Rockwall (SMEG) 10QSB 2004 Q3 Quarterly report (small business)

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

FORM 10-QSB

[X]	Quarterly report filed under Section 13 or 15 (d) of the Securities Exchange Act of 1934
	For the Quarterly Period Ended September 30, 2004
OR
[   ]	Transitional report filed under Section 13 or 15 (d) of the Exchange Act.

Commission File No. 0-33153

STARMED GROUP, INC.
------------------------
(Name of Small Business Issuer in its Charter)

Nevada	52-2220728
State or other jurisdiction of	I.R.S. Employer
incorporation or organization	Identification Number

2029 Century Park East, Suite 1112, Los Angeles, CA 90067
(Address of principal executive office)

(310) 226-2555
Issuer's telephone number:

 Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) been subject to such filing requirements for the past ninety (90) days.   Yes [X]   No [   ]

 State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practical date:

 As of November 1, 2004, there were 7,056,424 shares of Common Stock, par value $0.01 per share, outstanding.

 Transitional Small Business Disclosure Format (check one): Yes [   ]   No [X]

1 

TABLE OF CONTENTS

		PAGE
PART I.   FINANCIAL INFORMATION
Item 1.	Financial Statements
	(a)  Consolidated Balance Sheets	3
	(b)  Consolidated Statements of Operations	4
	(c)  Consolidated Statement of Shareholders' Equity (deficit)	5
	(d)  Consolidated Statements of Cash Flows	6
	(e)  Notes to Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis
	of Financial Condition and Results of Operations	8
Item 3.	Controls and Procedures	9
PART II.  OTHER INFORMATION		10
Item 1.	Legal Proceedings
Item 2.	Changes in Securities and Use of Proceeds
Item 3.	Defaults On Senior Securities
Item 4.	Submission of Items to a Vote
Item 5.	Other Information
Item 6.
	(a)  Exhibits
	(b)  Reports on Form 8K
SIGNATURES AND CERTIFICATES		11

2 

FINANCIAL STATEMENTS
TABLE OF CONTENTS
Consolidated Balance Sheets	F-2
Consolidated Statements of Operations	F-3
Consolidated Statement of Shareholders' Equity (Deficit)	F-4
Consolidated Statements of Cash Flows	F-5
Notes to Consolidated Financial Statements	F-6

F1 

STARMED GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

ASSETS

	September 30, 2004		December 31, 2003
Current assets:
Cash   Accounts receivable   Inventory   Prepaid expenses	$	157,205  29,079  20,940  3,187	$	247,288  20,215  45,493  5,946
Total current assets		210,411		318,942
Equipment and furniture:   Office furniture and computers   Accumulated depreciation		65,063  (28,114)		65,063  (21,142)
Total equipment and furniture		36,949		43,921
Deferred tax assets Deposits		93,000  10,682		105,000  6,313
Total assets	$	351,042	$	474,176
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:   Accounts payable   Accrued expenses   Income tax payable   Capital lease obligation - current portion	$	32,132  307,753  15,000  15,343		133,527  355,848  -  18,200
Total current liabilities		370,228		507,575
Long term debt:   Capital lease obligation - less current portion		11,006		22,972
Total long term debt		11,006		22,972
Total liabilities		391,633		530,547
Shareholders' equity:
Common stock (par value $0.01) 50,000,000 shares authorized;      7,056,424 and 6,936,424 shares issued and outstanding at     September 30, 2004 and December 31, 2003, respectively   Additional paid in capital   Accumulated deficit		70,564  109,646  (210,402)		69,364  88,924  (214,659)
Total shareholders' equity (deficit)		(30,192)		(56,371)
Total liabilities and shareholders' equity (deficit)	$	351,042	$	474,176

See accompanying notes to financial statements

F-2 

STARMED GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

	For the three months ended September 30,				For the nine months ended September 30,
	2004		2003		2004		2003
Sales Revenues form royalties	$	16,742  25,667	$	147,590  97,000	$	1,736,281  90,449	$	191,880  97,000
Total revenues		42,409		244,590		1,826,730		288,880
Cost of sales		11,610		27,497		1,410,046		43,613
General, selling and administrative expenses:
Officer's compensation   Salaries    Professional fees    Accounting fees    Office    Rent    Insurance    Advertising, marketing and promotion    Depreciation    Travel   Other expenses		27,050  71,877  11,841  8,477  (13,550) 19,864  5,919  12,469  2,324  (859) -		10,369  -  27,971  -  -  11,500  747,  5,982  2,325  343  -		71,565  99,642  38,232  31,195  25,297  49,485  11,999  43,176  6,972  833  27,915		10,369  -  39,738  7,677  8,291  30,715  4,799  7,244  6,973  692  -
Total general, selling and administrative expenses		145,412		59,237		406,311		116,498
Total expenses		157,022		86,734		1,816,357		160,111
Income (loss) from operations Forgiveness of debt Interest expense		(114,613) -  (1,133)		157,856  178,382  (3,054)		10,373  -  (4,416)		128,769  178,382  (26,123)
Income (loss) before income taxes (Benefit) provision for income taxes		(115,746) (10,300)		333,184  12,000		5,957  1,700		281,028  12,000
Net income (loss)	$	(105,446)	$	321,184	$	4,257	$	269,028
Net income (loss) per share - basic	$	(0.01)	$	0.06	$	0.05	$	0.05
Net income (loss) per share - diluted	$	(0.01)	$	0.06	$	0.00	$	0.05
Weighted average common shares outstanding - basic		7,056,424		5,067,825		7,048,842		4,997,917
Weighted average common shares outstanding - diluted		7,056,424		5,342,825		7,048,842		5,272,917

See Accompanying notes to financial statements

F-3 

STARMED GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)

	Common Stock
	Number of Shares		Par Value $0.01 per Share		Paid in Capital		Accumulated deficit		Total Shareholders' Equity (Deficit)
Balance at December 31,2002bbConversion of note payable tob common sharesbCommon shares issued for b compensation for servicesb rendered in September and b December 2003, valued at b $0.01 per sharebbNet income		4,962,384 82,300 1,891,740 -	$	49,624 823 18,917 -	$	88,924 - - -	$	(582,053) - - 367,394	$	(443,505) 823  18,917  367,394
Balance at December 31, 2003 Common shares issued for services in January 2004, valued at $0.01 per share Common shares issued for cancellation of contact and in exchange for accounts payable in March 2004, valued at $2.08 per share Net income		6,936,424 110,000 10,000 -		69,364 1,100 100 -		88,924 - 20,722 -		(214,659) - - 4,257		(56,371) 1,100  20,822  109,703
Balance at September 30, 2004		7,056,424	$	70,564	$	109,646	$	(210,402)	$	75,254

See accompanying notes to financial statements

F-4 

STARMED GROUP, INC AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	For the nine months ended September 30, 2004		For the nine months ended September 30, 2003
Cash flows from operating activities:
Net income (loss) Adjustments to reconcile net (loss) to net cash:   Depreciation   Forgiveness of debt   Deferred tax assets   Shares issued for services (Increase) decease in operating assets:   Accounts receivable   Inventory   Prepaid expenses   Deposit Increase (decrease) in operating liabilities:   Accounts payable   Income tax payable   Accrued expenses	$	4,258  6,972  -  12,000  1,100  (8,864) 24,553  2,759  (4,369) (80,574) 15,000  (48,095)	$	269,027  6,973  (178,382) -  8,066  (20,975) (5,136) 2,668  -  25,703  -  22,016
Net cash provided by operating activities		75,260		129,938
Cash flows from financing activities:   Accrual of interest on note payable   Increase in note payable and accrued interest   Capital lease		-  -  (14,823)		22,365  -  (10,398)
Net cash provided by financing activities		(14,823)		11,967
Net increase in cash		(90,083)		141,905
Cash, beginning of period		247,288		6,476
Cash, end of period	$	157,205	$	148,381
Supplemental information on non-cash investing    and financial activities:
Conversion of note payable to common shares and accrued expenses	$	-	$	467,255
Stock issued for compensation and services	$	1,100	$	8,044
Stock issued in exchange for accounts payable	$	20,822	$	-
Supplemental cash flow information:   Cash paid during the period for:   Payments of interest	$		$	-

See accompanying notes to financial statements

F-5 

STARMED GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.      BASIS FOR PRESENTATION

The financial information included herein is unaudited, however, such information reflects all adjustments (consisting solely of normal occurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods. The results of operations for the nine months ended September 30, 2004 are not necessarily indicative of the results to be expected for the full year.

The accompanying consolidated financial statements do not include footnotes and certain financial presentations normally required under generally accepted accounting principles; and, therefore, should be read in conjunction with the Company's Annual Report on Form 10K-SB/A for the year ended December 31, 2003.

The Company was formed on January 10, 2000 and was in the development stage through March 31, 2003. The three and six months ended September 30, 2003 is the first period during which it is considered an operating company.

2.     INVENTORY

During the nine months ended September 30, 2004, the Company disposed of expired inventory totaling $27,371 through a donation to a not-for-profit organization.

3.     CAPITAL STOCK

On January 13, 2004, the Company issued 110,000 restricted common shares for services rendered valued at $1,110.

On March 16, 2004, the Company issued 10,000 restricted common shares for cancellation of a contract and in exchange for accounts payable of $20,822.

F-6 

ITEM 2.   MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS PRELIMINARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements contained in this Plan of Operation of this Quarterly Report on Form 10-QSB include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause the actual results of the Company (sometimes referred to as "we", "us" or the "Company"), performance (financial or operating) or achievements expressed or implied by such forward-looking statements not to occur or be realized. Such forward-looking statements generally are based upon the Company's best estimates of future results, general merger and acquisition activity in the marketplace, performance or achievement, based upon current conditions and the most recent results of operations. Forward-looking statements may be identified by the use of forward-looking terminology such as "may," "will," "project," "expect," "believe," "estimate," "anticipate," "intends," "continue", "potential," "opportunity" or similar terms, variations of those terms or the negative of those terms or other variations of those terms or comparable words or expressions. (See the Company's Form 10SB for a description of certain of the known risks and uncertainties of the Company.)

Overview of the Company's Business

       StarMed Group, Inc., a Nevada corporation, referred herein to as "we", "StarMed Group" or the "Company", is a holding company of Sierra Medicinals, Inc., an Arizona corporation, and our wholly-owned subsidiary ("Sierra Medicinals"). StarMed Group, through Sierra Medicinals is engaged in the development and marketing of natural alternative medicinals.

       The Company's products include two products to help problems with eyesight, one product to help those suffering from arthritis, one products for colon distress and two products for weight loss. The Company's physicians have formulated several levels of nutritionals for different levels of each patient's need.

       The Company recognizes the need for product education not only to the public, but also to doctors who are not trained in alternative medicine. The Company, therefore, has as one of its primary efforts, the preparation of educational material, including research data to support its products.

       The Company has commissioned the writing of three books, one on diabetes, the second is a spanish translation of the Starch Blocker Diet book published by Harper Collings, and the third is on weight loss for dogs. The Company plans to produce and market the products that help alleviate the health problems discussed in the books.

9 

 THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003

       TOTAL REVENUES. The Company's total revenue increased to $1,826,730 in nine months ended September 30, 2004 as compared to $288,880 revenue in the nine months ended September 30, 2003. The Company's total revenue decreased to $42,409 in the quarter ended September 30, 2004 as compared to $244,590 revenue in the quarter ended September 30, 2003.

       Operating revenues derived by the Company's from the sales of its products were $1,736,281 in the nine months ended September 30, 2004 as compared to $191,880 in the nine months ended September 30, 2003. Operating revenues derived by the Company's from the sales of its products were $16,742 in the quarter ended September 30, 2004 as compared to $147,590 in the quarter ended September 30, 2003.

       Revenues for the Company's from royalty payments in the quarter ended September 30, 2004 totaled $25,667 compared to $97,000 in the quarter ended September 30, 2003. Revenues for the Company's from royalty payments in the nine months ended September 30, 2004 totaled $90,447 compared to $97,000 in the nine months ended September 30, 2003.

       TOTAL EXPENSES. The Company's total expenses for the quarter ended September 30, 2004 totaled $157,022 compared to $86,734 in the quarter ended September 30, 2003, representing an increase in total expenses primarily due to marketing and other costs associated with the sale of the Company's products. The Company's total expenses for the nine months ended September 30, 2004 totaled $1,816,357 compared to $160,111 in the nine months ended September 30, 2003. This reflects the increased costs incurred by the Company as it started to significantly increase its sales and derive revenues from its operations.

       NET INCOME (LOSS). The Company had a net loss of $(105,446) for the quarter ended September 30, 2004, compared to a net income of $321,184 for the quarter ended September 30, 2003. The Company had a net income of $4,257 for the nine months ended September 30, 2004, compared to a net income of $269,028 for the nine months ended September 30, 2003.

LIQUIDITY AND CAPITAL RESOURCES

       The Company had a cash balance of $157,205 at September 30, 2004 as compared to $247,288 at December 31, 2003.

       The Company has been able to borrow and raise sufficient capital to continue operations.

ITEM 3.  CONTROLS AND PROCEDURES

Our President and Treasurer/Chief Financial Officer (the "Certifying Officer") is responsible for establishing and maintaining disclosure controls and procedures and internal controls and procedures for financial reporting for the Company. The Certifying Officer has designed such disclosure controls and procedures and internal controls and procedures for financial reporting to ensure that material information is made known to him, particularly during the period in which this report was prepared. The Certifying Officer has evaluated the effectiveness of the Company's disclosure controls and procedures and internal controls and procedures for financial reporting as of September 30, 2004 and believes that the Company's disclosure controls and procedures and internal controls and procedures for financial reporting are effective based on the required evaluation. There have been no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

10 

PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS - NONE

ITEM 2 - CHANGES IN SECURITIES - NONE

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES - NONE

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE

ITEM 5 - OTHER INFORMATION - NONE

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

       (a)  Exhibits.   None

       (b)  Reports on Form 8-K.  None

11 

SIGNATURES

       In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	STARMED GROUP, INC.
November 16, 2004	/s/ Herman Rappaport
	By: Herman Rappaport, President

12 

Exhibit 31

CERTIFICATIONS OF PRESIDENT, CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER PURSUANT
TO SECTION 302 OF THE SARBANES-OXLEY ACT

CERTIFICATIONS

I, Herman Rappaport, President, Chief Executive Officer and Chief Financial Officer of Starmed Group, Inc. certify that:

1. I have reviewed this quarterly report on Form 10-QSB of, Starmed Group, Inc. (the "Company" or "registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, is made known to us by others within Company, particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the Company's first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls, which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls.

Date: November 16, 2004	/s/ Herman Rappaport
	Herman Rappaport, President,
	Chief Executive Officer and
	Chief Financial Officer

Exhibit 32

CERTIFICATION OF PRESIDENT, CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT

       In connection with the Report of Starmed Group, Inc. (the "Company") on Form 10-QSB for the for the quarter ended September 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Herman Rappaport, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

       (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
       (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Herman Rappaport            
Herman Rappaport, President,
Chief Executive Officer and
Chief Financial Officer

November 16, 2004