Attached files
| file | filename |
|---|---|
| EXCEL - IDEA: XBRL DOCUMENT - New Asia Holdings, Inc. | Financial_Report.xls |
| EX-32.1 - EXHIBIT 32.1 - New Asia Holdings, Inc. | ex321.htm |
| EX-31.2 - EXHIBIT 31.2 - New Asia Holdings, Inc. | ex312.htm |
| EX-31.1 - EXHIBIT 31.1 - New Asia Holdings, Inc. | ex311.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
|
[X]
|
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
| For the quarterly period ended March 31, 2013 | |
|
|
|
|
[ ]
|
Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
|
| For the transition period from __________ to __________ | |
| Commission File Number: 333-165961 | |
DM Products, Inc.
(Exact name of registrant as specified in its charter)
|
Nevada
|
45-0460095
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
|
P.O. Box 2458
Walnut Creek, CA
|
|
(Address of principal executive offices)
|
|
925-943-2090
|
|
(Registrant’s telephone number)
|
|
_______________________________________________________________
|
|
(Former name, former address and former fiscal year, if changed since last report)
|
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days [X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] Yes [X] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
|
[ ] Large accelerated filer Accelerated filer
|
[ ] Non-accelerated filer
|
|
[X] Smaller reporting company
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No
State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 273,339,011 common shares as of March 31, 2013.
|
Page
|
||
|
PART I – FINANCIAL INFORMATION
|
||
|
PART II – OTHER INFORMATION
|
||
2
PART I - FINANCIAL INFORMATION
|
Our financial statements included in this Form 10-Q are as follows:
|
|
These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended March 31, 2013 are not necessarily indicative of the results that can be expected for the full year.
3
|
Consolidated Balance Sheets
|
||||||||
|
(Unaudited)
|
||||||||
|
March 31, 2013
|
December 31, 2012
|
|||||||
|
ASSETS
|
||||||||
|
Current Assets
|
||||||||
|
Cash and cash equivalents
|
$ | 14,182 | $ | 34,762 | ||||
|
Royalties Receivable
|
0 | 1,541 | ||||||
|
Prepaid Expense
|
0 | 0 | ||||||
|
Total Current Assets
|
14,182 | 36,303 | ||||||
|
Property and Equipment - net
|
353 | 428 | ||||||
|
Other Assets
|
||||||||
|
TOTAL ASSETS
|
$ | 14,535 | $ | 36,731 | ||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||
|
Current Liabilities
|
||||||||
|
Accounts Payable
|
$ | 37,783 | $ | 50,302 | ||||
|
Accrued Expenses
|
323,653 | 293,653 | ||||||
|
Sales Tax Payable
|
2,424 | 2,424 | ||||||
|
Total Current Liabilities
|
363,860 | 346,379 | ||||||
|
Total Liabilities
|
363,860 | 346,379 | ||||||
|
Stockholders' Equity (Deficit)
|
||||||||
|
Preferred Stock, $0.001 par value, 30,000,000 shares authorized, 0 shares issued and outstanding
|
- | - | ||||||
|
Common Stock, $0.001 par value, 400,000,000 shares authorized, 273,339,011 shares issued and outstanding (273,339,011 - 2012)
|
273,339 | 273,339 | ||||||
|
Additional Paid In Capital
|
642,345 | 642,345 | ||||||
|
Accumulated Deficit
|
(1,562,464 | ) | (1,522,860 | ) | ||||
|
Total DM Products, Inc. Stockholders' Equity (Deficit)
|
(646,780 | ) | (607,176 | ) | ||||
|
Non-Controlling Interest
|
297,455 | 297,528 | ||||||
|
Total Stockholders' Equity (Deficit)
|
(349,325 | ) | (309,648 | ) | ||||
|
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
|
$ | 14,535 | $ | 36,731 | ||||
F-1
|
Consolidated Statements of Operations
|
||||||||
|
(Unaudited)
|
||||||||
|
For the 3 months ended
|
For the 3 months ended
|
|||||||
|
March 31, 2013
|
March 31, 2012
|
|||||||
|
Revenues
|
||||||||
|
Royalty income
|
$ | - | $ | 6,547 | ||||
|
Total revenues
|
- | 6,547 | ||||||
|
Operating expenses
|
||||||||
|
Professional Fees
|
5,422 | 7,086 | ||||||
|
Salary & Wages
|
30,000 | 30,500 | ||||||
|
Consulting
|
184 | 5,000 | ||||||
|
General & Administrative expenses
|
4,071 | 26,944 | ||||||
|
Total operating expense
|
39,677 | 69,530 | ||||||
|
Income (Loss) from operations and before non-controlling Interest
|
(39,677 | ) | (62,983 | ) | ||||
|
Less: Income Attributable to non-controlling interest
|
(73 | ) | 945 | |||||
|
Income (Loss) before income taxes
|
(39,604 | ) | (63,928 | ) | ||||
|
Provision for income taxes
|
- | - | ||||||
|
Net Income (Loss)
|
$ | (39,604 | ) | $ | (63,928 | ) | ||
|
Net Income (Loss) per common share-basic and fully diluted
|
$ | (0.0001 | ) | $ | (0.0002 | ) | ||
|
Weighted average common shares outstanding-basic and diluted
|
273,339,011 | 282,205,207 | ||||||
F-2
|
DM Products, Inc. And Subsidiaries
|
||||||||||||||||||||||||
|
Consolidated Statements of Shareholders' Equity (Deficit)
|
||||||||||||||||||||||||
|
(Unaudited)
|
||||||||||||||||||||||||
|
Common Stock
|
Additional Paid In Capital
|
Non-Controlling Interest
|
Accumulated Deficit
|
Total Shareholders' Equity (Deficit)
|
||||||||||||||||||||
|
Shares
|
Amount
|
|||||||||||||||||||||||
|
Balance, December 31, 2012
|
273,339,011 | $ | 273,339 | $ | 642,345 | $ | 297,528 | $ | (1,522,860 | ) | $ | (309,648 | ) | |||||||||||
|
Net income (loss) for the period ended March 31, 2013
|
- | - | - | (73 | ) | (39,604 | ) | (39,677 | ) | |||||||||||||||
| - | ||||||||||||||||||||||||
|
Balance, March 31, 2013
|
273,339,011 | $ | 273,339 | $ | 642,345 | $ | 297,455 | $ | (1,562,464 | ) | $ | (349,325 | ) | |||||||||||
F-3
|
Consolidated Statements of Cash Flows
|
||||||||
|
(Unaudited)
|
||||||||
|
For the 3 months ended
|
For the 3 months ended
|
|||||||
|
March 31, 2013
|
March 31, 2012
|
|||||||
|
Cash flows from operating activities
|
||||||||
|
Net Loss
|
$ | (39,677 | ) | $ | (62,984 | ) | ||
|
Adjustment to reconcile net loss to net cash provided (used) by operating activities:
|
||||||||
|
Depreciation
|
75 | 75 | ||||||
|
Share-based compensation
|
- | - | ||||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Royalties receivable
|
1,541 | 9,428 | ||||||
|
Employee Advances
|
- | - | ||||||
|
Prepaid Expenses
|
- | 4,445 | ||||||
|
Accounts payable
|
(12,518 | ) | 8,883 | |||||
|
Accrued Expenses
|
30,000 | 30,000 | ||||||
|
Net cash provided (used) by operating activities
|
(20,579 | ) | (10,153 | ) | ||||
|
Cash flows from financing activities
|
||||||||
|
Net increase in credit card balances
|
- | - | ||||||
|
Net cash (used) by financing activities
|
- | - | ||||||
|
Net increase (decrease) in cash
|
(20,579 | ) | (10,153 | ) | ||||
|
Cash at beginning of period
|
34,762 | 26,089 | ||||||
|
Cash at end of period
|
$ | 14,183 | $ | 15,936 | ||||
|
Supplemental disclosure of cash flow information:
|
||||||||
|
Interest paid
|
$ | - | 636 | |||||
|
Taxes paid
|
$ | - | 3,300 | |||||
F-4
Note 1: Summary of Significant Accounting Policies
Nature of Operations
DM Products, Inc. (the Company) was incorporated on March 1, 2001 as Effective Sport Nutrition Corporation. Subsequently, on April 11, 2005, the Company changed its name to Midwest E.S.W.T Corp and on December 14, 2005, it changed its name again to DM Products, Inc.
On July 18, 2005, the Company acquired Direct Success, Inc. a California Corporation in exchange for 70% of the Company's Common Stock, making Direct Success, Inc. a wholly owned subsidiary of the Company. Midwest E.S.W.T agreed that a total of 114,851,043 shares of Restricted Common Stock were to be issued to shareholders of Direct Success, Inc.
The Company operates from Walnut Creek, California and it wholly owns Direct Success, Inc., which owns 75% of Direct Success, LLC 3, a limited liability company formed on or about August 16, 2002. Direct Success, Inc. entered into a joint venture with Buena Vista Infomercial Corporation which owns the remaining 25% of Direct Success, LLC 3. The Company has decided to dissolve both Direct Success, Inc. and Direct Success, LLC 3 since it is no longer participating in infomercial projects and is considering changing it’s business model.
On April 8, 2010, a Form S-1 Registration Statement was completed and submitted to the Securities and Exchange Commission. The registration filing was declared effective on October 15, 2010. On April 21, 2010, an Information Statement Form 211 was submitted to the Financial Industry Regulatory Authority (FINRA) for active trading on the Over the Counter Bulletin Board (OTCBB). The filing was approved on November 09, 2010.
On April 11, 2012, Articles of Incorporation were filed with the California Secretary of State for the creation of a new division, ELK Films, Inc. This division was established for both film production and distribution.
On December 14, 2012 the Company dissolved ELK Films, Inc. since the corporation had been unsuccessful in raising sufficient capital to commence operations. As a result of this dissolution the intercompany loan between the Company and ELK Films, Inc. were written off in the respective books with no effect in the consolidated balance sheet and in the consolidated statement of operations.
On January 4,2013, the Company entered into a Joint Venture with Dyatlov Pass Productions, LLC, a Nevada limited liability company established for the purpose of producing, promoting and distributing a film based on a screenplay written by Don Baker. Pursuant to the current agreement, DM Products currently owns 1/3 of Dyatlov Pass Productions, LLC. However, management is reconsidering the Company’s participation in the joint venture and may decide to terminate its involvement in the project based on its consideration of a new direction for the Company and its execution of the Letter of Intent with Iris Corporation Berhad, more fully discussed elsewhere in this filing.
Basis of Consolidation
The consolidated financial statements include the accounts of DM Products, Inc., Direct Success, Inc., and the accounts of its 75% owned subsidiary Direct Success LLC 3. All material inter-company transactions have been eliminated.
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting). The Company has adopted a December 31 fiscal year end.
F-5
Cash and Cash Equivalents
All highly liquid investments with maturities of three months or less are considered to be cash equivalents. At March 31, 2013 and December 31, 2012, the Company had cash balances of $14,182 and $34,762, respectively.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, sales tax payable, and other current liabilities. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates, unless otherwise disclosed in these financial statements.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax, assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. It is the Company’s policy to classify interest and penalties on income taxes as interest expense or penalties expense. As of March 31, 2013, there have been no interest or penalties incurred on income taxes.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company records revenue in accordance with ASC Topic 605 - Revenue Recognition. Revenues derived from the Company license sales are recognized when (1) there is evidence of an arrangement, (2) collection of our fee is considered probable, and (3) the fee is fixed and determinable.
Concentration of Risk
The Company is earning (over 90%) the majority of the royalty income from Tristar Products, Inc. Since the Company is depending on Tristar Products, Inc., the inability of Tristar to perform in the future may have a material adverse effect on the Company’s financial condition.
Advertising Policy
The Company recognizes advertising expense as incurred. The advertising expense for the three month periods ended March 31, 2013 and March 31, 2012 are $0 and $0 respectively.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as of March 31, 2013.
F-6
Stock-Based Compensation
The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.
The Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees. In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined. The fair value of the equity instrument is charged directly to operating expense and additional paid-in capital over the period during which services are rendered. In 2011, 22,783,333 common shares were issued at the fair market value of $0.0015 per share totaling to $34,175. There was no stock-based compensation issued to non-employees during the period ended March 31, 2013.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
Note 2: Property & Equipment
Property and equipment are carried at cost. Major expenditures and those which substantially increase useful lives are capitalized. Maintenance, repairs and minor renewals are charged to operations when incurred. When property and equipment is sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in operations. Once placed in service, depreciable assets are depreciated over their estimated useful lives using both accelerated and straight-line methods.
Depreciation expenses totaled $75 and $75 for the three month periods ended March 31, 2013 and March 31, 2012, respectively.
Note 3: Prepaid Expenses
Prepaid expenses consisted of the following at March 31, 2013 and December 31, 2012:
|
2013
|
2012
|
|||||||
|
Prepaid insurance
|
$ | 0 | $ | 0 | ||||
|
Total Prepaid Expenses
|
$ | 0 | $ | 0 | ||||
Note 4: Non-Controlling Interest
The Company has owned 75% of Direct Success LLC 3 (LLC 3) since 2002. The assets and liabilities of Direct Success LLC 3 have been included in these consolidated financial statements. The 25% of LLC 3 not owned by the Company has been presented as a non-controlling interest in these financial statements.
F-7
Note 5: Accrued Expenses
Accrued expenses consisted of the following at March 31, 2013 and December 31, 2012:
|
2013
|
2012
|
|||||||
|
Accrued Wages
|
$ | 315,653 | $ | 285,653 | ||||
|
Accrued Directors' Fees
|
$ | 8,000 | $ | 8,000 | ||||
|
Total Accrued Expenses
|
$ | 323,653 | $ | 293,653 | ||||
Wages are accrued under an employee agreement entered into on the 20th day of April, 2007 by and between the Company and its President. According to the agreement, employee's starting salary is $6,000 per month during the first 90 days following execution of the agreement or until $500,000 in capital is raised. After such period of time, employee's salary shall be increased to $10,000 per month. Should the company determine it in the best interest not to pay employee's entire monthly compensation, at any time, any such compensation shall be treated as deferred compensation and will accumulate on the books and provided to employee, at employee's sole discretion, taking into consideration the funds available and the best interest of the Company.
The accrued wages owed under the employment agreement as of March 31, 2013 and December 31, 2012, respectively, were $315,653 and $285,653.
Salary expense to the related party was $30,000 and $30,000 for the period ended March 31, 2013 and March 31, 2012, respectively.
The Board of Directors passed a resolution on October 15, 2011 to compensate Directors, Secretary, Treasurer, CEO, President and Board Chairman by issuing common stock annually. This policy is retroactive with an effective date of January 1, 2010. Per the policy the Company owed Kurtis Cockrum who is a Director, CEO, President and Board Chairman $6,000 worth of common stock, James Clarke who is a Director, Secretary and Treasurer $2,000 worth of common stock as of December 31, 2011. This amount has been recorded as director fees at December 31, 2011. The entire balance of $8,000 was still outstanding at March 31, 2013.
Note 6: Related Party Transactions
There were no related party transactions during the period set forth in this filing.
Note 7: Common Stock
The Company has 430,000,000 shares of capital stock, consisting of 400,000,000 shares of $0.001 par value common stock, and 30,000,000 shares of $0.001 par value preferred stock. The Company had 273,339,011 shares of common stock issued and outstanding as of March 31, 2013 and December 31, 2012.
Note 8: Commitments and Contingencies
The CEO and employees of the Company work from their homes. The fair market value of rents contributed by the related parties are estimated to be $50.00 per month, which is immaterial to the Company's financial statements, and has not been recorded on the Company's books.
Note 9: Income Taxes
As of March 31, 2013, the Company had net operating loss carry forwards of approximately $1,562,464 that may be available to reduce future years’ taxable income through 2032. Future tax benefits, which may arise as a result of these losses, have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
The provision for federal income tax consists of the following:
|
March 31,
2013
|
March 31,
2012
|
|||||||
|
Federal income tax benefit attributable to:
|
||||||||
|
Current Operations
|
$ | 13,465 | $ | 21,736 | ||||
|
Less: valuation allowance
|
$ | (13,465 | ) | $ | (21,736 | ) | ||
|
Net provision for Federal income taxes
|
$ | 0 | $ | 0 | ||||
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:
|
March 31,
2013
|
December 31,
2012
|
|||||||
|
Deferred tax asset attributable to:
|
||||||||
|
Net operating loss carryover
|
$ | 531,237 | $ | 517,772 | ||||
|
Less: valuation allowance
|
$ | (531,237 | ) | $ | (517,772 | ) | ||
|
Net deferred tax asset
|
$ | 0 | $ | 0 | ||||
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of $1,562,464 for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, the net operating loss carry forwards may be limited as to use in future years.
Note 10: Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has sustained substantial losses since inception, has a working capital deficit, and is in need of additional capital to grow its operations so that it can become profitable.
In view of these matters, the ability of the Company to continue as a going concern is dependent upon growth of revenues and the ability of the Company to raise additional capital. Management believes that its successful ability to raise capital and increases in revenues will provide the opportunity for the Company to continue as a going concern.
Note 11: Subsequent Events
April 26, 2013 DM Products, Inc. submitted Certificate of Cancellation to the state of Delaware to dissolve Direct Success LLC3.
April 29, 2013 DM Products, Inc. submitted Certificate of Dissolution to the state of California to dissolve Direct Success, Inc.
April 29, 2013 DM Products, Inc. surrendered all ownership interest in Dyatlov Pass Productions LLC and removed itself, and its principals, from all participation in the limited liability company and its operations.
On May 5, 2013, the Company entered into a non-binding Letter of Intent with Iris Corporation Berhad for the purchase of certain assets in exchange for 96.75% of the outstanding stock of DM Products. Both parties to the transaction acknowledge that the Letter of Intent does not contain all matters upon which a Definitive Agreement (“Agreement”) must be reached. Further, the obligations of the Parties to consummate the Agreement are subject to the negotiations and execution of the Agreement in form and substance satisfactory to all Parties and their respective counsel and further due diligence analysis.
F-8
Forward-Looking Statements
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.
Executive Overview
We, through our wholly owned subsidiary, Direct Success, Inc., have developed, financed, produced, marketed and distributed beauty, fashion, fitness and other products for sale through infomercial marketing and distribution channels. Profits were derived from inbound sales, outbound sales, up sells and retail distribution. Our primary objective has been to penetrate this rapidly expanding industry by introducing consumer products to national and international markets through a series of infomercial campaigns.
4
The Company operates from Walnut Creek, California and it wholly owns Direct Success, Inc., which owns 75% of Direct Success, LLC 3, a limited liability company formed on or about August 16, 2002. Direct Success, Inc. entered into a joint venture with Buena Vista Infomercial Corporation which owns the remaining 25% of Direct Success, LLC 3. The Company has decided to dissolve both, Direct Success, Inc. and Direct Success, LLC 3 since it is considering changing its business model consistent with that non-binding letter of intent more fully described elsewhere in this filing.
Letter of Intent for Purchase of Iris Corporation Berhad
On May 5, 2013, the Company entered into a non-binding Letter of Intent with Iris Corporation Berhad for the purchase of certain assets in exchange for 96.75% of the outstanding stock of DM Products. Both parties to the transaction acknowledge that the Letter of Intent does not contain all matters upon which a Definitive Agreement (“Agreement”) must be reached. Further, the obligations of the Parties to consummate the Agreement are subject to the negotiations and execution of the Agreement in form and substance satisfactory to all Parties and their respective counsel and further due diligence analysis.
5
General
Our results of operations may vary significantly from period-to-period. Our revenues will fluctuate due to the seasonality of our products, customer buying patterns, product innovations and competition, our ability to meet customer demand, media and advertising campaigns, and our ability to attract new customers and renew existing sales relationships. In addition, our revenues are highly susceptible to economic factors, including, among other things: the overall condition of the U.S. economy and economics of other countries where we market our products; and the availability of credit, both in the U.S. and abroad.
Results of Operations for the three months ended March 31, 2013
Our revenue was $0 for the three months ended March 31, 2013, a decrease of $6,547 for the same period ended March 31, 2012. For all periods mentioned above, our revenues were solely based on royalty payments, thus, our cost of goods sold during this period was zero. Pursuant to an arbitration settlement, the contractual term of our rights concerning the Banjo Minnow discontinued June 30, 2012. However some revenue continued from the inventory sell off period until yearend 2012.
We have incurred an operating loss in the amount of $39,677 and net loss in the amount of $39,604 for the three months ended March 31, 2013 as compared to an operating loss $62,983 and net loss in the amount of $63,928 for the same period ended March 31, 2012.
6
Liquidity and Capital Resources
As of March 31, 2013, we had total assets in the amount of $14,535, consisting of $14,182 in cash, $0.00 in Tristar Receivables and $353 in property and Equipment. Our current liabilities as of March 31, 2013 were $363,8601. We had a working capital deficit of $(349,325) as of March 31, 2013.
Our current monthly fixed expenses (“Burn Rate”) are approximately $10,000.
As of March 31, 2013, our cash reserves were $14,182 and we do have a line of credit which enables us to access $45,000. If we need to and cannot raise additional capital, we would be forced to discontinue operations.
Off Balance Sheet Arrangements
As of March 31, 2013, there were no off balance sheet arrangements.
7
A smaller reporting company is not required to provide the information required by this Item.
Disclosure Controls and Procedures
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2013. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, Kurtis Cockrum. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2013, our disclosure controls and procedures are effective. There have been no changes in our internal controls over financial reporting during the quarter ended March 31, 2013.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Limitations on the Effectiveness of Internal Controls
Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
8
PART II – OTHER INFORMATION
We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.
A smaller reporting company is not required to provide the information required by this Item.
There were no sales of equity securities during the period ended March 31, 2013.
None
None
None
|
Exhibit Number
|
Description of Exhibit
|
|
31.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
31.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
32.1
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
9
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
DM Products, Inc.
|
|
|
Date:
|
May 15, 2013
|
|
By: /s/ Kurtis Cockrum
Kurtis Cockrum
Title: Chief Executive Officer and Director
|
10