U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the Three Months ended: September 30, 2014 |
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from _________ to _________ |
Commission File No. 001-32032
Dewmar International BMC, Inc.
(Name of Registrant in its Charter )
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NEVADA | | 26-4465583 |
State or other jurisdiction of | | (I.R.S. Employer I.D. No.) |
incorporation or organization) | | |
132 E. Northside Dr. Suite C Clinton, MS 39056
(Address of principal executive offices)
(601) 488-4360
(Registrants telephone number, including area code)
Indicate by check mark whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] Yes [ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of the large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
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Large Accelerated Filer | [ ] | Accelerated Filer | [ ] |
Non-Accelerated Filer | [ ] | Smaller reporting company | [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of July 6, 2016 the registrant had 2,759,542,401 issued and outstanding shares of common stock.
Dewmar International BMC, Inc.
TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION
Forward-Looking Information
This report on Form 10-Q contains forward-looking statements. Forward-looking statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as anticipate, estimate, plan, project, continuing, ongoing, expect, we believe, we intend, may, should, will, could and similar expressions denoting uncertainty or an action that may, will or is expected to occur in the future. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements.
Examples of forward-looking statements include:
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the timing of the development of future products;
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projections of costs, revenue, earnings, capital structure and other financial items;
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statements of our plans and objectives;
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statements regarding the capabilities of our business operations;
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statements of expected future economic performance;
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statements regarding competition in our market; and
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assumptions underlying statements regarding us or our business.
The ultimate correctness of these forward-looking statements depends upon a number of known and unknown risks and events. We discuss our known material risks under Item 1.A Risk Factors contained in the Companys Annual Report on Form 10K for the year ended December 31, 2013. Many factors could cause our actual results to differ materially from the forward-looking statements. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
The forward-looking statements speak only as of the date on which they are made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
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ITEM 1. FINANCIAL STATEMENTS
DEWMAR INTERNATIONAL BMC, INC.
CONSOLIDATED BALANCE SHEETS
| | | | | | | |
| | September 30, 2014 | | | December 31, 2013 |
| | (Unaudited) | | | |
ASSETS | | | | | | | |
| | | | | | | |
Current Assets | | | | | | | |
Cash and cash equivalents | | $ | 22,570 | | | $ | 7,231 |
Account receivables, net | | | 197,487 | | | | 9,532 |
Related party receivable | | | 12,059 | | | | 4,085 |
Advances to related party | | | 9,332 | | | | 9,332 |
Inventory | | | 60,553 | | | | 35,144 |
Prepaid expenses and other current assets | | | - | | | | 6,000 |
Total Current Assets | | | 302,001 | | | | 71,324 |
| | | | | | | |
Property & equipment, net of accumulated depreciation of $19,873 and $14,210 | | | 21,182 | | | | 26,845 |
| | | | | | | |
Total assets | | $ | 323,183 | | | $ | 98,169 |
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LIABILITIES AND STOCKHOLDERS DEFICIT | | | | | | | |
| | | | | | | |
Current Liabilities | | | | | | | |
Accounts payable and accrued liabilities | | $ | 737,909 | | | $ | 714,868 |
Accrued interest | | | 14,073 | | | | 9.707 |
Notes payable | | | 173,890 | | | | 173,890 |
Convertible notes payable, net of unamortized discount of $1,254 and $77,230, respectively | | | 153,066 | | | | 122,750 |
Derivative liability | | | 212,828 | | | | 151,120 |
| | | | | | | |
Total Liabilities | | | 1,291,766 | | | | 1,172,335 |
| | | | | | | |
COMMITMENTS AND CONTINGENCIES (NOTE 7) | | | | | | | - |
| | | | | | | |
Stockholders Deficit | | | | | | | |
Preferred stock; $0.001 par value; 50,000,000 shares authorized; 50,000,000 issued and outstanding | | | 50,000 | | | | 50,000 |
Common stock; $0.001 par value; 4,450,000,000 shares authorized, 2,759,542,401 and 2,310,488,796 shares issued and outstanding, respectively | | | 2,759,546 | | | | 2,310,493 |
Additional paid-in capital | | | 4,354,763 | | | | 3,370,195 |
Accumulated deficit | | | (8,132,892) | | | | (6,804,854) |
Total Stockholders Deficit | | | (968,583) | | | | (1,074,166) |
| | | | | | | |
Total Liabilities and Stockholders Deficit | | $ | 323,183 | | | $ | 98,169 |
The accompanying notes are an integral part of these unaudited financial statements.
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DEWMAR INTERNATIONAL BMC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | | | | | | | | | | | |
| | | For the Three Months Ended | | | For the Nine Months Ended |
| | | September 30, | | | September 30, |
| | | 2014 | | | 2013 | | | 2014 | | | 2013 |
| | | | | | | | | | | | |
Revenues | | | | | | | | | | | | |
Revenue, net | | $ | 234,468 | | $ | 46,259 | | $ | 457,778 | | $ | 222,342 |
Revenue, related party | | | - | | | 5,379 | | | 21,924 | | | 9,984 |
| | | | | | | | | | | | |
Cost of Goods Sold | | | | | | | | | | | | |
Cost of goods sold-product | | | 68,734 | | | 14,409 | | | 207,126 | | | 89,138 |
Gross Profit | | | 165,734 | | | 37,229 | | | 272,576 | | | 143,188 |
Operating Expenses | | | | | | | | | | | | |
Occupancy and related expenses | | | 8,999 | | | 8,613 | | | 28,248 | | | 34,867 |
Marketing and advertising | | | 8,639 | | | 18,565 | | | 17,526 | | | 34,527 |
General and administrative expenses | | | 217,367 | | | 205,715 | | | 1,281,143 | | | 1,516,618 |
Contract labor | | | 14,266 | | | 23,235 | | | 36,661 | | | 111,003 |
Total Operating Expenses | | | 249,271 | | | 256,128 | | | 1,363,578 | | | 1,697,015 |
| | | | | | | | | | | | |
Loss from operations | | | (83,537) | | | (218,899) | | | (1,091,002) | | | (1,553,827) |
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Other Income (Expense) | | | | | | | | | | | | |
Interest expense, net | | | (19,380) | | | (70,827) | | | (85,687) | | | (195,227) |
Gain (loss) on derivative liability | | | 128,318 | | | (50,574) | | | (151,349) | | | (157,254) |
Total other income (expense) | | | 108,938 | | | (121,401) | | | (237,036 | ) | | (352,481) |
Net Profit / (Loss) | | $ | 25,401 | | $ | (340,300) | | $ | (1,328,038) | | $ | (1,906,308) |
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Net loss per common share - basic and fully diluted | $ | 0.00 | | $ | (0.00) | | $ | (0.00) | | $ | (0.01) |
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Weighted average shares outstanding - basic | | | 2,802,060,227 | | | 518,813,217 | | | 2,749,415,353 | | | 279,513,432 |
Weighted average shares outstanding - fully diluted | | | 2,918,213,560 | | | 518,813,217 | | | 2,749,415,353 | | | 279,513,432 |
The accompanying notes are an integral part of these unaudited financial statements
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DEWMAR INTERNATIONAL BMC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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| | Nine Months Ended | | Nine Months Ended |
| | September 30, 2014 | | September 30, 2013 |
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Cash flows from operating activities: | | | | | | |
Net loss | | $ | (1,328,038) | | $ | (1,906,308) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | |
Depreciation expense | | | 5,663 | | | 3,753 |
Stock-based compensation | | | 993,000 | | | 932,451 |
Amortization of debt discount | | | 75,976 | | | 174,120 |
Loss on derivative liability | | | 151,349 | | | 157,254 |
Changes in operating assets and liabilities: | | | | | | |
Accounts receivable | | | (187,955) | | | 5,184 |
Related party receivables and payables | | | (7,974) | | | 2,648 |
Inventory | | | (25,409) | | | 17,649 |
Prepaid expenses and other current assets | | | 6,000 | | | 1,700 |
Accounts payable and accrued liabilities | | | 29,107 | | | 405,690 |
Net cash used in operating activities | | | (288,281) | | | (205,859) |
| | | | | | |
Cash flows from investing activities: | | | | | | |
Cash paid for purchase of vehicles | | | - | | | (19,900) |
Net cash used in investing activities | | | - | | | (19,900) |
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Cash flows from financing activities: | | | | | | |
Proceeds from notes payable | | | - | | | 199,320 |
Proceeds from issuance of common stock | | | 303,620 | | | - |
Net cash provided from financing activities | | | 303,620 | | | 199,320 |
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Net change in cash and cash equivalents | | | 15,339 | | | (26,439) |
Cash and cash equivalents, at beginning of period | | | 7,231 | | | 38,388 |
Cash and cash equivalents, at end of period | | $ | 22,570 | | $ | 11,949 |
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Supplemental cash flow information: | | | | | | |
Interest paid | | $ | 3,692 | | $ | 10,709 |
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Supplemental noncash investing and financing activities: | | | | | | |
Issuance of common stock for conversions of notes payable | | $ | 47,360 | | | 230,250 |
Reclassification of accounts payable to notes payable | | $ | - | | | 334,661 |
Creation of debt discount | | $ | - | | | 182,796 |
Reduction in derivative liability due to conversions of convertible notes payable | | $ | 89,641 | | | 302,044 |
Reduction in common stock payable for issuance of common stock | | $ | - | | | 199,193 |
The accompanying notes are an integral part of these unaudited financial statements
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DEWMAR INTERNATIONAL BMC, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT
(Unaudited)
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| Preferred Stock | | | Common Stock | | | | | | | | | |
| Shares | | Amount | | | Shares | | | Amount | | | Additional Paid-in Capital | | | Accumulated Deficit | | | Total Stockholders Deficit |
| | | | | | | | | | | | | | | | | | |
Balance December 31, 2013 | 50,000,000 | | $50,000 | | | 2,310,488,796 | | $ | 2,310,493 | | $ | 3,370,195 | | $ | (6,804,854) | | $ | (1,074,166) |
| | | | | | | | | | | | | | | | | | |
Shares issued for cash | - | | - | | | 161,538,888 | | | 161,539 | | | 142,081 | | | - | | | 303,620 |
| | | | | | | | | | | | | | | | | | |
Shares issued for service | - | | - | | | 185,000,000 | | | 185,000 | | | 856,000 | | | - | | | 1,041,000 |
| | | | | | | | | | | | | | | | | | |
Shares cancelled | | | | | | (100,000,000) | | | (100,000) | | | 52,000 | | | | | | (48,000) |
| | | | | | | | | | | | | | | | | | |
Shares issued for conversions of notes payable | - | | - | | | 202,514,717 | | | 202,514 | | | (155,154) | | | - | | | 47,360 |
| | | | | | | | | | | | | | | | | | |
Reduction in derivative liability due to conversion | - | | - | | | | | | | | | 89,641 | | | - | | | 89,641 |
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Net loss | - | | - | | | | | | | | | | | | (1,328,038) | | | (1,328,038) |
| | | | | | | | | | | | | | | | | | |
Balance September 30, 2014 | 50,000,000 | | $50,000 | | | 2,759,542,401 | | | $2,759,546 | | | $4,354,763 | | | $(8,132,892) | | | ($968,583) |
The accompanying notes are an integral part of these unaudited financial statements
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DEWMAR INTERNATIONAL BMC, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Dewmar International BMC (we, our, the Company) was formed as a Nevada corporation on March 13, 2009. Today, Dewmar International BMC is a diversified operating company headquartered in Clinton, Mississippi. The Company conducts business across a variegated set of categories and sectors including consumer goods, wholesale trade, pharmaceuticals and health sciences. The Company and its subsidiaries develop market and distribute goods, therapeutics and services in national and international markets through licensing agreements, e-commerce platforms, fee-for-service arrangements and distribution contracts.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. The accompanying interim unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the Companys opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 2014 are not necessarily indicative of the results for the full years. While management of the Company believes that the disclosures presented herein and adequate and not misleading, these interim financial statements should be read in conjunction with the audited combined financial statements and the footnotes thereto for the periods ended December 31, 2013 filed in our Annual Report on Form 10K.
NOTE 3. CONVERTIBLE NOTES PAYABLE
In October, 2012, the Company entered into a 10% Contingently Convertible Promissory Note with Birr Marketing Group, Inc. for $20,000 with a due date of April 1, 2013. At September 30 2014, the Company revalued the fair market value of the derivative liability and recorded a loss of $27,104 on derivative liability.
On April 16, 2013, the Company entered into a sixth Securities Purchase Agreement with Asher Enterprises, Inc. (Asher) a Delaware Corporation for an 8% contingently convertible promissory note with an aggregate principal amount of $42,500 which together with any unpaid accrued interest was due on December 21, 2013.
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On January 2, 2014, Asher converted the remaining $6,500 of its outstanding notes payable and $1,700 accrued interest into 34,166,667 shares of common stock at a conversion price of $0.00024. After conversion, a principal balance of $0 remained on the notes payable. On the day of conversion, the Company revalued the derivative liability and recorded a loss on the derivative liability of $4,425; and reduced the pro-rated balance of the derivative liability by $17,877 into additional paid in capital. As such, the derivative liability had a $0 balance after conversion on January 2, 2014. In 2014, the Company accelerated amortization of the discount of $1,670 into interest expense.
On April 7, 2013, the Company entered into a convertible promissory note with a vendor to satisfy outstanding invoices in the amount of $68,000. The note bears no interest and was convertible into shares of common stock. On September 30, 2014; the Company re-valued the derivative liability and recorded a loss on derivative liability of $16,473 making the balance in the derivative liability at September 30, 2014 $82,666. The Company also recorded $48,921 amortization of the original discount into interest expense.
On May 21, 2013, the Company entered into a second Convertible Promissory Note with Continental Equities, LLC, a New York limited liability corporation for an 8% convertible promissory note in the aggregate principal amount of $30,000, which together with any unpaid accrued interest is due on May 20, 2014. $28,500 of the proceeds was funded directly to the company while $1,500 was recorded as original issuance discount.
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On January 21, 2014, Continental converted the remaining $17,760 of its outstanding notes payable into 64,581,818 shares of common stock at a conversion price of $0.000275. On the day of conversion, the Company revalued the derivative liability and recorded a gain on derivative liability of $28 and reduced the pro-rated portion of the derivative liability by $20,975 into additional paid in capital bringing the derivative liability to $0. The Company also accelerated the amortization of $7,433 of the original discount into interest expense.
On December 10, 2013, the Company entered into an assignment agreement where the Company assigned a previously entered into $17,500 Notes payable with Pitts Riley to Microcap Equity Group, LLC, a third party. As such the Company entered into a 10% Convertible note with Microcap Equity Group for $17,500 which matured on December 10, 2014.
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On January 27, 2014, Microcap converted the remaining $7,400 of the notes payable into 52,857,142 shares of common stock at a conversion price of $0.00014 bringing the notes payable balance to $0. On the day of conversion, the Company re-valued the derivative liability and recorded a gain on the derivative liability of $335 and reduced the pro-rated portion of the derivative liability of $25,958 into additional paid in capital. Additionally, the company accelerated the amortization of $3,952 of the original discount into interest expense.
During the year ended December 31, 2013, the Company entered into two 10% Contingently Convertible Promissory Notes with Birr Marketing Group, Inc. for $28,000 and $22,820 with due dates of June 4, 2014 and June 26, 2014. After the due dates, the notes became convertible at a fixed price of $0.001 into the Companys common shares at the Holders option. On June 6, 2014 and June 26, 2014, these notes were in default and were due and payable immediately. On the respective due dates, the Company created a derivative liability. As of September 30, 2014, the derivative liability balances were $41,942 and $51,462 respectively. A resulting cumulative loss on derivative liability of $93,404 was recorded for the nine months ended September 30, 2014. See Note 4 for a description of derivative liabilities.
On December 24 ,2013, The Company entered into an assignment agreement where the Company assigned a previously entered into $48,470 Notes Payable to Pitts Riley to Magna Group, LLC, a third party. As such the Company entered into a 10% Convertible note with Magna Group for $48,470 on December 26, 2013. The Note matured on December 26, 2014. On January 6, 2014, Magna converted the remaining $14,000 of the original notes payable into 50,909,090 shares of common stock at a conversion price of $0.00028. After conversion, $0 remained on the original notes payable. On the day of conversion, the Company revalued the derivative liability and recorded a loss on derivative liability of $10,305 and reduced the pro-rated portion of the derivative liability by $24,830 into additional paid in capital. The Company also accelerated the remaining discount of $14,000 into interest expense.
In summary, during the periods ended September 30, 2014 and 2013, the Company recorded a total of $85,735 and $195,227, respectively in interest expense. During periods ended September 30, 2014 and 2013, the amount of interest expense associated with the amortization of discounts associated with the amortization of the debt discounts established by derivative liabilities in the convertible notes was $79,976 and $174,120, respectively.
NOTE 4. DERIVATIVE LIABILITY
In June 2008, the FASB issued authoritative guidance on determining whether an instrument (or embedded feature) is indexed to an entitys own stock. Under the authoritative guidance, effective January 1, 2009, instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The conversion features of certain of the Companys Convertible Promissory Note (described in Note 3), do not have a fixed settlement provision because conversion of the Notes will be lowered if the Company issues securities at lower prices in the future. This provision contained in these notes tainted the other convertible notes and therefore the other convertible notes have been treated as derivative liabilities. In accordance with the FASB authoritative guidance, the conversion feature of the Notes were separated from the host contract and recognized as a derivative instrument. The conversion feature of the above described notes have been characterized as a derivative liability to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.
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The following table summarizes the derivative liabilities included in the consolidated balance sheet at September 30, 2014:
| | |
Derivative liability | |
Derivative liabilities as of December 31, 2013 | $ | 151,120 |
Net Loss on derivative liability | | 151,349 |
Debt discount | | - |
Settlement of derivative liability due to conversion of related notes | | (89,641) |
Derivative liabilities as of September 30, 2014 | $ | 212,828 |
NOTE 5. STOCKHOLDERS DEFICIT
Shares Issued for Cash
During the period ended September 30, 2014, the Company issued 161,538,888 shares of common stock for $303,620 in cash.
Shares Issued for Services
During the period ended September 30, 2014, the Company issued 185,000,000 shares to consultants for services rendered. The Company estimated the fair market value of the shares issued to be $1,041,000 and recorded this as stock based compensation. In addition, the Company cancelled a consulting agreement which it had previously accounted for and as such reversed 100,000,000 shares and a corresponding $48,000 from share based compensation.
Shares Issued for Conversion of Notes Payable
During the period ended September 30, 2014, the Company issued 202,514,717 shares of common stock related to conversions of various notes payable. See Note 3 for further discussion.
NOTE 6. RELATED PARTY TRANSACTIONS
Sales to Related Party Distributor
The Company is engaged with a distributor that is wholly-owned by the Companys 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 Companys will for Company use, for which the Company will provide the Distributor with a credit memo based on a per-case price equal to the price paid by the Distributor to the Company.
At September 30, 2014 and December 31, 2013, receivable from the Distributor was $12,059 and $4,085, respectively. For the nine months ended September 30, 2014 and 2013, the Company recorded $21,924 and $9,984 in revenue from related parties, respectively.
Advances to Related Party
At both September 30, 2014, and December 31, 2013, the Company had outstanding accounts receivable of $9,332, from a company owned by the CEOs wife. These receivables represent shipping reimbursements erroneously billed by logistics and shipping companies. The Company paid these invoices and then in turn generated invoices to the company owned by the CEOs wife for reimbursement.
NOTE 7. COMMITMENTS AND CONTINGENCIES
Employment Agreement
On January 1, 2011, the Company entered into employment agreement with Dr. Moran (Employee) to serve as President and Chief Executive Officer of the Company. The employment commenced on January 1, 2011 and runs for the period through January 1, 2015. The Company will pay Employee, as consideration for services rendered, a base salary of $120,000 per year.
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As additional compensation, Employee is eligible to receive one percent of the issued and outstanding shares of the Company if the gross revenues hit specified milestones for each fiscal year under the agreement. The Company will provide additional benefits to Employee during the employment term which include, but are not limited to, health and life insurance benefits, vacation pay, expense reimbursement, relocation reimbursement and a Company car. If Employee dies, the Company will pay the designated beneficiary an amount equal to two years compensation, in equal payments over the next twenty four months.
In the event Employees employment is constructively terminated within five years of the commencement date, Employee shall receive a termination payment, which will be determined according to a schedule based upon the number of years since the commencement of the contract, within a range of $120,000 to $400,000. Additionally, Employee shall continue to receive the additional benefits mentioned above for a period of two years from the termination date. If the constructive termination date is later than five years after the commencement date, Employee shall receive the lesser amount of an amount equal to his aggregate base salary for five years following the date of the termination date, or an amount equal to his aggregate base salary through the end of the term. Additionally, Employee shall continue to receive the additional benefits mentioned above during the period he is entitled to receive the base salary.
For both the period ended September 30, 2014 and 2013, the Company incurred $127,458 base salary to Dr. Moran, which was included as a component of general and administrative expenses. The Company recorded total accrued payroll to Dr. Moran in the amounts of $549,502 and $494,000 in accounts payable and accrued liabilities on its consolidated balance sheets at September 30, 2014and December 31, 2013, respectively.
Legal Proceedings
The Company is aggressively defending itself in all of the below proceedings. The Companys 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 September 30, 2014 and December 31, 2013. While the results of these matters cannot be predicted with certainty, the Companys management believes that losses, if any, resulting from the ultimate resolution of these proceedings will not have a material adverse effect on the Companys financial position, results of operations, or cash flows.
On January 20, 2011, a claim was filed against Dewmar International BMC, Inc.(Dewmar) by Corey Powell, in Ascension Parish, LA 23rd Judicial District Court. Corey Powell was a former distributor of LEAN, a relaxation beverage marketed by Dewmar. Powell filed suit to recover allegedly unpaid commissions, invasion fees and finders fees. The commissions related to payments allegedly owed for Powells 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 Dewmars management. Discovery is complete. Dewmar has vigorously contested each and every one of the plaintiffs allegations and has instructed counsel to proceed to trial on the merits which is scheduled this summer. Plaintiff sent a settlement demand earlier this year which was rejected by Dewmar. Currently, there is no trial date set.
NOTE 8. SUBSEQUENT EVENTS
On December 4, 2014, Health & Wellness Research Consortium, LLC, (Health & Wellness) was created with Dewmar owning 100% of the LLC membership units. The business objective of Health & Wellness is to develop, implement and execute healthcare sales and marketing strategies for pharmacies, clinics and hospitals in order to help the client broaden market presence, influence effective prescribing behaviors and ultimately maximize their return on assets.
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Except for the historical information contained in this report on Form 10-Q, the matters discussed herein are forward-looking statements. Words such as anticipates, believes, expects, future, and intends, and similar expressions are used to identify forward-looking statements. These and other statements regarding matters that are not historical are forward-looking statements. These matters involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include without limitation those discussed below as well as those discussed elsewhere in this report. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect managements analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements. This information should also be read in conjunction with our audited historical financial statements which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013,
Company Overview
Dewmar International BMC was formed as a Nevada corporation on March 13, 2009.
Today, Dewmar International BMC, Inc. is a diversified operating company headquartered in Clinton, Mississippi. The Company conducts business across a variegated set of categories and sectors including consumer goods, wholesale trade, pharmaceuticals and health sciences.
The Company and its subsidiaries develop, market and distribute goods, therapeutics and services in national and international markets through licensing agreements, e-commerce platforms, fee-for-service arrangements and distribution contracts.
Business Strategy
The Companys business strategy is to identify paradigm shifts occurring in large, traditional or growth markets within the Companys sphere of expertise to create innovative products, services and/or financial offerings that exploit new market opportunities.
Forward-looking, management expects business growth resulting from increased domestic and foreign trade, new health science service offerings and expanded placement of the Companys licensed products in Walmart and other big box retailers.
Results of Operations
For the three months ended September 30, 2014 and 2013.
Revenue
Revenue is presented net of sales allowances. Net revenue increased $182,830, or 354%, to $234,468 from $51,638 for the three months ended September 30, 2014 and 2013 respectively. This increase was primarily due to an overall increase in purchase orders.
Cost of Goods Sold
Cost of goods sold increased $54,325, or 377%, to $68,734 from $14,409 for the three months ended September 30, 2014 and 2013, respectively. This overall increase was primarily the result of the payment and recognition of the costs of raw materials.
12
Operating Expenses
Operating expenses decreased $6,857, or 2.7%, to $249,271 from $256,128 for the three months ended September 30, 2014 and 2013 respectively. The overall decrease in operating expenses results from decreases in stock based compensation arrangements totaling for three months ended September 30, 2014 as compared to 2013, respectively. Also included was a decrease in Marketing and advertising costs of $9,926, or 53%, to $8,639 for the three month ended September 30, 2014, as compared to $18,565 for the three month ended September 30, 2013. Contract labor costs decreased $8,969 or 39% to $14,266 from $23,235 for the three months ended September 30, 2014 and 2013, respectively. Contract labor costs primarily included costs for administrative and marketing/sales support.
Interest Expense
For the three months ended September 30, 2014 and 2013, the Company incurred interest expense of $19,380 and $70,827 respectively. The decrease is due to the conversion of outstanding convertible notes during the period.
Net Income/Loss
Our net income for the three months ended September 30, 2014 was $25,401 as compared to a net loss of $340,300 for the same period ended September 30, 2013. The decrease in net loss is attributable to the decrease in expenses from the operating expenses and overall increase in sales, which is discussed above.
For the nine months ended September 30, 2014 and 2013.
Revenue
Revenue is presented net of sales allowances. Net revenue increased $247,376, or 106%, to $479,702 from $232,326 for the nine months ended September 30, 2014 and 2013 respectively. This increase was primarily due to an overall increase in purchase orders.
Cost of Goods Sold
Cost of goods sold increased $117,988, or 132%, to $207,126 from $89,138 for the nine months ended September 30, 2014 and 2013, respectively. This overall increase was primarily the result of the payment and recognition of the costs of raw materials and overall increase in revenue.
Operating Expenses
Operating expenses decreased $333,437, or 20%, to $1,363,578 from $1,697,015 for the nine months ended September 30, 2014 and 2013 respectively. The overall decrease in operating expenses results from decreases in stock based compensation arrangements totaling for nine months ended September 30, 2014 as compared to 2013, respectively. Marketing and advertising costs decreased $17,001, or 49%, to $17,526 for the nine month ended September 30, 2014, as compared to $34,527 for the nine month ended September 30, 2013. Contract labor costs decreased $74,342 or 67% to $36,661 from $111,003 for the nine months ended September 30, 2014 and 2013, respectively. Contract labor costs primarily included costs for administrative and marketing/sales support.
Interest Expense
For the nine months ended September 30, 2014 and 2013, the Company incurred interest expense of $85,688 and $195,227, respectively. The decrease is due to a decrease and conversion of convertible notes payable from the prior year period.
Net Loss
Our net losses for the nine months ended September 30, 2014 and 2013 were $1,328,038 and $1,906,308, respectively. The decrease in net loss is attributable to the decrease in expenses from the operating expenses and overall increase in sales, which is discussed above.
13
Off-Balance Sheet Arrangements
As of September 30, 2014, we have no off-balance sheet arrangements such as guarantees, retained or contingent interest in assets transferred, obligation under a derivative instrument and obligation arising out of or a variable interest in an unconsolidated entity.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. Our Annual Report on Form 10-K for the year ended December 31, 2013 contains a discussion of these significant accounting policies. There have been no significant changes in our significant accounting policies since December 31, 2013. See our Note 2 in our unaudited financial statements for the six months ended September 30, 2014, as set forth herein.
Liquidity and Capital Resources
During the nine months ended September 30, 2014 and 2013, the Company recognized negative cash flows from operating activities of $(288,281) and $(205,859), respectively. As of September 30, 2014 and December 31 2013, the Company held cash and cash equivalents of $22,570 and $7,231, respectively.
Cash used in investing activities totaled $0 and $19,900 or the six months ended September 30 2014 and 2013, respectively.
Cash provided by financing activities totaled $303,620 for the six months ended September 30, 2014, respectively, and consisted of proceeds from issuances of common stock for cash. For the same period ended September 30, 2013, cash provided from financing activities totaled $199,320 and consisted of proceeds from issuance of convertible notes payable.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Required
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, the Company carried out an evaluation of the effectiveness of the Companys disclosure controls and procedures (as defined by Rule 13-15(e) under the Securities Exchange Act of 1934) under the supervision and with the participation of the Companys Chief Executive Officer and Chief Financial Officer. Based on and as of the date of such evaluation, the aforementioned officers have concluded that the Companys disclosure controls and procedures were not effective to ensure the recording, processing and timely filing of periodic financial reports.
Changes in Internal Controls over Financial Reporting
Changes in Internal Controls Over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended September 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is aggressively defending itself in all of the legal proceedings. See Note 7: Commitments and Contingencies in the footnotes for a complete listing of legal proceedings. The Companys management believes the likelihood of future liability to the Company for these contingencies is remote, and the Company has not recorded any liability for these legal proceedings at June 30, 2014 and December 31, 2013. While the results of these matters cannot be predicted with certainty, the Companys management believes that losses, if any, resulting from the ultimate resolution of these proceedings will not have a material adverse effect on the Companys financial position, results of operations, or cash flows.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the period ended September 30, 2014, the Company issued 161,538,888 shares of common stock for $303,620 in cash. During the period ended September 30, 2014, the Company issued 185,000,000 shares to consultants for services rendered. During the period ended September 30, 2014, the Company issued 202,514,717 shares of common stock related to conversions of various notes payable. See Note 5 for further discussion. The public float as of April 18, 2016 was 2,225,613,590 shares
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following exhibits are filed herewith:
| | |
Exhibit Number | | Exhibit Description |
31.1 | | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 | | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 | | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | |
| Dewmar International BMC, Inc. |
| | |
Date: July 8, 2016 | By: | /s/ Marco Moran |
| | President, CEO, and Director |
16
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Marco Moran, certify that:
1.
I have reviewed this quarterly report of Dewmar International BMC, Inc. for the period ended September 30, 2014.
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.
The Registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the Registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its subsidiaries, is made known to us by others within those entities, particularly during the period in which the report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the Registrants most recent fiscal quarter (the Registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and
5.
The Registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants auditors and the audit committee of the Registrants board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design of operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting.
Date: July 8, 2016
/s/ Marco Moran
Marco Moran
CEO
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Marco Moran, certify that:
1.
I have reviewed this quarterly report of Dewmar International BMC, Inc. for the period ended September 30, 2014.
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.
The Registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the Registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its subsidiaries, is made known to us by others within those entities, particularly during the period in which the report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the Registrants most recent fiscal quarter (the Registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and
5.
The Registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants auditors and the audit committee of the Registrants board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design of operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting.
Date: July 8, 2016
/s/ Marco Moran
Marco Moran
CFO
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. 1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to their knowledge, the Quarterly Report on Form 10-Q for the period ended September 30, 2014 of Dewmar International BMC, Inc.. (the Company) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and the information contained in such periodic report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in such report.
Very truly yours,
| |
/s/ Marco Moran | |
Marco Moran | |
Chief Executive Officer | |
| |
July 8, 2016
| |
| |
| |
/s/ Marco Moran | |
Marco Moran | |
Chief Financial Officer | |
| |
July 8, 2016 | |
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Dewmar International BMC, Inc. and will be furnished to the Securities and Exchange Commission or its staff upon request.
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v3.5.0.2
Consolidated Balance Sheets - USD ($)
|
Sep. 30, 2014 |
Dec. 31, 2013 |
Current Assets |
|
|
Cash and cash equivalents |
$ 22,570
|
$ 7,231
|
Accounts receivable, net |
197,487
|
9,532
|
Related party receivable |
12,059
|
4,085
|
Advances to related party |
9,332
|
9,332
|
Inventory |
60,553
|
35,144
|
Prepaid expenses and other current assets |
|
6,000
|
Total Current Assets |
302,001
|
71,324
|
Property and equipment, net |
21,182
|
26,845
|
Total Assets |
323,183
|
98,169
|
Current Liabilities |
|
|
Accounts payable and accrued liabilities |
737,909
|
714,868
|
Accrued interest |
14,073
|
9,707
|
Notes payable |
173,890
|
173,890
|
Convertible notes payable, net |
153,066
|
122,750
|
Derivative liability |
212,828
|
151,120
|
Total Current Liabilities |
1,291,766
|
1,172,335
|
Total Liabilities |
1,291,766
|
1,172,335
|
Commitments and Contingencies |
|
|
Stockholders' Deficit |
|
|
Preferred stock value |
50,000
|
50,000
|
Common stock value |
2,759,546
|
2,310,493
|
Additional paid-in capital |
4,354,763
|
3,370,195
|
Accumulated deficit |
(8,132,892)
|
(6,804,854)
|
Total Stockholders' Deficit |
(968,583)
|
(1,074,166)
|
Total Liabilities and Stockholders' Deficit |
$ 323,183
|
$ 98,169
|
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v3.5.0.2
Consolidated Balance Sheets (Parenthetical) - USD ($)
|
Sep. 30, 2014 |
Dec. 31, 2013 |
Balance Sheet |
|
|
Accumulated depreciation of property, plant and equipment |
$ 19,873
|
$ 14,210
|
Unamortized discount, note payable |
$ 1,254
|
$ 77,230
|
Preferred stock, par value |
$ 0.001
|
$ 0.001
|
Preferred stock, shares authorized |
50,000,000
|
50,000,000
|
Preferred stock, shares issued |
50,000,000
|
50,000,000
|
Common stock, par value |
$ 0.001
|
$ 0.001
|
Common stock, shares authorized |
4,450,000,000
|
4,450,000,000
|
Common stock, shares issued |
2,759,542,401
|
2,310,488,796
|
Common stock, shares outstanding |
2,759,542,401
|
2,310,488,796
|
X |
- DefinitionFace amount or stated value per share of common stock.
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v3.5.0.2
Consolidated Statements of Operations - USD ($)
|
3 Months Ended |
9 Months Ended |
Sep. 30, 2014 |
Sep. 30, 2013 |
Sep. 30, 2014 |
Sep. 30, 2013 |
Income Statement |
|
|
|
|
Revenues, net |
$ 234,468
|
$ 46,259
|
$ 457,778
|
$ 222,342
|
Related party revenue |
|
5,379
|
21,924
|
9,984
|
Cost of goods sold |
68,734
|
14,409
|
207,126
|
89,138
|
Gross profit |
165,734
|
37,229
|
272,576
|
143,188
|
Operating expenses |
|
|
|
|
Occupancy and related expenses |
8,999
|
8,613
|
28,248
|
34,867
|
Marketing and advertising |
8,639
|
18,565
|
17,526
|
34,527
|
General and administrative |
217,367
|
205,715
|
1,281,143
|
1,516,618
|
Contract labor |
14,266
|
23,235
|
36,661
|
111,003
|
Total operating expenses |
249,271
|
256,128
|
1,363,578
|
1,697,015
|
Loss from operations |
(83,537)
|
(218,899)
|
(1,091,002)
|
(1,553,827)
|
Other income (expenses) |
|
|
|
|
Interest expense |
19,380
|
70,827
|
85,687
|
195,227
|
Gain (loss) on derivative liability |
128,318
|
(50,574)
|
(151,349)
|
(157,254)
|
Total other income (expense) |
108,938
|
(121,401)
|
(237,036)
|
(352,481)
|
Net income (loss) |
$ 25,401
|
$ (340,300)
|
$ (1,328,038)
|
$ (1,906,308)
|
Net income (loss) per common share - basic and diluted |
$ 0.00
|
$ 0.00
|
$ 0.00
|
$ (0.01)
|
Weighted average common shares outstanding - basic |
2,802,060,227
|
518,813,217
|
2,749,415,353
|
279,513,432
|
Weighted average common shares outstanding - diluted |
2,918,213,560
|
518,813,217
|
2,749,415,353
|
279,513,432
|
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- DefinitionTotal costs related to goods produced and sold during the reporting period.
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v3.5.0.2
Consolidated Statements of Stockholders' Deficit - 9 months ended Sep. 30, 2014 - USD ($)
|
Preferred Stock |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Total Stockholders' Deficit |
Beginning Balance, shares at Dec. 31, 2013 |
50,000,000
|
2,310,488,796
|
|
|
|
Beginning Balance, amount at Dec. 31, 2013 |
$ 50,000
|
$ 2,310,493
|
$ 3,370,195
|
$ (6,804,854)
|
$ (1,074,166)
|
Shares issued for cash, shares |
|
161,538,888
|
|
|
|
Shares issued for cash, value |
|
$ 161,539
|
142,081
|
|
303,620
|
Shares issued for services, shares |
|
185,000,000
|
|
|
|
Shares issued for services, value |
|
$ 185,000
|
856,000
|
|
1,041,000
|
Shares cancelled, shares |
|
(100,000,000)
|
|
|
|
Shares cancelled, value |
|
$ (100,000)
|
52,000
|
|
(48,000)
|
Shares issued for conversions of note payable, shares |
|
202,514,717
|
|
|
|
Shares issued for conversions of note payable, value |
|
$ 202,514
|
(155,154)
|
|
47,360
|
Reduction in derivative liability due to debt conversion |
|
|
89,641
|
|
89,641
|
Net income (loss) |
|
|
|
(1,328,038)
|
(1,328,038)
|
Ending Balance, shares at Sep. 30, 2014 |
50,000,000
|
2,759,542,401
|
|
|
|
Ending Balance, amount at Sep. 30, 2014 |
$ 50,000
|
$ 2,759,546
|
$ 4,354,763
|
$ (8,132,892)
|
$ (968,583)
|
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v3.5.0.2
Consolidated Statements of Cash Flows - USD ($)
|
9 Months Ended |
Sep. 30, 2014 |
Sep. 30, 2013 |
Cash flows from operating activities |
|
|
Net income (loss) |
$ (1,328,038)
|
$ (1,906,308)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
Depreciation expense |
5,663
|
3,753
|
Stock-based compensation |
993,000
|
932,451
|
Amortization of debt discount |
75,976
|
174,120
|
Gain (loss) on derivative liability |
(151,349)
|
(157,254)
|
Changes in operating assets and liabilities: |
|
|
Accounts receivable |
(187,955)
|
5,184
|
Related party receivables and payables |
(7,974)
|
2,648
|
Inventory |
(25,409)
|
17,649
|
Prepaid expenses and other current assets |
6,000
|
1,700
|
Accounts payable and accrued liabilities |
29,107
|
405,690
|
Net cash used in operating activities |
(288,281)
|
(205,859)
|
Cash flows from investing activities |
|
|
Purchase of fixed assets |
|
19,900
|
Net cash used in investing activities |
|
(19,900)
|
Cash flows from financing activities |
|
|
Proceeds from notes payable |
|
199,320
|
Proceeds from issuance of common stock |
303,620
|
|
Net cash provided by (used in) financing activities |
303,620
|
199,320
|
Net change in cash and cash equivalents |
15,339
|
(26,439)
|
Cash and cash equivalents, at beginning of period |
7,231
|
38,388
|
Cash and cash equivalents, at end of period |
22,570
|
11,949
|
Supplemental cash flow information |
|
|
Interest paid |
3,692
|
10,709
|
Income taxes paid |
|
|
Supplemental noncash investing and financing activities |
|
|
Issuance of common stock for conversions of notes payable |
47,360
|
230,250
|
Reclassification of accounts payable to notes payable |
|
334,661
|
Creation of debt discount |
|
182,796
|
Reduction in derivative liability due to conversions of notes payable |
$ 89,641
|
302,044
|
Reduction in common stock payable for issuance of common stock |
|
$ 199,193
|
X |
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v3.5.0.2
Organization and Description of Business
|
9 Months Ended |
Sep. 30, 2014 |
Notes |
|
Organization and Description of Business |
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Dewmar International BMC (we, our, the Company) was formed as a Nevada corporation on March 13, 2009. Today, Dewmar International BMC is a diversified operating company headquartered in Clinton, Mississippi. The Company conducts business across a variegated set of categories and sectors including consumer goods, wholesale trade, pharmaceuticals and health sciences. The Company and its subsidiaries develop market and distribute goods, therapeutics and services in national and international markets through licensing agreements, e-commerce platforms, fee-for-service arrangements and distribution contracts.
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v3.5.0.2
Summary of Significant Accounting Policies
|
9 Months Ended |
Sep. 30, 2014 |
Notes |
|
Summary of Significant Accounting Policies |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. The accompanying interim unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the Companys opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 2014 are not necessarily indicative of the results for the full years. While management of the Company believes that the disclosures presented herein and adequate and not misleading, these interim financial statements should be read in conjunction with the audited combined financial statements and the footnotes thereto for the periods ended December 31, 2013 filed in our Annual Report on Form 10K.
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v3.5.0.2
Convertible Notes Payable Disclosure
|
9 Months Ended |
Sep. 30, 2014 |
Notes |
|
Convertible Notes Payable Disclosure |
NOTE 3. CONVERTIBLE NOTES PAYABLE In October, 2012, the Company entered into a 10% Contingently Convertible Promissory Note with Birr Marketing Group, Inc. for $20,000 with a due date of April 1, 2013. At September 30 2014, the Company revalued the fair market value of the derivative liability and recorded a loss of ($27,104) on derivative liability. On April 16, 2013, the Company entered into a sixth Securities Purchase Agreement with Asher Enterprises, Inc. (Asher) a Delaware Corporation for an 8% contingently convertible promissory note with an aggregate principal amount of $42,500 which together with any unpaid accrued interest was due on December 21, 2013. · On January 2, 2014, Asher converted the remaining $6,500 of its outstanding notes payable and $1,700 accrued interest into 34,166,667 shares of common stock at a conversion price of $0.00024. After conversion, a principal balance of $0 remained on the notes payable. On the day of conversion, the Company revalued the derivative liability and recorded a loss on the derivative liability of ($4,425); and reduced the pro-rated balance of the derivative liability by $17,877 into additional paid in capital. As such, the derivative liability had a $0 balance after conversion on January 2, 2014. In 2014, the Company accelerated amortization of the discount of $1,670 into interest expense. On April 7, 2013, the Company entered into a convertible promissory note with a vendor to satisfy outstanding invoices in the amount of $68,000. The note bears no interest and was convertible into shares of common stock. On September 30, 2014; the Company re-valued the derivative liability and recorded a loss on derivative liability of ($16,473) making the balance in the derivative liability at September 30, 2014 $82,666. The Company also recorded $48,921 amortization of the original discount into interest expense. On May 21, 2013, the Company entered into a second Convertible Promissory Note with Continental Equities, LLC, a New York limited liability corporation for an 8% convertible promissory note in the aggregate principal amount of $30,000, which together with any unpaid accrued interest is due on May 20, 2014. $28,500 of the proceeds was funded directly to the company while $1,500 was recorded as original issuance discount. · On January 21, 2014, Continental converted the remaining $17,760 of its outstanding notes payable into 64,581,818 shares of common stock at a conversion price of $0.000275. On the day of conversion, the Company revalued the derivative liability and recorded a gain on derivative liability of $28 and reduced the pro-rated portion of the derivative liability by $20,975 into additional paid in capital bringing the derivative liability to $0. The Company also accelerated the amortization of $7,433 of the original discount into interest expense. On December 10, 2013, the Company entered into an assignment agreement where the Company assigned a previously entered into $17,500 Notes payable with Pitts Riley to Microcap Equity Group, LLC, a third party. As such the Company entered into a 10% Convertible note with Microcap Equity Group for $17,500 which matured on December 10, 2014. · On January 27, 2014, Microcap converted the remaining $7,400 of the notes payable into 52,857,142 shares of common stock at a conversion price of $0.00014 bringing the notes payable balance to $0. On the day of conversion, the Company re-valued the derivative liability and recorded a gain on the derivative liability of $335 and reduced the pro-rated portion of the derivative liability of $25,958 into additional paid in capital. Additionally, the company accelerated the amortization of $3,952 of the original discount into interest expense. During the year ended December 31, 2013, the Company entered into two 10% Contingently Convertible Promissory Notes with Birr Marketing Group, Inc. for $28,000 and $22,820 with due dates of June 4, 2014 and June 26, 2014. After the due dates, the notes became convertible at a fixed price of $0.001 into the Companys common shares at the Holders option. On June 6, 2014 and June 26, 2014, these notes were in default and were due and payable immediately. On the respective due dates, the Company created a derivative liability. As of September 30, 2014, the derivative liability balances were $41,942 and $51,462 respectively. A resulting cumulative loss on derivative liability of $93,404 was recorded for the nine months ended September 30, 2014. See Note 4 for a description of derivative liabilities. On December 24, 2013, The Company entered into an assignment agreement where the Company assigned a previously entered into $48,470 Notes Payable to Pitts Riley to Magna Group, LLC, a third party. As such the Company entered into a 10% Convertible note with Magna Group for $48,470 on December 26, 2013. The Note matured on December 26, 2014. On January 6, 2014, Magna converted the remaining $14,000 of the original notes payable into 50,909,090 shares of common stock at a conversion price of $0.00028. After conversion, $0 remained on the original notes payable. On the day of conversion, the Company revalued the derivative liability and recorded a loss on derivative liability of ($10,305) and reduced the pro-rated portion of the derivative liability by $24,830 into additional paid in capital. The Company also accelerated the remaining discount of $14,000 into interest expense. In summary, during the periods ended September 30, 2014 and 2013, the Company recorded a total of $85,687 and $195,227, respectively in interest expense. During periods ended September 30, 2014 and 2013, the amount of interest expense associated with the amortization of discounts associated with the amortization of the debt discounts established by derivative liabilities in the convertible notes was $79,976 and $174,120, respectively.
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v3.5.0.2
Derivative Liability Disclosure
|
9 Months Ended |
Sep. 30, 2014 |
Notes |
|
Derivative Liability Disclosure |
NOTE 4. DERIVATIVE LIABILITY In June 2008, the FASB issued authoritative guidance on determining whether an instrument (or embedded feature) is indexed to an entitys own stock. Under the authoritative guidance, effective January 1, 2009, instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The conversion features of certain of the Companys Convertible Promissory Note (described in Note 3), do not have a fixed settlement provision because conversion of the Notes will be lowered if the Company issues securities at lower prices in the future. This provision contained in these notes tainted the other convertible notes and therefore the other convertible notes have been treated as derivative liabilities. In accordance with the FASB authoritative guidance, the conversion feature of the Notes were separated from the host contract and recognized as a derivative instrument. The conversion feature of the above described notes have been characterized as a derivative liability to be re-measured at the end of every reporting period with the change in value reported in the statement of operations. The following table summarizes the derivative liabilities included in the consolidated balance sheet at September 30, 2014: Derivative liability | | Derivative liabilities as of December 31, 2013 | $ | 151,120 | Net Loss on derivative liability | | 151,349 | Debt discount | | -- | Settlement of derivative liability due to conversion of related notes | | (89,641) | Derivative liabilities as of September 30, 2014 | $ | 212,828 |
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v3.5.0.2
Stockholders' Deficit Disclosure
|
9 Months Ended |
Sep. 30, 2014 |
Notes |
|
Stockholders' Deficit Disclosure |
NOTE 5. STOCKHOLDERS DEFICIT Shares Issued for Cash During the period ended September 30, 2014, the Company issued 161,538,888 shares of common stock for $303,620 in cash. Shares Issued for Services During the period ended September 30, 2014, the Company issued 185,000,000 shares to consultants for services rendered. The Company estimated the fair market value of the shares issued to be $1,041,000 and recorded this as stock based compensation. In addition, the Company cancelled a consulting agreement which it had previously accounted for and as such reversed 100,000,000 shares and a corresponding $48,000 from share based compensation. Shares Issued for Conversion of Notes Payable During the period ended September 30, 2014, the Company issued 202,514,717 shares of common stock related to conversions of various notes payable. See Note 3 for further discussion.
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v3.5.0.2
Related Party Transactions Disclosure
|
9 Months Ended |
Sep. 30, 2014 |
Notes |
|
Related Party Transactions Disclosure |
NOTE 6. RELATED PARTY TRANSACTIONS Sales to Related Party Distributor The Company is engaged with a distributor that is wholly-owned by the Companys 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 Companys will for Company use, for which the Company will provide the Distributor with a credit memo based on a per-case price equal to the price paid by the Distributor to the Company. At September 30, 2014 and December 31, 2013, receivable from the Distributor was $12,059 and $4,085, respectively. For the nine months ended September 30, 2014 and 2013, the Company recorded $21,924 and $9,984 in revenue from related parties, respectively. Advances to Related Party At both September 30, 2014, and December 31, 2013, the Company had outstanding accounts receivable of $9,332, from a company owned by the CEOs wife. These receivables represent shipping reimbursements erroneously billed by logistics and shipping companies. The Company paid these invoices and then in turn generated invoices to the company owned by the CEOs wife for reimbursement.
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v3.5.0.2
Commitments and Contingencies Disclosure
|
9 Months Ended |
Sep. 30, 2014 |
Notes |
|
Commitments and Contingencies Disclosure |
NOTE 7. COMMITMENTS AND CONTINGENCIES Employment Agreement On January 1, 2011, the Company entered into employment agreement with Dr. Moran (Employee) to serve as President and Chief Executive Officer of the Company. The employment commenced on January 1, 2011 and runs for the period through January 1, 2015. The Company will pay Employee, as consideration for services rendered, a base salary of $120,000 per year. As additional compensation, Employee is eligible to receive one percent of the issued and outstanding shares of the Company if the gross revenues hit specified milestones for each fiscal year under the agreement. The Company will provide additional benefits to Employee during the employment term which include, but are not limited to, health and life insurance benefits, vacation pay, expense reimbursement, relocation reimbursement and a Company car. If Employee dies, the Company will pay the designated beneficiary an amount equal to two years compensation, in equal payments over the next twenty four months. In the event Employees employment is constructively terminated within five years of the commencement date, Employee shall receive a termination payment, which will be determined according to a schedule based upon the number of years since the commencement of the contract, within a range of $120,000 to $400,000. Additionally, Employee shall continue to receive the additional benefits mentioned above for a period of two years from the termination date. If the constructive termination date is later than five years after the commencement date, Employee shall receive the lesser amount of an amount equal to his aggregate base salary for five years following the date of the termination date, or an amount equal to his aggregate base salary through the end of the term. Additionally, Employee shall continue to receive the additional benefits mentioned above during the period he is entitled to receive the base salary. For both the period ended September 30, 2014 and 2013, the Company incurred $127,458 base salary to Dr. Moran, which was included as a component of general and administrative expenses. The Company recorded total accrued payroll to Dr. Moran in the amounts of $549,502 and $494,000 in accounts payable and accrued liabilities on its consolidated balance sheets at September 30, 2014and December 31, 2013, respectively. Legal Proceedings The Company is aggressively defending itself in all of the below proceedings. The Companys 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 September 30, 2014 and December 31, 2013. While the results of these matters cannot be predicted with certainty, the Companys management believes that losses, if any, resulting from the ultimate resolution of these proceedings will not have a material adverse effect on the Companys financial position, results of operations, or cash flows. On January 20, 2011, a claim was filed against Dewmar International BMC, Inc.(Dewmar) by Corey Powell, in Ascension Parish, LA 23rd Judicial District Court. Corey Powell was a former distributor of LEAN, a relaxation beverage marketed by Dewmar. Powell filed suit to recover allegedly unpaid commissions, invasion fees and finders fees. The commissions related to payments allegedly owed for Powells 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 Dewmars management. Discovery is complete. Dewmar has vigorously contested each and every one of the plaintiffs allegations and has instructed counsel to proceed to trial on the merits which is scheduled this summer. Plaintiff sent a settlement demand earlier this year which was rejected by Dewmar. Currently, there is no trial date set.
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v3.5.0.2
Subsequent Events
|
9 Months Ended |
Sep. 30, 2014 |
Notes |
|
Subsequent Events |
NOTE 8. SUBSEQUENT EVENTS On December 4, 2014, Health & Wellness Research Consortium, LLC, (Health & Wellness) was created with Dewmar owning 100% of the LLC membership units. The business objective of Health & Wellness is to develop, implement and execute healthcare sales and marketing strategies for pharmacies, clinics and hospitals in order to help the client broaden market presence, influence effective prescribing behaviors and ultimately maximize their return on assets.
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v3.5.0.2
Summary of Significant Accounting Policies: Basis of Presentation (Policies)
|
9 Months Ended |
Sep. 30, 2014 |
Policies |
|
Basis of Presentation |
Basis of Presentation The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. The accompanying interim unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the Companys opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 2014 are not necessarily indicative of the results for the full years. While management of the Company believes that the disclosures presented herein and adequate and not misleading, these interim financial statements should be read in conjunction with the audited combined financial statements and the footnotes thereto for the periods ended December 31, 2013 filed in our Annual Report on Form 10K.
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v3.5.0.2
Derivative Liability Disclosure: Schedule of Derivative Liabilities (Tables)
|
9 Months Ended |
Sep. 30, 2014 |
Tables/Schedules |
|
Schedule of Derivative Liabilities |
Derivative liability | | Derivative liabilities as of December 31, 2013 | $ | 151,120 | Net Loss on derivative liability | | 151,349 | Debt discount | | -- | Settlement of derivative liability due to conversion of related notes | | (89,641) | Derivative liabilities as of September 30, 2014 | $ | 212,828 |
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v3.5.0.2
Convertible Notes Payable Disclosure (Details) - USD ($)
|
3 Months Ended |
9 Months Ended |
12 Months Ended |
Sep. 30, 2014 |
Sep. 30, 2013 |
Sep. 30, 2014 |
Sep. 30, 2013 |
Dec. 31, 2013 |
Dec. 31, 2012 |
Gain (loss) on derivative liability |
$ 128,318
|
$ (50,574)
|
$ (151,349)
|
$ (157,254)
|
|
|
Common stock issued for debt conversion |
|
|
202,514,717
|
|
|
|
Interest expense |
$ 19,380
|
$ 70,827
|
$ 85,687
|
$ 195,227
|
|
|
Contingently Convertible Promissory Note with Birr Marketing Group |
|
|
|
|
|
|
Interest rate |
|
|
|
|
|
10.00%
|
Proceeds from convertible promissory note |
|
|
|
|
$ 28,000
|
$ 20,000
|
Gain (loss) on derivative liability |
|
|
(27,104)
|
|
|
|
Contingently Convertible Promissory Note with Asher |
|
|
|
|
|
|
Interest rate |
|
|
|
|
8.00%
|
|
Proceeds from convertible promissory note |
|
|
|
|
$ 42,500
|
|
Gain (loss) on derivative liability |
|
|
(4,425)
|
|
|
|
Amount of debt converted into common stock |
|
|
6,500
|
|
|
|
Accrued interest converted |
|
|
$ 1,700
|
|
|
|
Common stock issued for debt conversion |
|
|
34,166,667
|
|
|
|
Conversion price |
$ 0.00024
|
|
$ 0.00024
|
|
|
|
Interest expense |
|
|
$ 1,670
|
|
|
|
Convertible Promissory Note to Satisfy Outstanding Invoices |
|
|
|
|
|
|
Proceeds from convertible promissory note |
|
|
|
|
$ 68,000
|
|
Gain (loss) on derivative liability |
|
|
(16,473)
|
|
|
|
Interest expense |
|
|
48,921
|
|
|
|
Convertible Promissory Note with Continental Equities |
|
|
|
|
|
|
Interest rate |
|
|
|
|
8.00%
|
|
Proceeds from convertible promissory note |
|
|
|
|
$ 30,000
|
|
Gain (loss) on derivative liability |
|
|
28
|
|
|
|
Amount of debt converted into common stock |
|
|
$ 17,760
|
|
|
|
Common stock issued for debt conversion |
|
|
64,581,818
|
|
|
|
Conversion price |
0.000275
|
|
$ 0.000275
|
|
|
|
Interest expense |
|
|
$ 7,433
|
|
|
|
Convertible Note with Microcap Equity Group |
|
|
|
|
|
|
Interest rate |
|
|
|
|
10.00%
|
|
Proceeds from convertible promissory note |
|
|
|
|
$ 17,500
|
|
Gain (loss) on derivative liability |
|
|
335
|
|
|
|
Amount of debt converted into common stock |
|
|
$ 7,400
|
|
|
|
Common stock issued for debt conversion |
|
|
52,857,142
|
|
|
|
Conversion price |
0.00014
|
|
$ 0.00014
|
|
|
|
Interest expense |
|
|
$ 3,952
|
|
|
|
ContingentlyConvertiblePromissoryNoteWithBirrMarketingGroup2Member |
|
|
|
|
|
|
Proceeds from convertible promissory note |
|
|
|
|
22,820
|
|
Convertible note with Magna Group (2) |
|
|
|
|
|
|
Proceeds from convertible promissory note |
|
|
|
|
$ 48,470
|
|
Gain (loss) on derivative liability |
|
|
(10,305)
|
|
|
|
Amount of debt converted into common stock |
|
|
$ 14,000
|
|
|
|
Common stock issued for debt conversion |
|
|
50,909,090
|
|
|
|
Conversion price |
$ 0.00028
|
|
$ 0.00028
|
|
|
|
Interest expense |
|
|
$ 14,000
|
|
|
|
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v3.5.0.2
Derivative Liability Disclosure: Schedule of Derivative Liabilities (Details) - USD ($)
|
3 Months Ended |
9 Months Ended |
|
Sep. 30, 2014 |
Sep. 30, 2013 |
Sep. 30, 2014 |
Sep. 30, 2013 |
Dec. 31, 2013 |
Details |
|
|
|
|
|
Derivative liability |
$ 212,828
|
|
$ 212,828
|
|
$ 151,120
|
Gain (loss) on derivative liability |
$ (128,318)
|
$ 50,574
|
151,349
|
$ 157,254
|
|
Settlement of derivative liability |
|
|
$ 89,641
|
|
|
X |
- DefinitionFair value, after the effects of master netting arrangements, of a financial liability or contract with one or more underlyings, notional amount or payment provision or both, and the contract can be net settled by means outside the contract or delivery of an asset, expected to be settled within one year or normal operating cycle, if longer. Includes assets not subject to a master netting arrangement and not elected to be offset.
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v3.5.0.2
Stockholders' Deficit Disclosure (Details)
|
9 Months Ended |
Sep. 30, 2014
USD ($)
shares
|
Details |
|
Common stock issued for cash |
161,538,888
|
Proceeds from issuance of common stock | $ |
$ 303,620
|
Common stock issued for services |
185,000,000
|
Value of common stock issued for services | $ |
$ 1,041,000
|
Common stock reversed and cancelled |
100,000,000
|
Share based compensation recorded from cancellation | $ |
$ 48,000
|
Common stock issued for debt conversion |
202,514,717
|
X |
- DefinitionThe number of shares issued in exchange for the original debt being converted in a noncash (or part noncash) transaction. "Part noncash" refers to that portion of the transaction not resulting in cash receipts or payments in the period.
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v3.5.0.2
Related Party Transactions Disclosure (Details) - USD ($)
|
3 Months Ended |
9 Months Ended |
|
Sep. 30, 2013 |
Sep. 30, 2014 |
Sep. 30, 2013 |
Dec. 31, 2013 |
Details |
|
|
|
|
Related party receivable |
|
$ 12,059
|
|
$ 4,085
|
Related party revenue |
$ 5,379
|
21,924
|
$ 9,984
|
|
Advances to related party |
|
$ 9,332
|
|
$ 9,332
|
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- References
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v3.5.0.2
Commitments and Contingencies Disclosure (Details) - Salary to Dr. Moran (CEO) - USD ($)
|
9 Months Ended |
|
Sep. 30, 2014 |
Dec. 31, 2013 |
Salaries paid |
$ 127,458
|
|
Accrued payroll |
$ 549,502
|
$ 494,000
|
X |
- DefinitionCarrying value as of the balance sheet date of the obligations incurred through that date and payable for employees' services provided. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).
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