UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended May 31, 2011
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 333-136247
DoMark International, Inc.
(Name of small business issuer as specified in its charter)
Nevada 20-4647578
(State of Incorporation) (IRS Employer Identification No.)
254 S Ronald Reagan Blvd, Ste 134
Longwood, FL 32750
(Address of principal executive offices)
1809 East Broadway #125
Oviedo Florida 32765
(previous address)
757-572-9241
(Registrant's telephone number, including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 Par Value
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss. 232.405
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller Reporting Company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act. Yes [ ] No [X]
The aggregate market value of voting stock held by non-affiliates of the
registrant on November 30, 2010 was $6,142,742
As of September 9, 2011, there were 36,460,835 shares of Common Stock, $0.001
par value per share, issued and outstanding and there were 100,000 shares of
Preferred 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 1B. UNRESOLVED STAFF COMMENTS 8
ITEM 2. PROPERTIES 8
ITEM 3. LEGAL PROCEEDINGS 8
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 9
ITEM 6. SELECTED FINANCIAL DATA 10
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 10
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 11
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 12
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE 28
ITEM 9A. CONTROLS AND PROCEDURES 28
ITEM 9B. OTHER INFORMATION 29
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND
CORPORATE GOVERNANCE COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT. 29
ITEM 11. EXECUTIVE COMPENSATION 30
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS 30
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE 31
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 31
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 32
SIGNATURES 34
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EXPLANATORY NOTE
We are filing this Amendment No. 1 to Domark International, Inc.'s (the
"Company") Form 10-K for the fiscal year ended May 31, 2011, filed on September
14, 2011. The Company has restated its financial statements for the year ending
May 31, 2011, to correct items relating to the outstanding shares issued for the
Victory Lane agreement. Accordingly, our previously filed financial statements
for the year ending May 31, 2011 cannot be relied upon. On May 27, 2009, the
Company issued 5,747,126 shares of common stock, valued at $10,000,000, to
Victory Lane Financial Elite, LLC for the purchase of Victory Lane. Shortly
thereafter, a dispute arose between the Company and Victory Lane regarding
alleged misrepresentations made by Victory Lane in connection with the Victory
Lane Agreement. As a result the Company considered the transaction as
incomplete, demanded the return of the shares and reversed the initial recording
of the transaction.
Our May 31, 2011 Form 10-K will be restated to include the issuance of the
shares valued at $10,000,000, and then an impairment loss for the $10,000,000
invested. The loss will be recorded retro-actively in August 2009, coinciding
with the date the Company along with Victory Lane, LLC and R. Thomas Kidd filed
a lawsuit in the United States District Court, Middle District of Florida. Our
accumulated deficit for the current period ending May 31, 2011 and May 31, 2010
will therefore increase by $10,000,000, respectively. If the Company prevails in
its suit against Victory Lane, the shares originally issued to Victory Lane will
be returned to treasury and the Company will recognize the value as litigation
proceeds on the income statement for the applicable period.
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 the "Company") was incorporated under
the laws of the State of Nevada on March 30, 2006. In 2008, the Company embarked
on a business plan that was intended to acquire profitable businesses that would
create shareholder value in diverse industries. During 2008 and 2009, the
company acquired several operating businesses, as set forth in various Current
Reports on Form 8-K filed with the Securities and Exchange Commission. On May
21, 2009, the Company closed an acquisition pursuant to that certain Agreement
for the Exchange of Common Stock (the "Victory Lane Agreement") with Victory
Lane Financial Elite, LLC ("Victory Lane") with respect to a real estate
lifestyle business known as Victory Lane (the "Victory Lane Business"). Shortly
thereafter, a dispute arose between the Company and the principals of Victory
Lane regarding the representations of the principals of Victory Lane and the
Victory Lane Business and the Victory Lane Agreement. Litigation between the
Company and various parties pertaining to the Victory Lane Business remains
outstanding. (Refer to "Item 3, Legal Proceedings" below).
During the last half of 2009, the Company sold two of its operating
subsidiaries, Javaco, Inc. and ECFO Corporation and effected rescissions of
acquisition transactions on the remainder of its operating businesses. Between
October 2009 and May 2011, the Company had no material ongoing operations. The
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business of the Company during the period from October 2009 through May 2011 was
to seek out new acquisitions and to conduct the litigation with Victory Lane. On
May 31, 2011, the Company formed a wholly owned subsidiary, Armada Sports &
Entertainment, Inc. ("Armada"). Armada is a sports marketing and management
company engaged in owning, developing, and conducting made-for-television sports
and entertainment events. Armada currently owns "The Golf Championships", a
series of unique competitions in the sport known as The Million Dollar
Invitational, The World Putting Tour Championships, and the Celebrity
Challenges. Through Armada, the Company intends to generate revenues through the
sale of advertising, sponsorships, event tickets, promotional fees, broadcasting
rights and other products. The Company is also currently reviewing, researching,
and evaluating other acquisitions in the sports and entertainment field as well
as related industries.
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 free of charge through the Commission's
Internet site at www.sec.gov.
EMPLOYEES
As of fiscal year end May 31, 2011, the Company had one employee. The Company
conducts its business through independent contractors at May 31, 2011.
ITEM 1A. RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING INFORMATION ABOUT THESE RISKS, TOGETHER WITH
THE OTHER INFORMATION CONTAINED IN THIS ANNUAL REPORT ON FORM 10-K, BEFORE
INVESTING IN OUR COMMON STOCK. IF ANY OF THE EVENTS ANTICIPATED BY THE RISKS
DESCRIBED BELOW OCCUR, OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION COULD
BE ADVERSELY AFFECTED, WHICH COULD RESULT IN A DECLINE IN THE MARKET PRICE OF
OUR COMMON STOCK, CAUSING YOU TO LOSE ALL OR PART OF YOUR INVESTMENT. The risks
described below are not the only risks facing the Company and there may be
additional risks of which the Company is not presently aware or that the Company
currently considers unlikely to significantly impact the Company.
RISKS RELATED TO OUR OPERATIONS
EFFORTS TO COMPLY WITH RECENTLY ENACTED CHANGES IN SECURITIES LAWS AND
REGULATIONS WILL INCREASE OUR COSTS AND REQUIRE ADDITIONAL MANAGEMENT RESOURCES,
AND WE STILL MAY FAIL TO COMPLY.
As directed by Section 404 of the Sarbanes-Oxley Act of 2002, the SEC has
adopted rules requiring public companies to include a report of management on
their internal controls over financial reporting in their annual reports on Form
10-K. In addition, the public accounting firm auditing a public company's
financial statements must attest to and report on management's assessment of the
effectiveness of its internal controls over financial reporting. These
requirements are not presently applicable to us, and we do not expect the
requirement to have the public accounting firm auditing our financial statements
attest to and report on management's assessment of the effectiveness of its
internal controls over financial reporting to be applicable to us in the
foreseeable future. If and when these regulations become applicable to us and if
we are unable to conclude that we have effective internal controls over
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financial reporting or if our independent auditors are unable to provide us with
an unqualified report as to the effectiveness of our internal controls over
financial reporting as required by Section 404 of the Sarbanes-Oxley Act of
2002, investors could lose confidence in the reliability of our financial
statements, which could result in a decrease in the value of our common stock.
We have not yet begun a formal process to evaluate our internal controls over
financial reporting. Given the status of our efforts, coupled with the fact that
guidance from regulatory authorities in the area of internal controls continues
to evolve, substantial uncertainty exists regarding our ability to comply by
applicable deadlines.
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's
business through our wholly owned subsidiary Armada Sports &Entertainment, Inc.
and by acquisition of other entities engaged in the sports and entertainment
industry. 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 may 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 of its
subsidiary Armada Sports & Entertainment, Inc. and its events and growth of the
Company by acquisitions. Although the Company believes there are significant
opportunities to grow the company and its subsidiary Armada Sports &
Entertainment, Inc. (and its events) and to grow the company through other
acquisitions of sports and entertainment companies, we can make no assurances
that the Company will be able to execute its acquisition strategy. If the
Company is unable to execute its business and acquisition strategy, the value of
our common stock may decrease significantly.
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 stock.
RISKS RELATING TO OWNERSHIP OF OUR COMMON STOCK
Although there is presently a market for our common stock, the price of our
common stock may be extremely volatile and investors may not be able to sell
their shares at or above their purchase price, or at all. We anticipate that the
market for our common stock may be highly volatile and may fluctuate
substantially because of:
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* Actual or anticipated fluctuations in our future business and
operating results;
* Changes in or failure to meet market expectations; and
* Fluctuations in stock market price and volume.
BECAUSE WE ARE QUOTED ON THE OTCBB INSTEAD OF AN EXCHANGE OR NATIONAL QUOTATION
SYSTEM, OUR INVESTORS MAY HAVE A TOUGHER TIME SELLING THEIR STOCK OR EXPERIENCE
NEGATIVE VOLATILITY ON THE MARKET PRICE OF OUR STOCK.
Our common stock is traded on the OTCBB. The OTCBB is often highly illiquid, in
part because it does not have a national quotation system by which potential
investors can follow the market price of shares except through information
received and generated by a limited number of broker-dealers that make markets
in particular stocks. There is a greater chance of volatility for securities
that trade on the OTCBB as compared to a national exchange or quotation system.
This volatility may be caused by a variety of factors, including the lack of
readily available price quotations, the absence of consistent administrative
supervision of bid and ask quotations, lower trading volume, and market
conditions. Investors in our common stock may experience high fluctuations in
the market price and volume of the trading market for our securities. These
fluctuations, when they occur, have a negative effect on the market price for
our securities. Accordingly, our stockholders may not be able to realize a fair
price from their shares when they determine to sell them or may have to hold
them for a substantial period of time until the market for our common stock
improves.
WE DO NOT INTEND TO PAY DIVIDENDS.
We do not anticipate paying cash dividends on our common stock in the
foreseeable future. While there are various reasons for not doing so, one reason
we do not anticipate paying a divided is that we may not have sufficient funds
to do so under the laws governing the Company. Even if funds are legally
available to pay dividends, we may nevertheless decide in our sole discretion
not to pay dividends. If we do pay dividends, the declaration, payment and
amount of such dividends will be made at the sole 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 paid, we cannot ascertain the amount of any such dividend.
THE MARKET PRICE FOR OUR COMMON SHARES IS PARTICULARLY VOLATILE GIVEN OUR STATUS
AS A RELATIVELY UNKNOWN COMPANY WITH A SMALL AND THINLY TRADED PUBLIC FLOAT,
LIMITED OPERATING HISTORY AND LACK OF PROFITS, WHICH COULD LEAD TO WIDE
FLUCTUATIONS IN OUR SHARE PRICE.
The market for our common stock is characterized by significant price volatility
when compared to seasoned issuers, and we expect that the price for our common
stock will continue to be more volatile than a seasoned issuer for the
indefinite future. The volatility in our stock price is attributable to a number
of factors. First, as noted above, shares of our common stock 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 both positively and negatively. The price
for our shares could, for example, decline precipitously in the event that a
large number of our common shares are sold on the market without commensurate
demand, as compared to a seasoned issuer which could better absorb those sales
without adverse impact on its stock 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, 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 stock, regardless of our operating performance. We cannot make any
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predictions or projections as to what the prevailing market price for our common
stock will be at any time, including as to whether our common stock will sustain
its current market price, or as to what effect that the sale of shares or the
availability of common stock for sale at any time will have on the prevailing
market price.
Shareholders should be aware that 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 STOCK PRICE MAY SUBJECT US TO SECURITIES LITIGATION,
THEREBY DIVERTING OUR RESOURCES, WHICH IN TURN MAY HAVE A MATERIAL EFFECT ON OUR
PROFITABILITY AND RESULTS OF OPERATIONS.
As discussed in the preceding risk factors, the market for our common stock is
characterized by significant price volatility when compared to seasoned issuers,
and we expect that our stock price will continue to be more volatile than a
seasoned issuer for the indefinite future. In the past, plaintiffs have often
initiated securities class action litigation against a company following periods
of volatility in the market price of its securities. We may in the future be the
target of similar litigation. Securities litigation could result in substantial
costs and liabilities and could divert management's attention and resources.
SHOULD ONE OR MORE OF THE FOREGOING RISKS OR UNCERTAINTIES MATERIALIZE, OR
SHOULD THE UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY DIFFER
SIGNIFICANTLY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, EXPECTED, INTENDED OR
PLANNED.
FORWARD-LOOKING STATEMENTS
This Annual Report contains information that may constitute "forward-looking
statements" within the meaning of the federal securities laws. Generally, the
words "believe," "expect," "intend," "estimate," "anticipate," "project," "will"
and similar expressions identify forward-looking statements, which generally are
not historical in nature. However, the absence of these words or similar
expressions does not mean that a statement is not forward-looking. All
statements that address operating performance, events or developments that we
expect or anticipate will occur in the future - including statements relating to
our growth strategies, anticipated trends in our industry, our ability to obtain
and retain sufficient capital for future operations and our anticipated needs
for working capital - are forward-looking statements. 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
7
inaccurate and therefore there can be no assurance that the results contemplated
in forward-looking statements will be realized. The Company undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except as required
by law. In addition, forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from the
Company's historical experience and our present expectations or projections.
These risks and uncertainties include, but are not limited to, those described
in "Management's Discussion and Analysis OF FINANCIAL CONDITION AND RESULTS OF
OPERATION," "RISK FACTORS," "Business," and elsewhere in this Annual Report and
our future reports filed with the Securities and Exchange Commission.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable to smaller reporting companies.
ITEM 2. PROPERTIES
The Company maintains its corporate executive office in Longwood, Florida. ECFO,
a former subsidiary of the Company, has been providing the office space at no
charge to the Company as a courtesy to the Company. The Company does not
maintain, own or lease any other property.
ITEM 3. LEGAL PROCEEDINGS
On May 21, 2009, the Company entered into that certain Agreement for the
Exchange of Common Stock (the "Victory Lane Agreement") with Victory Lane
Financial Elite, LLC ("Victory Lane") with respect to a real estate lifestyle
business known as Victory Lane (the "Victory Lane Business") pursuant to which
the Company intended to purchase the Victory Lane Business. Shortly thereafter,
a dispute arose between the Company and Victory Lane regarding alleged
mis-representations made by Victory Lane in connection with the Victory Lane
Agreement.
In August, 2009, Victory Lane Financial Elite, LLC, Legacy Development, LLC and
Patrick Costello filed suit in the Superior Court of Tattnall County, Georgia
(Civ. No. 2009-V-381-JW) against the Company, R. Thomas Kidd and various
officers and directors of the Company, alleging that the Company was in breach
of the Victory Lane Agreement and that the Company and certain of the individual
defendants had committed various torts against the plaintiffs and that certain
of the individual defendants had violated various fiduciary and other duties
owed to the plaintiffs in connection with the Victory Lane Agreement and the
handling of the Victory Lane Business (the "VLFE Case"). The plaintiffs sought a
declaratory judgment to the effect that the Victory Lane Agreement had not been
executed, as well as money damages from the Company and the individual
defendants. The Company and Mr. Kidd have answered the Complaint, denying any
liability for the plaintiff's claims and have asserted various counterclaims
including fraud and other torts. In July 2010 the court dismissed all of the
individual defendants, other than R. Thomas Kidd, in response to a motion to
dismiss for lack of jurisdiction. The case has since been stayed.
In December, 2009, AHIFO-21, LLC filed a lawsuit in the Superior Court of
Tattnall County, Georgia (Civ. No. 2009-V-672-JS) against Victory Lane, LLC,
Patrick J. Costello and Stephen Brown (the "Victory Lane Defendants") alleging
that the Victory Lane Defendants owe the plaintiff more than $7,740,000 in
respect of one or more loans made by the plaintiff to certain Victory Lane
Defendants in connection with the Victory Lane Business (the "AHIFO Case"). In
February, 2010, the Victory Lane Defendants filed a Third Party Complaint
against the Company and R. Thomas Kidd, claiming that the Company and Mr. Kidd
should be liable for any amounts the Victor Lane Defendants are required to pay
to the plaintiff in this case. The Company and Mr. Kidd have answered the
Complaint, denying any liability for the plaintiff's claims and Mr. Kidd has
asserted various counterclaims including fraud and other torts. The Company and
Mr. Kidd filed a motion to dismiss the Third Party Complaint, but the entire
case was subsequently stayed.
Because each of the VLFE Case and the AHIFO Case have been stayed and because
discovery in those cases is not complete, the Company has not reached a
determination that any loss is other than remote and that the amount of any
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damages, if any were determined adverse to the Company, would be reasonably
estimable. The Company believes that it has meritorious claims against the
opposing parties with respect to the Victory Lane Agreement and that the claims
asserted against it are not meritorious. The Company intends to defend itself
vigorously.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters to a vote of its security holders during
the fiscal year ended May 31, 2011.
PART II
ITEM 5. MARKET FOR OUR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
REPURCHASES OF EQUITY SECURITIES
Our 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".
As of September 9, 2011, there were 36,460,835 shares of our common stock
outstanding and there were approximately 89 shareholders of record of the
Company's common stock.
The following table sets forth for the periods indicated the high and low bid
quotations for our common stock. These quotations represent inter-dealer
quotations, without adjustment for retail markup, markdown or commission and may
not represent actual transactions.
FISCAL YEAR ENDED MAY 31, 2011
High Low
------ ------
First Quarter (June - August, 2010) $ 0.23 $ 0.07
Second Quarter (September - November 2010) $ 0.30 $ 0.13
Third Quarter (December - February 2011) $ 0.20 $ 0.15
Fourth Quarter (March - May 2011) $ 0.15 $ 0.15
On September 9, 2011, the closing bid price of our common stock was $1.50.
DIVIDENDS
The Company has never paid dividends on any shares of its common stock, nor does
the Company anticipate paying dividends at any time in the foreseeable future.
Any profits received by the Company will be reinvested in its business.
RECENT SALES OF UNREGISTERED SECURITIES
Stock Issued Stock Issued
for Cash Cash Recieved for Assests
-------- ------------- -----------
Year Ended May 31, 2010 -- $ -- --
Year Ended May 31, 2011 -- $ -- --
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ITEM 6. SELECTED FINANCIAL DATA
Not applicable to smaller reporting companies.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
The following is management's discussion and analysis of certain significant
factors that have affected our financial position and operating results during
the periods included in the accompanying consolidated financial statements, as
well as information relating to the current plans of our management. This report
includes forward-looking statements. Generally, the words "believes",
"anticipates", "may", "will", "should", "expect", "intend", "estimate",
"continue", and similar expressions or the negative thereof or comparable
terminology are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties, including the matters set forth
in this report or other reports or documents we file with the Securities and
Exchange Commission from time to time, which could cause actual results or
outcomes to differ materially from those projected. Undue reliance should not be
placed on these forward-looking statements, which speak only as of the date
hereof. We undertake no obligation to update these forward-looking statements.
The following discussion and analysis should be read in conjunction with our
consolidated financial statements and the related notes thereto and other
financial information contained elsewhere in this Form 10-K.
RECENT DEVELOPMENTS
Effective May 31, 2011, the Company formed a wholly owned subsidiary, Armada
Sports & Entertainment, Inc. ("Armada Sports"). Armada Sports is a sports
marketing and management company engaged in owning, developing and conducting
made for television sports and entertainment events. Armada Sports currently
owns THE GOLF CHAMPIONSHIPS, a series of unique competitions in the sport, known
as The Million Dollar Invitationals, The World Putting Tour Championships, and
the Celebrity Challenges. More Information is available at
www.TheGolfChampionships.com.
RESULTS OF OPERATIONS
FISCAL YEAR ENDED MAY 31, 2011 COMPARED TO FISCAL YEAR ENDED MAY 31, 2010
The Company had no revenues for the fiscal year ended May 31, 2011 or for the
fiscal year ended May 31, 2010. During fiscal 2011, we have been forming
relationships and aggressively developing our sports marketing and management
business. We continue to focus on new acquisitions to increase our revenues and
cash flow.
General and administrative expenses for fiscal 2011 decreased to $35,159 as
compared to $1,904,430 in fiscal 2010. The decrease reflects a decrease in legal
and administrative expenses and stock compensation. There was no interest
expense for the twelve months ending May 31, 2011. The Company's operations
during fiscal 2011 were funded through loans from shareholders. This loan is an
interest free, demand note payable. During March 2011, the Company also received
a short term loan from Infinite Funding, Inc. in the amount of $75,000 from a
private lender as evidenced by a promissory note. Interest accrues on the amount
borrowed at 3% per annum.
10
The operating loss for fiscal 2011 decreased to $125,478 as compared to
$2,243,935 in fiscal 2010. Our loss from discontinued operations for the period
ending May 31, 2011 was $0.00 as compared to $568,722 for the period ending May
31, 2010.
No tax benefit was recorded for fiscal 2011 or fiscal 2010 as required by ASC
Standard 740-25, Accounting for Income Taxes. The Company has provided for a
100% allowance of its deferred tax assets, as it is uncertain that there will be
sufficient net profits in the future to fully realize the tax benefit of its net
operating loss carry-forwards.
LIQUIDITY AND CAPITAL RESOURCES
Our operating requirements have been funded primarily through financing
facilities, sales of our common stock, and loans from shareholders. Currently
the Company's cash flows do not adequately support the operating expenses of the
Company. We received $0 in fiscal years 2011 and 2010 from the sale of our
common stock. The Company will continue to require financing from loans and
notes payable until such time our business has generated income sufficient to
carry our operating costs.
Cash provided (used) by operating activities for the fiscal year 2011 was
($33,444) compared to $448,773 for the fiscal year 2010. Depreciation expense
for fiscal year 2011 was $1,715 as compared to $659 for fiscal 2010.
Cash (used in) provided in investing activities was ($3,500) for the fiscal year
2011, compared to $0.00 for the fiscal year 2010.
Cash provided by financing activities was $41,334 for fiscal year 2011 as
compared to 678,924 for fiscal 2010. Financing activities consisted of cash
received from shareholders and notes payable.
OTHER CONSIDERATIONS
There are numerous factors that affect the Company's business and the results of
its operations. Sources of these factors include general economic and business
conditions, federal and state regulation of business activities, the level of
demand for services, the level and intensity of competition in the sports
marketing and media content industry, the ability to develop new services or
events based on new or evolving needs for sports marketing services and the
market's acceptance of those new services, our ability to timely and effectively
manage our events and acquisitions, and our ability to continue to improve our
infrastructure, including personnel and systems, to keep pace with our
anticipated rapid growth in the development of our sports business.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to smaller reporting companies.
11
ITEM 8. FINANCIAL STATEMENTS
DOMARK INTERNATIONAL, INC.
TABLE OF CONTENTS
Page
----
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM: 13
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheet at May 31, 2011 and 2010 14
Consolidated Statements of Operations for the years ended
May 31, 2011 and 2010 16
Consolidated Statements of Stockholders' Deficit for the years
ended May 31, 2011 and 2010 17
Consolidated Statements of Cash Flows for the years ended
May 31, 2011 and 2010 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 19
12
[LETTERHEAD OF DE JOYA GRIFFITH & COMPANY, LLC]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Domark International, Inc.
We have audited the accompanying balance sheet of Domark International Inc. (A
Development Stage Company) (the "Company") as of May 31, 2011 and the related
statements of operations, stockholders' deficit and cash flows for the year
ended May 31, 2011. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. We did not audit, nor were we engaged
to perform an audit of the financial statements of Domark International Inc. for
the year ended May 31, 2010 and from October 21, 2009 through May 31, 2010.
Accordingly, those statements are unaudited and we express no such opinion, in
so far as it relates to the amounts included in the year ended May 31, 2010 and
from October 21, 2009 through May 31, 2010 financial 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 financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Domark International Inc. (A
Development Stage Company) as of May 31, 2011 and the related statements of
operations, stockholders' deficit and cash flows for the year ended May 31, 2011
in conformity with accounting principles generally accepted in the United States
of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has suffered losses from operations, which raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ De Joya Griffith & Company, LLC
----------------------------------------------
Henderson, Nevada
September 13, 2011, except for Note 4 which is dated January 27, 2012
13
DOMARK INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
ASSETS
As of May 31, As of May 31,
2011 2010
-------- --------
(Restated) (Unaudited-Restated)
CURRENT ASSETS
Cash $ 4,587 $ 197
Loans and notes receivable -- 100,000
-------- --------
Total current assets 4,587 100,197
-------- --------
FIXED ASSETS
Property & equipment, net 399 1,531
-------- --------
Total fixed assets 399 1,531
-------- --------
OTHER ASSETS
Website development costs 6,417 --
Investment in unconsolidated subsidiary -- 10,000
-------- --------
Total other assets 6,417 10,000
-------- --------
TOTAL ASSETS $ 11,403 $111,728
======== ========
The accompanying notes are an integral part of these financial statements.
14
DOMARK INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
As of May 31, As of May 31,
2011 2010
------------ ------------
(Restated) (Unaudited-restated)
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 44,987 $ 61,168
Note payable 75,000 --
------------ ------------
Total current liabilities 119,987 61,168
------------ ------------
LONG-TERM LIABILITIES
Due to affiliate and shareholder 696,171 729,835
------------ ------------
Total long-term liabilities 696,171 729,835
------------ ------------
TOTAL LIABILITIES 816,158 791,003
------------ ------------
STOCKHOLDERS' DEFICIT
Convertible preferred stock series A, $0.001 par value,
authorized: 2,000,000
issued: 100,000 and none, respectively 100 100
Common stock, $0.001 par value,
authorized: 200,000,000
issued: 36,460,835 and 36,460,835, respectively 36,461 36,461
Additional paid in capital 26,448,172 26,448,172
Accumulated deficit (26,850,830) (26,850,830)
Accumulated deficit during development stage (438,656) (313,178)
------------ ------------
Total stockholders' deficiency (804,755) (679,275)
------------ ------------
TOTAL LIABILITIES AND EQUITY $ 11,403 $ 111,728
============ ============
The accompanying notes are an integral part of these financial statements.
15
DOMARK INTERNATIONAL, INC.
(A DEVELOPMENT STATE COMPANY)
STATEMENTS OF OPERATIONS
From
October 21, 2009
For the For the (Development stage)
year ended year ended to
May 31, 2011 May 31, 2010 May 31, 2011
------------ ------------ ------------
(Restated) (Unaudited-Restated) (Unaudited-Restated)
GENERAL AND ADMINISTRATIVE EXPENSES $ 35,161 $ 1,904,430 $ 348,225
BAD DEBT EXPENSE 100,000 1,882 100,000
IMPAIRMENT OF GOODWILL -- 332,000 10,000
------------ ------------ ------------
OPERATING INCOME/(LOSS) (135,161) (2,238,312) (458,225)
GAIN ON SALE OF SUBSIDIARY -- 8,000 --
OTHER INCOME 19,681 26,377 29,567
IMPAIRMENT OF ASSET (10,000) (10,040,000) (10,000)
------------ ------------ ------------
NET LOSS FROM OPERATIONS $ (125,480) $(12,243,935) $ (438,656)
============ ============ ============
INCOME (LOSS) FROM DISCONTINUED OPERATONS -- (568,722) --
NET LOSS $ (125,480) $(12,812,657) $ (438,658)
============ ============ ============
Loss per share on continuing operations, basic and diluted $ (0.07) $ (0.13)
Loss per share on discontinued operations, basic and diluted $ (0.00) $ (0.02)
Net loss per share, basic and diluted $ (0.07) $ (0.15)
Weighted average common shares outstanding 36,460,835 36,460,835
The accompanying notes are an integral part of these financial statements.
16
DOMARK INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIT
As of May 31, 2011
Deficit
Accumulated
Additional During the Total
Preferred Stock Common Stock Paid-in Development Stockholders'
Amount Shares Shares Amount Capital Stage Deficit
------ ------ ------ ------ ------- ----- -------
Balance, May 31, 2009 -- $ -- 151,070,387 $151,169 $ 36,226,508 $(14,351,352) $(22,026,326)
Common Stock issued for
consulting on June 1, 2009
at $2.00 per share -- -- 3,000 3 5,997 -- 6,000
Common Stock issued for
consulting on June 1, 2009
at $2.00 per share -- -- 50,000 50 99,950 -- 100,000
Common Stock issued for
consulting on June 1, 2009
at $2.00 per share -- -- 25,000 25 49,975 -- 50,000
Common Stock issued for
consulting on June 1, 2009
at $2.00 per share -- -- 212,500 213 424,787 -- 425,000
Common Stock issued for
consulting on June 2, 2009
at $1.90 per share -- -- 2,500 3 4,997 -- 5,000
Common Stock issued for
consulting on June 3, 2009
at $1.90 per share -- -- 5,000 5 9,495 -- 9,500
Common Stock issued for
consulting on June 4, 2009
at $1.90 per share -- -- 15,750 16 29,909 -- 29,925
Common Stock issued for
consulting on June 6, 2009
at $1.90 per share -- -- 125,000 125 218,625 -- 218,750
Common Stock returned to
treasury as a result of
rescinded consulting
agreement on August 7, 2009 -- -- (50,000) (50) (204,950) -- (205,000)
Preferred Stock issued for
compensation on December 1, 100,000 100 -- -- -- -- 100
2009
Common Stock returned to
treasury for debt settlement
at $0.04 per share -- -- (111,438,394) 111,438) (3,398,562) -- (3,510,000)
Common Stock returned to
treasury and cancelled as
a result of rescissions -- -- (3,559,908) (3,560) (3,398,562) -- (3,510,000)
Net Loss from discontinued
operations -- -- -- -- -- (568,722) (568,722)
Net Income (loss) -- -- -- -- -- (12,243,935) (12,243,935)
------- ------- ------------ -------- ------------ ------------ ------------
Balance, May 31, 2010 100,000 100 36,460,835 36,461 26,448,172 (27,164,009) (679,275)
Net Loss from discontinued
operations -- -- -- -- -- -- --
Net Income (loss) -- -- -- -- -- (125,480) (125,480)
------- ------- ------------ -------- ------------ ------------ ------------
Balance, May 31, 2011 100,000 $ 100 $ 36,460,835 $ 36,461 $ 26,448,172 $(27,289,488) $ (804,755)
======= ======= ============ ======== ============ ============ ============
The accompanying notes are an integral part of these financial statements.
17
DOMARK INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the twelve months ending May 31, 2011 and 2010
From
October 21, 2009
For the For the (Development stage)
year ended year ended to
May 31, 2011 May 31, 2010 May 31, 2011
-------------- -------------- --------------
(Restated) (Unaudited-Restated) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (125,480) $ (12,243,935) $ (438,658)
------------- ------------- -------------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and Amortization 1,715 659 2,374
Impairment of Assets 10,000 10,040,000 10,000
Impairment of Goodwill -- 332,000 --
Common stock issued as compensation and for expenses -- 957,344 89
Gain on sale of subsidiary -- (8,000) --
Bad debt expense 100,000 1,882 --
CHANGES IN OPERATING ASSETS AND LIABILITIES:
(Increase)/Decrease Prepaid Exp and Other Current Assets -- 1,519,363 --
Increase/(Decrease) in Accounts Payable (19,681) (540) (78,130)
Increase/(Decrease) in Accrued Expenses -- (150,000) --
------------- ------------- -------------
Net cash provided by (used in) operating activities 33,446 448,773 (504,325)
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Paid for Web Development (3,500) -- (3,500)
------------- ------------- -------------
Net cash flows provided by (used in) investing activities (3,500) -- (3,500)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Received/(Paid) from/(to) Affiliates and/or Shareholders (33,664) 678,924 534,355
Cash Received/(Paid) on notes payable 75,000 -- 75,000
Cash Received/(Paid) on notes payable -- -- (100,470)
------------- ------------- -------------
Net cash provided by (used in) financing activities 41,336 678,924 508,885
------------- ------------- -------------
CASH RECONCILIATION
Net increase (decrease) in cash and cash equivalents 4,390 1,127,697 1,060
Net cash flows from discontinued operations -- (1,143,299) --
Cash and cash equivalents - beginning balance 197 15,799 3,527
------------- ------------- -------------
CASH AND CASH EQUIVALENTS BALANCE END OF PERIOD $ 4,587 $ 197 $ 4,587
============= ============= =============
The accompanying notes are an integral part of these financial statements.
18
DOMARK INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED MAY 31, 2011 AND 2010
NOTE 1 - DESCRIPTION OF BUSINESS
DOMARK INTERNATIONAL, INC. ("DoMark" or the "Company") was incorporated under
the laws of the State of Nevada on March 30, 2006. In 2008, the Company embarked
on a business plan that was intended to acquire profitable businesses that would
create shareholder value in diverse industries. During 2008 and 2009, the
Company acquired several operating businesses, as set forth in various Current
Reports on Form 8-K filed with the Securities and Exchange Commission. On May
21, 2009, the Company closed an acquisition pursuant to that certain Agreement
for the Exchange of Common Stock (the "Victory Lane Agreement") with Victory
Lane Financial Elite, LLC ("Victory Lane") with respect to a real estate
lifestyle business known as "Victory Lane" (the "Victory Lane Business").
Shortly thereafter a dispute arose between the Company and the principals of
Victory Lane regarding the representations of the principals of Victory Lane and
the Victory Lane Business and the Victory Lane Agreement. Litigation between the
Company and various parties pertaining to the Victory Lane Business remains
outstanding. (Refer to Note 10 - Commitments and Contingencies below).
During the last half of 2009, the Company sold two operating subsidiaries,
Javaco, Inc. and ECFO Corporation and effected rescissions of acquisition
transactions on the remainder of its operating businesses. Between October 2009
and May 2011 the Company had no material ongoing operations. The business of the
Company during the period from October 2009 through May 2011 was to seek out new
acquisitions and to conduct the litigation with Victory Lane. On May 31, 2011,
the Company formed a wholly owned subsidiary, Armada Sports & Entertainment,
Inc. ("Armada Sports"). Armada Sports is a sports marketing and management
company engaged in owning, developing, and conducting made-for-television sports
and entertainment events. Armada Sports currently owns "The Golf Championships",
a series of unique competitions in the sport known as The Million Dollar
Invitationals, The World Putting Tour Championships, and the Celebrity
Challenges. Through Armada Sports, the Company intends to generate revenues
through the sale of advertising, sponsorships, event tickets, promotional fees,
broadcasting rights and other products. The Company is also currently reviewing,
researching, and evaluating other acquisitions in the sports and entertainment
field as well as related industries.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America which
contemplate continuation of the Company as a going concern. The Company has
year-end losses from operations of $125,480 and $12,243,935 for the years ended
May 31, 2011 and 2010, respectively. Furthermore, the Company has inadequate
working capital to maintain or develop its operations, and is dependent upon
funds from private investors and the support of certain stockholders.
These factors raise substantial doubt about the ability of the Company to
continue as a going concern. These financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts, or amounts and classification of liabilities that might result from
this uncertainty. In this regard, management is planning to raise any necessary
additional funds through loans and additional sales of its common stock. There
is no assurance that the Company will be successful in raising additional
capital.
19
NOTE 3 - BASIS OF PRESENTATION
The audited financial statements of the Company have been prepared in accordance
with United States generally accepted accounting principles ("GAAP") for
financial information and the rules and regulations of the Securities and
Exchange Commission ("SEC"). In the opinion of management, all adjustments,
consisting of normal recurring accruals considered necessary for a fair
presentation, have been included.
The Company's financial statements for the year ending May 31, 2010 were audited
by Larry O'Donnell, C.P.A., P.C. (the "O'Donnell Firm"). Subsequent to the
filing of the Company's Annual Report on Form 10-K for the year ending May 31,
2010 (the "2010 Financial Statement"), the O'Donnell Firm resigned from its role
as the Company's outside auditor. The Company was subsequently informed that the
O'Donnell Firm's license was revoked by the Public Company Accounting Oversight
Board ("PCAOB"). Subsequent to that event, the Company was requested by the SEC
to have a new audit of the 2010 Financial Statement conducted by the Company's
new auditors. The Company was unable to complete a new audit of the 2010
Financial Statement, however, because the Company's sale of its Javaco business
in 2009 included the sale of key accounting work papers that would have been
required to perform the audit. Although the Company undertook significant
efforts to try to obtain the missing accounting work papers from Javaco, the
Company was ultimately unable to obtain them. As a result, the Company sought
and obtained the approval of the SEC to include its 2010 Financial Statement in
this Annual Report on Form 10-K subject to the Company's disclosure that the
2010 Financial Statement should be considered to be unaudited.
NOTE 4 - RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS
The impact of the restatement on the consolidated financial statements as of and
for the year ended May 31, 2011 and the comparative period ending May 31, 2010
is shown in the following tables:
As reported
for May 31, 2010
in 10-K filed on
September 14, 2011 Adjustment As restated
------------------ ---------- -----------
BALANCE SHEET DATA - MAY 31, 2010
Common stock $ 30,714 $ 5,747 $ 36,461
Additional paid-in capital $ 16,453,918 $ 9,994,254 $ 26,448,172
Accumulated deficit $(16,850,830) $(10,000,000) $(26,850,830)
Total stockholders' deficiency $ (679,277) $ 2 $ (679,275)
As reported
for May 31, 2011
in 10-K filed on
September 14, 2011 Adjustment As restated
------------------ ---------- -----------
BALANCE SHEET DATA -- MAY 31, 2011
Common stock $ 30,714 $ 5,747 $ 36,461
Additional paid-in capital $ 16,453,918 $ 9,994,254 $ 26,448,172
Accumulated deficit $(16,850,830) $(10,000,000) $(26,850,830)
20
As reported
for May 31, 2010
in 10-K filed on
September 14, 2011 Adjustment As restated
------------------ ---------- -----------
STATEMENT OF OPERATIONS DATA
FOR THE YEAR ENDED MAY 31, 2010
Asset Impairment $ 40,000 $ 10,000,000 $ 10,040,000
NET LOSS $ (2,812,657) $(10,000,000) $(12,812,657)
BASIC AND DILUTED NET LOSS PER SHARE $ (0.07) $ (0.08) $ (0.15)
As reported
for May 31, 2010
in 10-K filed on
September 14, 2011 Adjustment As restated
------------------ ---------- -----------
STATEMENT OF CASH FLOWS DATA
FOR THE YEAR ENDED MAY 31, 2010
NET LOSS $ (2,243,935) $(10,000,000) $(12,243,935)
Asset Impairment $ 40,000 $ 10,000,000 $ 10,040,000
NET CASH USED IN OPERATING ACTIVITIES $ 449,853 $ (1,080) $ 448,773
NET INCREASE (DECREASE) IN CASH $ 1,128,777 $ (1,080) $ 1,127,697
As reported
for May 31, 2011
in 10-K filed on
September 14, 2011 Adjustment As restated
------------------ ---------- -----------
STATEMENT OF CASH FLOWS DATA
FOR THE YEAR ENDED MAY 31, 2011
Asset Impairment $ 110,000 $ (100,000) $ 10,000
NOTE 5 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RECENT ACCOUNTNG PRONOUNCEMENTS
The Company has reviewed recently issued accounting pronouncements and plans to
adopt those that are applicable to it. It does not expect the adoption of these
pronouncements to have a material impact on its financial position, results of
operations or cash flows.
DEVELOPMENT STAGE COMPANY
The Company is a development stage company as defined in ASC Standard 915-10-05
and has recognized no revenue and devotes substantially all of its efforts on
establishing its sports business. Its planned principal operations in developing
its sports business have commenced. All losses accumulated since inception have
been considered as part of the Company's development stage activities.
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements represent the consolidated financial
position and results of operations of the Company and include the accounts and
results of operations of the Company and its subsidiaries. The accompanying
financial statements include the active entity of DoMark International, Inc. and
its wholly owned subsidiary, Armada Sports & Entertainment, Inc. The Company has
relied upon the guidance provided by Statements of Financial Accounting
Standards, ASC 810-10-15-3.
21
USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements. These estimates and assumptions also
affect the reported amounts of revenues, costs and expenses during the reporting
period. Management evaluates these estimates and assumptions on a regular basis.
Actual results could differ from those estimates.
The primary management estimates included in these 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.
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, 2011 and 2010, cash and
cash equivalents included cash on hand and cash in the bank.
NET LOSS PER COMMON SHARE
Basic net loss per common share is computed by dividing net loss by the weighted
average number of shares of common stock outstanding during the period. Diluted
net loss per common share is computed by dividing net loss by the weighted
average number of shares of common stock and potentially outstanding shares of
common stock during each period. There were no potentially dilutive shares
outstanding as of May 31, 2011.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost and depreciated over the estimated
useful lives of the assets using principally the straight-line method. When
items are retired or otherwise disposed of, income is charged or credited for
the difference between net book value and proceeds realized thereon. Ordinary
maintenance and repairs are charged to expense as incurred, and replacements and
betterments are capitalized. The ranges of estimated useful lives used to
calculated depreciation for principal items of property and equipment are as
follows:
Depreciation/
Asset Category Amortization Period
-------------- -------------------
Computer Equipment 3 Years
Office equipment 5 Years
Vehicle 5 Years
Leasehold Improvements 15 Years
GOODWILL AND OTHER INTANGIBLE ASSETS
The Company accounts for Goodwill and other intangible assets as defined by ASC
Standard 350, GOODWILL AND OTHER INTANGIBLE ASSETS. 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 ASC Standard 350-20-35. A reduction of the
value of goodwill is expensed as an impairment loss.
22
IMPAIRMENT OF LONG-LIVED ASSETS
In accordance with ASC Standard 360-10-40, long-lived assets, such as property,
plant, and equipment, and purchased intangibles, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Goodwill and other intangible assets are tested
for impairment annually. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to estimated
undiscounted future cash flows expected to be generated by the asset. If the
carrying amount of an asset exceeds its estimated future cash flows, an
impairment charge is recognized by the amount by which the carrying amount of
the asset exceeds the fair value of the asset.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company is indebted to R. Thomas Kidd, the Company's Chief Executive Officer
and sole Director, and his wife, in the amount of $696,171, which amount does
not bear interest but is due on demand. This amount reflects advances made to
the Company by Mr. Kidd and his wife.
NOTE 7 - NOTES RECEIVABLE
On November 30, 2010, the Company deemed a $100,000 note receivable as
uncollectable and has written it off to bad debt.
NOTE 8 - INVESTMENTS IN UNCONSOLIDATED SUBSIDIARY
On November 30, 2010, the Company deemed the investment in an unconsolidated
subsidiary as a loss and has impaired the $10,000 asset.
NOTE 9 - NOTE PAYABLE
Effective March 3, 2011, we obtained an unsecured loan in the amount of $75,000
from Infinite Funding, Inc. ("IFI") as evidenced by a Promissory Note from the
Company to Infinite Funding, Inc. dated March 3, 2011 (the "IFI Note"). The loan
proceeds were disbursed as follows: $50,000 on March 7, 2011, and $25,000 on
March 21, 2011. The maturity date of the promissory note was July 1, 2011. On
June 9, 2011, the Company entered into an Amendment to Promissory Note with IFI
that amended the IFI Note to (a) increase the amount of the line to $150,000,
(b) extend the maturity date to October 15, 2011, and (c) provide for the
Company to pay an amendment fee of $10,000.
The IFI Note provides for interest at the rate of 3.00% per annum, payable
together with the principal amount at the maturity date, and is personally
guaranteed by our Chief Executive Officer. Upon an event of default, interest
shall accrue upon the total sum outstanding, from time to time, at the rate
equal to 18% per annum on a basis of a 365-day year for the actual number of
days in which any indebtedness under this promissory note remains outstanding.
NOTE 10 - INCOME TAXES
The Company has available net operating loss carry-forwards for financial
statement and federal income tax purposes. These loss carry-forwards expire if
not used within 20 years from the year generated. The Company's management has
decided a valuation allowance is necessary to reduce any tax benefits because
the available benefits are more likely than not to expire before they can be
used. The tax based accumulated deficit creates tax benefits in the amount of
$4,093,423 from inception through May 31, 2011.
23
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial statement
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets as of May 31, 2010 are as
follows:
Deferred tax assets:
Federal $ 4,093,423
State 0
-----------
Total Deferred Tax Asset 4,093,423
Less valuation allowance (4,093,423)
-----------
$ 0
===========
The Company has provided a 100% valuation allowance on the deferred tax assets
at May 31, 2011 to reduce such tax asset to $0 as there is no assurance that the
Company will generate future taxable income to utilize such asset. Management
will review this valuation allowance requirement periodically and make
adjustments as warranted.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
On May 21, 2009, the Company entered into that certain Agreement for the
Exchange of Common Stock (the "Victory Lane Agreement") with Victory Lane
Financial Elite, LLC ("Victory Lane") with respect to a real estate lifestyle
business known as Victory Lane (the "Victory Lane Business") pursuant to which
the Company intended to purchase the Victory Lane Business. Shortly thereafter,
a dispute arose between the Company and Victory Lane regarding alleged
mis-representations made by Victory Lane in connection with the Victory Lane
Agreement.
In August, 2009, Victory Lane Financial Elite, LLC, Legacy Development, LLC and
Patrick Costello filed suit in the Superior Court of Tattnall County, Georgia
(Civ. No. 2009-V-381-JW) against the Company, R. Thomas Kidd and various
officers and directors of the Company, alleging that the Company was in breach
of the Victory Lane Agreement and that the Company and certain of the individual
defendants had committed various torts against the plaintiffs and that certain
of the individual defendants had violated various fiduciary and other duties
owed to the plaintiffs in connection with the Victory Lane Agreement and the
handling of the Victory Lane Business (the "VLFE Case"). The plaintiffs sought a
declaratory judgment to the effect that the Victory Lane Agreement had not been
executed, as well as money damages from the Company and the individual
defendants. The Company and Mr. Kidd have answered the Complaint, denying any
liability for the plaintiff's claims and have asserted various counterclaims
including fraud and other torts. In July 2010 the court dismissed all of the
individual defendants, other than R. Thomas Kidd, in response to a motion to
dismiss for lack of jurisdiction. The case has since been stayed.
In December, 2009, AHIFO-21, LLC filed a lawsuit in the Superior Court of
Tattnall County, Georgia (Civ. No. 2009-V-672-JS) against Victory Lane, LLC,
Patrick J. Costello and Stephen Brown (the "Victory Lane Defendants") alleging
that the Victory Lane Defendants owe the plaintiff more than $7,740,000 in
respect of one or more loans made by the plaintiff to certain of the Victory
Lane Defendants in connection with the Victory Lane Business (the "AHIFO Case").
In February, 2010, the Victory Lane Defendants filed a Third Party Complaint
against the Company and R. Thomas Kidd, claiming that the Company and Mr. Kidd
should be liable for any amounts the Victor Lane Defendants are required to pay
to the plaintiff in this case. The Company and Mr. Kidd have answered the
Complaint, denying any liability for the plaintiff's claims and have asserted
24
various counterclaims including fraud and other torts. The Company and Mr. Kidd
filed a motion to dismiss the Third Party Complaint, but the entire case was
subsequently stayed.
Because each of the VLFE Case and the AHIFO Case have been stayed and because
discovery in those cases is not complete, the Company has not reached a
determination that any loss is other than remote and that the amount of any
damages, if any were determined adverse to the Company, would be reasonably
estimable. The Company believes that it has meritorious claims against the
opposing parties with respect to the Victory Lane Agreement and that the claims
asserted against it are not meritorious. The Company intends to defend itself
vigorously.
NOTE 12 - STOCKHOLDER'S EQUITY
Stock Issued Stock Issued
for Cash Cash Recieved for Assests
-------- ------------- -----------
Twelve months ended May 31, 2011 -- -- --
====== ====== ======
On June 1, 2009, the Company issued 3,000 shares of common stock to a consultant
for a value of $6,000, or $2.00 per share.
On June 1, 2009, the Company issued 50,000 shares of common stock to a
consultant for a value of $100,000, or $2.00 per share.
On June 1, 2009, the Company issued 25,000 shares of common stock to a
consultant for a value of $50,000, or $2.00 per share.
On June 1, 2009, the Company issued 212,500 shares of common stock to a
consultant for a value of $425,000, or $2.00 per share.
On June 2, 2009, the Company issued 2,500 shares of common stock to a consultant
for a value of $5,000, or $2.00 per share.
On June 3, 2009, the Company issued 5,000 shares of common stock to a consultant
for a value of $9,500, or $1.90 per share.
On June 4, 2009, the Company issued 15,750 shares of common stock to a
consultant for a value of $29,925, or $1.90 per share.
On June 6, 2009, 50,000 shares of common stock were returned to treasury by a
consultant for a value of $205,000, or $1.75 per share.
On August 7, 2009, the Company issued 125,000 shares of common stock to a
consultant for a value of $218,750, or $1.75 per share.
During October and November 2009, 111,438,394 shares of common stock were
returned to treasury for a value of $3,510,000, or $0.04 per share.
During October and November 2009, 3,559,908 shares of common stock were returned
to treasury as a result of rescissions for a value of $7,022,120, or an average
of $1.98 per share.
25
NOTE 13 - OTHER INCOME AND EXPENSE
At May 31, 2011, the Company has taken two accrued vendor balances no longer
owed and written $19,681 down to Other Income.
NOTE 14 - SUBSEQUENT EVENTS
On June 1, 2011, Amy Pennock of Pennock Consulting Group, Inc. was engaged to
provide fraud and internal auditing services for the Company.
On June 3, 2011, Domark International, Inc. (the "Company") executed an
Agreement for the Exchange of Common Stock with Silk For Less, Inc., a Florida
corporation (Silk) providing for the issuance of convertible preferred stock of
the Company in exchange for all of the outstanding shares of Silk. The closing
of the transaction is subject to and wholly conditioned upon the delivery of
documents by both parties, including but not limited to the completion and
delivery of an audit of the books and records of Silk by a PCAOB member firm
acceptable to the Company.
On June 9, 2011, Domark International, Inc. amended its existing credit facility
of $75,000 with a private lender as follows: a. The existing amount of the line
was increased to $150,000, with a new maturity date of October 15, 2011. b. The
Company agreed to pay an amendment fee of $10,000. c. All other terms of the
line remained the same.
On June 10, 2011, the Company entered into a media agreement with TVA Media
Group, Inc. to provide a national television, radio, social media, and print
media campaign for the benefit of the Company and Armada Sports & Entertainment,
Inc., a wholly owned subsidiary of the Company.
On June 13, 2011, Armada Sports & Entertainment, Inc. a wholly owned subsidiary
of the Company, launched its web site at www.TheGolfChampionships.com.
On June 20, 2011, the Company engaged William Seery as Chief Financial Officer
with an effective start date of September 1, 2011.
On June 30, 2011, Armada Sports & Entertainment, Inc., a wholly owned subsidiary
of the Company, entered into an Escrow Agreement with Lanigan and Lanigan, PL,
Attorneys at Law.
On June 28, 2011, the Company engaged Peter Bonell as Chief Operating Officer
with an effective start date of July 15, 2011. On July 15, 2011, the Company
terminated its engagement of Peter Bonell.
On July 22, 2011, the Company engaged Jordan Silverstein as Vice President,
Public Sponsor Group & Investor Relations with an effective start date of August
1, 2011.
On July 25, 2011, Armada Sports & Entertainment, Inc., a wholly owned subsidiary
of Domark International, Inc. announced that it had engaged GoConvergence to
provide its world class television production services in connection with its US
and Caribbean made for television Golf Championships, the Million Dollar
Invitationals, and World Putting Tour Championships.
On July 26, 2011, the Company engaged Anthony Gebbia as Chief Operating Officer
with an effective start date of August 8, 2011.
26
On July 29, 2011, DoMark International, Inc., the parent of Armada Sports &
Entertainment, Inc., announced that it had launched its new corporate website at
www.domarkintl.com.
On August 3, 2011, Armada Sports & Entertainment, Inc., a wholly owned
subsidiary of Domark International, Inc. announced that Joseph Mediate, former
tournament director of the LPGA's Shop Rite Classic, had joined Armada Sports as
Director of Tournament Operations for The Golf Championships.
On August 15, 2011, Armada Sports, a wholly owned subsidiary of Domark
International, Inc. announced the 2012 schedule of the Million Dollar
Invitationals and the World Putting Tour Championships, which are tournament
series under the brand, The Golf Championships.
On August 15, 2011, Armada Sports & Entertainment, Inc., a wholly owned
subsidiary of Domark International, Inc. announced that VPAR Golf had granted
Armada Sports an exclusive license on its VPAR Scoring system for Florida
business development and for use at its events The Golf Championships, wherever
they may occur in the world, excluding the United Kingdom.
On August 21, 2011, Domark International, Inc. (the "Company") entered into an
Asset Purchase Agreement to acquire all of the assets of USPT, LLC., which owns
and operates The US Putting Tour Championship. www.usputtingtour.com.
On Aug 24, 2011, Armada Sports & Entertainment, Inc., a wholly owned subsidiary
of DoMark International, Inc., announced that it had reached an agreement with
Peter Jacobsen Sports to provide event management services for its three (3) US
and Caribbean Million Dollar Invitationals and World Putting Tour Championships
commencing in 2012.
On October 29, 2010, De Joya Griffith & Company, LLC ("Griffith") was appointed
as the independent auditors for DoMark International, Inc. (the
"Company")commencing with the year ending May 31, 2011. The decision to appoint
De Joya Griffith & Company, LLC was approved by the Board of Directors on
October 29, 2010.
27
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company's financial statements for the year ending May 31, 2010 were audited
by Larry O'Donnell, C.P.A., P.C. (the "O'Donnell Firm"). Subsequent to the
filing of the Company's Annual Report on Form 10-K for the year ending May 31,
2010 (the "2010 Financial Statement"), the O'Donnell Firm resigned from its role
as the Company's outside auditor. The Company was subsequently informed that the
O'Donnell Firm's license was revoked by the Public Company Accounting Oversight
Board ("PCAOB"). Subsequent to that event, the Company was requested by the SEC
to have a new audit of the 2010 Financial Statement conducted by the Company's
new auditors. The Company was unable to complete a new audit of the 2010
Financial Statement, however, because the Company's sale of its Javaco business
in 2009 included the sale of key accounting work papers that would have been
required to perform the audit. Although the Company undertook significant
efforts to try to obtain the missing accounting work papers from Javaco, the
Company was ultimately unable to obtain them. As a result, the Company sought
and obtained the approval of the SEC to include its 2010 Financial Statement in
this Annual Report on Form 10-K subject to the Company's disclosure that the
2010 Financial Statement should be considered to be unaudited.
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, 2011. The term disclosure
controls and procedures means our controls and other procedures that are
designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed by
us in the reports that we file or submit under the Exchange Act is accumulated
and communicated to management, including our principal executive and principal
financial officer, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure. Based on this evaluation,
our principal executive officer and our principal financial officer concluded
that our disclosure controls and procedures were not effective as of May 31,
2011.
Our principal executive officer and our principal financial officer, are
responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act Rules 13a-15(f).
Management is required to base its assessment of the effectiveness of our
internal control over financial reporting on a suitable, recognized control
framework, such as the framework developed by the Committee of Sponsoring
Organizations ("COSO"). The COSO framework, published in INTERNAL
CONTROL-INTEGRATED FRAMEWORK, is known as the COSO Report. Our principal
executive officer and our principal financial officer have chosen the COSO
framework on which to base its assessment. Based on this evaluation, our
management concluded that our internal control over financial reporting was
effective as of May 31, 2011.
There were no changes in our internal control over financial reporting that
occurred during the fiscal year ended May 31, 2011 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
It should be noted that any system of controls, however well designed and
operated, can provide only reasonable and not absolute assurance that the
objectives of the system are met. In addition, the design of any control system
is based in part upon certain assumptions about the likelihood of certain
events. Because of these and other inherent limitations of control systems,
28
there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions, regardless of how remote.
ITEM 9B. OTHER INFORMATION
None
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
DIRECTORS AND EXECUTIVE OFFICERS
As of May 31, 2011, R. Thomas Kidd, age 64, is our Chairman, President, Chief
Executive Officer and Chief Financial Officer. Mr. Kidd is the sole member of
our Board of Directors and has been the sole member of the Board of Directors
since April 13, 2010. Mr. Kidd has served as Chief Executive Officer and Chief
Financial Officer for the periods from May 2008 until August 2009 and from April
2010 through the current date.
Mr. Kidd will hold office as the Company's Chief Executive Officer and Chief
Financial Officer until additional members or officers are duly elected and
qualified.
R. Thomas Kidd has served as the President and Chief Executive Officer of
SportsQuest, Inc., a Delaware corporation that was involved in creating,
developing, and managing high end sports events and related operating entities.
From January 2007 until August 2007, Mr. Kidd was the Chief Executive Officer of
Lextra Management Group, Inc., whose assets were acquired by SportsQuest, Inc.
Prior thereto, from July 2005 through November 2006, he served as the Chief
Executive Officer and Director of Greens Worldwide Incorporated, a publicly held
company, and its subsidiary U.S. Golf Tour, primarily involved in the
development of a new golf organization and sports enterprise. Mr. Kidd currently
serves as the managing member of Armada Capital, LLC. For approximately the past
30 years, Mr. Kidd has been engaged in various capacities in developing sports
organizations including, among others, two national professional golf tours and
one senior golf tour and has completed mergers and acquisitions of various
business operations in the technology, business services, and communications
industries.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act and rules and regulations of the SEC
thereunder require our directors, officers and persons who beneficially own more
than 10% of our common stock, as well as certain affiliates of such persons, to
file initial reports of their ownership of our common stock and subsequent
reports of changes in such ownership with the SEC. Our sole director and sole
officer and persons owning more than 10% of our common stock are required by SEC
rules and regulations to furnish us with copies of all Section 16(a) reports
they file. Based solely on our review of the Forms 3, 4 and 5 that were
furnished to the Company, the Company is not aware of any filings on Forms 3, 4
or Form 5 required by Section 16(a) of the Exchange Act that have not been
timely filed and the Company has instituted procedures to ensure compliance in
the future.
CORPORATE GOVERNANCE
The Company has adopted a Financial Code of Ethics, an Audit Committee Charter,
a Compensation Committee Charter, and a Policy on Suspected Misconduct,
Dishonesty and Fraud.
29
LACK OF INDEPENDENT BOARD OF DIRECTORS AND AUDIT COMMITTEE
The sole director of the Company is not independent from the Company. Further,
an audit committee composed of the requisite number of independent members along
with a qualified financial expert has not yet been established. Considering the
costs associated with procuring and providing the infrastructure to support an
independent audit committee and the limited number of transactions considered or
consummated by the Company, management has concluded that the risks associated
with the lack of an independent audit committee are not justified. Management
will periodically reevaluate this situation.
LACK OF SEGREGATION OF DUTIES
Management is aware that there is a lack of segregation of duties at the Company
due to the small number of employees dealing with general administrative and
financial matters. However, at this time management has decided that considering
the abilities of the employees now involved and the control procedures in place,
the risks associated with such lack of segregation are low and the potential
benefits of adding employees to clearly segregate duties do not justify the
substantial expenses associated with such increases. Management will
periodically re-evaluate this situation.
COMMITTEES
The Company has an audit and a compensation committee, each of which is
comprised of the Company's sole director.
The Company's audit committee has determined that its sole member is not an
"audit committee financial expert" within the meaning of federal securities
regulations.
ITEM 11. EXECUTIVE COMPENSATION
Mr. Kidd has not received any compensation for his role as an officer or a
director the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding beneficial
ownership of the Company's common stock as of September 9, 2011 by (i) each
person who is known by the Company to own beneficially more than 5% of the any
class of the Company's voting securities, (ii) each director of the Company,
(iii) each of the Chief Executive Officers and the two (2) most highly
compensated executive officers who earned in excess of $100,000 for all services
in all capacities (collectively, the "Named Executive Officers") and (iv) all
directors and executive officers of the Company as a group.
The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 and 13d-5 of the Exchange Act, and the information is
not necessarily indicative of beneficial ownership for any other purpose and is
based on 36,460,835 shares outstanding as of May 31, 2011. . 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: 254 S Ronald Reagan Blvd, Ste 134,
Longwood, FL, 32750.
30
Amount and nature of beneficial ownership
----------------------------------------------
Name and Address Common Stock Preferred Stock Percentage
---------------- ------------ --------------- ----------
R. Thomas Kidd & Joan Kidd,
as Tenants by the Entireties(1) 10,268,000 100,000 80.81%(2)
----------
(1) The address for R. Thomas Kidd and Joan Kidd is 432 Valley Stream Drive,
Geneva Florida 32765.
(2) Percentage beneficial ownership as if preferred stock has been converted
into shares of common stock at a ratio of 1,000 shares of common stock for
every 1 share of preferred stock.
CHANGES IN CONTROL
There were no changes in control of the Company during fiscal year 2011, nor are
there currently any arrangements, the operation of which may subsequently result
in a change in control of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
On December 29, 2008, the Company issued 200,000 shares of its common stock to a
Director as compensation for a value of $400,000. Subsequently, the Director has
returned 170,940 shares to the Company and the shares were cancelled.
On May 15, 2009, the Chief Executive Officer at the time, converted to common
100,000 shares of the Company's preferred stock, convertible at a rate of
1000:1.
During October and November 2009, 111,438,394 shares of common stock were
returned to treasury and cancelled.
From time to time, the Company's officers have provided loans to the Company. At
May 31, 2011, the Company is indebted to R. Thomas Kidd and Joan L. Kidd, the
Company's Chief Executive Officer and sole Director, and his wife in the amount
of $696,169, which amount does not bear interest but is due on demand. This
amount reflects advances made to the Company by Mr. Kidd and his wife.
The sole director of the Company is not independent from the Company.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
AUDIT FEES
The aggregate fees billed by Larry O'Donnell CPA, P.C. for professional services
rendered for the audit of the Company's annual financial statements for fiscal
years ended May 31, 2011 and 2010 approximated $0 and $10,000, respectively. The
aggregate fees billed by DeJoya Griffith & Company, LLC for professional
services rendered for the audit of the Company's annual financial statements for
fiscal year ending May 31, 2011 was $7,500.
31
AUDIT-RELATED FEES
The aggregate fees billed by Larry O'Donnell CPA, P.C. for assurance and related
services that are reasonably related to the performance of the audit or review
of the Company's financial statements for the fiscal years ended May 31, 2011
and 2010, and that are not disclosed in the paragraph captioned "Audit Fees"
above, were $0 and $6,400, respectively. The aggregate fees billed by DeJoya
Griffith & Company, LLC for assurance and related services that are reasonably
related to the performance of the audit or review of the Company's annual
financial statements for fiscal year ending May 31, 2011 was $0.
TAX FEES
The aggregate fees billed by ECFO Corporation for professional services rendered
for accounting, tax compliance, tax advice and tax planning for the fiscal year
ended May 31, 2011 and 2010 were $18,000 and $28,000, respectively.
ALL OTHER FEES
The Company has incurred no other fees for audit, audit-related, or tax
services.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENTS
The information required in Item 15 relating to the Company's financial
statements are contained in Item 8 of this Annual Report and incorporated herein
by reference.
EXHIBITS
Exhibit No. Description of Exhibit Footnote
----------- ---------------------- --------
3.1 Articles of Incorporation 1
3.2 Bylaws 2
10.1 Agreement for the Exchange of Common Stock between the 3
Company and Armada Capital, LLC, dated as of July 10,
2010.
10.2 Agreement for the Exchange of Common Stock between the 4
Company and Silk for Less, Inc., dated as of June 3, 2011.
10.3 Media Campaign Agreement between the Company and TVA Media 5
Group, Inc., dated as of June 20, 2011.
10.4 Escrow Agreement between the Company and Armada Sports & 6
Entertainment, Inc., dated as of June 30, 2011.
10.5 Asset Purchase Agreement between the Company and USPT, 7
LLC, dated as of August 21, 2011.
14 Financial Code of Ethics 8
21 Subsidiaries 9
31.1 Certification of Chief Executive Officer Pursuant to 10
Section 302 of the Sarbanes Oxley Act.*
32
31.2 Certification of Principal Financial Officer Pursuant 11
to Section 302 of the Sarbanes Oxley Act.*
32.1 Certification of Chief Executive Officer Pursuant to 12
Section 906 of the Sarbanes Oxley Act.*
32.2 Certification of Principal Accounting Officer Pursuant 13
to Section 906 of the Sarbanes Oxley Act.*
99.1 Audit Committee Charter 14
99.2 Compensation Committee Charter 15
----------
Footnotes
1 Filed as Exhibit 3.1 to the Company's Form SB-2 filed on August 6, 2006 and
incorporated herein by reference.
2 Filed as Exhibit 3.2 to the Company's Form SB-2 filed on August 6, 2006 and
incorporated herein by reference.
3 Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on
July 22, 2010 and incorporated herein by reference.
4 Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on
June 6, 2011 and incorporated herein by reference.
5 Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on
June 13, 2011 and incorporated herein by reference.
6 Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on
July 1, 2011 and incorporated herein by reference.
7 Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on
August 22, 2011 and incorporated herein by reference.
8 Filed as Exhibit 14.1 to the Company's Annual Report on Form 10-K for the
year ending May 31, 2009 and incorporated herein by reference.
9 Filed herewith
10 Filed herewith
11 Filed herewith
12 Filed herewith
13 Filed herewith
14 Filed as Exhibit 99.1 to the Company's Annual Report on Form 10-K for the
year ending May 31, 2009 and incorporated herein by reference.
15 Filed as Exhibit 99.2. to the Company's Annual Report on Form 10-K for the
year ending May 31, 2009 and incorporated herein by reference.
33
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, there unto duly authorized.
Registrant
DoMark International, Inc.
Date: January 27, 2012
By: /s/ R. Thomas Kidd
--------------------------------------------
R. Thomas Kidd
Chairman, President, Chief Executive Officer
Date: January 27, 2012
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 13th day of September.
/s/ R. Thomas Kidd
-----------------------------------------------
R. Thomas Kidd
Chairman, President, Chief Executive Officer
/s/ R. Thomas Kidd
-----------------------------------------------
R Thomas Kidd
Principal Financial Officer
34