The accompanying notes are an integral part of these financial statements

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Primco Management Inc.

(A Development Stage Company)

Consolidated Statements of Operations

(Restated)

The accompanying notes are an integral part of these financial statements

17

Primco Management Inc.

(A Development Stage Company)

Statements of Stockholders’ Equity

(Restated)

The accompanying notes are an integral part of the financial statements.

18

Primco Management Inc.

(A Development Stage Company)

Consolidated Statements of Cash Flows

(Restated)

19

Primco Management Inc.

(A Development Stage Company)

Consolidated Statements of Cash Flows

(Restated)

Continued from previous page

The accompanying notes are an integral part of the financial statements.

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Primco Management Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2013

NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization

Primco Management Inc. (the “Company”) was incorporated under the laws of the state of Delaware on October 14, 2010.

On October 10, 2012, the Company’s board of directors adopted a resolution approving an amendment to our Articles of Incorporation to effectuate an increase of the authorized common shares from 25,000,000 par value $0.001 to 500,000,000 par value $0.001 and additionally authorized a 20 for 1 forward split increasing the number of issued and outstanding common shares from 9,245,600 common shares to 184,912,000 common shares. The forward split did not affect the number of authorized common shares or their par value.

On June 10, 2013, the Company’s board of directors adopted a resolution approving an amendment to the Articles of Incorporation increasing the authorized common shares from 500,000,000 par value $0.001 to 2,000,000,000 par value $0.00001 and to designate 10,000,000 preferred shares, par value $0.00001, to be issued from time to time in one or more series as determined by the board of directors, with the balance being designated as 1,990,000,000 common shares.

On August 6, 2013, the Company filed a Certificate of Designation with the State of Delaware to create and issue a series of 10,000,000 preferred stock to be designated the “Series A Preferred Stock” .These shares rank senior to the common stock with respect to distributions or payments in the event of any liquidation, dissolution, or winding up of the Company.

On August 19, 2013, the Company’s board of directors adopted a resolution approving an amendment to the Articles of Incorporation increasing the authorized shares from 2,000,000,000 par value $0.00001 to 5,000,000,000 par value $0.00001, with 10,000,000 preferred shares, par value $0.00001 and 4,990,000,000 common shares, par value $ 0.00001, to be issued from time to time in one or more series as determined by the board of directors.

Mergers and Acquisitions

Effective January 31, 2013, the Company executed a reverse merger with ESMG, Inc. by entering into a stock purchase agreement whereby the Company acquired all of the issued and outstanding stock of ESMG, Inc. as well as the assets, contracts and obligations of ESMG Inc. existing as of that date through a cashless exchange of stock. ESMG Inc., which was formed in the state of Nevada on October 9, 2012, is a formative multi-media entertainment enterprise with an active music production and distribution division, as well as having a business plan to launch a motion picture and TV production and distribution division; a radio content syndication division and an on-line interactive sports division. Accordingly, as of January 31, 2013, through the acquisition of ESMG Inc., the Company expanded its operations to include entertainment in addition to continuing to offer real estate management and development services.

 On May 30, 2013, the Company completed and funded the acquisition of Top Sail Productions, “Top Sail” a music production company and record label with a multi-year US distribution agreement through WEA, a Warner Music Group Company.  The Company purchased Top Sail from Chuck Gullo, the principal of Top Sail, who will continue as Senior Executive Consultant to assist in the operation of Top Sail and other

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entertainment entities owned by the Company.  The Company purchased the membership interests in Top Sail for a total of $440,000.  The initial payment was $75,000 and $15,000 worth of the Company’s 5,000,000 restricted common shares. The remaining $350,000 is being paid in installments until June 30, 2016 pursuant to a three year consulting agreement with Mr. Gullo.  As of December 31, 2013, the Company has paid a total of $37,500 ($6,250/month) pursuant to the payment terms of the consulting agreement .

On June 1, 2013 the board of directors entered into an Amendment and Plan of Reorganization with D & B Music, Inc. (previously known as D & B Records, Inc.) a Delaware corporation, in which D & B Music, Inc. merged with and into the Company. D & B Music, Inc, has a music catalog of 41 titles. The consideration paid by the company was the assumption by the Company of a promissory note for $242,000 due Pegasus Group, Inc. together with accrued and unpaid interest thereon of $114, 841 and the issuance of 7,000,000 of the Company’s Series A preferred stock and 20,000,000 of the Company’s common stock to the sole shareholder, David Michery, who the CEO and director of the Company.

Nature of operations

The Company is a real estate management and property development company and., through its wholly-owned subsidiaries of ESMG Inc, Top Sail Productions, LLC and D & B Music, Inc., the Company produces and distributes recorded music and intends to co-produce for distribution lower budgeted motion pictures.  

In February, 2014 the Company expanded its operations to include the leasing and property management of facilities for the legal cultivation of medical cannabis,  and the acquisition and/or entering into joint ventures with third parties involving the planning, staffing, management and operation of legalized medical marijuana dispensing and cultivation.

Development stage enterprise

The Company is a development stage company as defined in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 915 "Development Stage Entities". Since October 14, 2010 the Company had been devoting substantially all of its efforts in real estate management and property development programs as well as the production and creation of recorded music by such artists as V.I.C., Tion Phipps, Jesse Scott, Kamp Hustle, Bungle Knot Dred as well as the exploitation of the Top Sail Productions’ Casey Kasem music library and the D & B music library.

 

Use of estimates

The preparation of the accompanying financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that directly affect the results of reported assets, liabilities, revenue, and expenses. Actual results may differ from these estimates.

Revenue recognition

Operating revenue during the year ended December 31, 2013 consists of the physical and digital sale of recorded music.

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company will recognize revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

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Research and development

The Company records research and development expense as incurred.

Net loss per common share

Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by ASC Topic 260, "Earnings per Share". Basic earnings per common share (“EPS”) calculations are determined by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the reporting period. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.

Income taxes

Income tax expense is based on pretax financial accounting income. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Financial Accounting Standards Board Accounting Standards Codification ASC 740, “ Income Tax,” requires the recognition of the impact of a tax position in the financial statements only if that position is more likely than not of being sustained on a tax return upon examination by the relevant taxing authority, based on the technical merits of the position.

At December 31, 2013 and 2012, the Company had no unrecognized tax benefits. The Company recognizes interest and penalties related to income tax matters in interest expense and operating expenses, respectively. As of December 31, 2013 and 2012, the Company had no accrued interest or penalties related to uncertain tax positions.

Concentration of cash

The Company maintains cash balances at a bank where amounts on deposit may exceed $250,000 throughout the year.  Accounts at the institution are insured by the Federal Deposit Insurance Corporation up to $250,000.  The Company has not experienced losses in such accounts and believes it is not exposed to any significant credit risk on cash.

Recent accounting pronouncements

The Company does not believe recently issued accounting pronouncements will have any material impact on its financial position, results of operations or cash flows.

NOTE 2 – GOING CONCERN

The Company is a development stage company and the management of the Company has devoted substantially all of its efforts to locating real estate properties for development and constriction  and to the production  and/or distribution of recorded music from the music artists it has developed  and from the music catalogs that it has acquired. The Company expects operating costs to continue to exceed funds generated from operations until significant revenues are generated from its operations and from new financing sources.

The Company had only generated minimal revenues from its operations through December 31, 2013 mainly due to the unsuccessful and disappointing  sale of  recorded music from the music artists it has under contract. As a result, the Company expects to continue to incur operating losses in the near term, and

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the operations in the near future are expected to continue to require working capital. The ability of the Company to continue as a going concern is in turn dependent on its ability to raise capital to meet its operating requirements.

The Company’s independent auditors, in their report on the financial statements for the years ended December 31, 2013 and 2012, expressed substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that could result from the outcome of this uncertainty.

NOTE 3 - ACCOUNTS RECEIVABLE AND INVENTORY

Accounts receivable represents the net amount due from WEA/Warner Music Group from the sale of Top Sale Productions’ music CDs, and ESMG’s digital music releases through December 31, 2013.   As of December 31, 2013 and 2012, the Company had accounts receivable balances of $26,026 and $0.

 Inventory represents the finished cost of Top Sail Productions’ music CDs (including prepaid royalties to music artists) available for resale to consumers, less a reserve for defective CDs of $3,729.   As of December 31, 2013 and 2012, the Company had net inventory balances of $70,528 and $0.

NOTE 4 – REVERSE MERGER WITH ESMG, INC.

On January 31, 2013, the Company executed a stock purchase agreement with ESMG, Inc. whereby the Company’s majority stockholder sold 155,200,000 shares of common stock (approx. 86.52% of the issued and outstanding) in exchange for all of the issued and outstanding stock of ESMG, Inc.  On the date of the stock purchase agreement, ESMG, Inc. had an asset balance of $1,050,750 which consisted entirely of intangible assets related to music and picture rights and a liabilities balance of $1,050,750 which was made up of $1,025,000 in current notes payable and $25,750 in accounts payable. Management deemed it too costly to have the $1,050,750 of intangible assets appraised at fair value and therefore wrote the intangible assets down to zero with the offsetting entry to additional paid in capital.

Intellectual Property - Music

Through the acquisition of ESMG, Inc., the Company acquired the intangible assets of ESMG, Inc. which included the intellectual property rights to produce and/or co-produce original recorded music, and subsequent production and marketing costs, for the worldwide distribution of the following artists:

Artist                                            

(a)

Jesse Scott                                               

(b)

V.I.C.                                                         

(c)

 Hurricane Chris                                          

(d)

Tion Phipps                                                 

(e)

Choo Biggz                                                 

(f)

Bruce-E-Bee                                                 

(g)

Downtown Attraction                                   

(h)

Kamp Hustle                                                 

(i)

Bungle Knot Dred                                         

(j)

Other various Hip Hop catalog artists       

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Intellectual Property - Picture

Through the acquisition of ESMG, Inc., the Company acquired the motion picture rights to co-produce with Gorilla Pictures  the right to distribute worldwide the animated motion picture  “Bigfoot’s Big Halloween Adventures” (the sequel to “The Legend of Sasquatch’). Management did not record an intellectual property asset with regards to the acquisition of ESMG, Inc. due to the lack of evidence to support a current valuation of the music and picture rights. The Company did not have an independent valuation of the intangible assets acquired.  Management has reclassified the intangible assets upon acquisition to additional paid in capital due to the uncertain nature of future returns from the intellectual property assets. To date, the Company has generated minimal revenues from the music property rights.

NOTE 5 – PREPAID EXPENSES

Prepaid expenses represent fees and costs totaling $ 135,000 incurred with Southridge Partners II, LLC “Southridge”) in connection with the Equity Purchase Agreement entered into by the Company on September 30, 2013 whereby Southridge has undertaken to purchase up to $ 10 million of the Company’s issued common stock periodically over a 24 month period at a rate equal to 90% of the Company’s trading price during the applicable period prior to drawdown. The Company’s obligation to Southridge for their fee and legal costs is evidenced partly through a promissory note for $ 100,000 due June, 2014 and partly through a convertible note for $ 35,000 maturing August 20, 2014.  Under the terms of this Agreement, the Company is required to register an S-1 for the authority to issue registered common shares, which it plans to do so by the end of second quarter 2014..

 Management plans to use the net proceeds from this facility to make early retirement of convertible debt as well as to finance ongoing operations and new investments.  Because the transaction is not triggered until the successful registration of the S-1, the total cost of $ 135,000 has been treated as a prepaid expense and will be expensed concurrent with the S-1 filing.   As of the date of this filing, Southridge Partners II, LLC only advanced $20,000 to lawyers pursuant to this agreement. Furthermore, the Company is in the process of terminating the Equity Purchase Agreement with Southridge. The Company has restated its financial statements as of December 31, 2013 to write off $115,000 of prepaid expenses against $35,000 in convertible notes payable and $80,000 in promissory notes payable to Southridge Partners II, LLC.

NOTE 6 - – ACQUISITION OF D&B MUSIC, INC.

The music catalog arises from the merger of D & B Music, Inc. into the Company on June 1, 2013. D & B Music, Inc. (formerly D & B Records, Inc.) has the worldwide rights to reproduce and distribute 41 fully produced titles.

The sole shareholder of D & B Music, Inc. at the time of merger was David Michery, the Company’s CEO and President.

The Company did not record an intangible asset on this acquisition because the transaction was consumed between related parties. The Company did not have an independent valuation of the assets acquired. The cost to acquire D & B Music, Inc. was the assumption of $357,111 in liabilities as well as the par value of stock issued as noted in part (b) below

The cost of $357,111 represents:

(a)

the assumption by the Company of a promissory note, originally dated February 1, 2009, payable in the amount of $242,000 to Pegasus Group, Inc., together with the assumption of accrued and unpaid interest thereon through June 30, 2013 of $114,841, for total consideration of $ 356,841 to acquire D & B Music, Inc.; plus

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(b)

 $ 270 par value of 7,000,000 preferred shares and 20,000,000 common shares issued to David Michery for the right to access and duplicate the recording masters associated with both the D & B Music catalog and David Michery’s own music catalog, for exploitation by ESMG and distribution through WEA/Warner Music Group.

ESMG has begun to compile and rerelease albums of artists comprised in both music catalogs. Interest continues to accrue at the rate of 10% on the balance of principal due to Pegasus Group, Inc.,

NOTE 7 – FIXED ASSETS: FURNITURE AND EQUIPMENT

Property and equipment consists of the following at December 31, 2013:

 

	December 31, 2013
Property and equipment, net			$                   9,412
Less: accumulated depreciation			1,527
Property and equipment, net			$                   7,885

Depreciation expense for the three months ended March 31, 2014 was $728.

This represents the cost ($9,412) less accumulated depreciation through December 31, 2013  ($1,527) of furniture and equipment purchased for the operating offices of ESMG and Top Sail Productions, which offices became fully operational as of August 1, 2013 (see Note 4).

NOTE 8 - ACCRUED LIABILITIES

Accrued liabilities at December 31, 2013 represent the following:

Accrued interest: D & B Music, Inc. (See Note 6)	$134,805
Other accrued interest on short-term debt	40,658
Accrued management compensation due CEO and CFO	125,712
Total accrued liabilities	$301,175

NOTE 9 – DUE TO AFFILIATED COMPANY

   

The amount due to affiliated company of $13,928 at December 31, 2013 represents the balance due to Michery Inc. for costs originally incurred by Michery, Inc. totaling $25,750 to acquire and initial test market music recorded by the music artist Bruce-E-Bee. Michery Inc. assigned all right and interest to this artist to ESMG Inc. on October 22, 2013, with the understanding that ESMG Inc., reimburse Michery, Inc. those costs.  Michery Inc. is owned by our CEO, David Michery.  

NOTE 10 – COMMITMENTS & CONTINGENCIES

The Company remitted $35,000  on September 6, 2013 to open an escrow deposit to acquire a parcel of approximately 3.55 acres of land located in the city of Corona, California with already approved plans, permits and tract mapping etc. to construct 60 residential townhouses to be called “Tuscany Villas”. In addition, the Company obtained a certified appraisal on the property at a cost of $ 3,500. The total purchase price was subsequently reduced on December 5, 2013 to $4,100,000.   The current property owner agreed to take back a first trust deed note in the property of $ 2,645,000, leaving the Company to fund the balance of $1,420,000 on or before the required escrow closing and funding date of January 14, 2014.  The Company was unable to secure the required funding by the close of escrow and have forfeited the $35,000 deposit. The Company plans to pursue this project and is still in negotiations with the land owner.

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Office lease

The Company entered into a lease agreement on July 1, 2013 which commenced on August 31, 2013. The Company paid a lease deposit of $8,714 represents a security deposit paid to the landlord against the lease of office space at 6725 Sunset Boulevard, Suite 420, Hollywood, CA 90028, which houses ESMG’s music and motion picture operations. The offices consist of 2,592 square feet for a lease term of 66 months. As an inducement for the Company to lease the space, a 50% rent abatement of $ 45,100.80 was allowed by the landlord for the first 12 months’ of occupation, so that the annualized rent for the first 12 months is $ 45,100.80, plus common areas charges.  Thereafter, the rent becomes $92,897.28 in year two; $ 95,696.64 in year three; $ 98,573.76 in year four; $101,528.64 in year 5 and $ 52,280.64 for the final 6 months in year 6, plus an applicable increment for common area costs in all years.  As a further concession, the landlord granted a tenant improvement allowance of up to $25,920 to cover the cost of initial (move-in) construction build and certain equipment required by the Company.

Minimum future rental payments under the agreement are as follows:

2014 - $61,033

2015 - $93,830

2016 - $96,655

Consulting agreement with Chuck Gullo

On May 30, 2013, the Company completed and funded the acquisition of Top Sail Productions, “Top Sail” a music production company and record label with a multi-year US distribution agreement through WEA, a Warner Music Group Company.  The Company purchased Top Sail from Chuck Gullo, the principal of Top Sail, who will continue as Senior Executive Consultant to assist in the operation of Top Sail and other entertainment entities owned by the Company.  The Company purchased the membership interests in Top Sail for a total of $440,000.  The initial payment was $75,000 and $15,000 worth of the Company’s 5,000,000 restricted common shares. The remaining $350,000 is being paid in installments until June 30, 2016 pursuant to a three year consulting agreement with Mr. Gullo. As of December 31, 2013, the Company has paid a total of $37,500 ($6,250/month) pursuant to the payment terms of the consulting agreement.

NOTE 11 – INCOME TAXES

Through December 31, 2013, the Company incurred net operating losses for tax purposes of approximately $4.2 million.. The net operating loss carry forward for federal purposes may be used to reduce taxable income through the year 2033. The availability of the Company’s net operating loss carry forward may be subject to limitation if there is a 50% or more change in the ownership of the Company’s stock.

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A reconciliation of the potential federal tax benefit computed at the statutory federal income tax rate of 34% to the provision for income taxes is as follows:

	Year ended December 31, 2013	Year Ended December 31, 2012	Year Ended December 31, 2011	Inception to Year Ended December 31, 2010
Net loss for period	$(4,048,486)	$(137,540)	$(48,744)	$(12,000)
Potential tax benefit at statutory rates	$(1,376,485)	$(46,764)	$(16,473)	$(4,080)
Change in valuation allowance	1,376,485	46,764	16,473	4,080
Provision for income taxes	$0	$0	$0	$0

The cumulative deferred tax asset at December 31, 2013 and 2012 was  $1,443,802 and $ 67,417 respectively.

A 100% valuation allowance has been established against the deferred tax asset as the utilization of the loss carry forward cannot be reasonably assured. Significant components of the deferred tax assets  (liability), computed at the statutory federal tax rate of 34% are as follows:

	2013	2012
Deferred tax asset	$1,443,802	$67,417
Valuation allowance	(1,443,802)	(67,417)
Net deferred tax asset	$0	$0

Although the Company is not under examination, the tax years for 2010 and forward are subject to examination by United States tax authorities. The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense.  As of December 31,2013 and 2012, however there was no accrued interest or penalties related to uncertain tax positions.

NOTE 12 – RELATED PARTY TRANSACTIONS

Acquisition of Bruce-E-Bee artist recording contract

As explained in Note 10, the Company assumed the obligation to reimburse Michery, Inc (a company owned by our CEO) the sum of $25,750 in reimbursement of the actual costs incurred by Michery, Inc. to acquire and initial test market music recorded by the music artist Bruce-E-Bee.

 

Merger of D & B Music, Inc.

As explained in Note 7, D & B Music, Inc.(formerly D & B Records, Inc.) merged with the Company on June 1, 2013. D & B Music, Inc. has the worldwide right to reproduce and distribute 41 fully produced titles. At the time of merger, the sole owner of D & B Music, Inc. was David Michery, our CEO. As a component of the merger, David Michery received 7,000,000  preferred shares and 20,000,000 common shares of the Company.

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NOTE 13 – SHORT TERM DEBT

On November 25, 2013, Magna Funds, LLC entered into a debt purchase agreement with GAGG, Inc. for the purchase and assignment of $50,000 in principle of that certain promissory note to GAGG, Inc. in the original amount of $250,000 dated May 21, 2013. On the same date, the Company then entered into a convertible debenture with Magna Funds, LLC for that $50,000 of debt assigned. As of December 31, 2013, Magna Funds, LLC has not converted any principle on the note.

On December 30, 2013, Magna Funds, LLC entered into a debt purchase agreement with GAGG, Inc. for the purchase and assignment of $50,000 in principle of that certain promissory note to GAGG, Inc. in the original amount of $250,000 dated May 21, 2013. On the same date, the Company then entered into a convertible debenture with Magna Funds, LLC for that $50,000 of debt assigned. As of December 31, 2013, Magna Funds, LLC has not converted any principle on this note.

Short-term debt at December 31, 2013 represents the following:

Balance of Promissory Note due GGAG, Inc.	200,000
Balance of Promissory Note due Pegasus Group, Inc.	228,000
Promissory Note due Southridge Partners II, LLC	2 0,000
Balance of Promissory Note due Gorilla Pictures	265,000
Total Notes Due	$7 1 3,000

NOTE 14 - SHORT-TERM CONVERTIBLE DEBT AND DERIVATIVE LIABILITY

From time-to-time, the Company enters into convertible note agreements whereby the conversion feature is required to be bifurcated out as a derivative liability.  Upon conversion of all or a portion of the convertible note, the derivative liability associated with the principal and interest converted is valued immediately before conversion using the Black-Scholes model. The change in fair value of the derivative liability associated with the principal and interest converted was recorded as a gain/loss on fair value of derivative liability in the accompanying statement of operations, with the remaining value of that portion of the derivative liability written off with a corresponding credit to additional paid-in capital.

Convertible Notes – Asher Enterprises

On April 4, May 14, July 10, August 28, and October 14, 2013, the Company issued convertible notes of $32,500, $63,000, $55,000, $32,500, and 32,500 to Asher Enterprises, Inc. Under the terms of the notes, the Company is to repay any principal balance and interest, at 8% per annum at the maturity dates ranging from December 11, 2013 to July 21, 2014. Of the principal amounts, $2,500 to $3,000 was withheld for legal expenses from each note resulting in an on-issuance discount of the notes that will be amortized over the life of the note.  The Company may prepay the convertible promissory notes prior to maturity at varying prepayment penalty rates specified under the agreements. The convertible promissory notes are convertible into shares of the Company’s common stock after six months. The conversion price is calculated by multiplying 51 - 58% (42 - 49% discount) by the average of the lowest three closing bid prices during the 10 days prior to the conversion date. Since the conversion features are only convertible after six months, there is no derivative liability upon issuance. However, the Company accounts for the derivative liability upon the passage of time or in the event of default whereby the notes become convertible if not extinguished, as defined above. Derivative accounting applies upon the conversion feature being available to the holder, as it is variable and does not have a floor as to the number of common shares in which could be converted.  

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During the quarter ended December 31, 2013, the notes dated April 4 and May 14, 2013 became convertible into common stock the above motioned conversion rates.  The Company recognized initial derivative liability in aggregate of approximately $102,200 which resulted in a full discount of the convertible notes and an additional day one charge of $12,288 for the excess value of the derivative liability over the convertible notes. Both of the notes, including approximately $3,800 of accrued interest thereon were converted in full during the quarter ended December 31, 2013, for 283,429,725 shares of common.  Upon conversion, the discounted notes were accreted up to face value.

Convertible Notes – Magna Group, LLC

On November 25, 2013, pursuant to a debt purchase agreement, described in 12, the Company issued a convertible note of $50,000 to Magana Group, LLC. Under the terms of the note, the Company was to repay any principal balance and interest, at 12% per annum at the maturity date of August 25, 2014.  The Company could prepay the convertible promissory note prior to maturity at varying prepayment penalty rates specified under the agreement. The convertible promissory note was convertible into shares of the Company’s common stock any time after the issuance of the convertible note. The conversion price was calculated by multiplying 55% (45% discount) by the lowest trading price in the three (3) trading days prior to the conversion date.  The conversion feature was considered a derivative liability as the conversion feature was variable with no floor as to the number of common shares which could be converted.  Accordingly, the Company calculated a derivative liability using the Black-Scholes option pricing model with the following assumptions: volatility of 190.7%, expected life of 1.67 years, risk free interest rate of 0.12% and no dividends.

On December 30, 2013, pursuant to a debt purchase agreement, described in 12, the Company issued a convertible note of $50,000 to Magana Group, LLC. Under the terms of the note, the Company was to repay any principal balance and interest, at 12% per annum at the maturity date of September 30, 2014.  The Company could prepay the convertible promissory note prior to maturity at varying prepayment penalty rates specified under the agreement. The convertible promissory note was convertible into shares of the Company’s common stock any time after the issuance of the convertible note. The conversion price was calculated by multiplying 55% (45% discount) by the lowest trading price in the three (3) trading days prior to the conversion date.  The conversion feature was considered a derivative liability as the conversion feature was variable with no floor as to the number of common shares which could be converted.  Accordingly, the Company calculated a derivative liability using the Black-Scholes option pricing model with the following assumptions: volatility of 190.7%, expected life of 1.67 years, risk free interest rate of 0.12% and no dividends.

Convertible Notes – Redwood Management LLC

On April 29, 2013, the Company issued a convertible note of $200,000 to Redwood Management LLC. Under the terms of the note, the Company was to repay any principal balance and interest, at 8% per annum at the maturity date of April 29, 2014.  The Company may prepay the convertible promissory note prior to maturity at varying prepayment penalty rates specified under the agreement. The convertible promissory note was convertible into shares of the Company’s common stock any time after the issuance of the convertible note. The conversion price is calculated by multiplying 55% (45% discount) by the lowest closing day trading price during the eight (8) trading days prior to the conversion date.  The conversion feature is considered a derivative liability as the conversion feature is variable with no floor as to the number of common shares which could be converted.  Accordingly, the Company calculated the derivative liability to be $1,417,303 using the Black-Scholes option pricing model with the following assumptions: volatility of 208.6%, expected life of 1.0 year, risk free interest rate of 0.12% and no dividends.  This derivative liability exceeded the principal amount resulting in a full discount of the note and an additional day one charge for the excess value of the derivative liability of $1,217,303 which is included in the accompanying statement of operations. The discount is being amortized over the life of the note.  

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During the year ended December 31, 2013, the holder of the convertible note converted $200,000 of principal into 151,801,600 shares of common stock. In aggregate, derivative liability of $552,854 associated with the converted principal was credited to additional paid-in capital at the time of conversion. As of December 31, 2013, there was no remaining derivative liability associated with this note as all outstanding balances were fully converted.    The company recorded a gain on the change in fair value of the derivative liability of $864,449 during the yeare ended December 31, 2013.  During the year ended December 31, 2013, amortization of debt discount was $200,000. As of December 31, 2013 there was no remaining unamortized discount. The Company used the below range of inputs to the Black-Scholes pricing model for each valuation and the quarter end valuation related to the derivative liability.

Convertible Note – Redwood Fund II, LLC

On April 29, 2013, the Company issued a convertible note of $100,000 to Redwood Fund II, LLC. Under the terms of the note, the Company is to repay any principal balance and interest, at 8% per annum at maturity date of January 29, 2014. During the three months ended September 30, 2013, an additional $$50,000 was received and added to the note with the same terms and conditions for an aggregate note balance of $150,000.  The Company may prepay the convertible promissory note prior to maturity at varying prepayment penalty rates specified under the agreement. The convertible promissory note is convertible into shares of the Company’s common stock after six months. The conversion price is calculated by multiplying 55% (45% discount) by the lowest traded price during the eight (8) days prior to the conversion date. Since the conversion feature is only convertible after six months, there is no derivative liability upon issuance. However, the Company accounts for the derivative liability upon the passage of time or in the event of default whereby the note becomes convertible if not extinguished, as defined above. Derivative accounting applies upon the conversion feature being available to the holder, as it is variable and does not have a floor as to the number of common shares in which could be converted.  

During the quarter ended December 31, 2013, the $150,000 note became convertible. The conversion feature is considered a derivative liability as the conversion feature is variable with no floor as to the number of common shares which could be converted.  Accordingly, the Company calculated the derivative liability to be $79,935 using the Black-Scholes option pricing model with the following assumptions: volatility of 170.8%, expected life of 0.26 year, risk free interest rate of 0.02% and no dividends.  The discount is being amortized over the life of the note.  

During the year ended December 31, 2013, the holder of the convertible note converted $30,336 of principal into 195,653,333 shares of common stock. In aggregate, derivative liability of $38,064 associated with the converted principal was credited to additional paid-in capital at the time of conversion. As of December 31, 2013, derivative liability associated with this note of $145,773 remained outstanding.  The company recorded a loss on the change in fair value of the derivative liability of $103,902 during the year ended December 31, 2013.  During the year ended December 31, 2013, amortization of debt discount was $55,534. As of December 31, 2013 there is $24,401 of unamortized discount. The Company used the below range of inputs to the Black-Scholes pricing model for each valuation and the quarter end valuation related to the derivative liability.

Convertible Notes – WHC Capital, LLC (1)

On June 27, August 8, September 9, October 22, November 29, and December 27, 2013, the Company issued convertible notes of $50,000, $100,000, $100,000, $50,000, $50,000, and $50,000, respectively to WHC Capital, LLC.  Under the terms of the notes, the Company is to repay any principal balance and interest, at 10% per annum at the maturity dates ranging from May 1 – October 31, 2014.  The Company may prepay the convertible promissory note prior to maturity at varying prepayment penalty rates specified under the agreement. The convertible promissory notes are convertible into shares of the Company’s common stock six months after the issuance of the convertible note. The conversion price is calculated by multiplying 45% (55% discount) by the average of the three (3) lowest intra-day trading prices for the Company’s common stock during the ten (10) trading days prior to the conversion date.  Since the

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conversion features are only convertible after six months, there is no derivative liability upon issuance. However, the Company accounts for the derivative liability upon the passage of time or in the event of default whereby the notes become convertible if not extinguished, as defined above. Derivative accounting applies upon the conversion feature being available to the holder, as it is variable and does not have a floor as to the number of common shares in which could be converted.  

As of December 31, 2013, one of the notes (June 27, 2013) became convertible and was subject to derivative accounting. Accordingly, the Company calculated the derivative liability to be $58,427 using the Black-Scholes option pricing model with the following assumptions: volatility of 287.8%, expected life of 0.35 year, risk free interest rate of 0.07% and no dividends.  The discount is being amortized over the life of the note.  

As of December 31, 2013, derivative liability associated with this note of $70,314 remained outstanding.  The company recorded a loss on the change in fair value of the derivative liability of $11,877 during the year ended December 31, 2013.  During the year ended December 31, 2013, amortization of debt discount was $2,893. As of December 31, 2013 there is $47,107 of unamortized discount. The Company used the below range of inputs to the Black-Scholes pricing model for each valuation and the quarter end valuation related to the derivative liability.

Convertible Note – WHC Capital, LLC (2)

As indicated below below, the Company issued convertible promissory notes to WHC Capital, LLC.  Each note contained the same terms and maturity date.  Under the terms of the notes, the Company is to repay any principal balance and interest, at 10% per annum at the maturity date of May 1, 2014.  The Company may prepay the convertible promissory notes prior to maturity at varying prepayment penalty rates specified under the agreement. The convertible promissory notes are convertible into shares of the Company’s common stock any time after the issuance of the convertible note. The conversion prices are calculated by multiplying 45% (55% discount) by the average of the three (3) lowest intra-day trading prices for the Company’s common stock during the ten (10) trading days prior to the conversion date.  The conversion features are considered derivative liabilities as the conversion features are variable with no floor as to the number of common shares which could be converted.  

On June 27, 2013, the Company issued a convertible note of $100,000 to WHC Capital, LLC. The Company calculated the derivative liability to be $131,703 using the Black-Scholes option pricing model with the following assumptions: volatility of 259.6%, expected life of 0.84 years, risk free interest rate of 0.15% and no dividends.  This derivative liability exceeded the principal amount resulting in a full discount of the note and an additional day one charge for the excess value of the derivative liability of $31,703 which is included in the accompanying statement of operations. The discount is being amortized over the life of the note.  During the year ended December 31, 2013 accretion of discount was $100,000 based on the original convertible note and accelerated amortization due to conversation of the principal balance.  

During the year ended December 31, 2013, the holder of the convertible note converted $100,000 of principal into 133,290,807 shares of common stock. In aggregate, derivative liability of $798,067 associated with the converted principal was credited to additional paid-in capital at the time of conversion. As of December 31, 2013, there was no remaining derivative liability associated with this note as all outstanding balances were fully converted.    The company recorded a loss on the change in fair value of the derivative liability of 666,364 during the year ended December 31, 2013. The Company used the below range of inputs to the Black-Scholes pricing model for each valuation related to the derivative liability.

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On August 5, 2013, the Company issued a convertible note of $100,000 to WHC Capital, LLC.  The Company calculated the derivative liability to be $291,725 using the Black-Scholes option pricing model with the following assumptions: volatility of 382.0%, expected life of 0.74 years, risk free interest rate of 0.12% and no dividends.  This derivative liability exceeded the principal amount resulting in a full discount of the note and an additional day one charge for the excess value of the derivative liability of $191,725 which is included in the accompanying statement of operations. The discount is being amortized over the life of the note.  During the year ended December 31, 2013 accretion of discount was $100,000 based on the original convertible note and accelerated amortization due to conversation of the principal balance.  

During the year ended December 31, 2013, the holder of the convertible note converted $100,000 of principal and interest into 104,932,197 shares of common stock. In aggregate, derivative liability of $298,939 associated with the converted principal was credited to additional paid-in capital at the time of conversion. As of December 31, 2013, there was no remaining derivative liability associated with this note.  The Company used the below range of inputs to the Black-Scholes pricing model for each valuation and the quarter end valuation related to the derivative liability.

On September 9, 2013, the Company issued a convertible note of $100,000 to WHC Capital, LLC. The Company calculated the derivative liability to be $84,349 using the Black-Scholes option pricing model with the following assumptions: volatility of 382.0%, expected life of 0.64 years, risk free interest rate of 0.12% and no dividends.  This derivative liability discounted the note for a like amount and is being amortized over the life of the note.  During the year ended December 31, 2013 accretion of the discount was $84,349 based on the original convertible note and accelerated amortization due to conversation of the principal balance.  

During the year ended December 31, 2013, the holder of the convertible note converted $100,000 of principal and interest thereon into 368,980,000 shares of common stock. In aggregate, derivative liability of $273,418 associated with the converted principal was credited to additional paid-in capital at the time of conversion. As of December 31, 2013, there was no remaining derivative liability associated with this note as all outstanding balances were fully converted.    The company recorded a loss on the change in fair value of the derivative liability of 172,819 during the year ended December 31, 2013. The Company used the below range of inputs to the Black-Scholes pricing model for each valuation related to the derivative liability.

On October 9, 2013, the Company issued a convertible note of $100,000 to WHC Capital, LLC. The Company calculated the derivative liability to be $86,354 using the Black-Scholes option pricing model with the following assumptions: volatility of  309.1%, expected life of 0.56 years, risk free interest rate of 0.10% and no dividends.  This derivative liability discounted the note for a like amount and is being amortized over the life of the note.  During the year ended December 31, 2013 accretion of the discount was $27,149 based on the original convertible note.  As of December 31, 2013, there was $59,205 of unamortized discount remaining on the note.  

During the year ended December 31, 2013, the holder of the convertible note has not converted any of the principal or interest into shares of common stock. As of December 31, 2013, derivative liability associated with this note was $62,284    The Company recorded a gain on the change in fair value of the derivative liability of 24,070 during the year ended December 31, 2013. The Company used the below range of inputs to the Black-Scholes pricing model for each valuation related to the derivative liability.

In the three months ended March 31, 2014, WHC Capital., LLC converted $19,734 of convertible debt into 378,766,430 shares of common stock in the Company.

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Convertible Note – Hanover Holdings I, LLC

On November 25, 2013, the Company issued a convertible note of $32,500 to Hanover Holdings I, LLC. Under the terms of the note, the Company is to repay any principal balance and interest, at 12% per annum at the maturity date of November 25, 2014.  The Company may prepay the convertible promissory note prior to maturity at varying prepayment penalty rates specified under the agreement. The convertible promissory note is convertible into shares of the Company’s common stock any time after the issuance of the convertible note. The conversion price is calculated by multiplying 55% (45% discount) by the lowest trading prices anytime during the ten (10) trading days prior to the conversion date.  The conversion feature is considered a derivative liability as the conversion feature is variable with no floor as to the number of common shares which could be converted.  Accordingly, the Company calculated the derivative liability to be $18,664 using the Black-Scholes option pricing model with the following assumptions: volatility of 311.3%, expected life of 1.0 years, risk free interest rate of 0.14% and no dividends.  This derivative liability discounted the convertible note for a like amount and will be amortized over the life of the note.  As of December 31, 2013, $2,709 of the discount was amortized with $15,955 remaining.

For the three months ended March 31, 2014 and for the year ended December 31, 2013, the holder of the convertible note has not converted any of the principal or interest into shares of common stock. As of December 31, 2013, derivative liability associated with this note was $14,017.    The Company recorded a gain on the change in fair value of the derivative liability of $4.647 during the year ended December 31, 2013. The Company used the below range of inputs to the Black-Scholes pricing model for each valuation related to the derivative liability.

Convertible Note – Anything Media

On October 15, 2013, the Company issued a convertible note of $10,000 to Anything Media Under the terms of the note, the Company is to repay any principal balance and interest, at 8% per annum at the maturity date July 15, 2014. The convertible promissory note is convertible into shares of the Company’s common stock any time after the issuance of the convertible note. The conversion price is fixed at 60,000,000 shares and accordingly, is not subject to derivative accounting.  On October 28, 2013, the note was converted in full.

Convertible Note – Fourth Street Funding, LLC

On June 6, 2013, pursuant to a debt purchase agreement, the Company issued a convertible note of $50,000 to Fourth Street Funding, LLC. Under the terms of the note, the Company was to repay any principal balance and interest, at 8% per annum at the maturity date of December 6, 2013.  The Company could prepay the convertible promissory note prior to maturity at varying prepayment penalty rates specified under the agreement. The convertible promissory note was convertible into shares of the Company’s common stock any time after the issuance of the convertible note. The conversion price was calculated by multiplying 50% (50% discount) by the lowest trading price in the three (3) trading days prior to the conversion date.  The conversion feature was considered a derivative liability as the conversion feature was variable with no floor as to the number of common shares which could be converted.  Accordingly, the Company calculated a derivative liability using the Black-Scholes option pricing model with the following assumptions: volatility of 190.7%, expected life of 1.67 years, risk free interest rate of 0.12% and no dividends.

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Short –term convertible debt at December 31, 2013 represents the following:

Convertible Debt Due:	Original Principal	Reduction through conversion to stock	Balance at December 31, 2013	Unamortized Discount	Convertible Debt, net
Asher Enterprises, Inc.	$ 220,500	$  (95,500)	$125,000	$          0	$   125,000
Magna Group, Inc/Hanover Holdings	222,500	(177,500)	45,000	(34,619)	10,381
Redwood Management, LLC	200,000	(200,000)	0	0	-
Redwood Fund II, LLC	150,000	(30,336)	119,664	(24,401)	95,263
WHC Capital, LLC	800,000	(300,000)	500,000	(69,443)	430,557
Fourth Street Fund LP	50,000	0	50,000	0	50,000
Total	$1,678,000	$(802,336)	$839,664	$(128,463)	$711,201

Nature of Derivative Liability

From time-to-time, the Company enters into convertible note agreements whereby the conversion feature is required to be bifurcated out as a derivative liability.  Upon conversion of all or a portion of the convertible note, the derivative liability associated with the principal and interest converted is valued immediately before conversion using the Black-Scholes model. The change in fair value of the derivative liability associated with the principal and interest converted was recorded as a gain/loss on fair value of derivative liability in the accompanying statement of operations, with the remaining value of that portion of the derivative liability written off with a corresponding credit to additional paid-in capital.

The derivative liability at December 31, 2013 related to the following convertible notes, which had reached their 6 month convertible dates, but which had not yet been converted to the Company’s stock

	Derivative liability
Magna Group, Inc.	$45,166
Redwood Fund II, LLC	145,773
Southridge Partners II, LLC	25,998
WHC Capital, LLC	70,134
	$287,071

The following is the range of variables used in revaluing the derivative liabilities at December 31, 2013 and during the year then ended for derivatives that were revalued upon conversion of principle balances: .

Annual dividend yield	0
Expected life (years) of	0.08 - 1.43
Risk-free interest rate	0.02 - 0.17%
Expected volatility	170.8 - 400.9%

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NOTE 15 – STOCKHOLDERS’ EQUITY

Authorized Preferred Stock

On August 6, 2013, the Company filed a Certificate of Designation with the State of Delaware to create and issue a series of 10,000,000 preferred stock to be designated the “Series A Preferred Stock” .These shares rank senior to the common stock with respect to distributions or payments in the event of any liquidation, dissolution, or winding up of the Company.

On August 6, 2013, the registrant filed a Certificate of Designation with the State of Delaware to create and issue a series of preferred stock to be designated the “Series A Preferred Stock” by adding the following subsections to Article IV:

- There are Ten Million (10,000,000) Series A Preferred Shares with a par value of $0.001.

-These shares rank senior to the common stock with respect to distributions or payments in the event of any liquidation, dissolution, or winding up of the registrant.

- These shares are not entitled to receive any cash dividends.

- After twelve months, each Series A Preferred Share will be convertible at the option of the holder into one hundred (100) common shares.  This conversion ratio will be adjusted to account for stock splits and other, similar changes in the capital structure of the registrant.

- These shares are not entitled to any preemptive rights to purchase stock in any future stock offerings.

- Each Series A Preferred Share shall be entitled to one thousand (1,000) votes per share at any meeting of the stockholders or to participate in any action taken by the registrant or the stockholders thereof, or to receive any notice of any meeting of stockholders.

Preferred Stock Issuances

On June 1, 2013 the board of directors entered into an Amendment and Plan of Reorganization with D & B Music, Inc. (previously known as D & B Records, Inc.) a Delaware corporation, in which D & B Music, Inc. merged with and into the Company. D & B Music, Inc, has a music catalog of 41 titles. The consideration paid by the company was the assumption by the Company of a promissory note for $242,000 due Pegasus Group, Inc. together with accrued and unpaid interest thereon of $114, 841 and the issuance of 7,000,000 of the Company’s Series A preferred stock and 20,000,000 of the Company’s common stock to the sole shareholder of D & B Music, Inc., David Michery, who is also CEO and director of the Company .

Authorized Common Stock

On June 10, 2013, the Company’s board of directors adopted a resolution approving an amendment to the Articles of Incorporation increasing the authorized common shares from 500,000,000 par value $0.001 to 2,000,000,000 par value $0.00001 and to designate 10,000,000 preferred shares, par value $0.00001, to be issued from time to time in one or more series as determined by the board of directors, with the balance being designated as 1,990,000,000 common shares.

On August 19, 2013, the Company’s board of directors adopted a resolution approving an amendment to the Articles of Incorporation increasing the authorized shares from 2,000,000,000 par value $0.00001 to 5,000,000,000 par value $0.00001, with 10,000,000 preferred shares, par value $0.00001 and 4,990,000,000 common shares, par value $ 0.00001, to be issued from time to time in one or more series as determined by the board of directors.

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Common Stock Issuances

In the year ended December 31, 2013, the Company issued 1,868,002,181 shares of common stock of which 5,000,000 shares were for the purchase of Top Sail Productions, LLC as a wholly owned subsidiary, 20,000,000 shares were for the acquisition of D&B Music, 1,663,090,181 shares were for the reduction of $824,640 in convertible debt and 179,912,000 shares were deemed issued pursuant to the reverse merger with ESMG, Inc..

NOTE 16 – SUBSEQUENT EVENTS

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that no other material subsequent events exist.

Joint Venture Agreement with CanMed Ventures, Inc.

On February 23, 2014, the Company entered into a Joint Venture Agreement with CanMed Ventures, Inc., a British Columbia company, to build and operate a 30,000 square foot cultivation facility for the production of medical marijuana, whereby the Company will own 100% of the building, land and equipment and has granted CanMED a 10-year management contract for the operation of the Joint Venture.

Legal Status of Marijuana Industry in Canada

Recently, there was a Federal Court action which was commenced by 2 licensed medical marijuana patients. They won an injunction to block the new regulations from ending their right to grow marijuana or to have a designated grower. Health Canada is preparing an appeal of the injunction to have it set aside. Or the issue will go to trial within an estimated 4 to 5 months. This led to a temporary halt on growers like our proposed deal with Health Canada, The injunction did not prevent the introduction of the new regulations on April 1^st. Now there are 12 to 14 “Licensed Producers” (LP) in Canada supplying medical marijuana to the market. There are some 350 LP applications being processed by Health Canada at this time. So for now we have in Canada both the old regulations and the new regulations in effect.

Legal experts have speculated that there is a 90% likelihood of the injunction being overturned. The problem with the old regulations is that people are allowed to grow in their homes or hire someone to grow in their homes without adequate fire and security measures. Most “growers” are also sources for the illegal market. So the legal right issue is more about affordability than about the right to grow and Health Canada has the legal authority to regulate this market.

All current LP are impacted by the injunction. Instead of having a 40,000 customer pool to themselves, they must compete against the “old” system until the court decision is made. These circumstances give our Joint Venture the opportunity to capture market share that would have gone elsewhere but for the injunction. In addition, these circumstances require a re-evaluation of market strategy and tactics as follows:

·

Configure CanMED’s operations to grow and sell marijuana under both the old and the new regulations with a strong focus upon customer acquisition.

·

Look to acquire suitable land and prepare to file Health Canada license application or make agreement with company that has already filed and is well advanced in the process.

·

Make agreements with existing growers who operate under the old regulations to acquire their customers. This would bring revenues within 60 to 90 days.

As of March 31, 2014, the Company has not made any payments or advanced any assets pursuant to the joint venture agreement with CanMEd.

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Asset purchase agreement with Susie Q and Puget Power Co LLC

On March 7, 2014, the Company entered into an Asset Purchase Agreement with Jessica Vance, the owner of Suzie Q’s NPO and Puget Power CO LLC, which is located at 12710 Aurora Ave N, Seattle WA 98133. The acquired business consists of permits and licenses issued by the City of Seattle for the cultivation and sale of medical cannabis to patients, as well as the lease on the facility, and all the necessary equipment and furniture.

Under the Asset Purchase Agreement, the Company will be purchasing, free and clear of all liabilities, all rights, permits, licenses, applications, records, leases, equipment, and any other assets related to the acquired business. The sale has yet to be completed. The Agreement calls for the purchase of 100% of the assets of the Co-Op as well as the purchase and transfer of a Tier I Production License granted by the Washington State Liquor Board.

 The consideration proposed is for the Company to pay Ms. Vance a total cash payment of $250,000 and 25,000,000 common shares.

Consulting agreement

On March 7, 2014, the Company entered into a consulting agreement with Jessica Vance whereby the Company will compensate Ms. Vance a $3,000 a month.

Conditional Leases in the Los Angeles area

The Company signed a conditional lease for the launch of its first medical cannabis cultivation center. Plans call to subdivide the property into up to 6 separate nurseries to be sublet to fully licensed dispensaries in Los Angeles. Primco has decided to pull back on its MJ plans for the Los Angeles market. Legislation continues to change on a daily basis and Primco is unclear until California has ratified its position one way or another. Primco currently maintains leases in the unincorporated parts of Los Angeles and will not move forward with its LA MJ plan until local and federal law permit. Furthermore Primco has decided to focus all its efforts in the State of Washington and in Canada.

On January 13, 2014, Sherry Harden entered into a debt purchase agreement with Pegasus Capital, Inc. for a $5,000 portion of the promissory note originally in the amount of $242,000 dated February 1, 2009. On the same date, the Company then entered into convertible debenture for that $5,000 portion of debt assigned to Mrs. Harden through the debt purchase agreement. As of March 31, 2013, Mrs. Harden converted $5,000 of principle into 100,000,000 unrestricted common shares of the Company.

On January 13, 2014, SFH Capital, LLC entered into a debt purchase agreement with Pegasus Capital, Inc. for a $5,000 portion of the promissory note originally in the amount of $242,000 dated February 1, 2009. On the same date, the Company then entered into convertible debenture for that $5,000 portion of debt assigned to SFH Captial, LLC. As of March 31, 2013, SFH Capital, LLC converted $5,000 of principle into 100,000,000 unrestricted common shares of the Company.

On February 13, 2014, SFH Capital, LLC entered into a debt purchase agreement with Pegasus Capital, Inc. for a $22,515 portion of the promissory note originally in the amount of $242,000 dated February 1, 2009. On the same date, the Company then entered into convertible debenture for that $22,515 portion of debt assigned to SFH Captial, LLC. As of March 31, 2013, SFH Capital, LLC converted $22,515 of principle into 125,000,000 unrestricted common shares of the Company.

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Convertible Note – LG Capital

On February 20, 2014, the Company issued a convertible note of $50,000 to LG Capital Funding, LLC. Under the terms of the note, the Company is to repay any principal balance and interest, at 8% per annum at the maturity date of February 20, 2015.  The Company may prepay the convertible promissory note prior to maturity at varying prepayment penalty rates specified under the agreement. The convertible promissory note is convertible into shares of the Company’s common stock any time after the issuance of the convertible note. The conversion price is calculated by multiplying 50% (50% discount) by the lowest trading prices anytime during the five (5) trading days prior to the conversion date.  The conversion feature is considered a derivative liability as the conversion feature is variable with no floor as to the number of common shares which could be converted.  Accordingly, the Company calculated a derivative liability using the Black-Scholes option pricing model with the following assumptions: volatility of 311.3%, expected life of 1.0 years, risk free interest rate of 0.14% and no dividends.  As of March 31, 2014, LG Capital Funding, LLC has not converted any debt.

Convertible Note – Elegant Funding, Inc.

On January 1, 2014, the Company issued a convertible note of $20,000 to Elegant Funding, Inc.. Under the terms of the note, the Company is to repay any principal balance and interest, at 8% per annum at the maturity date of September 30, 2014.  The Company may prepay the convertible promissory note prior to maturity at varying prepayment penalty rates specified under the agreement. The convertible promissory note is convertible into shares of the Company’s common stock any time after the issuance of the convertible note. The conversion price is calculated by multiplying 45% (55% discount) by the average closing trading prices five (5) prior to the conversion date.  The conversion feature is considered a derivative liability as the conversion feature is variable with no floor as to the number of common shares which could be converted.  Accordingly, the Company calculated a derivative liability using the Black-Scholes option pricing model with the following assumptions: volatility of 311.3%, expected life of 1.0 years, risk free interest rate of 0.14% and no dividends.  As of March 31, 2014, Elegant Funding, Inc. has not converted any debt.

Issuance of Stock

In the three months ended March 31, 2014, the Company issued 3,241,997,544 shares of common stock for the reduction of $191,171 in convertible debt. The Company also temporarily canceled 135,880,000 shares to its CEO David Michery to allow the Company to issue additional shares to other parties because it reached its maximum authorized shares. The Company is currently in the process of increasing its authorized shares.

Stock Subscription Payable

In the three months ended March 31, 2014, the Company sold stock purchase agreements for 282,010,795 common shares for 194,375 cash. The Company does not have the authorized shares available to issue these shares and therefore has recorded them as a stock subscription payable.

On April 2, 2014, the Company executed a stock purchase agreement with an unrelated third party whereby the Company will issue 40,000,000 common shares for $60,000 cash.

On April 3, 2014, the Company paid Asher $100,000 for the extinguishment of all Asher’s convertible debt outstanding which includes interest and penalty.

On April 7, 2014, the Company executed a stock subscription agreement with SFH Capital whereby the Company will issue 40,000,000 common shares for $40,000 cash.

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In April of 2014, the Company received $500,000 cash pursuant to the issuance of a secured convertible promissory note and securities purchase agreement with Inter-Mountain Capital Corp. The convertible promissory note is in the amount up to $2,207,500, accrues interest at 9% per annum and is convertible into shares of the Company at a conversion rate fixed at $0.0075 per share.

On April 27, 2014, the Company executed a subscription agreement with SFH Capital whereby the Company will issue 33,325,000 common shares for $49,988.

On April 1, 2014, the Company executed a $100,000 stock purchase agreement and convertible note payable to an unrelated third party. The convertible note has 8% interest per annum, a maturity date of April 1, 2015 and has a 50% discount to market conversion feature which is based on the lowest closing trading price in the five trading days prior to conversion.

NOTE 17 – RESTATEMENT OF FINANCIAL STATEMENTS

The Company has restated its consolidated balance sheet as of December 31, 2013, its consolidated statement of operations for the year ended December 31, 2013 and from inception (October 14, 2010) to December 31, 2013, its consolidated statement of cash flows for the year ended December 31, 2013 and from inception (October 14, 2010) to December 31, 2013, and its consolidated statements of stockholders’ equity to account for the following;

1.

Revaluation of the acquisitions of D&B Music, Inc. and Top Sail Productions, LLC whereby the intangible assets acquired, totaling $1,361,056, are to be reclassified to additional paid in capital.

2.

To reclassify $115,000 of prepaid expenses against $35,000 in convertible notes payable and $80,000 in promissory notes payable to Southridge Partners II, LLC.

3.

To reconcile 110,000,000 shares of common stock believed to be issue and outstanding but were never issued by the transfer agency due to lack of authorized shares as of December 31, 2013.

The following are previously recorded and restated balances as of December 31, 2013, for the year ended December 31, 2013 and from inception (October 14, 2010) to December 31, 2013.

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Primco Management Inc.

(A Development Stage Company)

Consolidated Balance Sheets

41

Primco Management Inc.

(A Development Stage Company)

Consolidated Balance Sheets

Continued from previous page

The accompanying notes are an integral part of these financial statements.

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Primco Management Inc.

(A Development Stage Company)

Consolidated Statements of Operations

The accompanying notes are an integral part of these financial statements

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Primco Management Inc.

(A Development Stage Company)

Consolidated Statements of Cash Flows

(1)

Based on 4,835,821,341 issued and outstanding common shares and 7,000,000 issued and outstanding preferred shares as of April 15, 2014.

Securities authorized for issuance under equity compensation plans.

We have no equity compensation plans.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Director Independence

The Company’s board of directors consists of David Michery (and Alan J. Bailey until February 14, 2014).  Neither Mr. Michery nor Mr. Bailey are independent as such term is defined by a national securities exchange or an inter-dealer quotation system.

Acquisition of Bruce-E-Bee artist recording contract

As explained in Note 10, the Company assumed the obligation to reimburse Michery, Inc (a company owned by our CEO) the sum of $25,750 in reimbursement of the actual costs incurred by Michery, Inc. to acquire and initial test market music recorded by the music artist Bruce-E-Bee.

 

Merger of D & B Music, Inc.

As explained in Note 7, D & B Music, Inc.(formerly D & B Records, Inc.) merged with the Company on June 1, 2013. D & B Music, Inc. has the worldwide right to reproduce and distribute 41 fully produced titles. At the time of merger, the sole owner of D & B Music, Inc. was David Michery, our CEO. As a component of the merger , David Michery received 7,000,000  preferred shares and 20,000,000 common shares of the Company.

In 2012, the Company reported the following related party transactions at that time:

-

The Company’s officer, who provided unsecured interest free advances, net of repayments, totaling $ 22,575 to the Company through September 30, 2012, forgave those advances upon his resignation as an officer on October 17, 2012. The advance forgiven was recorded as Additional Paid-In Capital.

-

The Company incurred $ 14,200 and $26,000 during the years ended December 31, 2012 and 2011, respectively, for consultation services to a firm whose officers were related to the former CEO of the Company.

-

The Company’s  sole source of revenue through  September 30, 2012 was a  property management agreement with New Visions Group , a company owned by a former CEO and  director of the Company. Revenue recognized by the Company from this agreement during the years ended December 31, 2012 and 2011 amounted to $2,600 and $2,200, respectively.

Acquisition, through merger, of D & B Music, Inc.

On June 1, 2013 the board of directors entered into an Amendment and Plan of Reorganization with D & B Music, Inc. (previously known as D & B Records, Inc.) a Delaware corporation, in which D & B Music, Inc. merged with and into the Company. D & B Music, Inc, has a music catalog of 41 titles. The consideration paid by the company was the assumption by the Company of a promissory note for $242,000 due Pegasus Group, Inc. together with accrued and unpaid interest thereon of $114, 841 and the issuance of 7,000,000 of the Company’s Series A preferred stock and 20,000,000 of the Company’s common stock to the sole shareholder of D & B Music, Inc. , David Michery, who is also CEO  and director of the Company,

Acquisition of Bruce-E-Bee artist recording contract

In consideration for the acquisition by the Company of the exclusive recording agreement with Bruce –E- Bee, the Company assumed the obligation to reimburse Michery, Inc (a company wholly-owned by David Michery our,  CEO and director ) the sum of $25,750 in reimbursement of the actual costs incurred by Michery, Inc. to acquire and initial test market music recorded by the music artist Bruce-E-Bee.

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees. In 2013 we incurred audit fees totaling $ 6,041 being  $ 2,500 from Patrick Rodgers FCA relating to the 10Q’s in 2013  and $3,541 from  Gumbiner Savett Inc. relating to the 2012 fiscal year audit paid in 2013.  By comparison , we incurred audit fees of  $ 14,000 with Gumbiner Savett Inc for the 2012 fiscal year. Such fees included work completed for our annual audit and for the review of our financial statements included in our Forms 10-K and 10-Q.

All Other Fees. We did not incur any non-audit related fees from  Patrick Rodgers  or Gumbiner Savett Inc . during the fiscal years ended 2012 and 2011. The Board of Directors, acting as the Audit Committee considered whether, and determined that, the auditor's provision of non-audit services was compatible with maintaining the auditor's independence.

All of the services described above for fiscal years 2013 and 2012 were approved by the Board of Directors pursuant to its policies and procedures. On March 6, 2014 we appointed Terry L. Johnson  as the Company’s auditor  to replace Patrick Rogers.  We intend to continue using Terry L Johnson  solely for audit and audit-related services, tax consultation, and, as needed, for due diligence in acquisitions.

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Part IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1)  List of Financial statements included in Part II hereof

Consolidated Balance Sheets, December 31, 2013 and 2012

Consolidated Statements of Operations for the years ended December 31, 2013 and 2012

Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2013 and 2012

Consolidated Statements of Cash Flows for the years ended December 31, 2013 and 2012

Notes to the Financial Statements

(a)(2) List of Financial Statement schedules included in Part IV hereof:  None.

(a)(3) Exhibits

The following exhibits are included herewith:

Exhibit No.	Description
31	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

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

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Following are a list of exhibits which we previously filed in other reports which we filed with the SEC, including the Exhibit No., description of the exhibit and the identity of the Report where the exhibit was filed.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Primco Management Inc.

/s/ David Michery

By: David Michery

Principal Executive Officer

Date:  June 3, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/David Michery		CEO/ Director		June 3, 2014
/s/Steven John Corso		CFO		June 3, 2014

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