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 Three Months ended: June 30, 2014

 

[  ] 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

 

26-4465583

State or other jurisdiction of

 

(I.R.S. Employer I.D. No.)

incorporation or organization)

 

 


132 E. Northside Dr. Suite C Clinton, MS 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 June 1, 2016 the registrant had 2,759,542,401 issued and outstanding shares of common stock.






Dewmar International BMC, Inc.

TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION

3

ITEM 1. FINANCIAL STATEMENTS

4

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

12

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

14

ITEM 4. CONTROLS AND PROCEDURES

14

PART II - OTHER INFORMATION

15

ITEM 1. LEGAL PROCEEDINGS

15

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

15

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

15

ITEM 4. MINE SAFETY DISCLOSURES

15

ITEM 5. OTHER INFORMATION

15

ITEM 6. EXHIBITS

15

SIGNATURES

16

































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 for the year ended December 31, 2013. 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.

CONSOLIDATED BALANCE SHEETS


 

 

June 30, 2014

 

 

December 31, 2013

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

39,903

 

 

$

7,231

Account receivables, net

 

 

79,619

 

 

 

9,532

Related party receivable

 

 

21,509

 

 

 

4,085

Advances to related party

 

 

9,332

 

 

 

9,332

Inventory

 

 

83,728

 

 

 

35,144

Prepaid expenses and other current assets

 

 

-

 

 

 

6,000

Total Current Assets

 

 

234,091

 

 

 

71,324

 

 

 

 

 

 

 

 

Property & equipment, net of accumulated

  depreciation of $17,985 and $14,210

 

 

23,070

 

 

 

26,845

 

 

 

 

 

 

 

 

Total assets

 

$

257,161

 

 

$

98,169

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

706,437

 

 

$

714,868

Accrued interest

 

 

12,093

 

 

 

9.707

Notes payable

 

 

173,890

 

 

 

173,890

Convertible notes payable, net of unamortized discount

  of $17,740 and $77,230, respectively

 

 

136,580

 

 

 

122,750

Derivative liability

 

 

341,145

 

 

 

151,120

 

 

 

 

 

 

 

 

Total Liabilities

 

 

1,370,145

 

 

 

1,172,335

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (NOTE 7)

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

Stockholders’ Deficit

 

 

 

 

 

 

 

Preferred stock; $0.001 par value; 50,000,000

  shares authorized; 50,000,000 issued and outstanding

 

 

50,000

 

 

 

50,000

Common stock; $0.001 par value; 4,450,000,000

  shares authorized, 2,704,542,401 and 2,310,488,796

  shares issued and outstanding, respectively

 

 

2,704,546

 

 

 

2,310,493

Additional paid-in capital

 

 

4,290,763

 

 

 

3,370,195

Accumulated deficit

 

 

(8,158,293)

 

 

 

(6,804,854)

Total Stockholders’ Deficit

 

 

(1,112,984)

 

 

 

(1,074,166)

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders’ Deficit

 

$

257,161

 

 

$

98,169




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



4




DEWMAR INTERNATIONAL BMC, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


 

 

 

For the Three Months

Ended

 

 

For the Six Months

Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Revenue, net

 

$

120,220

 

$

93,827

 

$

223,310

 

$

176,083

Related party revenue

 

 

12,590

 

 

7,410

 

 

21,924

 

 

4,605

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Goods Sold

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold-product

 

 

94,075

 

 

28,124

 

 

138,392

 

 

74,729

Gross Profit

 

 

38,735

 

 

73,113

 

 

106,842

 

 

105,959

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Occupancy and related expenses

 

 

10,323

 

 

9,675

 

 

19,249

 

 

26,254

Marketing and advertising

 

 

2,278

 

 

1,244

 

 

8,887

 

 

15,936

General and administrative expenses

 

 

473,853

 

 

588,068

 

 

1,063,776

 

 

1,310,901

Contract labor

 

 

14,545

 

 

23,590

 

 

22,395

 

 

87,768

Total Operating Expenses

 

 

500,999

 

 

622,577

 

 

1,114,307

 

 

1,440,886

 

 

 

 

 

 

 

 

 

 

 

 

 

  Loss from operations

 

 

(462,264)

 

 

(549,464)

 

 

(1,007,465)

 

 

(1,334,927)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(19,042)

 

 

(84,489)

 

 

(66,308)

 

 

(124,400)

Loss on derivative liability

 

 

(23,481)

 

 

(15,094)

 

 

(279,666)

 

 

(106,680)

  Total other income (expense)

 

 

(42,522)

 

 

(99,583)

 

 

(345,974)

 

 

(231,080)

  Net Loss

 

$

(504,787)

 

$

(649,047)

 

$

(1,353,439)

 

$

(1,566,007)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share - basic and diluted

$

(0.00)

 

$

(0.00)

 

$

(0.00)

 

$

(0.01)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic and diluted

 

 

2,612,196,080

 

 

290,367,247

 

 

2,648,571,412

 

 

227,567,297


















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



5




DEWMAR INTERNATIONAL BMC, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


 

 

Six Months

Ended

 

 

Six Months

Ended

 

 

June 30, 2014

 

 

June 30, 2013

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

$

(1,353,439)

 

 

$

(1,566,007)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation expense

 

 

3,775

 

 

 

1,865

Stock-based compensation

 

 

874,000

 

 

 

816,475

Amortization of debt discount

 

 

59,490

 

 

 

109,226

Loss on derivative liability

 

 

279,666

 

 

 

106,680

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

(70,087)

 

 

 

(9,152)

Related party receivables and payables

 

 

(17,424)

 

 

 

13,501

Inventory

 

 

(48,584)

 

 

 

5,906

Prepaid expenses and other current assets

 

 

6,000

 

 

 

3,210

Accounts payable and accrued liabilities

 

 

(4,345)

 

 

 

371,250

Net cash used in operating activities

 

 

(270,948)

 

 

 

(147,046)

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Cash paid for purchase of vehicles

 

 

-

 

 

 

(19,900)

Net cash used in investing activities

 

 

-

 

 

 

(19,900)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from notes payable

 

 

-

 

 

 

199,320

Proceeds from issuance of common stock

 

 

303,620

 

 

 

-

Net cash provided from financing activities

 

 

303,620

 

 

 

199,320

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

32,672

 

 

 

32,374

Cash and cash equivalents, at beginning of period

 

 

7,231

 

 

 

38,388

Cash and cash equivalents, at end of period

 

$

39,903

 

 

$

70,762

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

Interest paid

 

$

2,778

 

 

$

8,837

 

 

 

 

 

 

 

 

Supplemental noncash investing and financing activities:

 

 

 

 

 

 

 

Issuance of common stock for conversions of notes payable and interest

 

$

47,360

 

 

 

150,859

Reclassification of accounts payable to notes payable

 

$

-

 

 

 

317,161

Creation of debt discount

 

$

 

 

 

 

110,754

Reduction in derivative liability due to conversions of convertible notes payable

 

$

89,641

 

 

 

191,919

Reduction in common stock payable for issuance of common stock

 

$

-

 

 

 

594,326







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



6




DEWMAR INTERNATIONAL BMC, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)


 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

Shares

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional

Paid-in

Capital

 

 

Accumulated

Deficit

 

 

Total

Stockholders’

Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2013

50,000,000

 

$50,000

 

 

2,310,488,796

 

$

2,310,493

 

$

3,370,195

 

$

(6,804,854)

 

$

(1,074,166)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for cash

-

 

-

 

 

161,538,888

 

 

161,539

 

 

142,081

 

 

-

 

 

303,620

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for service

-

 

-

 

 

130,000,000

 

 

130,000

 

 

792,000

 

 

-

 

 

922,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares cancelled

 

 

 

 

 

(100,000,000)

 

 

(100,000)

 

 

52,000

 

 

 

 

 

(48,000)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for conversions

of notes payable

-

 

-

 

 

202,514,717

 

 

202,514

 

 

(155,154)

 

 

-

 

 

47,360

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reduction in derivative liability

due to conversion

-

 

-

 

 

 

 

 

 

 

 

89,641

 

 

-

 

 

89,641

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

-

 

-

 

 

 

 

 

 

 

 

 

 

 

(1,353,439)

 

 

(1,353,439)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance June 30, 2014

50,000,000

 

$50,000

 

 

2,704,542,401

 

 

$2,704,546

 

 

$4,290,763

 

 

$(8,158,293)

 

 

($1,112,984)























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



7




DEWMAR INTERNATIONAL BMC, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2014


NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Dewmar International BMC (“we”, “our”, the “Company”) was formed as a Nevada corporation on March 13, 2009.  Today, Dewmar International BMC is a diversified operating company headquartered in Clinton, Mississippi.  The Company conducts business across a variegated set of categories and sectors including consumer goods, wholesale trade, pharmaceuticals and health sciences. The Company and its subsidiaries develop market and distribute goods, therapeutics and services in national and international markets through licensing agreements, e-commerce platforms, fee-for-service arrangements and distribution contracts.

 

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, 2014 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, 2013 filed in our Annual Report on Form 10K.


NOTE 3. CONVERTIBLE NOTES PAYABLE


In October, 2012, the Company entered into a 10% Contingently Convertible Promissory Note with Birr Marketing Group, Inc. for $20,000 with a due date of April 1, 2013. At June 30 2014, the Company revalued the fair market value of the derivative liability and recorded a loss of $66,974 on derivative liability.  


On April 16, 2013, the Company entered into a sixth Securities Purchase Agreement with Asher Enterprises, Inc. (“Asher”) a Delaware Corporation for an 8% contingently convertible promissory note with an aggregate principal amount of $42,500 which together with any unpaid accrued interest was due on December 21, 2013.


·

On January 2, 2014, Asher converted the remaining $6,500 of its outstanding notes payable and $1,700 accrued interest into 34,166,667 shares of common stock at a conversion price of $0.00024. After conversion, a principal balance of $0 remained on the notes payable. On the day of conversion, the Company revalued the derivative liability and recorded a loss on the derivative liability of $4,425; and reduced the pro-rated balance of the derivative liability by $17,877 into additional paid in capital.  As such, the derivative liability had a $0 balance after conversion on January 2, 2014.  In 2014, the Company accelerated amortization of the discount of $1,670 into interest expense.


On April 7, 2013, the Company entered into a convertible promissory note with a vendor to satisfy outstanding invoices in the amount of $68,000.  The note bears no interest and was convertible into shares of common stock. On June 30, 2014; the Company re-valued the derivative liability and recorded a loss on derivative liability of $3,611 making the balance in the derivative liability at June 30, 2014 $69,806.  The Company also recorded $32,435 amortization of the original discount into interest expense.


On May 21, 2013, the Company entered into a second Convertible Promissory Note with Continental Equities, LLC, a New York limited liability corporation for an 8% convertible promissory note in the aggregate principal amount of $30,000, which together with any unpaid accrued interest is due on May 20, 2014. $28,500 of the proceeds was funded directly to the company while $1,500 was recorded as original issuance discount.



8




·

On January 21, 2014, Continental converted the remaining $17,760 of its outstanding notes payable into 64,581,818 shares of common stock at a conversion price of $0.000275.  On the day of conversion, the Company revalued the derivative liability and recorded a gain on derivative liability of $28 and reduced the pro-rated portion of the derivative liability by $20,975 into additional paid in capital bringing the derivative liability to $0.  The Company also accelerated the amortization of $7,433 of the original discount into interest expense.


On December 10, 2013, the Company entered into an assignment agreement where the Company assigned a previously entered into $17,500 Notes payable with Pitts Riley to Microcap Equity Group, LLC, a third party.  As such the Company entered into a 10% Convertible note with Microcap Equity Group for $17,500 which matured on December 10, 2014.  


·

On January 27, 2014, Microcap converted the remaining $7,400 of the notes payable into 52,857,142 shares of common stock at a conversion price of $0.00014 bringing the notes payable balance to $0.  On the day of conversion, the Company re-valued the derivative liability and recorded a gain on the derivative liability of $335 and reduced the pro-rated portion of the derivative liability of $25,958 into additional paid in capital.  Additionally, the company accelerated the amortization of $3,952 of the original discount into interest expense.


During the year ended December 31, 2013, the Company entered into two 10% Contingently Convertible Promissory Notes with Birr Marketing Group, Inc. for $28,000 and $22,820 with due dates of June 4, 2014 and June 26, 2014. After the due dates, the notes became convertible at a fixed price of $0.001 into the Company’s common shares at the Holder’s option.   On June 6, 2014 and June 26, 2014, these notes were in default and were due and payable immediately.  On the respective due dates, the Company created a derivative liability of $80,642 and $165,906, respectively, with a resulting combined loss on derivative liability of $246,548.  On June 30, 2014, the Company re-valued the derivative liability to be $87,433 and $107,280 respectively, resulting in a combined gain on derivative liability of $51,834. See Note 4 for a description of why these notes were treated as a derivative.   


On December 24 ,2013, The Company entered into an assignment agreement where the Company assigned  a previously entered into $48,470 Notes Payable to Pitts Riley  to Magna Group, LLC, a third party.  As such the Company entered into a 10% Convertible note with Magna Group for $48,470 on December 26, 2013.  The Note matured on December 26, 2014.  On January 6, 2014, Magna converted the remaining $14,000 of the original notes payable into 50,909,090 shares of common stock at a conversion price of $0.00028.  After conversion, $0 remained on the original notes payable.  On the day of conversion, the Company revalued the derivative liability and recorded a loss on derivative liability of $10,305 and reduced the pro-rated portion of the derivative liability by $24,831 into additional paid in capital.  The Company also accelerated the remaining discount of $14,000 into interest expense.  


In summary, during the periods ended June 30, 2014 and 2013, the Company recorded a total of $66,308 and $124,400, respectively in interest expense.  During periods ended June 30, 2014 and 2013, the amount of interest expense associated with the amortization of discounts associated with the amortization of the debt discounts established by derivative liabilities in the convertible notes was $59,490 and $109,226, respectively.


NOTE 4. DERIVATIVE LIABILITY


In June 2008, the FASB issued authoritative guidance on determining whether an instrument (or embedded feature) is indexed to an entity’s own stock. Under the authoritative guidance, effective January 1, 2009, instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The conversion features of certain of the Company’s Convertible Promissory Note (described in Note 3), do not have a fixed settlement provision because conversion of the Notes will be lowered if the Company issues securities at lower prices in the future. This provision contained in these notes tainted the other convertible notes and therefore the other convertible notes have been treated as derivative liabilities. In accordance with the FASB authoritative guidance, the conversion feature of the Notes were separated from the host contract and recognized as a derivative instrument. The conversion feature of the  above described notes have been characterized as a derivative liability to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.



9



The following table summarizes the derivative liabilities included in the consolidated balance sheet at June 30, 2014:


Derivative liability

 

Derivative liabilities as of December 31, 2013

$

151,120

Net Loss on derivative liability

 

279,666

Debt discount

 

-

Settlement of derivative liability due to conversion of related notes

 

(89,641)

Derivative liabilities as of June 30, 2014

$

341,145


NOTE 5. STOCKHOLDERS’ DEFICIT

 

Shares Issued for Cash

During the period ended June 30, 2014, the Company issued 161,538,888 shares of common stock for $303,620 in cash.


Shares Issued for Services

 

During the period ending June 30, 2014, the Company issued 130,000,000 shares to consultants for services rendered.  The Company estimated the fair market value of the shares issued to be $922,000 and recorded this as stock based compensation.  In addition, the Company cancelled a consulting agreement which it had previously accounted for and as such reversed 100,000,000 shares and a corresponding $48,000 from share based compensation.  


Shares Issued for Conversion of Notes Payable


During the period ended June 30, 2014, the Company issued 202,514,717 shares of common stock related to conversions of various notes payable.  See Note 3 for further discussion.


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.


At June 30, 2014 and December 31, 2013, receivable from the Distributor was $21,509 and $4,085, respectively.  During the six months ended June 30, 2014 and 2013, revenue generated from related parties totaled $21,924 and $4,605, respectively.


Advances to Related Party

 

At both June 30, 2014, and December 31, 2013, the Company had outstanding accounts receivable of $9,332 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.


NOTE 7. 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.



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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. 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.


For both the period ended June 30, 2014 and 2013, the Company incurred $64,208 base salary to Dr. Moran,  which was included as a component of general and administrative expenses. The Company recorded total accrued payroll to Dr. Moran in the amounts of $522,502 and $494,000 in accounts payable and accrued liabilities on its consolidated balance sheets at June 30, 2014and December 31, 2013, respectively.

 

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, 2014 and December 31, 2013. 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.


On January 20, 2011, a claim was filed against Dewmar International BMC, Inc.(“Dewmar”) by Corey Powell, in Ascension Parish, LA 23rd Judicial District Court. Corey Powell was a former distributor of LEAN, a relaxation beverage marketed by Dewmar. 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 Dewmar’s management. Discovery is complete. Dewmar has vigorously contested each and every one of the plaintiff’s allegations and has instructed counsel to proceed to trial on the merits which is scheduled this summer. Plaintiff sent a settlement demand earlier this year which was rejected by Dewmar.  Currently, there is no trial date set.


NOTE 8. SUBSEQUENT EVENTS


During the quarter ended September 30, 2014, Dewmar accounted for the issuance of 55,000,000 shares due under various consulting agreements.  


On December 4, 2014, Health & Wellness Research Consortium, LLC, (“Health & Wellness”) was created with Dewmar owning 100% of the LLC membership units.   The business objective of Health & Wellness is to develop, implement and execute healthcare sales and marketing strategies for pharmacies, clinics and hospitals in order to help the client broaden market presence, influence effective prescribing behaviors and ultimately maximize their return on assets.






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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-looking statements, 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, 2013,

 

Company Overview

 

Dewmar International BMC was formed as a Nevada corporation on March 13, 2009.


Today, Dewmar International BMC, Inc. is a diversified operating company headquartered in Clinton, Mississippi. The Company conducts business across a variegated set of categories and sectors including consumer goods, wholesale trade, pharmaceuticals and health sciences.


The Company and its subsidiaries develop, market and distribute goods, therapeutics and services in national and international markets through licensing agreements, e-commerce platforms, fee-for-service arrangements and distribution contracts.


Business Strategy


The Company’s business strategy is to identify paradigm shifts occurring in large, traditional or growth markets within the Company’s sphere of expertise to create innovative products, services and/or financial offerings that exploit new market opportunities.  


Forward-looking, management expects business growth resulting from increased domestic and foreign trade, new health science service offerings and expanded placement of the Company’s licensed products in Walmart and other big box retailers.

 

Results of Operations


For the three months ended June 30, 2014 and 2013.

 

Revenue

 

Revenue is presented net of sales allowances. Net revenue increased $31,573, or 31%, to $132,810 from $101,237 for the three months ended June 30, 2014 and 2013 respectively. This increase was primarily due to an overall increase in purchase orders.

 

Cost of Goods Sold

 

Cost of goods sold increased $65,951, or 235%, to $94,075 from $28,124 for the three months ended June 30, 2014 and 2013, respectively. This overall increase was primarily the result of the payment and recognition of the costs of raw materials in order to produce future batch runs of final product for sale.





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Operating Expenses

 

Operating expenses decreased $121,578, or 20%, to $500,999 from $622,577 for the three months ended June 30, 2014 and 2013 respectively. The overall decrease in operating expenses results from decreases in stock based compensation arrangements totaling for three months ended June 30, 2014 as compared to 2013, respectively.   This was offset by the increase in Marketing and advertising costs of $1,034, or 83%, to $2,278 for the three month ended June 30, 2014, as compared to $1,244 for the three month ended June 30, 2013.   Contract labor costs decreased $9,045 or 38% to $14,545 from $23,590 for the three months ended June 30, 2014 and 2013, respectively. Contract labor costs primarily included costs for administrative and marketing/sales support.

 

Interest Expense

 

For the three months ended June 30, 2014 and 2013, the Company incurred interest expense of $19,042 and $84,489 respectively.  The decrease is due to the conversion of outstanding convertible notes during the period.


Net Loss

 

Our net losses for the three months ended June 30, 2014 and 2013 were $504,787 and $649,047, respectively. The decrease in net loss is attributable to the decrease in expenses from the operating expenses and overall increase in sales, which is discussed above.

 

For the six months ended June 30, 2014 and 2013.

 

Revenue

 

Revenue is presented net of sales allowances. Net revenue increased $64,546, or 36%, to $245,234 from $180,688 for the six months ended June 30, 2014 and 2013 respectively. This increase was primarily due to an overall increase in purchase orders.

 

Cost of Goods Sold

 

Cost of goods sold increased $63,663, or 85%, to $138,392 from $74,729 for the six months ended June 30, 2014 and 2013, respectively. This overall increase was primarily the result of the payment and recognition of the costs of raw materials.

 

Operating Expenses

 

Operating expenses decreased $326,579, or 23%, to $1,114,307 from $1,440,886 for the six months ended June 30, 2014 and 2013 respectively. The overall decrease in operating expenses results from decreases in stock based compensation arrangements totaling for six months ended June 30, 2014 as compared to 2013, respectively. Marketing and advertising costs decreased $7,076, or 44%, to $8,887 for the six month ended June 30, 2014, as compared to $15,963 for the six month ended June 30, 2013.  Contract labor costs decreased $65,373 or 74% to $22,395 from $87,768 for the six months ended June 30, 2014 and 2013, respectively. Contract labor costs primarily included costs for administrative and marketing/sales support.

 

Interest Expense

 

For the six months ended June 30, 2014 and 2013, the Company incurred interest expense of $66,308 and $124,400 respectively.  The decrease is due to a decrease and conversion of convertible notes payable from the prior year period.

 

Net Loss

 

Our net losses for the six months ended June 30, 2014 and 2013 were $1,353,439 and $1,566,007, respectively. The decrease in net loss is attributable to the decrease in expenses from the operating expenses and overall increase in sales, which is discussed above.



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Off-Balance Sheet Arrangements

 

As of June 30, 2014, 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 for the year ended December 31, 2013 contains a discussion of these significant accounting policies. There have been no significant changes in our significant accounting policies since December 31, 2013. See our Note 2 in our unaudited financial statements for the six months ended June 30, 2014, as set forth herein.

 

Liquidity and Capital Resources

 

During the six months ended June 30, 2014 and 2013, the Company recognized negative cash flows from operating activities of $(270,948) and $(147,046), respectively. As of June 30, 2014 and December 31 2013, the Company held cash and cash equivalents of $39,903 and $7,231, respectively.


Cash used in investing activities totaled $0 and $19,900 for the six months ended June 30 2014 and 2013, respectively.


Cash provided by financing activities totaled $303,620 for the six months ended June 30, 2014, respectively, and consisted of proceeds from issuances of common stock for cash.   For the same period ended June 30, 2013, cash provided from financing activities totaled $199,320 and consisted of proceeds from issuance of convertible notes payable.


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 to ensure the recording, processing and timely filing of periodic financial reports.

 

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, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.





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PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

The Company is aggressively defending itself in all of the legal proceedings. See Note 7: Commitments and Contingencies in the footnotes for a complete listing of legal 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, 2014 and December 31, 2013. 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.

 

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

 

During the period ended June 30, 2014, the Company issued 161,538,888 shares of common stock for $303,620 in cash.   During the period ended June 30, 2014, the Company issued 130,000,000 shares to consultants for services rendered.  During the period ended June 30, 2014, the Company issued 202,514,717 shares of common stock related to conversions of various notes payable.  See Note 5 for further discussion.  The public float as of April 18, 2016 was 2,225,613,590 shares


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

None.  

 

ITEM 5. OTHER INFORMATION

 

None.

 

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

 

 

 

101.INS

 

XBRL Instance Document

101.SCH

 

XBRL Taxonomy Extension Schema

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase

101.LAB

 

XBRL Taxonomy Extension Label Linkbase

101.PRE

 

XBRL Taxonomy Presentation Linkbase

 





15




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: July 8, 2016

By:

/s/ Marco Moran

 

 

President, CEO, and Director


















































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