UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended May 31, 2008
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from N/A to N/A
Commission File 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.
1809 East Broadway #125, Oviedo, Florida 32765
(Address of principal executive offices)
Registrant's telephone number, including Area Code: (757) 572-9241
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 Par Value
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. [ ] Yes [ ] No
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. [ ] Yes [ ] ? No
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Small Business Issuer [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act. Yes [ ] No [X]
The aggregate market value of voting stock held by non-affiliates of the
registrant on September 12, 2008 was approximately $3,515,000
State the number of shares outstanding of each of the issuer's classes of equity
securities, as of the latest practicable date: As September 12, 2008, there were
17,750,000 shares of Common Stock, $0.001 par value per share issued and
outstanding.
Documents Incorporated By Reference
None
TABLE OF CONTENTS
PART I
ITEM 1. BUSINESS 3
ITEM 1A. RISK FACTORS 4
ITEM 2. PROPERTIES 9
ITEM 3. LEGAL PROCEEDINGS 9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 9
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 10
ITEM 6. SELECTED FINANCIAL DATA 12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 12
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 17
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 17
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE 40
ITEM 9A. CONTROLS AND PROCEDURES 41
ITEM 9B. OTHER INFORMATION 42
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND
CORPORATE GOVERNANCE COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT. 42
ITEM 11. EXECUTIVE COMPENSATION 43
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS 45
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE 47
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 49
SIGNATURES 50
2
PART I
ITEM 1. BUSINESS
Except for historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties. Such
forward-looking statements include, but are not limited to, statements regarding
future events and the Company's plans and expectations. Actual results could
differ materially from those discussed herein. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
elsewhere in this Form 10-K or incorporated herein by reference, including those
set forth in MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
HISTORY AND GENERAL OVERVIEW
DOMARK INTERNATIONAL, INC. ("DoMark" or "Company") was incorporated under the
laws of the State of Nevada on March 30, 2006. The Company was formed to engage
in the acquisition and refinishing of aged furniture using exotic materials and
then reselling it through interior decorators, high-end consignment shops and
online sales. The Company has abandoned it prior business of exotic furniture
sales and is acquiring operating entities through acquisition that will bring
value to the company and then providing marketing and management services in
support of the acquired entities.
SportsQuest, Inc. ("SportsQuest") is a majority owned subsidiary of DoMark whose
business is the creation, development, and management of high end sports events,
as well as executing a growth strategy involving acquisition of diverse and
effective sports marketing platforms. SportsQuest was incorporated in April 3,
1986 in Delaware under the name Bay Head Ventures, Inc. The Company has been
managing the US Pro Golf Tour and anticipates it will continue to manage USPGT
for the foreseeable future. SportsQuest trades on the Pink Sheets under
"SPQS.PK". SportsQuest holds significant value in content media and is pursuing
its business model.
On July 16, 2008, DoMark executed a purchase agreement with JAVACO, Inc. an Ohio
corporation ("Javaco") whereby pursuant to the terms and conditions of that
Agreement we completed the purchase of all the issued and outstanding shares of
Javaco. Judith Vazquez, the President of Javaco, is the sister-in-law of R.
Thomas Kidd, our Chief Executive Officer. The Closing of the transaction
occurred on July 18, 2008.
As consideration for all the issued and outstanding shares of Javaco, we issued
the shareholders of Javaco, seven hundred and fifty thousand shares of our
common stock, and common stock purchase warrants as follows: 20,000 common stock
purchase warrants at an exercise price of $3.00 per share, expiring on December
31, 2008; 20,000 common stock purchase warrants at an exercise price of $4.00.
JAVACO is a wholly owned subsidiary of DoMark but is not a consolidated
subsidiary as of May 31, 2008.
On July 24, 2008, we executed an asset purchase agreement (the "Agreement") with
TotalMed Systems, Inc., a Florida corporation ("TotalMed"), whereby pursuant to
the terms and conditions of that Agreement, we completed the purchase of certain
assets and assumed certain liabilities. The Closing of the transaction occurred
on August 6, 2008 (the "Closing"). As consideration for the certain assets of
TotalMed, we agreed to pay TotalMed issued and outstanding shares of our common
stock that will have the aggregate value of six million Dollars ($6,000,000),
determined by dividing the average closing price for the 5 days prior to the
Closing ($2.34), which sum may be reduced based on contingencies described in
the Agreement.
This agreement was subsequently rescinded and the stock not issued.
3
On August 17, 2007, SportsQuest, Inc. entered into a Stock Issuance, Assumption
and Release Agreement (the "Assumption Agreement"), by and among SportsQuest,
Inc. and Greens Worldwide Incorporated ("Greens") and AJW Partners, LLC, AJW
Offshore, Ltd., AJW Qualified Partners, LLC and New Millennium Capital Partners
II, LLC (collectively, the "Greens Worldwide Investors"). The transactions
contemplated by the Assumption Agreement included the following:
The issuance by Greens of 390,000 shares of its Series A Convertible Preferred
Stock, par value $10.00 per share, to SportsQuest, Inc; and;
The assumption by SportsQuest, Inc. of 50% of Greens indebtedness to the Greens
Worldwide Investors under a Securities Purchase Agreement, dated as of March 22,
2007, by and among Greens and the Greens Worldwide Investors (the "Greens
Worldwide Agreement").
Under the terms of the Assumption Agreement, the Greens Worldwide Investors will
release Greens from its obligations under the notes described above. In
consideration for such release, SportsQuest, Inc. issued to the SportsQuest
Investors (who are the successors to the Greens Investors) callable secured
convertible notes with an aggregate face amount of $3,903,750, including
interest (collectively, the "Assumption Notes"), and Greens issued to the Greens
Investors callable secured convertible notes with an aggregate face amount of
$3,903,750, including interest. The Assumption Notes have the same terms and
conditions as the notes described above, except that the Assumption Notes are
convertible into the Company's common stock.
The Company has elected to account for the investment at cost since Greens does
not currently have common shares for the Company to convert its preferred. In
the event that Greens has sufficient common shares available for conversion, and
the Company was to exercise its conversion rights, the Company would not own
more than 50% of the voting common shares of Greens.
ADDITIONAL INFORMATION
DoMark files reports and other materials with the Securities and Exchange
Commission. These documents may be inspected and copied at the Commission's
Public Reference Room at 100 F Street, N.E., Washington, D.C., 20549. You can
obtain information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. You can also get copies of documents that the
Company files with the Commission through the Commission's Internet site at
www.sec.gov.
EMPLOYEES
As of fiscal year end May 31, 2008, the Company had one employee.
ITEM 1A.RISK FACTORS
You should carefully consider the following risk factors before making an
investment decision. If any of the following risks actually occur, our business,
financial condition or results of operations could be materially adversely
affected. In such cases, the trading price of our common stock could decline and
you may lose all or a part of your investment.
4
OUR COMMON STOCK IS SUBJECT TO PENNY STOCK REGULATION
Our shares are subject to the provisions of Section 15(g) and Rule 15g-9 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly
referred to as the "penny stock" rule. Section 15(g) sets forth certain
requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates
the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.
The Commission generally defines penny stock to be any equity security that has
a market price less than $5.00 per share, subject to certain exceptions. Rule
3a51-1 provides that any equity security is considered to be penny stock unless
that security is: registered and traded on a national securities exchange
meeting specified criteria set by the Commission; authorized for quotation on
the NASDAQ Stock Market; issued by a registered investment company; excluded
from the definition on the basis of price (at least $5.00 per share) or the
registrant's net tangible assets; or exempted from the definition by the
Commission. Since our shares are deemed to be "penny stock", trading in the
shares will be subject to additional sales practice requirements on
broker/dealers who sell penny stock to persons other than established customers
and accredited investors.
WE MAY NOT HAVE ACCESS TO SUFFICIENT CAPITAL TO PURSUE OUR BUSINESS AND
THEREFORE WOULD BE UNABLE TO ACHIEVE OUR PLANNED FUTURE GROWTH:
We intend to pursue a growth strategy that includes development of the Company
business and technology. Currently we have limited capital which is insufficient
to pursue our plans for development and growth. Our ability to implement our
growth plans will depend primarily on our ability to obtain additional private
or public equity or debt financing. We are currently seeking additional capital.
Such financing may not be available at all, or we may be unable to locate and
secure additional capital on terms and conditions that are acceptable to us. Our
failure to obtain additional capital will have a material adverse effect on our
business.
OUR SIGNIFICANT FOCUS ON ACQUISITIONS IN OUR BUSINESS SUBJECTS INVESTORS TO A
GREATER RISK OF LOSSES
A significant portion of our efforts are focused on the development and growth
of the Company and its subsidiaries by acquisitions. Although the Company
believes there are significant acquisition opportunities available, we can make
no assurances that the Company will be able to execute its acquisition strategy.
WE DO NOT INTEND TO PAY DIVIDENDS
We do not anticipate paying cash dividends on our common stock in the
foreseeable future. We may not have sufficient funds to legally pay dividends.
Even if funds are legally available to pay dividends, we may nevertheless decide
in our sole discretion not to pay dividends. The declaration, payment and amount
of any future dividends will be made at the discretion of the board of
directors, and will depend upon, among other things, the results of our
operations, cash flows and financial condition, operating and capital
requirements, and other factors our board of directors may consider relevant.
There is no assurance that we will pay any dividends in the future, and, if
dividends are rapid, there is no assurance with respect to the amount of any
such dividend.
BECAUSE WE ARE QUOTED ON THE OTCBB INSTEAD OF AN EXCHANGE OR NATIONAL QUOTATION
SYSTEM, OUR INVESTORS MAY HAVE A TOUGHER TIME SELLING THEIR STOCK OR EXPERIENCE
NEGATIVE VOLATILITY ON THE MARKET PRICE OF OUR STOCK.
5
Our common stock is traded on the OTCBB. The OTCBB is often highly illiquid, in
part because it does not have a national quotation system by which potential
investors can follow the market price of shares except through information
received and generated by a limited number of broker-dealers that make markets
in particular stocks. There is a greater chance of volatility for securities
that trade on the OTCBB as compared to a national exchange or quotation system.
This volatility may be caused by a variety of factors, including the lack of
readily available price quotations, the absence of consistent administrative
supervision of bid and ask quotations, lower trading volume, and market
conditions. Investors in our common stock may experience high fluctuations in
the market price and volume of the trading market for our securities. These
fluctuations, when they occur, have a negative effect on the market price for
our securities. Accordingly, our stockholders may not be able to realize a fair
price from their shares when they determine to sell them or may have to hold
them for a substantial period of time until the market for our common stock
improves.
FAILURE TO ACHIEVE AND MAINTAIN EFFECTIVE INTERNAL CONTROLS IN ACCORDANCE WITH
SECTION 404 OF THE SARBANES-OXLEY ACT COULD HAVE A MATERIAL ADVERSE EFFECT ON
OUR BUSINESS AND OPERATING RESULTS.
It may be time consuming, difficult and costly for us to develop and implement
the additional internal controls, processes and reporting procedures required by
the Sarbanes-Oxley Act. We may need to hire additional financial reporting,
internal auditing and other finance staff in order to develop and implement
appropriate additional internal controls, processes and reporting procedures. If
we are unable to comply with these requirements of the Sarbanes-Oxley Act, we
may not be able to obtain the independent accountant certifications that the
Sarbanes-Oxley Act requires of publicly traded companies.
If we fail to comply in a timely manner with the requirements of Section 404 of
the Sarbanes-Oxley Act regarding internal control over financial reporting or to
remedy any material weaknesses in our internal controls that we may identify,
such failure could result in material misstatements in our financial statements,
cause investors to lose confidence in our reported financial information and
have a negative effect on the trading price of our common stock.
Pursuant to Section 404 of the Sarbanes-Oxley Act and current SEC regulations,
beginning with our annual report on Form 10-K for our fiscal period ending
December 31, 2007, we will be required to prepare assessments regarding internal
controls over financial reporting and beginning with our annual report on Form
10-K for our fiscal period ending December 31, 2008, furnish a report by our
management on our internal control over financial reporting. We have begun the
process of documenting and testing our internal control procedures in order to
satisfy these requirements, which is likely to result in increased general and
administrative expenses and may shift management time and attention from
revenue-generating activities to compliance activities. While our management is
expending significant resources in an effort to complete this important project,
there can be no assurance that we will be able to achieve our objective on a
timely basis. There also can be no assurance that our auditors will be able to
issue an unqualified opinion on management's assessment of the effectiveness of
our internal control over financial reporting. Failure to achieve and maintain
an effective internal control environment or complete our Section 404
certifications could have a material adverse effect on our stock price.
In addition, in connection with our on-going assessment of the effectiveness of
our internal control over financial reporting, we may discover "material
weaknesses" in our internal controls as defined in standards established by the
Public Company Accounting Oversight Board, or the PCAOB. A material weakness is
a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the
annual or interim financial statements will not be prevented or detected. The
PCAOB defines "significant deficiency" as a deficiency that results in more than
a remote likelihood that a misstatement of the financial statements that is more
than inconsequential will not be prevented or detected.
6
In the event that a material weakness is identified, we will employ qualified
personnel and adopt and implement policies and procedures to address any
material weaknesses that we identify. However, the process of designing and
implementing effective internal controls is a continuous effort that requires us
to anticipate and react to changes in our business and the economic and
regulatory environments and to expend significant resources to maintain a system
of internal controls that is adequate to satisfy our reporting obligations as a
public company. We cannot assure you that the measures we will take will
remediate any material weaknesses that we may identify or that we will implement
and maintain adequate controls over our financial process and reporting in the
future.
Any failure to complete our assessment of our internal control over financial
reporting, to remediate any material weaknesses that we may identify or to
implement new or improved controls, or difficulties encountered in their
implementation, could harm our operating results, cause us to fail to meet our
reporting obligations or result in material misstatements in our financial
statements. Any such failure could also adversely affect the results of the
periodic management evaluations of our internal controls and, in the case of a
failure to remediate any material weaknesses that we may identify, would
adversely affect the annual auditor attestation reports regarding the
effectiveness of our internal control over financial reporting that are required
under Section 404 of the Sarbanes-Oxley Act. Inadequate internal controls could
also cause investors to lose confidence in our reported financial information,
which could have a negative effect on the trading price of our common stock.
THE REPORT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM CONTAINS
EXPLANATORY LANGUAGE THAT SUBSTANTIAL DOUBT EXISTS ABOUT OUR ABILITY TO CONTINUE
AS A GOING CONCERN
The independent auditor's report on our financial statements contains
explanatory language that substantial doubt exists about our ability to continue
as a going concern. The report states that we depend on the continued
contributions of our executive officers to work effectively as a team, to
execute our business strategy and to manage our business. The loss of key
personnel, or their failure to work effectively, could have a material adverse
effect on our business, financial condition, and results of operations. If we
are unable to obtain sufficient financing in the near term or achieve
profitability, then we would, in all likelihood, experience severe liquidity
problems and may have to curtail our operations. If we curtail our operations,
we may be placed into bankruptcy or undergo liquidation, the result of which
will adversely affect the value of our common shares.
OPERATING HISTORY AND LACK OF PROFITS WHICH COULD LEAD TO WIDE FLUCTUATIONS IN
OUR SHARE PRICE. THE PRICE AT WHICH YOU PURCHASE OUR COMMON SHARES MAY NOT BE
INDICATIVE OF THE PRICE THAT WILL PREVAIL IN THE TRADING MARKET. YOU MAY BE
UNABLE TO SELL YOUR COMMON SHARES AT OR ABOVE YOUR PURCHASE PRICE, WHICH MAY
RESULT IN SUBSTANTIAL LOSSES TO YOU. THE MARKET PRICE FOR OUR COMMON SHARES IS
PARTICULARLY VOLATILE GIVEN OUR STATUS AS A RELATIVELY UNKNOWN COMPANY WITH A
SMALL AND THINLY TRADED PUBLIC FLOAT, LIMITED
The market for our common shares is characterized by significant price
volatility when compared to seasoned issuers, and we expect that our share price
will continue to be more volatile than a seasoned issuer for the indefinite
future. The volatility in our share price is attributable to a number of
factors. First, as noted above, our common shares are sporadically and thinly
traded. As a consequence of this lack of liquidity, the trading of relatively
small quantities of shares by our shareholders may disproportionately influence
the price of those shares in either direction. The price for our shares could,
for example, decline precipitously in the event that a large number of our
7
common shares are sold on the market without commensurate demand, as compared to
a seasoned issuer which could better absorb those sales without adverse impact
on its share price. Secondly, we are a speculative or "risky" investment due to
our limited operating history and lack of profits to date, and uncertainty of
future market acceptance for our potential products. As a consequence of this
enhanced risk, more risk-adverse investors may, under the fear of losing all or
most of their investment in the event of negative news or lack of progress, be
more inclined to sell their shares on the market more quickly and at greater
discounts than would be the case with the stock of a seasoned issuer. Many of
these factors are beyond our control and may decrease the market price of our
common shares, regardless of our operating performance. We cannot make any
predictions or projections as to what the prevailing market price for our common
shares will be at any time, including as to whether our common shares will
sustain their current market prices, or as to what effect that the sale of
shares or the availability of common shares for sale at any time will have on
the prevailing market price.
Shareholders should be aware that, according to SEC Release No. 34-29093, the
market for penny stocks has suffered in recent years from patterns of fraud and
abuse. Such patterns include (1) control of the market for the security by one
or a few broker-dealers that are often related to the promoter or issuer; (2)
manipulation of prices through prearranged matching of purchases and sales and
false and misleading press releases; (3) boiler room practices involving
high-pressure sales tactics and unrealistic price projections by inexperienced
sales persons; (4) excessive and undisclosed bid-ask differential and markups by
selling broker-dealers; and (5) the wholesale dumping of the same securities by
promoters and broker-dealers after prices have been manipulated to a desired
level, along with the resulting inevitable collapse of those prices and with
consequent investor losses. Our management is aware of the abuses that have
occurred historically in the penny stock market. Although we do not expect to be
in a position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being established
with respect to our securities. The occurrence of these patterns or practices
could increase the volatility of our share price.
VOLATILITY IN OUR COMMON SHARE PRICE MAY SUBJECT US TO SECURITIES LITIGATION,
THEREBY DIVERTING OUR RESOURCES THAT MAY HAVE A MATERIAL EFFECT ON OUR
PROFITABILITY AND RESULTS OF OPERATIONS.
As discussed in the preceding risk factors, the market for our common shares is
characterized by significant price volatility when compared to seasoned issuers,
and we expect that our share price will continue to be more volatile than a
seasoned issuer for the indefinite future. In the past, plaintiffs have often
initiated securities class action litigation against a company following periods
of volatility in the market price of its securities. We may in the future be the
target of similar litigation. Securities litigation could result in substantial
costs and liabilities and could divert management's attention and resources.
FORWARD-LOOKING STATEMENTS
This Annual Report contains certain forward-looking statements regarding
management's plans and objectives for future operations including plans and
objectives relating to our planned marketing efforts and future economic
performance. The forward-looking statements and associated risks set forth in
this Annual Report include or relate to, among other things, (a) our growth
strategies, (b) anticipated trends in our industry, (c) our ability to obtain
and retain sufficient capital for future operations, and (d) our anticipated
needs for working capital. These statements may be found under "Management's
Discussion and Analysis or Plan of Operations" and "Business," as well as in
this Annual Report generally. Actual events or results may differ materially
from those discussed in forward-looking statements as a result of various
factors, including, without limitation, the risks outlined under "Risk Factors"
and matters described in this Annual Report generally. In light of these risks
and uncertainties, there can be no assurance that the forward-looking statements
contained in this Annual Report will in fact occur.
8
The forward-looking statements herein are based on current expectations that
involve a number of risks and uncertainties. Such forward-looking statements are
based on assumptions described herein. The assumptions are based on judgments
with respect to, among other things, future economic, competitive and market
conditions, and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond our control.
Accordingly, although we believe that the assumptions underlying the
forward-looking statements are reasonable, any such assumption could prove to be
inaccurate and therefore there can be no assurance that the results contemplated
in forward-looking statements will be realized. In addition, as disclosed
elsewhere in the "Risk Factors" section of this prospectus, there are a number
of other risks inherent in our business and operations which could cause our
operating results to vary markedly and adversely from prior results or the
results contemplated by the forward-looking statements. Management decisions,
including budgeting, are subjective in many respects and periodic revisions must
be made to reflect actual conditions and business developments, the impact of
which may cause us to alter marketing, capital investment and other
expenditures, which may also materially adversely affect our results of
operations. In light of significant uncertainties inherent in the
forward-looking information included in this prospectus, the inclusion of such
information should not be regarded as a representation by us or any other person
that our objectives or plans will be achieved.
Some of the information in this prospectus contains forward-looking statements
that involve substantial risks and uncertainties. Any statement in this
prospectus and in the documents incorporated by reference into this prospectus
that is not a statement of an historical fact constitutes a "forward-looking
statement". Further, when we use the words "may", "expect", "anticipate",
"plan", "believe", "seek", "estimate", "internal", and similar words, we intend
to identify statements and expressions that may be forward- looking statements.
We believe it is important to communicate certain of our expectations to our
investors. Forward-looking statements are not guarantees of future performance.
They involve risks, uncertainties and assumptions that could cause our future
results to differ materially from those expressed in any forward-looking
statements. Many factors are beyond our ability to control or predict. You are
accordingly cautioned not to place undue reliance on such forward-looking
statements. Important factors that may cause our actual results to differ from
such forward-looking statements include, but are not limited to, the risk
factors discussed herein.
ITEM 2. PROPERTIES
As of fiscal year end May 31, 2008, the Company maintains its corporate
executive office in Oviedo, Florida. The CEO of the Company has been providing
the office space at no charge to the Company as a courtesy to the Company.
ITEM 3. LEGAL PROCEEDINGS
The Company may become involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, except as
discussed above, the ultimate disposition of these matters will not have a
material adverse effect on the Company's financial position, results of
operations, or liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company submitted no matters to a vote of its security holders during the
fiscal year ended May 31, 2008.
9
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
DoMark common stock is traded in the over-the-counter market, and quoted in the
National Association of Securities Dealers Inter-dealer Quotation System
("Electronic Bulletin Board) and can be accessed on the Internet at
www.otcbb.com under the symbol "DOMK.OB"
At May 31, 2008, there were 8,500,000 shares of common stock of DoMark
outstanding and there were approximately 40 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 DoMark's common stock. These quotations represent inter-dealer
quotations, without adjustment for retail markup, markdown or commission and may
not represent actual transactions.
High Low
---- ---
Fiscal Year Ended May 31, 2008
First Quarter (June - August, 2007) $ 0 $ 0
Second Quarter (September - November 2007) $ 0 $ 0
Third Quarter (December - February 2008) $ 0 $ 0
Fourth Quarter (March - May 2008) $3.80 $1.60
On August 31, 2008, the closing bid price of our common stock was $.3.80
DIVIDENDS
DoMark has never paid dividends on any of its common stock shares. DoMark does
not anticipate paying dividends at any time in the foreseeable future and any
profits will be reinvested in DoMark's business. DoMark's Transfer Agent and
Registrar for the common stock is Signature Stock Transfer, 2301 Ohio Drive
Suite 100, Plano, TX 75093-3956
RECENT SALES OF UNREGISTERED SECURITIES
Stock issued Stock issued
for Cash Cash Received for Assets
-------- ------------- ----------
Year Ended May 31, 2007 1,000,000 $50,000 --
Year Ended May 31, 2008 -- -- 6,500,000
During the year ended May 31, 2007 the Company issued 1,000,000 shares of its
common stock for $50,000. The shares were issued to third parties in a private
placement of the Company's common stock. The offer and sale of such shares of
our common stock were effected in reliance on the exemptions for sales of
securities not involving a public offering, as set forth in Rule 506 promulgated
under the Securities Act and in Section 4(2) of the Securities Act, based on the
following: (a) the investors confirmed to us that they were "accredited
10
investors," as defined in Rule 501 of Regulation D promulgated under the
Securities Act and had such background, education and experience in financial
and business matters as to be able to evaluate the merits and risks of an
investment in the securities; (b) there was no public offering or general
solicitation with respect to the offering; (c) the investors were provided with
certain disclosure materials and all other information requested with respect to
our company; (d) the investors acknowledged that all securities being purchased
were "restricted securities" for purposes of the Securities Act, and agreed to
transfer such securities only in a transaction registered under the Securities
Act or exempt from registration under the Securities Act; and (e) a legend was
placed on the certificates representing each such security stating that it was
restricted and could only be transferred if subsequent registered under the
Securities Act or transferred in a transaction exempt from registration under
the Securities Act.
The Company has issued 6,500,000 shares of its common stock as consideration for
the fair value of the assets delivered. The offer and sale of such shares of our
common stock were affected in reliance on the exemptions for sales of securities
not involving a public offering, as set forth in Rule 506 promulgated under the
Securities Act and in Section 4(2) of the Securities Act. A legend was placed on
the certificates representing each such security stating that it was restricted
and could only be transferred if subsequently registered under the Securities
Act or transferred in a transaction exempt from registration under the
Securities Act.
TRANSFER AGENT
The Company engaged Signature Stock Transfer, 2301 Ohio Drive, Suite 100, Plano,
TX 75093-3956 to serve in the capacity of transfer agent.
STOCK SPLITS
On June 27, 2008, the Company enacted a 2-for-1 forward split and share data in
this report has not been adjusted to reflect the stock split relating to the
Company's common stock.
11
ITEM 6. SELECTED FINANCIAL DATA.
The following information has been summarized from financial information
included elsewhere and should be read in conjunction with such financial
statements and notes thereto.
Summary of Statements of Operations of DOMK
Year Ended May 31, 2008 and 2007
Years Ended Years Ended
May 31, 2008 May 31, 2007
------------ ------------
Statement of Operations Data
Revenues $ 15,750 $ --
Operating and Other Expenses (1,434,920) (12,460)
------------ ------------
Net Loss $ (1,419,170) $ (12,460)
============ ============
Balance Sheet Data:
Current Assets $ 165,181 $ 43,104
Total Assets 14,796,347 43,400
Current Liabilities 3,993,436 1,200
Non Current Liabilities 988,513 --
Total Liabilities 4,981,949 1,200
Working Capital (Deficit) (3,828,255) 41,904
Shareholders'Equity (Deficit) $ 9,814,398 $ 42,200
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OR PLAN OF OPERATION.
The following is management's discussion and analysis of certain significant
factors that have affected our financial position and operating results during
the periods included in the accompanying consolidated financial statements, as
well as information relating to the plans of our current management. This report
includes forward-looking statements. Generally, the words "believes,"
"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.
12
The following discussion and analysis should be read in conjunction with our
consolidated financial statements and the related notes thereto and other
financial information contained elsewhere in this Form 10-K.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We prepare our consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America. The preparation
of these financial statements requires the use of estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amount of revenues and expenses during the reporting period. Our
management periodically evaluates the estimates and judgments made. Management
bases its estimates and judgments on historical experience and on various
factors that are believed to be reasonable under the circumstances. Actual
results may differ from these estimates as a result of different assumptions or
conditions.
The following critical accounting policies affect the more significant judgments
and estimates used in the preparation of the Company's consolidated financial
statements.
STOCK BASED COMPENSATION
In December 2004, the FASB issued a revision of SFAS No. 123 ("SFAS No. 123(R)")
that requires compensation costs related to share-based payment transactions to
be recognized in the statement of operations. With limited exceptions, the
amount of compensation cost will be measured based on the grant-date fair value
of the equity or liability instruments issued. In addition, liability awards
will be re-measured each reporting period. Compensation cost will be recognized
over the period that an employee provides service in exchange for the award.
SFAS No. 123(R) replaces SFAS No. 123 and is effective as of the beginning of
January 1, 2006. Based on the number of shares and awards outstanding as of
December 31, 2005 (and without giving effect to any awards which may be granted
in 2006), we do not expect our adoption of SFAS No. 123(R) in January 2006 to
have a material impact on the financial statements.
FSP FAS 123(R)-5 was issued on October 10, 2006. The FSP provides that
instruments that were originally issued as employee compensation and then
modified, and that modification is made to the terms of the instrument solely to
reflect an equity restructuring that occurs when the holders are no longer
employees, then no change in the recognition or the measurement (due to a change
in classification) of those instruments will result if both of the following
conditions are met: (a). There is no increase in fair value of the award (or the
ratio of intrinsic value to the exercise price of the award is preserved, that
is, the holder is made whole), or the antidilution provision is not added to the
terms of the award in contemplation of an equity restructuring; and (b). All
holders of the same class of equity instruments (for example, stock options) are
treated in the same manner. The provisions in this FSP shall be applied in the
first reporting period beginning after the date the FSP is posted to the FASB
website. The Company has adopted SP FAS 123(R)-5 but it did not have a material
impact on its consolidated results of operations and financial condition.
ACCOUNTING POLICIES AND ESTIMATES
The preparation of our financial statements in conformity with accounting
principles generally accepted in the United States of America requires our
management to make certain estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Our management periodically
evaluates the estimates and judgments made. Management bases its estimates and
13
judgments on historical experience and on various factors that are believed to
be reasonable under the circumstances. Actual results may differ from these
estimates as a result of different assumptions or conditions. As such, in
accordance with the use of accounting principles generally accepted in the
United States of America, our actual realized results may differ from
management's initial estimates as reported. A summary of significant accounting
policies are detailed in notes to the financial statements which are an integral
component of this filing.
REVENUES
We have adopted the Securities and Exchange Commission's Staff Accounting
Bulletin (SAB) No. 104, which provides guidance on the recognition, presentation
and disclosure of revenue in financial statements.
RECENT DEVELOPMENTS
On May 15, 2008, we executed an agreement with R. Thomas Kidd (the "Agreement"),
whereby pursuant to the terms and conditions of that Agreement by and between
our company and Kidd we completed the purchase of 100,000 Series A Preferred
Convertible Shares of SportsQuest, Inc., a Delaware corporation from R. Thomas
Kidd. On a fully diluted basis, the 100,000 Series A Preferred Convertible
Shares of SportsQuest, Inc., represent approximately seventy-nine percent (79%)
of the capital stock of SportsQuest, Inc. The Closing of the transaction
occurred on May 20, 2008 ("Closing").
As consideration for the 100,000 Series A Preferred Convertible Shares of
SportsQuest, Inc., we issued R. Thomas Kidd the sum of six million, five hundred
thousand (6,500,000) shares of our common stock.
Effective June 27, 2008, DoMark International, Inc., a Nevada corporation (the
"Company"), changed its name from DoMark Exotic Furnishings Inc. to DoMark
International, Inc, increased the authorized common stock of the Corporation to
200,000,000 shares, created and authorized 2,000,000 shares of preferred stock,
the rights and preferences of which can be designated by the Board of Directors
and enacted a forward stock split of our common stock on a two for one basis,
payable upon surrender of our shareholders' stock certificates. Our authorized
stock is as follows: The number of shares of common stock authorized that may be
issued by the Corporation is Two Hundred Million (200,000,000) shares, with a
par value of One Tenth of One Cent ($0.001) per share and Two Million
(2,000,000) shares of Preferred Stock, $0.001 par value, the rights and
preferences of which may be determined by the Board of Directors. Said shares
may be issued by the Corporation from time to time for such considerations as
may be fixed by the Board of Directors.
On July 16, 2008, we executed an agreement with JAVACO, Inc, an Ohio corporation
("Javaco") and Judith Vazquez (the "Agreement"), whereby pursuant to the terms
and conditions of that Agreement we completed the purchase of all the issued and
outstanding shares of Javaco. Judith Vazquez is the sister-in-law of R. Thomas
Kidd, our Chief Executive Officer. The Closing of the transaction occurred on
July 18, 2008 (the "Closing").
As consideration for all the issued and outstanding shares of Javaco, we issued
the shareholders of Javaco, seven hundred and fifty thousand shares of our
common stock, and common stock purchase warrants as follows: 20,000 common stock
purchase warrants at an exercise price of $3.00 per share, expiring on December
31, 2008; 20,000 common stock purchase warrants at an exercise price of $4.00
per share, expiring on 40,000 common stock purchase warrants at an exercise
price of $5.00 per share, expiring on December 31, 2010.
On July 24, 2008, we executed an asset purchase agreement (the "Agreement") with
TotalMed Systems, Inc., a Florida corporation ("TotalMed"), whereby pursuant to
the terms and conditions of that Agreement, we completed the purchase of certain
14
assets. The Closing of the transaction occurred on August 6, 2008 (the
"Closing"). As consideration for the certain assets of TotalMed, we agreed to
pay TotalMed issued and outstanding shares of our common stock that will have
the aggregate value of six million Dollars ($6,000,000), determined by dividing
the average closing price for the 5 days prior to the Closing ($2.34), which sum
may be reduced based on contingencies described in the Agreement.
This agreement was subsequently rescinded and the stock was not issued.
On August 4, 2008, DoMark entered into an investment agreement and registration
rights agreement with Dutchess Private Equities, LTD. The investment agreement,
in the form of an equity funding commitment, provides for the right by the
company at its discretion to require Dutchess to purchase up to $50 million of
the Company's common stock at a seven percent discount to market over the 36
months following the registration statement being declared effective by the
Securities and Exchange Commission. DoMark intends to file a registration
statement in the near future.
On August 18, 2008, DoMark retained E & E Communications, Laguna Hills, Ca. to
assist with its investor and public relations activities.
RESULTS OF OPERATIONS
FISCAL YEAR ENDED MAY 31, 2008, COMPARED TO FISCAL YEAR ENDED MAY 31, 2007
Revenues for Fiscal 2008 increased to $15,750 from $0.00 during fiscal 2007.
This increase in revenue is directly the result of changes in the Company's
strategic direction in core operations. We continue to aggressively pursue and
devote its resources and focus its direction in building asset value. We have
further refocused in new acquisitions to increase our revenues and cash flow.
General and administrative expenses for the fiscal 2008 increased to $1,007,027
as compared to fiscal 2007 of $12,460. This increase is attributed to the
Company's increase in acquisitions and issuance of stock for assets delivered.
Interest expense for fiscal 2008 increased to $245,643 as compared to fiscal
2007. This increase is a result of embedded warrants in certain bond and loan
payables of our subsidiary SportsQuest, Inc. which required us to accrue for the
beneficial conversations feature in theses derivatives.
The loss for fiscal 2007 increased to ($1,419,170) as compared to fiscal 2007 of
($12,460). The increase is due to the increase in non cash transactions for
assets delivered.
No tax benefit was recorded on the expected operating loss for fiscal 2008 and
2007 as required by Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes. For the year ended we do not expect to realize a
deferred tax asset and it is uncertain, therefore we have provided a 100%
valuation of the tax benefit and assets until we are certain to experience net
profits in the future to fully realize the tax benefit and tax assets.
15
LIQUIDITY AND CAPITAL RESOURCES
Our operating requirements have been funded primarily on its sale of media
content, financing facilities, and sales of our common stock. During the fiscal
2008, our net proceeds from the media content were $15,000 as compared to fiscal
2007 of $28,183. We have received $0.00 in fiscal 2008 as compared to Fiscal
2007 of $50,000 in proceeds from the sale of common stock. We believe that the
cash flows are inadequate to repay the capital obligations and have relied upon
the sale of common stock to sustain its operations.
Cash provided (used) operating activities for the fiscal year 2008 was $75,490
compared to ($14,027) for fiscal year 2007. We have focus on core operations
results in an increase in acquisitions. However we are still operating in a
deficit. We have depreciation expenses for fiscal 2008 of $449 as compared to
fiscal 2007 of $5.00
Cash (used) provided in investing activities was ($724,569) for fiscal 2008,
compared to $(302) for Fiscal 2007. We have advanced financing to affiliates of
$717,076, and purchased new equipment of $7,493.
Cash provided by financing activities was $647,313 for fiscal 2008 as compared
to $50,000 for fiscal 2007. Financing activities primarily consisted of proceeds
from bond and loan payables from third parties. We do not have adequate cash
flows to satisfy its obligations although have improved cash flow and
anticipates have adequate cash flows in the upcoming fiscal period. We received
proceeds from the our bond issuance of $733,308 we received proceeds from our
loan payables of $255,205 and have advanced proceeds to our affiliate of
($341,200)
On August 4, 2008, DoMark has entered into an investment agreement and
registration rights agreement with Dutchess Private Equities, LTD. The
investment agreement, in the form of an equity funding commitment, provides for
the right by the company at its discretion to require Dutchess to purchase up to
$50 million of the Company's common stock at a seven percent discount to market
over the 36 months following the registration statement being declared effective
by the Securities and Exchange Commission. DoMark intends to file a registration
statement in the near future.
On August 23, 2007, SportsQuest, Inc., our majority owned subsidiary, entered
into an investment agreement and registration rights agreement with Dutchess
Private Equities, LTD. The investment agreement, in the form of an equity
funding commitment, provides for the right by Sportsquest at its discretion to
require Dutchess to purchase up to $50 Million of SportsQuest common stock at a
seven percent discount to market over the 36 months following the registration
statement being declared effective by the Securities and Exchange Commission.
SportsQuest filed an SB-2 registration statement on September 17, 2007.
OTHER CONSIDERATIONS
There are numerous factors that affect the business and the results of its
operations. Sources of these factors include general economic and business
conditions, federal and state regulation of business activities, the level of
demand for product services, the level and intensity of competition in the media
content industry, and the ability to develop new services based on new or
evolving technology and the market's acceptance of those new services, our
ability to timely and effectively manage periodic product transitions, the
services, customer and geographic sales mix of any particular period, and our
ability to continue to improve our infrastructure including personnel and
systems to keep pace with our anticipated rapid growth.
16
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do hold any derivative instruments but do not engage in any hedging
activities. We are in the business of acquiring successfully operating
subsidiaries to build the value of our Company.
ITEM 8. FINANCIAL STATEMENTS
DOMARK INTERNATIONAL, INC.
TABLE OF CONTENTS
Page
----
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM:
Kramer Weisman and Associates LLP 18
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheet at May 31, 2008 and 2007 19
Consolidated Statements of Operations for the years ended
May 31, 2008 and 2007 20
Consolidated Statements of Stockholders' Equity for the years
ended May 31, 2008 and 2007 21
Consolidated Statements of Cash Flows for the years ended
May 31, 2008 and 2007 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 23
17
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
DOMARK INTERNATIONAL, INC.
We have audited the accompanying consolidated balance sheet of DoMark
International, Inc. and Subsidiaries as of May 31, 2008, and the related
consolidated statements of operations, changes in shareholders' deficiency and
cash flows for the year then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits. The financial
statements of DoMark International, Inc. and Subsidiaries as of May 31, 2007
were audited by other auditors whose report dated August 8, 2008, expressed an
unqualified opinion, with an explanatory paragraph relating to the assumption
the Company will continue as a going concern, on those statements.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provided a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of DoMark
International, Inc., Inc and Subsidiaries, as of May 31, 2008, and the results
of their operations and their cash flows for the period then ended in conformity
with accounting principles generally accepted in the United States of America.
These consolidated financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has operating and liquidity
concerns, has incurred an accumulated deficit of approximately $1,431,970
through the period ended May 31, 2008, and current liabilities exceeded current
assets by approximately $3,828,255 at May 31, 2008. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans as to these matters are also described in Note 2. The
consolidated financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the outcome
of these uncertainties.
/s/ Kramer Weisman and Associates LLP
- --------------------------------------------
Kramer Weisman and Associates LLP
Davies, Florida
September 15, 2008
18
DOMARK INTERNATIONAL, INC.
CONSOLIDATED BALANCES SHEETS
FOR YEARS ENDED MAY 31, 2008 AND 2007
- --------------------------------------------------------------------------------
2008 2007
------------ ------------
ASSETS:
CURRENT ASSETS
Cash $ 38,906 $ 40,672
Inventory 1,232 1,232
Prepaid expenses and other current assets 125,043 1,200
------------ ------------
Total current assets 165,181 43,104
PROPERTY AND EQUIPMENT, net 7,340 296
Due from affiliate 717,076 --
Intangible assets - media content 10,000,000 --
Investment in unconsolidated subsidiary 3,903,750 --
Deposits 3,000 --
------------ ------------
TOTAL ASSETS $ 14,796,347 $ 43,400
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 73,739 $ --
Accrued expenses and other liabilities 15,947 --
Notes from affiliates 3,903,750 1,200
------------ ------------
Total current liabilities 3,993,436 1,200
Convertible notes payable 255,205 --
Bond payable 733,308 --
------------ ------------
Total liabilities 4,981,949 1,200
------------ ------------
COMMITMENTS AND CONTINGENCIES: -- --
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value, 75,000,000 shares authorized,
8,500,000 and 2,000,000 issued and outstanding as 8,500 2,000
of May 31, 2008 and 2007
Additional Paid-in capital 8,425,568 53,000
Common stock subscribed, not issued 2,812,300 --
Accumulated deficit (1,431,970) (12,800)
------------ ------------
Total stockholders' equity 9,814,398 42,200
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,796,347 $ 43,400
============ ============
The accompanying notes are an integral part of
these consolidated financial statements.
19
DOMARK INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR YEARS ENDED MAY 31, 2008 AND 2007
- --------------------------------------------------------------------------------
2008 2007
----------- -----------
REVENUES:
Revenue $ 15,750 $ --
----------- -----------
15,750 --
OPERATING EXPENSES:
General and administrative expenses 1,007,027 12,460
Depreciation and amortization 449 --
----------- -----------
Total operating expenses 1,007,476 12,460
----------- -----------
OPERATING LOSS (INCOME) (991,726) (12,460)
----------- -----------
OTHER (INCOME) AND EXPENSES
Interest expense 245,653 --
Impairment of assets 189,534 --
Gain on the sale of assets (7,743) --
----------- -----------
Total other expense (income) 427,444 --
----------- -----------
NET (LOSS) INCOME $(1,419,170) $ (12,460)
=========== ===========
NET (LOSS) INCOME PER SHARE:
Basic and diluted: $ (0.70) $ (0.01)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted: 2,037,931 1,230,137
=========== ===========
The accompanying notes are an integral part of
these consolidated financial statements.
20
DOMARK INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR YEARS ENDED MAY 31, 2008 AND 2007
- --------------------------------------------------------------------------------
Common Stock
Common Stock Paid-in Accumulated Subscribed
Shares Amount Capital Deficit Not Issued Total
------ ------ ------- ------- ---------- -----
MAY 31, 2006 1,000,000 $ 1,000 $ 4,000 $ (340) $ -- $ 4,660
Common stock issued for cash 1,000,000 1,000 49,000 50,000
Net income -- -- -- (12,460) (12,460)
--------- ------- ---------- ----------- ---------- -----------
MAY 31, 2007 2,000,000 $ 2,000 $ 53,000 $ (12,800) $ -- $ 42,200
========= ======= ========== =========== ========== ===========
Common stock issued for asset 6,500,000 6,500 7,322,788 7,329,288
Warrants issued 804,800 804,800
Bond issuance 170,000 170,000
Common stock subscribed, not issued 2,812,300 2,812,300
Common stock issued for compensation 74,980 74,980
Net loss (1,419,170) (1,419,170)
--------- ------- ---------- ----------- ---------- -----------
MAY 31, 2008 8,500,000 $ 8,500 $8,425,568 $(1,431,970) $2,812,300 $ 9,814,398
========= ======= ========== =========== ========== ===========
The accompanying notes are an integral part of
these consolidated financial statements.
21
DOMARK INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR YEARS ENDED MAY 31, 2008 AND 2007
- --------------------------------------------------------------------------------
2008 2007
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $(1,419,170) $ (12,460)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 449 5
Common stock issued for services 74,980
Common stock subscribed, not issued 2,812,300
Commons stock issued for assets (2,330,712) --
Bond issuance 170,000 --
Warrants issued 804,800 --
Changes in operating assets and liabilities:
Prepaid and other current assets (123,843) (2,432)
Accounts payable 73,739 (340)
Accrued expenses and other liabilities 15,947 1,200
Deposits (3,000) --
----------- -----------
Net cash provided (used) in operating activities 75,490 (14,027)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchasing of equipment (7,493) (301)
Note receivable affiliates (717,076) --
----------- -----------
Net cash (used in) provided by investing activities (724,569) (301)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash received on bond payable 733,308 --
Advances from related party (341,200) --
Cash received on loans payable 255,205 --
Proceeds from sale of common stock -- 50,000
----------- -----------
Net cash provided by financing activities 647,313 50,000
----------- -----------
(DECREASE) INCREASE IN CASH (1,766) 35,672
CASH, BEGINNING OF YEAR 40,672 5,000
----------- -----------
CASH, END OF YEAR $ 38,906 $ 40,672
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 245,643 $ --
=========== ===========
Common stock issued for services $ 75,000 $ --
=========== ===========
Value of warrants from convertible note payable $ 804,800 $ --
=========== ===========
Common stock subscribed, not issued $ 2,812,300 $ --
=========== ===========
The accompanying notes are an integral part of
these consolidated financial statements.
22
DOMARK INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED MAY 31, 2008 AND 2007
- --------------------------------------------------------------------------------
NOTE 1 - BACKGROUND
The consolidated financial statements of DoMark International, Inc. include the
accounts of its majority owned subsidiary, SportsQuest of 79%.
DoMark International, Inc. ("DoMark" or "Company") was incorporated under the
laws of the State of Nevada on March 30, 2006. The Company was formed to engage
in the acquisition and refinishing of aged furniture using exotic materials and
then reselling it through interior decorators, high-end consignment shops and
online sales. The Company has abandoned it prior business of exotic furniture
sales and is acquiring through acquisition and reverse merger operating entities
that will bring value to the company.
SportsQuest, Inc. ("SportsQuest") is a majority, 79%, owned subsidiary of
DoMark. The Sportsquest business was created to develop, own and manage high end
sports events and their operating entities, as well as executing a growth
strategy involving acquisition of diverse and effective sports marketing
platforms. SportsQuest was incorporated in April 3, 1986 in Delaware under the
name Bay Head Ventures, Inc. The Company has been managing the US Pro Golf Tour
and anticipates it will continue to manage USPGT for the foreseeable future.
SportsQuest trades on the Pink Sheets under "SPQS.PK". SportsQuest holds
significant value in content media and is refocusing is business model.
On July 16, 2008, we closed an agreement with JAVACO, Inc, an Ohio corporation
("Javaco") whereby JAVACO became a wholly owned subsidiary of DoMark but is not
a consolidated subsidiary as of May 31, 2008.
On July 24, 2008, we executed an asset purchase agreement with TotalMed Systems,
Inc., a Florida corporation. However, TotalMed assets are not included in the
financial statements of the Company at May 31, 2008. This agreement was
subsequently rescinded and the stock was not issued.
On August 17, 2007,SportsQuest, Inc., a majority owned subsidiary of the
Company, entered into a Stock Issuance, Assumption and Release Agreement (the
"Assumption Agreement"), by and among SportsQuest, Inc. and Greens Worldwide
Incorporated ("Greens") and AJW Partners, LLC, AJW Offshore, Ltd., AJW Qualified
Partners, LLC and New Millennium Capital Partners II, LLC (collectively, the
"Greens Worldwide Investors").
The transactions contemplated by the Assumption Agreement include the following:
The issuance by Greens of 390,000 shares of its Series A Convertible Preferred
Stock, par value 10.00 per share, to SportsQuest, Inc.; and;
The assumption by SportsQuest of 50% of Greens indebtedness to the Greens
Worldwide Investors under a Securities Purchase Agreement, dated as of March 22,
2007, by and among Greens and the Greens Worldwide Investors (the "Greens
Worldwide Agreement").
Greens is an unconsolidated subsidiary of SportsQuest, Inc.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America which
23
contemplate continuation of the Company as a going concern. However, the Company
has year end losses from operations and had minimal revenues from operations in
2007 and 2007. During the year ended May 31, 2008 and 2007 the Company incurred
net loss of $1,659,170 and net income of $18,425, respectively and an
accumulated loss of $2,011,874. Further, the Company has inadequate working
capital to maintain or develop its operations, and is dependent upon funds from
private investors and the support of certain stockholders.
These factors raise substantial doubt about the ability of the Company to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties. In this
regard, Management is planning to raise any necessary additional funds through
loans and additional sales of its common stock. There is no assurance that the
Company will be successful in raising additional capital.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company prepares its financial statements in accordance with accounting
principles generally accepted in the United States of America. Significant
accounting policies are as follows:
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements represent the consolidated financial
position and results of operations of the Company and include the accounts and
results of operations of the Company and its majority owned subsidiary. The
accompanying financial statements include only the active entity of DoMark
International, Inc. and SportsQuest, Inc.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements. These estimates and assumptions also affect the
reported amounts of revenues, costs and expenses during the reporting period.
Management evaluates these estimates and assumptions on a regular basis. Actual
results could differ from those estimates.
The primary management estimates included in these financial statements are the
impairment reserves applied to various long-lived assets, allowance for doubtful
accounts for gateway access fees and licensing fees, and the fair value of its
stock tendered in various non-monetary transactions.
RECLASSIFICATION
Certain prior period amounts have been reclassified to conform to current year
presentations.
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, 2008 and 2007, cash and
cash equivalents include cash on hand and cash in the bank.
24
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost and depreciated over the estimated
useful lives of the assets using principally the straight-line method. When
items are retired or otherwise disposed of, income is charged or credited for
the difference between net book value and proceeds realized thereon. Ordinary
maintenance and repairs are charged to expense as incurred, and replacements and
betterments are capitalized. The range of estimated useful lives used to
calculated depreciation for principal items of property and equipment are as
follow:
Depreciation/
Asset Category Amortization Period
-------------- -------------------
Computer Equipment 3 Years
Office equipment 5 Years
INCOME TAXES
Deferred income taxes are provided based on the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
109"), to reflect the tax effect of differences in the recognition of revenues
and expenses between financial reporting and income tax purposes based on the
enacted tax laws in effect at May 31, 2008 and 2007, respectively.
NET LOSS PER SHARE
Basic earnings per share is computed in accordance with FASB No. 128 EARNINGS
PER SHARE, by dividing net income (loss) available to common shareholders by the
weighted average number of common shares outstanding during the reporting
period. Diluted earnings per share reflects the potential dilution that could
occur if stock options and other commitments to issue common stock were
exercised or equity awards vest resulting in the issuance of common stock that
could share in the earnings of the Company. As of May 31, 2008 and 2007, there
were no potential dilutive instruments that could result in share dilution.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument is the amount at which the instrument
could be exchanged in a current transaction between willing parties other than
in a forced sale or liquidation.
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:
Cash and cash equivalents, licensing receivable, prepaid expenses, other assets,
and accounts payable, income tax payable, and other current liabilities carrying
amounts approximate fair value due to their most maturities.
STOCK-BASED COMPENSATION
Financial Statement Position ("FSP") FAS No. 123(R)-5 was issued on October 10,
2006. The FSP provides that instruments that were originally issued as employee
compensation and then modified, and that modification is made to the terms of
the instrument solely to reflect an equity restructuring that occurs when the
holders are no longer employees, then no change in the recognition or the
measurement (due to a change in classification) of those instruments will result
25
if both of the following conditions are met: (a). There is no increase in fair
value of the award (or the ratio of intrinsic value to the exercise price of the
award is preserved, that is, the holder is made whole), or the antidilution
provision is not added to the terms of the award in contemplation of an equity
restructuring; and (b). All holders of the same class of equity instruments (for
example, stock options) are treated in the same manner. The provisions in this
FSP shall be applied in the first reporting period beginning after the date the
FSP is posted to the FASB website. The Company has adopted SP FAS No. 123(R)-5
but it did not have a material impact on its consolidated results of operations
and financial condition.
GOODWILL AND OTHER INTANGIBLE ASSETS
The Company adopted Statement of Financial Accounting Standard ("SFAS No.") No.
142, GOODWILL AND OTHER INTANGIBLE ASSETS, effective July 1, 2002. As a result,
the Company discontinued amortization of goodwill, and instead annually
evaluates the carrying value of goodwill and other intangible assets for
impairment, in accordance with the provisions of SFAS No. 142. There was no
impairment of goodwill or other intangible assets in Fiscal 2008
IMPAIRMENT OF LONG-LIVED ASSETS
In accordance with SFAS No. 144, long-lived assets, such as property, plant, and
equipment, and purchased intangibles, are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Goodwill and other intangible assets are tested for
impairment annually. Recoverability of assets to be held and used is measured by
a comparison of the carrying amount of an asset to estimated undiscounted future
cash flows expected to be generated by the asset. If the carrying amount of an
asset exceeds its estimated future cash flows, an impairment charge is
recognized by the amount by which the carrying amount of the asset exceeds the
fair value of the asset. There were no events or changes in circumstances that
necessitated a review of impairment of long lived assets.
CONCENTRATION OF CREDIT RISK
The Company maintains its operating cash balances in banks in Oviedo Florida.
The Federal Depository Insurance Corporation (FDIC) insures accounts at each
institution up to $100,000.
Financial instruments that potentially subject the Company to concentrations of
credit risk are primarily trade accounts receivable. The trade accounts
receivable are due primarily from small business customers in numerous
geographical locations throughout the United States.
The Company estimates and provides an allowance for uncollectible accounts
receivable.
REVENUE RECOGNITION
Revenue includes sponsorship and media sales. The Company recognizes revenue
from product sales in accordance with Staff Accounting Bulletin (SAB) No. 104,
"Revenue Recognition in Financial Statement" which is at the time customers are
invoiced at shipping point, provided title and risk of loss has passed to the
customer, evidence of an arrangement exists, fees are contractually fixed or
determinable, collection is reasonably assured through historical collection
results and regular credit evaluations, and there are no uncertainties regarding
customer acceptance.
26
RECENT ACCOUNTING PRONOUNCEMENTS
DETERMINING WHETHER INSTRUMENTS GRANTED IN SHARE-BASED PAYMENT TRANSACTIONS ARE
PARTICIPATING SECURITIES
In June 2008, the FASB issued FSP Emerging Issues Task Force ("EITF") Issue No.
03-6-1, "Determining Whether Instruments Granted in Share-Based Payment
Transactions Are Participating Securities." The FSP addresses whether
instruments granted in share-based payment transactions are participating
securities prior to vesting and, therefore, need to be included in the earnings
allocation in computing earnings per share under the two-class method. The FSP
affects entities that accrue dividends on share-based payment awards during the
awards' service period when the dividends do not need to be returned if the
employees forfeit the award. This FSP is effective for fiscal years beginning
after December 15, 2008. The Company is currently assessing the impact of FSP
EITF 03-6-1 on its consolidated financial position and results of operations.
DETERMINING WHETHER AN INSTRUMENT (OR AN EMBEDDED FEATURE) IS INDEXED TO AN
ENTITY'S OWN STOCK
In June 2008, the FASB ratified EITF Issue No. 07-5, "Determining Whether an
Instrument (or an Embedded Feature) Is Indexed to an Entity's Own Stock" (EITF
07-5). EITF 07-5 provides that an entity should use a two step approach to
evaluate whether an equity-linked financial instrument (or embedded feature) is
indexed to its own stock, including evaluating the instrument's contingent
exercise and settlement provisions. It also clarifies on the impact of foreign
currency denominated strike prices and market-based employee stock option
valuation instruments on the evaluation. EITF 07-5 is effective for fiscal years
beginning after December 15, 2008. The Company is currently assessing the impact
of EITF 07-5 on its consolidated financial position and results of operations.
ACCOUNTING FOR CONVERTIBLE DEBT INSTRUMENTS THAT MAY BE SETTLED IN CASH UPON
CONVERSION (INCLUDING PARTIAL CASH SETTLEMENT)
In May 2008, the FASB issued FSP Accounting Principles Board ("APB") Opinion No.
14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash
upon Conversion (Including Partial Cash Settlement)." The FSP clarifies the
accounting for convertible debt instruments that may be settled in cash
(including partial cash settlement) upon conversion. The FSP requires issuers to
account separately for the liability and equity components of certain
convertible debt instruments in a manner that reflects the issuer's
nonconvertible debt (unsecured debt) borrowing rate when interest cost is
recognized. The FSP requires bifurcation of a component of the debt,
classification of that component in equity and the accretion of the resulting
discount on the debt to be recognized as part of interest expense in our
consolidated statement of operations. The FSP requires retrospective application
to the terms of instruments as they existed for all periods presented. The FSP
is effective as of January 1, 2009 and early adoption is not permitted. The
Company is currently evaluating the potential impact of FSP APB 14-1 upon its
consolidated financial statements.
THE HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" (FAS No.162). SFAS No. 162 identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements. SFAS No. 162 is effective 60 days following
the SEC's approval of the Public Company Accounting Oversight Board amendments
to AU Section 411, "The Meaning of Present Fairly in Conformity with Generally
Accepted Accounting Principles". The implementation of this standard will not
have a material impact on the Company's consolidated financial position and
results of operations.
27
DETERMINATION OF THE USEFUL LIFE OF INTANGIBLE ASSETS
In April 2008, the Financial Accounting Standards Board ("FASB") issued FASB
Staff Position on Financial Accounting Standard ("FSP FAS") No. 142-3,
"Determination of the Useful Life of Intangible Assets", which amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of intangible assets under SFAS No. 142
"Goodwill and Other Intangible Assets". The intent of this FSP is to improve the
consistency between the useful life of a recognized intangible asset under SFAS
No. 142 and the period of the expected cash flows used to measure the fair value
of the asset under SFAS No. 141 (revised 2007) "Business Combinations" and other
U.S. generally accepted accounting principles. The Company is currently
evaluating the potential impact of FSP FAS No. 142-3 on its consolidated
financial statements.
DISCLOSURE ABOUT DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In March 2008, the FASB issued SFAS No. 161, "Disclosure about Derivative
Instruments and Hedging Activities, an amendment of SFAS No. 133", (SFAS 161).
This statement requires that objectives for using derivative instruments be
disclosed in terms of underlying risk and accounting designation. The Company is
required to adopt SFAS No. 161 on January 1, 2009. The Company is currently
evaluating the potential impact of SFAS No. 161 on the Company's consolidated
financial statements.
DELAY IN EFFECTIVE DATE
In February 2008, the FASB issued FSP FAS No. 157-2, "Effective Date of FASB
Statement No. 157". This FSP delays the effective date of SFAS No. 157 for all
nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value on a recurring basis (at least annually)
to fiscal years beginning after November 15, 2008, and interim periods within
those fiscal years. The impact of adoption was not material to the Company's
consolidated financial condition or results of operations.
BUSINESS COMBINATIONS
In December 2007, the FASB issued SFAS No. 141(R) "Business Combinations" (SFAS
141(R)). This Statement replaces the original SFAS No. 141. This Statement
retains the fundamental requirements in SFAS No. 141 that the acquisition method
of accounting (which SFAS No. 141 called the PURCHASE METHOD) be used for all
business combinations and for an acquirer to be identified for each business
combination. The objective of SFAS No. 141(R) is to improve the relevance, and
comparability of the information that a reporting entity provides in its
financial reports about a business combination and its effects. To accomplish
that, SFAS No. 141(R) establishes principles and requirements for how the
acquirer:
a. Recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree.
b. Recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase.
c. Determines what information to disclose to enable users of the
financial statements to evaluate the nature and financial effects of
the business combination.
This Statement applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008 and may not be applied before
that date. The Company does not expect the effect that its adoption of SFAS No.
141(R) will have on its consolidated results of operations and financial
condition.
28
NONCONTROLLING INTERESTS IN CONSOLIDATED FINANCIAL STATEMENTS--AN AMENDMENT OF
ARB NO. 51
In December 2007, the FASB issued SFAS No. 160 "Noncontrolling Interests in
Consolidated Financial Statements - an amendment of ARB No. 51" (SFAS No. 160).
This Statement amends the original Accounting Review Board (ARB) No. 51
"Consolidated Financial Statements" to establish accounting and reporting
standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in
a subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements. This Statement is
effective for fiscal years and interim periods within those fiscal years,
beginning on or after December 15, 2008 and may not be applied before that date.
The does not expect the effect that its adoption of SFAS No. 160 will have on
its consolidated results of operations and financial condition.
FAIR VALUE OPTION FOR FINANCIAL ASSETS AND FINANCIAL LIABILITIES
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an amendment of SFAS No.
115" (SFAS No. 159), which becomes effective for the Company on February 1,
2008, permits companies to choose to measure many financial instruments and
certain other items at fair value and report unrealized gains and losses in
earnings. Such accounting is optional and is generally to be applied instrument
by instrument. The Company does not anticipate that the election, of this
fair-value option will have a material effect on its consolidated financial
condition, results of operations, cash flows or disclosures.
FAIR VALUE MEASUREMENTS
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS
No. 157). SFAS No. 157 provides guidance for using fair value to measure assets
and liabilities. SFAS No. 157 addresses the requests from investors for expanded
disclosure about the extent to which companies' measure assets and liabilities
at fair value, the information used to measure fair value and the effect of fair
value measurements on earnings. SFAS No. 157 applies whenever other standards
require (or permit) assets or liabilities to be measured at fair value, and does
not expand the use of fair value in any new circumstances. SFAS No. 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007 and will be adopted by the Company in the first quarter of
fiscal year 2008. The Company is unable at this time to determine the effect
that its adoption of SFAS No. 157 will have on its consolidated results of
operations and financial condition.
ACCOUNTING CHANGES AND ERROR CORRECTIONS
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections" (SFAS No. 154), which replaces Accounting Principles Board (APB)
Opinion No. 20, "Accounting Changes," and SFAS No. 3, "Reporting Accounting
Changes in Interim Financial Statements - An Amendment of APB Opinion No. 28".
SFAS No. 154 provides guidance on the accounting for and reporting of accounting
changes and error corrections, and it establishes retrospective application, or
the latest practicable date, as the required method for reporting a change in
accounting principle and the reporting of a correction of an error. SFAS No. 154
is effective for accounting changes and corrections of errors made in fiscal
years beginning after December 15, 2005. The Company adopted SFAS No. 154 in the
first quarter of fiscal year 2007 and does not expect it to have a material
impact on its consolidated results of operations and financial condition.
29
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment, net at May 31, consist of the following:
Years 2008 2007
----- ---- ----
Computer Equipment 3 $ 8,402 $ 301
Total property and equipment 8,402 296
------- -------
Less: accumulated depreciation (1,060) (5)
------- -------
$ 7,340 $ 296
======= =======
The depreciation expense for the years ended May 31, 2008 and 2007 was $449 and
$5, respectively.
The Company occupies premises under month to month rental arrangements
Total rental payments under the lease agreement totaled $12,000 and $24,000 for
the years ended in May 31, 2008 and 2007, respectively.
NOTE 5 - INTANGIBLE ASSETS
Property and equipment, net at May 31, consist of the following:
Years 2008 2007
----- ---- ----
Media content 3 $10,000,000 $ --
Total intangible assets 10,000,000 --
----------- --------
Less: accumulated amortization -- --
----------- --------
$10,000,000 $ --
=========== ========
The Company has not amortized these assets as they were purchased late in the
year and have not been placed in services as of May 31, 2008.
NOTE 6 - NOTE PAYABLE
Notes payable comprise the following:
* On February 26, 2008, SportsQuest, Inc. entered into a Securities Purchase
Agreement (the "Purchase Agreement"), by and among SportsQuest, Inc.
("Parent"), and SportsQuest Management Group, Inc. (the "Subsidiary"). The
Parent SportsQuest, Inc., and Subsidiary, SQ Mgt Group are collectively
referred to as the "Company" and the secured party's signatory and their
respective endorsees, transferees and assigns are collectively the "Secured
Party". The transactions contemplated by the Purchase Agreement resulted in
a funding of a total of $250,000 into the Company.
The Callable Secured Convertible Notes issued for the $250,000 resulted in
a beneficial conversion factor that was valued at $170,000 on the date of
issuance which was accounted for as additional paid in capital and the
value of this beneficial conversion factor will be amortized over the
conversion or when a note is converted during the period available for
conversion.
30
The Purchase Agreement provided that the Parent shall issue to the Secured
Party certain of SportsQuest 8% Callable Secured Convertible Notes, due
three years from the date of issue, which are convertible into shares of
SportsQuest Common Stock, par value $0.0001 per share and the Parent shall
issue the Secured Party certain Common Stock purchase warrants.
AJW Master Fund or its registered assigns, is entitled to purchase from
SportsQuest 2,000,000 fully paid and non-assessable shares of the Company's
Common Stock, par value $0.0001 per share, at an exercise price per share
equal to $0.003.
AJW Partners, LLC or its registered assigns, is entitled to purchase from
SportsQuest 2,000,000 fully paid and non-assessable shares of the Company's
Common Stock, par value $0.0001 per share, at an exercise price per share
equal to $0.003.
New Millennium Capital Partners II, LLC or its registered assigns, is
entitled to purchase from the Company SportsQuest, Inc. 6,000,000 fully
paid and non-assessable shares of Common Stock, par value $0.0001 per
share, at an exercise price per share equal to $0.003.
* On August 16, 2007, SportsQuest, Inc. entered into a Securities Purchase
Agreement (the "Purchase Agreement"), by and among the Company and AJW
Partners, LLC, AJW Master Fund, Ltd. and New Millennium Capital Partners
II, LLC (collectively, the "Air Brook Investors"). The transactions
contemplated by the Purchase Agreement will result in a funding of a total
of $1,500,000 into the Company.
The Purchase Agreement provided for the sale by SportsQuest to the
SportsQuest Investors of callable secured convertible notes with an
aggregate face amount of $1,500,000, plus interest (the "Facility Notes").
The Air Brook Investors purchased from the Company at closing Facility
Notes with an aggregate face amount of $500,000 and are required to
purchase additional Facility Notes with an aggregate face amount of
$500,000 from the Company upon each of (i) the filing of the registration
statement required by the Registration Rights Agreement and (iii) the
declaration of effectiveness of such registration statement by the
Securities and Exchange Commission. The Facility Notes accrue interest at a
rate of 8% per year, require quarterly interest payments in certain
circumstances related to the market price of the Company's common stock,
and are due and payable on August 16, 2010 (the "Maturity Date"). The
Company is not required to make any principal payments until the Maturity
Date, but it has the option to prepay the amounts due under the Facility
Notes in whole or in part at any time, subject to the payment of varying
prepayment penalties depending on the time of such prepayment, as set forth
in the Facility Notes. The Facility Notes are convertible into common stock
of the Company at a discount to the then current fair market value of the
Company's common stock, as set forth in the Facility Notes.
In addition, the Purchase Agreement provided for the issuance by
SportsQuest to the SportsQuest Investors of warrants to purchase 10,000,000
shares of SportsQuest common stock (the "Warrants"). Each Warrant permits
its holder to acquire shares of SportsQuest common stock at an exercise
price of $0.25 per share at any time through August 16, 2014.
SportsQuest allocated the proceeds received between the Facility Notes
issued and the warrant based on the relative fair values at the time of
issuance in accordance with APB Opinion 14, ACCOUNTING FOR CONVERTIBLE DEBT
31
AND DEBT ISSUED WITH STOCK PURCHASE WARRANTS. The Company then further
allocated the proceeds received to the beneficial conversion feature in
accordance with EITF Issue No. 98-5, ACCOUNTING FOR CONVERTIBLE SECURITIES
WITH BENEFICIAL CONVERSION FEATURES OR CONTINGENTLY ADJUSTABLE CONVERSION
RATIOS, and the guidance in EITF Issue No. 00-27, APPLICATION OF ISSUE NO.
98-5 TO CERTAIN CONVERTIBLE INSTRUMENTS. The fair value of the warrant was
estimated on the date of issuance using the Black-Scholes valuation model
and the assumptions described in the table below:
Fair value of underlying stock at date of issuance $ 0.51
Exercise price $ 0.25
Expected life 7 years
Expected dividend yield 0%
Risk-free interest rate 4.39%
Volatility 62.08%
As of a result of the above allocations, the Company recorded discounts of
$833,333 related to the $1,000,000 worth of Facility Notes issued during
2007. These discounts have been reflected as additional paid in capital in
the accompany statement of stockholders' equity. During 2007, the Company
recorded approximately $496,193 of interest expense related to the
amortization of the discounts.
As a condition to entering into the Purchase Agreement, SportsQuest and the
SportsQuest Investors entered into a Registration Rights Agreement, dated
as of August 16, 2007. As set forth in the Registration Rights Agreement,
SportsQuest has agreed to file a registration statement with the Securities
and Exchange Commission, within 30 days, to cover the resale by the
SportsQuest Investors of the shares of SportsQuest common stock into which
the Facility Notes are convertible. The Company has further agreed to use
its best efforts to have such registration statement declared effective and
to keep such registration statement effective until the earlier of (i) the
date on which all of the securities covered by the registration statement
have been sold and (ii) the date on which such securities may be
immediately sold to the public without registration or restriction. The
Company has also granted piggyback registration rights to the SportsQuest
Investors, to the extent that it files a registration statement for its own
account, for the same period.
* On August 16, 2007, SportsQuest loaned $500,000 to Lextra Management Group,
Inc. ("Lextra"), as set forth in a callable secured note (the "Lextra
Note") containing terms substantially similar to the Facility Notes. The
Lextra Note, however, does not contain any provision for the outstanding
amount due under it to be converted into Lextra's stock. This note was
satisfied during the period through the Asset Purchase Agreement referred
to in note 9.
* On August 17, 2007, SportsQuest entered into a Stock Issuance, Assumption
and Release Agreement (the "Assumption Agreement"), by and among the
Company and Greens Worldwide Incorporated ("Greens Worldwide") and AJW
Partners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC and New
Millennium Capital Partners II, LLC (collectively, the "Greens Worldwide
Investors"). The transactions contemplated by the Assumption Agreement
include the following:
* The issuance by Greens Worldwide of 390,000 shares of its Series A
Convertible Preferred Stock, par value $10.00 per share (the "Series A
Preferred Stock"), to SportsQuest; and
32
* The assumption by SportsQuest of 50% of Greens Worldwide's indebtedness to
the Greens Worldwide Investors under a Securities Purchase Agreement, dated
as of March 22, 2007, by and among Greens Worldwide and the Greens
Worldwide Investors (the "Greens Worldwide Agreement").
Under the terms of the Assumption Agreement, the Greens Worldwide Investors
will release Greens Worldwide from its obligations under the notes
described above. In consideration for such release, SportsQuest will issue
to the SportsQuest Investors (who are the successors to the Greens
Worldwide Investors) callable secured convertible notes with an aggregate
face amount of $3,903,750, including interest (collectively, the
"Assumption Notes"), and Greens Worldwide will issue to the SportsQuest
Investors callable secured convertible notes with an aggregate face amount
of $3,903,750, including interest. The Assumption Notes have the same terms
and conditions as the notes described above, except that the Assumption
Notes are convertible into SportsQuest common stock.
SportsQuest has elected to account for the investment at cost since Greens
Worldwide does not have common shares for SportsQuest to convert its
preferred and it is unlikely that Greens Worldwide will have common shares
in the short term. In the event that Greens Worldwide has sufficient common
shares available for conversion, and SportsQuest was to exercise its
conversion rights, SportsQuest would not own more than 50% of the voting
common shares of Greens Worldwide.
* On September 25, 2007, SportsQuest entered into an Exchange Agreement that
stipulated that the Company shall pay ZCE the sum of $150,000 in cash at
the closing (the "Closing Cash Payment"). Under the Bring Down and
Amendment, the parties acknowledged that the Closing Cash Payment was
intended to be used to pay off certain debts of ZCE (the Debt"). Pursuant
to the Bring Down and Amendment, the parties agreed that the Closing Cash
Payment would be paid to ZCE at closing. Instead, the parties amended the
cash payment and SportsQuest agreed to service the Debt after closing
according to the then current monthly schedule and pursuant to the terms of
the Bring Down and Amendment. SportsQuest agreed in the Bring Down and
Amendment to pay off the Debt in full on the closing of the sale of
callable secured convertible notes in the aggregate principal amount of
$500,000 to AJW Master Fund, Ltd., AJW Partners, LLC (collectively, "NIR")
pursuant to the Securities Purchase Agreement, dated August 16, 2007, among
the Company and NIR, which closing shall occur within five business days
after the declaration of the effectiveness of the Form SB-2 registration
Statement filed by the Company with the Securities and Exchange Commission
on September 14, 2007.
NOTE 7 - STOCKHOLDER'S EQUITY
During the year ended May 31, 2008 and 2007:
Stock issued Stock issued
for Cash Cash Received for Assets
-------- ------------- ----------
Year Ended May 31, 2007 1,000,000 $50,000 --
Year Ended May 31, 2008 -- -- 6,500,000
During the year ended May 31, 2007 the Company issued 1,000,000 shares of its
common stock for $50,000. The shares were issued to third parties in a private
placement of the Company's common stock.
33
The Company has issued shares of its common stock as consideration for the fair
value of the assets delivered. During the year ended May 31, 2008, the Company
issued 6,500,000 shares of common stock.
NOTE 8 - INCOME TAXES
The provision (benefit) for income taxes from continued operations for the years
ended May 31, 2008 and 2007 consist of the following:
2008 2007
--------- ---------
Current:
Federal $(564,264) $ (6,264)
State -- --
--------- ---------
(564,264) (6,264)
Deferred:
Federal 564,264 6,264
State -- --
--------- ---------
564,264 6,264
Benefit from the operating loss carryforward -- --
--------- ---------
(Benefit) provision for income taxes, net $ -- $ --
========= =========
The difference between income tax expense computed by applying the federal
statutory corporate tax rate and actual income tax expense is as follows:
May 31,
--------------------------
2008 2007
------ ------
Statutory federal income tax rate 34.0% 34.0%
State income taxes and other 0.0% 0.0%
------ ------
Effective tax rate 34% 34%
====== ======
Deferred income taxes result from temporary differences in the recognition of
income and expenses for the financial reporting purposes and for tax purposes.
The tax effect of these temporary differences representing deferred tax asset
and liabilities result principally from the following:
May 31,
------------------------------
2008 2007
----------- -----------
Net operating loss carryforward $ 1,431,970 $ 12,800
(1,431,970) (12,800)
----------- -----------
Deferred income tax asset $ -- $ --
=========== ===========
The Company has a net operating loss carryforward of approximately $1,431,970
available to offset future taxable income through 2028.
34
NOTE 9 - COMMITMENTS AND CONTINGENCIES
ZCE, INC.
On September 27, 2007, the Company completed an Exchange Agreement entered into
on August 20, 2007 with Zaring-Cioffi Entertainment, LLC, a California limited
liability company ("Zaring-Cioffi"), ZCE, Inc., a California corporation
("ZCE"), and Q-C Entertainment, LLC, a Washington limited liability company
("Q-C"). Pursuant to a Bring Down Agreement and Amendment (the "Bring Down and
Amendment"), dated September 25, 2007, among the Company, Zaring/Cioffi
Entertainment, Inc., Zce, David Quin ("Quin") and Jeff Merriman Cohen ("Cohen"),
Quin and Cohen, the sole members of Q-C, assumed the rights, obligations and
liabilities of Q-C under the Exchange Agreement, as amended by the Bring Down
and Amendment. Under the terms of the Exchange Agreement, as amended by the
Bring Down and Amendment, the Company purchased 100% of the issued and
outstanding shares of Zaring-Cioffi from its shareholders, ZCE, Quin and Cohen,
in exchange for the issuance of 409,836 shares of restricted common stock of the
Company to ZCE and 409,836 shares of restricted common stock of the Company to
Cohen and Quin, which stock in the aggregate was valued at $500,000. In
addition, the Company issued warrants (the "Warrants") to purchase an aggregate
400,000 shares of restricted common stock of the Company to the shareholders of
Zaring-Cioffi according to the following Schedule:
50,000 shares to each of ZCE and Quin Cohen at a strike price of $0.50 per share
expiring December 31, 2007; 50,000 shares to each ZCE and Quin and Cohen at a
strike price of $1.00 per share expiring December 31, 2008; and 100,000 shares
to each of ZCE and Quin and Cohen at a strike price of $1.50 per share expiring
December 31, 2009.
Furthermore, Quin and Cohen received, at no cost, a Bronze Level sponsorship
position (or its equivalent) at all Zaring-Cioffi events through 2009.
Under the Bring Down and Amendment, the Company, Zaring-Cioffi, ZCE, Cohen and
Quin also made the representations and warranties set forth in the Exchange
Agreement as of closing and agreed that the representations and warranties would
not survive the closing.
This matter is presently in litigation and the Company has been assured by its
counsel that it will prevail in this matter.
NOTE 10 - NET LOSS PER SHARE
Net loss per share is calculated using the weighted average number of shares of
common stock outstanding during the year. The company considers the outstanding
warrants granted for diluted earnings per share for the year ended May 31, 2008
and 2007 respectively because the effect of their inclusion would be
anti-dilutive.
NOTE 11 - RELATED PARTY TRANSACTIONS
On February 15, 2008, SportsQuest issued 500,000 of its common shares to a
Company Director as compensation for a value of $75,000, or $.15 per share.
35
The 2007, Air Brook Limousine notified us that it had experienced extraordinary
increases in the cost of performing the agreements and advised us of its intent
to cancel the contracts. As part of a settlement of issues, we entered into an
Agreement and Plan of Reorganization dated March 8, 2007, pursuant to which,
among other things, we agreed that A.B. Park & Fly would be merged with and into
a wholly-owned subsidiary of Air Brook Limousine, wherein the separate existence
of A.B. Park & Fly would cease. In consideration for the preceding, Air Brook
Limousine agreed to deliver to us 150,000 shares of our common stock, which we
canceled as outstanding shares. This merger was completed on March 15, 2007.
On August 16, 2007, Lextra Management Group, Inc., an event management company,
acquired 51.16% of our issued and outstanding common stock pursuant to an
Agreement dated June 26, 2007 by and among Lextra, our company and certain of
our principal stockholders. Pursuant to the terms of this agreement, at the
closing, Lextra acquired (a) 1,165,397 shares representing 51.16% of the issued
and outstanding shares of our common stock from the selling stockholders for an
aggregate purchase price of $116,500 and (b) an outstanding accounts receivable
due to Air Brook Limousine by us in the amount of $340,000. At the closing, Air
Brook Limousine cancelled the agreement dated August 10, 1993 under which Air
Brook Limousine stipulated that it would fund our operations for as long as Air
Brook Limousine deemed necessary and as long as it was financially able.
The Company has chosen to account for the acquisition of its wholly owned
subsidiary, ZCE, Inc., as an unconsolidated investment in the subsidiary as the
Exchange Agreement and Bring Down and Amendment agreement is in question and may
be settled or rescinded once the Company determines which course of action is in
the best interest of the Company and its shareholders during litigation.
Effective January 1, 2008, the Company entered into a consulting agreement with
Rick Altmann, one of the Company's directors. The agreement is for a term of
five years. As compensation for services, he will receive a monthly fee of
$6000, payable on the first and 15th of each month for 2008, $7000 per month for
2009, and $8000 per month for 2010 and thereafter. The Company may pay up to a
mutually agreeable amount of fees in common stock of the Company. The Consultant
is responsible for all expenses that may be incurred in performing the
consulting services, including, but not limited to, travel, third party
expenses, and copying and mailing expenses unless otherwise pre-approved by the
Company. Mr. Altmann also received 500,000 shares of Common stock as
compensation for serving as a Director.
On January 8, 2008, the Company executed an Executive Employment Agreement with
its President and Chief Executive Officer for a term of five years. The
agreement provides for an annual base salary of $240,000, payable in accordance
with the Company's generally applicable payroll practices and policies, but not
less frequently than twice per month in arrears. Annual base salary will
increase 10% per year automatically.
The Executive is also eligible to receive a bonus from the Company, and to
participate in any of the Company's bonus plan(s) that may be adopted for the
benefit of executives of the Company. The award of any discretionary bonus under
this section shall be determined by the Board of Directors of the Company.
The Executive is also entitled to receive such stock options as may be granted
to other executives of the Company as adopted by the Board of Directors. As a
signing bonus, the Company agreed to issue 100,000 shares of Series A
Convertible Preferred shares, convertible at the rate of one share of preferred
for each 500 shares of common stock of the Company, with voting rights as if
converted.
The Executive has been serving SportsQuest since August 17, 2007 through May 31,
2008. The Company has accrued the sum of $150,000 for the period and agrees to
pay the accrued amount upon receiving funding in an amount sufficient to pay the
accrual.
36
The Executive and Executive's dependants are eligible for medical health
insurance and Executive will receive five weeks of paid vacation after one year
of service, seven sick days, six personal days, and six major holidays per year
as well as any other benefits that are available generally to other executives
of the Company.
The Company shall pay or reimburse Executive for all reasonable expenses
incurred or paid by the Executive in the performance of Executive's duties.
On August 16, 2007, 6,800,000 shares were issued for a value of $340,000 in
exchange for release from debt to the Company's affiliate.
As of October 31, 2007, there was a balance due to Zaring Cioffi Entertainment
of $150,000. Pursuant to the Bring Down and Amendment, the Company would service
the debt of ZCE on a monthly basis until the registration statement was declared
effective by the SEC and the Company had received its third tranche of funding
in the amount of $500,000 under the callable notes dated August 17, 2007. In
addition, the Company has the right of offset for the sum of $20,000 already
advanced to ZCE on August 30, 2007, before the closing.
NOTE 12 - STOCK BASED COMPENSATION
The Company issues stock options from time to time to executives, key employees
and members of the Board of Directors. The Company has adopted the
disclosure-only provisions of Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation," and continues to account for
stock based compensation using the intrinsic value method prescribed by
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees". Accordingly, no compensation cost has been recognized for the stock
options granted to employees.
In December 2004, the FASB issued a revision of SFAS No. 123 ("SFAS No. 123(R)")
that requires compensation costs related to share-based payment transactions to
be recognized in the statement of operations. With limited exceptions, the
amount of compensation cost will be measured based on the grant-date fair value
of the equity or liability instruments issued. In addition, liability awards
will be re-measured each reporting period. Compensation cost will be recognized
over the period that an employee provides service in exchange for the award.
SFAS No. 123(R) replaces SFAS No. 123 and is effective as of the beginning of
January 1, 2006. Based on the number of shares and awards outstanding as of
December 31, 2005 (and without giving effect to any awards which may be granted
in 2006), we do not expect our adoption of SFAS No. 123(R) in January 2006 to
have a material impact on the financial statements.
Financial Statement Position ("FSP") FAS No. 123(R)-5 was issued on October 10,
2006. The FSP provides that instruments that were originally issued as employee
compensation and then modified, and that modification is made to the terms of
the instrument solely to reflect an equity restructuring that occurs when the
holders are no longer employees, then no change in the recognition or the
measurement (due to a change in classification) of those instruments will result
if both of the following conditions are met: (a). There is no increase in fair
value of the award (or the ratio of intrinsic value to the exercise price of the
award is preserved, that is, the holder is made whole), or the antidilution
provision is not added to the terms of the award in contemplation of an equity
restructuring; and (b). All holders of the same class of equity instruments (for
example, stock options) are treated in the same manner. The provisions in this
FSP shall be applied in the first reporting period beginning after the date the
FSP is posted to the FASB website. The Company has adopted SP FAS No. 123(R)-5
but it did not have a material impact on its consolidated results of operations
and financial condition.
37
There were no options granted in the year ended May 31, 2008 and 2007 and all
options previously granted have been fully vested and therefore there is no pro
forma effect for the year then ended. The fair value of each option grant is
estimated on the date of grant using the Black-Scholes option-pricing model.
The Company accounts for stock awards issued to nonemployees in accordance with
the provisions of SFAS No. 123 and Emerging Issues Task Force ("EITF") Issue No.
96-18 ACCOUNTING FOR EQUITY INSTRUMENTS THAT ARE ISSUED TO OTHER THAN EMPLOYEES
FOR ACQUIRING, OR IN CONJUNCTION WITH SELLING GOODS OR SERVICES. Under SFAS No.
123 and EITF 96-18, stock awards to nonemployees are accounted for at their fair
value as determined under Black-Scholes option pricing model.
On July 16, 2008, we executed an agreement with JAVACO, Inc, an Ohio corporation
("Javaco") whereby pursuant to the terms and conditions of that Agreement we
completed the purchase of all the issued and outstanding shares of Javaco.
Judith Vazquez is the sister-in-law of R. Thomas Kidd, our Chief Executive
Officer. The Closing of the transaction occurred on July 18, 2008.
As consideration for all the issued and outstanding shares of Javaco, we issued
the shareholders of Javaco, seven hundred and fifty thousand shares of our
common stock, and common stock purchase warrants as follows: 20,000 common stock
purchase warrants at an exercise price of $3.00 per share, expiring on December
31, 2008; 20,000 common stock purchase warrants at an exercise price of $4.00.
JAVACO is a wholly owned subsidiary of DoMark but is not a consolidated
subsidiary as of May 31, 2008.
On July 24, 2008, we executed an asset purchase agreement (the "Agreement") with
TOTALMED SYSTEMS, INC., a Florida corporation ("TotalMed"), whereby pursuant to
the terms and conditions of that Agreement, we completed the purchase of certain
assets. The Closing of the transaction occurred on August 6, 2008 (the
"Closing"). This agreement was subsequently rescinded and the stock was not
issued
As consideration for the certain assets of TotalMed, we agreed to pay TotalMed
issued and outstanding shares of our common stock that will have the aggregate
value of six million Dollars ($6,000,000), determined by dividing the average
closing price for the 5 days prior to the Closing ($2.34), which sum may be
reduced based on contingencies described in the Agreement.
On May 20, 2008, DoMark Exotic Furnishings, Inc. (OTCBB DMXF) acquired 100,000
preferred shares held by our President and CEO, in exchange for 6.5 million of
DMXF common shares. This transaction represented a change in control of the
Company; however effective control of the Company's subsidiary SportsQuest is
unchanged due to a beneficial interest in SportsQuest via DoMark. DoMark changed
its name to DoMark International, Inc. and now trades on the OTC Bulletin Board
under the stock symbol DOMK.
NOTE 13 - SUBSEQUENT EVENTS
On August 23, 2008, SportsQuest entered into an Investment Agreement (the
"Investment Agreement") with Dutchess Private Equities Fund, Ltd., a Cayman
Islands exempted company ("Dutchess"). The Investment Agreement provides for the
Company's right, subject to certain conditions, to require Dutchess to purchase
up to $50,000,000 of SportsQuest common stock at a seven percent discount to
market over the 36 month period following a registration statement covering such
common stock being declared effective by the Securities and Exchange Commission.
As a condition to entering into the Investment Agreement, SportsQuest and
Dutchess entered into a Registration Rights Agreement, dated as of August 23,
2007 (the "Registration Rights Agreement"). As set forth in the Registration
Rights Agreement, the Company has agreed to file a registration statement with
the Securities and Exchange Commission within 45 days after the date of the
Registration Rights Agreement to cover the resale by Dutchess of the shares of
38
the Company's common stock issued pursuant to the Investment Agreement.
SportsQuest has agreed to initially register for resale 10,000,000 shares of its
common stock which would be issuable on the date preceding the filing of the
registration statement based on the closing bid price of SportsQuest common
stock on such date and the amount reasonably calculated that represents common
stock issuable to other parties as set forth in the Investment Agreement except
to the extent that the Securities and Exchange Commission requires the share
amount to be reduced as a condition of effectiveness. SportsQuest has further
agreed to use all commercially reasonable efforts to cause the registration
statement to be declared effective by the Securities and Exchange Commission
within 120 days after the date of the Registration Rights Agreement and to keep
such registration statement effective until the earlier to occur of the date on
which (a) Dutchess shall have sold all of the shares of common stock issued or
issuable pursuant to the Investment Agreement; or (b) Dutchess has no right to
acquire any additional shares of common stock under the Investment Agreement.
39
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
On September 8, 2008, Kramer Wiseman and Associates, LLP ("KWA") was appointed
as the independent auditor for DoMark International, Inc. (the "Company")
commencing with the year ending May 31, 2008, and Chang G. Park, CPA, Ph.D.
("Chang") were dismissed as the independent auditors for the Company as of
September 8, 2008. The decision to change auditors was approved by the Board of
Directors on September 8, 2008.
The report of Chang on the financial statements for either of the one most
recent completed fiscal years did not contain any adverse opinion or disclaimer
of opinion or was qualified or modified as to uncertainty, audit scope or
accounting principles, except for the following:
"The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the accumulation of losses and shortage of capital raise
substantial doubt about its ability to continue as a going concern. Management's
plans concerning these matters are also described in Note 3. The financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to continue as a
going concern.
During the Company's one most recent interim quarter February 28, 2008, November
30, 2007, August 31, 2007, and annual report May 31, 2007, and three prior
interim quarters August 31, 2006, November 30, 2006, and February 29, 2007,
there were no disagreements with Chang on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of Chang, would have caused it
to make reference to the subject matter of the disagreements in connection with
its report with respect to the financial statements of the Company.
During the Company's one most recent interim quarter February 28, 2008, November
30, 2007, August 31, 2007, and annual report May 31, 2007, and three prior
interim quarters August 31, 2006, November 30, 2006, and February 29, 2007,
there were no "reportable events" as such term is described in Item 304(a)(1)(v)
of Regulation S-B under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), with respect to the Company.
During the Company's one most recent interim quarter February 28, 2008, November
30, 2007, August 31, 2007, and annual report May 31, 2007, and three prior
interim quarters August 31, 2006, November 30, 2006, and February 29, 2007, the
Company did not consult with KWA with respect to the Company regarding (i) the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's financial statements, (ii) any matter that was either the subject
of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-B under the
Exchange Act and the related instructions to Item 304 of Regulation S-B) or a
"reportable event" (as such term is described in Item 304(a)(1)(v) of Regulation
S-B), or (iii) any of the matters or events set forth in Item 304(a)(2)(i) and
(ii) of Regulation S-B.
The Company has furnished a copy of this Report to Chang and requested them to
furnish the Company with a letter addressed to the Securities and Exchange
Commission stating whether it agrees with the statements made by the Company
herein in response to Item 304(a) of Regulation S-K and, if not, stating the
respects in which it does not agree. The letter from Chang will be submitted
when received with an amended filing.
40
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, 2008. The term disclosure
controls and procedures means our controls and other procedures that are
designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SEC's rules
and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is
accumulated and communicated to management, including our principal executive
and principal financial officer, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure. Based on
this evaluation, our principal executive officer and our principal financial
officer concluded that our disclosure controls and procedures were effective as
of May 31, 2008.
Our principal executive officer and our principal financial officer, are
responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act Rules 13a-15(f).
Management is required to base its assessment of the effectiveness of our
internal control over financial reporting on a suitable, recognized control
framework, such as the framework developed by the Committee of Sponsoring
Organizations (COSO). The COSO framework, published in INTERNAL
CONTROL-INTEGRATED FRAMEWORK, is known as the COSO Report. Our principal
executive officer and our principal financial officer, have has chosen the COSO
framework on which to base its assessment. Based on this evaluation, our
management concluded that our internal control over financial reporting was
effective as of May 31, 2008.
This annual report on Form 10-K does not include an attestation report of our
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by our registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit us to provide only management's report in this
annual report on Form 10-K.
There were no changes in our internal control over financial reporting that
occurred during the last quarter of 2008 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
This annual report does not include an attestation report of the company's
registered public accounting firm regarding internal control over financial
reporting. Our principal executive officer and our principal financial officer,
report was not subject to attestation by the company's registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit the company to provide only management's report in this
annual report.
It should be noted that any system of controls, however well designed and
operated, can provide only reasonable and not absolute assurance that the
objectives of the system are met. In addition, the design of any control system
is based in part upon certain assumptions about the likelihood of certain
events. Because of these and other inherent limitations of control systems,
there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions, regardless of how remote.
41
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
During the fiscal quarter ended May 31, 2008, there were no changes in our
internal control over financial reporting that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
DIRECTORS AND EXECUTIVE OFFICER
Mr. R. Thomas Kidd as of May 2008 accepted the position of Chief Executive
Officer and Director of the Company. Information representing Mr. Kidd
R. Thomas Kidd 61 Chairman, President, Chief Executive Officer,
and Chief Financial Officer
Richard Altmann 58 Director
Scott Sieck 49 Director
The Chief Executive Officer of the Company will hold office until additional
members or officers are duly elected and qualified. The background and principal
occupations of the sole officer and director of the Company is as follows:
R. Thomas Kidd, Chief Executive Officer, of DoMark
Since August, 2007, R. Thomas Kidd is the President and Chief Executive Officer
of SportsQuest, Inc., a Delaware corporation that creates, develops, owns and
manages high end sports events and related operating entities. From January 2007
until August 2007, Mr. Kidd was the Chief Executive Officer of Lextra Management
Group, Inc., whose assets were acquired by SportsQuest, Inc. Prior thereto from
July 2005 through November 2006 he served as the Chief Executive Officer and
Director of Greens Worldwide Incorporated, a publicly held company, and its
subsidiary U.S. Golf Tour, primarily involved in the development of a new golf
organization and sports enterprise. Prior thereto, from April 1999 through
October 2004, Mr. Kidd served as Chief Executive Officer and President of ASGA,
Inc., and the American Senior Golf Association. For approximately the past
thirty (30) years, Mr. Kidd has been engaged in various capacities in developing
sports organizations including, among others, two (2) national professional golf
tours and one (1) senior golf tour.
RICHARD ALTMANN, DIRECTOR
Rick Altmann has served as a member of the Board of Directors of SportsQuest,
Inc. since September 14, 2007. Mr. Altmann has served as the President of
American Lawn keepers since 1996.
42
SCOTT SIECK, DIRECTOR
MR. SCOTT SIECK has been a Director of our company since inception. From 2000 to
present, Mr. Sieck has been self employed as a day trader, managing his own
investment portfolio. Mr. Sieck is a graduate of Penn State University with a BA
in Labor Relations and graduate studies at John Hopkins University (Master's of
Administrative Sciences)
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT 9.A. DIRECTORS AND EXECUTIVE
OFFICERS, PROMOTERS, AND CONTROL PERSONS:
The Company is aware that all filings of Form 4 and 5 required of Section 16(a)
of the Exchange Act of Directors, Officers or holders of 10% of the Company's
shares have not been timely and the Company has instituted procedures to ensure
compliance in the future.
ITEM 11. EXECUTIVE COMPENSATION
2008 SUMMARY COMPENSATION TABLE
Change in
Pension
Value and
Non-Equity Nonqualified
Incentive Deferred All
Name and Plan Compen- Other
Principal Stock Option Compen- sation Compen-
Position Year Salary($) Bonus($) Awards($) Awards($) sation($) Earnings($) sation($) Totals($)
-------- ---- --------- -------- --------- --------- --------- ----------- --------- ---------
R. Thomas Kidd 2008 -- -- -- -- -- -- -- --
Chief Executive 2007 -- -- -- -- -- -- -- --
Officer
SUMMARY COMPENSATION TABLE
The following table sets forth the cash compensation paid by the Company to its
Chief Executive Officer and to all other executive officers for services
rendered from May 20, 2008 through May 31, 2008. Currently, R. Thomas Kidd is
the Chairman, Chief Executive Officer, President and Principle Financial
Officer.
2007 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
Option Awards Stock Awards
----------------------------------------------------------------- ---------------------------------------------------
Equity
Equity Incentive
Equity Incentive Plan Awards:
Incentive Plan Awards: Market or
Plan Awards: Market Number of Payout Value
Number of Number of Number of Number of Value of Unearned of Unearned
Securities Securities Securities Shares or Shares or Shares, Units Shares, Units
Underlying Underlying Underlying Units of Units of or Other or Other
Unexercised Unexercised Unexercised Option Option Stock That Stock That Rights That Rights That
Options(#) Options(#) Unearned Exercise Expiration Have Not Have Not Have Not Have Not
Exercisable Unexercisable Options(#) Price($) Date Vested(#) Vested($) Vested(#) Vested(#)
----------- ------------- ---------- -------- ---- --------- --------- --------- ---------
R.Thomas
Kidd -- -- -- -- -- -- -- -- --
43
2008 OPTION EXERCISES AND STOCK VESTED TABLE
2008 PENSION BENEFITS TABLE
Number of Present
Years Value of Payments
Plan Credited Accumulated During Last
Name Name Service(#) Benefit($) Fiscal Year($)
- ---- ---- ---------- ---------- --------------
R.Thomas Kidd -- -- -- --
Chief Executive Officer
2008 NONQUALIFIED DEFERRED COMPENSATION TABLE
Eecutive Registrant Aggregate Aggregate
Contributions Contributions Earnings Aggregate Balance at
in Last in Last in Last Withdrawals/ Last Fiscal
Name Fiscal Year($) Fiscal Year($) Fiscal Year($) Distributions($) Year-end($)
---- -------------- -------------- -------------- ---------------- -----------
R.Thomas Kidd -- -- -- -- --
Chief Executive Officer
2008 DIRECTOR COMPENSATION TABLE
Change in
Pension
Value and
Fees Non-Equity Nonqualified
Earned Incentive Deferred
Paid in Stock Option Plan Compensation All Other
Name Cash($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Total($)
---- ------- --------- --------- --------------- ----------- --------------- --------
R. Thomas Kidd -- -- -- -- -- -- --
Chief Executive Officer
44
2008 ALL OTHER COMPENSATION TABLE
Prequisites Company Change
and Other Contributions Severance in Control
Personal Tax Insurance to Retirement Payments/ Payments/
Name Year Benefits($) Reimbursements($) Premiums($) and 401(k) Plans($) Accruals($) Accruals($) Total($)
---- ---- ----------- ----------------- ----------- ------------------- ----------- ----------- --------
R.Thomas Kidd 2008 -- -- -- -- -- -- --
Chief Executive 2007 -- -- -- -- -- -- --
Officer
2008 PERQUISITES TABLE
Total
Perquisites
Personal Use Financial and Other
of Company Planning Executive Personal
Name Year Car/parking Legal Fees Club Dues Relocation Benefits
---- ---- ----------- ---------- --------- ---------- --------
R.Thomas Kidd 2008 -- -- -- -- --
Chief Executive Officer 2007 -- -- -- -- --
2008 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLE
Before After Change
Change in Change in
Control Control
Termination Termination
w/o Cause w/o Cause
or for or for Voluntary Change in
Name Benefit Good Reason Good Reason Termination Death Disability Control
---- ------- ----------- ----------- ----------- ----- ---------- -------
R. Thomas Kidd Basic salary -- -- -- -- -- --
Chief Executive Officer
COMPENSATION OF DIRECTORS
Mr. Kidd is also a member of the board of directors of the Company and is not
compensated for those services.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the common stock as of May 31, 2008 by (i) each person who is known
by the Company to own beneficially more than 5% of the any classes of
outstanding Stock, (ii) each director of the Company, (iii) each of the Chief
Executive Officers and the two (2) most highly compensated executive officers
who earned in excess of $100,000 for all services in all capacities
(collectively, the "Named Executive Officers") and (iv) all directors and
executive officers of the Company as a group.
45
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 8,500,000 shares beneficially owned as of May 31, 2008. We believe
that each individual or entity named has sole investment and voting power with
respect to the securities indicated as beneficially owned by them, subject to
community property laws, where applicable, except where otherwise noted. Unless
otherwise stated, the address of each person; 1809 East Broadway # 125, Oviedo,
FL 32795.
Name and Address Shares Owned (1) Common Stock
---------------- ---------------- ------------
R. Thomas Kidd & Joan Kidd 6.5 million 76.47%
1809 East Broadway # 125
Oviedo, Fl 32795
Richard Altmann 0 0%
1809 East Broadway # 125
Oviedo, Fl 32795
Scott and Maureen Doyle Sieck 1.0 million 11.76%
1624 Tioga Trail
Winter Park, Fl 32789
All such directors
as a group (3 persons) 7.5 million 88.23%
CHANGES IN CONTROL
We are not aware of any arrangements that may result in a change in control of
the Company.
DESCRIPTION OF SECURITIES
GENERAL
Our authorized capital stock consists of 75,000,000 shares of common stock, par
value $ .001.
COMMON STOCK
The shares of our common stock presently outstanding, and any shares of our
common stock issues upon exercise of stock options and/or warrants, will be
fully paid and non-assessable. Each holder of common stock is entitled to one
vote for each share owned on all matters voted upon by shareholders, and a
majority vote is required for all actions to be taken by shareholders. In the
event we liquidate, dissolve or wind-up our operations, the holders of the
common stock are entitled to share equally and ratably in our assets, if any,
remaining after the payment of all our debts and liabilities and the liquidation
preference of any shares of preferred stock that may then be outstanding. The
common stock has no preemptive rights, no cumulative voting rights, and no
redemption, sinking fund, or conversion provisions. Since the holders of common
stock do not have cumulative voting rights, holders of more than 50% of the
outstanding shares can elect all of our Directors, and the holders of the
remaining shares by themselves cannot elect any Directors. Holders of common
46
stock are entitled to receive dividends, if and when declared by the Board of
Directors, out of funds legally available for such purpose, subject to the
dividend and liquidation rights of any preferred stock that may then be
outstanding.
DIVIDEND POLICY
We have never declared any cash dividends on our common stock. We currently
intend to retain future earnings, if any, to finance the expansion of our
business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.
OPTIONS AND WARRANTS
As of May 31, 2008 there were no options or warrants outstanding to acquire
shares of the Company's common stock.
CONVERTIBLE SECURITIES
At May 31, 2008 we have no convertible securities, except those convertible
securities as disclosed outstanding with SportsQuest, Inc.
AMENDMENT OF OUR BYLAWS
Our bylaws may be adopted, amended or repealed by the affirmative vote of a
majority of our outstanding shares. Subject to applicable law, our bylaws also
may be adopted, amended or repealed by our board of directors.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDPENDENCE
March 2007, Air Brook Limousine notified us that it had experienced
extraordinary increases in the cost of performing the agreements and advised us
of its intent to cancel the contracts. As part of a settlement of issues, we
entered into an Agreement and Plan of Reorganization dated March 8, 2007,
pursuant to which, among other things, we agreed that A.B. Park & Fly would be
merged with and into a wholly-owned subsidiary of Air Brook Limousine, wherein
the separate existence of A.B. Park & Fly would cease. In consideration for the
preceding, Air Brook Limousine agreed to deliver to us 150,000 shares of our
common stock, which we canceled as outstanding shares. This merger was completed
on March 15, 2007.
On February 15, 2008, SportsQuest issued 500,000 of its common shares to a
SportsQuest Director as compensation for a value of $75,000, or $.15 per share.
On August 16, 2007, Lextra Management Group, Inc., an event management company,
acquired 51.16% of our issued and outstanding common stock pursuant to an
Agreement dated June 26, 2007 by and among Lextra, our company and certain of
our principal stockholders. Pursuant to the terms of this agreement, at the
closing, Lextra acquired (a) 1,165,397 shares representing 51.16% of the issued
and outstanding shares of our common stock from the selling stockholders for an
aggregate purchase price of $116,500 and (b) an outstanding accounts receivable
due to Air Brook Limousine by us in the amount of $340,000. At the closing, Air
Brook Limousine cancelled the agreement dated August 10, 1993 under which Air
Brook Limousine stipulated that it would fund our operations for as long as Air
Brook Limousine deemed necessary and as long as it was financially able.
47
SportsQuest has chosen to account for the acquisition of its wholly owned
subsidiary, ZCE, Inc., as an unconsolidated investment in the subsidiary as the
Exchange Agreement and Bring Down and Amendment agreement is in question and may
be settled or rescinded once the Company determines which course of action is in
the best interest of the Company and its shareholders during litigation.
Effective January 1, 2008, SportsQuest entered into a consulting agreement with
Rick Altmann, one of the Company's directors. The agreement is for a term of
five years. As compensation for services, he will receive a monthly fee of
$6000, payable on the first and 15th of each month for 2008, $7000 per month for
2009, and $8000 per month for 2010 and thereafter. The Company may pay up to a
mutually agreeable amount of fees in common stock of the Company. The Consultant
is responsible for all expenses that may be incurred in performing the
consulting services, including, but not limited to, travel, third party
expenses, and copying and mailing expenses unless otherwise pre-approved by the
Company. Mr. Altmann also received 500,000 shares of Common stock as
compensation for serving as a Director.
On January 8, 2008, SportsQuest executed an Executive Employment Agreement with
its President and Chief Executive Officer for a term of five years. The
agreement provides for an annual base salary of $240,000, payable in accordance
with the Company's generally applicable payroll practices and policies, but not
less frequently than twice per month in arrears. Annual base salary will
increase 10% per year automatically.
The Executive is also eligible to receive a bonus from the Company, and to
participate in any of the Company's bonus plan(s) that may be adopted for the
benefit of executives of the Company. The award of any discretionary bonus under
this section shall be determined by the Board of Directors of the Company.
The Executive is also entitled to receive such stock options as may be granted
to other executives of the Company as adopted by the Board of Directors. As a
signing bonus, SportsQuest agreed to issue 100,000 shares of Series A
Convertible Preferred shares, convertible at the rate of one share of preferred
for each 500 shares of common stock of the Company, with voting rights as if
converted.
The Executive has been serving SportsQuest since August 17, 2007 through May 31,
2008. SportsQuest has accrued the sum of $150,000 for the period and agrees to
pay the accrued amount upon receiving funding in an amount sufficient to pay the
accrual.
The Executive and Executive's dependants are eligible for medical health
insurance and Executive will receive five weeks of paid vacation after one year
of service, seven sick days, six personal days, and six major holidays per year
as well as any other benefits that are available generally to other executives
of the Company.
SportsQuest shall pay or reimburse Executive for all reasonable expenses
incurred or paid by the Executive in the performance of Executive's duties.
On August 16, 2007, 6,800,000 shares were issued for a value of $340,000 in
exchange for release from debt to the Company's affiliate.
As of October 31, 2007, there was a balance due to Zaring Cioffi Entertainment
of $150,000. Pursuant to the Bring Down and Amendment, SportsQuest would service
the debt of ZCE on a monthly basis until the registration statement was declared
effective by the SEC and SportsQuest had received its third tranche of funding
in the amount of $500,000 under the callable notes dated August 17, 2007. In
addition, SportsQuest has the right of offset for the sum of $20,000 already
advanced to ZCE on August 30, 2007, before the closing.
48
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
AUDIT FEES. The aggregate fees billed by Kramer Weisman and Associates LLP for
professional services rendered for the audit of the Company's annual financial
statements for fiscal years ended May 31, 2008 approximated $7,500 and $0.00
respectively. The aggregate fees billed by Kramer Weisman and Associates LLP for
the review of the financial statements included in the Company's Forms 10-Q for
fiscal year 2008 approximated $0 per year.
AUDIT-RELATED FEES. The aggregate fees billed by Kramer Weisman and Associates
LLP for assurance and related services that are reasonably related to the
performance of the audit or review of the Company's financial statements for the
fiscal years ended May 31, 2008 and 2007, and that are not disclosed in the
paragraph captioned "Audit Fees" above, were $7,500 and $0, respectively.
TAX FEES. The aggregate fees billed by Kramer Weisman and Associates LLP for
professional services rendered for tax compliance, tax advice and tax planning
for the fiscal year ended May 31, 2008 and 2007 were $0.
ALL OTHER FEES. The aggregate fees billed by Kramer Weisman and Associates LLP
for products and services, other than the services described in the paragraphs
"Audit Fees," "Audit-Related Fees," and "Tax Fees" above for the fiscal years
ended May 31, 2008 and 2007 approximated $0 and $0 respectively.
PART IV
ITEM 15. EXHIBITS AND REPORTS
Exhibits
3.1 Articles of Incorporation (1)
3.1 Amendments to Articles of Incorporation - Fourth Article (1)
3.1 Amendment to Articles of Incorporation - Name Change (1)
14.1 Code of Ethics (2)
21 Subsidiaries (2)
23.3 Consent of Chang Park CPA Ph.D. (2)
31.1 Certification of Chief Executive Officer Pursuant to Section 302 of
the Sarbanes Oxley Act. (2)
31.2 Certification of Principal Accounting Officer Pursuant to Section 302
of the Sarbanes Oxley Act (2)
32.1 Certification of Chief Executive Officer Pursuant to Section 906 of
the Sarbanes Oxley Act. (2)
32.2 Certification of Principal Accounting Officer Pursuant to Section 906
of the Sarbanes Oxley Act (2)
99.1 Audit Committee Charter (2)
99.2 Compensations Committee Charter (2)
- ----------
(1) Incorporated by reference to the same exhibit filed with the Company's
Annual Report on Form 10-KSB for the year ending May 31, 2006.
(2) Filed herewith.
49
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, there unto duly authorized.
DOMARK INTERNATIONAL, INC., Registrant
Date: September 12, 2008 By: /s/ R. Thomas Kidd
-------------------------------------------
R. Thomas Kidd
Chairman, President Chief Executive Officer
Date: September 12, 2008 By: /s/ R. Thomas Kidd
-------------------------------------------
R. Thomas Kidd
Principal Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on the 12th day of September 2008.
/s/ R. Thomas Kidd Chief Executive Officer, Principal Financial
- -------------------------------- Officer and Director
R. Thomas Kidd
/s/ Richard Altmann Director
- --------------------------------
R. Richard Altmann
/s/ Scott Sieck Director
- --------------------------------
Scott Sieck
50