donmarcos_10q-093010.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q

[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2010
 
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-52692

DON MARCOS TRADING CO.
(Exact name of registrant as specified in its charter)
 
Florida
 
65-0921319
(State or other jurisdiction of
incorporation or organization)
 
(IRS Employer
Identification No.)
 
1535 Southeast 17th Street, Suite 107, Ft. Lauderdale, FL  33316
(Address of principal executive offices)

(954) 356-8111
(Registrant’s telephone number)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ No ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer ¨                                                                                  Accelerated filer ¨
Non-accelerated filer ¨                                                                                    Smaller reporting company þ
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨ No þ
 
As of November 16, 2010, the number of shares of common stock outstanding was 48,300,000.
 
 
 
 
 
INDEX
     
 
    
 
  
Page
Number
     
PART I - FINANCIAL INFORMATION
  
     
Item 1.
Financial Statements (Unaudited)
1
     
 
Condensed Balance Sheet – September 30, 2010 and 2009
 1
     
 
 Condensed Statement of Operations –  
 
For the three and nine months ended September 30, 2010 and 2009
 2
     
 
 Condensed Statements of Cash Flows –  
 
For the three and nine months ended September 30, 2010 and 2009
 3
     
 
Condensed Notes to Financial Statements
 5
     
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 8
     
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
12
     
Item 4.
Controls and Procedures
12
     
PART II - OTHER INFORMATION
  
     
Item 1.
Legal Proceedings
13
     
Item 1A.
Risk Factors  
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
13
     
Item 3.
Defaults upon Senior Securities
13
     
Item 4.
(Removed and reserved)
13
     
Item 5.
Other Information
13
     
Item 6.
Exhibits
13
     
SIGNATURES
 
 14
 
 
 
 
 
 
PART I - FINANCIAL INFORMATION
 
ITEM 1.
FINANCIAL STATEMENTS
 
DON MARCOS TRADING CO.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
SEPTEMBER 30, 2010 AND DECEMBER 31, 2009
 
 
  
Unaudited
     Audited  
 
  
September 30,
     December 31,  
 
  
2010
     2009  
             
ASSETS
             
CURRENT ASSETS
            
Cash
   $ 293     $ 469  
Accounts receivable
     -       96  
Inventory
     8,820       8,838  
                 
TOTAL CURRENT ASSETS
   $ 9,113     $ 9,403  
                 
                 
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
                 
                 
CURRENT LIABILITIES
                
Accounts payable and accrued expenses
   $ 31,984     $ 21,569  
                 
LONG-TERM LIABILITIES
                
Note payable, officer and stockholder
     25,000       -  
                 
STOCKHOLDERS’ 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 - 48,300,000 shares
     243,454       243,454  
Deficit accumulated during the
                
development stage
     (291,325 )     (255,620 )
                 
TOTAL STOCKHOLDERS’ DEFICIT
     (47,871 )     (12,166 )
                 
TOTAL LIABILITIES AND
                
STOCKHOLDERS’ DEFICIT
   $ 9,113     $ 9,403  
 
The accompanying notes are an integral part of these financial statements.
 
 
1
 
 
DON MARCOS TRADING CO.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
AND FOR THE PERIOD FROM MAY 11, 1999 (INCEPTION) TO SEPTEMBER 30, 2010
(UNAUDITED)
 
 
  
Three Months Ended
September 30,
    
Nine Month Ended
September 30,
    
May 11, 1999
(Inception)
To
September 30,
  
 
  
2010
    
2009
     2010     2009     2010  
                               
REVENUES
   $ -     $ 288     $ 344     $ 864     $ 1,976  
                                         
OPERATING EXPENSES
     8,029       7,527       36,049       21,030       293,301  
                                         
NET (LOSS)
   $ (8,029 )   $ (7,239 )   $ (35,705 )   $ (20,166 )   $ (291,325 )
                                         
NET (LOSS) PER SHARE
                                        
                                         
Basic and diluted
   $ (.00 )   $ (.00 )   $ (.00 )   $ (.00 )   $ (.01 )
                                         
WEIGHTED AVERAGE NUMBER
                                        
OF SHARES OUTSTANDING
                                        
                                         
Basic and diluted
     48,300,000       48,158,696       48,300,000       46,567,399       48,300,000  
 
The accompanying notes are an integral part of these unaudited financial statements
 
 
2
 
 
DON MARCOS TRADING CO.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
AND FOR THE PERIOD FROM MAY 11, 1999 (INCEPTION) TO SEPTEMBER 30, 2010
 
 
  
2010
    
2009
    
May 11, 1999
(Inception)
To
September 30,
2010
  
                   
CASH FLOWS FROM
                  
OPERATING ACTIVITIES:
                  
Net (loss)
   $ (35,705 )   $ (20,166 )   $ (291,325 )
Adjustments to reconcile net
                        
(loss) to net cash (used)
                        
by operating activities:
                        
Common stock issued for services
     -       -       3,635  
Stock based compensation
     -       -       45,474  
Changes in operating assets and liabilities:
                        
Accounts receivable
     96       (96 )     -  
Inventory
     18       41       (8,820 )
Accounts payable and accrued expenses
     10,415       (1,585 )     31,984  
                         
NET CASH (USED) BY
                        
OPERATING ACTIVITIES
     (25,176 )     (21,806 )     (219,052 )
                         
CASH FLOWS FROM
                        
INVESTING ACTIVITIES
     -       -       -  
                         
CASH FLOWS FROM
                        
FINANCING ACTIVIITES
                        
Proceeds from note payable
     25,000       -       25,000  
Issuance of common stock for cash
     -       20,000       192,000  
Cash contributed by stockholder
     -       -       2,345  
                         
NET CASH PROVIDED BY
                        
FINANCING ACTIVITIES
     25,000       20,000       219,345  
                         
NET INCREASE (DECREASE) IN CASH
                        
AND CASH EQUIVALENTS
     (176 )     (1,806 )     293  
                         
CASH AND CASH EQUIVALENTS,
                        
BEGINNING OF PERIOD
     469       2,613       -  
                         
CASH AND CASH EQUIVALENTS,
                        
END OF PERIOD
   $ 293     $ 807     $ 293  
 
The accompanying notes are an integral part of these financial statements
 
 
3
 
 
DON MARCOS TRADING CO.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
AND FOR THE PERIOD FROM MAY 11, 1999 (INCEPTION) TO SEPTEMBER 30, 2010
 
 
  
2010
    
2009
    
May 11, 1999
(Inception)
To
September 30,
2010
  
                   
SUPPLEMENTAL DISCLOSURE
                  
OF CASH FLOW INFORMATION
                  
                   
CASH PAID DURING THE YEAR FOR:
                  
                   
Interest
   $ -     $ -     $ -  
                         
Taxes
   $ -     $ -     $ -  
                         
NON-CASH INVESTING ACTIVITIES
                        
                         
Stock-based compensation
   $ -     $ -     $ 45,474  
 
The accompanying notes are an integral part of these financial statements
 
 
4
 
 
DON MARCOS TRADING CO.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2010 AND 2009
 
 
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 
Nature of Business and History of Company

 
Don Marcos Trading Co. (“the Company”) is a development stage enterprise incorporated on May 11, 1999 in the state of Florida. The Company is 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

 
For purposes of the statement of cash flows, 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 Company 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 ASC 260 (formerly FASB 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 ASC 260 any anti-dilutive effects on net income (loss) per share are excluded.

 
Revenue Recognition

 
The Company recognizes revenue from product sales when shipment of product to the customer has been made, which is when title passes. The Company estimates and records provisions for rebates, sales returns and allowances in the period the sale is recorded. Shipping and handling charges are included in gross sales, with the related costs included in selling, general and administrative expenses.
 
 
5
 

DON MARCOS TRADING CO.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2010 AND 2009


NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 
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.

 
Common Stock Issued for Non-Cash Transaction

 
It is the Company’s 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.

 
Income Taxes

 
Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements.  Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in ASC 740 (formerly FASB 109) "Accounting for Income Taxes".  As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

 
Stock Based Compensation

 
Effective November 1, 2005, the Company adopted ASC 718 (formerly FASB 123(R) and 95), “Share-Based Payment: An Amendment of FASB 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 ASC 718 are based on the same estimate of the grant-date or modification-date fair value and the same attribution method used previously under ASC 718.

 
Development Stage Enterprise

 
The Company is a development state enterprise, as defined in ASC 915 (formerly FASB 7). The Company’s planned principal operations have not commenced, and accordingly, only nominal revenue has been derived during this period.
 
 
6
 
 
DON MARCOS TRADING CO.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2010 AND 2009
 
 
NOTE 2
GOING CONCERN

 
The accompanying financial statements 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 by issuance of common stock and through stockholder contributions and loans. 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.

 
Management plans to eliminate the going concern situation which includes, but is not limited to, obtaining investors to fund the working capital needs of the Company.

NOTE 3
INVENTORY

 
Inventory consists of the following at September 30, 2010 and December 31, 2009.

   
2010
    
2009
  
             
Materials
   $ 8,820     $ 8,838  


NOTE 4
NOTE PAYABLE, OFFICER AND STOCKHOLDER

 
On April 9, 2010, the Company obtained a $25,000 note payable from an officer stockholder of the Company.  The note accrues interest at 1%, is unsecured and is due on October 9, 2010.  It was subsequently extended until October 9, 2011.

NOTE 5
SUBSEQUENT EVENTS

 
Management has evaluated subsequent events through the date which the financial statements were available for issue.

 
On November 5, 2010, the Company obtained a $25,000 note payable from an officer stockholder of the Company.  The note accrues interest at 1%, is unsecured and is due on October 9, 2011.

 
 
7
 
 
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Report.

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 financial condition and results of operations 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 the understanding of our financial statements. These important accounting policies require management’s most difficult, subjective judgments.

Development Stage Enterprise

We are a development stage enterprise, as defined in ASC 915 (formerly FASB 7).  Our planned principal operations have not commenced, and, accordingly, only nominal revenue has been derived during the period.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

Net Loss Per Share

We adopted ASC 260 (formerly FASB 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 ASC 260, any anti-dilutive effects on net income (loss) per share are excluded.
 
 
8
 

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 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 nine months ended September 30, 2010 and 2009.
 
 
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 our ability to locate sources of capital, and attain 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 ASC 718 (formerly FASB 123 (R) and 95), Share-Based Payment, under the modified-prospective transitions method on January 1, 2006. ASC 718 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 ASC 718 includes share-based compensation based on the grant-date fair-value determined in accordance with the original provision of ASC 718, Accounting for Stock-Based Compensation, for all share-based compensation based on the grant-date fair-value determined in accordance with ASC 718 for all share-based payments granted after January 1, 2006. ASC 718 eliminates the ability to account for the award of these instruments under the intrinsic value method, and allowed under the original provisions of ASC 718. Prior to the adoption of ASC 718, 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 recognize 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 statements of operations.
 
 
9
 

Results of Operations

You should read the selected financial data set forth below along with our “Management’s Discussion and Analysis” and our financial statements and the related notes. We have derived the financial data from our financial statements. We believe the financial data shown in the table below includes 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.

SELECTED FINANCIAL INFORMATION AND RESULTS OF OPERATIONS

   
Nine Months
    
Nine Months
    
Three Months
    
Three Months
  
   
Ended
    
Ended
    
Ended
    
Ended
  
   
Sept. 30,
    
Sept. 30,
    
Sept. 30,
    
Sept. 30,
  
   
2010
    
2009
    
2010
    
2009
  
   
(Unaudited)
    
(Unaudited)
    
(Unaudited)
    
(Unaudited)
  
                                 
Revenue
   $ 344     $ 864     $ -     $ 288  
                                 
Operating expenses
     36,049       21,030       8,029       7,527  
                                 
Net (loss)
   $ (35,705 )   $ (20,166 )   $ (8,029 )   $ (7,239 )
                                 
Net (loss) per share
   $ (.00 )   $ (.00 )   $ (.00 )   $ (.00 )

Results for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009.

Revenues

We had revenue of $344 and $864 for the nine months ended September 30, 2010 and 2009, respectively.

Operating Expenses

Operating expenses increased by $15,019 to $36,049 for the nine months ended September 30, 2010 as compared to $21,030 for the nine months ended September 30, 2009.  The increase arose from increases in legal fees and accounting fees required for our SEC filings.

Net Loss

Primarily as a result of our operating expenses, we had a net loss of $35,705 for the nine months ended September 30, 2010 compared to a net loss of $20,166 for the nine months ended September 30, 2009.
 
 
10
 

Results for the three months ended September 30, 2010 compared to the three months ended September 30, 2009.

Revenues

We did not have any revenue for the three months ended September 31, 2010, and had revenue of $288 for the three months ended September 30, 2009.

Operating Expenses

Operating expenses increased by $502 to $8,029 for the three months ended September 30, 2010 as compared to $7,527 for the three months ended September 30, 2009.  The increase arose from increases in legal fees and accounting fees required for our SEC filings.

Net Loss

Primarily as a result of our operating expenses, we had a net loss of $8,029 for the three months ended September 30, 2010 compared to a net loss of $7,239 for the three months ended September 30, 2009.

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:

   
September 30,
2010
    
September 30,
2009
  
                 
Current assets
   $ 9,113     $ 9,753  
Current liabilities
     31,984       10,591  
                 
Working Capital (Deficit)
   $ (22,871 )   $ (838 )

The changes in our working capital are primarily due to operating losses.

Changes in cash flows are summarized as follows:

Our net cash used by operations was $25,176 for the nine months ended September 30, 2010 as compared to $21,806 used by operations for the nine months ended September 30, 2009.  During the nine months ended September 30, 2010, we experienced a net loss of $35,705.  This was offset by a decrease in accounts receivable of $96, an increase in accounts payable and accrued expenses of $10,415, and a decrease in inventory of $18.  During the nine months ended September 30, 2009, we experienced a net loss of $20,166.  In addition, we had an increase in accounts receivable of $96, and a decrease in accounts payable and accrued expenses of $1,585.  These were offset by a decrease in inventory of $41.
 
 
11
 

There was no net cash used or provided from investing activities for the nine months ended September 30, 2010 and 2009.

On April 9, 2010, Scott W. Bodenweber, our Chief Financial Officer and one of our directors, loaned us $25,000 at an interest rate of 1% per annum for six months.  On October 9, 2010, the maturity date of this note was extended to October 9, 2011.  On November 5, 2010, Mr. Bodenweber loaned us $25,000 at an interest rate of 1% per annum until October 9, 2011.

For the nine months ended September 30, 2010, we had $50,000 from financing activities, as a result of proceeds from notes payable.  For the nine months ended September 30, 2009, we had $15,000 from financing activities as a result of the issuance of common stock for cash.

ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.

ITEM 4.
CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures

Our President and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of the end of period covered by this report.  Based upon such evaluation,  the President and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
 
12
 
 
PART II - OTHER INFORMATION

ITEM 1. 
LEGAL PROCEEDINGS
                     
To the best knowledge of our management, there are no legal proceedings pending or threatened against us.

ITEM 1A.
RISK FACTORS
                   
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.

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

None.

ITEM 3. 
DEFAULTS UPON SENIOR SECURITIES
                     
None.

ITEM 4.
(REMOVED AND RESERVED)
 
ITEM 5.    
OTHER INFORMATION
                 
None.

ITEM 6.
EXHIBITS
                      

The following Exhibits are filed herein:
 
No.
Title
   
10.1
Promissory Note with Scott W. Bodenweber, dated November 5, 2010
   
31.1
Certification of President Pursuant to the Securities Exchange Act of 1934, Rules 13a-14(a) and 15d-14(a), 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(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
32
Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
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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.
 
DATED: November 16, 2010            DON MARCOS TRADING CO.  
 
    
 
  
 
    
/s/ Earl T. Shannon
  
 
    
BY: Earl T. Shannon
ITS: President
(Principal Executive Officer)
  
         
      /s/ Scott W. Bodenweber  
      BY: Scott W. Bodenweber
ITS: Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
  
 
 
14