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, 2014
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 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.) |
34 King Street Suite 1102
Toronto, Ontario, Canada M5C1E9
(Address of principal executive offices)
321-250-4996
(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 o 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 o 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 o
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 o No x
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. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | o | Accelerated filer | o |
| Non-accelerated filer | o | Smaller Reporting Company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act. Yes o No x
The aggregate market value of voting stock held by non-affiliates of the registrant on May 31, 2014 was $3,500,000.
As of May 31, 2014 there were 801,626,781 shares of Common Stock, $0.001 par value per share, issued and outstanding and there were 50,000 shares of Preferred Stock, $0.001 par value per share, issued and outstanding.
TABLE OF CONTENTS
| PART I | | | |
| | | | | |
| ITEM 1. | BUSINESS | | | 3 | |
| ITEM 1A. | RISK FACTORS | | | 4 | |
| ITEM 1B. | UNRESOLVED STAFF COMMENTS | | | 4 | |
| ITEM 2. | PROPERTIES | | | 4 | |
| ITEM 3. | LEGAL PROCEEDINGS | | | 4 | |
| ITEM 4. | MINE SAFETY DISCLOSURES | | | 4 | |
| | | | | | |
| PART II | | | | |
| | | | | | |
| ITEM 5. | MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | | | 5 | |
| ITEM 6. | SELECTED FINANCIAL DATA | | | 6 | |
| ITEM 7. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | | | 6 | |
| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | | | 6 | |
| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | | | 7 | |
| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | | | 34 | |
| ITEM 9A. | CONTROLS AND PROCEDURES | | | 34 | |
| ITEM 9B. | OTHER INFORMATION | | | 34 | |
| | | | | | |
| PART III | | | | |
| | | | | | |
| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT | | | 35 | |
| ITEM 11. | EXECUTIVE COMPENSATION | | | 36 | |
| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | | | 37 | |
| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | | | 38 | |
| ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES | | | 39 | |
| | | | | | |
| PART IV | | | | |
| | | | | | |
| ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | | | 40 | |
| | | | | | |
| SIGNATURES | | | 42 | |
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 the "Company") was incorporated under the laws of the State of Nevada on March 30, 2006. In 2008, the Company embarked on a business plan that was intended to acquire profitable businesses that would create shareholder value in diverse industries. During 2008 and 2009, the Company acquired several operating businesses. On May 21, 2009, the Company entered into an acquisition agreement for the exchange of common stock (the "Victory Lane Agreement") with Victory Lane Financial Elite, LLC ("Victory Lane") with respect to a real estate lifestyle business known as Victory Lane (the "Victory Lane Business"). Shortly thereafter, a dispute arose between the Company and the principals of Victory Lane regarding the representations of the principals of Victory Lane and the Victory Lane Business and the Victory Lane Agreement. Litigation between the Company and various parties pertaining to the Victory Lane Business remains outstanding. (Refer to "Item 3, Legal Proceedings" below).
During the last half of 2009, the Company sold two of its operating subsidiaries, Javaco, Inc. and ECFO Corporation and effected rescissions of acquisition transactions on the remainder of its operating businesses. Between October 2009 and May 2011, the Company had no material ongoing operations. The business of the Company during the period from October 2009 through May 2011 was to seek out new acquisitions and to conduct the litigation with Victory Lane.
On May 31, 2011, the Company formed a wholly owned subsidiary, Armada Sports & Entertainment, Inc. Armada is a sports marketing and management company engaged in owning, developing, and conducting made-for-television sports and entertainment events. On March 5, 2012, the Company entered into an Asset Purchase Agreement with its then controlling shareholder, R. Thomas Kidd, for the sale of Armada, and certain assets related thereto.
On February 29, 2012, the Company formed a new wholly owned subsidiary, SolarWerks, Inc. in the state of Nevada, for the purposes of entering the business of marketing specialized solar consumer electronics.
On June 20, 2012, the Company formed a new wholly owned subsidiary, MuscleFoot Inc. in the state of Nevada for the purpose of distributing, marketing, and acting as sales agent for the patented foot care system, Barefoot Science. This entity is currently in default with the Nevada Secretary of State.
On July 20, 2012, the Company formed a new wholly owned subsidiary, Domark Canada Inc. in the province of Ontario for the purpose of supporting the Company’s corporate operations based in Toronto, Ontario, Canada.
In December 2012, we entered into a global sales and distribution agreement with BioHarmonics Technology to develop and sell the new patent pending IR charger for all Apple iPhone® models and Samsung SIII and S4 models. The IR charger has a high density backup battery which is designed to double the battery life of a smartphone. The IR charger cell can be used to recharge the phone in emergency by sun or normal room lights. This product will have a range of different lines from a low cost model up to designer products. We are aiming to launch the product later this year.
On February 28, 2013, the Company entered into a Memorandum of Understanding to purchase 44% of Zaktek Ltd. (“Zaktek”). Zaktek’s main product is the phonepad+, an Apple Inc. approved tablet device that works with smartphones including the Apple iPhone® and Samsung Galaxy to improve functionality including video and gaming abilities.
On April 23, 2013, the Company received notification that Zaktek was ending discussions in regards to the definitive purchase agreement with DoMark.
In June 2013, the Company entered into an agreement to purchase 29% of Imagic for stock and cash. Imagic is a UK company that has patented, or patent pending, smartphone products. Domark is actively involved with the management and marketing direction of Imagic. Domark increased its holding in Imagic to 34% in September 2013.
EMPLOYEES
As of fiscal years ending May 31, 2014, and May 31, 2013 the Company conducts its business through independent contractors.
ITEM 1A. RISK FACTORS
Not applicable to smaller reporting companies.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable to smaller reporting companies.
ITEM 2. PROPERTIES
In August 2013, we relocated our corporate office to Toronto, Canada. As a result, the Company rented 1347 square feet of office space in Toronto. This lease is for a five year period. This office has 1347 square feet of office space. Our rent expense is approximately $1,600 per month, which increases to approximately $1,900 for the following year, and approximately $2,100 for succeeding years. We believe that this space is adequate for our current needs.
ITEM 3. LEGAL PROCEEDINGS
On May 21, 2009, the Company entered into an Agreement for the Exchange of Common Stock (the "Victory Lane Agreement") with Victory Lane Financial Elite, LLC ("Victory Lane") with respect to a real estate lifestyle business known as Victory Lane (the "Victory Lane Business") pursuant to which the Company intended to purchase the Victory Lane Business. Shortly thereafter, a dispute arose between the Company and Victory Lane regarding alleged misrepresentations made by Victory Lane in connection with the Victory Lane Agreement.
In August, 2009, Victory Lane Financial Elite, LLC, Legacy Development, LLC and Patrick Costello filed suit in the Superior Court of Tattnall County, Georgia (Civ. No. 2009-V-381-JW) against the Company, R. Thomas Kidd and various officers and directors of the Company, alleging that the Company was in breach of the Victory Lane Agreement and that the Company and certain of the individual defendants had committed various torts against the plaintiffs and that certain of the individual defendants had violated various fiduciary and other duties owed to the plaintiffs in connection with the Victory Lane Agreement and the handling of the Victory Lane Business (the "VLFE Case"). The plaintiffs sought a declaratory judgment to the effect that the Victory Lane Agreement had not been executed, as well as money damages from the Company and the individual defendants. The Company and Mr. Kidd have answered the Complaint, denying any liability for the plaintiff's claims and have asserted various counterclaims including fraud and other torts. In July 2010 the court dismissed all of the individual defendants, other than R. Thomas Kidd, in response to a motion to dismiss for lack of jurisdiction. The case has since been stayed.
In December, 2009, AHIFO-21, LLC filed a lawsuit in the Superior Court of Tattnall County, Georgia (Civ. No. 2009-V-672-JS) against Victory Lane, LLC, Patrick J. Costello and Stephen Brown (the "Victory Lane Defendants") alleging that the Victory Lane Defendants owe the plaintiff more than $7,740,000 in respect of one or more loans made by the plaintiff to certain Victory Lane Defendants in connection with the Victory Lane Business (the "AHIFO Case"). In February 2010, the Victory Lane Defendants filed a Third Party Complaint against the Company and R. Thomas Kidd, claiming that the Company and Mr. Kidd should be liable for any amounts the Victory Lane Defendants are required to pay to the plaintiff in this case. The Company and Mr. Kidd have answered the Complaint, denying any liability for the plaintiff's claims and Mr. Kidd has asserted various counterclaims including fraud and other torts. The Company and Mr. Kidd filed a motion to dismiss the Third Party Complaint, but the entire case was subsequently stayed.
Because each of the VLFE Case and the AHIFO Case have been stayed and because discovery in those cases is not complete, the Company has determined that the probability of any loss is remote and that the amount of any damages, if any were determined adverse to the Company, would not be reasonably estimable. The Company believes that it has meritorious claims against the opposing parties with respect to the Victory Lane Agreement and that the claims asserted against it are not meritorious. The Company intends to defend itself vigorously.
On January 24, 2012, the Company was made aware by its former Chief Executive Officer that a complaint had been filed against the Company for approximately $534,000 by the United States Trustee for the Middle District of Florida to claim against funds we owed to our former Chief Executive Officer and his wife. On January 23, 2012, the Trustee's Motion for Approval and Notice of Compromise was filed to obtain the approval of the court of a settlement of the matters that were the subject of the complaint. On April 24, 2012, the Company was advised that the complaint, which was never served, was dismissed with prejudice by the US Trustee.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. MARKET FOR OUR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded in the over-the-counter market and is quoted on the OTCQB quotation service operated by OTC Markets Group, Inc.
There were 801,626,781 and 54,615,298 shares of our common stock issued and outstanding, as of May 31, 2014 and May 31, 2013 respectively. There were approximately 100 shareholders of record of the Company's common stock.
The following table sets forth for the periods indicated the high and low bid quotations for our 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, 2013
| | | F/Y 2014 | | | F/Y 2013 | |
| | | High | | | Low | | | High | | | Low | |
| | | | | | | | | | | | | | | |
| First Quarter (June - August) | | $ | 0.14 | | | $ | 0.05 | | | $ | 0.23 | | | $ | 0.07 | |
| Second Quarter (September - November) | | $ | 0.07 | | | $ | 0.01 | | | $ | 0.30 | | | $ | 0.13 | |
| Third Quarter (December - February) | | $ | 0.02 | | | $ | 0.01 | | | $ | 0.26 | | | $ | 0.04 | |
| Fourth Quarter (March - May) | | $ | 0.001 | | | $ | 0.001 | | | $ | 0.14 | | | $ | 0.04 | |
DIVIDENDS
The Company has never paid dividends on any shares of its common stock, nor does the Company anticipate paying dividends at any time in the foreseeable future. Any profits received by the Company will be reinvested in its business.
RECENT SALES OF UNREGISTERED SECURITIES
On June 17, 2013, the Company issued 2,500,000 shares of common stock for a related party loan conversion.
On June 18, 2013, the Company issued 3,160,000 shares of common stock for consulting services.
On June 29, 2013, the Company issued 2,500,000 shares of common stock for consulting services.
On July 5, 2013, the Company issued 250,000 shares of common stock for consulting services.
On July 17, 2013, the Company issued 575,000 shares of common stock for consulting services.
On July 22, 2013, the Company issued 7,500,000 shares of common stock purchased 100% of South Hill Ltd., an English private limited company, which owned 19% of Zaktek.
On July 24, 2013, the Company issued 2,874,550 shares of common stock for a related party loan conversion.
On August 14, 2013, the Company issued 500,000 shares of common stock for patent purchased on April 16, 2013 and settled the stock payable 500,000 shares recorded as of May 31, 2013. The aggregate value of the stock at time of issuance was $40,000.
On August 26, 2013, the Company issued 2,000,000 shares of common stock for consulting services.
On August 28, 2013, the Company issued 1,114,206 shares of common stock for conversion of Asher convertible note.
The Company claims an exemption from registration for the above issuances pursuant to Section 4(a)(2) of the Securities Act due to the small number of purchasers and their sophistication in financial and business matters. The Company claims an exemption under Section 3(a)(9) of the Securities Act for issuances of common stock pursuant to each note conversion described above.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable to smaller reporting companies.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 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 current plans of our management. This report includes forward-looking statements. Generally, the words "believes", "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.
FISCAL YEAR ENDED MAY 31, 2014 COMPARED TO FISCAL YEAR ENDED MAY 31, 2013
The Company did not have any revenues for fiscal year ending May 31, 2014 and $37,935 in revenues for the fiscal year ended May 31, 2013. Revenues earned for fiscal year ending May 31, 2013 were related to the sale of Solacases through the Company's wholly owned subsidiary, Solawerks, Inc.
General and administrative expenses for fiscal 2014 increased to $1,027,248 as compared to $542,133 in fiscal 2013. The increase is primarily related to an increase of consultants, and increased professional fees. In fiscal year 2014 the Company placed on hold the sale of Solawerks products. Interest expense for the twelve months ending May 31, 2014 was $511,876 as compared to $44,588 for the period ending May 31, 2013. The Company’s operations during fiscal 2014 were funded through convertible promissory notes, through a plethora of lenders.
The operating loss for fiscal 2014 decreased to $3,735,676 as compared to $9,480,407 for fiscal 2013. The primary decrease in the operating loss was due to the impairment of assets totaling $4,605,480 due to a cancellation of a license agreement for our old Solawerks product.
No tax benefit was recorded for fiscal 2014 or fiscal 2013 as required by ASC Standard 740-25, 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 and sales of our common stock. The Company will continue to require financing from loans and notes payable until such time our business has generated income sufficient to carry our operating costs.
Cash used in operating activities for the fiscal year 2014 was $1,323,233 compared to $430,595 for the fiscal year 2013. Depreciation and amortization expense for fiscal year 2013 was $62,685 as compared to $3,703 for fiscal 2013. The increase was due primarily to paying the officers of the Company.
Cash used in investing activities was $195,753 for the fiscal year 2014, compared to $0 for the fiscal year 2013.
Cash provided by financing activities was $1,519,426 for fiscal year 2014 as compared to $378,346 for fiscal 2013. Financing activities consisted of cash received from shareholders and notes payable.
OTHER CONSIDERATIONS
There are numerous factors that affect the Company’s 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 services, the level and intensity of competition in the, and our ability to continue to improve our infrastructure, including personnel and systems, to keep pace with our anticipated rapid growth in the development of our business.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to smaller reporting companies.
ITEM 8. FINANCIAL STATEMENTS
DOMARK INTERNATIONAL, INC.
TABLE OF CONTENTS
| | | Page | |
| | | | |
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | | | 8 | |
| | | | | |
| CONSOLIDATED FINANCIAL STATEMENTS: | | | | |
| | | | | |
| Consolidated Balance Sheets at May 31, 2014 and 2013 | | | 9-10 | |
| | | | | |
| Consolidated Statements of Operations for the years ended May 31, 2014 and 2013 | | | 11 | |
| | | | | |
| Consolidated Statements of Stockholders' Deficit for the years ended May 31, 2014 and 2013 | | | 12-18 | |
| | | | | |
| Consolidated Statements of Cash Flows for the years ended May 31, 2014 and 2013 | | | 19-20 | |
| | | | | |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | | | 21-23 | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Domark, International Inc.
Longwood, Florida
We have audited the accompanying consolidated balance sheets of Domark International Inc. as of May 31, 2014 and 2013, and the related statements of operations, stockholders’ deficit and cash flows for each of the years in the two year period ended May 31, 2014. Domark International Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Domark International Inc. as of May 31, 2014, and 2013, and the results of its operations and its cash flows for each of the years in the two year period ended May 31, 2014, in conformity with accounting principles generally accepted in the United States of America.
| /s/ ZBS Group, LLP | |
| |
Plainview, NY August 29, 2014 |
DOMARK INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
| | | May 31, | | | May 31, | |
| | | 2014 | | | 2013 | |
| | | | | | | |
| ASSETS | |
| CURRENT ASSETS | | | | | | |
| Cash and cash equivalents | | $ | 460 | | | $ | 20 | |
| Loan receivable from consultant | | | 36,203 | | | | - | |
| Prepaid expenses | | | 4,500 | | | | 17,823 | |
| TOTAL CURRENT ASSETS | | | 41,163 | | | | 17,843 | |
| | | | | | | | | |
| INVESTMENTS | | | 1,144,166 | | | | - | |
| | | | | | | | | |
| OTHER ASSETS | | | | | | | | |
Patents, net of accumulated amortization of $3,605 and $0, respectively | | | 66,897 | | | | 40,000 | |
Licenses, net of accumulated amortization of $60,898 and $1,818, respectively | | | 249,102 | | | | 8,182 | |
| TOTAL OTHER ASSETS | | | 315,999 | | | | 48,182 | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 1,501,328 | | | $ | 66,025 | |
The accompanying notes are an integral part of these consolidated financial statements.
DOMARK INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
| CURRENT LIABILITIES | | | | | | |
| Note payable to bank | | $ | 180,000 | | | $ | - | |
| Accounts payable and accrued expenses | | | 56,940 | | | | 209,179 | |
| Amounts due under Licensing Agreement with Wazzamba SA | | | 224,925 | | | | - | |
| Loans payable to related parties, consultants and stockholders | | | 188,972 | | | | 45,288 | |
Convertible notes payable (net of unamortized discounts of $674,886 and $59,301, respectively) | | | 67,414 | | | | 148,691 | |
| Derivative liability for convertible notes payable | | | 1,748,982 | | | | 237,578 | |
| TOTAL LIABILITIES | | | 2,467,233 | | | | 640,736 | |
| | | | | | | | | |
| STOCKHOLDERS' DEFICIT | | | | | | | | |
| Preferred stock, $0.001 par value, authorized 10,000,000 shares: | | | | | | | | |
| Series A convertible preferred stock - issued and outstanding | | | | | | | | |
| 50,000 shares, as of May 31, 2014 and 2013 | | | 50 | | | | 50 | |
| Convertible preferred stock series B, $0.0001 par value, | | | | | | | | |
| Authorized: 10,000,000 | | | - | | | | - | |
| Common stock, $0.001 par value, authorized 2,000,000,000 shares: | | | | | | | | |
| 801,626,781 and 179,435,100 shares issued, | | | | | | | | |
| and 676,806,979 and 54,615,298 shares outstanding, | | | | | | | | |
| respectively, as of May 31, 2014 and 2013 | | | 801,627 | | | | 179,435 | |
| | | | | | | | | |
| Less: Treasury stock (124,819,802 shares) as of May 31, 2014 and 2013 | | | (124,820 | ) | | | (124,820 | ) |
| Common stock payable | | | 858,000 | | | | 858,000 | |
| Additional paid in capital | | | 43,529,923 | | | | 40,816,440 | |
| Accumulated deficit | | | (46,030,685 | ) | | | (45,303,816 | ) |
| TOTAL STOCKHOLDERS' DEFICIT | | | (965,905 | ) | | | (574,711 | ) |
| | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | | $ | 1,501,328 | | | $ | 66,025 | |
The accompanying notes are an integral part of these consolidated financial statements.
DOMARK INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| | | For the Years Ended | |
| | | May 31, | |
| | | 2014 | | | 2013 | |
| | | | | | | |
| Sales | | $ | - | | | $ | 37,935 | |
| Cost of sles | | | - | | | | 31,775 | |
| Gross profit | | | - | | | | 6,160 | |
| | | | | | | | | |
| Operating expenses: | | | | | | | | |
| General and administrative | | | 1,027,248 | | | | 542,133 | |
| Stock-based compensation - Consultants | | | 666,755 | | | | 1,205,448 | |
| Stock-based compensation - Salaries and wages | | | 156,600 | | | | 1,037,758 | |
| Amortization of Barefoot - Science license fee | | | - | | | | 1,394,520 | |
| Impairment of Barefoot - Science license fee | | | - | | | | 4,605,480 | |
| Depreciation and amortization expense | | | 62,685 | | | | 3,703 | |
| Bad debts expense | | | - | | | | 1,456 | |
| Loss (income) on settlement of debt | | | - | | | | 413,903 | |
| Total operating expenses | | | 1,913,288 | | | | 9,204,401 | |
| | | | | | | | | |
| Loss from operations | | | (1,913,288 | ) | | | (9,198,241 | ) |
| | | | | | | | | |
| Other income (expense): | | | | | | | | |
| Other income | | | - | | | | - | |
Revaluation of derivative liability for convertible notes | | | (1,213,154 | ) | | | (237,578 | ) |
| Interest expense | | | (511,876 | ) | | | (44,588 | ) |
| Total other income (expense) | | | (1,725,030 | ) | | | (282,166 | ) |
| | | | | | | | | |
| Net Loss | | | (3,638,318 | ) | | | (9,480,407 | ) |
| | | | | | | | | |
| Statement of Comperhansive Income: | | | | | | | | |
| Net Loss | | | (3,638,318 | ) | | | (9,480,407 | ) |
| | | | | | | | | |
| Other Comprehensive loss | | | | | | | | |
| Foreign currancy adjustment | | | (88,551 | ) | | | - | |
| | | | (88,551 | ) | | | - | |
| | | | | | | | | |
| Total Comperhansive Loss | | $ | (3,726,869 | ) | | $ | (9,480,407 | ) |
| | | | | | | | | |
| Net loss per common shares, basic and diluted | | $ | (0.01 | ) | | $ | (0.06 | ) |
| Weighted average common shares outstanding | | | 298,705,632 | | | | 156,961,456 | |
The accompanying notes are an integral part of these consolidated financial statements.
DOMARK INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED MAY 31, 2013 AND 2014
| | Preferred stock | | Preferred Stock | | | | | | Additional | | Common | | | | | | | | | | | |
| | Series A | | Series B | | Common Stock | | Paid-in | | Stock | | Accumulated | | Treasury Stock | | | | Stockholders' | |
| | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | Capital | | Payable | | Deficit | | Shares | | Amount | | OCI | | Deficit | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance, May 31, 2012 | | 50,000 | | | 50 | | | | | | | 153,825,100 | | | 153,825 | | | 31,499,029 | | | 738,000 | | | (32,823,409 | ) | | (124,819,802 | ) | | (124,820 | ) | | | | (557,325 | ) |
| Preferred stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| distribution agreement | | - | | | - | | | 2,500,000 | | | 6,000,000 | | | - | | | - | | | - | | | - | | | - | | | | | | | | | | | 6,000,000 | |
| Preferred stock converted into | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| shares of common stock | | - | | | - | | | (2,500,000 | ) | | (6,000,000 | ) | | 5,000,000 | | | 5,000 | | | 5,995,000 | | | - | | | - | | | | | | | | | | | - | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| stock payable | | - | | | - | | | - | | | - | | | 100,000 | | | 100 | | | 21,900 | | | (22,000 | ) | | - | | | | | | | | | | | - | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| compensation | | - | | | - | | | - | | | - | | | 8,110,000 | | | 8,110 | | | 1,094,998 | | | - | | | - | | | | | | | | | | | 1,103,108 | |
| Common stock issued to settle | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| loan payable | | - | | | - | | | - | | | - | | | 7,400,000 | | | 7,400 | | | 578,700 | | | - | | | - | | | | | | | | | | | 586,100 | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| salaries and wages | | - | | | - | | | - | | | - | | | 5,000,000 | | | 5,000 | | | 400,000 | | | - | | | - | | | | | | | | | | | 405,000 | |
| Stock payable for stock-based | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| compensation | | - | | | - | | | - | | | - | | | - | | | - | | | - | | | 102,000 | | | - | | | | | | | | | | | 102,000 | |
| Warrants granted to officers | | - | | | - | | | - | | | - | | | - | | | - | | | 633,098 | | | - | | | - | | | | | | | | | | | 633,098 | |
| Settlement of related party debt | | - | | | - | | | - | | | - | | | - | | | - | | | 575,715 | | | - | | | - | | | | | | | | | | | 575,715 | |
| Convertible note payable - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| beneficial conversion feature | | - | | | - | | | - | | | - | | | - | | | - | | | 18,000 | | | - | | | - | | | | | | | | | | | 18,000 | |
| Stock payable for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| patent acquisition | | - | | | - | | | - | | | - | | | - | | | - | | | - | | | 40,000 | | | - | | | | | | | | | | | 40,000 | |
| Net loss | | - | | | - | | | - | | | - | | | - | | | - | | | - | | | - | | | (9,480,407 | ) | | - | | | - | | | - | | | (9,480,407 | ) |
| Balance, May 31, 2013 | | 50,000 | | | 50 | | | - | | | - | | | 179,435,100 | | | 179,435 | | | 40,816,440 | | | 858,000 | | | (42,303,816 | ) | | (124,819,802 | ) | | (124,820 | ) | | - | | | (574,711 | ) |
| | | | | | | | | Common Stock | | | | | | | | | Accumulated | | | Treasury Stock | | | | | | Stockholders' | |
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Payable | | | Deficit | | | Shares | | | Amount | | | OCI | | | Deficit | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common stock issued to settle | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| loan payable | | - | | | - | | | - | | | - | | | 2,500,000 | | | 2,500 | | | 47,500 | | | - | | | - | | | | | | | | | | | | 50,000 | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| consulting services | | - | | | - | | | - | | | - | | | 2,500,000 | | | 2,500 | | | 247,500 | | | - | | | - | | | | | | | | | | | | 250,000 | |
| Common stock issued for | | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| consulting services | | - | | | - | | | - | | | - | | | 250,000 | | | 250 | | | 22,250 | | | - | | | - | | | | | | | | | | | | 22,500 | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| consulting services | | - | | | - | | | - | | | - | | | 75,000 | | | 75 | | | 6,600 | | | - | | | - | | | | | | | | | | | | 6,675 | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| consulting services | | - | | | - | | | - | | | - | | | 500,000 | | | 500 | | | 41,150 | | | - | | | - | | | | | | | | | | | | 41,650 | |
| Common stock issued to | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| settle loan payable | | - | | | - | | | - | | | - | | | 2,874,550 | | | 2,875 | | | 54,616 | | | - | | | - | | | | | | | | | | | | 57,491 | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| investment in Imagic Ltd. | | - | | | - | | | - | | | - | | | 7,500,000 | | | 7,500 | | | 690,000 | | | - | | | - | | | | | | | | | | | | 697,500 | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| patents acquisition | | - | | | - | | | - | | | - | | | 500,000 | | | 500 | | | 35,000 | | | - | | | - | | | | | | | | | | | | 35,500 | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| consulting services | | - | | | - | | | - | | | - | | | 2,000,000 | | | 2,000 | | | 131,000 | | | - | | | - | | | | | | | | | | | | 133,000 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 1,114,206 | | | 1,114 | | | 38,886 | | | - | | | - | | | | | | | | | | | | 40,000 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 856,164 | | | 856 | | | 24,144 | | | - | | | - | | | | | | | | | | | | 25,000 | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| consulting services | | - | | | - | | | - | | | - | | | 1,000,000 | | | 1,000 | | | 44,600 | | | - | | | - | | | | | | | | | | | | 45,600 | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| consulting services | | - | | | - | | | - | | | - | | | 250,000 | | | 250 | | | 12,250 | | | - | | | - | | | | | | | | | | | | 12,500 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 903,261 | | | 903 | | | 13,594 | | | - | | | - | | | | | | | | | | | | 14,497 | |
| | | | | | | | | Common Stock | | | | | | | | | Accumulated | | | Treasury Stock | | | | | | Stockholders' | |
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Payable | | | Deficit | | | Shares | | | Amount | | | OCI | | | Deficit | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 1,153,846 | | | 1,154 | | | 13,847 | | | - | | | - | | | | | | | | | | | | 15,001 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of loan payable | | - | | | - | | | - | | | - | | | 3,500,000 | | | 3,500 | | | 49,000 | | | - | | | - | | | | | | | | | | | | 52,500 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 1,630,435 | | | 1,630 | | | 13,371 | | | - | | | - | | | | | | | | | | | | 15,001 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 3,999,200 | | | 3,999 | | | 9,198 | | | - | | | - | | | | | | | | | | | | 13,197 | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| consulting services | | - | | | - | | | - | | | - | | | 175,000 | | | 175 | | | 1,575 | | | - | | | - | | | | | | | | | | | | 1,750 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 3,456,597 | | | 3,457 | | | 16,588 | | | - | | | - | | | | | | | | | | | | 20,045 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 8,850,572 | | | 8,851 | | | 13,275 | | | - | | | - | | | | | | | | | | | | 22,126 | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| investment in Imagic Ltd. | | - | | | - | | | - | | | - | | | 8,000,000 | | | 8,000 | | | 91,200 | | | - | | | - | | | | | | | | | | | | 99,200 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 7,072,457 | | | 7,072 | | | 7,780 | | | - | | | - | | | | | | | | | | | | 14,852 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 5,445,005 | | | 5,445 | | | 5,990 | | | - | | | - | | | | | | | | | | | | 11,435 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 4,166,667 | | | 4,167 | | | 15,833 | | | - | | | - | | | | | | | | | | | | 20,000 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 4,791,667 | | | 4,792 | | | 18,208 | | | - | | | - | | | | | | | | | | | | 23,000 | |
| | | | | | | | | Common Stock | | | | | | | | | Accumulated | | | Treasury Stock | | | | | Stockholders' | |
| | | Shares | | | Amount | | | Shares | | | Amount | | | | | | | | | Capital | | | Payable | | | Deficit | | | Shares | | | Amount | | | OCI | | | Deficit | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 1,305,556 | | | 1,306 | | | 5,744 | | | - | | | - | | | | | | | | | | | | 7,050 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 6,198,762 | | | 6,199 | | | 6,818 | | | - | | | - | | | | | | | | | | | | 13,017 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 6,436,781 | | | 6,437 | | | 7,563 | | | - | | | - | | | | | | | | | | | | 14,000 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 7,498,890 | | | 7,499 | | | 7,499 | | | - | | | - | | | | | | | | | | | | 14,998 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 4,900,000 | | | 4,900 | | | 12,250 | | | - | | | - | | | | | | | | | | | | 17,150 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 3,000,000 | | | 3,000 | | | 7,800 | | | - | | | - | | | | | | | | | | | | 10,800 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | - | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | - | |
| notes payable | | - | | | - | | | - | | | - | | | 4,901,960 | | | 4,902 | | | 15,098 | | | - | | | - | | | | | | | | | | | | 20,000 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 5,000,000 | | | 5,000 | | | 10,000 | | | - | | | - | | | | | | | | | | | | 15,000 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 4,000,000 | | | 4,000 | | | 8,000 | | | - | | | - | | | | | | | | | | | | 12,000 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 3,278,688 | | | 3,279 | | | 6,721 | | | - | | | - | | | | | | | | | | | | 10,000 | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| consulting services | | - | | | - | | | - | | | - | | | 12,000,000 | | | 12,000 | | | 68,400 | | | - | | | - | | | | | | | | | | | | 80,400 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 6,419,120 | | | 6,419 | | | 4,494 | | | - | | | - | | | | | | | | | | | | 10,913 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 6,755,135 | | | 6,755 | | | 3,378 | | | - | | | - | | | | | | | | | | | | 10,133 | |
| | | | | | | | | Common Stock | | | | | | | | | Accumulated | | | Treasury Stock | | | | | | Stockholders' | |
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Payable | | | Deficit | | | Shares | | | Amount | | | OCI | | | Deficit | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 3,990,435 | | | 3,990 | | | 5,188 | | | - | | | - | | | | | | | | | | | | 9,178 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 7,108,733 | | | 7,109 | | | 3,554 | | | - | | | - | | | | | | | | | | | | 10,663 | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| consulting services | | - | | | - | | | - | | | - | | | 5,668,934 | | | 5,669 | | | 27,211 | | | - | | | - | | | | | | | | | | | | 32,880 | |
| Common stock issued to | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| officers for services | | - | | | - | | | - | | | - | | | 27,000,000 | | | 27,000 | | | 129,600 | | | - | | | - | | | | | | | | | | | | 156,600 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 6,818,182 | | | 6,818 | | | 8,182 | | | - | | | - | | | | | | | | | | | | 15,000 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 10,053,100 | | | 10,053 | | | 2,915 | | | - | | | - | | | | | | | | | | | | 12,968 | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| consulting services | | - | | | - | | | - | | | - | | | 2,000,000 | | | 2,000 | | | 7,800 | | | - | | | - | | | | | | | | | | | | 9,800 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 8,863,636 | | | 8,864 | | | 10,636 | | | - | | | - | | | | | | | | | | | | 19,500 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 11,081,400 | | | 11,081 | | | 2,106 | | | - | | | - | | | | | | | | | | | | 13,187 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 6,000,000 | | | 6,000 | | | 5,400 | | | - | | | - | | | | | | | | | | | | 11,400 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 2,766,667 | | | 2,767 | | | 1,383 | | | - | | | - | | | | | | | | | | | | 4,150 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 11,652,000 | | | 11,652 | | | (5,010 | ) | | - | | | - | | | | | | | | | | | | 6,642 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 17,647,059 | | | 17,647 | | | (2,647 | ) | | - | | | - | | | | | | | | | | | | 15,000 | |
| | | | | | | | | Common Stock | | | | | | | | | Accumulated | | | Treasury Stock | | | | | | Stockholders' | |
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Payable | | | Deficit | | | Shares | | | Amount | | | OCI | | | Deficit | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 6,900,000 | | | 6,900 | | | 138 | | | - | | | - | | | | | | | | | | | | 7,038 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 12,273,600 | | | 12,274 | | | (5,278 | ) | | - | | | - | | | | | | | | | | | | 6,996 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 12,916,695 | | | 12,917 | | | (5,554 | ) | | - | | | - | | | | | | | | | | | | 7,363 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 17,647,059 | | | 17,647 | | | (2,647 | ) | | - | | | - | | | | | | | | | | | | 15,000 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 31,749,235 | | | 31,749 | | | 635 | | | - | | | - | | | | | | | | | | | | 32,384 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 13,593,400 | | | 13,593 | | | (5,845 | ) | | - | | | - | | | | | | | | | | | | 7,748 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 10,220,000 | | | 10,220 | | | (6,132 | ) | | - | | | - | | | | | | | | | | | | 4,088 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 14,678,154 | | | 14,678 | | | (6,311 | ) | | - | | | - | | | | | | | | | | | | 8,367 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 15,500,000 | | | 15,500 | | | - | | | - | | | - | | | | | | | | | | | | 15,500 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of accrued | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| interest on convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 10,900,000 | | | 10,900 | | | - | | | - | | | - | | | | | | | | | | | | 10,900 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 22,716,552 | | | 22,717 | | | (8,708 | ) | | - | | | - | | | | | | | | | | | | 14,009 | |
| | | | | | | | | Common Stock | | | | | | | | | Accumulated | | | Treasury Stock | | | | | | Stockholders' | |
| | | | | | Amount | | | | | | | | | Shares | | | | | | | | | | | | | | | | | | | | | OCI | | | Deficit | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| investment in Barefoot | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Science Products & | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Services Inc. | | - | | | - | | | - | | | - | | | 15,000,000 | | | 15,000 | | | 30,000 | | | - | | | - | | | | | | | | | | | | 45,000 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 30,000,000 | | | 30,000 | | | (15,000 | ) | | - | | | - | | | | | | | | | | | | 15,000 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 4,492,470 | | | 4,492 | | | (1,418 | ) | | - | | | - | | | | | | | | | | | | 3,074 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 33,065,760 | | | 33,066 | | | (16,533 | ) | | - | | | - | | | | | | | | | | | | 16,533 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 15,483,636 | | | 15,484 | | | (6,968 | ) | | - | | | - | | | | | | | | | | | | 8,516 | |
| Common stock issued for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| consulting services | | - | | | - | | | - | | | - | | | 15,000,000 | | | 15,000 | | | 15,000 | | | - | | | - | | | | | | | | | | | | 30,000 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 17,545,455 | | | 17,545 | | | 1,755 | | | - | | | - | | | | | | | | | | | | 19,300 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 37,500,000 | | | 37,500 | | | (22,500 | ) | | - | | | - | | | | | | | | | | | | 15,000 | |
| Common stock issued in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| satisfaction of convertible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| notes payable | | - | | | - | | | - | | | - | | | 17,600,000 | | | 17,600 | | | - | | | - | | | - | | | | | | | | | | | | 17,600 | |
| Beneficial conversion features | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| of convertible notes issued | | - | | | - | | | - | | | - | | | - | | | - | | | 743,810 | | | - | | | - | | | | | | | | | | | | 743,810 | |
| Currency Translation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | - | | | (88,551 | ) | | (88,551 | ) |
| Net loss | | - | | | - | | | - | | | - | | | - | | | - | | | - | | | - | | | (3,638,318 | ) | | - | | | - | | | - | | | (3,638,318 | ) |
| Balance, May 31, 2014 | | 50,000 | | $ | 50 | | | - | | $ | - | | | 801,626,781 | | $ | 801,627 | | $ | 43,529,923 | | $ | 858,000 | | $ | (45,942,134 | ) | | (124,819,802 | ) | $ | (124,820 | ) | $ | (88,551 | ) | $ | (965,905 | ) |
The accompany notes are an integral part of these consolidated financial statements
DOMARK INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | For the year ended | |
| | | May 31, | |
| | | 2014 | | | 2013 | |
| | | | | | | |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | |
| Net Loss | | $ | (3,726,869 | ) | | $ | (9,480,407 | ) |
| | | | | | | | | |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
| Depreciation and amortization | | | 62,685 | | | | 3,703 | |
| Amortization of deferred finance costs | | | - | | | | 24,799 | |
| Common stock issued as compensation | | | 823,355 | | | | 2,243,206 | |
| Non cash interest expense | | | 451,988 | | | | - | |
| Loss (gain) on derivative valuation | | | 1,213,154 | | | | 237,578 | |
| Amortization of prepaid license fees | | | - | | | | 1,394,520 | |
| Impairment of assets | | | - | | | | 4,605,480 | |
| Loss (income) on settlement of debt | | | - | | | | 413,903 | |
| | | | | | | | | |
| Change in operating assets and liabilities: | | | | | | | | |
| Inventory - tv production | | | - | | | | - | |
| Prepaid expenses | | | 13,323 | | | | (12,926 | ) |
| Accounts payable and accrued expenses | | | (152,062 | ) | | | 139,549 | |
| Accounts payable - related party | | | - | | | | - | |
| | | | | | | | | |
| Net cash used in operating activities | | | (1,323,233 | ) | | | (430,595 | ) |
| | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
| Cash paid for investments | | | (159,550 | ) | | | - | |
| Cash paid for loan receivable from consultant | | | (36,203 | ) | | | - | |
| | | | | | | | | |
| Net cash used investing activities | | | ( 195,753 | ) | | | - | |
The accompanying notes are an integral part of these consolidated financial statements
DOMARK INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | |
| Proceeds from convertible notes payable | | | 1,162,500 | | | | 110,000 | |
Payments made on amounts due under Licensing Agreement with Wazzamba SA | | | (75,075 | ) | | | - | |
| Proceeds from loans payable to consultants and stockholders | | | 262,542 | | | | 193,288 | |
Payments made on loans payable to consultants and stockholders | | | (10,541 | ) | | | (1,000 | ) |
| Proceeds received from note payable | | | 180,000 | | | | 76,058 | |
| Payments made on notes payable | | | - | | | | - | |
| | | | | | | | | |
| Net cash provided by financing activities | | | 1,519,426 | | | | 378,346 | |
| | | | | | | | | |
| Net increase (decrease) in cash and cash equivalents | | | 440 | | | | (52,249 | ) |
| Cash & cash equivalents beginning of year | | | 20 | | | | 52,269 | |
| Cash & cash equivalents end of year | | $ | 460 | | | $ | 20 | |
| | | | | | | | | |
| Cash paid for interest | | $ | 9,700 | | | $ | - | |
| Cash paid for taxes | | $ | - | | | $ | - | |
| | | | | | | | | |
SUPPLEMENT SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | | | | | | | | |
Llicensing Agreement with Wazzamba SA in exchange for amounts due under Licensing Agreement with Wazzamba SA | | $ | 300,000 | | | $ | - | |
| Prepaid licensing fee | | $ | - | | | $ | 6,000,000 | |
Shares issued for settlement of loans payable to consultants and stockholders | | $ | 159,991 | | | $ | 148,000 | |
| Shares issued for settlement of convertible notes payable | | $ | 731,329 | | | $ | - | |
| Shares issued for patent acquisition | | $ | 35,500 | | | $ | 40,000 | |
| Shares issued for equity interests in Imagic Ltd. | | $ | 796,700 | | | $ | - | |
Shares issued for equity interest in Barefoot Science Products & Services, Inc. | | $ | 45,000 | | | $ | - | |
Convertible notes payable issued for equity interests in Imagic Ltd. | | $ | 150,000 | | | $ | - | |
The accompanying notes are an integral part of these consolidated financial statements.
DOMARK INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MAY 31, 2014 AND MAY 31, 2013
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. During 2008 and 2009, the Company acquired several operating businesses. The Company devotes most of its time developing its products. On May 21, 2009, the Company entered into an acquisition agreement (the “Victory Lane Agreement”) with Victory Lane Financial Elite, LLC (“Victory Lane”) with respect to a real estate lifestyle business known as “Victory Lane” (the “Victory Lane Business”). Shortly thereafter, a dispute arose between the Company and the principals of Victory Lane regarding the representations of the principals of Victory Lane and the Victory Lane Business and the Victory Lane Agreement.
On February 29, 2012, the Company formed a new wholly owned subsidiary, Solawerks, Inc., in the State of Nevada, for the purposes of entering the business of marketing specialized solar consumer electronics. Solawerk’s current focus is to develop and distribute the IR Charger, which is a combined cover and charging case for Apple’s iPad, and Samsung products. Solawerks competes in a market that also includes 3D Systems (DDD), Dell ( DELL ), and Hewlett Packard (HPQ). Currently the charter is in default with the Secretary of State of Nevada.
On June 20, 2012, the Company formed a new wholly-owned subsidiary, MuscleFoot Inc. in the state of Nevada for the purpose of distributing, marketing, and acting as sales agent for the patented foot care system of Barefoot Science. MuscleFoot Inc. is currently in default with the Nevada Secretary of State.
On July 20, 2012, the Company formed a new wholly-owned subsidiary, DoMark Canada Inc. in the province of Ontario for the purpose of supporting the Company’s corporate operations based in Toronto, Ontario, Canada.
On February 28, 2013, the Company entered into a Memorandum of Understanding to purchase 44% of Zaktek Ltd. (“Zaktek”). Zaktek’s main product is the phonepad+, an Apple Inc. approved tablet device that works with smartphones, including the Apple iPhone® and Samsung Galaxy products to improve functionality including video and gaming abilities.
On April 23, 2013, the Company received notification that Zaktek was ending discussions in regards to the definitive purchase agreement with DoMark.
On June 11, 2013, the Company then purchased 100% of South Hill Ltd., an English private limited company, which owns approximately 19% of Zaktek.
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. For the period March 30, 2006 (inception) to May 31, 2014, the Company incurred net losses of $46,028,386. Furthermore, 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. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty. 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 ACCOUNTNG PRONOUNCEMENTS
In June 2014, The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation” (“ASU 2014-10”). ASU 2014-10 removes the financial reporting distinction between development stage entities and other reporting entities and eliminates the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. As permitted by ASU 2014-10, the Company has elected early application of this standard for the accompanying consolidated financial statements for the years ended May 31, 2014 and 2013.
The Company has reviewed other 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.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated 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 consolidated financial statements include the parent entity of DoMark International, Inc. and its wholly owned subsidiaries, DoMark Canada, Inc., Solarwerks, Inc., and MuscleFoot, Inc. The Company has relied upon the guidance provided by ASC Topic No. 810-10-15-3.
FOREIGN CURRENCY TRANSLATION AND TRANSACTION GAINS AND LOSSES
We record foreign currency translation adjustments and transaction gains and losses in accordance with SFAS 52, Foreign Currency Translation. For our operations that have a functional currency other than the U.S. dollar, gains and losses resulting from the translation of the functional currency into U.S. dollars for financial statement presentation are not included in determining net loss but are accumulated in the cumulative foreign currency translation adjustment account as a separate component of shareholders’ deficit. The Company and its subsidiaries also have transactions in foreign currencies other than the functional currency. We record transaction gains and losses in our consolidated statements of operations related to the recurring measurement and settlement of such transactions. The translation rate for the Canadian dollar as of May 31, 2014 was $0.95.
USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP 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 consolidated financial statements are the fair value of Company stock tendered in various non-monetary transactions and the fair value of the derivative liability for convertible notes payable.
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, 2014 and 2013, cash and cash equivalents consisted only of cash in the bank.
LOAN RECEIVABLE FROM CONSULTANT
The loan receivable from consultant is a short term, less than one year note, due July 15, 2014, and is non-interest bearing.
NET LOSS PER COMMON SHARE
Basic net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock and potentially dilutive securities (such as convertible notes payable, convertible preferred stock, and warrants) outstanding during the relevant period. Dilutive securities having an anti-dilutive effect on diluted net loss per common share are excluded from the calculation.
For the years ended May 31, 2014 and 2013, diluted common shares outstanding excluded the following dilutive securities as the effect of their inclusion was anti-dilutive:
| | | Common Shares Equivalent | |
| | | Year Ended May 31, | |
| | | 2014 | | | 2013 | |
| Convertible notes payable | | | 1,568,946,386 | | | | 2,337,662 | |
| Series A convertible preferred stock | | | 50,000,000 | | | | 50,000,000 | |
| Warrants | | | 850,000 | | | | 850,000 | |
| | | | | | | | | |
| Total common shares equivalent | | | 1,619,796,386 | | | | 53,187,662 | |
INTANGIBLE ASSETS
Intangible assets are carried at cost less accumulated amortization. Amortization is recorded over the estimated useful lives of the respective assets.
RECLASSIFICATION
A reclassification has been made to the prior period consolidated balance sheet to conform to the current period presentation. This reclassification had no effect on previous reported results of operations. The Company has shown separately the amount of treasury stock from the Common stock in the consolidated balance sheet and statement of stockholders’ deficit.
IMPAIRMENT OF LONG-LIVED ASSETS
In accordance with ASC Topic No. 360-10-40, 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.
STOCK-BASED COMPENSATION
The Company accounts for share based payments in accordance with ASC Topic No. 718, Compensation - Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. In accordance with ASC 718-10-30-9, Measurement Objective - Fair Value at Grant Date, the Company estimates the fair value of the award using a valuation technique. For stock options, the Company uses the Black-Scholes option pricing model. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates, and to allow for actual exercise behavior of option holders. Compensation cost is recognized over the requisite service period which is generally equal to the vesting period. Upon exercise, shares issued will be newly issued shares from authorized common stock.
ASC Topic No. 505, "Compensation-Stock Compensation", establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non-employees for goods or services. Under this method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505.
RESEARCH AND DEVELOPMENT
All research and development expenditures are expensed as incurred.
REVENUE RECOGNITION
The Company recognizes revenues when persuasive evidence of an arrangement exists, delivery and acceptance has occurred or service has been rendered, the price is fixed or determinable, and collection of the resulting receivable is reasonably assured.
NOTE 4 – INVESTMENTS
Investments consist of:
| | | May 31, 2014 | | | May 31, 2013 | |
| Imagic Ltd. - 40% equity interest | | $ | 1,094,166 | | | $ | - | |
| Barefoot Science Products & Services Inc. - 15% equity interest | | | 50,000 | | | | - | |
| Total | | $ | 1,144,166 | | | $ | - | |
The cost of the 40% equity interest in Imagic Ltd. at May 31, 2014 consists of:
| July 22, 2013 issuance of 7,500,000 shares of DoMark common stock to Imagic Ltd. | | $ | 697,500 | |
| December 3, 2013 issuance of 8,000,000 shares of DoMark common stock to Meadow Grove Ltd. in exchange for 9% equity interest in Imagic Ltd. | | | 99,200 | |
| Cash payments to or for the benefit of Imagic Ltd. | | | 147,466 | |
| Payments from Foremark Holdings to Imagic Ltd. in exchange for DoMark notes payable to Foremark Holdings | | | 150,000 | |
| Total | | $ | 1,094,166 | |
Imagic is a privately owned company registered in Gibraltar which owns proprietary product designs for its Digilink and Game Control products. Imagic shares are not quoted or traded on any securities exchange or in any recognized over-the counter market. Imagic is accounted for on the equity method of accounting. The Company consolidates entities that we control. The Company accounts for investments in joint ventures using the equity method of accounting when we exercise significant influence over the venture. If the Company does not exercise significant influence, we account for the investment using the cost method of accounting. Imagic did not have any revenues or expenses for the year ended May 31, 2014.
The cost of the 15% equity interest in Barefoot Science Products & Services Inc. consists of:
| January 25, 2013 cancellation of the Marketing and Distribution Agreement dated June 20, 2012 | | $ | 5,000 | |
| May 14, 2014 issuance of 15,000,000 shares of DoMark common stock to Lance Todd pursuant to Agreement of Understanding dated March 27, 2014 | | | 45,000 | |
| Total | | $ | 50,000 | |
On January 25, 2013, the Company executed an agreement with Barefoot Science Products & Services Inc. (“Barefoot Science”) which cancelled the Marketing and Distribution Agreement dated June 20, 2012 and which provided the Company a 15% equity interest in Barefoot Science. As a result, the Company recognized an impairment charge of $4,605,480 in the year ended May 31, 2013 to write off the remaining unamortized prepaid license fees at February 28, 2013 ($4,605,480) and to record the estimated fair value of the 15% equity interest in Barefoot Science at $5,000. On March 27, 2014, DoMark executed an Agreement of Understanding with Barefoot Science and its other owner Lanee Todd. Among other things, the Agreement of Understanding provides for (1) DoMark’s issuance of 15,000,000 shares of DoMark common stock to Lance Todd (which occurred May 14, 2014), (2) future monthly remittances of 15% of Barefoot Science’s profit (as defined) to DoMark, and (3) the addition of R. Brentwood Strasler (DoMark’s non-executive Chairman) to Barefoot Science’s Board of Directors.
Barefoot Science has developed a patented foot strengthening system through insertion of an insole system or by incorporation right into the design of shoes. Barefoot Science shares are not quoted or traded on any securities exchange or in any recognized over-the counter market. Accordingly, it is not practicable to estimate the fair value of this investment.
NOTE 5 – LICENSING AGREEMENT WITH WAZZAMBA SA
During the three months ended February 28, 2014, the Company executed a Licensing Agreement with Wazzamba SA (the “Licensor”). The agreement provides the Company an exclusive license to use certain technology (which permits third-party subscribers to integrate a fully equipped online shop into their websites) in Canada and the United States for an initial term ending July 31, 2015. The agreement provides for the Company to pay the Licensor “Flat Fee” compensation of $ 300,000 in 3 installments of $100,000 each (first installment payable within 5 days of the signing of the agreement, second installment payable on July 1, 2014, and third installment payable on February 1, 2015) plus “Revenue Share” compensation equal to 50% of Net Commissions generated by the Company payable monthly. In the event that the Company does not generate $500,000 in Net Commissions by January 31, 2015, the Licensor has the right to cancel the agreement with one month notice (in which case the third $100,000 installment will no longer be due). With respect to an Extended License Term after July 31, 2015, the agreement provides the Company a right of first refusal to match any offer received by the Licensor from a third party.
At February 28, 2014, the Company recorded this Licensing Agreement and the related “Flat Fee” liability as an intangible asset and liability in the amount of $300,000. In the three months ended May 31, 2014, the Company paid $75,075 of the first $100,000 “Flat Fee” installment due the Licensor under the agreement. The other $24,925 due is presently past due. The Company is currently in negotiations with the Licensor to have its rights pursuant to the Licensing Agreement converted into an equity interest in a new entity to be owned by both the Company and the Licensor. The new entity would have worldwide rights to Licensor’s technology now entitled “Monetizer 101”.
Licenses, net of accumulated amortization, consist of:
| | | May 31, | | | May 31, | |
| | | 2014 | | | 2013 | |
| Wazzamba, S.A. | | $ | 300,000 | | | $ | - | |
| Bioharmonics | | | 10,000 | | | | 10,000 | |
| Subtotal | | | 310,000 | | | | 10,000 | |
| Accumulated amortization | | | (60,898 | ) | | | (1,818 | ) |
| Total | | $ | 249,102 | | | $ | 8,182 | |
NOTE 6 – NOTE PAYABLE TO BANK
In December 2013, the Company entered into a Loan Agreement with a bank located in Maryland. The related Promissory Note in the amount of $180,000 bears interest at a rate at 10% payable monthly, is due in full on December 31, 2014, and is secured by a Common Stock Reserve (as defined in the Loan Agreement), a Guaranty of Payment from the Company’s chief financial officer and his wife, and certain real property owned by the Company’s chief financial officer and his wife.
NOTE 7 – LOANS PAYABLE TO RELATED PARTIES, CONSULTANTS, AND STOCKHOLDERS
Loans payable to related parties, consultants, and stockholders consist of:
| | | May 31, | | | May 31, | |
| | | 2014 | | | 2013 | |
| Consultant and stockholder | | $ | 90,402 | | | $ | 7,800 | |
| Chief executive officer/Pres. of DoMark | | | 47,500 | | | | - | |
| Non Exec. Chairman of Board of DoMark | | | 11,875 | | | | - | |
| Chairman of Barefoot Science and affiliate | | | 21,500 | | | | - | |
| | | | | | | | - | |
| Consultant | | | 16,097 | | | | 37,488 | |
| Consultant | | | 1,598 | | | | - | |
| Total | | $ | 188,972 | | | $ | 45,288 | |
The loans are informal and do not provide for interest or a stated maturity date.
NOTE 8 – CONVERTIBLE NOTES PAYABLE
At May 31, 2014, convertible notes payable consisted of:
| Date of Note | | Noteholder | | Interest Rate | | | Maturity date | | Principal Amount | | Unamortized Debt Discount | | | Net Carrying Amount | |
| 11/08/13 | | Iconic Holdings, LLC | | | 10 | % | | 11/08/14 | | $ | 15,000 | (a) | | $ | 15,000 | | | $ | - | |
| 11/26/13 | | Asher Enterprises, Inc. | | | 8 | % | | 08/26/14 | | | 7,300 | (b) | | | 7,300 | | | | - | |
| 12/04/13 | | LG Capital | | | 10 | % | | 06/04/14 | | | 50,000 | (a) | | | 35,309 | | | | 14,691 | |
| 12/09/13 | | JMJ Financial Inc. | | | 12 | % | | 12/09/14 | | | 50,000 | (c) | | | 49,247 | | | | 753 | |
| 12/13/13 | | Gel Properties Inc. | | | 10 | % | | 09/02/14 | | | 35,000 | (d) | | | 20,658 | | | | 14,342 | |
| 01/10/14 | | Asher Enterprises, Inc. | | | 8 | % | | 10/02/14 | | | 37,500 | (b) | | | 24,616 | | | | 12,884 | |
| 02/13/14 | | JMJ Financial Inc. | | | 12 | % | | 02/13/15 | | | 50,000 | (e) | | | 29,830 | | | | 20,170 | |
| 02/13/14 | | Asher Enterprises, Inc. | | | 8 | % | | 11/13/14 | | | 27,500 | (f) | | | 26,580 | | | | 920 | |
| 02/19/14 | | Iconic Holdings, LLC | | | 10 | % | | 02/19/15 | | | 30,000 | (a) | | | 29,830 | | | | 170 | |
| 02/28/14 | | LG Capital | | | 8 | % | | 02/28/15 | | | 30,000 | (a) | | | 29,891 | | | | 109 | |
| 03/07/14 | | JSJ Investments, Inc. | | | 12 | % | | 09/07/14 | | | 30,000 | (g) | | | 29,550 | | | | 450 | |
| 03/28/14 | | Redwood Fund III | | | 10 | % | | 09/28/14 | | | 50,000 | (h) | | | 49,922 | | | | 78 | |
| 03/28/14 | | Redwood Mgt LLC | | | 10 | % | | 09/28/14 | | | 50,000 | (h) | | | 49,922 | | | | 78 | |
| 03/28/14 | | Asher Enterprises, Inc. | | | 8 | % | | 09/28/14 | | | 42,500 | (f) | | | 39,965 | | | | 2,535 | |
| 04/07/14 | | WHC Capital | | | 12 | % | | 10/07/14 | | | 53,000 | (i) | | | 52,921 | | | | 79 | |
| 04/11/14 | | Tonaquint | | | 12 | % | | 10/11/14 | | | 47,000 | (j) | | | 46,923 | | | | 77 | |
| 04/24/14 | | JSJ Investments, Inc. | | | 12 | % | | 10/24/14 | | | 50,000 | (g) | | | 49,922 | | | | 78 | |
| 05/14/14 | | Iconic Holdings, LLC | | | 5 | % | | 11/12/14 | | | 55,000 | (j) | | | 55,000 | | | | - | |
| 05/16/14 | | Asher Enterprises, Inc. | | | 8 | % | | 11/14/14 | | | 32,500 | (f) | | | 32,500 | | | | - | |
| Totals | | | | | | | | | | $ | 742,300 | | | $ | 674,886 | | | $ | 67,414 | |
Legend
| (a) | At noteholder’s option, the principal amount (and accrued interest) are convertible into shares of DoMark common stock at a conversion price equal to 25% of the lowest trading price during the 20 trading days prior to the notice of conversion. |
| (b) | At noteholder’s option, the principal amount (and accrued interest) are convertible into shares of DoMark common stock at a conversion price equal to 58% of the average of the two lowest closing prices during the 15 trading days prior to the notice of conversion. |
| (c) | At noteholder’s option, the principal amount (and accrued interest) are convertible into shares of DoMark common stock at a conversion price equal to 40% of the lowest closing price during the 25 trading days prior to the notice of conversion. |
| (d) | At noteholder’s option, the principal amount (and accrued interest) are convertible into shares of DoMark common stock at a conversion price equal to 40% of the lowest closing price during the 20 trading days prior to the notice of conversion. |
| (e) | At noteholder’s option, the principal amount (and accrued interest) are convertible into shares of DoMark common stock at a conversion price equal to the lower of $0.085 or 60% of the lowest closing price during the 25 trading days prior to the notice of conversion. |
| (f) | At noteholder’s option, the principal amount (and accrued interest) are convertible into shares of DoMark common stock at a conversion price equal to 49% of the average of the two lowest closing prices during the 15 trading days prior to the notice of conversion. |
| (g) | At noteholder’s option, the principal amount (and accrued interest) are convertible into shares of DoMark common stock at a conversion price equal to 25% of the average of the three lowest bid prices during the 20 trading days prior to the notice of conversion. |
| (h) | At noteholder’s option, the principal amount (and accrued interest) are convertible into shares of DoMark common stock at a conversion price equal to 20% of the lowest trading price during the 20 trading days prior to the notice of conversion. |
| (i) | At noteholder’s option, the principal amount (and accrued interest) are convertible into shares of DoMark common stock at a conversion price equal to 40% of the lowest trading price during the 20 trading days prior to the notice of conversion. |
| (j) | At noteholder’s option, the principal amount (and accrued interest) are convertible into shares of DoMark common stock at a conversion price equal to 25% of the lowest trading price during the 15 trading days prior to the notice of conversion. |
NOTE 9 – STOCKHOLDERS’ DEFICIT
Series A Convertible Preferred Stock
Each share of Series A Convertible Preferred Stock has 1,000 voting rights and is convertible into 1,000 shares of common stock.
Common Stock Issuances
On June 15, 2012, the Company issued 2,500,000 shares of Preferred Stock Series B for a distribution right to market an insole product from Barefoot Science, at no par value. These shares were convertible into common shares at a ratio of 2 shares of common stock for 1 Preferred B. The aggregate value of the shares at time issuance was $6,000,000. On January 10, 2013, the 2,500,000 shares of Preferred Stock Series B were converted into 5,000,000 shares of the Company’s common stock, for a 15% interest in Barefoot Science. As a result of this conversion, no shares of Preferred Stock Series B remained outstanding after this transaction.
On June 15, 2012, the Company issued 100,000 shares of common stock for settling the stock payable recorded as of May 31, 2012. The aggregate value of the stock issued was $22,000 or $0.22 per share.
On June 15, 2012, the Company entered into a consulting agreement. In consideration for services, the Company issued 10,000 shares of unrestricted common stock. The aggregate value of the stock issued was $15,300 or $1.53 per share.
On July 12, 2012, the Company entered into a consulting agreement. In consideration for services, the Company issued 425,000 shares of unrestricted common stock. The aggregate value of the stock issued was $382,500 or $0.90 per share.
On December 11, 2012, the Company entered into a consulting agreement. In consideration for services, the Company issued 775,000 shares of unrestricted common stock. The aggregate value of the stock issued was $147,250 or $0.19 per share.
On April 23, 2013, the Company issued 2,000,000 shares of common stock to settle a dispute with a prior executive. The aggregate value of the stock was $190,000, or $.095 per share.
On May 13, 2013, the Company issued 4,900,000 shares of common stock as compensation for its consultants. The aggregate value of the stock at time of issuance was $367,000, or $.075 per share.
On June 17, 2013, the Company issued 2,500,000 shares of common stock in satisfaction of a $50,000 loan payable.
On June 29, 2013, the Company issued 2,500,000 shares of common stock (valued at $250,000) to a consultant for services rendered.
On July 5, 2013, the Company issued 250,000 shares of common stock (valued at $22,500) to a consultant for website development services.
On July 9, 2013, the Company issued 75,000 shares of common stock (valued at $6,675) to a consultant for services rendered.
On July 17, 2013, the Company issued 500,000 shares of common stock (valued at $41,650) to a consultant for investor relations services.
On July 22, 2013, the Company issued 2,874,550 shares of common stock in satisfaction of a $57,491 loan payable.
On July 22, 2013, the Company issued 7,500,000 shares of common stock (valued at $697,500) in connection with the acquisition of a 19% equity interest in Imagic Ltd. See Note 4.
On August 15, 2013, the Company issued 500,000 shares of common stock (valued at $35,500) to Bioharmonics Technologies Corp. in connection with the acquisition of certain inventions and related patents and patent applications.
On August 26, 2013, the Company issued 2,000,000 shares of common stock (valued at $133,000) to a consultant for services rendered.
On August 28, 2013, the Company issued 1,114,206 shares of common stock to Asher Enterprises, inc. in satisfaction of $14,000 principal amount of convertible notes payable and $26,000 of fees.
On September 18, 2013, the Company issued 856,164 shares of common stock to Asher Enterprises, Inc. in satisfaction of $25,000 principal amount of convertible notes payable.
On October 9, 2013, the Company issued 1,000,000 shares of common stock (valued at $45,600) to a consultant for services rendered.
On October 10, 2013, the Company issued 250,000 shares of common stock (valued at $12,500) to a consultant for services rendered.
On November 4, 2013, the Company issued 903,261 shares of common stock to Asher Enterprises, Inc. in satisfaction of $14,000 principal amount of convertible notes payable and $500 of costs.
On November 4, 2013, the Company issued 1,153,846 shares of common stock to Asher Enterprises, Inc. in satisfaction of $15,000 principal amount of principal amount of convertible notes payable.
On November 4, 2013, the Company issued 3,500,000 shares of common stock in satisfaction of a $52,500 loan payable.
On November 12, 2013, the Company issued 1,630,435 shares of common stock to Asher Enterprises, Inc. in satisfaction of $15,000 principal amount of convertible notes payable.
On November 14, 2013, the Company issued 3,999,200 shares of common stock to Iconic Holdings, LLC in satisfaction of $13,197 principal amount of convertible notes payable.
On November 15, 2013 the Company issued 175,000 shares of common stock (valued at $1,750) to a consultant for services rendered.
On November 19, 2013, the Company issued 3,456,597 shares of common stock to Asher Enterprises, Inc. in satisfaction of $2,500 principal amount of convertible notes payable and $17,548 of costs.
On November 19, 2013, the Company issued 8,850,572 shares of common stock to Iconic Holdings, LLC in satisfaction of $22,126 principal amount of convertible notes payable.
Effective December 3, 2013, the Company issued 8,000,000 shares of common stock (valued at $99,200) to Meadow Grove Ltd. in connection with the acquisition of a 9% equity interest in Imagic Ltd. See Note 4.
On December 4, 2013, the Company issued 7,072,457 shares of common stock to Iconic Holdings, LLC in satisfaction of $14,852 principal amount of convertible notes payable.
On December 18, 2013, the Company issued 5,445,005 shares of common stock to Iconic Holdings, LLC in satisfaction of $11,435 principal amount of convertible notes payable.
On December 26, 2013 the Company issued 4,166,667 shares of common stock to Asher Enterprises, Inc. in satisfaction of $20,000 principal amount of convertible notes payable.
On December 30, 2013, the Company issued 4,791,667 shares of common stock to Asher Enterprises, Inc. in satisfaction of $23,000 principal amount of convertible notes payable.
On January 6, 2014, the Company issued 1,305,556 shares of common stock to Asher Enterprises, Inc. in satisfaction of $7,050 principal amount of convertible notes payable.
On January 13, 2014, the Company issued 6,198,762 shares of common stock to Iconic Holdings, LLC in satisfaction of $13,017 principal amount of convertible notes payable.
On January 23, 2014, the Company issued 6,436,781 shares of common stock to Iconic Holdings, LLC in satisfaction of $14,000 principal amount of convertible notes payable.
On February 3, 2014, the Company issued 7,498,890 shares of common stock to Iconic Holdings, LLC in satisfaction of $14,998 principal amount of convertible notes payable.
On February 6, 2014, the Company issued 4,900,000 shares of common stock to JSJ Investments, Inc. in satisfaction of $17,150 principal amount of convertible notes payable.
On February 11, 2014, the Company issued 3,000,000 shares of common stock to JMJ Financial Inc. in satisfaction of $10,800 principal amount of convertible notes payable.
On February 11, 2014, the Company issued 4,901,960 shares of common stock to Continental Equities, LLC in satisfaction of $20,000 principal amount of convertible notes payable.
On February 13, 2014, the Company issued 5,000,000 shares of common stock to Black Mountain Equities, Inc. in satisfaction of $15,000 principal amount of convertible notes payable.
On February 25, 2014, the Company issued 4,000,000 shares of common stock to JMJ Financial Inc. in satisfaction of $12,000 principal amount of convertible notes payable.
On February 26, 2014, the Company issued 3,278,688 shares of common stock to Continental Equities, LLC in satisfaction of $10,000 principal amount of convertible notes payable.
On March 3, 2014, the Company issued 12,000,000 shares of common stock (valued at $80,400) to a consultant for services.
On March 3, 2014, the Company issued 6,419,120 shares of common stock to Redwood Fund III in satisfaction of $10,913 principal amount of convertible payable.
On March 6, 2014, the Company issued 6,755,135 shares of common stock to Redwood Fund III in satisfaction of $10,133 principal amount of convertible payable.
On March 6, 2014, the Company issued 3,990,435 shares of common stock to JSJ Investments in satisfaction of $9,178 principal amount of convertible payable.
On March 6, 2014, the Company issued 7,108,733 shares of common stock to Redwood Fund III in satisfaction of $10,663 principal amount of convertible payable.
On March 17, 2014, the Company issued 5,668,934 shares of common stock (valued at $32,880) to a consultant for services.
On March 17, 2014, the Company issued a total of 27,000,000 shares of common stock (valued at $156,600) to officers for services.
On March 18, 2014, the Company issued 6,818,182 shares of common stock to Asher Enterprises in satisfaction of $15,000 principal amount of convertible notes payable.
On March 18, 2014, the Company issued 10,053,100 shares of common stock to Redwood Fund III in satisfaction of $12,968 principal amount of convertible notes payable.
On March 19, 2014, the Company issued 2,000,000 shares of common stock (valued at $9,800) to a consultant for services.
On March 20, 2014, the Company issued 8,863,636 shares of common stock to Asher Enterprises in satisfaction of $19,500 principal amount of convertible notes payable.
On March 24, 2014, the Company issued 11,081,400 shares of common stock to Redwood Fund III in satisfaction of $13,187 principal amount of convertible notes payable.
On March 25, 2014, the Company issued 6,000,000 shares of common stock to Asher Enterprises in satisfaction of $11,400 principal amount of convertible notes payable.
On March 28, 2014, the Company issued 2.766.667 shares of common stock to Asher Enterprises in satisfaction of $4,150 principal amount of convertible notes payable.
On March 28, 2014, the Company issued 11,652,000 shares of common stock to Redwood Fund III in satisfaction of $6,642 principal amount of convertible notes payable.
On April 1, 2014, the Company issued 17,647,059 shares of common stock to Black Mountain Equities in satisfaction of $15,000 principal amount of convertible notes payable.
On April 2, 2014, the Company issued 6,900,000 shares of common stock to JMJ Financial in satisfaction of $7,038 principal amount of convertible notes payable.
On April 2, 2014, the Company issued 12,273,600 shares of common stock to Redwood Fund III in satisfaction of $6,996 principal amount of convertible notes payable.
On April 8, 2014, the Company issued 12,916,695 shares of common stock to Redwood Fund III in satisfaction of $7,363 principal amount of convertible notes payable.
On April 10, 2014, the Company issued 17,647,059 shares of common stock to Black Mountain Equities in satisfaction of $15,000 principal amount of convertible notes payable.
On April 10, 2014, the Company issued 31,749,235 shares of common stock to JMJ Financial in satisfaction of $32,384 principal amount of convertible notes payable.
On April 10, 2014, the Company issued 13,593,400 shares of common stock to Redwood Fund III in satisfaction of $7,748 principal amount of convertible notes payable.
On April 10, 2014, the Company issued 10,220,000 shares of common stock to JSJ Investments in satisfaction of $4,088 principal amount of convertible notes payable.
On April 16, 2014, the Company issued 14,678,154 shares of common stock to Redwood Fund III in satisfaction of $8,367 principal amount of convertible notes payable.
On April 16, 2014, the Company issued 15,500,000 shares of common stock to Black Mountain Equities in satisfaction of $15,500 principal amount of convertible notes payable.
On April 23, 2014, the Company issued 10,900,000 shares of common stock to JMJ Financial in satisfaction of $10,900 principal amount of convertible notes payable.
On April 29, 2014, the Company issued 22,716,552 shares of common stock to JSJ Investments in satisfaction of $14,009 principal amount of convertible notes payable.
On May 5, 2014, the Company issued 15,000,000 shares of common stock to Barefoot Science Products & Services Inc.
On May 6, 2014, the Company issued 30,000,000 shares of common stock to Iconic Holdings, LLC in satisfaction of $15,000 principal amount of convertible payable.
On May 6, 2014, the Company issued 4,492,470 shares of common stock to Redwood Fund III in satisfaction of $3,074 principal amount of convertible payable.
On May 14, 2014, the Company issued 33,065,760 shares of common stock to Iconic Holdings, LLC in satisfaction of $16,533 principal amount of convertible payable.
On May 14, 2014, the Company issued 15,483,636 shares of common stock to JSJ Investments in satisfaction of $8,516 principal amount of convertible notes payable.
On May 27, 2014, the Company issued 15,000,000 shares of common stock (valued at $30,000) to a consultant for services.
On May 28, 2014, the Company issued 17,545,455 shares of common stock to Asher Enterprises, Inc. in satisfaction of $19,300 principal amount of convertible notes payable.
On May 29, 2014, the Company issued 37,500,000 shares of common stock to Iconic Holdings, LLC in satisfaction of $15,000 principal amount of convertible notes payable.
On May 29, 2014, the Company issued 17,600,000 shares of common stock to Iconic Holdings, LLC in satisfaction of $17,600 principal amount of convertible notes payable
Warrants to Purchase Common Stock
A summary of warrant activity for the years ended May 31, 2014 and 2013 follows:
| | | Number of Warrants | | | Weighted Average Exercise Price | |
| Outstanding May 31, 2012 | | | - | | | $ | - | |
| Granted | | | 850,000 | | | | 0.42 | |
| Exercised | | | - | | | | - | |
| Cancelled | | | - | | | | - | |
| | | | | | | | | |
| Outstanding at May 31, 2013 | | | 850,000 | | | | 0.42 | |
| Granted | | | - | | | | - | |
| Exercised | | | - | | | | - | |
| Cancelled | | | - | | | | - | |
| Outstanding at May 31, 2014 | | | 850,000 | | | $ | 0.42 | |
Warrants outstanding at May 31, 2014 consist of:
| Date Granted | | Number Outstanding | | | Exercise price | | Expiration Date |
| June 1, 2012 | | | 100,000 | | | $ | 1.00 | | May 25, 2015 |
| June 12, 2012 | | | 150,000 | | | $ | 1.00 | | June 12, 2015 |
| June 26, 2012 | | | 100,000 | | | $ | 1.00 | | June 26, 2015 |
| January 1, 2013 | | | 500,000 | | | $ | 0.01 | | January 1, 2015 |
| Totals | | | 850,000 | | | | | | |
NOTE 10 – FAIR VALUE MEASUREMENTS AND DERIVATIVE LIABILIITY
The Company evaluates all of it financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.
During the year ended May 31, 2014, the Company entered into numerous convertible note agreements.Under ASC-815, the conversion options embedded in the notes payable described in Note 8 require derivate liability classification because they do not contain an explicit limit to the number of shares that could be issued upon settlement.
As defined in FASB ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. FASB ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
The three levels of the fair value hierarchy are as follows:
Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date.
Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.
Derivative liability — the Company’s derivative liability is classified within Level 3 of the fair value hierarchy.
The Company uses the Black Scholes Option Pricing Model to value its option based derivatives based upon the following assumptions: dividend yield of -0-%, volatility of 100%, risk free interest rate ranging from 0.04% to 0.13 % and an expected term equal to the remaining term of the note.
The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as at May 31, 2014.
| Recurring Fair Value Measurements | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| | | | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | | |
| Derivative liability – May 31, 2014 | | $ | - | | | $ | - | | | $ | 1,748,982 | | | $ | 1,748,982 | |
| Derivative liability – May 31, 2013 | | $ | - | | | $ | - | | | $ | 237,578 | | | $ | 237,578 | |
NOTE 11 – 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 creates tax benefits in the amount of $5,068,598 from inception through May 31, 2014.
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, 2014 and 2013 are as follows:
| | | May 31, | |
| | | 2014 | | | 2013 | |
| Deferred tax assets | | | 5,068,598 | | | | 4,801,271 | |
| Valuation allowance | | | (5,068,598 | ) | | | (4,801,271 | ) |
| Total deferred tax assets | | $ | - | | | $ | - | |
The valuation allowance for deferred tax assets as of May 31, 2014 and 2013 was $5,068,598 and $4,801,271, respectively. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of May 31, 2014 and 2013, and maintained a full valuation allowance.
Reconciliation between the statutory rate and the effective tax rate is as follows for the years ended May 31, 2014 and 2013:
| Federal statutory tax rate | | | (35.0 | )% |
| Permanent differences and valuation allowance | | | 35.0 | % |
| Effective tax rate | | | 0.0 | % |
NOTE 12 – COMMITMENTS AND CONTINGENCIES
License Agreements
On April 19, 2013, our subsidiary DoMark Canada Inc. executed an agreement with Bioharmonics Technologies Cop. (“Bioharmoniecs”). The agreement provided for the acquisition of certain inventions and related patents and patent applications in exchange for 500,000 shares of DoMark common stock (which was delivered April 19, 2013) and $30,000 cash payable no later than October 17, 2013 (which was satisfied through the delivery of an additional 500,000 shares of DoMark common stock to Bioharmonics on August 15, 2013). The agreement also provides for a royalty obligation payable quarterly to Bioharmonics equal to 10% of the wholesale price for each unit using infrared and solar charging.
In January 2014, the Company executed a Licensing Agreement with Wazzamba SA. See Note 5.
Employment Agreements
On May 25, 2012, the Company entered into an employment agreement with its Chaiman of the Board, R. Brentwood Strasler, for an indefinite period or until terminated. Mr. Strasler is entitled to an annual salary of $150,000 and 100,000 stock purchase warrants exercisable to purchase shares of common stock of the Company at $1.00 per share. The warrants are exercisable for a three year period and can be vested quarterly on a pro rata basis over twelve months from the date of issue. Additionally, Mr. Strasler is to be enrolled in a long term Executive Option Plan and is entitled to term life insurance in the face amount of $2,500,000, payable to the beneficiary designated by Mr. Strasler. The policy has not been implanted as of May 31, 2014.
On June 15, 2012, the Company entered into an employment agreement with its Chief Executive Officer Andrew Ritchie, for an indefinite period or until terminated. Mr. Ritchie is entitled to an annual salary of $240,000 and 150,000 stock purchase warrants exercisable to purchase shares of common stock of the Company at $1.00 per share. The warrants are exercisable for a three year period and can be vested quarterly on a pro rata basis over twelve months from the date of issue. Additionally, Mr. Ritchie is to be enrolled in a long term Executive Option Plan and is entitled to term life insurance in the face amount of $2,500,000, payable to the beneficiary designated by Mr. Ritchie.
Related Party Transactions
During the current fiscal year ending May 31, 2014, Mr. Andrew Ritchie was compensated $165,209, with an additional amount of $300,000 for reimbursed expensed. Mr. R. Brent Strasler was compensated $115,850 with no reimbursed expenses.
Lease Agreement
On August 1, 2013, the Company entered into an office lease in Toronto, Ontario, Canada for a five year period. At May 31, 2014, the future lease commitments on this lease for the years ended May 31, are as follows:
| 2015 | | $ | 47,189 | |
| 2016 | | | 47,615 | |
| 2017 | | | 47,615 | |
| 2018 | | | 47,615 | |
| Thereafter | | | 7,936 | |
| Total | | $ | 197,970 | |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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, 2013. 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 not effective as of May 31, 2014.
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 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 not effective as of May 31, 2014.
Management is looking to increase consulting staff to assist in the lack of deficiency in internal control over financial reporting and spread duties thereof.
There were no changes in our internal control over financial reporting that occurred during the fiscal year ended May 31, 2014 that have materially affected, or are 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.
ITEM 9B. OTHER INFORMATION
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
DIRECTORS AND EXECUTIVE OFFICERS
Andrew Ritchie is the Company’s CEO and a director. Mr. Ritchie has over ten years of experience leading and directing companies. His experience includes working for three as the CEO of Easymed Services Inc. where he led the restructuring of the global medical information Technology Company and positioned the company as a global leader in the TeleMedicine sector, Working for two years as the Operations Director at Evening Standard Ltd. (UK), Working for two years as the publisher of The Winnipeg Free Press, at which he reported to the Chairman of the Board and was responsible for 1000 staff, revenue of $120 million, and the leadership of all aspects of the Winnipeg Free Press operations. Working for three years as Vice President of Operations at The Globe and Mail (Canada), Canada's largest selling national newspaper with revenues of approximately $300 million. Mr. Ritchie reported directly to the Publisher/CEO and was responsible for the daily operation of all aspects of the newspaper. Mr. Ritchie is 45 years old.
R. Brentwood Strasler is the Company’s president and a director. Mr. Strasler has more than twenty years of experience in both private industry and the public capital markets and has a broad range of skills and expertise in corporate governance, corporate finance, and other matters faced by emerging companies. Mr. Strasler holds an Economics Degree from the University of Western Ontario and an MBA in International Finance from the University of Notre Dame. Mr. Strasler has been with Domark since May 25, 2012. Mr. Strasler is 45 years old.
None of our officers or directors have filed any bankruptcy petition, been convicted of or been the subject of any criminal proceedings or the subject of any order, judgment or decree involving the violation of any state or federal securities law within the past ten (10) years.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act and rules and regulations of the SEC thereunder require our directors, officers and persons who beneficially own more than 10% of our common stock, as well as certain affiliates of such persons, to file initial reports of their ownership of our common stock and subsequent reports of changes in such ownership with the SEC. Our directors and officers and persons owning more than 10% of our common stock are required by SEC rules and regulations to furnish us with copies of all Section 16(a) reports they file. The Company has determined that the following Section 16(a) filings were not made with the SEC:
* R. Brentwood Strasler, our President, did not file a Form 3 within the prescribed time period after his appointment as President. Mr. Strasler was unaware of this requirement. Mr. Strasler has subsequently filed a Form 3 to comply with the SEC.
* Andrew Ritchie, our CEO, did not file a Form 3 within the prescribed time period after his appointment as CEO.
CORPORATE GOVERNANCE
The Company has adopted a code of ethics.
The directors of the Company are not independent from the Company. Further, an audit committee composed of the requisite number of independent directors 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 considered or consummated by the Company, management has concluded that the risks associated with the lack of an independent audit committee are not justified. Management will periodically re-evaluate 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.
COMMITTEES
The Company does not have an audit committee or any standing committees due to the Company’s small size.
The Company's audit committee has determined that its members are not "audit committee financial experts" within the meaning of federal securities regulations.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
| Name and Principal Position | | Year | | Salary($) | | | Bonus | | | Stock Awards($) | | | Warrant Awards | | | All Other Compensation($) | | | Total($) | |
| | | | | | | | | | | | | | | | | | | | | |
R. Thomas Kidd, Chairman and CEO(1) | | 2012 | | | 240,000 | | | | -- | | | | -- | | | | -- | | | | -- | | | | 240,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
William Seery, Chief Financial Officer(2) | | 2012 | | | -- | | | | -- | | | | 140,000 | | | | -- | | | | -- | | | | 140,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Michael Franklin, Chairman, CEO, CFO(3) | | 2012 | | | 5,000 | | | | -- | | | | -- | | | | -- | | | | -- | | | | 5,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Andrew Ritchie(5) | | 2014 | | | 165,209 | | | | -- | | | | -- | | | | | | | | -- | | | | 165,209 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| R. Brentwood Strasler(4) | | 2013 | | | 150,000 | | | | -- | | | | -- | | | | 261,810 | | | | -- | | | | 411,810 | |
| | | | | | | | | | 38 | | | | | | | | | | | | | | | | | |
| R. Brentwood Strasler(4) | | 2014 | | | 115,850 | | | | -- | | | | -- | | | | - | | | | -- | | | | 115,850 | |
____________________
| (1) | R. Thomas Kidd was Chairman of the Board and CEO of the Company until March 5, 2012. |
| (2) | Mr. Seery was Chief Financial Officer until March 5, 2012. |
| (3) | Mr. Franklin was Chairman of the Board , Chief Executive Officer, and Chief Financial Officer of the Company from March 5, 2012 until May 25, 2012. Mr. Franklin no longer serves as an officer or director. |
| (4) | Mr. Strasler was appointed President, Director, and Corporate Secretary of the Company on May 25, 2012. |
| (5) | Mr. Ritchie was appointed Chief Executive Officer and Director of the Company on June 15, 2012. |
For the period from June 1, 2011 to March 5, 2012, the Company accrued $50,000 as compensation to R. Thomas Kidd for his role as an officer and director. The accrued liability was extinguished as a result of the Asset Purchase Agreement entered into on March 5, 2012.
For the period from March 5, 2012 to May 25, 2012, Michael Franklin received $5,000 as compensation for his role as an officer and director. Mr. Franklin did not have a written employment agreement with the Company.
On May 25, 2012, the Company entered into an employment agreement with its newly appointed President, R. Brentwood Strasler, for a period of three years. Mr. Strasler is entitled to an annual salary of $150,000 and 100,000 stock purchase warrants exercisable to purchase shares of common stock of the Company at $1.00 per share. The warrants are exercisable for a three year period and can be vested quarterly on a pro rata basis over twelve months from the date of issue. Additionally, Mr. Strasler will be enrolled in a long term executive option plan no later than three months after the effective date of the employment agreement and is entitled to term life insurance in the face amount of $2,500,000, payable to the beneficiary designated by Mr. Strasler. As of May 31, 2012, the Company did not accrue any salaries under the employment agreement.
During 2013, the Company did not pay our officers their full salaries due to the Company’s financial situation. As a result, Mr. Ritchie and Mr. Strasler converted part of the accrued salaries into common stock pursuant to the Company’s 2012 Stock Plan for Directors, Officers, and Consultants.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
EQUITY COMPENSATION PLAN INFORMATION
| | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | Weighted-average exercise price of outstanding options, warrants and rights | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |
| | | | | | | | | | |
| Plan category | | 0 | | | 0 | | | 0 | |
| Equity compensation plans approved by security holders | | | | | | | | | |
| Equity compensation plans not approved by security holders | | | 100,000 | | | $ | 1 | | | | 0 | |
| Total | | | 100,000 | | | $ | 1 | | | | 0 | |
_____________
| (1) | On January 25, 2013, the Company approved registering an additional 9,900,000 shares of the Company’s common stock to its 2012 Stock Plan for Directors, Officers and Consultants (“2012 Stock Plan”). The 2012 Stock Plan originally authorized the issuance of 500,000 shares of the Company’s common stock for directors, officers, and employees (including consultants meeting the definition of “employee” under Rule 405 promulgated under the Securities Act). Pursuant to the 2012 Stock Plan, the Company registered 9,900,000 shares of its stock with the SEC on Form S-8 on May 13, 2013. |
The following table sets forth certain information regarding beneficial ownership of the Company’s common stock as of May 31, 2014 by (i) each person who is known by the Company to own beneficially more than 5% of the any class of the Company’s voting securities, (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 801,626,781 shares outstanding as of May 31, 2014. 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.
