Premier Beverage Group Corp - FORM 10-K

Attached files

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EX-32 - DAM HOLDINGS 10K, CERTIFICATION 906 - Premier Beverage Group Corp	damhexh32_1.htm
EX-31 - DAM HOLDINGS 10K, CERTIFICATION 302 - Premier Beverage Group Corp	damhexh31_1.htm

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended 2009

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-50370

DAM HOLDINGS, INC.

(Name of Small Business Issuer in its charter)

State of Nevada		33-1041835
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification No.)

52-66 Iowa Avenue, Paterson, NJ		07503
(Address of Principal Executive Offices)		(Zip Code)

Issuer's telephone number (973) 279-3261

Securities registered under Section 12(b) of the Exchange Act: NONE

Securities registered under Section 12(g) of the Exchange Act:

COMMON STOCK, $0.00015 PAR VALUE

(Title of Class)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

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Check if there is no disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to Form 10-K.

Yes x No o

State Issuer’s revenues for its most recent fiscal year: $49,188

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days.

Aggregate market value of the voting stock held by non-affiliates of the registrant as of December 31, 2009: $82,988.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEEDING FIVE YEARS)

Check whether the issuer has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Exchange Act subsequent to the distribution of securities under a plan confirmed by a court.

Yes o No o

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

As of December 31, 2009 there were 1,291,939 shares of common stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Documents incorporated by reference: None

Transitional Small Business Disclosure Format (Check one): Yes o No x

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DAM HOLDINGS, INC.

INDEX

		Page
PART I		4
Item 1.	Description of Business	5
Item 2.	Description of Property	8
Item 3.	Legal Proceedings	8
Item 4.	Submission of Matters to a Vote of Security Holders	8

PART II		8
Item 5.	Market for Common Equity and Related Stockholder Matters	8
Item 6.	Management’s Discussion and Analysis	10
Item 7.	Financial Statements	14
Item 8.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosures	14
Item 8A.	Controls and Procedures	14
Item 8B.	Other Information	14

PART III		16
Item 9.	Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act	16
Item 10.	Executive Compensation	17
Item 11.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	18
Item 12.	Certain Relationships and Related Transactions	20
Item 13.	Exhibits and Reports on Form 10-K	21
Item 14.	Principal Accountant Fees and Services	23

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PART I

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K and the documents incorporated by reference herein contain forward-looking statements that are not statements of historical fact and may involve a number of risks and uncertainties. These statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our future prospects, developments and business strategies.

We have used the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "will," "plan," "predict," "project" and similar terms and phrases, including references to assumptions, in this annual report on Form 10-K and our incorporated documents to identify forward-looking statements. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements. The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

● general economic and industry conditions;

● our history of losses, deficits and negative operating cash flows;

● our limited operating history;

● industry competition;

● environmental and government regulation;

● protection and defense of our intellectual property rights;

● reliance on, and the ability to attract, key personnel;

You should keep in mind that any forward-looking statement made by us in this annual report or elsewhere speaks only as of the date on which we make it. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We have no duty to, and do not intend to, update or revise the forward-looking statements in this annual report after the date of filing, except as may be required by law. In light of these risks and uncertainties, you should keep in mind that any forward-looking statement made in this annual report or elsewhere might not occur.

In this annual report on Form 10-K the terms "DAMH,” "Company," "we," "us" and "our" refer to DAM Holdings, Inc. and its subsidiaries.

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Item 1. Description of Business

General

DAM Holdings, Inc. (“DAMH”), was incorporated on July 22, 1999 in the State of Nevada and is a non-operating holding company. Our principal operating subsidiary is Delaware American Motors LLC (“DAM”) which we acquired on May 13, 2008 in a stock for stock exchange. DAM is a builder of high performance over the road motorcycles.

Our Motorcycle Business

DAM was founded by our President Mark Klein on August 12, 2002 to be an uncompromising motorcycle design and craft enterprise. DAM has designed and built two Tech Twin American 13C motorcycles as the first models in a series of high performance motorcycle products known as Delaware and Pennsylvania. These motorcycles were completed in 2008 and the Pennsylvania debuted at the 2008 Sturgis AMD World Championship competition where it won the first place award in the Production Manufacture class. We expect our motorcycles to be sold in the United States. Our manufacturing operation is based in Paterson, New Jersey consisting primarily of motorcycle assembly and our repair and maintenance facility. For more information on Delaware American Motors, please visit www.dammotorcycles.com.

The Delaware American Motors

2008 Sturgis AMD World Championship trophy winner the “Pennsylvania”

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The Delaware American Motors

The Colony series “Delaware” model.

Our motorcycles are designed by our in house staff of professionals and are hand assembled in Paterson by us from custom and stock parts manufactured to our specifications.

Motorcycle Related Product Offerings

As a contextual component of our factory technical service structure, we offer a select variety of wearing apparel and other related retail products displaying the Delaware American Motors name. This has the effect of providing enjoyment for our customers and displaying our name in the current market.

DAM Acquisition

On May 13, 2008 we issued 22,500 shares of Common Stock as the sole consideration paid in exchange for 100% of the issued shares of the common stock of Delaware American Motors, Inc. (“DAM INC”) a Nevada corporation, the sole owner of DAM. The acquisition has been accounted for as a purchase transaction for an aggregate value of $140,166 and the accompanying financial statements include the accounts of DAM INC and DAM for the period May 13, 2008 to December 31, 2008 and for all periods presented thereafter.

Inactive Subsidiaries

We also own 100% of the capital stock of Pukka USA, Inc. (“Pukka”) a Utah corporation and its wholly-owned subsidiaries: Red Iron Group, LLC (“RIG”), a Utah limited liability company, Infomac Corporation (“Infomac”), a Nevada corporation and Fire Ant Corporation (“Fire Ant”), a Utah corporation. We acquired Pukka on August 15, 2006 in a stock for stock exchange, RIG on June 27, 2007 in a stock for stock exchange, and Infomac and Fire Ant on August 23, 2007 in a stock for stock exchange. As of the date of this report these companies are inactive.

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Pukka and its subsidiaries are the owners of several motor vehicle technologies and patent applications including five (5) motor-control systems and hybrid drive-train technologies for use in electric and hybrid motorized vehicles:

(i)

On December 1, 2005 we filed a patent application for a maximum efficiency control device (“MEC”) that will allow an electric motor to run more efficiently by operating at or near it peak operating limit for a higher percentage of total operating time.

(ii)

On November 3, 2005 we filed a patent application for a hydraulic regenerative braking system (“HRB”) for capturing a moving vehicle’s kinetic energy for use in braking or battery recharging. An update to this patent application was file on December 12, 2005.

(iii)

On November 3, 2005 we filed a patent application for an integrated extended range propulsion system (“ERT”) linking three drive motors to the same transmission.

(iv)

On October 4, 2004 we filed a patent application for a split-rim wheel (“Split-Rim”) that encapsulates a multi-speed planetary gear type transmission for light vehicles having small diameter wheels and small motors.

(v)

the rights to a spring-loaded, regenerative braking system for light electric and hybrid vehicles in connection with our acquisition of Fire Ant Corporation.

The Company has been unsuccessful in obtaining the substantial investment capital necessary to develop and prove these technologies and we have determined to terminate this project including termination of our development of a hybrid electric motor scooter which would utilize elements of these technologies. Our investment in these technologies was written down to a net realizable value of zero in 2007. We are presently assessing opportunities for the sale of technologies or the opportunity to restart the project in the event sufficient capital becomes available for development.

Governmental Regulations

Vehicles intended for use on public roadways must satisfy regulations implemented by the United States Department of Transportation (“DOT”) and by the corresponding agencies in other countries. Our vehicles and our manufacturing and repair facility are also subject to environmental regulations. Our vehicles are manufactured to meet all applicable government standards.

Competitive Conditions

The high performance custom manufactured motorcycle market is highly competitive. The Company’s major competitors are based both within and outside the U.S. and generally have financial and marketing resources that are substantially greater than those of the Company. They also have large worldwide revenues and are more diversified than the Company. In addition to

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these larger, established competitors, the Company has custom manufacturing shop competitors headquartered in the United States. These competitors generally offer high performance heavyweight motorcycles with traditional styling that compete directly with many of the Company’s products. These competitors currently have established production and sales volumes that are higher than the Company’s and have considerably higher U.S. market share than the Company.

Competition in the high performance custom motorcycle market is based upon a number of factors, including price, quality, reliability, styling, product features, customer preference and warranties. In the U.S., suggested retail prices for the Company’s motorcycles range from being comparable to higher than suggested retail prices for comparable motorcycles available in the market. The Company believes that its high performance custom products will be able to command a premium price. The Company emphasizes quality, reliability and styling in its products and generally offers a two-year warranty for its motorcycles. The Company’s established competitors, such as Harley-Davidson, have the financial ability to offer manufacturer financing, which the Company cannot presently offer to customers which is a substantial competitive advantage over the Company.

Employees

As of December 31, 2009, we had a total of 1 employee. We have an employment agreement with Mr. Klein our President, Secretary and Treasurer that provides for his continued service to the Company until either party provides 2 weeks notice to the other of their intent to terminate. We believe our employee relations are generally good. Our employees are not represented by a collective bargaining unit.

Item 2. Description of Property

The Company is the owner of certain proprietary technologies for which United States patents have been applied for.

Item 3. Legal Proceedings

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters

(a) Market Information. Our common stock currently trades on the OTC Bulletin Board under the symbol “DAMH.” The following table states the range of the high and low bid-prices per share of our common stock for each of the calendar quarters since our stock began trading in July 2007, as reported by the OTC Bulletin Board. These quotations represent inter-dealer prices, without retail mark-up, markdown, or commission, and may not represent actual transactions.

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The last price of our common stock as reported on the OTC Bulletin Board on December 31, 2009 was $0.16 per share.

	High		Low
Fiscal Year 2008
First Quarter	$	20.00	$	1.40
Second Quarter	$	20.00	$	5.00
Third Quarter	$	10.00	$	2.00
Fourth Quarter	$	0.16	$	0.10

(b) Holders. As of December 31, 2009, there were 175 shareholders of record of our common stock; this number does not include beneficial owners from whom shares are held by nominees in street name.

(c) Dividends. During the last two fiscal years, no cash dividends have been declared on the Company’s common stock and management does not anticipate that dividends will be paid in the foreseeable future.

(d) Securities authorized for issuance under equity compensation plans.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)(c)

Equity compensation plans approved by security holders (i)	None	N/A	1,000,000

Equity compensation plans not approved by security holders	None	N/A	None

Total

______________
(i)	Includes the aggregate of all options that may be granted pursuant to the terms of the Company’s 2009 Consultant’s Stock Compensation Plan.
(ii)	The Company has no plans or agreements for the issuance of shares of common stock under any compensation plan or individual compensation arrangement other than upon the exercise of an option, warrant or right.

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The Company has no compensation plan under which equity securities of the Company are authorized for issuance that was adopted without the approval of security holders.

Item 6. Management’s Discussion and Analysis

This Management’s Discussion and Analysis and other parts of this report contain forward-looking statements that involve risks and uncertainties. All forward-looking statements included in this report are based on information available to us on the date hereof, and except as required by law, we assume no obligation to update any such forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth in the section captioned "Risk Factors" in Item 1A and elsewhere in this report. The following should be read in conjunction with our audited financial statements and the related notes included elsewhere herein.

Critical Accounting Policies Judgments and Estimates

This management's discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. In preparing these financial statements, we are required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to doubtful accounts, stock-based compensation, investments, goodwill and intangible assets and income taxes as well as contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe are reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates using different assumptions or conditions. We believe the following critical accounting policies reflect the more significant judgments and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition

The Company records revenues only upon the occurrence of all of the following conditions:

The Company has received a binding purchase order or similar commitment from the customer or distributor authorized by a representative empowered to commit the purchaser (evidence of a sale);

The purchase price has been fixed, based on the terms of the purchase order;

The Company has delivered the product from its distribution center to a common carrier acceptable to the purchaser. The Company's customary shipping terms are FOB shipping point; and

The Company deems the collection of the amount invoiced probable.

The Company provides no price protection. Product sales are net of promotional discounts, rebates and return allowances.

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The Company does not recognize sales taxes collected from customers as revenue.

Allowance for Doubtful Accounts

The Company performs ongoing credit evaluations of its customers' financial condition and, generally, requires no collateral from its customers. The Company records an allowance for doubtful accounts receivable for credit losses at the end of each period based on an analysis of individual aged accounts receivable balances. As a result of this analysis, the Company believes that its allowance for doubtful accounts is adequate at December 31, 2009 and 2008. If the financial condition of the Company's customers should deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Inventory Valuation

We adjust the value of our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions and development of new products by our competitors. Inventories consist primarily of vehicles gas and electric, parts and supplies, and finished goods and are carried at the lower of cost (first-in, first-out method) or market.

Deferred Tax Asset Realization

We record a full valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. While we have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made.

Classification of Financial Instruments with Characteristics of Both Liability and Equity

We account for financial instruments that we have issued and that have characteristics of both liability and equity in accordance with SFAS No. 150, ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY. SFAS No. 150 specifies that mandatory redeemable financial instruments are to be recorded as liabilities unless the redemption is required to occur upon the liquidation or termination of the issuer. SFAS No. 150 also specifies that a financial instrument that embodies a conditional obligation that an issuer may settle by issuing a variable number of its equity shares is to be classified as a liability if, at inception, the value of the obligation is based solely or predominantly on variations inversely related to changes in the fair value of the issuer's equity shares. Should a financial instrument not be classified as a liability under the provisions of SFAS No. 150, we further apply the criteria in Emerging Issues Task Force (EITF) Issue No. 00-19, ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS INDEXED TO, AND POTENTIALLY SETTLED IN, A COMPANY'S OWN STOCK, which enumerates additional criteria to determine the appropriate classification as liability or equity. We also evaluate the anti-dilution and/or beneficial conversion features that may be included in our financial instruments in accordance with the provisions of SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, which may classify the feature

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as an embedded derivative and require that the financial instrument be bifurcated and the feature accounted for separately. We evaluate each financial instrument on its own merits at inception or other prescribed measurement or valuation dates and may engage the services of valuation experts and other professionals to assist us in our determination of the appropriate classification.

Accounting for Stock-Based Compensation

Effective January 1, 2006, we adopted the fair value recognition provisions of SFAS No. 123 (revised 2004), Share-Based Payment ("SFAS 123(R)"), using the modified-prospective transition method. Under the fair value recognition provisions of SFAS 123(R), share-based compensation cost is estimated at the grant date based on the fair value of the award and is recognized as expense, net of estimated pre-vesting forfeitures, ratably over the vesting period of the award.

In addition, the adoption of SFAS 123R requires additional accounting related to the income tax effects and disclosure regarding the cash flow effects resulting from share-based payment arrangements. In January 2005, the SEC issued Staff Accounting Bulletin ("SAB") No. 107, which provides supplemental implementation guidance for SFAS 123R. We selected the Black-Scholes option-pricing model as the most appropriate fair-value method for our awards. Calculating share-based compensation expense requires the input of highly subjective assumptions, including the expected term of the share-based awards, stock price volatility, and pre-vesting forfeitures. The assumptions used in calculating the fair value of stock-based awards represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our share-based compensation expense could be materially different in the future. In addition, we are required to estimate the expected pre-vesting forfeiture rate and only recognize expense for those shares expected to vest. If our actual forfeiture rate is materially different from our estimate, our share-based compensation expense could be significantly different from what we have recorded in the current period.

On November 10, 2005, the FASB issued FASB Staff Position No. FAS 123(R)-3 "TRANSITION ELECTION RELATED TO ACCOUNTING FOR TAX EFFECTS OF SHARE-BASED PAYMENT AWARDS " (FSP 123(R)-3). We adopted the alternative transition method provided in the FASB Staff Position for calculating the tax effects of stock-based compensation pursuant to SFAS 123R in the fourth quarter of fiscal 2006. The alternative transition method includes simplified methods to establish the beginning balance of the additional paid-in capital pool (APIC pool) related to the tax effects of employee stock-based compensation, and to determine the subsequent impact on the APIC pool and Consolidated Statements of Cash Flows of the tax effects of employee stock-based compensation awards that are outstanding upon adoption of SFAS 123R. The adoption did not have a material impact on our results of operations and financial condition.

Prior to January 1, 2006, we accounted for share-based payments to our employees and non-employee members of our board of directors under the recognition and measurement provisions of Accounting Principles Board ("APB") Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related guidance, as permitted by SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION ("SFAS 123"), and amended by SFAS No. 148, ACCOUNTING FOR STOCK-BASED COMPENSATION-TRANSITION AND DISCLOSURE ("SFAS 148"). We did not recognize any significant share-based employee

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compensation costs in our statements of operations prior to January 1, 2006, as options granted to employees and non-employee members of the board of directors generally had an exercise price equal to the fair value of the underlying common stock on the date of grant. As required by SFAS 148, prior to the adoption of SFAS 123(R), we provided pro forma disclosure of net income (loss) applicable to common shareholders as if the fair-value-based method defined in SFAS No. 123 had been applied. In the pro forma information for periods prior to 2006, we accounted for pre-vesting forfeitures as they occurred. Our operating results for prior periods have not been restated.

Further details related to our Stock Plans and our adoption of SFAS 123R are provided in Note 1 – Description of Business and significant accounting policies and Note 9 – Capital Stock and Member Interests to our consolidated financial statements.

Results of Operations

Fiscal 2009 Compared To Fiscal 2008

Revenues and Cost of Sales

Revenue for 2009 were $49,168 which is an increase from $21,210 in 2008. Cost of sales for 2009 was $21,471 which is an increase from $12,232 in 2008.

Selling, General and Administrative Expenses

In 2008, selling, general and administrative costs were $623,746 which increased to $280,812 in 2009. This change is primarily a reflection of decreases in expenditures for salaries, consulting and operating expenses for our motorcycle manufacturing business.

Our expenses for 2009 and 2008 include $33,669 and $357,543 respectively, of non-cash stock based compensation expenses.

Provision for Income Taxes

For the years ending December 31, 2009 and 2008, the Company has incurred losses for tax purposes. The tax asset generated by the tax losses and any temporary differences has been fully reserved.

Net Income

The company had a loss of $317,608 in 2009 compared to net loss of $752,148 in 2007. The loss was due primarily to expenditures for salaries, consulting and operating expenses for our motorcycle manufacturing business.

Liquidity and Capital Resources

As of December 31, 2009, we had negligible cash of $696 and approximately $576,979 in liabilities. To continue operations we require additional financing and are exploring various methods for obtaining additional capital including short term borrowing and the issuance of our equity or debt securities. There is no assurance that additional capital will be available to us, or if available, will be made available on suitable terms.

Net cash used by operating activities for the twelve months ended December 31, 2009 was $61,494 which was primarily the result of the net loss. This compared to net cash used by operating activities of $396,823 for the twelve months ended December 31, 2008. Net cash from

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financing activities for the twelve months ended December 31, 2009 was $29,047 compared to $462,773 for the twelve months ended December 31, 2008. The reductions in 2009 from 2008 are primarily a reflection of the deteriorating economy and difficulties in securing sources of investment and financing.

Subsequent Events

None.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditures.

Future Commitments

We do not have any material future commitments that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditures.

Item 7. Financial Statements

Please refer to the pages beginning with F-1.

Item 8. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

Change in Accountants

On November 11, 2008, we changed our principal public accounting firm as reported on Form 8-K and filed with the Commission on November 17, 2008.

Disagreements with Accountants

None.

Item 8A. Controls And Procedures.

Reference is made to the disclosures below under Item 8A(T) Controls and Procedures.

Item 8A(T). Controls and Procedures.

Disclosure Controls and Procedures

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report (December 31, 2008), as is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended.

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Our disclosure controls and procedures are intended to ensure that the information we are required to disclose in the reports that we file or submit under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and (ii) accumulated and communicated to our management, including the Principal Executive Officer and Principal Financial Officer, as the principal executive and financial officers, respectively, to allow timely decisions regarding required disclosures.

Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that, as of the end of the period covered by this Annual Report, our disclosure controls and procedures were effective.

Our management has concluded that the financial statements included in this Form 10-K present fairly, in all material respects our financial position, results of operations and cash flows for the periods presented in conformity with generally accepted accounting principles.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles.

Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as set forth in Internal Control - Integrated Framework. Based on our evaluation under the framework in Internal Control - Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2008.

This annual report does not include an audit or attestation report of our registered public accounting firm regarding our internal control over financial reporting. Our management’s report was not subject to audit or attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Evaluation of Changes in Internal Control over Financial Reporting

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of our internal control over financial reporting to determine whether any change occurred during the fourth quarter of 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, our management concluded that the improvements described below were the only such changes during the quarter. As of the end of the period covered by this Annual Report, no deficiencies were identified in our internal controls over financial reporting which constitute a “material weakness.”

Remediation Plan for Previously Identified Material Weaknesses

Other than as described herein, there has been no change in the Company’s internal control over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 8B. Other Information.

None.

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act.

(a) Directors and executive officers:

Name	Age	Position

Mark S. Klein	49	President, Treasurer, Secretary and Director since 2006

The directors of the Company are elected to serve until the next annual shareholders' meeting or until their respective successors are elected and qualified. Officers of the Company hold office until the meeting of the Board of Directors immediately following the next annual shareholders' meeting or until removal by the Board of Directors.

MARK S. KLEIN is a graduate of the American Motorcycle Institute and certified technician. Mr. Klein opened his first independent service facility in 1979, held northeast distribution rights for Yoshimura racing parts and from that, developed Cycle Connection, Inc., a highly successful super-bike racing team. He also developed the first branded store for Ducati Motors in Manhattan, New York and served on the Ducati Dealer Development Group for several years.

(b) Significant Employees.

None.

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None.

(d) Involvement in certain legal proceedings.

None.

(e) Section 16(A) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company's officers and directors, and persons who own more than 10% of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than 10% percent shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Mr. Klein was required to file an Initial Statement of Beneficial Ownership of Securities on Form 3 at the time of his acquisition of shares from DAMH on May 13, 2008 and Form 4 for the acquisition of 750,000 shares acquired on December 20, 2009. Mr. Giordano was required to file a report on Form 4 at the time of his acquisition of shares from DAMH on May 13, 2008 and Mr. David S. Lee was required to file a report on Form 4 at the time of his acquisition of a convertible note from DAMH on December 17, 2008 and upon the conversion of his to note to 118,653 shares of common stock. To the best knowledge and belief of the Company, none of such persons made a timely filing of the required forms and, to the best of the Company’s knowledge, these persons are not current as of the date of this Report in their respective Section 16(A) Beneficial Ownership Reporting Compliance requirements. To the best of the Company's knowledge, with the exception of those persons disclosed at ITEM 11 hereof, no reports have been filed by any other persons who claim ownership of more than 10% of the Company's equity securities.

(f) Code of Ethics

We have adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. Our Code of Ethics is designed to deter wrongdoing and promote: (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (ii) full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in our other public communications; (iii) compliance with applicable governmental laws, rules and regulations; (iv) the prompt internal reporting of violations of our Code of Ethics to an appropriate person or persons identified in the code; and (v) accountability for adherence to our Code of Ethics.

Item 10. Executive Compensation

The following table sets forth certain information with respect to annual compensation paid in 2008 and 2008 to the Company's executive officers.

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Name and Principal Position

Year

Annual Compensation

Awards

Payouts

All Other Compensation

Mark S. Klein (i)

2009

None

45,925

None

50,000

President, Secretary, Treasurer and Director

2008

33,875

None

Steven Radt (ii)

2009

n/a

Former President, Secretary, and Director

2008

8,308

None

Leonard DuCharme

2009

n/a

Former Chief Executive Officer and Director (iii)

2008

16,623

None

Paul R. Ressler (iii)

2009

n/a

Former President and Director

2008

19,283

None

Darren Jensen (iii)

2009

n/a

Former Treasurer, Secretary and Director

2008

14,675

None

______________________
(i)	Mr. Klein has a Key Employee Agreement with the Company dated as of May 6, 2008 which provides for annual compensation of $96,000. The 2009 Annual Compensation includes compensation payments of 752,500 shares of common stock and a $50,000 promissory note. The 2008 Annual Compensation does not include $33,488 of accrued and unpaid compensation owing as to the year ending December 31, 2008.

(ii)	On June 1, 2008 Mr. Radt was granted a option to purchase 5,000 shares of Company common stock pursuant to the our 2006 Qualified Stock Option Plan. Mr. Radt resigned on December 2, 2008 and the options expired unexercised.

(iii)	Messrs DuCharme, Ressler and Jensen resigned on October 10, 2008.

(b) Outstanding equity awards at fiscal year-end

None.

The Executive Officers of the Company also serve as the Directors of the Company. The Company did not make any separate director compensation payments of fees, stock awards, option awards, non-equity incentive plan compensation, non-qualified deferred compensation earnings or other compensation to any of its directors. The Company does not pay its directors for their service as a director or for attending meetings of the directors.

Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth information, as of December 31, 2009, with respect to the beneficial ownership of the Company’s common stock by each person known by the Company to be the beneficial owner of more than five percent of the outstanding common stock and by directors and officers of the Company, both individually and as a group.

(a) Security ownership of certain beneficial owners and management

The following table indicates how many shares of our common stock were beneficially owned as of December 31, 2009, by (1) each person known by us to be the owner of more than 5% of our outstanding shares of common stock, (2) our directors, (3) our executive officers, and (4) our directors and executive officers as a group.

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In general, “beneficial ownership” includes those shares a director or executive officer has sole or shared power to vote or transfer (whether or not owned directly) and rights to acquire common stock through the exercise of stock options or warrants those are exercisable currently or become exercisable within 60 days. Except as indicated otherwise, the persons named in the table below have sole voting and investment power with respect to all shares shown as beneficially owned by them. We based our calculation of the percentage owned on 1,291,939 shares outstanding on December 31, 2009. The address of each director, executive officer and certain beneficial owners is listed below:

Name and Address	Number of Shares Beneficially Owned		Percent of Class
Mark S. Klein Director, President, Secretary and Treasurer 52-66 Iowa Avenue Paterson, NJ 07508		772,863		59.84	%

David S. Lee 52-66 Iowa Avenue Paterson, NJ 07508		119,154		9.23	%

Sharp Capital LP 800 Third Ave., 27th Floor New York, NY 10022		89,365		6.92	%

Frank Basile c/o Sharp Capital LP 800 Third Ave., 27th Floor New York, NY 10022		89,365		6.92	%

All officers and directors as a group (1 person)		772,863		59.84	%

(b) Changes in control

Our articles of incorporation and by-laws do not contain any provisions having an anti-takeover effect, except that our articles of incorporation authorize the issuance of common and preferred stock. Although no shares of preferred stock have been issued to date, our articles of incorporation were amended on October 25, 2006 to grant the Company’s board of directors the power to issue such shares and to establish their terms. For example, the directors have the power to establish terms for the preferred stock which would cause the preferred stock may rank prior to the common stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of common stock. Accordingly, the issuance of shares of preferred stock may discourage bids for the common stock or may

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otherwise adversely affect the market price of the common stock. If issued, the preferred stock could also render more difficult, or discourage, a merger, tender offer or proxy contest relative to the Company, and make the removal of incumbent management more difficult. Our board of directors has no present intention to issue preferred stock for such purposes. Our articles of incorporation prohibit cumulative voting with respect to any matters brought to a vote by our stockholders. The Company filed Definitive Schedule 14F describing the amendment to its articles of incorporation with the Securities & Exchange Commission on October 5, 2006.

Item 12. Certain Relationships and Related Transactions, and Director Independence

(a) Transactions with related persons.

Other than as disclosed below, none of the present directors, officers or principal shareholders of the Company, nor any family member of the foregoing, have or have had any interest, direct or indirect, in any transaction, the amount of which exceeds the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last three completed fiscal years, within the last fiscal year, or in any proposed transaction. Management believes the following transactions are fair to the Company and similar to terms that could be obtained from unrelated third parties.

During 2008 the Company paid finder’s fees and issued shares of common stock to Mr. Christopher Giordano individually and to company’s controlled by him in the amount of $25,000 in cash and 4,425 shares of Company common stock in acquisition of the shares of common stock of Delaware American Motors Inc.

On June 1, 2008 the Company issued to Steven Radt the right to purchase up to 5,000 shares of Company common stock pursuant to a stock option grant under the Company’s 2006 Qualified Incentive Stock Option Plan (the “Radt Options”) with 1,750 options at an exercise price of $60.00 per share immediately vested. The Radt Options were terminated on December 2, 2008 the date of Radt’s resignation.

On October 10, 2008 Leonard DuCharme, Paul Ressler, and Darren Jensen (the “Resigning Officers”), each an executive officer and a director entered into a Settlement Agreement and Release with the Company which provided for, among other things, their resignations, the payment to the Company of an aggregate of 2,109,873 shares of the Company’s common stock being all of the shares owned by the Resigning Officers, the release of the Company’s obligation to pay the Resigning Officers an aggregate of $179,399 of unpaid wages and mutual releases and indemnifications.

On October 10, 2008 the Company agreed to issue to Mark Klein its President and sole director, 10,548 shares and to Steven Radt, its then President and director, 3 shares of the common stock which was received from the Resigning Officers. In addition, the Company issued Mr. Klein 12,500 shares of Company common stock on May 13, 2008 in acquisition of the shares of common stock of Delaware American Motors Inc. and 752,500 shares as stock based compensation for the year ending December 31, 2009.

On December 17, 2008 the Company issued its 8% Convertible Secured Promissory Note and Assignment to Mr. David Lee. The Note provided for the payment of 500 shares as bonus interest. During the year ending December 31, 2009 the Company issued Mr. Lee 118,653 shares of Company common stock in conversion of his Note.

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(b) Parents

None.

DAM Holdings, Inc. (formerly Hybrid Dynamics Corporation) was a blank check shell company at August 15, 2006, the date of the acquisition of Pukka USA, Inc. The acquisition was a reverse acquisition whereby the shareholders of Pukka exchanged their shares of Pukka common stock for a controlling number of DAMH shares of common stock. The Company filed Schedule 14F-1 describing the Change of Control Transaction with the Securities & Exchange Commission on June 12, 2006 and Form 8-K describing the exchange and including Form 10-SB information in respect of Pukka with the Securities & Exchange Commission on August 21, 2006.

(d) Corporate Governance

(i) Director independence

The directors of the Company are the executive officers of the Company and are shareholders of the Company. Members of the Company's management may become associated with other firms involved in a range of business activities. Consequently, there are potential inherent conflicts of interest in their acting as officers and directors of the Company. Insofar as the officers and directors are engaged in other business activities, management anticipates they will devote as much time to the Company's affairs as is reasonably needed.

The officers and directors are, so long as they are officers or directors of the Company, subject to the restriction that all opportunities contemplated by the Company's plan of operation which come to their attention, either in the performance of their duties or in any other manner, will be considered opportunities of, and be made available to the Company and the companies that they are affiliated with on an equal basis. A breach of this requirement will be a breach of the fiduciary duties of the officer or director. If the Company or the companies in which the officers and directors are affiliated with both desire to take advantage of an opportunity, then said officers and directors would abstain from negotiating and voting upon the opportunity. However, all directors may still individually take advantage of opportunities if the Company should decline to do so. Except as set forth above, the Company has not adopted any other conflict of interest policy with respect to such transactions.

(ii) Board meetings and committees; annual meeting attendance

The Board of Directors does not meet on a regular basis and take action as and when required. The Company does not have any standing audit, nominating, or compensation committees of the Board of Directors.

Item 13. Exhibits and Reports on Form 10-K

(a) Exhibits

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Exhibit Number	EXHIBIT
3(i)	Certificate of Incorporation (1)(6)
3(ii)	Articles of Incorporation-ByLaws (1)(6)
3(iii)	Amendments to Articles of Incorporation (1)(6)
3(iv)	Amendments to the Articles of Incorporation October 30, 2003 (2)
4.1	Description of Securities (1)(6)
4.1(i)	Sample Common Stock Share Certificate (1)(6)
4.1(ii)	Description of Securities (2)
4.1(iii)	Sample $0.0001 par value Common Stock Share Certificate (2)
4.1(iv)	Share Escrow Agreement (2)
4.1(iv)(a)	Share Escrow Agreement with signatures (3)
4.1(v)	Form of Lock-Up Agreement (2)
4.1(v)(a)	Lock-Up Agreement of Hugo Barrientos (3)
4.1(v)(b)	Lock-Up Agreement of Omar A. Barrientos (3)
4.1(v)(c)	Lock-Up Agreement of Omar G. Barrientos (3)
4.1(v)(d)	Lock-Up Agreement of Elizabeth Schroeder & Isabel Barrientos (3)
4.1(v)(e)	Lock-up Agreement of Elizabeth Schroeder (3)
4.1(v)(f)	Lock-Up Agreement of Gene Fairchild (3)
4.1(v)(g)	Lock-Up Agreement of Charles A. Koenig (3)
4.1(v)(h)	Lock-Up Agreement of John E. Rayl (3)
4.1(v)(i)	Lock-Up Agreement of Elisa Giordano (3)
4.1(v)(j)	Lock-Up Agreement of Christopher H. Giordano (3)
4.1(v)(k)	Lock-Up Agreement of Michael Giordano (3)
4.1(v)(l)	Lock-Up Agreement of Nicholas Giordano (3)
4.1(v)(m)	Lock-Up Agreement of Birchwood Capital Advisors, Inc. (3)
4.1(vi)(a)	Class A Warrant Agreement dated November 20, 2007 (9)
4.1(vi)(b)	Sample Class A Warrant Certificate (9)
4.1(vii)	Sample Series A Convertible Stock Certificate (9)
4.2	Resolution to Incorporate Spin-Off dated June 16, 1999 (1)(6)
4.3	Resolution for the Transfer of Intellectual Assets dated August 14, 2002 (1) (6)
4.4	Resolution Stock Dividend dated September 20, 2002 (1)(6)
4.5(i)	Payment Agreement Omar Barrientos (1)(6)
4.5(ii)	Payment Agreement Chris Giordano (1)(6)
4.5(iii)	Payment Agreement John E. Rayl (1)(6)
4.5(iv)	Payment Agreement Charles A. Koenig (1)(6)
4.6(i)	Resolution to Issue Stock to Omar Barrientos (1)(6)
4.6(ii)	Resolution to Issue Stock to Chris Giordano (1)(6)
4.6(iii)	Resolution to Issue Stock to John E. Rayl (1)(6)
4.6(iv)	Resolution to Issue Stock to Charles A. Koenig (1)(6)
4.7(i)	Subscription Agreement Omar Barrientos (1)(6)
4.7(ii)	Subscription Agreement Chris Giordano (1)(6)
4.7(iii)	Subscription Agreement John E. Rayl (1)(6)
4.7(iv)	Subscription Agreement Charles A. Koenig (1)(6)
4.8	Resolution of Board of Directors dated May 31, 1997 re: rights of Preferred Stock of USA Sunrise Beverages, Inc. (6)

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*4.9(i)	8% Convertible Secured Promissory Note and Security Agreement issued to Arturo Montepara dated November 12, 2008 in the principal amount of $5,000
*4.9(ii)	8% Convertible Secured Promissory Note and Assignment issued to David S. Lee dated December 17, 2008 in the principal amount of $100,000
5.0	Opinion of Counsel dated August 7, 2003 (1)(6)
6.0	2005 Stock Option Plan (7)
10.1	Letter of Intent with Paul Miller Sr. Trust Dated March 31, 2003 (1)(6)
10.2	Stock Purchase Agreement Among The Purchasers Executing This Agreement and Omar Barrientos and Other Stockholders of USA Sunrise Beverage, Inc. dated September 23, 2002 (3)
10.2.a	Stock Purchase Agreement Among The Purchasers Executing This Agreement and Omar Barrientos and Other Stockholders of USA Sunrise Beverage, Inc. dated September 23, 2002 with Schedule I, Appendix A and Exhibit A thereto (4)
10.2b	Sunrise USA Beverages, Inc. Shareholder Solicitation Letter (6)
10.6	Quit Claim Deed and Release dated August 18, 1998 between Dakota Mining and Construction, Inc. and USA Sunrise Beverages, Inc. (6)
10.8	Loan Agreement between Omar Barrientos and USA Sunrise Beverages, Inc. dated January 1, 1994 (6)
10.9	Note Agreement between Dr. Neil Kurti and USA Sunrise Beverages, Inc. dated November 11, 1995 (6)
10.9(i)	Note Satisfaction and Release between Dr. Neil Kurti and USA Sunrise Beverages, Inc. dated September 6, 2002 (3)
10.9(ii)	Agreement For Satisfaction and Release between Paul Miller Sr. Trust and USA Sunrise Beverages, Inc. dated September 4, 2002. (3)
10.9(iii)	Satisfaction of Judgment of Dr. Vincent E. Eilers dated January 19, 2004 (3)
10.9(iv)	Satisfaction and Release between Tesoro Corporation and USA Sunrise Beverages, Inc. executed June, 2002 (3)
12.1	Code of Ethics (8)
*31	Rule 13a-14(a)/15d-14(a) Certifications
*32	Section 1350 Certifications

	* Filed herewith

(1)	Incorporated by reference to the attachments filed with the Registration Statement of Sunrise USA, Incorporated on Form 10-SB filed with the United States Securities and Exchange Commission (the “Commission”) on August 19, 2003 (File #000-50370) (the “Form 10-SB”)
(2)	Incorporated by reference to the Exhibits filed with the Registration Statement of Sunrise USA, Incorporated on Form 10-SB Amendment No. 1 filed with the Commission on June 4, 2004 (File #000-50370) (the “Form 10-SB/A1”)
(3)	Incorporated by reference to the Exhibits filed with the Registration Statement of Sunrise USA, Incorporated on Form 10-SB Amendment No. 2 filed with the Commission on November 15, 2004 (File #000-50370) (the “Form 10-SB/A2”)
(4)	Incorporated by reference to the Exhibits filed with the Registration Statement of Sunrise USA, Incorporated on Form 10-SB Amendment No. 3 filed with the Commission on March 11, 2005 (File #000-50370) (the “Form 10-SB/A3”)
(5)	Incorporated by reference to the Exhibits filed with the Registration Statement of Sunrise USA, Incorporated on Form 10-SB Amendment No. 4 filed with the Commission on May 23, 2005 (File #000-50370) (the “Form 10-SB/A4”)
(6)	Incorporated by reference to the Exhibits filed with the Registration Statement of Sunrise USA, Incorporated on Form 10-SB Amendment No. 5 filed with the Commission on July 20, 2005 (File #000-50370) (the “Form 10-SB/A5”)
(7)	Incorporated by reference to the Exhibits filed with the Form 14C Information Statement of Sunrise USA, Incorporated, filed with the Commission on February 28, 2006 (File #000-50370) (the “Form 14C”)
(8)	Incorporated by reference to the Exhibits filed with the Form 10K of Sunrise USA, Incorporated, filed with the Commission on March 31, 2006 (File #000-50370)
(9)	Incorporated by reference to the Exhibits filed with the Form 10KSB of Hybrid Dynamics Corporation, for the year ending December 31, 2007 (File #000-50370)

(b) Reports on Form 10-K: None

Item 14. Principal Accountant Fees and Services

	For the year ended
	2009		2008
Audit Fees	$	15,000	$	37,566
Audit-Related Fees		0		0
Tax Fees		0		0
All Other Fees		0		0

Audit Fees consist of fees billed for professional services rendered for the audit of our financial statements and review of the interim financial statements included in quarterly reports and services that are normally provided by our independent accountants in connection with statutory and regulatory filings or engagements.

Audit-Related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company's consolidated financial statements and are not reported under "Audit Fees."

Tax129 consist of fees billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal and state tax compliance, tax audit defense, customs and duties, and mergers and acquisitions.

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All Other Fees consist of fees billed for products and services provided by the principal accountant, other than those services described above.

Audit Committee Pre-Approval Procedures

Our Board of Directors serves as our audit committee. Our Board of Directors approves the engagement of our independent auditors, and meets with our independent auditors to approve the annual scope of accounting services to be performed and the related fee estimates. It also meets with our independent auditors, on a quarterly basis, following completion of their quarterly reviews and annual audit and prior to our earnings announcements, if any, to review the results of their work. During the course of the year, our chairman has the authority to pre-approve requests for services that were not approved in the annual pre-approval process. The chairman reports any interim pre-approvals at the following quarterly meeting. At each of the meetings, management and our independent auditors update the Board of Directors with material changes to any service engagement and related fee estimates as compared to amounts previously approved. During 2008, all audit and non-audit services performed by our independent accountants were pre-approved by the Board of Directors in accordance with the foregoing procedures.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated April 15, 2010	By:	/s/ MARK KLEIN
		Mark Klein
		President, Principal Financial Officer and Sole Director (Principal Executive Officer)

*31	Rule 13a-14(a)/15d-14(a) Certifications
*32	Section 1350 Certifications

	* Filed herewith

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DAM Holdings, Inc. and Subsidiaries

I N D E X

Report of Independent Registered Public Accounting Firm	F-2
Comparative Consolidated Balance Sheet December 31, 2009 and 2008	F-3
Consolidated Statement of Operations For the Years Ended December 31, 2009 and 2008	F-4
Consolidated Statement of Cash Flow For the Years Ended December 31, 2009 and 2008	F-5
Statement of Stockholder’s and Member’s Equity For the Years Ended December 31, 2009 and 2008	F-7
Notes to the Consolidated Financial Statements	F-8 to F-22

F - 1

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of

DAM Holdings, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of DAM Holdings, Inc. and Subsidiaries (“the Company) as of December 31, 2009 and 2008, and the related consolidated statement of operations, stockholders’ deficit and cash flows for the years ended December 31, 2009 and 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated 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 consolidated statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of the Company’s 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of DAM Holdings, Inc. and Subsidiaries as of December 31, 2009 and 2008 and the results of its operations, and cash flows for the years ended December 31, 2009 and 2008 in conformity with accounting principles generally accepted in the United States of America.

The Company's financial statements are prepared using the 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. The Company has accumulated deficit of $2,606,252 as of December 31, 2009 and has incurred a net loss of $317,608 for the year ended December 31, 2009. These factors as discussed in notes to the financial statements 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 Note 3 to the consolidated financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Gruber & Company, LLC

Lake Saint Louis, Missouri

April 14, 2010

F - 2

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DAM HOLDINGS, INC. & SUBSIDIARIES

Comparative Consolidated Balance Sheet

As of December 31, 2009 and 2008

	December 31				December 31
	2009				2008
	(Audited)				(Audited)
ASSETS
Current Assets:
Cash		$	696		$	65,954
Accounts Receivable			-			244
Prepaid Expenses			6,295			2,250
Inventory (net of valuation reserve of $13,580 and $17,898 respectively)			92,738			85,749
Total Current Assets			99,729			154,197

Equipment			36,608			69,415
Less: Accumulated Depreciation			(22,008	)		(32,519	)
Total Equipment			14,600			36,896

Total Assets		$	114,329		$	191,093

LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts Payable		$	118,903		$	331,009
Accrued Payroll and Payroll Taxes Payable			56,550			42,575
Promissory Notes Payable Officers			61,979			71,618
Promissory Notes Payable			111,825			185,511
Current Portion of Long Term Notes Payable			87,052			17,136
Total Current Liabilities			436,309			647,849

Long Term Notes Payable			-			57,570

Total Liabilities			436,309			705,419

Stockholders' Deficit
Preferred Stock - $0.0001 par value, 900,000 shares
authorized no shares issued and outstanding			-			-
Series A Preferred Stock - $5 stated value, 660,000 shares
authorized 60,000 shares issued and outstanding			300,000			300,000
Series B Preferred Stock - $500 stated value, 2,000 shares
authorized 30 shares issued and outstanding			15,000			-
Common Stock - $.00015 par value, 99,000,000 shares
authorized, 1,291,939 shares and 56,628 shares issued and outstanding			194			8
Additional Paid-In Capital			1,969,078			1,474,310
Accumulated Deficit			(2,606,252	)		(2,288,644	)
Total Stockholders' Deficit			(321,980	)		(514,326	)

Total Liabilities and Stockholders' Deficit		$	114,329		$	191,093

The accompanying notes are an integral part of these financial statements

F - 3

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DAM HOLDINGS, INC. & SUBSIDIARIES

Consolidated Statement of Operations

For the Years Ended December 31, 2009 and 2008

	For The Year Ending December 31
	2009			2008
	(Audited)			(Audited)
Revenues	$	49,188		$	21,210
Cost of Goods Sold		21,471			12,232

Gross Profit		27,717			8,978

Operating Expenses
General and Administrative		238,823			641,499
Stock based compensation		75,658			357,543
Depreciation and amortization		12,999			10,686

Total Operating Expenses		327,480			1,009,728

Other Expenses
Interest expense		17,845			11,314
Other income		-			259,916

Net Income (Loss)	$	(317,608	)	$	(752,148	)

Basic net loss per share before extraordinary item	$	(3.59	)	$	(25.16	)
Basic net income from extraordinary item	$	-		$	-
Basic net loss per share	$	(3.59	)	$	(25.16	)

Weighted average shares outstanding		88,467			29,895

The accompanying notes are an integral part of these financial statements

F - 4

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DAM HOLDINGS, INC. & SUBSIDIARIES

Consolidated Statement of Cash Flow

For the Years Ended December 31, 2009 and 2008

	For The Year Ending December 31
	2009			2008
	(Audited)			(Audited)
Cash Flows from Operating Activities

Net (Loss)	$	(317,608	)	$	(752,148	)

Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation & amortization		12,999			10,686
Stock based compensation expenses		75,658			357,543
Officers compensation contributed to capital		172,410			-
Changes in assets and liabilities:
Accounts receivable		244			(244	)
Prepaid expenses		(4,045	)		(2,250	)
Inventory		(6,989	)		(34,103	)
Accounts payable vendors		62,386			9,011
Accrued payroll and payroll taxes		(56,549	)		14,682

Net Cash Used in Operating Activities		(61,494	)		(396,823	)

Cash Flows Used in Investing Activities:
Sale of equipment		(32,807	)		-

Cash Flows Used in Investing Activities		(32,807	)		-

Cash Flows From Financing Activities:
Sale of securities for cash, net		15,100			170,267
Proceeds from notes payable		16,700			155,000
Payment on notes payable		(2,753	)		(4,759	)
Cash acquired in acquisition		-			142,265

Net Cash From Financing Activities		29,047			462,773

Net (Decrease) Increase in Cash	$	(65,254	)	$	65,950
Cash at Beginning of Period		65,950			-
Cash at End of Period	$	696		$	65,950

The accompanying notes are an integral part of these financial statements

F - 5

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Supplemental Disclosures of Cash Flow Information:

Cash paid during the periods ending December 31:

	2009		2008
Interest	$	1,172	$	8,476
Income taxes	$	-0-	$	-0-

Supplemental Schedule of Non-cash Investing and Financing Activities:

For the year ended December 31, 2009:

The Company issued common stock for services in the amount of $75,658.

The Company issued promissory notes in payment of accrued officers compensation and accounts payable due shareholders in the amount of $150,000.

The Company issued common stock to convert a note payable in the amount of $108,891.

The Company issued common stock in termination of a royalty agreement in the amount of $7,549.

The Company issued common stock pursuant to antidilution agreements in the amount of $4,363.

An officer and two shareholders contributed services and indebtedness to the capital of the Company in the amounts of $172,410 and $140,670, respectively.

For the year ended December 31, 2008:

The Company issued common stock for services in the amount of $357,545.

The Company issued common stock for an acquisition in the amount of $140,166.

The Company issued common stock to convert a note payable in the amount of $97,619.00

The Company redeemed common stock in a settlement agreement in the amount of $84,395.00

The accompanying notes are an integral part of these financial statements

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DAM HOLDINGS, INC. & SUBSIDIARIES

Statements of Stockholder’s Deficit

For the Years Ending December 31, 2009 and 2008

	Preferred Stock				Class A Preferred				Class B Preferred				Common Stock						Additional			Accumulated			Total
	Number of				Number of				Number of				Number of						Paid-in			Retained			Stockholders'
	Shares		Amount		Shares		Amount		Shares		Amount		Shares			Amount			Capital			(Deficit)			(Deficit)
Balance, December 31, 2007		-	$	-		-	$	-		-	$	-		25,936		$	4		$	1,093,112		$	(1,536,496	)	$	(443,380	)

Shares issued for services														1,000			-			67,000						67,000
Shares issued on conversion of note														1,794			-			53,812						53,812
Shares issued for cash:
Shares of Series A preferred stock						60,000		300,000																		300,000
Series A preferred stock discount																				(283,439	)					(283,439	)
Shares of common stock														750			-			26,880						26,880
Class A warrants																				106,800						106,800
Selling agent warrants																				20,025						20,025
Shares issued for acquisition														22,500			3			140,163						140,166
Share Based Compensation																				82,167						82,167
Incentive stock options granted																				110,333						110,333
Shares received on settlement agreement														(10,549	)		(2	)		(84,393	)					(84,395	)
Shares issued for executive services														10,549			2			84,393						84,395
Shares issued in payment of indebtedness														1,000			-			43,808						43,808
Shares issued as bonus interest on notes														525			-			8,250						8,250
Shares issued for late registration penalty														540			-			5,400						5,400
Shares issued for anti-dilution agreement														2,583			-			-						-

Net loss																							(752,148	)		(752,148	)

Balance, December 31, 2008		-	$	-		60,000	$	300,000		-	$	-		56,628		$	8		$	1,474,310		$	(2,288,644	)	$	(514,326	)

Shares issued for cash:
Shares of Series B preferred stock										30		15,000														15,000
Shares of common stock														400			-			100						100
Shares issued in conversion of debt														118,653			18			108,858						108,876
Shares issued in termination of royalty agreement														28,371			4			7,545						7,549
Share issued for services														863,350			130			54,464						54,594
Shares issued in payment of accounts payable														50,000			8			2,388						2,395
Shares issued under antidilution agreements														174,537			26			8,334						8,360
Indebtedness contributed by shareholders																				140,670						140,670
Compensation contributed by officer																				172,410						172,410

Net loss																							(317,608	)		(317,608	)

Balance, December 31, 2009		-	$	-		60,000	$	300,000		30	$	15,000		1,291,939		$	194		$	1,969,078		$	(2,606,252	)	$	(321,980	)

The accompanying notes are an integral part of these financial statements

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DAM HOLDINGS, INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – DESCRIPTION OF BUSINESS

DAM Holdings, Inc. (“DAMH”) is a Nevada corporation incorporated on July 22, 1999. DAMH is a non-operating holding company owning 100% of the capital stock of Pukka USA, Inc. and subsidiaries (“Pukka”) which was acquired in a reverse acquisition transaction completed on August 15, 2006 (the “Pukka Acquisition Date”) which are now dormant and 100% of the capital stock of Delaware American Motors, Inc. and subsidiary (“DAM”) which was acquired in a purchase acquisition transaction completed on May 13, 2008 (the “DAM Acquisition Date”). DAMH, DAM and Pukka and all of their subsidiaries are collectively referred to hereafter as the “Company”.

The DAM Purchase Acquisition

On May 13, 2008 the Company issued 22,500 shares of Common Stock as the sole consideration paid in exchange for 100% of the issued shares of the common stock of Delaware American Motors, Inc., a Nevada corporation, and the sole owner of Delaware American Motors LLC (“DAMLLC”), a New Jersey limited liability company. The acquisition has been accounted for as a purchase transaction for an aggregate value of $140,166 and the accompanying financial statements include the accounts of DAM and DAMLLC for the period May 13, 2008 to December 31, 2008 and for each period thereafter.

2009 Reverse Split of Common Stock

On September 14, 2009 (the “Effective Date”) the Company filed an amendment to its articles of incorporation which reduced the number of shares of issued and outstanding common stock $0.00015 par value from 13,758,706 shares to 68,794 shares; a 200:1 reverse split (the “Reverse Split”). All references to common stock in the accompanying financial statements and these notes have been adjusted to the number of shares of common stock equivalent to DAMH’s $0.00015 par value common stock on a post-reverse split basis.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of all subsidiaries after elimination of all intercompany accounts, transactions, and profits.

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, disclosures of contingent assets and liabilities, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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Revenue Recognition

Revenue from product sales is recognized at the time products are shipped and title transfers. Allowances for returned products, charge backs and other credits are estimated and recorded as revenue is recognized.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash is held primarily in one bank. At December 31, 2009 and 2008 the Company had cash on hand of $696 and $65,954 respectively.

Accounts Receivable Allowances

Management maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market. The Company has recorded an allowance for slow moving and obsolete inventory of $13,580 at December 31, 2009 and $17,898 at December 31, 2008.

	2009		2008
Motorcycles and prototypes	$	83,246	$	68,080
Parts and supplies		23,072		17,650
Less valuation allowance		13,580		17,898
	$	92,738	$	67,832

Property, Plant and Equipment

Property, plant and equipment are carried at original cost. Expenditures for betterments and additions are capitalized, while maintenance and repairs are charged to operations as incurred. Upon sale, retirement or other disposition of property, plant and equipment, the cost and accumulated depreciation are eliminated from the accounts and gain or loss is included in the statement of income.

Depreciation is computed generally using the straight line method over the following estimated useful lives of the various classes of assets:

	Years
Buildings and improvements		40
Machinery and equipment		10
Office furniture and equipment		3 – 7

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Trademarks, Patents and Copyrights

The direct costs associated with the filing of the Company’s copyrights, trademarks and patents have been capitalized and are amortized over the effective period of the related trademarks or patents once granted (20 and 21 years). The Company follows SFAS 121, which requires a review of the Company’s trademarks and patents be made whenever events or changes in circumstances indicate that the carrying amount of the patents may not be recoverable. As of the date of these consolidated financial statements, no such events have occurred.

Long Lived Assets

Long-lived assets consist primarily of property and equipment. The recoverability of long-lived assets is evaluated by an analysis of operating results and consideration of other significant events or changes in the business environment. The Company evaluates whether impairment exists for property and equipment on the basis of undiscounted expected future cash flows from operations before interest. If impairment exists, the carrying amount of the long-lived assets is reduced to its estimated fair value, less any costs associated with the final settlement. For the years ended December 31, 2009 and 2008 there was no impairment of the Company’s long-lived assets.

Income Taxes

The Company follows SFAS No. 109, Accounting for Income Taxes, which requires the use of the asset and liability method of accounting for deferred income taxes. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Future tax benefits, including net operating loss carryforwards, are recognized to the extent that realization of such benefits is more likely than not to occur.

Fair Value of Financial Instruments

The Company’s financial instruments consist of long-term debt, interest rate swaps, accounts receivable, and accounts payable. The carrying amount of these financial instruments approximated their fair value.

In September 2006, the Financial Accounting Standards Board (“FASB”) issued a standard to define fair value, establish a framework for measuring fair value and to expand disclosures about fair value measurements. This standard does not change the requirements to apply fair value in existing accounting standards. Under this standard, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. The standard clarifies that fair value should be based on the assumptions market participants would use when pricing the asset or liability.

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To increase consistency and comparability in fair value measurements, this standard establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy disclosed is based on the lowest level of input that is significant to the fair value measurement. The three levels of the fair value hierarchy are as follows:

●

Level 1 inputs are quoted prices (unadjusted) in active markets for identical asset or liabilities that the company has the ability to access as of the reporting date.

●

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly through corroboration with observable market data.

●

Level 3 inputs are unobservable inputs, such as internally developed pricing models for the asset or liability due to little or no market activity for the asset or liability.

There were no recurring or non-recurring fair value measurements for the year ended December 31, 2009.

In March 2008, the FASB issued a standard to amend and expand the disclosure requirements of derivative instruments with the intent to provide users of the financial statements with an enhanced understanding of how and why an entity uses derivative instruments, how these derivatives are accounted for and how the respective reporting entity’s financial statements are affected. The Company adopted this standard on January 1, 2009.

The Company has no derivative instruments at December 31, 2009.

Earnings Per Common Share

Basic earnings per common share is computed based on the weighted average number of common shares outstanding during the period. Diluted earnings per common share are computed similarly but include the effect of the assumed exercise of dilutive stock options and vesting of restricted stock under the treasury stock method.

	2009				2008
Net loss		$	(317,608	)	$	(752,148	)

Weighted average common shares outstanding			88,467			29,895
Plus: dilutive options assumed exercised			-			-
Plus: weighted average non-vested restricted stock			-			-
Less: shares assumed repurchased with proceeds from exercise			-			-
Weighted average common and potentially issuable common shares outstanding			88,467			29,895

Basic earnings (loss) per common share		$	(3.59	)	$	(25.16	)
Diluted earnings per common share		$	n/a		$	n/a

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215,600 shares at December 31, 2009 and 76,904 shares at December 31, 2008 were not included in diluted earnings per share as they were anti-dilutive.

Research and Development

All costs incurred to establish the technological feasibility of new products or technology to be sold, leased, or otherwise marketed are charged to expense. Technological feasibility is established when a product design and a working model of the product have been completed and confirmed by testing. Costs to produce or purchase technology incurred subsequent to establishing technological feasibility are capitalized. Capitalization of costs ceases when the product is available for general release to customers. Costs to perform consulting or development services are charged to cost of revenues in the period in which the corresponding revenues are recognized. Costs of maintenance and customer support are charged to expense when related revenue is recognized or when these costs are incurred, whichever occurs first.

All costs associated with the development, production and sale of the DAM and Pukka technologies have been expensed in the periods to which they relate.

Recent Accounting Pronouncements

In June 2009, FASB issued a standard regarding the FASB Accounting Standards CodificationTM (the “Codification”), and the hierarchy of generally accepted accounting principles, which replaces the standard previously issued by the FASB regarding the hierarchy of generally accepted accounting principles (“GAAP”) in the United States. This standard identifies the source of accounting principles and the framework for selecting the principles used in the preparation of financial statements of non-governmental entities that are presented in conformity with GAAP (the “GAAP hierarchy”). In addition, this standard establishes the Codification as the single source of authoritative GAAP recognized by the FASB to be applied by non-governmental entities in the preparation of financial statements in conformity with GAAP. All guidance contained in the Codification carries an equal level of authority. This standard was effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company adopted this standard during the third quarter of 2009 and its adoption did not have a significant impact on its financial statements.

In December 2008, the FASB issued a standard to amend guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. This standard is effective for fiscal years ending after December 15, 2009 with earlier adoption permitted. The adoption of this standard did not have a material impact on the Consolidated Financial Statements.

In February 2008, the FASB issued a standard, which delayed the effective date of accounting for all nonrecurring fair value measurements of non-financial assets and liabilities until fiscal years beginning after November 15, 2008. The Company has not recorded any nonrecurring fair value measurements of non-financial assets and liabilities since adopting this standard on January 1, 2009.

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In April 2009, the FASB issued a standard to provide additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased. This standard is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted.

In June 2009, the FASB issued a standard to amend certain requirements of accounting for consolidation of variable interest entities, to improve financial reporting by enterprises involved with variable interest entities and to provide more relevant and reliable information to users of financial statements. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on the first fiscal year that begins after November 15, 2009 with early adoption prohibited. The adoption of this standard did not have a material impact on the Consolidated Financial Statements.

NOTE 3 – GOING CONCERN

The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles, which contemplates continuation of the Company as a going concern. The Company incurred a net loss of $317,608 and $752,148 for the years ended December 31, 2009 and 2008 respectively and as of December 31, 2009 the Company has an accumulated deficit of $2,606,252 and a working capital deficit of $477,250. Consequently, the aforementioned items raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s ability to continue as a going concern is dependent upon its ability to raise capital through equity and debt financing or other means on desirable terms. If the Company is unable to obtain additional funds when they are required or if the funds cannot be obtained on favorable terms, management may be required to, liquidate available assets, restructure the company or cease operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

NOTE 4 – PLAN OF 0PERATIONS

The current economic environment in the U.S. and abroad has continued to deteriorate throughout 2009. The effect of this deterioration on the Company is expected to be significant. The Company is a young company with a new brand and a high dollar value luxury product. Over the next twelve months we intend to build our brand name “Delaware American Motors” based upon the introduction of the Tech Twin American 13C Series and Tech Twin American Signature Series of high-performance heavy weight motorcycles. Competition in the heavyweight motorcycle market is based upon a number of factors, including price, quality, reliability, styling, product features, customer preference and warranties. In the U.S., suggested retail prices for the Company’s motorcycles range from being comparable to, to higher than the suggested retail prices for comparable motorcycles available in the market.

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Our plan of operation for the coming year is to focus on obtaining the financing necessary to undertake our goals of: (i) the development of our Tech Twin American 13C Series and Tech Twin American Signature Series of motorcycles, (ii) undertake selling efforts of these products and (iii) undertake the development of our brand.

NOTE 5 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at December 31:

	2009		2008
Machinery, plant and equipment	$	106,318	$	103,647
Accumulated depreciation		13,580		17,898
	$	92,738	$	85,749

Depreciation expense was $12,999 and $10,686 for the years ended December 31, 2009 and 2008 respectively.

NOTE 6 – DEBT AND COMMITTMENTS

Debt consists of the following at December 31:

	2009			2008
Commercial notes	$	73,706		$	77,314
Secured convertible promissory note		5,403
Unsecured convertible promissory notes		87,052			84,955
Unsecured demand promissory notes		167,402			105,374
Total		333,563			267,643
Less current portion		(333,563	)		(267,643	)
Long-term debt	$	-		$	-

Accounts Payable and Commercial Notes

Accounts payable includes accounts payable due vendors, and commercial obligations due banks under a commercial line of credit loan with a maximum loan amount of $15,000 and amounts due on various bank credit cards. Interest rates vary on the line of credit loan and the bank credit card obligations at rates ranging from 5.5% to 24% per annum, all are payable monthly and include the personal repayment guarantee of the Company's President.

Secured Convertible Promissory Notes

The Company has a $5,000 10% Convertible Secured Promissory Note (the “10% Secured Note”). The 10% Secured Note was due on May 12, 2009 and bears an annual rate of interest of ten percent (10%). The 10% Secured Note is secured by assignment of a motorcycle engine. The 10% Secured Note may be converted by the holder into shares of the Company’s common stock at a price equal to seventy-five percent (75%) of the market price of the Company’s shares on the date of conversion limited to not more than 300,000 shares. The Company also paid 25 shares of common stock as bonus interest at a fair value of $250. At the date of issuance, the Company determined that the fair value of the beneficial conversion

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feature in respect of this 10% Secured Note on the date the note was issued to be equal to $4,054 using the Black-Scholes model which amount has been recorded as a debt discount and is being amortized over the term of the note. The accompanying financial statements include $3,203 and $1,668 of interest expense and additional interest in respect of the beneficial conversion feature for the years ending December 31, 2009 and 2008, respectively.

On May 30, 2009 the Company issued an aggregate of 118,655 shares of common stock to a note holder in full conversion of a secured convertible promissory in the principal amount of $100,000 originally issued on December 17, 2008. The accompanying financial statements include $8,340 and $306 of interest expense for the years ending December 31, 2009 and 2008, respectively.

Unsecured Convertible Promissory Notes

The Company has four (4) unsecured 6% Convertible Promissory Notes payable in the aggregate amount of $50,000 (the “Convertible Notes”). The Convertible Notes bear interest at the rate of 6% per annum and are due on dates ranging from August 8, 2010 through September 8, 2010. The Convertible Notes may be converted into shares of the Company’s common stock at the election of the holder at any time prior to the maturity date at the rate of thirty dollars ($40.00) per share. Interest may, at the election of the Company, be paid in shares of the Company’s common stock at the rate of one hundred ($100.00) per share. The accompanying financial statements include $3,182 and $962 of interest expense for the year ending December 31, 2009 and 2008, respectively.

A wholly-owned subsidiary of the Company has an unsecured promissory note payable to a shareholder in the principal amount of $20,000. The note bears interest at the rate of 20% per annum and was due on June 30, 2008. Pukka is in default on the payment of this note. The accompanying financial statements include $4,000 and $3,000 of interest expense for the years ended December 31, 2009 and 2008, respectively.

Unsecured Demand Promissory Notes

The Company has promissory notes in the principal amount of $166,700 each due on demand. The notes were issued throughout 2009 and each note bears interest at the rate of 12% per annum. The accompanying financial statements include $702 of interest expense for the year ending December 31, 2009 and there is a total balance due on December 31, 2009 of $167,402.

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Conversion Feature of Convertible Promissory Notes

In accordance with Emerging Issues Task Force (“EITF”) No.00-27, “Application of EITF Issue No. 98-5, ‘Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Rates’, to Certain Convertible Instruments.” We determined there to be no value attributable to the beneficial conversion features of the Convertible Notes in that the effective conversion price of those shares was greater than the FMV price of our common stock.

Facilities Lease

The Company rents 8,300 sq. ft. of office, garage and storage space in a single facility located in Paterson, New Jersey. The lease is for an initial term of 60 months from April, 2006 at $2,500 per month and includes 2 five year renewal terms at an increase in monthly payments to $3,100 per month and $3,600 per month, respectively. The accompanying financial statements include rent expense of $30,000 and $30,712 for the year ended December 31, 2009 and 2008, respectively.

The following table summarizes the future annual rentals for all periods including renewal periods:

	Amount
Annual Rent for the year 2010	$	30,000
Annual Rent for the year 2011		30,000
Annual Rent for the year 2012		7,500
Thereafter		-
Total Aggregate Annual Rent	$	67,500

Key Employee Agreements

On May 8, 2008 the Company entered into a Key Employee Agreement with its President. The terms of the agreement provides that the executive is employed on an “at will” basis at an annual rate of compensation of $96,000, having an initial term of two years. Each agreement also provides that any intellectual property originated by the executive during his term of the agreement shall be the property of the Company.

The accompanying consolidated financial statements include an aggregate of $119,957 and $266,261 of executive officer compensation expense for the years ending December 31, 2009 and 2008 respectively.

October 10, 2008 three of the Company’s executive officers resigned and entered into a Settlement Agreement and Release with the Company which provided for, among other things, their resignations, the payment to the Company of an aggregate of 10,549 shares of the Company’s common stock being all of the shares owned by the Resigning Officers having a fair value of $84,393, the release of the Company’s obligation to pay the Resigning Officers an aggregate of $175,133 of unpaid wages and accounts payable and for mutual releases and indemnifications. The accompanying financial statements include $256,596 of other income for the year ending December 31, 2008 relating to the forgiveness of the indebtedness and receipt of the shares of stock.

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NOTE 7 – CAPITAL STOCK

Private Placement Unit Offering

The Company closed on the sale of $15,000 of the Company’s Series B Convertible Preferred Stock investment units (the “Units”). The Units were sold for an aggregate selling price of $15,000 and included 20 shares of Series B Convertible Preferred Stock, 400 shares of Common Stock and 400 Class B Warrants entitling the holders to purchase 400 shares of Common Stock. This issuance was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act (or Regulation D promulgated thereunder) for transactions by an issuer not involving a public offering. The securities issued are deemed restricted securities for the purposes of the Securities Act. The Company received a total of $15,100. The sold Units are part of Unit offering of up to 1,500 shares of Series B Convertible Preferred Stock, 30,000 shares of Common Stock on a post-reverse split basis and 30,000 Class B Warrants entitling the holders to purchase 30,000 shares of Common Stock on a post-split basis.

Preferred Stock

The Company has 338,000 shares of $0.0001 par value shares of preferred stock authorized with no shares issued and outstanding. This stock, if issued, will carry liquidation preferences and other rights, as determined by the Board of Directors.

Series A 8% Convertible Preferred Stock

The Company has 660,000 shares of “Series A 8% Convertible Preferred Stock” authorized with 60,000 shares issued and outstanding as of the date of this report having an aggregate stated value of $300,000. Each share of Series A Preferred Stock (a) has a stated value of $5.00 per share (“Stated Value”), (b) is non-voting, (c) includes a dividend of 8% per annum paid annually, (d) may be redeemed at any time for an amount equal to the Stated Value plus all accumulated and unpaid dividends, (e) may be converted into 10 shares of $0.00015 par value common stock, and has a (f) liquidation preference of $5.00 per share plus all accumulated and unpaid dividends.

The terms of these shares have been adjusted pursuant to an Anti-Dilution Agreement with the purchasers such that the purchasers may now convert their shares of Series A Preferred Stock into 13,300 shares of the Company’s common stock at an exercise conversion ratio of one (1) share of Preferred Stock to 0.22 shares of Common Stock. This adjustment does not affect the terms of the remaining authorized but un-issued shares of Series A Preferred Stock.

Series B 8% Convertible Preferred Stock

The Series B 8% Convertible Preferred Stock consists of 2,000 shares of preferred stock (the “Series B Preferred Stock”). Each share of Series B Preferred Stock has an initial issue price or face value of $500.00 (the “Original Issue Price”) and may

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be converted into shares of the Company’s $0.00015 par value common stock (the “Common Stock”) at any time at the election of the holder. The Series B Preferred Stock may also be redeemed by the Company upon the cash payment per share of $500.00 plus any unpaid dividends thereon. The Series B Preferred Stock is non-voting.

Shares of Series B Convertible Preferred Stock may be converted into fully paid and nonassessable shares of Common Stock of the Company at a price (the "Conversion Price") equal to 50% of the Market Price per share of Common Stock on the date of conversion (but the Conversion Price shall not be less than $5.00 per share (the "Minimum Price") or greater than $25.00 per share (the "Maximum Price") with respect to the Stated Value of each share of Series B Convertible Preferred Stock and on the basis of the post-reverse split shares of Common Stock. Such option may be exercised by any holder on an all or none basis on or after July 1, 2010. The Market Price per share of Common Stock on any date shall be deemed to be the average of the daily closing prices for the 10 consecutive trading days commencing 12 trading days before the day in question.

Common Stock

The Company has authorized 99,000,000 shares of common stock $.00015 par value per share (the “Common Stock”). As of December 31, 2009, the Company has 1,291,939 shares of Common Stock issued and outstanding. The Company’s shares of Common Stock are traded on the Over the Counter Bulletin Board (“OTCBB”) electronic quotation system, the trading symbol is DAMH.

On May 8, 2009 the Company entered into an agreement with the members of Garden Rise Investments LTD LLC for the termination of a Royalty Agreement dated August 31, 2006 in exchange for an aggregate of 28,371 shares of our common stock. The accompanying financial statements include $7,549 of stock based compensation expense for the year ended December 31, 2009 related to the termination of the royalty agreement.

On May 31, 2009 a noteholder agreed to convert his promissory note to shares of common stock. The Company issued an aggregate of 118,653 shares of common stock in conversion of this note and in satisfaction of an anti-dilution agreement with the noteholder. The accompanying financial statements include $8,340 of interest expense for the year ending December 31, 2009.

On December 20, 2009 the Company issued 174,536 shares of common stock pursuant to anti-dilution agreements plus 400 shares of common stock issued for $100 in cash. The accompanying financial statements include $4,463 of stock based compensation expense in respect of these shares for the year ending December 31, 2009.

On December 20, 2009 the Company issued 60,850 shares of common stock pursuant to the terms of the 2008 and 2009 Consultant Stock Compensation Plans in payment of $2,395 of prior year services and $3,880 of current period compensation expense. In addition, the Company issued 752,500 shares to its President for payment of $45,925 of accrued wages. The accompanying financial statements include $49,804 of stock based compensation expense for the year ending December 31, 2009.

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Class A Warrants

At December 31, 2009 the Company had Class A Warrants issued pursuant to its Series A Preferred Stock Private Placement Unit Offering. The terms of these Class A Warrants have been adjusted pursuant to the Anti-Dilution Agreement with the Unit purchasers such that the purchasers may purchase 13,333 shares of the Company’s common stock at an exercise price of $45.00 per share at any time prior to December 31, 2012 the date of expiration of the Class A Warrants and may be called for redemption at a redemption price of $2.00 per warrant at any time after the Company’s shares of common stock have traded above $1.50 for 10 consecutive trading days.

Class B Warrants

The Company has outstanding Class B Warrants for the purchase of 600 shares of common stock at an exercise price of $25.00 per share. The Class B Warrants (a) may be exercised at any time before expiration or redemption, (b) may be called for redemption for a redemption price of $0.01 per warrant and (c) expire on June 30, 2014. The Company may call the Warrants at any time.

Selling Agent Warrants

The Company granted a selling agent rights to purchase 2,497 shares of the Company’s common stock at an exercise price of fifty-four dollars ($54.00) cents per share at any time prior to the date of expiration of January 31, 2013.

2009 Consultant Stock Compensation Plan

The 2009 Consultant Stock Compensation Plan provides for the issuance of up to 1,000,000 shares of Company’s $0.00015 shares of Common Stock at a price to be no less than the fair value of the Company’s shares of common stock on the date of grant. On December 22, 2009 the Company filed SEC Form S-8 in registration of shares to be issued pursuant to this plan. As of the date of this report he Company has issued pursuant to the Plan 60,000 shares of common stock and granted options for the purchase of 200,000 shares of common stock at an exercise price of $1.00 per share.

Shares Available For Future Issuance

The Company has reserved shares of common stock for future issuance upon conversion of convertible debt, conversion of shares of convertible preferred stock, exercise of warrants and options and for future issuance under the Company’s 2009 Consultants Stock Compensation Plan summarized as of December 31, 2009 is presented below:

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			Conversion Rate		Number of
	Amount		Per Share		Shares
Shares of common stock authorized						99,000,000
Shares of common stock outstanding						1,291,939
Shares of common stock reserved for:
Secured convertible promissory note	$	5,567	$	0.12		46,392
Unsecured convertible promissory notes		53,961		40.00		1,349
Series A convertible preferred stock		300,000		22.50		13,333
Series B convertible preferred stock		15,000		1.00		15,000
Class A warrants				45.00		13,333
Class B warrants				25.00		600
2009 Consultants Stock Compensation Plan
Vested options outstanding				1.00		200,000
Reserved for future issuance						740,000
Selling agent warrants				54.00		2,497

Shares of common stock available for future issuance						96,676,557

Summary of Common Stock Warrants and Options Outstanding

A summary of the status of warrants and options granted at December 31, and changes during the periods then ended is presented below:

	2009			2008
		Weighted			Weighted
	Number	Average		Number	Average
	of	Exercise		of	Exercise
	Options	Price		Options	Price
Outstanding - beginning of year	15,830	$	46.40
Granted	200,600		1.07	17,580	$	47.80
Vested	-		-	-		-
Forfeited	-		-	-		-
Expired	-		-	1,750		60.00
Outstanding - end of year	216,430	$	4.39	15,830	$	46.40
Exercisable at December 31, 2009	216,430	$	4.39	15,830	$	46.40

A summary of the status of the warrants and options outstanding at December 31, 2009 is presented below:

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	Warrants Outstanding					Warrants Exercisable
			Weighted
			Average	Weighted			Weighted
			Remaining	Average			Average
Exercise		Number	Contractual	Exercise		Number	Exercise
Prices		Outstanding	Life	Price		Exercisable	Price
$	45.00	13,333	3.00	$	45.00	13,333	$	45.00
$	25.00	600	4.08	$	25.00	600	$	25.00
$	54.00	2,497	3.08	$	54.00	2,497	$	54.00
$	1.00	200,000	10.00	$	1.00	200,000	$	1.00

NOTE 8 – ACQUISITION OF DELAWARE AMERICAN MOTORS, INC.

On May 13, 2008, the Company issued 22,500 shares of $0.00015 par value common stock for the purchase of 100% of the outstanding capital of Delaware American Motors Inc. and its wholly-owned subsidiary Delaware American Motors LLC valued in the aggregate at $140,166 or $6.23 per share. The assets and liabilities were the following:

	Amount
Assets	$	241,529
Liabilities		101,363
Purchase price of DAM	$	140,166

NOTE 9 – INCOME TAXES

The Company has available at December 31, 2009 an unused operating loss carryforward of approximately $2,448,555 which may be applied against future taxable income and which expires in the years 2026 and 2028. The amount of and ultimate realization of the benefits from the operating loss carryforward for income tax purposes is dependent, in part, upon the tax laws then in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined. Because of the uncertainty surrounding the realization of the net deferred tax asset associated with the Company’s net operating loss carryforward and allowances for uncollectible accounts, the Company has established a valuation allowance equal to their tax effect and, therefore, no deferred tax asset has been recognized.

	2009		2008
Deferred tax assets:
Net operating loss and credit carryforwards	$	930,451	$	809,760
Less valuation allowance		930,451		809,760
Total deferred tax assets	$	-	$	-

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NOTE 10 – MATERIAL SUBSEQUENT EVENTS AND CONTINGENCIES

The Company has evaluated subsequent events through the time April 12, 2010 which is the date the consolidated financial statements were issued. No events have occurred subsequent to April 12, 2010, that requires disclosure or recognition in these financial statements.

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Premier Beverage Group Corp - FORM 10-K - April 15, 2010

Attached files

Premier Beverage Group Corp Reports