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EX-31.1 - CEO SECTION 302 CERTIFICATION - Domark International Inc.ex31-1.txt
EX-32.1 - CEO SECTION 906 CERTIFICATION - Domark International Inc.ex32-1.txt
EX-31.2 - CFO SECTION 302 CERTIFICATION - Domark International Inc.ex31-2.txt
EX-32.2 - CFO SECTION 906 CERTIFICATION - Domark International Inc.ex32-2.txt

                                  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 May 31, 2010
                                       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: 333-136247

                           DoMark International, Inc.
           (Name of small business issuer as specified in its charter)

        Nevada                                              20-4647578
(State of Incorporation)                       (IRS Employer Identification No.)

                         3551 W Lake Mary Blvd, Ste 209
                               Lake Mary, FL 32746
                    (Address of principal executive offices)

                             1809 East Broadway #125
                              Oviedo Florida 32765
                               (previous address)

                                  877-700-7369
              (Registrant's telephone number, including Area Code)

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

           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $.001 Par Value

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]

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 [ ] No [X]

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. Yes [X] 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, 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. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer [ ]                            Accelerated filer [ ]
Non-accelerated filer  [ ]                             Small Business Issuer [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 voting stock held by non-affiliates of the
registrant on August 17, 2010 was $4,010,692.

State the number of shares outstanding of each of the issuer's classes of equity
securities, as of the latest practicable date: As of August 20, 2010, there were
36,460,835 shares of Common Stock, $0.001 par value per share issued and
outstanding.

                       Documents Incorporated By Reference
                                      None

TABLE OF CONTENTS PART I ITEM 1. BUSINESS 3 ITEM 1A. RISK FACTORS 8 ITEM 1B. UNRESOLVED STAFF COMMENTS 15 ITEM 2. PROPERTIES 15 ITEM 3. LEGAL PROCEEDINGS 15 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 16 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 16 ITEM 6. SELECTED FINANCIAL DATA 18 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 18 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 22 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 23 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 49 ITEM 9A. CONTROLS AND PROCEDURES 49 ITEM 9B. OTHER INFORMATION 50 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT. 51 ITEM 11. EXECUTIVE COMPENSATION 52 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 52 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 54 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 55 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 56 SIGNATURES 57 2
PART I ITEM 1. BUSINESS Except for historical information contained herein, the following discussion contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements include, but are not limited to, statements regarding future events and the Company's plans and expectations. Actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed elsewhere in this Form 10-K or incorporated herein by reference, including those set forth in MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. HISTORY AND GENERAL OVERVIEW DOMARK INTERNATIONAL, INC. ("DoMark" or "Company") was incorporated under the laws of the State of Nevada on March 30, 2006. The Company was formed to engage in the acquisition and refinishing of aged furniture using exotic materials and then reselling it through interior decorators, high-end consignment shops and online sales. The Company has abandoned it prior business of exotic furniture sales and is acquiring operating entities through acquisition that will bring value to the company and then providing marketing and management services in support of the acquired entities. We acquired successfully operating subsidiaries and started to deploy accounting, governance, risk and compliance services, marketing, management and media assets to the subsidiaries in order to build the value of our Company during and subsequent to our 2009 operating period. These endeavors have resulted in the rescissions of certain acquisitions due to the advent of the Victory Lane litigation (see legal) that derailed the Company's ability to pursue its business plan. The business model of the company did not have enough time to implement and realize results due to the VL transaction issues and subsequent litigation. The Company is reviewing its current business model in consideration of legal matters and is seeking swift resolution in order to adequately pursue its business purpose. On July 16, 2008, DoMark executed a purchase agreement with JAVACO, Inc. an Ohio corporation ("Javaco") whereby pursuant to the terms and conditions of that Agreement we completed the purchase of all the issued and outstanding shares of Javaco. Judith Vazquez, the President of Javaco, is the sister-in-law of R. Thomas Kidd, our former Chief Executive Officer. The Closing of the transaction occurred on July 18, 2008. Javaco, Inc. is engaged in the business of distributing equipment and tools for the Cable TV and Telecommunications industry. The company distributes to major telecom systems and their contractors in North and Latin America. On October 20, 2008, we executed an agreement between Mecanismo Corp., a Nevada Corporation, Domark and R. Thomas Kidd (the "Agreement"), whereby pursuant to the terms and conditions of that Agreement, Mecanismo Corp. acquired nine million, nine hundred and seventy three thousand, three hundred and ninety seven (9,973,397) shares of SportsQuest, Inc. common stock and one hundred thousand (100,000) shares of SportsQuest, Inc. preferred stock held by us. As consideration for this acquisition, a judgment arising from CASE BC 359831 LOS ANGELES SUPERIOR COURT Veridigm Inc (f/k/a E-Notes Systems Inc (DE) ("the Plaintiff"), against TotalMed Systems, Inc., (The "Defendant") shall be assigned to Domark and Domark shall receive a promissory note in the amount of One Hundred Thousand Dollars ($100,000). Consequently, Domark ceased being a controlling shareholder of SportsQuest, Inc. 3
On November 6, 2008, we executed an asset purchase agreement between Emerging Growth Advisors, LLC, a Florida limited liability company ("EGA") and Domark (the "Agreement"), whereby pursuant to the terms and conditions of that Agreement, Domark acquired the right, title, and interest of EGA in and to all of the assets of EGA used exclusively in their business in return for one million (1,000,000) shares of Domark common stock. The closing of the transactions in the agreement are contingent upon satisfaction of closing conditions listed in the Agreement. In addition, on December 29, 2008, the Agreement was amended to waive the closing condition of minimum capital raise of $250,000. This agreement was subsequently rescinded on August 19, 2009 and the stock was not issued. On December 3, 2008, we executed an agreement for the exchange of common stock between Executive Sports Tickets and Entertainment, Inc. a Georgia Corporation ("EST") and Domark (the "Agreement"), whereby pursuant to the terms and conditions of that Agreement, Domark acquired all the shares in EST in return for an initial issuance of Fifty Thousand (50,000) shares of Domark common stock and the right to an additional Fifty Thousand (50,000) shares of Domark common stock in the event that a current pending contract concerning EST's management of a Junior World Series endorsed by Major League Baseball becomes a written binding agreement between EST and the appropriate entities in the face amount of $1.5 million, and all terms of the contract are performed and payment received. Accordingly, EST became a wholly owned subsidiary of Domark. On December 11, 2008, we executed an asset purchase agreement between Crowley and Company Advertising, Inc., a Florida corporation ("C&C") and Domark (the "Agreement"), whereby pursuant to the terms and conditions of that Agreement, Domark acquired the right, title, and interest of C&C in and to all of the assets of C&C used exclusively in their business in return for one hundred thousand (100,000) shares of Domark common stock. This Agreement was subsequently rescinded on August 12, 2009 and the stock was not issued. On December 16, 2008, we executed an agreement for the exchange of common stock between ECFO Corporation, a Florida Corporation ("ECFO") and Cathryn L. Walker, the sole shareholder of Company, (the "Shareholder") and Domark (the "Agreement"), whereby pursuant to the terms and conditions of that Agreement, Domark acquired all the shares in ECFO in return for an issuance of One Hundred Thousand (100,000) shares of Domark common stock in return for all outstanding capital securities of ECFO. Accordingly, ECFO became a wholly owned subsidiary of Domark. ECFO is an accounting firm who provides accounting and tax services to public and private entities. On April 27, 2009, we executed an Agreement for the Exchange of Common Stock Between Motivation Advantage, Inc., a Florida corporation ("Motivation Advantage") and its sole shareholder, Suzanne Winfield (the "Agreement"), whereby pursuant to the terms and conditions of that Agreement, Domark acquired the right, title, and interest of Motivation Advantage in and to all of the shares and assets of Motivation Advantage used exclusively in their business in return for common stock valued at Two Million Dollars ($2,000,000) based on a formula as described in the Agreement. In addition, for a period of five (5) years, commencing with the calendar year 2010, Suzanne Winfield shall be entitled to additional shares of common stock based on certain earn out 4
provisions as described in the Agreement. The Closing underlying the Agreement, subject to certain due diligence and closing requirements is intended to be on or before May 15, 2009 (unless both parties agree to a permissible extension of seven days). After the closing this transaction was subsequently rescinded on August 12, 2009 and the stock was not issued. On May 13, 2009, we executed an Agreement for the Exchange of Common Stock with Victory Lane LLC, a Colorado limited liability corporation ("Victory Lane") and its members, whereby pursuant to the terms and conditions of that Agreement, Domark acquired the right, title, and interest of Victory Lane in and to all of the member interests and assets of Victory Lane in return for our common stock valued at Ten Million Dollars ($10,000,000) based on a formula as described in the Agreement. Victory Lane is a unique and exclusive Lifestyle Development on 3,000 acres approximately 75 miles from Savannah Georgia, which includes exclusive home sites, a 4.5-mile grand prix circuit, a Davis Love III designed golf course and a 6,000' private runway. On August 10, 2009 legal proceeding were initiated by both parties (see item 3 Legal Proceedings). On August 12, 2009, Joseph Vittoria, resigned as a member of the Board of Directors. There were no disagreements with Joseph Vittoria on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure. On August 13, 2009, Dr. Louis Corrnachia and Richard Smith resigned as members of the Board of Directors. There were no disagreements with Louis Corrnachia or Richard Smith, on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure. On August 14, 2009, Greg Jaclin and Terry Carlson resigned as members of the Board of Directors. There were no disagreements with Greg Jaclin or Terry Carlson on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure. On August 24, 2009, 310 Holdings, Inc.("310") and the Company closed a Securities Purchase Agreement whereby the 310 purchased 100% of the issued and outstanding common shares of Javaco in exchange for $150,000 and the issuance of 2,500,000 shares of 310's common stock to Domark. We also entered into a separate agreement and have assigned $9,997,134 of media credits in print and radio to 310 Holdings in exchange for the issuance of 1,000,000 shares of 310 Holding's common stock. On August 26, 2009, R. Thomas Kidd resigned as Chief Executive Officer and President and as a member of the Board of Directors. There were no disagreements with R. Thomas Kidd on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure. R. Thomas Kidd will remain in his position as Principal Financial Officer. On August 26, 2009, in a Debt Settlement Agreement by and between the Company and R. Thomas Kidd, any and all debt owed to Mr. Kidd for expenses, advances, or loans has been settled. The Company agrees to pay Mr. Kidd $150,000 cash and transfer 3.5 million shares of common stock of TRTN, OTCBB held by us. Furthermore, the Company shall execute an assignment of all claims against Victory Lane Financial Elite, et al as known or shall become known in the course of the litigation entitled DOMK vs Victory Lane Elite, LLC, Costello, et al in the US District Court, Middle District of Florida, and the case in Tattnall County, Georgia. In addition, the parties shall execute an assignment of the repurchase agreement entered into by and between the Company and TRTN, OTCBB. 5
Upon payment and assignment of TRTN shares and assignment of the Company's claims, Mr. Kidd shall surrender 111,438,394 common shares of Domark, to be returned to treasury and cancelled. On August 26, 2009, Scott Sieck, a member of the Board of directors and Chief Operating Officer, was appointed as our Chief Executive Officer. On August 26, 2009 the Company executed a Securities purchase agreement with R. Thomas Kidd, whereby pursuant to the terms of the agreement, the Company agreed to transfer its ownership of 100 Units of Victory lane LLC to R. Thomas Kidd in exchange for 25 million shares of Domark common stock held by Mr. Kidd. The transaction closed on October 15, 2009, upon delivery to the Company of 25 million shares of common stock owned by Mr. Kidd. The issuance of the securities above were effected in reliance on the exemptions for private sales of securities not involving a public offering pursuant to in Section 4(2) and Section 4(6) of the Securities Act. On September 4, 2009, Richard Altmann resigned as member of the Board of Directors. On September 14, 2009, R. Thomas Kidd resigned as Principle Accounting Officer of the Company to pursue other interests. Mr. Kidd has provided no written disagreement with the Company on any matter related to the Company's operations, policies or practices. Scott Sieck, our current Chief Executive Officer, has been appointed as Principle Accounting Officer. On September 18, 2009, Scott Sieck entered into an employment agreement with our Company. The employment agreement provided that the Executive has agreed to waive his compensation until such time as the Board of Directors determines the Company has sufficient assets to repay the Executive or receive compensation in equity and accepts from the corporation 100,000 shares it its authorized Series "A" Preferred stock during the interim period. Subsequently, on September 21, 2009, Mr. Sieck choose to receive 100,000 shares of Series A Preferred Stock which have a voting rights in all matters to be voted upon by shareholders of common stock of 1,000 votes per share of Series A Preferred Stock. On October 15, 2009, the Company entered into an agreement whereby the Company and R Thomas Kidd settled outstanding debts to Mr. Kidd. Terms of the debt settlement agreement relieved the Company of indebtedness to Mr. Kidd in the amount of $16,491 in exchange for the transference of the website of Executive Sports and Entertainment, Inc., representing ownership of that website, delivery of the website framework for www.domarkinternational.com, the assignment of a $100,000 promissory note payable to the Company, and assignment of all shares related to MedQuest, Inc., a Nevada corporation formed by the Company in 2008. On October 20, 2009, the Company executed an agreement to sell the stock of ECFO Corporation back to ECFO's founding shareholder. Consideration for the 2,000 shares of ECFO Corporation, representing all issued and outstanding shares of ECFO Corporation, owned by the Company, is Ten Thousand Dollars ($10,000), payable in the form of a one year promissory note. The transaction is a private sale exempt from registration under Section 4(1) of the Securities Act of 1933, as amended. As of February 28, 2010, the promissory note was satisfied. 6
On October 26, 2009, pursuant to an Assignment and Assumption Agreement, the loan payable in the amount of $100,000, entered into on October 23, 2009 was assigned to the Company's officer, Scott Sieck. On November 22, 2009, the Company entered into an agreement with R Thomas Kidd whereby the Company and Kidd have agreed upon the disbursement of certain proceeds to be received in a possible settlement the Company and certain Victory Lane Financial elite parties or a final adjudication of litigation and arbitration actions in connection with claims in current litigation. The agreement also mutually cancels the Assignment of Claims granted to R Thomas Kidd by the Company on August 26, 2009. Terms of the new agreement are outlined as follows: Upon closing of any settlement agreement between the Company and Victory Lane Financial Elite, et al, the Company shall pay to R Thomas Kidd the sum of $192,500 in cash if cash is received, or at a minimum, $42,500 in cash and an assignment of a third party promissory note in the minimum amount of $150,000 executed by all Victory Lane Financial Elite, et al in favor of the Company on terms acceptable to Kidd provided that R Thomas Kidd will cancel the promissory note executed by the Company in favor of R Thomas Kidd in the amount of $192,500 and return the original promissory note to the Company. In the event of no settlement agreement between the Company and Victory Lane Financial Elite, et al, R Thomas Kidd agree to accept and the Company agrees to pay R Thomas Kidd the sum of $192,500 from the first proceeds of any award or judgment obtained as a result of the prosecution of the litigation and arbitration actions against the Victory Lane Financial Elite, et al; R Thomas Kidd canceled the Assignment of Claims executed by the Company in favor of R. Thomas Kidd on August 26, 2009 and transferred title and ownership of the Victory Lane, LLC Units to the Company; in addition, R Thomas Kidd resigned as Managing Member of Victory Lane, LLC and appointed Scott Sieck as Managing Member of Victory Lane, LLC. Effective March 29th, 2010, Scott Sieck, CEO/Director and R. Thomas Kidd entered into a in a Debt and Securities Purchase Agreement (the "Agreement"). Pursuant to the terms of the Agreement, all debt owed to Mr. Sieck by the Company ($534,271 as of 3/29/2010), his Preferred Series A shares, and one million common shares were purchased by Mr. Kidd in consideration for the delivery of 250,000 restricted common shares JBI Inc. owned by Mr. Kidd. The change in control is as a result of the transfer of the Preferred Series A Shares, which collectively provides the holder thereof with a majority of voting rights. On April 13, 2010, Scott Sieck resigned as a member of the Boards of Directors and Chief Operating Officer, and Chief Executive Officer. On April 13, 2010, R. Thomas Kidd was appointed as a sole member of the Board of Directors and our Chief Executive Officer, Chief Operating Officer, and Chief Financial Officer. 7
ADDITIONAL INFORMATION DoMark files reports and other materials with the Securities and Exchange Commission. These documents may be inspected and copied at the Commission's Public Reference Room at 100 F Street, N.E., Washington D.C., 20549. You can obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. You can also get copies of documents that the Company files with the Commission through the Commission's Internet site at www.sec.gov. EMPLOYEES As of fiscal year end May 31, 2010, the Company had no employees. ITEM 1A. RISK FACTORS AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING INFORMATION ABOUT THESE RISKS, TOGETHER WITH THE OTHER INFORMATION CONTAINED IN THIS ANNUAL REPORT ON FORM 10-K, BEFORE INVESTING IN OUR COMMON STOCK. IF ANY OF THE EVENTS ANTICIPATED BY THE RISKS DESCRIBED BELOW OCCUR, OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION COULD BE ADVERSELY AFFECTED WHICH COULD RESULT IN A DECLINE IN THE MARKET PRICE OF OUR COMMON STOCK, CAUSING YOU TO LOSE ALL OR PART OF YOUR INVESTMENT. BECAUSE WE ARE QUOTED ON THE OTCBB INSTEAD OF AN EXCHANGE OR NATIONAL QUOTATION SYSTEM, OUR INVESTORS MAY HAVE A TOUGHER TIME SELLING THEIR STOCK OR EXPERIENCE NEGATIVE VOLATILITY ON THE MARKET PRICE OF OUR STOCK. Our common stock is traded on the OTCBB. The OTCBB is often highly illiquid, in part because it does not have a national quotation system by which potential investors can follow the market price of shares except through information received and generated by a limited number of broker-dealers that make markets in particular stocks. There is a greater chance of volatility for securities that trade on the OTCBB as compared to a national exchange or quotation system. This volatility may be caused by a variety of factors, including the lack of readily available price quotations, the absence of consistent administrative supervision of bid and ask quotations, lower trading volume, and market conditions. Investors in our common stock may experience high fluctuations in the market price and volume of the trading market for our securities. These fluctuations, when they occur, have a negative effect on the market price for our securities. Accordingly, our stockholders may not be able to realize a fair price from their shares when they determine to sell them or may have to hold them for a substantial period of time until the market for our common stock improves. FAILURE TO ACHIEVE AND MAINTAIN EFFECTIVE INTERNAL CONTROLS IN ACCORDANCE WITH SECTION 404 OF THE SARBANES-OXLEY ACT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND OPERATING RESULTS. It may be time consuming, difficult and costly for us to develop and implement the additional internal controls, processes and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal auditing and other finance staff in order to develop and implement appropriate additional internal controls, processes and reporting procedures. If we are unable to comply with these requirements of the Sarbanes-Oxley Act, we may not be able to obtain the independent accountant certifications that the Sarbanes-Oxley Act requires of publicly traded companies. If we fail to comply in a timely manner with the requirements of Section 404 of the Sarbanes-Oxley Act regarding internal control over financial reporting or to remedy any material weaknesses in our internal controls that we may identify, such failure could result in material misstatements in our financial statements, cause investors to lose confidence in our reported financial information and have a negative effect on the trading price of our common stock. 8
Pursuant to Section 404 of the Sarbanes-Oxley Act and current SEC regulations, beginning with our annual report on Form 10-K for our fiscal period ending December 31, 2007, we will be required to prepare assessments regarding internal controls over financial reporting and beginning with our annual report on Form 10-K for our fiscal period ending December 31, 2008, furnish a report by our management on our internal control over financial reporting. We have begun the process of documenting and testing our internal control procedures in order to satisfy these requirements, which is likely to result in increased general and administrative expenses and may shift management time and attention from revenue-generating activities to compliance activities. While our management is expending significant resources in an effort to complete this important project, there can be no assurance that we will be able to achieve our objective on a timely basis. There also can be no assurance that our auditors will be able to issue an unqualified opinion on management's assessment of the effectiveness of our internal control over financial reporting. Failure to achieve and maintain an effective internal control environment or complete our Section 404 certifications could have a material adverse effect on our stock price. In addition, in connection with our on-going assessment of the effectiveness of our internal control over financial reporting, we may discover "material weaknesses" in our internal controls as defined in standards established by the Public Company Accounting Oversight Board, or the PCAOB. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The PCAOB defines "significant deficiency" as a deficiency that results in more than a remote likelihood that a misstatement of the financial statements that is more than inconsequential will not be prevented or detected. In the event that a material weakness is identified, we will employ qualified personnel and adopt and implement policies and procedures to address any material weaknesses that we identify. However, the process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. We cannot assure you that the measures we will take will remediate any material weaknesses that we may identify or that we will implement and maintain adequate controls over our financial process and reporting in the future. Any failure to complete our assessment of our internal control over financial reporting, to remediate any material weaknesses that we may identify or to implement new or improved controls, or difficulties encountered in their implementation, could harm our operating results, cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements. Any such failure could also adversely affect the results of the periodic management evaluations of our internal controls and, in the case of a failure to remediate any material weaknesses that we may identify, would adversely affect the annual auditor attestation reports regarding the effectiveness of our internal control over financial reporting that are required under Section 404 of the Sarbanes-Oxley Act. Inadequate internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock. RISKS RELATING TO OWNERSHIP OF OUR COMMON STOCK Although there is presently a market for our common stock, the price of our common stack may be extremely volatile and investors may not be able to sell their shares at or above their purchase price, or at all. We anticipate that the market may be potentially highly volatile and may fluctuate substantially because of: * Actual or anticipated fluctuations in our future business and operating results; * Changes in or failure to meet market expectations; * Fluctuations in stock market price and volume 9
WE DO NOT INTEND TO PAY DIVIDENDS We do not anticipate paying cash dividends on our common stock in the foreseeable future. We may not have sufficient funds to legally pay dividends. Even if funds are legally available to pay dividends, we may nevertheless decide in our sole discretion not to pay dividends. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors our board of directors may consider relevant. There is no assurance that we will pay any dividends in the future, and, if dividends are rapid, there is no assurance with respect to the amount of any such dividend. THE MARKET PRICE FOR OUR COMMON SHARES IS PARTICULARLY VOLATILE GIVEN OUR STATUS AS A RELATIVELY UNKNOWN COMPANY WITH A SMALL AND THINLY TRADED PUBLIC FLOAT, LIMITED OPERATING HISTORY AND LACK OF PROFITS WHICH COULD LEAD TO WIDE FLUCTUATIONS IN OUR SHARE PRICE. The market for our common shares is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in our share price is attributable to a number of factors. First, as noted above, our common shares are sporadically and thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our common shares are sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Secondly, we are a speculative or "risky" investment due to our limited operating history and lack of profits to date, and uncertainty of future market acceptance for our potential products. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer. Many of these factors are beyond our control and may decrease the market price of our common shares, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common shares will be at any time, including as to whether our common shares will sustain their current market prices, or as to what effect that the sale of shares or the availability of common shares for sale at any time will have on the prevailing market price. Shareholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with 10
consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price. VOLATILITY IN OUR COMMON SHARE PRICE MAY SUBJECT US TO SECURITIES LITIGATION, THEREBY DIVERTING OUR RESOURCES THAT MAY HAVE A MATERIAL EFFECT ON OUR PROFITABILITY AND RESULTS OF OPERATIONS. As discussed in the preceding risk factors, the market for our common shares is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may in the future be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management's attention and resources. OPERATING HISTORY AND LACK OF PROFITS COULD LEAD TO WIDE FLUCTUATIONS IN OUR SHARE PRICE. THE PRICE AT WHICH YOU PURCHASE OUR COMMON SHARES MAY NOT BE INDICATIVE OF THE PRICE THAT WILL PREVAIL IN THE TRADING MARKET. YOU MAY BE UNABLE TO SELL YOUR COMMON SHARES AT OR ABOVE YOUR PURCHASE PRICE, WHICH MAY RESULT IN SUBSTANTIAL LOSSES TO YOU. THE MARKET PRICE FOR OUR COMMON SHARES IS PARTICULARLY VOLATILE GIVEN OUR STATUS AS A RELATIVELY UNKNOWN COMPANY WITH A SMALL AND THINLY TRADED PUBLIC FLOAT. The market for our common shares is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in our share price is attributable to a number of factors. First, as noted above, our common shares are sporadically and thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our common shares are sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Secondly, we are a speculative or "risky" investment due to our limited operating history and lack of profits to date, and uncertainty of future market acceptance for our potential products. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer. Many of these factors are beyond our control and may decrease the market price of our common shares, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common shares will be at any time, including as to whether our common shares will 11
sustain their current market prices, or as to what effect that the sale of shares or the availability of common shares for sale at any time will have on the prevailing market price. Shareholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price. WE MAY NOT HAVE ACCESS TO SUFFICIENT CAPITAL TO PURSUE OUR BUSINESS AND THEREFORE WOULD BE UNABLE TO ACHIEVE OUR PLANNED FUTURE GROWTH We intend to pursue a growth strategy that includes development of the Company business and technology. Currently we have limited capital which is insufficient to pursue our plans for development and growth. Our ability to implement our growth plans will depend primarily on our ability to obtain additional private or public equity or debt financing. We are currently seeking additional capital. Such financing may not be available at all, or we may be unable to locate and secure additional capital on terms and conditions that are acceptable to us. Our failure to obtain additional capital will have a material adverse effect on our business. OUR SIGNIFICANT FOCUS ON ACQUISITIONS IN OUR BUSINESS SUBJECTS INVESTORS TO A GREATER RISK OF LOSSES A significant portion of our efforts are focused on the development and growth of the Company and its subsidiaries by acquisitions. Although the Company believes there are significant acquisition opportunities available, we can make no assurances that the Company will be able to execute its acquisition strategy. THE REPORT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM CONTAINS EXPLANATORY LANGUAGE THAT SUBSTANTIAL DOUBT EXISTS ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN 12
The independent auditor's report on our financial statements contains explanatory language that substantial doubt exists about our ability to continue as a going concern. The report states that we depend on the continued contributions of our executive officers to work effectively as a team, to execute our business strategy and to manage our business. The loss of key personnel, or their failure to work effectively, could have a material adverse effect on our business, financial condition, and results of operations. If we are unable to obtain sufficient financing in the near term or achieve profitability, then we would, in all likelihood, experience severe liquidity problems and may have to curtail our operations. If we curtail our operations, we may be placed into bankruptcy or undergo liquidation, the result of which will adversely affect the value of our common shares. OPERATING HISTORY AND LACK OF PROFITS COULD LEAD TO WIDE FLUCTUATIONS IN OUR SHARE PRICE. THE PRICE AT WHICH YOU PURCHASE OUR COMMON SHARES MAY NOT BE INDICATIVE OF THE PRICE THAT WILL PREVAIL IN THE TRADING MARKET. YOU MAY BE UNABLE TO SELL YOUR COMMON SHARES AT OR ABOVE YOUR PURCHASE PRICE, WHICH MAY RESULT IN SUBSTANTIAL LOSSES TO YOU. THE MARKET PRICE FOR OUR COMMON SHARES IS PARTICULARLY VOLATILE GIVEN OUR STATUS AS A RELATIVELY UNKNOWN COMPANY WITH A SMALL AND THINLY TRADED PUBLIC FLOAT The market for our common shares is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in our share price is attributable to a number of factors. First, as noted above, our common shares are sporadically and thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our common shares are sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Secondly, we are a speculative or "risky" investment due to our limited operating history and lack of profits to date, and uncertainty of future market acceptance for our potential products. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer. Many of these factors are beyond our control and may decrease the market price of our common shares, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common shares will be at any time, including as to whether our common shares will sustain their current market prices, or as to what effect that the sale of shares or the availability of common shares for sale at any time will have on the prevailing market price. Shareholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by 13
promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price. VOLATILITY IN OUR COMMON SHARE PRICE MAY SUBJECT US TO SECURITIES LITIGATION, THEREBY DIVERTING OUR RESOURCES THAT MAY HAVE A MATERIAL EFFECT ON OUR PROFITABILITY AND RESULTS OF OPERATIONS. As discussed in the preceding risk factors, the market for our common shares is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may in the future be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management's attention and resources. SHOULD ONE OR MORE OF THE FOREGOING RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD THE UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, EXPECTED, INTENDED OR PLANNED. FORWARD-LOOKING STATEMENTS This Annual Report contains certain forward-looking statements regarding management's plans and objectives for future operations including plans and objectives relating to our planned marketing efforts and future economic performance. The forward-looking statements and associated risks set forth in this Annual Report include or relate to, among other things, (a) our growth strategies, (b) anticipated trends in our industry, (c) our ability to obtain and retain sufficient capital for future operations, and (d) our anticipated needs for working capital. These statements may be found under "Management's Discussion and Analysis or Plan of Operations" and "Business," as well as in this Annual Report generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in this Annual Report generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Annual Report will in fact occur. The forward-looking statements herein are based on current expectations that involve a number of risks and uncertainties. Such forward-looking statements are based on assumptions described herein. The assumptions are based on judgments with respect to, among other things, future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Accordingly, although we believe that the assumptions underlying the forward-looking statements are reasonable, any such assumption could prove to be 14
inaccurate and therefore there can be no assurance that the results contemplated in forward-looking statements will be realized. In addition, as disclosed elsewhere in the "Risk Factors" section of this prospectus, there are a number of other risks inherent in our business and operations which could cause our operating results to vary markedly and adversely from prior results or the results contemplated by the forward-looking statements. Management decisions, including budgeting, are subjective in many respects and periodic revisions must be made to reflect actual conditions and business developments, the impact of which may cause us to alter marketing, capital investment and other expenditures, which may also materially adversely affect our results of operations. In light of significant uncertainties inherent in the forward-looking information included in this prospectus, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives or plans will be achieved. Some of the information in this prospectus contains forward-looking statements that involve substantial risks and uncertainties. Any statement in this prospectus and in the documents incorporated by reference into this prospectus that is not a statement of an historical fact constitutes a "forward-looking statement". Further, when we use the words "may", "expect", "anticipate", "plan", "believe", "seek", "estimate", "internal", and similar words, we intend to identify statements and expressions that may be forward- looking statements. We believe it is important to communicate certain of our expectations to our investors. Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions that could cause our future results to differ materially from those expressed in any forward-looking statements. Many factors are beyond our ability to control or predict. You are accordingly cautioned not to place undue reliance on such forward-looking statements. Important factors that may cause our actual results to differ from such forward-looking statements include, but are not limited to, the risk factors discussed herein. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable to small business issuers. ITEM 2. PROPERTIES As of August 17, 2010, the Company maintains its corporate executive office in Lake Mary, Florida. ECFO, a former subsidiary of the Company, has been providing the office space at no charge to the Company as a courtesy to the Company. ITEM 3. LEGAL PROCEEDINGS The Company may become involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, except as discussed herein, the ultimate disposition of these matters will not have a material adverse effect on the Company's financial position, results of operations, or liquidity. On August 10, 2009, the Company along with Victory Lane, LLC and R. Thomas Kidd filed a lawsuit in the United States District Court, Middle District of Florida Case Number 09-CV-1396-ORL-35-DAB against Victory Lane Financial Elite, LLC et al, for the following causes of action: Fraud in the Inducement, Breach of Contract, Rescission, Conspiracy, and Libel. 15
On August 10, 2009, the Company was made aware of an action filed in the Superior Court of Tattnall County, Georgia, case number 2009-V-381-JS by Victory Lane Financial Elite, LLC et al against the Company and its directors and officers. The Company believes that the complaint is without merit and the Company intends to defend said action and file substantial counterclaims against Victory Lane Financial Elite, LLC, Patrick Costello and numerous other defendants. Management is of the opinion that the action has no merit and intends to defend the action aggressively. On September 25, 2009 the company amended its Case Number CV-1396-ORL-35-DAB compliant to request certain complaints be heard in arbitration as called for in the original acquisition agreement dated May 13, 2009. Both venues are proceeding. The secured lender on the Victory Lane property foreclosed and then filed suit against Victory Lane, LLC, Patrick J. Costello and Stephen Brown seeking a deficiency judgment. Brown and Costello filed a third party complaint against the Company and R. Thomas Kidd. The Company contends the third party complaint is fatally defective in that it alleges independent claims as opposed to derivative or a cause of action for indemnity or contribution. On the July 5, 2010, the Company has filed a motion to dismiss the third party complaint which they believe is meritorious and there should be a ruling by the Court within sixty days. The hearing is scheduled for August 11, 2010. On August 11, 2010, the motion to dismiss was converted to a motion for summary judgment. On July 20, 2010, pursuant to the Company's previously filed motion to dismiss case number 2009-V-381-JS for lack of jurisdiction in the Superior Court of Tattnall County, Georgia, the motion was denied as to the Company and R. Thomas Kidd, but granted as to the other officers and directors of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company submitted no matters to a vote of its security holders during the fiscal year ended May 31, 2010. PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS DoMark common stock is traded in the over-the-counter market, and quoted in the National Association of Securities Dealers Inter-dealer Quotation System ("Electronic Bulletin Board) and can be accessed on the Internet at www.otcbb.com under the symbol "DOMK.OB" At May 31, 2010, there were 36,460,835 shares of common stock of DoMark outstanding and there were approximately 60 shareholders of record of the Company's common stock. 16
The following table sets forth for the periods indicated the high and low bid quotations for DoMark's common stock. These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown or commission and may not represent actual transactions. FISCAL YEAR ENDED MAY 31, 2010 High Low ---- --- First Quarter (June - August, 2009) $ 2.00 $ 0.05 Second Quarter (September - November 2009) $ 0.05 $ 0.02 Third Quarter (December - February 2010) $ 0.25 $ 0.01 Fourth Quarter (March - May 2010) $ 0.17 $ 0.02 On August 17, 2010, the closing bid price of our common stock was $0.23. DIVIDENDS DoMark has never paid dividends on any of its common stock shares. DoMark does not anticipate paying dividends at any time in the foreseeable future and any profits will be reinvested in DoMark's business. RECENT SALES OF UNREGISTERED SECURITIES Stock Issued Stock Issued for Cash Cash Recieved for Assests -------- ------------- ----------- Year Ended May 31, 2009 100,000 $ 100,500 -- Year Ended May 31, 2010 -- $ -- -- TRANSFER AGENT The Company's Transfer Agent is Signature Stock Transfer, located at 2220 Coit Road, suite 480, Plano Texas 75075 to serve in the capacity of transfer agent. STOCK SPLITS On June 27, 2008, the Company enacted a 2-for-1 forward split and share data in this report has been adjusted to reflect the stock split relating to the Company's common stock. 17
On January 22, 2009 the Company enacted a 2-for-1 forward split and share data in this report has been adjusted to reflect the stock split relating to the Company's common stock. ITEM 6. SELECTED FINANCIAL DATA The following information has been summarized from financial information included elsewhere and should be read in conjunction with such financial statements and notes thereto. Summary of Statements of Operations of DOMK Year Ended May 31, 2010 and 2009 STATEMENT OF OPERATIONS DATA Years Ended Years Ended May 31, 2010 May 31, 2009 ------------ ------------ Revenues $ 1,002,682 $ 6,617,675 Operating and Other Expenses (2,528,986) (20,443,221) ------------ ------------ Net Loss $ (1,526,304) $(13,825,546) BALANCE SHEET DATA Years Ended Years Ended May 31, 2010 May 31, 2009 ------------ ------------ Current Assets $ 100,197 $1,840,515 Total Assets 111,728 5,887,668 Current Liabilities 776,704 1,411,629 Non Current Liabilities -- -- Total Liabilities 776,704 1,411,629 Working Capital (Deficit) (676,507) 428,886 Shareholders'Equity (Deficit) $ (664,976) $4,476,039 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OR PLAN OF OPERATION The following is management's discussion and analysis of certain significant factors that have affected our financial position and operating results during the periods included in the accompanying consolidated financial statements, as well as information relating to the plans of our current management. This report includes forward-looking statements. Generally, the words "believes," 18
"anticipates," "may," "will," "should," "expect," "intend," "estimate," "continue," and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements. The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes thereto and other financial information contained elsewhere in this Form 10-K. CRITICAL ACCOUNTING POLICIES ACCOUNTING POLICIES AND ESTIMATES The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make certain 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. Our management periodically evaluates the estimates and judgments made. Management bases its estimates and judgments on historical experience and on various factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates as a result of different assumptions or conditions. As such, in accordance with the use of accounting principles generally accepted in the United States of America, our actual realized results may differ from management's initial estimates as reported. A summary of significant accounting policies are detailed in notes to the financial statements which are an integral component of this filing. REVENUE RECOGNITION Revenue from product sales is recognized upon shipment to customers at which time such customers are invoiced. Units are shipped under the terms of FOB shipping point when determination is made that collectability is probable. Revenues for services are recognized upon completion of the services. For consulting services and other fee-for-service arrangements, revenue is recognized upon completion of the services. The Company has adopted the Securities and Exchange Commission's Staff Accounting Bulletin (SAB) No. 104, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. STOCK BASED COMPENSATION FSP FAS The FSP provides that instruments that were originally issued as employee compensation and then modified, and that modification is made to the terms of the instrument solely to reflect an equity restructuring that occurs when the holders are no longer employees, then no change in the recognition or the measurement (due to a change in classification) of those instruments will result if both of the following conditions are met: (a). There is no increase in fair value of the award (or the ratio of intrinsic value to the exercise price of the award is preserved, that is, the holder is made whole), or the 19
anti-dilution provision is not added to the terms of the award in contemplation of an equity restructuring; and (b). All holders of the same class of equity instruments (for example, stock options) are treated in the same manner. The provisions in this FSP shall be applied in the first reporting period beginning after the date the FSP is posted to the FASB website. The Company has adopted SP FAS ACCOUNTING POLICIES AND ESTIMATES The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make certain 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. Our management periodically evaluates the estimates and judgments made. Management bases its estimates and judgments on historical experience and on various factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates as a result of different assumptions or conditions. As such, in accordance with the use of accounting principles generally accepted in the United States of America, our actual realized results may differ from management's initial estimates as reported. A summary of significant accounting policies are detailed in notes to the financial statements which are an integral component of this filing. REVENUES The Company has adopted the Securities and Exchange Commission's Staff Accounting Bulletin (SAB) No. 104, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. RECENT DEVELOPMENTS On August 10, 2009, the Company along with Victory Lane, LLC and R. Thomas Kidd filed a lawsuit in the United States District Court, Middle District of Florida Case Number 09-CV-1396-ORL-35-DAB against Victory Lane Financial Elite, LLC et al, for the following causes of action: Fraud in the Inducement, Breach of Contract, Rescission, Conspiracy, and Libel. On August 10, 2009, the Company was made aware of an action filed in the Superior Court of Tattnall County, Georgia, case number 2009-V-381-JS by Victory Lane Financial Elite, LLC et al against the Company and its directors and officers. The Company believes that the complaint is without merit and the Company intends to defend said action and file substantial counterclaims against Victory Lane Financial Elite, LLC, Patrick Costello and numerous other defendants. On September 25, 2009 the company amended its Case Number CV-1396-ORL-35-DAB compliant to request certain complaints be heard in arbitration as called for in the original acquisition agreement dated May 13, 2009. Both venues are proceeding. The secured lender on the Victory Lane property foreclosed and then filed suit against Victory Lane, LLC, Patrick J. Costello and Stephen Brown seeking a 20
deficiency judgment. Brown and Costello filed a third party complaint against the Company and R. Thomas Kidd. The Company contends the third party complaint is fatally defective in that it alleges independent claims as opposed to derivative or a cause of action for indemnity or contribution. On the July 5, 2010, the Company has filed a motion to dismiss the third party complaint which they believe is meritorious and there should be a ruling by the Court within sixty days. The hearing is scheduled for August 11, 2010. On August 11, 2010, the motion to dismiss was converted to a motion for summary judgment. On July 20, 2010, pursuant to the Company's previously filed motion to dismiss case number 2009-V-381-JS for lack of jurisdiction in the Superior Court of Tattnall County, Georgia, the motion was denied as to the Company and R. Thomas Kidd, but granted as to the other officers and directors of the Company. On May 26, 2010, Domark International, Inc. (the "Company") entered into an Asset Purchase Agreement (the "Agreement") with Armada Capital, LLC ("Armada") providing for the purchase and sale of all of Armada's right, title and interest in and to all of the assets of Armada. Armada, an entity engaged in the business of providing consulting services for small capital public companies and private businesses, is owned by R. Thomas Kidd, the Company's Chief Executive Officer, Director and majority shareholder. The closing of the Agreement shall take place upon (i) the delivery of all signed documentation; (ii) the completion of all documentation necessary to perfect the delivery of the assets; and (iii) the completion and delivery of the audited financial statements of the assets to be purchased and sold; provided, however, that the closing date shall take place on or before June 30, 2010. The Purchase Price for the Assets is equal to twenty percent (20%) of the revenue derived from the fees generated from the consulting agreements sold pursuant to the Agreement. As of the date of this report, the parties agreed to mutually terminate the transaction. On July 21, 2010, Domark International, Inc. (the "Company") entered into an Agreement for the Exchange of Common Stock (the "Agreement") with Virtual Devices, Inc., a Pennsylvania corporation (VDI) providing for the issuance of stock of the Company in exchange for all of the outstanding shares of VDI. At the closing, VDI will become a wholly owned subsidiary of the Company. The closing of the Agreement shall take place upon (i) the delivery of all required signed documentation; (ii) the completion of due diligence by all parties, provided however, that the closing date shall take place on or before August 15, 2010. On August 13, 2010, the Company and Virtual Devices, Inc. extended the closing date to allow for sufficient time to complete due diligence. RESULTS OF OPERATIONS FISCAL YEAR ENDED MAY 31, 2010, COMPARED TO FISCAL YEAR ENDED MAY 31, 2009 Revenues for Fiscal 2010 decreased to $1,002,682 from $6,617,175 during fiscal 2009. We continue to aggressively pursue and devote our resources and focus our direction in building asset value. We have further refocused in new acquisitions to increase our revenues and cash flow. General and administrative expenses for the fiscal 2010 decreased to $843,825 as compared to fiscal 2009 of $3,937,598. The decrease is largely due to the rescissions of our recent acquisitions. 21
Interest expense for fiscal 2010 decreased to $6,727 as compared to fiscal 2009 of $41,958. The loss for fiscal 2010 decreased to ($1,526,304) as compared to fiscal 2009 of ($13,416,046). No tax benefit was recorded for fiscal 2010 and 2009 as required by Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. The Company has provided for a 100% allowance of its deferred tax assets as it is uncertain that there will be sufficient net profits in the future to fully realize the tax benefit of its net operating loss carry-forwards. LIQUIDITY AND CAPITAL RESOURCES Our operating requirements have been funded primarily through financing facilities, sales of our common stock, and loans from shareholders. Currently the Company's cash flows do not adequately support the operating expenses of the Company. We received $0 in fiscal year 2010 from the sale of our common stock as compared to $100,500 in fiscal year 2009. Cash provided (used) by operating activities for the fiscal year 2010 was $323,574 compared to $2,650 for the fiscal year 2009. Depreciation expense for the fiscal year of 2010 was $1,319 as compared to $49,054 for the fiscal year of 2009. Cash (used in) provided in investing activities was 0 for the fiscal year of 2010, compared to $(26,953) for the fiscal year of 2009. Cash provided (used in) by financing activities was $(347,828) for the fiscal year of 2010 as compared to $9,848 for the fiscal year of 2009. Financing activities primarily consisted of cash paid on notes payable. OTHER CONSIDERATIONS There are numerous factors that affect the business and the results of its operations. Sources of these factors include general economic and business conditions, federal and state regulation of business activities, the level of demand for product services, the level and intensity of competition in the media content industry, and the ability to develop new services based on new or evolving technology and the market's acceptance of those new services, our ability to timely and effectively manage periodic product transitions, the services, customer and geographic sales mix of any particular period, and our ability to continue to improve our infrastructure including personnel and systems to keep pace with our anticipated rapid growth. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We do not hold any derivative instruments and do not engage in any hedging activities. We are in the business of acquiring successfully operating subsidiaries to build the value of our Company. 22
ITEM 8. FINANCIAL STATEMENTS DOMARK INTERNATIONAL, INC. TABLE OF CONTENTS Page ---- INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM: 24 Larry O'Donnell CPA P.C CONSOLIDATED FINANCIAL STATEMENTS: Consolidated Balance Sheet at May 31, 2010 and 2009 25 Consolidated Statements of Operations for the years ended May 31, 2010 and 2009 27 Consolidated Statements of Stockholders' Equity for the years ended May 31, 2010 and 2009 28 Consolidated Statements of Cash Flows for the years ended May 31, 2010 and 2009 31 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 32 23
Larry O'Donnell, CPA, P.C. Telephone (303)745-4545 2228 South Fraser Street Fax (303)369-9384 Unit 1 e-mail larryodonnelcpa@comcast.net Aurora, Colorado 80014 www.larryodonnellcpa.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors Domark International, Inc. Oviedo, Florida I have audited the accompanying consolidated balance sheets of Domark International, Inc. and subsidiaries as of May 31, 2010 and 200, and the related consolidated statements of operations, changes in stockholders' deficiency, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Domark International, Inc. and subsidiaries as of May 31, 2010 and 2009, and the results of their operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. These consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has operating and liquidity concerns, has incurred an accumulated deficit of approximately $14,228,156 through the period ended May 31, 2010. This condition raises substantial doubt about the Company's ability to continue as a going concern. Management's plans as to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties. /s/ Larry O'Donnell ------------------------------------ Larry O'Donnell, CPA, P.C. August 13, 2010 24
DOMARK INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS As of May 31, 2010 and May 31, 2009 ASSETS 5/31/2010 5/31/2009 --------- --------- CURRENT ASSETS Cash $ 197 $ 24,451 Accounts Receivable -- 1,262,334 Loans and Notes Receivable 100,000 3,352 Prepaid Expenses -- 16,023 Inventory -- 534,355 ---------- ---------- Total Current Assets 100,197 1,840,515 ---------- ---------- FIXED ASSETS Property & Equipment, Net 1,531 184,218 ---------- ---------- Total Fixed Assets 1,531 184,218 ---------- ---------- OTHER ASSETS Deposits -- 6,608 Due From Affiliate -- 106,561 Prepaid Media -- 1,002,866 Investment in unconsolidated subsidiary 10,000 -- Goodwill -- 2,746,900 ---------- ---------- Total Other Assets 10,000 3,862,935 ---------- ---------- TOTAL ASSETS $ 111,728 $5,887,668 ========== ========== The accompanying notes are an integral part of these financial statements. 25
DOMARK INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS As of May 31, 2010 and May 31, 2009 LIABILITIES AND STOCKHOLDERS' EQUITY 5/31/2010 5/31/2009 --------- --------- CURRENT LIABILITIES Accounts Payable and Accrued Expenses $ 46,868 $ 968,869 Payroll Liabilities -- 8,903 Due to Affiliate and Shareholder 729,836 44,000 Notes payable and Line of Credit -- 389,857 ------------ ------------ Total Current Liabilities 776,704 1,411,629 ------------ ------------ LONG-TERM LIABILITIES Convertible Notes Payable -- -- Bond Payable -- -- ------------ ------------ Total Long-Term Liabilities -- -- ------------ ------------ TOTAL LIABILITIES 776,704 1,411,629 ------------ ------------ MINORITY INTEREST IN SUBSIDIARY -- -- ------------ ------------ STOCKHOLDERS' EQUITY Convertible Preferred stock series A, $0.001 par value, Authorized: 2,000,000 Issued: 100,000 and none, respectively 100 -- Common Stock, $0.001 par value, Authorized: 200,000,000 Issued: 36,460,835 and 141,695,383, respectively 36,461 141,695 Additional paid in capital 13,526,619 17,036,196 Accumulated income/(deficit) (14,228,156) (12,701,852) ------------ ------------ Total Stockholders' Equity (Deficiency) (664,976) 4,476,039 ------------ ------------ TOTAL LIABILITIES AND EQUITY $ 111,728 $ 5,887,668 ============ ============ The accompanying notes are an integral part of these financial statements. 26
DOMARK INTERNATIONAL, INC. STATEMENTS OF OPERATIONS For the twelve months ending May 31, 2010 and 2009 TWELVE TWELVE MONTHS MONTHS 5/31/2010 5/31/2009 --------- --------- REVENUE $ 1,002,682 $ 6,617,175 COST OF SERVICES 815,260 5,519,669 ------------- ------------- GROSS PROFIT OR (LOSS) 187,422 1,097,506 GENERAL AND ADMINISTRATIVE EXPENSES 843,825 3,937,598 IMPAIRMENT OF GOODWILL 857,551 2,079,750 ------------- ------------- OPERATING INCOME/(LOSS) (1,513,954) (4,919,842) INTEREST EXPENSE 6,727 41,958 GAIN ON SALE OF SUBSIDIARY 8,000 292,868 OTHER INCOME 26,377 250,020 IMPAIRMENT OF ASSET 40,000 8,997,134 ------------- ------------- INCOME/(LOSS) BEFORE INCOME TAXES (1,526,304) (13,416,046) PROVISION FOR INCOME TAXES Federal -- -- State -- -- ------------- ------------- CONSOLIDATED NET INCOME/(LOSS) $ (1,526,304) $ (13,416,046) ============= ============= EARNINGS (LOSS) PER SHARE, BASIC AND DILUTED $ (0.04) $ (0.30) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 36,460,835 45,162,659 The accompanying notes are an integral part of these financial statements. 27
DOMARK INTERNATIONAL, INC. STATEMENT OF STOCKHOLDERS' EQUITY As of May 31, 2009 ADDITIONAL COMMON STOCK PREFERRED COMMON PAR PAID IN ACCUM SUBSCRIBED TOTAL STOCK STOCK VALUE CAPITAL DEFICIT NOT ISSUED EQUITY ----- ----- ----- ------- ------- ---------- ------ Balance, May 31, 2006 -- 4,000,000 $ 4,000 $ 1,000 (340) $ -- $ 4,660 Common stock issued for cash 4,000,000 4,000 46,000 50,000 Net income (loss) (12,460) (12,460) --------- ------------ --------- ------------ ------------ ---------- ------------ Balance, May 31, 2007 -- 8,000,000 8,000 47,000 (12,800) -- 42,200 ========= ============ ========= ============ ============ ========== ============ Preferred Stock issued as compensation on January 7, 2008 at $0.001 per share 100,000 100 -- 100 Common stock issued for asset on May 15, 2008 at $1.13 per share 26,000,000 26,000 7,303,288 7,329,288 Warrants Issued 804,800 804,800 Bond Issuance 170,000 170,000 Common stock subscribed, not issued 2,812,300 2,812,300 Common stock issued for compensation 74,980 74,980 Net income (loss) (1,419,170) (1,419,170) --------- ------------ --------- ------------ ------------ ---------- ------------ Balance, May 31, 2008 100,000 34,000,000 34,100 8,400,068 (1,431,970) 2,812,300 9,814,498 ========= ============ ========= ============ ============ ========== ============ Common stock issued in a 2 for 1 forward split on June 27, 2008 Removal of Warrants Issued (804,800) (804,800) Removal of Bond Issuance (170,000) (170,000) Cancellation of Common stock subscribed, not issued (2,812,300) (2,812,300) Cancellation of Common stock issued as compensation (74,980) (74,980) Removal of retro-application of subsidiary earnings 2,146,164 2,146,164 Valuation adjustment to common stock issued for asset on May 15, 2008 (7,322,788) (7,322,788) Common stock issued for acquisition on July 18, 2008 at $1.75 per share 1,500,000 1,500 2,623,500 2,625,000 Common stock issued on July 18, 2008 for assignment of acquisition rights at $0.75 per share 1,000,000 1,000 1,749,000 1,750,000 Common stock issued for prepaid media on August 15, 2008 at $3.79 per share 2,640,000 2,640 9,997,360 10,000,000 Common stock issued as compensation on September 1, 2008 at $0.001 per share 1,000,000 1,000 (500) 500 The accompanying notes are an integral part of these financial statements. 28
DOMARK INTERNATIONAL, INC. STATEMENT OF STOCKHOLDERS' EQUITY As of May 31, 2009 cont'd ADDITIONAL COMMON STOCK PREFERRED COMMON PAR PAID IN ACCUM SUBSCRIBED TOTAL STOCK STOCK VALUE CAPITAL DEFICIT NOT ISSUED EQUITY ----- ----- ----- ------- ------- ---------- ------ Common stock issued for cash on November 5, 2008 at $1.00 per share 100,000 100 99,900 100,000 Common stock issued for consulting on November 5, 2008 at $1.00 per share 100,000 100 99,900 100,000 Common stock issued for cash & consulting on December 3, 2008 at $0.005 per share 200,000 200 300 500 Common stock issued for acquisition on December 3, 2008 at $4.10 per share 100,000 100 204,900 205,000 Common stock issued as compensation on December 11, 2008 at $4.10 per share 200,000 200 409,800 410,000 Common stock issued for compensation on December 11, 2008 at $4.10 per share 10,000 10 20,490 20,500 Common stock issued for acquisition on December 15, 2008 at $4.10 per share 200,000 200 409,800 410,000 Common stock issued for assets on December 28, 2008 at $4.10 per share 2,000,000 2,000 4,098,000 4,100,000 Common stock issued for compensation on December 29, 2009 at $4.00 per share 500,000 500 999,500 1,000,000 Common stock issued for compensation on December 29, 2008 at $4.00 per share 200,000 200 399,800 400,000 Retroactively applied share issuance treated as a 2-to-1 stock split on December 29, 2008 Common stock issued as compensation on April 1, 2009 at $2.35 per share 12,500 13 29,363 29,375 Common stock issued for consulting on April 1, 2009 at $2.35 per share 60,000 60 140,940 141,000 Common stock issued for consulting on April 1, 2009 at $2.35 per share 25,000 25 58,725 58,750 Common stock issued for consulting on April 1, 2009 at $2.35 per share 200,000 200 469,800 470,000 Common stock issued for consulting on April 6, 2009 at $2.00 per share 125,000 125 249,875 250,000 Common Stock issued for expenses on April 13, 2009 at $2.00 per share 60,000 60 119,940 120,000 Common stock issued as compensation on April 14, 2009 at $2.00 per share 12,500 13 24,988 25,000 The accompanying notes are an integral part of these financial statements. 29
DOMARK INTERNATIONAL, INC. STATEMENT OF STOCKHOLDERS' EQUITY As of May 31, 2009 cont'd ADDITIONAL COMMON STOCK PREFERRED COMMON PAR PAID IN ACCUM SUBSCRIBED TOTAL STOCK STOCK VALUE CAPITAL DEFICIT NOT ISSUED EQUITY ----- ----- ----- ------- ------- ---------- ------ Common stock issued as compensation on April 14, 2009 at $2.00 per share 12,500 13 24,988 25,000 Common stock issued for consulting on April 14, 2009 at $2.00 per share 100,000 100 199,900 200,000 Common stock issued for consulting on April 15, 2009 at $2.00 per share 8,823 9 17,637 17,646 Preferred Stock converted into common shares at 1000:1 on May 15, 2009 (100,000) 100,000,000 99,900 -- 99,900 Common stock issued for acquisition on May 20, 2009 at $1.90 per share 956,938 957 1,817,225 1,818,182 Common stock issued for acquisition on May 27, 2009 at $1.74 per share 5,747,126 5,747 9,994,253 10,000,000 Common stock returned to treasury and cancelled as a result of rescission (8,704,064) (8,704) (15,909,478) (17,412,434) Common stock returned to treasury (670,940) (671) (1,341,209) (1,341,880) Net income (loss) (13,416,046) (13,416,046) -------- ------------ --------- ------------ ------------ ---------- ------------ Balance, May 31, 2009 -- 141,695,383 $ 141,695 $ 17,036,196 $(12,701,852) $ -- $ 4,476,039 -------- ----------- --------- ------------ ------------ ---------- ------------ Common stock returned to treasury and cancelled (105,234,548) (105,235) (3,509,577) -- -- (3,614,812) Preferred Stock issued for compensation on December 1, 2009 at $0.001 per share 100,000 -- 100 -- 100 Net income (loss) (1,526,304) (1,526,304) -------- ----------- --------- ------------ ------------ ---------- ------------ Balance, May 31, 2010 100,000 36,460,835 $ 36,561 $ 13,526,619 $(14,228,156) $ -- $ (664,976) ======== =========== ========= ============ ============ ========== ============ The accompanying notes are an integral part of these financial statements. 30
DOMARK INTERNATIONAL, INC. STATEMENTS OF CASH FLOWS For the twelve months ending May 31, 2010 and 2009 TWELVE TWELVE MONTHS MONTHS 5/31/2010 5/31/2009 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (1,526,304) $(13,416,046) ------------ ------------ Adjustments to reconcile net income to net cash provided by (used in) operating activities: ADJUSTMENTS FOR CHARGES NOT REQUIRING OUTLAY OF CASH: Depreciation and Amortization 1,319 49,054 Impairment of Assets 40,000 2,079,750 Impairment of Goodwill 857,551 -- Common stock issued as compensation and for expenses 5,000 12,367,771 Gain on sale of subsidiary (8,000) -- CHANGES IN OPERATING ASSETS AND LIABILITITES: (Increase)/Decrease in Accounts Receivable 1,262,334 (1,262,334) (Increase)/Decrease in Notes Receivable 6,561 (106,561) (Increase)/Decrease in Inventory 534,355 (534,355) (Increase)/Decrease Prepaid Exp and Other Current Assets 59,107 (59,107) Deposits 6,608 (3,608) Increase/(Decrease) in Accounts Payable (874,190) 847,319 Increase/(Decrease) in Accrued Expenses (40,767) 40,767 ------------ ------------ Total adjustments to net income 1,849,878 13,418,696 ------------ ------------ Net cash provided by (used in) operating activities 323,574 2,650 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Cash Received/(Paid) Furniture & Equipment -- (26,953) ------------ ------------ Net cash flows provided by (used in) investing activities -- (26,953) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Cash Proceeds from stock issuance -- 100,500 Cash Received/(Paid) from/(to) Affiliates and/or Shareholders 42,029 44,000 Cash Received/(Paid) on notes payable (389,857) (134,652) ------------ ------------ Net cash provided by (used in) financing activities (347,828) 9,848 ------------ ------------ CASH RECONCILIATION Net increase (decrease) in cash and cash equivalents (24,254) (14,455) Cash and cash equivalents - beginning balance 24,451 38,906 ------------ ------------ CASH AND CASH EQUIVALENTS BALANCE END OF PERIOD $ 197 $ 24,451 ============ ============ The accompanying notes are an integral part of these financial statements. 31
DOMARK INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MAY 31, 2010 AND 2009 NOTE 1 - DESCRIPTION OF BUSINESS DOMARK INTERNATIONAL, INC. ("DoMark" or the "Company") was incorporated under the laws of the State of Nevada on March 30, 2006. The Company was formed to engage in the acquisition and refinishing of aged furniture using exotic materials and then reselling it through interior decorators, high-end consignment shops and online sales. The Company abandoned its original business of exotic furniture sales in May of 2008 and pursued the acquisition of entities to best bring value to the company and its shareholders. We attempted to acquire successfully operating subsidiaries and to deploy accounting, governance, risk and compliance services, marketing, management and media assets to the subsidiaries in order to build the value of our Company during and subsequent to our 2009 operating period. These endeavors have resulted in the rescissions of certain acquisitions due to the advent of the Victory Lane litigation (see legal) that derailed the Company's ability to pursue its business plan. The business model of the company did not have enough time to implement and realize results due to the VL transaction issues and subsequent litigation. The Company is reviewing its current business model in consideration of legal matters and is seeking swift resolution in order to adequately pursue its business purpose of growing shareholder value by acquisition. NOTE 2 - GOING CONCERN The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate continuation of the Company as a going concern. The Company has year-end losses from operations. During the year ended May 31, 2010 and 2009, the Company incurred consolidated net losses of $1,526,304 and $13,416,046, respectively. Further, the Company has inadequate working capital to maintain or develop its operations, and is dependent upon funds from private investors and the support of certain stockholders. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. In this regard, Management is planning to raise any necessary additional funds through loans and additional sales of its common stock. There is no assurance that the Company will be successful in raising additional capital. NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES RECENT ACCOUNTING PRONOUNCEMENTS DETERMINING WHETHER INSTRUMENTS GRANTED IN SHARE-BASED PAYMENT TRANSACTIONS ARE PARTICIPATING SECURITIES In June 2008, the FASB issued FSP Emerging Issues Task Force ("EITF") Issue No. 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities." The FSP addresses whether 32
instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method. The FSP affects entities that accrue dividends on share-based payment awards during the awards' service period when the dividends do not need to be returned if the employees forfeit the award. This FSP is effective for fiscal years beginning after December 15, 2008. The Company is currently assessing the impact of FSP EITF 03-6-1 on its consolidated financial position and results of operations. DETERMINING WHETHER AN INSTRUMENT (OR AN EMBEDDED FEATURE) IS INDEXED TO AN ENTITY'S OWN STOCK In June 2008, the FASB ratified EITF Issue No. 07-5, "Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entity's Own Stock" (EITF 07-5). EITF 07-5 provides that an entity should use a two step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument's contingent exercise and settlement provisions. It also clarifies on the impact of foreign currency denominated strike prices and market-based employee stock option valuation instruments on the evaluation. EITF 07-5 is effective for fiscal years beginning after December 15, 2008. The Company is currently assessing the impact of EITF 07-5 on its consolidated financial position and results of operations. ACCOUNTING FOR CONVERTIBLE DEBT INSTRUMENTS THAT MAY BE SETTLED IN CASH UPON CONVERSION (INCLUDING PARTIAL CASH SETTLEMENT) In May 2008, the FASB issued FSP Accounting Principles Board ("APB") Opinion No. 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)." The FSP clarifies the accounting for convertible debt instruments that may be settled in cash (including partial cash settlement) upon conversion. The FSP requires issuers to account separately for the liability and equity components of certain convertible debt instruments in a manner that reflects the issuer's Non-convertible debt (unsecured debt) borrowing rate when interest cost is recognized. The FSP requires bifurcation of a component of the debt, classification of that component in equity and the accretion of the resulting discount on the debt to be recognized as part of interest expense in our consolidated statement of operations. The FSP requires retrospective application to the terms of instruments as they existed for all periods presented. The FSP is effective as of January 1, 2009 and early adoption is not permitted. The Company is currently evaluating the potential impact of FSP APB 14-1 upon its consolidated financial statements. THE HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles" (FAS No.162). SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements. SFAS No. 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles". The implementation of this standard will not have a material impact on the Company's consolidated financial position and results of operations. 33
DETERMINATION OF THE USEFUL LIFE OF INTANGIBLE ASSETS In April 2008, the Financial Accounting Standards Board ("FASB") issued FASB Staff Position on Financial Accounting Standard ("FSP FAS") No. 142-3, "Determination of the Useful Life of Intangible Assets", which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of intangible assets under SFAS No. 142 "Goodwill and Other Intangible Assets". The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of the expected cash flows used to measure the fair value of the asset under SFAS No. 141 (revised 2007) "Business Combinations" and other U.S. generally accepted accounting principles. The Company is currently evaluating the potential impact of FSP FAS No. 142-3 on its consolidated financial statements. DISCLOSURE ABOUT DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES In March 2008, the FASB issued SFAS No. 161, "Disclosure about Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133", (SFAS 161). This statement requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. The Company is required to adopt SFAS No. 161 on January 1, 2009. The Company is currently evaluating the potential impact of SFAS No. 161 on the Company's consolidated financial statements. DELAY IN EFFECTIVE DATE In February 2008, the FASB issued FSP FAS No. 157-2, "Effective Date of FASB Statement No. 157". This FSP delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The impact of adoption was not material to the Company's consolidated financial condition or results of operations. BUSINESS COMBINATIONS In December 2007, the FASB issued SFAS No. 141(R) "Business Combinations" (SFAS 141(R)). This Statement replaces the original SFAS No. 141. This Statement retains the fundamental requirements in SFAS No. 141 that the acquisition method of accounting (which SFAS No. 141 called the PURCHASE METHOD) be used for all business combinations and for an acquirer to be identified for each business combination. The objective of SFAS No. 141(R) is to improve the relevance, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. To accomplish that, SFAS No. 141(R) establishes principles and requirements for how the acquirer: a. Recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree. b. Recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase. 34
c. Determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008 and may not be applied before that date. The Company does not expect the effect that its adoption of SFAS No. 141(R) will have on its consolidated results of operations and financial condition. NONCONTROLLING INTERESTS IN CONSOLIDATED FINANCIAL STATEMENTS -- AN AMENDMENT OF ARB NO. 51 In December 2007, the FASB issued SFAS No. 160 "Non-controlling Interests in Consolidated Financial Statements - an amendment of ARB No. 51" (SFAS No. 160). This Statement amends the original Accounting Review Board (ARB) No. 51 "Consolidated Financial Statements" to establish accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This Statement is effective for fiscal years and interim periods within those fiscal years, beginning on or after December 15, 2008 and may not be applied before that date. The does not expect the effect that its adoption of SFAS No. 160 will have on its consolidated results of operations and financial condition. PRINCIPLES OF CONSOLIDATION The accompanying financial statements represent the consolidated financial position and results of operations of the Company and include the accounts and results of operations of the Company and its subsidiaries. The accompanying financial statements include the active entity of DoMark International, Inc., Javaco, Inc., ECFO Corporation, and Executive Sports & Entertainment. The Company has relied upon the guidance provided by Statements of Financial Accounting Standards 94, 141(R) and 160. 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. These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates. The primary management estimates included in these financial statements are the impairment reserves applied to various long-lived assets, allowance for doubtful accounts for gateway access fees and licensing fees, and the fair value of its stock tendered in various non-monetary transactions. RECLASSIFICATION Certain prior period amounts have been reclassified to conform to current year presentations. 35
CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At May 31, 2010 and 2009, cash and cash equivalents include cash on hand and cash in the bank. PROPERTY AND EQUIPMENT Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using principally the straight-line method. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized thereon. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized. The ranges of estimated useful lives used to calculated depreciation for principal items of property and equipment are as follows: Depreciation/ Asset Category Amortization Period -------------- ------------------- Computer Equipment 3 Years Office equipment 5 Years Vehicle 5 Years Leasehold Improvements 15 Years GOODWILL AND OTHER INTANGIBLE ASSETS The Company adopted Statement of Financial Accounting Standard No.142, GOODWILL AND OTHER INTANGIBLE ASSETS, made effective July 1, 2002. As a result, the Company discontinued amortization of goodwill, and instead annually evaluates the carrying value of goodwill and other intangible assets for impairment, in accordance with the provisions of SFAS No. 142. A reduction of the value of goodwill is expensed as an impairment loss. IMPAIRMENT OF LONG-LIVED ASSETS In accordance with SFAS No. 144, long-lived assets, such as property, plant, and equipment, and purchased intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Goodwill and other intangible assets are tested for impairment annually. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. CONCENTRATION OF CREDIT RISK The Company maintains its operating cash balances in banks in Florida. The Federal Depository Insurance Corporation (FDIC) insures accounts at each institution up to $100,000. 36
Financial instruments that potentially subject the Company to concentrations of credit risk are primarily trade accounts receivable. The trade accounts receivable are due primarily from small business customers in numerous geographical locations throughout the United States. The Company estimates and provides an allowance for uncollectible accounts receivable. RECONCILING ADJUSTMENTS TO CASH FLOW The Company is using the indirect method of reporting cash flow. Information about all investing and financing activities of the Company that affect recognized assets or liabilities but that do not result in cash receipts or cash payments in the period are reported in the cash flow statement as adjustments for charges not requiring outlay of cash and receipt of cash. Recent accounting pronouncements that the Company has adopted or that will be required to adopt in the future are summarized below. On September 30, 2009, the Company adopted updates issued by the Financial Accounting Standards Board (FASB) to the authoritative hierarchy of GAAP. These changes establish the FASB Accounting Standards CodificationTM (ASC) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the Securities and Exchange Commission ("SEC") under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead the FASB will issue Accounting Standards Updates. Accounting Standards Updates will not be authoritative in their own right as they will only serve to update the Codification. These changes and the Codification itself do not change GAAP. Other than the manner in which new accounting guidance is referenced, the adoption of these changes had no impact on the Condensed Consolidated Financial Statements. In June 2009, the FASB issued guidance now codified as ASC Topic 105, "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" ("ASC 105"), which establishes the FASB Accounting Standards Codification as the source of GAAP to be applied to nongovernmental agencies. ASC 105 explicitly recognizes rules and interpretive releases of the SEC under authority of federal securities laws as authoritative GAAP for SEC registrants. ASC 105 became effective for interim or annual periods ending after September 15, 2009. ASC 105 does not have a material impact on the Company's consolidated financial statements presented hereby. In May 2009, the FASB issued guidance now codified as ASC Topic 855, "SUBSEQUENT EVENTS" ("ASC 855"). The pronouncement modifies the definition of what qualifies as a subsequent event--those events or transactions that occur following the balance sheet date, but before the financial statements are issued, or are available to be issued--and requires companies to disclose the date through which it has evaluated subsequent events and the basis for determining that date. The Company adopted the provisions of ASC 855 in the second quarter of 2009, in accordance with the effective date. 37
On April 1, 2009, the Company adopted updates issued by the FASB to the recognition and presentation of other-than-temporary impairments. These changes amend existing other-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities. The recognition provision applies only to fixed maturity investments that are subject to the other-than-temporary impairments. If an entity intends to sell, or if it is more likely than not that it will be required to sell an impaired security prior to recovery of its cost basis, the security is other-than-temporarily impaired and the full amount of the impairment is recognized as a loss through earnings. Otherwise, losses on securities which are other-than-temporarily impaired are separated into: (i) the portion of loss which represents the credit loss; or (ii) the portion which is due to other factors. The credit loss portion is recognized as a loss through earnings, while the loss due to other factors is recognized in other comprehensive income (loss), net of taxes and related amortization. A cumulative effect adjustment is required to accumulated earnings and a corresponding adjustment to accumulated other comprehensive income (loss) to reclassify the non-credit portion of previously other-than-temporarily impaired securities which were held at the beginning of the period of adoption and for which the Company does not intend to sell and it is more likely than not that the Company will not be required to sell such securities before recovery of the amortized cost basis. These changes were effective for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The Company adopted these changes effective April 1, 2009. In April 2009, the FASB issued guidance now codified as ASC Topic 825, "Financial Instruments" ("ASC 825"). The pronouncement amends previous ASC 825 guidance to require disclosures about the fair value of financial instruments in all interim as well as annual financial statements. This pronouncement was effective for interim periods ending after June 15, 2009 and the Company adopted its provisions in the second quarter of 2009. On January 1, 2009, the Company adopted updates issued by the FASB to fair value accounting and reporting as it relates to nonfinancial assets and nonfinancial liabilities that are not recognized or disclosed at fair value in the financial statements on at least an annual basis. These changes define fair value, establish a framework for measuring fair value in GAAP, and expand disclosures about fair value measurements. This guidance applies to other GAAP that require or permit fair value measurements and is to be applied prospectively with limited exceptions. The adoption of these changes, as it relates to nonfinancial assets and nonfinancial liabilities had no impact on the Condensed Consolidated Financial Statements. These provisions will be applied at such time a fair value measurement of a nonfinancial asset or nonfinancial liability is required, which may result in a fair value that is materially different than would have been calculated prior to the adoption of these changes. On January 1, 2009, the Company adopted updates issued by the FASB to accounting for intangible assets. These changes amend the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset in order to improve the consistency between the useful life of a recognized intangible asset outside of a business combination and the period of expected cash flows used to measure the fair value of an 38
intangible asset in a business combination. The adoption of these changes had no impact on the Condensed Consolidated Financial Statements. On January 1, 2009, the Company adopted updates issued by the FASB to the calculation of earnings per share. These changes state that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method for all periods presented. The adoption of these changes had no impact on the Condensed Consolidated Financial Statements. In April 2008, the FASB issued guidance now codified as ASC Topic 350, "INTANGIBLES--GOODWILL AND OTHER" ("ASC 350"). This pronouncement amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under previous ASC 350 guidance, thereby improving the consistency between the useful life of a recognized intangible asset under ASC 350 and the period of expected cash flows used to measure the fair value of the asset under ASC Topic 805, "Business Combinations" ("ASC 805"). This pronouncement was effective for financial statements issued for fiscal years beginning after December 15, 2008 and must be applied prospectively to intangible assets acquired after the effective date. The Company has not acquired any intangible assets since adopting this pronouncement. As such, there has been no impact to the Company's financial statements since the January 1, 2009 adoption date. In March 2008, the FASB issued guidance now codified as ASC Topic 815 "DERIVATIVES AND HEDGING" ("ASC 815"), which expands the disclosure requirements in previous ASC 815 guidance about an entity's derivative instruments and hedging activities. This pronouncement's disclosure provisions apply to all entities with derivative instruments subject to the previous ASC 815 guidance. The provisions also apply to related hedged items, bifurcated derivatives, and non-derivative instruments that are designated and qualify as hedging instruments. Entities with instruments subject to this pronouncement must provide more robust qualitative disclosures and expanded quantitative disclosures. Such disclosures, as well as existing required disclosures, generally will need to be presented for every annual and interim reporting period. This pronouncement was effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. For the nine months ended September 30, 2009, the Company has included the expanded disclosures about derivative instruments and hedging activities within the Company's financial statements. In December 2007, the FASB issued guidance now codified as ASC Topic 805, "BUSINESS COMBINATIONS" ("ASC 805"), which replaces previous ASC 805 guidance. This pronouncement establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired in connection with a business combination. This pronouncement also establishes disclosure requirements that will enable users to evaluate the nature and financial effect of the business combination. This pronouncement applies prospectively to business combinations for which the acquisition date is on or after the beginning of an entity's first fiscal year that begins after December 15, 2008. The Company applied the provisions of ASC 805 in connection with the acquisition that closed during the first quarter of 2009. The adoption of this pronouncement did not have a material impact on the Company's consolidated financial statements. 39
In August 2009, the FASB issued updates to fair value accounting for liabilities. These changes clarify existing guidance that in circumstances in which a quoted price in an active market for the identical liability is not available, an entity is required to measure fair value using either a valuation technique that uses a quoted price of either a similar liability or a quoted price of an identical or similar liability when traded as an asset, or another valuation technique that is consistent with the principles of fair value measurements, such as an income approach (e.g., present value technique). This guidance also states that both a quoted price in an active market for the identical liability and a quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. These changes became effective for the Company's Consolidated Financial Statements for the year ended May 31, 2010. The adoption of this pronouncement did not have a material impact on the Company's consolidated financial statements. UPDATES ISSUED BUT NOT YET ADOPTED In October 2009, the FASB issued updates to revenue recognition guidance. These changes provide application guidance on whether multiple deliverables exist, how the deliverables should be separated, and how the consideration should be allocated to one or more units of accounting. This update establishes a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence, if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific or third-party evidence is available. The Company will be required to apply this guidance prospectively for revenue arrangements entered into or materially modified after January 1, 2011; however, earlier application is permitted. The Company has not determined the impact that this update may have on its Consolidated Financial Statements. NOTE 4 - RECLASSIFICATIONS Certain prior periods' balances have been reclassified to conform to the current period's financial statement presentation. These reclassifications had no impact on previously reported results of operations or stockholders' equity. 40
NOTE 5 - RELATED PARTY TRANSACTIONS On August 12, 2009, the parties rescinded the Motivation Advantage transaction and agreed to return any consideration issued. On August 12, 2009, the parties rescinded the Crowley & Company transaction and agreed to consider the stock issued as compensation for services rendered. On August 12, 2009, Joseph Vittoria, resigned as a member of the Board of Directors. There were no disagreements with Joseph Vittoria on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure. On August 13, 2009, Dr. Louis Corrnachia and Richard Smith resigned as members of the Board of Directors. There were no disagreements with Louis Corrnachia or Richard Smith, on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure. On August 14, 2009, Greg Jaclin and Terry Carlson resigned as members of the Board of Directors. There were no disagreements with Greg Jaclin or Terry Carlson on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure. On August 19, 2009, the parties rescinded the EGA transaction and agreed to return any consideration issued. On August 24, 2009, 310 Holdings, Inc.("310") and the Company closed a Securities Purchase Agreement whereby the 310 purchased 100% of the issued and outstanding common shares of Javaco in exchange for $150,000 and the issuance of 2,500,000 shares of 310's common stock to Domark. We also entered into a separate agreement and have assigned $9,997,134 of media credits in print and radio to 310 Holdings in exchange for the issuance of 1,000,000 shares of 310 Holding's common stock. On August 26, 2009, R. Thomas Kidd resigned as Chief Executive Officer and President and as a member of the Board of Directors. There were no disagreements with R. Thomas Kidd on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure. R. Thomas Kidd will remain in his position as Principal Financial Officer. On August 26, 2009, in a Debt Settlement Agreement by and between the Company and R. Thomas Kidd, any and all debt owed to Mr. Kidd for expenses, advances, or loans has been settled. The Company agrees to pay Mr. Kidd $150,000 cash and transfer 3.5 million shares of common stock of TRTN, OTCBB held by us. Furthermore, the Company shall execute an assignment of all claims against Victory Lane Financial Elite, et al as known or shall become known in the course of the litigation entitled DOMK vs Victory Lane Elite, LLC, Costello, et al in the US District Court, Middle District of Florida, and the case in Tattnall County, Georgia. In addition, the parties shall execute an assignment of the repurchase agreement entered into by and between the Company and TRTN, OTCBB. Upon payment and assignment of TRTN shares and assignment of the Company's claims, Mr. Kidd shall surrender 111,438,394 common shares of Domark, to be returned to treasury and cancelled. 41
On August 26, 2009, Scott Sieck, a member of the Board of directors and Chief Operating Officer, was appointed as our Chief Executive Officer. On August 26, 2009 the Company executed a Securities purchase agreement with R. Thomas Kidd, whereby pursuant to the terms of the agreement, the Company agreed to transfer its ownership of 100 Units of Victory lane LLC to R. Thomas Kidd in exchange for 25 million shares of Domark common stock held by Mr. Kidd. The transaction closed on October 15, 2009, upon delivery to the Company of 25 million shares of common stock owned by Mr. Kidd. The issuance of the securities above were effected in reliance on the exemptions for private sales of securities not involving a public offering pursuant to in Section 4(2) and Section 4(6) of the Securities Act. On September 4, 2009, Richard Altmann resigned as member of the Board of Directors. On September 14, 2009, R. Thomas Kidd resigned as Principle Accounting Officer of the Company to pursue other interests. Mr. Kidd has provided no written disagreement with the Company on any matter related to the Company's operations, policies or practices. Scott Sieck, our current Chief Executive Officer, has been appointed as Principle Accounting Officer. On September 18, 2009, Scott Sieck entered into an employment agreement with our Company. The employment agreement provided that the Executive has agreed to waive his compensation until such time as the Board of Directors determines the Company has sufficient assets to repay the Executive or receive compensation in equity and accepts from the corporation 100,000 shares it its authorized Series "A" Preferred stock during the interim period. Subsequently, on September 21, 2009, Mr. Sieck choose to receive 100,000 shares of Series A Preferred Stock which have a voting rights in all matters to be voted upon by shareholders of common stock of 1,000 votes per share of Series A Preferred Stock. On October 15, 2009, the Company entered into an agreement whereby the Company and R Thomas Kidd settled outstanding debts to Mr. Kidd. Terms of the debt settlement agreement relieved the Company of indebtedness to Mr. Kidd in the amount of $16,491 in exchange for the transference of the website of Executive Sports and Entertainment, Inc., representing ownership of that website, delivery of the website framework for www.domarkinternational.com, the assignment of a $100,000 promissory note payable to the Company, and assignment of all shares related to MedQuest, Inc., a Nevada corporation formed by the Company in 2008. On October 20, 2009, the Company executed an agreement to sell the stock of ECFO Corporation back to ECFO's founding shareholder. Consideration for the 2,000 shares of ECFO Corporation, representing all issued and outstanding shares of ECFO Corporation, owned by the Company, is Ten Thousand Dollars ($10,000), payable in the form of a one year promissory note. The transaction is a private sale exempt from registration under Section 4(1) of the Securities Act of 1933, as amended. As of February 28, 2009, the promissory note was satisfied. On October 26, 2009, pursuant to an Assignment and Assumption Agreement, the loan payable in the amount of $100,000, entered into on October 23, 2009 was assigned to the Company's officer, Scott Sieck. 42
On November 22, 2009, the Company entered into an agreement with R Thomas Kidd whereby the Company and Kidd have agreed upon the disbursement of certain proceeds to be received in a possible settlement the Company and certain Victory Lane Financial elite parties or a final adjudication of litigation and arbitration actions in connection with claims in current litigation. The agreement also mutually cancels the Assignment of Claims granted to R Thomas Kidd by the Company on August 26, 2009. Terms of the new agreement are outlined as follows: Upon closing of any settlement agreement between the Company and Victory Lane Financial Elite, et al, the Company shall pay to R Thomas Kidd the sum of $192,500 in cash if cash is received, or at a minimum, $42,500 in cash and an assignment of a third party promissory note in the minimum amount of $150,000 executed by all Victory Lane Financial Elite, et al in favor of the Company on terms acceptable to Kidd provided that R Thomas Kidd will cancel the promissory note executed by the Company in favor of R Thomas Kidd in the amount of $192,500 and return the original promissory note to the Company. In the event of no settlement agreement between the Company and Victory Lane Financial Elite, et al, R Thomas Kidd agree to accept and the Company agrees to pay R Thomas Kidd the sum of $192,500 from the first proceeds of any award or judgment obtained as a result of the prosecution of the litigation and arbitration actions against the Victory Lane Financial Elite, et al; R Thomas Kidd canceled the Assignment of Claims executed by the Company in favor of R. Thomas Kidd on August 26, 2009 and transferred title and ownership of the Victory Lane, LLC Units to the Company; in addition, R Thomas Kidd resigned as Managing Member of Victory Lane, LLC and appointed Scott Sieck as Managing Member of Victory Lane, LLC. Effective March 29th, 2010, Scott Sieck, CEO/Director and R. Thomas Kidd entered into a in a Debt and Securities Purchase Agreement (the "Agreement"). Pursuant to the terms of the Agreement, all debt owed to Mr. Sieck by the Company ($534,271 as of 3/29/2010), his Preferred Series A shares, and one million common shares were purchased by Mr. Kidd in consideration for the delivery of 250,000 restricted common shares JBI Inc. owned by Mr. Kidd. The change in control is as a result of the transfer of the Preferred Series A Shares, which collectively provides the holder thereof with a majority of voting rights. On May 26, 2010, Domark International, Inc. (the "Company") entered into an Asset Purchase Agreement (the "Agreement") with Armada Capital, LLC ("Armada") providing for the purchase and sale of all of Armada's right, title and interest in and to all of the assets of Armada. Armada, an entity engaged in the business of providing consulting services for small capital public companies and private businesses, is owned by R. Thomas Kidd, the Company's Chief Executive Officer, Director and majority shareholder. The closing of the Agreement shall take place upon (i) the delivery of all signed documentation; (ii) the completion of all documentation necessary to perfect the delivery of the assets; and (iii) the completion and delivery of the audited financial statements of the assets to be purchased and sold; provided, however, that the closing date shall take place on or before June 30, 2010. The Purchase Price for the Assets is equal to twenty percent (20%) of the revenue derived from the fees generated from the consulting agreements sold pursuant to the Agreement. As of the date of this report, the parties agreed to mutually terminate the transaction. 43
On July 21, 2010, Domark International, Inc. (the "Company") entered into an Agreement for the Exchange of Common Stock (the "Agreement") with Virtual Devices, Inc., a Pennsylvania corporation (VDI) providing for the issuance of stock of the Company in exchange for all of the outstanding shares of VDI. At the closing, VDI will become a wholly owned subsidiary of the Company. The closing of the Agreement shall take place upon (i) the delivery of all required signed documentation; (ii) the completion of due diligence by all parties, provided however, that the closing date shall take place on or before August 15, 2010. On August 13, 2010, the Company and Virtual Devices, Inc. extended the closing date to allow for sufficient time to complete due diligence. NOTE 6 - ACCOUNTS RECEIVABLE At the end of the twelve months period ending May 31, 2010, the Company had no trade receivables. NOTE 7 - GOODWILL AND OTHER INTANGIBLE ASSETS - Adoption of Statement 142 The changes in the carrying amounts of goodwill for the year ended May 31, 2010 are as follows: JAVACO ESE ECFO ---------- ---------- ---------- Balance as of May 31, 2009 $1,650,000 $ 69,900 $ 27,000 Goodwill acquired during year -- -- -- Impairment Loss -- 69,900 -- Goodwill written off related to sale of business unit 1,650,000 -- 27,000 ---------- ---------- ---------- Balance as of May 31, 2010 $ -- $ -- $ -- ========== ========== ========== * JAVACO The Company had adjusted the carrying amount of goodwill as of May 31, 2009 as a result of the subsequent sale of the Company's wholly owned subsidiary on August 24, 2009. The amount of the impairment loss was determined by adjusting the carrying amount to the quoted market price of the acquirer's stock at the time of sale. 44
* ECFO The Company has impaired the carrying amount of goodwill as of May 31, 2009 according to the guidance in FAS 142, GOODWILL AND OTHER INTANGIBLE ASSETS. The amount of the impairment was determined by adjusting the carrying amount to the present value of the reporting unit. As of October 20, 2009, the Company adjusted the balance to zero as a result of the sale of ECFO, its wholly owned Subsidiary. NOTE 8 - LIABILITIES The Company is reporting loans and notes payable of $100,000. On October 23, 2009, pursuant to a Rescission Offer, the Company agreed to repay $100,000 to one of its shareholders in exchange for the return of 100,000 shares of the Company's common stock. The Company is required to repay the note on or before April 22, 2010. In the event that a default occurs, the note will accrue interest at a rate of 1.5% per month on any unpaid balance. On October 26, 2009, pursuant to an Assignment and Assumption Agreement, the loan payable entered into on October 23, 2009 was assigned to the Company's officer, Scott Sieck. Pursuant to the terms of the Debt and Securities Purchase Agreement between Scott Sieck and R. Thomas Kidd as of March 29, 2010, all debt owed to Mr. Sieck by the Company ($534,271 as of 3/29/2010 including $100,000 in assigned loan payable) was purchased by Mr. Kidd. NOTE 9 - INCOME TAXES The Company has available net operating loss carry-forwards for financial statement and federal income tax purposes. These loss carry-forwards expire if not used within 20 years from the year generated. The Company's management has decided a valuation allowance is necessary to reduce any tax benefits because the available benefits are more likely than not to expire before they can be used. The tax based accumulated deficit create tax benefits in the amount of $2,134,223 from inception through May 31, 2010. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets as of May 31, 2010 are as follows: Deferred tax assets: Federal $ 2,134,223 State 0 ----------- Total Deferred Tax Asset 2,134,223 Less valuation allowance (2,134,223) ----------- $ 0 =========== The Company has provided a 100% valuation allowance on the deferred tax assets at May 31, 2010 to reduce such tax asset to $0 as there is no assurance that the 45
Company will generate future taxable income to utilize such asset. Management will review this valuation allowance requirement periodically and make adjustments as warranted. NOTE 10 - COMMITMENTS AND CONTINGENCIES On April 13, 2009, the Company entered into a sponsorship agreement with Executive Adventures, LLC. The Company has committed to $465,000 in total sponsorship fees for the annual World Sailfish Championship events, for years 2009 - 2012. The agreement provides that the Company shall remit fees according to the following payment schedule: 2009 Event 60,000 shares, due by April 14, 2009 * 2010 Event 105,000 net due January 15, 2010 2011 Event 110,000 net due January 15, 2011 2012 Event 115,000 net due January 15, 2012 ---------- * On April 13, 2009, the Company issued 60,000 shares for a value of $120,000. Terms of the Agreement include an option to pay stock shares in lieu of cash payments based upon a mutually agreed upon arrangement that will be determined on a yearly basis. Due to the change in the business model of the Company, the Company has previously notified Executive Adventures, LLC. that it was not going forward with any future sponsorships. On May 13, 2009, we executed an Agreement for the Exchange of Common Stock with Victory Lane LLC. Subsequent to closing, the Company has discovered certain liabilities which were undisclosed at the time of closing. The amounts of those liabilities are as follows: Legacy Development $3,157,000 Executive Adventures 227,000 Statewide Engineering 20,000 Tattnall County 3,000 Bob Barnard 140,000 Davis Love Design 950,000 Davis Love Design - Penalties 85,000 Andrew Goggin 307,000 ---------- TOTAL $4,889,000 ========== On August 10, 2009, the Company along with Victory Lane, LLC and R. Thomas Kidd filed a lawsuit in the United States District Court, Middle District of Florida Case Number 09-CV-1396-ORL-35-DAB against Victory Lane Financial Elite, LLC et al, for the following causes of action: Fraud in the Inducement, Breach of Contract, Rescission, Conspiracy, and Libel. The Company considers these liabilities contingent until the court makes a ruling on the aforementioned court case. 46
On August 10, 2009, the Company was made aware of an action filed in the Superior Court of Tattnall County, Georgia, case number 2009-V-381-JS by Victory Lane Financial Elite, LLC et al against the Company and its directors and officers. The Company believes that the complaint is without merit and the Company intends to defend said action and file substantial counterclaims against Victory Lane Financial Elite, LLC, Patrick Costello and numerous other defendants. On September 25, 2009 the company amended its Case Number CV-1396-ORL-35-DAB to request certain complaints be heard in arbitration as called for in the original acquisition agreement dated May 13, 2009. Both venues are proceeding. The secured lender on the Victory Lane property foreclosed and then filed suit against Victory Lane, LLC, Patrick J. Costello and Stephen Brown seeking a deficiency judgment. Brown and Costello filed a third party complaint against the Company and R. Thomas Kidd. The Company contends the third party complaint is fatally defective in that it alleges independent claims as opposed to derivative or a cause of action for indemnity or contribution. On the July 5, 2010, the Company has filed a motion to dismiss the third party complaint which they believe is meritorious and there should be a ruling by the Court within sixty days. The hearing is scheduled for August 11, 2010. On August 11, 2010, the motion to dismiss was converted to a motion for summary judgment. On July 20, 2010, pursuant to the Company's previously filed motion to dismiss case number 2009-V-381-JS for lack of jurisdiction in the Superior Court of Tattnall County, Georgia, the motion was denied as to the Company and R. Thomas Kidd, but granted as to the other officers and directors of the Company. NOTE 11 - NET LOSS PER SHARE Restricted shares and warrants are not included in the computation of the weighted average number of shares outstanding during the periods. The net loss per common share is calculated by dividing the consolidated loss by the weighted average number of shares outstanding during the periods. NOTE 12 - STOCKHOLDER'S EQUITY Stock issued Stock issued for Cash Cash Received for Assets -------- ------------- ---------- Twelve months ended May 31, 2010 -- -- -- During the twelve months ended May 31, 2010, the Company cancelled 105,234,548 shares of its common stock as a result of rescissions of its subsidiaries and debt settlements. 47
NOTE 13 - SUBSEQUENT EVENTS On July 21, 2010, Domark International, Inc. (the "Company") entered into an Agreement for the Exchange of Common Stock (the "Agreement") with Virtual Devices, Inc., a Pennsylvania corporation (VDI) providing for the issuance of stock of the Company in exchange for all of the outstanding shares of VDI. At the closing, VDI will become a wholly owned subsidiary of the Company. The closing of the Agreement shall take place upon (i) the delivery of all required signed documentation; (ii) the completion of due diligence by all parties, provided however, that the closing date shall take place on or before August 15, 2010. On August 13, 2010, the Company and Virtual Devices, Inc. extended the closing date to allow for sufficient time to complete due diligence. 48
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE On October 15 2009, Larry O'Donnell CPA P.C. was appointed as the independent auditor for Domark International commencing with a re-audit of year ending May 31, 2008 and for the years ended May 31, 2009 and May 31, 2010. On October 15, 2009, Kramer Wiseman and Associates, LLP was dismissed as the independent auditors for the Company. ITEM 9A. CONTROLS AND PROCEDURES Our management team, under the supervision and with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of the last day of the fiscal period covered by this report, May 31, 2010. The term disclosure controls and procedures means our controls and other procedures that are designed to ensure that information required to be disclosed by us 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 SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of May 31, 2010. Our principal executive officer and our principal financial officer, are responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Management is required to base its assessment of the effectiveness of our internal control over financial reporting on a suitable, recognized control framework, such as the framework developed by the Committee of Sponsoring Organizations (COSO). The COSO framework, published in INTERNAL CONTROL-INTEGRATED FRAMEWORK, is known as the COSO Report. Our principal executive officer and our principal financial officer, have has chosen the COSO framework on which to base its assessment. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of May 31, 2010. This annual report on Form 10-K 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 our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report on Form 10-K. 49
There were no changes in our internal control over financial reporting that occurred during of fiscal year of 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. This annual report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Our principal executive officer and our principal financial officer, report was not subject to attestation by the company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this annual report. It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of certain events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING During the fiscal year ended May 31, 2010, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. LACK OF INDEPENDENT BOARD OF DIRECTORS AND AUDIT COMMITTEE Management is aware that an audit committee composed of the requisite number of independent members along with a qualified financial expert has not yet been established. Considering the costs associated with procuring and providing the infrastructure to support an independent audit committee and the limited number of transactions, Management has concluded that the risks associated with the lack of an independent audit committee are not justified. Management will periodically reevaluate this situation. LACK OF SEGREGATION OF DUTIES Management is aware that there is a lack of segregation of duties at the Company due to the small number of employees dealing with general administrative and financial matters. However, at this time management has decided that considering the abilities of the employees now involved and the control procedures in place, the risks associated with such lack of segregation are low and the potential benefits of adding employees to clearly segregate duties do not justify the substantial expenses associated with such increases. Management will periodically re-evaluate this situation ITEM 9B. OTHER INFORMATION None 50
PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT Our executive officers and directors, and their ages and positions as of May 31, 2010 are as follows: DIRECTORS AND EXECUTIVE OFFICER R. Thomas Kidd, 63, Chairman, President, Chief Executive Officer and Chief Financial Officer (1) ---------- (1) As of April 13, 2010, Mr. Kidd holds the positions of Chief Executive Officer, Chief Operating Officer and Principal Financial Officer and is a sole member of the Board of Directors. The Chief Executive Officer of the Company will hold office until additional members or officers are duly elected and qualified. The background and principal occupations of the sole officer and director of the Company is as follows: R. THOMAS KIDD, Chief Executive Officer , Chief Operating Officer and Principal Financial Officer Mr. R. Thomas Kidd, as of April 13, 2010, has served as Chief Executive Officer, Chief Operating Officer and Principal Financial Officer and Director of the Company for the periods from May 2008 until August 2009 and from April 2010 through the current date. R. Thomas Kidd has served as the President and Chief Executive Officer of SportsQuest, Inc., a Delaware corporation that was involved in creating, developing, and managing high end sports events and related operating entities. From January 2007 until August 2007, Mr. Kidd was the Chief Executive Officer of Lextra Management Group, Inc., whose assets were acquired by SportsQuest, Inc. Prior thereto from July 2005 through November 2006 he served as the Chief Executive Officer and Director of Greens Worldwide Incorporated, a publicly held company, and its subsidiary U.S. Golf Tour, primarily involved in the development of a new golf organization and sports enterprise. Mr. Kidd currently serves as the managing member of Armada Capital, LLC. For approximately the past thirty (30) years, Mr. Kidd has been engaged in various capacities in developing sports organizations including, among others, two (2) national professional golf tours and one (1) senior golf tour and completing mergers and acquisitions of various business operations in the technology, business services, and communications industries. COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT 9.A. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS: The Company is aware that some filings of Form 4 and 5 required of Section 16(a) of the Exchange Act of Directors, Officers or holders of 10% of the Company's shares have not been timely and the Company has instituted procedures to ensure compliance in the future. On August 26, 2009 R. Thomas Kidd resigned as Chief Executive Office and President and as a member of the Board of Directors. There were no disagreements with R. Thomas Kidd on any matter of accounting principles or practices, 51
financial statement disclosure or auditing scope or procedure. R. Thomas Kidd will remain in his position as Principal Financial Officer. On August 26, 2009, Scott Sieck, a member of the Board of Directors and Chief Operating Officer, was appointed as our Chief Executive Officer. On September 4, 2009, Richard Altman resigned as member of the Board of Directors. There were no disagreements with Richard Altman on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure. On April 13, 2010, Scott Sieck resigned as a member of the Boards of Directors and Chief Operating Officer, and Chief Executive Officer. On April 13, 2010, R. Thomas Kidd was appointed as a sole member of the Board of Directors and our Chief Executive Officer, Chief Operating Officer, and Chief Financial Officer. ITEM 11. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table sets forth the cash compensation paid by the Company to its Chief Executive Officer and to all other executive officers for services rendered from May 31, 2009 through May 31, 2010. SUMMARY COMPENSATION TABLE Change in Pension Value and Non-Equity Nonqualified Incentive Deferred All Name and Plan Compen- Other Principal Stock Option Compen- sation Compen- Position Year Salary Bonus Awards Awards sation Earnings sation Totals ------------ ---- ------ ----- ------ ------ ------ -------- ------ ------ R. Thomas Kidd 2010 0 0 0 0 0 0 0 0 Chief Executive 2009 0 0 0 0 0 0 0 0 Officer COMPENSATION OF DIRECTORS Mr. Kidd is also a member of the board of directors of the Company and is not compensated for those services. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 52
The following table sets forth certain information regarding beneficial ownership of the common stock as of August 13, 2010 by (i) each person who is known by the Company to own beneficially more than 5% of the any classes of outstanding Stock, (ii) each director of the Company, (iii) each of the Chief Executive Officers and the two (2) most highly compensated executive officers who earned in excess of $100,000 for all services in all capacities (collectively, the "Named Executive Officers") and (iv) all directors and executive officers of the Company as a group. The number and percentage of shares beneficially owned is determined in accordance with Rule 13d-3 and 13d-5 of the Exchange Act, and the information is not necessarily indicative of beneficial ownership for any other purpose and is based on 36,460,835 shares beneficially owned as of August 13, 2009. We believe that each individual or entity named has sole investment and voting power with respect to the securities indicated as beneficially owned by them, subject to community property laws, where applicable, except where otherwise noted. Unless otherwise stated, the address of each person: 3551 W Lake Mary Blvd, Ste. 209, Lake Mary, FL 32746. Shares Owned (1) Name and Address Common Stock Preferred Stock Percentage ---------------- ------------ --------------- ---------- R. Thomas Kidd & Joan Kidd 10,785,000 100,000 81.18% (1) as Tenants by the Entireties 1809 East Broadway #125 Oviedo Florida 32765 ---------- (1) Percentage beneficial ownership as if preferred is converted. CHANGES IN CONTROL We are not aware of any arrangements that may result in a change in control of the Company. DESCRIPTION OF SECURITIES GENERAL Our authorized capital stock consists of 200,000,000 common stock, par value of $0.001, and 2,000,000 preferred stock, par value of $0.001. COMMON STOCK The shares of our common stock presently outstanding, and any shares of our common stock issues upon exercise of stock options and/or warrants, will be fully paid and non-assessable. Each holder of common stock is entitled to one vote for each share owned on all matters voted upon by shareholders, and a majority vote is required for all actions to be taken by shareholders. In the event we liquidate, dissolve or wind-up our operations, the holders of the common stock are entitled to share equally and ratably in our assets, if any, remaining after the payment of all our debts and liabilities and the liquidation preference of any shares of preferred stock that may then be outstanding. The common stock has no preemptive rights, no cumulative voting rights, and no redemption, sinking fund, or conversion provisions. Since the holders of common 53
stock do not have cumulative voting rights, holders of more than 50% of the outstanding shares can elect all of our Directors, and the holders of the remaining shares by themselves cannot elect any Directors. Holders of common stock are entitled to receive dividends, if and when declared by the Board of Directors, out of funds legally available for such purpose, subject to the dividend and liquidation rights of any preferred stock that may then be outstanding. SERIES A PREFERRED STOCK The Company has 2,000,000 shares of preferred stock, the rights and preferences of which can be designated by the Board of Directors. The Board of Directors designated and issued 100,000 shares of Series A Preferred. The shares have no dividend rights but may be voted as if converted, and convert at the holder's option to the Company's Common Stock at the rate of 1,000 to 1. The preferred shares have no liquidation value, no liquidation rights, no dividend rights and no redemption rights. On December 1, 2009, the Company issued 100,000 shares of its preferred stock to a Director for a value of $100. DIVIDEND POLICY We have never declared any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future. OPTIONS AND WARRANTS: As of May 31, 2010, we have no options and warrants issued and outstanding. CONVERTIBLE SECURITIES At May 31, 2010 we have no convertible securities issued. AMENDMENT OF OUR BYLAWS Our bylaws may be adopted, amended or repealed by the affirmative vote of a majority of our outstanding shares. Subject to applicable law, our bylaws also may be adopted, amended or repealed by our board of directors. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE On September 1, 2008, the Company issued 1,000,000 shares of its common stock to a Director as compensation for a value of $500. On December 29, 2008, the Company issued 200,000 shares of its common stock to a Director as compensation for a value of $400,000. Subsequently, the Director has returned 170,940 shares to the Company and the shares were cancelled. 54
On April 1, 2009, the Company issued 12,500 shares of its common stock to a Director as compensation for a value of $29,375. On April 14, 2009, the Company issued 12,500 shares of its common stock to a Director as compensation for a value of $25,000. On April 14, 2009, the Company issued 12,500 shares of its common stock to a Director as compensation for a value of $25,000. On May 15, 2009, the Chief Executive Officer at the time, converted to common 100,000 shares of the Company's preferred stock, convertible at a rate of 1000:1. During August 2009, 105,234,548 shares of common stock were returned to treasury and cancelled. On December 1, 2009, the Company issued 100,000 share of its preferred stock to a Director as compensation for a value of $100. From time to time, the Company's officers would lend the Company money. At May 31, 2010, there was an outstanding loan payable in the amount of $729,836 to the Chief Executive Officer of the Company. As of May 31, 2010, there were no formal executive compensation agreements in effect. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES AUDIT FEES The aggregate fees billed by Larry O'Donnell CPA, P.C. for professional services rendered for the audit of the Company's annual financial statements for fiscal years ended May 31, 2010 and 2009 approximated $10,000 and $10,000, respectively. AUDIT-RELATED FEES The aggregate fees billed by Larry O'Donnell CPA, P.C. for assurance and related services that are reasonably related to the performance of the audit or review of the Company's financial statements for the fiscal years ended May 31, 2010 and 2009, and that are not disclosed in the paragraph captioned "Audit Fees" above, were $10,000 and $10,000, respectively. TAX FEES The aggregate fees billed by ECFO Corporation for professional services rendered for accounting, tax compliance, tax advice and tax planning for the fiscal year ended May 31, 2010 and 2009 were $17,500 and $24,795, respectively. 55
PART IV ITEM 15. EXHIBITS AND REPORTS EXHIBITS -------- 31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act. (1) 31.2 Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act (1) 32.1 Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes Oxley Act. (1) 32.2 Certification of Principal Accounting Officer Pursuant to Section 906 of the Sarbanes Oxley Act (1) ---------- (1) Filed herewith 56
ITEM 15. SIGNATURES SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized. Registrant DoMark International, Inc. Date: August 20, 2010 By: /s/ R. Thomas Kidd ------------------------------------------- R. Thomas Kidd Chairman, President Chief Executive Officer Date: August 20, 2010 By: /s/ R. Thomas Kidd ------------------------------------------- R Thomas Kidd Principal Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 20th day of August 2010. /s/ R. Thomas Kidd ------------------------------------------- R. Thomas Kidd Chairman, President Chief Executive Officer /s/ R. Thomas Kidd ------------------------------------------- R Thomas Kidd Principal Financial Officer 5