UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549  FORM 10-K  [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934  For the fiscal year ended: December 31, 2012  Or  [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period from: _____________ to _____________  Commission file number 333-113296  BETA MUSIC GROUP, INC (Exact name of registrant as specified in its charter)  FLORIDA26-0582871(State or other jurisdiction(I.R.S. Employerof incorporation or organization)Identification No.)  160 EAST 65TH STREET NEW YORK, NY 10065 (Address of principal executive offices) (Zip Code)  (212)249-4900 (Registrant’s telephone number, including area code)  n/a (Former name or former address, if changed since last report)  SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:  TITLE OF EACH CLASSNAME OF EACH EXCHANGE ON WHICH REGISTEREDcommon stock, $0.01 par valueNone  SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:  COMMON STOCK (Title of Class)  Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [  ] Yes   [X] No  Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. [  ] Yes   [X] No  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes   [  ] No    Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[  ] Yes   [X] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[  ]

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

Large accelerated filer [  ]Accelerated filer [  ]Non-accelerated filer [  ]Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
[  ] Yes [X] No

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant computed by reference to the price at which the common equity was last sold, or the average bid and asked price for such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter as reported by the Pink Sheets OTCQB on March 24, 2013 as approximately $57,050.

APPLICABLE ONLY TO CORPPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 16,555,315 shares of common stock, $.01 par value as of March 22, 2013.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K(e.g. Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to the security holders; (2) Any proxy or information statement ; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933.

None.

This Form 10-K contains “forward-looking statements” within the meaning of applicable securities laws relating to Beta Music Group, Inc. (“Beta”, “Beta Music” “we”, “our”, or the “Company”) which represent our current expectations or beliefs including, but not limited to, statements concerning our operations, performance, and financial condition. These statements by their nature involve substantial risks and uncertainties, credit losses, dependence on management and key personnel, variability of quarterly results, and our ability to continue growth. Statements in this annual report about the Company’s future expectations, beliefs, goals, plans or prospects constitute forward-looking statements. You should also see our risk factors as set forth in this Form 10-K. For this purpose, any statements contained in this Form 10-K that are not statements of historical fact are forward-looking statements. Without limiting the generality of the foregoing, words such as “may”, anticipate”, “intend”, “could”, “estimate”, or “continue” or the negative or other comparable terminology are intended to identify forward- looking statements. Other matters such as our growth strategy and competition are beyond our control. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual outcomes and results could differ materially from those indicated in the forward-looking statements.

Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for us to predict all of such factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

We are under no duty to update such forward-looking statements.


Table of Contents

PART IITEM 1.DESCRIPTION OF BUSINESS.1ITEM 1A.RISK FACTORS1ITEM 1B.UNRESOLVED STAFF COMMENTS7ITEM 2.PROPERTIES.7ITEM 3.LEGAL PROCEEDINGS7ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS.7PART IIITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES7ITEM 6.SELECTED FINANCIAL DATA8ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.8ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURE.9ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.9ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.9ITEM 9A.CONTROLS AND PROCEDURES.9ITEM 9B.OTHER INFORMATION10PART IIIITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.10ITEM 11.EXECUTIVE COMPENSATION.12ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS12ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.12ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES13PART IVITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES13

ITEM 1. DESCRIPTION OF BUSINESS.

BACKGROUND:

Beta Music Group Inc.  (“BETA”, the “Company” or “we” ) is a Florida corporation incorporated in the state of Florida on July 5, 2006.  Our original business plan wasto produce live entertainment competitions to be taped and/or filmed for distribution by television and/or internet means.  We were not successful in this endeavor.  Our next business focus was to sign “singer-songwriters” to exclusive services agreements or license the artists’ products in domestic and foreign markets. With limited capital we were not successful in this endeavor.

In December 2009 there was a change in the Company’s control and new management was appointed. In April 2010 we spun-off our operating subsidiary and issued a stock dividend to our shareholders.

Since the completion of the spin-off, we have had no operations. Our focus had been to effect a merger, exchange of capital stock, asset acquisition or other similar business combination with an operating or development stage business which desires to utilize our status as a reporting corporation under the Securities Exchange Act of 1934.

In March 2012 we determined to establish ourselves as a wholesale auto dealer in the state of Indiana.  We are licensed in the state of Indiana as a wholesale auto dealer. Our license is valid in all states in the union. In furtherance thereof we formed a wholly owned subsidiary, Beta Auto Group, Inc. We have obtained a dealer license, obtained a bond and have secured garage man insurance. During the year ended December 31, 2012, we also acquired and sold auto inventory. In order to continue with this business plan we will need to secure additional funding.

We have no commitment for additional funding, nor, can there be any assurance that we will be able to secure sufficient funding to carry on this business.

In addition to establishing ourselves as a wholesale dealer, we continue to focus efforts on identifying an operating company or development stage business with which to effect a merger, exchange of capital stock, asset acquisition or other similar business combination (a “Business Combination”) which desires to utilize our status as a reporting corporation under the Securities Exchange Act of 1934 (“Exchange Act”). We intend to seek potential business opportunities and effectuate a Business Combination with a Target Business with significant growth potential which, in the opinion of our management, could provide a profit to both the Company and our shareholders. We intend to seek opportunities demonstrating the potential of long term growth as opposed to short term earnings. Our efforts in identifying a prospective Target Business are expected to emphasize businesses primarily located in the United States; however, we reserve the right to acquire a Target Business located elsewhere. While we may, under certain circumstances, seek to effect Business Combinations with more than one Target Business, as a result of our limited resources, we will, in all likelihood, have the ability to effect only a single Business Combination. We may effect a Business Combination with a Target Business which may be financially unstable or in its early stages of development or growth. We will not restrict our search to any specific business, industry or geographical location, and we may participate in a business venture of virtually any kind or nature. Our management may become involved in management of the Target Business and/or may hire qualified but as yet unidentified individuals to manage such Target Business. Presently, we have no plans, proposals, agreements, understandings or arrangements to acquire or merge with any specific business or company, and we have not identified any specific business or company for investigation and evaluation.

ITEM 1A. RISK FACTORS

The risks and uncertainties described below are not the only ones facing the Company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. If any of the following risks actually occur, our business could be materially adversely affected. In such case, the Company may not be able to proceed with its planned operations and your investment may be lost entirely.

RISKS RELATED TO OUR BUSINESS

WE HAVE EXTREMELY LIMITED ASSETS AND LIMITED REVENUE.

We have minimal assets and have had limited revenues since inception. We currently do not have any inventory and as such do not anticipate generating significant revenues. We can provide no assurance that we will be successful as a wholesale automobile dealer, or that we will produce any material revenues for us or our stockholders, or that our business will operate on a profitable basis.


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We are dependent upon the efforts of our sole officer and director to effectuate a Business Combination. Assuming he is successful in identifying a Business Combination, it is unlikely our shareholders will have an opportunity to evaluate the specific merits or risks of any one or more Business combinations and will have no control over the decision making relating to such.

Due to our limited capital resources, the consummation of a Business Combination would likely involve the acquisition of, or merger or consolidation with, a company that does not need substantial additional capital but which desires to establish a public trading market for our shares, while avoiding what it might deem to be the adverse consequences of undertaking a public offering itself, such as the time delays and significant expenses incurred to comply with the various federal and state securities laws that regulate initial public offerings. A Target Business might desire, among other reasons, to create a public market for their shares in order to enhance liquidity for current shareholders, facilitate raising capital through the public sale of securities of which a prior existence of a public market for our securities exists, and/or acquire additional assets through the issuance of securities rather than for cash.

We cannot estimate the time that it will take to effectuate a Business Combination. It could be time consuming; possibly in excess of many months. Additionally, no assurance can be made that we will be able to effectuate a Business Combination on favorable terms. We might identify and effectuate a Business Combination with a Target Business which proves to be unsuccessful for any number of reasons, many of which are due to the fact that the Target Business is not identified at this time. If this occurs, the Company and our shareholders might not realize any type of profit.

We may seek to acquire a Target Business without limiting ourselves to a particular industry. Most likely, the Target Business will be primarily located in the United States, although we reserve the right to acquire a Target Business located outside the United States. In seeking a Target Business, we will consider, without limitation, businesses which (i) offer or provide services or develop, manufacture or distribute goods in the United States or abroad, including, without limitation, in the following areas: Internet services, real estate, health care and health products, educational services, environmental services, consumer-related products and services (including amusement, entertainment and/or recreational services), personal care services, voice and data information processing and transmission and related technology development or (ii) is engaged in wholesale or retail distribution. To date, we have not selected any particular industry or any Target Business in which to concentrate our Business Combination efforts. Accordingly, we are only able to make general disclosures concerning the risks and hazards of effectuating a Business Combination with a Target Business since there is presently no current basis for us to evaluate the possible merits or risks of the Target Business or the particular industry in which we may ultimately operate.

To the extent that we effect a Business Combination with a financially unstable company or an entity in its early stage of development or growth (including entities without established records of sales or earnings), we will become subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, to the extent that we effect a Business Combination with a Target Business in an industry characterized by a high level of risk, we will become subject to the currently unascertainable risks of that industry. An extremely high level of risk frequently characterizes certain industries which experience rapid growth. Although management will endeavor to evaluate the risks inherent in a particular industry or Target Business, there can be no assurances that we will properly ascertain or assess all significant risk factors.

PROBABLE LACK OF BUSINESS DIVERSIFICATION.

As a result of our limited resources, in all likelihood, we will have the ability to effect only a single Business Combination. Accordingly, our prospects for success will be entirely dependent upon the future performance of a single business.

Unlike certain entities that have the resources to consummate several Business Combinations or entities operating in multiple industries or multiple segments of a single industry, it is highly unlikely that we will have the resources to diversify our operations or benefit from spreading risks or offsetting losses. Our probable lack of diversification could subject us to numerous economic, competitive and regulatory developments, any or all of which may have a material adverse impact upon the particular industry in which we may operate subsequent to consummation of a Business Combination. The prospects for our success may become dependent upon the development or market acceptance of a single or limited number of products, processes or services. Accordingly, notwithstanding the possibility of management assistance to the Target Business by us, there can be no assurance that the Target Business will prove to be commercially viable.


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LIMITED ABILITY TO EVALUATE TARGET BUSINESS’ MANAGEMENT.

While our ability to successfully effect a Business Combination will be dependent upon certain key personnel, the future role of such personnel in the Target Business cannot presently be stated with any certainty. There can be no assurance that current management will remain associated in any operational capacity with the Company following a Business Combination. Moreover, there can be no assurances that current management will have any experience or knowledge relating to the operations of the particular Target Business. Furthermore, although we intend to closely scrutinize the management of a prospective Target Business in connection with evaluating the desirability of effecting a Business Combination, there can be no assurances that our assessment of such management will prove to be correct, especially since none of our management are professional business analysts. See “Directors, Executive Officers, Promoters and Control Persons”.

Accordingly, we will be dependant, in some significant respects, on the ability of the management of the Target Business who are unidentifiable as of the date hereof. In addition, there can be no assurances that such future management will have the necessary skills, qualifications or abilities to manage a public company. We may also seek to recruit additional managers to supplement the incumbent management of the Target Business. There can be no assurances that we will have the ability to recruit such additional managers, or that such additional managers will have the requisite skill, knowledge or experience necessary or desirable to enhance the incumbent management.

OPPORTUNITY FOR SHAREHOLDER EVALUATION OR APPROVAL OF BUSINESS COMBINATIONS.

Our shareholders will, in all likelihood, not receive nor otherwise have the opportunity to evaluate any financial or other information which will be made available to us in connection with selecting a potential Business Combination until after we have entered into an agreement to effectuate a Business Combination. Such agreement to effectuate a Business Combination, however, may be subject to shareholder approval pursuant to applicable law. As a result, our shareholders will be almost entirely dependent on the judgment and experience of management in connection with the selection and ultimate consummation of a Business Combination. In addition, under Florida law, the form of Business Combination could impact upon the availability of dissenters’ rights (i.e., the right to receive fair payment with respect to the Company’s Common Stock) to shareholders disapproving the proposed Business Combination.

SELECTION OF A TARGET BUSINESS AND STRUCTURING OF A BUSINESS COMBINATION.

We anticipate that the selection of a Target Business will be complex and risky because of competition for such business opportunities among all segments of the financial community. The nature of our search for the acquisition of a Target Business requires maximum flexibility inasmuch as we will results of operation of the Target Business;

- growth potential and projected financial performance of the Target Business and the industry in which it operates;

- experience and skill of management and availability of additional personnel of the Target Business;

- capital requirements of the Target Business;

- the availability of a transaction exemption from registration pursuant to the Securities Act for the Business Combination;

- the location of the Target Business;

- competitive position of the Target Business;

- stage of development of the product, process or service of the Target Business;

- degree of current or potential market acceptance of the product, process or service of the Target Business;

- possible proprietary features and possible other protection of the product, process or service of the Target Business;

- regulatory environment of the industry in which the Target Business operates;

- costs associated with effecting the Business Combination; and

- equity interest in and possible management participation in the Target Business.


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The foregoing criteria are not intended to be exhaustive; any evaluation relating to the merits of a particular Business Combination will be based, to the extent relevant, on the above factors as well as other considerations deemed relevant by us in connection with effecting a Business Combination consistent with our business objective. In many instances, it is anticipated that the historical operations of a Target Business may not necessarily be indicative of the potential for the future because of the possible need to shift marketing approaches substantially, expand significantly, change product emphasis, change or substantially augment management, or make other changes.

We will be dependent upon the owners of a Target Business to identify any such problems which may exist and to implement, or be primarily responsible for the implementation of, required changes. Because we may engage in a Business Combination with a newly organized firm or with a firm which is entering a new phase of growth, we will incur further risks, because in many instances, management of the Target Business will not have proven its abilities or effectiveness, the eventual market for the products or services of the Target Business will likely not be established, and the Target Business may not be profitable subsequent to a Business Combination.

Our limited funds and the lack of full-time management will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of a Target Business before we commit our capital or other resources thereto. Management decisions, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys and the like which, if we had more funds available to it, would be desirable. We will be particularly dependent in making decisions upon information provided by the promoter, owner, sponsor, or others associated with the business opportunity seeking our participation.

In connection with our evaluation of a prospective Target Business, management anticipates that it will conduct a due diligence review which will encompass, among other things, meetings with incumbent management and inspection of facilities, as well as review of financial or other information which will be made available to us. The time and costs required to select and evaluate a Target Business (including conducting a due diligence review) and to structure and consummate the Business Combination (including negotiating relevant agreements and preparing requisite documents for filing pursuant to applicable securities laws cannot presently be ascertained with any degree of certainty. Management only devotes a small portion of their time to the operations of the Company, and accordingly, consummation of a Business Combination may require a greater period of time than if management devoted its full time to the Company’s affairs.

However management will devote such time as they deem reasonably necessary, to carry out the business and affairs of the Company, including the evaluation of potential Target Businesses and the negotiation of a Business Combination and, as a result, the amount of time devoted to our business and affairs may vary significantly depending upon, among other things, whether we have identified a Target Business or are engaged in active negotiations of a Business Combination. Any costs incurred in connection with the identification and evaluation of a prospective Target Business with which a Business Combination is not ultimately consummated will result in a loss to the Company and reduce the amount of capital available to otherwise complete a Business Combination or for the resulting entity to utilize. In the event we deplete our cash reserves, we might be forced to cease operations and a Business Combination might not occur.

We anticipate that we will locate and make contact with Target Businesses primarily through the reputation and efforts of management, who will meet personally with existing management and key personnel, visit and inspect material facilities, assets, products and services belonging to such prospects, and undertake such further reasonable investigation as they deem appropriate. Management has a network of business contacts and believes that prospective Target Businesses will be referred to the Company through these network of contacts.

We also expect that many prospective Target Businesses will be brought to our attention from various other non-affiliated sources, including securities broker-dealers, investment bankers, venture capitalists, bankers, and other members of the financial community. We have neither the present intention, nor does the present potential exist for us, to consummate a Business Combination with a Target Business in which our management, promoters, or their affiliates or associates directly or indirectly have a pecuniary interest, although no existing corporate policies would prevent this from occurring. Although there are no current plans to do so, we may engage the services of professional firms that specialize in finding business acquisitions and pay a finder’s fee or other compensation. Since we have no current plans to utilize any outside consultants or advisors to assist in a Business Combination, no policies have been adopted regarding use of such consultants or advisors, the criteria to be used in selecting such consultants or advisors, the services to be provided, the term of service, or regarding the total amount of fees that may be paid. However, because of our limited resources, it is likely that any such fee we agree to pay would be paid in stock and not in cash. In no event will we pay a finder’s fee or commission to any officer or director or to any entity with which they are affiliated for such service.


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As a general rule, Federal and state tax laws and regulations have a significant impact upon the structuring of business combinations. We will evaluate the possible tax consequences of any prospective Business Combination and will endeavor to structure a Business Combination so as to achieve the most favorable tax treatment for us, the Target Business and their respective stockholders. There can be no assurance that the Internal Revenue Service or relevant state tax authorities will ultimately assent to our tax treatment of a particular consummated Business Combination.

To the extent the Internal Revenue Service or any relevant state tax authorities ultimately prevail in recharacterizing the tax treatment of a Business Combination, there may be adverse tax consequences to us, the Target Business and their respective stockholders. Tax considerations as well as other relevant factors will be evaluated in determining the precise structure of a particular Business Combination, which could be effected through various forms of a merger, consolidation or stock or asset acquisition.

We will, in all likelihood, issue a substantial number of additional shares in connection with the consummation of a Business Combination. To the extent that such additional shares are issued, dilution to the interests of our stockholders will occur. Additionally, if a substantial number of shares of Common Stock are issued in connection with the consummation of a Business Combination, a change in our control is likely to occur which will likely affect, among other things, our ability to utilize net operating loss carry forwards, if any.

Any such change in control may also result in the resignation or removal of our present officer and director. If there is a change in management, no assurance can be given as to the experience or qualification of such persons, either in the operation of our activities or in the operation of the business, assets or property being acquired. Management considers it likely that in order to consummate a Business Combination, a change in control will occur; therefore, management anticipates offering a controlling interest to a Target Business in order to effectuate a Business Combination.

Management may actively negotiate for or otherwise consent to the disposition of any portion of their Common Stock as a condition to or in connection with a Business Combination. Therefore, it is possible that the terms of any Business Combination will provide for the sale of some shares of Common Stock held by management. It is likely that none of our other shareholders will be afforded the right to sell their shares of Common Stock in connection with a Business Combination pursuant to the same terms that Management will be provided. There are currently no limitations relating to our ability to borrow funds to increase the amount of capital available to us to effect a Business Combination or otherwise finance the operations of the Target Business. However, our limited resources and lack of operating history could make it difficult for us to borrow additional funds from other sources. The amount and nature of any borrowings by us will depend on numerous considerations, including our capital requirements, potential lenders’ evaluation of our ability to meet debt service on borrowings and the then prevailing conditions in the financial markets, as well as general economic conditions. We do not have any arrangements with any bank or financial institution to secure additional financing and there can be no assurance that such arrangements if required or otherwise sought, would be available on terms commercially acceptable or otherwise in our best interests. Our inability to borrow funds required to effect or facilitate a Business Combination, or to provide funds for an additional infusion of capital into a Target Business, may have a material adverse effect on our financial condition and future prospects, including the ability to effect a Business Combination. To the extent that debt financing ultimately proves to be available, any borrowings may subject us to various risks traditionally associated with indebtedness, including the risks of interest rate fluctuations and insufficiency of cash flow to pay principal and interest. Furthermore, a Target Business may have already incurred debt financing and, therefore, all the risks inherent thereto.

If our securities are issued as part of an acquisition, such securities are required to be issued either in reliance upon exemptions from registration under applicable federal or state securities laws or registered for public distribution. We intend to primarily target only those companies where an exemption from registration would be available; however, since the structure of the Business Combination has yet to be determined, no assurances can be made that we will be able to rely on such exemptions. Registration of securities typically requires significant costs and time delays are typically encountered. In addition, the issuance of additional securities and their potential sale in any trading market which might develop in our Common Stock, of which there is presently no trading market and no assurances can be given that one will develop, could depress the price of our Common Stock in any market which may develop in our Common Stock. Further, such issuance of additional securities would result in a decrease in the percentage ownership of present shareholders.

Due to our small size and limited amount of capital, our ability to raise additional capital if and when needed could be constrained. Until such time as any enterprise, product or service which we acquire generates revenues sufficient to cover operating costs, it is conceivable that we could find ourselves in a situation where it needs additional funds in order to continue our operations. This need could arise at a time when we are unable to borrow funds and when market acceptance for the sale of additional shares of our Common Stock does not exist.


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REPORTING REQUIREMENTS UNDER THE EXCHANGE ACT AND COMPLIANCE WITH THE SARBANES-OXLEY ACT OF 2002, INCLUDING ESTABLISHING AND MAINTAINING ACCEPTABLE INTERNAL CONTROLS OVER FINANCIAL REPORTING, ARE COSTLY.

The rules and regulations pursuant to the Exchange Act require a public company to provide periodic reports which will require the Company to engage legal, accounting and auditing services. The engagement of such services can be costly and the Company is likely to incur losses which may adversely affect the Company’s ability to continue as a going concern. Additionally, the Sarbanes-Oxley Act of 2002 requires the Company to establish and maintain adequate internal controls and procedures over financial reporting. The costs of complying with the Sarbanes-Oxley Act of 2002 and the limited time that management will devote to the Company may make it difficult for the Company to establish and maintain adequate internal controls over financial reporting. In the event the Company fails to maintain an effective system of internal controls or discover material weaknesses in our internal controls, we may not be able to produce reliable financial reports or report fraud, which may harm our financial condition and result in loss of investor confidence and a decline in our share price.

WE WILL NEED TO RAISE ADDITIONAL CAPITAL.

We will require additional financing. Any debt or equity financing may be dilutive to shareholders, and debt financing, if available, would increase expenses and may involve restrictive covenants. We may be required to raise additional capital, at times and in amounts, which are uncertain, especially under the current capital market conditions. Under these circumstances, if we are unable to acquire additional capital or are required to raise it on terms that are less satisfactory than desired, it may have a material adverse effect on our financial condition.

RISKS RELATED TO OUR STOCKHOLDERS AND SHARES OF COMMON STOCK

WE HAVE NEVER PAID DIVIDENDS ON OUR COMMON STOCK.

We have never paid cash dividends on our common stock and do not presently intend to pay any dividends in the foreseeable future. We anticipate that any funds available for payment of cash dividends will be re-invested into the Company to further our business strategy.

IT IS LIKELY THAT OUR COMMON STOCK WILL BE CONSIDERED “PENNY STOCK,” WHICH MAY MAKE IT MORE DIFFICULT FOR INVESTORS TO SELL THEIR SHARES DUE TO SUITABILITY REQUIREMENTS.

Our common stock may be deemed to be “penny stock” as that term is defined under the Exchange Act. Penny stocks generally are equity securities with a price of less than $5.00. Penny stock rules impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors.” The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or an annual income exceeding $200,000 or $300,000 jointly with their spouse.

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 disclosure document in a form prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the penny stock market. Moreover, broker/dealers are required to determine whether an investment in a penny stock is a suitable investment for a prospective investor. A broker/dealer must receive a written agreement to the transaction from the investor setting forth the identity and quantity of the penny stock to be purchased. These requirements may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of them. This could cause our stock price to decline.

WE EXPECT TO ISSUE MORE SHARES IN A MERGER OR ACQUISITION, WHICH WILL RESULT IN SUBSTANTIAL DILUTION.

Our Articles of Incorporation authorize the Company to issue 100,000,000 shares of common stock. Any merger or acquisition effected by the Company may result in the issuance of additional securities without stockholder approval and may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. Moreover, our common stock issued in any such merger or acquisition transaction may be valued on an arbitrary or non-arm’s-length basis by our management, resulting in an additional reduction in the percentage of common stock held by our then existing stockholders. Our board of directors has the power to issue any or all of such authorized but unissued shares without stockholder approval. To the extent that additional shares of common stock or preferred stock are issued in connection with a business combination or otherwise, dilution to the interests of our stockholders will occur and the rights of the holders of common stock might be materially adversely affected.


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ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES.

Our executive offices are currently located at 160 East 65th Street New York, NY 10065 which is also the principal place of business of our chief executive officer. The office is provided rent free and should be sufficient to meet our current needs.

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. MINE SAFETY DISCLOSURE

None.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

A. MARKET INFORMATION

Our common stock currently trades on the Pink Sheets Over-the-Counter-under the symbol (“BEMG”). There is a very limited market for our common stock. There has been a very limited market for our common stock.

2011HighLowFirst Quarter$0.75$0.15Second Quarter$0.51$0.08Third Quarter$0.10$0.10Fourth Quarter$0.10$0.052012HighLowFirst Quarter$0.60$0.03Second Quarter$0.60$0.02Third Quarter$0.02$0.02Fourth Quarter$0.19$0.022013 (Through March 24, 2013)HighLowFirst Quarter$0.38$0.12
B. HOLDERS

As of December 31, 2012 there were 79 shareholders of record of our Common Stock.

Our transfer agent is Pacific Stock Transfer Company. Their mailing address is 4045 South Spencer Street Suite 403, Las Vegas, NV 89119.

C. DIVIDENDS

Holders of our common stock are entitled to receive such dividends as our board of directors may declare from time to time from any surplus that we may have. We have not paid any cash dividends on our common stock since the date of our incorporation and we do not anticipate paying any common stock dividends in the foreseeable future. We anticipate that any earnings will be retained for development and expansion of our businesses and we do not anticipate paying any cash dividends in the foreseeable future. Future dividend policy will depend upon our earnings, financial condition, contractual restrictions and other factors considered relevant by our Board of Directors and will be subject to limitations imposed under Florida law.


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D. EQUITY COMPENSATION PLANS

None.

E. SALE OF UNREGISTERED SECURITIES

None.

ITEM 6. SELECTED FINANCIAL DATA

Not applicable.

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

FORWARD LOOKING STATEMENTS

The statements contained in this report that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements are made based upon management’s current expectations and beliefs concerning future developments and their potential effects upon the Company. There can be no assurance that future developments affecting the Company will be those anticipated by management. Actual results may differ materially from those included in the forward-looking statements.

Readers are also directed to other risks and uncertainties discussed in other documents filed by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking information, whether as a result of new information, future developments or otherwise.

The following discussion and analysis should be read in conjunction with our audited financial statements for the fiscal year ended December 31, 2012.

We are a development stage company and have limited continuing operations. Our business objectives are to operate as a wholesale automobile dealer and/or to effect a merger, exchange of capital stock, asset acquisition or other similar business combination with an operating or development stage business which desires to utilize our status as a reporting corporation under the Exchange Act.

RESULTS OF OPERATIONS FOR FISCAL YEAR ENDED DECEMBER 31, 2012 AS COMPARED TO DECEMBER 31, 2011

REVENUES:

We are a development stage company with no significant revenues. We recognized revenue of $4,700 during the year ended December 31, 2012. We had no revenues in 2011. Our revenues since Inception (July 5, 2006) totaled $7,460.

OPERATING UPDATE:

General and administrative expenses for the years ended 2012 and 2011 totaled $58,674 and $32,376 respectively. Total general and administrative expenses since Inception totaled $299,555. Our Net loss from continuing operations for the year ended December 31, 2012 and 2011 totaled $(64,545) and $(35,725) and $(308,416) since Inception. We also recorded a net loss from discontinued operations of $(149,500) for the period from inception through December 31, 2012. Our Net Losses for the years ended December 31, 2012 and 2011 and from Inception totaled $(64,545), $(35,725), and $(457,916).

LIQUIDITY AND CAPITAL RESOURCES:

ASSETS AND LIABILITIES

At December 31, 2012, we had cash totaling $6,123 and prepaid expenses of $991 which represented our only assets.  At December 31, 2011 we had cash totaling $938. Our total assets were $7,114 at December 31, 2012.


- 8 -

Our liabilities at December 31, 2012 totaled $139,886 of which $125,500 is attributable to notes payable. At December 31, 2011 our liabilities totaled $69,165 of which $63,500 is attributable to notes payable. We have a working capital deficit at December 31, 2012 of $132,772 as compared to a working capital deficit at December 31, 2011 of $68,277. The increase in our liabilities and our deficit in working capital is due to the lack of revenues and our use of debt to fund our operations.

We do not have sufficient  revenues to satisfy our ongoing liabilities. Unless we secure equity or debt financing, of which there can be no assurance, or identify an acquisition candidate, we will not be able to continue any operations.

PLAN OF OPERATION FOR FISCAL YEAR 2013

We will attempt to identify an acquisition candidate. We have had discussions with several companies in different industries. However, we have not come to terms with any company and there can be no assurance that we will enter an agreement at any time in the near future.

OFF-BALANCE SHEET ARRANGEMENTS

None.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE.

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Our financial statements have been examined to the extent indicated in their reports by Malonebailey LLP and have been prepared in accordance with generally accepted accounting principles and pursuant to Regulation S-K as promulgated by the Securities and Exchange Commission and are included herein, on Page F-1 hereof in response to Part F/S of this Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Our disclosure controls and procedures are also designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, to allow timely decisions regarding required disclosure. Our chief executive officer and chief financial officer have reviewed the effectiveness of our disclosure controls and procedures as of December 31, 2012 and, based on their evaluation, and, have concluded that the disclosure controls and procedures were effective.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the year ended December 31, 2012 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is defined in Rule 13a-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our principal executive and principal financial officer, we assessed, as of December 31, 2012, the effectiveness of our internal control over financial reporting. This assessment was based on criteria established in the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment using those criteria, management concluded that our internal control over financial reporting as of December 31, 2012, was effective.

Internal control over financial reporting is defined as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:

·pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;·provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with U.S. generally accepted accounting principles and that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and·provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal control system are met. Because of the inherent limitations of any internal control system, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.

This Annual Report on Form 10-K does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report on Form 10-K.

CORPORATE GOVERNANCE.

We have one director. We do not have an audit committee, compensation committee or nominating committee. We do not have sufficient funds to secure officer and directors insurance and we do not believe that we will be able to retain an independent Board of Directors in the immediate future. We do not believe that we will be able to attract independent board members until such time as we acquire an operating business.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The following information sets forth the names of our officers and directors, their present positions, and some brief information about their background.

NAME:AGE:POSITION:Edwin Mendlinger77CEO/President/Secretary/CFO/Director

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OFFICERS AND DIRECTORS:

EDWIN MENDLINGER: Mr. Mendlinger currently serves as our sole officer and director. He has been involved in investment banking for over 40 years. He has been instrumental in structuring a variety of investment banking transactions, including initial public offerings, reverse mergers, consolidations and restructuring both as a principal and agent. He was the founder of Mendlinger, Snyder Inc., formerly a FINRA member firm. He currently works as an independent consultant in New York. He is the President of Diversified Mortgage Workout Corp. He attended New York University receiving his Bachelor of Science degree in accounting with a minor in finance and also attended University of Miami Law School.

COMMITTEES OF THE BOARD OF DIRECTORS

None.

COMPENSATION OF DIRECTORS

Our current director does not receive any compensation, either in cash or common stock, for serving on our Board of Directors. Board members are reimbursed for their reasonable expenses incurred in attending board or committee meetings.

TERMS OF OFFICE

Our directors are appointed for one-year terms to hold office until the next annual general meeting of the holders of our Common Stock or until removed from office in accordance with our by-laws. Our officers are appointed by our board of directors and hold office until removed by our board of directors.

PENALTIES OR SANCTIONS

To the best of our knowledge, none of our directors, officers or stockholders holding a sufficient number of securities to affect materially the control of the Company, has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority or been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor making an investment decision.

PERSONAL BANKRUPTCIES

To the best of our knowledge, none of our directors, officers or stockholders holding a sufficient number of securities to affect materially the control of the Company, nor any personal holding company of any such person has, within the last ten years become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or been subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of that person.

FAMILY RELATIONSHIPS

None.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Compliance with Section 16(a) of the Securities Exchange Act of 1934

For companies registered pursuant to section 12(g) of the Exchange Act, Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than ten percent of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on a review of the copies of reports furnished to us and written representations that no other reports were required, Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with on a timely basis for the period which this report relates.


- 11 -

ITEM 11. EXECUTIVE COMPENSATION.

Our current CEO has been paid $9,000 since assuming office in December 2009. There is no employment agreement in place. The Company has not set any parameters to pay any salaries. We believe that any compensation to be paid should be based on the belief that any compensation programs should: be aligned with stockholders’ interests and business objectives; reward performance; and be externally competitive and internally equitable. We may compensate our officers with cash compensation and equity awards.

The following table discloses compensation paid during the fiscal years ended December 31, 2012 and 2011 to the Company’s Chief Executive Officer and the most highly compensated executive officer whose total compensation exceeded $100,000 for the fiscal year ended December 31, 2012 (collectively, the “Named Executive Officers”). No restricted stock awards, long-term incentive plan payouts or other types of compensation, other than the compensation identified in the table below, were paid to the Named Executive Officers during these fiscal years.

STOCKOPTIONAWARDSAWARDSNAME AND PRINCIPALSALARYBONUS($)($)TOTALPOSITIONYEAR($)($)(1)(1)($)Edwin Mendlinger20129,0000009,000201100000
(1) The amounts in these columns reflect the dollar amount recognized for financial statement reporting purposes for the fiscal years indicated in accordance with SFAS No. 123(R). These amounts reflect the Company’s accounting expense for these awards, and do not correspond to the actual value that will be recognized by the named executives.

STOCK OPTIONS GRANTED/EXERCISED IN LAST YEAR

The Company has never issued any stock options.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth certain information as of December 31, 2011 with respect to the beneficial ownership of the Company’s Common Stock by:

(i) all persons known by the Company to be beneficial owners of more than 5% of the Company’s Common Stock, (ii) each current officer and director and Named Executive Officer, and (iii) by all executive officers and directors as a group.

Number ofShares ofPercent ofNameCommon StockClassEdwin Mendlinger——Mark Teitelbaum13,711,67682.8%All officers and directors as a group——
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

Except as described below, none of the following persons has any direct or indirect material interest in any transaction to which we are a party during the past two years, or in any proposed transaction to which the Company is proposed to be a party:

(A) any director or officer;

(B) any proposed nominee for election as a director;

(C) any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our common stock; or


- 12 -

(D) any relative or spouse of any of the foregoing persons, or any relative of such spouse, who has the same house as such person or who is a director or officer of any parent or subsidiary.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

AUDIT FEES. The aggregate fees billed for professional services rendered was $7,000 and $7,500 for 2012 and 2011 respectively.

AUDIT-RELATED FEES. The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of our financial statements and not reported under the caption “Audit Fee.” There were no such fees billed for the fiscal year ended December 31, 2012 and 2011.

TAX FEES. No fees were billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning services.

ALL OTHER FEES. Other than the services described above, there were no other services provided by our principal accountants for the fiscal years ended December 31, 2012 and 2011.

We do not have an audit committee. Therefore, our entire Board of Directors (the “Board”) serves in the capacity of the audit committee. In discharging its oversight responsibility as to the audit process, our Board obtained from the independent auditors a formal written statement describing all relationships between the auditors and us that might bear on the auditors’ independence as required by Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees.”

Our Board discussed with the auditors any relationships that may impact their objectivity and independence, including fees for non-audit services, and satisfied itself as to the auditors’ independence. The Board also discussed with management and the independent auditors the quality and adequacy of its internal controls. The Board reviewed with the independent auditors their management letter on internal controls.

Our Board discussed and reviewed with the independent auditors all matters required to be discussed by auditing standards generally accepted in the United States of America, including those described in Statement on Auditing Standards No. 61, as amended, “Communication with Audit Committees”. Our entire Board, acting in the capacity of the audit committee reviewed the audited consolidated financial statements of the Company as of and for the year ended December 31, 2012 and 2011 with the independent auditors. Management has the responsibility for the preparation of the Company’s financial statements and the independent auditors have the responsibility for the examination of those statements. Based on the above-mentioned review and discussions with the independent auditors our Board of Directors approved the Company’s audited consolidated financial statements and recommended that they be included in its Annual Report on Form 10-K for the year ended December 31, 2012, for filing with the Securities and Exchange Commission.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

a. The following report and financial statements are filed together with this Annual Report.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2012 and 2011

CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2012 and 2011 AND CUMULATIVE SINCE JULY 5, 2006 (INCEPTION)

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ (DEFICIT)

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2012 and 2011 AND CUMULATIVE SINCE JULY 5, 2006 (INCEPTION) THROUGH DECEMBER 31, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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b. Index to Exhibits

31.1Certificate of the Chief Executive Officer pursuant Section 302 of the Sarbanes-Oxley Act of 200231.2Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1Certificate of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2Certificate of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002101*XBRL data files of Financial Statements and Notes contained in this Annual Report on Form 10-K.
*  To be submitted by amendment

SIGNATURES

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

BETA MUSIC GROUP, INC.By:/s/ Edwin MendlingerDate: April 5, 2013Edwin MendlingerCEO and Director
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:/s/ Edwin MendlingerDate: April 5, 2013Edwin MendlingerCEO and Director

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of
Beta Music Group, Inc .
(a development stage company)
New York, New York

We have audited the accompanying consolidated balance sheets of Beta Music Group, Inc. and its subsidiary (a development stage company) (collectively the Company”) as of December 31, 2012 and December 31, 2011 and the related consolidated statement of operations, changes in stockholders’ deficit and cash flows for the years ended December 31, 2012 and December 31, 2011 and the period from July 5, 2006 (inception) through December 31, 2012. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with 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 misstatements. 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide 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 Beta Music Group, Inc. and its subsidiary as of December 31, 2012 and December 31, 2011 and the results of its operations and their cash flows for the years ended December 31, 2012 and December 31, 2011 and the period from July 5, 2006 (inception) through December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has a working capital deficit and no source of revenue, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.


MALONEBAILEY, LLP
www.malone-bailey.com
Houston, Texas

April 5, 2013


F-1

BETA MUSIC GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS

December 31,December 31,20122011AssetsCurrent Assets:Cash$6,123$938Prepaid Expenses991—Total Assets$7,114$938Liabilities and Stockholders’ DeficitCurrent Liabilities:Accounts payable$3,675$1,284Accrued liabilities10,7114,381Notes payable95,50063,500Notes payable - related party30,000—Total Current Liabilities139,88669,165Total Liabilities139,88669,165Stockholders’ (Deficit)Common stock, $.01 par value 100,000,000 authorized and 16,555,315 issued and outstanding at December 31, 2012 and 2011.165,553165,553Additional paid in capital174,490174,490Deficit Accumulated in the Development Stage(472,815)(408,270)Total Stockholders’ Deficit(132,772)(68,227)Total Liabilities and Stockholders’ Deficit$7,114$938
The Accompanying Notes are an Integral Part of these Consolidated Financial Statements


F-2

BETA MUSIC GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS

FromJuly 5, 2006For the Year Ended(Date of Inception)December 31,to December 31,201220112012Revenue$4,700$—$7,460Cost of sales4,000—6,251Gross profit700—1,209General administrative expenses58,67432,376299,555Interest expense6,5713,34910,070Net loss from continuing operations(64,545)(35,725)(308,416)Loss from discontinued operations——(149,500)Net Loss$(64,545)$(35,725)$(457,916)Basic and Diluted Loss per Common Share$(0.00)$(0.00)Basic and Diluted Weighted AverageCommon Shares Outstanding16,555,31516,555,315
The Accompanying Notes are an Integral Part of these Consolidated Financial Statements


F-3

BETA MUSIC GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ (DEFICIT)

Common StockAmountPaid in CapitalDeficit Accumulated in the Development StageNon Controlling InterestTotal Stockholders’ DeficitBalance, July 5, 2006, date of inception—$—$—$—$—$—Proceeds from Founders shares issued on July 14, 2006 at $.01 per share10,000100———100Net Loss———(100)—(100)Balance December 31, 200610,000100—(100)——Net Loss———(21,522)—(21,522)Balance, December 31, 200710,000100—(21,622)—(21,522)Shares issued for conversion of accounts payable-related parties at $.01 per share on March 31, 20082,160,08721,601———21,601Shares issued for conversion of accounts payable-related party at $.01 per share on April 24, 2008244,0002,440———2,440Shares issued for conversion of accounts payable-related party and accrued wages-related parties on May 27, 20081,000,09110,001———10,001Shares issued for conversion of accounts payable-related party and accrued wages-related parties on August 21, 2008383,0003,830———3,830Shares issued for conversion of accounts payable-related party and accrued wages-related parties on September 4, 20081,126,59011,266———11,266Shares issued for conversion of accounts payable-related party and accrued wages-related parties on October 22, 2008645,5006,455———6,455Shares issued for prepaid expenses on October 22, 20081,230,94212,309———12,309Net Loss———(75,614)—(75,614)Balance, December 31, 20086,800,21068,002—(97,236)—(29,234)Shares issued for conversion of accounts payable-related party——————and accrued wages-related parties on January 7, 2009 at $.01 per share1,969,50019,695———19,695Shares issued at $.01 per share for services and prepaid expenses on January 7, 2009550,0005,500———5,500Shares issued for conversion of accounts payable-related party and accrued wages-related parties on February 4, 2009870,0008,700———8,700Shares issued for accrued liabilities and consulting expenses on August 3, 2009 at $.01100,0001,000———1,000Shares issued for conversion of accounts payable-related party and accrued wages-related parties on August 3, 20094,790,60547,906———47,906Shares issued for accrued rent-related party750,0007,500———7,500Shares issued for conversion of accounts payable-related party and accrued wages-related parties on September 1, 2009725,0007,250———7,250Contributed capital from related party debt forgiveness——24,95824,958Net Loss———(178,412)45(178,367)Balance, December 31, 200916,555,315165,55324,958(275,648)45(85,092)Shares of subsidiary issued to non controlling interest———(48,560)48,560—Spinoff of subsidiaries——149,53248,560(41,409)156,683Dividend in the form of shares of former subsidiary———(14,899)—(14,899)Net Loss———(81,998)(7,196)(89,194)Balance, December 31, 201016,555,315165,553174,490(372,545)—(32,502)Net Loss———(35,725)—(35,725)Balance, December 31, 201116,555,315$165,553$174,490$(408,270)$—$(68,227)Net Loss———(64,545)—(64,545)Balance, December 31, 201216,555,315$165,553$174,490$(472,815)$—$(132,772)
The Accompanying Notes are an Integral Part of these Consolidated Financial Statements


F-4

BETA MUSIC GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS

December 31,From
July 5, 2006
(Date of Inception)
to December 31,201220112012Operating Activities:Net loss$(64,545)$(35,725)$(457,916)Adjustments to reconcile net loss to net cash used by operating activities:Rent expense paid through issuance of common stock——21,750Shares issued for services——1,000Shares issued for services-related party——28,800Shares of subsidiary issued for services-related party——15,434Officers compensation forgiven as paid-in capital——24,958Shares of subsidiary issued to minority interest——(7,196)Loss allocated to non controlling interest——45Amortization of prepaid expenses——12,496Changes in Assets and Liabilities:Prepaid insurance(991)—(991)Accounts payable2,391(1,040)14,654Accounts payable-related parties——2,750Accrued wages related party——47,930Accrued liabilities6,3303,34810,711Net Cash Used by Operating Activities(56,815)(33,417)(285,575)Investing ActivitiesCash relinquished in distribution of subsidiaries——(394)Net Cash Used by Investing Activities——(394)Financing Activities:Proceeds from related party advances30,000—203,192Repayment of related party advances——(6,600)Proceeds from notes payable32,00028,00095,500Net Cash Provided by Financing Activities62,00028,000292,092Net Increase (Decrease) in Cash5,185(5,417)6,123Cash at Beginning of Period9386,355—Cash at End of Period$6,123$938$6,123Supplemental Disclosures:Cash paid for income taxes$—$—$—Cash paid for interest$242$—$242Non-cash TransactionsStock issued for repayment of related party advances$—$—$81,404Shares of subsidiary issued as repayment of related party advances$—$—$33,126Stock issued for prepaid compensation at subsidiary$—$—$13,676Shares of subsidiary issued to non controlling interests$—$—$48,560Dividend paid through issuance of shares of subsidiary$—$—$14,899Stock issued as repayment of accrued liabilities$—$—$14,400
The Accompanying Notes are an Integral Part of these Consolidated Financial Statements


F-5

BETA MUSIC GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: DESCRIPTION OF COMPANY AND BASIS OF PRESENTATION

Beta Music Group, Inc. (the “Company” or “Beta”) was incorporated in the state of Florida on July 5, 2006 under the name Pop Starz Productions, Inc. On November 14, 2007 the name of the Company was changed to The Next Pop Star, Inc. On October 20, 2008, the name was changed again to Beta Music Group, Inc.

In March 2012 we determined to establish ourselves as a wholesale auto dealer in the state of Indiana.  We are licensed in the state of Indiana as a wholesale auto dealer. Our license is valid in all states in the union. In furtherance thereof we formed a wholly owned subsidiary, Beta Auto Group, Inc. We have obtained a dealer license, obtained a bond and have secured garage man insurance. During the year ended December 31, 2012, we also acquired and sold auto inventory. In order to continue with this business plan we will need to secure additional funding.

Additionally, the Company intends to locate and combine with an existing company that is profitable or which, in management’s view, has growth potential, irrespective of the industry in which it is engaged. A combination may be structured as a merger, consolidation, exchange of the Company’s common stock for stock or assets or any other form.

The Company does not currently have cash on hand sufficient to fund its operations until the earlier of a combination or a period of one year, and will be required to seek additional funding to consummate a transaction. The Company intends to either seek additional equity or debt financing. No assurances can be given that such equity or debt financing will be available, nor can there be any assurance that a combination transaction will be consummated. Should the Company be required to incur any significant liabilities prior to a combination transaction, including those associated with the current minimal level of general and administrative expenses, it may not be able to satisfy those liabilities in the event it was unable to obtain additional equity or debt financing.

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary Beta Auto Group, Inc.

Development Stage

The Company complies with Statement of Financial Accounting Standard ASC 915-15 and the Securities and Exchange Commission Exchange Act 7 for its characterization of the Company as development stage.

Going Concern

At December 31, 2012, the Company has a working capital deficit and no significant revenue source. As such, the accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company does not have sufficient working capital for its planned activities, which raises substantial doubt about its ability to continue as a going concern.

Continuation of the Company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective through short-term loans from related parties and additional equity investments, which will enable the Company to continue operations for the coming year.

NOTE 2: SUMMARY OF ACCOUNTING POLICIES

CONSOLIDATION PRINCIPLES

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for all periods presented and include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions, which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.


F-6

BETA MUSIC GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CASH AND CASH EQUIVALENTS:

Cash and cash equivalents are considered to be all highly liquid investments purchased with an initial maturity of three (3) months or less.

CONCENTRATION OF CREDIT RISK:

Financial instruments that potentially subject the company to credit risk consist principally of cash and cash equivalents and receivables. The Company places its cash and cash equivalents with financial institutions. Deposits are insured to Federal Deposit Insurance Corp. limits. At December 31, 2012 and 2011 there was no uninsured cash.

Other financial instruments include notes payable and amounts due to related parties for wages and advances. Due to the short-term maturity of these obligations and the stated interest rates on notes payable, the carrying value of these instruments represent their fair value.

REVENUE RECOGNITION:

Revenues are recognized when all of the following have been met:

·Persuasive evidence of an arrangement exists;·Delivery or service has been performed;·The customer’s fee is deemed to be fixed or determinable and free of contingencies or significant uncertainties·Collectability is probable.
ADVERTISING:

Advertising costs are charged to operations when incurred. Advertising cost for the years ended December 31, 2012 and 2011 were nil.

INCOME TAXES:

Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts and are based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized.

INCOME (LOSS) PER SHARE:

Basic net loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted net loss per common share is computed similar to basic net loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. At December 31, 2012 and 2011 diluted net loss per share is equivalent to basic net loss per share as the inclusion of any shares committed to be issued would be anti-dilutive.

RECENT ACCOUNTING PRONOUNCEMENTS

The Company has implemented all new relevant accounting pronouncements that are in effect through the date of these financial statements. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its consolidated financial position or results of operations.


F-7

BETA MUSIC GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RECLASSIFCATIONS

Certain prior year amounts have been reclassified to conform with the current year presentation.

NOTE 3: Stock Purchase and Sale Agreement and Discontinued Operations

In December 2009, certain shareholders entered into a Stock Purchase and Sale Agreement to sell 13,711,676 shares of common stock held to an individual. Pursuant to that agreement, the Board of Directors of the Company resolved to spin off its subsidiaries to the shareholders of record as of December 15, 2009. The effective date was April 13, 2010. Accordingly, the statement of operations includes a loss from discontinued operations since inception of $149,500.

In relation to the spin-off, the Company distributed its investment in its former subsidiary to the shareholders of record as of December 15, 2009 through the issuance of 16,555,315 shares of subsidiary common stock. The value of the dividend was determined to be $14,899, which represented the Company’s investment in the former sub.

Additionally, as of the date of the spin off, the Company recorded Additional Paid in Capital of $149,532, which, on the date of the spinoff, represented the net liabilities and stockholders’ equity of the subsidiary.

NOTE 4: Income taxes

At December 31, 2012 and 2011 deferred tax assets consist of the following:

December 31,December 31,20122011Federal loss carryforwards$132,000$108,000Less: valuation allowance(132,000)(108,000)$—$—
The Company has established a valuation allowance equal to the full amount of the deferred tax asset primarily due to uncertainty in the utilization of the net operating loss carry forwards.

As of December 31, 2012, the effective tax rate is lower than the statutory rate due to net operating losses.

The estimated net operating loss carry forwards of approximately $372,000 begin to expire in 2028 for both federal and state purposes.

NOTE 5: Notes Payable

At December 31, 2012 and 2011 the Company has notes payable outstanding in the amounts of $95,500 and $63,500, respectively. The notes are due on demand, unsecured, and accrue interest at the rate of 6% per year.

NOTE 6: Related Party

At December 31, 2012, the Company has notes payable due to a related party in the amount of $30,000. The notes are due on demand, unsecured, and accrue interest at the rate of 6% per year.

NOTE 7: SUBSEQUENT EVENTS

In February 2013, we received proceeds from a note payable in the amount of $13,000. The note bears interest at the rate of 6% per annum, is unsecured, and due on demand.


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