of the Company authorizes the designation and issuance of an aggregate of ten million (10,000,000) shares of preferred stock in one or more series with all rights and privileges determined by the Board of Directors of Pegasus. Prior to the filing of the Certificate of Designation, there were 10,000,000 shares of Series B Preferred Stock designated or issued which were herby amended. Pursuant to the Amended Certificate of Designation, each share of Amended Series B Preferred Stock may be converted at any time by Pegasus or the holders thereof into 1,711.156 post-reverse fully-paid and non-assessable shares of the Company's Common Stock.

On June 13, 2011, the Company signed and filed a Certificate of Designations, Powers, Preferences and Rights (the “ June 2011 Certificate of Designation”) with the Secretary of State of the State of Delaware thereby and designating 1,000,000 shares of preferred stock as Series C Convertible Preferred Stock, $0.0001 (the “Series C Preferred Stock”). The Certificate of Incorporation of the Company authorizes the designation and issuance of an aggregate of ten million (10,000,000) shares of preferred stock in one or more series with all rights and privileges determined by the Board of Directors of Pegasus. Prior to the filing of the Certificate of Designation, there were 7,000,000 shares of Amended Series B Preferred Stock designated or issued. Pursuant to the June 2011 Certificate of Designation, each share of Amended Series C Preferred Stock may be converted at any time by Pegasus or the holders thereof into one (1) fully-paid and non-assessable shares of the Company's Common Stock and the voting rights of three hundred fifty (350) shares.

On June 6, 2011, the Company entered into a Asset Purchas Agreement (the "Purchase Agreement") which was superseded on July 14, 2011 (the "Amended Purchase Agreement") with Encounter Technologies, Inc., a Colorado Corporation trading publicly on the Over-the-Counter under the symbol ENTI.PK ("Encounter"). Pursuant to the Amended Purchase Agreement, Pegasus acquired all of Encounter’s rights, title, and interest in and to certain assets and liabilities of Encounter relating to MusicMatrix.com (“MusicMatrix.com”) in consideration of 6,995,206 shares of the Company's Amended Series B Preferred Stock.

On June 30, 2011, the Company signed and filed an July 5, 2011 Amended Certificate of Incorporation with the Secretary of State of the State of Delaware to increase the authorized to twenty billion (20,000,000,000) of which nineteen billion nine hundred ninety million (19,990,000,000) shall be designated as common shares and ten million (10,000,000) shall be designated as preferred shares. The par value remained at $.0001 per share.

On September 26, 2011, the Company signed and filed on September 29, 2011 an Amended Certificate of Incorporation with the Secretary of State of the State of Delaware to declare a four (4%) percent forward stock split for shareholders of record on September 28, 2011. The forward split was never approved by the Financial Industry Regulatory Authority ("FINRA") and was cancelled by the Company on April 9, 2012.

On March 12, 2012, the Company signed and filed on March 15, 2012 an Amendment to Certificate of Designations, Powers, Preferences and Rights (the “March 2012 Amended Certificate of Designation”) with the Secretary of State of the State of Delaware thereby and designating 1,000,000 shares of preferred stock as Series C Convertible Preferred Stock, $0.0001 (the “Amended Series C Preferred Stock”). The Certificate of Incorporation of the Company authorizes the designation and issuance of an aggregate of ten million (10,000,000) shares of preferred stock in one or more series with all rights and privileges determined by the Board of Directors of Pegasus. Prior to the filing of the Certificate of Designation, there were 7,000,000 shares of Amended Series B Preferred Stock designated or issued and 1,000,000 shares of Series C Preferred Stock designated or issued. Pursuant to the March 2012 Amended Certificate of Designation, each share of Amended Series C Preferred Stock may be converted at any time by Pegasus or the holders thereof into one (1) fully-paid and non-assessable shares of the Company's Common Stock and the voting rights of twenty thousand (20,000) shares.

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On March 12, 2012 the Company issued an aggregate of 1,000,000 shares of Amended Series C Preferred Stock to Total-Invest International B.V., a Dutch limited liability company ("Total-Invest") pursuant to a Securities Purchase Agreement for $0.0001per share of Series C Preferred Stock. The Company issued the Series C Preferred Stock pursuant to an exemption under Section 4(2) of the Securities Act due to the fact that it did not involve a public offering of securities. The shares of Series C Preferred Stock were “restricted securities” (as such term is defined in the Securities Act).

On March 21, 2012, the Company entered into a Rescission Agreement with Encounter. The Company and Encounter canceled and rescinded the Purchase Agreement and the Amended Purchase Agreement and declared them to be null and void, ab initio, for all purposes, including, without limitation, for tax purposes. In addition the Company and Encounter agreed that the 6,995,206 shares of the Company's Amended Series B Preferred Stock issued in connection with the Amended Purchase Agreement were cancelled by the Company in accordance with Section 3 of the Amended Certificate of Designation. As a result of the rescissions and cancellations MusicMatrix.com was returned to Encounter and each party was in the same position it was in immediately prior to the consummation of the Amended Purchase Agreement.

On March 21, 2012, the Company signed and filed on March 26, 2011 in accordance with the Rescission Agreement with Encounter, a Certificate of Elimination of Designations, Powers, Preferences and Rights (the “Certificate of Elimination”) with the Secretary of State of the State of Delaware thereby eliminating the 7,000,000,000 Amended Series B Convertible Preferred Stock, The Certificate of Incorporation of the Company authorizes the designation and issuance of an aggregate of ten million (10,000,000) shares of preferred stock in one or more series with all rights and privileges determined by the Board of Directors of Pegasus. Prior to the filing of the Certificate of Elimination, there were 7,000,000 shares of Amended Series B Preferred Stock designated or issued and 1,000,000 shares of Series C Preferred Stock designated or issued.

On March 21, 2012, the Company signed and filed on March 26, 2012 a Certificate of Designations, Powers, Preferences and Rights (the “ March 2012 Certificate of Designation”) with the Secretary of State of the State of Delaware thereby and designating 3,000,000 shares of preferred stock as Series D Convertible Preferred Stock, $0.0001 (the “Series D Preferred Stock”). The Certificate of Incorporation of the Company authorizes the designation and issuance of an aggregate of ten million (10,000,000) shares of preferred stock in one or more series with all rights and privileges determined by the Board of Directors of Pegasus. Prior to the filing of the Certificate of Designation, there were1,000,000 shares of Amended Series C Preferred Stock designated or issued. Pursuant to the March 2012 Certificate of Designation, each share of Amended Series D Preferred Stock may be converted at any time by Pegasus or the holders thereof into twenty thousand (20,000) fully-paid and non-assessable shares of the Company's Common Stock and have no voting rights.

On March 21, 2012, the Company acquired Blue Bull Ventures B.V., a Dutch limited liability company that provides venture capital from European private equity and institutional investors as well as advisory and management resources to emerging companies throughout the world, primarily in Europe, including providing financial advice and resources on mergers, acquisitions, restructuring, financing and capital raising from Total-Invest for 2,436,453 Series D Preferred Stock of the Company. The Company's financial statements reflect that the transaction was booked as a reverse merger.

We are subject to the information reporting requirements of the Exchange Act, and accordingly, are required to file periodic reports, including quarterly and annual reports and other information with the Securities and Exchange Commission. Any person or entity may read and copy our reports with the Securities and Exchange Commission at the SEC's Public Reference Room at 100 F Street N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Room by calling the SEC toll free at 1-800-SEC-0330. The SEC also maintains an Internet site at http://www.sec.gov where reports, proxies and informational statements on public companies may be viewed by the public.

Services and Products

We own, operate and manage privately owned public payphones in the County of Delaware, State of New York. As of December 31, 2011, we owned, operated, and managed 11 payphones. The Company does not have any long-term agreements with the customers of these payphones and they may terminate our license to operate at will. We may pay site owners a commission based on a flat monthly rate or on a percentage of sales. Some of the businesses include, but are not limited to, retail stores, convenience stores, bars, restaurants, gas stations, colleges and hospitals. In the alternative, our agreement with business owners may be to provide the telecommunications services without the payment of any commissions.

The Company on March 21, 2012 acquired Blue Bull Ventures B.V., a Dutch limited liability company that provides venture capital from European private equity and institutional investors. In addition, Blue Bull provides advisory and management resources to emerging companies throughout the world, primarily in Europe, including providing financial advice and resources on mergers, acquisitions, restructuring, financing and capital raising. The Company long term strategic plan is to expand this operation both in Europe and the United States.

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On April 27, 2012, the Company’s subsidiary Blue Bull Ventures, B.V. acquired a 19.9% interest in Dailyal BV, a Dutch limited liability company. Blue Bull Ventures acquired the interest in Dailyal BV in return for an investment of $2,117 (€1.600), a loan of $119,061 (€90.000) and a $132,290 (€100.000) in direct investment from independent sources that Blue Bull secured for Dailyal BV. Dailyal (www.dailyal.nl) is an internet platform with 13 high quality 100% natural health products (dietary supplements) that are offered under the brand name Dailyal. All these 13 products are manufactured under ISO 22000:2005 quality standard with a food safety certificate. Dailyal is targeting for the high end market. The range of Dailyal products is projected to be available online in various countries.

On July 24, 2012, the Company’s subsidiary Blue Bull Ventures, B.V. acquired a 19.8% interest in Kingstart International BV, a Dutch limited liability company. Blue Bull Ventures acquired the interest in Dailyal BV in return for a future line of credit to enable Kingstart to sell to its products through Groupon.

The local telephone switch controls the traditional payphone technology. The local switch does not provide any services in the payphone that can benefit the owner of the phone. As we purchase phones from other companies, we upgrade them with "smart card" payphone technology which we license from Quortech. The upgrade is a circuit board with improved technology. The “smart card” technology allows us to determine the operational status of the payphone. It also tells us when the coins in the phone have to be collected, the number and types of calls that have been made from each phone, as well as other helpful information that helps us provide better service to our payphone using public. This upgrade of the phones reduces the number and frequency of service visits due to outages and other payphone-related problems and, in turn, reduces the maintenance costs. Other companies manufacture the components of the payphones for the industry including Universal Communications and TCI, which provides handsets, key pads, totalizers, and relays.

Payphone users can circumvent the usual payment method and avoid inserting a coin by using an access code or 800 number provided by a long distance carrier. These “dial-around” numbers, while convenient for users, leave payphone service providers uncompensated for the call made. The Federal Communications Commission, or the FCC, as instructed by Congress in the Telecommunications Act of 1996, created regulations to ensure that payphone service providers receive compensation for these “dial-around” calls.

~~Market and Competition~~

The market in which we do business is highly competitive and constantly evolving. We face competition from the larger and more established companies -- from companies that develop new technology, as well as the many smaller companies throughout the country. The last several years have shown a marked increase in the use of cellular phones and toll free services which cut into our potential payphone customer base. Companies that have greater resources, including but not limited to, a larger sales force, more money, larger manufacturing capabilities and greater ability to expand their markets also cut into our potential payphone customers. Many of our competitors have longer operating histories, significantly greater financial strength, nationwide advertising coverage and other resources that we do not have. Our competitors might introduce a less expensive or more improved payphone. These, as well as other factors can have a negative impact on our income.

The competition from cellular phones is a very serious threat that can result in substantially less revenue per payphone. We have attempted to address this issue by avoiding locations that service business travelers. For many years, these locations were the most lucrative, but now they are the locations most impacted by the cellular user.

The large former Bell companies and other large companies who provide local service dominate the industry. These companies have greater financial ability than us, and provide the greatest competitive challenge. However, we compete with these companies by paying a commission to the site owner. The commission is an enticement for the site owner to use our phone on its site. We believe we are able to provide a higher quality customer service because the phones alert us to any technical difficulties, and we can service them promptly. The ability to immediately know that a problem exists with a payphone is very important because down time for a phone means lost revenue for us.

~~Significant Customers~~

We do not rely on a major customer for our revenue. We have a variety of small single businesses as well as some small chain stores that we service. We do not believe that we would suffer dramatically if any one customer or small chain decided to stop using our phones.

~~Significant Vendors~~

We must buy dial tone for each payphone from the local exchange carrier. As long as we pay the carrier bill, it is required to provide a dial tone. As a regulated utility, the exchange carrier may not refuse to provide us service. Alternate service exists in certain areas where Verizon competitors are located. We use alternate local service providers when we can get a better price for the service. We use long distance providers on all the payphones.

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~~Intellectual Property~~

As we purchase phones from other companies, we upgrade them with "smart card" payphone technology. The upgrade is a circuit board with improved technology. The “smart card” technology allows us to determine on a preset time basis the operational status of the payphone. We are given a license to use the “smart card” technology from Quortech, the founder and manufacturer of “smart card” technology. The technology informs us when the coins in the phone have to be collected, the number and types of calls that have been made from each phone, as well as other helpful information that helps us provide better service to our payphone using public. This upgrade of the phones reduces the number and frequency of service visits due to outages and other payphone-related problems and, in turn, reduces the maintenance costs. Other companies manufacture the components of the payphones for the industry including Universal Communications and TCI, which provides handsets, key pads, totalizers, and relays.

We do not own any patents or trademarks. Companies in the telecommunications industry and other industries in which we compete own large numbers of patents, copyrights and trademarks and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights. As we face increasing competition, the possibility of intellectual property claims against us grows. We might not be able to withstand any third-party claims or rights against their use.

Government Regulation:

We are subject to varying degrees of regulation by federal, state, local and foreign regulators. The implementation, modification, interpretation and enforcement of these laws and regulations vary and can limit our ability to provide many of our services. Our ability to compete in our target markets depends, in part, upon favorable regulatory conditions and the favorable interpretations of existing laws and regulations.

~~FCC Regulation and Interstate Rates~~:

Our services are subject to the jurisdiction of the Federal Communications Commission (FCC) with respect to interstate telecommunications services and other matters for which the FCC has jurisdiction under the Communications Act of 1934, as amended.

Payphone users can circumvent the usual payment method and avoid inserting a coin by using an access code or 800 number provided by a long distance carrier. These “dial-around” numbers, while convenient for users, leave payphone service providers uncompensated for the call made. The Federal Communications Commission, as instructed by Congress in the Telecommunications Act of 1996, created regulations to ensure that payphone service providers receive compensation for these “dial-around” calls.

The FCC requires the sellers of long distance toll free services to pay the payphone owner $0.494 cents per call. These funds are remitted quarterly through a service provided by the American Public Communication Council (APCC). If the FCC regulation requiring sellers of long distance toll free services to pay payphone owners $0.494 per call is reduced or repealed, it could have a negative effect upon our revenue stream. We have no control over what rules and regulations the state and federal regulatory agencies require us to follow now or in the future. It is possible for future regulations to be so financially demanding that they cause us to go out of business. We are not aware of any proposed regulations or changes to any existing regulations.

~~Telecommunications Act of 1996~~

The Telecommunications Act of 1996, regulatory and judicial actions and the development of new technologies, products and services have created opportunities for alternative telecommunication service providers, many of which are subject to fewer regulatory constraints. We are unable to predict definitively the impact that the ongoing changes in the telecommunications industry will ultimately have on our business, results of operations or financial condition. The financial impact will depend on several factors, including the timing, extent and success of competition in our markets, the timing and outcome of various regulatory proceedings and any appeals, and the timing, extent and success of our pursuit of new opportunities resulting from the Telecommunications Act of 1996 and technological advances.

~~Research and Development~~

~~We have not expended any money in the last two fiscal years on research and development activities.~~

~~Seasonality~~

Our revenues from payphone operation are affected by seasonal variations, geographic distribution of payphones and type of location. Because we operate in the northeastern part of the country with many of the payphones located outdoor, weather patterns affect our revenue streams. Revenues drop off significantly during winter and conversely show an increase in the spring and summer. Revenues are generally lowest in the first quarter and highest in the third quarter.

Employees

The company does not have any employees. Jerry Gruenbaum is our Chief Executive Officer, President, Secretary and Director and Nathan Lapkin is our Chief Financial Officer. Besides its officers, management of the Company expects to use consultants, attorneys, and accountants as necessary, and does not anticipate a need to engage any other full-time employees until absolutely necessary for the operations of the Company. The need for employees and their availability will be addressed in connection with the scope and requirements of the operations of the Company.

Our common stock is quoted on the OTC Electronic Bulletin Board (OTCBB) under the symbol PTEL.

We have never paid dividends. We do not intend to declare any dividends in the foreseeable future. We presently intend to retain earnings, if any, for the development and expansion of our business.

We operate 11 payphones in upstate New York. However, industry trends in the payphone industry are not specific to upstate New York; but, rather, mirror what is happening in the industry nationwide. Over the past years, more and more people are opting to use personal cell phones to communicate as compared to pay phones. Cell phone technology has advanced over the recent years and competition has made cell phones and cell phone service plans more affordable to the average consumer. Pay phones have had a hard time competing with cell phones and we do not see this changing in the foreseeable future. Consumers might opt to use pay phones in areas where cell phone reception is nonexistent or unreliable or when consumers do not wish to incur charges for minutes used on their cell phone. This is not specific to upstate New York but apply to the cell phone industry nationwide.

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CRITICAL ACCOUNTING POLICIES & ESTIMATES

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. However, future events are subject to change, and the best estimates and judgments routinely require adjustment. The amounts of assets and liabilities reported in our balance sheet, and the amounts of revenues and expenses reported for each of our fiscal periods, are affected by estimates and assumptions which are used for, but not limited to, the accounting for allowance for doubtful accounts, goodwill and intangible asset impairments, restructurings, inventory and income taxes. Actual results could differ from these estimates. The following critical accounting policies are significantly affected by judgments, assumptions and estimates used in the preparation of our consolidated financial statements.

Use of Estimates

It is important to note that when preparing the financial statements in conformity with U.S. generally accepted accounting principles, management is required to make certain estimates and assumptions that affect the amounts reported and disclosed in the financial statements and related notes. Actual results could differ if those estimates and assumptions approve to be incorrect.

On an ongoing basis, we evaluate our estimates, including those related to estimated customer life, used to determine the appropriate amortization period for deferred revenue and deferred costs associated with licensing fees, the useful lives of property and equipment and our estimates of the value of common stock for the purpose of determining stock-based compensation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

~~Revenue Recognition Policies~~

The Company recognizes revenues in accordance with the Securities and Exchange Commission Staff Accounting Bulletin (SAB) number 104, "Revenue Recognition." SAB 104 clarifies application of U. S. generally accepted accounting principles to revenue transactions. As of the year ended December 31, 2011 and December 31, 2010, there was no deferred revenue. The Company derives its primary revenue from the sources described below, which includes dial-around revenues, operator service revenue, coin collections, telephone equipment repairs, and sales. Other revenue generated by the company includes sales commissions.

The Dial Around revenue is recognized when the billing and collection agent of the Company, APCC, calculates and compensates the Company for the use of the payphone on a quarterly basis by billing the actual party’s long distance carrier that received the calls. The date of the Dial Around revenue recognition is determined when this compensation is collected and deposited into the Company’s bank account.

The Operator Service revenue is recognized when the collection agents of the Company, Legacy Long Distance and US Intercom calculates and compensates the Company for the use of operator services on a monthly basis. The date of the Operator Service revenue recognition is determined when this compensation is collected and deposited into the Company’s bank account.

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~~Coin revenues are recorded in an equal amount to the coins collected.~~

~~Revenues on commissions, telephone equipment and sales are realized when the services are provided and payment for such services is deemed certain.~~

Off- Balance Sheet Arrangements

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

Cash and Cash Equivalents

~~SERVICES AND PRODUCTS~~

We own, operate and manage privately owned public payphones in the County of Delaware, State of New York. As of March 31, 2012, we owned, operated and managed 11 payphones. We may pay site owners a commission based on a flat monthly rate or on a percentage of sales. Some of the businesses include, but are not limited to, retail stores, convenience stores, bars, restaurants, gas stations, colleges and hospitals. In the alternative, our agreement with business owners may be to provide the telecommunications services without the payment of any commissions.

~~Seasonality~~

~~Our installed payphone base generates revenue from two principal sources: coin-calls and non-coin calls.~~

1. ~~Coin calls~~:

~~Coin calls represent calls paid for by customers who deposit coins into the payphones. Coin call revenue is recorded as the actual amount of coins collected from the payphones.~~

2. ~~Non-Coin calls~~:

Non-coin revenue includes commissions from operator service telecommunications companies and a “dial-around” commission of $0.494 per call that the FCC requires sellers of long distance toll free services to pay payphone owners. The commissions for operator services are paid 45 days in arrears. These funds are remitted quarterly through a service provided by the American Public Communication Council (APCC).

If we are unable to achieve or sustain profitability, or if operating losses increase in the future, we may not be able to remain a viable company and may have to discontinue operations. Our expenses have historically exceeded our revenues and we have had losses in all fiscal years of operation, including those in fiscal years 2010 and 2011, and the losses are projected to continue in 2012. Our net losses were $(4,198) and $(37,337) through the quarter ended March 31, 2012 and 2011, respectively. We have a cumulative net loss from February 19, 2002 (Date of Inception) to March 31, 2012 of $(19,544,045). We have been concentrating on the development of our products, services and business plan. There is no assurance that we will be successful in implementing our business plan or that we will be profitable now or in the future.

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~~COSTS RELATED TO OUR OPERATION~~

The principal costs related to the ongoing operation of our payphones include telecommunication costs, commissions and depreciation. Telecommunication expenses consist of payments made by us to local exchange carriers and long distance carriers for access to and use of their telecommunications networks and service and maintenance costs. Commission expense represents payments to owners or operators of the premises at which a payphone is located.

GOING CONCERN QUALIFICATION

In their Independent Auditor's Report for the fiscal years ending December 31, 2011 and 2010, Robison, Hill & Co. stated that several conditions and events cast substantial doubt about our ability to continue as a “going concern.” At ~~March 31,~~June 30, 2012, we had ~~$25,341~~$0 cash on hand and ~~$135~~$2,664 in accounts receivable. We have incurred a deficit of $(~~19,544~~40,720~~,045)~~) from ~~our inception~~February 1, 2012 Incetption of Development Stage to ~~March 31,~~June 30, 2012. See “Liquidity and Capital resources.”

~~THE QUARTER ENDED MARCH 31, 2012, COMPARED TO THE QUARTER ENDED MARCH 31, 2011.~~

~~REVENUES~~

Our total revenue decreased by $493, from $405 for the quarterr ended March 31, 2011 to $898 for the quarter ended March 31, 2012. This decrease was primarily due to a decline in payphone customers and a lower volume of calls. We foresee revenues decreasing further in light of the growing trend of cell phone use. We anticipate remedying this situation by strategically placing payphones in key areas, especially where cell phone reception is not reliable. Our non-coin call revenue, or commission income, which is comprised primarily of “dial around” revenue, star 88 commission revenue and operator service revenue decreased for the quarter ended March 31, 2012 primarily due to a decline in payphone customers that made operator assisted calls and a lower volume of total calls. The FCC requires the sellers of long distance toll free services to pay the payphone owner $0.494 cents per “dial-around” call. These funds are remitted quarterly through a service provided by the American Public Communication Council (APCC).

On March 12, 2012 we acquired Blue Bull Ventures B.V., a Dutch corporation from our control shareholder Total-Invest International B.V. which provides venture capital from European private equity and institutional investors to emerging companies throughout the world. We anticipate this area of our business to grow and generate revenues for us in fiscal year 2012.

~~COST OF SERVICES~~

Our overall cost of services decreased by $102, from $792 for the quarter ended March 31, 2011, to $690 for the quarter ended March 31, 2012. The principal costs related to the ongoing operation of our payphones include telecommunication costs, commissions and depreciation. Telecommunication costs consist of payments made by us to local exchange carriers and long distance carriers for access to and use of their telecommunications networks and service and maintenance costs. Commission expense represents payments to owners or operators of the premises at which a payphone is located and APCC commission fees related to Dial Around processing. There was no Depreciation expense in 2012 or 2011. As of March 31, 2012 and March 31, 2011, the payphone equipment was fully depreciated.

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Once a low revenue payphone is identified, we offer the site owner an opportunity to purchase the equipment. If the site owner does not purchase the payphone, we remove it from the site. Also a correction was made at the central office of Margaretville Telephony Company to provide a higher level of uninterrupted service to increase revenue in the future. We own telephone equipment which provides a service for a number of years. The term of service is commonly referred to as the "useful life" of the asset. Because an asset such as telephone equipment or motor vehicle is expected to provide service for many years, it is recorded as an asset, rather than an expense, in the year acquired. A portion of the cost of the long-lived asset is reported as an expense each year over its useful life and the amount of the expense in each year is determined in a rational and systematic manner.

~~OPERATION AND ADMINISTATIVE EXPENSES~~

~~Operating expenses decreased by $27,884, from $31,040 for the quarter ended March 31, 2011 to $3,156 for the quarter ended March 31, 2012.~~ Professional fees decreased from $24,248 for the quarter ended March 31, 2011 to $2,848 for the quarter ended March 31, 2012. Professional fees include fees the Company pays for accountants, bookkeepers and attorneys throughout the year for performing various tasks. This decrease was primarily due to increase in legal fees from $23,098 for quarter ended March 31, 2011 to $2,848 for quarter ended March 31, 2012 and a decrease in accounting fees from $5,258 for quarter ended March 31, 2011 to $258 for quarter ended March 31, 2012. General and Administrative expenses (G&A) decreased by $1,484 in the quarter ended March 31, 2012. Our expenses to date are largely due to professional fees that include accounting, bookkeeping and legal fees.

~~LIQUIDITY AND CAPITAL RESOURCES~~

In their 2011 audit report, our auditors have expressed their doubt as to our ability to continue as a going concern. Our primary source of liquidity has been from borrowing funds from certain executive officers and principal stockholders related to certain of our executive officers. As of quarter ended March 31, 2012 and 2011, we had $25,341 and $285 in cash and cash equivalents respectively. Our net loss for quarter ended March 31, 2012 and 2011 were $(4,198) and $(37,337) respectively. Our accounts receivable for the quarter ended March 31, 2012and 2011 were $135 and $387, respectively. The accumulated deficit as of March 31, 2012 was $ (19,544,045).

As of March 31, 2012, the Company owed $15,766 in Related Party Accounts Payable. As of March 31, 2012 this balance includes $15,542 due to Lyboldt-Daly Inc. for bookkeeping expenses (of which Joseph C. Passalaqua, our former officer and director is President and Sole Director). These amounts are non-interest bearing.

As of March 31, 2012, the Company owed $18,762 in Related Party Notes Payable. These notes are owed to Cobalt Blue LLC, of which Mary Passalaqua, the wife of Joseph C. Passalaqua, our former officer and director is the President. These notes are accruing simple interest between 10%, 15% and 18% annually. As of March 31, 2012, the Company owed a total principle balance of $18,762 related to these notes and had accrued $46,920 in simple interest.

Net cash used in operating activities was $(2,930) during the three-month period ended March 31, 2012, mainly representative of the net loss incurred during 2012. This compares to net cash used in operating activities of $(33,549) during the three-month period ended March 31, 2011.

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Net cash provided by investing activities was $24,136 during three-month period ended March 31, 2012. This compares to net cash provided by investing activities of $0 for the three-month period ended March 31, 2011.

Net cash provided by financial activities was $3,850 during three-month period ended March 31, 2012, representing the proceeds from Related Party Notes in the amount of $2,850 and Preferred Stck issued for cash in the amounts of $1,000. This compares to net cash provided by financing activities of $33,323 during the three-month period ended March 31, 2011 due to proceeds from related party notes of $33,323.

To date, we have had minimal revenues; and we require additional financing in order to finance our business activities on an ongoing basis. Our future capital requirements will depend on numerous factors including, but not limited to, continued progress in finding a merger candidate and the pursuit of business opportunities. We are actively pursuing alternative financing and have had discussions with various third parties, although no firm commitments have been obtained to date. In the interim, shareholders of the Company have committed to meet our minimal operating expenses. We believe that actions presently being taken to revise our operating and financial requirements provide them with the opportunity to continue as a “going concern,” although no assurances can be given.

COMMON STOCK

Our board of directors is authorized to issue 20,000,000,000 shares of Common stock, with a par value of $0.0001. There are an aggregate of 3,510,496,677 shares of Common Stock issued and outstanding, which are held by 228 stockholders as of the date of this Quarterly Report. All shares of our common stock have one vote per share on all matters, including election of directors, without provision for cumulative voting. The common stock is not redeemable and has no conversion or preemptive rights. The common stock currently outstanding is validly issued, fully paid and non-assessable. In the event of liquidation of the Company, the holders of common stock will share equally in any balance of the Company's assets available for distribution to them after satisfaction of creditors and preferred stockholders, if any. The holders of our common stock are entitled to equal dividends and distributions per share with respect to the Common Stock when, as and if, declared by the board of directors from funds legally available.

Dividends

We have never declared dividends. We do not intend to declare any dividends in the foreseeable future. We presently intend to retain earnings, if any, for the development and expansion of our business.

Share Purchase Warrants

We have not issued and do not have outstanding any warrants to purchase shares of our common stock.

Options

We do not have a stock option plan in place nor are there any outstanding exercisable for shares of our common stock.

Convertible Securities

On March 12, 2012, the Company issued an aggregate of 1,000,000 shares of Amended Series C Preferred Stock to Total-Invest pursuant to a Securiities Purchase Agreement. Each share of Amended Series C Preferred Stock may be converted at any time by Pegasus or the holders thereof into one (1) fully-paid and non-assessable shares of the Company's Common Stock and the voting rights of twenty thousand (20,000) shares. On March 21, 2012, the Company issued an aggregate of 2,436,453 Series D Preferred Stock to Total-Invest for the acquisition of Blue Bull Ventures B.V., a Dutch limited liability company pursuant to an Acquisition Agreement. Each share of Amended Series D Preferred Stock may be converted at any time by the Company or the holders thereof into twenty thousand (20,000) fully-paid and non-assessable shares of the Company's Common Stock and have no voting rights.

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PREFERRED STOCK

Our board of directors is authorized to issue 10,000,000 shares of Common stock, with a par value of $0.0001. There are an aggregate of 3,436,453 shares of Preferred Stock issued and outstanding as of the date of this Annual Report. On March 12, 2012, the Company issued an aggregate of 1,000,000 shares of Amended Series C Preferred Stock to Total-Invest pursuant to a Securiities Purchase Agreement for $1,000. Each share of Amended Series C Preferred Stock may be converted at any time by Pegasus or the holders thereof into one (1) fully-paid and non-assessable shares of the Company's Common Stock and the voting rights of twenty thousand (20,000) shares. On March 21, 2012, the Company issued an aggregate of 2,436,453 Series D Preferred Stock to Total-Invest for the acquisition of Blue Bull Ventures B.V., a Dutch limited liability company pursuant to an Acquisition Agreement. Each share of Amended Series D Preferred Stock may be converted at any time by the Company or the holders thereof into twenty thousand (20,000) fully-paid and non-assessable shares of the Company's Common Stock and have no voting rights.

COMMON AND PREFERRED STOCK TRANSACTIONS

On February 19, 2002, we filed a Certificate of Incorporation with the Secretary of State of Delaware. Our authorized capital was 1,000 shares of common stock, no par value.

On September 21, 2006, we filed an Amended and Restated Certificate of Incorporation increasing our authorized capital to 110,000,000 shares, of which 100,000,000 shares were designated as Common Stock, par value $0.0001 per share, and the remaining 10,000,000 as Preferred Stock, par value $0.0001 per share. The designations and the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption of such shares shall be determined by the Board of Directors from time to time, without stockholder approval.

On May 15, 2007, the Company filed an Amended Certificate of Incorporation and there was forward stock split 5,100 to 1. This change is retro-active and therefore changes the 1,000 shares of common stock issued on December 31, 2003 to 5,100,000 shares of common stock. The par value remains at $.0001 per share.

On August 5, 2008, we filed a Certificate of Designations, Powers, Preferences and Rights (the “Certificate of Designation”) with the Secretary of State of the State of Delaware thereby designating 2,000,000 shares of preferred stock as Series A Convertible Preferred Stock, $0.0001 (the “Series A Preferred Stock”). Prior to the filing of the Certificate of Designation, there were no shares of preferred stock designated or issued. Pursuant to the Certificate of Designation, each share of Series A Preferred Stock may be converted at any time by Pegasus or the holders thereof into ten (10) fully-paid and non-assessable shares of Pegasus Common Stock.

On August 15, 2008, Pegasus issued an aggregate of 1,800,000 shares of Series A Preferred Stock to an aggregate of 17 individuals pursuant to a Securities Purchase Agreement for $0.0001per share of Series A Preferred Stock. Pegasus issued the Series A Preferred Stock pursuant to an exemption under Section 4(2) of the Securities Act due to the fact that it did not involve a public offering of securities. The shares of Series A Preferred Stock are “restricted securities” (as such term is defined in the Securities Act).

On August 18, 2008, Sino Gas International Holdings, Inc., a Utah corporation, or Sino Gas, (OTCBB: SGAS), our former parent company, distributed to its stockholders of record as of August 15, 2008, 100% of the issued and outstanding common stock of Pegasus (the “Spin-off”). The ratio of distribution was one (1) share of common stock of Pegasus for every twelve (12) shares of common stock of Sino (1:12). Fractional shares were rounded up to the nearest whole-number. An aggregate of 2,215,136 shares of Pegasus common stock were issued pursuant to the distribution to an aggregate of 167 Sino stockholders. The Pegasus common stock issued were “restricted securities” (as defined in Rule 144 of the Securities Act of 1933, as amended).

On August 18, 2008 and pursuant to the Certificate of Designation, Pegasus converted an aggregate of 1,800,000 shares of Series A Preferred Stock into an aggregate of 18,000,000 shares of Pegasus common stock. Pegasus issued the common stock pursuant to Section 3(a)(9) of the Securities Act due to the fact that the securities were exchanged upon conversion of the Series A Preferred Stock held by existing security holders and there was no commission or other remuneration paid or given directly or indirectly for soliciting such exchange.

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Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Market risk is the risk of loss from adverse changes in market prices and rates. The Company’s market risk arises primarily from the fact that the area in which we do business is highly competitive and constantly evolving. The market in which we do business is highly competitive and constantly evolving. We face competition from the larger and more established companies, from companies that ~~may develop new technology, that~~ have greater resources, including but not limited to, ~~a larger sales force,~~ more money, ~~larger manufacturing capabilities~~ and greater ability to expand their markets also cut into our potential ~~payphone~~ customers. Many of our competitors have longer operating histories, significantly greater financial strength, nationwide advertising coverage and other resources that we do not have. Our competitors might introduce a less expensive or more improved payphone. Also, the last several years have shown a marked increase in the use of cellular phones and toll free services which cut into our potential payphone customer base. These, as well as other factors can have a negative impact on our income.

Options, Warranties and Other Equity Items

There are no outstanding options or warrants to purchase, nor any securities convertible into, the our common shares. Additionally, there are no shares that could be sold pursuant to Rule 144 under the Securities Act or that we had agreed to register under the Securities Act for sale by security holders. Further, there are no common shares of the Company being, or proposed to be, publicly offered by the Company.

Market Information

~~No Trading Market~~

~~There is currently no market for our common stock. As the registration statement is now effective, we intend to solicit a registered broker/dealer to apply with FINRA to have our~~Our common stock is quoted on the ~~OTCBB~~OTC Electronic Bulletin ~~Board (OTCBB).~~Board. We ~~cannot assure that FINRA will approve~~obtained our trading symbol which is PTEL.OB and the ~~application or that a market for our common stock will develop or maintained. If not, your investment might be illiquid.~~right to trade on June 15, 2010.

Evaluation of disclosure controls and procedures.

Management is responsible for establishing and maintaining adequate controls over financial reporting. The Company’s disclosure controls and procedures are designed to ensure (i) that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act of 1934, as amended (the “Exchange Act”), are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms; and (ii) that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and may find it difficult to properly segregate duties. Often, one or two individuals control every aspect of the company’s operation and are in a position to override any system of internal control. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

Pursuant to rules adopted by the SEC as directed by Section 302 of the Sarbanes-Oxley Act of 2002, the Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e)) as of ~~March 31,~~June 30, 2012. In making this assessment, our Chief Executive Officer and Chief Financial Officer used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework.

Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of that date, the Company’s disclosure controls and procedures required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15, were not effective at a reasonable assurance level. Management’s assessment identified the following material weaknesses:

Notwithstanding the existence of these material weaknesses in our internal control over financial reporting, our management believes that the financial statements included in its reports fairly present in all material respects the Company’s financial condition, results of operations and cash flows for the periods presented. We continue to evaluate the effectiveness of internal controls and procedures on an on-going basis. We plan to further address these issues once we commence operations and are able to hire additional personnel in financial reporting.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the quarter ended ~~March 31,~~June 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~An investment in our shares~~ The Company is ~~speculative and involves~~not required to provide the information required by this item as it is a high degree of risk. Therefore, you should not invest in our shares unless you are able to bear a loss of your entire investment. You should carefully consider the following factors as well as those set forth in our annual report on Form 10-K for the year ended December 31, 2011 and the other information contained herein before deciding to invest in our shares. Factors that could cause actual results to differ from our expectations, statements or projections include the risks and uncertainties relating to our business described above. The fact that some of the risk factors may be the same or similar to our past filings means only that the risks are present in multiple periods. We believe that many of the risks detailed here and in our SEC filings are part of doing business in our industry and will likely be present in all periods reported. The fact that certain risks are endemic to our industry does not lessen the significance of the risk. We urge you to carefully consider the following discussion of risks as well as other information regarding our common stock. This report and statements that we may make from time to time may contain forward-looking information. There can be no assurance that actual results will not differ materially from our expectations, statements or projections.smaller reporting company.

~~We are a development stage company and have history of losses since our inception. If we cannot reverse our losses, we will have to discontinue operations.~~

At March 31, 2012, we had $25,341 in cash on hand and an accumulated deficit of $(19,544,045), causing our auditors to express their doubt as to our ability to continue as a going concern. We anticipate incurring losses in the near future. We do not have an established source of revenue sufficient to cover our operating costs. Our ability to continue as a going concern is dependent upon our ability to successfully compete, operate profitably and/or raise additional capital through other means. If we are unable to reverse our losses, we will have to discontinue operations.

~~Our history of losses is expected to continue and will need to obtain additional capital financing in the future.~~

~~We have a history of losses and expect to generate losses until such a time when we can become profitable in the collection of payphone service fees.~~

~~As of March 31, 2012, we had $25,341 in cash and cash equivalents on hand and an accumulated deficit of $(19,544,045).~~

As of March 31, 2012, the Company had Related Party Accounts Payable in the amount of $15,542 due to Lyboldt-Daly, Inc. for Bookkeeping expenses. Joseph Passalaqua (a former officer and director of the company) is President and Sole Director of Lyboldt-Daly, Inc.

As of March 31, 2012, the Company owed $18,762 in Related Party Notes Payable. These notes are owed to Shareholders of the Company, Joseph C. Passalaqua, Mary Passalaqua, and Cobalt Blue of which Mary Passalaqua is President. These notes are accruing simple interest of 10%, 15% and 18% annually. As of March 31, 2012, the Company owed a total principle balance of $18,762 related to these notes and had accrued $46,920 ~~in simple interest.~~

All notes are payable upon demand. We believe that our cash from borrowings will be insufficient to fund our operations and to satisfy our long-term liquidity needs for the next twelve months. We will required to seek additional financing in the future to respond to increased expenses or shortfalls in anticipated revenues, respond to competitive pressures or take advantage of unanticipated acquisition opportunities. We cannot be certain we will be able to find such additional financing on reasonable terms, or at all. If we are unable to obtain additional financing when needed, we could be required to modify our business plan in accordance with the extent of available financing.

~~We do not have an external credit facility.~~

We currently do not have an external credit facility. The current economic recession has hampered small businesses, like ours, from obtaining loans and lines of credit from banks and lending agencies. Overall, due to the recession and increasing bank failures, banks have become more selective when granting loans and/or lines of credit to businesses and individuals. If we are unable to grow our business from generating revenues, we may need access to additional capital such as loans and/or lines of credit. We might not qualify for such loans and/or lines of credit. Our failure to secure an external credit facility could prevent us from growing our business or to cease operations.

~~Our future financings could substantially dilute our stockholders or restrict our flexibility.~~

We will need additional funding which may not be available when needed. We estimate that we will need $75,000 to continue our operations for the next 12 months. If we are able to raise additional funds and by issuing equity securities, you may experience significant dilution of your ownership interest and holders of these securities may have rights senior to those of the holders of our common stock. If we obtain additional financing by issuing debt securities, the terms of these securities could restrict or prevent us from paying dividends and could limit our flexibility in making business decisions. In this case, the value of your investment could be reduced.

~~Table of Content~~

~~We compete with the growing cell-phone industry and other well-established companies.~~

The large former Bell companies who provide local service dominate the industry. These companies have greater financial ability than us, and provide the greatest competitive challenge. However, we compete with these companies by paying a commission to the site owner. The commission is an enticement for the site owner to use our phone on its site. We believe we are able to provide a higher quality customer service because the phones alert us to any technical difficulties, and we can service them promptly. The ability to immediately know that a problem exists with a payphone is very important because down time for a phone means lost revenue for us.

~~Our non-coin revenue is primarily attributable to “dial-around” commissions. If the FCC reduces or repeals the “dial-around” commission, our revenues could be materially adversely affected.~~

Payphone users can circumvent the usual payment method and avoid inserting a coin by using an access code or 800 number provided by a long distance carrier. These “dial-around” numbers, while convenient for users, leave payphone service providers uncompensated for the call made. The Federal Communications Commission, as instructed by Congress in the Telecommunications Act of 1996, created regulations to ensure that payphone service providers receive compensation for these “dial-around” calls.

If the FCC regulation requiring sellers of long distance toll free services to pay payphone owners $0.494 per call is reduced or repealed, it could have a negative effect upon our revenue stream. We have no control over what rules and regulations the state and federal regulatory agencies require us to follow now or in the future. It is possible for future regulations to be so financially demanding that they cause us to go out of business.

~~We are highly dependent on our two executive officers, Jerry Gruenbaum and Nathan Lapkin. The loss of either of them would have a material adverse affect on our business and prospects.~~

We currently have only two executive officers, Jerry Gruenbaum and Nathan Lapkin. Jerry Gruenbaum serves as our Chief Executive Officer, President and Director, and Nathan Lapkin serves as our Chief Financial Officer. The loss of either executive officer could have a material adverse effect on our business and prospects.

~~Table of Content~~

~~If we cannot attract, retain, motivate and integrate additional skilled personal, our ability to compete will be impaired.~~

The Company has no employees and many of our current and potential competitors have employees. Our success depends in large part on our ability to attract, retain and motivate highly qualified management and technical personnel. We face intense competition for qualified personnel. The industry in which we compete has a high level of employee mobility and aggressive recruiting of skilled personnel. If we are unable to continue to employ our key personnel or to attract and retain qualified personnel in the future, our ability to successfully execute our business plan will be jeopardized and our growth will be inhibited.

~~We will depend on outside manufacturing sources and suppliers.~~

As we purchase phones from other companies, we upgrade them with "smart card" payphone technology. The upgrade is a circuit board with improved technology. The “smart card” technology allows us to determine on a preset time basis the operational status of the payphone. We were given a license to use the “smart card” technology from Quortech, the founder and manufacturer of “smart card” technology. The technology informs us when the coins in the phone have to be collected, the number and types of calls that have been made from each phone, as well as other helpful information that helps us provide better service to our payphone using public. This upgrade of the phones reduces the number and frequency of service visits due to outages and other payphone-related problems and, in turn, reduces the maintenance costs. Other companies manufacture the components of the payphones for the industry including Universal Communications and TCI, which provides handsets, key pads, totalizers, and relays.

We will have limited control over the actual production process. Moreover, difficulties encountered by any one of our third party manufacturers which result in product defects, delayed or reduced product shipments, cost overruns or our inability to fill orders on a timely basis, could have an adverse impact on our business. Even a short-term disruption in our relationship with third party manufacturers or suppliers could have a material adverse effect on our operations. We do not intend to maintain an inventory of sufficient size to protect ourselves for any significant period of time against supply interruptions, particularly if we are required to obtain alternative sources of supply.

~~We may be unable to adequately protect our proprietary rights or may be sued by third parties for infringement of their proprietary rights.~~

The telecommunications industry is characterized by the existence of a large number of patents and frequent litigation based on allegations of trade secret, copyright or patent infringement. We may inadvertently infringe a patent of which we are unaware. In addition, because patent applications can take many years to issue, there may be a patent application now pending of which we are unaware that will cause us to be infringing when it is issued in the future. If we make any acquisitions, we could have similar problems in those industries. Although we are not currently involved in any intellectual property litigation, we may be a party to litigation in the future to protect our intellectual property or as a result of our alleged infringement of another's intellectual property, forcing us to do one or more of the following:

~~Cease selling, incorporating or using products or services that incorporate the challenged intellectual property;~~

~~Obtain from the holder of the infringed intellectual property right a license to sell or use the relevant technology, which license may not be available on reasonable terms; or~~

~~Redesign those products or services that incorporate such technology.~~

A successful claim of infringement against us, and our failure to license the same or similar technology, could adversely affect our business, asset value or stock value. Infringement claims, with or without merit, would be expensive to litigate or settle, and would divert management resources.

~~Table of Content~~

Our employees may be bound by confidentiality and other nondisclosure agreements regarding the trade secrets of their former employers. As a result, our employees or we could be subject to allegations of trade secret violations and other similar violations if claims are made that they breached these agreements.

~~If we engage in acquisitions, we may experience significant costs and difficulty assimilating the operations or personnel of the acquired companies, which could threaten our future growth.~~

If we make any acquisitions, we could have difficulty assimilating the operations, technologies and products acquired or integrating or retaining personnel of acquired companies. In addition, acquisitions may involve entering markets in which we have no or limited direct prior experience. The occurrence of any one or more of these factors could disrupt our ongoing business, distract our management and employees and increase our expenses. In addition, pursuing acquisition opportunities could divert our management's attention from our ongoing business operations and result in decreased operating performance. Moreover, our profitability may suffer because of acquisition-related costs or amortization of acquired goodwill and other intangible assets. Furthermore, we may have to incur debt or issue equity securities in future acquisitions. The issuance of equity securities would dilute our existing stockholders.

~~Because our officers and directors are indemnified against certain losses, we may be exposed to costs associated with litigation.~~

If our directors or officers become exposed to liabilities invoking the indemnification provisions, we could be exposed to additional none reimbursable costs, including legal fees. Our articles of incorporation and bylaws provide that our directors and officers will not be liable to us or to any shareholder and will be indemnified and held harmless for any consequences of any act or omission by the directors and officers unless the act or omission constitutes gross negligence or willful misconduct. Extended or protracted litigation could have a material adverse effect on our cash flow.

~~We are subject to SEC regulations relating to “penny stock” and the market for our common stock could be adversely affected.~~

The SEC has adopted regulations concerning low-priced stock, or “penny stocks.” The regulations generally define "penny stock" to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. If our shares are offered at a market price less than $5.00 per share, and do not qualify for any exemption from the penny stock regulations, our shares may become subject to these additional regulations relating to low-priced stocks.

The penny stock regulations require that broker-dealers, who recommend penny stocks to persons other than institutional accredited investors make a special suitability determination for the purchaser, receive the purchaser's written agreement to the transaction prior to the sale and provide the purchaser with risk disclosure documents that identify risks associated with investing in penny stocks. Furthermore, the broker-dealer must obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before effecting a transaction in penny stock. These requirements have historically resulted in reducing the level of trading activity in securities that become subject to the penny stock rules. The additional burdens imposed upon broker-dealers by these penny stock requirements may discourage broker-dealers from effecting transactions in the common stock, which could severely limit the market liquidity of our common stock and our shareholders' ability to sell our common stock in the secondary market.

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EXHIBIT INDEX

		Incorporated by
		Reference
			Filing Date/
Exhibit			Period End
Number	Exhibit Description	Form	Date

3.1	Certificate of Incorporation as filed with the Delaware Secretary of State dated February 19, 2002.	10-SB	5/7/2007

3.2	Amended Certificate of Incorporation as filed with the Delaware Secretary of State dated September 21, 2006	10-SB	5/7/2007

3.3	Amendment to Certificate of Incorporation as filed with the Delaware Secretary of State dated May 15, 2007	10-SB	5/7/2007

3.4	Certificate of the Designations, Powers Preferences and Rights of the Series A Convertible Preferred Stock as filed with the Delaware Secretary of State dated August 5, 2008	8-K	8/27/2008

3.5	Certificate of the Designations, Powers Preferences and Rights of the Series B Convertible Preferred Stock and cancellation of the Series A Convertible Preferred Stock as filed with the Delaware Secretary of State dated February 10, 2011	10-K	5/4/2012

3.6	Amended Certificate of the Designations, Powers Preferences and Rights of the Series B Convertible Preferred Stock as filed with the Delaware Secretary of State dated June 13, 2011	8-K	6/16/2011

3.7	Certificate of the Designations, Powers Preferences and Rights of the Series C Convertible Preferred Stock as filed with the Delaware Secretary of State dated June 13, 2011	8-K	6/16/2011

3.8	Amendment to Certificate of Incorporation as filed with the Delaware Secretary of State dated July 5, 2011	10-K	5/4/2012

3.9	Amendment to Certificate of Incorporation as filed with the Delaware Secretary of State dated September 29, 2011	10-K	5/4/2012

3.10	Amended Certificate of the Designations, Powers Preferences and Rights of the Series C Convertible Preferred Stock as filed with the Delaware Secretary of State dated March 15, 2012	8-K	3/16/2012

3.11	Cancellation of the Series B Convertible Preferred Stock as filed with the Delaware Secretary of State dated March 26, 2012	8-K/A	4/10/2012

3.12	Certificate of the Designations, Powers Preferences and Rights of the Series D Convertible Preferred Stock as filed with the Delaware Secretary of State dated March 26, 2011	8-K	3/26/2012

3.13	By-laws	10-SB	5/7/2007

10.1	Series C Preferred Stock Purchase Agreement dated March 12, 2012	8-K	3/16/2012

10.2	Acquisition Agreement of Blue Bull Ventures B.V. from Total-Invest International B.V. dated March 21, 2012	8-K	3/26/2012

14.1	Code of Ethics	8-K	4/5/2012

21.1*21.1	Subsidiaries of the Registrant

31.1*31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.

31.2*31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.

32.1*32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of ~~2002.~~2002.

32.2*32.2	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

Reports on Form 8-K

Description	Form	Filing Date

Item 1.02: Termination of a Definitive Agreement; Item 5.01: Change of Control of Registrant; Item 5.02: Departure of Director or Certain Officers; Election of Directors; Appointment of Certain Officers	~~8-K~~	~~1/18/2012~~
None
Item 3.02: Unregistered Sales of Equity Securities; Item 5.01: Change in Control of Registrant; Item 5.02: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Item 5.03: Amendment to Articles of Incorporation; Item 9.01 Exhibits	~~8-K~~	~~3/16/2012~~

~~Item 1.01: Entry into a Material Definitive Agreement; Item 1.02: Termination of a Material Definitive Agreement; Item 9.01: Exhibits~~	~~8-K~~	~~3/26/2012~~

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


	PEGASUS TEL, INC.
Date: ~~May 14,~~August 20, 2012
	By:	/s/ JERRY GRUENBAUM
		Jerry Gruenbaum
		President, Director, Chief Executive Officer
		(Principal Executive Officer)

Date: ~~May 14,~~August 20, 2012	By:	/s/ NATHAN LAPKIN
		Nathan Lapkin
		Chief Financial Officer
		(Principal Financial Officer
		and Principal Accounting Officer)

Delaware		41-2039686
(State or other jurisdiction		(I.R.S. Employer Identification No.)
of icorporation or organization)

2 Corporate Drive, Suite 234
Shelton, Connecticut		06484
(Address of principal executive offices)		(Zip Code)

Item #	Description	Page Numbers

	PART I		5

ITEM 1	FINANCIAL STATEMENTS		5

ITEM 2	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		1817

ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		2027

ITEM 4	CONTROLS AND PROCEDURES		2027

	PART II		2128

ITEM 1	LEGAL PROCEEDINGS		2128

ITEM 1A	RISK FACTORS		2128

ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		2228

ITEM 3	DEFAULTS UPON SENIOR SECURITIES		2229

ITEM 4	~~SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS~~MINE SAFETY DISCLOSURES		2229

ITEM 5	OTHER INFORMATION		2229

ITEM 6	EXHIBITS		2330

	SIGNATURES		2431

EXHIBIT 31.1	SECTION 302 CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

EXHIBIT 31.2	SECTION 302 CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

EXHIBIT 32.1	SECTION 906 CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

EXHIBIT 32.2	SECTION 906 CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER


	•	risks arising from material weaknesses in our internal control over financial reporting, including material weaknesses in our control environment;

	•	our ability to attract new clients and retain existing clients;

	•	our ability to retain and attract key employees;

	•	risks associated with assumptions we make in connection with our critical accounting estimates;

	•	potential adverse effects if we are required to recognize impairment charges or other adverse accounting-related developments;

	•	potential downgrades in the credit ratings of our securities;

	•	risks associated with the effects of global, national and regional economic and political conditions, including fluctuations in economic growth rates, interest rates and currency exchange rates; and

	•	developments from changes in the regulatory and legal environment for advertising and marketing and communications services companies around the world.

	Large accelerated filer o			Accelerated filer o
	Non-accelerated filer o (Do not check if a smaller reporting company)			Smaller reporting company x


	March 31,			December 31,				June 30,
	2012			2011				2012
	(Unaudited)							(Unaudited)
Assets:
Cash and Cash Equivalents	$	25,341		$	285			$	-
Accounts Receivable		135			387
VAT Receivable									2,664
Investment in Kingstart Int'l									116,573
Investment in Blue Bull Ventures Corp									4,996

Total Current Assets		25,476			672				124,233

Total Assets	$	25,476		$	672			$	124,233

Liabilities:
Accounts Payable	$	35,066		$	34,808			$	37,638
Overdrawn Cash									1,097
VAT Payable									2,410
Accounts Payable- Related Party		15,766			15,766				15,766
Accrued Interest		46,920			46,162				47,798
Related Party Notes Payable- Convertible		18,762			15,912
Notes Payable- Convertible		30,623			30,623
Related Party Notes Payable									25,246
Notes Payable									157,333

Total Current Liabilities		147,137			143,271				287,288

Total Liabilities		147,137			143,271				287,288

Stockholders' Equity:
Preferred Stock, Series C Convertible, Par value $0.0001, Authorized
10,000,000 shares Issued 1,000,000 shares at March 31, 2012 and
0 at December 31, 2011		100			-
Preferred Stock, Series D Convertible, Par value $0.0001, Authorized
10,000,000 shares Issued 2,436,453 shares at March 31, 2012 and
0 at December 31, 2011		244			-
Common Stock, Par value $0.0001, Authorized 19,990,000,000 shares
Issued 3,510,496,677 and 3,510,496,677 shares		351,050			351,050
Preferred Stock, Series C Convertible, Par value $0.0001, Authorized 10,000,000 shares Issued 1,000,000 shares at June 30, 2012									100
Preferred Stock, Series D Convertible, Par value $0.0001, Authorized 10,000,000 shares Issued 2,436,453 shares at June 30, 2012									244
Common Stock, Par value $0.0001, Authorized 19,990,000,000 shares Issued 3,510,496,677 shares									351,050
Paid-In Capital		19,220,990			19,196,198				22,700
Stock Subscription Receivable		(150,000	)		(150,000	)			(150,000	)
Retained Deficit									(346,429	)
Deficit Accumulated During Development Stage		(19,544,045	)		(19,539,847	)			(40,720	)
Total Stockholders' Equity		(121,661	)		(142,599	)			(163,055	)

Total Liabilities and Stockholders' Equity	$	25,476		$	672			$	124,233

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

																	Deficit Accumulated Since
																	February 19, 2002			Total
																	Inception of			Stockholders'
	Preferred Stock						Common Stock						Paid in				Development			Equity
	Shares			Par Value			Shares			Par Value			Capital				Stage			Deficiency

Balance at February 19, 2002		-		$	-			-		$	-		$	-			$	-		$	-

Net Loss		-			-			-			-			-				(25,809	)		(25,809	)
Balance at December 31, 2002		-			-			-			-			-				(25,809	)		(25,809	)

December 31, 2003, Stock
Issued as Intercompany Dues		-			-			1,000			1			999				-			1,000
Forward Stock Split 5,100 to 1		-			-			5,099,000			509			(509	)			-			-
Net Loss		-			-			-			-			-				(15,704	)		(15,704	)
Balance at December 31, 2003		-			-			5,100,000			510			490				(41,513	)		(40,513	)

Net Loss		-			-			-			-			-				(6,508	)		(6,508	)
Balance at December 31, 2004		-			-			5,100,000			510			490				(48,021	)		(47,021	)

Net Loss		-			-			-			-			-				(11,067	)		(11,067	)
Balance at December 31, 2005		-			-			5,100,000			510			490				(59,088	)		(58,088	)

December 31, 2006, Capital
Contributed		-			-			-			-			56,684				-			56,684
Net Loss		-			-			-			-			-				(16,596	)		(16,596	)
Balance at December 31, 2006		-			-			5,100,000			510			57,174				(75,684	)		(18,000	)

Net Loss		-			-			-			-			-				(65,711	)		(65,711	)
Balance at December 31, 2007		-			-			5,100,000			510			57,174				(141,395	)		(83,711	)

August 15, 2008, Spin-Off
Completed and all Common
Stock not Distrubuted
to the Shareholders was
Cancelled		-			-			(2,884,864	)		(288	)		288				-			-
August 15, 2008 Issued
Convertible Preferred Class
A Stock for Cash		1,800,000			180			-			-			-				-			180
August 18, 2008, Convertible
Preferred Class A Stock
Converted to Common Stock		(1,800,000	)		(180	)		18,000,000			1,800			(1,620	)			-			-
Net Loss		-			-			-			-			-				(40,882	)		(40,882	)
Balance at December 31, 2008		-			-			20,215,136			2,022			55,842				(182,277	)		(124,413	)

Net Loss for the year		-			-			-			-			-				(38,593	)		(38,593	)
Balance at December 31, 2009		-			-			20,215,136			2,022			55,842				(220,870	)		(163,006	)

Net Loss for the year		-			-			-			-			-				(49,392	)		(49,392	)
Balance at December 31, 2010		-			-			20,215,136		$	2,022		$	55,842			$	(270,262	)	$	(212,398	)

Common Stock issued for services		-			-			2,579,281,541			257,928			17,221,456				-			17,479,384
Common Stock issued for debt reduction		-			-			611,000,000			61,100			1,798,900				-			1,860,000
								300,000,000			30,000			120,000		(150,000)					-
Net loss for the year		-			-			-			-			-				(19,269,585	)		(19,269,585	)
Balance at December 31, 2011		-		$	-			3,510,496,677		$	351,050		$	19,196,198		$ (150,000)	$	(19,539,847	)	$	(142,599	)

Preferred C shares issued for cash		1,000,000			100									900							1,000
Preferred D shares issued for Blue Bull		2,436,453			244									23,892							24,136
Net loss for the quarter																		(4,198	)		(4,198	)
Balance at March 31, 2012		3,436,453		$	344			3,510,496,677		$	351,050		$	19,220,990		$ (150,000)	$	(19,544,045	)	$	(121,661	)