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, 2008


or


o
            
            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: 000-52692





DON
MARCOS TRADING CO.


(Exact
name of registrant as specified in its charter)





Florida
              
              65-0921319(State
      or other jurisdiction of
              
              (I.R.S.
      Employerincorporation
      or organization)
              
              Identification
      No.)





1535 Southeast
17thStreet,
Suite 107, Ft. Lauderdale, Florida  33316


(Address
of principal executive offices)





Registrant’s
telephone number, including area code: (954)
356-8100





Securities
registered pursuant to Section 12(b) of the Act:  None





Securities
registered pursuant to Section 12(g) of the Act:





Common Stock, no par
value


(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.  o Yes þ No





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act.  o Yes þ 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 periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  þ Yes o No









Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained herein, 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.  þ





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
            o
            
            Accelerated
      filer
            oNon-accelerated
      filer
            o
            
            Smaller
      reporting company
            þ





Indicate
by check mark whether the registrant is a shell company.  o Yes þ No





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant on April 10, 2009 was approximately $1,520,000
(based on 15,200,000 shares at $0.10 per share).





The
registrant had 47,300,000 shares of common stock outstanding as of April 13,
2009.





DOCUMENTS
INCORPORATED BY REFERENCE





The
following documents are incorporated herein by reference in Part IV, Item 15:
(i) Registration Statement on Form SB-2, filed on May 15, 2007, as amended
(Registration No. 333-142976); (ii) Current Report on Form 8-K, filed on
December 14, 2007; (iii) Annual Report on Form 10-KSB, filed on March 31, 2008;
(iv) Current Report on Form 8-K, filed on April 30, 2008; and (v) Current Report
on Form 8-K, filed on August 14, 2008.





TABLE OF
CONTENTS







PagePART IITEM
      1.
                      BUSINESS
                      1ITEM
      1A.
                      RISK
      FACTORS
                      3ITEM
      1B.
                      UNRESOLVED
      STAFF COMMENTS
                      3ITEM
      2.
                      PROPERTIES
                      4ITEM
      3.
                      LEGAL
      PROCEEDINGS
                      4ITEM
      4.
                      SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                      4PART IIITEM
      5.
                      MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES
                      4ITEM
      6.
                      SELECTED
      FINANCIAL DATA
                      5ITEM
      7.
                      MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
                      5ITEM
      7A.
                      QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                      9ITEM
      8.
                      FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA
                      10ITEM
      9.
                      CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
                      10ITEM
      9A.
                      CONTROLS
      AND PROCEDURES
                      10ITEM
      9A(T).
                      CONTROLS
      AND PROCEDURES
                      12ITEM
      9B.
                      OTHER
      INFORMATION
                      12PART IIIITEM
      10.
                      DIRECTORS,
      EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
                      12ITEM
      11.
                      EXECUTIVE
      COMPENSATION
                      14ITEM
      12.
                      SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
                      15ITEM
      13.
                      CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
                      16ITEM
      14.
                      PRINCIPAL
      ACCOUNTING FEES AND SERVICES
                      16PART IVITEM
      15.
                      EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES
                      17SIGNATURES
                      
                      18





i


PART
I





ITEM
1.      BUSINESS.





Business
Development





We were
incorporated on May 11, 1999 in the state of Florida to be the sole importer and
distributor of Don Marcos Coffee.





Business
of Registrant





Don
Marcos Coffee is grown, roasted and packaged in Costa Rica by the Don Marcos
Coffee Company, S.A., a Costa Rica company.  On January 23, 2003, we
entered into a Distributorship Agreement with Don Marcos Coffee Company,
S.A.  Don Marcos Coffee Company, S.A. is a licensed coffee
exporter.  Coffee exports are regulated by the National Costa Rican
Coffee Institute (INCAFE).





Don
Marcos Coffee is a specialty grade coffee, sometimes called gourmet or premium
coffee.  Specialty coffees are made from exceptional beans grown only
in ideal coffee-producing climates. They tend to feature distinctive flavors,
which are shaped by the unique characteristics of the soil that produces
them.





Don
Marcos Coffee is designated Strictly Hard Bean (SHB) by the grower, Don Marcos
Coffee Company, S.A.  SHB is part of a classification system for Costa
Rican coffees, with the characteristic of being cultivated at an altitude higher
than 3,900 feet above sea level.  In Costa Rica, coffee trees that
grow at this altitude produce higher quality beans that have a high density that
holds in the nutrients and flavor the beans during roasting.





The
coffee is not roasted until the time of order for maximum
freshness.  It can be packaged ground or whole bean.





We order
coffee in quantities of 69 kilograms.  This is the standard size
export bag.  For wholesale orders, the coffee is shipped to us in a 69
kilogram bulk pack.





For
retail sales, we use a custom printed, 12-ounce foil side gusseted
bag.  There are approximately 202 bags per order.  The bags
are dropped shipped by the bag manufacturer directly to Costa
Rica.  The bags are machine filled and machine sealed in Costa
Rica.  The filled bags are then shipped directly to our
offices. In addition, we offer custom packaging for both resale and
business promotion.





We sell
our coffee directly on our e-commerce website,www.donmarcos.com and
plan to distribute coffee to specialty coffee stores and select restaurants as
well.


1


Competition





Although
we face intense competition from numerous other coffee distributors, we believe
that we can compete on the basis of the quality and uniqueness of our
products.  We believe our products are unique because:





·
            Our
      coffee is specialty coffee.  Specialty coffee is defined as a
      coffee that has no defects and has a distinctive flavor in the
      cup.  Like wine and honey, specialty coffee has a unique flavor
      thanks to the micro-climates that produce it.  Our coffee is
      full bodied with a sweet caramel
taste.


·
            Our
      coffee is Strictly Hard Bean.  Strictly Hard Bean is part of a
      classification system for coffees, with the characteristic of being
      cultivated above 3,900 feet above sea level.  In Costa Rica,
      coffee trees that grow at this altitude produce higher quality beans that
      have a high density that holds in the nutrients and flavor the beans
      during roasting.


·
            Our
      packaging is unique in that our bag incorporates a one-way degassing valve
      to protect the freshness of the
coffee.


·
            Our
      coffee is processed under the highest quality standards, using the latest
      and most environmentally friendly machinery available.  We maintain
      the strictest environmental standards concerning water quality, recycling
      and reforestation.





However,
many of our competitors are substantially larger, better financed and have
superior resources compared to us.  Therefore, there is no guarantee
that we will be able to successfully compete with them.





We have
numerous competitors.  Some of our competitors are large companies
selling a large variety of products, including products that compete with our
coffee.  Competitors include Kraft General Foods, Inc., The Kroger
Co., The Procter & Gamble Company and Sara Lee Corporation.  Our
noteworthy competitors for specialty coffee include:





1.          Caf
Britt


2.          Triangulo
de Oro


3.          Caf
1820


4.          Volio


5.          Caf
Rey





These are
five popular coffee companies from Costa Rica.  Other coffee
companies, such as Peets and Starbucks, offer coffee from several regions of the
world.  The five competitors listed above are direct competitors of
our company because they all produce only Costa Rican coffee like Don Marcos
Coffee.


2


Sources and Availability of Raw Material and Principal
Suppliers





Don
Marcos Coffee is grown, roasted and packaged in Costa Rica by the Don Marcos
Coffee Company, S.A., a Costa Rica company.  On January 23, 2003, we
entered into a Distributorship Agreement with Don Marcos Coffee Company,
S.A.  The material terms of our Distributorship Agreement with Don
Marcos Coffee Company, S.A. are:





·
            We
      have exclusive worldwide rights to distribute all coffee products of Don
      Marcos Coffee Company, S.A.


·
            We
      have the right to appoint subdistributors, but have not done so
      yet.


·
            We
      must place a minimum order of $200 with payment terms of net 30
      days.


·
            We
      have a 30 day right of inspection of the
coffee.


·
            The
      agreement has an initial term of five years with automatic five year
      renewals unless either party terminates in writing at least 90 days prior
      to the end of any term.


·
            We
      pay the current market price for coffee when we place an order for coffee
      from Don Marcos Coffee Company,
S.A.





If Don
Marcos Coffee Company, S.A. terminated the Distributorship Agreement, it would
be difficult to find a replacement distributor and our operations would
suffer.





Dependence
on Major Customers





We are
not dependent on any one customer for a substantial portion of our sales of any
product.





Intellectual
Property





We own
the registered trademark, Don Marcos, registration number 2559462, registered on
April 9, 2002 with the U.S. Patent and Trademark Office.  At this
time, we do not have any other trademark, copyright or patent
protection.





Employees





As of the
date hereof, we have three full-time employees.  We plan to hire
independent contractors on an “as needed” basis only.  We have no
collective bargaining agreements with our employees.  We believe that
our employee relationships are satisfactory.





ITEM
1A.      RISK FACTORS





We are a
smaller reporting company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and are not required to provide the information under this
item.





ITEM
1B.      UNRESOLVED STAFF COMMENTS





We are a
smaller reporting company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and are not required to provide the information under this
item.


3


ITEM
2.      PROPERTIES





Our
office encompasses 800 square feet located in downtown Ft. Lauderdale, Florida
in a building owned by Hudson Capital Group.  Our management believes
these premises are in good condition.  Hudson Capital Group allows us
to use this space free of charge.  Although Hudson Capital Group can
revoke our right to use this space at any time, we have been informed by its
principal, Steven W. Hudson, that Hudson Capital Group intends to allow us to
continue using the space free of charge for the foreseeable
future.  However, should we be evicted from the space, we would need
to relocate to new facilities and may lack the funds to do so.





ITEM
3.      LEGAL PROCEEDINGS





To the
best knowledge of management, there are no litigation matters pending or
threatened against us.





ITEM
4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS





None.







PART
II




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





Market
for Common Equity




Our
common stock is currently quoted on the Over-The-Counter Bulletin Board under
the Symbol “DNMO.”  Our common stock was first eligible for quotation
on the Over-the-Counter Bulletin Board on March 5, 2008.  The last
sale price of our common stock was $0.10 per share on March 28, 2008, without
retail mark-up, mark-down or commissions.




The above
quotations are inter-dealer quotations from market makers of our common
stock.  At certain times the actual closing or opening quotations may
not represent actual trades that took place.




Holders




As of
April 13, 2009, there were 86 shareholders holding certificated
securities.  Our transfer agent is Transfer Online, Inc., 317 SW Alder
Street, 2nd Floor, Portland, Oregon  97204.





Dividends




We have
paid no dividends on our common stock since inception and do not anticipate or
contemplate paying cash dividends in the foreseeable future.




4


Securities
Authorized for Issuance under Equity Compensation Plans




None.




Recent
Sales of Unregistered Securities




On April
13, 2009, we entered into Stock Purchase Agreements with certain of our officers
for the sale to those officers of shares of our common stock as
follows:




Name
      of Officer
                        Number
      of Shares of
                          Common
      Stock Purchased
                        Purchase
      Price PaidEarl
      T. Shannon
                        1,000,000
                        $5,000Steven
      W. Hudson
                        1,000,000
                        $5,000Scott
      W. Bodenweber
                        1,000,000
                        $5,000




Pursuant
to the Stock Purchase Agreements described above, we sold an aggregate of
3,000,000 shares of our common stock at a price of $0.005 per share to three
accredited investors for gross proceeds of $15,000.  We relied on the
exemption from registration relating to offerings that do not involve any public
offering pursuant to Section 4(2) under the Act and/or Rule 506 of Regulation D
promulgated pursuant thereto.  We believe that the investors are
“accredited investors” under Rule 501 under Regulation D of the Act and had
adequate access to information about us.





ITEM
6. SELECTED
FINANCIAL DATA




We are a
smaller reporting company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and are not required to provide the information under this
item.





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




The
following discussion and analysis should be read in conjunction with our
financial statements, including the notes thereto, appearing elsewhere in this
Report.





Overview





We were
incorporated on May 11, 1999 in the state of Florida to be the sole importer and
distributor of Don Marcos® Coffee.


5


Critical
Accounting Policies





Our
discussion and analysis of our financial condition and results of operations are
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses.  In consultation with our Board of Directors, we have
identified several accounting principles that we believe are key to
understanding of our financial statements.  These important accounting
policies require management's most difficult, subjective judgments.





Development
Stage Enterprise





We are a
development stage enterprise, as defined in Financial Accounting Standards Board
No. 7.  Our planned principal operations have not commenced, and,
accordingly, only nominal revenue has been derived during the
period.





Use
of Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities 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.  Actual results could differ from those
estimates.





Net
Loss per Share





We
adopted Statement of Financial Accounting Standards No. 128 that requires the
reporting of both basic and diluted earnings (loss) per share. Basic earnings
(loss) per share is computed by dividing net income (loss) available to common
stockholders by the weighted average number of common shares outstanding for the
period.  Diluted earnings (loss) per share reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. In accordance with FASB 128, any
anti-dilutive effects on net income (loss) per share are excluded.





Inventory





Inventory
is stated at the lower of cost (determined by the first-in, first-out method),
or market.  Inventories are adjusted for estimated obsolescence and
written down to net realizable value based upon estimates of future demand,
technology developments, and market conditions.


6


Stock
Issued for Non-Cash Transactions





It is our
policy to value stock issued for non-cash transactions, such as services, at the
fair market value of the goods or services received or the consideration
granted, whichever is more readily determinable, at the date the transaction is
negotiated.





There
were no shares of common stock issued for services during the years ended
December 31, 2008 and 2007.





Going
Concern





Our
financial statements are prepared using generally accepted accounting principles
applicable to a going concern, which contemplates the realization of assets and
liquidation of liabilities in the normal course of business.  Our
ability to continue as a going concern is dependent upon our ability to locate
sources of capital, and attain future profitable operations.  Our
management is currently initiating their business plan.  The
accompanying financial statements do not include any adjustments that might be
necessary should we be unable to continue as a going concern.





Stock
Based Compensation





We
adopted SFAS No. 123 (Revised 2004), Share Based Payment (“SFAS
No. 123R”), under the modified-prospective transition method on
January 1, 2006.  SFAS No. 123R requires companies to
measure and recognize the cost of employee services received in exchange for an
award of equity instruments based on the grant-date
fair-value.  Share-based compensation recognized under the
modified-prospective transition method of SFAS No. 123R includes
share-based compensation based on the grant-date fair-value determined in
accordance with the original provisions of SFAS No. 123, Accounting for
Stock-Based Compensation, for all share-based payments granted prior to and not
yet vested as of January 1, 2006 and share-based compensation based on the
grant-date fair-value determined in accordance with SFAS No. 123R for all
share-based payments granted after January 1, 2006.  SFAS
No. 123R eliminates the ability to account for the award of these
instruments under the intrinsic value method prescribed by Accounting Principles
Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and
allowed under the original provisions of SFAS No. 123.  Prior to
the adoption of SFAS No. 123R, we accounted for our stock option plans
using the intrinsic value method in accordance with the provisions of APB
Opinion No. 25 and related interpretations.





Stock-based
compensation represents the cost related to stock-based awards granted to
employees.  We measure stock-based compensation cost at grant date,
based on the estimated fair value of the award, and recognizes the cost as
expense on a straight-line basis (net of estimated forfeitures) over the
employee requisite service period.  We estimate the fair value of
stock options using a Black-Scholes valuation model.  The expense is
recorded in operating expenses in the condensed statements of
operations.


7


Results
of Operations





You
should read the selected financial data set forth below along with our
discussion and our financial statements and the related notes.  We
have derived the financial data from our audited financial
statements.  We believe the financial data shown in the table below
include all adjustments consisting only of normal recurring adjustments, that we
consider necessary for a fair presentation of such
information.  Operating results for the period are not necessarily
indicative of the results that may be expected in the future.





Year
      Ended
                      December
      31, 2008
                      (audited)
                    
                    
                    Year
      Ended
                      December
      31, 2007
                      (audited)
                    
                    
                    Increase/(Decrease)Revenue
                    
                    $
                    480
                    
                    
                    $
                    -
                    
                    
                    $
                    480Operating
      expenses
                    
                    $
                    43,107
                    
                    
                    $
                    132,650
                    
                    
                    $
                    (89,543
                    )Net
      (loss)
                    
                    $
                    (42,627
                    )
                    
                    $
                    (132,650
                    )
                    
                    $
                    (90,023
                    )Net
      (loss) per share
                    
                    $
                    (0.00
                    )
                    
                    $
                    (0.00
                    )
                    
                    $
                    (0.00
                    )






Results for the Year Ended
December 31, 2008 Compared to the Year Ended December 31, 2007
(audited)





Revenues





There
were revenues from operations in the amount of $480 for the year ended December
31, 2008.  There were no revenues from operations for the year ended
December 31, 2007.





Operating
Expenses





Operating
expenses decreased by $89,543 to $43,107for the year ended
December 31, 2008 as compared to $132,650 for the year ended December 31,
2007.





During
the year ended December 31, 2008, we incurred accounting, legal and professional
services expenses of $41,020 associated with our public company reporting
requirements and other expenses of $2,087.  During the year
ended December 31, 2007, we incurred accounting, legal and professional services
expenses of $86,381 associated with our public company reporting requirements,
salaries expense of $45,474 associated with the issuance of stock options to
employees, and other expenses of $795.





Net
Loss





Primarily
as a result of our operating expenses, we had a net loss of $42,627 for the year
ended December 31, 2008 compared to a net loss of $132,650 for the same period
in the prior year.


8


Liquidity
and Capital Resources





We
currently have no material commitments for capital expenditures and have no
fixed expenses.





Working
capital is summarized and compared as follows:





December
      31, 2008
                  
                  
                  December
      31, 2007Current
      assets
                  
                  $
                  11,504
                  
                  
                  $
                  15,421Current
      liabilities
                  
                  $
                  12,176
                  
                  
                  $
                  9,466Working
      capital (deficit)
                  
                  $
                  (672
                  )
                  
                  $
                  5,955





Our net
cash used by operations was $44,553 for the year ended December 31, 2008 as
compared to net cash used of $91,965 for the year ended December 31,
2007.  During the year ended December 31, 2008, we experienced a net
loss of $42,627, an increase in inventory of $4,636, and accounts payable and
accrued expenses of $2,710.  During the year ended December 31, 2007,
we experienced a net loss of $132,650, an increase in inventory of $4,255, and a
decrease in accrued accounting and legal expenses of $534.  This was
offset by non-cash stock options issued to employees in the amount of
$45,474.





There was
no net cash used or provided from investing activities for the years ended
December 31, 2008 and 2007.





Our net
cash provided from financing activities was $36,000 during the year ended
December 31, 2008, due to the issuance of a private placement of common
stock.  For the year ended December 31, 2007, cash was provided from
financing activities of $103,000, due to the issuance of a private placement of
common stock.





On April
13, 2009, cash was provided from financing activities amounting to $15,000,
which were stock purchases by shareholders.





Off-Balance
Sheet Arrangements





None.





ITEM
7A. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





We are a
smaller reporting company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and are not required to provide the information under this
item.


9


ITEM 8.        FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA





The
financial statements required to be filed pursuant to this Item 8 begin on page
F-1 of this report.




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




Effective
October 31, 2007, we dismissed Kabani & Company, Inc. (“Kabani”) as our
independent auditors for the fiscal year ended December 31, 2007 and approved
the engagement of Weaver & Martin, LLC as Kabani’s
replacement.  The decision to change auditors was approved by our
Board of Directors.





For the
last two fiscal years, Kabani’s reports on the financial statements of our
company did not contain an adverse opinion or a disclaimer of opinion, nor were
the reports qualified or modified as to uncertainty, audit scope, or accounting
principles.  For the last two fiscal years and any subsequent interim
period preceding the dismissal, there were no disagreements with Kabani on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure which, if not resolved to the satisfaction of Kabani
would have caused Kabani to make reference to the matter in their
reports.





ITEM
9A.      CONTROLS AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures





Our
President and Chief Financial Officer have evaluated the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
of the Securities Exchange Act of 1934) as of the end of period covered by this
report.  Based upon such evaluation,  the President and
Chief Financial Officer concluded that our disclosure controls and procedures
were effective to ensure that the information required to be disclosed by us in
the reports that we file or submit under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms, and is accumulated and communicated to our
management, including our President and Chief Financial Officer, as appropriate
to allow timely decisions regarding required disclosure.





Changes
in Internal Control over Financial Reporting





There
were no changes to our internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934)
that occurred during the period covered by this report that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.


10


Management
Report on Internal Control over Financial Reporting





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





Management
assessed our internal control over financial reporting as of December 31, 2008,
the end of our fiscal-year.  Management based its assessment on
criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway
Commission.  Management’s assessment included evaluation of elements
such as the design and operating effectiveness of key financial reporting
controls, process documentation, accounting policies, and our overall control
environment.





Based on
our assessment, management has concluded that our internal control over
financial reporting was effective as of the end of the fiscal-year to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external reporting purposes in
accordance with U.S. generally accepted accounting principles.  We
reviewed the results of management’s assessment with our Board of
Directors.





Inherent
Limitations on Effectiveness of Controls





Our
management, including the CEO and CFO, does not expect that our disclosure
controls or our internal control over financial reporting will prevent or detect
all error and all fraud.  A control system, no matter how well
designed and operated, can provide only reasonable, not absolute, assurance that
the control system’s objectives will be met.  The design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their
costs.  Further, because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that
misstatements due to error or fraud will not occur or that all control issues
and instances of fraud, if any, have been detected.  These inherent
limitations include the realities that judgments in decision-making can be
faulty and that breakdowns can occur because of simple error or
mistake.  Controls can also be circumvented by the individual acts of
some persons, by collusion of two or more people, or by management override of
the controls.  The design of any system of controls is based in part
on certain assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions.  Projections of any evaluation of
controls effectiveness to future periods are subject to risks.  Over
time, controls may become inadequate because of changes in conditions or
deterioration in the degree of compliance with policies or
procedures.





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


11


ITEM
9A(T).        CONTROLS AND
PROCEDURES





This Item
is not applicable to us.





ITEM
9B.             
OTHER INFORMATION





We have
nothing to report under this Item.





PART
III





ITEM
10. DIRECTORS,
EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE




Directors
and Executive Officers




Our
directors and executive officers are as follows:




Name
                Age
                PositionEarl
      T. Shannon
                41
                Director,
      PresidentSteven
      W. Hudson
                39
                Director,
      Executive Vice PresidentScott
      W. Bodenweber
                37
                Director,
      Chief Financial OfficerPeter
      Wright
                57
                Director,
      SecretaryMark
      E. Tupper
                62
                Director





Earl T. Shannon,President,Director.
Mr. Shannon has been our President and one of our Directors since our
inception.  Mr. Shannon was an officer and director of Salty's
Warehouse, Inc. from its inception on July 16, 1998 through its sale on
December 11, 2006.  From January 1997 and continuing through the present,
Mr. Shannon has been the President of Winthrop Venture
Management, Inc., an investment management company based in Fort
Lauderdale, Florida.





Steven W. Hudson, Executive Vice
President, Director. Mr. Hudson has been with us since
February 1, 2007.  Mr. Hudson was an officer and director of
Salty’s Warehouse, Inc. from April 20, 2004 through its sale on December
11, 2006.  Mr. Hudson was President and CEO of International
Yacht Construction from May 1999 through July 3, 2007.  Since
June 1997, Mr. Hudson also has served as President and CEO of Hudson
Capital Group, a private investment firm.  Mr. Hudson graduated
from Southern Methodist University with a Bachelor of Arts degree in Business
Economics.


12


Scott W. Bodenweber, Chief Financial
Officer, Director.Mr. Bodenweber joined us January 21,
2003.  Mr. Bodenweber was an officer and director of Salty’s
Warehouse, Inc. from April 20, 2004 through its sale on December 11,
2006.  From June 1997 and continuing through the present,
Mr. Bodenweber has been the Controller of Hudson Capital Group, an
investment firm in Fort Lauderdale, Florida.  Mr. Bodenweber
graduated from Florida State University in 1994 with Bachelor of
Science Degrees in both Accounting and Finance.  He is a licensed
Certified Public Accountant in the State of Florida.





Peter Wright, Secretary,
Director.Mr. Wright joined us on January 21,
2003.  Mr. Wright has been the Chief Financial Officer of Hudson
Capital Group, an investment firm in Fort Lauderdale, Florida from May 1998
continuing through the present.  Mr. Wright graduated from
Stetson University in 1975, with a Bachelor of Science degree in
Accounting.





Mark E. Tupper,
Director.Mr. Tupper joined us on February 1,
2007.  Mr. Tupper has been the founder, Chief Executive Officer and
principal shareholder of Don Marcos Coffee Company, S.A. since its inception on
March 27, 2000.  Mr. Tupper has been the founder, Chief Executive
Officer and principal shareholder of Tupper Centroamerica, S.A. since its
inception on July 9, 1982.  Mr. Tupper graduated from the American
School in Switzerland with studies in World & European History, the
University of Aix-en-Provence in France in European Politics & French
Literature, and the Lewisham Technical College of London, England in Mechanical
Engineering.





Our
Directors serve until the next annual meeting or until their successors are
qualified and elected.  Our Officers serve at the discretion of the
Board of Directors.




Family
Relationships





Mark E.
Tupper, one of our directors, is the uncle of Earl T. Shannon, who is our
President and one of our directors.





Compliance
with Section 16(a) of the Exchange Act




Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our directors
and certain officers, as well as persons who own more than 10% of a registered
class of our equity securities, (“Reporting Persons”) to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission.





Based
solely upon a review of the copies of such forms, we believe that all Reporting
Persons have complied on a timely basis with all filing requirements applicable
to them.


13


ITEM
11.        EXECUTIVE
COMPENSATION





Summary
Compensation Table





None of
our officers or directors is currently receiving any cash compensation for their
services.





Outstanding
Equity Awards at Fiscal Year-End





In order
to compensate our officers and directors, we enacted an Incentive and
Nonstatutory Stock Option Plan on February 1, 2007.  Our stock
option plan has a total of 5,000,000 shares reserved for issuance as stock
options. All issued options are 100% vested.  Other than our stock
option plan, we do not currently have any arrangements or contracts pursuant to
which our officers and directors are compensated for any services, including any
additional amounts payable for committee participation or special
assignments.   No such arrangements were in effect between us and
our officers and directors for the last completed fiscal year,
either.  As of the date of this report, we have issued the following
stock options:




Option
      AwardsName
                    Number
      of securities
                      underlying
      unexercised
                      options
      (#)
                      exercisable
                    Number
      of securities
                      underlying
      unexercised
                      options
      (#)
                      unexercisable
                    Equity
      incentive
                      plan
      awards:
                      Number
      of securities
                      underlying
      unexercised
                      unearned
      options(#)
                    Option
      exercise price ($)
                    Option
                      expiration
      dateEarl
      T. Shannon
                    1,000,000
                    -0-
                    -0-
                    $0.005
                    02/01/17Steven
      W. Hudson
                    1,000,000
                    -0-
                    -0-
                    $0.005
                    02/01/17Scott
      W. Bodenweber
                    1,000,000
                    -0-
                    -0-
                    $0.005
                    02/01/17Peter
      Wright
                    1,000,000
                    -0-
                    -0-
                    $0.005
                    02/01/17Mark
      E. Tupper
                    1,000,000
                    -0-
                    -0-
                    $0.005
                    02/01/17TOTAL
                    5,000,000
                    -0-
                    -0-


Compensation
of Directors





Our
Directors do not receive any cash compensation, but are entitled to
reimbursement of their reasonable expenses incurred in attending directors’
meetings.





We do not
have any audit, nominating, compensation or other committee of our Board of
Directors.


14


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




The
following table sets forth certain information regarding our shares of
outstanding common stock beneficially owned as of the date hereof by (i) each of
our directors and executive officers, (ii) all directors and executive officers
as a group, and (iii) each other person who is known by us to own beneficially
more than 5% of our common stock based upon 47,300,000 issued shares of common
stock.





Name
      and Address of Beneficial Owners1
              Amount
      and Nature
                of
      Beneficial Ownership
              PercentOwnership2Earl
      T. Shannon, Director, President
              13,225,0003
              27.4%Steven
      W. Hudson, Director, Executive Vice President
              10,737,5004
              22.0%Scott
      W. Bodenweber, Director, Chief Financial Officer
              10,937,5005
              22.4%Peter
      Wright, Director, Secretary
              1,200,0006
              2.5%Mark
      E. Tupper, Director
              1,000,0007
              2.1%All
      executive officers and directors as a group (five persons)
              37,100,000
              69.3%








1  
c/o our address, 1850 Southeast 17th Street, Suite 300, Ft.
Lauderdale, FL 33316.


2   Except
as otherwise indicated, we believe that the beneficial owners of common stock
listed above, based on information furnished by such owners, have sole
investment and voting power with respect to such shares, subject to community
property laws where applicable.  Beneficial ownership is determined in
accordance with the rules of the SEC and generally includes voting or investment
power with respect to securities.  Shares of common stock subject to
options or warrants currently exercisable, or exercisable within 60 days, are
deemed outstanding for purposes of computing the percentage of the person
holding such options or warrants, but are not deemed outstanding for purposes of
computing the percentage of any other person.


3   Includes
1,000,000 options to purchase shares of common stock at $0.005 per share until
February 1, 2017.


4   Includes
1,000,000 options to purchase shares of common stock at $0.005 per share until
February 1, 2017 and 400,000 shares of common stock owned by family
members.


5  
Includes 1,000,000 options to purchase shares of common stock at $0.005 per
share until February 1, 2017 and 600,000 shares owned by family
members.


6   Consists
of 1,000,000 options to purchase shares of common stock at $0.005 per share
until February 1, 2017 and 200,000 shares owned by family
members.


7   Consists
of 1,000,000 options to purchase shares of common stock at $0.005 per share
until February 1, 2017.


15


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





Steven W.
Hudson is a principal of Hudson Capital Group, which furnishes us with office
space, a value of approximately $400 per month, on a rent-free
basis.





Don
Marcos Coffee is grown, roasted and packaged in Costa Rica by the Don Marcos
Coffee Company, S.A., a Costa Rica company owned and operated by Mark E.
Tupper.  Mark E. Tupper is the uncle of Earl T. Shannon, our President
and one of our directors.  We have an exclusive distributorship
agreement with Don Marcos Coffee Company, S.A., the material terms of which are
described in Part I, Item 1, Description of Business—Sources and Availability of
Raw Materials and Principal Suppliers.





ITEM
14.        PRINCIPAL ACCOUNTING FEES AND
SERVICES





Weaver
& Martin, LLC (“Weaver”)





Weaver
was our independent auditor and examined our financial statements for the years
ended December 31, 2008 and December 31, 2007.  Weaver performed the
services listed below and was paid the fees listed below for the years ended
December 31, 2008 and December 31, 2007.





Audit
Fees





Weaver
was paid aggregate fees of approximately $7,200 and $5,400 for the years ended
December 31, 2008 and December 31, 2007, respectively, for professional services
rendered for the audit of our annual financial statements and for the reviews of
the financial statements included in our quarterly reports on Form 10-Q during
the first, second and third quarters of 2008 and the third quarter of
2007.





Audit
Related Fees





Weaver
was not paid additional fees for the years ended December 31, 2008 and December
31, 2007 for assurance and related services reasonably related to the
performance of the audit or review of our financial statements.





Tax
Fees





Weaver
was not paid fees for the years ended December 31, 2008 and December 31, 2007 or
professional services rendered for tax compliance, tax advice and tax planning
during this fiscal year period.





All
Other Fees





Weaver
was not paid any other fees for professional services during the years ended
December 31, 2008 and December 31, 2007.


16


PART
IV





ITEM
15.        EXHIBITS, FINANCIAL STATEMENT
SCHEDULES





Exhibits





3.1
                  Articles
      of Incorporation of Don Marcos Trading Co., filed May 11, 199913.2
                  Amendment
      to Articles of Incorporation of Don Marcos Trading Co., filed February 6,
      200313.3
                  Amendment
      to Articles of Incorporation of Don Marcos Trading Co., filed February 14,
      200713.4
                  Amendment
      to Articles of Incorporation of Don Marcos Trading Co., filed May 4,
      200713.5
                  Amended
      and Restated Bylaws of Don Marcos Trading Co., dated February 2, 2007110.1
                  Form of
      Stock Purchase Agreement Used in Private Offering110.2
                  2007
      Incentive and Nonstatutory Stock Option Plan, dated February 1, 2007110.3
                  Distributorship
      Agreement dated January 23, 2003110.4
                  Stock
      Purchase Agreement with Earl T. Shannon, dated December 12, 2007210.5
                  Stock
      Purchase Agreement with Steven W. Hudson, dated December 12, 2007210.6
                  Stock
      Purchase Agreement with Scott W. Bodenweber, dated December 12, 2007210.7
                  Stock
      Purchase Agreement with Earl T. Shannon, dated April 1, 2008310.8
                  Stock
      Purchase Agreement with Steven W. Hudson, dated April 1, 2008310.9
                  Stock
      Purchase Agreement with Scott W. Bodenweber, dated April 1, 2008310.10
                  Stock
      Purchase Agreement with Earl T. Shannon, dated August 4, 2008410.11
                  Stock
      Purchase Agreement with Steven W. Hudson, dated August 4, 2008410.12
                  Stock
      Purchase Agreement with Scott W. Bodenweber, dated August 4, 2008410.13
                  Stock
      Purchase Agreement with Earl T. Shannon, dated April 13,
    200910.14
                  Stock
      Purchase Agreement with Steven W. Hudson, dated April 13,
    200910.15
                  Stock
      Purchase Agreement with Scott W. Bodenweber, dated April 13,
      200914
                  Code
      of Ethics523
                  Consent
      of Weaver & Martin LLC31.1
                  Certification
      of Chief Executive Officer Pursuant to the Securities Exchange Act of
      1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of
      the Sarbanes-Oxley Act of 200231.2
                  Certification
      of Chief Financial Officer Pursuant to the Securities Exchange Act of
      1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of
      the Sarbanes-Oxley Act of 200232
                  Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes Oxley Act of
2002








1  
Incorporated by reference from our Registration Statement on Form SB-2, filed on
May 15, 2007, as amended (Registration No. 333-142976).


2  
Incorporated by reference from our Current Report on Form 8-K, filed on December
14, 2007.


3  
Incorporated by reference from our Current Report on Form 8-K, filed on April
30, 2008.


4  
Incorporated by reference from our Current Report on Form 8-K, filed on August
14, 2008.


5  
Incorporated by reference from our Annual Report on Form 10-KSB, filed on March
31, 2008.


17


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, duly
authorized.







DON
      MARCOS TRADING CO.DATED:  April
      14, 2009
            By:
      /s/ Earl T.
      Shannon
                Earl
      T. Shannon
                Director,
      President
                (Principal
      Executive Officer)DATED:  April
      14, 2009
            By: /s/ Scott W.
      Bodenweber
              Scott
      W. Bodenweber
                Director,
      Chief Financial Officer
                (Principal
      Financial Officer and Principal Accounting
  Officer)









18




WEAVER
& MARTIN






To the
Board of Directors and Stockholders


Don
Marcos Trading Co.


Ft.
Lauderdale, FL




REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




We have
audited the balance sheet of Don Marcos Trading Co. as of December 31, 2008
and 2007 and the related statements of operations, stockholders' equity,
and cash flows for the year then ended. Don Marcos Trading Co.'s management is
responsible for these financial statements. Our responsibility is to
express an opinion on these financial statements based on our
audit.




We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit of the financial
statements includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.




In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Don Marcos Trading Co. as of
December 31, 2008 and 2007, and the results of its operations,
stockholders' equity, and cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.




The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has suffered recurring losses from operations and is
dependent upon the continued sale of its securities or obtaining debt financing
for funds to meet its cash requirements.  These factors raise
substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.







/s/ Weaver & Martin
LLC


Weaver
& Martin LLC


Kansas
City, Missouri


April 14,
2009





Certified
      Public Accountants & Consultants
              411
      Valentine, Suite 300
              Kansas
      City, Missouri 64111
              Phone:
      (816) 756-5525
              Fax:
      (816) 756-2252




F-1





DON
MARCOS TRADING CO.


(A
DEVELOPMENT STAGE COMPANY)


BALANCE
SHEETS


DECEMBER
31, 2008 AND 2007








2008
                  
                  
                  2007ASSETSCURRENT
      ASSETSCash
                  
                  $
                  2,613
                  
                  
                  $
                  11,166Inventory
                  
                  
                  8,891
                  
                  
                  
                  4,255TOTAL
      CURRENT ASSETS
                  
                  $
                  11,504
                  
                  
                  $
                  15,421LIABILITIES
      AND STOCKHOLDERS’ EQUITY (DEFICIT)CURRENT
      LIABILITIESAccounts
      payable and accrued expenses
                  
                  $
                  12,176
                  
                  
                  $
                  9,466STOCKHOLDERS’
      EQUITYPreferred
      stock, no stated valueAuthorized
      10,000,000 sharesIssued
      and outstanding -0- sharesCommon
      stock, no par valueAuthorized
      100,000,000 sharesIssued
      and outstanding - 44,300,000 shares at December 31, 2008 and 37,100,000
      shares at December 31, 2007
                  
                  
                  223,454
                  
                  
                  
                  187,454Deficit
      accumulated during the development stage
                  
                  
                  (224,126
                  )
                  
                  
                  (181,499
                  )TOTAL STOCKHOLDERS’ EQUITY
      (DEFICIT)
                  
                  
                  (672
                  )
                  
                  
                  5,955TOTAL LIABILITIES AND
      STOCKHOLDERS’ EQUITY (DEFICIT)
                  
                  $
                  11,504
                  
                  
                  $
                  15,421








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





F-2




DON
MARCOS TRADING CO.


(A
DEVELOPMENT STAGE COMPANY)


STATEMENTS
OF OPERATIONS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


AND
FOR THE PERIOD FROM MAY 11, 1999 TO DECEMBER 31, 2008








May
      11, 1999(Date
      of Inception)To2008
                                
                                
                                2007
                                
                                
                                December 31, 2008REVENUES
                                
                                $
                                480
                                
                                
                                $
                                -
                                
                                
                                $
                                480OPERATING
      EXPENSES
                                
                                
                                43,107
                                
                                
                                
                                132,650
                                
                                
                                
                                224,606NET
    (LOSS)
                                
                                $
                                (42,627
                                )
                                
                                $
                                (132,650
                                )
                                
                                $
                                (224,126
                                )NET
      (LOSS) PER COMMON SHAREBasic
      and diluted
                                
                                $
                                (0.00
                                )
                                
                                $
                                (0.00
                                )WEIGHTED
      AVERAGE NUMBER OF COMMON SHARES OUTSTANDINGBasic
      and diluted
                                
                                
                                40,861,096
                                
                                
                                
                                29,872,055








The
accompanying notes are an integral part of these financial
statements




F-3





DON
MARCOS TRADING CO.


(A
DEVELOPMENT STAGE COMPANY)


STATEMENT
OF STOCKHOLDERS’ EQUITY (CONTINUED)








DeficitAccumulatedCommon Stock
                
                
                During
      TheShares
                
                
                Amount
                
                
                DevelopmentStage
                
                
                TotalBALANCE,
      JANUARY 1, 2007
                
                
                16,500,000
                
                
                
                38,980
                
                
                
                (
      48,849
                )
                
                
                (
      9,869
                )Common
      stock issued for cash
                
                
                20,600,000
                
                
                
                103,000
                
                
                
                -
                
                
                
                103,000Stock
      based compensation
                
                
                -
                
                
                
                45,474
                
                
                
                -
                
                
                
                45,474Net
      (loss) for the year ended December 31, 2007
                
                
                -
                
                
                
                -
                
                
                
                ( 132,650
                )
                
                
                ( 132,650
                )BALANCE,
      DECEMBER 31, 2007
                
                
                37,100,000
                
                
                
                187,454
                
                
                
                (
      181,499
                )
                
                
                5,955Common
      stock issued for cash
                
                
                7,200,000
                
                
                
                36,000
                
                
                
                -
                
                
                
                36,000Net
      (loss) for the year ended December 31, 2008
                
                
                -
                
                
                
                -
                
                
                
                ( 42,627
                )
                
                
                ( 42,627
                )BALANCE,
      DECEMBER 31, 2008
                
                
                44,300,000
                
                
                $
                223,454
                
                
                $
                ( 224,126
                )
                
                $
                ( 672
                )








The
accompanying notes are an integral part of these financial
statements





F-4




DON
MARCOS TRADING CO.


(A
DEVELOPMENT STAGE COMPANY)


CONDENSED
STATEMENTS OF CASH FLOWS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


AND
FOR THE PERIOD FROM MAY 11, 1999 (INCEPTION) TO DECEMBER 31, 2008








May
      11, 1999(Inception)To2008
                                  
                                  
                                  2007
                                  
                                  
                                  December 31, 2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                                  
                                  $
                                  (42,627
                                  )
                                  
                                  $
                                  (132,650
                                  )
                                  
                                  $
                                  (224,126
                                  )Adjustments
      to reconcile net loss to net cash used by operating
      activities:Common stock issuedfor
      services
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  3,635Stock
      based compensation
                                  
                                  
                                  -
                                  
                                  
                                  
                                  45,474
                                  
                                  
                                  
                                  45,474Changes
      in operating assets and liabilities:Inventory
                                  
                                  
                                  (4,636
                                  )
                                  
                                  
                                  (4,255
                                  )
                                  
                                  
                                  (8,891
                                  )Accounts
      payable and accrued expenses
                                  
                                  
                                  2,710
                                  
                                  
                                  
                                  (534
                                  )
                                  
                                  
                                  12,176NET CASH USED IN OPERATING
      ACTIVITIES
                                  
                                  
                                  (44,553
                                  )
                                  
                                  
                                  (91,965
                                  )
                                  
                                  
                                  (171,732
                                  )CASH
      FLOWS FROM INVESTING ACTIVITIES
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -CASH
      FLOWS FROM FINANCING ACTIVIITESIssuance
      of common stock for cash
                                  
                                  
                                  36,000
                                  
                                  
                                  
                                  103,000
                                  
                                  
                                  
                                  172,000Cash
      contributed by stockholder
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  2,345NET CASH PROVIDED BY FINANCING
      ACTIVITIES
                                  
                                  
                                  36,000
                                  
                                  
                                  
                                  103,000
                                  
                                  
                                  
                                  174,345NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                                  
                                  
                                  (8,553
                                  )
                                  
                                  
                                  11,035
                                  
                                  
                                  
                                  2,613CASH
      AND CASH EQUIVALENTS, BEGINNING OF YEAR
                                  
                                  
                                  11,166
                                  
                                  
                                  
                                  131
                                  
                                  
                                  
                                  -CASH
      AND CASH EQUIVALENTS, END OF YEAR
                                  
                                  $
                                  2,613
                                  
                                  
                                  $
                                  11,166
                                  
                                  
                                  $
                                  2,613








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





F-5




DON
MARCOS TRADING CO.


(A
DEVELOPMENT STAGE COMPANY)


CONDENSED
STATEMENTS OF CASH FLOWS (CONTINUED)


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


AND
FOR THE PERIOD FROM MAY 11, 1999 (INCEPTION) TO DECEMBER 31, 2008








May
      11, 1999(Inception)To2008
                              
                              
                              2007
                              
                              
                              December 31, 2008SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONCASH
      PAID DURING THE YEAR FOR:Interest
                              
                              $
                              -
                              
                              
                              $
                              -
                              
                              
                              $
                              -Taxes
                              
                              $
                              -
                              
                              
                              $
                              -
                              
                              
                              $
                              -NON-CASH
      INVESTING ACTIVITIESStock-based
      compensation
                              
                              $
                              -
                              
                              
                              $
                              45,474
                              
                              
                              $
                              45,474






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





F-6




DON
MARCOS TRADING CO.


(A
DEVELOPMENT STAGE COMPANY)


CONDENSED
NOTES TO FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007








NOTE
1  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES





Nature of Business and
History of Company





Don
Marcos Trading Co. (“the Company”) is a development stage enterprise
incorporated on May 11, 1999 in the state of Florida.  The Company is
the sole importer and distributor of Don Marcos coffee.





Use of
Estimates





The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
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.
Actual results could differ from those estimates.





Cash and Cash
Equivalents





For
purposes of the statement of cash flows, the Company considers all highly liquid
debt instruments purchased with an original maturity of three months or less to
be cash equivalents.





Fair value of financial
instruments





For
certain of the Company’s instruments, including cash and accounts payable and
accrued expenses, the carrying amounts approximate fair value due to their short
maturities.





Net Loss Per
Share





The
Company adopted Statement of Financial Accounting Standards No. 128 that
requires the reporting of both basic and diluted earnings (loss) per share.
Basic earnings (loss) per share is computed by dividing net income (loss)
available to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted earnings (loss) per share reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock. In accordance with
FASB 128, any anti-dilutive effects on net income (loss) per share are
excluded.





F-7




DON
MARCOS TRADING CO.


(A
DEVELOPMENT STAGE COMPANY)


CONDENSED
NOTES TO FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007








NOTE
1  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Revenue
Recognition





The
Company recognizes revenue from product sales when shipment of product to the
customer has been made, which is when title passes. The Company estimates and
records provisions for rebates, sales returns and allowances in the period the
sale is recorded. Shipping and handling charges are included in gross sales,
with the related costs included in selling, general and administrative
expenses.





Inventory





Inventory
is stated at the lower of cost (determined by the first-in, first-out method) or
market.  Inventories are adjusted for estimated obsolescence and
written down to net realizable value based upon estimates of future demand,
technology developments, and market conditions.




Common Stock Issued for
Non-Cash Transaction




It is the
Company’s policy to value stock issued for non-cash transactions, such as
services, at the fair market value of the goods or services received or the
consideration granted, whichever is more readily determinable, at the date the
transaction is negotiated.





Stock Based
Compensation





Effective
November 1, 2005, the Company adopted Statement of Financial Accounting
Standards (“SFAS”) No. 123(R), “Share-Based Payment: An Amendment of FASB
Statements No. 123 and 95” using the modified prospective method. Under this
method, compensation cost is recognized on or after the effective date for the
portion of outstanding awards, for which the requisite service has not yet been
rendered, based on the grant date fair value of those awards. For stock-based
awards issued on or after November 1, 2005, the Company recognizes the
compensation cost on a straight-line basis over the requisite service period for
the entire award. Measurement and attribution of compensation cost for awards
that are unvested as of the effective date of SFAS No. 123(R) are based on the
same estimate of the grant-date or modification-date fair value and the same
attribution method used previously under SFAS No. 12.





Development Stage
Enterprise





The
Company is a development stage enterprise, as defined in Financial Accounting
Standards Board No. 7. The Company’s planned principal operations have not
commenced, and accordingly, only nominal revenue has been derived during this
period.





F-8





DON
MARCOS TRADING CO.


(A
DEVELOPMENT STAGE COMPANY)


CONDENSED
NOTES TO FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007








NOTE
1 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Recently Issued Accounting
Pronouncements





In July
2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes” (“FIN 48”).  FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in enterprises’ financial statements in
accordance with SFAS No. 109, “Accounting for Income Taxes.”  FIN 48
prescribes a recognition threshold and measurement attributable for the
financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return.  FIN 48 also provides guidance
on derecognizing, classification, interest and penalties, accounting in interim
periods, disclosures and transitions.  FIN 48 is effective for fiscal
yeas beginning after December 15, 2006.  The Company is currently
reviewing the effect, if any, FIN 48 will have on its financial position and
operations.





In
September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’ (“SFAS No. 157”).
SFAS No. 157 defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles (GAAP), expands disclosures
about fair value measurements, and applies under other accounting pronouncements
that require or permit fair value measurements.  SFAS No. 157 does not
require any new fair value measurements, however the current FASB anticipates
that for some entities, the application of SFAS No. 157 will change current
practice.  SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007.  The Company is
currently reviewing the effect, if any SFAS No. 157 will have on its financial
position and operations.





In
September 2006, FASB issued SFAS 158 ‘Employers' Accounting for Defined Benefit
Pension and Other Postretirement Plans--an amendment of FASB Statements No. 87,
88, 106, and 132(R)’ This Statement requires employers to recognize the
overfunded or underfunded status of a defined benefit postretirement plan (other
than a multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded status in the year in
which the changes occur through comprehensive income of a business entity or
changes in unrestricted net assets of a not-for-profit organization. This
Statement also requires an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. The provisions of SFAS No. 158 are effective for employers with
publicly traded equity securities is required to initially recognize the funded
status of a defined benefit postretirement plan and to provide the required
disclosures as of the end of the fiscal year ending after December 15,
2006.   The adoption of this statement is not expected to have a
material effect on the Company’s future reported financial position or results
of operations.





F-9





DON
MARCOS TRADING CO.


(A
DEVELOPMENT STAGE COMPANY)


CONDENSED
NOTES TO FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007








NOTE
1 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





In
February 2007, FASB issued FASB Statement No. 159 (“SFAS 159) - The Fair Value
Option for Financial Assets and Financial Liabilities including an amendment of
SFAS 115.  This statement permits entities to choose to measure many
financial instruments and certain other items at fair value.  The
objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions.  This statement is expected to expand the use
of fair value measurement objectives for accounting for financial
instruments.  This statement is effective for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. Early
adoption is permitted subject as of the beginning of a fiscal year that begins
on or before November 15, 2007, provided the entity also elects to apply the
provisions of FASB statement No. 157, Fair value measurements.  The
Company is currently evaluating the impact of SFAS 159 on its financial
statements





NOTE
2 GOING
CONCERN





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates the recoverability of
assets and the satisfaction of liabilities in the normal course of
business.





The
Company’s development activities since inception have been financially sustained
through stockholder contribution to the Company and issuance of common stock.
The Company may raise additional funding to continue its operations through
contributions from the current shareholders and stock issuance to other
investors.





The
ability of the Company to continue as a going concern is dependent upon its
ability to raise additional capital from the sale of common stock and,
ultimately, the achievement of significant operating revenues. The accompanying
financial statements do not include any adjustments that might be required
should the Company be unable to recover the value of its assets or satisfy its
liabilities.





NOTE
3 INVENTORY





Inventory
consists of the following for the years ended December 31, 2008 and
2007:





2008
                        
                        
                        2007Finished
      goods inventory
                        
                        $
                        54
                        
                        
                        $
                        -Materials
                        
                        
                        8,837
                        
                        
                        
                        4,255$
                        8,891
                        
                        
                        $
                        4,255





F-10





DON
MARCOS TRADING CO.


(A
DEVELOPMENT STAGE COMPANY)


CONDENSED
NOTES TO FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007








NOTE
4 PREFERRED
STOCK





The
Company has not assigned any preference rights to the preferred
stock.





NOTE
5 COMMON
STOCK





The
Company effected a 1:5 forward split of the stock in February, 2007. All per
share amounts and number of shares outstanding have been retroactively restated
for this adjustment.





On March
14, 2007, the Company offered a private placement of 16,400,000 shares of common
stock, no par value, and received $82,000 cash for the shares sold.





The
Company effected a 1:10 forward split of the stock on March 30, 2007. All per
share amounts and number of shares outstanding have been retroactively restated
for this adjustment.





On April
1, 2008, the Company sold 2,400,000 shares of its common stock, no par value,
with an aggregate value of $12,000, to three officers of the
company.





On August
4, 2008, the Company sold 4,800,000 shares of its common stock, no par value,
for cash in the amount of $24,000 to three officers of the company.





NOTE
6 STOCK
OPTIONS





The
officers of the Company approved the Don Marcos Trading Co., Inc. 2007 Incentive
and Nonstatutory Stock Option Plan which permits the officers to grant, for a
ten year period, both stock purchase rights and stock options.  The
Company has reserved 5,000,000 shares of its common stock for issuance to the
directors, employees and consultants under the Plan.  The Plan is
administered by the officers of the Company.  The administrators have
the authority and discretion, subject to the provisions of the Plan, to select
persons to whom stock purchase rights or options will be granted, to designate
the number of shares to be covered by each option or stock purchase right, to
specify the type of consideration to be paid, and to establish all other terms
and conditions of each option or stock purchase right.  Options
granted under the Plan will not have a term that exceeds ten years from date of
grant.  The stock subject to the plan and issuable upon exercise of
options granted under the plan are shares of the Company’s common stock, no par
value, which may be restricted, or grants of options to purchase shares of
common stock.





During
the year ended December 31, 2008, there were no options
issued.  During the year ended December 31, 2007, there were 5,000,000
options granted to the officers of the Company.





F-11





DON
MARCOS TRADING CO.


(A
DEVELOPMENT STAGE COMPANY)


CONDENSED
NOTES TO FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007








NOTE
6  STOCK
OPTIONS (CONTINUED)





A summary
of the option and warranty activity for the year ended December 31, 2007
follows:





Shares
                      Under
                      Option
                    
                    
                    Weighted
      Average
                      ExercisePriceOptions
      outstanding at January 1, 2007
                    
                    
                    -
                    
                    
                    $
                    -Issuances
                    
                    
                    5,000,000
                    
                    
                    
                    0.005Options
      outstanding at December 31, 2007
                    
                    
                    5,000,000
                    
                    
                    $
                    0.005





Information
regarding stock options outstanding as of December 31, 2007 is as
follows:





Price
                  
                  $
      0.005Weighted
      average exercise price
                  
                  $
      0.005Weighted
      average remaining contractual life
                  
                  9
      years, 1 month








A summary
of the option and warranty activity for the year ended December 31, 2008
follows:





Shares
                      Under
                      Option
                    
                    
                    Weighted
      Average
                      ExercisePriceOptions
      outstanding at January 1, 2008
                    
                    
                    5,000,000
                    
                    
                    $
                    0.005Cancelled,
      expired or new issuances
                    
                    
                    -
                    
                    
                    
                    -Options
      outstanding at December 31, 2008
                    
                    
                    5,000,000
                    
                    
                    $
                    0.005





Information
regarding stock options outstanding as of December 31, 2008 is as
follows:





Price
                  
                  $
      0.005Weighted
      average exercise price
                  
                  $
      0.005Weighted
      average remaining contractual life
                  
                  8
      years, 1 month








F-12




DON
MARCOS TRADING CO.
 (A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
NOTES TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007
 
 
 
 NOTE
7 SUBSEQUENT
EVENT
 
 On
      April 13, 2009, the Company entered into Stock Purchase Agreements with
      certain of the Company’s officers for the sale to those officers of the
      Company’s common stock as follows:
 
 Name of Officer
                        
                        Number
      of
                          Common
      Stock
                          Shares
      Purchased
                        
                        
                        Purchase
                          Price
      PaidEarl
      Shannon
                        
                        
                        1,000,000
                        
                        
                        $
                        5,000Steven
      W. Hudson
                        
                        
                        1,000,000
                        
                        
                        $
                        5,000Scott
      W. Bodenweber
                        
                        
                        1,000,000
                        
                        
                        $
                        5,000
 
 Pursuant
      to the Stock Purchase Agreements described above, the Company sold an
      aggregate of 3,000,000 shares of its common stock at a price of $0.005 per
      share to three accredited investors for gross proceeds of
      $15,000.  The Company relied on the exemption from registration
      relating to offerings that do not involve any public offering pursuant to
      Section 4(2) under the Act and/or Rule 506 of Regulation D promulgated
      pursuant thereto.  The Company believes that the investors are
      “accredited investors” under Rule 501 under Regulation D of the Act and
      had adequate access to information about the
  Company.
 
 
     F-13