DEWM Dewmar International BMC Inc (CE)

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.

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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

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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.

 

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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.

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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

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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

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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

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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.

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·

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.

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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

 

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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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