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

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                For the quarterly period ended February 28, 2011

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                    For the transition period from N/A to N/A

                         Commission File No. 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.)

                       254 S Ronald Reagan Blvd, Ste. 134
                               Longwood, FL 32750
                    (Address of principal executive offices)

                                  877-700-7369
                           (Issuer's telephone number)

         Securities registered under Section 12(b) of the Exchange Act:
                                      None

         Securities registered under Section 12(g) of the Exchange Act:

                    Common Stock, $0.001 par value per share
                                (Title of Class)

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 whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company.

Large accelerated filer [ ]                        Accelerated Filer [ ]

Non-accelerated filer [ ]                          Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

          Class                                 Outstanding at February 28, 2011
          -----                                 --------------------------------
Common stock, $0.001 par value                             36,460,835
Preferred stock, $0.001 par value                             100,000

DOMARK INTERNATIONAL, INC. INDEX TO FORM 10-Q FILING FOR THE NINE MONTHS ENDED FEBRUARY 28, 2011 TABLE OF CONTENTS PAGE ---- PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (unaudited) 3 Consolidated Balance Sheets 3 Consolidated Statements of Income 5 Consolidated Statement of Cash Flows 6 Notes to Consolidated Financial Statements 7 Item 2. Management Discussion & Analysis of Financial Condition and Results of Operations 13 Item 3 Quantitative and Qualitative Disclosures About Market Risk 16 Item 4. Controls and Procedures 17 PART II - OTHER INFORMATION Item 1A. Legal Proceedings 18 Item 1B. Risk Factors 19 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 25 Item 3. Defaults Upon Senior Securities 25 Item 4. Submission of Matters to a Vote of Security Holders 25 Item 5 Other information 25 Item 6. Exhibits 25 2
PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS DOMARK INTERNATIONAL, INC. (A development Stage Company) BALANCE SHEETS ASSETS 2/28/2011 5/31/2010 --------- --------- (unaudited) (unaudited) CURRENT ASSETS Cash $ -- $ 197 Loans and Notes Receivable -- 100,000 -------- -------- Total Current Assets -- 100,197 -------- -------- FIXED ASSETS Property & Equipment, Net 763 1,531 -------- -------- Total Fixed Assets 763 1,531 -------- -------- OTHER ASSETS Investment in unconsolidated subsidiary -- 10,000 -------- -------- Total Other Assets -- 10,000 -------- -------- TOTAL ASSETS $ 763 $111,728 ======== ======== The accompanying notes are an integral part of these financial statements. 3
DOMARK INTERNATIONAL, INC. (A development Stage Company) BALANCE SHEETS (continued) LIABILITIES AND STOCKHOLDERS' DEFICIENCY 2/28/2011 5/31/2010 ------------ ------------ (unaudited) (unaudited) CURRENT LIABILITIES Accounts Payable and Accrued Expenses $ 46,868 $ 46,868 Bank Overdraft 22 -- Due to Affiliate and Shareholder 755,359 729,836 ------------ ------------ Total Current Liabilities 802,249 776,704 ------------ ------------ TOTAL LIABILITIES 802,249 776,704 ------------ ------------ STOCKHOLDERS' DEFICIT Convertible Preferred stock series A, $0.001 par value, Authorized: 2,000,000 Issued: 100,000 and none, respectively 100 100 Common Stock, $0.001 par value, Authorized: 200,000,000 Issued: 36,460,835 and 36,460,835, respectively 36,461 36,461 Additional paid in capital 13,526,620 13,526,619 Accumulated deficit (13,864,994) (13,864,994) Accumulated deficit during development stage (499,673) (363,162) ------------ ------------ Total Stockholders' Deficiency (801,486) (664,976) ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 763 $ 111,728 ============ ============ The accompanying notes are an integral part of these financial statements. 4
DOMARK INTERNATIONAL, INC. (A development Stage Company) STATEMENTS OF OPERATIONS (Unaudited) For the cumulative period during the Development Stage from For the three For the Three For the Nine For the Nine October 21, 2009 Months ended Months ended Months Ended Months Ended to February 28, February 28, February 28, February 28, February 28, 2011 2010 2011 2010 2011 ----------- ----------- ----------- ----------- ----------- REVENUE $ -- $ -- $ -- $ -- $ -- COST OF SERVICES -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- GROSS PROFIT -- -- -- -- -- GENERAL AND ADMINISTRATIVE EXPENSES (450) 427,373 26,511 583,206 399,559 BAD DEBT EXPENSE -- -- 100,000 -- 100,000 IMPAIRMENT OF GOODWILL -- -- -- 332,000 ----------- ----------- ----------- ----------- ----------- OPERATING INCOME 450 (427,373) (126,511) (915,206) (499,559) INTEREST EXPENSE -- -- -- -- GAIN ON SALE OF SUBSIDIARY -- -- -- 8,000 OTHER INCOME -- 10,006 -- 26,497 9,886 IMPAIRMENT OF ASSET -- -- 10,000 40,000 10,000 ----------- ----------- ----------- ----------- ----------- INCOME/(LOSS) BEFORE INCOME TAXES 450 (417,367) (136,511) (920,709) (499,673) PROVISION FOR INCOME TAXES Federal -- -- -- -- -- State -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- NET INCOME/(LOSS) FROM OPERATIONS $ 450 $ (417,367) $ (136,511) $ (920,709) $ (499,673) =========== =========== =========== =========== =========== INCOME (LOSS) FROM DISCONTINUED OPERATIONS -- (426,108) -- (568,704) -- NET INCOME/(LOSS) $ 450 $ (843,475) $ (136,511) $(1,489,413) $ (499,673) =========== =========== =========== =========== =========== LOSS PER SHARE ON CONTINUING OPERATIONS, BASIC AND DILUTED $ 0.00 $ (0.01) $ (0.00) $ (0.03) =========== =========== =========== =========== LOSS PER SHARE ON DISCONTINUED OPERATIONS, BASIC AND DILUTED $ -- $ (0.01) $ -- $ (0.02) =========== =========== =========== =========== NET LOSS PER SHARE, BASIC AND DILUTED $ 0.00 $ (0.02) $ (0.00) $ (0.04) =========== =========== =========== =========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 36,460,835 36,460,835 36,460,835 36,460,835 The accompanying notes are an integral part of these financial statements. 5
DOMARK INTERNATIONAL, INC. (A development Stage Company) STATEMENTS OF CASH FLOWS For the cumulative period during the Development Stage from For the Nine For the Nine October 21, 2009 Months Ended Months Ended to February 28, February 28, February 28, 2011 2010 2011 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) from continuing operations $ (136,511) $ (920,709) $ (499,673) ------------ ------------ ------------ Loss from disconitinued operations 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 768 659 1,427 Impairment of Assets 10,000 40,000 -- Impairment of Goodwill -- 332,000 -- Common stock issued as compensation and for expenses -- (4,711) 89 Gain on sale of subsidiary -- 8,000 -- Forgiveness of debt -- 26,497 -- Bad debt expense 100,000 1,882 100,000 CHANGES IN OPERATING ASSETS AND LIABILITITES: (Increase)/Decrease in Notes Receivable -- -- 10,000 (Increase)/Decrease Prepaid Exp and Other Current Assets -- 1,016,866 -- Increase/(Decrease) in Accounts Payable -- (13,759) (58,426) Increase/(Decrease) in Accrued Expenses -- 310,000 -- ------------ ------------ ------------ Total adjustments to net income 110,768 1,717,434 53,090 ------------ ------------ ------------ Net cash provided by (used in) operating activities (25,743) 796,725 (446,583) ------------ ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Bank over draft 22 -- 22 Cash Received/(Paid) from/(to) Affiliates and/or Shareholders 25,524 332,100 643,056 Cash Received/(Paid) on notes payable -- -- (100,000) ------------ ------------ ------------ Net cash provided by (used in) financing activities 25,546 332,100 543,078 ------------ ------------ ------------ CASH RECONCILIATION Cash flows from discontinued operations -- (1,153,031) -- Net increase (decrease) in cash and cash equivalents (197) 1,128,825 96,495 Cash and cash equivalents - beginning balance 197 24,451 3,527 ------------ ------------ ------------ CASH AND CASH EQUIVALENTS BALANCE END OF PERIOD $ -- $ 245 $ -- ============ ============ ============ The accompanying notes are an integral part of these financial statements. 6
DOMARK INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTERS ENDED FEBRUARY 28, 2011 AND 2010 ----------------------------------------------------------------------------- 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. As of October 21, 2009, the Company re-entered into development stage. NOTE 2 - GOING CONCERN The accompanying consolidated 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 for the years ended May 31, 2010 and 2009 and has incurred additional losses of $136,511 for the nine months ended February 28, 2011. 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. 7
NOTE 3 - BASIS OF PRESENTATION The unaudited interim consolidated financial statements of DOMARK INTERNATIONAL, INC. (the"Company") have been prepared in accordance with United States generally accepted accounting principles ("GAAP") for interim financial information and the rules and regulations of the Securities and Exchange Commission ("SEC"). . In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation, have been included. Operating results for the three and nine months ended February 28, 2011 are not necessarily indicative of the results that may be expected for the year ending May 31, 2011. Please note the Company intends to amend the Form 10K due to SEC correspondence related to the revocation of licenses of our former auditor. As such the May 31, 2010 financial may not be relied upon. NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES RECENT ACCOUNTNG PRONOUNCEMENTS The Company has reviewed recently issued accounting pronouncements and plans to adopt those that are applicable to it. It does not expect the adoption of these pronouncements to have a material impact on its financial position, results of operations or cash flows. 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 estimate 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. 8
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 5 - RELATED PARTY TRANSACTIONS 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. As of December 10, 2010, the Company and VDI determined that it was in the best interest of the shareholders of the Company and VDI to mutually agree to terminate the Agreement with no further obligation or liability on the part of one party to the other. NOTE 6 - NOTES RECEIVABLE On November 30, 2010, the Company deemed the note receivable for $100,000 as uncollectible and has written it off to bad debts. NOTE 7 - INVESTMENTS IN UNCONSOLIDATED SUBSIDIARY On November 30, 2010, the Company deemed the investment in an unconsolidated subsidiary as a loss and has impaired the $10,000 asset. NOTE 8 - LIABILITIES The Company is reporting a note payable of $755,359 due on demand and non-interest bearing. This note is due to our executive officer and reflects advances, assignment of claims, and expenses paid on behalf of the Company by our executive officer. 9
NOTE 9 - 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 =========== 10
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. 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. 11
Note 10 - G&A EXPENSE The Company intended to pay its predecessor auditor $6,700 for Audit fees incurred through August 31, 2010 during the six months ended November 30, 2010. However, the Company changed its intent during the current period due to SEC correspondence related to the revocation of licenses of our former auditor. The $6,700 was recorded as a reduction in general and administrative expense and resulted in a negative expense of $450 for the three months ended February 28, 2010. NOTE 11 - SUBSEQUENT EVENTS Effective March 3, 2011, we obtained an unsecured loan in the amount of $75,000 from a private lender. The loan proceeds are disbursed as follows: $50,000 on March 7, 2011, and $25,000 on March 21, 2011. The first disbursement was received by the Company on March 7, 2011. The maturity date of the promissory note is July 1, 2011. The promissory note provides for interest at the below-market rate of 3.00% per annum, payable together with the principal amount at the maturity date, and is personally guaranteed by our Chief Executive Officer. Upon an event of default, interest shall accrue upon the total sum outstanding, from time to time, at the rate equal to 18% per annum on a basis of a 365-day year for the actual number of days in which any indebtedness under this promissory note remains outstanding. 12
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's Discussion and Analysis contains various "forward looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding future events or the future financial performance of the Company that involve risks and uncertainties. Certain statements included in this Form 10-Q, including, without limitation, statements related to anticipated cash flow sources and uses, and words including but not limited to "anticipates", "believes", "plans", "expects", "future" and similar statements or expressions, identify forward looking statements. Any forward-looking statements herein are subject to certain risks and uncertainties in the Company's business, including but not limited to, reliance on key customers and competition in its markets, market demand, product performance, technological developments, maintenance of relationships with key suppliers, difficulties of hiring or retaining key personnel and any changes in current accounting rules, all of which may be beyond the control of the Company. The Company adopted at management's discretion, the most conservative recognition of revenue based on the most astringent guidelines of the SEC in terms of recognition of software licenses and recurring revenue. Management will elect additional changes to revenue recognition to comply with the most conservative SEC recognition on a forward going accrual basis as the model is replicated with other similar markets (i.e. SBDC). The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth therein. Forward-looking statements involve risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results and achievements and cause them to materially differ from those contained in the forward-looking statements include those identified in the section titled "Risk Factors" in the Company's Annual Report on Form 10-K for the transition period ended May 31, 2010, as well as other factors that we are currently unable to identify or quantify, but that may exist in the future. In addition, the foregoing factors may affect generally our business, results of operations and financial position. Forward-looking statements speak only as of the date the statement was made. We do not undertake and specifically decline any obligation to update any forward-looking statements. 13
RECENT DEVELOPMENTS NONE ADDITIONAL INFORMATION We file reports and other materials with the Securities and Exchange Commission. These documents may be inspected and copied at the Securities and Exchange Commission, Judiciary Plaza, 100 F Street, N.E., Room 1580, and 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 we file with the Commission through the Commission's Internet site at www.sec.gov. RESULTS OF OPERATIONS Revenues for the nine months ended February 28, 2011 were $0 as compared to $0 for the nine months ended February 28, 2010. After the sale of ECFO on October 20, 2009, the Company no longer has any operating subsidiaries and is considered a development stage company as it has nominal operations and assets consisting of only cash or cash equivalents. Our future revenue plan is dependent on our ability to effectively close new viable acquisitions. General and administrative expenses for the nine months ended February 28, 2011 decreased to $26,511 from $583,206 for the nine months ended February 28, 2010. As a result of the rescission of subsidiaries, the Company recognized a significant decrease in the amount of general and administrative expenses. The Company expects to continue to incur professional and legal fees until such time it can close new viable acquisitions. The Company realized a net loss of $136,511, for the nine months ended February 28, 2011 compared to net loss of $920,709 for the nine months ended February 28, 2010. The Company had no activity attributed to discontinued operations in the first nine months of fiscal 2011 as compared to a net loss of $568,704 in the first nine months of 2010. The current net loss is largely attributable to the legal and professional fees associated with the contingent liability with Victory Lane Financial Elite, LLC, and the write off to bad debt of a note receivable deemed uncollectible. 14
LIQUIDITY AND CAPITAL RESOURCES The Company's net cash used in operating activities for the nine months ending February 28, 2011 was $25,743 compared to the net cash of $796,725 - provided by operating activities for the nine months ending February 28, 2010. Accounts receivable was reduced to zero during the nine months ending February 28, 2011 as a result of the deconsolidation of all subsidiaries. Our future revenues and profits, if any, will primarily depend upon our ability to close new viable acquisitions. At February 28, 2011 the Company had no capital resources and will rely upon additional capital contributions from its sole director to fund administrative expenses. OFF-BALANCE SHEET ARRANGEMENTS We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditures. 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. CRITICAL ACCOUNTING POLICIES We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Our 15
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. 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. ADDITIONAL INFORMATION We file reports and other materials with the Securities and Exchange Commission. These documents may be inspected and copied the Commission's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains a web site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission. ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We do not hold any derivative instruments and do not engage in any hedging activities. We attempted to acquire successfully operating subsidiaries and to deploy accounting, governance, risk and compliance services, marketing, management and media assets to the subsidiaries, to build the value of our Company. 16
ITEM 4 - CONTROLS AND PROCEDURES a) Evaluation of Disclosure Controls and Procedures Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties. Often, one or two individuals control every aspect of the Company's operation and are in a position to override any system of internal control. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls. 17
Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company's internal control over financial reporting as of February 28, 2011. In making this assessment, our Chief Executive Officer and Chief Financial Officer used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-- Integrated Framework. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of February 28, 2011, our internal control over financial reporting was effective. b) Changes in Internal Control over Financial Reporting. During the Quarter ended February 28, 2011, there was not a change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 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. PART II - OTHER INFORMATION ITEM 1 - 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 below, the ultimate disposition of these matters will not have a material adverse effect on the Company's financial position, results of operations, or liquidity except as follows: 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. 18
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 1A - RISK FACTORS You should carefully consider the following risk factors, in addition to the risk factors disclosed in prior filings on Form 10-K (as amended) or 10-Q before making an investment decision. If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected. In such cases, the trading price of our common stock could decline and you may lose all or a part of your investment. 19
OUR COMMON STOCK IS SUBJECT TO PENNY STOCK REGULATION Our shares are subject to the provisions of Section 15(g) and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly referred to as the "penny stock" rule. Section 15(g) sets forth certain requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act. The Commission generally defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 provides that any equity security is considered to be penny stock unless that security is: registered and traded on a national securities exchange meeting specified criteria set by the Commission; authorized for quotation on the NASDAQ Stock Market; issued by a registered investment company; excluded from the definition on the basis of price (at least $5.00 per share) or the registrant's net tangible assets; or exempted from the definition by the Commission. Since our shares are deemed to be "penny stock", trading in the shares will be subject to additional sales practice requirements on broker/dealers who sell penny stock to persons other than established customers and accredited investors. 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 LACK OF DIVERSIFICATION IN OUR BUSINESS SUBJECTS INVESTORS TO A GREATER RISK OF LOSSES All of our efforts are focused on the development and growth of our business and its technology in an unproven area. 20
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. There is a greater chance of volatility for securities that trade on the OTCBB is 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. 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 May 31, 2008, we will be required to prepare assessments regarding internal controls over financial reporting and beginning with our annual report on Form 10-K for 21
our fiscal period ending May 31, 2009, 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 22
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. OPERATING HISTORY AND LACK OF PROFITS WHICH 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, LIMITED 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 23
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. 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. WE ARE A "SHELL" COMPANY AND OUR SHARES WILL SUBJECT TO RESTRICTIONS ON RESALE. As we currently have nominal operations and our assets consist of cash, and/or cash equivalents, we will be deemed a "shell company" as defined in Rule 12b-2 of the Securities Exchange Act of 1934. Accordingly, until we are no longer a 24
"shell company," and will file a Form 10 level disclosure, and continue to be a reporting company pursuant to the Securities Exchange Act of 1934, as amended, and for twelve months following the filing of the Form 10 level disclosure, shareholders holding restricted, non-registered shares will not be able to use the exemptions provided under Rule 144 for the resale of their shares of common stock. Preclusion from any prospective investor using the exemptions provided by Rule 144 may be more difficult for us to sell equity securities or equity-related securities in the future to investors that require a shorter period before liquidity or may require us to expend limited funds to register their shares for resale in a future prospectus. ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS SECURITIES There were no unregistered sales of equity securities during the interim period ended February 28, 2011. ITEM 3 - DEFAULTS UPON SENIOR SECURITIES There were no defaults upon senior securities during the interim period ended February 28, 2011. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to the vote of securities holders during the interim period ended February 28, 2011. ITEM 5 - OTHER INFORMATION There is no information with respect to which information is not otherwise called for by this form. ITEM 6 - EXHIBITS 31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act 31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act. 32.1 Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act. 32.2 Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act. 25
SIGNATURES Pursuant to the requirements of 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, thereunto duly authorized. DoMark International, Inc. Registrant Date: April 1, 2011 By: /s/ R. Thomas Kidd -------------------------------------- R. Thomas Kidd Chief Executive Officer, Principal Executive Officer, Principal Financial Officer 2