DMC Beverage Form 10-Q

See accompanying notes to financial statements

DMC Beverage Corp.

Notes to Financial Statements

June 30, 2014

(Unaudited)

Note 1 – Organization, Presentation and Going Concern

Organization

DMC Beverage Corp. (the “Company”) was incorporated in Delaware on November 1, 2002 as Destiny Media Corp. (“Destiny”).

On July 1, 2012, GBX Companies, Inc. (“GBX”) and Destiny entered into a Merger Agreement pursuant to which Destiny issued 11,092,320 shares of its restricted Common Stock in exchange for 100% of the outstanding shares of GBX common stock. Each GBX shareholder received 15 shares of Destiny common stock for each share of GBX stock held on the merger date. As a result of the Merger Agreement, former shareholders of GBX owned 86% of the Company and our principal business became the business of GBX, the juice beverage manufacture and sales industry. After the merger, the Company changed its name to DMC Beverage Corp (“DMC”), to reflect the Company’s focus on juice.

The merger has been accounted for as a reverse acquisition with GBX as the accounting acquirer.

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial statement presentation and in accordance with Form 10-Q. Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position and results of operations and cash flows. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year.

These unaudited financial statements should be read in conjunction with the 2013 audited annual financial statements included in the amended Annual Report on Form 10 K/A, filed with the U.S. Securities and Exchange Commission (“SEC”) on May 5, 2014.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred a net loss of $196,177 and $194,548 for the six months ended June 30, 2014 and 2013. The Company has a stockholders’ deficit of $1,665,626 at June 30, 2014. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to generate revenues, its ability to continue to raise investment capital, and implement its business plan. No assurance can be given that the Company will be successful in these efforts.

These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.

Note 2 – Property and Equipment, net

Property and equipment at June 30, 2014 and December 31, 2013 consisted of the following:


	June 30,	December 31,
	2014	2013
Machinery and equipment	$ 18,451	$ 18,451
Office equipment	5,562	5,562
	24,013	24,013
Less accumulated depreciation	(12,658)	(11,074)
Property and equipment, net	$ 11,355	$ 12,939

Depreciation expense was $1,584 and $1,552 for the six months ended June 30, 2014 and 2013, respectively.

Management periodically reviews the valuation of long-lived assets for potential impairments. Management has not recognized an impairment of these assets to date, and does not anticipate any negative impact from known current business developments.

Note 3 – Contractor Liabilities

At June 30, 2014 and December 31, 2013 contractor liabilities totaled $-0- and $214,000, respectively. These amounts are accrued under consulting agreements as deferred contract labor and employment agreement entered into during 2012. During the six months ended June 30, 2014, $214,000 of contractor liabilities were converted into 535,000 shares of the Company’s restricted common stock, which remains issuable at June 30, 2014. As of June 30, 2014 and December 31, 2013, amounts recorded in the amount of, $-0- and $205,194, respectively were due to related parties.

Note 4 – Coupon Reimbursement Liabilities

Amounts included in the account were coupon redemptions received by third party coupon clearing houses and submitted to the Company for payment. Upon being unpaid by the Company, the third party coupon clearing houses charged redemption amounts back to the customers of the Company. The customers then billed the Company for the coupon amounts not honored. During the six months ended June 30, 2104, $99,392 were deemed to be expired and credited to operating expenses.

Note 5 – Line-of-Credit and Notes Payable – Related Parties

At June 30, 2014 and December 31, 2013, a line-of-credit and notes payable to related parties consisted of the following:

Note 9 – Commitments and Contingencies

Operating Lease Commitments

The Company leases executive office space for its corporate office on a month to month basis and can be terminated with a thirty day notice. Base rent is $225 per month. The Company believes this office space is satisfactory for its current needs. Rent expense for the six months ended June 30, 2014 and 2013 was $1,875 and $-0-, respectively.

Security Interests in Common Stock

As of June 30, 2014 and December 31, 2013, related party note holders held security interests in 20,000 and 269,091 shares of the Company’s common stock as collateral to notes payable totaling $5,000 and $171,000, respectively.

Legal Matters

litigation verdicts could have a material effect on the Company’s financial position or results of operations. Management, in consultation with legal counsel, has addressed known assertions and predicted unasserted claims below.

At June 30, 2014 and December 31, 2013, included in accounts payable there were balances due to C.H. Robinson Worldwide, Inc., Echo Global Logistics and Golden 100/Jouge Inc. of $154,390, $64,699 and $96,147, respectively. These entities have initiated legal proceedings. The debt to C.H. Robinson is transportation debt of 60+ days under which the payable was uncovered when funding diminished. The debt to Echo Global is a disputed transportation debt regarding their failure to perform under the contract. Golden 100/Jouge is a disputed debt regarding their failure to share expenses under the contract. The current liability has been recorded in full, but no estimation of final outcome for accrued interest, legal costs or other judgment costs resulting from the legal proceedings has been evaluated or accrued. The Company is unaware of any other current or pending lawsuits; however, given the number of overdue balances it is at least reasonably possible that other lawsuits may follow.

Note 10 – Subsequent Events

On July 28, 2014, the Company formed CoolJuice Beverage Company, a Colorado corporation, as a wholly-owned subsidiary.

The Company has evaluated subsequent events through the date the financial statements were issued and filed with the SEC. The Company has determined that there are no events that warrant disclosure or recognition in the consolidated financial statements.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements made in this Form 10-Q are "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate and, therefore, there can be no assurance the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

The forward-looking statements included in this Form 10-Q and referred to elsewhere are related to future events or our strategies or future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "believe," "anticipate," "future," "potential," "estimate," "encourage," "opportunity," "growth," "leader," "expect," "intend," "plan," "expand," "focus," "through," "strategy," "provide," "offer," "allow," commitment," "implement," "result," "increase," "establish," "perform," "make," "continue," "can," "ongoing," "include" or the negative of such terms or comparable terminology. All forward-looking statements included in this Form 10-Q are based on information available to us as of the filing date of this report, and the Company assumes no obligation to update any such forward-looking statements, except as required by law. Our actual results could differ materially from the forward-looking statements.

Company Overview

DMC Beverage Corp. is in the juice beverage manufacture and sales industry, under the brand name “CoolJuice”.

CoolJuice is an all-natural, healthy, vitamin and calcium enhanced, 100% fruit juice targeting kids under 16, their gatekeepers, and young adults. The demand for healthy beverage products for children and families will be filled through our efforts and distribution of the CoolJuice products. CoolJuice has created a substitute for the mass distributed lessor quality juice and beverage products available on grocery shelves today, both refrigerated and shelf stable.

CoolJuice is an all-natural, gluten-free, vitamin and calcium fortified 100% juice blend family with zero artificial ingredients, sweeteners or preservatives sold in both the chilled juice / dairy case and the ambient juice aisle

•

All-natural, gluten-free

•

100% fruit juice blends

•

Vitamins A, C & D, calcium and iron

•

2 servings of fruit in every 8oz glass

•

Exceeds national nutrition standards

•

No high fructose corn syrup

•

No preservatives

•

No added sugars or sweeteners

•

No artificial colors

•

No artificial flavors

Recent federal studies indicate for the first time in history, young people have a lower life expectancy than their parents, primarily due to unhealthy diets and sedentary lifestyles. Many of today's popular beverage drinks, with added sugar, have been linked to childhood obesity and juvenile diabetes, consequently causing a national focus on healthier beverage alternatives.

The market for juice products in the U.S. is a multi-billion dollar industry and continues to be a high-growth product category, especially for all natural products like CoolJuice. The U.S. market for children’s food and drink has grown in value by 50 percent from $16.4B in 2007 to $26.8B in 2010 according to a new report from New Nutrition Business. While the World market for juice products is growing negligibly to $60B, the $1 billion US Food, Drug & Mass natural juices market continues to grow 7% p.a. as nutritional awareness increases.

Company History

DMC Beverage Corp. was incorporated in Delaware on November 1, 2002 as Destiny Media Corp. (“Destiny”).

On July 28, 2014, the Company formed CoolJuice Beverage Company, a Colorado corporation, as a wholly-owned subsidiary.

Plan of Operation

The CoolJuice business plan is to build a profitable business in the all-natural, better-for-you, nutritious arena, with the intent of selling in the next six to five years to a major consumer packaged goods company.

Results of Operations

For the three months ended June 30, 2014 compared to the three months ended June 30, 2013

Revenues

The Company had no revenues for the three months ended June 30, 2014 and 2103.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the six months ended June 30, 2014 were $856 compared to $94,475 for the three months ended June 30, 2013, a decrease of $93,619 or 99%. The decrease in expenses during 2014 was attributable to a recovery of expense for coupons which expired during the three months ended June 30, 2014 of $99,392. Selling, general and administrative expenses incurred during the six months ended June 30, 2014 consisted of: (i) officers’ salaries of $60,000 (2013: $42,000); (ii) stock based compensation and stock option expenses of $23,600 (2013: $37,600); (iii) audit and legal fees of $9,941 (2013: $-0-); and (iv) other overhead expenses of -$92,685 (2013: $14,875).

Our net loss from operations for three months ended June 30, 2014 was $856 as compared to $94,475 for the three months ended June 30, 2013.

Net Loss

Other expenses incurred during the three months ended June 30, 2014 included: interest expense of $34,071 (2013: $35,162); offset by interest income of $249 (2013: $100).

Our net loss for the three months ended June 30, 2014 was $34,678 compared to $129,537 for the three months ended June 30, 2013.

For the six months ended June 30, 2014 compared to the six months ended June 30, 2013

Revenues

The Company had no revenues for the six months ended June 30, 2014 and 2013.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the six months ended June 30, 2014 were $134,773 compared to $131,808 for the six months ended June 30, 2013, an increase of $2,965 or 2%. The increase in expenses during 2014 was attributable to efforts to re-launch the Company’s operations and in becoming a public reporting company, offset by a recovery of expense for coupons which expired during the three months ended June 30, 2014 of $99,392. Selling, general and administrative expenses incurred during the six months ended June 30, 2014 consisted of: (i) officers’ salaries of $120,000 (2013: $84,000); (ii) stock based compensation and stock option expenses of $64,950 (2013: $38,200); (iii) audit and legal fees of $37,941 (2013: $500); and (iv) other overhead expenses of -$88,118 (2013: $9,108).

Our net loss from operations for the six months ended June 30, 2014 was $134,773 as compared to $131,808 for the six months ended June 30, 2013.

Net Loss

Other expenses incurred during the six months ended June 30, 2014 included: interest expense of $61,879 (2013: $62,953); offset by interest income of $475 (2013: $213).

Our net loss for the six months ended June 30, 2014 was $196,177 compared to $194,548 for the six months ended June 30, 2013.

Liquidity and Capital Resources

Overview

The Company historically has utilized various credit facilities to fund working capital needs, acquisitions and capital expenditures. Future cash needs for working capital, acquisitions and capital expenditures may require management to seek additional equity or obtain additional credit facilities. The sale of additional equity could result in additional dilution to the Company's shareholders. A portion of the Company's cash may be used to acquire or invest in complementary businesses or products or to obtain the right to use complementary technologies. From time to time, in the ordinary course of business, the Company evaluates potential acquisitions of such businesses, products or technologies.

For the six months ended June 30, 2014, we funded our operations through borrowings from third parties, while for the six months ended June 30, 2013, we funded our operations through sales of our common stock and borrowings from related parties. Our principal use of funds during the six months ended June 30, 2014 has been for general corporate expenses. Management believes that based on the current level of operations and cash flow from operations, the Company will not have sufficient liquidity to fund anticipated expenses and other commitments for the next twelve months without issuing additional debt or equity securities.

Liquidity and Capital Resources during the Six Months ended June 30, 2014 compared to the Six Months ended June 30, 2013

As of June 30, 2014, we had cash of $358 and a deficit in working capital of $1,665,626. The Company used cash in operations of $21,518 for the six months ended June 30, 2014 compared to cash used in operations of $5,263 for the six months ended June 30, 2013. The cash used in operating activities for the six months ended June 30, 2014 was primarily attributable to the Company's net loss of $196,177, offset by depreciation of $1,584, stock based compensation of $63,750, stock option expense of $1,200, interest accrued on notes payable of $43,129, accretion of debt discounts as interest of $18,750, and the net changes in operating assets and liabilities of $46,246. Cash used in operations for the six months ended June 30, 2013 was primarily attributable to the Company's net loss of $194,548, offset by depreciation of $1,552, stock issued as debt discount for loan inducement of $5,001, stock based compensation of $37,000, stock option expense of $1,200, interest accrued on notes payable of $57,952, and net changes in operating assets and liabilities of $76,560.

Cash used in investing activities was $8,393 and $7,885 for the six months ended June 30, 2014 and 2013, respectively, and consisted entirely of advances to related parties.

Cash from financing activities was $30,000 and $31,289 for the six months ended June 30, 2014 and 2013, respectively. Cash from in financing activities for the six months ended June 30, 2014 included $30,000 of proceeds from the issuance of notes payable. Cash from financing activities for the six months ended June 30, 2013 include $11,265 from the sale of common stock, borrowings from related parties of $20,000 and $12 from stock options exercised.

At June 30, 2014, we had a cash balance of $358. We anticipate cash needs of approximately $75,000 to sustain our current level of operations. On February 14, 2014, we received effectiveness of our Registration Statement on Form S-1. We had registered up to 8,000,000 shares of our common stock to be sold at a proposed offering price of $.50 per share for an aggregate of $4,000,000. As we were unable to raise capital from the offering, we terminated the registration statement and deregistered all of the securities that were unsold under the registration statement. We are currently evaluating alternative sources to raise capital.

Should we be able to raise the necessary capital, we plan to spend approximately $2,500,000 in the next twelve months to carry out our business plan in manufacture and distributing the CoolJuice product. We presently do not have sufficient financing to enable us to complete these activities and will require additional financing to continue our business plan in the future. Our actual expenditures on these activities will depend on the amount of funds we have available as a result of our financing efforts. There is no assurance that we will be able to raise the necessary financing.

On January 20, 2014, the Company issued a $5,000 unsecured convertible promissory note to Gerald Bender. The note bears interest at 12% per annum, is due January 20, 2015, and is convertible at $0.40 per share. As an inducement to making the loan, the Company has agreed to issue 12,500 shares of its restricted common stock.

On January 21, 2014, the Company issued a $25,000 unsecured convertible promissory note to Kim and John Rodell. The note bears interest at 12% per annum, is due January 21, 2015, and is convertible at $0.40 per share. As an inducement to making the loan, the Company has agreed to issue 62,500 shares of its restricted common stock.

On January 31 2014, the Company and Rachel Moore entered into a Promissory Note Conversion and Common Stock Purchase Agreement (the “Agreement”). Under terms of the Agreement, the Company will issue 22,015 shares of its restricted common stock in conversion of the promissory note of $8,806.

On January 31, 2014, the Company and Al Restaino entered into a Promissory Note Conversion and Common Stock Purchase Agreement (the “Agreement”). Under terms of the Agreement, the Company will issue 21,738 shares of its restricted common stock in conversion of the promissory note and accrued interest aggregating $8,695.

On February 22, 2014, the Company and Shelimar Investments Ltd. entered into a Promissory Note Conversion and Common Stock Purchase Agreement (the “Agreement”). Under terms of the Agreement, the Company will issue 473,894 shares of its restricted common stock in conversion of the promissory note and accrued interest aggregating $189,558.

On February 22, 2014, the Company and Juan Carlos Sabillion Davila entered into a Promissory Note Conversion and Common Stock Purchase Agreement (the “Agreement”). Under terms of the Agreement, the Company will issue 37,500 shares of its restricted common stock in conversion of the promissory note and accrued interest aggregating $15,000.

On March 6, 2014, the Company and George Gamble entered into a Promissory Note Conversion and Common Stock Purchase Agreement (the “Agreement”). Under terms of the Agreement, the Company will issue 23,835 shares of its restricted common stock in conversion of the promissory note and accrued interest aggregating $9,534.

On March 31 2014, the Company and Robert Paladino entered into a Promissory Note Conversion and Common Stock Purchase Agreement (the “Agreement”). Under terms of the Agreement, the Company will issue 299,696 shares of its restricted common stock in conversion of the promissory note of $119,878.

On March 31 2014, the Company and Teresa Poletz entered into a Promissory Note Conversion and Common Stock Purchase Agreement (the “Agreement”). Under terms of the Agreement, the Company will issue 140,000 shares of its restricted common stock in conversion of the promissory note of $56,000.

On April 1, 2014, the Company and Gerald Bender entered into a Promissory Note Conversion and Common Stock Purchase Agreement (the “Agreement”). Under terms of the Agreement, the Company will issue 12,787 shares of its restricted common stock in conversion of the promissory note and accrued interest of $5,115.

On April 1, 2014, the Company and Kim Rodell entered into a Promissory Note Conversion and Common Stock Purchase Agreement (the “Agreement”). Under terms of the Agreement, the Company will issue 63,939 shares of its restricted common stock in conversion of the promissory note and accrued interest of $25,575.

On June 27, 2014, the Company and Donald Slater entered into a Promissory Note Conversion and Common Stock Purchase Agreement (the “Agreement”). Under terms of the Agreement, the Company will issue 97,500 shares of its restricted common stock in conversion of contractor liabilities of $39,000.

On June 27, 2014, the Company and Alfred Restaino entered into a Promissory Note Conversion and Common Stock Purchase Agreement (the “Agreement”). Under terms of the Agreement, the Company will issue 357,237 shares of its restricted common stock in conversion of the promissory note and accrued interest of $142,895.

Going Concern

Our independent auditors included an explanatory paragraph in their report on the accompanying financial statements regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

Our financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/ or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due.

The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that we will be able to continue as a going concern. Our financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

There is no assurance that our operations will be profitable. Our continued existence and plans for future growth depend on our ability to obtain the additional capital necessary to operate either through the generation of revenue or the issuance of additional debt or equity.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of 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. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions and

conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.

See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2, “Summary of Significant Accounting Policies” in our audited financial statements as of and for the year ended December 31, 2013, included in our amended Annual Report on Form 10-K/A filed with the U.S. Securities and Exchange Commission (“SEC”) on May 5, 2014.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The disclosure required under this item is not required to be reported by smaller reporting companies.

Item 4. Controls and Procedures

(a)

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by the Company's management, with the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act")) as of June 30, 2014. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, the Company's management concluded, as of the end of the period covered by this report, that the Company's disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission's rules and forms, and that such information was accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.

(b)

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

During the course of business, litigation commonly occurs. From time to time the Company may be a party to litigation matters involving claims against the Company. The Company operates in a highly regulated industry and employs personnel which may inherently lend itself to legal matters. Management is aware that litigation has associated costs and that results of adverse litigation verdicts could have a material effect on the Company’s financial position or results of operations. Management, in consultation with legal counsel, has addressed known assertions and predicted unasserted claims below.

ITEM 1A. RISK FACTORS

Not required for smaller reporting companies.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On March 31, 2014, the Company and Robert Paladino entered into a Promissory Note Conversion and Common Stock Purchase Agreement (the “Agreement”). Under terms of the Agreement, the Company will issue 299,696 shares of its restricted common stock in conversion of the promissory note of $119,878.

On March 31, 2014, the Company and Teresa Poletz entered into a Promissory Note Conversion and Common Stock Purchase Agreement (the “Agreement”). Under terms of the Agreement, the Company will issue 140,000 shares of its restricted common stock in conversion of the promissory note of $56,000.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The Company is in default with several of its noteholders as reflected below and disclosed within this report in Notes 5 and 6 of the Notes to the Financial Statements dated June 30, 2014.


Susanne Woods	$ 23,963
Susanne Woods	10,000
Sean McBride	79,500
David Sample	50,000
	$ 163,463

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit 31* - Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32* - Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS** XBRL Instance Document

101.SCH** XBRL Taxonomy Extension Schema Document

101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**. XBRL Taxonomy Extension Definition Linkbase Document

101.LAB** XBRL Taxonomy Extension Label Linkbase Document

101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith

**XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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.

DMC Beverage Corp.


Delaware		01-0638346
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)


Large accelerated filer [ ]		Non-accelerated filer [ ]
Accelerated filer [ ]		Smaller reporting company [x]


	June 30,	December 31,
	2014	2013
	(unaudited)
ASSETS
Current assets:
Cash	$ 358	$ 269

Total current assets	358	269

Property and equipment, net	11,355	12,939

Total assets	$ 11,713	$ 13,208

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$ 855,015	$ 756,935
Accrued expenses	320,279	281,115
Contractor liabilities	-	214,000
Coupon reimbursement liabilities	205,552	304,944
Accrued interest	96,030	154,300
Due to related parties	-	19,218
Line-of-credit and notes payable - related parties	150,463	395,901
Notes payable	50,000	60,000
Total current liabilities	1,677,339	2,186,413

Other liabilities:	-	-
Total liabilities	1,677,339	2,186,413

Commitments and contingencies

Stockholders' equity:

Preferred stock, 50,000,000 shares authorized, $0.0001 par value, no shares issued or outstanding	-	-
Common stock, $0.0001 par value, 2,000,000,000 shares authorized, 13,642,391 and 13,642,391 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively	1,364	1,364
Additional paid-in-capital	3,504,793	3,503,593
Common stock issuable	702,556	-
Retained earnings	(5,874,339)	(5,678,162)
Total stockholders' equity	(1,665,626)	(2,173,205)

Total liabilities and stockholders' equity	$ 11,713	$ 13,208


	For the Three Months Ended		For the Six Months Ended
	June 30,		June 30,
	2014	2014	2013	2013

Sales, gross	$ -	$ -	$ -	$ -
Discounts	-	-	-	-

Sales, net of discounts	-	-	-	-

Cost of Sales	-	-	-	-

Gross profit (loss)	-	-	-	-

Selling, general and administrative expenses	856	94,475	134,773	131,808

Net loss from operations	(856)	(94,475)	(134,773)	(131,808)

Other income (expense):
Interest income	249	100	475	213
Interest expense	(34,071)	(35,162)	(61,879)	(62,953)
Total other income (expense)	(33,822)	(35,062)	(61,404)	(62,740)

Net loss before income taxes (benefit)	(34,678)	(129,537)	(196,177)	(194,548)

Provision (benefit) for income taxes	-	-	-	-

Net loss	$ (34,678)	$(129,537)	$(196,177)	$(194,548)

Net loss per common share - Basic and diluted	$ (0.00)	$ (0.01)	$ (0.01)	$ (0.01)

Weighted average number of common shares outstanding during the period - Basic and diluted	13,642,391	13,368,194	13,642,194	13,272,512


	For the Six Months Ended
	June 30,
	2013	2013

Cash flows from operating activities:
Net loss	$ (196,177)	$ (194,548)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation	1,584	1,552
Stock issued as debt discount for loan inducement	-	5,001
Stock based compensation	63,750	37,000
Stock option expense	1,200	1,200
Issuance of notes payable for financing fees	-	10,020
Interest accrued on notes payable	43,129	57,952
Accretion of debt discount as interest	18,750	-
Changes in operating assets and liabilities:
Accounts payable	98,080	1,303
Accrued expenses	47,558	85,807
Coupon reimbursement liabilities	(99,392)	-
Contractor liabilities	-	(10,550)
Net cash used in operating activities	(21,518)	(5,263)

Cash flows provided by (used in) investing activities:
Cash advanced to related parties, net	(8,393)	(7,885)
Net cash used in investing activities	(8,393)	(7,885)

Cash flows provided by (used in) financing activities:
Proceeds from the sale of common stock	-	11,265
Stock options exercised	-	24
Proceeds from issuance of notes payable	30,000	-
Proceeds from issuance of notes payable – related parties	-	20,000
Net cash provided by financing activities	30,000	31,289

Net decrease in cash	89	18,141

Cash at beginning of period	269	2,905

Cash at end of period	$ 358	$ 21,046



		Page
Item 1. Financial Statements (Unaudited)		4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3. Quantitative and Qualitative Disclosure About Market Risk		25
Item 4. Controls and Procedures		25



Item 1. Legal Proceedings		26
Item 1A. Risk Factors		26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		26
Item 3. Defaults upon Senior Securities		28
Item 4. Mine Safety Disclosures		28
Item 5. Other Information		28
Item 6. Exhibits		28

SIGNATURES		29


	March 31,
	2013	2013

Supplemental disclosure of cash flow information:

Cash paid for interest	$ -	$ -

Cash paid for taxes	$ -	$ -

Non-cash investing and financing activities:

Conversion of note payable and accrued interest to common stock:
Notes payable - related parties	$ (257,439)	$(10,020)
Notes payable	$ (40,000)	$ -
Accrued interest	$ (89,399)	$ (419)
Common stock	$ -	$ 10
Additional paid in capital	$ -	$ 10,429
Common stock issuable	$ 386,838	$ -

Conversion of contractor liabilities and amounts due to related parties to common stock:
Contractor liabilities	$ (214,000)	$ -
Due to related parties	$ (19,218)	$ -
Common stock issuable	$ 233,218	$ -

Common stock issuable as debt discount on notes payable:
Notes payable (debt discount)	$ (18,750)	$ -
Common stock issuable	$ 18,750	$ -

Assignment of notes payable:
Notes payable – related parties	$ (20,000)	$ -
Accrued interest	$ (12,000)	$ -
Notes payable – related parties	$ 32,000	$ -


	June 30, 2014	December 31, 2013
Promissory note to Roger Shorthill, a shareholder of the Company, dated June 22, 2013, in the amount of $5,000, bearing interest at 60% and is due the earlier of June 22, 2014 or upon the Company receiving $500,000 in funding from a lender. On June 27, 2014, the note balance and accrued interest of $3,000 was assigned to Robert Paladino.	-	5,000

Promissory note to LeeAnna Marchel, a shareholder of the Company, dated June 22, 2013, in the amount of $5,000, bearing interest at 60% and is due the earlier of June 22, 2014 or upon the Company receiving $500,000 in funding from a lender. On June 27, 2014, the note balance and accrued interest of $3,000 was assigned to Robert Paladino	-	5,000

Promissory note to Rick and Cyndi DeGarlais, shareholders of the Company, dated June 23, 2013, in the amount of $5,000, bearing interest at 60% and is due the earlier of June 23, 2014 or upon the Company receiving $500,000 in funding from a lender.	5,000	5,000

Promissory note to Alfred Restaino, Jr., shareholders of the Company, dated June 23, 2013, in the amount of $5,000, bearing interest at 60% and is due the earlier of June 23, 2014 or upon the Company receiving $500,000 in funding from a lender. On June 27, 2014, the note balance and accrued interest of $3,000 was assigned to Robert Paladino	-	5,000

Promissory note to Teresa Poletz, a shareholder of the Company, dated June 26, 2013, in the amount of $5,000, bearing interest at 60% and is due the earlier of June 26, 2014 or upon the Company receiving $500,000 in funding from a lender. On June 27, 2014, the note balance and accrued interest of $3,000 was assigned to Robert Paladino.	-	5,000

Promissory note to Shelimar, dated July 8, 2013, in the amount of $40,000 and bearing interest at 8% and due the earlier of July 8, 2014 or upon the Company receiving $500,000 in funding from a lender. During the six months ended June 30, 2014, the note and accrued interest totalling $1,974 was converted into 104,935 shares of the Company's common stock, which remains issuable at June 30, 2014.	-	40,000
Promissory note to Robert Paladino, an officer and shareholder of the Company, dated June 27, 2014, in the amount of $32,000, which bears no interest and is due upon the Company receiving $500,000 in funding from a lender.	32,000	-
	150,463	395,901
Less current portion	(150,463)	(395,901)
Line-of-credit and notes payable - related parties, net of current portion	$ -	$ -


	June 30, 2014	December 31, 2013
Convertible promissory note to David Sample dated April 27, 2012, in the amount of $50,000, bearing interest at 18% and was due on October 27, 2012. The note is in default and is accruing interest at a default rate of 24% since the date of default. The note is convertible at the option of the lender into shares of the Company's common stock at a conversion rate of $0.10 per share.	$ 50,000	$ 50,000

Promissory note to Juan Carlos Sabillon Davila dated July 18, 2013, in the amount of $5,000, with a flat interest fee of $5,000 and is due the earlier of July 18, 2014 or upon the Company receiving $500,000 in funding from a lender. During the six months ended June 30, 2014, the note and accrued interest totaling $5,000 was converted into 37,500 shares of the Company’s common stock, which remains issuable at June 30, 2014.	-	10,000

Convertible promissory note to Gerald Bender dated January 20, 2014, in the amount of $5,000, bearing interest at 12% and is due on January 20, 2015. The note was convertible at the option of the lender into shares of the Company’s common stock at a conversion rate of $0.40 per share. 12,500 shares of the Company’s common stock, valued at $3,125, are issuable at June 30, 2014 as an inducement to make the loan, which was accounted for as a debt discount. During the six months ended June 30, 2014, the note and accrued interest totaling $115 was converted into 12,787 shares of the Company’s common stock, which remains issuable at June 30, 2014.	-	-

Convertible promissory note to Kim and John Rodell dated January 21, 2014, in the amount of $25,000, bearing interest at 12% and is due on January 21, 2015. The note is convertible at the option of the lender into shares of the Company's common stock at a conversion rate of $0.40 per share. 62,500 shares of the Company's common stock, valued at $15,625, are issuable at June 30, 2014 as an inducement to make the loan, which is accounted for as a debt discount. During the six months ended June 30, 2014, the note and accrued interest totaling $575 was converted into 63,939 shares of the Company’s common stock, which remains issuable at June 30, 2014.	-	-
	50,000	60,000
Less current portion	(50,000)	(60,000)
Notes payable, net of current portion	$ -	$ -


				Weighted
	Common Stock Options Outstanding			average
	Employees and			exercise
	Directors	Non-employees	Total	price

Outstanding at December 31, 2012	1,766,037	1,305,000	3,071,037	0.170

Options granted	-	-	-	-

Options exercised	(240,000)	-	(240,000)	0.001

Options cancelled or expired	-	-	-	-

Outstanding at December 31, 2013 and June 30, 2014	1,526,037	1,305,000	2,831,037	$ 0.186


	Options outstanding				Options vested and exercisable
		Weighted
		average	Weighted			Weighted
		remaining	average	Aggregate		average	Aggregate
	Number	contractual	exercise	intrinsic	Number	exercise	intrinsic
Exercise price	outstanding	life (years)	price	value	vested	price	value
$0.0001	960,000	7.97	$0.0001	$ 143,904	240,000	$0.0001	$ 35,976
$0.0053	566,037	4.71	$0.0053	81,906	566,037	$0.0053	81,906
	1,526,037		$0.0020	$225,810	806,037	$0.0040	$ 117,882


Date: August 19, 2014		By: /s/ Donald G. Mack
		Donald G. Mack
		Chief Executive Officer (Principal Executive Officer)


Date: August 19, 2014		By: /s/ John S. Wittler
		John S. Wittler
		Chief Financial Officer (Principal Financial Officer)