UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

DM Products, Inc.
(Exact name of Registrant as specified in its charter)

Nevada
________________
45-0460095
(State or other jurisdiction of  incorporation or organization)
(Primary Standard Industrial Classification Code Number)
(I.R.S. Employer Identification Number)
     
 
P.O. Box 2458
Walnut Creek, CA  94595
 
Incorp Services, Inc.
375 N. Stephanie St. - Suite 1411
Henderson ,   NV 89014
(Name and address of principal executive offices)
 
(Name and address of agent for service)

Registrant's telephone number, including area code:   925-943-2090

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement .

If any of the securities being registered on the Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box |X|

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |__|

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |__|

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |__|

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definition of “large accelerated filer, “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act

Large accelerated filer |__|                                                                Accelerated filer |__|

Non-accelerated filer |__|                                                                Smaller reporting company |X|

CALCULATION OF REGISTRATION FEE

TITLE OF EACH
CLASS OF
SECURITIES
TO BE
REGISTERED
 
 
 
AMOUNT TO BE
REGISTERED
PROPOSED
MAXIMUM
OFFERING
PRICE PER
SHARE
PROPOSED
MAXIMUM
AGGREGATE
OFFERING
PRICE (2)
 
 
AMOUNT OF
REGISTRATION
FEE
Common Stock (1)
 148,009,888
$0.0120 (2)
$1,776,118.65
$126.63
 
(1)   
Includes 148,009, 888 shares of common and an indeterminate number of additional shares of common stock issuable for no additional consideration pursuant to any stock dividend, stock split, recapitalization or other similar transaction effected without receipt of consideration, which results in an increase in the number of outstanding shares of our common stock. In the event of a stock split, stock dividend or similar transaction involving our common stock, in order to prevent dilution, the number of shares registered shall be automatically increased to cover the additional shares in accordance with Rule 416(a) under the Securities Act of 1933 .

(2)   
In accordance with Rule 457(c), the aggregate offering price of the common stock is estimated solely for the calculating of the registration fees due for this filing. For the initial filing of this Registration Statement, this estimate was based on the average of the high and low sales price of our stock reported by Pink Sheets on April 1, 2010, which was $0.0120 per share.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE.

COPIES OF COMMUNICATIONS TO:
Scott Doney, Esq.
CANE CLARK, LLP
3273 E. Warm Springs Road
Las Vegas, NV  89120
(702) 312-6255 (702) 944-7100
 
SUBJECT TO COMPLETION, Dated April 1, 2010

PROSPECTUS
DM PRODUCTS, INC.
168,009,888
SHARES OF COMMON STOCK
PUBLIC OFFERING
___________________

The selling shareholders are registering in this prospectus 148,009,888 shares of common stock.  The shares being offered under this prospectus are comprised of:

§  
104,903,888 shares of common stock issued as the result of a Share Exchange Agreement (more fully described elsewhere in this Prospectus);

§  
43,076,000 shares of common stock issued in consideration for services provided to our company; and

§  
30,000 shares of common stock issued in private placements.

We will not receive any proceeds from the sale of shares in this offering. We will pay the expenses of registering these shares. We have not made any arrangements for the sale of these securities.
 
The selling stockholders may sell common stock from time to time in the principal market on which the stock is traded at the prevailing market price or in negotiated transactions. Our common stock is quoted on the Pink OTC Markets, Inc. (“Pink Sheets”) under the symbol “DMPD.PK.” The last reported sale price of our common stock on the Pink Sheets on March 1, 2010, was $0.0120 per share.
 
The purchase of the securities offered through this prospectus involves a high degree of risk.  See section entitled “Risk Factors” starting on page 6.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The information in this prospectus is not complete and may be changed.  We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective.  The prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

The Date of This Prospectus is: April 1, 2010
 
 
Table of Contents
 
GRAPHIC
 
Page
 
 
45
52
 
 
Summary

The Company

Our Business

We are in the business of locating inventive products and coordinating the process of marketing those products on infomercials and other distribution channels.  Within the last five years, we have only exploited one such product, a fishing lure product known as the Banjo Minnow Fishing Lure System (“Banjo Minnow”). We own 75% interest in a joint venture, known as Direct Success LLC #3, which has the exclusive rights to manufacture, use, distribute, sell, advertise, promote and otherwise exploit the Banjo Minnow.

We do not manufacture or distribute the products that we locate to market.  In the case of Banjo Minnow, our joint venture entity subcontracted all manufacturing and distribution details to a company known as TriStar Products, Inc. The Banjo Minnow was aired on an infomercial and is responsible for all of our revenues in the past five years.  We receive royalties from the sales of the Banjo Minnow that TriStar distributes in proportion to our holdings in Direct Success LLC #3.

We are currently looking to locate and market innovative health, beauty, fashion, fitness and other products for sale through infomercial marketing and distribution channels. Profits are expected to be derived from inbound sales, outbound sales, up sells and retail distribution. In addition to direct sales from infomercial play, infomercials drive customers to websites and retail centers and assist in branding products and driving product demand. Infomercials currently run in many foreign markets in addition to the US, and we believe that foreign markets represent a tremendous growth opportunity. Our primary objective is to penetrate this rapidly expanding industry by introducing unique and innovative consumer products to national and international markets through a series of infomercial campaigns. We intend to aggressively develop, finance, produce and market various new products for television infomercials. We further intend to systematically expand our product list using a direct response model.

Our operational strategy consists of employing one of three distinct business alternatives for each product/infomercial:

§   Complete Project Funding - We would obtain the exclusive licensing rights to products and pay a nominal royalty (2-5%) of gross sales to the product developer;

§   Joint Venture Projects - We would share costs of production, marketing and distribution and would share revenues with product developers; and

§   Straight Royalty Arrangements - We would partially finance the infomercials in exchange for a fixed royalty on gross sales.
 

The key to our ability to continually attract new products and new product developers will, in large part, determine our success. As part of our strategy, we intend to develop strategic alliances with strong companies that are established operators in the infomercial and advertising industry.

Corporate History

We were incorporated on March 1, 2001 under the laws of the state of Nevada under the name Effective Sports Nutrition Corporation.  On April 11, 2005, Effective Sports Nutrition changed its name to Midwest E.S.W.T. Corp. On July 18, 2005, the company entered into a share exchange agreement (the “Share Exchange Agreement”) with Direct Success, Inc., a California corporation.  As a result of the agreement, Midwest E.S.W.T issued an aggregate of 114,851,043 shares of common stock to the shareholders of Direct Success, Inc. in exchange for all of the issued and outstanding common stock in Director Success, Inc. On December 14, 2005, Midwest E.S.W.T changed its name to DM Products, Inc.  As a result of this transaction, Direct Success, Inc. is the wholly owned subsidiary of the registrant, DM Products, Inc.

The Offering

Securities Being Offered
 
Up to 148,009,888 shares of our common stock, issued to shareholders of Direct Success, Inc as the result of 1) the Share Exchange Agreement between us and Direct Success, Inc., 2) shares issued as compensation for services provided to the company, and 3) shares issued pursuant to a private placements.
 
Offering Price and Alternative Plan of Distribution
All shares being offered are being sold by existing shareholders without our involvement, so the actual price of the stock will be determined by prevailing market prices at the time of sale or by private transactions negotiated by the selling shareholders. The offering price will thus be determined by market factors and the independent decisions of the selling shareholders.
 
Minimum Number of Shares To Be Sold in This Offering
None

Securities Issued and to be Issued
239,937,352 shares of our common stock are issued and outstanding as of April 1, 2010. All of the common stock to be sold under this prospectus will be sold by existing shareholders. There will be no increase in our issued and outstanding shares as a result of this offering.

Use of Proceeds
We will not receive any proceeds from the sale of the common stock by the selling shareholders.
 
Financial Information

 
Balance Sheet Data
Fiscal Year Ended
12/31//2007 (audited)
 
Fiscal Year Ended
12/31/2008 (audited)
 
Fiscal Year Ended
12/31/2009 (audited)
Cash
Total Assets
Liabilities
Total Stockholder’s Equity
$
 
 
 
2,358
41,020
76,258
(35,238) 
 
$
 
 
 
7,786
95,745
129,730
(33,985)
 
$
 
 
 
36,729
119,195
56,619
62,576
 
Statement of Operations
   
Revenue
Net Loss/Net Profit for Reporting Period
$
 
169,980
(163,051)
 
$
 
220,261
(38,693)
 
$
 
363,767
88,670
 

Risk Factors

An investment in the Shares involves a high degree of risk.

You should carefully consider the risks described below before purchasing any shares. Our most significant risks and uncertainties are described below; if any of the following risks actually occur, our business, financial condition, or results of operations could be materially adversely affected, the trading of our common stock could decline, and you may lose all or part of your investment therein. You should acquire the shares only if you can afford to lose your entire investment. Our filings with the Securities and Exchange Commission also contain forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks we have described below. Please refer to “Note Regarding Forward-Looking Statements” on pages 15 of this Prospectus.

Risks Related to Our Financial Condition
 
Because we had reoccurring losses, it is uncertain whether we will be able to achieve our business objectives .
 
Although we had net income of $88,670 for the year ended December 31, 2009, we incurred net losses of $38,693 and $163,051 for the years ended December 31, 2008 and 2007, respectively.    We cannot assure you that we will not sustain similar or higher net losses or that we will ever sustain profitability on a quarterly or annual basis at any time in the future. Our operations are subject to the risks and competition inherent in the establishment of a business enterprise. There can be no assurance that future operations will be profitable. Revenues and profits, if any, will depend upon various factors, including the current market for our products. We may not achieve our business objectives and the failure to achieve such goals would have an adverse impact on us.
 
We expect to incur net losses as we build our business and execute our operational strategy.  We are using a substantial portion of our cash resources to develop, market and sell our products.  We may not achieve profitability or positive cash flow from our operations before we use up our cash.  If we cannot generate positive cash flow from our activities in a timely basis or raise additional capital, your shares may be worthless.
 
Because we have limited operating capital, and if we are not successful in continuing to grow our business and obtaining additional capital, then we may have to scale back or even cease our ongoing business operations.

We do not have sufficient capital for current operations through our cash position and current cash flows. We had working capital of $62,576 as of December 31, 2009. We will require additional financing to pay our debts, operate our business and to fund our growth plans.  There can be no assurance that we will be able to obtain such financing on attractive terms, if at all. We have no firm commitments for additional cash.  If we are not able to raise capital and operate profitably, we may have to scale back or cease operations and investors may lose some or all of their investment in our company.
 

Because we have faced the recurrent inability to continue as a going concern, you may lose your entire investment in our company.

Our independent registered public accounting firm’s opinion on our 2007, 2008 and 2009 financial statements, which are included herein, includes an explanatory paragraph indicating substantial doubt about our ability to continue as a going concern. For the past 3 years or more, we have operated with limited operating capital.  We will continue to face immediate and substantial cash needs, and there is a risk we may continue to require more investment capital to fund our business plan.  You may lose your entire investment in our company.
 
Risks Related to Our Business

Because we are a developing company with limited operating history and only one current source of revenue,  our business may fail should an event arise which would compromise this single source of revenue.

We are a developing company with limited operations since the date of our inception. Our entire revenue, for the past five years, has been derived through our wholly owned subsidiary, and that entity, in turn, has derived its revenue as the result of one infomercial campaign. Although our management is continually searching for additional products and business opportunities, and has completed evaluations of several potential product ideas, currently, total company revenue is derived from royalty payments received as a result of the Banjo Minnow fishing lure infomercial campaign.  Should an event arise which would compromise the royalties we receive from the Banjo Minow campaign, it will be unlikely that we will continue to survive as a going concern.

Because our marketplace is inherently “hit driven,” and our success depends on the appeal of products on infomercials, we may be forced to discontinue operations if our campaigns are unsuccessful.

We depend on infomercials as our sole distribution channels for marketing and selling our products. The success rate of an infomercial is approximately 10% .  If customers are not as receptive to new infomercial content or product offerings, our sales through our infomercial sales channel may decline. In addition, if there is a marked increase in the price we pay for our media time, the cost-effectiveness of our infomercials will decrease. If our infomercials are broadcast during times when viewership is low, this could also result in a decrease of the cost-effectiveness of such broadcasts, which could cause our results of operations to suffer. Also, to the extent we have committed in advance for broadcast time for our infomercials, we would have fewer resources available for potentially more effective distribution channels.

To develop a profitable business, we must minimize the number of unsuccessful campaigns and use our capital and any profits from successful campaigns to fund operations between successful campaigns.  Although we are starting to see some success with the Banjo Minnow campaign, we may not have enough cash from internal sources to continue operations.  If that were to happen, we would need to seek additional funding, which would dilute our current shareholders and might not be available on any reasonable terms.  If we cannot raise needed additional capital, we would be forced to discontinue operations.
 

If we are unable to identify and market new products, our ability to increase or maintain our sales and profitability will be negatively affected.

Our ability to maintain and increase revenues depends, to a large extent, on the periodic introduction and availability of new products. If we fail to identify these new products, or if we fail to enter into relationships with their developers prior to widespread distribution within the market, our sales and profitability could be adversely affected. Any new products we identify may have a limited sales life. As a result, we will need to continue to identify new successful products to remain in business. If we identify a potentially successful product, we must also develop a successful campaign to attract consumer interest.

Furthermore, it is possible that new products will never achieve widespread consumer acceptance, also adversely affecting our sales and profitability.

In the event that we are unable to successfully compete within the infomercial industry, we may not be able to achieve profitable operations.

The business of selling products in infomercial industry is highly competitive. This market includes numerous manufacturers, distributors, marketers and retailers that actively compete for consumers both in the United States and abroad. The market is highly sensitive to the introduction of new products, which may rapidly capture a significant share of the market. In addition, our products may be, or are at the risk of becoming, obsolete due to new product introductions or new technologies. Our competitors may foresee the course of market development more accurately than we do, develop products and technologies that are superior to ours, produce similar products at a lower cost than we can or adapt more quickly to consumer preferences. Any of these developments would harm our operating results.

We compete in select product categories against a number of multinational manufacturers, many of which are larger and have substantially greater resources than we do. Therefore, these larger competitors have the ability to spend more aggressively on advertising, marketing and research and to grow more quickly through acquisitions. Our largest competitors currently sell their products more outlets than we do and have significantly more selling capabilities than we do.

Our competitors may attempt to gain market share by offering products at prices at or below the prices at which our products are typically offered. Competitive pricing may require us to reduce our prices, which would decrease our profitability or result in lost sales. Our competitors, many of whom have greater resources than we do, may be better able to withstand these price reductions and lost sales. We cannot assure you that future price or product changes by our competitors will not adversely affect our net sales or that we will be able to react with price or product changes of our own to maintain our current market position.

 
Because our products may have defects, we could be subject to significant costs or damages which could adversely affect market acceptance of our products.

Despite testing and quality assurance efforts that we intend to implement, it is possible that product defects will be found in some of our products.  The manufacture and sale of consumer goods involves an inherent risk of liability in the event of product failure or claim of harm caused by product operation.  If this should happen, it is likely that our products will be delayed in gaining market acceptance and our sales will be lower than projected.  These events may also require us to divert our resource from product development in order to resolve these problems.  Additionally, we may suffer a consequent injury to our reputation, increased service and support costs, any of which could have a material adverse effect on our ability to successfully conduct our planned business.  We have in place, through Tristar Products, Inc., product liability insurance for the Banjo Minnow and we plan to obtain product liability insurance coverage for additional products as well; however, there can be no assurance that such coverage will remain available at a reasonable cost and in amounts sufficient to protect us against claims or recalls that could have a material adverse effect on our financial condition and prospects.

If we fail to implement our product manufacturing and distribution strategy effectively, our revenue, gross margin and profitability could suffer.

We rely on third party distributors and manufactures for our products.  For our Banjo Minnow product, we rely on TriStar Products, Inc. to manufacture and distribute the product to customers.

We do not own or operate any manufacturing facilities. We plan to pursue and enter into written agreements with the third party manufacturers to manufacture our products and ship them directly to our customers. If we lose the services of our third party manufacturers, we may be unable to secure the services of replacement manufacturers. In addition, if we are unable to procure written agreements with all of these manufacturers, they could refuse to supply some or all of our products, reduce the number of products that they supply or change the terms and prices under which they normally supply our products. The occurrence of any such conditions will have a materially negative effect upon our reputation and our ability to distribute our products, which will cause a material reduction in our revenues.

We plan to use a variety of different distribution methods to sell our products in the future aside from informercials, including direct response television sales, indirect sales through retail stores and sales through a website. Successfully managing the interaction of our direct and indirect channel efforts to reach all of the potential customer segments for our products is a complex process. Moreover, since each distribution method has distinct risks and gross margins, our failure to implement the most advantageous balance in the delivery model for our products could adversely affect our revenue and gross margins and therefore profitability.

 
If we are not granted full protection for property rights over any copyrights, trademarks, service marks and trade secrets, we may have difficulty safeguarding our name or the public’s identification of our brand resulting in a potential loss of any competitive advantage.

We do not currently own, either legally or beneficially, any patent or trademark.  However, our future success relies, in part, on our ability to protect any copyrights, trademarks, service marks and trade secrets we acquire.  We intend to rely primarily on a combination of statutory and common law copyright, trademark and trade secret laws, customer licensing agreements, employee and third-party nondisclosure agreements and other methods to protect those proprietary rights.  We anticipate entering into confidentiality and invention assignment agreements with our employees and contractors, and nondisclosure agreements with parties with which we conduct business in order to limit access to and disclosure of our proprietary information.  We can make no guarantee that these contractual arrangements or any other steps we may take to protect our intellectual property will prevent misappropriation of our technology or that we will succeed in deterring independent third party development of similar products or businesses.  We plan to register any inventions eligible for patent or trade protection.  However, effective patent, trademark, service mark, copyright and trade secret protection may not be available in every country in which we seek to do business.  Additionally, as part of our distribution network, we may be required to license certain of our intellectual property to distributors.  There can be no assurance that such licensees will not take actions that might materially adversely affect the value of our proprietary rights or reputation.  We will also rely on certain licensed technology from suppliers of key database technology, operating systems and certain hardware components in order to conduct our business.  We can make no guarantee that these third party technology licenses will continue to be available to us on commercially reasonable terms.  If any one of these licenses terminates and a replacement license is not readily available, we may be forced to obtain substitute technology with a lower quality of performance on less favorable terms.  If this should happen our operational efficiency could materially and adversely affect our results of operations.

There can be no assurance that third parties will not assert a claim of infringement against us with respect to past, current or future technologies.  We expect that participants in the infomercial market will be increasingly subject to infringement claims, as the number of services and competitors in this industry segment grows.  Any such claim, whether meritorious or not, could be time consuming, result in costly litigation, cause service upgrade delays or require us to enter into royalty or licensing agreements.  We may not be able to negotiate such royalty or licensing agreements on terms acceptable to us.  As a result, any such claim could have a material adverse effect upon our business, results of operations and financial condition.

If we are unable to successfully manage growth, our operations could be adversely affected.

Our progress is expected to require the full utilization of our management, financial and other resources, which to date has occurred with limited working capital. Our ability to manage growth effectively will depend on our ability to improve and expand operations, including our financial and management information systems, and to recruit, train and manage sales personnel. There can be no absolute assurance that management will be able to manage growth effectively.

If we do not properly manage the growth of our business, we may experience significant strains on our management and operations and disruptions in our business. Various risks arise when companies and industries grow quickly. If our business or industry grows too quickly, our ability to meet customer demand in a timely and efficient manner could be challenged. We may also experience development delays as we seek to meet increased demand for our products. Our failure to properly manage the growth that we or our industry might experience could negatively impact our ability to execute on our operating plan and, accordingly, could have an adverse impact on our business, our cash flow and results of operations, and our reputation with our current or potential customers.

 
Because one of our largest shareholders is also our legal counsel, the loss of his services could substantially affect our business operations

Our legal counsel is currently the second largest shareholder in the company.  We anticipate continuing such representation unless a conflict of interest arises.  If such a conflict arises, our Board will consider the extent to and the manner in which our interests may diverge from those of our legal counsel, officers and directors, and our directors will vote to determine whether to seek new counsel or waive any potential conflict.

If we are unable to hire and retain key personnel, we may not be able to implement our business plan.

If any member of our senior management should cease working on our behalf, our business could be materially and adversely affected.  We do not maintain "key person" life insurance policies.  Our future success also depends on our ability to identify, attract, hire, train, retain and motivate other highly skilled technical, managerial, marketing and customer service personnel.  Competition for such personnel is intense, and there can be no assurance that we will be able to successfully attract, integrate or retain sufficiently qualified personnel.  If we fail to retain and attract the necessary personnel, our ability to execute our business plan could be materially and adversely affected.

Risks Related to Our Common Stock

Our Common Stock is quoted on the Pink Sheets, which may limit the liquidity and price of our Common Stock more than if our Common Stock were quoted or listed on the Nasdaq Stock Market or a national exchange.

Our securities are currently quoted on the Pink Sheets, a FINRA -sponsored and operated inter-dealer automated quotation system for equity securities not included in the Nasdaq Stock Market. Quotation of our securities on the Pink Sheets may limit the liquidity and price of our securities more than if our securities were quoted or listed on the Nasdaq Stock Market or a national exchange. Some investors may perceive our securities to be less attractive because they are traded in the over-the-counter market. In addition, as a Pink Sheets listed company, we do not attract the extensive analyst coverage that accompanies companies listed on other exchanges. Further, institutional and other investors may have investment guidelines that restrict or prohibit investing in securities traded on the Pink Sheets. These factors may have an adverse impact on the trading and price of our Common Stock.

The trading price of our common stock may decrease due to factors beyond our control.

Our stock is currently quoted on the Pink Sheets.  The stock market from time to time has experienced extreme price and volume fluctuations, which have particularly affected the market prices for emerging growth companies and which often have been unrelated to the operating performance of the companies. These broad market fluctuations may adversely affect the market price of our common stock. If our shareholders sell substantial amounts of their common stock in the public market, the price of our common stock could fall. These sales also might make it more difficult for us to sell equity, or equity-related securities, in the future at a price we deem appropriate.
 
 
The market price of our common stock may also fluctuate significantly in response to the following factors, most of which are beyond our control:
 
§  
variations in our quarterly operating results;

§  
changes in general economic conditions and in the child health care product industry;

§  
changes in market valuations of similar companies;

§  
announcements by us or our competitors of significant new contracts, acquisitions, strategic partnerships or joint ventures, or capital commitments;

§  
loss of a major supplier, customer, partner or joint venture participant; and

§  
the addition or loss of key managerial and collaborative personnel.

Any such fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. As a result, stockholders may be unable to sell their shares, or may be forced to sell them at a loss.

If a market for our common stock does not develop, shareholders may be unable to sell their shares.

A market for our common stock may never develop. We intend to contact an authorized OTC Bulletin Board market-maker for sponsorship of our securities on the OTC Bulletin Board upon the effectiveness of the registration statement of which this prospectus forms a part. However, our shares may never be traded on the bulletin board, or, if traded, a public market may not materialize. If our common stock is not traded on the bulletin board or if a public market for our common stock does not develop, investors may not be able to re-sell the shares of our common stock that they have purchased and may lose all of their investment.

If the selling shareholders sell a large number of shares all at once or in blocks, the market price of our shares would most likely decline.

The selling shareholders are offering 148,009,888 shares of our common stock through this prospectus. The outstanding shares of common stock covered by this prospectus represent approximately 61.69% of the common shares outstanding as of the date of this prospectus. Shares sold at a price below the current market price at which the common stock is trading will cause that market price to decline. Moreover, the offer or sale of a large number of shares at any price may cause the market price to fall.
 

Because we will be a public reporting company, we face increased costs and risks that could harm our growing business.

As a result of the registration of our common stock on this Form S-1, we will become a public reporting company.  As such, we will incur significant legal, accounting and other expenses that we have not incurred in the past.  In addition, the Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the SCC, has required changes in corporate governance practices of public companies.  We expect these new rules and regulations to increase our legal and financial compliance costs, and to make some activities more time consuming and costly.  These new rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly, to serve on our audit committee, and qualified executive officers.

Effective internal controls are necessary for us to provide accurate financial reports.  We are beginning to evaluate how to document and test our internal control procedures to satisfy the requirements of Section 404 of the Sarbanes Oxley Act of 2002 and the related rules of the SEC, which require, among other things, our management to assess annually the effectiveness of our internal control over financial reporting and our independent registered public accounting firm to issue a report on that assessment.  During the course of this documentation and testing, we may identify significant deficiencies or material weaknesses that we may be unable to remedy before the deadline of those reports.

There can be no assurance that we will maintain adequate controls over our financial processes and reporting in the future or that those controls will be adequate in all cases to uncover inaccurate or misleading financial information that could be reported by members of management.  If our controls fail to identify any misreporting of financial information, or our management or independent registered public accounting firm were to conclude, in their reports, that our internal control over financial reporting was not effective, investors could lose confidence in our reported financial information and the trading price of our shares could drop significantly.  In addition, we could be subject to sanctions or investigations by the stock exchange upon which our common stock may be listed, the SEC or other regulatory authorities, which would require additional financial and management resources.

Because we do not expect to pay dividends for the foreseeable future, investors seeking cash dividends should not purchase our common stock.

We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future. Our payment of any future dividends will be at the discretion of our board of directors after taking into account various factors, including but not limited to our financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time. Accordingly, investors must rely on sales of their own common stock after price appreciation, which may never occur, as the only way to realize their investment. Investors seeking cash dividends should not purchase our common stock.

 
Because we will be subject to the “Penny Stock” rules, the level of trading activity in our stock may be reduced.

Broker-dealer practices in connection with transactions in “penny stocks” are regulated by penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on some national securities exchanges or quoted on Nasdaq). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, broker-dealers who sell these securities to persons other than established customers and “accredited investors” must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. Consequently, these requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security subject to the penny stock rules, and investors in our common stock may find it difficult to sell their shares.

If our shares are quoted on the over-the-counter bulletin board, we will be required to remain current in our filings with the SEC and our securities will not be eligible for quotation if we are not current in our filings with the SEC.

Currently, our shares are quoted on the Pink Sheets.  In the event that our shares are quoted on the over-the-counter bulletin board, we will be required to remain current in our filings with the SEC in order for shares of our common stock to be eligible for quotation on the over-the-counter bulletin board. In the event that we become delinquent in our required filings with the SEC, quotation of our common stock will be terminated following a 30 day grace period if we do not make our required filing during that time. If our shares are not eligible for quotation on the over-the-counter bulletin board, investors in our common stock may find it difficult to sell their shares.

Because of market pressures on our common stock, the market price of our shares may decline.

The market price of our common stock could fluctuate significantly   as a result of:

§   quarterly variations in our operating results;
§   interest rate changes;
§   changes in the market’s expectations about our operating results;
§   our operating results failing to meet the expectation of securities analysts or investors in a particular period;
§   changes in financial estimates and recommendations by securities analysts concerning our company or in general;
§   operating and stock price performance of other companies that investors deem comparable to us;
§   news reports relating to trends in our markets;
§   changes in laws and regulations affecting our business;
§   material announcements by us or our competitors;
§   sales of substantial amounts of common stock by our directors, executive officers or significant stockholders, or the perception that such sales could occur; and
§   general economic and political conditions, such as recessions and acts of war or terrorism.

 
Fluctuations in the price of our common stock could contribute to the loss of all or part of an investor’s investment in the company.

We currently do not intend to pay dividends on our common stock and consequently your only opportunity to achieve a return on your investment is if the price of common stock appreciates.

If a large number of shares of our common stock are sold in the public market, the sales could reduce the trading price of our common stock and impede our ability to raise future capital.

Note Regarding Forward Looking Statements

This Prospectus contains forward-looking statements which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished.

Such forward-looking statements include statements regarding, among other things:

§  
the demand for our products;
§  
our ability to expand our product offerings;
§  
the competitive environment in our business;
§  
our operations and ability to achieve cost savings;
§  
the effect of technological and regulatory changes on our business;
§  
our cash needs; and
§  
our financial performance.

This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” and “DESCRIPTION OF OUR BUSINESS AND PROPERTY,” as well as in this Prospectus generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “RISK FACTORS” and matters described in this Prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. In addition to the information expressly required to be included in this filing, we will provide such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.

Although forward-looking statements in this report reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the Securities and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected. We will have little likelihood of long-term success unless we are able to continue to raise capital from the sale of our securities until, if ever, we generate positive cash flow from operations.

 
Use of Proceeds

We will not receive any proceeds from the sale of the common stock offered through this prospectus by the selling shareholders.

Determination of Offering Price

All shares being offered will be sold by existing shareholders without our involvement, consequently the actual price of the stock will be determined by prevailing market prices at the time of sale or by private transactions negotiated by the selling shareholders. The offering price will thus be determined by market factors and the independent decisions of the selling shareholders. Please refer to “Plan of Distribution.”

Dilution

The common stock to be sold by the selling shareholders is common stock that is currently issued and outstanding.  Accordingly, there will be no dilution to our existing shareholders.

Selling Shareholders

The selling shareholders named in this prospectus are offering all of the 148,009,888 shares of common stock offered through this prospectus. At the time of the purchase, the selling shareholders had no agreements or understandings to distribute the securities.  The shares include the following:

§  
104,903,888 shares of common stock, which were received in the Share Exchange Agreement, dated July 18, 2005, between us and Direct Success, Inc. ;
§  
43,076,000 shares of common stock, which were paid as consideration for services performed for the company; and
§  
30,000 shares of common stock, which were issued to Joel Boodoosingh in a private placement for cash consideration of $30,000.00.

The following table provides information regarding the beneficial ownership of our common stock held by each of the selling shareholders as of April 1, 2010, including:

1.   the number of shares owned by each prior to this offering;
2.   the total number of shares that are to be offered by each;
3.   the total number of shares that will be owned by each upon completion of the offering;
4.   the percentage owned by each upon completion of the offering; and
5.   the identity of the beneficial holder of any entity that owns the shares.
 

The named party beneficially owns and has sole voting and investment power over all shares or rights to the shares, unless otherwise shown in the table.  The numbers in this table assume that none of the selling shareholders sells shares of common stock not being offered in this prospectus or purchases additional shares of common stock, and assumes that all shares offered are sold.    The percentages are based on 239,937,352 shares of common stock outstanding on April 1, 2010.

Name and Address of Selling Shareholder
Shares
Owned
Prior to
This
Offering
Total
Number Of
Shares To Be
Offered For
Selling Shareholder
Account
Total
Shares To
Be Owned
Upon
Completion
of This
Offering
Percent
Owned
Upon
Completion
Of This
Offering
 
Adam B. Zucker or Christinea L. Zucker
2876 Lochgreen Way
Dublin, CA  94568
572,000
572,000
0
0.00%
Alan Farr
682 E. 4129 S.
Salt Lake City, UT  84107
130,000
130,000
0
0.00%
Alan H. Santana
10603 Angel Avenue
Fountain Valley, CA  92708
41,600
41,600
0
0.00%
Alan or Patricia England
200 Mount Carmel Church Road
Temple, GA  20179-3133
26,000
26,000
0
0.00%
Alan R. Mittelstaedt or Rosemary M. Mittelstaedt
10591 E. Cordova Street
Gold Canyon, Az   85218
416,000
416,000
0
0.00%
Albert S. Kaneshiro Trust
1600 Valley View
Las Vegas, NV   89102    (2)
162,500
162,500
0
0.00%
Alberta B. Paris
113 Trent Ln.
Chocowinity, NC  27817
52,000
52,000
0
0.00%
Gretchen M. Anderson
325 Mountain View Road
Apache Junction, AZ  85219
78,000
78,000
0
0.00%
James E. Anderson
5504 E. Holmes Avenue
Mesa, AZ   85206
78,000
78,000
0
0.00%
Anthony Vlamis
655 River Vale Road
River Valley, NJ  07676
208,000
208,000
0
0.00%
Don Baker
387 Larcom St.
Thousand Oaks, CA  91360
  2,000,000
   2,000,000
0
0.00%
Barbara J. Grice & Timothy A. Grice, Trustees 16790 Frutridge
Kent City, MI  49330    (3)
   130,000
130,000
0
0.00%
Leo E. Beld
435 e. Wiser Lake Road
Lunden, WA
    65,000
65,000
0
0.00%
Birthright Funding
15 Timberline Drive
Tuckerton, NJ  08087
     1,513,918
1,513,918
0
0.00%
Bruce C. Rowe
2505 Whiteclift Dr.
Richmond, VA  23233
650,000
650,000
0
0.00%
Bruce or Joyce A. Westenskow
45 N. 200 W. P.O. Box 31
Moroni, UT  84646
182,000
182,000
0
0.00%
Bruce Seldeen
870 Palo Verde Ave.
Long Beach, CA  90815
312,000
312,000
0
0.00%
Bruce W. Cutting
413 N. Central Ave., Suite B
Upland, CA  91786
78,000
78,000
0
0.00%
Buddy Geelhoed
3134 E. Royal Oak Dr.
Duarte, CA  91010
53,300
53,300
0
0.00%
 
Byington Family Trust
1377 Idaho St.
Elko, NV  89801        (4)
260,000
260,000
0
0.00%
C. Garry Amen or Belita E. Amen
17908 Noel Dr.
New Boston, MO  63557
260,000
260,000
0
0.00%
C. Mirror Systems, LLC
3155 E. Patrick Ln., Ste 1
Las Vegas, NV  89120-3481
104,000
104,000
0
0.00%
Celecia Family Trust dated 12/20/04
833 Summit Drive
Laguna Beach, CA  92651  (5)
6,781,669
6,781,669
0
0.00%
Charles J. Heinlein or
Ellen L. Heinlein
12 Deerhaven Drive.
Wheeling, WV   26003
13,000
13,000
0
0.00%
Charles L. Thompson & Ella E. Thompson, Trustees
43861 Generation Ave.
Lancaster, CA  92526
42,900
42,900
0
0.00%
Clyde A. Rhodes Jr.
2400 Wycliff St.
St. Paul, MN  55114
162,500
162,500
0
0.00%
Clyde A. Stevick or
Wendy K. Stevick
3225 Scotch Meadows, Ctl, SE
Olympia, WA  98501
65,000
65,000
0
0.00%
Clyde Graham
1160 E. Mission Blvd.
Pomona, CA  91766
10,400
10,400
0
0.00%
Constance K. Lautieri IRA Ameritrade Inc., Custodian
P.O. Box 2226
Omaha, NE  68103-2226   (6)
249,106
249,106
0
0.00%
Constance K. Lautieri
780 W. 71 PL.
Hialeah, FL  33014
87,750
87,750
0
0.00%
Daniel Coulters
3472 Highway NH
West Bend, WI  53095
32,500
32,500
0
0.00%
Daniel E. Meyer
610 N. Agner St.
Ottawa, OH  45875
39,000
39,000
0
0.00%
Daniel Scherer
949 Marshall Ave.
St. Paul, MN  55104
10,400
10,400
0
0.00%
Daniel W. Munzer
3450 E. Spring St., Ste 218
Long Beach, CA  90806
32,500
32,500
0
0.00%
Darrell R. Anderson
29246 Lawrence Welk Lane
Escondido, CA  92026
156,000
156,000
0
0.00%
 
David A. Carter
37 Blakiston Lane
Warwick, MD  21912
78,000
78,000
0
0.00%
David Frawley
215 Schreiber
Roselle, IL  60172
26,000
26,000
0
0.00%
David G. Paff or Judith A. Paff
9360 N. Lookout Land
Pleasant Hope, MO  65725
260,000
260,000
0
0.00%
David K. Murrow
1141 N. Escondido Blvd., #4
Escondito, CA  92026
52,000
52,000
0
0.00%
David Overhalt
22190 Hall Road
Woodhaven, MI  48183
65,000
65,000
0
0.00%
Michael DeBenon
20522 Pierview Lane
Huntington Beach, CA 92646
1,500,000
1,500,000
0
0.00%
Michael DeBenon
20522 Pierview Lane
Huntington Beach, CA  92646
1,976,000
1,976,000
0
0.00%
Denker Cattle Co.
Route 5, Box 87
Enid, OK  73701
26,000
26,000
0
0.00%
Dennis J. Little
17409 Woods Edge Drive
Dallas, TX  75287
260,000
260,000
0
0.00%
Don & Marilyn Frazier Family Trust DTD 12/30/97
42431 8th Street East
Lancaster, CA  92535     (7)
124,800
124,800
0
0.00%
Donald Lee Rogers
1812 W. St. Anne Place
Santa Ana, CA  92704
26,000
 
26,000
0
0.00%
 Donald Zdanowski
7 Woodcroft Rd.
Summit, NJ  07901
218,400
218,400
0
0.00%
Donald E. Deaton or
Deborah A. Deaton
52 Rocky Cove Road
Lexington, SC  29072
52,000
52,000
0
0.00%
Dudley P. Shaw or
Dorothy B. Shaw
60 Chapin Road
Barrington, RI  02806
322,400
322,400
0
0.00%
Elliott C. Robertson, Jr.
3694 Rolling Ridge Ct.
Ann Arbor, MI  48105
130,000
130,000
0
0.00%
Elmer D. Yance
1 Golf Course Drive
Searcy, AR  72143
65,000
65,000
0
0.00%
EMC Associates
180 Newport Center Dr., #180
Newport Beach, CA  92660  (8)
130,000
130,000
0
0.00%
 
Felipe Martinez
2616 Paseo La Paz
West Covina, CA  91791
156,000
156,000
0
0.00%
Frederick S. Ricker
5920 Grimes Ave., S
Edina, MN  55424
26,000
26,000
0
0.00%
Gary F. Brooks
590 W. Shore Trail
Sparta, NJ  07871
130,000
130,000
0
0.00%
Gary Gologorsky
40 Prescott St.
Demarest, NJ  07627
78,000
78,000
0
0.00%
Gary Grygiel
631 S. Agate Street
Anaheim, CA  92806
52,000
52,000
0
0.00%
George F. Poppe III
137 Main Street
Metuchen, NJ  08840
104,000
104,000
0
0.00%
Glenn R. Weber
1744 Roswell Road, Suite B-200
Marietta, GA  30062
36,400
36,400
0
0.00%
Gloria Morales
814 E. Catalina Avenue
Santa Ana, CA  92706
130,000
130,000
0
0.00%
Greg McGrew or
Renee McGrew
503 Fairfield Way S.W.
Leesburg, VA  20175
195,000
195,000
0
0.00%
Greg Morse
P.O. Box 55
Lisbon Falls, ME   04252
52,000
52,000
0
0.00%
Grover Mann
8340 Washington St. NE, Ste B
Albuquerque, NM  87113
260,000
260,000
0
0.00%
H & C Martin Family Living Trust
2789 E. Oshkosh Avenue
Anaheim, CA  92805   (9)
156,000
156,000
0
0.00%
H. Milton Heins and Jean M. Heins Community Property
3819 Portsmouth Point
Stockton, CA  95219
130,000
130,000
0
0.00%
Hamid R. Doroutan
29618 Nuevo Road, #B3
Nuevo, CA  92567
26,000
26,000
0
0.00%
Harold B. Thomas or
Barbara Y. Thomas
1706 E. Bullard Ave., #107
Fresno, CA  92710
52,000
52,000
0
0.00%
Herbert H. Campbell
P.O. Box 607
18340 Possum Point Road
Dumfries, VA  22026
52,000
52,000
0
0.00%
Herbert N. Klinenberg
8300 Adbeth Avenue
Woodridge, IL  60517
26,000
26,000
0
0.00%
 
 
Howard G. Blair, Jr.
20500 Franklin Canyon Road
Martinez, CA  94553
1,050,400
1,050,400
0
0.00%
IRA Resources, Inc. FBO :
Joseph B. Dupont, IRA #1
100 N. Arlington Ave., #23 N
Reno, NV  89501    (10)
26,000
26,000
0
0.00%
IRA Resources, Inc. FBO :
Marion Schulte, IRA #16302
19545 Sherman Way #45
Reseda, CA  91335   (11)
51,886
51,886
0
0.00%
J. Christian Nelson
901 Appling
Placentia, CA  92870
130,000
130,000
0
0.00%
J. Keith Farmer
4977 Shiloh Road
Hahira, GA  31362
20,800
20,800
0
0.00%
Jackie Lance Frazier
27474 S. Hwy 69
Vinita, OK  74301
26,000
26,000
0
0.00%
Jamie J. Anaya or Isabel Anaya
8900 Sugarcane Court
Corona, CA  92883
78,000
78,000
0
0.00%
James D. Gilbert
16 Battery Ridge Drive
Gettysburg, PA  17325-6622
65,000
65,000
0
0.00%
James E. Doten
2600 Shattuck Avenue
Berkeley, CA  94704
130,000
130,000
0
0.00%
James G. Smith or
Nicoline H. Smith
36 Shongum Road
Randolph, NJ  07869
520,000
520,000
0
0.00%
James J. Bauman
950 Royal Oak Drive
Redding, CA  96001
52,000
52,000
0
0.00%
James L. Gunther
11474 Gold Strike Road
Pine Grove, CA  95665
260,000
260,000
0
0.00%
James M. Bentley
524 Prinston Place
San Luis Obispo, CA  93405
26,000
26,000
0
0.00%
James M. Fragola
4545 Commodore Drive
Stow, OH  44224
52,000
52,000
0
0.00%
James R. Siegel
21862 Oceanview Lane
Huntington Beach, CA  92646
156,000
156,000
0
0.00%
James Robert or
Deborah Ann McPartland
10706 N.W. 4th Avenue
Vancouver, WA  98685
130,000
130,000
0
0.00%
James V. Carlson
231 Purple Glen Drive
San Jose, CA  95119
582,400
582,400
0
0.00%
 
Janice M. Dwyer
296 Enchanted Drive
Mabank, TX  75156
5,200
5,200
0
0.00%
Jason Clode
842 Reichert Avenue, #4
Novato, CA 04045
15,600
15,600
0
0.00%
Jean E. Chaffee Living Trust
226 Toucan Street
Rochester Hills, MI  48309
161,200
161,200
0
0.00%
Jeffery A. Lavery
16503 Oxford Drive
Tinley Park, IL  60477
32,500
32,500
0
0.00%
Jeffrey L. Reitzel
9454 Roberts Avenue
Perrysburg, OH  43551
780,000
780,000
0
0.00%
Jeremiah Madieros
6 Middleton Land
Paget, BE  PG03
65,000
65,000
0
0.00%
Jerome S. Hill
1513 Emil Street
Madison, WI  53713
130,000
130,000
0
0.00%
Jerry or Jeani Colwell Trust Dated 9/27/1995
2851 Hearst Road
Willits, CA  95490   (12)
130,000
130,000
0
0.00%
Jerry Wayne Huggins
P.O. Box 3918
Greenville, NC  27836
104,000
104,000
0
0.00%
Joanne N. Peotter
1638 Springfield Avenue
New Providence, NJ  07974
36,400
36,400
0
0.00%
Joe Thompson
4024 Braddock Street
Martinez, GA  30907
91,000
91,000
0
0.00%
Joel S. Zetti
9690 Graceland Way
San Diego, CA  92129
208,000
208,000
0
0.00%
John A. Macinnis
299 Forest Glen Avenue
Franklin Lakes, NJ  07417
26,000
26,000
0
0.00%
John A. Spencer or
Cynthia A. Spencer
P.O. Box 321
Lake Forest, CA  92609
78,000
78,000
0
0.00%
John D. Sorrell
1532 N. Ontario Street
Burbank, CA  91505
26,000
26,000
0
0.00%
John E. Muse
8159 Dartmoor Drive
Huntington Beach, CA  92646
1,456,000
1,456,000
0
0.00%
John J. Matheson
P.O. Box 13786
Roanoke, VA  24037
130,000
130,000
0
0.00%
John L. Orlando
192 E. Wilson
Costa Mesa, CA  92627
26,000
26,000
0
0.00%
 
John P. or Thelma J. Otto HWJTROS
182 E. Wilson
Costa Mesa, CA  92627
52,000
52,000
0
0.00%
John P. Otto/Thelma J. Otto Family Trust
182 E. Wilson
Cosa Mesa, CA  92627  (13)
32,500
32,500
0
0.00%
John R. Lamb
1001 Foorier Drive
Madison, WI  53717
227,500
227,500
0
0.00%
John T. Smith or
Patricia L. Smith
113 First St., Box 138
Harmon, IL  61042
260,000
260,000
0
0.00%
John V. Fragola
P.O. Box 10172
Zephyr Cove, NV  89448
117,000
117,000
0
0.00%
John W. Lundstrom
603 Crestview Drive
Glendora, CA  91741
65,000
65,000
0
0.00%
Joseph B. Marsh
4090 Harwood Road
S. Euclid, OH  44121
130,000
130,000
0
0.00%
Joseph Elam
4401 Central Avenue
Middletown, OH  45044
52,000
52,000
0
0.00%
Joseph M. Nelson
138 Fairfax Drive
Huntington, WV  25705
520,000
520,000
0
0.00%
Joseph M. Rosenfeld
560 Vinington Court
Atlanta, GA  30350
143,000
143,000
0
0.00%
Julian Rice
18682 Paseo Cortez
Irvine, CA  92603
1,820,000
1,820,000
0
0.00%
K&B Kerry Living Trust dated 6/1/1998
12 Morning View Drive
Newport Crest, CA  92627   (14)
16,163,338
16,163,338
0
0.00%
Kazumasa Okubo
388 Photinia Lane
San Jose, CA  95127
130,000
130,000
0
0.00%
Keith Johns
35 Washington Avenue, Ste E
Bay shore, NY  11706
207,636
207,636
0
0.00%
Keith Lane Axtheim
2934 Riverbottom Road
Ellensburg, WA  98926
26,000
26,000
0
0.00%
Keith T. Hunziker
Jerrie Eaakins Hunziker
8565 Sierra Circle 918-D
Huntington Beach, CA  92646
26,000
26,000
0
0.00%
 
 
Keith Thurston
15123 Brookhurst Unit 198
Westminster, CA  92683
26,000
26,000
0
0.00%
Kenneth A. Or Lorielle H. Zlotkowski
4251 Pierce Road
Powhatan, VA  23139
130,000
130,000
0
0.00%
Kevin or Maureen Blackmer
1250 Aviation Ave., #255
San Jose, CA  95110
104,000
104,000
0
0.00%
Koontz Family Trust dated 8/27/86
2015 Seadrift Drive
Corona del Mar, CA  92626 (15)
6,781,669
6,781,669
0
0.00%
Kurney W. Ramsey
2731 Commerce Road
Jacksonville, NC  28546
31,200
31,200
0
0.00%
Kurtis Lynn Cockrum and
Lorraine H. Cockrum Family
1507 Elise Court
Walnut Creek, CA  94596  (16)
5,264,130
5,264,130
0
0.00%
Larry W. Stephens (IRA) FCC as Custodian
9508 E. MLK Blvd.
Tampa, FL  33619   (17)
260,000
260,000
0
0.00%
Le Com Enterprises, Inc.
2813 Fairway Drive
Belleville, IL  62220   (18)
20,800
20,800
0
0.00%
Lee A. Kann and Mary C. Kann
UTD Dated 8/24/99
1406 Janeen Way
Anaheim, CA  92801  (19)
130,000
130,000
0
0.00%
Lee Kann & Mary Kann, Trustees of the Lee Kann & Mary Kann Family Trust
1406 Janee Way
Anaheim, CA  92801   (20)
130,000
130,000
0
0.00%
Lee Van E. Tucker
15814 W. Dorman Drive
Austin, TX  78717
52,000
52,000
0
0.00%
Leo E. Beld or Janet D. Beld
435 E. Wiser Lake Road
Lynden, WA  98264
32,500
32,500
0
0.00%
Leonard E. McCormic or
Lou Berta McCormic
3970 Berryman Avenue
Los Angeles, CA  90066
26,000
26,000
0
0.00%
Leslie Bingnell
1101 Southridge Road
New Ulm, MN  56073
520,000
520,000
0
0.00%
Louis Pizi
250 Spring St. N.W., Ste 12 E 111B
Atlanta, GA  30303
65,000
65,000
0
0.00%
M. Kirk Sperry
828 Delborn Avenue
Turlock, CA  95382
65,000
65,000
0
0.00%
 
Marc W. Anderson
325 Northgate Road
Walnut Creek, CA  94598
195,000
195,000
0
0.00%
Marilyn Claridge
3902 W. Brinkerhoff Street
Thather, AZ  85552
52,000
52,000
0
0.00%
Mark Brodhagen
1052 Bel Aire Court
Greenbay, WI  54304
260,000
260,000
0
0.00%
Mark C. Londean
2097 E. Washington St #1   E 392
Colton, CA  92324
104,000
104,000
0
0.00%
Mark Roisen or
Deborah Roisen
719 Airport Drive
An Arbor, MI  48108
2,080,000
2,080,000
0
0.00%
Mark S. Cieslak
4060 Parkstone Court
Troy, MI  48098
65,000
65,000
0
0.00%
Martha or Kevin Adamsky
919 E. Main
Troy, OH
52,000
52,000
0
0.00%
Maravin Haramoto
9692 Mansor
Garden Grove, CA  92844
26,000
26,000
0
0.00%
Mary Ferguson Quinn
11360 Palm Drive
Desert Hot Springs
52,000
52,000
0
0.00%
Matt M. Clabaugh
180 Newport Center Dr., #180
Newport Beach, CA  92660
52,000
52,000
0
0.00%
Michael A. Perfas or
Steven S. Perfas
55 Chumassero Dr., #12G
San Francisco, CA  94132
26,000
26,000
0
0.00%
Michael H. Beatty
P.O. Box 1369
Quincy, CA  95971
62,400
62,400
0
0.00%
Michael or Jacquee Trenberth
808 Live Oak Place
Cornoa, CA  92882
15,600
15,600
0
0.00%
Michael or Theresa Clary
22 Butter Cup Lane
San Carlos, CA  94070
130,000
130,000
0
0.00%
Michael P. Carbone
193 Island Street
Keene, NH  02431
62,400
62,400
0
0.00%
Mitchell R. Dempsey
1274 Sierra Seneca Drive
San Jacinto, CA  92583
32,500
32,500
0
0.00%
Sarah Mohr
3339 Helen Lane
Lafayette, CA  94549
4,000,000
4,000,000
0
0.00%
 
Taylor Morris
1102 Aerie Cove
Austin, TX  78759
130,000
130,000
0
0.00%
John Muse
8158 Dartmoor Dr.
Huntington Beach, CA  92646
8,000,000
8,000,000
0
0.00%
Nancy L. Wilson or
James W. Wilson
1012 Divison Street
Biloxi, MS  39530
117,000
117,000
0
0.00%
Natasha DeBenon
20522 Pierview Lane
Huntington Beach, CA  92646
2,004,130
2,004,130
0
0.00%
Oilfield Surplus, LLC
Sean Thomas
P.O. Box 88053
Lafayette, LA  70598
182,000
182,000
0
0.00%
Patrice W. Wagman, Trustee of the Patrice E. Wagman Trust
2040 E. Briar Street
Springfield, MO  65804  (21)
52,000
52,000
0
0.00%
Pataricia M. Smith
3407 E. Street
San Diego, CA  92102
13,000
13,000
0
0.00%
Paul Grizzard
731 Little Neck Road
Savannah, GA  31419
32,500
32,500
0
0.00%
George O. Peters
15951 W. Silver Breeze Drive
Surprise, AZ  85374-5039
146,000
146,000
0
0.00%
Private Trust Company FBO
John Trombetta IRA
14 Alexandria Road
Morristown, NJ   (22)
65,000
65,000
0
0.00%
Ralph F. Starritt
P.O. Box 453
Yreka, CA  96097
10,400
10,400
0
0.00%
Raman Patel
3912  135 Street, Ste 100
Waco TX  76706
32,500
32,500
0
0.00%
Raymond W. Paris Trust
113 Trent Lane
Chocowinity, NC  27817
52,000
52,000
0
0.00%
Reitzel Realty Ltd.
9454 Roberts Avenue
Perrysburg, OH  43551
1,560,000
1,560,000
0
0.00%
Rex Lee Wilkes
911 Escondido Circle
Brownfield, TX  79316
10,400
10,400
0
0.00%
Jill Reza
2600 Michelson Dr.  Ste 800
Irvine, CA 92612
1,500,000
1,500,000
0
0.00%
Richard A. Wood
42357 50th Street W. Suite 101
Quartz Hill, CA  93536
32,500
32,500
0
0.00%
 
Richard E. Winn
1353 Glenn Wllen Lane
Lompoc, CA  93436
26,000
26,000
0
0.00%
Richard H. & MJ Conner HWJTROS
13826 N. 96th Street
Scottsdale, AZ  85260
52,000
52,000
0
0.00%
Richard Ted McDonald
1408 Michael Court
Lompoc, CA  93436
26,000
26,000
0
0.00%
Richard W. Kasperson
172 Cheshire Way
Naples, FL  34110
130,000
130,000
0
0.00%
Robert A. & Helen J. Meyer Living Trust dated May
2804 Hampton Drive
Henersonville, NC  28791  (23)
26,000
26,000
0
0.00%
Robert B. Dumas
P.O. Box 608
Brownfield, TX  79316
65,000
65,000
0
0.00%
Robert Bobber or
David Christopher
P.O. Box 2195
Higley, AZ  85236
104,000
104,000
0
0.00%
Robert C. Fong or
Agnes C. Fong
27961 Beechgate Drive
Rancho Palos Verdes, CA 90274
52,000
52,000
0
0.00%
Robert Craig McManigal
2660 Victoria Park Drive
Riverside, CA  92506
130,000
130,000
0
0.00%
Robert Glasby
2981 Ventura Blvd.
Oxnard, CA  93036
33,800
33,800
0
0.00%
Robert Grego
1948 Wading River Manor Road
Wading River, NY  11792
1,560,000
1,560,000
0
0.00%
Robert J. Knoll or Ella C. Knoll
19211-A Chennault Way
Gaithersburg, MD  20879
130,000
130,000
0
0.00%
Robert M. Tribble
3000 ormond Drive
Winston Salem, NC  27108
52,000
52,000
0
0.00%
Robert Ott or Sharon Ott
3043 Bancroft Road
Modesto, CA  95358
2,132,000
2,132,000
0
0.00%
Robert Reitzel or
Mary Jane Reitzel
25260 Ault Road
Perrysburg, OH  43551
884,000
884,000
0
0.00%
Robert W. Frantz or
Ruth E. Frantz
40W297 Apache Lane
Huntley, IL  60142
65,000
65,000
0
0.00%
Roderick J. Pejsar
11 Inwood Drive
Indian Harbor Beach, FL  32937
26,000
26,000
0
0.00%
 
Ron K. Le or Lekiue T. Nguyen
5414 Vicenza Way
San Jose, CA  95138
130,000
130,000
0
0.00%
Ronald F. Bratek
P.O. Box301
Cranbury NJ  08512
52,000
52,000
0
0.00%
Russell W. Ericksen or
Marva A. Ericksen
53434 Lonerock Road
Condon, OR  97823
156,000
156,000
0
0.00%
Schoenduve Family Trust under Trust Agreement dtd
10733 E. Ashlan Avenue
Sanager, CA  93657   (24)
136,500
136,500
0
0.00%
Scott L. Baker
315 Millhouse Drive
Franklin, TN  37064
26,000
26,000
0
0.00%
Security Bank of Trust Co. IRA FBO : Dennis R. Philip
5800 Lakeview Drive
Minnetrista, MN  55364  (25)
130,000
130,000
0
0.00%
Sheldon Henderson
1320 Southside Drive
Salem, VA  24153
52,000
52,000
0
0.00%
Kathleen H. Simpson
15826 Norwich
Livonia, MI  48154
26,000
26,000
0
0.00%
Smith Barney FBO Joseph M. Nelson, IRA #193-61235-1
138 Fiarfax Drive
Huntington, WV  25705  (26)
140,541
140,541
0
0.00%
Sttephen G. Huff
39268 Marbella Terraza
Fremont, CA  94538
130,000
130,000
0
0.00%
Sterling Trust Co., Custodian FBO : Guy Ferguson
4448 W. Braddock Road
Alexandria, VA  22304   (1)
52,000
52,000
0
0.00%
Sterling Trust Co., Custodian FBO : John Brobert
545 Conejo Road
Santa Barbara, CA  93103 (1)
32,500
32,500
0
0.00%
Sterling Trust Co., Custodian FBO : Keith Johns
35 Washington Avenue, Ste E
Bay Shore, NY  11706   (1)
51,642
51,642
0
0.00%
Sterling Trust Co., Custodian FBO : George O. Peters
15951 W. Silver Breeze Ddrive
Surprise, AZ  85374   (1)
87,174
87,174
0
0.00%
Sterling Trust Co., Custodian FBO : Harald G. Martin
2789 E. Oshkosh Avenue
Anaheim, CA  92805   (1)
20,800
20,800
0
0.00%
 
Sterling Trust Co., Custodian FBO : Michael K. Gorman
81398 Avenida Coyote
Indio, CA  92201   (1)
96,273
96,273
0
0.00%
Sterling Trust Co., Custodian FBO : Richard W. Drummond
1458 LeGrand Circle NW
Lawrenceville, GA  30043   (1)
57,200
57,200
0
0.00%
Sterling Trust Co., Custodian FBO : Andrew Hamling
100 S. Sunrise Way, #330
Palm Springs, CA  92262   (1)
52,000
52,000
0
0.00%
Sterling Trust Co., Custodian FBO : Bruce Westenskow
45 N. 200 W. P.O. Box 31
Moroni, UT  84646   (1)
207,881
207,881
0
0.00%
Sterling Trust Co., Custodian FBO :  Christopher King
19020 Pinehurst Place
Tahachape, CA  93561   (1)
415,090
415,090
0
0.00%
Sterling Trust Co., Custodian FBO : David S. Scherer
949 Marshall Avenue
St. Paul, MN  55104   (1)
15,902
15,902
0
0.00%
Sterling Trust Co., Custodian FBO : Daniel W. Plow
70 S. Weston Road
Troy, OH  45373   (1)
97,500
97,500
0
0.00%
Sterling Trust Co., Custodian FBO : David Frawley
215 Schreiber
Roselle, Il  60172   (1)
130,000
130,000
0
0.00%
Sterling Trust Co., Custodian FBO :  David Kent
22190 Hall Road
Woodhaven, MI  48183   (1)
195,000
195,000
0
0.00%
Sterling Trust Co., Custodian FBO : Dennis E. Neal
1195 Bridgewater Walk
Snellville, GA  30078   (1)
234,000
234,000
0
0.00%
Sterling Trust Co., Custodian FBO : Dwight A. Cottier
8073 Monte Drive
Cinncinati, OH  45242   (1)
194,564
194,564
0
0.00%
Sterling Trust Co., Custodian FBO :  Jade Harris
P.O. Box 2792
Oregon City, OR  97045   (1)
36,400
36,400
0
0.00%
Sterling Trust Co., Custodian FBO : James Dyck
425 Kunzler Ranch Road, #J
Ukiah, CA  95482   (1)
85,800
85,800
0
0.00%
Sterling Trust Co., Custodian FBO : Jennie B. Brodhagen
2119 Sylvan Court
Greenbay, WI  54313  (1)
299,000
299,000
0
0.00%
 
Sterling Trust Co., Custodian FBO : Joel S. Zetti
9690 Graceland Way
San Diego, CA  92129   (1)
39,000
39,000
0
0.00%
Sterling Trust Co., Custodian FBO : John E. Muse
8159 Dartmoor Drive
Huntington Beach, CA  92646  (1)
624,000
624,000
0
0.00%
Sterling Trust Co., Custodian FBO : Kenneth D. Brown
17455 S. Avenue, A1/2
Somerton, AZ  85350   (1)
62,302
62,302
0
0.00%
Sterling Trust Co., Custodian FBO : Leonard Phillips
14 Winchester Street
Boston, MA  02116
52,000
52,000
0
0.00%
Sterling Trust Co., Custodian FBO : Mark A. Brodhagen
1052 Bel Aire Court
Greenbay, WI  54304   (1)
234,000
234,000
0
0.00%
Sterling Trust Co., Custodian FBO : Melvin L. Stephens
15743 Troon Court
Northville, MI  48167   (1)
1,040,000
1,040,000
0
0.00%
Sterling Trust Co., Custodian FBO : Michael A. Parles
55 Chumasero Drive, #12G
San Francisco, CA  94132   (1)
104,000
104,000
0
0.00%
Sterling Trust Co., Custodian FBO : Micki M. Mulkern
3003 W. Broadway Blvd., #39
Tucson, AZ  85745
39,000
39,000
0
0.00%
Sterling Trust Co., Custodian FBO : Sidney K. Swank
3625 Runnymede
St. Charles, MO  63301   (1)
156,000
156,000
0
0.00%
Sterling Trust Co., Custodian FBO : Warren D. Russell
P.O. Box 356
Peshastin, WA  98847   (1)
212,722
212,722
0
0.00%
Sterling Trust Co., Custodian FBO :  William Cantarini
1616 Esplanade #8
Redondo Beach, CA  90277   (1)
52,000
52,000
0
0.00%
Sterling Trust Co., Custodian FBO : William R. Haney
1073 Wentworth Avenue
Calumet City, IL  60409   (1 )
104,000
104,000
0
0.00%
Sterling Trust Co., Custodian FBO : Alan H. Santana
10603 Angel Avenue
Fountain Valley, CA  92708
31,200
31,200
0
0.00%
 
Sterling Trust Co., Custodian FBO : Everett B. Richardson
1401 Waltham Ddrive
Southgate, TX  76092   (1)
130,000
130,000
0
0.00%
Sterling Trust Co., Custodian FBO : Gary T. Evans
1010 N. Mill 1
Bowie, TX  76230   (1)
130,000
130,000
0
0.00%
Sterling Trust Co., Custodian FBO : James Robert McPartlan
10706 N.W. 4th Avenue
Vancouver, WA  98685   (1)
1,043,406
1,043,406
0
0.00%
Sterling Trust Co., Custodian FBO : John E. Muse
8159 Dartmoor Drive
Huntington Beach, CA  92646   (1)
114,400
114,400
0
0.00%
Sterling Trust Co., Custodian FBO : Richard Fleming
32 Thunderbird Drive
Oakland, NJ  07436   (1)
65,000
65,000
0
0.00%
Sterling Trust Co., Custodian FBO : Thomas R. Ikelman
1751 E. Roseville Parkway #324
Roseville, CA  95661   (1)
65,000
65,000
0
0.00%
Sterling Trust Co., Custodian FBO : John Edward O’Donnell
3418 Hardy Street, Apt 9
Hattiesburg, MS  39402   (1)
54,559
54,559
0
0.00%
Steven G. Yeomans
404 Eureka Street
Ripon, WI  54971
32,500
32,500
0
0.00%
Stroup Living Trust dated 7/19/199
33 Raven Oak Drive
Belleville, IL  62221   (27)
286,000
 
286,000
0
0.00%
STS Employee Trust
200 North Tustin Avenue, Suite 200
Santa Ana, CA  92705  (28)
1,560,000
1,560,000
0
0.00%
Stuart Schwuchow
19361 Weymouth Lane
Huntington Beach, CA  92646
65,000
65,000
0
0.00%
Susan Lentz Fogt
1204 W. Main Streeet
Troy, MI  45373
65,000
65,000
0
0.00%
Ted G. Walsh or Connie Walsh
1885 Laurel Road
Oceanside, CA  92054
182,000
182,000
0
0.00%
Ted K. Tanaka & Grace T. Tanaka as Community Property
1155 N. 1st Street E. Suite 104
San Jose, CA  95112
104,000
104,000
0
0.00%
Ted M. Otero
13816 Arbor Circle
Ocean Springs, MS  39564
78,000
78,000
0
0.00%
 
The Jean R. Arnett Revocable Living Trust
4514 7th Street
Lubbock, TX  79416  (28)
10,400
10,400
0
0.00%
The Kurtis Lynn Cockrum and Lorraine H. Cockrum Family Trust
1507 Elise Court
Walnut Creek, CA  94596 (29)
7,000,000
7,000,000
0
0.00%
The Kurtis Lynn Cockrum and Lorraine H. Cockrum Family Trust
1507 Elise Court
Walnut Creek, CA  94596 (30)
15,100,000
15,100,000
0
0.00%
The Otto M. Slater and Luciel W. Slater Revocable Trust
12109 Byrd Lane
Los Altos Hills, CA  94022 (31)
26,000
26,000
0
0.00%
The Rigsby Living Trust DTD 2/11/91
1542 Alcala Plaace
San Diego, CA  92111 (32)
26,000
26,000
0
0.00%
The Scherer Asset Mgmt. Co.
3515 N. Shell Road
Olney, IL  62450  (33)
32,500
32,500
0
0.00%
The Warner Whipple Family Trust UDT 10/29/90
975  5th Street
Elko, NV  89801   (34)
52,000
52,000
0
0.00%
Thomas E. Melin
208 Beach Road, N.
Wilmington, NC 28411
260,000
260,000
0
0.00%
Thomas J. McGovern
64 Valley Vale Drive
Old Bridge, NJ  08857
65,000
65,000
0
0.00%
Thomas M. Grant or
Karen R. Matz
37185 Forest Court
Farmington Hills, MI  48335
260,000
260,000
0
0.00%
Thomas R. Ikelman
1751 E. Roseville Parkway #324
Roseville, CA  95661
52,000
52,000
0
0.00%
Tim M. Chalmers
35579 Reymouth Drive
Newark, CA  94560
130,000
130,000
0
0.00%
Timothy S. Beam
8342 Keeneland Court
Maineville, OH  45039
52,000
52,000
0
0.00%
Tony Gatten
14819 Sherman Way, #8
Van Nuys, CA  91405
260,000
260,000
0
0.00%
Turner C. Smith III
6280 E. Powers Avenue
Greenwood, CO  80111
10,400
10,400
0
0.00%
 
United Financial Partners, LTD
805 N. Oak
Hinsdale, IL  60521   (34)
91,000
91,000
0
0.00%
Urban Trucking
4141 Morris Bridge Road
Zephyrhills, FL  33543   (35)
78,000
78,000
0
0.00%
Vern Starr
1122 W. Front Street
Monroe, MI  48161
20,800
20,800
0
0.00%
W.J. Eastwood & Company, Inc.
6532 Gunn Road
Houston, TX  77040   (35)
104,000
104,000
0
0.00%
Walter G. Schmalgemeier
P.O. Box 981
National City, CA  91951
26,000
26,000
0
0.00%
Walter Ohlmann or
Selma Ohlmann
3122 Winterhaven Avenue
Dayton, OH  45405
52,000
52,000
0
0.00%
Ward A. Campbell
P.O. Box 7
Archer City, TX  76351
252,200
252,200
0
0.00%
Willard Robertson
15899 W.  3rd Street
Hayward, WI  54843
62,400
62,400
0
0.00%
William D. Himes
2305 Kent Street
Flint, MI  48503
130,000
130,000
0
0.00%
William D. Ratliff
201 Main Street, #2200
Fort Worth, TX  76102
936,000
936,000
0
0.00%
William E. Budrow or
Terese A. Budrow
137 Country Club Drive
San Gabriel, CA  91775
52,000
52,000
0
0.00%
William E. Newcomer
1401 Meridian
Puyallup, WA  98371
130,000
130,000
0
0.00%
William E. Smyser
623 Blue Spruce Trail
Chagrin Falls, OH  44023
32,500
32,500
0
0.00%
William F. Olson
708 Chelsea Road
Absecon, NJ  08201
26,000
26,000
0
0.00%
William H. Huddleston IV.
2115 N.W. Broad Street
Murfreesboro, TN  37129
104,000
104,000
0
0.00%
William R. Haney Revocable Trust
1073 Wentworth Avenue
Calumet City, IL  60409   (36)
104,000
104,000
0
0.00%
William W. Lett
16661 N. St. Road 3
Eaton, IN  47338
169,000
 
169,000
0
0.00%
Willie L. Yeary
300 S. Wheeler Street
Jasper, TX  75951
13,000
13,000
0
0.00%
 
 
Kurt Cockrum
1507 Elise Court
Walnut Creek,CA  94596
20,000,000
10,000,000
10,000,000
4.16%
Michael DeBenon
20522 Pierview Lane
Huntington Beach, CA  94646
20,000,000
10,000,000
10,000,000
4.16%
James Clarke
40 Technology Drive
Irvine, CA  92618
3,000,000
3,000,000
0
0.00%
Joel Boodoosingh
#2 Cardini Savannah Rd, Corner Biljan Rd.Chaguanas next to Roopnarine Hardware
Trinidad W.I (Port of Spain)
 
30,000
30,000
0
0.00%
 
 
 
(1)   Sterling Trust Co. is the Trustee of these Trusts and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(2)  Alan S. Kaneshiro is the Trustee of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(3)  Barbara J. Grice and Timothy A. Grice are the Trustees of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(4)  Dan Byington is the Trustee of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(5)  Dallas Celicia is the Trustee of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(6) Constance K. Lautieri is the controlling principal of this IRA account and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(7)  Don and Marilyn Frazier are the Trustees of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(8)  Matt Clabaugh is the controlling principal of this entity and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(9)  Harold Martin is the Trustee of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(10)  Joseph Dupont  is the controlling principal of this IRA account and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.
 
(11)  Marion Schulte is the controlling principal of this IRA account and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(12)  Jerry and Jeani Colwell are the Trustees of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(13)  John P. Otto and Thelma J. Otto are the Trustees of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(14)  Ken Kerry and Barbara Kerry are the Trustees of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(15)  Michael Koontz is the Trustee of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(16)  Kurtis Lynn Cockrum and Lorraine H. Cockrum are the Trustees of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(17)  Larry W. Stephens is the controlling principal of this IRA account and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(18)  Norman Loja is the controlling principal of this entity and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

 
(19)  Lee A. Kann and Mary C. Kann are the Trustees of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(20)  Lee A. Kann and Mary C. Kann are the Trustees of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(21)  Patrice W. Wagman is the Trustee of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(22)  John Trometta Schulte is the controlling principal of this IRA account and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(23)  Robert A. Meyer and Helen J. Meyer are the Trustees of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(24)  Howard Schoenduve is the Trustee of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(25)  Dennis R. Phillips is the controlling principal of this IRA account and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(26)  Joseph M. Nelson is the controlling principal of this IRA account and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(27)  David Stroup is the Trustee of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(28)  Script to Screen is the Trustee of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(29)  Jean R. Arnett is the Trustee of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(30)  Kurtis Lynn Cockrum and Lorraine H. Cockrum are the Trustees of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(31)  Kurtis Lynn Cockrum and Lorraine H. Cockrum are the Trustees of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(32)  Otto M. Slater and Luciels W. Slater are the Trustees of this Trust and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(33)  Gary Scherer is the Trustee of this Trust and , in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(34)  Warner Whipple is the Trustee of this Trust and , in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(35) Edward Wavak is the controlling principal of United Financial Partners, LTD and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(36) William Eastwood is the controlling principal of W.J. Eastwood & Company, Inc.  and, in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

(37)  William R. Haney is the Trustee of this Trust and , in such capacity, may be deemed to have voting and dispositive power over the securities held for the account of this selling stockholder.

 
Plan of Distribution

Each Selling Stockholder of the common stock and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on the Pink Sheets or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling shares:

§  
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
§  
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
§  
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
§  
an exchange distribution in accordance with the rules of the applicable exchange;
§  
privately negotiated transactions;
§  
settlement of short sales entered into after the effective date of the registration statement of which this Prospectus is a part;
§  
broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;
§  
through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
§  
a combination of any such methods of sale; or
§  
any other method permitted pursuant to applicable law.

The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, as amended, if available, rather than under this Prospectus.

Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA NASD Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with NASD IM-2440.

In connection with the sale of the common stock or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The Selling Stockholders may also sell shares of the common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this Prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this Prospectus (as supplemented or amended to reflect such transaction).
 

The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed us that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the Common Stock.

We are required to pay certain fees and expenses incurred by us incident to the registration of the shares.

Because Selling Stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the Prospectus delivery requirements of the Securities Act including Rule 172 as promulgated thereunder. In addition, any securities covered by this Prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this Prospectus. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the Selling Stockholders.

We agreed to keep this Prospectus effective until the earlier of (i) two years from the date that the registration statement of which this Prospectus is part is declared effective  (ii) the date on which the shares may be resold by the Selling Stockholders without registration and without regard to any volume limitations by reason of Rule 144 under the Securities Act or any other rule of similar effect or (iii) all of the shares have been sold pursuant to this Prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the Selling Stockholders or any other person. We will make copies of this Prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this Prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

We cannot estimate the number of shares, if any, which will be sold by the Selling Stockholders pursuant to this Prospectus.
 

Description of Securities to be Registered/Dividends/Pre-emptive Rights

We are authorized to issue 300,000,000 shares of Common Stock with a par value of $0.001 per share. As of April 1, 2010, there were 239,937,352 shares of Common Stock outstanding.  Each outstanding share of Common Stock is entitled to one vote, either in person or by proxy, on all matters that may be voted upon by the owners thereof at meetings of the stockholders, have equal ratable rights to dividends from funds legally available therefore, if declared by our Board of Directors, are entitled to share ratably in all our assets available for distribution to holders of common stock upon our liquidation, dissolution or winding up, does not have preemptive, subscription or conversion rights or redemption or sinking fund provisions, are entitled to one non-cumulative vote per share on all matters on which stockholders may vote at all meetings of our stockholders other than for directors, and are not entitled cumulative voting per share in the election of directors. All of our outstanding shares of Common Stock are validly issued, fully paid and non-assessable.
 
We have not declared any cash dividends on our Common Stock during our fiscal years ended on December 31, 2007, 2008 or 2009, and do not intend to declare any cash dividends during our fiscal year ending December 31, 2010.  Our Board of Directors has made no determination to date to declare cash dividends during the foreseeable future, and is not likely to do so.  
 
Holders of common stock are not entitled to pre-emptive or subscription or conversion rights, and there are no redemption or sinking fund provisions applicable to the Common Stock. All outstanding shares of common stock are, and the shares of common stock offered hereby will be when issued, fully paid and non-assessable.

We do not have outstanding any securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock.

We have authorized to issue 30,000,000 shares of Preferred Stock.  We have no shares of Preferred Stock outstanding.

Pacific Stock Transfer Co. serves as transfer agent for our common stock.
 
Interests of Named Experts and Counsel

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

Cane Clark LLP, our independent legal counsel, has provided an opinion on the validity of our common stock.
 

Beckstead & Watts, LLP, 2425 W. Horizon Ridge Parkway, Henderson, NV 89052, Certified Public Accountants, has audited our financial statements included in this prospectus and registration statement to the extent and for the periods set forth in their audit report.

Description of Business

Organizational Structure

We were incorporated on March 1, 2001 under the laws of the state of Nevada under the name Effective Sports Nutrition Corporation.  On April 11, 2005, Effective Sports Nutrition changed its name to Midwest E.S.W.T. Corp. On July 18, 2005, we then entered into a share exchange agreement with Direct Success, Inc., a California corporation.  As a result of the agreement, Midwest E.S.W.T agreed that a total of 114,851,043 shares of Restricted Common Stock were to be issued to the shareholders of Direct Success, Inc.  Direct Success, Inc., in turn, surrendered all of its authorized stock to Midwest E.S.W.T.  On December 14, 2005, Midwest E.S.W.T changed its name to DM Products, Inc.

Operations

We are in the business of locating inventive products and coordinating the process of marketing those products on infomercials and other distribution channels.  Within the last five years, we have only exploited one such product, a fishing lure product known as the “Banjo Minnow.” Although we tested several products in 2003 and 2004, those test runs on infomercials did not justify going forward with a full infomercial campaign.  We have only pursued the Banjo Minnow in a full infomercial campaign.  We own 75% interest in a joint venture, known as Direct Success LLC #3, which has the exclusive rights to manufacture, use, distribute, sell, advertise, promote and otherwise exploit the Banjo Minnow.

We do not manufacture or distribute the products that we locate to market.  In the case of Banjo Minnow, our joint venture entity subcontracted all manufacturing and distribution details to a company known as TriStar Products, Inc. The Banjo Minnow was aired on an infomercial and is responsible for all of our revenues to date.  We receive royalties from the sales of the Banjo Minnow that TriStar distributes in proportion to our holdings in Direct Success LLC #3.

On or about August 16, 2002, Direct Success, Inc., our wholly owned subsidiary, entered into a joint venture with Buena Vista Infomercial Corporation and formed Direct Success, LLC #3 for the purpose of acquiring the exclusive manufacturing and distribution rights to the Banjo Minnow. Direct Success LLC #3 is a limited liability company, organized under the laws of the State of Delaware, and is 75% owned by Direct Success, Inc.  The remaining 25% is owned by Buena Vista Infomercial Corporation.
 

On or about October 10, 2003, Direct Success, LLC #3 entered into an agreement with Banjo Buddies, Inc. (the owner and inventor of the lure) in which Banjo granted to Direct Success LLC, #3 the exclusive rights to manufacture, use, distribute, sell, advertise, promote and otherwise exploit the Banjo Minnow.  Direct Success LLC, #3 receives a royalty based on the sales of the product.  On or about May 11, 2005, Direct Success, LLC #3 subcontracted the manufacturing and distribution rights to TriStar Products, Inc.  Pursuant to this subcontract, Direct Success, LLC #3 receives a royalty, based on sales generated by TriStar.

We are currently looking to locate and market innovative health, beauty, fashion, fitness and other products for sale through infomercial marketing and distribution channels. Profits are expected to be derived from inbound sales, outbound sales, up sells and retail distribution. In addition to direct sales from infomercial play, infomercials drive customers to websites and retail centers and assist in branding products and driving product demand. Infomercials currently run in many foreign markets in addition to the US, and we  believe that foreign markets represent a tremendous growth opportunity. Our primary objective is to penetrate this rapidly expanding industry by introducing unique and innovative consumer products to national and international markets through a series of infomercial campaigns. We intend to aggressively develop, finance, produce and market various new products for television infomercials. At the same time, we intend to systematically expand our product list using a direct response model.

Our operational strategy consists of employing one of three distinct business alternatives for each product/infomercial:

§  
Complete Project Funding - The Company would obtain the exclusive licensing rights to products and pay a nominal royalty (2-5%) of gross sales to the product developer;

§  
Joint Venture Projects - The Company would share costs of production, marketing and distribution and would share revenues with product developers; and

§  
Straight Royalty Arrangements - The Company would partially finance the infomercials in exchange for a fixed royalty on gross sales.

Of course, the key to  our ability to continually attract new products and new product developers will, in large part, determine its success. As part of  our strategy, we intend to develop strategic alliances with strong companies that are established operators in the infomercial and advertising industry.

Infomercials are watched by a diverse range of consumers, consisting of both men and women, according to Direct Marketing Today. Many successful infomercials have targeted the tastes of this audience by offering health, beauty, fashion and fitness products. Unfortunately, many product inventors are unable to bring innovative and promising products to market because they do not have the know-how or the financial capability to efficiently and effectively manufacture and market their products for sale to a large number of consumers. We intend to bridge this gap for inventors by funding and managing the various tasks associated with launching and maintaining a successful infomercial sales campaign. Our business strategy focuses on funding and supervising the product's development and manufacture, the production of the infomercial and the overall marketing and sales campaign of the product. We think that the arrangements we enter into with product developers will be one of the following: 1) Complete Project Funding, 2) Joint Venture Projects, or 3) Straight Royalty Contracts, as discussed above.

Our directors and officers are consistently approached with ideas for new products from various individuals and companies. It is expected that the officers and directors will continue to be “pitched” for new product ideas and that our referral sources will grow as we gain recognition in the infomercial industry. As opportunities arise, our officers and directors will present potential product ideas to our Board of Directors for its discussion and review. In deciding which products to pursue, the Board will consider, among other things, the product's viability, costs of development and marketing, acceptable sales price point per unit, as well as the product's overall likelihood of success. In some instances, the Board may retain an outside consultant to evaluate such things as the product's likely market appeal or the product's optimal price point. We will pursue products approved by a majority vote of the Board. Although we expect that the directors and officers will continue to be approached by inventors with viable products without any solicitation, the Board of Directors may decide to solicit product pitches or ideas in the future if the Board believes that such a strategy would be in the Company’s best interest.
 

If the Board approves a product for further development, we intend to retain outside parties to produce the infomercial, assist in the design, the overall marketing campaign and sales process, and source and manufacture the product for competitive rates. When determining what parties to retain for these services, our Board of Directors will consider several factors, including a proven track record, cost and the ability to meet our timetable. We do not intend to retain any one service provider exclusively, and, instead  intend to seek competitive bids from numerous potential providers for each infomercial campaign.

Principal Place of Business

Our principal place of business is P.O. Box 2458, Walnut Creek, CA 94595.

Competition

We believe we are distinct from the other service providers operating within direct response television market because we intend to specialize in offering a complete suite of distribution in the mass market.  We are not aware of any operators who focus on financing, supervising and managing an infomercial campaign through a model that is based on outsourcing most development, marketing and sales services.  However, there are many entities that operate in the direct response television arena, several of whom offer one or more of the services that it intends to manage and supervise for the accounts.

Nautilus Inc. (formerly Direct Focus), is a strong operator in the infomercial industry. Nautilus, Inc. takes a product from conception to market by performing all tasks and services “in house.”  However, while Nautilus, Inc. participates in the infomercial market, the infomercial advertising arena is only one of its several operating areas.  Nautilus, Inc. has a broader core business, comprised of functions associated with traditional advertising firms.  For instance, Nautilus Group develops and manages direct response television spots, 30 and 60-second ads as well as print, online and other forms of advertising.  The products Nautilus, Inc. markets via infomercial will compete directly with the products the we ultimately bring to market, however, we believe that our approach to infomercial campaigns will allow us to successfully compete with Nautilus, Inc. in that market.

 
Employees

We  currently employ two (2) employees.

Patents and Trademarks

We do not own, either legally or beneficially, any patent or trademark.

Description of Properties

From early 2003 until April of 2008 our executive and administrative offices were located at 575 Anton Boulevard in Costa Mesa, California 92626.  Since then, we have relocated all executive and administrative offices to a new location in northern California. Our present mailing address and contact information is; DM Products, Inc. P.O Box 2458, Walnut Creek California 94595. Phone: 925-943-2090 Fax: 925-943-2091 www.dmproducts.biz . We currently do not own any real-estate or have any long or short term real-estate lease obligations. We believe that our current facilities are suitable and adequate to meet our present needs, and that suitable additional or substitute space will be available as needed to accommodate expansion of our operations. It is possible, however, that we will acquire additional needed facilities by the end of 2010. Our growth strategy includes acquisition of additional businesses and products to complement and strengthen our current offering of products and services. If our current or planned efforts in this regard are successful, we may lease or purchase property in connection with such an acquisition.

Legal Proceedings
 
Since our inception, we have been involved in one (1) matter of litigation with Banjo Minnow.  This matter was submitted to Arbitration and ultimately settled.  However, we realize the nature of our industry is often the subject of litigation and various claims.  Most arise as the result of product defects, advertizing issues, and conract disputes between inventors, distributors and outsources contractors.  As of the date of this filing, there are no matters of pending or threatened litigation.

There are no other matters of pending or threatened litigation.

Market for Common Equity and Related Stockholder Matters

Our common stock is currently quoted on PinkSheets, which is sponsored by FINRA.  The PinkSheets is a network of security dealers who buy and sell stock.  The dealers are connected by a computer network that provides information on current "bids" and "asks", as well as volume information.  Our shares are quoted under the symbol “DMPD.”

The following table summarizes the low and high prices of our common stock for each of the calendar quarters of 2008 and 2009.
 
 
2008
2009
 
High
Low
High
Low
First Quarter
.005
.0021
.001
.0002
Second Quarter
.0025
.001
.001
.0001
Third Quarter
.002
.0005
.0072
.0005
Fourth Quarter
.0011
.0002
.004
.0007
 
 
There were 294 shareholders of record as of April 1, 2010. This number does not include an indeterminate number of shareholders whose shares are held by brokers in “street name.”
 
Our common stock is subject to rules adopted by the Securities and Exchange Commission ("Commission") regulating broker dealer practices in connection with transactions in "penny stocks." Those disclosure rules applicable to "penny stocks" require a broker dealer, prior to a transaction in a "penny stock" not otherwise exempt from the rules, to deliver a standardized disclosure document prepared by the Commission. That disclosure document advises an investor that investment in "penny stocks" can be very risky and that the investor's salesperson or broker is not an impartial advisor, but rather paid to sell the shares. The disclosure contains further warnings for the investor to exercise caution in connection with an investment in "penny stocks," to independently investigate the security, as well as the salesperson the investor is working with and to understand the risky nature of an investment in this security. The broker dealer must also provide the customer with certain other information and must make a special written determination that the "penny stock" is a suitable investment for the purchaser, and receive the purchaser's written agreement to the transaction. Further, the rules require that, following the proposed transaction, the broker provide the customer with monthly account statements containing market information about the prices of the securities.  These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for our common stock. Many brokers may be unwilling to engage in transactions involving our common stock because of the added disclosure requirements, thereby making it more difficult for stockholders to dispose of their shares.
 
We have agreed to file a registration statement with the SEC registering the resale of the selling shareholders’ shares of common stock. We will use our best efforts to maintain the effectiveness of the resale registration statement from the effective date through and until all securities registered under the registration statement have been sold or are otherwise able to be sold pursuant to Rule 144.


Index to Financial Statements :

Audited Financial Statements:
 
 
 
44

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of DM Products, Inc.
 
We have audited the accompanying balance sheet of DM Products, Inc.  as of December 31, 2009, and the related statements of operations, stockholders’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of DM Products, Inc.  as of December 31, 2009, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, the Company is dependent on raising capital to fund operations.  These conditions raise substantial doubt about its ability to continue as a going concern.  Management’s plans regarding those matters also are described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
Beckstead and Watts, LLP
Henderson, NV
March 29, 2010
 
 
F-1

DM Products, Inc.
Consolidated Balance Sheet
 
 
December 31, 2009
ASSETS
 
Current Assets
 
Cash
  36,729
Tristar Receivable
  59,708
Prepaid Expense
  21,454
  Total Current Assets   117,891
     
Property and Equipment - net
  1,304
TOTAL ASSETS
  119,195
     
LIABILITIES & SHAREHOLDERS' EQUITY
   
Current Liabilities
   
Sales Tax Payable
  2,424
Other Current Liabilities
  54,195
  Total Current Liabilities   56,619
     
     
Commitments and contingencies
   
     
Shareholders' Equity (Deficit)
   
Common Stock: $0.001 par value; 300,000,000 shares authorized;
239,907,352 shares issued and outstanding at December 31, 2009 -Note 9
  239,908
Additional Paid In Capital
  761,601
Accumulated Deficit
  (938,933)
Shareholders' Equity (Deficit)
  62,576
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY
  119,195
 
The accompanying Notes are an integral part of these financial statements.
 
F-2

DM Products, Inc.
Consolidated Statements of Operations
 
 
For the year ended
December 31, 2009
Revenues
 
Royalty income
  363,767
Total revenues
  363,767
     
Operating expenses
   
Depreciation
  1,709
Outside services
  12,186
Professional Fees
  91,060
Salary & Wages - other
  137,500
Salary- employer taxes
  11,151
General & Administrative expenses
  66,369
Total operating expense
  319,974
     
Operating Income (Loss) from operations
  43,793
     
Other Income
  47,277
     
Income (Loss) before income taxes
  91,070
     
Provision for income taxes
  (2,400)
     
Net Income (Loss)
$ 88,670
     
     
Net Income (Loss) per common share-basic and fully diluted
$ 0.0004
     
Weighted average common shares outstanding-basic and diluted
  232,341,873
 
The accompanying Notes are an integral part of these financial statements.
 
F-3

DM Products, Inc.
Consolidated Statements of Shareholders' Equity
 
 
 
 Common Stock
 
Additional
Paid In
 
 
Accumulated
 
Total
Shareholders'
 
Shares
 
Amount
  Capital   Deficit   Equity
Balance at December 31, 2008
  212,107,352     212,108     794,561     (1,040,654)     (33,985)
                             
Issuance of stock to corporation officer and independent
consultant 40,000,000 shares at ($.000176) per share
  40,000,000     40,000     (32,960)           7,040
                             
Issuance of stock to corporation officer 3,000,0000 shares at ($.001) per share
  3,000,000     3,000                 3,000
                             
Cancellation of Stock to Marc Tow 15,200,000 shares issued on 4/23/08 @ $.001
  (15,200,000)     (15,200)                 (15,200)
                             
Retained Earnings Adjustment
                    13,051     13,051
                             
Net Income
  -     -     -     88,670     88,670
                             
Balance at December 31, 2009
  239,907,352     239,908     761,601     (938,933)     62,576
 
The accompanying Notes are an integral part of these financial statements.
 
F-4

DM Products, Inc.
Consolidated Statements of Cash Flows
 
 
For the year ended
December 31, 2009
Cash flows from operating activities
 
Net Income
$ 88,670
Adjustment to reconcile net income to net cash provided by operating activities:
   
Depreciation
  1,709
Share-based compensation
  10,040
Changes in operating assets and liabilities:
   
Accounts receivables
  25,292
Other assets
  (21,412)
Accounts payable
  (44,462)
Other payables
  (28,302)
Net cash provided by operating activities
  31,535
     
Purchase of property and equipment
  (2,607)
Net cash (used) by investing activities
  (2,607)
Cash flows from financing activities
   
Advance from Credit Line
  15
Net cash provided by financing activities
  15
     
Net change in cash
  28,943
     
Cash at beginning of period
  7,786
Cash at end of period
$ 36,729
     
Supplemental disclosure of cash flow information:
   
Interest paid
$ 459
Taxes paid
$ 2,400
 
The accompanying Notes are an integral part of these financial statements.
DM Products , Inc.
Notes to Consolidated Financial Statements
 
 
Note 1: Summary of Significant Accounting Policies
     
Nature of Operations
       
         
DM Products, Inc.(the Company) was incorporated on March 1, 2001 as Effective Sport Nutrition Corporation. Subsequently, on April 11, 2005, the Company changed its name to Midwest E.S.W.T Corp and on December 14, 2005, it changed its name again to DM Products, Inc.
         
On July 18, 2005, the Company acquired Direct Success, Inc. a California Corporation in exchange for 70 % of the Company's Common Stock, making Direct Success, Inc. a wholly owned subsidiary of the Company. Midwest E.S.W.T agreed that a total of 114,851,043 shares of Restricted Common Stock were to be issued to shareholders of Direct Success, Inc.
         
DM Products, Inc operates from Walnut Creek, California and it wholly  owns Direct Sucess, Inc which owns 75% of Direct Success, LLC 3  a limited liability company formed on or about August 16, 2002. Direct Success, Inc entered into a joint venture with Buena Vista Infomercial Corporation which owns 25%. The purpose is to market products through direct response to television infomercials. The companies obtain the distribution, production, and licensing rights to a product in exchange for royalty agreements based on the sales of the products.  The Company sets up the production, marketing and the distribution of the products.
         
Cash and Cash Equivalents Policy
     
         
The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.
Licensing Agreements
       
         
Direct Success entered into a manufacturing, marketing and distribution agreement with Banjo Buddies who is the inventor of Banjo Minnow, a fishing lure which Direct Success 3 had a licence agreement to market the product since Oct 2002. The Company entered into a modification of said agreement in April 2005.  On or about May 11, 2005  Direct Success LLC 3, subcontracted the manufacturing and distribution rights to TriStar Products, Inc.  In March 2007, Direct Success granted back to Banjo, the right,license and privilege for internet sales and small parts sale of the product. Under the agreement, Banjo will pay Direct Success 4% royalty on all gross sales of product. As of date of settlement Direct Success no longer receive the 4% royalty for internet and part sales from Banjo Buddies.
         
Basis of consolidation
       
The consolidated financial statements include the accounts of DM Products, Inc., Direct Success, Inc. and the accounts of its 75% owned subsidiaries Direct Success LLC 3. (collectively referred to as Direct Success, Inc.) The Company consolidated all entities in which it has a controlling interest.  All material inter-company transactions have been eliminated.
         
Property and equipment
       
         
Property and equipment are carried at cost. Major expenditures and those which substantially increase useful lives are capitalized. Maintenance, repairs and minor renewals are charged to operations when incurred. When property and equipment is sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in operations. Once placed in service, depreciable assets are depreciated over their estimated useful lives using both accelerated and straight-line methods.
         
Use of Estimates
       
         
Timely preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts, some of which may require revision in future period.
         
Advertising Policy
       
The Company recognizes advertising expense as incurred.  The Company recognized  no advertising expense for the year ended December 31, 2009
 
 
Impairment Policy
       
         
In the event that it tangible operational assets and finite life intangible assets are impaired, DM Products, Inc. will follow FASB topic 360 to measure any impairment loss. There has not been any impairment loss for 2009.
         
Long-lived Assets
       
         
Long-lived assets are evaluated when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows from the use of these assets.  When any such impairment exists, the related assets will be written down to fair value.
         
Deposits
       
         
Deposits consist of $0 for the year ended December 31,2009 respectively . All deposits are carried at the lower of fair value or cost.
         
Insurance Liability
       
         
The Company maintains various insurance policies for workers’ compensation, employee health, and officer and director.  Pursuant to these policies, the Company is responsible for losses up to certain limits and is required to estimate a liability that represents the ultimate exposure for aggregate losses below those limits.  No liability exists as of December 31, 2009, but in the event a liability is incurred, the amount will be based on management’s estimates of the ultimate costs to be incurred to settle known claims and claims not reported as of the balance sheet date.  Any future estimated liability may not be discounted and may be based on a number of assumptions and factors, including historical trends, actuarial assumptions, and economic conditions.  If actual trends differ from the estimates, future financial results could be impacted.
         
Stock-based Compensation
       
         
The company policy requires all share-based payments to employees, including  other equity-based compensation arrangements, to be recognized in the financial statements based on the grant date fair value of the awards or par value. During the year ended December 31, 2009,  stock-based compensation expense totaled $10,040. See note 10 Related Parties for further discussion.
         
Concentration of Risk
       
         
The company is earning (over 90%) majority of the royalty income from Tristar Products, Inc. Since the company is depending on Tristar Products, Inc, inabilities of these companies to perform may have a material adverse effect on the Company’s financial condition.
         
Intangible Assets
       
         
Intangible assets subject to amortization include organization costs and informercial production costs. Organization costs and informercial production costs are being amortized on a straight-line basis over five years and three years, respectively.
         
Earnings (Loss) Per Share
       
         
We use FASB ASC Topic 260, “Earnings per Share” (ASC 260) for calculating the basic and diluted earnings per share. We compute basic earnings per share by dividing the income attributable to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per share include the dilutive effect, if any, from the potential exercise of stock options and warrants using the treasury stock method, as well as the dilutive effect from outstanding restricted Common Stock. Potential common shares not included in the calculation of net income per share, since their effect would be anti-dilutive.Per share basic and diluted net income( loss) amounted to $0.0004 for the year ended December 31, 2009.
         
Prepaid Expenses
       
         
Prepaid expenses include prepaid audit fees and prepaid insurance. Prepaid expenses as of December 31, 2009 is $21,454.
 
F-7

 
Fair Market Value Policy
       
         
In the first quarter of fiscal year 2008, the Company adopted FASB ASC Topic -820, “Fair Value Measurements and Disclosures” (ASC 820) as amended by ASC Topic 820-10-55. ASC 820 defines fair value, establishes a framework for measuring fair value, and enhances fair value measurement disclosure. ASC Topic 820-10-55 delays, until the first quarter of fiscal year 2009, the effective date for ASC 820 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The adoption of ASC 820 did not have a material impact on the Company’s financial position or operations.
         
New Accounting Policies in 2009
     
         
On July 1, 2009, the Accounting Standards Codification (“ASC”) became FASB’s officially recognized source of authoritative U.S. generally accepted accounting principles applicable to all public and non-public non-governmental entities, superseding existing FASB, AICPA, EITF and related literature. Rules and interpretive releases of the SEC under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. All other accounting literature is considered non-authoritative. The switch to the ASC affects the way companies refer to U.S. GAAP in financial statements and accounting policies. Citing particular content in the ASC involves specifying the unique numeric path to the content through the Topic, Subtopic, Section and Paragraph structure.
FASB ASC Topic 260, “Earnings Per Share.” New authoritative accounting guidance under FASB ASC Topic 260, “Earnings Per Share,” provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method.  The new authoritative accounting guidance will be effective for the Company’s consolidated financial statements beginning November 1, 2009 and is not expected to have a significant impact on the Company’s consolidated financial statements.
         
FASB ASC Topic 320, “Investments - Debt and Equity Securities.” New authoritative accounting guidance under ASC Topic 320, “Investments - Debt and Equity Securities,” (i) changes existing guidance for determining whether an impairment is other than temporary to debt securities and (ii) replaces the existing requirement that the entity’s management assert it has both the intent and ability to hold an impaired security until recovery with a requirement that management assert: (a) it does not have the intent to sell the security; and (b) it is more likely than not it will not have to sell the security before recovery of its cost basis. Under ASC Topic 320, declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. The new authoritative accounting guidance will be effective for the Company’s consolidated financial statements beginning November 1, 2009 and is not expected to have a significant impact on the Company’s consolidated
financial statements.
         
FASB ASC Topic 805, “Business Combinations.”New authoritative accounting guidance under ASC Topic 805, “Business Combinations,” applies to all transactions and other events in which one entity obtains control over one or more other businesses. ASC Topic 805 requires an acquirer, upon initially obtaining control of another entity, to recognize the assets, liabilities and any non-controlling interest in the acquiree at fair value as of the acquisition date. Contingent consideration is required to be recognized and measured at fair value on the date of acquisition rather than at a later date when the amount of that consideration may be determinable beyond a reasonable doubt. This fair value approach replaces the cost-allocation process required under previous accounting guidance whereby the cost of an acquisition was allocated to the individual assets acquired and liabilities assumed based on their estimated fair value. ASC Topic 805 requires acquirers to expense acquisition-related costs as incurred rather than allocating such costs to the assets acquired and liabilities assumed, as was previously the case under prior accounting guidance. Assets acquired and liabilities assumed in a business
combination that arise from contingencies are to be recognized at fair value if fair value can be reasonably estimated. If fair value of such an asset or liability cannot be reasonably estimated, the asset or liability would generally be recognized in accordance with ASC Topic 450, “Contingencies.” Under ASC Topic 805, the requirements of ASC Topic 420, “Exit or Disposal Cost Obligations,” would have to be met in order to accrue for a restructuring plan in purchase accounting. Pre-acquisition contingencies are to be recognized at fair value, unless it is a non-contractual contingency that is not likely to materialize, in which case, nothing should be recognized in purchase accounting and, instead, that contingency would be subject to the probable and estimable recognition criteria of ASC Topic 450, “Contingencies.” The new authoritative accounting guidance will be effective for the Company’s consolidated financial statements beginning November 1, 2009 and is not expected to have a significant impact on the Company’s consolidated financial statements.
 
FASB ASC Topic 810, “Consolidation.” New authoritative accounting guidance under ASC Topic 810, “Consolidation,” amended prior guidance to establish accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. Under ASC Topic 810, a non-controlling interest in a subsidiary, which is sometimes referred to as minority interest, is an ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated financial statements. Among other requirements, ASC Topic 810 requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest.
         
Further new authoritative accounting guidance under ASC Topic 810 amends prior guidance to change how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. The new authoritative accounting guidance requires additional disclosures about the reporting entity’s involvement with variable-interest entities and any significant changes in risk exposure due to that involvement as well as its affect on the entity’s financial statements.The new authoritative accounting guidance under ASC Topic 810 will be effective for the Company on November 1, 2009 and is not expected to have a significant impact on the Company’s consolidated financial statements.
         
FASB ASC Topic 815, “Derivatives and Hedging.” New authoritative accounting guidance under ASC Topic 815, “Derivatives and Hedging,” amends prior guidance to amend and expand the disclosure requirements for derivatives and hedging activities to provide greater transparency about (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedge items are accounted for under ASC Topic 815, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, results of operations and cash flows. To meet those objectives, the new authoritative accounting guidance requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. The new authoritative accounting guidance under ASC Topic 815 will be effective for the Company on November 1, 2009 and is not expected to have a significant impact on the Company’s consolidated financial statements.
         
FASB ASC Topic 820, “Fair Value Measurements and Disclosures.” New authoritative accounting guidance under ASC Topic 820,”Fair Value Measurements and Disclosures,” affirms that the objective of fair value when the market for an asset is not active is the price that would be received to sell the asset in an orderly transaction, and clarifies and includes additional factors for determining whether there has been a significant decrease in market activity for an asset when the market for that asset is not active. ASC Topic 820 requires an entity to base its conclusion about whether a transaction was not orderly on the weight of the evidence. The new accounting guidance amended prior guidance to expand certain disclosure requirements. The Company adopted the new authoritative accounting guidance under ASC Topic 820.  Adoption of the new guidance did not significantly impact the Company’s consolidated financial statements
         
Further new authoritative accounting guidance (Accounting Standards Update No. 2009-5) under ASC Topic 820 provides guidance for measuring the fair value of a liability in circumstances in which a quoted price in an active market for the identical liability is not available. In such instances, a reporting entity is required to measure fair value utilizing a valuation technique that uses (i) the quoted price of the identical liability when traded as an asset, (ii) quoted prices for similar liabilities or similar liabilities when traded as assets, or (iii) another valuation technique that is consistent with the existing principles of ASC Topic 820, such as an income approach or market approach. The new authoritative accounting guidance also clarifies that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. The forgoing new authoritative accounting guidance under ASC Topic 820 will be effective for the Company’s consolidated financial statements beginning November 1, 2009 and is not expected to have a significant impact on the Company’s consolidated
financial statements.
         
FASB ASC Topic 825 “Financial Instruments.” New authoritative accounting guidance under ASC Topic 825,”Financial Instruments,” requires an entity to provide disclosures about the fair value of financial instruments in interim financial information and amends prior guidance to require those disclosures in summarized financial information at interim reporting periods. The new authoritative accounting guidance will be effective for the Company’s consolidated financial statements beginning November 1, 2009 and is not expected to have a significant impact on the Company’s consolidated financial statements.
 
 
F-9

 
FASB ASC Topic 855, “Subsequent Events.” New authoritative accounting guidance under ASC Topic 855, “Subsequent Events,” establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued. ASC Topic 855 defines (i) the period after the balance sheet date during which a reporting entity’s management should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and (iii) the disclosures an entity should make about events or transactions that occurred after the balance sheet date. The new authoritative accounting guidance under ASC Topic 855 became effective for the Company’s financial statements for periods ending after June 15, 2009 and did not have a significant impact on the Company’s consolidated financial statements.
         
Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have an effect on the accompanying consolidated financial statements.
         
Revenue and Cost Recognition
     
         
We record revenue in accordance with ASC Topic 605 - Revenue Recognition. During the year ended December 31, 2009 our revenues came from royalties. The royalties came from the contract Banjo Minnow the fishing lure with TriStar Products, Inc. Revenues derived from our license sales are recognized when (1) there is evidence of an arrangement, (2) collection of our fee is considered probable and (3) the fee is fixed and determinable.
         
Note 2: Going Concern
       
Before being acquired by DM Products, Inc., Direct Success, Inc. had an accumulated loss of $6,195,881. Notwithstanding the continued losses, these financial statements have been prepared by management on a going concern basis.
         
The going concern basis of presentation assumes the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.
         
Certain conditions, discussed below, currently exist which raise substantial doubt upon the validity of this assumption.  The consolidated financial statements do not include any adjustments thus might result from the outcome of this uncertainty.  If the Company were unable to continue as a going concern, assets and liabilities would require restatement on a liquidation basis, which would differ materially from the going concern basis.
         
The Company’s future operations are dependant upon the marketing of its products and the Company’s ability to secure sufficient financing to continue operations and marketing of its products.  There can be no assurance that the Company’s products will be able to secure market acceptance or that successful commercialization of its products will be achieved.
         
Note 3: Fixed Assets
       
Fixed Assets consists of the following:
     
 
   
As of
12/31/2009
 
Office Equipment
  3,193
 
Mold
  3,000
 
Website
  1,300
      7,493
Accumulated Depreciation
    (6,189)
Fixed Assets, net
    1,304
 
         
Total depreciation expenses related to the above mentioned fixed assets were $1,709 for the year  ended December 31, 2009.
 
 
F-10

 
Note 4: Income Taxes
       
         
The company accounts for income taxes in accordance with FASB Topic 740, "Accounting for Income Taxes," which requires the use of the "liability method" of accounting for income taxes. Accordingly, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Current income taxes are based on the year's income taxable for Federal and state income tax reporting purposes.
         
The Provision income taxes consists of the following:
     
 
 
Fo the Year Ended
12/31/2009
Federal
  -
State (minimum taxes and LLC fees)
  2,400
    2,400
     
 
For the Period Ended
12/31/2009
US Tax rate (34%)
  0.34
State Rate
  0.09
Total Rate
  0.43
Valuation Adjustment
  (0.43)
Net Effect
  -
 
In 2009 DM Products has a Net Operating Loss (NOL) carry forward in the amount $827,375
 
         
The tax benefit was not reflected due to a 100% valuation allowance provided as a result of losses and an uncertainty of future profitability.
         
Note 5: Interest Expenses
       
         
Interest expense for the year December 31, 2009 totaled $459.
     
         
Note 6: Royalties waived
       
         
Script To Screen, Inc. has entered into an agreement with Direct Success LLC 3 and Direct Success, Inc. to waive royalties for all past years to date and current year to date as well as future royalties that may come due under the current Royalty Agreement. Total past and current year royalties waived and included in other income equals $47,277.
         
Note 7: Acquired Intangible Assets
     
         
The company books intangibles at cost and amortizes then over their useful lives.  The consolidated intangible assets consists of the following:
 
 
As of
12/31/2009
Infomercial production costs
  239,598
Accumulated amortization
  (239,598)
Intangible assets-net
  -
 
Total amortization expenses related to the above mentioned intangible assets for the year ended 12/31/09 were $0.
 
 
F-11

 
Note 8: Line of Credit
       
         
DM Products, Inc has two Revolving Line of Credits with a credit limit of $30,000 each. Both Line of Credits have fluctuating interest rate. The latest charged interest rate for these are 7.24%. The Line of Credits balance as of December 31, 2009 is $15.
         
Note 9: Common Stock
       
         
During 2009, 43,000,000 shares of Common Stocks were issued at par value of US $0.001 and 15,200,000 shares of Common stocks were revoked at par value of US $0.001:
         
 
Shares
   
Dollar Value
   
Year
 
For
                 
20,000,000     $ 3,520       2009  
services
20,000,000     $ 3,520       2009  
services
3,000,000     $ 3,000       2009  
services
(15,200,000)     $ 15,200       2009  
services
27,800,000                    
 
Note 10: Related Party Transactions
     
         
Employment Agreement
       
         
An employee agreement was entered into on the 20th day of April, 2007 by and between DM Products, Inc. and Kurtis Cockrum. Employee's starting salary is $6,000 per month during the first 90 days following execution of the agreement, or after $500,000 in capital is raised. After such period of time, Employee's salary shall be increased to $10,000 per month. Should the company determine it in the best interest not to pay employee's entire monthly compensation, at any time, any such compensation shall be treated as deferred compensation and will accumulate on the books and provided to employee at employee's sole discretion, taking into consideration the funds available and the best interest the company. The accrued salary as of 12/31/09 is $25,653.
         
Consulting Contracts
     
 
         
DM Products, Inc has entered in  a consulting contract with Michael Debenon, Esq. for $6,000 per month on a month to month basis for general counsel.
         
Note 11: Subsequent Events
       
         
The Board of Directors passed a resolution on 2/10/10 to issue 30,000 shares of Restricted Common Stock to Joel Boodoosingh. In 2007 Joel Boodoosingh paid $30,000 for preferred stock in error. DM Products, Inc does not have preferred stock so 30,000 shares common stock will be issued at .001 par value.
         
Banjo Buddies, Inc. Arbitration
     
         
Direct Success, LLC #3 entered into a Manufacturing, Marketing, and Distribution Agreement with Banjo Buddies, Inc. on October 10, 2003 which was later modified in writing on April 30, 2005. This agreement, and subsequent modification, granted DS the exclusive rights to market and distribute the Banjo Lure a fishing  lure, owned by Banjo Buddies, Inc., in exchange for a royalty on sales. Direct Success, LLC #3 subcontracted the rights to manufacture, market and distribute the lure with Tristar Products, Inc. on May 11, 2005. A dispute arose between Direct Success, LLC #3 and Banjo Buddies, Inc. in which both claimed contract breaches to the terms contained in the Manufacturing, Marketing and Distribution Agreement and the modification thereof. Pursuant to the terms of the Agreement, any disputes arising from the performance of either party was required to be submitted to binding arbitration, in the State of California, and governed by California law. Direct Success, LLC #3 commenced arbitration of the dispute by filing a claim with the American Arbitration Association on March 13, 2009 and an Answering Statement and Counterclaim was filed by Banjo Buddies, Inc. on April 20, 2009. On February 26, 2010, prior to commencement of the Arbitration hearing, the parties entered into Settlement Agreement and Release which resolved all issues pertaining to the arbitration and the disputes between the parties. The Arbitration has been dismissed in its entirety.  No current litigation exists, and no future disputes are anticipated.
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of DM Products, Inc.
 
We have audited the accompanying balance sheet of DM Products, Inc.  as of December 31, 2008 and 2007, and the related statements of operations, stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of DM Products, Inc.  as of December 31, 2008 and 2007, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, the Company is dependent on raising capital to fund operations.  These conditions raise substantial doubt about its ability to continue as a going concern.  Management’s plans regarding those matters also are described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
Beckstead and Watts, LLP
Henderson, NV
February 5, 2010
 
F-13

DM   Products, Inc.
Consolidated Balance Sheet
 
 
(Unaudited)
September 30, 2009
 
(Audited)
December 31, 2008
 
(Audited)
December 31, 2007
ASSETS
         
Current Assets
         
Cash
  33,849     7,786     2,358
Tristar Receivable
  58,013     85,000     21,051
Other Receivable
  19,826     2,149     1,021
Prepaid Expense
  20,648     42     14,772
Total Current Assets
  132,336     94,977     39,202
                 
Property and Equipment - net
  1,705     761     226
Other Assets
               
Deposit
  0     0     992
Intangible Assets-net of amortization
  0     7     600
    0     7     1,592
TOTAL ASSETS
  134,041     95,745     41,020
                 
LIABILITIES & SHAREHOLDERS' EQUITY
               
Current Liabilities
               
Accounts Payable
  0     44,462     11,895
Sales Tax Payable
  2,424     2,424     2,424
Other Current Liabilities
  58,437     82,844     61,939
Total Current Liabilities
  60,861     129,730     76,258
                 
Commitments and contingencies
               
                 
Shareholders' Equity (Deficit)
               
Common Stock: $0.001 par value; 300,000,000 shares authorized; 252,107,352,  212,107,352, and 172,807,352
shares issued and outstanding at September 30, 2009, December 31,2008, and December 31, 2007 respectively -Note 10
  252,108     212,108     172,808
Additional Paid In Capital
  761,601     794,561     794,561
Accumulated Deficit
  (940,529)     (1,040,654)     (1,002,607)
Shareholders' Equity (Deficit)
  73,180     (33,985)     (35,238)
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY
  134,041     95,745     41,020
 
The accompanying Notes are an integral part of these financial statements.
DM Products, Inc.
Consolidated Statements of Operations
 
 
(Unaudited)
 
(Audited)
 
(Audited)
 
For the period ended
 
For the years ended
 
September 30, 2009
 
December 31, 2008
 
December 31, 2007
Revenues
         
Sales revenues
    $ -   $ 50,236
Royalty income
  278,851     220,261     119,744
Total revenues
  278,851     220,261     169,980
                 
Cost of sales
        -     48,134
                 
Gross profit
  278,851     220,261     121,846
                 
Operating expenses
               
Amortization
  7     563     7,500
Depreciation
  168     698     1,200
Outside services
  8,088     86,672     52,505
Professional Fees
  61,232     12,580     20,776
Salary & Wages - other
  102,000     85,663     94,775
Salary- employer taxes
  10,188     7,267     6,811
General & Administrative expenses
  41,565     63,413     95,430
Total operating expense
  223,248     256,856     278,997
                 
Operating Income (Loss) from operations
  55,603     (36,595)     (157,151)
                 
Other Income
  47,277     -     -
                 
Income (Loss) before income taxes
  102,880     (36,595)     (157,151)
                 
Provision for income taxes
  (2,400)     (2,098)     (5,900)
                 
Net Income (Loss)
$ 100,480   $ (38,693)   $ (163,051)
                 
Net Income (Loss) per common share-basic and fully diluted
$ 0.0004   $ (0.0002)   $ (0.0010)
                 
Weighted average common shares outstanding-basic and diluted
  228,810,649     199,114,729     162,870,749
 
The accompanying Notes are an integral part of these financial statements.
 
F-15

DM Products, Inc.
Consolidated Statements of Shareholders' Equity
 
 
 
Common Stock
 
Additional
Paid In
 
 
Accumulated
 
Total
Shareholders'
 
Shares
 
Amount
  Capital   Deficit   Equity
Balance at December 31, 2006
  152,777,352   $ 152,778     759,591     (839,556)   $ 72,813
                             
Issuance of stock pursuant to private placement
  30,000     30     29,970     -     30,000
30,000 shares at par value of $.001
                           
                             
Issuance of stock to corporation officer
  14,000,000     14,000                 14,000
14,000,000 shares at par value of $.001
                           
                             
Issuance of stock to corporation officer and independent consultant 6,000,000 shares at par value of $.001
  6,000,000     6,000                 6,000
                             
Additional Paid in Capital
              5,000           5,000
                             
Net (Loss)
  -     -     -     (163,051)     (163,051)
                             
Balance at December 31, 2007 (Audited)
  172,807,352   $ 172,808     794,561     (1,002,607)   $ (35,238)
                             
Issuance of stock to corporation officer and independent consultant 39,300,000 shares at par value of $.001
  39,300,000     39,300                 39,300
                             
Net (Loss)
  -     -     -     (38,047)     (38,047)
Balance at December 31, 2008 (Audited)
  212,107,352     212,108     794,561     (1,040,654)     (33,985)
                             
Issuance of stock to corporation officer and independent consultant 40,000,000 shares at ($.000176) per share
  40,000,000     40,000     (32,960)           7,040
                             
Net Income
  -     -     -     100,125     100,125
                             
Balance at September 30, 2009 (Unaudited)
  252,107,352     252,108     761,601     (940,529)     73,180
 
The accompanying Notes are an integral part of these financial statements.
DM Products, Inc.
Consolidated Statements of Cash Flows
 
 
(Unaudited)
 
(Audited)
 
(Audited)
 
For the period ended
 
For the years ended
 
September 30, 2009
 
December 31, 2008
 
December 31, 2007
Cash flows from operating activities
         
Net (Loss)
$ 100,480   $ (38,693)   $ (163,051)
Adjustment to reconcile net (loss) to net cash (used) by operating activities:
     
Depreciation
  168     698     1,200
Amortization
  7     593     7,500
Share-based compensation
  7,040     39,300     20,000
Changes in operating assets and liabilities:
               
Accounts receivables
  14,310     (65,077)     (21,083)
Inventory
        -     34,944
Other Current Assets
  (5,000)     14,730     (14,772)
Other assets
  (21,410)     992     47,317
Accounts payable
  (44,462)     32,567     3,095
Other payables
  (34,098)     20,905     33,589
Net cash (used) by operating activities
  17,035     6,015     (51,261)
                 
Cash flow from investing activities
               
Purchase of property and equipment
  (1,467)     (587)      
Net cash provided by investing activities
  (1,467)     (587)     -
Cash flows from financing activities
               
Advance from Credit Line
  10,495     -     -
Additional Paid In Capital
              34,970
Issuance of stock
  -     -     30
Net cash provided by financing activities
  10,495     -     35,000
                 
Net change in cash
  26,063     5,428     (16,261)
                 
Cash at beginning of period
  7,786     2,358     18,619
Cash at end of period
$ 33,849   $ 7,786   $ 2,358
                 
Supplemental disclosure of cash flow information:
           
Interest paid
$ -   $ -   $ -
Taxes paid
$ 2,400   $ 2,098   $ 5,900
   
The accompanying Notes are an integral part of these financial statements.
 
F-17

DM Products, Inc.
Notes to Consolidated Financial Statements
 
Note 1: Summary of Significant Accounting Policies
     
Nature of Operations
       
         
DM Products, Inc.(the Company) was incorporated on March 1, 2001 as Effective Sport Nutrition Corporation. Subsequently, on April 11, 2005, the Company changed its name to Midwest E.S.W.T Corp and on December 14, 2005, it changed its name again to DM Products, Inc.
         
On July 18, 2005, the Company acquired Direct Success, Inc. a California Corporation in exchange for 70 % of the Company's Common Stock, making Direct Success, Inc. a wholly owned subsidiary of the Company. Midwest E.S.W.T agreed that a total of 114,851,043 shares of Restricted Common Stock were to be issued to shareholders of Direct Success, Inc.
         
DM Products, Inc operates from Walnut Creek, California and it wholly  owns Direct Sucess, Inc which owns 75% of Direct Success, LLC 3  a limited liability company formed on or about August 16, 2002. Direct Success, Inc entered into a joint venture with Buena Vista Infomercial Corporation which owns 25%. The purpose is to market products through direct response to television infomercials. The companies obtain the distribution, production, and licensing rights to a product in exchange for royalty agreements based on the sales of the products.  The Company sets up the production, marketing and the distribution of the products.
         
Cash and Cash Equivalents Policy
     
         
The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.
Licensing Agreements
       
         
Direct Success entered into a manufacturing, marketing and distribution agreement with Banjo Buddies who is the inventor of Banjo Minnow, a fishing lure which Direct Success 3 had a licence agreement to market the product since Oct 2002. The Company entered into a modification of said agreement in April 2005.  On or about May 11, 2005  Direct Success LLC 3, subcontracted the manufacturing and distribution rights to TriStar Products, Inc.  In March 2007, Direct Success granted back to Banjo, the right,license and privilege for internet sales and small parts sale of the product.
         
Under the agreement, Banjo will pay Direct Success 4% royalty on all gross sales of product.
 
         
Basis of consolidation
       
The consolidated financial statements include the accounts of DM Products, Inc., Direct Success, Inc. and the accounts of its 75% owned subsidiaries Direct Success LLC 3. (collectively referred to as Direct Success, Inc.) The Company consolidated all entities in which it has a controlling interest.  All material inter-company transactions have been eliminated.
         
Property and equipment
       
         
Property and equipment are carried at cost. Major expenditures and those which substantially increase useful lives are capitalized. Maintenance, repairs and minor renewals are charged to operations when incurred. When property and equipment is sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in operations. Once placed in service, depreciable assets are depreciated over their estimated useful lives using both accelerated and straight-line methods.
         
Use of Estimates
       
         
Timely preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts, some of which may require revision in future period.
         
Advertising Policy
       
The Company recognizes advertising expense as incurred.  The Company recognized  no advertising expense for the years ended December 31, 2007, 2008, and the period ended September 30, 2009.
 
Impairment Policy
       
         
In the event that that it tangible operational assets and finite life intangible assets are impaired, DM Products, Inc. will follow FASB topic 360 to measure any impairment loss. There has not been any impairment loss for 2007, 2008 and nine months ended 2009.
         
Long-lived Assets
       
         
Long-lived assets are evaluated when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows from the use of these assets.  When any such impairment exists, the related assets will be written down to fair value.
         
Deposits
       
         
Deposits consist of $992, $0, and $0 in rent deposits as of December 31, 2007, 2008, and September 30,2009 respectively . All deposits are carried at the lower of fair value or cost.
         
Insurance Liability
       
         
The Company maintains various insurance policies for workers’ compensation, employee health, and officer and director.  Pursuant to these policies, the Company is responsible for losses up to certain limits and is required to estimate a liability that represents the ultimate exposure for aggregate losses below those limits.  No liability exists as of December 31, 2007, 2008, and September 30, 2009, but in the event a liability is incurred, the amount will be based on management’s estimates of the ultimate costs to be incurred to settle known claims and claims not reported as of the balance sheet date.  Any future estimated liability may not be discounted and may be based on a number of assumptions and factors, including historical trends, actuarial assumptions, and economic conditions.  If actual trends differ from the estimates, future financial results could be impacted.
         
Stock-based Compensation
       
         
The company policy requires all share-based payments to employees, including  other equity-based compensation arrangements, to be recognized in the financial statements based on the grant date fair value of the awards or par value. During fiscal years 2007, 2008, and the period ended September 30, 2009,  stock-based compensation expense totaled $20,000, $39,300, and $7,040 respectively. See note 12 Related Parties for further discussion.
         
Concentration of Risk
       
         
The company is earning (over 90%) majority of the royalty income from Tristar Products, Inc. Also the company is earning royalty from Banjo Buddies Inc., of 4% of gross sales. Since the company is depending on Tristar Products, Inc and Banjo Buddies, Inc, inabilities of these companies to perform may have a material adverse effect on the Company’s financial condition.
         
Intangible Assets
       
         
Intangible assets subject to amortization include organization costs and informercial production costs. Organization costs and informercial production costs are being amortized on a straight-line basis over five years and three years, respectively.
         
Earnings (Loss) Per Share
       
         
We use FASB ASC Topic 260, “Earnings per Share” (ASC 260) for calculating the basic and diluted earnings per share. We compute basic earnings per share by dividing the income attributable to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per share include the dilutive effect, if any, from the potential exercise of stock options and warrants using the treasury stock method, as well as the dilutive effect from outstanding restricted Common Stock. Potential common shares not included in the calculation of net income per share, since their effect would be anti-dilutive.Per share basic and diluted net income( loss) amounted to ($0.0010),($0.0002) and $0.0004 for the years ended December 31, 2007 and 2008, and period ended September 30, 2009 respectively.
         
Prepaid Expenses
       
         
Prepaid expenses include prepaid audit fees and prepaid insurance. Prepaid expenses for the fiscal years 2007 and 2008, and for the period ended September 30, 2009 are $14,772, $42, and $21,452, respectively.
 
Fair Market Value Policy
       
         
In the first quarter of fiscal year 2008, the Company adopted FASB ASC Topic -820, “Fair Value Measurements and Disclosures” (ASC 820) as amended by ASC Topic 820-10-55. ASC 820 defines fair value, establishes a framework for measuring fair value, and enhances fair value measurement disclosure. ASC Topic 820-10-55 delays, until the first quarter of fiscal year 2009, the effective date for ASC 820 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The adoption of ASC 820 did not have a material impact on the Company’s financial position or operations.
         
New Accounting Policies in 2009
     
         
On July 1, 2009, the Accounting Standards Codification (“ASC”) became FASB’s officially recognized source of authoritative U.S. generally accepted accounting principles applicable to all public and non-public non-governmental entities, superseding existing FASB, AICPA, EITF and related literature. Rules and interpretive releases of the SEC under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. All other accounting literature is considered non-authoritative. The switch to the ASC affects the way companies refer to U.S. GAAP in financial statements and accounting policies. Citing particular content in the ASC involves specifying the unique numeric path to the content through the Topic, Subtopic, Section and Paragraph structure.
FASB ASC Topic 260, “Earnings Per Share.” New authoritative accounting guidance under FASB ASC Topic 260, “Earnings Per Share,” provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method.  The new authoritative accounting guidance will be effective for the Company’s consolidated financial statements beginning November 1, 2009 and is not expected to have a significant impact on the Company’s consolidated financial statements.
         
FASB ASC Topic 320, “Investments - Debt and Equity Securities.” New authoritative accounting guidance under ASC Topic 320, “Investments - Debt and Equity Securities,” (i) changes existing guidance for determining whether an impairment is other than temporary to debt securities and (ii) replaces the existing requirement that the entity’s management assert it has both the intent and ability to hold an impaired security until recovery with a requirement that management assert: (a) it does not have the intent to sell the security; and (b) it is more likely than not it will not have to sell the security before recovery of its cost basis. Under ASC Topic 320, declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. The new authoritative accounting guidance will be effective for the Company’s consolidated financial statements beginning November 1, 2009 and is not expected to have a significant impact on the Company’s consolidated
financial statements.
         
FASB ASC Topic 805, “Business Combinations.”New authoritative accounting guidance under ASC Topic 805, “Business Combinations,” applies to all transactions and other events in which one entity obtains control over one or more other businesses. ASC Topic 805 requires an acquirer, upon initially obtaining control of another entity, to recognize the assets, liabilities and any non-controlling interest in the acquiree at fair value as of the acquisition date. Contingent consideration is required to be recognized and measured at fair value on the date of acquisition rather than at a later date when the amount of that consideration may be determinable beyond a reasonable doubt. This fair value approach replaces the cost-allocation process required under previous accounting guidance whereby the cost of an acquisition was allocated to the individual assets acquired and liabilities assumed based on their estimated fair value. ASC Topic 805 requires acquirers to expense acquisition-related costs as incurred rather than allocating such costs to the assets acquired and liabilities assumed, as was previously the case under prior accounting guidance. Assets acquired and liabilities assumed in a business
combination that arise from contingencies are to be recognized at fair value if fair value can be reasonably estimated. If fair value of such an asset or liability cannot be reasonably estimated, the asset or liability would generally be recognized in accordance with ASC Topic 450, “Contingencies.” Under ASC Topic 805, the requirements of ASC Topic 420, “Exit or Disposal Cost Obligations,” would have to be met in order to accrue for a restructuring plan in purchase accounting. Pre-acquisition contingencies are to be recognized at fair value, unless it is a non-contractual contingency that is not likely to materialize, in which case, nothing should be recognized in purchase accounting and, instead, that contingency would be subject to the probable and estimable recognition criteria of ASC Topic 450, “Contingencies.” The new authoritative accounting guidance will be effective for the Company’s consolidated financial statements beginning November 1, 2009 and is not expected to have a significant impact on the Company’s consolidated financial statements.
 
FASB ASC Topic 810, “Consolidation.” New authoritative accounting guidance under ASC Topic 810, “Consolidation,” amended prior guidance to establish accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. Under ASC Topic 810, a non-controlling interest in a subsidiary, which is sometimes referred to as minority interest, is an ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated financial statements. Among other requirements, ASC Topic 810 requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest.
         
Further new authoritative accounting guidance under ASC Topic 810 amends prior guidance to change how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. The new authoritative accounting guidance requires additional disclosures about the reporting entity’s involvement with variable-interest entities and any significant changes in risk exposure due to that involvement as well as its affect on the entity’s financial statements.The new authoritative accounting guidance under ASC Topic 810 will be effective for the Company on November 1, 2009 and is not expected to have a significant impact on the Company’s consolidated financial statements.
         
FASB ASC Topic 815, “Derivatives and Hedging.” New authoritative accounting guidance under ASC Topic 815, “Derivatives and Hedging,” amends prior guidance to amend and expand the disclosure requirements for derivatives and hedging activities to provide greater transparency about (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedge items are accounted for under ASC Topic 815, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, results of operations and cash flows. To meet those objectives, the new authoritative accounting guidance requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. The new authoritative accounting guidance under ASC Topic 815 will be effective for the Company on November 1, 2009 and is not expected to have a significant impact on the Company’s consolidated financial statements.
         
FASB ASC Topic 820, “Fair Value Measurements and Disclosures.” New authoritative accounting guidance under ASC Topic 820,”Fair Value Measurements and Disclosures,” affirms that the objective of fair value when the market for an asset is not active is the price that would be received to sell the asset in an orderly transaction, and clarifies and includes additional factors for determining whether there has been a significant decrease in market activity for an asset when the market for that asset is not active. ASC Topic 820 requires an entity to base its conclusion about whether a transaction was not orderly on the weight of the evidence. The new accounting guidance amended prior guidance to expand certain disclosure requirements. The Company adopted the new authoritative accounting guidance under ASC Topic 820.  Adoption of the new guidance did not significantly impact the Company’s consolidated financial statements
         
Further new authoritative accounting guidance (Accounting Standards Update No. 2009-5) under ASC Topic 820 provides guidance for measuring the fair value of a liability in circumstances in which a quoted price in an active market for the identical liability is not available. In such instances, a reporting entity is required to measure fair value utilizing a valuation technique that uses (i) the quoted price of the identical liability when traded as an asset, (ii) quoted prices for similar liabilities or similar liabilities when traded as assets, or (iii) another valuation technique that is consistent with the existing principles of ASC Topic 820, such as an income approach or market approach. The new authoritative accounting guidance also clarifies that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. The forgoing new authoritative accounting guidance under ASC Topic 820 will be effective for the Company’s consolidated financial statements beginning November 1, 2009 and is not expected to have a significant impact on the Company’s consolidated
financial statements.
         
FASB ASC Topic 825 “Financial Instruments.” New authoritative accounting guidance under ASC Topic 825,”Financial Instruments,” requires an entity to provide disclosures about the fair value of financial instruments in interim financial information and amends prior guidance to require those disclosures in summarized financial information at interim reporting periods. The new authoritative accounting guidance will be effective for the Company’s consolidated financial statements beginning November 1, 2009 and is not expected to have a significant impact on the Company’s consolidated financial statements.
 
FASB ASC Topic 855, “Subsequent Events.” New authoritative accounting guidance under ASC Topic 855, “Subsequent Events,” establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued. ASC Topic 855 defines (i) the period after the balance sheet date during which a reporting entity’s management should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and (iii) the disclosures an entity should make about events or transactions that occurred after the balance sheet date. The new authoritative accounting guidance under ASC Topic 855 became effective for the Company’s financial statements for periods ending after June 15, 2009 and did not have a significant impact on the Company’s consolidated financial statements.
         
Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have an effect on the accompanying consolidated financial statements.
         
Revenue and Cost Recognition
     
         
We record revenue in accordance with ASC Topic 605 - Revenue Recognition. In 2007 our revenues came from two sources the first is derived from sales of a fishing lure parts for fishing industry. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the contract price is fixed or determinable, and collectibility is reasonably assured and right of returns. The second source revenue in 2007 and became the only source of revenues in 2008 and period ended September 2009 were royalties. The royalties came from two contracts one for parts sales with Banjo Buddies, Inc and the other for Banjo Minnow the fishing lure with TriStar Products, Inc. Revenues derived from our license sales are recognized when (1) there is evidence of an arrangement, (2) collection of our fee is considered probable and (3) the fee is fixed and determinable.
In 2007, Cost of Sales consists of parts of the Banjo Minnow product and are recorded as incurred based on sales process.
         
Note 2: Going Concern
       
Before being acquired by DM Products, Inc., Direct Success, Inc. had an accumulated loss of $6,195,881. Notwithstanding the continued losses, these financial statements have been prepared by management on a going concern basis.
         
The going concern basis of presentation assumes the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.
         
Certain conditions, discussed below, currently exist which raise substantial doubt upon the validity of this assumption.  The consolidated financial statements do not include any adjustments thus might result from the outcome of this uncertainty.  If the Company were unable to continue as a going concern, assets and liabilities would require restatement on a liquidation basis, which would differ materially from the going concern basis.
         
The Company’s future operations are dependant upon the marketing of its products and the Company’s ability to secure sufficient financing to continue operations and marketing of its products.  There can be no assurance that the Company’s products will be able to secure market acceptance or that successful commercialization of its products will be achieved.
         
Note 3: Fixed Assets
       
Fixed Assets consists of the following:
     
 
   
As of
12/31/2007
 
As of
12/31/2008
 
As of
9/30/2009
 
Furniture and fixtures
    -     -
 
Office Equipment
      1,768     2,053
 
Mold
  3,000     3,000     3,000
 
Website
  1,300     1,300     1,300
      4,300     6,068     6,353
Accumulated Depreciation
    (4,074)     (5,307)     (4,648)
Fixed Assets, net
    226     761     1,705
 
Total depreciation expenses related to the above mentioned fixed assets were $1,200 for the year  ended December 31, 2007, $698 for the year ended December 31, 2008 and $168 for the 9 months period ended September 30, 2009.
 
Note 4: Income Taxes
       
         
The company accounts for income taxes in accordance with FASB Topic 740, "Accounting for Income Taxes," which requires the use of the "liability method" of accounting for income taxes. Accordingly, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Current income taxes are based on the year's income taxable for Federal and state income tax reporting purposes.
         
The Provision income taxes consists of the following:
     
 
 
For the years Ended
12/31/2007
 
12/31/2008
 
For the Period Ended
9/30/2009
Federal
      -     -
State (minimum taxes and LLC fees)
5,900     2,098     2,400
  5,900     2,098     2,400
               
 
For the years Ended
12/31/2007
 
12/31/2008
 
For the Period Ended
9/30/2009
US Tax rate (34%)
0.34     0.34     0.34
State Rate
0.09     0.09     0.09
Total Rate
0.43     0.43     0.43
Valuation Adjustment
(0.43)     (0.43)     (0.43)
Net Effect
-     -     -
 
In 2008 DM Products has a Net Operating Loss (NOL) carry forward in the amount $517,345.
 
         
The tax benefit was not reflected due to a 100% valuation allowance provided as a result of losses and an uncertainty of future profitability.
         
Note 5: Operating Lease
       
         
Direct Success, Inc.  leases office space under an operating lease agreement. Total lease expense for the year ended 12/31/07 and 12/31/08 were $4,113 and $747 repectively and $0 for the 9 months period ended 09/30/2009. The lease ended in 2008.
         
Note 6: Interest Expenses
       
         
Interest expense for the fiscal years ended 2007 and 2008 and for the period ended September 30, 2009 totaled $0, $951, and  $230 respectively
         
Note 7: Royalties waived
       
         
Script To Screen, Inc. has entered into an agreement with Direct Success LLC 3 and Direct Success, Inc. to waive royalties for all past years to date and current year to date as well as future royalties that may come due under the current Royalty Agreement. Total past and current year royalties waived and included in other income equals $47,277.
 
Note 8: Acquired Intangible Assets
     
         
The company books intangibles at cost and amortizes then over their useful lives.  The consolidated intangible assets consists of the following:
 
 
As of
12/31/2007
 
As of
12/31/2008
 
As of
9/30/2009
Infomercial production costs
  239,598     239,598     239,598
Accumulated amortization
  (238,998)     (239,591)     (239,598)
Intangible assets-net
  600     7     -
 
Total amortization expenses related to the above mentioned intangible assets for the year ended 12/31/07 and 12/31/08 were $7,500 and $563 repectively and $7 for the 9 months period ended 09/30/09.
         
Note 9: Line of Credit
       
         
DM Products, Inc has two Revolving Line of Credits with a credit limit of $30,000 each. Both Line of Credits have fluctuating interest rate. The latest charged interest rate for these are 6.24% and 7.24%. The Line of Credits balance as of December 31, 2007, 2008, and September 30, 2009 is $0, $0, and $10,495 respectively.
         
Note 10: Common Stock
       
         
During 2007, 20,030,000 shares of Common Stocks was issued at par value of US$0.001. 39,300,000 shares of Common Stocks were issued at par value of US $0.001 in 2008 and 40,000,0000 shares of Common Stocks were issued at par value of US $0.001 in 2009:
 
Shares
 
Dollar Value
 
Year
 
For
 
30,000   $ 30     2007  
cash
see note 13
2,000,000   $ 2,000     2007  
services
 
5,000,000   $ 5,000     2007  
services
 
5,000,000   $ 5,000     2007  
services
 
2,000,000   $ 2,000     2007  
services
 
3,000,000   $ 3,000     2007  
services
 
3,000,000   $ 3,000     2007  
services
 
20,030,000                  
                   
15,100,000   $ 15,100     2008  
services
 
15,200,000   $ 15,200     2008  
services
see note 13
5,000,000   $ 5,000     2008  
services
 
4,000,000   $ 4,000     2008  
services
 
39,300,000                  
                   
20,000,000   $ 3,520     2009  
services
 
20,000,000   $ 3,520     2009  
services
 
40,000,000                  
 
Note 11: Contingency
       
         
Arbitration
       
         
Direct Success LLC 3 is in arbitration with Banjo Buddies over terms of the contract. Management is uncertain about the possible outcome.The 2009 royalties for Banjo parts has been accrued as of September 30, 2009.
         
Note 12: Related Party Transactions
     
         
Employment Agreement
       
         
An employee agreement was entered into on the 20th day of April, 2007 by and between DM Products, Inc. and Kurtis Cockrum. Employee's starting salary is $6,000 per month during the first 90 days following execution of the agreement, or after $500,000 in capital is raised. After such period of time, Employee's salary shall be increased to $10,000 per month. Should the company determine it in the best interest not to pay employee's entire monthly compensation, at any time, any such compensation shall be treated as deferred compensation and will accumulate on the books and provided to employee at employee's sole discretion, taking into consideration the funds available and the best interest the company. The accrued salary as of 12/31/07 is $23,422, as of 12/31/08 is $67,884 , and as of 09/30/09 is $25,653.
         
Consulting Contracts
     
 
         
DM Products, Inc has entered in  a consulting contract with Michael Debenon, Esq. for $6,000 per month on a month to month basis for general counsel.
         
Note 13: Subsequent Events
       
         
The Board of Directors passed a resolution on 10/12/09 to issue 3,000,000 shares of company stock to James Clark in recognition of his services as President and member of the Board of Directors of DM Products, Inc. from 05/01/08 until 09/30/09, in addition to any monetary compensation already agreed upon.
         
The Board of Directors passed a resolution on 10/20/09 to cancel 15,200,000 shares issued to Marc Tow on 04/25/08 and to revoke share certificate number 10442. The shares so issued were intended to compensate Mark Tow for legal services he provided the company and Marc Tow has failed to provide the company with proof of services performed in consideration for the issuance of shares.
         
The Board of Directors passed a resolution to issue 30,000 shares of Restricted Common Stock to Joel Boodoosingh. In 2007 Joel Boodoosingh paid $30,000 for preferred stock in error. DM Products, Inc does not have preferred stock so 30,000 shares common stock will be issued at .001 par value.
 
 
Management Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with our interim unaudited consolidated financial statements and notes thereto for the nine month period ended September 30, 2009, and our audited consolidated financial statements and related notes thereto for the years ended December 31, 2007, 2008 and 2009 included elsewhere in this Prospectus. We also urge you to review and consider our disclosures describing various risks that may affect our business, which are set forth under the heading “RISK FACTORS.”

Executive Overview

We, through our wholly owned subsidiary, Direct Success, Inc., develop, finance, produce, market, and distribute unique and innovative health, beauty, fashion, fitness and other products for sale through infomercial marketing and distribution channels. Profits are derived from inbound sales, outbound sales, up sells and retail distribution. Our primary objective is to penetrate this rapidly expanding industry by introducing unique and innovative consumer products to national and international markets through a series of infomercial campaigns. We intend to aggressively develop, finance, produce and market various new products for television infomercials. We intend to systematically expand our product list using a direct response model.

Our operational strategy consists of employing one of three distinct business alternatives for each product/infomercial:

§  
Complete Project Funding - The Company would obtain the exclusive licensing rights to products and pay a nominal royalty (2-5%) of gross sales to the product developer;

§  
Joint Venture Projects - The Company would share costs of production, marketing and distribution and would share revenues with product developers; and

§  
Straight Royalty Arrangements - The Company would partially finance the infomercials in exchange for a fixed royalty on gross sales.

Of course, the key to our ability to continually attract new products and new product developers will, in large part, determine our success. As part of  our strategy, we intend to, and have developed, strategic alliances with strong companies that are established operators in the infomercial and advertising industry.

Our business is focused on improving shareholder returns with a particular emphasis on profitability and capital productivity.

Economic and market conditions have been, and continue to be, disruptive and volatile.  The availability and cost of credit and currency volatility have obviously contributed to diminished expectations for the economy.  These conditions, along with reduced consumer confidence and increased unemployment, have contributed to reductions in consumer spending, particularly on discretionary products such as the ones offered by DM Products.

 
Although we continually adjust our procurement, marketing and production schedules, together with an acute awareness of production costs, it is still uncertain as to when the economy will recover, and it is not clear that our current activities will sufficiently offset the impact of the poor economy on our net sales.

Plan of Operation

Since its acquisition of Direct Success, Inc. in July, 2005 (pursuant to the Share Exchange Agreement more fully described elsewhere in this document), we have  focused primarily on the manufacturing, marketing, sale, and distribution of the Banjo Minnow Fishing Lure System (“Banjo Minnow”), via a direct marketing campaign, primarily promoted through the production and airing of a thirty minute infomercial.  The exclusive rights to the Banjo Minnow were acquired through a Manufacturing, Marketing and Distribution Agreement entered into between Direct Success, LLC#3 and Banjo Buddies, Inc., dated October 10, 2003 (prior to the company’s acquisition of Direct Success, Inc.).

Direct Success, Inc., on or about August 16, 2003, entered into a joint venture with Buena Vista Infomercial Corporation and formed Direct Success, LLC #3 (a Delaware Limited Liability Company) for the purpose of acquiring the exclusive manufacturing and distribution rights to the Banjo Minnow.   Direct Success, LLC #3 is 75% owned by Direct Success, Inc. (a wholly owned subsidiary of DM Products, Inc.), while the remaining 25% is owned by Buena Vista Infomercial Corporation.

On or about October 10, 2003, Direct Success, LLC #3 entered into an agreement with Banjo Buddies Inc. (the owner and inventor of the lure) in which Banjo granted to Direct Success, LLC #3 the exclusive rights to manufacture, use, distribute, sell, advertise, promote and otherwise exploit the Banjo Minnow.  Direct Success, Inc. produced and financed the current infomercial featuring the Banjo Minnow and invested substantial capital in its promotion.  Direct Success, LLC #3 receives a royalty based on the sales of the product.

On or about May 11, 2005, Direct Success, LLC #3 subcontracted the manufacturing and distribution rights to TriStar Products, Inc.  Pursuant to this subcontract, Direct Success, LLC #3 receives a royalty, based on sales generated by TriStar.

Diversification

We realize the need to expand on the products offered to consumers, thereby diversifying our commitments and attracting new customers.  Our directors and officers are consistently approached with ideas for new products from various individuals and companies. It is expected that our officers and directors will continue to be “pitched” for new product ideas and that our referral sources will grow as we gain recognition in the infomercial industry. As opportunities arise, our officers and directors will present potential product ideas to our Board of Directors for its discussion and review.

In deciding which products to pursue, our Board will consider, among other things, the product's viability, costs of development and marketing, acceptable sales price point per unit, as well as the product's overall likelihood of success. In some instances, our Board may retain an outside consultant to evaluate such things as the product's likely market appeal or the product's optimal price point. We will pursue products approved by a majority vote of the Board. Although we expect that our directors and officers will continue to be approached by inventors with viable products without any solicitation, the Board of Directors may decide to solicit product pitches or ideas in the future if the Board believes that such a strategy would be in the our best interest.
 

If the Board approves a product for further development, we intend to retain outside parties to produce the infomercial, assist in the design, the overall marketing campaign and sales process, and source and manufacture the product for competitive rates. When determining what parties to retain for these services, our Board of Directors will consider several factors, including a proven track record, cost and the ability to meet our timetable. We do not intend to retain any one service provider exclusively, and, instead we intend to seek competitive bids from numerous potential providers for each infomercial campaign.

In addition, we realize the significance of our public posture and ability to expand outside the world of direct marketing.  As such, management has been engaged in discussions concerning the acquisition of additional projects that do not necessarily fit the parameters of direct marketing.  Utilizing DM Products, Inc. as a “holding company” will allow us the opportunity to explore other business ventures.  We believe in diversification and intend to utilize our present posture to aggressively pursue other avenues that cross our path.  This model of operation has seen tremendous success with other companies.  Having a company with years of operational history, minimal debt, and a management team with open eyes towards expansion, allows us this unique opportunity.  Although we are currently focused on direct marketing, there is no reason to limit our expansion into other areas of growth and revenue gains.

General

Our results of operations may vary significantly from period-to-period.  Our revenues will fluctuate due to the seasonality of our products, customer buying patterns, product innovations and competition, our ability to meet customer demand, media and advertising campaigns, and our ability to attract new customers and renew existing sales relationships.  In addition, our revenues are highly susceptible to economic factors, including, among other things:  the overall condition of the U.S. economy and economics of other countries where we market our products; and the availability of credit, both in the U.S. and abroad.

Results of Operations for the years ended December 31, 2007, December 31, 2008 and December 31, 2009

As stated above, for the year ended December 31, 2007, the company received revenues from part sales and revenues from the royalty arrangement between Direct Success, LLC #3 and TriStar Products, Inc.  For the year ended December 31, 2008 and December 31, 2009, the company’s sole revenue has been derived through the royalty arrangement between Direct Success, LLC #3 and TriStar Products, Inc.

 
In year ended December 31, 2007, this  resulted in $119,744 of revenue received by DM Products.  In addition we received $50,236. in sales revenue from the part sales, for a total of $169,980. (Our various subsidiaries combine operations through consolidated returns).  In year ended December 31, 2008, our revenue increased to $220,261.  In year ended December 31, 2009, this royalty amount increased to $363,767., a $143,506 increase from 2008 (65%).  For years ended 2008 and 2009 our revenues were solely based on royalty payments, thus, our cost of goods sold during this period was zero. Pursuant to recent negotiations, the contractual term of our rights concerning the Banjo Minnow will continue through January 1, 2012, with an option to extend the contract for an additional six months.

We have incurred operating losses in the amounts of $157,151 for year ended December 31, 2007 and $36,595 for year ended December 31,2008.  We achieved an operating income for year ended 2009 in the amount of $43,793 along with miscellaneous income of $47,277, for a total incomeof $88,670, after a $2,400 provision for income tax..  Management anticipates continued growth in operating income based on the royalty payments received on the Banjo Minnow project alone.
 
Liquidity and Capital Resources

As of December 31, 2009, we had total assets in the amount of $119,195, consisting of $36,729 in cash, $59,708 in Tristar Receivables, $21,454 in Prepaid Expenses, and property and equipment of $1,304.  Our current liabilities as of December 31, 2009, were $56,619. Thus, we had working capital of $62,576 as of December 31, 2009.

Although we have attained minimal profitable operations, we are still dependent upon future financing to pursue significant expansion.  We are presently in the developing stage of our business and we can provide no assurance that we can successfully obtain additional products, or financing, that will increase our profitability.  We have established a $95,000 line of credit with Bank of America and have the ability to access these funds should the need arise, or a specific opportunity present itself.

Off Balance Sheet Arrangements

As of December 31, 2009, there were no off balance sheet arrangements.

Changes In and Disagreements with Accountants

We have had no changes in or disagreements with our accountants.
 
 
Directors and Executive Officers

The following information sets forth the names of our current directors and executive officers, their ages as of December 31, 2009 and their present positions.

Name
Age
Position Held with the Company
Kurtis L. Cockrum
58
President, Chairman of Board of Directors
James Clarke
63
Secretary, Treasurer, Board Member

Set forth below is a brief description of the background and business experience of executive officers and directors.

Kurtis L. Cockrum.   Mr. Cockrum is currently the President and Chairman of the Board of Directors for DM Products, Inc.  He has over 33 years of extensive experience working in the Material Handling Industry, more specifically in warehouse distribution and fulfillment. He worked for Interlake, Inc., the world’s leading Materials Handling equipment supplier from 1973 thru 1983.  In 1983 he founded Kacee Construction Company, a subsidiary of Cockrum Enterprises, Inc., a private company, where he is currently the CEO and President.  He has extensive management experience in general business operations, human resource, sales, permit procurement, financial planning, development, warehouse construction, distribution and fulfillment. He is also a board member of a publicly traded company, DM Products, which specializes in producing Infomercials along with marketing, distribution and fulfillment of their products.  From April 2007 to March of 2008 he was President and Board Chairman. March of 2008 till October of 2009 he held the position of V.P. of Operations. He was then reappointed to the Board and retained his former positions as president and board Chairman. He is also a certified OSHA outreach trainer.

In addition, Mr. Cockrum has been involved with several organizations throughout the community, volunteering and helping out with the community’s youth and his church, serving on various boards and committees.  He is presently serving in an advisory capacity to Pacific Lutheran Theological Seminary in Berkeley, California.

James Clarke is currently on the Board of DM Products, Inc. and holds the positions of Secretary and Treasurer. He was President and Board Chairman from March of 2007 until October 2009. Mr. Clarke has over 30 years of Senior and Executive level management experience, including developing operations and building international distribution networks throughout the U.S. and worldwide. He founded five companies, one of which grew to revenues of $10,000,000 in less than two years.  Over the past 20 years, he operated as President or CEO with several other companies, and has previous Board experience. He received his BS in Business Administration and MS in Marketing from Oklahoma State University.

 
Term of Office

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws.  Our officers are appointed by our board of directors and hold office until removed by the board.

Significant Employees

At present, Kurtis Cockrum is serving as both President and Chairman and has been a significant figure in directing all aspects of company activity.  His overall experience in business start-ups is vital to the success of DM  Products. (For more information concerning Mr. Cockrum’s qualifications to lead our company, see his full Bio contained elsewhere in this disclosure statement.).

There are no other significant employees at this time.

Involvement in Certain Legal Proceedings

To the best of our knowledge, during the past five years, none of the following occurred with respect to our present or former director, executive officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Audit Committee

We do not have a separately-designated standing audit committee.  The entire board of directors performs the functions of an audit committee, but no written charter governs the actions of the board of directors when performing the functions of that which would generally be performed by an audit committee. The board of directors approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, the board of directors reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers reviews auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor.

We do not have an audit committee financial expert because of the size of our company and our board of directors at this time.  We believe that we do not require an audit committee financial expert at this time because we retain outside consultants who possess these attributes.
 

For the fiscal year ending December 31, 2008, the board of directors:

1.  
Reviewed and discussed the audited financial statements with management, and

2.  
Reviewed and discussed the written disclosures and the letter from our independent auditors on the matters relating to the auditor's independence.

Code of Ethics

As of December 31, 2009, we had not adopted a Code of Ethics for Financial Executives, which would include our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
 
Executive Compensation

The table below summarizes all compensation awarded to, earned by, or paid to our executive officers for all services rendered in all capacities to us for the years ended December 31, 2009 and 2008.

SUMMARY COMPENSATION TABLE
Name and
principal position
Year
Salary
($)
Bonus
($)
 
Stock
Awards
($)
Option
Awards
($)
Non-Equity
Incentive Plan
Compensation
($)
Nonqualified
Deferred
Compensation
Earnings ($)
All Other
Compensation
($)
Total
($)
Kuris L. Cockrum,
President
2009
2008
 
162,230
75,538
 
0
0
 
2,000(1)
15,100(1)
 
0
0
 
0
0
 
0
0
 
0
0
 
164,230
90,638
 
James R. Clarke
Secretary/Treasurer
2009
2008
 
4,500
0
 
1,000
0
 
3,000(1)(2)
0
 
0
0
 
0
0
 
0
0
 
0
0
 
8,500
0
 
 
(1)  
These amounts reflect the dollar amount recognized for financial statement reporting purposes for the fiscal years indicated in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123R, Share Based Payments of awards of restricted stock and stock options, as applicable.
(2)  
Mr. Clarke was compensated in stock for his service as a director of our company.

Employment Arrangement’s with Named Executive Officers

The company’s only employment contract is with its President, Kurt Cockrum. Such agreement was effective April 20, 2007 and continues unless and until terminated by either party pursuant to their rights under California law.  Compensation is $10,000 per month.  Due to lack of funds available in 2007 and 2008, a portion of Executive salaries were deferred from 2007 and 2008 until 2009.   Approximately $25,000 in salary is still owed from years 2007 and 2008.
 

Outstanding Equity Awards at Fiscal Year-End

The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer as of December 31, 2009.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
OPTION AWARDS
STOCK AWARDS
 
Name
 
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
 
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
 
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
 
Option
Exercise
Price
($)
 
Option
Expiration
Date
 
Number
of
Shares
or Units
of
Stock That
Have
Not
Vested
(#)
 
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
(#)
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)
Kuris L. Cockrum,
-
-
-
-
-
-
-
-
-
James R. Clarke
-
-
-
-
-
-
-
-
-

Equity Compensation Plan.

The Company does not have a formal Equity Compensation Plan or 401 K Plan but does use its restricted securities to entice employees and to provide additional performance based compensation.

Compensation of Directors

The only director to have ever received any compensation for his or her services on the board of directors is James Clarke.  As shown in the Summery Compensation Table above, this compensation by grant of stock is minimal.  We have considered offering additional compensation to our directors should we see a growth in our revenues and net worth.
 

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information, as of April 1, 2010, with respect to the beneficial ownership of our common stock by (i) all of our directors, (ii) each of our executive officers named in the Summary Compensation Table, (iii) all of our directors and named executive officers as a group, and (iv) all persons known to us to be the beneficial owner of more than five percent (5%) of any class of our voting securities.
 
  Common Stock
Name and Address of Beneficial Owner
Amount and Nature of Beneficial Ownership
Percent of Ownership (1)
Kurtis L. Cockrum
1507 Elise Ct.
Walnut Creek, CA 94596
49,000,000
20%
James Clarke
40 Technology Drive
Irvine, CA 92618
3,000,000 1.00%
All officer and directors
52,000,000
21%
5% SHARHEOLDERS
   
Michael S. DeBenon
20522 Pierview Lane
Huntington Beach, CA  92646
27,116,000
 
 
11.3%
K & B Kerry Living Trust
12 Morning View Dr.
Newport Beach, CA  92627
16,081,669
6.70%
 
(1)  
The percentages are based on 239,937,352 shares of common stock outstanding on April 1, 2010.

Disclosure of Commission Position of Indemnification for Securities Act Liabilities

In accordance with the provisions in our articles of incorporation, we will indemnify an officer, director, or former officer or director, to the full extent permitted by law.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of us in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
 

Certain Relationships and Related Transactions

The Issuer was incorporated on March 1, 2001 under the laws of the State of Nevada under the name Effective Sports Nutrition Corporation.  On April 11, 2005, Effective Sports Nutrition changed its name to Midwest E.S.W.T. Corp.

On July 18, 2005, the company entered into a share exchange agreement with Direct Success, Inc., a California corporation.  As a result of the agreement, Midwest E.S.W.T agreed that a total of 114,851,043 shares of Restricted Common Stock were to be issued to the shareholders of Direct Success, Inc.  Direct Success, Inc., in turn, surrendered all of its authorized stock to Midwest E.S.W.T.  On December 14, 2005, Midwest E.S.W.T changed its name to DM Products, Inc.

DM Products, Inc. operates through its wholly owned subsidiary Direct Success, Inc.  Direct Success, Inc. has a seventy-five percent (75%) interest in Direct Success, LLC #3, a Delaware Limited Liability Company.  Direct Success, LLC #3 has an exclusive licensing agreement with Banjo Buddies, LLC, for the sale of the Banjo Minnow Fishing System (see Item 1 above).

On or about April 2007, the company entered into an employment agreement with Kurt Cockrum whereby he would receive a monthly salary in the amount of $10,000 for services as President.

On or about May, 2009, the company entered into a monthly retainer agreement with its general counsel and affiliate, Michael S. DeBenon, whereby Mr. DeBenon receives a $6,000 per month retainer for legal services provided.

There is no other parent, subsidiary, or Affiliate Company’s of the Issuer, and there are no additional transactions between the company and its directors, officers or employees, including transactions concerning receivables, payables, notes, or guarantees.

Available Information

We have filed a registration statement on form S-1 under the Securities Act of 1933 with the Securities and Exchange Commission with respect to the shares of our common stock offered through this prospectus.  This prospectus is filed as a part of that registration statement, but does not contain all of the information contained in the registration statement and exhibits.  Statements made in the registration statement are summaries of the material terms of the referenced contracts, agreements or documents of the company.  We refer you to our registration statement and each exhibit attached to it for a more detailed description of matters involving the company.  You may inspect the registration statement, exhibits and schedules filed with the Securities and Exchange Commission at the Commission's principal office in Washington, D.C.  Copies of all or any part of the registration statement may be obtained from the Public Reference Section of the Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.  Please Call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms.  The Securities and Exchange Commission also maintains a web site at http://www.sec.gov that contains reports, proxy Statements and information regarding registrants that files electronically with the Commission.  Our registration statement and the referenced exhibits can also be found on this site.

If we are not required to provide an annual report to our security holders, we intend to still voluntarily do so when otherwise due, and will attach audited financial statements with such report.

Dealer Prospectus Delivery Obligation

Until ___________________, all dealers that effect transactions in these securities whether or not participating in this offering may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
 

Part II

Information Not Required In the Prospectus

Item 13. Other Expenses Of Issuance And Distribution

The estimated costs of this offering are as follows:

Securities and Exchange Commission registration fee
$ 30
Federal Taxes
$ 0
State Taxes and Fees
$ 0
Listing Fees
$ 0
Printing and Engraving Fees
$ 1,200.00
Transfer Agent Fees
$ 0
Accounting fees and expenses
$ 18,451.00
Legal fees and expenses
$ 11,000.00
 
   
Total
$ 30,681
 
All amounts are estimates

We are paying all expenses of the offering listed above.  No portion of these expenses will be borne by the selling shareholders.  The selling shareholders, however, will pay any other expenses incurred in selling their common stock, including any brokerage commissions or costs of sale.

Item 14. Indemnification of Directors and Officers

Our officers and directors are indemnified as provided by the Nevada General Corporation Law and our articles of incorporation and our bylaws.

Pursuant to our articles of incorporation and our bylaws, we may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, (other than an action by or in the right of us) by reason of the fact that he is or was a director, officer, employee, fiduciary or agent of the company or is or was serving at the request of us as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorney fees), judgments, fines, and amounts paid in settlement actually and reasonably believed to be in our best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, or conviction or upon a pleas of nolo contendere or its equivalent shall not of itself create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in our best interests and, with respect to any criminal action or proceeding, had reasonable cause to believe his conduct was unlawful.
 

Our articles of incorporation and bylaws also provide that we may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of our company or procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee, or agent of our company or is or was serving at our request as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorney fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in our best interests: but no indemnification shall be made in respect to any claim, issue, or matter as to which such person has been adjudged to be liable for negligence or misconduct in the performance of his duty to us unless and only to the extent that the court in which such action or suit was brought determines upon application that, despite the adjudication of liability, but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnification for such expenses which such court deems proper.

To the extent that a director, officer, employee, fiduciary or agent of a corporation has been successful on the merits in defense of any action, suit, or proceeding referred to in the preceding two paragraphs or in defense of any claim, issue, or matter therein, he shall be indemnified against expenses (including attorney fees) actually and reasonably incurred by him in connection therewith.

The indemnification provided by the provisions described in this section shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under our articles of incorporation, the bylaws, agreements, vote of the shareholders or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs and personal representatives of such a person.

Item 15. Re cent Sales of Unregistered Securities

We issued shares of our common stock in the following transactions in the last five years:

Shares Issued in Acquisition of Direct Success, Inc :   On July 18, 2005, the company entered into a share exchange agreement with Direct Success, Inc., a California corporation.  As a result of the agreement, the company issued a total of 114,851,043 shares of Restricted Common Stock to the shareholders of Direct Success, Inc.  Direct Success, Inc., in exchange, surrendered all of its authorized stock to Midwest E.S.W.T.  On December 14, 2005, Midwest E.S.W.T changed its name to DM Products, Inc.

Shares Issued For Director Compensation:   We have issued shares for services performed by our Board of directors in the following transactions:

§  
In 2008, we issued 3,000,000 shares of restricted common stock to John Muse for services performed as a member of the board of directors. These shares were issued pursuant to a “private placement” exemption under Section 4(2) of the Securities Act.  The issuance did not involve a public offering of securities, as the shares were not offered or sold by means of any form of general solicitation or general advertising.  In our judgment, Mr. Muse had knowledge of our assets, liabilities and business plan, and such information about us as was necessary to make an informed decision.

 
§  
In 2008, we issued 5,000,000 shares of restricted common stock to John Muse for services performed as a member of the board of directors. These shares were issued pursuant to a “private placement” exemption under Section 4(2) of the Securities Act.  The issuance did not involve a public offering of securities, as the shares were not offered or sold by means of any form of general solicitation or general advertising.  In our judgment, Mr. Muse had knowledge of our assets, liabilities and business plan, and such information about us as was necessary to make an informed decision.
 
Shares Issued for Executive Compensation:

§  
In 2007, we issued 8,000,000 shares of restricted common stock to Kurtis Cockrum for services performed as President of the company. These shares were issued pursuant to a “private placement” exemption under Section 4(2) of the Securities Act.  The issuance did not involve a public offering of securities, as the shares were not offered or sold by means of any form of general solicitation or general advertising.  In our judgment, Mr. Cockrum had knowledge of our assets, liabilities and business plan, and such information about us as was necessary to make an informed decision.

§  
In 2008, we issued 15,100,000 shares of restricted common stock to Kurtis Cockrum, for services performed as President of the company. These shares were issued pursuant to a “private placement” exemption under Section 4(2) of the Securities Act.  The issuance did not involve a public offering of securities, as the shares were not offered or sold by means of any form of general solicitation or general advertising.  In our judgment, Mr. Cockrum had knowledge of our assets, liabilities and business plan, and such information about us as was necessary to make an informed decision.

§  
In 2009, we issued 20,000,000 shares of restricted common stock to Kurtis Cockrum, for services performed as President of the company. These shares were issued pursuant to a “private placement” exemption under Section 4(2) of the Securities Act.  The issuance did not involve a public offering of securities, as the shares were not offered or sold by means of any form of general solicitation or general advertising.  In our judgment, Mr. Cockrum had knowledge of our assets, liabilities and business plan, and such information about us as was necessary to make an informed decision.

Shares Issued for Employment and Consulting Services:

§  
In 2007, we issued 2,000,000 shares of restricted common stock to Kurtis Cockrum, for employment services rendered to the company.  These shares were issued pursuant to a “private placement” exemption under Section 4(2) of the Securities Act.  The issuance did not involve a public offering of securities, as the shares were not offered or sold by means of any form of general solicitation or general advertising.  In our judgment, Mr. Cockrum had knowledge of our assets, liabilities and business plan, and such information about us as was necessary to make an informed decision.
 
§  
In 2007, we issued 2,000,000 shares of restricted common stock to Don Baker, for consulting services rendered to the company.  These shares were issued pursuant to a “private placement” exemption under Section 4(2) of the Securities Act.  The issuance did not involve a public offering of securities, as the shares were not offered or sold by means of any form of general solicitation or general advertising.  In our judgment, Mr. Baker had knowledge of our assets, liabilities and business plan, and such information about us as was necessary to make an informed decision.

§  
In 2008, we issued 4,000,000 shares of restricted common stock to Sarah Mohr, for employment services rendered to the company.  These shares were issued pursuant to a “private placement” exemption under Section 4(2) of the Securities Act.  The issuance did not involve a public offering of securities, as the shares were not offered or sold by means of any form of general solicitation or general advertising.  In our judgment, Ms. Mohr had knowledge of our assets, liabilities and business plan, and such information about us as was necessary to make an informed decision.

Shares Issued for Legal Services:

§  
In 2007, we issued 5,000,000 shares of restricted common stock to Michael S. DeBenon for legal services performed.  These shares were issued pursuant to a “private placement” exemption under Section 4(2) of the Securities Act.  The issuance did not involve a public offering of securities, as the shares were not offered or sold by means of any form of general solicitation or general advertising.  In our judgment, Mr. DeBenon had knowledge of our assets, liabilities and business plan, and such information about us as was necessary to make an informed decision.

§  
In 2009, we issued 20,000,000 shares of restricted common stock to Michael S. DeBenon for legal services performed.  These shares were issued pursuant to a “private placement” exemption under Section 4(2) of the Securities Act.  The issuance did not involve a public offering of securities, as the shares were not offered or sold by means of any form of general solicitation or general advertising.  In our judgment, Mr. DeBenon had knowledge of our assets, liabilities and business plan, and such information about us as was necessary to make an informed decision.

Shares Issued in Private Placement, Pursuant to Section 4(2) of the Securities Act:

§  
In 2007, we issued 30,000 shares of restricted common stock to Joel Boodoosingh, pursuant to a private placement.  These shares were issued pursuant to a “private placement” exemption under Section 4(2) of the Securities Act.  The issuance did not involve a public offering of securities, as the shares were not offered or sold by means of any form of general solicitation or general advertising.  In our judgment, Mr. Boodoosingh had knowledge of our assets, liabilities and business plan, and such information about us as was necessary to make an informed decision.

 
Item 16. Table of Exhibits

Exhibit Number
Description
24.1
Power of Attorney (see attached signature page)

 
Item 17. Undertakings

The undersigned registrant hereby undertakes:

1.   To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement;

     (a)  to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

     (b) to reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and notwithstanding the forgoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.; and

     (c) to include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any  material change to such information in the registration statement.

2.   That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

3.   To remove from registration by means of a post-effective amendment any of the securities being registered hereby which remain unsold at the termination of the offering. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the provisions above, or otherwise, we been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by one of our directors, officers, or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act of 1933, and we will be governed by the final adjudication of such issue.

 
SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and authorized this registration statement to be signed on its behalf by the undersigned, in Walnut Creek, California, on April 5, 2010.

 
DM PRODUCTS, INC.

 

By: /s/ Kurtis Cockrum
Kurtis Cockrum
President, Chairman of the Board of Directors, Principal Executive Officer, Principal Accounting Officer, and Director
 

/s/ James Clarke
James Clarke
Chief Financial Officer, Principal Financial Officer, Treasurer, Secretary and Director

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kurtis Cockrum and James Clarke as their true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or any of them, or of their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates stated.

DM PRODUCTS, INC.

 
By: /s/ Kurtis Cockrum
Kurtis Cockrum
President, Chairman of the Board of Directors, Principal Executive Officer, Principal Accounting Officer, and Director
April 5, 2010

By: /s/ James Clarke
James Clarke
Chief Financial Officer, Principal Financial Officer, Treasurer, Secretary and Director
April 5, 2010
 
 
ARTICLES OF INCORPORATION
 
OF
 
Effective Sport Nutrition Corporation
 
                        FIRST . The name of the corporation is
 
Effective Sport Nutrition Corporation
 
                      SECOND .   Its registered officer in the State of Nevada is located at 2533 North Carson Street, Carson City, Nevada 89706 that this Corporation may maintain an office, or offices, in such other place within or without the State of Nevada as may be from time to time designated by the Board of Directors, or by the By-Laws of said Corporation, and that this Corporation may conduct all Corporation business of every kind and nature, including the holding of all meetings of Directors and Stockholders, outside the State of Nevada as well as within the State of Nevada.
 
                      THIRD . The objects for which this Corporation is formed are: To engage in any lawful activity, including, but not limited to the following:
 
(A)  
Shall have such rights, privileges and powers as may be conferred upon corporations by any existing law.
 
(B)  
May at any time exercise rights, privileges and powers, when not inconsistent with the purposes and objects for which this corporation is organized.
 
 
 

 
 
(C)  
Shall have the power to have succession by its corporate name for the period limited in its certificate or articles of incorporation, and when no period is limited, perpetually, or until dissolved and its affairs wound up according to law.
 
(D)  
 Shall have the power to sue and be sued in any court of law or equity.
 
(E)  
 Shall have the power to make contracts.
 
(F)  
Shall have the power to hold, purchase convey real and personal estate or mortgage or lease any such real and personal estate with its franchises. The power to hold real and personal estate shall include the power to take the same by devise or bequest in the State of Nevada, or in any other state, territory or country.
 
(G)  
 Shall have the power to appoint such officers and agents as the affairs of the corporation shall require, and to allow them suitable compensation.
 
(H)  
 Shall have the power to make By-Laws not inconsistent with the constitution or laws of the United States, or of the State of Nevada, for the management, regulation and government of its affairs and property, the transfer of its stock, the transaction of its business, and the calling and holdings of meetings of its stockholders.
 
(I)  
Shall have the power to wind up and dissolve itself, or be wound up or dissolved.
 
(J)  
Shall have the power to adopt and use a common seal or stamp, and alter the same at pleasure. The use of a seal or stamp by the corporation on any corporate documents is not necessary. The corporation may use a seal or stamp, if it desires, but such use or nonuse shall not in any way affect the legality of the document.
 
(K)  
 Shall have power to borrow money and contract debts when necessary for the transaction of its business, or for the exercise of its corporate rights, privileges or franchises, or for any lawful purpose of its incorporation; to issue bonds, promissory notes, bills of exchange, debentures, and other obligations and evidences of indebtedness, payable at a specified time or times, or payable upon the happening of a specified event or events, whether secured by mortgage, pledge or otherwise, or unsecured, for money borrowed, or in payment for property purchased, or acquired, or for any other lawful object.
 
 
2

 
 
(L)  
Shall have the guarantee, purchase, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose of the shares of the capital stock of, or any bonds, securities or evidences of the indebtedness created by, any other corporation or corporations of the State of Nevada, or any other state or government, and, while owners of such stock, bonds, securities or evidences of indebtedness, to exercise all the rights, powers and privileges of ownership, including the right to vote, if any.
 
(M)  
Shall have power to purchase, hold, sell and transfer shares of its own capital stock, and use therefor its capital, capital surplus, surplus, or other property or fund.
 
(N)  
Shall have the power to conduct business, have one or more offices, and hold, purchase, mortgage and convey real and personal property in the State of Nevada and in any of the several states, territories, possessions and dependencies of the United States, the District of Columbia, and any foreign countries.
 
(O)  
Shall have the power to do all and everything necessary and proper for the accomplishment of the objects enumerated in its certificate or articles of incorporation, or any amendment thereof, or necessary or incidental to the protection and benefit of the corporation, and, in general, to carry on any lawful business necessary or incidental to the attainment of the objects of the corporation, whether or not such business is similar in nature to the objects set forth in the certificate or articles of incorporation of the corporation, or any amendment thereof.
 
 
3

 
 
(P)  
Shall have power to make donations for the public welfare or for charitable, scientific or educational purposes.
 
(Q)  
Shall have the power to enter into partnerships, general or limited, or joint ventures, in connection with any lawful activities, as may be allowed by law.
 
FOURTH . That the total number of common stock authorized thatmay be issued by the Corporation is TWENTY FIVE MILLION (25,000,000) shares of stock with a par value of ONE TENTH OF A CENT ($0.001) and no other class of stock shall be authorized. Said shares may be issued by the corporation from time to time for such considerations as may be fixed by the Board of Directors.
 
FIFTH . The governing board of its corporation shall be known a directors, and the number of directors may from time to time be increased and decreased in such manner as shall be provided by the By-Laws of this Corporation, providing that the number of directors shall not be reduced to fewer than one (1).
 
 
        The name and post office address of the first board of Directors shall be one (1) in number and listed as follows:
 
NAME           POST OFFICE ADDRESS
Brent Buscay       2533 North Carson Street
           Carson City, Nevada 89706
 
 
4

 
                   
SIXTH . The capital stock, after the amount of the subscription price, or par value, has been paid in, shall not be subject to the assessment to pay the debts of the corporation.
 
SEVENTH . The name and post office address of the Incorporator signing the Articles of Incorporation is as follows:
 
NAME           POST OFFICE ADDRESS
Brent Buscay       2533 North Carson Street
           Carson City, Nevada 89706
                  
EIGHTH . The resident agent for this corporation shall be:
 
LAUGHLIN ASSOCIATES, INC.
 
The address of said agent, and, the registered or statutory address of this corporation in the state of Nevada, shall be:
 
2533 North Carson Street
Carson City, Nevada 89706
 
NINTH . The corporation is to have perpetual existence.
 
TENTH . In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized:
 
Subject to the By-Laws, if any, adopted by the Stockholders, to make, alter or amend the By-Laws of the Corporation.
 
To fix the amount to be reserved as working capital over and above its capital stock paid in; to authorize and cause to be executed, mortgages and liens upon the real and personal property of this Corporation.
 
 
5

 
                          
By Resolution passed by a majority of the whole Board, to designate one (1) or more committees, each committee to consist of one or more of the Directors of the Corporation, which, to the extent provided in the resolution, or in the By-Laws of the Corporation, shall have and may exercise powers of the Board of Directors in the management of the business and affairs of the Corporation. Such committee, or committees, shall have such name, or names, as may be stated in the By-Laws of the Corporation, or as may be determined from time to time by resolution adopted by the Board of Directors.
 
When and as authorized by the affirmative vote of the Stockholders holding stock entitling them to exercise as least a majority of the voting power given at the Stockholders meeting called for that purpose, or when authorized by the written consent of the holders of at least a majority of the voting stock issued and outstanding, the Board of Directors shall have the power and authority at any meeting to sell, lease or exchange all of the property and assests of the Corporation, including its good will and its corporate franchises, upon such terms and conditions as its board of Directors deems expedient and for the best interests of the Corporation.
 
ELEVENTH . No shareholder shall be entitled as a matter of right to subscribe for or receive additional shares of any class of stock of the Corporation, whether now or hereafter authorized, or any bonds, debentures or securities convertible into stock, but such additional shares of stock or other securities convertible into stock may be issued or disposed of by the Board of Directors to such persons and on such terms as in its discretion it shall deem advisable.
 
 
6

 
 
TWELFTH . No director or officer of the Corporation shall be personally liable to the Corporation or any of its stockholders for damages for breach of fiduciary duty as director or officer involving any act or omission of any such director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or officer (i) for acts or omissions which involve intentional misconduct, fraud or a knowing violation of law, or (ii) the payment of dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any repeal or modification of this Article by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director or officer of the Corporation for acts or omissions prior to such repeal or modification.
 
THIRTEENTH . This Corporation reserves the right to amend, alter, change or repeal any provision contained in the Articles of Incorporation, in the manner now or hereafter prescribed by statute, or by the Articles of Incorporation, and all rights conferred upon Stockholders herein are granted subject to this reservation.
 
 
7

 
 
I, THE UNDERSIGNED, being the Incorporator herein before named for the purpose of forming a Corporation pursuant to the General Corporation Law of the State of Nevada, do make and file these Articles of Incorporation, hereby declaring and certifying that the facts herein stated are true, and accordingly have hereunto set my hand this March 1, 2001.
 

 
/s/ Brent Buscay
Brent Buscay
 

 
I, Laughlin Associates, Inc, hereby accept as Resident Agent for the previously name Corporation.
 

 
March 1, 2001                  /s/ Brent Buscay
Date                                Brent Buscay, Director of Operations
On Behalf of Laughlin Assocaites, Inc.
ROSS MILLER
Secretary of State
206 North Carson Street
Carson City, Nevada 89701-4299
(775) 684 5708
Website: secretaryofstate.biz
 
Filed 4/11/05

 
Certificate of Amendment
 (PURSUANT TO NRS 78.385 and 78.390)
 
USE BLACK INK ONLY-DO NOT HIGHLIGHT
ABOVE SPACE IS FOR OFFICE USE ONLY
Certificate of Amendment to Articles of Incorporation
For Nevada Corporations
(Pursuant to NRS 78.385 and 78.390—After Issuance of Stock)
 
1.
Name of corporation:
  Effective Sport Nutrition Corporaiton
   
2.
The articles have been amended as follows (provide article numbers, if available):
 
FIRST Article is hereby amended to read as follows:
 
The name of this Corporation is: Midwest E.S.W.T. Corp.
 
FOURTH Article is hereby amended to read as follows:
 
The total number of shares of capital stock, which this Corporation shall have authority to issue, is One Hundred Ten Million (110,000,000), with a par value of $.001 per share amounting to $110,000.00.  One Hundred Million (100,000,000) of those shares are common stock and Ten Million (10,000,000) of those shares are preferred stock.
   
3.
The vote by which the stockholders holding shares in the corporationentitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation* have voted in favor of the amendment is:   
  12,184,000
   
4.
Effective date of filing (optional): 4/4/05
   
5.
Signatures (required)
   
 
X /s/ Justin Nieters
   
 
Signature
   
 
* If any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless to limitations or restrictions on the voting power thereof.
 
 
 

 
 
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
 
EFFECTIVE SPORT NUTRITION CORPORATION.
 
I, the undersigned, Justin Nieters, do hereby certify:
 
That the Board of Directors of Effective Sport Nutrition Corporation (the "Company"), at a meeting duly convened and held on the 4th day of April, 2005, adopted a resolution to amend the Articles of Incorporation as follows:
 
FIRST Article is hereby amended to read as follows:
 
The name of the Corporation is: Midwest E.S.W.T. Corp.
 
FOURTH Article is hereby amened to read as follows:
 
The total number of shares of capital stock, which this Corporation shall have authority to issue, is One Hundred Ten Million (110,000,000), with a par value of $.001 per share amounting to $110,000.00.  One Hundred Million (100,000,000) of those shares are common stock and Ten Million (10,000,000) of those shares are preferred stock.
 
The number of shares ofthe Company's common stock outstanding and entitiled to vote on an amendment to the Articles of Incorporation was 12,184,000; that the said changes and amendment were unanimously adopted on the 4th day of April 2005 by the Company's shareholders.
 
/s/ Justin Nieters
Justin Nieters
President
Sole Officer & Director
 
 
 

 
ROSS MILLER
Secretary of State
206 North Carson Street
Carson City, Nevada 89701-4299
(775) 684 5708
Website: secretaryofstate.biz
 
 
Filed 12/6/05
 
Articles of Exchange
(PURSUANT TO NRS 92A.200)
Page 1
 
   
USE BLACK INK ONLY – DO NOT HIGHLIGHT
ABOVE SPACE IS FOR OFFICE USE ONLY
   
(Pursuant to Nevada Revised Statutes Chapter 92A) (excluding 92A.200(4b))
 
1)   Name and jurisdiction of organization of each constituent entity (NRS 92A.200).  If there are more than two constituent entities, check box [  ] and attached an 8 ½” X 11” blank sheet containing the required information for each additional entity.
   
        Direct Success, Inc.  
Name of acquired entity
 
        California Corporation
Jurisdiction
Entity type*
   
        Midwest E.S.W.T., Corp.  
Name of acquiring entity
 
        Nevada Corporation
Jurisdiction
Entity type*
   
2)   The undersigned declares that a plan of exchange has been adopted by each constituent entity (NRS 92A.200).
 

 
* Corporation, non-profit corporation, limited partnership, limited-liability company or business trust.
 
 
 

 
Articles of Exchange
(PURSUANT TO NRS 92A.200)
Page 2
 
3)   Owner's approval (NRS 92A.200) (options a b or c must be used for each entity) (if there aremore than two constituent entities, check box and attach an 8 1/2"' x 11 '' blank sheet listing the entities continued from article three):
 
(a) Owner's approval was not required from
 
______________________________
Name of acquired entity, if applicable
 
and, or:
 
______________________________
Name of acquiring entity, if applicable
 
(b) The plan was approved by the required consent of the owners of *
 
  Direct Success, Inc.
Name of acquired entity, if applicable
 
and, or:
 
Midwest E.S.W.T., Corp.
Name of acquiring entity, if applicable

 
* Unless otherwise provided in the certificate of trust or governing instrument of a business trust, an exchange must be approved by all the trustees and beneficial owners of each business trust that is a constituent entity in the exchange.
 
 
 

 
Articles of Exchange
(PURSUANT TO NRS 92A.200)
Page 3
 
(c) Approval of plan of exchange for Nevada non-profit corporation (NRS 92A.160):
The plan of exchange has been approved by the directors of the corporation and by each public officer or other person whose approval of the plan of exchange is required by the articles of incorporation of the domestic corporation.
 
______________________________
Name of acquired entity, if applicable
 
and, or:
 
______________________________
Name of acquiring entity, if applicable
 
4)   Location of Plan of Exchange (check a or b):
[ ]  (a) The entire plan of exchange is attached:
 
or
 
[ X ] (b)The entire plan of exchange is on file at the registered office of the acquiring corporation, limited-liability company or business trust, or at the records office address if a limited partnership, or other place of business of the acquiring entity (NRS 92A.200).

 
 

 
Articles of Merger
(PURSUANT TO NRS 92A.200)
Page 4
 
5)   Effective date* (optional):
6)   Signatures - Must be signed by: An officer of each Nevada corporation; All general partners of each Nevada limited partnership; All general partners of each Nevada limited-liability limited partnership; A manager of each Nevada limited-liability company with managers or one member if there are no managers; A trustee of each Nevada business trust (NRS 92A.230)*
(If there are more than two constituent entities, check box [  ] and attached an 8 ½” X 11” blank sheet containing the required information for each additional entity.):
 
        Direct Success, Inc.
Name of acquired entity
     
X /s/
President 11/22/05
Signature
Title
Date
 
         Midwest E.S.W.T., Corp.
Name of acquiring entity
     
X /s/ Justin Nieters
President  
Signature
Title
Date

 
* An exchange takes effect upon filing the articles of exchange or upon a later date as specified in the articles, which must not be more than 90 days after the articles are filed (NRS 92A.240).
 
**The articles of exchange must be signed by each foreign constituent entity in the manner provided by the law governing it (NRS 92A.230). Additional signature blocks may be added to this page or as an attachment, as needed.
 
 
 

 
ROSS MILLER
Secretary of State
206 North Carson Street
Carson City, Nevada 89701-4299
(775) 684 5708
Website: secretaryofstate.biz
 
Filed 12/14/05

 
Certificate of Amendment
 (PURSUANT TO NRS 78.385 and 78.390)
 
USE BLACK INK ONLY-DO NOT HIGHLIGHT
ABOVE SPACE IS FOR OFFICE USE ONLY
Certificate of Amendment to Articles of Incorporation
For Nevada Corporations
(Pursuant to NRS 78.385 and 78.390—After Issuance of Stock)
 
1.
Name of corporation:
  E.S.W.T. Corp.
   
2.
The articles have been amended as follows (provide article numbers, if available):
 
FIRST: T he name of the Corporation is DM Products, Inc.
   
3.
The vote by which the stockholders holding shares in the corporationentitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation* have voted in favor of the amendment is:   
  86,019,751
   
4.
Effective date of filing (optional):
   
5.
Signatures (required)
   
 
X /s/ Justin Nieters
   
 
Signature
   
 
 
 

 
ROSS MILLER
Secretary of State
206 North Carson Street
Carson City, Nevada 89701-4299
(775) 684 5708
Website: secretaryofstate.biz
 
Filed 4/7/06

 
Certificate of Amendment
 (PURSUANT TO NRS 78.385 and 78.390)
 
USE BLACK INK ONLY-DO NOT HIGHLIGHT
ABOVE SPACE IS FOR OFFICE USE ONLY
Certificate of Amendment to Articles of Incorporation
For Nevada Corporations
(Pursuant to NRS 78.385 and 78.390—After Issuance of Stock)
 
1.
Name of corporation:
  DM Products, Inc.
   
2.
The articles have been amended as follows (provide article numbers, if available):
 
Article 4: That t he total number of common stock authorized that maybe issued by the Corporation is THREE HUNDRED MILLION (300,000,000) shares of stock with a par value of ONE TENTH OF A CENT ($0.001).  That the total number of preferred stock authorized that maybe issued by the Corporation is THIRTY MILLION (30,000,000) shares of stock with a par value of ONE TENTH OF ONE CENT ($0.001),
   
3.
The vote by which the stockholders holding shares in the corporationentitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation* have voted in favor of the amendment is:   
  70,000,000
   
4.
Effective date of filing (optional):
   
5.
Signatures (required)
   
 
X /s/ Justin Nieters
   
 
Signature
   
 
Effective Sport Nutrition Corporation
 
BY-LAWS
 
ARTICLE 1 MEETING OF SHAREHOLDERS

 
         1.   Shareholders’ Meetings shall be held in the office of the corporation, at 1928 Oakland Dr., Bismark, N.D. 58504, or at such other place or places as the Directors shall, from time to time, determine.
 
          2.   The annual meeting of the shareholders of this corporation shall be held at 11:30 a.m. on the 5 th of March of each year beginning in 2002, at which time there shall be elected by the shareholders of the corporation a Board of Directors for the ensuing year, and the shareholders shall transact such other business as shall properly come before them. If the day fixed for the annual meeting shall be a legal holiday such meeting shall be held on the next succeeding business day.
 
          3.  A notice signed by any Officer of the corporation or by any person designated by the Board of Directors, which sets forth the place of the annual meeting, shall be personally delievered to each of the shareholders of record, or mailed postage prepaid, at the address as appears on the stock book of the corporation, or if no such address appears in the stock book of the corporation, to his last known address, at least ten (10) days prior to the annual meeting.
 
Whenever any notice whatever is required to be given under any article of these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to the notice, whether before or after the time of the meeting of the shareholders, shall be deemed equivalent to proper notice.
 
 
 

 
 
4.    A majority of the shares issued and outstanding, either in person or by proxy shall constitute a quorum for the transaction of business at any meeting of the shareholders.
 
5.    If a quorum is not present at the annual meeting, the shareholders present, in person or by proxy, may adjourn to such future time as shall be agreed upon by them, and notice of such adjournment shall be mailed, postage prepaid, to each shareholder of record at least ten days before such date to which the meeting was adjourned: but if a quorum is present, they may adjourn from day to day as they see fit, and no notice of such adjournment need be given.
 
6.     Special meetings of the shareholders may be called at anytime by the President, by all of the Directors provided there are no more than three, or if there are more than three, by any three Directors; or by the holder of a majority share of the capital stock of the corporation. The Secretary shall send a notice of such called meeting to each shareholder of record at least ten days before such meeting, and such notice shall state the time and place of the meeting, and the object thereof. No business shall be transacted at a special meeting except as stated in the notice to the shareholders, unless by unanimous consent of all shareholders present, either in person or by proxy, all such shares being represented at the meeting.
 
7.     Each shareholder shall be entitled to one vote for each share of stock in his own name on the books of the corporation, whether represented in person or by proxy.
 
 
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8.   At all meeting of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary of the corporation, before or at the time of the meeting.
 
9.   The following order of business shall be observed at all meetings of the shareholders so far is practicable:
 
a.     Call the Roll
 
b.     Reading, correcting, and approving of
the minutes of the previous meeting;
 
c.      Reports of Officers;
 
d.     Reports of Committees;
 
e.     Election of Directors;
 
f.     Unfinished business; and
 
g.     New business.
 
10.   Unless otherwise provided by law, any action required to be taken at a meeting of the shareholders, or any action which may be taken at a meeting of the shareholders, may be taken without a meeting if a consent in writing, setting forth the action to be taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof.
 
ARTICLE II   STOCK
 
1.    Certificates of stock shall be in a form adopted by the Board of Directors and shall Office shall be one (1) year, and Directors may be re-elected for successive annual terms.
 
 
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2.      Vacancies on the Board of Directors by reason of death, resignation or other causes shall be filled by the remaining Director or Directors choosing a Director or Directors to fill the unexpired term.
 
3.    Regular meetings of the Board of Directors shall be held at 11:30 a.m., on the 5 th day of March of each year beginning in 2002 at the office of the company at 1928 Oakland Dr., Bismark, N.D. 58504, the Board of Directors shall by resolution appoint; special meetings may be called by the President or any Director giving ten days notice to each Director. Special meetings may also be called by execution of the appropriate waiver of notice and called when executed by a majority of the Directors of the company. A majority of the Directors shall constitute a quorum.
 
4.   The Directors shall have the general management and control of the business and affairs of the corporation and shall exercise all the powers that may be exercised or performed by the corporation, under the statutes, the Articles of Incorporation, and the By-Laws. Such management will be by equal vote of each member of the Board of Directors with each Board member having an equal vote.
 
5.  The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Directors. Be signed by the President and Secretary of the corporation.
 
2.        All certificates shall be consecutively numbered; the name of the person owning the shares represented thereby, with the number of such shares and the date of issue shall be entered on the company’s books.
 
3.     All certificate of stock transferred by endorsement thereon shall be surrendered by cancellation and new certificates issued to the purchaser or assignee.
 
4.     Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, and cancel the old certificate; every such transfer shall be entered on the transfer book of the corporation.
 
5.    The corporation shall be entitled to treat holder of record of any share as the holder in fact thereof, and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person whether or not it shall have express or other notice thereof, except as expressly provided by the laws of this state.
 
ARTICLE III DIRECTORS
 
1.       A Board of Directors, consisting of at least one person shall be chosen annually by the shareholders at their meeting to manage the affairs of the corporation. The Directors’ term of
 
 
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6.    A resolution, in writing, signed by all or a majority of the members of the Board of Directors, shall constitute action by the Board of Directors to effect therein expressed, with the same force and effect as though such resolution had been passed at a duly convened meeting, and it shall be the duty of the Secretary to record every such resolution in the Minute Book of the corporation under its proper date.
 
7.      Any or all of the Directors may be removed for cause by vote of the shareholders or by action of the Board. Directors may be removed without cause only by vote of the shareholders.
 
8.   A Director may resign at any time by giving written notice to the Board, the President or the Secretary of the corporation. Unless otherwise specified in the notice, the resignation shall take effect upon receipt thereof by the Board or such Officer, and the acceptance of the resignation shall not be necessary to make it effective.
 
9.   A Director of the corporation who is present at a meeting of the Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action.
 
ARTICLE IV OFFICERS
 
1.   The Officers of this company shall consist of a President, one or more Vice Presidents, Secretary, Treasurer, and such other officers as shall, from time to time, be elected or appointed by the Board of Directors.
 
 
5

 
 
2.    The PRESIDENT shall preside at all meetings of the Directors and the shareholders and shall have general charge and control over the affairs of the corporation subject to the Board of Directors. He shall sign or countersign all certificates, contracts and other instruments of the corporation as authorized by the Board of Directors and shall perform all such other duties as are incident to his office or are required by him by the Board of Directors.
 
3.  The VICE PRESIDENT shall exercise the functions of the President during the absence or disability of the President and shall have such powers and such duties as may be assigned to her, from time to time, by the Board of Directors.
 
4.   The SECRETARY shall issue notices for all meetings as required by the By-Laws, shall keep a record of the miniute of the proceedings of the meetings of the shareholders and Directors, shall have charge of the corporate books, and shall make such reports and perform such other duties as are incident ti her office, or properly required of her by the Board of Directors, she shall be responsible for supplying to the Resident Agent or Rregistered Office with any and all documents required to be kept and maintained by the Resident Agent at the Registered Office to the provisions of Nevada law.
 
5.  The TREASURER shall have the custody of all monies and securities of the corporation and shall keep regular books of account. He shall disburse the funds of the corporation in payment of just demands against the corporation or as may be ordered by the Board of Directors, making proper vouchers for such disbursements and shall render to the Board of Directors, from time to time, as may be required of him, an account of all his transactions as Treasurer and of the financial condition of the corporation. He shall perform all duties incident to him office or which are properly required of him by the Board of Directors.
 
6.       The RESIDENT AGENT shall be in charge of the corporation’s registered office in the State of Nevada, upon whom process against the corporation may be served and shall perform all duties required of him by statue.
 
7.     The salaries of all Officers shall be fixed by the Board of Directors and may be changed, from time to time, by a majority vote of the Board.
 
8.     Each of such Officers shall seve for a term of (1) year or until their successors are chosen and qualified. Officers may be re-elected or appointed for successive annual terms.
 
9.     The Board of Directors may appoint such other Officers and Agents, as it shall deem necessary or expedient, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined, from time to time, by the Board of Directors.
 
 
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10.    Any Officer or Agent elected or appointed by the Directors may be removed by the Directors whenever in their judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.
 
11.     A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the Directors for the unexpired portion of the term.
 
ARTICLE V INDEMNIFICATION OF OFFICERS AND DIRECTORS
 
The corporation shall indemnify any and all of its Directors and Officers, and its former Director and Officers, or any person who may have served at the corporation’s request as a Director or Officer of another corporation in which it owns shares of capital stock or of which it is a creditor, against expenses actually and necessarily incurred by them in connection with the defense of any action, suit or proceeding in which they, or any of them, are made parties, or a party, by reason of being or having been Director(s) or Officer(s) of the corporation, or of such other corporation, except, in relation to matters as to which any such Director or Officer or former Director or Officer or person shall be adjudged in such action, suit or proceeding to be liable for negligence or misconduct in the performance of duty. Such indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled, under By-Law agreement, vote of shareholders or otherwise.
 
ARTICLE VI DIVIDENDS
 
The Directors may, from time to time, declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law.
 
ARTICLE VII WAIVER OF NOTICE
 
Unless otherwise provided by law, whenever any notice is required to be given to any shareholder or Director of the corporation under the provisions of these By-Laws or under the provisions of the Articles of Incorporation, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.
 
ARTICLE VIII AMENDMENTS
 
1.   Any of these By-laws may be amended by a majority vote of the shareholders at any annual meeting or at any special meeting called for that purpose.
 
2.   The Board of Directors may amend the By-Laws or adopt additional By-Laws, but shall not alter or repeal any By-Laws adopted by the shareholders of the company.
 
 
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CERTIFIED TO BE THE BY-LAWS OF:
 
Effective Sport Nutrition Corporation
 

 
BY: /s/ Suzy Sanders
Secretary
 
8

 
 
Cane Clark llp
 
 
3273 E. Warm Springs
Las Vegas, NV  89120
 
Kyleen E. Cane*
Bryan R. Clark^
     
Telephone:   702-312-6255
Joe Laxague
Scott P. Doney
 
Facsimile:     702-944-7100
Christopher T. Clark
   
Email:  sdoney@caneclark.com
 
April 8, 2010

DM Products, Inc.
P.O. Box 2458
Walnut Creek, CA 94595

Re: DM Products, Inc., Registration Statement on Form S-1

Ladies and Gentlemen:

I have acted as special counsel for DM Products, Inc., a Nevada corporation (the “ Company ”), in connection with the preparation of the registration statement on Form S-1 (the “ Registration Statement ”) to be filed with the Securities and Exchange Commission (the “ Commission ”) pursuant to the Securities Act of 1933, as amended (the “Act”), relating to the offering of 148,009,888 shares held by the selling shareholders described in the Registration Statement.

In rendering the opinion set forth below, I have reviewed: (a) the Registration Statement and the exhibits attached thereto; (b) the Company’s Articles of Incorporation; (c) the Company’s Bylaws; (d) certain records of the Company’s corporate proceedings as reflected in its minute books; and (e) such statutes, records and other documents as we have deemed relevant. In my examination, I have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and conformity with the originals of all documents submitted to us as copies thereof.  In addition, I have made such other examinations of law and fact, as I have deemed relevant in order to form a basis for the opinion hereinafter expressed.

Based upon the foregoing, I am of the opinion that the 148,009,888 shares of common stock to be sold by selling shareholders are validly issued, fully paid and non-assessable.

 This opinion is based on Nevada general corporate law, including the statutory provisions, all applicable provisions of the Nevada constitution and reported judicial decisions interpreting those laws.

The opinions set forth herein are limited to the matters expressly set forth in this opinion letter, and no opinion is to be implied or may be inferred beyond the matters expressly so stated.

Regards,


/s/ Scott P. Doney
Scott P. Doney, Esq.
 
*Licensed in California, Washington and Hawaii;
^Licensed in Colorado and District of Columbia
 
 

 
 
April 8, 2010


CONSENT

I HEREBY CONSENT to the inclusion of my name and use of my opinion in connection with the Form S-1 Registration Statement filed with the Securities and Exchange Commission as special counsel for the registrant, DM Products, Inc.


Respectfully,


/s/ Scott P. Doney
Scott P. Doney, Esq.
SHARE EXCHANGE AGREEMENT

THIS SHARE EXCHANGE AGREEMENT (this “Agreement") is entered into as of
7/18/2005 by and between Midwest E.S.W.T. Corp., a Nevada corporation (“MDWE”), on the one hand, and Direct Success, Inc., a California corporation (“Direct Success"), and the shareholders of Direct Success identified on the signature page hereof (the "Shareholders”), on the other hand.

RECITALS

WHEREAS, the Shareholders are the owners of 100% of the issued and outstanding shares of common stock of Direct Success as set forth in Exhibit A (the "Direct Success Shares");

WHEREAS, MDWE desires to purchase from the Shareholders and the Shareholders desire to sell to MDWE, all the Direct Success Shares in accordance with the provisions of this Agreement.

NOW, THEREFORE, in consideration of the premises and respective mutual agreements, covenants, representations and warranties contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

AGREEMENTS

1.            Purchase and Sale . At the Closing, subject to terms and conditions contained in this Agreement, and on the basis of the representations, warranties and agreements herein contained, the Shareholders shall sell to MDWE, and MDWE shall purchase from the Shareholders, the Direct Success Shares.

2.            Purchase Price . As consideration for the purchase of the Direct Success Shares, MDWE shall issue to the Shareholders, as set forth in Exhibit A, a total of seventy million (70,000,000) shares of MDWE common stock (the "MDWE Shares").

3.            Closing . The closing of the sale and purchase of the Direct Success Shares (the “Closing") shall take place on July 15, 2005 at Newport Beach, or at such other date, time and place as may be agreed upon in writing by the parties hereto, but not later than August 15,2005 (the "Termination Date"). The date of the Closing is sometimes herein referred to as the "Closing Date."

 
3.1.            Items to be Delivered Immediately Prior to or at Closing . At the Closing:
 
A.           The Shareholders shall deliver to MDWE:

 
(i)
the Direct Success Shares, fully paid and non-assessable and subject to no liens, security interests, pledges, encumbrances, charges, restrictions, demands or claims in any other party whatsoever, except as set forth in the legend on the certificate(s), which legend shall provide substantially as follows:
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT8EEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT”'), OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOTSE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF FOR A PERIOD OF ONE YEAR FROM THEISSUANCE THEREOF EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS OR (ii) UPON THE EXPRESS WRITTEN AGREEMENT OF THE COMPANY AND COMPLIANCE, TO THE EXTENT APPLICABLE, WITH RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES).
 
 
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B.           MDWE shall deliver to the Shareholders:
 
(i)  
the MDWE Shares, in amounts and issued as set forth in Exhibit A, fully paid and non-assessable and subject to no liens, security interests, pledges, encumbrances, charges, restrictions, demands or claims in any other party whatsoever, except as set forth in the legend on the certificate(s) asset forth in Section3.1(A).

C.           MDWE shall deliver to Direct Success:

(i)  
written confirmation of the approval of the herein described transactions by MDWE's Board of Directors;

(ii)  
an officers certificate, executed by the President and Secretary of MDWE, in the form attached hereto as Exhibit B ;
 
D.           Direct Success shall deliver to MDWE:

(i) written confirmation of the approval of the herein described transactions by Direct Success's Board of Directors;
 
(ii) an officers certificate, executed by the President and Secretary of Direct Success, in the form attached hereto as Exhibit C ;

4.            Representations and Warranties of Direct Success . To induce MDWE to enter into this Agreement and to consummate the transactions contemplated hereby, Direct Success represents and warrants as of the date hereof and as of the Closing, as follows:
 
4.1.            Corporate Status . Direct Success is a corporation duly organized, validly existing and in good standing under the Laws of the State of California and is qualified to do business in any jurisdiction where it is required to be so qualified. The articles and bylaws of Direct Success that have been delivered to MDWE as of the date hereof are current, correct and complete.
 
 
2

 
 
4.2.            Authorization . Direct Success has the requisite power and authority to execute and deliver this Agreement and to perform the transactions hereunder. This Agreement, and all of the exhibits attached hereto, constitutes the legal, valid and binding obligation of Direct Success.

4.3.            Consents and Approvals . Except for the filings, permits, authorizations, consents and approvals under federal and/or state securities laws, and applicable stock exchange regulations which may be applicable, neither the execution and delivery by Direct Success of this Agreement, nor the performance by it of the transactions contemplated hereby, require any filing, consent or approval.

4.4.            Capitalization . The authorized capital stock of Direct Success consists of one hundred million (100,000,000) shares of common stock, with no par value, of which twenty one million, eight hundred and seventy two thousand, four hundred and eighty seven (21,872,487) shares are issued and outstanding.

4.5.            Books and Records . Direct Success keeps its books, records and accounts (including, without limitation, those kept for financial reporting purposes and for tax purposes) in accordance with good business practice and in sufficient detail to reflect the transactions and dispositions of their assets, liabilities and equities. The minute books of Direct Success contain records of their shareholders' and directors' meetings and of action taken by such shareholders and directors.  The meetings of directors and shareholders referred to in such minute books were duly called and held, and the resolutions appearing in such minute books were duly appointed. The signatures appearing on all documents contained in such minute books are the true signatures of the persons purporting to have signed the same.

4.6.            Financial Statements; Contracts . Attached hereto as Exhibit D is (a) an income statement and a balance sheet as of and for the year ended December 31, 2004, (b) an income statement and a balance sheet as of March 31, 2005 and for the quarter then ended. Attached hereto as Exhibit E is a list of all contracts to which Direct Success is a party or obligated as of the Closing Date, and Direct Success hereby represents and warrants that there are no other material contracts or agreements in existence as of the Closing Date.

4.7.            Taxes .

A.           All taxes, assessments, fees, penalties, interest and other governmental charges with respect to Direct Success which have become due and payable on the date hereof have been paid in full or adequately reserved against by Direct Success, (including without limitation, income, property, sales, use, franchise, capital stock, excise, added value, employees' income withholding, social security and unemployment taxes), and all interest and penalties thereon with respect to the periods then ended and for all periods thereto;

B.           There are no agreements, waivers or other arrangements providing for an extension of time with respect to the assessment of any tax or deficiency against Direct Success, nor are there any actions, suits, proceedings, investigations or claims now pending against Direct Success, nor are there any actions, suits, proceedings, investigations or claims now pending against Direct Success in respect of any tax or assessment, or any matters under discussion with any federal, state, local or foreign authority relating to any taxes or assessments, or any claims for additional taxes or assessments asserted by any such authority, and there is no basis for the assertion of any additional taxes or assessments against Direct Success; and

 
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C.           The consummation of the transactions contemplated by this Agreement will not result in the imposition of any additional taxes on or assessments against Direct Success.

4.8            Subsidiaries. Direct Success does not own, directly or indirectly, any interest or investment (whether equity or debt) in any corporation, partnership, limited liability company, trust, joint venture or other legal entity other than as follows: 75% interest in Direct Success LLP 3 (dba “Banjo Minnow") and 100% interest in Direct Success LLC 1 (dba “Torso-T”).

4.9.            Legal Proceedings and Compliance with Law . There is no litigation that is pending or, to Direct Success's knowledge, threatened against Direct Success. To Direct Success's knowledge, there has been no default under any laws applicable to Direct Success, Direct Success has not received any notices from any governmental entity regarding any alleged defaults under any laws, and there has been no default with respect to any court order applicable to Direct Success.

4.10            Intellectual Property . Direct Success has good and valid title to and ownership of all intellectual property (defined herein as trademarks, trade names or copyrights, patents, domestic or foreign, collectively the "Intellectual Property") necessary for its business and operations (as now conducted and as proposed to be conducted). Other than as set forth in Exhibit E, there are no outstanding options, licenses or agreements of any kind to which Direct Success is a party or by which it is bound relating to any Intellectual Property, whether owned by Direct Success or another person. To the knowledge of Direct Success, the business of Direct Success as formerly and presently conducted did not and does not conflict with or infringe upon any Intellectual Property right owned or claimed by another.

4.11.            Finder's Fees . Other than as set forth in a contract disclosed in Exhibit E. no person retained by Direct Success is or will be entitled to any commission or finder's or similar fee in connection with the transactions contemplated by this Agreement.

4.12.            Accuracy of Information .  To Direct Success's knowledge, no representation or warranty by Direct Success made herein contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained herein not misleading in light of the circumstances under which such statements were made;

5.            Representations and Warranties of MDWE . To induce Direct Success and the Shareholders to enter into this Agreement and to consummate the transactions contemplated hereby, MDWE represents and warrants as of the date hereof and as of the Closing, as follows:
 
5.1.            Corporate Status .  MDWE is a corporation duly organized, validly existing and in good standing under the Laws of the State of Nevada and is qualified to do business in any jurisdiction where it is required to be so qualified. The articles and bylaws of MDWE that have been delivered to Direct Success as of the date hereof are current, correct and complete.
 
 
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5.2.            Authorization . MDWE has the requisite power and authority to execute and deliver this Agreement and to perform the transactions hereunder. This Agreement and all of the exhibits attached hereto, constitutes the legal, valid and binding obligation of MDWE.

5.3.            Consents and Approvals . Except for the filings, permits, authorizations, consents and approvals under federal and/or state securities laws, and applicable stock exchange regulations which maybe applicable, neither the execution and delivery by MDWE of this Agreement, nor the performance by it of the transactions contemplated hereby require any filing, consent or approval.

5.4.            Capitalization . The authorized capital stock of MDWE consists of one hundred million (100,000,000) shares of common stock, par value $.001, and ten million (1 0,000,000) shares of preferred stock, par value $.001, of which thirty two million (32,000,000) restricted shares and sixteen million, seven hundred and thirty six thousand (16,736,000) shares, respectively, are issued and outstanding.

5.5.            Books and Records . MDWE keeps its books, records and accounts (including, without limitation, those kept for financial reporting purposes and for tax purposes) in accordance with good business practice and in sufficient detail to reflect the transactions and dispositions of their assets, liabilities and equities. The minute books of MDWE contain records of their shareholders' and directors' meetings and of action taken by such shareholders and directors. The meetings of directors and shareholders referred to in such minute books were duly called and held, and the resolutions appearing in such minute books were duly adopted. The signatures appearing on all documents contained in such minute books are the true signatures of the persons purporting to have signed the same.

5.6.            Financial Statements; Contracts . MDWE hereby represents and warrants that the financial statements included in its filings with the Securities and Exchange Commission are complete and accurately represent its current financial condition. Attached hereto as Exhibit F is a list of all contracts to which MDWE is a party or obligated as of the Closing Date which are not included in its filings with the SEC, and MDWE hereby represents and warrants that there are no other material contracts or agreements in existence as of the Closing Date.

5.7.            Taxes .

A.           All taxes, assessments,. fees, penalties, interest and other governmental charges with respect to MDME which have become due and payable on the date hereof have been paid in full or adequately reserved against by MDWE (including without limitation, income, property, sales, use, franchise, capital stock, excise, added value, employees' income withholding, social security and unemployment taxes) and all interest and penalties thereon with respect to the periods then ended and for all periods thereto;

B;           There are no agreements, waivers or other arrangements providing for an extension of time with respect to the assessment of any tax or deficiency against MDWE. nor are there any actions, suits, proceedings, investigations or claims now pending against MDWE, nor are there any actions, suits, proceedings, investigations or claims. now pending against MDWE in respect of any tax or assessment, or any matters under discussion with any federal, state, local or foreign authority relating to any taxes or assessments, or any claims for additional taxes or assessments asserted by any such authority, and there is no basis for the assertion of any additional taxes or assessments against MDWE ; and

 
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C.           The consummation of the transactions contemplated by this Agreement will not result in the imposition of any additional taxes on or assessments against MDWE.

5.8.            Subsidiaries . MDWE does not own, directly or indirectly, any interest or investment (whether equity or debt) in any corporation, partnership, limited liability company, trust, joint venture or other legal entity.
 
5.9.            Legal Proceedings and Compliance with Law . There is no litigation that is pending or, to MDWE's knowledge, threatened against MDWE. To MDWE's knowledge, there has been no default under any laws applicable to MDWE, MDWE has not received any notices from any governmental entity regarding any alleged defaults under any laws, and there has been no default with respect to any court order applicable to MDWE.

5.10.            Intellectual Property . MDWE has good and valid title to and ownership of all Intellectual Property necessary for its business and operations (as now conducted and as proposed to be conducted). Other than as set forth in Exhibit F, there are no outstanding options, licenses or agreements of any kind to which MDWE is a party or by which it is bound relating to any Intellectual Property, whether owned by MDWE or another person.  To the knowledge of MDWE, the business of MDWE as formerly and presently conducted did not and does not conflict with or infringe upon any Intellectual Property right owned or claimed by another.

5.11.            Finder's Fees . Other than as set forth in a contract disclosed in Exhibit F, no person retained by MDWE is or will be entitled to any commission or finder's or similar fee in connection with the transactions contemplated by this Agreement.

5.12. Accuracy of Information . To MDWE’s knowledge, no representation or warranty by MDWE made herein contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained herein not misleading in light of the circumstances under which such statements were made.

6.            Covenants of Direct Success .  To induce MDWE to enter into this Agreement and to consummate the transactions contemplated hereby, and without limiting any covenant, agreement, representation or warranty made, Direct Success covenants and agrees as follows:

6.1.            Conduct of the Business . Except as contemplated or otherwise consented to by MDWE in writing, after the date of this Agreement and until the date of Closing, Direct Success shall carry on its business in the ordinary course.
 
6.2.            Access to Information . From the date of this Agreement to the Closing Date, Direct Success shall give to MDWE and its officers, employees, counsel, accountants and other representatives access to and the right to inspect, during normal business hours, all of the assets, records, contracts and other documents relating to Direct Success as the other party may reasonably request.  MDWE shall not use such information for purposes other than in connection with the transactions contemplated by this Agreement and shall otherwise hold such information in confidence until such time as such information otherwise becomes publicly available and will sign such standard and customary non-disclosure agreements as are reasonably requested by Direct Success.

 
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6.3.            No Solicitation . From and after the date hereof until the Termination Date, Direct Success will not, and will not authorize or permit any Direct Success representatives to, directly or indirectly, solicit or initiate (including by way of furnishing information) or take any other action to facilitate knowingly any inquiries or the making of any proposal that constitutes or may reasonably be expected to lead to an acquisition proposal from any person, or engage in any discussion or negotiations relating thereto or accept any acquisition proposal.
 
6.4.            Delivery of Financial Statements . Direct Success will use its best efforts to deliver to MDWE audited financial statements as of December 31, 2003 and 2004 and for the two years then ended, audited by a firm acceptable to MDWE, prior to the date which is sixty (60) days following the Closing.

 
7.            Covenants of MDWE . To induce Direct Success and the Shareholders to enter into this Agreement and to consummate the transactions contemplated hereby, and without limiting any covenant, agreement, representation or warranty made, MDWE covenants and agrees as follows:
 
7.1.            Conduct of the Business . Except as contemplated or otherwise consented to by Direct Success in writing, after the date of this Agreement and until the date of Closing, MDWE shall carryon its business in the ordinary course.
 
7.2.            Access to Information . From the date of this Agreement to the Closing Date, MDWE shall give to Direct Success and the Shareholders, and each of their officers, employees, counsel, accountants and other representatives access to and the right to inspect during normal business hours, all of the assets, records, contracts and other documents relating to MDWE as the other party may reasonably request. Direct Success and the Shareholders shall not use such information for purposes other than in connection with the transactions contemplated by this Agreement and shall otherwise hold such information in confidence until such time as such information otherwise becomes publicly available and will sign such standard and customary non-disclosure agreements as are reasonably requested by MDWE.
 
7.3.            No Solicitation .  From and after the date hereof until the Termination Date, MDWE will not, and will not authorize or permit any MDWE representatives to, directly or indirectly, solicit or initiate (including by way of furnishing information) or take any other action to facilitate knowingly any inquiries or the making of any proposal that constitutes or may reasonably be expected to lead to an acquisition proposal from any person, or engage in any discussion or negotiations relating thereto or accept any acquisition proposal.
 
8.            Mutual Covenants . Without limiting any covenant, agreement, representation or warranty made, each of the parties covenants and agrees as follows:

8.1.            Fulfillment of Closing Conditions . At and prior to the Closing, each party shall use commercially reasonable efforts to fulfill, and to cause each other to fulfill, the conditions specified in this Agreement to the extent that the fulfillment of such conditions is within its or his control.
 
 
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8.2.            Disclosure of Certain Matters . Direct Success on the one hand, and MDWE, on the other hand, shall give MDWE and Direct Success, respectively, .prompt notice of any event or development that occurs that (a) had it existed or been known on the date hereof would have been required to be disclosed by such party under this Agreement, (b) would cause any of the representations and warranties of such party contained herein to be inaccurate or otherwise misleading, except as contemplated by the terms hereof, or (c) gives any such party any reason to believe that any of the conditions set forth in this Agreement will not be satisfied prior to the Termination Date.
 
8.3.            Public Announcements . Direct Success and MDWE shall consult with each other before issuing any press release or making any public statement with respect to this Agreement and the transactions contemplated hereby and, except as maybe required by applicable law, neither party shall issue any such press release or make any such public statement without the consent of the other parties hereto.
 
8.4.            Confidentiality .  If the transactions contemplated hereby are not consummated, each party shall treat all information obtained in its investigation of the other party or any affiliate thereof, and not otherwise known to them or already in the public domain, as confidential and shall not use or otherwise disclose such information to any third party and shall return to such other party or affiliate all copies made by it or its representatives of confidential information provided by such other party or affiliate.
 
9.            Conditions Precedent . This Agreement, and the transactions contemplated hereby, shall be subject to the following conditions precedent:
 
9.1.           The obligations of Direct Success and the Shareholders to deliver the Direct Success Common Shares and to satisfy their other obligations hereunder shall be subject to the fulfillment (or waiver by Direct Success and the Shareholders), at or prior to the Closing, of the following conditions, which MDWE agrees to use its best efforts to cause to be fullfilled:
 
A.            Representations and Warranties .  The representations and warranties of MDWE contained in this Agreement shall be true and correct on the date hereof and (except to the extent such representations and warranties speak as of an earlier date) shall also be true and correct on and as of the Closing Date with the same force and effect as if made on and as of the Closing Date.

B.            Agreements, Conditions and Covenants .  MDWE shall have performed or complied with all agreements, conditions and covenants required by this Agreement to be performed or complied with by it on or before the Closing Date.
 
C.            Legality . No Law or Court Order shall have been enacted, entered, promulgated or enforced by any court or governmental authority that is in effect and has the effect of making the transactions contemplated by this Agreement illegal or otherwise prohibiting the consummation of such purchase and sale.

9.2.           The obligations of MDWE to pay the Purchase Price and to satisfy their other obligations hereunder shall be subject to the fulfillment (or waiver by MDWE), at or prior to the Closing, of the following conditions, which Direct Success agrees to use its best efforts to cause to be fulfilled:
 
 
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A.            Representations and Warranties . The representations and warranties of Direct Success contained in this Agreement shall be true and correct on the date hereof and (except to the extent such representations and warranties speak as of an earlier date) shall also be true and correct on and as of the Closing Date with the same force and effect as if made on and as of the Closing Date.

B.            Agreements, Conditions and Covenants . Direct Success shall have performed or complied with all agreements, conditions and covenants required by this Agreement to be performed or complied with by it on or before the Closing Date.
 
C.            Legality . No Law or Court Order shall have been enacted, entered, promulgated or enforced by any court or governmental authority that is in effect and has the effect of making the transactions contemplated by this Agreement illegal or otherwise prohibiting the consummation of such purchase and sale.

10.            Termination .

10.1.           Notwithstanding anything to the contrary contained in this Agreement, this Agreement may be terminated and the transactions contemplated hereby may be abandoned prior to the Closing Date only by the mutual consent of all of the Parties. Following the Closing Date, in the event the Closing does occur within ten (10) days of the Closing Date, this Agreement may be terminated by either Party upon delivery of written notice to the other Party.

10.2.           If this Agreement is terminated pursuant to Section 10.1, the agreements contained in Section 8 shall survive the termination hereof and any party may pursue any legal or equitable remedies that may be available if such termination is based on a breach of another party.

11.            General .

11.1.            Expenses .  Except as otherwise specifically provided for herein, whether or not the transactions contemplated hereby are consummated, each of the parties hereto shall bear the cost of all fees and expenses relating to or arising from its compliance with the various provisions of this Agreement and such party's covenants to be performed hereunder, and except as otherwise specifically provided for herein, each of the Parties hereto agrees to pay all of its own expenses (including, without limitation, attorneys and accountants' fees and printing expenses) incurred in connection with this Agreement, the transactions contemplated hereby, the negotiations leading to the same and the preparations made for carrying the same into effect, and all such fees and expenses of the Parties hereto shall be paid prior to Closing.
 
11.2.            Notices .  Any notice, request, instruction or other document required by the terms of this Agreement, or deemed by any of the Parties hereto to be desirable, to be given to any other Party hereto shall be in writing and shall be delivered by facsimile or overnight courier to the following addresses:
 
 
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To Direct Success:

Direct Success, Inc.
575 Anton Blvd., Suite 300
Costa Mesa, CA 92626
 
with a copy to:

Marc R. Tow & Associates
3920 Birch Street, Suite 102
Newport Beach, CA 92660

To MDWE:

Midwest E.S.W.T. Corp.
1605 Park Ave., Suite B
Bismark, ND 58504

The persons and addresses set forth above may be changed from time to time by a notice sent as aforesaid. Notice shall be conclusively deemed given at the time of delivery if made during normal business hours, otherwise notice shall be deemed given on the next business day.

11.3.            Entire Agreement . This Agreement, together with the schedules and exhibits hereto, sets forth the entire agreement and understanding of the Parties hereto with respect to the transactions contemplated hereby, and supersedes all prior agreements, arrangements and understandings related to the subject matter hereof. No understanding, promise, inducement, statement of intention, representation, warranty, covenant or condition, written or oral, express or implied, whether by statute or otherwise, has been made by any Party hereto which is not embodied in this Agreement, or exhibits hereto or the written statements, certificates, or other documents delivered pursuant hereto or in connection with the transactions contemplated hereby, and no Party hereto shall be bound by or liable for any alleged understanding, promise, inducement, statement, representation, warranty, covenant or condition not so set forth.
 
11.4.            Survival of Representations . All statements of fact (including financial statements) contained in the schedules, the exhibits, the certificates or any other-Instrument delivered by or on behalf of the Parties hereto, or in connection with the transactions contemplated hereby, shall be deemed representations and warranties by the respective Party hereunder. All representations, warranties, agreements, and covenants hereunder shall survive the Closing and remain effective regardless of any investigation or audit at any time made by or on behalf of the Parties or of any information a Party may have in respect thereto. Consummation of the transactions contemplated hereby shall not be deemed or construed to be a waiver of any right or remedy possessed by any Party hereto, notwithstanding that such Party knew or should have known at the time of Closing that such right or remedy existed.
 
 
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11.5.            Incorporated by Reference . All documents (including, without limitation, all financial statements) delivered as part hereof or incident hereto are incorporated as a part of this Agreement by reference.

11.6.            Remedies Cumulative . No remedy herein conferred upon any Party is intended to be exclusive of any other remedy and each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise.

11.7.            Execution of Additional Documents . Each Party hereto shall make, execute, acknowledge and deliver such other instruments and documents, and take all such other actions as may be reasonably required in order to effectuate the purposes of this Agreement and to consummate the transactions contemplated hereby.

11.8.            Finders' and Related Fees . Each of the Parties hereto is responsible for, and shall indemnify the other against any claim by any third party to a fee, commission. bonus or other remuneration arising by reason of any services alleged to have been rendered to or at the instance of said Party to this Agreement with respect to this Agreement or to any of the transactions contemplated hereby.

11.9.            Governing Law . This Agreement has been negotiated and executed in the State of California and shall be construed and enforced in accordance with the laws of such state.

11.10.            Forum . Each of the Parties hereto agrees that any action or suit which may be brought by any Party hereto against any other Party hereto in connection with this Agreement or the transactions contemplated hereby may be brought only in a federal or state court in Orange County, California.

11.11.            Attorneys' Fees .  Except as otherwise provided herein, if a dispute should arise between the Parties including, but not limited to arbitration, the prevailing Party shall be reimbursed by the nonprevai1ing Party for all reasonable expenses incurred in resolving such dispute, including reasonable attorneys' fees exclusive of such amount of attorneys' fees as shall be a premium for result or for risk of loss under a contingency fee arrangement.

11.12.            Binding Effect and Assignment . This Agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective heirs, executors, administrators, legal representatives and assigns.

11.13.            Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. In making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart.

{remainder of page intentionally left blank]
 
 
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first written hereinabove.
 
“Direct Success” 
“MDWE”
   
Direct Success, Inc. 
Midwest E.S.W.T. Corp.
A California corporation   
a Nevada Corporation
   
   
/s/                                             
/s/ Justin Nieters
By: 
By: Justin Nieters
Its: President                                                                
Its: President
   
“Shareholders”
 
   
__________________  
   
__________________  

 
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EMPLOYMENT AGREEMENT

This Agreement is entered into on the 20th day of April, 2007 by and between DMP, Inc. (hereinafter "DMP”) and Kurtis Cockrum (hereinafter "Employee").

WHEREAS, The DMP is engaged in the business of Direct selling though media marketing; and

WHEREAS, Employee has acquired special skills and abilities to be "PRESIDENT" for DMP; and

WHEREAS, To obtain the benefit of employee's experience, skills and abilities, DMP desires to employ Employee on the terms and conditions set forth in this Agreement; and

WHEREAS, Employee desires to be employed by DMP on the terms and conditions set forth in this Agreement.

WHEREAS, Employee has previously been appointed as a member of the Board of Directors of DMP and is currently holding the position of Chairman of said Board

WHEREAS, DMP has already issued (pursuant to a Board Resolution) to Employee 2,000,000 shares of DMP restricted common stock for services performed by Employee in his capacity as advisor and consultant; and

WHEREAS, DMP has already issued (pursuant to a Board Resolution) to Employee 5,000,000 shares of DMP restricted common stock as incentive for accepting this appointment; and

WHEREAS, DMP has already issued to Employee a term sheet essentially setting forth the terms of this agreement.

NOW THEREFORE, in consideration of the mutual promises and agreements set forth below, it is agreed as follows:

1.            Term of Employment. The DMP hereby employs employee "at will", as that term is defined under California Law, and Employee hereby accepts employment with the Company as an "at will" employee, for a period beginning as of April 20, 2007, and continuing unless and until terminated by either party pursuant to their rights under California Law. As used in this Agreement, "Employment Term" means the entire period of employment of Employee by the Company hereunder.

2.            Position. Employee is hereby employed as DMP's "President" and shall perform his duties in to the best of Employee's ability and experience. Employee shall at all times loyally and conscientiously perform all of the duties and obligations required as President of DMP. Immediately after execution of this agreement, Michael S. DeBenon shall resign as DMP's current President but shall retain the positions of Secretary and Treasurer.
 
 
 

 
 
3.            Limitations On Other Activities

3.1            Restrictions On Outside Business Activities. During the Term of Employment, Employee shall not, without the prior written consent of DMP, directly or indirectly render any services of a business, commercial or professional nature to any other person or organization, whether for compensation or otherwise, or engage in any other business activity that may interfere with the performance of his duties under this Agreement.

3.2            Covenant Not To Compete During Employment Term. During the Employment Term, Employee shall not, directly or indirectly, whether as a principal, partner, employee, creditor, shareholder or otherwise, promote, participate in or engage in any business competitive with the Company.

3.3            Non-Solicitation Of Employees . During the Employment Term, and for a period of one year following termination of this agreement, Employee shall not interfere with the business of DMP by soliciting, attempting to solicit, inducing, or otherwise causing any employee of DMP to terminate his or her employment in order to become an employee, consultant or independent contractor to or for any competitor of DMP. Employee acknowledges that any breach of the non­-solicitation covenant will give rise to irreparable injury to DMP, inadequately compensable in damages. Therefore, DMP shall be granted injunctive relief against the breach of the foregoing undertakings, in addition to any other legal remedies available. Employee further acknowledges and agrees that the covenants contained herein are necessary for the protection of DMP’s legitimate business interests and are reasonable in scope and effect.

3.4            Non-Solicitation Of Clients During the Employment Term, and for a period of one year following termination of this agreement, Employee agrees, to the extent permitted by law, he will not directly or indirectly, either for himself or for any other person, firm or corporation, call upon, solicit, divert or take away or attempt to solicit clients or take away any of the customers, business or patrons of DMP. Employee acknowledges that any breach of the non-solicitation covenant will give rise to irreparable injury to DMP, inadequately compensable in damages. Therefore, DMP shall be granted injunctive relief against the breach of the foregoing undertakings, in addition to any other legal remedies available. Employee further acknowledges and agrees that the covenants contained herein are necessary for the protection of DMP's legitimate business interest and are reasonable in scope and effect.

4.            Non-Disclosure Of Confidential Information

4.1            Confidentiality Obligation. During the Employment Term and after the termination of Employee's employment with the Company, Employee shall keep in confidence any proprietary or confidential information DMP and shall not use or disclose such information, except to the extent required to perform his work for DMP. Failure to mark any writing as confidential or secret shall not affect the confidential nature of such writing or the information contained therein. At all times during and after Employee's employment with DMP, Employee shall not disclose, sell, transfer or use (except as required by Employee's employment by DMP) any confidential information without first obtaining DMP's consent thereto; it is understood that such consent must be in writing and can only be given by a resolution of the Board of Directors of DMP.
 
 
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4.2            Definitions. Proprietary or confidential information refers to any information not generally known among the DMP's competitors that has commercial value to DMP. By way of illustration but not limitation, "proprietary" or "confidential" information includes: cost data base; estimates and fees; client lists and contact personnel information; information regarding business plans; budgets and unpublished financial statements; information regarding the skills and compensation of other employees of DMP; purchasing data; plans, specifications, drawings, sketches, layouts, designs; processes and formulas, whether or not reduced to writing, which is or may be used in research and development, production and/or sale of the DMP's products and services; and any other information reasonably designated by DMP as confidential.
 
4.3            Information That Is Not Confidential. Confidential information does not include any information which becomes public (i.e. is generally known among DMP's competitors) other than as a result of any breach by Employee or any other person of this Agreement or the law.

4.4            Third Party Information. DMP has received and in the future will receive from third parties confidential or proprietary information ("Third Party Information") subject to a duty on DMP's part to maintain the confidentiality of such information and to use it only for certain requested purposes. During the Employment Term and after the termination of Employee's employment with DMP, Employee will hold Third Party Information in the strictest confidence and will not disclose or use Third Party Information except as permitted by any agreement between the DMP and such third party.

4.5            Information Demanded By Subpoena. If pursuant to subpoena (or otherwise) during the Employment Term or thereafter, a demand is made upon Employee to disclose proprietary or confidential information of DMP or a third party by compulsion of law, Employee shall promptly notify DMP in advance of such proposed disclosure to enable DMP to be heard with respect to any such disclosure or to otherwise respond to any such compulsion if it desires to do so. Any disclosure of proprietary or confidential information by Employee pursuant to Court Order shall not be considered a breach of this Agreement.

4.6            Irreparable Harm. Employee acknowledges that the unauthorized disclosure of any Employer proprietary or confidential information will give rise to irreparable injury to Employer, or customers of Employer, inadequately compensable in damages. Accordingly, Employer, or where appropriate customers or clients of Employer, shall be granted injunctive relief against a breach or threatened breach of the foregoing undertakings of non-disclosure in addition to any other legal remedies available. Employee further acknowledges and agrees that the covenants herein are necessary for the protection of Employer's legitimate business interests and are reasonable in scope and content.

5.            Compensation, Benefits and Payables

5.1            Compensation. Employee's starting salary shall be $6,000 per month during the first 90 days following execution of this agreement or after $500,000 in capital is raised. After such period of time, Employee's salary shall be increased to $10,000 per month. Should the company, in Employee's sole discretion as President, determine it in the best interest not to receive his entire monthly compensation, at any time, any such compensation shall be treated as deferred compensation and will accumulate on the books and provided to Employee at Employee's sole discretion, taking into consideration the funds available and the best interest of DMP. Employee acknowledges that he has already received 2,000,000 of DMP common stock for previous services as an advisor and consultant and further acknowledges that he has received 5,000,000 as incentive for executing this agreement.
 
 
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5.2            Performance Bonus . Employee shall be eligible for annual performance bonuses. All bonuses to be paid annually at the conclusion of all calendar year end financials. The amount of the performance bonus shall be determined by the Board of Directors and may be by way of monetary compensation, common stock, stock options, or a combination thereof.

5.3            Health Benefits During the Employment Term, DMP shall be responsible for paying Seventy five (75%) of any health insurance coverage for Employee and his dependants. Such amount shall not exceed $1,500 per month. Twenty five percent (25%) shall be paid by the Employee. Coverage to go into effect after the first 30 days of employment

5.4            Vacations Employee shall be entitled to accrue four (4) weeks paid vacation per calendar year of employment. Employee may take vacation time off at such times and for such periods as are mutually agreed upon by the DMP and Employee.

5.5            Reimbursement Of Business Expenses . All approved business expenses reasonably and properly incurred by Employee in promoting the business of the Company shall be reimburse by DMP to Employee, provided that:
a.       Each such expense is of a nature qualifying it as a proper deduction on the federal and state income tax returns of DMP; and

b.       Employee furnishes to DMP adequate records and other documentary
evidence required by DMP and federal and state statutes and regulations issued by the appropriate taxing authorities for the substantiation of each such expense as an income tax deduction.

5.6            Miscellaneous Benefits. DMP. shall provide Employee, at the sole cost to DMP with a cell phone, fax, computer and internet service.

6.            Termination. Either party may terminate this agreement at any time upon 30 days written notice to the other party.

7.            Return Of Materials . Upon the request of DMP or upon termination of Employee's employment., Employee shall deliver to DMP all written and tangible material in his possession or control that incorporates proprietary and confidential information or otherwise relates to DMP's or any customer's business, including, but not limited to, all office equipment, hardware, computer's, blue prints, notebooks, documents, software, manuals, memoranda, reports, files, samples, books, correspondence, lists, or other written, magnetic or graphic records, and the like, including all copies and extracts thereof in any form. This obligation with respect to proprietary or confidential information extends to information belonging to customers of DMP who may have disclosed such information belonging to customers of DMP who may have disclosed such information to Employee as the result of his status as an employee of the Company.

8.            Conflict Of Interest . Employee shall conduct the business DMP to avoid actual or potential conflicts of interest and shall immediately report to the Board of Directors any actual or potential conflicts of interest. A potential or actual conflict of interest exists when business dealings with an outside firm or person result in unusual gain for that firm or person. Unusual gain means illegal or unauthorized referrals, bribes, product bonuses, special fringe benefits, unusual price breaks and other windfalls designed to ultimately benefit the outside firm or person. A potential or actual conflict of interest also exists when an employee of DMP is in a position to influence a decision that may result in a personal gain for an employee of DMP or for a relative of the employee as a result of DMP's business dealings. Personal gain results when an employee or relative receives any promotional item, insurance company compensation, kickback, bribe, substantial gift or special consideration as a result of any transaction or business dealings involving DMP or its employees. For purposes of this Section 8, a relative is any person who is related by blood or marriage, or whose relationship with the employee is similar to that of persons who are related by blood or marriage.
 
 
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9.            Costs and Expenses. Each of the parties shall pay all costs and expenses incurred or to be incurred by them in negotiating and preparing this Agreement and in closing and carrying out the transaction contemplated by this Agreement.

10.            Enforceabilitv If any provision of provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever, the validity, legality and enforceability of the remaining provisions of this agreement shall not in any way be effected or impaired thereby. To the fullest extent possible, the provisions of this Agreement (including, without limitation, each provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provisions held invalid, illegal or unenforceable.

11.            Modifications . No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both parties hereto. No waiver of any other provisions hereof (whether or not similar) shall be binding unless executed in writing by both parties hereto, nor shall such waiver constitute a continuing waiver.

12.            Arbitration . Any controversy relating to this Agreement shall be submitted to and settled by binding Arbitration in accordance with the rules of the American Arbitration Association which are in effect at the time the demand for Arbitration is filed. In the event that an Arbitrator requests reasonable compensation for serving as such, the parties agree to share equally the costs of such compensation.

13.            Entire Agreement. This Agreement constitutes the entire agreement between the parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties.

14.            Binding Agreement. This Agreement shall be binding on, and shall inure to the benefit of, the parties to it and their respective heirs, legal representatives, successors and assigns.

15.            Attorney Fees/Cost. If any legal action or Arbitration or other proceeding is brought for the enforcement of this Agreement, or because of an alleged breach, dispute, default or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party shall be entitled to recover reasonable attorneys fees and other costs incurred in that action or proceeding.

16.            Counterparts . This Agreement shall be executed in any one or more counter parts, each of which shall be deemed an original, but all of which shall constitute one document.
 
17.            Governing Law . This Agreement shall be construed in accordance with, and governed by the laws of the State of California.
 
18.            Separate Counsel. Each party acknowledges that they were advised that they were entitled to separate counsel and they have either employed such counsel or voluntarily waived their right to consult with counsel.

 
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19.            Headings . The various headings and numbers herein and the grouping of provisions of this Agreement into separate divisions are for the purpose of convenience only and shall not be considered a part hereof. The language in all parts of this Agreement shall in all cases be construed in accordance to its fair meaning as if prepared by all parties to the agreement and not strictly for or against any of the parties.

20.            Notices . All notices or other communications DMP hereunder shall be in writing and addressed to DM PRODUCTS and in care of the DMP's Secretary at the Company's main office address. Any notice required to be given or delivered to Employee shall be in writing and addressed to Employee at the address indicated below Employee's signature line on this Agreement. All notices shall be deemed to have been given or delivered upon personal delivery or upon deposit in the United States mail, postage prepaid and properly addressed to the party to be notified.

IN WITNESS WHEREOF, the parties to this Agreement have duly executed it effective on the day and year herein written.

DM PRODUCTS
a California corporation


/s/ Kurtis Cockrum             /s/ Michael S. DeBenon
Kurtis Cockrum, Employee         Michael S. DeBenon, President
 
 
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Law Offices
Of
MICHAEL S. DEBENON, ESQ.
575 Anton Boulevard, Ste. 300
Costa Mesa, CA 92626
Phone: (714) 432-6551                                           Fax: (714) 964-7344


ATTORNEY-CILENT MONTHLY RETAINER AGREEMENT

This is the written fee agreement ("Agreement") that California law requires attorneys to have with their clients. The Law Offices of Michael S. DeBenon, (hereinafter referred to as "Attorney") will provide legal services to DM Products, Inc. ("Client") on the terms set forth below.

1.  
CONDITIONS. This Agreement will not take effect, and Attorney will have no obligation to provide legal services, until Client returns a signed copy of this Agreement.

2.  
SCOPE OF SERVICES. Client hires Attorney to provide legal services as general counsel for client on a month to month basis.  Attorney will provide those legal services reasonably required to represent Client. Attorney will take reasonable steps to keep Client informed of progress and to respond to Client's inquiries. This Agreement will cover all services required by client that are within attorney's ability to perform. This will include all forms of communication, document review and preparation, litigation, and general advice.

3.  
CLIENT DUTIES. Client agrees to be truthful with Attorney, to cooperate, to keep Attorneys informed of any information or developments which may come to Client's attention, to abide by this agreement, to pay Attorney's bills on time and to keep Attorney advised of Client's address, telephone number and whereabouts. Client will assist Attorney in providing information and documents necessary for the representation in desired matter.

4.  
MONTHLY RETAINER. Client agrees to pay Attorney a flat fee of $6,000.00 per month, commencing July 1, 2009 and continuing until terminated by either party upon thirty (30) days written notice.

Client agrees to pay all monthly retainer fees within thirty (30) days after receipt from attorney of an invoice reflecting the amount then owed.

5.  
LEGAL FEES AND BILLING PRACTICES. Client understands and acknowledges current hourly rates for legal personnel are as follows:

Partners                           $300.00/hour

Associates                      $225.00/hour

Paralegals                        $175.00/hour

 
 

 

 
6. COSTS AND OTHER CHARGES.
 
(a)  In General Attorney will incur various costs and expenses in performing legal services under this Agreement. Client agrees to pay for all costs, disbursements and expenses in addition to the monthly fees. The costs and expenses commonly include fees fixed by law or assessed by public agencies, long distance telephone charges, messenger and other delivery fees, postage, photocopying and other reproductions costs, travel costs including parking, mileage, transportation, meals and hotel costs, investigation expenses and consultants' fees and other similar items. All costs and expenses will be charged at Attorney's cost.

 
(b) Out of Town Travel Client agrees to pay transportation, meals, lodging and all other costs of any necessary out-of-town travel by Attorneys' personnel.

 
(c) Consultants and Investigators To aid in the representation of Client's matter, it may become necessary to hire consultants or investigators. Client agrees to pay such fees and charges. Attorney will select any consultants or investigators to be hired and Client will be informed of persons chosen and their charges.

7.  
DISCHARGE AND WITHDRAWAL. Client may discharge Attorney at any time. Attorney may withdraw with Client's consent or for good cause. Good cause includes Client's breach of this agreement, refusal to cooperate or to follow Attorney's advice on a material matter or any fact or circumstance that would render Attorney's continuing representation unlawful or unethical. When Attorney's services conclude, all unpaid charges will immediately become due and payable. After services conclude, Attorney will, upon Client's request, deliver Client's file(s), and property in Attorney's possession, whether or not Client has paid for all services.
 
8.  
DISCLAIMER OF GUARANTEE AND ESTIMATES. Nothing in this agreement and nothing in Attorney's statements to Client will be construed as a promise or guarantee about the outcome of any matter. Attorney makes no such promises or guarantees. Attorney's comments about the outcome of the matters are expressions of opinion only.

9.  
ENTIRE AGREEMENT. This Agreement contains the entire Agreement of the parties. No other agreement, statement, or promise made on or before the effective date of this Agreement will be binding on the parties.

10.  
SEVERABILITY IN EVENT OF PARTIAL INVALIDITY. If any provision of this Agreement is held in whole or in part to be unenforceable for any reason, the remainder of that provision and of the entire Agreement will be severable and remain in effect.

  11.
MODIFICATION BY SUBSEQUENT AGREEMENT. This Agreement of the parties only by an instrument in writing signed by both of them or an oral agreement only to the extent that the parties carry it out.
 
 
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12.  
EFFECTIVE DATE. This Agreement will govern all legal services performed by Attorney on behalf of Client commencing with the date Attorney first performed services. The date at the beginning of this Agreement is for reference only. Even if this agreement does not take effect, Client will be obliged to pay Attorney's the reasonable value of any services Attorney may have performed for Client

DATED:   06-07-09



DM Products, Inc.


By: /s/  Kurt Cockrum        
   
 
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MANUFACTURING, MARKETING AND DISTRIBUTION
AGREEMENT

BANJO MINNOW

This Agreement ("Agreement") is by and between BANJO BUDDIES ("Banjo") a Maine Corporation, 100 Route 201, P.O. Box 100, The Forks, ME 04985 and DIRECT SUCCESS LLC #3 (''Direct Success"), 575 Anton Boulevard, Suite 590, Costa Mesa, California 92626, a California Corporation, both of which are sometimes referred to herein as a "party" or the "parties."

WHEREAS , Banjo has invented and developed a fishing lure product currently known as "Banjo Minnow" (the "Product”, and when more than one - "Products"); and

 
WHEREAS , Direct Success is in the business, among other things, of manufacturing, advertising, marketing and distributing products in various media, including television, print, and retail; and

WHEREAS , the parties wish to set forth in this Agreement their understanding of the terms, and conditions upon which Banjo will grant to Direct Success rights to manufacture, use, distribute, sell, advertise, promote and otherwise exploit the Products.

NOW THEREFORE in consideration of the premises and the mutual promises and undertakings set forth herein, and intending to be legally bound hereby, the parties agree as follows:

1.            Manufacturing, Marketing and Distribution Rights .

1.1            Grant of Rights . Banjo hereby grants to Direct Success during the Term the following rights (the "Manufacturing, Marketing and Distribution Rights"), which Direct Success may, but is not obligated to, exercise alone or through any one or rnore of its affiliates or contract out through other companies:

(a)            Generally . The exclusive right, license and privilege during
the Term (as hereafter defined) and throughout the World (the "Territory") to manufacture, use, distribute, sell, advertise, promote and otherwise exploit the Products and all improvements, line extensions and modifications thereof by any and all means and media, in any and all markets including but not limited to broadcast, cable, satellite and all other forms of television transmission now existing or hereafter developed, including without limitation, infomercials, commercial spots, promos, television shopping programs such as QVC and HSN, radio, electronic and computer retailing media (such as the Internet), an print media, direct mail solicitation, package inserts, inbound and outbound telemarketing, credit card syndication, CD-ROM, catalog sales, retail sales, and all other channels or means of distribution now existing or hereafter developed;
 
 
 

 
 
(b)            Use of Patents; Know-How; Secret Formula .   The right to use any U.S. and foreign patents that exist or that may issue that include claims embodied in, or that read on, the Product and on like or related matter developed, owned or controlled by Banjo (collectively referred to as the "Patents"), and all know- how and secret formulas that may be in the possession or control of Banjo relating to the manufacture of the Products;

(c)            Use of Trademarks .  The exclusive right to use any and all trademarks that Banjo may own or control with respect to the Product, including “Banjo” (the "Trademarks”), and the right to advertise, promote, market, sell and distribute the Products under or in connection with such other trademarks or identifying names or marks as Direct Success may determine.  Notwithstanding the above, Banjo will be allowed to market and distribute the Product and other products bearing the Banjo name on the internet, subject to the conditions noted in Section 2.4. Banjo warrants that it has the exclusive rights to use the Banjo trademark;

(d)            Use of Banjo’s Artwork .   The right to copy and use any and all artwork and promotional materials that Banjo may own or control with respect to the Products (“Banjo's Artwork”), copies of all of which Banjo shall make available to Direct Success for this purpose;
(e)            Names, Likenesses and Endorsements .   The right to use all names, likenesses (including, without limitation, photographs, illustrations, films and videotapes), endorsements and testimonials of all endorsers and other persons that Banjo may own or control with respect to the Products except Bill Dance, Joe Renosky, and any of Joe Renosky's suppliers;

(f)            Packages .   The right to develop such groupings, ensembles, configurations and packaging of the Products and either ancillary goods for sale as Direct Success may determine; and

(g)            Subdistributors .  The right to appoint such sub-distributors (other than Tristar) as Direct Success, in its sole judgment, may deem appropriate in order to market and distribute the Products.

1.2            Exclusivity .   During the term of this Agreement, Banjo shall not directly or indirectly, either alone or in participation with any other person or entity, engage in or be involved with manufacturing, marketing or distributing the Product, or any other products similar in design, composition, content or function to the Product, or any other product under the Banjo Minnow name, except through the Internet as noted in Section2.4 and except to and for the benefit of Direct Success as provided herein.

1.3            Prices .   Direct Success, in its sole judgment, shall have the right to sell and distribute the Products at such prices, and on such terms and conditions (including shipping and handling charges), as Direct Success may establish.

1.4            Qualitv Control .    Direct Success shall adhere to any reasonable requests and directions of Banjo relating to the maintenance of the quality of the Products manufactured pursuant to the terms of this Agreement.
 
 
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1.5            Third Party Contract Manufacturer .  Direct Success intends and is authorized to manufacture the Products by contract with a third party manufacturer.
 
2.            Consideration to Banjo .   Direct Success will pay Banjo a royalty on all sales including Test Marketing sales based on the combined amount of Television Gross Sales and Other Gross Sales (“Combined Sales”). For cumulative Combined Sales less than $10,000,000.00 the royalty percentage will be three percent (3%); for Combined Sales from $10,000,000.00 to $20,000,000.00 the royally percentage will be increased to four percent (4%); and for Combined Sales in excess of S20,000,000.000 the royalty percentage will increase to five percent (5%).

2.1           Royalties will be paid be paid quarterly within 30 days of each quarter's end by Direct Success to Banjo on Television Gross Sales, as defined below, and Other Gross Sales as defined below, in accordance with the provisions below (the aforesaid royalties are sometimes referred to collectively herein as "Royalties"). Royalty statements shall accompany all royalty payments and itemize Kits and Upsells and, where practicable, the categories of sales, media expenditures and prices charged for the Products. Delinquent royalty payments shall bear interest at 10% per annum.

2.2           "Television Gross Sales" shall mean the gross monies received by Direct Success or any Direct Success parent, subsidiary or affiliated company or otherwise credited to Direct Success's account any wherein the Territory in connection with the sale of Product and Upsell via inbound telephone calls, remittances mailed in, or other means, in response to the televising of the Commercial, after deducting therefrom:

(a)           All payments to customers on account of rejection or return of any products;

(b)           All losses due to credit card chargebacks and bad checks;

(c)           All applicable state sales taxes if collected; and

In the event Direct Success assigns or retains a third party to independently market the Product on television in the United States, the applicable royalty percentage noted in Section 2 above due Banjo shall accrue and be paid by Direct Success on sales as if they were made by Direct Success.
 
 
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2.3           “Other Gross Sales” shall mean the gross monies received by Direct Success or credited to Direct Success's account anywhere in the Territory in connection with the sale of Product and Upsell via any means or media other than those specified as Television Gross Sales including, without limitation, cross promotion, continuity, radio, print, direct mail, direct sales, telemarketing and telemarketing reads, credit card syndication, catalogs, retail and wholesale, after deducting therefrom:
(a)           All payments to customers on account of rejection or return of any products;

(b)           All losses due to credit card chargebacks and bad checks;

(c)           All applicable state sales taxes if collected; and

2.4(a)            Internet Kit Sales . Direct Success shall assume exclusive management of Internet Kit Sales operations (i.e. all revenues and expenses shall belong to Direct Success until such time that this Agreement is terminated or Direct Success returns management operations of Internet Kit Sales to Banjo) from the date the Infomercial first airs/tests. If Direct Success elects not to continue ownership and management of Internet Kit Sale, Banjo may, at its option, purchase as much as 60 days of inventory (if available) from Direct Success at Direct Success' costs; Direct Success shall pay Banjo a non refundable but recoupable monthly royalty advance of $2,700.00 ($32,400.00/12) due on the date the Infomercial first airs/tests and on each 30 day anniversary thereafter. This $2,700.00 non-refundab1e but recoupable monthly advance will continue to be paid by Direct Success to Banjo at the beginning of each month that Direct Success desires to retain management of these operations. To maintain management and ownership of Internet Kit Sales, Direct Success shall pay Banjo an additional advance calculated as the difference between$32,400.00 less the total of the previously paid monthly non-refundable advances of $2,700.00 on or before six months from the date the Infomercial first airs/tests. During the time Direct Success assumes management and operations for Internet Kit Sales, these sales will be treated as Other Gross Sales for royalty calculation purposes.

(b) Internet Parts Sales. Banjo shall market Internet Part Sales and other non-kit products bearing the Banjo name at its own expense and shall retain all profits from its efforts until such time as Direct Success, at its option, elects to assume management of operations of Internet Parts Sales. Direct Success shall provide a link to Banjo's website on any website created by Direct Success for Products sales until such time that Direct Success elects to assume the management of operations of Internet Part Sales. At that time, all revenues and expenses will belong to Direct Success until this Agreement is terminated, at which time they shall revert back to Banjo. If Direct Success assumes ownership and management of Internet Part Sales, Direct Success will purchase Banjo's non-defective existing parts inventory from Banjo at Banjo's costs. Direct Success shall pay Banjo a non refundable but recoupable monthly royalty advance of  $2,000.00 due on the date the Infomercial first airs/tests and on each 30 day anniversary thereafter. This $2,000.00 non-refundable but recoupable monthly advance will continue to be paid Banjo at the beginning of each month until Direct Success elects to assume management of these operations. To maintain management and ownership of Internet Part Sales, Direct Success shall pay Banjo the difference between S18,000.00 less the total of the previously paid monthly non-refundable advances of S2,000.00 on or before six months from the date the Infomercial first airs/tests. During the time Direct Success assumes management and operations for Internet Parts Sales, these sales will be treated as Other Gross Sales for royalty calculation purposes.
 
 
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2.5           A Product shall be deemed to have been sold when payment has been received therefore.

2.6           Sale of Banjo Marketing Rights. Direct Success shall not knowingly sell its rights to any entity owned partially or in full by Tristar, Keith Mirchandani, or Joe Renosky . In the event Direct Success desires to sell its rights under this Agreement to an entity other than to Tristar, Keith Mirchandani, or Joe Renosky, Direct Success will pay Banjo a percentage of the net cash proceeds of such sale to Banjo within 30 days of receipt by Direct Success as follows:
If such Sale of Banjo Marketing Rights consummates within twelve (12) months from the date of the first airing of the Commercial Direct Success will pay Banjo forty percent. (40%) of the net proceeds; if such Sale of Banjo Marketing Rights consummates more than twelve (12) months but less than twenty four (24) months from the date of the first airing of the Commercial, Direct Success will pay Banjo thirty percent (30%) of the net proceeds; and if such Sale of Banjo Marketing rights consummates more than twenty four (24) months from the dateof the first airing of the Commercial, Direct Success will pay Banjo twenty percent (20%) of the net proceeds.  Net proceeds shall be defined as gross proceeds less any of the fol1owing: business broker costs, legal fees, escrow fees, any costs of inventory to be sold as part of the sale transaction, the amount of any outstanding indebtedness of Direct Success to be paid from the proceeds of the sale including capital and loans from Direct Success, Inc. and third party lenders or distribution partners, but excluding any loans to officers, directors, employees or other Direct Success insiders, any third party royalties on the sale, any prepaid royalties previously paid to Banjo, and any other costs directly associated with the sale, all of the foregoing to be determined under Generally Accepted Accounting Principles.

2.7           Music Royalties. Direct Success shall pay Banjo 50% of the music royalties it receives, if any, within 30 days of its receipt.

2.8            Audit Rights.    Direct Success shall maintain complete and accurate books and records with respect to all matters set forth herein. During the Term, and for a period of one (1) year thereafter, Banjo shall have the right, at Banjo's expense, not more than once in each annual calendar period, to have its representative examine Direct Success' books and records including, without limitation, all purchase orders, invoices, checks received, all debts and credits to customers, all records regarding the number of units of the Product sold, actual selling prices, shipping and handling charges, tax charges, fulfillment reports, telemarketing reports, airing dates, those parties from whom airtime was purchased, media expenses, and Royalties due to Banjo hereunder, and to make photocopies and extracts thereof. Such examination shall take place during normal business hours at the place where such books and records are regularly kept. Any adjustments in payment resulting from such examination shall be payable to Banjo within thirty (30) days after completion of such examination and the delivery to Direct Success of a written copy thereof. If any such examination shall determine that Direct Success has paid to Banjo less than ninety-five (95%) of the Royalties owed to Banjo for the subject accounting period(s), then Direct Success shall, upon demand, pay Banjo for the actua1 cost of conducting such examination.
 
 
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3.            Television Direct Response and Other Advertising

3.1            Commercial

(a)            Generally .  Direct Success shall, through its employees, agents and/or independent contractors, to produce a short and/or long form television commercial ("the Commercial") which will describe, display and promote the benefits to be derived from the use of the Product and offer the Product for sale to the general public.  Banjo has provided to Direct Success videotapes of “Live Strike" footage to be used in the Commercial.

(b)            Production/Editing . Production/editing work for the Commercial shall be performed at such studio location, or facility as may be determined by Direct Success in its sole judgment.  It is contemplated that such work will be done by Script to Screen, Inc. which has an affiliation with Direct Success. Direct Success shall he solely responsible for selecting and engaging hosts, product demonstrators and other persons to appear in the Commercial and any additional infomercials or commercials.  Direct Success shall at its expense, perform or cause to be performed all work necessary to produce and edit the Commercial.

3.2            Broadcast of Commercial .  Direct Success shall have exclusive control over and shall be responsible for the broadcast, performance, and transmission of the Commercial via broadcast, cable and satellite television, at such times, with such frequency, in such markets, and on such networks and stations as Direct Success, in its sole judgment, may determine.

3.3            Test Marketing . If Direct Success does not test the Commercial on or before January 1,2004 or when product is available, whichever is later, this Agreement shall terminate. Direct Success will conduct test marketing of the Products by airing the Commercial, at its own expense, at such times, with such frequency, in such markets, and on such networks and stations as Direct Success, in its sole judgment may determine (“Test Marketing”). Direct Success shall evaluate the results of the Test Marketing and determine, in its sole judgment, whether Test Marketing has been successful. This Agreement will terminate if Direct Success does not “roll out" the Commercial within six months that the infomercial first airs/tests.

3.4            Advertising and Distribution Costs .  Direct Success shall bear all costs incurred in connection with the advertising, marketing and distribution of the Products by Direct Success, including the costs of purchasing media, order processing, payment processing, order fulfillment and Customer service.

3.5            Use of Wayne Hockmeyer as a Spokesperson . Direct Success shall use Wayne Hockmeyer in the Commercial as a spokesperson for the Product. Banjo will make Wayne Hockmeyer available to appear in the Commercial as a spokesperson for the Product, at no additional charge to Direct Success other than reasonable travel and accommodation related expenses.
 
 
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4.            Proprietary Rights .

4.1            Banjo's Intellectual Property .

(a)            Generally . Subject to the rights granted to Direct Success under this Agreement, all right, title and interest in and to the design of the Products, the Patents, Know-How, Trademarks, and Banjo's Artwork (collectively "Banjo's Intellectual Property"), is and shall remain the sole property of Banjo, and neither Direct Success nor any third party shall acquire any right, title or interest in Banjo's Intellectual Property by virtue of this Agreement or otherwise, except as expressly provided herein. Banjo shall have reasonable approval rights overuse of the Banjo Intellectual Property. Any unauthorized use of Banjo's Intellectual Property by Direct Success shall be deemed an infringement of the rights of Banjo therein. Direct Success shall not in any way or at any time dispute or attack the validity or contest the rights of Banjo in or to any of Banjo's Intellectual Property. The provisions of this Section 4.1(a) are subject in all respects to the accuracy of the representations and warranties of Banjo given pursuant to Section 5.3.

(b)            Enforcement of Rights . Banjo may at its expense enforce Banjo's rights in Banjo's Intellectual Property against infringement thereof.  If Direct Success requests Banjo enforce such rights and Banjo declines to do so, Direct Success shall have the right (but shall not be required) to enforce such rights, and may do so in Banjo's name with Banjo's written agreement. The party enforcing the rights shall be responsible for its own legal fees and expenses incurred in such enforcement efforts, but shall first be reimbursed for such expenditures from any recovery obtained.  All monies recovered in excess of such expenditures shall be treated as Other Gross Sales and will be subject to the royalty noted in Section 2. Direct Success shall fully inform Banjo of the status of any such enforcement efforts undertaken by Direct Success.

4.2            Direct Success' Intellectual Property . All right, title and interest in and to the entire editorial, visual, audio, and graphic content of all advertisements and promotional materials developed by Direct Success in connection with its activities under this Agreement, any new trademarks developed by Direct Success to be used in conjunction with sales of the Product, any commercials that Direct Success produces including the Commercial, and all related materials and the contents thereof (collectively, "Direct Success' Intellectual Property") shall be and remain the sole property of Direct Success until this Agreement is terminated, and neither Banjo nor any third party shall acquire any right, title or interest in Direct Success' Intellectual Property by virtue of this Agreement or otherwise. Any unauthorized use of any of Direct Success' Intellectual Property by Banjo shall be deemed an infringement of the rights of Direct Success therein. Banjo shall not in any way or at anytime dispute or attack the validity or contest the rights of Direct Success in or to any of Direct Success' Intellectual Property. Notwithstanding the above, all strike footage and rights thereto provided by Banjo shall be returned to Banjo upon termination of this Agreement as well as all Commercial footage including source tapes and Banjo shall be assigned any of the intellectual property developed by Direct Success for the Product noted above.  All of the Direct Success rights and obligations in this Agreement shall be assigned including the rights to market the Commercial or any parts thereof to Banjo provided these rights haven't been sold pursuant to Section 2.6.
 
 
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4.3            Customer List . Direct Success may compile a list of the names and addresses of persons and entities who order the Products through it or its affiliates or are otherwise targeted by or on behalf of it or its affiliates as potential customers of the Products (the "Customer List"). The Customer list shall be the sole property of Direct Success, however fifty percent (50%) of any net revenue derived from the sale or rental of the list shall be paid from Direct Success to Banjo. Notwithstanding the above, upon termination, Banjo shall own the Customer List outright and be entitled to 100% of any revenue derived from its exploitation.
 
5.            Banjo's Representations, Warranties and Covenants .

5.1            Proprietary Rights . Banjo represents, warrants and covenants to Direct Success that:

(a)            Power and Authority . Banjo has and shall have all necessary power and authority to grant to Direct Success all of the rights and privileges granted pursuant to this Agreement.

(b)            No Infringement . Neither the granting of the rights and privileges granted hereunder nor the exercise thereof by Direct Success in accordance with the terns of this Agreement will, to the best of Banjo's knowledge and belief, infringe or otherwise violate the intellectual property or other proprietary rights of any person or entity.

(c)            No Adverse Claims . Banjo has not been and is not, as of the date of this Agreement, a party to any litigation enforcing or defending Banjo's rights in, to or with respect to the Products other than with Joe Renosky, and is not aware of any claims or demands made or threatened by any person or entity involving the validity of Banjo's rights in, to or with respect to the Products.

(d)            Applicable Patents, Copyrights, Trademarks and Licenses .
Banjo will at the time of execution of this Agreement, and thereafter, make available to Direct Success through its attorney, copies of all patents, patent applications, abstracts of all copyright registrations, copyright applications, trademark registrations, trademark applications, licenses and other agreements and instruments (and all amendments, supplements, and modifications thereof) relating to the Products which are now in existence or which Banjo shall obtain, file or enter into during the term of this Agreement.
 
 
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(e)            Intellectual Property Is Owned Solely by Banjo .  Banjo solely owns all of Banjo's Intellectual Property.
 
6.            Additional Representations and Warranties .Each party represents and warrants to the other as follows:

6.1            Power and Authority .  It has all requisite power and authority to enter into this Agreement, and has duly authorized by all necessary action the execution and delivery hereof by the officer or individual whose name is signed on its behalf below.

6.2            No Conflict . The execution and delivery of this Agreement by it, and the performance of its obligations hereunder, do not and will not conflict with or result in a breach of or a default under its organizational instruments or any other agreement, instrument, order, law or regulation applicable to it or by which it may be bound.

6.3            Binding Effect . This Agreement has duly and validly executed and delivered by it and constitutes its valid and legally binding obligation, enforceable in accordance with it terms.

7. Insurance .    Direct Success will obtain and maintain at its sole expense during the Term hereof a comprehensive general liability and product liability insurance policy with minimum limits of One Million Dollars ($1,000,000.00) per incident and Two Million Dollars ($2,000,000.00) in the aggregate as well as a product liability insurance policy, naming Banjo and its respective officers, directors, and employees as additional insured. Such insurance policies shall provide that they cannot be canceled or modified without the insured first giving Banjo a thirty (30) days prior written notice. Direct Success will indemnify and hold Banjo harmless from all claims arising out of the advertising materials or sale of the product (except with respect to any claim contesting Banjo's right to grant Direct Success the rights set forth in Section 1.1.

8.            Term . Unless sooner terminated in accordance, with the  provisions of Section 9, this Agreement shall remain in full force and effect for one year from the date the Infomercial first airs/tests (the "Initial Term"). This Agreement shall then be automatically extended for ten additional successive one-year periods (the "Extension Periods", which together with the Initial Term are herein referred to as the "Term") provided that Direct Success has paid Banjo, during the Initial Term and during each Extension Period, at least$90,000 in Royalties or fees in lieu of Roya1ties per year.

 
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9.            Termination .

9.1            Termination Events .
 
(a)            Expiration . Unless extended pursuant to the provisions of Section 8, this Agreement shall expire upon the expiration of the respective Term without the need for further action by either of the parties.

(b)            Election by Direct Success Not to Proceed .  If Direct Success determines at any time during the Term that it does not intend to continue with marketing of the Products, then Direct Success shall promptly notify Banjo and this Agreement, subject to the provisions of Section 9.3, shall terminate on Banjo's receipt of such notice. Notwithstanding the above, no termination shall relieve Direct Success' obligation to make royalty payments to Banjo on sales made on account for Direct' Success.

(c)            Termination Upon Breach .   Either party may terminate this Agreement upon 30 days written notice to the other party upon the material breach by the other party of any of its material representations, warranties, covenants or agreements contained in this Agreement.  Upon the expiration of such notice period, this Agreement shall terminate without the need for further action by either party; provided however, that if the breach upon which such notice of termination is based shall:

(i)           Have been fully cured to the reasonable satisfaction of the non-breaching party within such 30 day period, or

(ii)           Not be capable of cure within such 30 days but can be cured within a reasonable time thereafter, and the breaching party is taking reasonable steps to effect such a cure and it is in fact cured within 75 days, then such notice of termination shall be deemed rescinded, and this Agreement shall be deemed reinstated and in full force and effect. Such right of termination shall be in addition to such other rights and remedies as the terminating party may have under applicable law.

(d)            Early Termination for Failure to Broadcast Commercial .
This Agreement shall automatically terminate if Direct Success does not initiate test marketing of the Commercial promoting the Product in an amount of at least $50,000 in TV media buys on or before eight months following full execution of this Agreement unless the delay is beyond Direct Success' reasonable control.

9.2            Obligations Deemed Fulfilled in the Event of Early Termination .
Any early termination pursuant to Section 9.1(b) or (d) of this Agreement shall not be viewed to be a breach of this Agreement.  Unless either of the parties has separately breached a commitment made elsewhere in this Agreement, such parties shall be deemed to have fulfilled all of their obligations hereunder, except those which by their nature survive the termination of the Term (e.g. warranties and representations, payment obligations, confidentiality and indemnifications, etc.).

9.3            Limited Sales Rights After Termination . For a period of six months following the expiration or termination of the Manufacturing, Marketing and Distribution Rights granted in Section 1.1 of this Agreement, Direct Success shall retain non-exclusive rights to advertise, market, and sell the Products in the same manner at provided for in this Agreement until it has sold all of its existing inventory of the Product and any Product for which it placed a purchase order or for which it has entered into an agreement of sale provided Direct Success continues to pay Banjo its royalty.  Banjo may purchase any of Direct Success inventory at this time at Direct Success' costs plus ten percent (10%).
 
 
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10.            Confidentiality .

10.1            Generally . All customer lists, price lists, written and unwritten marketing plans, techniques, methods and data, sales and transaction data, all technology and know-how relating to the manufacture of the Products, and other information designated by either party as being confidential or a trade secret, shall constitute confidential information of such party (“Confidential Information”).  Either party receiving Confidential Information (a “Receiving Party”) from the other party (a "Conveying Party") shall hold all Confidential Information in the strictest confidence and shall protect all Confidential Information of the Conveying Party with at least the same degree of care that the Receiving Party exercises with respect to its own proprietary information. Without the prior written consent of the Conveying Party, the Receiving Party shall not use, disclose, divulge or otherwise disseminate any Confidential Information of the Conveying Party to any person or entity, except for the Receiving Party's attorneys, accountants and such other professionals as the Receiving Party may retain in order for it to perform and enforce the provisions of this Agreement.

10.2            Exceptions .  Notwithstanding Section 10.1, the Receiving Party shall have no obligation with respect to any Confidential Information o£ the Conveying Party which (i) is or becomes within the public domain through no act of the Receiving Party in breach of this Agreement, (ii) was lawfully in the possession of the Receiving Party without any restriction on use or disclosure prior to its disclosure in connection with this Agreement and the negotiations leading to this Agreement, (iii) is lawfully received from another source subsequent to the date of this Agreement without any restriction on use or disclosure, or (iv) is required to be disclosed by order of any court of competent jurisdiction or other governmental authority (provided in such latter case, however, that the Receiving Party shall timely inform the Conveying Party of all such legal or governmental proceedings so that the Conveying Party may attempt by appropriate legal means to limit such disclosure, and the Receiving Party shall further use its best efforts to limit the disclosure and maintain confidentiality to the maximum extent possible).

11.            Independent Contractor . No party or any of its officers, employees, agents or representatives is a partner, employee or agent of any other party for any purpose whatsoever. Rather, each party is and shall at all limes remain an independent contractor. No party has, nor shall it hold itself out at as having, any right, power or authority to create any contract or obligation, either express or implied, on behalf of, in the name of, or binding upon the other party, unless such other party shall consent thereto in writing. Each party shall have the right to appoint and shall be solely responsible for its own employees, agents and representatives, who shall be at such party's own risk, expense and supervision and shall not have any claim against any other party for compensation or reimbursement.
 
 
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12.            Force Majeure . In. the event of war, fire, flood, labor troubles, strike, riot, act of governmental authority, acts of God, or other similar contingencies beyond the reasonable control of either of the parties interfering with the performance of the obligations of such party, the obligations so affected shall be deferred to the extent necessitated by such event or contingency without liability, but this Agreement shall otherwise remain unaffected. Notice with full details of any circumstances referenced herein shall be given by the affected party to the other party, promptly after its occurrence. The affected party shall use due diligence, where practicable, to minimize the effects of or end any such event. Notwithstanding the above, no event of Force Majeure may extend either parties' obligations for more than one year.

13.            Further Actions . The parties agree to execute such additional documents and to perform all such other and further acts as may be necessary or desirable to carry out the purposes and intentions of this Agreement.

14.           Miscellaneous.

14.1            Notices .   All notices, requests, instructions, consents and other communications to be given pursuant to this Agreement shall be in writing and shall be deemed received (i) on the same day if delivered in person, by same-day courier or by telegraph, telex or facsimile transmission, (ii) on the next day if delivered by overnight mail or courier, or (iii) on the date indicated on the return receipt, or if there is no such receipt, on the third calendar day (excluding Sundays) after being sent by certified or registered mail, postage prepaid, to the party for whom intended to the fol1owing addresses:

If to Banjo:

Banjo Buddies                                                            Wayne Hockmeyer
100 Route 201, P.O. Box 100                                      1521 Alton Road, Ste. 630
The Forks, ME 04985                                                  Miami Beach, FL 33139
Attn: Wayne Hockmeyer
Fax No.:  ___/____- ______

If to Direct Success:

DIRECT SUCCESS LLC #3
c/o Direct Success, Inc. Managing Member
575 Anton Boulevard, Suite 590
Costa Mesa, California 92626
Attn: Tony Kerry, CEO
Fax No.: 714/558-1759

Each party may by written notice given to the other in accordance with this Agreement change the address to which notices to such party are to be delivered.
 
 
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14.2.            Entire Agreement . This Agreement contains the entire understanding of the parties and supersedes all prior agreements and understandings, whether written or oral, between them with respect to the subject matter hereof. Each Party has executed this Agreement without reliance upon any promise, representation or warranty other than those expressly set forth herein.

14.3            Amendment . No amendment of this Agreement shall be effective unless embodied in a written instrument executed by both of the parties.

14.4            Waiver of Breach .  The failure of any party hereto at any time to enforce any of the provisions of this Agreement shall not be deemed or construed to be a waiver of any such provisions, or in any way to affect the validity of this Agreement or any provisions hereof or the right of any party to thereafter enforce each and every provision of this Agreement. No waiver of any breach of any of the provisions of this Agreement shall be effective unless set forth in a written instrument executed by the party against which enforcement of such waiver is sought; and no waiver of any such breach shall be construed or deemed to be a waiver of any other or subsequent breach.

14.5            Assignability .  This Agreement shall be binding on and inure to the benefit of the parties hereto and their respective heirs, representatives, successors and assigns. Both patties hereto can assign their respective rights under this Agreement, but any such assignment shall not relieve such parties from their obligations contained herein.

14.6            Arbitration; Governing Law . All disputes relating to or arising out of this Agreement shall be resolved by mandatory, binding arbitration with the American Arbitration Association, under the rules of expedited procedure in or near Santa Ana, California.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of California. The arbitrator shall he asked to render a reasoned written opinion. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

14.7            No Representation as to Extent of Sales .  Notwithstanding the minimums required to maintain the license, Direct Success has not made and does not hereby make any representation or warranty with respect to the extent or volume it may achieve in the sale or other exploitation of the Product hereunder. Direct Success shall make such effort to exploit successfully the Product and the related rights herein granted as it may determine in accordance with its business judgment; however, Banjo recognizes and acknowledges that such matters are speculative and agrees that the judgment of Direct Success and its related companies or licensees in regard to any such matters shall be binding and conclusive upon Banjo. Banjo agrees that it will not make any claim nor shall any liability be imposed upon Direct Success based upon any claim that more or better business could have been done than was actually obtained or done by Direct Success or any of its related companies or licensees, or that better prices or terms could have been obtained.

14.8            Severability . All of the provisions of this Agreement are intended to be distinct and several. If any provision of this Agreement is or is declared to be invalid or unenforceable in any jurisdiction, it shall be ineffective in such jurisdiction only to the extent of such invalidity or unenforceability.  Such invalidity or unenforceability shall not affect either the balance of such provision, to the extent it is not invalid or unenforceable, or the remaining provisions hereof, or render invalid or unenforceable such provision in any other jurisdiction.
 
 
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14.9            Headings .The headings of sections and subsections have been included for convenience only and shall not be considered in interpreting this Agreement.

14.10            Full Execution Required; Counterparts; Facsimi1es . This Agreement shall not become effective unless and until fully executed by all proposed parties hereto. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same Agreement. This Agreement may be executed and delivered by electronic facsimile transmission with the same force and effect as if it were executed and delivered by the parties simultaneously in the presence of one another, and signatures on a facsimile copy hereof shall be deemed authorized original signatures.

IN WITNESS WHEREOF , the parties have caused this Agreement to be duly executed on the date last written below.


DIRECT SUCCESS LLC #3
By Direct Success, Inc.- Managing Member


By: /s/ Tony Kerry                                    10/10/03
Tony Kerry                                               Date
Chief Executive Officer

BANJO BUDDIES


By: /s/ Wayne Hockmeyer                       ______                                          
Wayne Hockmeyer                                  Date
President
 
 
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MODIFICATION OF MANUFACTURING, MARKETING AND DISTRIBUTION
AGREEMENT, DATED 10/16/2003
 
The Modification Agreement, dated April 30 th 2005, is entered into between Direct Success LLC # (“Direct Success”) and Banjo Buddies (“Banjo”) and is intended to modify and alter certain provisions of the Manufacturing, Marketing, and Distribution Agreement (“Agreement”) previously executed on or about October 10, 2003.
 
WHEREAS, the parties previously entered into a Manufacturing, Marketing and Distribution Agreement on or about October 10, 2003 which established the rights and obligations of Direct Success to manufacture, use, distribute, sell, advertise and promote the products described in said agreement; and
 
WHEREAS, Direct Success is current negotiating with Tristar Products, Inc. concerning the manufacturing, marketing and distribution of the Banjo Minnow; and
 
WHEREAS, The parties desire to hereby modify the terms of said Agreement for the mutual benefit of each party, and in connection of which is hereby acknowledged;
 
NOW THEREFORE, the parties agree as follows;
 
1.  
Section 1.1 (g) of the Agreement is hereby modified and replaced in its entirety to read as follows;” The right to appoint such sub-distributors as Direct Success, in its sole judgment, may deem appropriate in order to market and distribute the Products.” This modification specifically permits and allows Direct Success to contract with and appoint Tristar Products, Inc to manufacture, use, distribute, sell, advertise and promote the products described in said Agreement pursuant to the terms and conditions set forth in the Manufacturing, Marketing and Distribution Agreement between Direct Success and Tristar Products, Inc dated May ___,2005, a copy of which is attached as exhibit “A”. Notwithstanding the above Direct Success agrees that it will not approve any contract by Tristar with Joe Renosky or C&J. Plastics or any of their affiliates or any companies or individuals that were previously engaged by Banjo Buddies or Tristar in the manufacturing of Banjo products prior to the 2001 calendar year, and any changes to the original agreement between Tristar and Direct Success referred to above shall be made only with written approval of Banjo Buddies, as both Direct Success and Banjo Buddies view certain elements critical to the protection of both parties.
 
2.  
 Royalty set forth in Section 2 of the Agreement is hereby modified to reflect the following: Consideration to Banjo: Direct Success will pay Banjo a royalty on all sales including Test Marketing sales based on the amount of Direct Response Gross Sales and Retain Gross Sales. For cumulative Direct Response Gross Sales less than $10,000,000.00 the royalty percentage will be three percent (3%) for Direct Response Gross Sales from $10,000,000.00 to $20,000,000.00 the royalty percentage will be increased to four percent (4%); and for Direct Response Gross Sales in excess of $20,000,000.00 the royalty percentage will increase to five percent (5%). For cumulative Retail Gross Sales less than $10,000,000.00 the royalty percentage will be four percent (4%); for Retail Gross Sales from $10,000,000.00 to $20,000,000.00 the royalty percentage will be increased to five percent (5%); and for Retail Gross Sales in excess of $20,000,000.00 the royalty percentage will increase to six percent (6%).
 
 
 

 
 
            2.1     Royalties will be paid within 20 days of receipt by Direct Success from Tristar by Direct Success to Banjo on Direct Response Gross Sales, as defined below, and Retail Gross Sales, as defined below, in accordance with the provisions below (the aforesaid royalties are sometimes referred to collectively herein as “ Royalties”). Royalty statements shall accompany all Royalty payments and itemize Kits and Upsells and, where practicable, the categories of sales, media expenditures and prices charged for the Products Delinquent royalty payments shall bear no interest at 10% per annum for a period of one year and 18% thereafter.
 
                     2.2   “Direct Response Gross Sales” shall mean the gross monies received by Tristar Products, Inc., Direct Success or any Direct Success parent, subsidiary or affiliated company or otherwise credited to Direct Success’s account anywhere in the Territory in connection with the sale of Product and Upsell via inbound telephone calls, remittances mailed in, or other means, in response to the televising of the Commercial, and via any means or media other than those specified as Retail Gross Sales including, without limitation, internet sales, telemarketing and telemarketing reads, credit card syndication, catalogs after deducting therefrom:
 
                           (a) All payments to customers on account of rejection or return of any products;
 
                           (b) All loses due to credit card chargebacks and bad checks:
 
                           (c) All applicable state sales taxes if collected;
 
In the event Direct Success assigns or retains a third party independently market the Prodcut on television in the United States, the applicable royalty percentage noted in Section 2 above due Banjo shall accrue and be paid by Direct Success on sales as if they were made by Direct Success.
 
                     2.3 “ Retail Gross Sales” shall mean the gross monies received by Tristar Products, Inc., Direct Success or credited to Direct Success’s account anywhere in the Territory in connection with the sale of Products and Upsells to home shopping channels or retail establishments that intend on reselling the Products or Upsells to consumers, after deducting therefrom:
 
 
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(a) All payments to customers on account of rejection or return of any products;
 
                            (b) All loses due to credit card chargebacks and bad checks:
 
                            (c) All applicable state sales taxes if collected;
 
      3.      Section 2.6 of the Agreement is hereby modified to permit the licensing or sale of Banjo Marketing Rights pursuant to the terms and conditions set forth in the Manufacturing, Marketing and Distribution Agreement between Direct Success and Tristar Products, Inc dated May ____ 2005, a copy of which is attached as exhibit “A”.
 
      4.    Section 7 of the Agreement is hereby modified and replaced in its entirety to read as follows: “Direct Success will obtain and maintain at it sole expense, or require Tristar Products, Inc to obtain and maintain during the term a comprehensive general liability and product liability insurance policy with minimum limits of One Million Dollars ($1,000,000) per incident and Two Million Dollars ($2,000,000) in the aggregate naming Banjo, Direct Success and Tristar Products, Inc, their respective officers, directors and employees as additional insured’s. Such insurance policies shall provide that they cannot be cancelled or modified without the insured first giving Banjo a thirty (30) days prior written notice. Direct Success will indemnity and hold Banjo harmless from all claims arising out of the advertising materials or sale of the product (except with respect to any claim contesting Banjo’s rights to grant Direct Success the rights set forth in Section 1.1 of the agreement.
 
      5.       Section 8 of this Agreement is hereby modified to require the $90,000 in Royalties or fees in lieu of Royalties per year to extend the Agreement each year to be paid in the following manner:
 
For calendar year 2005:
 
No minimums for the first two quarters:
a minimum of $45,000 cumulative year to date through the end of the 3 rd quarter:
a minimum of $90,000 cumulative year to date through the end of the 4th quarter:
 
For yearly extensions thereafter:
a minimum of $22,500 cumulative year to date through the end of the 1st quarter:
a minimum of $45,000 cumulative year to date through the end of the 2nd quarter:
a minimum of $67,500 cumulative year to date through the end of the 3 rd quarter: and
a minimum of $90,000 cumulative year to date through the end of the 4th quarter
 
 
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5.1 In the advent that any minimum royalty payments due Banjo fall in arrears by 30 days or more, then Banjo shall have the right to notify Direct Success or its successor or successors by certified mail, that there is material breach of contract and that unless Banjo receives the full amount of payment due, within 15 days of receipt of said notice, then all rights to market, sell or promote its products are cancelled and returned to Banjo. No further action shall be required by Banjo should the full payment not be made within the stated 15 day time period. This action shall not, in any event, remove the obligations of any past or future royalties that are obligated under the original Agreement as stated in 2.1 above.
 
      6.     Section 9.3 of the Agreement is hereby modified to increase the time permitted Direct Success to retain the non-exclusive rights to advertise, market and sell the Products following expiration or termination of the Agreement from 6 months to one year as long as all Royalties are current and not in arrears.
 
      7.       Direct Success shall provide Banjo Buddies with copies of any and all reports it receives from media buyers, telemarketing companies and fulfillment houses pursuant to any and all agreements between Direct Success, Tristar and all vendors. The information anticipated by this paragraph shall include shipments to all retail vendors or distributors, retail accounts, receivable earnings and sales registers showing units sold and the dollar amount of cash sales invoice issued. Furthermore, the information shall include monthly statements concerning number of kits purchased to the number sold or inventory through all distribution channels.
 
     8.      If Tristar or any other subcontractor materially breaches its obligations under any distribution agreement. Direct Success shall, at its own expense, prosecute and vigorously litigate against the breaching party for all damages incurred. Banjo Buddies shall have the right to independently prosecute and litigate against any breaching party should Direct Success fail to act in a reasonable manner.
 
    9.    Any and all distribution agreements between Direct Success and a third party distributor shall in no case eliminate, reduce or impair the rights afforded Banjo Buddies in the original Manufacturing, Marketing and Distribution Agreement date October 3, 2003.
 
   10.      No change, alterations or design of the current Banjo Minnow or its logo shall be made by Direct Success or any subcontractor or distributor without the prior written consent of Banjo Buddies
 
   11.   Direct Success shall immediately inform Banjo Buddies of any and all disrepencies, failures to perform, failures to abide by written or oral agreements, or warnings of future failures, between Direct Success and any subcontractor or distributor.
 
   12.    Direct Success, nor any of its subcontractors or distributors shall alter the name “Banjo Minnow” on the products offered for sale without the express written consent of Banjo Buddies. Any new names, trademarks or other intellectual property developed by Tristar or in conjunction with the sale of the Banjo product shall become sole property of Banjo Buddies at the conclusion of the sell-off period noted in Paragraph 9.3 of the Manufacturing, Marketing and Distribution Agreement between Direct Success and Tristar Products, Inc.
 
 
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   13.    Any attempt by Direct Success or any of its subcontractors or distributors to remove or replace Wayne Hockmeyer as permanent spokes person shall require prior written approval of the board of directors of Banjo Buddies.
 
   14.    The Banjominnow.com website will have a permanent link to Banjominnowparts.com on which Wayne Hockmeyer shall be permitted to offer and sell fishing trips and competitions as well as display his email address wayne@banjominnow.com .
 
   15.       Wayne Hockmeyer shall have the right to maintain the e-mail address of wayne@banjominnow.com .
 
   16. Direct Success shall not assign the rights to sell parts (defined as any configuration of the Product that contains less than ten (10) fishing lures or packets of fishing lures of only one size with no limit on hooks, fish eyes, o-rings or weedguards) to Tristar, Joe Renosky, C&L Plastics or any of their affiliates without Banjo’s written permission.
 
   17.   It is expressly agreed upon and understood that the modification set forth in this document are entirely contingent on Direct Success entering into a Marketing and Distribution Agreement with Tristar Products, Inc for rights concerning the Banjo Minnow. The provisions of this document shall go into effect when an agreement with Tristar Products, Inc. is fully executed and Tristar pays Direct Success for its existing inventory.
 
 
By Direct Success, Inc- Managing Member
 

 
Dated: 5/6/05
 
/s/ Michael S. DeBenon
Michael S. DeBenon Secretary/Treasurer
 

Banjo Buddies
 

 
Dated: 4/20/05
 
/s /Wayne Hockmeyer
Wayne Hockmeyer, President
 
 
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MANUFACTURING, MARKETING AND DISTRIBUTION
AGREEMENT

Banjo Minnow

This Agreement (“Agreement”) is by and between DIRECT SUCCESS LLC #3, a Delaware limited liability company (“Direct Success”), and TRISTAR PRODUCTS, INC., a Pennsylvania corporation (“Tristar”), both of which are sometimes referred to herein as a “party” or the “parties”.

WHEREAS , Direct Success has the right to manufacture, market and sell throughout the World a fishing lure, which Direct Success is currently marketing under the trademark “Banjo” (the “Product”, and when more than one-“Products”); and

WHEREAS , Tristar is in the business, among other things, of manufacturing, advertising, marketing and distributing products in various media, including television, print, and retail; and

WHEREAS , the parties wish to set forth in this Agreement their understanding of the terms, and conditions upon which Direct Success will grant to Tristar certain rights to manufacture, use, distribute, sell, advertise, and promote the Products.

NOW THEREFORE , in consideration of the premises and the mutual promises and undertakings set forth herein, and intending to be legally bound hereby, the parties agree as follows:

1.  
Manufacturing, Marketing and Distribution Rights.

1.1.   Grant of Rights . Direct Success hereby grants to Tristar the following rights (the “Manufacturing, Marketing and Distribution Rights”), which Tristar may exercise alone or through any one or more of its affiliates:

(a)   Generally . The exclusive right, license and privilege during the Term (as hereafter defined) and throughout the World (the “Territory”) to manufacture, use, distribute, sell, advertise, and promote the Products in kit form (defined as any configuration of the Product that contains ten (10) or more fishing lures and related items) and including all improvements, line extensions and modifications thereof approved by Direct Success, however, excluding the parts business (defined as any configuration of the Product that contains less than ten (10) fishing lures or packets of fishing lures of only one size with no limit on hooks, fish eyes, o-rings or weedguards), by any and all means and media, in any and all markets, including but not limited to broadcast, cable, satellite and all other forms of television transmission now existing or hereafter developed, including without limitation, infomercials, commercial spots, promos, television shopping programs such as QVC and HSN, radio, electronic and computer retailing media (such as the Internet), all print media, direct mail solicitation, package inserts, inbound and outbound telemarketing, credit card syndication, CD-ROM, catalog sales, retail sales, and all other channels or means of distribution now existing or hereafter developed.  Tristar agrees to not knowingly sell to any entity whose primary source of revenue is derived through internet advertising and sales except for those who are specifically allowed to do so for Tristar under arrangements satisfactory to Tristar.  Tristar agrees to make federal excise payments due regarding any importation of the Product it may make.
 
 
 

 

(b)   Use of Patents . The right to use any U.S. and foreign patents that exist or that may issue on the Products and on like or related matter developed, owned or controlled by Direct Success (collectively referred to as the “Patents”), copies of which has been or will be provided to Tristar if Direct Success can obtain such copies from Wayne Hockmeyer.

(c)   Use of Trademarks . The right to use any and all trademarks that Direct Success may own or control with respect to the Products (the “Trademarks”), including the “Banjo” mark, and the right to advertise, promote, market, sell and distribute the Products under or in connection with such other trademarks or identifying names or marks as Tristar may determine subject to the approval of Direct Success which approval will not be unreasonably withheld;

(d)   Use of Direct Success’ Artwork . The right to copy and use any and all artwork and promotional materials that Direct Success may own or control with respect to the Products (“Direct Success’s Artwork”), copies of all of which Direct Success shall provide to Tristar for this purpose;

(e)   Names, Likenesses and Endorsements .  The right to use the names, likenesses (including, without limitation, photographs, illustrations, films and videotapes), endorsements and testimonials of all endorsers and other persons that Direct Success may own or control with respect to the Products;

(f)   Packages . The right to develop such groupings, ensembles, configurations and packaging of the Products and other ancillary goods for sale as Tristar may determine, however the retail packaging must first be submitted to Direct Success for its approval, which approval will not be unreasonable withheld, conditioned or delayed; and

(g)   Subdistributors . The right to appoint such subdistributors as Tristar, in its sole judgment, may deem appropriate in order to market and distribute the Products. Notwithstanding the above, Tristar agrees it will not contract with Joe Renosky or C&L Plastics or any of their affiliates or any companies or individuals that previously were engaged by Banjo Buddies or Tristar in the manufacturing of Banjo products prior to the 2001 calendar year.

1.2.   Non-Compete .  During the term of this Agreement, and except as may otherwise be permitted by this Agreement, Direct Success shall not in the Territory, directly or indirectly, either alone or in participation with any other person or entity, engage in or be involved with manufacturing, marketing or distributing the Product or any other fishing lure except as it may be sold in 2 parts configuration (and Direct Success may sell complete kits to customer who order parts and requests as part of the order one or a few kits), and Direct Success will use its best efforts to prevent any other individuals or entities from so manufacturing, marketing or distributing the Product. Notwithstanding the above, Tristar agrees to sell basic kits to Direct Success to be used in its fulfillment of part sales orders to individuals for $15.00 each or its direct costs plus $6.00, whichever is larger, plus freight and any applicable sales taxes. No royalty to Direct Success will be owned on these sales.
 
 
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During the term of this Agreement and for two years thereafter, provided that:

(i)   the advance for the Media Test (referenced in Section 1.8) from Tristar to Direct Success is timely repaid, and

(ii)   the Media Test is successful (as such term is defined in Section 1.8) or Tristar gives notice to Direct Success that it intends to go forward with this Agreement norwithstanding the results of the Media Test,

and except as may otherwise be permitted by this Agreement, Tristar and its chief executive officer shall not in the Territory, directly or indirectly, either alone or in participation with any other person or entity including Joe Renosky and/or C&L Plastics, engage in or be involved with manufacturing, marketing or distributing the Product or any other fishing lure.  To the knowledge of Tristar’s chief executive officer, no principal or officer of Tristar has any affiliation at the present time with Joe Renosky.

1.3.   Minimum Sales Requirements . Tristar shall not have any minimum sales requirement under this Agreement. However, extensions of the Term of this Agreement are subject to Tristar’s meeting certain minimum quarterly royalty payments, as described in Seciton 8 hereof.

1.4.   Prices .  Tristar, with Direct Success’ approval (to the extent permissible under law), which shall not be unreasonably withheld, shall have the right to sell and distribute the Products at such price ranges, and on such terms and conditions, as Tristar may establish.  In no case will Tristar sell the Products at or below cost without first offering to Direct Success the opportunity for Direct Success to purchase the Products at such price.

1.5.   Quality Control . Tristar shall adhere to any reasonable requests and directions of Direct Success relating to the maintenance of the quality of the Products manufactured, and the Trademark applied to such Products, pursuant to the terms of this Success and resin made in the United States and acceptable to Direct Success in all Banjo products.  Tristar agrees not to make any changes to the Product or kit form without approval from Direct Success (not to be unreasonably withheld).

1.6.   Third Party Contract Manufacturer . Tristar intends and is authorized to manufacture the Products by contract with a third party manufacturer.  Tristar will use its best efforts to use Medex in China as its manufacturer.  Tristar agrees to get approval (not to be unreasonably withheld) from Direct Success prior to any change in any product manufacturer.  Tristar further agrees that it will not impose restrictions on or encumber Eagle Claw, Mustad, or Medex with any agreements that would prevent them from supplying hooks or Products to Direct Success or Banjo Buddies at any time.

 
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1.7.   Royaties Due to Third Parties .  Direct Success represents that the only individuals or entities to whom compensation may be owing from Tristar’s sales of the Product are Banjo Buddies (as modified in 2005), Script to Screen, Inc., and Babe Winkleman, who collectively are owned no more than 7.75% of the adjusted gross sales of the Products. The exact amount owing to each is as stated in separate written agreements, copies of which have been provided to Tristar.  Direct Success assigns its rights in and to these contracts to Tristar and Tristar assumes those obligations thereunder of Direct Success which arise as a consequence of activities which take place after the date of this Agreement. Direct Success represents that as of the date of this Agreement, there is no default by any of thes parties to the aforesaid contracts.  Tristar agrees to provide supporting report documentation and make timely payments of the aforesaid royalties on a monthly basis directly to Direct Success who in turn shall forward reports and make the payments to the parties entitled to the royalties.  Tristar reaffirms and agrees that in the event it retains a third party to independently market at the Product in the United States, the applicable royalty due the Third Parties notes above will be calculated and paid by Tristar as if the sales were made by Tristar on the higher amount sold to (i) the ultimate seler to the consumer if sold by direct response television or direct response print, or (ii) the ultimate seller to the brick and mortar retail entity, cataloger, home shopping network or other end marketer.  Deliquent royalty payments due to Direct Success that are intended to be paid by Direct Success to Banjo Buddies shall bear interest at 10% per annum for a period of one year and 18% thereafter.

1.8.   Purchase of Existing Inventory . Tristar shall purchase from Direct Success the existing inventory of completed kits of the Product (between $5,000 and 58,000), as well as 25,000 + Big Fish kits, and 22,000+ VHS videos, all of which are currently completed and in Tennassee, at cost plus 10% as well as its hook inventory and work in progress that is at Medex in China, on the following terms and understanding.

On execution of this Agreement, Tristar will advance $100,000 to Direct Success.  This money may, at Tristar’s discretion, be paid by Tristar directly to Direct Success’ media agents for the purpose of purchasing television media time for the Commercial (the “Media Test”).  Direct Success will run the Media Test for the Commercial for two-three consecutive weeks for a total of $100,000 in media, to commence no later than May 9, 2005.  For this Media Test, the Commercial will be run, fulfillment completed, calls handled, ect. With the current vendors that Direct Success has been using, with any profits or losses accruing to the account of Direct Success, not Tristar.  Direct Success will provide to Tristar all reports it receives from the media buyer and fulfillment house during and at the conclusion of the Media Test.

The Media Test will be deemed successful is the Commercial results in sales of 2 to 1, meaning that gross receipts are twice the cost of media.  If the Commercial is successful, or if within 20 days following Tristar’s receipt of the full results of the completed Media Test Tristar gives notice to Direct Success in writing that it intends to go forward with this Agreement notwithstanding the results of the Media Test, Tristar will purchase all of the aforesaid inventory that remains.  If the Commercial is not successful, and if Tristar does not provide the aforesaid notice to Direct Success, this Agreement will be deemed terminated, and neither Tristar nor Direct Success shall have any further obligation hereunder, one to the other, except that Direct Success will repay the advance plus interest at the rate of 8% per annum from the date of money is advanced, to be repaid first from the net proceeds of the Media Test, but if the amount is insufficient the balance will be repaid to Tristar in full, with all accured interest, 30 days following the last day of the Media Test.

 
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1.9.   Tristar’s Transfer of Ownership of Prior Footage to Direct Success . Tristar hereby conveys to Direct Success such ownership and title to any existing footage of the Product as Tristar may have, and which may presently be in the possession of Script to Screen, Inc.  The previsions of this section will survive the termination of this Agreement.

2.  
Royalty to Direct Success .

2.1.   Amount of Royalty . Tristar shall pay Direct Success monthly a royalty equal to the fixed amount stated below, which varies based on the list wholesale price before freight charged by Tristar to the customer, on Tristar’s receipts from sales of the Product (collected invoices) through all channels of trade except through customers in the United States calling in on a toll free telephone number in direct response to airing of the infomercial (for which there will be no royalty paid to Direct Success, but the profits, if any, derived thereform will be split equally-see Section 3.4).  If Tristar includes freight for shipment of the Product to the customer in the wholesale price, the list wholesale price will be adjusted downward to reflect such cost.

List Wholesale Price Charged Customer
Amount of Royalty
Under $18.00
$4.00
$18.00 and above
$5.00

In the computation of the royalty, Tristar will take no deductions for returned Products, but may resale such returned Products without further payment of royalties thereon to Direct Success.  Tristar reaffirms and agrees that in the event it retains a third party to independently market the Product in the United States, the applicable royalty due Direct Success will be calculated and paid by Tristar as if the sales were made by Tristar on the higher amount sold to (i) the ultimate seller to the consumer if sold by direct response television or direct response print, or (ii) the ultimate seller to the brick and motar retail entity, cataloger, home shopping network or other end marketer.

2.2.   Reporting and Remittances: Review of Tristar’s Books .  All royalties shall be paid to Direct Success within 30 days of the close of the calendar month.  Tristar agrees to pay Direct Success interest at a per annum rate of 7%, compounded annually, on any payments made after the 30 days period.  Each payment made by Tristar to Direct Success shall be accompanied by an accounting statement setting forth the calculation of the amount of royalty shown thereby to be due to Direct Success for such period.  Direct Success shall  have the right to review the books and records of Tristar that pertain to the sale of the Products on a 14 day advance notice, provided the days of the audit are business days, and at reasonable intervals but not to exceed one time  in each calendar year, and provided further that the date selected does not conflict with vacation schedules or year-end auditing being conducted by Tristar’s own auditors.  Direct Success may be accompanied during the audit by a certified public accountant representing Banjo Buddies.  If the review reveals a shortage in the amount due to Direct Success for a twelve month period that is in excess of 5% of its entitlement, then Tristar will pay the actual, out-of-pocket third party costs of the audit.  In all cases, Tristar will promptly pay any shortfall revealed by the audit.

 
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2.3.   Reports from Service Providers .  Tristar shall direct its media buyer, telemarketing company, and all fulfillment houses to send to Direct Success copies of all the reports that it sends to Tristar as and when such reports are sent to Tristar, or otherwise to allow Direct Success the same electronic access to the information as is allowed to Tristar.  Each month Tristar will also provide third party documentation of shipments to all retail vendors or distributors, retail accounts receivable agings and sales registers showing units sold and the dollar amounts of each sales invoice issued, to the extent that this information is in Tristar’s possession.  Further, Tristar agrees to reconcile and provide monthly to Direct Success the number of kits purchased to the number sold or in inventory through all distribution channels.  Tristar agress to provide documentation from the Product manufacturer of its purchases each month.

3.  
Television Direct Response Advertising

3.1.   Assignment of Rights to Existing Commercial .  Direct Success represents to Tristar that it has produced and is presently airing a long form television commercial (“Commercial”) which describes, displays and promotes the benefits to be derived from the use of the Product and offers the Product for sale to the general public.  This Commercial is owned by Direct Success, however some of the footage belongs to Banjo Buddies or Wayne Hockmeyer, and Direct Success is not restricted in the locations at which the Commercial may be aired or in the length of time during which it can be used, provided it meets certain minimum royalty payments to Banjo Buddies.

Direct Success will provide to Tristar master tapes of Commercial and grants to Tristar and its designees the right to use the Commercial anywhere within the Territory for the promotion of the Products.  Direct Success represents that claims made about the Product in the Commercial have been documented and substantiated, and that the Commercial is in compliance with all applicable laws and regulations relating to the advertising and sale of the Product in the United States.  Direct Success shall provide to Tristar all such documentation and substantiation as Tristar shall request, to the extent such information is in Direct Success’ possession.

3.2.   Editing and Dubbing Existing Commercial .  Tristar is granted the right to edit and dub the Commercial in such manner and at such studio or facility as may be determined by Tristar in its sole judgment, but any creative changes must first be submitted to Direct Success for its approval, which approval will not be unreasonably withheld, conditioned or delayed.

3.3.   No Royalties Due to Producer or Talent . Direct Success represents to Tristar that neither the product of the Commercial (Script to Screen, Inc.) nor the talent appearing therein are entitled to royalties from the sales that Tristar may make with respect to the Products, except as in provided in Seciton 1.7 of this Agreement.

3.4.   Profits Split from Commercial Sales .  Tristar will split equally with Direct Success any profits that it earns from annual calendar year sales of the Products through the Commercial.  Tristar will use its own discretion to determine when any such profits will be distributed, but will split profits no less often than 60 days following the end of each calendar year.  It is envisioned by Tristar that there will be no or very little profits from the airing of the Commercial as it is the present intention of Tristar to air the Commercial at or below break-even in order to generate retail sales of the Product.  The definition of the Profits as it relates to this section only is Gross Receipts in response to television sales including Upsells and internet sales, less direct product costs, actual returns and bad debts, sales taxes collected, payments to media buyers whose commissions are not to exceed 10% fulfillment centers including freight, payments to telemarketing centers, payment of legal costs associated with allegations of product failures, substantiation of claims made about the products, or issues related to compliance with rules and regulations pertaining to sales of the Products, and royalties referred to in Section 1.7.
 
 
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4.  
Property Rights .

4.1.   Direct Success’ Intellectual Property .

(a)       Generally.     Subject to the rights granted to Tristar under this Agreement, all right, title and interest in and to the design of the Products, the Patents, Trademarks, Commercial, and Direct Success’ Artwork (collectively, “Direct Success’ Intellectual Property”), is and shall remain the sole property of Direct Success, and neither Tristar nor any third party shall acquire any right, title or interest in Direct Success’ Intellectual Property by virtue of this Agreement or otherwise, except as expressly provided herein. Any modifications to the Product developed and paid by Tristar and any trademarks developed by Tristar to be used in conjunction with sales of the Product shall be owned by Tristar. Any unauthorized use of Direct Success’ Intellectual Property by Tristar shall be deemed an infringement of the rights of Direct Success therein. Tristar shall not in any way or at any time dispute or attack the validity or contest the rights of Direct Success in or to any Direct Success’ Intellectual Property. The provisions of this Section 4.1(a) are subject in all respects to the accuracy of the representations and warranties of Direct Success given pursuant to Section 5.2.
 
(b)   Enforcement of Rights.    Direct Success may at its expense enforce Direct Success’ rights in Direct Success’ Intellectual Property against infringement thereof. If Tristar requests Direct Success to enforce such rights and Direct Success declines to do so, Tristar shall have the right (but shall not be required) to enforce such rights, and may do so in Direct Success’ name with Direct Success’ written agreement. The party enforcing the rights shall be responsible for its own legal fees and expenses incurred in such enforcement efforts, but shall first be reimbursed for such expenditures from any recovery obtained. All monies recovered in excess of such expenditures shall be paid to the party a suffering actual loss to the exten of such loss, and any amount remaining shall be shared equally by Tristar and by Direct Success. Tristar shall fully infrom Direct Success of the status of any such enforcement efforts undertaken by Tristar.
 
4.2.   Tristar’s Intellectual Property .  All right, title and interest and to the entire editoral, visual, audio, and graphic content of all advertisements and promotional materials developed by Tristar or nay of its distributors in connection with its activities under this Agreement, any new trademarks developed by Tristar to be used in conjunction with sales of the Product, and all related materials and the contents thereof (collectively, “Tristar’s Intellectual Property”) shall be and remain the sole property of Tristar during the Term, however after the Term, Tristar will assign to Direct Success all of Tristar’s right, title and interest in Tristar’s Intellectual Property subject to Tristar’s right to use it during the sell-off period described in Section 9.3 to dispose of remaining inventory. Any unauthorized use of any of Tristar’s Intellectual Property by Direct Success during the Term shall be deemed an infringement of the rights of Tristar therein. Direct Success shall not in any way or at any time dispute or attack the validity or contest the rights of Tristar in or to any of Tristar’s Intellectual Property during the term.

4.3.   Direct Success will assign to Tristar during the Term its rights to use the banjominnow.com website. Tristar agrees to use the banjominnow.com web address whenever it displays any web address in conjunction with the sale of any Banjo product. The banjominnow.com website will have a permanent link to sell fishing trips and competitions as well as display his e-mail address wayne@banjominnow.com . Direct Success will be allowed to sell Banjo parts on the banjominnowparts.com website.
 
 
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5.  
Direct Success’ Representations, Warranties and Covenants

5.1.   The Products . Direct Success represents, warrants and covenants to Tristar that:

(a)   Information. All information provided to Tristar by Direct Success relating to the Products is and will be, to the best of Direct Success’ knowledge and belief, true and correct, including without limitation regarding the effectiveness, quality, characteristics or fitness of the Products;
(b)   Substantiation. Direct Success will provide to Tristar all information in Direct Success possession or control with substantiates all claims made by Direct Success to Tristar about the Product; and
(c)   Compliance with FTC and other Rules, Regulations and Standards. The Product as presently packaged and sold by Direct Success and its designees is in compliance with all governmental requirement sin the Untied States, including all rules, regulations and standards of the Federal Trade Commission.

5.2.   Proprietary Rights. Direct Success represents, warrants and coveants to Tristar that:

(a)   Direct Success’ Intellectual Property. Direct Success owns or otherwise controls or shall own or otherwise control all right, title and interest in and to Direct Success’ Intellectual Property, which constitutes and shall constitue all of the intellectual property and other proprietary rights necessary or appropriate for the manufacture, marketing, distribution and sale of the Products provided certain conditions are met including minimum royalty payments purusuant to the Manufactoring, marketing and Distribution Agreement between Banjo Buddies and Direct Success LLC #3 executed on or about 10/10/03 and modified in April of 2005;
 
(b)   Power and Authority.    Direct Succes has and shall have all necessary power and authority to grant to Tristar all of its rights and privilgies granted pursuant to this Agreement:
 
(c)   No Infringement.   To the best of Direct Success’ knowledge, neither the granting of the rights and privileges granted hereunder nor the exercise thereof by Tristar in accordance with the terms of this Agreement will infringe or otherwise violate the intellectual property or other proprietary right of any person or entity;
 
(d)   No Adverse Claims.        Direct Success has not been and is not, as of the date of this Agreement, a party to any litigation enforcing or defending Direct Success’ rights in, to or with respect to the Products or any of Direct Success’ Intellectual Property, and is not aware of any claims or demands made or threatened by any person or entity involving the validity of Direct Success’ rights in, to or with respect to the Products or any of Direct Success’ Intellectual Property: and
 
(e)   Applicable Patents, Copyrights, Trademarks and Licenses. Direct Success will at the time of execution of this Agreement, and thereafter, provide Tristar with copies in its possession of all patents, patent applications, abstracts of all copyright registrations and other agreements and instruments relating to the Products and Direct Success’ Intellectual Property (and all amendments. Supplements and modifications thereof) which are now in existence or which Direct Success shall obtain, file or enter into during the term of this Agreement.

 
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5.3.   Other Warranties.     The warranties and representations of Direct Success set forth in this Section 5 and elsewhere in this Agreement are in addition to and without prejudice to all other warranties express or implied by law.

5.4.   No Warranty by Tristar.      Direct Success acknowledges that Tristar, by executing this Agreement and exercising its rights hereunder, makes no representation, warranty and endorsement or certification regarding the effectiveness, quality character or fitness of the Products.

6.  
Additional Representations and Warranties.    Each party represents and warrants to the other as follows:

6.1.   Power and Authority.   It has all requiste power and authority to enter into this Agreement, and has duly authorized by all necessary action the execution and delivery hereof by the officer or individual whose name is signed on its behalf below.

6.2.   No Conflict.   The execution and delivery of this Agreement by it, and the performance of its obligations hereunder, do not and will not conflict with or result in a breach of or a default under its organizational instruments or any other agreement, instrument, order, law or regulation applicable to it or by which it may be bound.

6.3.   Binding Effect.     This Agreement has duly and validity executed and delivered by it and constitutes its valid and legally binding obligation, enforceable in accordance with its terms.

7.  
Indemnification.
7.1.   By Tristar.
 
(a)   Generally.    Subject to Section 7.1 (b), Tristar shall defend, indemnify and hold harmless Direct Success and its affiliated companies and their respective officers, directors, shareholders, employees, licensees, agents, successors and assigns from and aginst any and all without limitation, claims, damages, judgements, awards, settlements, investigations, costs, and reasonable attorneys fees and disbursements (collectively “Claims”) which any of them may incur or become obligated to pay arising out of or resulting from the breach by Tristar of any of its representations, warranties, covenants, obligations, agreements or duties under this Agreement or including any claims arising out of a consumer’s use of Product.

(b)   Exceptions. Tristar shall have no duty under Section 7.1 (a) or otherwise to defend, indemnify or hold harmless with respect to any Claims which (i) arise out of or result from the breach by Direct Success of any of its representations, warranties, coveants, obligations, agreements or duties under this Agreement: or (ii) are subject to Direct Success’ duty to defend, indemnify and hold harmless pursuant to Section 7.2(a).

 
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7.2.   By Direct Success.

(a)   Generally.    Subject to Section 7.2(b), Direct Success shall defend, indemnify and hold harmless Tristar, its affiliated companies and their respective officer, directors, shareholders, employees, licenses, agents, successors and assigns from and against any and all Claims which any of them may incur or become obligated to pay arising out of or resulting from the breach by Direct Success of any of its representations, warranties, covenants, obligations, agreements or duties under the Agreement.

(b)   Exceptions.   Direct Success shall have no duty under Section 7.2(a) or otherwise to defend, indemnify or hold harmless with respect to any Claims which (i) arise out of or result from the breach by Tristar of any of its representations, warranties, covenants, obligations, agreements or duties under this Agreement; or (ii) are subject to Tristar’s duty to defend, indemnify and hold harmless pursuant to Section 7.1(a).

7.3.   Procedure.    Promptly after learning of the occurrence of any event which may give rise to it rights under the provisions of this Section 7, any party seeking to enforce such right (a “Claiming Person”) shall give written notice of such matter to the party against whom enforcement of such rights is sought (the “Indemnifying Party”). The Claiming Person shall cooperate with the Indemnifying party in the negotiation, compromise and defense of any such matter. The Indemnifying Party shall be in charge of and control such negotiations, compromise and defense and shall have the right to select counsel with respect thereto, provided that the Indemnifying Party shall promptly notify the Claiming Person of all material developments in the matter. In no event shall the Indemnifying Party compromise or settle any such matter without the prior consent of the Claiming Person, which shall not be bound by any such compromise or settlement absent its prior consent.
 
8.  
Term

Unless sooner terminated in accordance with the provisions of Section 9. This Agreement shall remain in full force and effect for 9 years or for so long as Tristar has paid, or accrued for payment and made payment within 30 days of each quarter’s end, calendar quarterly royalties to Direct Success in the amounts listed below (the “Term”):

1 st Quarter (2005)                                None
2 nd Quarter                               None
Each Quarter Thereafter $250,000

These royalties are exclusive of the royalties noted in Section 1.7.

Tristar may make up any shortfall in actual royalties by the payment of cash, in which case Tristar will be afforded a corresponding credit in future quarters during the same calendar year against actual, sub sequent royalties earned.

All payments of royalties shall be considered cumulative only within each calendar year.
 
 
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9.  
Termination

9.1.   Termination Events

(a)   Expiration.   Unless extended pursuant to the provisions of Section 8, this Agreement shall expire upon the expiration of the Term without the need for further action by either of the parties.

(b)   Election by Tristar not to Proceed.   If Tristar determines at any time during the Term, that it does not intend to continue with marketing of the Products, then Tristar shall promptly notify Direct Success and this agreement, subject to the provisions of Section 9.3 shall terminate on Direct Success’ receipt of such notice.

(c)   Termination Upon Breach .  Either party may terminate this Agreement upon 30 days written notice to the other party upon the material breach by the other party of any of its material representations, warranties, covenants or agreements contained in this Agreement. Upon the expiration of such notice period, this Agreement shall terminate without the need for further action by either party; provided, however, that if the breach upon which such notice of termination is based shall:

(i)   have been fully cured to the reasonable satisfaction of the nonbreaching party within such 30 day period, or
(ii)   not be capable of cure within such 30 days, but can be cured within a reasonable time thereafter, and the breaching party is taking reasonable steps to effect such a cure and it is in fact within 75 days,

Then such notice of termination shall be determined rescinded and this Agreement shall be deemed reinstated and in full force and effect. Such right of termination shall be in addition to such other rights and remedies as the terminating party may have under applicable law. Any uncured material breach by Tristar shall not relieve Tristar from the non-compete provisions of Section 1.2.

9.2.   Obligations Deemed Fulfilled in the Event of Early Termination.     Any early termination pursuant to Section 9.1 (b) of this Agreement shall not be viewed to be a breach of this Agreement. Unless either of the parties has separately breached a commitment made elsewhere in this Agreement, such parties shall be deemed to have fulfilled all of their obligations hereunder, except those by which their nature survive the termination of the Term (e.g. warranties and representations, payment obligations, confidentiality and indemnifications, etc.)

 
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9.3.   Limited Sales Rights After Termination.      Following the expiration or termination of the Manufacturing, Marketing and Distribution Rights granted in Section 1.1 of this Agreement, Tristar shall retain non-exclusive rights to advertise, market and sell the Products in the same manner as provided for in this Agreement for a period of six months or until it has sold all of its existing inventory of the Product, whichever is sooner. If at the end of six months there is any remaining inventory, Tristar will offer to sell the inventory to Direct Success at Tristar’s cost. If Direct Success does not then purchase the remaining inventory, Tristar shall have an additional six months in which to sell it as long as all Royalties in Sections 1.7 and 2.1 are current and not in arrears.

10.   Insurance.       Tristar will obtain and maintain at its sole expense during the Term hereof a comprehensive general liability and product liability insurance policy with minimum limits of One Million Dollars ($1,000,000.00) per incident and Two Million Dollars ($2,000,000.00) in the aggregate as well as a product liability insurance policy, naming Direct Success and Banjo Buddies and their respective officers, directors, and employees as additional insured. Such insurance policies shall provide that they cannot be canceled or modified without the insured first giving Direct Success a thirty (30) days prior written notice.

11.   Confidentiality.

11.1.   Generally.        All information which a party treats as confidential and which it advises the other party is confidential and all information which by its nature a party understands is intended to be kept confidential, is referred to herein as “ Confidential Information.” Confidential information does not include the names of retailers selling the Products where such retailers are known in the industry to be selling the Products. Either party receiving Confidential Information (a “Receiving Party”) from the other party (a “Conveying Party” shall hold all Confidential information in the strictest confidence and shall protect all Confidential Information of the Conveying Party with at least the same degree of care that the Receiving Party exercises with respect to its own proprietary information. Without the prior written consent of the Conveying party, the Receiving Party shall not use, disclose, divulge or otherwise disseminate any Confidential Information of the Conveying Party to any person or entity, except for the Receiving Party’s attorneys, accountants and such other professionals as the Receiving Party may retain in order for it to perform and enforce the provisions of this Agreement.
 
11.2.   Exceptions.        Notwithstanding Section 11.1, the Receiving Party shall have no obligation with respect to any Confidential Information of the Conveying Party which (i) is or become within the public domain through no act of the Receiving Party in breach of this Agreement, (ii) was lawfully in the possession of the Receiving Party without any restriction on use or disclosure prior to its disclosure in connection with this Agreement and the negotiations leading to this Agreement, (iii) is lawfully received from another source subsequent to the date of this Agreement without any restriction on use or disclosure, or (iv) is required to be disclosed by order of any court of competent jurisdiction or other governmental authority (provided in such latter case, however that the Receiving Party shall timely inform the conveying Party of all such legal or governmental proceedings so that the Conveying Party may attempt by appropriate legal means to limit such disclosure, and the Receiving Party shall further use it best efforts to limit the disclosure and maintain confidentiality to the maximum extent possible).

 
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12.   Injunction.   Each party acknowledges that a breach of obligations not to compete under Section 1.2 and/or of confidentiality under Section 11 will result in irreparable and continuing damage to the non- breaching party for which there will be no adequate remedy at law. Accordingly, in the event of any such breach, the non-breaching party shall be entitled to temporary and/or permanent injunctive relief and/or an order of special performance, without bond, with respect to such breach. Neither party shall oppose such relief on the grounds that there is an adequate remedy at law, and such right shall be cumulative and in addition to any other remedies at law or in equity (including monetary damages) which the non-breaching party may have upon the breach of either of the other party’s obligation of exclusivity or confidentiality hereunder. The non-breaching party may pursue such relief in either a court or by arbitration under Section 16.6, at its discretion.

13.   Independent Contractor. No party or any of its officers, employees, agents or representatives is a partner, employee or agent of any other party for any purpose whatsoever. Rather, each party is and shall at all times remain an independent contractor. No party has, nor shall it hold itself out at as having, any right, power or authority to create any contract or obligation, either express or implied, on behalf of, in the name of, or binding upon the other party, unless such other party shall consent thereto in writing. Each party shall have the right to appoint and shall be solely responsible for its own employees, agents and representatives, who shall be at such party’s own risk, expense and supervision and shall not have any claim against any other party for compensation or reimbursement.

14.   Force Majeure      In the event of war, fire, flood, labor troubles, strike, riot act of governmental authority, acts of God, or other similar contingencies beyond the reasonable control of either of the parties interfering with the performance of the obligations of such party, the obligations so affected shall be deferred to the extent necessitated by such event or contingency without liability, but this Agreement shall otherwise remain unaffected. Notice with full details of any circumstances referenced herein shall be given by the affected party to the other party, promptly after its occurrence. The affected party shall use due diligence, where practicable, to minimize the effects of or end any such event.

15.   Further Actions.       The parties agree to execute such additional documents and to perform all such other and further acts as may be necessary or desirable to carry out the purposes and intentions of this Agreement.

16.  
Miscellaneous

16.1.   Notices. All notices, requests, instructions, consents and other communications to be given pursuant to this Agreement shall be in writing and shall be deemed received (i) on the same day if delievered in person, by same-day courier or by email, telegraph, telex or facsimile transmission, (ii) on the next day if deleivered overnight mail or courier, or (iii) on the date indicated on the return recieot, or if there is certififed or registered mail, postage prepaid, to the party for whom intended to the following addresses:

If to Direct Success:
Direct Success LLC # 3
575 Anton Boulevard, Suite 300
Costa Mesa, California 92626

 
 If to Tristar:
Tristar Products, Inc
490-492 Route 46 East
Fairfield, New Jersey 07004
Attn: Keith Mirchandani, President
Fax No: (973) 575-6708
 
Each party may by written notice given to the other in accordance with this Agreement change the address to which notices to such party are to be delivered.

 
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16.2.   Entire Agreement. This Agreement contains the entire understanding of the parties and supersedes all prior agreements and understandings whether written or oral, between them with respect to the subject matter hereof. Each party other than those expressly set forth herein.

16.3.   Amendment. No amendment of this Agreement shall be effective unless embodied in a written instrument executed by both of the parties

16.4.   The failure of any party herto at any time to enforce any of the provisions of this Agreement shall not be deemed or construed to be a waiver of any such provisons, or in any way to affect the validity of this Agreement or any provisions hereof or the right of any party to thereafter enforce each and every provision of this Agreement. No waiver of any breach of any of the provisions of this Agreement shall be effective unless set forth in a written instrument executed by the party against which enforcement of such waiver is sought; and no waiver of any such breach shall be constructed or deemed to be a waiver of any other or subsequent breach.

16.5.   Assignability. This Agreement shall be binding on and inure to the benefit of the parties hereto and their repective heirs, representatives, successors and assigns. Both parties hereto cannot assign their respective rights under this Agreement without written agreement by the other party. Tristar agrees that the purchase of Direct Success by another entity will not terminate this agreement.

16.6.   Governing Law, Arbitration. This Agreement shall be governed by and construed in accordance with the internal laws of the State where any arbitration may be brought without regard to conflict of laws priniciples. The parties agree that all disputes arising out of or related to this Agreement, whether before or after its American Arbitration Assocation, in or near Newark, New Jersey if brought by Direct Success and in or near Santa Ana, California if brought by Tristar, with one arbiator. Counterclaims may be brought where the action is initially brought. The arbitrator shall be asked to render a reasoned, written decision. Judgement on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Tristar agrees that in the event it does not pay to Direct Success the royalties due and payable to Banjo Buddies noted in Section 1.7, that Banjo Buddies will be a third party beneficiary and allowed to pursue an arbitration action against Tristar under the terms of section 16.6.

 
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16.7.   No Representation as to Extent of Sales.   Notwithstanding the minimums required to maintain the license, Tristar has not made and does not hereby make any representation or warranty with respect to the extent or volume it may achieve in the sale of the Product hereunder. Tristar shall make such effort to market successfully the Product and the related rights herein granted as it may determine in accordance with its business judgment; however, Direct Success recognizes and acknowledges that such matters are speculative and agrees that the Judgment of Tristar and its related companies or licensee in regard to any such matters shall be binding and conclusive upon Direct Success. Direct Success agrees that it will not make any claim nor shall any liability be imposed upon Tristar based upon any claim that more or better business could have been done that was actually obtained or done by Tristar or any of its related companies or licensees, or that better prices or terms could have been obtained.

16.8.   All of the provisions of this Agreement are intended to be distinct and several. If any provision of this Agreement is or declared to be invalid or unenforceable in any jurisdiction, it shall be ineffective in such jurisdiction only to the extent of such invalidity or unenforceability. Such invalidity or unforceability shall not affect either the balance of such provision, to the extent it is not invalid or unforceable, or the remaining provisions hereof, or render invalid or unenforceable such provision in any other jurisdiction.

16.9.   Headings .  The headings of sections and subsections have been included for convenience only and shall not be considered in interpreting this Agreement.

16.10.   Full Execution Required: Counterparts: Facsimiles . This Agreement shall not become effective unless and until fully executed by all proposed parties hereto.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, and all of which shall constitute one and the same Agreement.  This Agreement may be executed and delivered by electronic facsimile transmission with the same force and effect as if it were executed and delivered by the parties simultaneously in the presence of one another, and signatures on a facsimile copy hereof shall be deemed authorized original signatures.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the date last written below.

TRISTAR PRODUCTS, INC.

By: /s/ Steven H. Sowers
Steven H. Sowers
Vice-President and CFO
Date: 5/11/05

DIRECT SUCCESS LLC #3
By Direct Success, Inc.-Managing Member

By: /s/ Mike Debenon
Mike Debenon
Secretary/Treasurer
Date: 5/6/05
 
 
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AMENDMENT AND ADDENDUM
 
TO MANUFACTURING, MARKETING AND DISTRIBUTION
 
AGREEMENT

 
Banjo Minnow
 
This is an amendment and addendum to the Agreement previously made and entered into (the "Original Agreement") by and between DIRECT SUCCESS LLC #3 and TRISTAR PRODUCTS, INC. (“Tristar”), which agreement is dated May 11,2005.
 
1.  
Modifications to Original Agreement . The Original Agreement is modified as follows:
 
a.  
Section 1.1.(a). Grant of Rights. Delete the next to the last sentence which says "Tristar agrees to not knowingly sell to any entity whose primary source of revenue is derived through internet advertising and sales except for those who are specifically allowed to do so for Tristar under arrangements satisfactory to Tristar."
 
b.  
Section 1.2. Non-Compete. Delete the following words contained in the next to the last sentence: "and for two years thereafter" and replace the deleted words with the following: "and thereafter for so long as Tristar is selling off its remaining inventory of the Product under Section 9.3 of this Agreement. II
 
c.  
Section 1.5. Quality Control. Delete the entire section.
 
d.  
Section 1.7. Royalties Due to Third Parties.
 
i.  
Delete the third sentence and add the following sentences in lieu thereof:
 
"Direct Success assigns its rights in and to these contracts to Tristar. Direct Success represents that as of the date of this Agreement, there is no default by any of the parties to the aforesaid contracts. Tristar agrees to provide supporting report documentation and make timely payments of the aforesaid royalties on a monthly basis directly to Banjo Buddies, Inc. and Babe Winkleman, providing copies of the reports to Direct Success, and to pay the royalties due to Script to Screen, Inc. directly to Direct Success who will in turn make the required payments to Script to Screen.
 
Tristar agrees to pay the royalties due to Banjo Buddies, Inc., Script to Screen, Inc. and Babe Winldeman as stated in separate agreements entered into between such parties and Direct Success, with the modification that for Banjo Buddies the royalty shall be five percent (5 %) for all sales of Products and Upsells made on and after January 1,2010 and that for each of calendar years 2010 and 2011 Tristar shall pay to Banjo Buddies a nonrefundable advance in the amount of $250,000.00 on the aforesaid royalties.
 
 
 

 
 
Tristar will pay the advance on such royalties for calendar year 2010 by on or before ten days following full execution and delivery of a Settlement Agreement between Banjo Buddies and Tristar with respect to certain litigation between them in the United States District Court for the Southern District of Georgia, Statesboro Division, Case No. CV609~030. Tristar will pay the advance on such royalties for calendar year 201] by on or before January 15, 2011.
 
All royalties paid, whether made as advances or made on actual sales, shall be considered cumulative during the Term, excluding the sell-off period described in Section 9.3, of this Agreement and may be applied against actual royalties due for sales of the Products and Upsells during the Term. As an example, if in 2010 Tristar sells $4 million of Products and Upsells, Tristar will have owed actual royalties to Banjo Buddies of 5% x $4 million = $200,000, but would have already paid to Banjo Buddies a $250,000 advance, so Tristar would in this example be entitled to carry forward into 2011 the excess advance of $50,000, which when combined with the advance to be made by Tristar for calendar year 2011 would result in Tristar having a credit for royalty advances to Banjo Buddies in the aggregate amount of $300,000 for 2011.
 
Tristar may extend the Term of this Agreement for six additional months, that is to and through June 30, 2012, by giving to Direct Success and to Banjo Buddies written notice (which may be bye-mail) that it (Tristar) elects to extend the Term. If Tristar does not provide the notice by on or before October 1, 2011, Direct Success or Banjo Buddies may send to Tristar written notice (which also may be by mail) to the attention of Tristar's President, with a copy to Tristar's Chief Financial Officer, stating that Tristar has 5 business days following receipt of the notice in which to provide the notice of Tristar's election to extend the Term of this Agreement and if Tristar does not provide written notice of its election to extend the Term within said 5 business days the election right shall expire and the Term shall end on December 31, 2011, subject to the sell-off period described in Section 9.3. If Tristar elects to extend the Term of this Agreement, Tristar will pay to Banjo Buddies an additional nonrefundable advance in the amount of$125,000.00 on royalties by on or before January 15, 2012.
 
If Tristar elects not to extend the Term as described above, Tristar shall not place any further purchase orders for Products with the third party product manufacturer from and following the date when Tristar's light to extend the Term has expired, except for any Products or parts required or anticipated to be needed to fulfill Tristar's warranty obligations to consumers.
 
If Tristar elects not to extend the Term as described above, Tristar shall as soon as possible provide to Banjo Buddies a report on Tristar's inventory of the Products as of October 1, 2011.
 
 
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As another example, assume that Tristar's sales in calendar year 2010 are $4 million and in calendar year 2011 are again $4 million and that Tristar elects to extend the Term. Tristar would have advanced a total of $625,000 in royalties to Banjo Buddies. As a consequence, Tristar would owe no further royalties to Banjo Buddies until Tristar’s sales for the period January 1,2012 through June 30, 2012 exceed $4.5 million, should that ever occur. To further extend this example, assume that Tristar's sales during the January 1, 2012 through June 30, 2012 period amount only $2 million, and that during the six month sell-off period provided by Section 9.3 of this Agreement Tristar sells an additional $1 million of Products and Upsells. For the six month sell-off period, Tristar will be required to pay monthly royalties to Banjo Buddies which in the aggregate will equal $50,000 by the conclusion of the sell-off period, and for which Tristar may not avail itself of any credit from the previously paid non-refundable advances on royalties.”
 
i.  
Delete the fifth sentence and add the following sentence in lieu thereof: "Tristar agrees to provide supporting report documentation and make timely payments of the aforesaid royalties on a monthly basis directly to the pm1y entitled to the royalty."
 
e.   Section 2.1. Amount of Royalty. Add at the end of the first paragraph: "The royalty to be paid on sales of the Product to customers outside of the United States shall be $2.40/unit. It
 
f.   Section 4.3. Internet Addresses. Delete all except for the last sentence.
 
g.   Section 8. Term. Delete all and insert the following in lieu of the present language:
 
"Unless sooner terminated in accordance with the provisions of Section 9, this Agreement shall remain in full force and effect through December 31,2011 (the "Term"). Tristar may extend the Term for an additional six months, that is to and through June 30, 2012, if Tristar complies with Section 1.7 of this Agreement."
 
h.   Section 9.3. Limited Sales Rights After Termination. Delete all and insert the following in lieu of the present language:
 
"Following the expiration or termination of the Manufacturing, Marketing and Distribution Rights granted in Section 1.1 of this Agreement, Tristar shall retain non­exclusive rights to advertise, market, and sell the Products in the same manner as provided for in this Agreement for a period of six months or until it has sold all of its existing inventory and inventory on order of the Product, whichever is sooner. During the aforesaid sell-off period, Tristar will offer to sell inventory it does not need to fulfill anticipated orders to Banjo Buddies at Tristar's cost plus the cost of shipping from Tristar to Banjo Buddies."
 
 
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i.  
Section 10. Insurance. Delete the last sentence.
 
2.   No Other Changes to Original Agreement. In all other respects, the Original Agreement shall remain the same, including but not limited to the Royalties owed by Tristar to Direct Success.
 
3.   Counterparts; Facsimiles. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, and all of which together shall constitute one and the same Agreement. This Agreement may be executed and delivered by electronic facsimile (including pdf) transmission with the same force and effect as if it were executed and delivered by the parties simultaneously in the presence of one another, and signatures on a facsimile copy hereof shall be deemed authorized original signatures.
 
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date last signed below.
 
TRISTAR PRODUCTS, INC.
 
 
 
/s/ Steven Sowers
DIRECT SUCCESS LLC #3
By: Direct Success, Inc.
Managing Member
 
 
By: Steven Sowers
By: /s/ Kurt Cockrum
Date: 2/26/10
Date: 2/26/10
AGREED:
 
BANGO BUDDIES, INC.
 
 
By: /s/ Vee Hockmeyer
 
Date: 2/26/10
 

 
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SETTLEMENT AGREEMENT AND RELEASE
 
This Settlement Agreement and Mutual General Release ("Settlement Agreement") is entered into on this 26day of February, 2010 by and between Direct Success, LLC #3 ("Direct"), and Banjo Buddies, Inc. ("Banjo''). For purposes of this Settlement Agreement, those named above may be referred to collectively as the "Parties."
 
RECITALS
 
A.   Direct and Banjo entered into a Manufacturing, Marketing and Distribution Agreement (the "Contract") on or about October 10, 2003. The Contract was later modified in writing.
 
B.      A dispute arose between the Parties regarding the Contract. Banjo claimed that Direct wall in breach of the terms of the Contract and demanded its termination.
 
C.     Direct denied the allegations, claiming no breach had occurred and demanded that the issue be arbitrated in California with the American Arbitration Association, Case No. #73­147-E-002982-09 (hereinafter "Arbitration"), as required under the terms of the Contract.
 
D.   The Parties desire to compromise and settle all claims between them arising out of the Contract, as well as any and all other claims and controversies which may exist between the Parties at the time of this Agreement. The Parties wish to resolve the issues between them amicably, without resort to further legal action and without making any admissions of liability.
 
AGREEMENT
 
NOW THEREFORE, in consideration of the mutual commitments, undertakings and agreements set forth below, the Parties stipulate and agree as follows:
 
1.   Termination of the Arbitration . Upon execution of this Settlement Agreement, the Plaintiffs agree to terminate the Arbitration by filing this Agreement with the American Arbitration Association. This Agreement entirely resolves the arbitration and litigation between· the parties.
 
2.   Mutual General Release and Discharge . Banjo hereby releases and discharges Direct, including its servants, agents, heirs, officers, directors, members, attorneys, representatives, stockholders, subsidiaries, affiliates, partners, assigns, predecessors, successor­-in-interest, and contractors; and all other persons and entities with whom Direct has been or is affiliated, from any and all actions, causes of actions, debts, claims, and demands of every name and nature, both at law and in equity, against Direct which Banijo had, now has, or may have on account of claims, cross claims or counterclaims asserted in the Arbitration.
 
Direct hereby release and discharges Banjo, including its servants, agents, heirs, officers, directors, members, attorneys, representatives, stockholders, subsidiaries, affiliates, partners, assigns, predecessors, successor-in-interest and contractors; and all other persons and entities with whom Banjo has been or is affiliated, from any and all actions, causes of actions, debts, claims, and demands of every name and nature, both at law and in equity, against Banjo which Direct had, now bas, or may have on account of the claims, cross claims or counterclaims asserted in the Arbitration.
 
 
 

 
 
3.   Agreement to be Exceuted Concurrently with Tristar and Banjo Agreement . Notwithstanding the foregoing, the existing contracts between Banjo and Direct remain in full force and effect, except to the extent that they conflict with the terms of the Settlement Agreement between Banjo and Tristar that is attached hereto as Exhibit "1," in which case the terms of Exhibit 1 shall constitute the continuing obligations of the parties and shall remain the binding and enforceable and shall survive the execution of this mutual general release.
 
4.   Waiver of Royalty Payment By Direct to Banjow. Following execution of this agreement, Banjo agrees to waive any and all royalty payments required by Direct pursuant to the provisions of the Manufacturing, Marketing and Distribution Agreement dated October 10, 2003 and the subsequent Modification to said Agreement dated April 30, 2005 to the extent that those royalty payments are controlled by Exhibit 1.
 
5.   Waiver of Royalty Payment By Banjo to Direct . Following execution of this Agreement. Direct agrees to waive any and all royalty payments required by Banjo that Banjo may have owed, currently owe, or win owe in the future pursuant to internet parts sales and small parts sales of the product.
 
6.   Entire Binding Agreement . This Settlement Agreement, with its incorporation of Exhibit 1, represents the entire understanding and agreement among the Parties with respect to the subject matter hereof and cannot be amended, supplemented or changed in any respect, except by a written instrument signed by the Parties. This Settlement Agreement, with its incorporation of Exhibit , supersedes all prior negotiations, understandings, agreements or representations, written or verbal, by or between the Parties with respect to the subject matter hereof. The Parties acknowledge and agree that there are no other oral understandings representations or agreements between them regarding the subject matter of this Settlement Agreement.
 
7.   Joint participation in Preparation of Agreement . Each Party hereby acknowledges and agrees that this Settlement Agreement, with its incorporation of Exhibit 1, is being entered into voluntarily and knowingly and is not based on any representations or statements of any kind made by any party or their representatives as to the merits, legal liability or value of any Party's claims or matters relating thereto. Each Party further agrees and declares that the terms of this Settlement Agreement have been read and are fully understood by such Party and that, except as expressly set forth herein, this is a full and final release of all claims of every nature and kind which such Party may have now or in the future, or may ever have had against any other Party to this SettIement Agreement. Each Party executes this Settlement Agreement voluntarily with full knowledge of its significance and consequences. The Parties further agree, having freely negotiated this Agreement, that there can be no claim of fraudulent inducement of this Agreement.
 
 
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8.   Severability . If any of the provisions herein are determined to be invalid by a Court or government agency of competent jurisdiction, the invalid provision shall be severed from the Settlement Agreement and all other provisions shall remain valid and enforceable.
 
9.   Full Execution; Counterparts; Facsimile Execution . This Settlement Agreement shall become binding on the parties hereto at the time of the last of them to execute it below. This Settlement Agreement may be executed in counterparts and by facsimile (including scanning), all of which together shall for all purposes constitute one agreement binding on each of the parties hereto, notwithstanding that each such party shall not have signed the same counterpart.
 
10.   Attorneys' Fees . In the event of it subsequent action to enforce any provisions of this Agreement. the prevailing party will be entitled to an award of tile attorneys' fees reasonably incurred.
 
THE PARTIES HAVE READ THE ABOVE AGREEMENT, HAVE HAD THE OPPORTUNITY TO DISCUSS IT WITH THEIR ATTORNEYS, AND ATTEST THAT THEY FULLY UNDERSTAND AND KNOWINGLY ACCEPT ITS PROVISIONS IN THEIR ENTIRETY WITHOUT RESERVATION, AND THAT THEY HAVE HAD SUFFICIENT TIME TO EVALUATE AND ASSESS THIS AGREEMENT.
 
11.   No Admission . The Plaintiff and Defendant, and each of them, further understand and agree that neither the payment of any sum of money, nor the execution of this Agreement shall constitute or be construed as an admission of any liability whatsoever by the Releases, or any of them, who have all consistently taken the position that they have no liability each to the other.
 
12.   Entire Agreement . The Plaintiff and Defendant. and each of them. further declare and represent that no promise or inducement, or agreement not herein expressed has been made to them, and that this Agreement contains the entire agreement between the parties hereto, and that the tenns of this Agreement are contractual and not a mere recital
 
This Settlement Agreement constitutes the entire agreement between the parties hereto and supersedes any and all prior o.ral, written or other agreements between the parties hereto. negotiations and discussions. This Settlement Agreement can only be amended in writing.
 
13.   Inurement . This Agreement shall bind and inure to the benefit of the heirs. executors, administrators, successors and assigns of the parties hereto.
 
14.   Interpretation . This Settlement Agreement was negotiated through arms-length bargaining and is entered into in good faith by all parties thereto. The order in which the paragraphs appear in this Settlement Agreement is of no significance. Neither this Settlement Agreement, nor any provision thereof, shall be construed against any party thereto based on the fact that such party or a representative of such party may have drafted the Settlement Agreement or any portion thereof.
 
 
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15.   Choice of Law . This Settlement Agreement shall be construed, interpreted and enforced according to the laws of the United States and the State of California.
 
16.   No Public Announcement of the Settlement . Neither Banjo nor Direct Success will unilaterally make any public announcement or other public disclosure relating to this Settlement Agreement other than to refer others to the dismissal of the Litigation from the Court's docket and to state that the parties hereto have reached a mutually agreeable settlement of their dispute. Any other public announcement by either Banjo or Direct Success regarding this Settlement Agreement or its subject matter shall require the prior, written consent of the other party hereto (which consent may not be unreasonably withheld).
 
The Parties have entered into this Settlement Agreement and Mutual Release as of the date and day first above set forth.
 
Date: 2/26/10
DIRECT SUCCESS, LLC #3
 
 
By: /s/ Kurtis L. Cockrum
Name: Kurtis L. Cockrum
Its Duly Authorized: President
   
Date: 2/26/10
Banjo Buddies, Inc.
 
By: /s/ Vincent Hockmeyer Jr.
Name: Vincent Hockmeyer Jr.
Its Duly Authorized: VP Treasurer

 
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We hereby consent to the inclusion of our Independent Auditors’ Reports on the financial statements of DM Products, Inc. for the years ended December 31, 2009, 2008, and 2007 in DM Products, Inc.’s Form S-1 Registration Statement dated April 8, 2010.

/s/ Beckstead and Watts, LLP

Beckstead and Watts, LLP
Henderson, Nevada