PART 1

ITEM 1.  BUSINESS.

CORPORATE BACKGROUND

On October 28, 2011, pursuant to an Exchange Agreement (“Agreement”), Dewmar International BMC, Inc. (fka Convenientcast, Inc.) 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 will 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. (“Dewmar”) 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.

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

The Company’s trademarked brand name Lean has been repeatedly used in hundreds of popular hip hop songs by a number of gold and platinum selling rap artists throughout the entire United States over the past 10 plus years; this shows that the trademarked name shall already have some valuable recognition by our targeted consumers due to this fact. Trademark is under the name of Dewmar International BMC, Inc. was formerly known as DSD. DSD (also referred to as “the Company”) is an existing business that launched its Lean Slow Motion Potion brand relaxation beverage in September of 2009. With operations based in Clinton, Mississippi; with offices in Houston, Texas and registered in the state of Nevada, the Company reflects a brand rooted in hip-hop culture that is influenced by a multitude of iconic rap music artists that is also embraced by high profile professional athletes. Its secondary consumer base includes the over 70 million Americans who suffer from insomnia and sleep deprivation. Bottling and manufacturing of the beverage has been outsourced to co-packers primarily in Memphis, Tennessee with a secondary facility based in Evansville, Indiana. The three uniquely formulated Lean flavors of Yella, Purp and Easta Pink; consist of a blend of calming natural herbs that provides a better alternative than alcohol and/or over the counter cough medicines when it’s time to naturally unwind. After a difficult day - Lean. In times of high stress - Lean. When you need to relax - Lean.

The soft drink industry has generated more than $40 billion annually since 2002 and is projected to grow to nearly $47 billion by 2015. IBISWorld. “Soft Drink Production in the US Industry Report,” Obtained June 2010. Although the “get your lean on” cultural phenomenon is relatively young, several companies have already ventured into the market in recent years with beverages in an attempt to capture the market. These include Innovative Beverage Group, Inc.; Funktional Beverages, Inc.; Katalyst Beverage Corp.; Revolt Distribution, Inc.; Next Generation Waters, Inc.; VIB Holdings, LLC; BeBevCo, Inc.; The Chill Group, Inc.; Boisson Slow Cow, Inc.; Sarpes Beverages, LLC. The Company’s research reveals that consumers are seeking a beverage in this category that is tied closely with hip-hop or cultural icons associated with popular music genres.  Research completed by Dr. Moran, CEO of DSD, during a series of surveys from 2000 - 2003 while working on his Masters Thesis revealed that prescription cough-syrup laced drinks, with a vast variety of “street names” are heavily indirectly endorsed by numerous popular rap musicians via their explicit lyrics which leads to potential drug-abuse issues for millions of fans and listeners worldwide.  Lean Slow Motion Potion is marketed specifically to curb this negative trend by steering easily influenced fans away from potential drug-abuse situations by providing them with a safe, non-alcohol, non-narcotic beverage alternative that is widely available to consumers in neighborhood stores and grocery markets.  DSD is perfectly positioned to be a leader in this market as it properly executes is precise business plan and marketing strategies.

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Dewmar uses a variety of marketing channels to promote its relaxation beverage. Creating a sales force to secure partnerships with distributors has been essential to generating recognition at the retail level. The Company additionally offers its retailers marketing materials including posters, display racks, and other point-of-sale items. This will comprise half of the Company’s overall marketing budget. To brand the product among consumers, the Company has allocated 20% of its budget to radio promotions, 10% toward online marketing and social networking, and nominal amounts for billboard and promotion vehicles. The Company will additionally hire celebrities to promote the brand and will pay them a promotional services fee ranging from ten cents up to fifty cents per case (1% to 5% of the case cost) sold in varying markets where the celebrity’s likeness is used. The Company has had agreements with Swisha House Entertainment of Houston, Texas during 2009 and year end 2010 but the contract since then has been terminated. Dewmar has plans to contact additional rap artists’ agents and management groups throughout the next 12 months to discuss mutually beneficial contractual endorsements.

DSD has identified the need for a relaxation beverage in response to a lack of market presence for such a product. In contrast to the multiple energy drinks that exist today, the Company’s Lean Slow Motion Potion^TM elicits a different kind of mindset. The active ingredients in Lean Slow Motion Potion are melatonin, rose hips and valerian root. Although there are numerous online journals and texts available that speaks on the topics of these ingredients, we have included a single quote regarding each ingredient from two of the more notable online health/wellness websites. WebMD website (www.WebMD.com) makes the following comment regarding two active ingredients that are found in Lean, “Melatonin supplements are sometimes used to treat jet lag or sleep problems (insomnia).” “There are probably 40 or 50 different herbs on the market that advertise that they really do something for sleep. There are only four or five that actually have any significant scientific data behind them. Valerian is a big one.” Furthermore, the website www.HealthLine.com made the following comments about the herb Rose Hips, “can also soothe the nervous system and relieve exhaustion.”

The drink’s premium relaxation formula was developed by a registered pharmacist with a commensurate understanding of pharmaceutical compounding and nutritional supplement formulations. Lean is a safe and satisfying mix of pharmaceutical grade herbs and syrup-based flavors to give the consumer “functional relaxation.” Lean additionally features a unique link to rap and hip-hop music culture, which is one of if not the most influential form of music in the World today that leads to consumer spending, that is reflected in the Company’s marketing strategy. The Us Pharmacopeia (USP) publishes official monographs for certain substances.  These monographs include specific assay methods and product specifications to assure identity and potency.     Material that is tested by these methods to meet those specifications is then eligible to be called pharmaceutical grade.  This is what we are referencing as it pertains to the active herbal ingredients contained within our nutritional supplement: Melatonin, Valerian Root and Rose Hips.

The two herbal ingredients valerian root and rose hips referenced as pharmaceutical grade are sourced by Allen Flavors, Inc. of 23 Progress St. Edison, NJ 08820.  The melatonin referenced as pharmaceutical grade is sourced by Metabev, Inc. of 75 Kingsland Ave. Clifton, NJ 07014.

Current Good Manufacturing Practices are followed by the pharmaceutical, biotech firms and food/beverage manufacturers to ensure that the products produced meet specific requirements for identity, strength, quality, and purity.  The Current Good Manufacturing Practices Guidelines are regulations enforced by the U.S. Food and Drug Administration (FDA).  These regulations are put into place to protect American citizens from potentially harmful products.

With a clear brand identity and current roster of distribution partners, the Company earns revenue through the wholesale of its products. The Company also expects to generate revenue by offering advertising space on its cans and on its website. DSD specifically offers three packages - a platinum package, gold package, and silver package that offer advertisers different levels of marketing. From among these packages, customers can choose whether they’d like to place banners ads on the Company’s website or have their name, logo, and website featured on a Lean can, among other options.

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Product Description

The Company’s Lean Slow Motion Potion^TM is a potent yet refreshing carbonated beverage that is naturally sweetened. With elements such as Acai Berry, Valerian Root, Rose Hips, and Melatonin, Lean beverage relieves everyday stress by creating an almost immediate sense of relaxation. Lean is available in three flavors - Purp, Yella, and Easta Pink. Served chilled straight from the can, over ice, blended, or in various cocktail combinations, Lean Slow Motion Potion^TM can appease a variety of personal tastes.

Purp resembles a light grape soda with aromatic hints of over five novel ingredients that drinkers are typically unable to pinpoint, but yet still enjoy. Focused on the more traditional Texas-based consumer, the raw mix of Sprite and grape Jolly Rancher is enhanced with a special syrup concentrate to take the edge off. A number of popular Texas rap stars, particularly Houston artists, have made this flavor the most well-known among hip hop fans worldwide as the name “Purp”- the slang term - has been used in hundreds of songs online, on the radio, and in music videos - more than any other relaxation beverage brand flavor on the market today. **

Yella is a mixture of two natural wild backwoods-grown Southern flavors enhanced by a light pineapple base. This Memphis, Tennessee born flavor includes a hint of cherry Jolly Rancher candy flavor plus a robust deep South honeysuckle-like sweetener. This flavor was derived from the wildly popular lyrics of the Oscar Academy Award-winning rap group Three 6 Mafia, that repeatedly mention how they prefer sipping on that “YellaYella” beverage to get them in the artistic zone and a steady, relaxed state of mind.** The Company does not have these artists’ permission for their song lyrics/persona.

Easta Pink combines strawberry cotton candy with two popular flavors loved by youngsters and adults alike. Inspired by repeat multi-platinum album selling and Grammy Award-winning rap artist DeWayne Michael Carter (aka Lil Wayne) originally of New Orleans, this mixture reveals a triple flavor combination including special syrup, Sprite, and a combination of cherry Skittles or Jolly Rancher candy flavors. Lil Wayne gives accolades to this concoction of Lean flavors as being his most favorite, with Purp being second. He single-handedly popularized the term Easta Pink in many of his hit songs while performing live worldwide and in multiple music videos aired on the MTV, VH1, and BET cable networks.**

**Other than Paul Wall and Swisha House no artists permission has been obtained. No proprietary or intellectual property of these artists is used. The terminology that the artists use are slang terminologies that we have happened to have trademarked such as Lean Slow Motion Potion ^TM or have created sub-category brand names for in the form of a flavor description as it pertains to Purp, Yella and Easta Pink.

Lean Slow Motion Potion^TM relaxation beverage is currently shipping beverages to or has shipped to distributors in the following states or U.S. territories for distribution and placement in stores since September 2009:

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Arkansas

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Alabama

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Florida

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Georgia

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Iowa

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Illinois

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Louisiana

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Massachusetts

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Maryland

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Michigan

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Minnesota

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Missouri

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Mississippi

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North Carolina

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Nebraska

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New York

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Oklahoma

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Pennsylvania

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Puerto Rico

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South Carolina

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Tennessee

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Texas

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Virginia

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West Virginia

Lean Slow Motion Potion^TM relaxation beverage is currently shipping beverages to or has shipped to distributors in the following countries for distribution and placement in stores since September 2009:

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Trinidad & Tobago

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Mexico

The Company does not have distribution agreements with every distributor, only those distributors who require exclusive territories or reserved markets for distribution of the Company’s brand.

DSD is currently distributing its product throughout fifteen states throughout the US. The Company intends to expand distribution of Lean Slow Motion Potion^TM nationally through retailers across the country. Furthermore, the Company intends to greatly extend the brand’s awareness more so internationally over the next twelve to twenty-four months as the CEO plans to visit a number of foreign countries on International Business Trade Missions. The industry analysis company IBIS World projects domestic demand for soft drinks to increase over the next five years by more than $2 billion, potentially generating more than $46.8 billion by 2015 (see chart below). ¹

Industry Data

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Annual Change

¹IBISWorld. “Soft Drink Production in the US Industry Report.” Obtained June 2010.

In this industry, the new age beverage category is a new, yet rapidly growing market. This industry is expected to continue growing due to increased media coverage. The Company itself has already captured a portion of the market share.

Generally, a beverage is considered as a “new age” beverage if it meets one or more of the following criteria; it has a noticeable functionality to the consumer other than just to cure thirst, it is not a traditional flavored soda, water or regular tea, or lastly there is no pre-existing beverage category for the product based upon the overall uniqueness of the new beverage.

As one article¹ explicitly states, “So what exactly are new age beverages? Well, this is a new category within the beverage industry that covers the new style of beverages. This new ‘category’ is growing and changing. Before only energy drinks and really new innovative beverages where part of the category. Now the category has evolved and you can include enhanced water, teas, diet drinks, iced coffee and really, any new drink. Every beverage company wants to be associated with the ‘new age’ category because not just because it's sexier but because the category is growing quicker and investors are looking at it up close.¹” The article continues on to say, “Why are these drinks growing at 50% per year or more? Why do we see so many waters, energy drinks, hydrating products, etc. on the market today? The answer is easy. Consumers are demanding more and more drinks. They want drinks for every occasion or part of the day. They want organic drinks, sugary drinks, healthy drinks and every type of drink to fit their personality, and style.¹”

¹Why Are Energy Drinks & New Age Beverages The New Hot Companies?

Published: Jul 15, 2008 http://www.articlesbase.com/business-opportunities-articles/why-are-energy-drinks-new-age-beverages-the-new-hot-
companies-484990.html#ixzz1bRVcQvGZ

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Yet another article written about the New Age Beverage category makes mention the following, “The New Age Carbonated Beverages segment is finally coming into its own with major and niche soda manufacturers creating new value-added healthy alternatives to CSDs (carbonated soft drinks).”² The article continues to read, “Companies examined include the major carbonated drink players (e.g., Coca-Cola, PepsiCo., Cadbury-Schweppes), as well as the niche players making a name for themselves in this market (e.g., IZZE, Jones, Red Bull). Market Trends: New Age Carbonated Beverages examines the state of the U.S. market, from everyday major supermarket players to specialty premium niche players.”² This explicitly proves that the “new age” beverage category is not simply a passing fad but has potential for longevity.

²Market Trends: New Age Carbonated Beverages Published:Apr 1, 2005 - 126 Pages

http://www.packagedfacts.com/sitemap/product.asp?productid=1073652

"Growing per capita disposable income and demand from convenience stores and other retail outlets is projected to benefit the Relaxation Drink Production industry in the five years to 2016, according to a new report released from IBISWorld. Also, existing companies are already signing nationwide distribution deals, which indicate market acceptance and familiarity with relaxation drinks - so they are not growing from an extremely low base as they did over the prior five years. For this reason, industry research firm IBISWorld has added a report on the Relaxation Drink industry to its growing Wellness & Nutrition & Supplements Report collection."

"The industry's fast-paced growth was possible because it was from an extremely low base and because there is an established market for sleep aids and products that help people focus. IBISWorld estimates industry revenue grew at a 68.7% annualized rate over five years, including a 49.5% increase from 2010 to 2011 to total $73.7 million"

"There are expected to be nearly 390 different types of relaxation drinks out on the market in 2011; however, the market is not yet saturated. Based on National Health Institute findings, IBISWorld estimates that there are more than 53 million Americans that have trouble sleeping. Not only are such people a potential market but also people who have trouble focusing are likely to consume relaxation drinks that are marketed for that purpose. As relaxation beverage producers succeed, new companies are entering into the relaxation drink market. According to IBIS World analyst, AgataKaczanowska, concentration has increased significantly since the industry began in the mid-2000s. The major companies in the Relaxation Drink Industry include Dream Products LLC, which launched its first product, a relaxation beverage called Dream Water, in January 2010 and Innovative Beverage Group, a beverage distributor and the producer of the popular relaxation drink called drank. In addition, the relaxation drink, ViB, an acronym for vacation in a bottle, launched in 2008, has gradually increased its distribution network."

 “The Relaxation Drink industry is already established and will be growing from a higher base, the potential demand pent-up in the market for relaxation drinks outweighs possible challenges to the industry,” says Kaczanowska.

³Relaxation Drink Industry Report Now Available from IBISWorld Published: December 29, 2011 by James Karklins of ISBISWorld.

Market Segmentation

Lean Slow Motion Potion’s^TM primary market is fans of the hip hop music community, particularly males/females of varying races and ethnicities that are under the age of 40. Not only does the hip-hop culture automatically embrace the brand, but it originally created the “get your lean on” culture. A secondary market exists among adult consumers of all mature ages searching for a non-alcoholic, drug-free beverage that aids in relaxation for the purposes of stress reduction or sleep assistance.  This secondary consumer base has been reported in several news media outlets to include over 70 million Americans of all ages, races and ethnicities.

Our sub-contracted flavor house, Allen Flavors Industries of New Jersey, has the exclusive responsibility to provide the highest level of quality assurance protocol to assure that we attain consistent, high quality herbal ingredients that serve as the active ingredients within our flavored concentrate. Also, Allen Flavors works in conjunction with our sub-contracted bottler Big Springs, Inc. of Huntsville, AL to make sure that the quality controlled active concentrate is properly diluted and mixed in an FDA approved current Good Manufacturing Practices manner to provide ultimate safety for consumer end-use.

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Material terms with Allen Flavors:

Dewmar must place a valid purchase order for all concentrates and premixes for Lean Slow Motion Potion^TM via the appropriately supplied Allen Flavors Formulation Batch Sheets Form.  Dewmar must allow for a minimum of two full weeks in order to have the concentrate order produced and shipped to the bottler for manufacturing. Dewmar is currently required to pay for the product plus its shipping cost immediately prior to Allen Flavors releases the order to the courier for delivery to the bottler. Allen Flavors is supposed to give Dewmar at least 30 days’ notice for any price increases and is currently considering offering Dewmar credit term.

The material terms with Big Springs, Inc. are:

Minimum production 2,000 cases per flavor if produced during regular 16oz schedule.   

All products will be produced on wooden pallets ($10.00 each) .Pricing is based on raw materials cost as of December 2, 2010.  Big Springs is to give Dewmar International at least 30 days’ notice of any price increases of raw materials.

Allen Flavors Mission Statement: Allen Flavors believes in responsibility and accountability in all aspects of our business. Our marketing, our procurement, our recruiting, our impact on the environment and our contributions to our communities, all are part of our responsibilities. Acting with these values, not just expressing them, is how we show our respect for our business, our employees, our customers and our communities.

Big Springs Inc. Statement: The Company that currently operates as Big Springs, Inc. was founded in 1902 in Huntsville, Alabama. Over the years, Big Springs, Inc. has grown into one of the best production facilities in the United States.

We produce a wide range of national, regional and private label soft drinks and energy drinks sold throughout the country. At Big Springs, Inc., our goal is to provide excellent customer service and satisfaction. We take pride in producing quality products while offering hands-on service. We have a team approach and are always available to support our customer needs.

With over 100 years of experience in soft drink production, we can assure our customers of the highest quality control standards in the beverage industry. From concept to consumption, Big Springs, Inc. can accomplish your goals. We work with suppliers throughout the country to procure all raw materials used in soft drink production. If you need a product developed, or a state-of-the-art production facility, Big Springs, Inc. can fulfill your needs. Our goal is to deliver a quality product on a continuous and consistent basis.

Market Needs

As rap and hip-hop increased in popularity in the 90’s and first part of the 21^st century, a sub-culture emerged in the south centered on “getting your lean on.” This term was a euphemism for the dangerous practice of adding cough syrup to a beverage (carbonated or alcoholic) for the purpose of relaxing. As the practice increased in prominence, some drink makers entered the market with products catered to this culture. The Company’s internal research revealed that consumers wanted a product with a stronger cultural association, a more pronounced physical affect, and more flavor options. The Company’s product’s formulation is developed by a licensed pharmacist and accomplishes the desired affects with none of the dangerous side effects that accompany the traditional practice of consuming cough syrup-laced beverages recreationally.

Many articles over the past years show where the Drug Enforcement Agency and other police officials fight the war against drugs that result in dangerous overdoses and side-effects daily whereas millions of people experiment with prescription cough syrup as a form of illicit drug use to get high by mixing it with different non-alcoholic beverages. The repeat use of prescription cough syrup for recreation can lead to drug abuse that has a number of dangerous drug-induced side-effects, even if the individual is wanting to simply get a good “buzz” or to attain a very deep sleep.

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Most recently, one news article reads: “Authorities say they cracked a ring that smuggled prescription-strength cough syrup into Houston to make a deadly potion popular in the hip-hop world. The U.S. Drug Enforcement Administration said the ring used its own rogue pharmacies in California to purchase 97,000 pints of the syrup used to make Purple Drank the Houston Chronicle reported Wednesday.” It continues on to say, “The popular but illegal beverage, a mixture of cough syrup containing codeine with carbonated soda and candy for flavor, sells for nearly twice as much in Houston as it does in Los Angeles, authorities said.”¹

The state Texas State Board of Pharmacy featured an article regarding the cultural association of prescription cough syrup abuse where it states, “Syrup is abused across all ethnic and cultural boundaries and its popularity is growing rapidly. Syrup has been glorified in musical lyrics with references to sippin’ syrup…”²

A recent article titled Cough Syrup Abuse written by Stacy Barnes on January 26, 2011 stated, “Cough syrup abuse typically involves taking codeine-promethazine hydrochloride cough syrup and mixing it with soda, alcohol, or candy in a concoction known as ‘syzurp’, ‘syrup’, or ‘purple stuff’. The ingredients in this concoction make it very easy to develop an addiction. Experts are worried about the danger of this syrup being such a highly trendy drug drink. It may be socially acceptable, but there have been many stories of overdoses or people drinking syrup at a party and falling asleep at the wheel when they drive home. As an opiate it is a very addictive substance. Erratic behavior and insomnia, or an inability to sleep without syrup are the warning signs of needing addiction treatment. Common side effects include confusion, dizziness, double or blurred vision, slurred speech, impaired physical coordination, abdominal pain, nausea and vomiting, rapid heart beat, drowsiness, numbness of fingers and toes, and disorientation. The effects typically last for 6 hours. More serious effects include elevated blood pressure, fainting, and liver damage.”³

Since the CEO of the company is a 16 year plus veteran licensed-registered pharmacist, he has seen these trends in prescription cough syrup abuse as previously noted; therefore he carefully crafted his brand to cater to all of the cultural demands of those who may have already or could potentially abuse prescription cough syrup by first developing an effective formulation that creates a sense of immediate relaxation and calming effect. A secondary yet very important factor includes appeasing the pallets of niche consumers by creating popular tasty flavors. This is supported by implementing unique branding methods, inclusive of creating highly recognizable and popular brand names and flavors that cater to potential abusers who relate to hip hop music and artists.

¹Houston Chronicle; Published: Oct. 19, 2011 at 12:02 PM

Read more: http://www.upi.com/Top_News/US/2011/10/19/Four-arrested-in-street-drug-smuggling/UPI-39651319040171/#ixzz1bdSuMrJf

² Texas State Board of Pharmacy, Newsletter Volume XXV , Number 2; Spring 2001

³Cough Syrup Abuse By Stacy Barnes | January 26, 2011 http://www.unityrehab.com/drug-addiction-treatment-news/addiction-treatment-2/cough-syrup-abuse/

Industry Analysis

The Company will operate within the Bottled and Canned Soft Drinks industry (Standard Industrial Classification 2086). The table below shows Dun & Bradstreet data regarding the performance of the businesses in this industry on a national level as well as in the carbonated beverages, nonalcoholic: packaged in cans, bottles subset. ²

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Competitive Comparison

The Company competes directly with Roboin, Drank, Purple Stuff, and Sippin’ Syrup brand beverages. Each of these products has the same target market, but the Company intends to differentiate itself by offering a more herbal effective product with more flavor varieties and stronger cultural identification. More importantly, the Company will provide excellent distributor level support via trained merchandisers and market managers to assist in gaining the niche consumers’ attention immediately for rapid brand awareness that will result in faster product turnover. For more information regarding the Company’s competitive advantages, see Competitive Edge.

² Dun & Bradstreet, Industry Data for SIC 5149-0000; obtained February 2010

Dewmarhas developed a brand that emphasizes a lifestyle beverage connected with the culture of the Deep South, but still has national consumer appeal. Aligning its brand with hip-hop and rap culture and celebrity spokespeople, the Company’s Lean Slow Motion Potion^TM will resonate with consumers as the “gotta-have” relaxation beverage that can ease the mind and body while displaying a level of confident swagger among peers if seen with the beverage in hand. To increase awareness, Dewmar will create relationships with distributors, supporting these partnerships with various marketing materials that speak directly to the niche market consumers.

With its brand established, the Company will send a clear message about the unique benefits of its flavorful products and how it can help consumers relax effectively and safely. The Company will promote this message using a comprehensive marketing strategy that includes celebrity endorsement to generate attention from its target market. This approach is intended to influence buyers and help the Company achieve the following objectives:

Competitive Edge

Dewmar sees a unique opportunity in the relaxation beverage market, and intends to capitalize on this by building on the following strengths:

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Expert brand management;

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Extraordinary sales support and training to help rapidly penetrate key markets

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Higher than average profit margins for both distributors and retailers

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Proven marketing strategy that creates immediate sale-thru to consumers

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Quality product with a variety of flavors demanded by consumers

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Formulated by a pharmaceutical scientist.  

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Pioneering experience in successfully launching the most popular relaxation beverage in 2008

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CEO is a licensed pharmacist and respected community icon, yielding instant comfort and rapport with consumers and distributors.

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Well-versed in recognizing distributor expectations for launching new brands

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Launched the brand with immediate distribution across six U.S. states

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Ownership is highly-educated in business, marketing, and leadership

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Fast-growing, new-age beverage category

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Company culture hinges on honesty and integrity

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Maintains an intimate understanding of its niche consumer market

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Commitment to building strong alliances with distribution partners

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Trademarked brand name Lean has been repeatedly used throughout the entire United States over the past 10 years or more; this shows that the trademarked name shall already have some limited recognition by our targeted consumers due to this fact. Trademark is under the name of Dewmar International BMC, Inc. which is now DSD.

A significant list of competitors to the Lean Slow Motion relaxation beverage brand along with a description for their products include but is not solely limited to:

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Purple Stuff (16 ounce aluminum can) multiple flavors which include Classic Grape, Berry Calming, Classic Lemon-Lime, Green Apple; describes themselves as a Pro-Relaxation beverage manufactured by Funktional Beverages Inc. of Spring, TX

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ViB - Vacation In a Bottle (12 ounce aluminum bottle) multiple flavors which include Mango Lime, Pomegranate; describes themselves as “The Happy, Relaxation Drink”, manufactured by Vacation In a Bottle, LLC of Austin, TX.

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MalavaNovocaine (8 ounce aluminum can) one flavor called Tropical Berry; describes themselves as an all-natural, non-carbonated numbing type of relaxation drink manufactured by Malava Beverages LLC of Newport Beach, CA.

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Unwind (12 ounce aluminum slim can) three flavors which include Citrus Orange, Goji Grape and Pom Berry; describes their carbonated product as the “Ultimate Relaxation Aid” that is manufactured by Frontier Beverage Company, Inc. of Memphis, TN.

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Blue Cow (10 ounce plastic bottle) has one flavor that is non-flavored water but plans to add 2 new flavors of green tea and Lazy Lemon; the brand touts itself as the “original relaxation drink” that is manufactured by RelaxCo, Inc. of El Sugundo, CA.

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Serenity (8.4 ounce aluminum can) has one flavor referred to as a lightly carbonated, nostalgic cream flavor that is manufactured by Apex Beverage, LLC of South Hackensack, NJ.

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Drank (16 ounce aluminum can) has one carbonated grape-like flavor that labels itself as the “Extreme Relaxation Beverage” that is manufactured by Innovative Beverage Group Holdings, Inc. of Houston, TX.

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Koma Unwind (12 ounce aluminum can) comes in four different flavors three of which are coffee-based flavors of Creamy Classic, Java Black and Moca Tonight and refers to its non-coffee flavor as a “chillaxation drink”; manufactured by BeBevCo, Inc. of Mooresville, NC.

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Ex Chillout (8.4 ounce aluminum can) whose relaxation drink is advertised as a natural calming drink with Chamomile, Valerian, Lemon Balm extracts sweetened with Fruit Up that is manufactured by Ex Drinks, LLC of Henderson, NV.

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Mellow Day and Mellow Night (16 ounce plastic bottles) comes in a variety of flavors that includes Peach Mango, Pomegranate, Cane Mint Lime, Melon Agave, Coconut Banana, Dragonfruit, Citrus Vanilla, and Honeydew Mint; manufactured by Mellow Beverage Company of Venice, CA.

Marketing Strategy

The Company will use a variety of advertising channels to increase its exposure among prospective customers. The Company believes that a celebrity spokesperson is essential, and the Company intends to seek out popular hip-hop artists to endorse its products. The Company’s current marketing efforts include the following:

Branding:

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Point of sale merchandising: Roughly 30% of the Company’s marketing budget will be devoted to posters, pole signs, coolers, racks, and other materials intended to help distributors brand its products in-store through retail merchandising partnerships.

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Radio: The Company will use radio ads to target listeners who may be interested in the Company’s products. Radio commercial production can be done cost effectively, and provides flexibility to tailor the message to the right customer segment. The Company will spend 35% of marketing dollars on radio promotions.

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Website: Customers can register on the Company’s official interactive website www.SlowMotionPotion.com. This will allow them to become an active member that can interact with other registered members that are a part of the Slow Motion Potion^TM community. The website also allows consumers to listen to and watch Lean-related hip hop music and videos and participate in chat rooms, blogs, and forums regarding a number of topics of interest to our niche market. The website, which accounts for 5% of the Company’s budget, not only serves as a popular form of entertainment, but also has the capability to generate revenue by providing advertising banner space for sale to businesses seeking advertising opportunities for its target consumer. More importantly, the website gives consumers the opportunity to order the beverage and promotional items such as clothing, t-shirts and hats at a nominal fee from anywhere in the U.S. Lastly, the website is a recruiting tool that provides more information about the Company’s brand to both retailers and distributors.

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Social networking sites: The Company will set up pages and profiles on social networking sites including Facebook, YouTube, and Twitter, to name a few, on behalf of the Lean brand, with 5% of its budget allotted toward advertising online. Social networking sites are an effective way to benefit from word of mouth on the web, and generate interest for the Company from the general public. The Company may also place advertisements on these sites. Customers can “become a fan” of Lean Slow Motion Potion^TM on Facebook or “follow” the Company’s Twitter feed in order to gain access to special discounts or promotions. Advertising on social networking sites is considered one of the most lucrative ways to generate return on investment (ROI), higher even than other online advertising methods and television. ³

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Billboard advertising: The Company will create a variety billboards advertising, inclusive of mobile advertising on sales route vehicles such as adhesive vinyl wraps on cargo vans and trucks, advertising its products and services along busy roads and on highways throughout each distribution territory. These billboards will both help increase brand recognition in the general populace and build the Company’s reputation as a quality provider of safe relaxing beverages. The Company will allow 2% of its budget to accommodate billboard marketing.

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Tradeshows and Events: Beverage industry tradeshows are fundamental in notifying potential new distributing partners and retailers, especially retail chain stores, about the brand’s presence. The Company will attend a number of annual tradeshows sponsored by national convenience store associations, international beverage cooperative groups, and localized distributor organizations several times per year as a major recruiting tool. The Company will also participate in local indoor and outdoor events to support local distributors in bringing consumer awareness to the brand. This includes concerts, on-campus collegiate tours, sporting events, fairs and other related local but relevant events. This will cumulatively account for 8% of the budget.

·

Print media: Print advertisements will be placed in magazines and trade journals geared toward both the Company’s demographic, as well as potential distributors, and will account for 2% of its budget. These advertisements will provide information about the Company, where to shop online, and where to purchase in a store near you. Ads will also list the benefits associated with Lean Slow Motion Potion^TM.

Business-to-Business:

·

Direct sales: The Company will use direct sales calls, presentations, and appointments with prospective distributors who have existing retail accounts throughout the United States. The Company will leverage current relationships and will also forge new ones by implementing an outside sales force to achieve its overall business objectives.

³Saleem, Muhammad. Pronet Advertising. “Social Network Ad Spending and Return on Investment.” May 13, 2007. Obtained at: http://tinyurl.com/ywlcn3

Employees

At December 31, 2012, the Company had 1 employee, the Company’s officer and director, who devotes full time efforts to the Company. None of its employees were represented by a collective bargaining arrangement.

The Company does carry key person life insurance on CEO/President in the amount of $2 million, however, the loss of the services of any of its executive officers or other directors could have a material adverse effect on the business, results of operations and financial condition of the Company. The Company's future success also depends on its ability to retain and attract highly qualified technical and managerial personnel.

ITEM 1A.   RISK FACTORS.

We rely heavily on our independent distributors, and this could affect our ability to efficiently and profitably distribute and market our products, and maintain our existing markets and expand our business into other geographic markets

Our ability to establish a market for our unique brands and products in new geographic distribution areas, as well as maintain and expand our existing markets, is dependent on our ability to establish and maintain successful relationships with reliable independent distributors strategically positioned to serve those areas. Many of our larger distributors sell and distribute competing products, including non-alcoholic and alcoholic beverages, and our products may represent a small portion of their business. To the extent that our distributors are distracted from selling our products or do not employ sufficient efforts in managing and selling our products, our sales and profitability will be adversely affected. Our ability to maintain our distribution network and attract additional distributors will depend on a number of factors, many of which are outside our control. Some of these factors include

·

the level of demand for our brands and products in a particular distribution area,

·

our ability to price our products at levels competitive with those offered by competing products, and

·

Our ability to deliver products in the quantity and at the time ordered by distributors.

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We cannot ensure that we will be able to meet all or any of these factors in any of our current or prospective geographic areas of distribution. Our inability to achieve any of these factors in a geographic distribution area will have a material adverse affect on our relationships with our distributors in that particular geographic area, thus limiting our ability to expand our market, which will likely adversely affect our revenues and financial results.

We incur significant time and expense in attracting and maintaining key distributors who are crucial to our business.

Our marketing and sales strategy presently, and in the future, will rely on the availability and performance of our independent distributors. We have entered into written agreements with many of our top distributors for varying terms and duration. In addition, despite the terms of the written agreements with many of our top distributors, there are no assurances as to the level of performance under those agreements, or that those agreements will not be terminated early. There is no assurance that we will be able to maintain our current distribution relationships or establish and maintain successful relationships with distributors in new geographic distribution areas. Moreover, there is the additional possibility that we may have to incur additional expenditures to attract and maintain key distributors in one or more of our geographic distribution areas in order to profitably exploit our geographic markets.

Because our distributors are not required to place minimum orders with us, we need to carefully manage our inventory levels, and it is difficult to predict the timing and amount of our sales.

Our independent distributors are not required to place minimum monthly or annual orders for our products. In order to reduce inventory costs, independent distributors endeavor to order products from us on a “just in time” basis in quantities, and at such times, based on the demand for the products in a particular distribution area. Accordingly, there is no assurance as to the timing or quantity of purchases by any of our independent distributors or that any of our distributors will continue to purchase products from us in the same frequencies and volumes as they may have done in the past. There can be no assurance as to the number of cases sold by any of our distributors.

We need to effectively manage our growth and execution of our current business strategy. A failure to do so would negatively impact our profitability.

To manage operations effectively and maintain profitability, we must continue to improve our operational, financial and other management processes and systems. Our success also depends largely on our ability to maintain high levels of employee utilization, to manage our production costs and general and administrative expense, and otherwise to execute on our business strategy. We need to maintain adequate operational controls and focus as we add new brands and products, distribution channels, and business strategies. There are no assurances that we will be able to effectively and efficiently manage our growth. Any inability to do so could increase our expenses and negatively impact our profit margin.

The loss of key personnel would directly affect our efficiency and profitability.

Our future success is dependent, in a large part, on retaining the services of our founder, Dr. Marco Moran, our President and Chief Executive Officer. Dr. Moran possesses a unique and comprehensive knowledge of our industry. While Dr. Moran has no plans to leave or retire in the near future, his loss could have a material adverse affect on our operating, marketing and financial performance, including our ability to develop and execute our long term business strategy.

We are unable to ensure we can retain key personnel.

There can be no assurance that the Company will be able to retain its key managerial and technical personnel or that it will be able to attract and retain additional highly qualified technical and managerial personnel in the future. The inability to attract and retain the technical and managerial personnel necessary to support the growth of the Company's business, due to, among other things, a large increase in the wages demanded by such personnel, could have a material adverse effect upon the Company's business, results of operations and financial condition

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We rely on third-party packers of our products, and this dependence could make management of our marketing and distribution efforts inefficient or unprofitable.

We do not control and manage the entire manufacturing process of our products, we do not own the plant and equipment required to manufacture and package our beverage products and do not anticipate having such capabilities in the future. As a consequence, we depend on third-parties and contract packers to produce our beverage products and to deliver them to distributors. Our ability to attract and maintain effective relationships with contract packers and other third parties for the production and delivery of our beverage products in a particular geographic distribution area is important to the achievement of successful operations within each distribution area. Currently, competition for contract packers’ business is tight, especially in the western United States, and this could make it more difficult for us to obtain new or replacement packers, or to locate back-up contract packers, in our various distribution areas, and could also affect the economic terms of our agreements with our packers. There is no assurance that we will be able to maintain our economic relationships with current contract packers or establish satisfactory relationships with new or replacement contract packers, whether in existing or new geographic distribution areas. The failure to establish and maintain effective relationships with contract packers for a distribution area could increase our manufacturing costs and thereby materially reduce profits realized from the sale of our products in that area. In addition, poor relations with our contract packers could adversely affect the amount and timing of product delivered to our distributors for resale, which would in turn adversely affect our revenues and financial condition.

Our business and financial results depend upon maintaining a consistent and cost-effective supply of raw materials.

Raw materials for our products include concentrate, glass, labels, caps and packaging materials. Currently, we purchase our flavor concentrate from a flavoring house we believe that we have adequate sources of raw materials, which are available from multiple suppliers, and that in general we maintain good supplier relationships. The price of our concentrate is determined by our flavor houses and us, and may be subject to change. Prices for the remaining raw materials are generally determined by the market, and may change at any time. Increases in prices for any of these raw materials could have an adverse impact on our profitability and financial position. If we are unable to continue to find adequate suppliers for our raw materials on economic terms acceptable to us, this will adversely affect our results of operations.

Our inability to protect our trademarks, patent and trade secrets may prevent us from successfully marketing our products and competing effectively.

Failure to protect our intellectual property could harm our brand and our reputation, and adversely affect our ability to compete effectively. Further, enforcing or defending our intellectual property rights, including our trademarks, patents, copyrights and trade secrets, could result in the expenditure of significant financial and managerial resources. We regard our intellectual property, particularly our trademarks, patent and trade secrets to be of considerable value and importance to our business and our success. We rely on a combination of trademark, patent, and trade secrecy laws, confidentiality procedures and contractual provisions to protect our intellectual property rights. We have obtained certain trademarks and are pursuing the registration of additional trademarks in the United States, Canada and internationally. There can be no assurance that the steps taken by us to protect these proprietary rights will be adequate or that third parties will not infringe or misappropriate our trademarks, trade secrets (including our flavor concentrate trade secrets) or similar proprietary rights. In addition, there can be no assurance that other parties will not assert infringement claims against us, and we may have to pursue litigation against other parties to assert our rights. Any such claim or litigation could be costly. In addition, any event that would jeopardize our proprietary rights or any claims of infringement by third parties could have a material adverse affect on our ability to market or sell our brands, profitably exploit our unique products or recoup our associated research and development costs.

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We have limited working capital and may need to raise additional capital in the future.

Our capital needs in the future will depend upon factors such as market acceptance of our products and any other new products we launch, the success of our independent distributors and our production, marketing and sales costs. None of these factors can be predicted with certainty.

The Company does not currently have the financial resources to expand its existing operations and to fully implement its business strategy. Absent raising additional capital or entering into joint venture agreements, it will not be able to fully implement its business strategy. This could limit the size of the business. There is no assurance that capital will be available in the future to the Company or that capital will be available under terms acceptable to the Company. The Company will need to raise additional money, either through the sale of equity securities (which could dilute the existing stockholders' interest), through the entering of joint venture agreements (which, while limiting the Company’s risk, could reduce its ownership interest in particular assets), or from borrowings from third parties (which could result in additional assets being pledged as collateral and which would increase the Company’s debt service requirements).

Additional capital could be obtained from a combination of funding sources, many of which could have a material adverse affect on the Company’s business, results of operations and financial condition. These potential funding sources and the potential adverse affects attributable thereto, include:

●  borrowings from financial institutions, which may subject the Company to certain restrictive covenants, including covenants restricting its ability to raise additional capital or pay dividends;

●  debt offerings, which would increase the Company’s leverage and add to its need for cash to service such debt (which could result in additional assets being pledged as collateral and which could increase the Company’s debt service requirements);

●  additional offerings of equity securities, which would cause dilution of the Company’s common stock;

●  cash flow from operating activities, which is dependent upon the success of current and future operations;

The Company’s ability to raise additional capital will depend on the results of operations and the status of various capital and industry markets at the time such additional capital is sought. Accordingly, capital may not become available to the Company from any particular source or at all. Even if additional capital becomes available, it may not be on terms acceptable to the Company. Failure to obtain additional financing on acceptable terms may have a material adverse affect on the Company’s business, results of operations and financial condition.

Increased competition could hurt our business.

The Beverage industry is highly competitive. The principal areas of competition are pricing, packaging, development of new products and flavors, and marketing campaigns. Our products compete with a wide range of drinks produced by a relatively large number of manufacturers, most of which have substantially greater financial, marketing, and distribution resources than we do.

Change in consumer preferences may reduce demand for our product.

Consumers are seeking greater variety in their beverages. Our future success will depend, in part, upon our continued ability to develop and introduce different and innovative beverages. In order to retain and expand our market share, we must continue to develop and introduce different and innovative beverages and be competitive in the areas of quality and health, although there can be no assurance of our ability to do so. There is no assurance that consumers will continue to purchase our product in the future

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We compete in an industry that is brand-conscious, so brand name recognition and acceptance of our products are critical to our success.

Our business is substantially dependent upon awareness and market acceptance of our products and brands by our targeted consumers, between the ages of 15 and 35. In addition, our business depends on acceptance by our independent distributors of our brands as beverage brands that have the potential to provide incremental sales growth rather than reduce distributors’ existing beverage sales. Although we believe that we have been relatively successful towards establishing our brands as recognizable brands in the Alternative beverage industry, it may be too early in the product life cycle of these brands to determine whether our products and brands will achieve and maintain satisfactory levels of acceptance by independent distributors and retail consumers.

We could be exposed to product liability claims for personal injury or possibly death.

Although we have product liability insurance in amounts we believe are adequate, we cannot assure that the coverage will be sufficient to cover any or all product liability claims. To the extent our product liability coverage is insufficient; a product liability claim would likely have a material adverse affect upon our financial condition. In addition, any product liability claim successfully brought against us may materially damage the reputation of our products, thus adversely affecting our ability to continue to market and sell that or other products.

Our business is subject to many regulations and noncompliance is costly.

The production, marketing and sale of our unique beverages, including contents, labels, caps and containers, are subject to the rules and regulations of various federal, provincial, state and local health agencies. If a regulatory authority finds that a current or future product or production run is not in compliance with any of these regulations, we may be fined, or production may be stopped, thus adversely affecting our financial conditions and operations. Similarly, any adverse publicity associated with any noncompliance may damage our reputation and our ability to successfully market our products. Furthermore, the rules and regulations are subject to change from time to time and while we closely monitor developments in this area, we have no way of anticipating whether changes in these rules and regulations will impact our business adversely. Additional or revised regulatory requirements, whether labeling, environmental, tax or otherwise, could have a material adverse affect on our financial condition and results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

In August 2012, the Company received a letter from the SEC indicating it was abandoning the comment process on the company’s previously filed 8K/A and December 31, 2011 10K/A.  

ITEM 2. PROPERTIES

The Company leases space at 132 E. Northside Dr. Suite C Clinton, MS 39056 and at 811 Town & Country Blvd in Houston, TX.   Furthermore, the company maintains an office at 101 Convention Center Dr., Suite 700, Las Vegas, NV 39202 at no cost. We believe that these spaces are adequate for our needs at this time, and we believe that we will be able to locate additional space in the future, if needed, on commercially reasonable terms.

ITEM 3. 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 December 31, 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.

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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.

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 commenced. 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. On June 27, 2012, Innovative Beverage Group Holdings (“IBGH”) filed the same claims against Dewmar International BMC, Inc., DSD Network of America, Inc. and Marco Moran CEO of the Company, in Harris County, Texas 127th Judicial District Court, whereas plaintiff asserted that the Defendants engaged in various acts of unfair business practices that caused harm to IBGH. The company’s and Marco Moran have filed an Answer and Counterclaim in this matter on October 31, 2012. Discovery has not yet begun in this matter. Written discovery will be propounded and depositions will have to be taken to better understand the nature and basis for the plaintiff’s claims and to build the Company’s defenses. The Company has vigorously contested each and every one of the plaintiff’s allegations and has instructed counsel to proceed to trial on the merits.

On March 22, 2012 Plaintiff, DSD NETWORK OF AMERICA, INC. (hereinafter “DSD”) filed suit against Defendants DeWayne McKoy, Charles Moody, Corey Powell and Peter Bianchi in United States District Court; District of Nevada for a combined thirteen claims 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. Bianchi failed to answer and was defaulted however Bianchi has filed a Motion to Set Aside the Default and Powell and Bianchi have filed Motions to Dismiss.  Rulings on these Motions are still pending.

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ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable

PART II

ITEM 5.  MARKET FOR OUR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

(a) Market Information. Our Common Stock is traded on the OTCBB as of March 14, 2013. No assurance can be given that any active market for our Common Stock will ever develop.

(b) Holders. As of April 15, 2013, there were 196 record holders of all of our issued and outstanding shares of Common Stock.

(c) Dividend Policy

We have not declared or paid any cash dividends on our Common Stock and do not intend to declare or pay any cash dividend in the foreseeable future. The payment of dividends, if any, is within the discretion of the Board of Directors and will depend on our earnings, if any, our capital requirements and financial condition and such other factors as the Board of Directors may consider.

ITEM 6. SELECTED FINANCIAL DATA.

As a smaller reporting company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are not required to provide the information required by this item.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Certain statements in this report and elsewhere (such as in other filings by the Company with the Securities and Exchange Commission ("SEC"), press releases, presentations by the Company of its management and oral statements) may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," and "should," and variations of these words and similar expressions, are intended to identify these forward-looking statements. Actual results may materially differ from any forward-looking statements. Factors that might cause or contribute to such differences include, among others, competitive pressures and constantly changing technology and market acceptance of the Company's products and services. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Results of Operations   

Fiscal Year Ended December 31, 2012 compared to December 31, 2011

Revenue

Revenue is presented net of sales allowances. Net revenue decreased $838,630, or 61.7%, to $520,874 from $1,359,504 for the years ended December 31, 2012 and 2011, respectively. This decrease was primarily due to overall decrease in business activities, and decreased marketing efforts.  The Company decided to change its distribution channel structure from selling to all accounts inclusive of general food and beverage wholesalers in 2011 to excluding those general food and beverage wholesalers and greatly focusing its sales to primarily direct store-delivery (SDS) beer distributors in 2012.

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Cost of Goods Sold

Cost of goods sold decreased $302,605, or 59.1%, to $209,278 from $511,883 for the years ended December 31, 2012 and 2011, respectively. This overall decrease was primarily the result of decreased sales.

Operating Expenses

Operating expenses increased $3,369,102 or 332%, to $4,385,056 from $1,015,954 for the years ended December 31, 2012 and 2011, respectively. The overall increase in operating expenses results primarily from issuances of preferred stock valued at $3,150,000 to Dr. Moran for services rendered and other stock based compensation of $475,901 to various consultants for services rendered.   

Marketing and advertising costs decreased $87,452, or 75%, to $28,550 for the year ended December 31, 2012, as compared to $116,002 for the year ended December 31, 2011.  This overall decrease was due to lack of funding needed to heighten awareness of our products.

Contract labor costs decreased to $145,037 from $358,792 for the years December 31, 2012 and 2011, respectively. Contract labor costs primarily included costs for administrative and marketing/sales support.

Interest Expense

For the years ended December 31, 2012 and 2011, the Company recognized interest expense of $23,764 and $43,066, respectively.  During the year ended December 31, 2012, amortization of debt discount associated with the creation of derivative liabilities totaled $17,282 as compared to $0 for the year ended December 31, 2011.

Net Loss

Our net loss for the year ended December 31, 2012 was $4,120,571 as compared to a net income of $36,007 for the year ended December 31, 2011.   The increase in net loss is attributable to the increases in expenses and the decrease in revenue, which is discussed above.

Liquidity and Capital Resources

Years ended December 31, 2012 as compared to December 31, 2011

During the years ended December 31, 2012 and 2011, the Company recognized negative cash flows from operating activities of ($193,118) and ($91,104), respectively. As of December 31, 2012, the Company held cash and cash equivalents of $38,388 compared to cash of $91,506 at December 31, 2011.

Cash used in investing activities totaled $0 and $7,850 for the years ended December 31, 2012 and 2011, respectively. Cash used in investing activities consisted of purchases of property and equipment and advances to a related party. Cash provided by (used in) financing activities totaled $140,000 and ($13,373) for the years ended December 31, 2012 and 2011, respectively, and consisted of proceeds received from convertible notes and payments made on notes payable during the year ended December 31, 2012 and 2011.

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.

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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.

 On January 15, 2013, 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 $53,000 which together with any unpaid accrued interest due on September 17, 2013. This convertible note together with any unpaid accrued interest is convertible into shares of common stock at the holder’s option 180 days from inception at a variable conversion price calculated as the greater of (i) the variable conversion price of 48% of the market price calculated as the average of the lowest three trading prices for the common stock during the 10 trading day period prior to the conversion date or (ii) the fixed price of $0.0009. This convertible promissory note was funded in the amount of $50,000, with $3,000 being recorded as legal fees for amounts held by note holder. The note contains an anti-dilution provision which causes the conversion price to decrease if the company issues any common stock at a lower price or with no consideration.

On February 19, 2013, 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 November 21, 2013. This convertible note together with any unpaid accrued interest is convertible into shares of common stock at the holder’s option 180 days from inception at a variable conversion price calculated as the greater of (i) the variable conversion price of 55% of the market price calculated as the average of the lowest three trading prices for the common stock during the 10 trading day period prior to the conversion date or (ii) the fixed price of $0.0009. This convertible promissory note was funded in the amount of $30,000, with $2,500 being recorded as legal fees for amounts held by note holder. The note contains an anti-dilution provision which causes the conversion price to decrease if the company issues any common stock at a lower price or with no consideration.

Commitments

We do not have any commitments, which are required to be disclosed in tabular form as of December 31, 2012.

Off-Balance Sheet Arrangements

As of December 31, 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

In preparing our consolidated financial statements, we make estimates, assumptions and judgments that can have a significant impact on our operating income and net income as well as on the value of certain assets and liabilities on our consolidated balance sheet. The application of our critical accounting policies requires an evaluation of a number of complex criteria and significant accounting judgments by us. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Senior management has discussed the development, selection and disclosure of these estimates with the Board of Directors. Actual results may differ materially from these estimates under different assumptions or conditions.

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An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made and/or if different estimates that reasonably could have been used or changes in the accounting estimates that are reasonably likely to occur periodically could materially impact the consolidated financial statements. Management believes the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of the consolidated financial statements:

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’ destination. 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 bill of lading 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. Products are sold with extended payment terms not to exceed 120 days. 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, aluminum cans, trays, shrink wrap, can ends, labels and packaging materials. Additionally, costs incurred for shipping, handling and warehousing 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.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

See the index to the Financial Statements below, beginning on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) in effect as of December 31, 2012 was carried out under the supervision and with the participation of our Chief Executive Officer who also performs the functions of the principal financial officer. Based upon that evaluation, the Chief Executive Officer (acting in that capacity and also as the Company’s principal financial officer) concluded that the design and operation of our disclosure controls and procedures were not effective as of December 31, 2012 (the end of the period covered by this annual report on Form 10-K).

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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 statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. It should be noted, however, that because of inherent limitations, 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.

An internal control material weakness is a 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, 2012 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 31, 2012.

No Attestation Report of the Registered Public Accounting Firm

This Annual Report on Form 10-K does not include an attestation report of the Company’s independent registered public accounting firm regarding the Company’s internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to an exemption for smaller reporting companies under Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Dodd-Frank Act provides an exemption from the independent auditor attestation requirement under Section 404(b) of the Sarbanes-Oxley Act for small issuers that are neither a large accelerated filer nor an accelerated filer. The Company qualifies for this exemption.

  Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation referred to above during the last quarter of fiscal 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The following table sets forth information concerning our officers and directors as of December 31, 2012 together with all positions and offices of the Company held by each and the term of office and the period during which each has served:

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Biographical Information

The following paragraphs set forth brief biographical information for the aforementioned director and executive officers and directors:

Marco Moran, CEO, President, Secretary, CFO, Treasurer, Director, Chief Accounting Officer

As Chief Executive Officer Marco Moran is responsible for product oversight, research and development, quality control, strategic planning, and sales and marketing efforts. He also provides leadership to the Company, as well as developing its strategic plan to advance its mission and objectives, and to promote revenue, profitability, and growth. Dr. Moran also oversees Company operations to insure production efficiency, quality, service, and cost-effective management of resources.

In 2008, he began Unique Beverage Group, LLC, where he branded his first beverage and learned how to take a product to market, leading him to develop his current enterprise Dr. Moran was previously a Pharmacist for several years throughout the Southeastern Region of the United States, practicing pharmacy in up to 5 states. From 2007 to 2008 he served in this role for Mississippi Baptist Health System, preceded by one year with Accredo Nova Factor as its Pharmacist and Project Manager in Memphis, TN. From 2004 to 2006, Dr. Moran was employed in the same capacity for River Region Medical Center in Vicksburg, Mississippi, where he managed Six Sigma project teams to assist administration in meeting annual corporate financial objectives. He also owned the financial services firm Wiser Tax Pros. During his first two years as a business owner he also worked for CVS Pharmacy in Mobile and Tuscaloosa, AL. Dr. Moran began his career as the Director of Pharmacy and Regulatory Affairs for INO Therapeutics, Inc. in Port Allen, Louisiana. He served as a Graduate Assistant and Instructor during his MBA studies, and previously served at the U.S. Naval Hospital in Camp Lejeune, North Carolina as a Medical Service Corp Officer and Pharmacist. Dr. Moran holds graduate degrees in Business Administration and Pharmaceutical Science from the University of Louisiana at Monroe, and was briefly a law student at the West Coast School of Law before becoming a full-time entrepreneur. Dr. Moran has expanded his pharmaceutical formulation experience by completing basic and advanced training as a Professional Compounding Centers of America (PCCA) Compounding in Houston, TX and as a trained American Colleges of the Apothecaries Compounding Specialist in Memphis, TN. Dr. Moran has completed various extensive training in New York and California through BevNet Live Entrepreneur School annually since 2009, inclusive of branding, packaging, and entrepreneur coursework to enhance his knowledge of the beverage industry.

Mr. Kevin M. Murphy, Director

Mr. Murphy, age 62, is an international consultant, with many years of executive management experience in corporate reorganization, finance, administration, and new business development. He has served on the Board of Directors of several companies. Mr. Murphy serves as President and CEO of Wannigan Capital Corp. and as President and Director of Convenientcast, Inc. (formerly Wannigan Ventures/PC 9-11, Inc/iAudioCampus.com). Mr. Murphy also serves as President and CEO of Silver Mountain Mines and Aldar Group Inc., a fully reporting public company (symbol ALDJ, OTC BB). He is also President and Chairman of the Board of Directors of Greenleaf Forum International, Inc., a private investment banking firm. Mr. Murphy became CEO and Chairman of the Board of Absolute Future.Com, Inc. on August 15, 2001. He applied for reorganization for Absolute Future.Com through the Federal Bankruptcy Courts January 31, 2002. Mr. Murphy filed Bankruptcy in June of 2001. He is CEO and President of a private company, Neighborhood Choices, Inc., in the International Domain registration and resale industry. He is CEO and President of Evergreen Firewood, Inc., a private company in the Alternate Fuel industry. Mr. Murphy is an alumnus of the University of California (UCLA), Los Angeles School of Economics and the California State University (CSULA) at Los Angeles's School of Business, and is an Alumni of Sigma Alpha Epsilon.

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Dr. Derrick Brooks,  Director

 Derrick D. Brooks, Sr., M.D., age 39, is a medical physician whose primary role is to serve as a licensed healthcare profession and medical liaison to assist the company in reviewing opportunities in developing new products that assist in mood enhancement, improving functionality and to serve as an additional medical expert as it relates to the Company’s flagship beverage Lean Slow Motion Potion^TM which proves worthy to major retailers, buyer and consumers worldwide.

PROFESSIONAL EXPERIENCE

Staff Emergency Room Physician  Level II)

Our Lady of the Lake Regional Medical Center

July 2003 - April 2011

Staff Pediatric Emergency Room Physician  (Level II)

Our Lady of the Lake Regional Medical Center

July 2003 - November 2009

Staff Emergency Room Physician  (Level II)

Ochsner Baton Rouge

March 2011 - present

Staff Emergency Room Physician  (Level II)

University Medical Center - Lafayette

March 2011 - present

Staff Emergency Room Physician  (Level III)

Iberia Medical Center - Iberia

June 2011 - present

MEDICAL EDUCATION

Louisiana State University School of Medicine

Doctor of Medicine 1999

New Orleans, Louisiana

GRADUATE TRAINING

Internship/Residency

Internal Medicine/Pediatrics

LSU Health Science Center

New Orleans, Louisiana

July 1999 - June 2003

BOARD CERTIFICATIONS

American Board of Internal Medicine

Certified 2003

American Board of Pediatrics

Certified 2003

American Board Physician Specialties - Emergency Medicine

Board Eligible

Sitting 2012

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MEDICAL LICENSURE

Louisiana #025414

CERTIFICATIONS

Advanced Trauma Life Support

Advanced Cardiac Life Support

Pediatric Advanced Life Support

Basic Life Support

Compensation and Audit Committees

As we only have three board members and given our limited operations, we do not have separate or independent audit or compensation committees. Our Board of Directors has determined that it does not have an “audit committee financial expert,” as that term is defined in Item 407(d)(5) of Regulation S-K. In addition, we have not adopted any procedures by which our shareholders may recommend nominees to our Board of Directors.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors and executive officers and persons who beneficially own more than ten percent of our Common Stock (collectively, the “Reporting Persons”) to report their ownership of and transactions in our Common Stock to the SEC. Copies of these reports are also required to be supplied to us. To our knowledge, during the fiscal year ended December 31, 2012 the Reporting Persons complied with all applicable Section 16(a) reporting requirements.

Code of Ethics

We have not adopted a Code of Ethics given our limited operations. We expect that our Board of Directors following a merger or other acquisition transaction will adopt a Code of Ethics.

ITEM 11. EXECUTIVE COMPENSATION.

Summary Compensation Table. The following table sets forth certain information concerning the annual compensation of our Chief Executive Officer and our other executive officers during the last two fiscal years including both accrued and cash compensation.

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“*” During 2012, $13,000 was paid and $107,000 accrued.  

** During 2011, $20,000 was paid and $100,000 was accrued.

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.

On November 7, 2012, the Company agreed to convert $50,000 of accrued salary for Dr. Marco Moran into 19,047,619 shares of common stock. The number of shares issued was calculated using a 25% discount to the trading price on the agreement date. The fair market value of the shares on the date of the agreement was $66,667 which resulted in recognition of loss on settlement of accrued salaries of $16,667 for the difference in the amount of accrued salary and the fair market value of the shares issued.  As of the issuance of this data, the shares have not been issued as such are recorded as a common stock payable.  These shares are not included in the calculation above.

On December 6, 2012, the Company agreed to issue 50,000,000 shares of Class A Preferred stock to Dr. Moran for services rendered.  The holders of the preferred stock shall be entitled to participate in dividends upon board approval and do not get liquidation preferences.  The shares are convertible into 10 shares of common stock.  Based on this, the Company determined the fair market value of the preferred shares to be equal to $3,150,000 based on the common stock trading price on the date of the resolution and recorded such as stock based compensation.  The shares were treated as if converted into common shares to determine the fair market value.

Director Compensation

We do not currently pay any cash fees to our directors, nor do we pay director’s expenses in attending board meetings.

Employment Agreements

We are not a party to any employment agreements other than with Dr. Moran.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth certain information as of December 31, 2012 regarding the number and percentage of our Common Stock (being our only voting securities) beneficially owned by each officer, director, each person (including any “group” as that term is used in Section 13(d)(3) of the Exchange Act) known by us to own 5% or more of our Common Stock, and all officers and directors as a group.

1. The address of each executive officer and director is 132 E. Northside Dr. Suite C Clinton, MS 39056.

2. As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or the sole or share investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of a security).

3. Dr. Moran also owns 50,000,000 shares of preferred stock which are convertible into common shares at a 10 to 1 ratio, which are excluded from the calculation above.

4. On November 7, 2012, the Company agreed to convert $50,000 of accrued salary for Dr. Marco Moran into 19,047,619 shares of common stock. The number of shares issued was calculated using a 25% discount to the trading price on the agreement date. The fair market value of the shares on the date of the agreement was $66,667 which resulted in recognition of loss on settlement of accrued salaries of $16,667 for the difference in the amount of accrued salary and the fair market value of the shares issued.  As of the issuance of this data, the shares have not been issued as such are recorded as a common stock payable.  These shares are not included in the calculation above.

Unless otherwise indicated, we have been advised that all individuals or entities listed have the sole power to vote and dispose of the number of shares set forth opposite their names. For purposes of computing the number and percentage of shares beneficially owned by a security holder, any shares which such person has the right to acquire within 60 days of December 31, 2012 are deemed to be outstanding, but those shares are not deemed to be outstanding for the purpose of computing the percentage ownership of any other security holder.

We currently do not maintain any equity compensation plans.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Our Board of Directors consists solely of Marco Moran, Kevin Murphy and Dr. Derrick Brooks. They are not independent as such term is defined by a national securities exchange or an inter-dealer quotation system.

Sales to Related Party Distributor

During the years ended December 31, 2012 and 2011, the Company 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.

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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 years ended December 31, 2012 and 2011, the Company recognized revenue from product sales to the Distributor of $14,240 and $13,162, respectively, which represented 2.7% and 0.97% respectively, of total product revenue recognized by the Company. At December 31, 2012 and 2011, accounts receivable from the Distributor was $6,329 and $3,000 respectively.

Shipping Reimbursements from Related Party

At December 31, 2012 and 2011, the Company had outstanding accounts receivable of $8,932 and $5,603, respectively, from a company owned by the CEO’s wife. These receivables represent shipping reimbursements erroneously billed to DSD 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.

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 December 31, 2012 and 2011, the company had repaid $40,152 of these advances resulting in outstanding advances due of $9,332 as of these dates.

Acquisition of Fixed Assets from Related Party

During the year ended December 31, 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 in the year ended December 31, 2012.

Loan from Related Party

During the period ended November 30, 2011, the Company received a related party loan from a company majority owned by the CEO and of which the CEO was the sole officer and director in the 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.

Other

During 2011, the Company paid consulting and research related fees on behalf of High Margins, Inc. another company owned by the CEO. Amounts receivable at December 31, 2012 was $4,569.  

During 2012, the Company made payments of $9,353 to his wife and daughter for reimbursement of medical insurance costs and other consulting services performed for the Company

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

McConnell & Jones, LLP is our independent registered public accounting firm.

(a) On December 27, 2011, Board of Directors of the Registrant dismissed Child, Van Wagoner and Bradshaw, PLLC, its independent registered public accounting firm. On the same date, December 27, 2011, the accounting firm of McConnell & Jones, LLP was engaged as the Registrant’s new independent registered public account firm. The Board of Directors of the Registrant approved of the dismissal of Child, Van Wagoner and Bradshaw, PLLC and the engagement of McConnell & Jones, LLP as its independent auditor. None of the reports of Child, Van Wagoner and Bradshaw, PLLC on the Company’s financial statements for either of the past two years or subsequent interim period contained an adverse opinion or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles, except that the Registrant’s audited financial statements contained in its 10-K for the period ended 12/31/2010 contained a going concern qualification in the registrant’s audited financial statements.

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b) On December 27, 2011, the Registrant engaged McConnell & Jones, LLP as its independent accountant. During the two most recent fiscal years and the interim periods preceding the engagement, the registrant has not consulted McConnell & Jones, LLP regarding any of the matters set forth in Item 304(a)(2)(i) or (ii) of Regulation S-K.

Audit Fees

The aggregate fees billed by McConnell & Jones, LLP for professional services rendered for the audit of our annual financial statements on Forms 10-K and 10Q or services that are normally provided in connection with statutory and regulatory filings (including 8-K for reverse merge financial statements and SEC comments) were $29,000 and $10,000 for the fiscal years ended December 31, 2012 and 2011.The aggregate fees billed by Child, Van Wagoner and Bradshaw, PLLC for professional services rendered for the audit of our annual financial statements and review of financial statements included in our quarterly reports on Forms 10-K and 10-Q or services that are normally provided in connection with statutory and regulatory filings were $5,400 for the fiscal year ended December 31, 2011.

Audit-Related Fees

None.  

Tax Fees

None.

All Other Fees

None.

Pre-Approval Policy

We do not currently have a standing audit committee. The above services were approved by our Board of Directors.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this Report:

1. Financial Statements. The following financial statements and the report of our independent registered public accounting firm, are filed herewith.

2. Financial Statement Schedules.

Schedules are omitted because the information required is not applicable or the required information is shown in the financial statements or notes thereto.

3. Exhibits Incorporated by Reference or Filed with this Report.

·

Report of Independent Registered Public Accounting Firm

·

Consolidated Balance Sheets as of December 31, 2012 and 2011

·

Consolidated Statements of Operations the years ended December 31, 2012 and 2011

·

Consolidated Statements of Changes in Stockholders’ Deficit the years ended December 31, 2012 and 2011

·

Consolidated Statements of Cash Flows for the years ended December 31, 2012 and 2011

·

Notes to Financial Statements

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31

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

32

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of

Dewmar International BMC, Inc.

We have audited the accompanying consolidated balance sheets of Dewmar International BMC, Inc. (the Company) as of December 31, 2012 and 2011, and the related consolidated statements of operations, shareholders' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal controls over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2012 and 2011 and the results of its operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 3 of the financial statements, the Company has incurred losses, has negative operational cash flows and its 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 matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note 3 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ McConnell & Jones, LLP

Houston, Texas

April 12, 2013

F-1

DEWMAR INTERNATIONAL BMC, INC.

CONSOLIDATED BALANCE SHEETS

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

F-2

DEWMAR INTERNATIONAL BMC, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

F-3

DEWMAR INTERNATIONAL BMC, INC.