----

----

| Colorado                                                       |   | 20-1892264                           |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (IRS Employer Identification Number) |

| Large Accelerated Filer o | Accelerated Filer o | Non-Accelerated Filer o | Smaller Reporting Company x |
|---------------------------|---------------------|-------------------------|-----------------------------|

----

|      |                                                                                         | Page     |
|-----------|----------------------------------------------------------------------------------------------|----------|
|      | PART I.—FINANCIAL INFORMATION                                                          |     |
| Item 1.   | Financial Statements                                                                         |   1 |
|      | Consolidated Balance Sheets (June 30, 2012 Unaudited)                                        | 2        |
|      | Consolidated Statements of Operations (Unaudited)                                            | 3        |
|      | Consolidated Statements of Cash Flows (Unaudited)                                            | 4        |
|      | Consolidated Statements of Stockholders' Deficit (Unaudited)                                 | 5        |
|      | Notes to Consolidated Financial Statements (Unaudited)                                       | 6        |
| Item 2.   | Management’s Discussion and Analysis of Financial Conditions and Results of Operations | 15       |
| Item 3.   | Quantitative and Qualitative Disclosures About Market Risks                                  | 22       |
| Item 4.   | Controls and Procedures                                                                      | 22       |
|      |                                                                                         |     |
|      | PART II—OTHER INFORMATION                                                              |     |
| Item 1.   | Legal Proceedings                                                                            | 23       |
| Item 2.   | Unregistered Sales of Equity Securities and Use of Proceeds                                  | 23       |
| Item 3.   | Defaults Upon Senior Securities                                                              | 23       |
| Item 4.   | Mine Safety Disclosures                                                                      | 23       |
| Item 5.   | Other Information                                                                            | 23       |
| Item 6.   | Exhibits                                                                                     | 23       |
| SIGNATURE | 24                                                                                           |

----

----

|                                                                                                                |   | June 30,    |        |   | December 31, |   |
|---------------------------------------------------------------------------------------------------------------------|--------|-------------|-------------|--------|--------------|--------|
|                                                                                                                |   | 2012        |        |   | 2011         |   |
|                                                                                                                |   | (Unaudited) |        |   |         |   |
|                                                                                                                |   |        |        |   |         |   |
| Assets                                                                                                              |   |        |        |   |         |   |
| Current assets                                                                                                      |   |        |        |   |         |   |
| Cash and cash equivalents                                                                                           |   | $           | 8,877       |   |         | $      | 15,939 |   |
| Accounts receivable                                                                                                 |   |        | 49,637      |   |         |   | 29,843 |   |
| Inventory                                                                                                           |   |        | 126,159     |   |         |   | 161,011 |   |
| Total current assets                                                                                                |   |        | 184,673     |   |         |   | 206,793 |   |
|                                                                                                                |   |        |        |   |         |   |   |   |
| Property and equipment, net                                                                                         |   |        | 16,547      |   |         |   | 18,390 |   |
|                                                                                                                |   |        |        |   |         |   |   |   |
| Total assets                                                                                                        |   | $           | 201,220     |   |         | $      | 225,183 |   |
|                                                                                                                |   |        |        |   |         |   |   |   |
| Liabilities                                                                                                         |   |        |        |   |         |   |   |   |
| Current liabilities                                                                                                 |   |        |        |   |         |   |   |   |
| Accounts payable                                                                                                    |   | $           | 74,082      |   |         | $      | 207,931 |   |
| Accrued bonuses                                                                                                     |   |        | 1,800,000   |   |         |   |   |   |
| Accrued interest payable                                                                                            |   |        | 863,186     |   |         |   | 863,320 |   |
| Accrued liabilities                                                                                                 |   |        | 637         |   |         |   | 637 |   |
| Related party payable                                                                                               |   |        | 211,658     |   |         |   | 1,413,569 |   |
| Note payable to former officer                                                                                      |   |        | 4,775,834   |   |         |   | - |   |
| Short-term notes payable and current portion of long-term debt                                                      |   |        | 3,691,752   |   |         |   | 3,206,483 |   |
| Total current liabilities                                                                                           |   |        | 11,417,149  |   |         |   | 5,691,940 |   |
| Long-term debt  to related party                                                                          |   |        | 90,556      |   |         |   | 1,650,841 |   |
| Long-term debt (Net of Unamortized Discount of $884,520 as of June 30, 2012 and $1,142,285 as of December 31, 2011) |   |        | 1,698,328   |   |         |   | 1,825,829 |   |
| Total liabilities                                                                                                   |   |        | 13,206,033  |   |         |   | 9,168,610 |   |
|                                                                                                                |   |        |        |   |         |   |   |   |
| Stockholders' deficit                                                                                               |   |        |        |   |         |   |   |   |
| Preferred Stock, $0.001 par value; 25,000,000 shares authorized                                                     |   |        |        |   |         |
| Series A Preferred Stock, 100,000 shares authorized; shares issued                                                  |   |        |        |   |         |
| and outstanding - 91,111 shares as of June 30, 2012 and December 31, 2011                                           |   |        | 91          |   |         |   | 91 |   |
| Series B Preferred Stock, 2,500 shares authorized; shares issued                                                    |   |        |        |   |         |
| and outstanding - 106 shares as of June 30, 2012 and 86 shares as of December 31, 2011                              |   |        | -           |   |         |   | - |   |
| Common Stock, $0.001 par value;5,000,000,000                                                                        |   |        |        |   |         |   |   |   |
| shares authorized; shares issued and outstanding                                                                    |   |        |        |   |         |   |   |   |
| - 20,871,220 as of June 30, 2012 and 995,646 as of December 31, 2011                                                |   |        | 20,872      |   |         |   | 996 |   |
| Additional paid in capital                                                                                          |   |        | 80,574,292  |   |         |   | 78,468,902 |   |
| Issuances in exchange for promotional consideration                                                                 |   |        | -           |   |         |   | - |   |
| Accumulated deficit                                                                                                 |   |        | (93,600,068 | )      |         |   | (87,413,416 | ) |
| Total stockholders' deficit                                                                                         |   |        | (13,004,813 | )      |         |   | (8,943,427 | ) |
|                                                                                                                |   |        |        |   |         |   |   |   |
| Total liabilities and stockholders' deficit                                                                         |   | $           | 201,220     |   |         | $      | 225,183 |   |

----

|                                                                                                                                                                                                                                           |   | Three Months Ended June 30, |       |   | Six Months Ended June 30, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|--------|---------------------------|--------|
|                                                                                                                                                                                                                                           |   | 2012                        |       |   | 2011                      |   |   | 2012 |   |   | 2011 |   |
| Net Revenues                                                                                                                                                                                                                                   |   | $                           | 43,689     |   |                      | $      | 174,656 |   |   | $ | 108,890 |   |   | $ | 303,617 |   |
| Cost of goods sold                                                                                                                                                                                                                             |   |                        | 24,052     |   |                      |   | 119,797 |   |   |   | 61,624 |   |   |   | 192,351 |   |
| Gross margin                                                                                                                                                                                                                                   |   |                        | 19,637     |   |                      |   | 54,859 |   |   |   | 47,266 |   |   |   | 111,266 |   |
|                                                                                                                                                                                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses                                                                                                                                                                                                                             |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative (includes share based compensation of $15,000 for three months ended and $33,000 for six months ended June 30 2012  and $222,000 for three months ended and $1,049,029 for six months ended June 30 2011) |   |                        | 2,325,452  |   |                      |   | 814,612 |   |   |   | 2,852,132 |   |   |   | 2,119,319 |   |
| Sales and marketing (includes share based compensation of $0 in for three months ended and $0 for six months ended June 30 2012  and $67,083 for three months ended and $299,365 for six months ended June 30 2011)                  |   |                        | 67,559     |   |                      |   | 810,106 |   |   |   | 202,795 |   |   |   | 1,240,125 |   |
| Severence agreement  expense                                                                                                                                                                                                         |   |                        | 1,265,800  |   |                      |   | - |   |   |   | 1,265,800 |   |   |   | - |   |
| Depreciation and amortization                                                                                                                                                                                                                  |   |                        | 6,683      |   |                      |   | 21,475 |   |   |   | 1,843 |   |   |   | 42,950 |   |
| Total operating expenses                                                                                                                                                                                                                       |   |                        | 3,665,494  |   |                      |   | 1,646,193 |   |   |   | 4,322,570 |   |   |   | 3,402,394 |   |
| Loss from operations                                                                                                                                                                                                                           |   |                        | (3,645,857 | )      |                      |   | (1,591,334 | ) |   |   | (4,275,304 | ) |   |   | (3,291,128 | ) |
|                                                                                                                                                                                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Other Expense (Income)                                                                                                                                                                                                                         |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                                                                                                                                                                                                               |   |                        | 399,276    |   |                      |   | 307,988 |   |   |   | 745,107 |   |   |   | 583,667 |   |
| Interest expense - warrant liability                                                                                                                                                                                                           |   |                        | -          |   |                      |   | (1,153,800 | ) |   |   |   |   |   |   | (1,063,800 | ) |
| Loss on retirement of debt                                                                                                                                                                                                                     |   |                        | 545,461    |   |                      |   | 116,000 |   |   |   | 1,166,241 |   |   |   | 1,276,500 |   |
| Total other expense (income)                                                                                                                                                                                                                   |   |                        | 944,737    |   |                      |   | (729,812 | ) |   |   | 1,911,348 |   |   |   | 796,367 |   |
|                                                                                                                                                                                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Loss Before Taxes                                                                                                                                                                                                                              |   |                        | (4,590,594 | )      |                      |   | (861,522 | ) |   |   | (6,186,652 | ) |   |   | (4,087,495 | ) |
| Provision for income taxes (Note 6)                                                                                                                                                                                                            |   |                        | -          |   |                      |   | - |   |   |   | - |   |   |   | - |   |
| Net Loss                                                                                                                                                                                                                                       |   | $                           | (4,590,594 | )      |                      | $      | (861,522 | ) |   | $ | (6,186,652 | ) |   | $ | (4,087,495 | ) |
|                                                                                                                                                                                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common shares outstanding                                                                                                                                                                                           |   |                        | 8,075,556  |   |                      |   | 187,153 |   |   |   | 4,903,108 |   |   |   | 176,591 |   |
|                                                                                                                                                                                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted net loss per common share                                                                                                                                                                                                    |   | $                           | (0.57      | )      |                      | $      | (4.60 | ) |   | $ | (1.26 | ) |   | $ | (23.15 | ) |

----

|                                                                                                           |   | For Six Months Ended June 30, |       |
|----------------------------------------------------------------------------------------------------------------|--------|------------------------------------|------------|
|                                                                                                           |   | 2012                               |       |   | 2011 |   |
| Cash used in operating activities                                                                              |   |                               |       |   |   |   |
| Net loss                                                                                                       |   | $                                  | (6,186,652 | ) |   | $ | (4,087,496 | ) |
| Adjustments to reconcile net loss to net cash                                                                  |   |                               |       |   |   |   |   |   |
| used in operating activities:                                                                                  |   |                               |       |   |   |   |   |   |
| Depreciation and amortization                                                                                  |   |                               | 1,843      |   |   |   | 42,950 |   |
| Common stock issued for services                                                                               |   |                               | 33,000     |   |   |   | 1,348,394 |   |
| Debt issued for services                                                                                       |   |                               | 157,914    |   |   |   | - |   |
| Loss on retirement of debt                                                                                     |   |                               | 1,166,241  |   |   |   | 1,276,500 |   |
| Severance agreement expenses                                                                                   |   |                               | 1,265,800  |   |   |   | - |   |
| Amortization of debt discount                                                                                  |   |                               | 293,485    |   |   |   | 210,385 |   |
| Reduction of debt for use of facilities                                                                        |   |                               | (60,000    | ) |   |   | - |   |
| Loss on Sale of PP&E                                                                                       |   |                               | -          |   |   |   | 5,127 |   |
| Changes in operating assets and liabilities:                                                                   |   |                               |       |   |   |   |   |   |
| Accounts receivable                                                                                            |   |                               | (19,794    | ) |   |   | (5,915 | ) |
| Inventory                                                                                                      |   |                               | 34,852     |   |   |   | 124,856 |   |
| Accounts payable                                                                                               |   |                               | (133,849   | ) |   |   | (127,673 | ) |
| Accrued Bonuses                                                                                                |   |                               | 1,800,000  |   |   |   | - |   |
| Accrued interest payable                                                                                       |   |                               | 428,308    |   |   |   | 376,970 |   |
| Related party payable                                                                                          |   |                               | 446,040    |   |   |   | 311,646 |   |
| Warrant liability                                                                                              |   |                               | -          |   |   |   | (1,063,800 | ) |
| Net cash used in operating activities                                                                          |   | $                                  | (772,812   | ) |   | $ | (1,588,056 | ) |
| Cash used in investing activities                                                                              |   |                               |       |   |   |   |   |   |
| Purchase of property and equipment                                                                             |   |                               | -          |   |   |   | - |   |
| Net cash used in investing activities                                                                          |   | $                                  | -          |   |   | $ | - |   |
| Cash provided by financing activities                                                                          |   |                               |       |   |   |   |   |   |
| Proceeds from notes payable                                                                                    |   |                               | 765,750    |   |   |   | 1,703,000 |   |
| Payment on notes payable                                                                                       |   |                               | -          |   |   |   | (34,744 | ) |
| Net cash provided by financing activities                                                                      |   | $                                  | 765,750    |   |   | $ | 1,668,256 |   |
| Net increase (decrease) in cash and cash equivalents                                                           |   | $                                  | (7,062     | ) |   | $ | 80,200 |   |
| Cash and cash equivalents                                                                                      |   |                               |       |   |   |   |   |   |
| Beginning of period                                                                                            |   |                               | 15,939     |   |   |   | 23,234 |   |
| End of period                                                                                                  |   | $                                  | 8,877      |   |   | $ | 103,434 |   |
|                                                                                                           |   |                               |       |   |   |   |   |   |
| Supplemental Disclosure of Noncash                                                                             |   |                               |       |   |   |   |   |   |
| Investing and Financing Activities                                                                             |   |                               |       |   |   |   |   |   |
| Notes payable converted to common stock                                                                        |   | $                                  | 918,249    |   |   | $ | 476,000 |   |
| Common stock issued for warrants                                                                               |   | $                                  | -          |   |   | $ | 384,600 |   |
| Discount on common and preferred stock                                                                         |   | $                                  | 7,776      |   |   | $ | 576,290 |   |
| Common Stock issued for retirement of debt and accrd int                                                       |   | $                                  | 2,084,490  |   |   | $ | 1,752,500 |   |
| Preferred stock issued as incentive for debt                                                                   |   | $                                  | 7,776      |   |   | $ | - |   |
| Accrued interest recassified to long-term debt                                                                 |   | $                                  | 126,644    |   |   | $ | - |   |
| Accrued interest, related party payable, & long-term debt to related party reclassified to short-term debt |   | $                                  | 3,510,034  |   |   | $ | - |   |
| Supplemental Disclosure                                                                                        |   |                               |       |   |   |   |   |   |
| Interest paid                                                                                                  |   | $                                  | 7,814      |   |   | $ | 8,653 |   |

----

|                                                                       |   | Series A Preferred Stock |   |   | Series B Preferred Stock |   |   | Common Stock |   |   | Additional Paid in |   |   | Accumulated |   |   | Total Stockholders' |   |
|----------------------------------------------------------------------------|--------|--------------------------|--------|--------|--------------------------|--------|--------|--------------|--------|--------|--------------------|--------|--------|-------------|--------|--------|---------------------|--------|
|                                                                       |   | Shares                   |   |   | Amount                   |   |   | Shares       |   |   | Amount             |   |   | Shares      |   |   | Amount              |   |   | Capital |   |   | Deficit |   |   | Deficit |   |
| Balance, Dec 31, 2011 (adjusted for a 1:200 split effective June 28, 2012) |   |                     | 91,111 |   |                     | $      | 91     |         |   |   | 86                 |   |   | $           | -      |   |                |   | 995,646 |   |   |   | 996 |   |   | $ | 78,468,902 |   |   | $ | (87,413,416 | ) |   | $ | (8,943,427 | ) |
| Preferred Stock issued with Debt                                           |   |                     |   |   |                     |   |   |         |   |   | 20                 |   |   |        |   |   |                |   |   |   |   |   |   |   |   |   | 7,776 |   |   |   |   |   |   |   | 7,776 |   |
| Common stock issued in exchange for services                               |   |                     |   |   |                     |   |   |         |   |   |               |   |   |        |   |   |                |   | 155,000 |   |   |   | 155 |   |   |   | 32,845 |   |   |   |   |   |   |   | 33,000 |   |
| Common stock issued in exchange for retirement of debt                     |   |                     |   |   |                     |   |   |         |   |   |               |   |   |        |   |   |                |   | 19,720,574 |   |   |   | 19,721 |   |   |   | 2,064,769 |   |   |   |   |   |   |   | 2,084,490 |   |
| Net loss                                                                   |   |                     |   |   |                     |   |   |         |   |   |               |   |   |        |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   | (6,186,652 | ) |   |   | (6,186,652 | ) |
| Balance, June 30, 2012                                                     |   |                     | 91,111 |   |                     | $      | 91     |         |   |   | 106                |   |   | $           | -      |   |                |   | 20,871,220 |   |   | $ | 20,872 |   |   | $ | 80,574,292 |   |   | $ | (93,600,068 | ) |   | $ | (13,004,813 | ) |

----

| 1. | Business and Significant Accounting Policies |
|----|----------------------------------------------|

----

| 2. | Inventory |
|----|-----------|

|                       |   | June 30, |    |   | December 31, |   |
|----------------------------|--------|----------|---------|--------|--------------|--------|
|                       |   | 2012     |    |   | 2011         |   |
| Finished goods             |   | $        | 34,139  |   |         | $      | 68,173 |   |
| Work in process            |   |     | 38,819  |   |         |   | 47,365 |   |
| Raw materials              |   |     | 53,201  |   |         |   | 45,473 |   |
|                       |   |     | 126,159 |   |         |   | 161,011 |   |
|                       |   |     |    |   |         |   |   |   |
| Allowance for obsolescence |   |     | -       |   |         |   | - |   |
|                       |   | $        | 126,159 |   |         | $      | 161,011 |   |

----

| 3. | Property and Equipment |
|----|------------------------|

|                          |   | June 30, |     |   | December 31, |   |
|-------------------------------|--------|----------|----------|--------|--------------|--------|
|                          |   | 2012     |     |   | 2011         |   |
| Leasehold improvements        |   | $        | 14,004   |   |         | $      | 14,004 |   |
| Office furniture and fixtures |   |     | 31,521   |   |         |   | 31,521 |   |
| Vehicles                      |   |     | 226,843  |   |         |   | 226,843 |   |
| Warehouse equipment           |   |     | 103,134  |   |         |   | 103,134 |   |
| Computer equipment            |   |     | 75,170   |   |         |   | 75,170 |   |
|                          |   |     | 450,672  |   |         |   | 450,672 |   |
| Accumulated depreciation      |   |     | (434,125 | )      |         |   | (432,282 | ) |
|                          |   | $        | 16,547   |   |         | $      | 18,390 |   |

| 4. | Commitments and Contingencies |
|----|-------------------------------|

| Years Ending December 31,  |   |   |    |
|----------------------------|--------|--------|---------|
| Remaining 6 months of 2012 |   | $      | 103,416 |   |
| 2013                       |   | $      | 69,260  |   |

| Remaining 6 months of 2012 |   | $ | 68,906 |   |
|----------------------------|--------|---|--------|--------|
| 2013                       |   | $ | 82,031 |   |
| 2014                       |   | $ | -      |   |

----

| 5. | Notes Payable |
|----|---------------|

|                                                        |   | Current |      | Long Term |   | Total  |      |
|-------------------------------------------------------------|--------|---------|-----------|-----------|--------|--------|-----------|
| 1 Note payable, originated in 2004, due in 2006,            |   |    | 538,890   |      |   |   | -         |   |   |   | 538,890 |   |
| 6% interest rate, secured by assets of                      |   |
| DC Brands, LLC, a wholly owned subsidiary                   |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 1 Note payable originated in 2007, due in 2007,             |   |    | 10,000    |      |   |   | -         |   |   |   | 10,000 |   |
| 36% interest, unsecured                                     |   |    |      |      |   |   |      |   |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 1 Note payable originated in 2007, due in 2008,             |   |    | 14,266    |      |   |   | -         |   |   |   | 14,266 |   |
| 24% interest, unsecured                                     |   |    |      |      |   |   |      |   |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 7 Notes payable, originated in 2008,                        |   |    | 462,873   |      |   |   | -         |   |   |   | 462,873 |   |
| due at various dates from July to August                    |   |
| 2010, 15% interest, unsecured                               |   |    |      |      |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 6 Notes payable, originated in 2010, due                    |   |    | 559,009   |      |   |   | 115,202   |   |   |   | 674,211 |   |
| January 1, 2015, 10.25% interest, unsecured                 |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 3 Notes payable, originated in 2010, due                    |   |    | 592,933   |      |   |   | -         |   |   |   | 592,933 |   |
| July 1, 2013, callable by Noteholders after                 |   |
| January 1, 2012, 6% interest, unsecured                |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 1 Note payable, originated in 2010, due                     |   |    | -         |      |   |   | 333,209   |   |   |   | 333,209 |   |
| July 1, 2013, 16% interest, unsecured                       |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 12 Notes payable, originated in 2010 and 2011, due          |   |    | -         |      |   |   | 1,078,333 |   |   |   | 1,078,333 |   |
| due at various dates from July 2013 to March 2014,          |   |
| 16% interest, unsecured                                     |   |    |      |      |   |   |      |   |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 2 Notes payable, originated in 2011 and 2012, due           |   |    | 207,680   |      |   |   | -         |   |   |   | 207,680 |   |
| Dec 31, 2013, 4% interest, unsecured                        |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 7 Notes payable, originated in 2011 &2012, due to be    |   |    | 750,000   |      |   |   | 575,000   |   |   |   | 1,325,000 |   |
| repaid from a portion of gross sales beginning in           |   |
| Feb 2012, 12% interest, unsecured                           |   |    |      |      |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 2 Notes payable, originated in 2011, due                    |   |    | 48,350    |      |   |   | -         |   |   |   | 48,350 |   |
| Aug & Sept, 2012, 8% interest, unsecured                |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 1 Note payable, originated in 2011, due                     |   |    | -         |      |   |   | 481,104   |   |   |   | 481,104 |   |
| Jan 1, 2014, 10.25% interest, unsecured                     |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 2 Notes payable, originated in 2011 & 2012, due in 2012 |   |    | 105,000   |      |   |   | -         |   |   |   | 105,000 |   |
| 4% interest and a 15% redemption premium                    |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 1 Note payable, originated in 2011, due in 2012             |   |    | 392,751   |      |   |   | -         |   |   |   | 392,751 |   |
| 6% interest                                                 |   |    |      |      |   |   |      |   |   |   |   |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 1 Note payable, originated in 2012, convertible into,       |   |    | 4,775,834 |      |   |   | -         |   |   |   | 4,775,834 |   |
| common stock after 90 days. 10.25% interest rate,           |   |
| secured by all assets of DC Brands International Inc.       |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 1 Note payable, originated in 2012, due in 2012             |   |    | 10,000    |      |   |   | -         |   |   |   | 10,000 |   |
| 6% interest                                                 |   |    |      |      |   |   |      |   |   |   |   |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
|                                                        |   |    | 8,467,586 |      |   |   | 2,582,848 |   |   |   | 11,050,434 |   |
| Unamortized discount                                        |   |    | -         |      |   |   | (884,520  | ) |   |   | (884,520 | ) |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
|                                                        |   |    | 8,467,586 |      |   |   | 1,698,328 |   |   |   | 10,165,914 |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| Related party notes                                         |   |    |      |      |   |   |      |   |   |   |   |   |
| 1 Note payable, originated in 2010, callable                |   |    | -         |      |   |   | 90,556    |   |   |   | 90,556 |   |
| with 366 day notice, 10% interest, unsecured                |   |

----

|                                                     |   | Current |      |   | Long Term |   |       | Total  |   |
|----------------------------------------------------------|--------|---------|-----------|--------|-----------|--------|------------|--------|--------|
| 1 Note payable, originated in 2004, due in 2006,         |   | $       | 538,890   |   |      | $      | -          |   |   | $ | 538,890 |   |
| 6% interest rate, secured by assets of                   |   |    |      |   |      |   |       |   |   |   |   |   |
| DC Brands, LLC, a wholly owned subsidiary                |   |    |      |   |      |   |       |   |   |   |   |   |
|                                                     |   |    |      |   |      |   |       |   |   |   |   |   |
| 1 Note payable originated in 2007, due in 2007,          |   |    | 10,000    |   |      |   | -          |   |   |   | 10,000 |   |
| 36% interest, unsecured                                  |   |    |      |   |      |   |       |   |   |   |   |   |
|                                                     |   |    |      |   |      |   |       |   |   |   |   |   |
| 1 Note payable originated in 2007, due in 2008,          |   |    | 14,266    |   |      |   | -          |   |   |   | 14,266 |   |
| 24% interest, unsecured                                  |   |    |      |   |      |   |       |   |   |   |   |   |
|                                                     |   |    |      |   |      |   |       |   |   |   |   |   |
| 7 Notes payable, originated in 2008,                     |   |    | 462,873   |   |      |   | -          |   |   |   | 462,873 |   |
| due at various dates from July to August                 |   |    |      |   |      |   |       |   |   |   |   |   |
| 2010, 15% interest, unsecured                            |   |    |      |   |      |   |       |   |   |   |   |   |
|                                                     |   |    |      |   |      |   |       |   |   |   |   |   |
| 6 Notes payable, originated in 2010, due                 |   |    | 271,254   |   |      |   | 1,007,017  |   |   |   | 1,278,271 |   |
| January 1, 2015, 10.25% interest, unsecured              |   |    |      |   |      |   |       |   |   |   |   |   |
|                                                     |   |    |      |   |      |   |       |   |   |   |   |   |
| 3 Notes payable, originated in 2010, due                 |   |    | 592,933   |   |      |   | -          |   |   |   | 592,933 |   |
| July 1, 2013, callable by Noteholders after              |   |    |      |   |      |   |       |   |   |   |   |   |
| January 1, 2012,   6% interest, unsecured |   |    |      |   |      |   |       |   |   |   |   |   |
|                                                     |   |    |      |   |      |   |       |   |   |   |   |   |
| 1 Note payable, originated in 2010, due                  |   |    | -         |   |      |   | 333,209    |   |   |   | 333,209 |   |
| July 1, 2013, 16% interest, unsecured                    |   |    |      |   |      |   |       |   |   |   |   |   |
|                                                     |   |    |      |   |      |   |       |   |   |   |   |   |
| 12 Notes payable, originated in 2010 and 2011, due       |   |    | -         |   |      |   | 1,078,333  |   |   |   | 1,078,333 |   |
| due at various dates from July 2013 to March 2014,       |   |    |      |   |      |   |       |   |   |   |   |   |
| 16% interest, unsecured                                  |   |    |      |   |      |   |       |   |   |   |   |   |
|                                                     |   |    |      |   |      |   |       |   |   |   |   |   |
| 1 Note payable, originated in 2011, due                  |   |    | 94,767    |   |      |   | -          |   |   |   | 94,767 |   |
| Dec 31, 2013, 4% interest, unsecured                     |   |    |      |   |      |   |       |   |   |   |   |   |
|                                                     |   |    |      |   |      |   |       |   |   |   |   |   |
| 6 Notes payable, originated in 2011, due to be           |   |    | 750,000   |   |      |   | 325,000    |   |   |   | 1,075,000 |   |
| repaid from a portion of gross sales beginning in        |   |    |      |   |      |   |       |   |   |   |   |   |
| Feb 2012, 12% interest, unsecured                        |   |    |      |   |      |   |       |   |   |   |   |   |
|                                                     |   |    |      |   |      |   |       |   |   |   |   |   |
| 2 Notes payable, originated in 2011, due                 |   |    | 85,500    |   |      |   | -          |   |   |   | 85,500 |   |
| Aug & Sept, 2012, 8% interest, unsecured             |   |    |      |   |      |   |       |   |   |   |   |   |
|                                                     |   |    |      |   |      |   |       |   |   |   |   |   |
| 1 Note payable, originated in 2011, due                  |   |    |      |   |      |   | 252,500    |   |   |   | 252,500 |   |
| Dec 31, 2015, 10.25% interest, unsecured                 |   |    |      |   |      |   |       |   |   |   |   |   |
|                                                     |   |    |      |   |      |   |       |   |   |   |   |   |
| 1 Note payable, originated in 2011, due in 2012          |   |    | 60,000    |   |      |   | -          |   |   |   | 60,000 |   |
| 4% interest and a 15% redemption premium                 |   |    |      |   |      |   |       |   |   |   |   |   |
|                                                     |   |    |      |   |      |   |       |   |   |   |   |   |
| 1 Note payable, originated in 2011, due in 2012          |   |    | 326,000   |   |      |   | -          |   |   |   | 326,000 |   |
| 6% interest                                              |   |    |      |   |      |   |       |   |   |   |   |   |
|                                                     |   |    |      |   |      |   |       |   |   |   |   |   |
|                                                     |   |    |      |   |      |   |       |   |   |   |   |   |
|                                                     |   |    | 3,206,484 |   |      |   | 2,996,059  |   |   |   | 6,202,541 |   |
| Unamortized discount                                     |   |    | -         |   |      |   | (1,170,230 | )      |   |   | (1,170,230 | ) |
|                                                     |   |    |      |   |      |   |       |   |   |   |   |   |
|                                                     |   | $       | 3,206,484 |   |      | $      | 1,825,829  |   |   | $ | 5,032,311 |   |
|                                                     |   |    |      |   |      |   |       |   |   |   |   |   |
| Related party notes                                      |   |    |      |   |      |   |       |   |   |   |   |   |
| 2 Notes payable, originated in 2010, callable            |   | $       | -         |   |      | $      | 1,650,841  |   |   | $ | 1,650,841 |   |
| with 366 day notice, 10% interest, unsecured             |   |    |      |   |      |   |       |   |   |   |   |   |

----

| 6. | Income Taxes |
|----|--------------|

| 7. | Stockholders’ Equity |
|----|----------------------------|

----

----

----

| 8. | Share Based Compensation Expense |
|----|----------------------------------|

|                       |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
|----------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
|                       |   | 2012                        |   |   | 2011                      |   |   | 2012 |   |   | 2011 |   |
| General and administrative |   | $                           | 15,000 |   |                      | $      | 222,000 |   |   | $ | 33,000 |   |   | $ | 1,049,092 |   |
| Sales and marketing        |   |                        | -      |   |                      |   | 67,083 |   |   |   | - |   |   |   | 250,552 |   |
|                       |   | $                           | 15,000 |   |                      | $      | 289,083 |   |   | $ | 33,000 |   |   | $ | 1,299,644 |   |

| 9. | Related Party Transactions |
|----|----------------------------|

| 10. | Subsequent Events |
|-----|-------------------|

|                   |   | Shares |       |   | Common Stock |   |   | Additional Paid in Capital |   |   | Amount  |   |
|------------------------|--------|--------|------------|--------|--------------|--------|--------|----------------------------|--------|--------|---------|--------|
| For conversion of debt |   |   | 37,303,025 |   |         | $      | 37,303 |                       |   | $      | 204,237 |   |   | $ | 241,540 |   |
|                   |   |   |       |   |         |   |   |                       |   |   |    |   |   |   |   |   |
|                   |   |   | 37,303,025 |   |         | $      | 37,303 |                       |   | $      | 204,237 |   |   | $ | 241,540 |   |

----

----

----

----

|                                                        |   | Current |      | Long Term |   | Total  |      |
|-------------------------------------------------------------|--------|---------|-----------|-----------|--------|--------|-----------|
| 1 Note payable, originated in 2004, due in 2006,            |   |    | 538,890   |      |   |   | -         |   |   |   | 538,890 |   |
| 6% interest rate, secured by assets of                      |   |
| DC Brands, LLC, a wholly owned subsidiary                   |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 1 Note payable originated in 2007, due in 2007,             |   |    | 10,000    |      |   |   | -         |   |   |   | 10,000 |   |
| 36% interest, unsecured                                     |   |    |      |      |   |   |      |   |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 1 Note payable originated in 2007, due in 2008,             |   |    | 14,266    |      |   |   | -         |   |   |   | 14,266 |   |
| 24% interest, unsecured                                     |   |    |      |      |   |   |      |   |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 7 Notes payable, originated in 2008,                        |   |    | 462,873   |      |   |   | -         |   |   |   | 462,873 |   |
| due at various dates from July to August                    |   |
| 2010, 15% interest, unsecured                               |   |    |      |      |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 6 Notes payable, originated in 2010, due                    |   |    | 559,009   |      |   |   | 115,202   |   |   |   | 674,211 |   |
| January 1, 2015, 10.25% interest, unsecured                 |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 3 Notes payable, originated in 2010, due                    |   |    | 592,933   |      |   |   | -         |   |   |   | 592,933 |   |
| July 1, 2013, callable by Noteholders after                 |   |
| January 1, 2012, 6% interest, unsecured                |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 1 Note payable, originated in 2010, due                     |   |    | -         |      |   |   | 333,209   |   |   |   | 333,209 |   |
| July 1, 2013, 16% interest, unsecured                       |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 12 Notes payable, originated in 2010 and 2011, due          |   |    | -         |      |   |   | 1,078,333 |   |   |   | 1,078,333 |   |
| due at various dates from July 2013 to March 2014,          |   |
| 16% interest, unsecured                                     |   |    |      |      |   |   |      |   |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 2 Notes payable, originated in 2011 and 2012, due           |   |    | 207,680   |      |   |   | -         |   |   |   | 207,680 |   |
| Dec 31, 2013, 4% interest, unsecured                        |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 7 Notes payable, originated in 2011 &2012, due to be    |   |    | 750,000   |      |   |   | 575,000   |   |   |   | 1,325,000 |   |
| repaid from a portion of gross sales beginning in           |   |
| Feb 2012, 12% interest, unsecured                           |   |    |      |      |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 2 Notes payable, originated in 2011, due                    |   |    | 48,350    |      |   |   | -         |   |   |   | 48,350 |   |
| Aug & Sept, 2012, 8% interest, unsecured                |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 1 Note payable, originated in 2011, due                     |   |    | -         |      |   |   | 481,104   |   |   |   | 481,104 |   |
| Jan 1, 2014, 10.25% interest, unsecured                     |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 2 Notes payable, originated in 2011 & 2012, due in 2012 |   |    | 105,000   |      |   |   | -         |   |   |   | 105,000 |   |
| 4% interest and a 15% redemption premium                    |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 1 Note payable, originated in 2011, due in 2012             |   |    | 392,751   |      |   |   | -         |   |   |   | 392,751 |   |
| 6% interest                                                 |   |    |      |      |   |   |      |   |   |   |   |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 1 Note payable, originated in 2012, convertible into,       |   |    | 4,775,834 |      |   |   | -         |   |   |   | 4,775,834 |   |
| common stock after 90 days. 10.25% interest rate,           |   |
| secured by all assets of DC Brands International Inc.       |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| 1 Note payable, originated in 2012, due in 2012             |   |    | 10,000    |      |   |   | -         |   |   |   | 10,000 |   |
| 6% interest                                                 |   |    |      |      |   |   |      |   |   |   |   |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
|                                                        |   |    | 8,467,586 |      |   |   | 2,582,848 |   |   |   | 11,050,434 |   |
| Unamortized discount                                        |   |    | -         |      |   |   | (884,520  | ) |   |   | (884,520 | ) |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
|                                                        |   |    | 8,467,586 |      |   |   | 1,698,328 |   |   |   | 10,165,914 |   |
|                                                        |   |    |      |      |   |   |      |   |   |   |   |   |
| Related party notes                                         |   |    |      |      |   |   |      |   |   |   |   |   |
| 1 Note payable, originated in 2010, callable                |   |    | -         |      |   |   | 90,556    |   |   |   | 90,556 |   |
| with 366 day notice, 10% interest, unsecured                |   |

----

----

----

|   Level 1: | Observable inputs such as quoted market prices in active markets for identical assets or liabilities.                             |
|----------------------|-----------------------------------------------------------------------------------------------------------------------------------|
|   Level 2: | Observable market-based inputs or unobservable inputs that are corroborated by market data                                        |
|   Level 3: | Unobservable inputs for which there is little or no market data, which require the use of the reporting entity's own assumptions. |

----

----

| RegulationS-B Number |   | Exhibit                                                                                                                                            |
|----------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1                 |   | Certification of the Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                           |
|                 |   |                                                                                                                                               |
| 31.2                 |   | Certification of the Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                      |
|                 |   |                                                                                                                                               |
| 32.1                 |   | Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act      |
|                 |   |                                                                                                                                               |
| 32.2                 |   | Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act |

----

| DATE: August 20, 2012 | DC BRANDS INTERNATIONAL, INC.(Registrant) |
|-----------------------|-------------------------------------------|
|                  |                                      |   |
|                  | By:                                       | /s/Stephen Horgan |
|                  |                                      | Stephen Horgan President andChief Executive Officer(Principal Executive Officer) |

----