XOTC:DEWM Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

XOTC:DEWM (): Fair Value Estimate
Premium
XOTC:DEWM (): Consider Buying
Premium
XOTC:DEWM (): Consider Selling
Premium
XOTC:DEWM (): Fair Value Uncertainty
Premium
XOTC:DEWM (): Economic Moat
Premium
XOTC:DEWM (): Stewardship
Premium
 

 

 

 

U.S. Securities and Exchange Commission

Washington, D.C. 20549

 

Form 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended: June 30, 2012
 
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _________ to _________

 

Commission File No. 001-32032

 

Dewmar International BMC, Inc.

(Name of Registrant in its Charter )

 

NEVADA   83-0375241
State or other jurisdiction of   (I.R.S. Employer I.D. No.)
incorporation or organization)    

 

132 E. Northside Dr. Suite C Clinton, M 39056
(Address of principal executive offices)

 

(601) 488-4360

(Registrant’s telephone number, including area code) 

 

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

Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 [  ] 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 the “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large Accelerated Filer [  ] Accelerated Filer [  ]
Non-Accelerated Filer [  ] 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 [X] No

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

As of August 14, 2012 the registrant had 59,233,000 issued and outstanding shares of common stock .

 

 

 

 
 

 

Dewmar International BMC, Inc.

 

TABLE OF CONTENTS

 

    Page
     
PART I – FINANCIAL INFORMATION   3
Item 1. Financial Statements:.    
Consolidated Balance Sheets (unaudited)   F-1
Consolidated Statements of Operations (unaudited)   F-2
Consolidated Statements of Cash Flows (unaudited)   F-3
Notes to Consolidated Financial Statements (unaudited)   F-4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   5
Item 3. Quantitative and Qualitative Disclosure About Market Risk   8
Item 4. Controls and Procedures   8
PART II – OTHER INFORMATION    
Item 1. Legal Proceedings.   9
Item 1A. Risk Factors.   10
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   10
Item 3. Defaults Upon Senior Securities   10
Item 4. Mine Safety Disclosures   10
Item 5. Other Information.   10
Item 6. Exhibits   11
SIGNATURES   12

 

2
 

 

 

 

PART I - FINANCIAL INFORMATION

 

Forward-Looking Information

 

This report on Form 10-Q contains forward-looking statements. Forward-looking statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “we believe,” “we intend,” “may,” “should,” “will,” “could” and similar expressions denoting uncertainty or an action that may, will or is expected to occur in the future. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements.

 

Examples of forward-looking statements include:

 

the timing of the development of future products;
  
projections of costs, revenue, earnings, capital structure and other financial items;
  
statements of our plans and objectives;
  
statements regarding the capabilities of our business operations;
  
statements of expected future economic performance;
  
statements regarding competition in our market; and
  
assumptions underlying statements regarding us or our business.

 

The ultimate correctness of these forward-looking statements depends upon a number of known and unknown risks and events. We discuss our known material risks under Item 1.A “Risk Factors contained in the Company’s Annual Report on Form 10K/A for the year ended December 31, 2011. Many factors could cause our actual results to differ materially from the forward-looking statements. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

 

The forward-looking statements speak only as of the date on which they are made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

 

3
 

 

 

 

Item 1. Financial Statements

 

DEWMAR INTERNATIONAL BMC, INC. (fka CONVENIENTCAST, INC.)

 

INDEX TO FINANCIAL STATEMENTS

JUNE 30, 2012

 

Consolidated Balance Sheets as of June 30, 2012 (unaudited) and December 31, 2011 F-1
   
Consolidated Statements of Operations for the Three and Six Months Ended  
June 30, 2012 and 2011 (unaudited) F-2
   
Consolidated Statements of Cash Flows for the Six Months Ended  
June 30, 2012 and 2011 (unaudited) F-3
   
Notes to Consolidated Financial Statements F-4

 

4
 

  

DEWMAR INTERNATIONAL BMC, INC. (fka CONVENIENTCAST, INC.)

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2012 (unaudited) and DECEMBER 31, 2011

 

 

       
    June 30, 2012     December 31, 2011  
             
ASSETS            
Current Assets                
Cash and cash equivalents   $ 32,216     $ 91,506  
Accounts receivable, net of allowance for doubtful account of $0  and $34,634     22,479       113,327  
Related party receivable     6,679       5,603  
Advances to related party     9,332       9,332  
Prepaid expenses and other current assets     4,403       11,463  
Inventory     31,948       58,162  
Total current assets     107,057       289,393  
                 
Property, Plant and Equipment, net of accumulated depreciation of $ 6,785 and $5000, respectively     14,370       16,155  
                 
TOTAL ASSETS   $ 121,427     $ 305,548  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT                
LIABILITIES                
Current Liabilities                
Accounts Payable   $ 55,999     $ 73,420  
Accrued liabilities     436,955       389,551  
Advances from related party     -       38,800  
Common stock payable     315,000       -  
Total current liabilities     807,954       501,771  
                 
                 
TOTAL LIABILITIES     807,954       501,771  
                 
COMMITMENTS AND CONTINGENCIES (Note 5)                
                 
STOCKHOLDERS’ DEFICIT                
                 
Preferred stock, par $0.001, 25,000,000 shares authorized and 0 shares issued and outstanding, respectively     -       -  
Common stock, par $0.001, 100,000,000 shares authorized and 59,233,000 and 58,495,000 shares issued and outstanding, respectively     59,233       58,495  
Additional paid in capital     104,159       22,097  
Accumulated deficit     (849,919 )     (276,815 )
                 
TOTAL STOCKHOLDERS’ DEFICIT     (686,527 )     (196,223 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT   $ 121,427     $ 305,548  

 

The accompanying notes to the unaudited consolidated financial statements are an integral part of these statements. 

 

F-1
 

  

DEWMAR INTERNATIONAL BMC, INC. (fka CONVENIENTCAST, INC.)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

FOR THE SIX MONTHS ENDED JUNE 30, 2012 and 2011

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2012   2011   2012   2011 
                 
Revenue, net  $101,874   $470,123   $295,090   $749,242 
                     
Cost of goods sold   47,681    197,660    123,374    367,979 
                     
Gross profit   54,196    272,463    171,716    381,263 
                     
OPERATING EXPENSES:                    
Occupancy and related expenses   8,548    11,262    14,884    20,134 
General and administrative   484,136    144,811    637,989    241,130 
Contract labor   33,232    83,926    70,545    152,630 
Marketing and advertising   6,899    31,345    16,397    48,441 
Total operating expenses   532,815    271,344    739,815    462,335 
                     
NET OPERATING INCOME (LOSS)   (478,622)   1,119    (568,099)   (81,072)
                     
OTHER INCOME (EXPENSE)                    
Interest expense   15    30,790    15    30,723 
Interest income   1    45    8    118 
Loss on extinguishment of debt   -    -    5,000    - 
Total other income (expense)   14    30,745    (5,007)   30,605 
                     
NET LOSS BEFORE INCOME TAXES   (442,636)   (29,626)   (537,106)   (111,677)
                     
PROVISION FOR INCOME TAXES   -    -    -    - 
                     
NET LOSS  $(478,636)  $(29,626)  $(573,106)  $(111,677)
                     
Net income per share, basic and diluted  $(0.00)  $(0.00)  $(0.00)  $(0.00)
Weighted-average common shares outstanding, basic and diluted   58,944,006    40,000,000    58,944,006    40,000,000 

 

 

The accompanying notes to the unaudited consolidated financial statements are an integral part of these statements.

 

F-2
 

  

DEWMAR INTERNATIONAL BMC, INC. (fka CONVENIENTCAST, INC.) 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

FOR THE SIX MONTHS ENDED JUNE 30, 2012

 

    June 30, 2012     June 30, 2011  
             
Cash flows from operating activities:                
Net loss   $ (573,106 )   $ (111,677 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation expense     1,785       1,330  
Stock-based compensation     354,000       -  
Loss on extinguishment of debt     5,000       -  
Changes in operating assets and liabilities :                
Accounts receivable     90,848       47,943  
Inventory     26,214       68,028  
Prepaid expenses and other current assets     7,060       (96)  
Accrued liabilities – related party     -       (6,500 )
Accounts payable and accrued liabilities     29,986       48,287  
Net cash provided by (used in) operating activities     (58,213 )     47,315  
                 
Cash flows from investing activities:                
Advances to related party     -       -  
Net cash used in investing activities     -       -  
                 
Cash flows from financing activities:                
Advances from related party     (1,076)       (45,572)  
Cash proceeds from borrowings             30,790  
Cash used for repayment of notes payable     -       (72,831)  
Cash proceeds from issuance of common stock     -       25,800  
Net cash used in financing activities     (1,076)       (61,813)  
                 
Net change in cash and cash equivalents     (59,289 )     (14,498 )
Cash and cash equivalents, at beginning of period     91,506       208,725  
Cash and cash equivalents, at end of period   $ 32,216     $ 194,227  
                 
Supplemental cash flow information:                
Interest paid   $ -     $ -  
                 
Supplemental noncash investing and financing activities:                
Extinguishment of debt for common stock   $ 43,800     $ 43,800  
Increase in common stock payable   $ 315,000     $ -  

 

The accompanying notes to the unaudited consolidated financial statements are an integral part of these statements. 

 

F-3
 

 

DEWMAR INTERNATIONAL BMC, INC. (fka CONVENIENTCAST, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2012

 

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

 

On October 28, 2011, pursuant to an Exchange Agreement (“Agreement”), Dewmar International BMC, Inc. (fka Convenientcast, Inc.) (“Dewmar International BMC, Inc. or the “Company”), a publicly reporting Nevada corporation, acquired DSD Network of America, Inc. (“DSD”), a Nevada corporation, in exchange for the issuance of 40,000,000 shares of common stock of Dewmar International BMC, Inc. (the “Exchange Shares”), a majority of the common stock, to the former owners of DSD. In conjunction with the Merger, DSD became a wholly-owned subsidiary of the Company.

 

For financial accounting purposes, this acquisition (referred to as the “Merger”) was a reverse acquisition of Dewmar International BMC, Inc. by DSD and was treated as a recapitalization. Accordingly, the financial statements were prepared to give retroactive effect of the reverse acquisition completed on October 28, 2011, and represent the operations of DSD prior to the Merger.

 

As of the time of the Merger, Dewmar International BMC, Inc. held minimal assets and was a developmental stage company. Following the Merger, the Company, through DSD, is a manufacturer of its Lean Slow Motion Potion™ brand relaxation beverage, which was launched by DSD in September of 2009. After the Merger, the Company operates through one operating segment.

 

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. The accompanying interim unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the Company’s opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six month period ended June 30, 2012 are not necessarily indicative of the results for the full years. While management of the Company believes that the disclosures presented herein and adequate and not misleading, these interim financial statements should be read in conjunction with the audited combined financial statements and the footnotes thereto for the periods ended December 31, 2011 filed in our Annual Report on Form 10K/A filed on August 3, 2012.

 

Certain amounts in prior periods have been reclassified to conform to current period presentation.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and DSD, its only subsidiary. All material intercompany accounts and transactions have been eliminated.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles 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 as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

F-4
 

  

Cash and Cash Equivalents

 

Cash and cash equivalents consist primarily of cash on deposit and money market accounts, which are readily convertible into cash and purchased with original maturities of three months or less. These investments are carried at cost, which approximates fair value.

 

The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”). Beginning December 31, 2011 through June 30, 2012, all noninterest-bearing transaction accounts are fully insured, regardless of the balance of the account, at all FDIC-insured institutions. This unlimited insurance coverage is separate from, and in addition to, the insurance coverage provided to the depositor’s other accounts held by a FDIC-insured institution, which are insured for balances up to $250,000 per depositor until December 31, 2013. At June 30, 2012 and December 31, 2011, the amounts held in banks did not exceed the insured limits.

 

 

Accounts Receivable and Allowance for Doubtful Accounts

 

The Company’s accounts receivable were composed of receivables from customers for sales of products. The Company performs credit evaluations prior to selling products or granting credit to its customers and generally does not require collateral.

 

The Company’s trade accounts receivable are typically collected within 60 days from the date of sale. The Company monitors its exposure to losses on trade accounts receivable and maintains an allowance for potential losses and adjustments. The Company determines its allowance for doubtful accounts based on the evaluation of the aging of accounts receivable and detailed analysis of high-risk customers’ accounts, and the overall market and economic conditions of its customers. Past due trade accounts receivable balances are written off when the Company’s collection efforts have been unsuccessful in collecting the amount due. At June 30, 2012 and December 31, 2011, the allowance for doubtful accounts was$0  and $34,634. During the six months ended June 30, 2012, the company wrote off $42,753 in accounts receivable.

 

Inventory Held by Third Party

 

Inventory costs are determined principally by the use of the first-in, first-out (FIFO) costing method and are stated at the lower of cost or market, including provisions for spoilage commensurate with known or estimated exposures which are recorded as a charge to cost of goods sold during the period spoilage is incurred.

 

Fixed Assets

 

Leasehold improvements, property and equipment are stated at cost less accumulated depreciation and amortization. Expenditures for property acquisitions, development, construction, improvements and major renewals are capitalized. The cost of repairs and maintenance is expensed as incurred. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are generally 3 to 10 years. Leasehold improvements are amortized over the shorter of the lease term, which generally includes reasonably assured option periods, or the estimated useful lives of the assets. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in ”Gain or Loss from Operations”.

 

The estimated useful lives are:

 

Furniture and fixtures   3-10 years
Equipment   3-7 years
Vehicles   3-7 years

 

F-5
 

  

Revenue Recognition Policy

 

The Company recognizes revenue when the product is received by and title passes to the customer. The Company’s standard terms are ‘FOB’ receiving point. If a customer receives any product that they consider damaged or unacceptable, the customer must document any such damages or reasons for it not to be accepted on the original invoice upon delivery and then inform the Company within 72 hours of receipt of the product. The Company does not accept returns of product for reasons other than damage.

 

We record estimates for reductions to revenue for customer programs and incentives, including price discounts, volume-based incentives, and promotions and advertising allowances. No products are sold on consignment. Revenue is shown net of sales allowances on the accompanying statements of operations.

 

Cost of Goods Sold

 

The Company’s cost of goods sold includes all costs of beverage production, which primarily consist of raw materials such as concentrate, aluminium cans, trays, shrink wrap, can ends, labels and packaging materials. Additionally, costs incurred for shipping and handling charges are included in cost of goods sold. The Company does not bill customers for cost of shipping unless the Company incurs additional charges such as refusing initial shipment or not being able to receive shipment at their prescheduled time with the freight company.

 

Advertising Expense

 

The Company recognizes advertising expense as incurred. The Company recognized advertising expense of $5,124 and $31,251 for the six months ended June 30, 2012 and 2011, respectively.

 

Income Taxes

 

The Company accounts for its income taxes using the liability method, whereby deferred tax assets and liabilities are established for the future tax consequences of temporary differences between the financial statement carrying amounts of assets and liabilities and their tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize the tax assets through future operations.

 

The Company’s federal and state income tax returns for the years ended 2009, 2010 and 2011 are open to examination. As of June 30, 2012, the Company evaluated its open tax years in all known jurisdictions. Based on this evaluation, the Company did not identify any uncertain tax positions. We will account for interest and penalties relating to uncertain tax positions in the current period statement of operations as necessary.

 

Fair value of Financial Instruments

 

U.S. GAAP establishes a fair value hierarchy which has three levels based on the reliability of the inputs to determine the fair value. These levels include: Level 1, defined as inputs such as unadjusted quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions.

 

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivables and payables and accrued liabilities. The carrying values of these financial instruments approximate their respective fair values as they are either short-term in nature or carry interest rates that approximate market rates.

 

Share-Based Compensation

 

The Company recognizes all share-based payments to employees, including grants of Company stock options to Company employees, as well as other equity-based compensation arrangements, in the financial statements based on the grant date fair value of the awards. Compensation expense is generally recognized over the vesting period. During the six months ending June 30, 2012 and 2011, the Company issued no stock options or other share-based payments to employees.

 

F-6
 

  

Income (Loss) per Share

 

Basic net income (loss) per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. At June 30, 2012 there were no such common stock equivalents outstanding.

 

Concentration of Risks

 

The Company’s operations and future business model are dependent in a large part on the Company’s ability to execute its business model. The Company’s inability to meet its sales objectives may have a material adverse effect on the Company’s financial condition.

 

Most of the Company’s sales are derived from beverage distributors located in the Southern region of the United States. This concentration of sales may have a negative impact on total sales in the event of a decline in the local economies.

 

New Accounting Pronouncements

 

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.

 

NOTE 3. GOING CONCERN

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern. The Company has incurred net losses and has an accumulated deficit totaling $849,919. The Company also had negative working capital. The Company’s operating results are subject to numerous factors, including fluctuation in the cost of raw materials, changes in consumer preference for beverage products and competitive pricing in the marketplace. These conditions give rise to substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to obtain additional financing or sale of its common stock as may be required and ultimately to attain profitability.

 

Management’s plan, in this regard, is to raise financing through equity financing to augment the cash flow it receives from product sales and finance the continuing development for the next twelve months.

 

NOTE 4. INCOME TAXES

 

No provision for federal income taxes has been recognized for the six months ended June 30, 2012 and the years ended December 30, 2011 as the Company incurred a net operating loss for income tax purposes in each year and has no carryback potential.

 

Significant components of the Company’s deferred tax liabilities and assets as of June 30, 2012 and December 31, 2011 were as follows:

 

    June 30, 2012     December 31, 2011  
Deferred tax assets:                
Net operating loss   $ 73,869     $ 23,938  
      73,869       23,938  
Less valuation allowance     (73,869 )     (23,938 )
    $ -     $ -  

 

F-7
 

  

The Company has provided a full valuation allowance for net deferred tax assets as it is more likely than not that these assets will not be realized.

 

At June 30, 2012, the Company had net operating loss carryforwards of approximately $217,000 for federal income tax purposes. These net operating loss carryforwards begin to expire in 2024.

 

NOTE 5. STOCKHOLDERS’ DEFICIT

 

Shares Issued for Services

 

On November 7, 2011, the Company entered into an Advisory Services Agreement (“Advisory Agreement”) with an unrelated investment advisory company (the “Advisor”), whereas the Advisor agreed to perform certain advisory services in exchange for 50,000 shares, valued at $4,500 ($0.09 per share), of the Company’s common stock, to be delivered within 10 days after execution of the Advisory Agreement, in addition to reimbursement by the Company for the $4,500 DTC Application fee. The shares issued pursuant to the Advisory Agreement are restricted shares. The term of the Advisory Agreement commenced on November 7, 2011 and was set to expire upon the Company’s receipt of either an approval or a denial of their DTC Eligibility Request by DTC. On March 14, 2012, the Company completed the final approved DTC opinion and it is currently expecting notification of its DTC Eligibility Request.

 

During the six months ended June 30, 2012, the Company exchanged 300,000 shares of restricted common stock for consulting services . The value was determined using the market value of the shares issued which was $39,000 resulting in an Additional Paid in Capital amount of $38,700.

 

During the six months ended June 30, 2012, the company entered into two consulting agreements with the commitment to issue a total of 2,100,000 shares at the signing of the agreement in April 2012. As of June 30, 2012, the shares had not been issued, but the Company recorded a common stock payable with a corresponding increase in stock based compensation in the amount of $315,000, which is the market value of the shares to be issued under the consulting arrangements.

 

NOTE 6. RELATED PARTY TRANSACTIONS

 

Sales to Related Party Distributor

 

The Company is engaged with a distributor that is wholly-owned by the Company’s CEO (the “Distributor”). The Distributor is responsible for shipping out product samples, transferring small quantities of product to local distributors at the request of the Company, sales of product to local retailers or small wholesalers and for the fulfillment of online sales orders. The Company may withdraw cases of product from the Distributor at the Company’s will for Company use, for which the Company will provide the Distributor with a credit memo based on a per-case price equal to the price paid by the Distributor to the Company.

 

The Distributor pays the Company on a per case basis which is consistent with terms between the Company and third party distributors. Since the Company uses a substantial amount of the Distributor’s inventory as samples and promotions, the Company offers the Distributor credit terms of “on consignment.” During the six months ended June 30, 2012 and 2011, the Company recognized revenue from product sales to the Distributor of $12,720 and $39,880, respectively, which represented 4% and 5%, respectively, of total product revenue recognized by the Company. At June 30, 2012 and December 31, 2011, receivable from the Distributor was $4,076 and $3,000 respectively.

 

Shipping Reimbursements from Related Party

 

At June 30, 2012 and December 31, 2011, the Company had outstanding accounts receivable of $2,603, respectively, from a company owned by the CEO’s wife. These receivables represent shipping reimbursements erroneously billed by logistics and shipping companies. The Company paid these invoices and then in turn generated invoices to the company owned by the CEO’s wife for reimbursement.

 

F-8
 

 

Advances to Related Party

 

During the period beginning February 2011 through April 2011, the Company advanced $49,484 to a company owned by the CEO’s wife. As of June 30, 2012 and December 31, 2011, that company had repaid $40,516 of these advances resulting in outstanding advances due of $9,332 as of these dates.

 

Acquisition of Fixed Assets from Related Party

 

During the period ended November 30, 2011, the Company purchased two used vehicles from companies owned by the CEO for a total of $7,850. There were no such purchases from related parties for the period ended June 30, 2012.

 

Advances from Related Party

 

During 2011, the Company received related party advances from a company majority owned by the CEO and of which the CEO was the sole officer and director in the aggregate amount of $38,800. On March 7, 2012, the Company issued 438,000 restricted shares of common stock to settle the $38,800 advances from third parties that were outstanding at December 31, 2011. The 438,000 restricted shares were valued at $43,800 ($0.10 per share) with a par value of $438 resulting in a loss on extinguishment of debt of $5,000.

 

NOTE 7. LEGAL PROCEEDINGS

 

The Company is aggressively defending itself in all of the below proceedings. The Company’s management believes the likelihood of future liability to the Company for these contingencies is remote, and the Company has not recorded any liability for these legal proceedings at June 30, 2012 and December 31 2011. While the results of these matters cannot be predicted with certainty, the Company’s management believes that losses, if any, resulting from the ultimate resolution of these proceedings will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

 

During January 2011, a claim was filed against DSD by Corey Powell, in Ascension Parish, LA 23rd Judicial District Court. Corey Powell was a former distributor of LEAN, a relaxation beverage marketed by DSD. Powell filed suit to recover allegedly unpaid commissions, “invasion fees” and “finder’s fees.” The commissions related to payments allegedly owed for Powell’s direct sale of LEAN product to wholesalers and retailers. The invasion fees relate to payments allegedly owed to Powell when the LEAN product was sold by other wholesalers in his geographic territory. The finders’ fees relate to payments allegedly owed to Powell for introducing investors to the DSD management. Discovery is ongoing. Written discovery has been propounded and depositions have been taken to better understand the nature and basis for the plaintiff’s claims and to build DSD’s defenses. DSD has vigorously contested each and every one of the plaintiff’s allegations and has instructed counsel to proceed to trial on the merits. There have been negotiations between the counsels for the parties regarding dropping approximately half of the original claims. However no trial date has been set.

 

On February 14, 2011, a claim was filed against DSD by Charles Moody, in Caddo Parish, LA First Judicial Court seeking in excess of $100,000 in damages. Charles Moody loaned DSD approximately $63,000 in June 2009. In exchange, Moody received a Promissory Note containing the terms and conditions of the repayment of the loan. Based upon the understanding of the parties, DSD began making monthly payments to Moody in January 2010 in satisfaction of the loan. In December 2010, final payment of the remaining balance of the loan was paid to Moody in full and final satisfaction of the Promissory Note. Moody filed suit to recover “late fees” allegedly owed under the Promissory Note. DSD contends the Promissory Note was satisfied with the final payment in December 2010; Moody contends that repayment should have begun in November 2009, and that because it did not, late fees are owed. This matter was settled for a payment of $8,000 by DSD on July 27, 2012 with no admission of guilt or liability by either party.

 

F-9
 

 

On November 9, 2011, Charles Moody and DeWayne McKoy filed a claim against DSD and Marco Moran, CEO, in Bossier Parish, LA 26th Judicial Court. Charles Moody and Dewayne McKoy, allegedly both shareholders of DSD, brought an action against Dr. Moran alleging that he engaged in various acts of misconduct and breaches of his fiduciary duties to the corporation which damaged them as minority shareholders. Moody and McKoy also seek damages from Dr. Moran for dilution and/or loss of value of their shareholder interest in DSD as a result of his alleged misconduct. DSD is a nominal defendant in this derivative action, as required by Louisiana law. Initial pleadings have been filed and exceptions to the plaintiff’s claims have been asserted. Discovery has not yet commences. DSD vigorously denies that its officers or directors engaged in any conduct which may have harmed minority shareholders.

 

During December 2011, Innovative Beverage Group Holdings (“IBGH”) filed a claim against Dewmar International BMC, Inc., Unique Beverage Group, and LLC. and Marco Moran, CEO of the Company, in Harris County, TX 61st Judicial District Court, whereas the plaintiff asserted certain allegations. On February 24, 2012, the Company filed a motion for summary judgment to dismiss these frivolous allegations due to lack of proper evidence. On April 12, 2012 Dewmar International BMC, Inc was given written notice of its non-suit without prejudice from Innovative Beverage Group, Inc. This releases Dewmar International BMC, Inc. from any and all liability. Dewmar’s counter suit remains alive and trial is set for October 8, 2012.

 

On March 22, 2012 whereas Plaintiff, DSD NETWORK OF AMERICA, INC. (hereinafter “DSD”) is a Nevada corporation doing business in Clark County, Nevada files suit against Defendants DeWayne McKoy, Charles Moody, Corey Powell and Peter Bianchi in United States District Court; District of Nevada for a combined thirteen complaints accusing this group of defendants in colluding against the Company. Answers have been received from McKoy, Moody and Powell and Powell has filed a counterclaim. DSD vigorously denies all the claims in Powell’s counterclaim.

 

NOTE 8. COMMITMENTS AND CONTINGENCIES

 

Employment Agreement

 

On January 1, 2011, the Company entered into employment agreement with Dr. Moran (“Employee”) to serve as President and Chief Executive Officer of the Company. The employment commenced on January 1, 2011 and runs for the period through January 1, 2015. The Company will pay Employee, as consideration for services rendered, a base salary of $120,000 per year.

 

As additional compensation, Employee is eligible to receive one percent of the issued and outstanding shares of the Company if the gross revenues hit specified milestones for each fiscal year under the agreement. The Company will provide additional benefits to Employee during the employment term which include, but are not limited to, health and life insurance benefits, vacation pay, expense reimbursement, relocation reimbursement and a Company car. The Company may also include Employee in any benefit plans which it now maintains or establishes in the future for executives. If Employee dies, the Company will pay the designated beneficiary an amount equal to two years’ compensation, in equal payments over the next twenty four months.

 

In the event Employee’s employment is constructively terminated within five years of the commencement date, Employee shall receive a termination payment, which will be determined according to a schedule based upon the number of years since the commencement of the contract, within a range of $120,000 to $400,000. Additionally, Employee shall continue to receive the additional benefits mentioned above for a period of two years from the termination date. If the constructive termination date is later than five years after the commencement date, Employee shall receive the lesser amount of an amount equal to his aggregate base salary for five years following the date of the termination date, or an amount equal to his aggregate base salary through the end of the term. Additionally, Employee shall continue to receive the additional benefits mentioned above during the period he is entitled to receive the base salary.

 

F-10
 

 

During the six months ended June 30, 2012 and 2011, the Company accrued $60,000 and $60,000 in base salary to Dr. Moran, respectively, which were included as a component of general and administrative expenses. The Company recorded total accrued payroll to Dr. Moran in the amounts of $391,000 and $293,000 in accounts payable and accrued liabilities on its consolidated balance sheets at June 30, 2012 and December 31, 2011, respectively.

 

Leases Operating Expenses

 

The Company leased office spaces in Clinton, MS and Houston, TX under non-cancelable operating leases during 2011. Rent expense for the six months ended June 30, 2012 and 2011 was approximately $11,137 and $9,560, respectively.

 

Future minimum lease payments through December 31, 2012 total $11,015 under non-cancelable operating leases at June 30, 2012..

 

Distribution Agreement

 

On March 1, 2012, the Company entered into a distribution and brokerage agreement with Brand Builderz, USA, LLC (BBUSA), a Limited Liability Company organized under the laws of the State of Maine, to sell, market, manage and assist in distributing products in its designated territory. The Company will pay a monthly retainer fee of two thousand dollars ($2,000) until sales commissions reach at least four thousand dollars ($4,000) for two consecutive months. The company will pay commissions of ten percent (10%) of gross sales collected, pay an invasion fee of fifty cents ($0.50) per physical case of product sold within the territory of BBUSA by a third party.

 

On April 9, 2012, The Company entered into an agreement with NA Beverages, LLC, a Nevada Limited Liability Company (the Consultant), to provide advice, analysis, sales and recommendations. The Consultant shall be paid at the base salary of $40,000 per year, receive a commission of five percent (5%) of the gross sales of all fully paid invoices received from the Consultant’s customers and provide a monthly bonus of up to twenty-five hundred dollars ($2,500) for arranging, conducting and reporting of meetings with buyers and or similar business related personnel. Either the Company or the Consultant may terminate the agreement with at least thirty (30) says prior written notice with no specific reasons given.

 

NOTE 9. SUBSEQUENT EVENTS

 

On June 27, 2012, the Company entered into a Securities Purchase Agreement with Asher Enterprises, Inc. (“Asher”) a Delaware Corporation for an 8% convertible promissory note with an aggregate principal amount of $32,500 which together with any unpaid accrued interest due on March 29, 2013. This convertible note together with any unpaid accrued interest is convertible in shares of common stock at the holder’s option at a variable conversion price calculated as 55% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date with no floor stated in the conversion feature. In July 2012, this convertible promissory note was funded in the amount of $30,000. The Company will analyze whether the variable conversion price results in need for bifurcation of the conversion feature into a separate derivative liability valued at fair market value on the date of funding.

 

On July 5, 2012, the Company entered into a distribution agreement with Mikeska Distributing Co, a corporation organized under the laws of the State of Texas to exclusively sell, market, manage and assist in distributing products in its designated territory in Texas. The Company grants the distributor a first right of refusal of distribution of products in other territories. The Company will provide an invasion fee of $2.00 to $4.00 per case if products are sold within said territory.

 

On July 16, 2012, the Company entered into a distribution agreement with New Age Distributing, a corporation organized under the laws of the State of Arkansas to sell and assist in distributing products in its designated territory of Arkansas. The Company grants the distributor a first right of refusal of distribution of products in other territories. The Company will provide an invasion fee of $2.00 to $4.00 per case if products are sold within said territory.

 

On August 1, 2012, the Company entered into an investor relations consulting agreement with Empire Relations Group, Inc.(“Empire”), a corporation organized under the laws of the State of New York. Under the terms of the agreement, the Company will pay Empire a non-refundable guaranteed consulting fee of $15,000 if Empire introduces the Company to at least $30,000 in capital either through equity investment, loans, notes, debt settlements or any other type of financing which results in an increase in the net cash position of the Company. 

 

F-11
 

 

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

 

Except for the historical information contained in this report on Form 10-Q, the matters discussed herein are forward-looking statements. Words such as “anticipates,” “believes,” “expects,” “future,” and “intends,” and similar expressions are used to identify forward-looking statements. These and other statements regarding matters that are not historical are forward-looking statements. These matters involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include without limitation those discussed below as well as those discussed elsewhere in this report. Readers are cautioned not to place undue reliance on these forward-lookingstatements, which reflect management’s analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements. This information should also be read in conjunction with our audited historical financial statements which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011,

 

Background

 

On October 28, 2011, pursuant to an Exchange Agreement (“Agreement”), Dewmar International BMC, Inc. (fka Convenientcast, Inc.) (“Dewmar International BMC, Inc or the “Company”), a publicly reporting Nevada corporation, acquired DSD Network of America, Inc. (“DSD”), a Nevada corporation, in exchange for the issuance of 40,000,000 shares of common stock of Dewmar International BMC, Inc. (the “Exchange Shares”), a majority of the common stock, to the former owners of DSD. In conjunction with the Merger, DSD became a wholly-owned subsidiary of the Company.

 

5
 

 

For financial accounting purposes, this acquisition (referred to as the “Merger”) was a reverse acquisition of Dewmar International BMC, Inc. by DSD and was treated as a recapitalization. Accordingly, the financial statements were be prepared to give retroactive effect of the reverse acquisition completed on October 28, 2011, and represent the operations of DSD prior to the Merger.

 

As of the time of the Merger, Dewmar International BMC, Inc held minimal assets and was a developmental stage company. Following the Merger, the Company, through DSD, is a manufacturer of its Lean Slow Motion Potion™ brand relaxation beverage, which was launched by DSD in September of 2009. After the Merger, the Company operates through one operating segment.

 

Results of Operations

 

For three months ended June 30, 2012 as compared to the three months ended June 30, 2011.

 

Revenue

 

Revenue is presented net of sales allowances. Net revenue decreased $368,249, or 78%, to $101,874 from $470,123 for the three months ended June 30, 2012 and 2010, respectively. This decrease was primarily due to an overall decrease in purchase orders.

 

Cost of Goods Sold

 

Cost of goods sold decreased $149,979, or 76%, to $47,681 from $197,660 for the three months ended June 30, 2012 and 2011, respectively. This overall decrease was primarily the result of decreased sales.

 

Operating Expenses

 

Operating expenses increased $261,471, or 96%, to $532,815 from $271,344 for the three months ended June 30, 2012 and 2011, respectively. The overall increase in operating expenses results from increase in share based compensation of $315,000 offset by decreases in professional fees.

 

Marketing and advertising costs decreased $24,446, or 78%, to $6,899 for the three month ended June 30, 2012, as compared to $31,345 for the three month ended June 30, 2011. This overall decrease was due to reducing marketing and advertising commitments.

 

Contract labor costs decreased $50,694 to $33,232 from $83,926 for the three months ended June 30, 2012 and 2011, respectively. Contract labor costs primarily included costs for administrative and marketing/sales support.

 

Interest Expense

 

For the three months ended June 30, 2012 and 2011, the Company incurred interest expense of $15 and $30,790 respectively.

 

Net Loss

 

Our net losses for the three months ended June 30, 2012 and 2011 were $478,636 and $29,626, respectively. The increase in net loss is attributable to the decrease in sales revenue recognized.

 

Results of Operations

 

For six months ended June 30, 2012 as compared to the six months ended June 30, 2011.

 

6
 

 

Revenue

 

Revenue is presented net of sales allowances. Net revenue decreased $454,152 from $749,242 to $295,090 for the six months ended June 30, 2012 and 2010, respectively. This decrease was primarily due to an overall decrease in purchase orders.

 

Cost of Goods Sold

 

Cost of goods sold decreased $244,605 from $367,979 to $123,374 for the six months ended June 30, 2012 and 2011, respectively. This overall decrease was primarily the result of decreased sales. Gross margins rose from 50% for the six months ended June 30, 2011 to 58% for the six months ended June 30, 2012.

 

Operating Expenses

 

Operating expenses increased $277,480 from $462,335 to $739,815 for the six months ended June 30, 2012 and 2011, respectively. The overall increase in operating expenses results from decreases in marketing and advertising costs of $32,044 and decreases in contract labor costs of $82,085, offset by increases in general and administrative costs of 396,859, primarily due to increased share based compensation of $354,000.

 

Interest Expense

 

For the six months ended June 30, 2012 and 2011, the Company incurred interest expense of $15 and $30,723 respectively.

 

Net Loss

 

Our net losses for the six months ended June 30, 2012 and 2011 were $537,106 and $111,677, respectively. The increase in net loss is primarily attributable to the decrease in sales revenue.

 

Off-Balance Sheet Arrangements

 

As of June 30, 2012, we have no off-balance sheet arrangements such as guarantees, retained or contingent interest in assets transferred, obligation under a derivative instrument and obligation arising out of or a variable interest in an unconsolidated entity.

 

Critical Accounting Policies

 

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. Our Annual Report on Form 10-K/A for the year ended December 31, 2011 contains a discussion of these significant accounting policies. There have been no significant changes in our significant accounting policies since December 31, 2011. See our Note 2 in our unaudited financial statements for the six months ended June 30, 2012, as set forth herein.

 

7
 

 

Liquidity and Capital Resources

 

During the six months ended June 30, 2012 and 2011, the Company recognized positive (negative) cash flows from operating activities of (58,213) and $47,315, respectively. As of June 30, 2012, the Company held cash and cash equivalents of $32,216 as compared to cash on hand of $91,506 as of June 30, 2011.

 

Cash used in investing activities totaled $0, for the six months ended June 30, 2012 and 2011, respectively. Cash used in financing activities totaled $1,076, and $61,813 for the three months ended June 30, 2012 and 2011, respectively, and consisted of advances received from third parties and payments made on notes payable.

 

On June 27, 2012, the Company entered into a Securities Purchase Agreement with Asher Enterprises, Inc. (“Asher”) a Delaware Corporation for an 8% convertible promissory note with an aggregate principal amount of $32,500 which together with any unpaid accrued interest due on March 29, 2013. This convertible note together with any unpaid accrued interest is convertible in shares of common stock at the holder’s option at a variable conversion price calculated as 55% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date with no floor stated in the conversion feature. In July 2012, this convertible promissory note was funded in the amount of $30,000. The Company will analyze whether the variable conversion price results in need for bifurcation of the conversion feature into a separate derivative liability valued at fair market value on the date of funding.

 

The Company is dependent upon obtaining adequate financing to enable it to pursue its business plan and manage its operations for profitability. The Company has limited financial resources available, which has had an adverse impact on the Company's liquidity, activities and operations. These limitations have adversely affected the Company's ability to obtain certain projects and pursue additional business. There is no assurance that the Company will be able to raise sufficient funding to enhance the Company's financial resources sufficiently to generate volume for the Company, or to engage in any significant research and development, or purchase plant or significant equipment.

 

Management has been successful in raising sufficient funds to cover the Company’s immediate expenses including general and administrative.

 

The Company as a whole may continue to operate at a loss for an indeterminate period thereafter, depending upon the performance of its new businesses. In the process of carrying out its business plan, the Company will continue to identify new financial partners and investors. However, it may determine that it cannot raise sufficient capital to support its business on acceptable terms, or at all. Accordingly, there can be no assurance that any additional funds will be available on terms acceptable to the Company or at all.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not Required

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this report, the Company carried out an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined by Rule 13-15(e) under the Securities Exchange Act of 1934) under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer. Based on and as of the date of such evaluation, the aforementioned officers have concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2012.

 

Management’s Annual Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statement for external reporting purposes in accordance with U.S generally accepted accounting principles. It should be noted, however, that because of inherent limitation, any system of internal controls, however well-designed and operated, can provide only reasonable, but not absolute, assurance that financial reporting objectives will be met. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

 

8
 

 

An internal control material weakness is significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements would not be prevented or detected on a timely basis by employees in the normal course of their work. Our Chief Executive Officer, also performing the functions of the principal financial officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2011, based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organization of the Treadway Commission (the COSO criteria). Based on that evaluation under the COSO criteria, our management concluded that the Company did not maintain effective internal control over financial reporting as of December 3,1 2011. Based on our internal control over financial reporting as designed, documented and tested, we identified multiple material weaknesses related to maintaining an adequate control environment. The material weaknesses in our internal controls related to inadequate staffing within our accounting department and upper management, lack of controls regarding the assignment of authority and responsibility, lack of consistent policies and procedures, inadequate monitoring of controls and inadequate disclosure controls.

 

For the period ending December 31, 2011 and June 30, 2012, the Company retained the services of a third party consulting firm to perform its bookkeeping and financial reporting duties on an outsourced basis. When funds become available, the Company intends to hire additional accounting and financial reporting personnel who will institute controls regarding the assignment of authority and responsibility, consistent policies and procedures, monitoring of controls and adequate disclosure controls. 

 

Changes in Internal Controls over Financial Reporting

 

Changes in Internal Controls Over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended June 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

The Company is aggressively defending itself in all of the below proceedings. The Company’s management believes the likelihood of future liability to the Company for these contingencies is remote, and the Company has not recorded any liability for these legal proceedings at June 30, 2012 and December 31 2011. While the results of these matters cannot be predicted with certainty, the Company’s management believes that losses, if any, resulting from the ultimate resolution of these proceedings will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

 

During January 2011, a claim was filed against DSD by Corey Powell, in Ascension Parish, LA 23rd Judicial District Court. Corey Powell was a former distributor of LEAN, a relaxation beverage marketed by DSD. Powell filed suit to recover allegedly unpaid commissions, “invasion fees” and “finder’s fees.” The commissions related to payments allegedly owed for Powell’s direct sale of LEAN product to wholesalers and retailers. The invasion fees relate to payments allegedly owed to Powell when the LEAN product was sold by other wholesalers in his geographic territory. The finders’ fees relate to payments allegedly owed to Powell for introducing investors to the DSD management. Discovery is ongoing. Written discovery has been propounded and depositions have been taken to better understand the nature and basis for the plaintiff’s claims and to build DSD’s defenses. DSD has vigorously contested each and every one of the plaintiff’s allegations and has instructed counsel to proceed to trial on the merits. There have been negotiations between the counsels for the parties regarding dropping approximately half of the original claims. However no trial date has been set.

 

On February 14, 2011, a claim was filed against DSD by Charles Moody, in Caddo Parish, LA First Judicial Court seeking in excess of $100,000 in damages. Charles Moody loaned DSD approximately $63,000 in June 2009. In exchange, Moody received a Promissory Note containing the terms and conditions of the repayment of the loan. Based upon the understanding of the parties, DSD began making monthly payments to Moody in January 2010 in satisfaction of the loan. In December 2010, final payment of the remaining balance of the loan was paid to Moody in full and final satisfaction of the Promissory Note. Moody filed suit to recover “late fees” allegedly owed under the Promissory Note. DSD contends the Promissory Note was satisfied with the final payment in December 2010; Moody contends that repayment should have begun in November 2009, and that because it did not, late fees are owed. This matter was settled for a payment of $8,000 by DSD on July 27, 2012 with no admission of guilt or liability by either party

 

9
 

 

On November 9, 2011, Charles Moody and DeWayne McKoy filed a claim against DSD and Marco Moran, CEO, in Bossier Parish, LA 26th Judicial Court. Charles Moody and Dewayne McKoy, allegedly both shareholders of DSD, brought an action against Dr. Moran alleging that he engaged in various acts of misconduct and breaches of his fiduciary duties to the corporation which damaged them as minority shareholders. Moody and McKoy also seek damages from Dr. Moran for dilution and/or loss of value of their shareholder interest in DSD as a result of his alleged misconduct. DSD is a nominal defendant in this derivative action, as required by Louisiana law. Initial pleadings have been filed and exceptions to the plaintiff’s claims have been asserted. Discovery has not yet commences. DSD vigorously denies that its officers or directors engaged in any conduct which may have harmed minority shareholders.

 

During December 2011, Innovative Beverage Group Holdings (“IBGH”) filed a claim against Dewmar International BMC, Inc., Unique Beverage Group, LLC. and Marco Moran, CEO of the Company, in Harris County, TX 61st Judicial District Court, whereas the plaintiff asserted certain allegations. On February 24, 2012, the Company filed a motion for summary judgment to dismiss these frivolous allegations due to lack of proper evidence. On April 12, 2012 Dewmar International BMC, Inc was given written notice of its non-suit without prejudice from Innovative Beverage Group, Inc. This releases Dewmar International BMC, Inc. from any and all liability. Dewmar’s countersuit remains alive and trial is set for October 8, 2012.

 

On March 22, 2012 whereas Plaintiff, DSD NETWORK OF AMERICA, INC. (hereinafter “DSD”) is a Nevada corporation doing business in Clark County, Nevada files suit against Defendants DeWayne McKoy, Charles Moody, Corey Powell and Peter Bianchi in United States District Court; District of Nevada for a combined thirteen complaints accusing this group of defendants in colluding against the Company. Answers have been received from McKoy, Moody and Powell and Powell has filed a counterclaim.D SD vigorously denies all the claims in Powell’s counterclaim.

 

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

 

During the six months ended June 30, 2012, the Company exchanged 300,000 shares of restricted common stock for consulting services. The value of the services was $39,000 resulting in an Additional Paid in Capital amount of $38,700.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Not Used

 

None.

 

Item 5. Other Information

 

None.

 

10
 

 

Item 6. Exhibits

 

The following exhibits are filed herewith:

 

 

Exhibit

 

Number

 

Exhibit

 

Description

     
31.1   Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
31.2   Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
32.1   Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

11
 

 

SIGNATURES

 

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

 

  Dewmar International BMC, Inc.
     
Date: August 20, 2012 By:  
    President, CEO, and Director

 

12
 

  

XOTC:DEWM Quarterly Report 10-Q Filling

XOTC:DEWM Stock - Get Quarterly Report SEC Filing of XOTC:DEWM stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

Content Partners
XOTC:DEWM Quarterly Report 10-Q Filing - 6/30/2012
Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol |  Title Star Rating |  Category |  Total Assets |  Top Holdings |  Top Sectors |  Symbol |  Name Title |  Date |  Author |  Collection |  Interest |  Popularity Topic |  Sector |  Key Indicators |  User Interest |  Market Cap |  Industry Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol / Ticker |  Title Star Rating |  Category |  Total Assets |  Symbol / Ticker |  Name Title |  Date |  Author |  Collection |  Popularity |  Interest Title |  Date |  Company |  Symbol |  Interest |  Popularity Topic |  Sector |  Key Indicators |  User Interest |  Market Cap |  Industry Name |  Ticker |  Popularity |  Our Choices |  Most Recent Title |  Date |  Company |  Symbol |  Interest |  Popularity

Previous: XOTC:DEWM Quarterly Report 10-Q Filing - 3/31/2012  |  Next: XOTC:DEWM Quarterly Report 10-Q/A Filing - 6/30/2012