Domark International, Inc.
1809 East Broadway #125
Oviedo, Florida 32765
August 28, 2009
VIA EDGAR
Securities and Exchange Commission
100 F Street, N.W.
Division of Corporate Finance
Washington, D.C. 20549
Re: Domark International, Inc.
Form 10-K for the year ended May 31, 2008
Form 10-Q for the period ended February 28, 2009
File No. 333-136247
Form 10K for the year ended May 31, 2008
Reports of Independent Registered Public Accounting Firm, page 18
1. We note in the first paragraph that your current auditors - Kramer Weisman
and Associates, LLP has made reference to the report of other auditors for
the fiscal year ended May 31, 2007. Please include in the amended filing
the report of the other accountants as required by Rule 2-05 of Regulation
S-X.
The Company will include the auditor's report in the amended filing.
Financial Statements:
Consolidated Balance Sheets, page 19
Investment in unconsolidated subsidiary
2. We note the disclosure in Note 1 on page 23 that you account for your
investment in Greens Worldwide, Inc. as an unconsolidated subsidiary. Tell
us how you evaluated the guidance in Rule 3-09 of Regulation S-X in
determining whether you are required to include separate audited financials
of Greens Worldwide Inc.
The Company realizes that separate audited financials should be have been
provided, however subsequent to the filing of Form 10K for May 31, 2008,
Domark sold its equity interest in SportsQuest, who holds the investment in
Greens Worldwide, Inc.
3. We note that you present "common stock subscribed, not issued"; "common
stock issued for assets"; "bond issuance" and "warrants issued" as
reconciling adjustments in the section for cash flows from operating
activities. Tell us how you applied the guidance SFAS 95 in determining the
presentation of these items in the statement of cash flows.
The Company has included language in accounting policies footnote number 3.
Notes to Consolidated Financial Statements
Note 1 - Background
4. We note that the consolidated financial statements include the Company's
79% owned subsidiary - SportsQuest. Please tell us where the minority
interest of 21% of the consolidated subsidiary is disclosed in the
financial statements.
The Company has included a line item representing the 21% minority interest
on the balance sheet of the amended filing. SportsQuest was no longer
consolidated with Domark as of October 20, 2008.
5. Disclose how you accounted for the issuance of 6.5 million shares of your
common stock for 100,000 Series A Preffered Convertible Shares of
SportsQuest as disclosed in the section on recent developments at page 14.
Also provide the disclosures required by paragraphs 51 to 55 of SFAS 141,
where applicable. As a result of the transaction the shareholder of
SportsQuest received a controlling interest in the Company. It appears that
SportsQuest should be treated as the accounting acquirer. Tell us how you
applied the guidance in SFAS 141 in determining the appropriate accounting
treatment.
The Company agrees that SportsQuest would be considered the accounting
acquirer under the guidance of SFAS 141 and has included a footnote
disclosure of the transaction in the amended filing.
Note 5 Intangible Assets, page 30
6. Disclose the nature of the $10,000,000 of media content. Also disclose the
transaction that resulted in the recognition of an intangible asset for
media content.
The Company will expand its disclosure in the amended filing. See attached
copies of the agreements. The Company has also reclassified the asset in
the amended filing, more appropriately classified as a prepaid expense. The
Company's original agreement for media was cancelled on August 13, 2008 and
a new agreement was issued on same date. The new agreement included
different terms and therefore the cancellation of the Company's "stock
subscription receivable" on the balance sheet as of the 10Q filings for the
periods ended August 31, 2008 and February 28, 2009.
Form 10-Q for the period ended February 28, 2009
7. We note that the balance sheet as of May 31, 2008 is not consistent with
the financial statements presented in the Form 10K for the year ended May
31, 2008. In addition we note that the revenue reported for the three
months and nine months ended February 28, 2008 is significantly greater
than revenue presented in the Form 10K for the year ended May 31, 2008.
Please tell us the reasons for these differences.
The Company, subsequent to its May 31, 2008 10K, acquired its wholly owned
subsidiary Javaco, Inc., which accounts for the marked increase in revenues
reported. The Company also deconsolidated its subsidiary SportsQuest during
the three months ended November 2008 as a result of the sale of its entire
equity interest, and thereby reporting the resulting gain on the income
statement.
Note 1 Description of Business, page 9
8. For each of the acquisitions described in Note 1 and the recent
acquisitions section at page 16, disclose how you accounted for the
transaction and provide the disclosures in SFAS 141, where applicable.
The Company acquired assets from its acquisitions and initially recognized
intangible assets or goodwill as a result of the purchase price paid. The
strategy of purchasing a Company more than its net equity is part of
obtaining personnel and an aggressive business plan using its experience
nationwide.
Management Discussion and Analysis of Results of Operations, page 18
9. Expand the discussion of your results of operations to describe the sources
of revenue during the periods presented. Also tell us how you applied the
guidance of SFAS 131 in identifying your operating segments and evaluating
whether you are required to provide the disclosures presented in paragraph
33 of SFAS 131.
The Company has included expanded discussion of the results of operations
in the amended filing. The entire business is comprehensively managed by a
single management team that reports to the Chief Executive Officer.
Revenues for the year ended May 31, 2008 were minimal and accordingly, the
Company does not have separately reportable segments as defined by
Statement of Financial Accounting Standards No. 131, DISCLOSURES ABOUT
SEGMENTS OF A ENTERPRISE AND RELATED INFORMATION.
The Company hereby acknowledges that:
* the Company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff comments
do not foreclose the Commission from taking any action with respect to
the filing; and
* the Company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
Sincerely,
/s/ R. Thomas Kidd
------------------------------------
R. Thomas Kidd
Chief Executive Officer
4
MEDIA PRODUCTION AND PLACEMENT SERVICES AGREEMENT
This Media Production and Placement Services Agreement (the "Agreement") is
entered into on the date indicated on the signature page (the "Effective Date"),
by and between Media4Equity LLC, a Nevada limited liability company ("M4E") and
DoMark International, Inc. 1809 East Broadway, Suite 125, Oviedo, FL 32765, (the
"Company"). (DoMark and M4E are referred to collectively herein as the
"Parties").
Whereas, M4E produces and distributes nationally syndicated print and radio
features for its clients in exchange for equity in its clients' businesses; and
Whereas, M4E wishes to accept the Company as a client; and
Whereas, the Company desires to further develop and promote its general
business, technologies, and/or products and services in order to enhance overall
brand awareness, stimulate new business, and build long-term value for its
shareholders; and
Whereas, the Company desires to utilize M4E's services to act as production
and placement agency for Company's print and broadcast media campaign.
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
herein, and other good and valuable consideration, the Parties agree as follows:
1. MEDIA CREDIT
M4E hereby provides the Company with a guaranteed dollar value of national
media exposure (the "Media Credit"), which Media Credit shall be reduced by
the "Media Value" of features placed, as further defined in Section 3(c),
below, of placements of print and radio features obtained by M4E on behalf
of Company. The value of the Media Credit shall be equivalent to ten
million dollars ($10,000,000.00 U.S.) in Media Value.
2. MEDIA CAMPAIGN
a) Consultation. M4E shall consult with Company regarding the content of
the Media Campaign. M4E shall develop, write, edit and deliver proofs
of any and all print media and any and all radio scripts (collectively
referred to herein as the "Copy," and all placements throughout the
term of the Agreement referred to as the "Media Campaign") to the
Company for inspection and approval. No print or radio feature shall
be distributed without Company's prior written approval. M4E shall not
be liable for the Company's failure to review and approve Copy on a
timely basis, or for any actions or inactions of the Company. Parties
agree that the initiation of the Media Campaign shall commence at the
sole discretion of the Company, but no later than 12 months from the
Effective Date, and shall terminate upon the earlier to occur of the
Media Credit being redeemed in its entirety, or three (3) years from
the commencement of said Media Campaign, (the "Redemption Period").
b) Content.
(i) PRINT FEATURES. Each Print Feature shall consist of a news story
that features the Company's name, products and/or service,
contact information, web address and such other information as
the Company may approve.
(ii) RADIO FEATURES. Each Radio Feature shall consist of two,
30-second nationally syndicated radio scripts under one heading.
Each Radio Feature will be specifically about the Company and
written and read by radio media professionals.
c) Distribution.
(i) All print media approved by Company for distribution pursuant to
Section 2(a) hereof, shall be distributed on computer disks, by
direct electronic feed, in a hard copy camera-ready format and/or
over the Internet to over ten thousand (10,000) daily and weekly
newspapers, news, and wire services, which may publish the
features, at their sole discretion, free of copyright, fees or
other charges.
(ii) All radio features, formatted as either scripts and/or audio
recordings, shall be sent directly, and/or indirectly via
radio networks, to over six thousand (6,000) radio stations in
the United States.
3. M4E PERFORMANCE
a) Redemption of Media Credit. Upon Company's request, further pursuant
to the guidelines detailed herein, M4E shall submit for Company review
and approval Copy for the first print or radio feature within five
business days of such request.
b) Production/Distribution/Publication. During the Redemption Period M4E
shall produce, distribute and gain placement/publication of nationally
syndicated newspaper features and/or nationally syndicated radio
features (final recordings to be provided to Company upon completion
by M4E) on behalf of Company. Each published feature shall be ascribed
a Media Value, and the Media Value of all respective features shall be
applied against and reduce the Media Credit. The entire value of the
Media Credit shall be utilized within three (3) years, commencing on
the date the Company first reviews and approves copy pursuant to
Section 2(a) herein, and in no case commencing later than one (1) year
from the Effective Date hereof.
c) Media Value. For purposes of this Agreement, the Media Value of each
aired radio feature and each published newspaper feature shall be
equivalent to each respective radio station's or newspaper's official
ad rate pricing policies, measured by length in column inches of each
complete story for print placements and in total seconds of each radio
feature for radio placements.
d) Reduction of Media Credit. The Media Value of all published news
features and all broadcasted radio features shall reduce the Media
Credit, notwithstanding any Company error in Copy approval or any
subsequent editing by newspapers, radio broadcasters, or any other
third parties.
e) "MEDIA PLACEMENT GUARANTEE." M4E guarantees that the aggregate Media
Value of all published print and all broadcast radio features shall be
equal to or greater than the Media Credit created by this Agreement.
In the event that the Minimum Placement Guarantee is not met by the
end of the Term, M4E shall create additional, and/or re-distribute
existing features at no cost to the Company until the Media Placement
Guarantee is reached.
f) Reports. M4E shall deliver weekly reports to the Company beginning ten
(10) weeks from the distribution date of each print and radio feature,
and continuing for a period of one (1) year. Reports shall include
Media Value, estimated listener and readership information, and actual
newspaper clippings of all reported published print features.
4. COMPANY PERFORMANCE
a) Redemption of Media Credit. The Company shall have one (1) year to
begin Campaign and thereby commence redemption of the Media Credit.
Once commenced, the redemption of the Media Credit must be completed
within three (3) years.
b) Consultation and Cooperation. The Company shall consult with M4E
pursuant to Section 2(a) herein and use its best reasonable efforts to
provide M4E with information necessary to write Copy for the Campaign
and to ensure the Company's review of same.
c) Timeliness. The Company shall make a good faith effort to approve or
submit corrections to all Copy within seventy-two (72) hours of
receipt thereof. Failure of Company to approve or return corrected
Copy within one (1) week of receipt by Company shall constitute a
material breach of this Agreement.
d) Investor Relations. When, and if, Company becomes publicly traded,
Company agrees to implement an investor relations plan and campaign
reasonably acceptable to M4E.
2
5. M4E COMPENSATION & ISSUANCE OF SHARES
a) Grant of Common Stock Shares. In consideration of M4E's commitment of
the Media Credit, the Company shall transfer to M4E, and/or its
designee(s) listed in "Exhibit A," attached hereto, within five
business days of the Effective Date One Million Three Hundred Twenty
Thousand (1,320,000) restricted shares of Company's common stock
("Compensation Shares"), which are hereby valued at $ .001 per share.
M4E's performance hereunder is contingent upon Company's timely
transfer of Compensation Shares.
b) Transfer Agent Instructions. Upon the execution of this Agreement, the
Company shall issue instructions to the Company's transfer agent
(attached hereto as "Exhibit A") effecting the provisions of Section
6(a) herein. Failure of Company to fully perform Section 6(a) or this
Section 5(b) shall be a material breach and shall excuse any further
performance by M4E under this Agreement.
c) Nature of Compensation Shares. The Parties acknowledge and agree that:
(i) the rights and obligations defined by this Agreement become
binding upon execution of this Agreement; and (ii) the consideration
for all Compensation Shares transferred hereby, regardless of the date
of transfer, is represented solely by M4E's obligations hereunder, and
M4E's interest in all Compensation Shares transferred hereunder
immediately and irrevocably vests in M4E upon the execution of this
Agreement; and (iii) the effective date of all Compensation Shares
transferred hereby, regardless of the actual date of transfer, shall
be the Effective Date hereof, and the tolling of any and all time
periods relating to the Shares, including but not limited to those
relating to any restriction, shall be calculated from the Effective
Date hereof; and (iv) all Compensation Shares transferred hereby shall
be fully paid, non assessable, common shares of the Company; (v) the
number of Compensation Shares shall be adjusted for any stock splits,
stock dividends, combinations, recapitalizations and the like; and
(vi) no Shares transferred hereby shall be blocked in any way or
subject to rescission or cancellation for any reason except gross
negligence or malfeasance.
d) Intrinsic Value of Compensation Shares. The Parties acknowledge and
agree: (i) the market value of Company shares, calculated using a
price quoted on the exchange on which such shares trade, may not
necessarily reflect a true and accurate valuation of the Shares; (ii)
the Media Value may bear no relationship to the current or future
value of the Compensation Shares.
e) Securities Documentation. M4E agrees to submit with an executed copy
of this Agreement any such documentation, including but not limited to
a Confidential Investor Questionnaire and Subscription Agreement, as
Company's counsel may deem necessary to comply with applicable
securities laws related to the issuance of the Compensation Shares.
f) Opinion Letter. Company agrees to accept and represent to Company's
transfer agent as valid, any opinion letter from M4E's counsel
regarding restricted stock status and the removal of the legend
thereon.
6. REGISTRATION RIGHTS
a) Piggyback and Demand Registration Rights. If, at any time or from time
to time after the Effective Date, the Company proposes to file a
registration statement covering any securities of the Company, other
than an offering registered on Form S-8 or Form S-4 (or successor
forms relating to employee stock plans and certain business
combinations), the Company shall, not less than thirty (30) days prior
to the proposed filing date of the registration statement, give
written notice of the proposed registration to M4E. Company agrees to
include in such registration statement, all Compensation Shares as M4E
so instructs, which instructions shall be delivered in writing to the
Company within 20 days of M4E's receipt of Company's notice of such
registration. If M4E requests, or as the Parties may agree, that fewer
shares than M4E then owns be included in such registration statement,
M4E shall continue to have piggyback registration rights for
succeeding registration statements until all Compensation Shares have
been registered. M4E may make one "demand" registration request, under
which Company agrees to file under the Securities Act of 1933, as
amended, a registration statement covering the Compensation Shares
within 30 days after receipt of such request.
b) Registration Costs. Company will bear all expenses attendant to
registering the securities.
c) Liquidated Damages. In the event that the Company is required to
include the Compensation Shares in a registration statement pursuant
to Section 6(a) herein, and the Company fails to register the
Compensation Shares, or if the Compensation Shares are or become
3
eligible for sale pursuant to Rule 144 and the Company does not
provide all required documents, including but not limited to any
required legal opinion letter to remove any stock restrictions, within
one week of written request from M4E, the Company shall pay as
liquidated damages to M4E, in legal tender of the United States, an
amount equal to five percent (5%) of the total value of this
Agreement, for every thirty (30) day period until the restrictions are
lifted. The Parties hereto agree that damages due to Company's breech
hereunder are difficult to determine as of the Effective Date, and the
Liquidated Damages hereunder are meant to approximate M4E's damages,
and are not punitive.
7. DEFAULT
Any failure of the Company to (i) transfer Stock as required by Section 5,
herein; (ii) timely review and approve Copy supplied by M4E for review; or
(iii) act in good faith to effectuate the terms of this Agreement, shall
constitute a default. Upon Company's default, all amounts due M4E hereunder
shall be due and payable, and M4E may in its sole discretion immediately
suspend performance and terminate this Agreement.
8. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
For the purposes of this Agreement, the expression "Confidential
Information" means all information of any nature previously, presently, or
subsequently disclosed by one party (the "Disclosing Party") to the other
party (the "Receiving Party"), relating to the Disclosing Party's business,
including, but not limited to, the terms of this Agreement, information
concerning any entities and/or interested parties and any analyses,
compilations, studies other documents which contain or otherwise reflect or
are generated from such information, all information relating to business,
financial, customer and product development plans, forecasts, lists,
methods, strategies, compilations and other information, inventions and
ideas, including without limitation, ideas, know how, inventions (whether
patentable or not), schematics and other technical information. However,
Confidential Information does not include any information that is generally
known in the Receiving Party's industry at the time of the signing of this
Agreement, any information that the Receiving Party rightfully had in its
possession prior to the disclosure of such information to the Receiving
Party by the Disclosing Party, or any information disclosed after the
termination of this agreement. The Disclosing Party Shall: Keep all
Confidential Information secret and confidential; Not use any Confidential
Information to obtain any financial, commercial, trading and/or other
advantage, but rather use Confidential Information for the sole purpose of
effectuating the mutual transaction(s) contemplated hereby; Not disclose
Confidential Information to any third party whatsoever except as necessary
to effectuate the terms of this Agreement.
9. INDEMNIFICATION
Company shall indemnify and hold harmless M4E its agents, employees, legal
representatives, heirs, executors or assigns from and against any and all
losses, damages, expenses and liabilities (collectively "Liabilities") or
actions, investigations, inquiries, arbitrations, claims or other
proceedings in respect thereof, including enforcement of this Agreement
(collectively "Actions") (Liabilities and Actions are herein collectively
referred to as "Losses"). Losses include, but are not limited to all
reasonable legal fees, court costs and other expenses incurred in
connection with investigating, preparing, defending, paying, settling or
compromising any suit in law or equity arising out of this Agreement or for
any breach of this Agreement notwithstanding the absence of a final
determination as to a Company's obligation to reimburse any of M4E
Covenantees for such Losses and the possibility that such payments might
later be held to have been improper.
10. CHOICE OF LAW/ARBITRATION
This Agreement shall be governed by and construed in accordance with laws
and judicial decisions of the Commonwealth of Virginia, without regard to
its principles of conflicts of laws. The resolution of all disputes,
actions or proceedings arising out of this Agreement shall be determined
solely and exclusively by arbitration, by a single arbitrator, under the
rules of the American Arbitration Association as then in effect. The place
of arbitration shall be Alexandria, Virginia. Any decision rendered by the
Arbitrator shall be final and binding, and any judgment upon any award
rendered by the Arbitrator may be entered in any court having jurisdiction.
4
11. PUBLIC ANNOUNCEMENTS
The Parties will jointly agree to the form of a public announcement of this
Agreement and the proposed services. Neither party will, without the
other's prior written consent and approval, issue any press release and/or
other public announcement relating to the terms and conditions set forth in
(or the existence of) this agreement or any additional press releases
mentioning Media4Equity LLC or any employee thereof, except for such
disclosure to the public or to governmental agencies as its counsel shall
deem necessary to comply with any and all applicable laws, rules or
regulations. Company explicitly acknowledges and agrees that no public
announcement of any kind may be made until Compensation Shares are issued
pursuant to Section 5, above.
12. TERM/TERMINATION
a) Term. The terms of this Agreement shall be effective as of the
Effective Date, and continue until the later of (i) one (1) year from
the date the Company first approves media for placement (which
approval shall not be unreasonably withheld); or (ii) four (4) years
from the Effective Date. The terms, conditions, and obligations of
Sections 9, 10, and 11 hereof shall survive the termination of this
Agreement.
b) Term Certain. As the execution of this Agreement triggers the
reallocation of M4E's staff and resources, the Company may not
terminate or cancel this Agreement prior to the expiration of the Term
set forth in Section 12(a) herein.
13. SUCCESSORS AND ASSIGNS
The Parties may not assign their rights or obligations hereunder except
that M4E may in its sole discretion assign the right to receive any
compensation due hereunder including without limitation any and all
interest in the Compensation Shares, however, Company reserves right to
assign media credits to any other company within the DoMark family of
companies, and Company reserves the right to assign and or pledge the media
credits hereunder to senior lenders of the Company as collateral for
financing as may be required by the lenders.
14. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same agreement. A telefaxed copy of this Agreement shall be deemed
an original.
15. HEADINGS
The headings used in this Agreement are for convenience of reference only
and shall not be deemed to limit, characterize or in any way affect the
interpretation of any provision of this Agreement.
16. MODIFICATION AND WAIVERS
No change, modification or waiver of any provision of this Agreement shall
be valid or binding unless it is in writing, dated subsequent to the
Effective Date of this Agreement, and signed by both the Company and M4E.
No waiver of any breach, term, condition or remedy of this Agreement by any
party shall constitute a subsequent waiver of the same or any other breach,
term, condition or remedy.
5
17. SEVERABILITY
If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision(s) shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with
its terms.
18. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and
all prior negotiations, correspondence, agreements, understandings duties
or obligations between the parties with respect to the subject matter
hereof.
19. FURTHER ASSURANCES
From and after the date of this Agreement, upon the request of M4E, the
Company shall execute and deliver such instruments, documents or other
writings as may be reasonably necessary or desirable to carry out and
effectuate fully the intents and purposes of this Agreement.
6
20. NOTICES
All notices or other communications required or permitted by this Agreement
shall be in writing and shall be deemed to have been duly received: (i) if
given by telecopier, when transmitted and the appropriate telephonic
confirmation received if transmitted on a business day and during normal
business hours of the recipient, and otherwise on the next business day
following transmission, (ii) if given by certified or registered mail,
return receipt requested, postage prepaid, three business days after being
deposited in the U.S. mails, or (iii) if given by courier or other means,
when received or personally delivered, and, in any such case, to the
address and contacts indicated on the signature page.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
________________ 2008:
MEDIA4EQUITY LLC: DoMark, Inc.:
------------------------------------ ------------------------------------
Signature Signature Title
Media4Equity LLC ------------------------------------
Richard Smith/President Full Legal Name (PRINT)
2841 Hartland Road #301
Falls Church, VA 22043 ------------------------------------
O: (888)-563-5200 Company Name
F: (515)-474-3279
C: (703)-395-9607 ------------------------------------
E-Mail: ecarlson@media4equity.com Ticker Symbol
------------------------------------
Street Address
------------------------------------
City State Zip
------------------------------------
Phone
------------------------------------
E-Mail
7
EXHIBIT A
DATE:
TO: Transfer Agent:
--------------------------
--------------------------
--------------------------
RE: (DOMARK, INC.)
Sirs:
Please immediately issue restricted common stock shares of the above named
company as authorized in the accompanying resolutions as follows:
1,122,000 shares to and in the name of Media4Equity LLC, 2841 Hartland Road,
Suite #301, Falls Church, VA 22043, via Federal Express FedEx Saver #1136-1259-2
or Hand Delivery.
198,000 shares to and in the name of Eric Carlson, 2841 Hartland Road, Suite
#301, Falls Church, VA 22043,via Federal Express FedEx Saver #1136-1259-2 or
Hand Delivery.
Please deliver the shares as set forth in the accompanying resolutions, and
let me know if you require any additional information or if I can be of any
further assistance.
Very truly yours,
DoMark, Inc.
By:
------------------------------------
------------------------------------
Printed Name
Its:
------------------------------------
8