donmarcos_10ksb-123107.htm
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-KSB
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[X]
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the
fiscal year ended December 31, 2007
or
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[ ]
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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 number: 000-52692
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DON
MARCOS TRADING CO.
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(Name
of Small Business Issuer as specific in its
Charter)
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Florida
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65-0921319
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(State
or Other Jurisdiction of
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(I.R.S.
Employer
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Incorporation
or Organization)
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Identification
No.)
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1850 Southeast 17th Street, Suite 300, Ft. Lauderdale,
Florida
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33316
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Issuer's
telephone number, including area code: (954)
356-8111
Securities
registered pursuant to Section 12(b) of the Act: None
Securities
registered pursuant to Section 12(g) of the Act:
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Common Stock, no par
value
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(Title
of Class)
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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 periods 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
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Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained herein, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. Yes __ No X
Indicate
by check mark whether the registrant is a shell company. Yes __ No
X
For the
year ended December 31, 2007, our revenue was $0.
As of
March 27, 2008, the number of shares of common stock outstanding was
37,100,000. As of March 27, 2008, the aggregate market value of our
common stock held by non-affiliates was approximately $1,520,000 (based upon
15,200,000 shares at $0.10 per share).
DOCUMENTS
INCORPORATED BY REFERENCE
The
following documents are incorporated herein by reference: (i) Registration
Statement on Form SB-2, filed on May 17, 2007, as amended (Registration No.
333-142976); and (ii) Form 8-K, filed on December 14, 2007, are incorporated in
Part III, Item 13.
TABLE OF
CONTENTS
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Page
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ITEM
1
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DESCRIPTION
OF BUSINESS
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1
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ITEM
2
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DESCRIPTION
OF PROPERTY
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4
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ITEM
3
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LEGAL
PROCEEDINGS
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4
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ITEM
4
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SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
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4
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ITEM
5
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MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
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4
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ITEM
6
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PLAN
OF OPERATION
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5
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ITEM
7
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FINANCIAL
STATEMENTS
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11
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ITEM
8
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CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
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11
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ITEM
8A
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CONTROLS
AND PROCEDURES
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11
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ITEM
8B
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OTHER
INFORMATION
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11
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ITEM
9
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DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
16(A) OF THE EXCHANGE ACT
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12
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ITEM
10
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EXECUTIVE
COMPENSATION
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14
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ITEM
11
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
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15
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ITEM
12
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
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15
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ITEM
13
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EXHIBITS
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16
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ITEM
14
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PRINCIPAL
ACCOUNTANT FEES AND SERVICES
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16
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SIGNATURES
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18
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ITEM
1. DESCRIPTION OF BUSINESS.
Development
of Business
We were incorporated on May 11, 1999 in
the state of Florida to be the sole importer and distributor
of Don Marcos Coffee. We prepared to conduct business by: (i)
applying for our trademark in 1999 and processing our trademark registration
application through 2002; (ii) establishing our merchant account in 2000; (iii)
establishing our website in 2000; and (iv) entering into a Distribution
Agreement with Don Marcos Coffee Company, S.A. in 2003. From 2004
through 2006, our operations were limited. In 2007, we designed our
packaging for the coffee. However, we have not yet made any sales of
coffee nor generated any revenues from operations.
Business
of Issuer
Don Marcos Coffee is grown, roasted and
packaged in Costa
Rica by the Don Marcos
Coffee Company, S.A., a Costa Rica company. Since its inception
on March 27, 2000, Mark E. Tupper has been and continues to be the founder,
Chief Executive Officer and principal shareholder of Don Marcos Coffee Company,
S.A. Mr. Tupper became a member of our board of directors on February
1, 2007. Mr. Tupper is the uncle of our President and director, Earl T.
Shannon. Don Marcos Coffee Company, S.A. is not our
subsidiary. On
January 23, 2003, we entered into a Distributorship Agreement with Don Marcos Coffee Company,
S.A. Don Marcos Coffee Company, S.A. is a licensed coffee
exporter. Coffee exports are regulated by the National Costa Rican
Coffee Institute (INCAFE).
Don Marcos Coffee is a specialty grade
coffee, sometimes called gourmet or premium coffee. Specialty coffees
are made from exceptional beans grown only in ideal coffee-producing climates.
They tend to feature distinctive flavors, which are shaped by the unique
characteristics of the soil that produces them.
Don Marcos Coffee is designated Strictly
Hard Bean (SHB) by the grower, Don Marcos Coffee Company, S.A. SHB is
part of a classification system for Costa Rican coffees, with the characteristic
of being cultivated at an altitude higher than 3,900 feet above sea level. In
Costa Rica, coffee trees that grow at this
altitude produce higher quality beans that have a high density that holds in the
nutrients and flavor the beans during roasting.
The coffee is not roasted until the time
of order for maximum freshness. It can be packaged ground or whole
bean.
We order coffee in quantities of 69
kilograms. This is the standard size export bag. For
wholesale orders, the coffee is shipped to us in a 69 kilogram bulk
pack.
For retail sales, we use a custom
printed, 12-ounce foil side gusseted bag. There are approximately 202
bags per order (69 kilograms x 2.2 = 151.80lbs. = 2,480.8 oz.
/12). The bags are dropped shipped by the bag manufacturer directly
to Costa Rica. The bags are machine filled
and machine sealed in Costa
Rica. The filled
bags are then shipped directly to our offices by United Parcel Service (UPS),
Federal Express, or DHL courier.
In addition, we offer custom packaging
for both resale and business promotion.
We entered into an exclusive importer
and distributor agreement with Don Marcos Coffee on January 23,
2003. We plan to distribute to specialty coffee stores and select
restaurants as well as sell it directly on our e-commerce website, www.donmarcos.com. Our website is listed with
the major search engines: Yahoo, Google, MSN, Ask, Dogpile,
etc.
Competition
Although we face intense competition
from numerous other coffee distributors, we believe that we can compete on the
basis of the quality and uniqueness of our products. We believe our
products are unique because:
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Our coffee is specialty
coffee. Specialty coffee is defined as a coffee that has no
defects and has a distinctive flavor in the cup. Like wine and
honey, specialty coffee has a unique flavor thanks to the micro-climates
that produce it. Our coffee is full bodied with a sweet caramel
taste.
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Our coffee is Strictly Hard
Bean. Strictly Hard Bean is part of a classification system for
coffees, with the characteristic of being cultivated above 3,900 feet
above sea level. In Costa Rica, coffee trees that grow at this
altitude produce higher quality beans that have a high density that holds
in the nutrients and flavor the beans during
roasting.
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Our packaging is unique in that
our bag incorporates a one-way degassing valve to protect the freshness of
the coffee.
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Our coffee is processed under the
highest quality standards, using the latest and most environmentally
friendly machinery available. We maintain the strictest
environmental standards concerning water quality, recycling and
reforestation.
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However, many of our competitors are
substantially larger, better financed and have superior resources compared to
us. Therefore, there is no guarantee that we will be able to
successfully compete with them.
We have numerous
competitors. Some of our competitors are large companies selling a
large variety of products, including products that compete with our
coffee. Competitors include Kraft General Foods, Inc., The Kroger
Co., The Procter & Gamble Company and
Sara Lee Corporation. Our noteworthy competitors for specialty coffee
include:
1. Caf Britt
2. Triangulo de Oro
3. Caf 1820
4. Volio
5. Caf Rey
These are five popular coffee companies
from Costa Rica. Other coffee companies,
such as Peets and Starbucks, offer coffee from several regions of the
world. The five competitors listed above are direct competitors of
our company because they all produce only Costa Rican coffee like Don Marcos
Coffee.
Don Marcos Coffee is grown, roasted and
packaged in Costa
Rica by the Don Marcos
Coffee Company, S.A., a Costa Rica company. On January 23,
2003, we entered into a Distributorship Agreement with Don Marcos Coffee
Company, S.A. The material terms of our Distributorship Agreement
with Don Marcos Coffee
Company, S.A. are:
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We have exclusive worldwide rights
to distribute all coffee products of Don Marcos Coffee Company,
S.A.
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We have the right to appoint
subdistributors, but have not done so
yet.
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We must place a minimum order of
$200 with payment terms of net 30
days.
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We have a 30 day right of
inspection of the coffee.
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The agreement has an initial term
of five years with automatic five year renewals unless either party
terminates in writing at least 90 days prior to the end of any
term.
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We pay the current market price
for coffee when we place an order for coffee from Don Marcos Coffee
Company, S.A.
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If Don Marcos Coffee Company,
S.A. terminated the
Distributorship Agreement, it would be difficult to find a replacement
distributor and our operations would suffer.
Dependence
on Major Customers
We are
not dependent on any one customer for a substantial portion of our sales of any
product.
Intellectual
Property
We own the registered trademark, Don
Marcos, registration number 2559462, registered on April 9, 2002 with the U.S.
Patent and Trademark Office. At this time, we do not have any other
trademark, copyright or patent protection.
Government
Approval
None.
Research
and Development Costs
We spent
$0 on research and development during the year ended December 31, 2007 as
compared to $0 spent on research and development during the year ended December
31, 2006.
Cost
and Effects of Compliance with Environmental Laws and Regulations
None.
Employees
As of the
date hereof, we have three full-time employees. We plan to hire
independent contractors on an “as needed” basis only. We have no
collective bargaining agreements with our employees. We believe that
our employee relationships are satisfactory.
ITEM
2. DESCRIPTION OF PROPERTY
Our office encompasses 800 square feet
located in downtown Ft.
Lauderdale, Florida in a building owned by Hudson Capital
Group. Our management believes these premises are in good
condition. Hudson Capital Group allows us to use this space free of
charge. Although Hudson Capital Group can revoke our right to use
this space at any time, we have been informed by its principal, Steven W.
Hudson, that Hudson Capital Group intends to allow us to continue using the
space free of charge for the foreseeable future. However, should we
be evicted from the space, we would need to relocate to new facilities and may
lack the funds to do so.
ITEM
3. LEGAL PROCEEDINGS
To the best knowledge of management,
there are no litigation matters pending or threatened against
us.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
None.
PART II
ITEM
5. MARKET FOR COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS.
Market
for Common Equity
Our
common stock is currently quoted on the Over-The-Counter Bulletin Board under
the Symbol “DNMO.” Our common stock was first eligible for quotation
on the Over-the-Counter Bulletin Board on March 5, 2008. The only
price of our common stock has been $0.10 per share on March 7, 2008, without
retail mark-up, mark-down or commissions.
The above
quotations are inter-dealer quotations from market makers of our common
stock. At certain times the actual closing or opening quotations may
not represent actual trades that took place.
Holders
As of
March 27, 2008, there were 85 shareholders holding certificated
securities. Our transfer agent is Transfer Online, Inc., 317 SW Alder
Street, 2nd Floor, Portland, Oregon 97204.
Dividends
We have paid no dividends on our common
stock since inception and do not anticipate or contemplate paying cash dividends
in the foreseeable future.
Securities
Authorized for Issuance Under Equity Compensation Plans
None.
Recent
Sales of Unregistered Securities
None.
ITEM 6.
PLAN OF
OPERATION.
The
following discussion and analysis should be read in conjunction with our
financial statements, including the notes thereto, appearing elsewhere in this
Report.
THE
FOLLOWING INFORMATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS OF OUR
MANAGEMENT. FORWARD-LOOKING STATEMENTS ARE STATEMENTS THAT ESTIMATE
THE HAPPENING OF FUTURE EVENTS AND ARE NOT BASED ON HISTORICAL
FACT. FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY THE USE OF
FORWARD-LOOKING TERMINOLOGY, SUCH AS “MAY,” “COULD,” “EXPECT,” “ESTIMATE,”
“ANTICIPATE,” “PLAN,” “PREDICT,” “PROBABLE,” “POSSIBLE,” “SHOULD,” “CONTINUE,”
OR SIMILAR TERMS, VARIATIONS OF THOSE TERMS OR THE NEGATIVE OF THOSE
TERMS. THE FORWARD-LOOKING STATEMENTS SPECIFIED IN THE FOLLOWING
INFORMATION HAVE BEEN COMPILED BY OUR MANAGEMENT ON THE BASIS OF ASSUMPTIONS
MADE BY MANAGEMENT AND CONSIDERED BY MANAGEMENT TO BE REASONABLE. OUR
FUTURE OPERATING RESULTS, HOWEVER, ARE IMPOSSIBLE TO PREDICT AND NO
REPRESENTATION, GUARANTY, OR WARRANTY IS TO BE INFERRED FROM THOSE
FORWARD-LOOKING STATEMENTS.
Overview
We were
incorporated on May 11, 1999 in the state of Florida to be the sole importer and
distributor of Don Marcos® Coffee.
Critical
Accounting Policies
Our
discussion and analysis of our plan of operation are based upon our financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and
expenses. In consultation with our Board of Directors, we have
identified several accounting principles that we believe are key to
understanding of our financial statements. These important accounting
policies require management's most difficult, subjective judgments.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires our 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 of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Net
Loss Per Share
We
adopted Statement of Financial Accounting Standards No. 128 that requires the
reporting of both basic and diluted earnings (loss) per share. Basic earnings
(loss) per share is computed by dividing net income (loss) available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted earnings (loss) per share reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock. In accordance with FASB 128, any
anti-dilutive effects on net income (loss) per share are excluded.
Stock
Issued for Non-Cash Transactions
It is our
policy to value stock issued for non-cash transactions, such as services, at the
fair market value of the goods or services received or the consideration
granted, whichever is more readily determinable, at the date the transaction is
negotiated.
There
were no shares of common stock issued for services during the year ended
December 31, 2007.
Going
Concern
Our
financial statements are prepared using generally accepted accounting principles
applicable to a going concern, which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. Our
ability to continue as a going concern is dependent upon the ability in our
endeavors to seek sources of capital, and in attaining future profitable
operations. Our management is currently initiating their business
plan. The accompanying financial statements do not include any
adjustments that might be necessary should we be unable to continue as a going
concern.
Stock
Based Compensation
We
adopted SFAS No. 123 (Revised 2004), Share Based Payment (“SFAS
No. 123R”), under the modified-prospective transition method on
January 1, 2006. SFAS No. 123R requires companies to measure and
recognize the cost of employee services received in exchange for an award of
equity instruments based on the grant-date fair-value. Share-based compensation
recognized under the modified-prospective transition method of SFAS
No. 123R includes share-based compensation based on the grant-date
fair-value determined in accordance with the original provisions of SFAS
No. 123, Accounting for Stock-Based Compensation, for all share-based
payments granted prior to and not yet vested as of January 1, 2006 and
share-based compensation based on the grant-date fair-value determined in
accordance with SFAS No. 123R for all share-based payments granted after
January 1, 2006. SFAS No. 123R eliminates the ability to account for
the award of these instruments under the intrinsic value method prescribed by
Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock
Issued to Employees, and allowed under the original provisions of SFAS
No. 123. Prior to the adoption of SFAS No. 123R, we accounted for our
stock option plans using the intrinsic value method in accordance with the
provisions of APB Opinion No. 25 and related interpretations.
Stock-based
compensation represents the cost related to stock-based awards granted to
employees. We measure stock-based compensation cost at grant date,
based on the estimated fair value of the award, and recognizes the cost as
expense on a straight-line basis (net of estimated forfeitures over the employee
requisite service period. We estimate the fair value of stock options
using a Black-Scholes valuation model. The expense is recorded in
operating expenses in the condensed statements of operations.
Selected
Financial Data
You
should read the selected financial data set forth below along with our
discussion of our plan of operation and our financial statements and the related
notes. We have derived the financial data from our audited financial
statements. We believe the financial data shown in the table below
include all adjustments consisting only of normal recurring adjustments, that we
consider necessary for a fair presentation of such
information. Operating results for the period are not necessarily
indicative of the results that may be expected in the future.
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Year
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Year
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Ended
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Ended
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December
31,
2007
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December
31,
2006
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(Audited)
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(Audited)
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Revenue
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$
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-
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$
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-
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Operating
expenses
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132,650
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14,664
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Net
(loss)
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$
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(132,650
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$
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(14,664
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Net
(loss) per share
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$
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(.00
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)
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$
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(.00
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)
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Results
for the year ended December 31, 2007 compared to the year ended December 31,
2006.
Revenues
There
were no revenues from operations for the years ended December 31, 2007 and
2006.
Operating
Expenses
Operating
expenses increased by $117,986 to $132,650 for the year ended December 30, 2007
as compared to $14,664 for the year ended December 31, 2006.
During
the year ended December 31, 2007, we incurred accounting, legal and professional
services of $86,381 associated with our filing to become a public company,
salaries, expense of $45,474 associated with the issuance of stock options to
employees, and other expenses of $795. For the year ended December
31, 2006, we incurred $14,184 of professional services, and $480 of other
expenses.
Net
Loss
Primarily
as a result of our operating expenses, we had a net loss of $132,650 for the
year ended December 31, 2007 compared to a net loss of $14,664 for the same
period in the prior year.
Liquidity
and Capital Resources
We
currently have no material commitments for capital expenditures and have no
fixed expenses.
Working
capital is summarized and compared as follows:
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December
31,
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December
31,
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2007
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2006
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Current
assets
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$
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15,421
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$
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131
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Current
liabilities
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9,466
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10,000
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Working
capital (deficit)
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$
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5,955
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$
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(9,869)
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The
changes in our working capital are primarily due to the issuance of common stock
for cash less payments of legal and accounting fees for our public
filings.
Changes
in cash flows is summarized as follows:
Our net
cash used by operations was $91,965 for the year ended December 31, 2007 as
compared to net cash used of $1,029 for the year ended December 31,
2006. During the year ended December 31, 2007, we experienced a net
loss of $132,650, an increase in inventory of $4,255, and a decrease in accrued
accounting and legal expenses of $534. This was offset by non-cash
stock options issued to employees in the amount of $45,474. During
the year ended December 31, 2006, we experienced a net loss of $1,029, which was
offset by common stock issued for services in the amount of $3,635.
There was
no net cash used or provided from investing activities for the year ended
December 31, 2007 and 2006.
Our net
cash provided from financing activities was $103,000 during the year ended
December 31, 2007, due to the issuance of a private placement of common stock of
$82,000, and stock sold for cash in the amount of $21,000 to three of our
shareholders. For the year ended December 31, 2006, cash was provided
from financing activities amounted to $1,000, which was a capital contribution
by a stockholder.
Plan
of Operation
Current
Activities and Plans
Beginning
on February 14, 2007 and concluding on March 10, 2007, we conducted a private
offering of our common stock to 82 accredited investors. We raised a
total of $82,000 gross in our private offering. The purpose of this
offering was to raise capital to begin marketing and distribution of Don Marcos®
Coffee.
We had a
graphic artist design the layout for our new bag for the coffee. The
bag is a foil gusseted bag printed on four sides that has the ability to be
machine filled and sealed. This bag incorporates a one-way degassing
valve to protect the freshness of the coffee. The one-way degassing
valve was originally developed for coffee. Coffee is unique as it is
the only food product that needs to be completely protected from oxygen (O2)
while at the same time gives off relatively large volumes of another gas, carbon
dioxide (CO2). This valve protects the coffee from O2 and release the
CO2 gas from the package.
Our
“cuppers” have been evaluating different roasts for several
months. Cupping is a method of systematically evaluating the aroma
and taste of coffee beans. It is often used by growers, buyers and roasters to
assess the quality of a particular coffee sample. Proper cupping
requires the adherence to an exacting set of brewing standards and a formal
step-by-step evaluation process. A trained cupper generally looks at
six characteristics:
1. Fragrance
- the smell of beans after grinding;
2. Aroma
- the smell of ground-up beans after being steeped in water;
3. Taste
- the flavor of the coffee;
4. Nose
- the vapors released by the coffee in the mouth;
5. Aftertaste
- the vapors and flavors that remain after swallowing; and
6. Body
- the feel of the coffee in the mouth.
Our
cuppers have agreed on a roast. Our custom designed bags have been
designed and delivered to us. We are in the process of bagging the
coffee now and we expect to have the completed product available for sale within
two weeks.
We
believe a majority of our sales may be generated online through our e-commerce
website, www.donmarcos.com. We believe online advertising and
customer ratings can drive traffic to our website.
We also
believe that a portion of our sales may come from custom
packaging. We have the ability to custom package as little as 69
kilos per custom order. In most cases, customers use custom packing
for business promotion or charity events.
We also
offer bulk pack coffee for restaurants and coffee shops. This coffee
is offered in commercial packs of whole bean only.
We plan
to scale our expenditures based upon the amount of revenues
generated. However, our ability to continue as a going concern is
dependent on obtaining additional capital and financing and operating at a
profitable level. We may have to seek additional capital either
through debt or equity offerings and to increase sales volume and operating
margins to achieve profitability. Our working capital and other
capital requirements during the next fiscal year and thereafter will vary based
on the sales revenue generated by our products and the distribution and sales
network we are currently creating. We will consider both the public
and private sale of securities and/or debt instruments for expansion of our
operations if such expansion would benefit our overall growth and income
objectives. Should sales growth not materialize, we may look to these
public and private sources of financing. There can be no assurance,
however, that we can obtain sufficient capital on acceptable terms, if at
all. Under such conditions, failure to obtain such capital likely
would at a minimum negatively impact our ability to timely meet our business
objectives.
We can
satisfy our cash requirements for the foreseeable future without raising any
additional financing. However, if we do not generate revenues within
the next 12 months, we will be unable to market or distribute our products and
we will have to raise additional funds for planned marketing and distribution
expenses.
We do not
plan to purchase any plant or significant equipment in the foreseeable
future.
Off-Balance
Sheet Arrangements
None.
ITEM
7. FINANCIAL
STATEMENTS.
The financial statements required to be
filed pursuant to this Item 7 begin on page F-1 of this
report.
ITEM
8. CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
Effective
October 31, 2007, we dismissed Kabani & Company, Inc. (“Kabani”) as our
independent auditors for the fiscal year ended December 31, 2007 and approved
the engagement of Weaver & Martin, LLC as Kabani’s
replacement. The decision to change auditors was approved by our
Board of Directors.
For the
last two fiscal years, Kabani’s reports on the financial statements of our
company did not contain an adverse opinion or a disclaimer of opinion, nor were
the reports qualified or modified as to uncertainty, audit scope, or accounting
principles. For the last two fiscal years and any subsequent interim
period preceding the dismissal, there were no disagreements with Kabani on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure which, if not resolved to the satisfaction of Kabani
would have caused Kabani to make reference to the matter in their
reports.
ITEM
8A. CONTROLS AND PROCEDURES
Our
President and Chief Financial Officer (the “Certifying Officers”) are
responsible for establishing and maintaining our disclosure controls and
procedures. The Certifying Officers have designed such disclosure
controls and procedures to ensure that material information is made known to
them, particularly during the period in which this report was
prepared. The Certifying Officers have evaluated the effectiveness of
our disclosure controls and procedures as of the end of the period covered by
this report and believe that our disclosure controls and procedures are
effective based on the required evaluation. During the period covered
by this report, there were no changes in internal controls that materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
ITEM
8B. OTHER INFORMATION
None.
PART III
|
ITEM 9.
|
DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT.
|
Directors, Executive Officers,
Promoters, and Control Persons
Our directors and executive officers are
as follows:
|
Name
|
Age
|
Position
|
|
|
|
|
|
Earl T.
Shannon
|
40
|
Director,
President
|
|
Steven
W. Hudson
|
38
|
Directors,
Executive Vice President
|
|
Scott
W. Bodenweber
|
37
|
Director,
Chief Financial Officer
|
|
Peter
Wright
|
56
|
Director,
Secretary
|
|
Mark
E. Tupper
|
61
|
Director
|
Earl T. Shannon,
Director.
Mr. Shannon has been an officer and director of Don Marcos since our
inception. Mr. Shannon was an officer and director of
Salty's Warehouse, Inc. from its
inception on July 16, 1998 through its sale on December 11, 2006. Mr.
Shannon was an officer and director of Nucotec, Inc. from its inception on
October 8, 2001 through its sale on March 19,
2004. Additionally, Mr. Shannon was an officer and director of
PageActive Holdings, Inc. from June 8, 1999 to July 11, 2001,
during which time PageActive Holdings, Inc. was a blank check company- a
development stage company that has no specific business plan or purpose or has
indicated its business plan is to engage in a merger or acquisition with an
unidentified company or companies. From January 1997 and continuing
through the present, Mr. Shannon has been the President of Winthrop Venture
Management, Inc., an investment management company based in Fort
Lauderdale, Florida.
Steven W. Hudson,
Executive Vice President, Director. Mr. Hudson has been with us since
February 1, 2007. Mr. Hudson was an officer and director of
Salty’s Warehouse, Inc. from April 20, 2004 through its sale on December
11, 2006. Mr. Hudson was an officer and director of
Nucotec, Inc. from its inception on October 8, 2001 through its sale
on March 19, 2004. Additionally, Mr. Hudson has served as
President and CEO of International Yacht Construction since
May 1999. International Yacht Construction specializes in new
construction, brokerage, charter, crew placement and yacht management for
vessels 80 feet long and over. Since June 1997, Mr. Hudson
also has served as President and CEO of Hudson Capital Group, a private
investment firm. From August 1995 through May 1999,
Mr. Hudson served as Division Vice President for Republic
Services, Inc., a leading provider of environmental services for
commercial, industrial, municipal and residential customers. From
September 1991 through August 1995, Mr. Hudson held various
positions with Hudson Management Corp, a holding company for several solid waste
services companies located in Florida. Mr. Hudson graduated
from Southern Methodist University with a Bachelor of Arts degree in Business
Economics.
Scott W. Bodenweber,
Chief Financial Officer, Director. Mr. Bodenweber joined us January
21, 2003. Mr. Bodenweber was an officer and director of Salty’s
Warehouse, Inc. from April 20, 2004 through its sale on December 11,
2006. Mr. Bodenweber was an officer and director of
Nucotec, Inc. from its inception on October 8, 2001 through its sale
on March 19, 2004. From June 1997 and continuing through
the present, Mr. Bodenweber has been the Controller of Hudson Capital
Group, an investment firm in Fort Lauderdale, Florida. From
February 1995 through May 1997, he was employed with Keefe,
McCullough & Co., a CPA firm in Ft. Lauderdale, Florida. Mr. Bodenweber
graduated from Florida State University in 1994 with Bachelor of Science
Degrees in both Accounting and Finance. He is a licensed Certified
Public Accountant in the State of Florida.
Peter Wright,
Secretary, Director. Mr. Wright joined us on January 21,
2003. Mr. Wright has been the Chief Financial Officer of Hudson
Capital Group, an investment firm in Fort Lauderdale, Florida from May 1998 continuing through the
present. From August 1995 to May 1998, Mr. Wright was Vice President
of Autonation, Inc. in Fort
Lauderdale, Florida. From February 1986 to
August 1995, Mr. Wright was the Chief Financial Officer of Hudson Management
Corporation, a regional waste collection and recycling firm. Mr.
Wright graduated from
Stetson University in 1975, with a Bachelor of Science
degree in Accounting.
Mark E. Tupper,
Director. Mr. Tupper joined us on February 1,
2007. Mr. Tupper has been the founder, Chief Executive Officer and
principal shareholder of Don Marcos Coffee Company, S.A. since its inception on
March 27, 2000. Mr. Tupper has been the founder, Chief Executive
Officer and principal shareholder of Tupper Centroamerica, S.A. since its
inception on July 9, 1982. Mr. Tupper was the Chief Executive Officer
and principal shareholder of Marina Ocotal, S.A. from October 1984 to August
1993. Mr. Tupper graduated from the American School in Switzerland
with studies in World & European History, the University of Aix-en-Provence
in France in European Politics & French Literature, and the Lewisham
Technical College of London, England in Mechanical Engineering.
Directors
serve until the next annual meeting or until their successors are qualified and
elected. Officers serve at the discretion of the Board of
Directors.
Family Relationships
Mark E. Tupper, one of our directors, is
the uncle of Earl T. Shannon, who is our President and one of our
directors.
Compliance
with Section 16(a) of the Exchange Act
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our directors
and certain officers, as well as persons who own more than 10% of a registered
class of our equity securities, (“Reporting Persons”) to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission.
Based
solely upon a review of the copies of such forms, we believe that all Reporting
Persons have complied on a timely basis with all filing requirements applicable
to them, except that our president and director, Earl T. Shannon, our chief
financial officer and director, Scott W. Bodenweber, our executive vice
president and director, Steven W. Hudson, our secretary and director, Peter W.
Wright, and our director, Mark E. Tupper each, filed one late report on Form 3 disclosing their
ownership interest in our company.
ITEM 10. EXECUTIVE
COMPENSATION.
Summary Compensation
Table
None of our officers or directors is
currently receiving any cash compensation for their
services.
Outstanding
Equity Awards at Fiscal Year-End
In order to compensate our officers and
directors, we enacted an Incentive and Nonstatutory Stock Option Plan on
February 1, 2007. Our stock option plan has a total of 5,000,000
shares reserved for issuance as stock options. All issued options are 100%
vested. Other than our stock option plan, we do not currently have
any arrangements or contracts pursuant to which our officers and directors are
compensated for any services, including any additional amounts payable for
committee participation or special assignments. No such
arrangements were in effect between us and our officers and directors for the
last completed fiscal year, either. As of the date of this
report, we have issued the following stock
options:
|
|
Option
Awards
|
|
Name
|
Number of
securities
underlying
unexercised options
(#)
exercisable
|
Number of
securities
underlying
unexercised
options (#)
unexercisable
|
Equity
incentive
plan awards:
Number of
securities
underlying
unexercised
unearned
options(#)
|
Option
exercise
price ($)
|
Option
expiration
date
|
|
Earl T.
Shannon
|
1,000,000
|
-0-
|
-0-
|
$0.005
|
02/01/17
|
|
Steven W.
Hudson
|
1,000,000
|
-0-
|
-0-
|
$0.005
|
02/01/17
|
|
Scott W.
Bodenweber
|
1,000,000
|
-0-
|
-0-
|
$0.005
|
02/01/17
|
|
Peter
Wright
|
1,000,000
|
-0-
|
-0-
|
$0.005
|
02/01/17
|
|
Mark E.
Tupper
|
1,000,000
|
-0-
|
-0-
|
$0.005
|
02/01/17
|
|
TOTAL
|
5,000,000
|
-0-
|
-0-
|
|
|
Compensation
of Directors
Our
Directors do not receive any cash compensation, but are entitled to
reimbursement of their reasonable expenses incurred in attending directors’
meetings.
We do not
have any audit, nominating, compensation or other committee of our Board of
Directors.
ITEM
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The
following table sets forth certain information regarding our shares of
outstanding common stock beneficially owned as of the date hereof by (i) each of
our directors and executive officers, (ii) all directors and executive officers
as a group, and (iii) each other person who is known by us to own beneficially
more than 5% of our common stock based upon 37,100,000 issued shares of common
stock.
Name
and Address of Beneficial Owners1
|
Amount
and Nature
of
Beneficial
Ownership
|
Percent
|
|
Earl
T. Shannon, Director, President
|
|
25.8%
|
|
Steven
W. Hudson, Director, Executive Vice President
|
|
19.3%
|
|
Scott
W. Bodenweber, Director, Chief Financial Officer
|
|
19.8%
|
|
Peter
Wright, Director, Secretary
|
|
3.1%
|
|
Mark
E. Tupper, Director
|
|
2.6%
|
|
All
executive officers and directors as a group (five persons)
|
26,900,000
|
63.9%
|
ITEM
12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.
Earl T. Shannon is a promoter of Don
Marcos as defined by Rule 405 of the Act. The only item of value received by Mr.
Shannon from Don Marcos is the stock he was issued by Don Marcos. Mr.
Shannon currently owns 8,825,000 shares of common stock and
1,000,000 options to purchase shares of
common stock of Don Marcos representing in the aggregate 25.8% of our outstanding shares.
Steven W. Hudson is a principal of
Hudson Capital Group, which furnishes us with office space, a value of
approximately $400 per month, on a rent-free basis.
1 C/o
our address, 1850 Southeast
17th Street, Suite 300, Ft. Lauderdale, FL 33316.
2 Except
as otherwise indicated, we believe that the beneficial owners of common stock
listed above, based on information furnished by such owners, have sole
investment and voting power with respect to such shares, subject to community
property laws where applicable. Beneficial ownership is determined in
accordance with the rules of the SEC and generally includes voting or investment
power with respect to securities. Shares of common stock subject to
options or warrants currently exercisable, or exercisable within 60 days, are
deemed outstanding for purposes of computing the percentage of the person
holding such options or warrants, but are not deemed outstanding for purposes of
computing the percentage of any other person.
3 Includes 1,000,000 options to purchase
shares of common stock at $0.005 per share until February 1,
2017.
4 Includes 1,000,000 options to purchase
shares of common stock at $0.005 per share until February 1, 2017 and 400,000
shares of common stock owned by family members.
5 Includes 1,000,000 options to purchase
shares of common stock at $0.005 per share until February 1, 2017 and 600,000
shares owned by family members.
6 Consists of 1,000,000 options to
purchase shares of common stock at $0.005 per share until February 1,
2017 and 200,000 shares owned by family
members.
7 Consists of 1,000,000 options to
purchase shares of common stock at $0.005 per share until February 1,
2017.
Don Marcos Coffee is grown, roasted and
packaged in Costa
Rica by the Don Marcos
Coffee Company, S.A., a Costa Rica company owned and operated by Mark E.
Tupper. Mark E. Tupper is the uncle of Earl T. Shannon, our President
and one of our directors. We have an exclusive distributorship
agreement with Don Marcos Coffee Company, S.A., the material terms of which are
described in Part I, Item
1, Description of Business—Sources and Availability of Raw
Materials and Principal Suppliers.
|
3.1
|
Articles
of Incorporation of Don Marcos Trading Co., filed May 11, 19998
|
|
3.2
|
Amendment
to Articles of Incorporation of Don Marcos Trading Co., filed February 6,
20038
|
|
3.3
|
Amendment
to Articles of Incorporation of Don Marcos Trading Co., filed February 14,
20078
|
|
3.4
|
Amendment
to Articles of Incorporation of Don Marcos Trading Co., filed May 4,
20078
|
|
3.5
|
Amended
and Restated Bylaws of Don Marcos Trading Co., dated February 2, 20078
|
|
10.1
|
Form of
Stock Purchase Agreement Used in Private Offering8
|
|
10.2
|
2007
Incentive and Nonstatutory Stock Option Plan, dated February 1, 20078
|
|
10.3
|
Distributorship
Agreement dated January 23, 20038
|
|
10.4
|
Stock
Purchase Agreement with Earl T. Shannon, dated December 12, 20079
|
|
10.5
|
Stock
Purchase Agreement with Steven W. Hudson, dated December 12, 20079
|
|
10.6
|
Stock
Purchase Agreement with Scott W. Bodenweber, dated December 12, 20079
|
|
14
|
Code
of Ethics
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant to the Securities Exchange Act of
1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
31.2
|
Certification
of Chief Financial Officer Pursuant to the Securities Exchange Act of
1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
32
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes Oxley Act of 2002
|
ITEM
14. PRINCIPAL
ACCOUNTANT FEES AND SERVICES.
Weaver
& Martin, LLC (“Weaver”)
Weaver
was our independent auditor and examined our financial statements for the year
ended December 31, 2007. Weaver performed the services listed below
and was paid the fees listed below for the year ended December 31,
2007.
8 Incorporated
by reference from our Registration Statement on Form SB-2, filed on May 17,
2007, as amended (Registration No. 333-142976).
9 Incorporated
by reference from our Current Report on Form 8-K, filed on December 14,
2007.
Weaver
was paid aggregate fees of approximately $900 for the year ended December 31,
2007 for professional services rendered for the audit of our annual financial
statements and for the reviews of the financial statements included in our
quarterly reports on Form 10-QSB during the third quarter of 2007.
Audit
Related Fees
Weaver
was not paid additional fees for the year ended December 31, 2007 for assurance
and related services reasonably related to the performance of the audit or
review of our financial statements.
Tax
Fees
Weaver
was not paid fees for the year ended December 31, 2007 or professional services
rendered for tax compliance, tax advice and tax planning during this fiscal year
period.
All
Other Fees
Weaver
was not paid any other fees for professional services during the year ended
December 31, 2007.
Kabani
& Company, Inc. (“Kabani”)
Kabani
was our independent auditor and examined our financial statements for the year
ended December 31, 2006. Kabani performed the services listed below
and was paid the fees listed below for the year ended December 31,
2006.
Kabani
was paid aggregate fees of approximately $19,000 for the year ended December 31,
2006 for professional services rendered for the audit of our annual financial
statements and for the reviews of the financial statements included in our
quarterly reports on Form 10-QSB during 2006 and the first two quarters of
2007.
Audit
Related Fees
Kabani
was not paid additional fees for the year ended December 31, 2006 for assurance
and related services reasonably related to the performance of the audit or
review of our financial statements.
Tax
Fees
Kabani
was not paid fees for the year ended December 31, 2006 or professional services
rendered for tax compliance, tax advice and tax planning during this fiscal year
period.
All
Other Fees
Kabani
was not paid any other fees for professional services during the year ended
December 31, 2006.
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, duly
authorized.
|
|
DON
MARCOS TRADING CO.
|
|
|
|
|
|
|
|
DATED:
March 31, 2008
|
By: /s/ Earl
T.
Shannon
|
|
|
Earl
T. Shannon
|
|
|
Director,
President
|
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
By:
/s/ Scott
W.
Bodenweber
|
|
|
Scott
W. Bodenweber
|
|
|
Director,
Chief Financial Officer
|
|
|
(Principal
Financial Officer and Principal Accounting
Officer)
|
WEAVER
& MARTIN
Report of Independent
Registered Public Accounting Firm
To the
Board of Directors and Stockholders
Don
Marcos Trading Co.
We have
audited the accompanying balance sheet of Don Marcos Trading Co. as of December
31, 2007, and the related statements of operations, changes in shareholders'
equity and cash flows for the year then ended. These financial statements are
the responsibility of Don Marcos Trading Co.'s management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Don Marcos Trading Co. as of
December 31, 2007, and the results of their operations and their cash flows for
the year then ended in conformity with accounting principles generally accepted
in the United States.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has suffered recurring losses and had negative cash
flows from operations that raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans in regard to these matters
are also described in the Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/S/
Weaver & Martin LLC
Weaver
& Martin LLC
Kansas
City, Missouri
March 31,
2008
| |
Certified
Public Accountants & Consultants
411
Valentine, Suite 300
Kansas
City, Missouri 64111
Phone:
(816) 756-5525
Fax:
(816) 756-2252
|
DON
MARCOS TRADING CO.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEET
DECEMBER
31, 2007
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
Cash
|
|
$ |
11,166 |
|
|
Inventory
|
|
|
4,255 |
|
|
|
|
|
|
|
|
TOTAL CURRENT
ASSETS
|
|
$ |
15,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
Accrued
accounting and legal expenses
|
|
$ |
9,466 |
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY (DEFICIT)
|
|
|
|
|
|
Preferred
stock, no stated value
|
|
|
|
|
|
Authorized
10,000,000 shares
|
|
|
|
|
|
Issued
and outstanding -0- shares
|
|
|
- |
|
|
Common
stock, no par value
|
|
|
|
|
|
Authorized
100,000,000 shares
|
|
|
|
|
|
Issued
and outstanding – 37,100,000 shares
|
|
|
187,454 |
|
|
Deficit
accumulated during the development stage
|
|
|
( 181,499 |
) |
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS’
EQUITY
|
|
|
5,955 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY
|
|
$ |
15,421 |
|
The
accompanying notes are an integral part of these financial
statements.
DON
MARCOS TRADING CO.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF OPERATIONS
FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006
AND
FOR THE PERIOD FROM MAY 11, 1999 TO DECEMBER 31, 2007
|
|
|
|
|
|
|
|
|
May
11, 1999
|
|
|
|
|
|
|
|
|
|
|
(Date
of Inception)
|
|
|
|
|
|
|
|
|
|
|
To
|
|
|
|
|
2007
|
|
|
2006
|
|
|
December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
132,650 |
|
|
|
14,664 |
|
|
|
181,499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
(LOSS)
|
|
$ |
( 132,650 |
) |
|
$ |
( 14,664 |
) |
|
$ |
( 181,499 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
(LOSS) PER COMMON SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
|
29,872,055 |
|
|
|
9,404,890 |
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements
DON
MARCOS TRADING CO.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF STOCKHOLDERS’ EQUITY
FOR
THE PERIOD FROM MAY 11, 1999
(INCEPTION)
TO DECEMBER 31, 2007
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Common Stock
|
|
|
During
The
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Development Stage
|
|
|
Total
|
|
|
MAY
11, 1999 (DATE OF INCEPTION)
Issuance
of common stock for cash
|
|
|
5,000 |
|
|
$ |
5,000 |
|
|
$ |
- |
|
|
$ |
5,000 |
|
|
Net
loss from inception to December 31, 1999
|
|
|
- |
|
|
|
- |
|
|
|
( 4,487 |
) |
|
|
( 4,487 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, DECEMBER
31, 1999
|
|
|
5,000 |
|
|
|
5,000 |
|
|
|
(
4,487 |
) |
|
|
513 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
contribution by stockholder
|
|
|
- |
|
|
|
10,000 |
|
|
|
- |
|
|
|
10,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the year ended December 31, 2000
|
|
|
- |
|
|
|
- |
|
|
|
( 7,781 |
) |
|
|
( 7,781 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, DECEMBER
31, 2000
|
|
|
5,000 |
|
|
|
15,000 |
|
|
|
(
12,268 |
) |
|
|
2,732 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)for the year ended December 31, 2001
|
|
|
- |
|
|
|
- |
|
|
|
( 1,565 |
) |
|
|
( 1,565 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE,
DECEMBER 31, 2001
|
|
|
5,000 |
|
|
|
15,000 |
|
|
|
(
13,833 |
) |
|
|
1,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
contribution by stockholder
|
|
|
- |
|
|
|
2,000 |
|
|
|
- |
|
|
|
2,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the year ended December 31, 2002
|
|
|
- |
|
|
|
- |
|
|
|
( 2,901 |
) |
|
|
( 2,901 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE,
DECEMBER 31, 2002
|
|
|
5,000 |
|
|
|
17,000 |
|
|
|
(
16,734 |
) |
|
|
266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
contribution by stockholder
|
|
|
- |
|
|
|
12,000 |
|
|
|
- |
|
|
|
12,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the year ended December 31, 2003
|
|
|
- |
|
|
|
- |
|
|
|
( 12,580 |
) |
|
|
( 12,580 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE,
DECEMBER 31, 2003
|
|
|
5,000 |
|
|
|
29,000 |
|
|
|
(
29,314 |
) |
|
|
(
314 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
contribution by stockholder
|
|
|
- |
|
|
|
4,000 |
|
|
|
- |
|
|
|
4,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the year ended December 31, 2004
|
|
|
- |
|
|
|
- |
|
|
|
( 3,845 |
) |
|
|
( 3,845 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE,
DECEMBER 31, 2004
|
|
|
5,000 |
|
|
|
33,000 |
|
|
|
(
33,159 |
) |
|
|
(
159 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
contribution by stockholder
|
|
|
- |
|
|
|
1,345 |
|
|
|
- |
|
|
|
1,345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the year ended December 31, 2005
|
|
|
- |
|
|
|
- |
|
|
|
( 1,026 |
) |
|
|
( 1,026 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE,
DECEMBER 31, 2005
|
|
|
5,000 |
|
|
|
34,345 |
|
|
|
(
34,185 |
) |
|
|
160 |
|
The
accompanying notes are an integral part of these financial
statements
DON
MARCOS TRADING CO.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF STOCKHOLDERS’ EQUITY (CONTINUED)
FOR
THE PERIOD FROM MAY 11, 1999
(INCEPTION)
TO DECEMBER 31, 2007
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Common Stock
|
|
|
During
The
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Development Stage
|
|
|
Total
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for services
|
|
|
16,495,000 |
|
|
$ |
3,635 |
|
|
$ |
- |
|
|
$ |
3,635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
contribution by stockholder
|
|
|
- |
|
|
|
1,000 |
|
|
|
- |
|
|
|
1,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the year ended December 31, 2006
|
|
|
- |
|
|
|
- |
|
|
|
( 14,664 |
) |
|
|
( 14,664 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE,
DECEMBER 31, 2006
|
|
|
16,500,000 |
|
|
|
38,980 |
|
|
|
(
48,849 |
) |
|
|
(
9,869 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for cash
|
|
|
20,600,000 |
|
|
|
103,000 |
|
|
|
- |
|
|
|
103,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
based compensation
|
|
|
- |
|
|
|
45,474 |
|
|
|
- |
|
|
|
45,474 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the year ended December 31, 2007
|
|
|
- |
|
|
|
- |
|
|
|
( 132,650 |
) |
|
|
( 132,650 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE,
DECEMBER 31, 2007
|
|
|
37,100,000 |
|
|
$ |
187,454 |
|
|
$ |
(181,499 |
) |
|
$ |
5,955 |
|
The
accompanying notes are an integral part of these financial
statements
DON
MARCOS TRADING CO.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF CASH FLOWS
FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006
AND
FOR THE PERIOD FROM MAY 11, 1999 TO DECEMBER 31, 2007
|
|
|
|
|
|
|
|
|
May
11, 1999
|
|
|
|
|
|
|
|
|
|
|
(Date
of Inception)
|
|
|
|
|
|
|
|
|
|
|
To
|
|
|
|
|
2007
|
|
|
2006
|
|
|
December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
$ |
(
132,650 |
) |
|
$ |
(
14,664 |
) |
|
$ |
(
181,499 |
) |
|
Adjustments
to reconcile net (loss) to net cash used by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for
services
|
|
|
- |
|
|
|
3,635 |
|
|
|
3,635 |
|
|
Stock
based compensation
|
|
|
45,474 |
|
|
|
- |
|
|
|
45,474 |
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory
|
|
|
(
4,255 |
) |
|
|
- |
|
|
|
(
4,255 |
) |
|
Accrued
accounting and legal expenses
|
|
|
( 534 |
) |
|
|
10,000 |
|
|
|
9,466 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
CASH USED BY OPERATING ACTIVITIES
|
|
|
( 91,965 |
) |
|
|
( 1,029 |
) |
|
|
( 127,179 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVIITES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for cash
|
|
|
103,000 |
|
|
|
- |
|
|
|
136,000 |
|
|
Cash
contributed by stockholder
|
|
|
- |
|
|
|
1,000 |
|
|
|
2,345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
103,000 |
|
|
|
1,000 |
|
|
|
138,345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
11,035 |
|
|
|
(
29 |
) |
|
|
11,166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BEGINNING
OF PERIOD
|
|
|
131 |
|
|
|
160 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
END
OF PERIOD
|
|
$ |
11,166 |
|
|
$ |
131 |
|
|
$ |
11,166 |
|
The
accompanying notes are an integral part of these financial
statements
DON
MARCOS TRADING CO.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF CASH FLOWS (CONTINUED)
FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006
AND
FOR THE PERIOD FROM MAY 11, 1999 TO DECEMBER 31, 2007
|
|
|
|
|
|
|
|
|
May
11, 1999
|
|
|
|
|
|
|
|
|
|
|
(Date
of Inception)
|
|
|
|
|
|
|
|
|
|
|
To
|
|
|
|
|
2007
|
|
|
2006
|
|
|
December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
PAID DURING THE YEAR FOR:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
$ |
45,474 |
|
|
$ |
- |
|
|
$ |
45,474 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for services
|
|
$ |
- |
|
|
$ |
3,635 |
|
|
$ |
3,635 |
|
The
accompanying notes are an integral part of these financial
statements
DON
MARCOS TRADING CO.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2007 AND 2006
NOTE
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of
Operations
Don
Marcos Trading Co. (“the Company”) is a development stage enterprise
incorporated on May 11, 1999 in the state of Florida. The Company has had no
significant operations since its inception. The Company’s only activities have
been organizational, directed at raising its initial capital and developing its
business plan.
The
original purpose of the Company was to be the sole importer and distributor of
Don Marcos coffee.
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 of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash and cash
equivalents
The
Company considers all highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.
Fair value of financial
instruments
For
certain of the Company’s instruments, including cash and accounts payable and
accrued expenses, the carrying amounts approximate fair value due to their short
maturities.
Net (Loss) Per
Share
The
Company adopted Statement of Financial Accounting Standards No. 128 that
requires the reporting of both basic and diluted earnings (loss) per share.
Basic earnings (loss) per share is computed by dividing net income (loss)
available to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted earnings (loss) per share reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock. In accordance with
FASB 128, any anti-dilutive effects on net income (loss) per share are
excluded.
DON
MARCOS TRADING CO.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2007 AND 2006
NOTE
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue
Recognition
The
Company will recognize revenue from product sales when shipment of product to
the customer has been made, which is when title passes. The Company will
estimate and record provisions for rebates, sales returns and allowances in the
period the sale is recorded. Shipping and handling charges will be included in
gross sales, with the related costs included in selling, general and
administrative expenses. For the years ended December 31, 2007 and 2006, the
Company had not generated any significant revenue.
Inventory
Inventory
is stated at the lower of cost (determined by the first-in, first-out method, or
market. Inventories are adjusted for estimated obsolescence and
written down to net realizable value based upon estimates of future demand,
technology developments, and market conditions.
Stock Based
Compensation
Effective
November 1, 2005, the Company adopted Statement of Financial Accounting
Standards (“SFAS”) No. 123(R), “Share-Based Payment: An Amendment of FASB
Statements No. 123 and 95” using the modified prospective method. Under this
method, compensation cost is recognized on or after the effective date for the
portion of outstanding awards, for which the requisite service has not yet been
rendered, based on the grant date fair value of those awards. For stock-based
awards issued on or after November 1, 2005, the Company recognizes the
compensation cost on a straight-line basis over the requisite service period for
the entire award. Measurement and attribution of compensation cost for awards
that are unvested as of the effective date of SFAS No. 123(R) are based on the
same estimate of the grant-date or modification-date fair value and the same
attribution method used previously under SFAS No. 12.
Advertising
Advertising
costs are expensed as incurred and included in operating expenses. There were no
advertising expenses for the years ended December 31, 2007 and 2006 and for the
period from May 11, 1999 (inception) to December 31, 2007.
Development Stage
Enterprise
The
Company is a development stage enterprise, as defined in Financial Accounting
Standards Board No.7. The Company‘s planned principal operations have not
commenced, and, accordingly, no revenue has been derived during this
period.
DON
MARCOS TRADING CO.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2007 AND 2006
NOTE
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting
Pronouncements
In July
2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes” (“FIN 48”). FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in enterprises’ financial statements in
accordance with SFAS No. 109, “Accounting for Income Taxes”. FIN 48
prescribes a recognition threshold and measurement attributable for the
financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. FIN 48 also provides guidance
on derecognizing, classification, interest and penalties, accounting in interim
periods, disclosures and transitions. FIN 48 is effective for fiscal
yeas beginning after December 15, 2006. The Company is currently
reviewing the effect, if any, FIN 48 will have on its financial position and
operations.
In
September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’ (“SFAS No. 157”).
SFAS No. 157 defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles (GAAP), expands disclosures
about fair value measurements, and applies under other accounting pronouncements
that require or permit fair value measurements. SFAS No. 157 does not
require any new fair value measurements, however the current FASB anticipates
that for some entities, the application of SFAS No. 157 will change current
practice. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007. The Company is
currently reviewing the effect, if any SFAS No. 157 will have on its financial
position and operations.
In
September 2006, FASB issued SFAS 158 ‘Employers' Accounting for Defined Benefit
Pension and Other Postretirement Plans--an amendment of FASB Statements No. 87,
88, 106, and 132(R)’ This Statement requires employers to recognize the
overfunded or underfunded status of a defined benefit postretirement plan (other
than a multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded status in the year in
which the changes occur through comprehensive income of a business entity or
changes in unrestricted net assets of a not-for-profit organization. This
Statement also requires an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. The provisions of SFAS No. 158 are effective for employers with
publicly traded equity securities is required to initially recognize the funded
status of a defined benefit postretirement plan and to provide the required
disclosures as of the end of the fiscal year ending after December 15,
2006. The adoption of this statement is not expected to have a
material effect on the Company’s future reported financial position or results
of operations.
DON
MARCOS TRADING CO.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2007 AND 2006
NOTE
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In
February 2007, FASB issued FASB Statement No. 159 (“SFAS 159) - The Fair Value
Option for Financial Assets and Financial Liabilities including an amendment of
SFAS 115. This statement permits entities to choose to measure many
financial instruments and certain other items at fair value. The
objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions. This statement is expected to expand the use
of fair value measurement objectives for accounting for financial
instruments. This statement is effective for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. Early
adoption is permitted subject as of the beginning of a fiscal year that begins
on or before November 15, 2007, provided the entity also elects to apply the
provisions of FASB statement No. 157, Fair value measurements. The
Company is currently evaluating the impact of SFAS 159 on its financial
statements
The
accompanying financial statement have been prepared assuming that the Company
will continue as a going concern, which contemplates the recoverability of
assets and the satisfaction of liabilities in the normal course of
business.
The
Company’s development activities since inception have been financially sustained
through stockholder contribution to the Company and issuance of common stock.
The Company may raise additional funding to continue its operations, through
contributions from the current shareholders and stock issuance to other
investors.
The
ability of the Company to continue as a going concern is dependent upon its
ability to raise additional capital from the sale of common stock and,
ultimately, the achievement of significant operating revenues. The accompanying
financial statements do not include any adjustments that might be required
should the Company be unable to recover the value of its assets or satisfy its
liabilities.
The
balance of $4,255 at December 31, 2007 consists of bags purchased for future
packaging of coffee products.
The
Company has not assigned any preference rights to the preferred
stock.
DON
MARCOS TRADING CO.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2007 AND 2006
The
Company effected a 1:5 forward split of the stock in February, 2007. All per
share amounts and number of shares outstanding have been retroactively restated
for this adjustment.
On March
14, 2007, the Company offered a private placement of 16,400,000 shares of common
stock, no par value, with an aggregate value of $82,000.
The
Company effected a 1:10 forward split of the stock on March 30, 2007. All per
share amounts and number of shares outstanding have been retroactively restated
for this adjustment.
On
December 14, 2007, the Company sold 4,200,000 shares of common stock, no par
value, with an aggregate value of $21,000 to three shareholders of the
Company.
F-12