UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Amendment No. 2)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended May 31, 2012
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)
321-250-4996
(Registrant's telephone number, including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 Par Value
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] 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 September 13, 2012 was $11,757,179.
As of September 13, 2012, there were 29,005,298 shares of Common Stock, $0.001
par value per share, issued and outstanding and there were 50,000 shares of
Preferred Stock, $0.001 par value per share, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
EXPLANATORY NOTE
DoMark International, Inc. (the "Company") is filing this Amendment No. 2 to its
annual report on Form 10-K for the fiscal year ended May 31, 2012, which was
filed on September 13, 2012 and amended on September 21, 2012, to correct errors
found in the financial statments after filing Amendment No. 1 and to provide the
required XBRL exhibit.
TABLE OF CONTENTS
PART I
ITEM 1. BUSINESS 3
ITEM 1A. RISK FACTORS 4
ITEM 1B. UNRESOLVED STAFF COMMENTS 4
ITEM 2. PROPERTIES 4
ITEM 3. LEGAL PROCEEDINGS 4
ITEM 4. MINE SAFETY DISCLOSURES 5
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 5
ITEM 6. SELECTED FINANCIAL DATA 6
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 6
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 9
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 9
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE 31
ITEM 9A. CONTROLS AND PROCEDURES 31
ITEM 9B. OTHER INFORMATION 32
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND
CORPORATE GOVERNANCE COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT. 32
ITEM 11. EXECUTIVE COMPENSATION 34
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS 35
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE 36
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 36
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 37
SIGNATURES 39
2
PART I
ITEM 1. BUSINESS
Except for historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties. Such
forward-looking statements include, but are not limited to, statements regarding
future events and the Company's plans and expectations. Actual results could
differ materially from those discussed herein. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
elsewhere in this Form 10-K or incorporated herein by reference, including those
set forth in MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
HISTORY AND GENERAL OVERVIEW
DOMARK INTERNATIONAL, INC. ("DoMark" or 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
business of the Company during the period from October 2009 through May 2011 was
to seek out new acquisitions and to conduct the litigation with Victory Lane.
On May 31, 2011, the Company formed a wholly owned subsidiary, Armada Sports &
Entertainment, Inc. Armada is a sports marketing and management company engaged
in owning, developing, and conducting made-for-television sports and
entertainment events. On March 5, 2012, the Company entered into an Asset
Purchase Agreement with its then controlling shareholder, R. Thomas Kidd, for
the sale of Armada, and certain assets related thereto.
On February 29, 2012, the Company formed a new wholly owned subsidiary,
SolarWerks, Inc. in the state of Nevada, for the purposes of entering the
business of marketing specialized solar consumer electronics.
On June 20, 2012, the Company formed a new wholly owned subsidiary, MuscleFoot
Inc. in the state of Nevada for the purpose of distributing, marketing, and
acting as sales agent for the patented foot care system, Barefoot Science. This
entity is currently on default under the Nevada Secretary of State.
As a result of the change in the Company's business model, the disclosures and
financial results contained herein should be reviewed as they relate to the
3
Company's historical operations but should be discounted as they relate to the
Company's potential future results.
EMPLOYEES
As of fiscal year end May 31, 2012, the Company had one employee. The Company
conducts its business through independent contractors at May 31, 2012.
ITEM 1A. RISK FACTORS
Not applicable to smaller reporting companies.
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 an Agreement for the Exchange of
Common Stock (the "Victory Lane Agreement") with Victory Lane Financial Elite,
LLC ("Victory Lane") with respect to a real estate lifestyle business known as
Victory Lane (the "Victory Lane Business") pursuant to which the Company
intended to purchase the Victory Lane Business. Shortly thereafter, a dispute
arose between the Company and Victory Lane regarding alleged
miss-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
4
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
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.
On January 24, 2012, the Company was made aware by the Chief Executive Officer
of the Company, that a complaint had been filed against the Company for
approximately $534,000 by the United States Trustee for the Middle District of
Florida to claim against funds we owed to our Chief Executive Officer and his
wife. On January 23, 2012, the Trustee's Motion for Approval and Notice of
Compromise was filed to obtain the approval of the court of a settlement of the
matters that were the subject of the complaint. On April 24, 2012, the Company
was advised that the complaint, which was never served, was dismissed with
prejudice by the US Trustee.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR OUR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Our common stock is traded in the over-the-counter market, and 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 13, 2012, there were 29,005,298 shares of our common stock
outstanding and there were approximately 87 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, 2012
High Low
------ ------
First Quarter (June - August, 2011) $ 1.70 $ 0.10
Second Quarter (September - November 2011) $ 1.69 $ 1.30
Third Quarter (December - February 2012) $ 1.65 $ 1.40
Fourth Quarter (March - May 2012) $ 4.88 $ 0.63
On September 13, 2012, the closing bid price of our common stock was $0.60.
5
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 Cash Stock Issued
for Cash Received for Assets
-------- -------- ----------
Year Ended May 31, 2011 -- $ -- --
Year Ended May 31, 2012 -- $ -- --
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
On February 29, 2012, the Company formed a new wholly owned subsidiary,
SolarWerks, Inc. in the state of Nevada, for the purposes of entering the
business of marketing specialized solar consumer electronics.
On February 29, 2012, the Company entered into a Memorandum of Agreement
with Xiamen Taiyang Neng Gongsi and Michael Franklin. For and in consideration
of the payment of an initial license fee of $10,000, and for the future payment
of royalties, Xiamen granted an exclusive worldwide license and joint patent
rights to Domark International, Inc. for a solar charging case for IPAD,
including IPAD 3. There is no prior business relationship with Xiamen, or any of
its officers or directors.
6
On March 5, 2012, the Company entered into an Asset Purchase Agreement with its
controlling shareholder, R. Thomas Kidd, for the sale of its wholly owned
subsidiary, Armada/The Golf Championships, and certain assets related thereto.
As consideration, the Mr. Kidd returned 9,771,500 shares of common stock to
treasury.
On March 5, 2012, Michael Franklin purchased 50,000 shares of the Company's
Series A Preferred Stock from R Thomas Kidd. Our Series A Preferred Stock is
convertible into Common Stock at the rate of 1,000 shares of Common for each
share of Preferred. In addition, our Preferred stock has voting rights
equivalent to 1,000 votes per share. Upon the conclusion of the Armada
transaction, Franklin became the controlling shareholder of Domark by virtue of
his ownership of 50,000 shares of Preferred Stock with voting rights equivalent
to 50,000,000 shares of our Common Stock.
On March 5, 2012, the Company's Shareholders appointed Michael Franklin as sole
Director, CEO and Corporate Secretary. Mr. Franklin will serve as a director
until his successor has been elected at the next annual meeting of the Company's
shareholders or until his earlier resignation, removal, or death. Mr. Franklin
has not been appointed to any committees of the Board, as the Board does not
presently have any committees.
As of March 29, 2012, our prior CEO, Tom Kidd, returned to the Company's
treasury, 50,000 shares of its Series A Preferred Stock and 9,771,500 shares of
its Common Stock. These shares were then cancelled. There are 50,000 issued and
outstanding shares of the Company's Series A Preferred Stock, owned by the
Company's CEO, Michael Franklin.
Effective May 25, 2012, Michael Franklin, Chairman and CEO the Company, resigned
from all positions held with the Company, including resigning from Board
service. There was no disagreement between the Registrant and Mr. Franklin at
the time of his resignation from the Board of Directors.
On May 25, 2012, the Company's Shareholders appointed R. Brentwood Strasler as
sole Director, President and Corporate Secretary.
MANAGEMENT'S DISCUSSION & ANALYSIS OF RESULTS OF OPERATIONS
FISCAL YEAR ENDED MAY 31, 2012 COMPARED TO FISCAL YEAR ENDED MAY 31, 2011
The Company had $19,929 in revenues for the fiscal year ended May 31, 2012 and
earned no revenues for the fiscal year ended May 31, 2011. Revenues earned for
the period were related to the sale of Solacases through the Company's wholly
owned subsidiary, Solawerks, Inc.
General and administrative expenses for fiscal 2012 increased to $5,463,736 as
compared to $35,161 in fiscal 2011. The increase is primarily related to
salaries and expenses during the period the Company was developing its made for
TV sports events through Armada/The Golf Championships. In addition, the Company
incurred significant expense in stock compensation and advertising relating to
the development of Solawerks, Inc. and MuscleFoot, Inc., the Company's wholly
owned subsidiaries formed during the period. Interest expense for the twelve
months ending May 31, 2012 was $46,060 as compared to $0 for the period ending
May 31, 2011. The Company's operations during fiscal 2012 were funded through
interest free, demand notes from shareholders and short term loans financed
through Infinite Funding. As of May 31, 2012, the Company is indebted to a
7
shareholder in the amount of $1,000 and to Infinite Funding in the aggregate of
$545,645 plus interest.
The operating loss for fiscal 2012 increased to $5,533,927 as compared to
$125,480 for fiscal 2011. Our loss from discontinued operations for the period
ending May 31, 2012 was $5,972,579 as compared to $0 for the period ending May
31, 2011.
The following table sets forth the assets and liabilities sold pursuant to an
Asset Purchase Agreement entered into on March 5, 2012:
Assets:
Prepaid Expenses $397,675
Inventory - Production $ 16,926
Equipment $ 3,867 (net of depreciation)
Website $ 1,167 (net of amortization)
VPAR License $ 24,432 (net of amortization)
Liabilities:
Accounts Payable $ 19,257
Payroll & related liabilities $249,631
Shareholder Loans $929,736
The net value recorded for this transaction was $754,558.
The Company recorded the sale consistent with ASC 860-20-25, and ASC 860-20-40.
Transactions with related parties are recorded at book value as determined under
GAAP. Book value was determined as the value of the assets less any liabilities
sold. The net value recorded for this transaction was $(754,558). In
consideration for the sale, Mr. Kidd returned 9,771,500 shares of common stock
to treasury.
No tax benefit was recorded for fiscal 2012 or fiscal 2011 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 2012 and 2011 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 2012 was
($548,885) compared to $(33,446) for the fiscal year 2011. Depreciation and
amortization expense for fiscal year 2012 was $8,465 as compared to $1,715 for
fiscal 2011.
Cash (used) provided in investing activities was ($43,000) for the fiscal year
2012, compared to $(3,500) for the fiscal year 2011.
8
Cash provided by financing activities was $639,567 for fiscal year 2012 as
compared to $41,336 for fiscal 2011. Financing activities consisted of cash
received from shareholders and notes payable.
OTHER CONSIDERATIONS
There are numerous factors that affect the Company's business and the results of
its operations. Sources of these factors include general economic and business
conditions, federal and state regulation of business activities, the level of
demand for services, the level and intensity of competition in the, and our
ability to continue to improve our infrastructure, including personnel and
systems, to keep pace with our anticipated rapid growth in the development of
our business.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to smaller reporting companies.
ITEM 8. FINANCIAL STATEMENTS
DOMARK INTERNATIONAL, INC.
TABLE OF CONTENTS
Page
----
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM: 10
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheet at May 31, 2012 and 2011 11
Consolidated Statements of Operations for the years ended
May 31, 2012 and 2011 13
Consolidated Statements of Stockholders' Deficit for the years
ended May 31, 2012 and 2011 14
Consolidated Statements of Cash Flows for the years ended
May 31, 2012 and 2011 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 16
9
[LETTERHEAD OF DE JOYA GRIFFITH, LLC]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Domark International, Inc.
We have audited the accompanying consolidated balance sheets of Domark
International, Inc. (A Development Stage Company) (the "Company") as of May 31,
2012 and 2011, and the related consolidated statements of operations,
stockholders' deficit, and cash flows for each of the years in the two-year
period ended May 31, 2012. Domark International Inc.'s management is responsible
for these financial statements. Our responsibility is to express an opinion on
these financial statements based on our audits. We 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 (development
stage re-entry date) to 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 period from October 21, 2009 (development stage re-entry date)
through May 31, 2010.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Domark International, Inc. (A
Development Stage Company) as of May 31, 2012 and 2011, and the results of its
operations, and its cash flows for each of the years in the two-year period
ended May 31, 2012, 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 2 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, LLC
---------------------------------
Henderson, Nevada
September 21, 2012
10
DOMARK INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
ASSETS
As of May 31, As of May 31,
2012 2011
-------- --------
(Audited) (Audited)
CURRENT ASSETS
Cash $ 52,269 $ 4,587
Prepaid Expenses 4,897 --
-------- --------
Total current assets 57,166 4,587
-------- --------
FIXED ASSETS
Property & equipment, net -- 399
-------- --------
Total fixed assets -- 399
-------- --------
OTHER ASSETS
Website development costs 2,250 6,417
Deferred Financing 24,799 --
License 9,635 --
-------- --------
Total other assets 36,684 6,417
-------- --------
TOTAL ASSETS $ 93,850 $ 11,403
======== ========
The accompanying notes are an integral part of these financial statements.
11
DOMARK INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' DEFICIT
As of May 31, As of May 31,
2012 2011
------------ ------------
(Audited) (Audited)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 89,164 $ 44,987
Accounts payable related party 15,366 --
Note payable 545,645 75,000
------------ ------------
Total current liabilities 650,367 119,987
------------ ------------
LONG-TERM LIABILITIES
Due to affiliate and shareholder 1,000 696,171
------------ ------------
Total long-term liabilities 1,000 696,171
------------ ------------
TOTAL LIABILITIES 651,175 816,158
------------ ------------
STOCKHOLDERS' DEFICIT
Convertible preferred stock series A, $0.001 par value,
authorized: 10,000,000
issued: 50,000 and 100,000, respectively 50 100
Common stock, $0.001 par value,
authorized: 200,000,000
issued: 29,005,298 and 36,460,835, respectively 29,005 36,461
Common stock payable 738,000 --
Additional paid in capital 31,499,029 26,448,172
Accumulated deficit (26,850,830) (26,850,830)
Accumulated deficit during development stage (5,972,579) (438,656)
------------ ------------
Total stockholders' deficiency (557,325) (804,755)
------------ ------------
TOTAL LIABILITIES AND EQUITY $ 93,850 $ 11,403
============ ============
The accompanying notes are an integral part of these financial statements.
12
DOMARK INTERNATIONAL, INC.
(A DEVELOPMENT STATE COMPANY)
STATEMENTS OF OPERATIONS
From
For the For the October 21, 2009
year ended year ended (Development stage) to
May 31, 2012 May 31, 2011 May 31, 2012
------------ ------------ ------------
(Audited) (Audited) (Unaudited)
INCOME $ 19,929 $ -- $ 19,929
COST OF SALES 48,509 -- 48,509
------------ ------------ ------------
NET OPERATING LOSS (28,580) -- (28,580)
------------ ------------ ------------
GENERAL AND ADMINISTRATIVE EXPENSES 5,463,734 35,161 5,811,957
RESEARCH AND DEVELOPMENT 45,609 -- 45,609
BAD DEBT EXPENSE -- 100,000 100,000
IMPAIRMENT OF ASSET -- 10,000 10,000
FORGIVENESS OF DEBT (4,000) -- (4,000)
IMPAIRMENT OF GOODWILL -- -- 10,000
------------ ------------ ------------
OPERATING LOSS (5,533,923) (145,161) 6,002,146
OTHER INCOME -- 19,681 29,567
------------ ------------ ------------
NET LOSS FROM OPERATIONS (5,533,923) (125,480) (5,972,579)
============ ============ ============
INCOME (LOSS) FROM DISCONTINUED OPERATONS -- -- --
NET LOSS $ (5,533,923) $ (125,480) $ (5,972,579)
============ ============ ============
Loss per share on continuing operations,
basic and diluted $ (0.20) $ (0.00)
============ ============
Loss per share on discontinued operations,
basic and diluted $ (0.20) $ (0.00)
============ ============
Net loss per share, basic and diluted $ (0.20) $ (0.00)
============ ============
Weighted average common shares outstanding 27,483,383 36,460,835
============ ============
The accompanying notes are an integral part of these financial statements.
13
DOMARK INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIT
As of May 31, 2012
Accumulated
Additional During the Common Total
Preferred Stock Common Stock Paid-in Development Stock Stockholders'
Amount Shares Shares Amount Capital Stage Payable Deficit
------ ------ ------ ------ ------- ----- ------- -------
Balance, May 31, 2010 100,000 $100 36,460,835 $36,461 $26,448,170 $(27,164,009) $ -- $ (679,275)
Net Income (loss) -- -- -- -- -- (125,480) (125,480)
------- ---- ---------- ------- ----------- ------------ -------- -----------
Balance, May 31, 2011 100,000 100 36,460,835 36,461 26,448,170 (27,289,488) -- (804,755)
------- ---- ---------- ------- ----------- ------------ -------- -----------
Common stock issued for
Prepaid expenses on
June 20, 2011 550,660 551 124,449 125,000
Common stock issued for
Prepaid expenses on
September 1, 2011 79,545 80 124,920 125,000
Common stock issued for
Prepaid expenses on
December 15, 2011 75,758 75 124,925 125,000
Common stock issued for
Compensation on
January 9, 2012 300,000 300 494,700 495,000
Common stock issued for
Compensation on
March 1, 2012 100,000 100 139,900 140,000
Common stock returned to
Treasury for sale of
assets on March 5, 2012 9,771,500 (9,772) 764,380 754,609
Preferred stock returned
to Treasury for sale of
assets on March 5, 2012 (50,000) (50) (50)
Common stock issued for
Compensation on
April 1, 2012 160,000 160 244,640 244,800
Common stock issued for
Compensation on
May 9, 2012 100,000 100 274,900 275,000
Common stock issued for
Compensation on
May 24, 2012 150,000 150 229,350 229,500
Common stock issued for
Compensation on
May 29, 2012 800,000 800 2,319,200 2,320,000
Common stock payable 738,000 738,000
Unissued, vested employee
stock comp 209,495 209,495
Net Loss (5,533,927) 738,000 (5,533,927)
------- ---- ---------- ------- ----------- ------------ -------- -----------
Balance, May 31, 2012 50,000 $ 50 29,005,298 $29,005 $31,499,031 $(32,823,416) $738,000 $ (557,325)
======= ==== ========== ======= =========== ============ ======== ===========
The accompanying notes are an integral part of these financial statements.
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DOMARK INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the twelve months ending May 31, 2012 and 2011
From
For the For the October 21, 2009
year ended year ended (Development stage) to
May 31, 2012 May 31, 2011 May 31, 2012
------------ ------------ ------------
(Audited) (Audited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(5,533,923) $ (125,480) $(5,972,579)
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 8,464 1,715 10,838
Amortized finance cost 35,201 -- 35,201
Impairment of assets -- 10,000 --
Forgiveness of debt (4,000) -- (4,000)
Non cash interest 5,645 -- 5,645
Common stock issued as compensation and for expenses 4,624,223 -- 4,624,310
Bad debt expense -- 100,000 --
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Increase in inventory (16,926) -- (16,926)
Increase in accounts payable 317,065 (19,681) 238,935
Increase in accounts payable - related party 15,366 -- 15,366
----------- ----------- -----------
Net cash used in operating activities (548,885) (33,446) (1,053,210)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed assets purchased (4,000) -- (4,000)
Cash paid for web development (4,000) (3,500) (7,500)
Cash paid for license (35,000) -- (35,000)
----------- ----------- -----------
Net cash flows used in investing activities (43,000) (3,500) (46,500)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in shareholder loans 234,567 (33,664) 768,850
Cash received on notes payable 405,000 75,000 480,000
Payments on notes payable -- -- (100,470)
----------- ----------- -----------
Net cash provided by financing activities 639,567 41,336 1,148,452
----------- ----------- -----------
CASH RECONCILIATION
Net increase in cash and cash equivalents 47,682 4,390 48,742
Cash and cash equivalents - beginning balance 4,587 197 3,527
----------- ----------- -----------
CASH AND CASH EQUIVALENTS BALANCE END OF PERIOD $ 52,269 $ 4,587 $ 52,269
=========== =========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Prepaid expenses $ (397,675) $ -- $ (397,675
Inventory $ (16,926) $ -- $ (16,926
Fixed assets, net of depreciation $ (3,868) $ -- $ (3,868
Website costs, net of amortization $ (1,167) $ -- $ (1,167
License, net of amortization $ (24,432) $ -- $ (24,432
Accounts payable $ 19,257 $ -- $ 19,257
Payroll & related liabilities $ 249,631 $ -- $ 249,631
Due to affiliate and shareholder $ 929,738 $ -- $ 929,738
Return of preferred shares, par value $ 50 $ -- $ 50
Return of common stock, par value $ 9,772 $ -- $ 9,772
Additional capital contributed in excess
of net assets sold $ (764,380) $ -- $ (764,380)
The accompanying notes are an integral part of these financial statements.
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DOMARK INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended May 31, 2012 and 2011
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 an Agreement for the
Exchange of Common Stock (the "Victory Lane Agreement") with Victory Lane
Financial Elite, LLC ("Victory Lane") with respect to a real estate lifestyle
business known as "Victory Lane" (the "Victory Lane Business"). 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.
On March 5, 2012, the Company entered into an Asset Purchase Agreement with its
then controlling shareholder, R. Thomas Kidd, for the sale of Armada, and
certain assets related thereto.
On February 29, 2012, the Company formed a new wholly owned subsidiary,
SolaWerks,Inc. in the state of Nevada, for the purposes of entering the business
of marketing specialized solar consumer electronics. SolaWerks' current focus is
to develop and distribute the SolaPad: a combined cover and charging system for
Apple's iPad, and the SolaCase: a combined cover and charging system for all
versions of Apple's iPhone. SolaWerks competes in a market that also includes 3D
Systems (DDD), Dell (DELL) and Hewlett Packard (HPQ).
On June 20, 2012, the Company formed a new wholly owned subsidiary, MuscleFoot
Inc., in the state of Nevada for the purpose of distributing, marketing, and
acting as sales agent for the patented foot care system, Barefoot Science.
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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 $5,533,927 and $125,480 for the years ended
May 31, 2012 and 2011, 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.
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.
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RECENT ACCOUNTNG PRONOUNCEMENTS
The Company has reviewed recently issued accounting pronouncements and plans to
adopt those that are applicable to it. It does not expect the adoption of these
pronouncements to have a material impact on its financial position, results of
operations or cash flows.
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 subsidiaries, Armada Sports & Entertainment, Inc. and
Solawerks, Inc. The Company has relied upon the guidance provided by Statements
of Financial Accounting Standards, ASC 810-10-15-3.
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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, 2012 and 2011, 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, 2012.
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 INDEFINITE-LIVED 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.
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OTHER INTANGIBLE ASSETS
Other intangible assets are carried at cost less accumulated amortization.
Amortization is recorded over the estimated useful lives of the assets,
generally 12 to 24 months.
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.
STOCK-BASED COMPENSATION
The Company accounts for share based payments in accordance with ASC 718,
Compensation - Stock Compensation, which requires all share-based payments to
employees, including grants of employee stock options, to be recognized in the
financial statements based on the grant date fair value of the award. In
accordance with ASC 718-10-30-9, Measurement Objective - Fair Value at Grant
Date, the Company estimates fair value of the award using a valuation technique.
For this purpose, the Company uses the Black-Scholes option pricing model. The
Company believes the model provides the best estimate of fair value due to its
ability to incorporate inputs that change over time, such as volatility and
interest rates, and to allow for actual exercise behavior of option holders.
Compensation cost is recognized over the requisite service period which is
generally equal to the vesting period. Upon exercise, shares issued will be
newly issued shares from authorized common stock.
ASC 505, "Compensation-Stock Compensation", establishes standards for the
accounting for transactions in which an entity exchanges its equity instruments
to non-employees for goods or services. Under this transition method, stock
compensation expenses includes compensation expense for all stock-based
compensation awards granted on or after January 1, 2006, based on the grant-date
fair value estimated in accordance with provisions of ASC 505.
RESEARCH AND DEVELOPMENT
All research and development expenditures are expensed as incurred.
REVENUE RECOGNITION
The Company recognizes revenues when persuasive evidence of an arrangement
exists, delivery and acceptance has occurred or services has been rendered, the
price is fixed or determinable, and collection of the resulting receivable is
reasonable assured. Revenue from licensing our technology is recognized over the
term of the license agreement. Costs and expenses are recognized during the
period in which they are incurred. The
19
Company derived its revenues for the period through internet sales of our solar
charging units. The Company recognizes these sales once delivery is confirmed to
the customer.
NOTE 5 - RELATED PARTY TRANSACTIONS
The Company was indebted to R. Thomas Kidd, the Company's previous Chief
Executive Officer and sole Director, and his wife, in the amount of $929,736,
which was not interest bearing and was due on demand. Pursuant to an Asset
Purchase Agreement executed on March 5, 2012, this debt was extinguished as part
of the consideration paid for the sale of certain assets of the Company's wholly
owned subsidiary, Armada/The Golf Championships.
On February 29, 2012 the Company executed a Memorandum of Agreement with Xiamen
Tiauyang Neng Gongsi and Michael Franklin related to the acquisition of certain
exclusive worldwide licensing and joint patent rights.
On May 25, 2012, the Company entered into an employment agreement with an
effective date of June 1, 2012 with its newly appointed President, R. Brentwood
Strasler, for a period of no less than three years. Mr. Strasler is entitled to
an annual salary of $150,000 and 100,000 stock purchase warrants exercisable to
purchase common shares of the Company at $1.00 per share. The warrants are
exercisable for a three year period and can be vested quarterly on a pro rata
basis over twelve months from the date of issue. Additionally, Mr. Strasler will
be enrolled in a long term Executive Option Plan no later than three months
after the effective date of the employment agreement and is entitled to term
life insurance in the face amount of $2,500,000, payable to the beneficiary
designated by Mr. Strasler. The warrants awarded will be valued in accordance
with ASC 718-10-30-9, Measurement Objective - Fair Value at Grant Date. The
Company estimates fair value of the award using the Black-Scholes option pricing
model. Since the effective date of the grant is June 1, 2012, the Company did
not realize or record an estimated fair value of the warrants and therefore
there is no impact to the financial statements for the fiscal period ending May
31, 2012.
The Company is indebted to Michael Franklin, previously President of our wholly
owned subsidiary Solawerks, Inc., in the amount of $1,000 for monies advanced to
the Company. This loan is non-interest bearing and payable upon demand.
NOTE 6 - COMMITMENTS
On June 1, 2011, Amy Pennock of Pennock Consulting Group, Inc. was engaged to
provide fraud and internal auditing services for the Company. Fees for services
will be billed at an hourly rate, as incurred.
On June 1, 2011, Peter Gordon was appointed Vice President & Executive Producer
of The Golf Championships, Inc., a wholly owned subsidiary of the Company. The
Company has agreed to pay a salary of $120,000 each year for the five year term
of the agreement, with 5% increases each year. In addition, Mr. Gordon is
entitled to 100,000 shares of the Company's common stock as a signing bonus. The
shares were valued as of the date of the Agreement and $10,186 in expense has
been recorded in relation to the transaction. The shares are to be issued but
held back by the Company and not earned and delivered until one full year of
service has elapsed under the agreement. As a result of the Asset Purchase
Agreement made effective on March 5, 2012, Mr. Gordon is no longer entitled to
salaries paid by the Company.
On June 10, 2011, TGC entered into an agreement with TVA Media Group who will
provide performance-based media campaigns. The Company has agreed to pay TVA
20
Media a total of $120,000 in cash, payable in three installments beginning
September 1, 2011. The second installment is due in week four of service and the
final payment is due in week nine. In addition, the Company has agreed to issue
stock in exchange for services at a value of $500,000 in four installments on
June 20, 2011, September 1, 2011, December 1, 2011, and March 1, 2012. The
number of shares issued will be determined by the five trading day Volume
Weighted Average price prior to the date of issuance. On November 30, 2011, TGC
modified the original Agreement by extending the due dates and modifying the
terms as follows:
* The final stock tranche is to be issued by March 15, 2012.
* Three payments of $50,000 each, payable on January 15, 2012, February
15, 2012, and March 15, 2012. The total sum of $150,000 includes a 25%
increase in the costs outlined in the original agreement as
"liquidated damages" for the delay in starting the project. TVA will
commence services upon receipt of payment on January 15, 2012 and will
credit the Company $15,000 that may be applied towards future projects
with TVA upon full payment as outlined in the contract modification.
As a result of the Asset Purchase Agreement made effective on March 5,
2012, this agreement is no longer enforceable to the Company.
On June 20, 2011, the Company engaged William Seery as Chief Financial Officer
with an effective start date of September 1, 2011. The Company has agreed to pay
a salary of $150,000 each year for the five year term of the agreement, with 5%
increases each year. In addition, Mr. Seery is entitled to 200,000 shares of the
Company's common stock as a signing bonus. The shares were valued as of the date
of the Agreement and $115,721 in expense has been recorded in relation to the
transaction. The shares are to be issued but held back by the Company. After six
months of service, 100,000 shares are to be delivered and after one full year of
service has elapsed, the remaining 100,000 shares are deliverable under the
agreement. Effective March 5, 2012, William Seery resigned from his position as
Chief Financial Officer of the Company. There was no disagreement between the
Registrant and Mr. Seery at the time of Mr. Seery's resignation from the Board
of Directors.
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 with 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. The Company has agreed to pay a salary of $90,000 each year for the
five year term of the agreement, with 5% increases each year. In addition, Mr.
Silverstein is entitled to 100,000 shares of the Company's common stock as a
signing bonus. The shares were valued as of the date of the Agreement and
$50,137 in expense has been recorded in relation to the transaction. The shares
are to be issued but held back by the Company and not earned and delivered until
one full year of service has elapsed under the agreement. The Company has also
agreed to pay bonuses equal to five percent of revenue of public company
sponsors up to $10,000,000 and six percent for sponsorship revenues above
$10,000,000. As a result of the Asset Purchase Agreement made effective on March
5, 2012, Jordan Silverstein is no longer entitled to salaries paid by the
Company.
On July 26, 2011, the Company engaged Anthony Gebbia as Chief Operating Officer
with an effective start date of August 8, 2011. The Company has agreed to pay a
salary of $120,000 each year for the five year term of the agreement, with 5%
increases each year. In addition, Mr. Gebbia is entitled to 100,000 shares of
the Company's common stock as a signing bonus. The shares were valued as of the
21
date of the Agreement and $53,562 in expense has been recorded in relation to
the transaction. The shares are to be issued but held back by the Company and
not earned and delivered until one full year of service has elapsed under the
agreement. The Company has also agreed to pay bonuses equal to $200,000, payable
half in stock and half in cash, upon signing of title sponsors of the Million
Dollar Invitationals. Mr. Gebbia will also receive $100,000 as a bonus, payable
half in Stock and half in cash, upon signing of presenting sponsors of the
Million Dollar Invitationals. Mr. Gebbia is entitled to a maximum of $300,000
each year. As a result of the Asset Purchase Agreement made effective on March
5, 2012, Anthony Gebbia is no longer entitled to salaries paid by the Company.
On August 3, 2011, TGC (fka 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. The effective date
of the agreement is September 1, 2011. The Company has agreed to pay a salary of
$80,000 each year for the five year term of the agreement, with 5% increases
each year. In addition, Mr. Mediate is entitled to 25,000 shares of the
Company's common stock as a signing bonus. The shares were valued as of the date
of the Agreement and $9,661 in expense has been recorded in relation to the
transaction. The shares are to be issued but held back by the Company and not
earned and delivered until one full year of service has elapsed under the
agreement. The Company has also agreed to pay a performance bonus equal to five
percent of the first $2,000,000 in local and regional sponsors and six percent
for sponsorship revenues that exceed $2,000,000. As a result of the Asset
Purchase Agreement made effective on March 5, 2012, Joseph Mediate is no longer
entitled to salaries paid by the Company. On August 12, 2011, the Company
entered into an Agent Agreement with VPAR Golf. VPAR has granted TGC 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. Pursuant to the terms of the agreement, TGC
shall pay a license fee for year 1, payable on January 2, 2012, of $25,000. For
years 2 through 7, the yearly fee is $10,000 and payable each year in January.
As a result of the Asset Purchase Agreement made effective on March 5, 2012, the
Company has assigned the Agreement to R. Thomas Kidd.
On September 16, 2011, the Company engaged Casey Walker as VP Administration
with an effective start date of July 15, 2011. The Company has agreed to pay a
salary of $48,000 each year for the five year term of the agreement, with 5%
increases each year. In addition, Ms. Walker is entitled to 100,000 shares of
the Company's common stock as a signing bonus. The shares are to be issued but
held back by the Company until after one full year of service has elapsed. On
December 28, 2011, Ms. Walker resigned her position with the Company as VP
Administration.
On September 28, 2011, Robert M. Greenway and Paul Mangiamele were appointed as
directors of the Company. As per the agreement, each director will receive an
annual salary of $25,000 payable in quarterly installments. In addition, each
director will receive as compensation, 100,000 shares of restricted stock. The
shares were issued and valued at market value as of the date of the Agreements
in the amount of $165,000 each. Effective March 5, 2012, Robert M. Greenway and
Paul Mangiamele resigned from their respective positions on the Board of
Directors.
On September 29, 2011, the Company entered into an agreement with Global Sports
and Entertainment to procure celebrities or celebrity athletes to participate in
The Celebrity Golf Challenge series and/or host one of our other events. Fees
are dependent upon the ability of Global Sports and Entertainment to procure
celebrity hosts for the anticipated events. Should Global Sports and
22
Entertainment be successful in this endeavor, fees are estimated to be $30,000
for the remainder of 2011 and $290,000 for 2012. As a result of the Asset
Purchase Agreement made effective on March 5, 2012, this agreement has been
assigned to R. Thomas Kidd.
On October 1, 2011, the Company entered into an agreement with Brener Zwikel &
Associates to develop global brand recognition of The Golf Championships and its
series of events. In compensation for services, the Company has agreed to issue
$90,000 in stock, payable in quarterly installments beginning January 31, 2012.
In addition to the stock compensation, the Company has agreed to pay a monthly
retainer in the amount of $6,000 beginning October 30, 2011 and increasing to
$10,000 as of July 30, 2012 through November 30, 2012. As of February 29, 2012,
$30,000 was due under this agreement, however the payments have not been made
and the TGC is seeking modification of the current agreement. As a result of the
Asset Purchase Agreement made effective on March 5, 2012, has been assigned to
R. Thomas Kidd.
On October 8, 2011, the Company entered into a letter agreement with Mary A.
Beck who will serve as an independent director of DoMark. As per the agreement,
the director will receive an annual salary of $25,000 payable in quarterly
installments. In addition, the director will receive as compensation, 100,000
shares of restricted stock. The shares were issued and valued at market value as
of the date of the Agreement in the amount of $165,000. Effective March 5, 2012,
Mary Beck resigned from her position on the Board of Directors.
On October 31, 2011, the Company entered into an agreement with CBS Sports, A
Division of CBS Broadcasting, Inc. Pursuant to the terms of the agreement, CBS
will make available eight (8) two (2)-hour time periods for the high-definition
(HD) broadcast coverage of each of the 2012-2013 and 2013-2014 Million Dollar
Invitationals. As consideration, the Company is to pay the net sums of (a)
$450,000 per two (2)-hour network time period made available for the 2012-2013
Programs for a total of $1,800,000; and (b) $470,000 per two (2)-hour network
time period made available for the 2013-2014 Programs, for a total of
$1,880,000. The net sum for the 2012-2013 Programs shall be paid to CBS as
follows: (a)$50,000 by no later than thirty (30) days prior to the taping of
each Event, with the balance of $400,000 by no later than forty-five (45) days
prior to the broadcast of each 2012-2013 Program. The net sum for the 2013-2014
Programs shall be paid to CBS as follows: (b)$50,000 by no later than thirty
(30) days prior to the taping of each Event, with the balance of $420,000 by no
later than forty-five (45) days prior to the broadcast of each 2013-2014
Program. The total net sum payable to CBS under the Agreement is $3,680,000.
In addition, the Company shall have the right to the following as set forth in
the Agreement:
* The Company shall have the right to sell eighteen (18) thirty
(30)-second commercial units during each one (1)-hour time period of
network broadcast time CBS makes available for a total of
thirty-six(36) thirty (30)-second commercial units per two (2)-hour
Program. The Company retains all revenue received from the sale of the
commercial units.
* The Company will receive one (1) opening billboard, one(1) middle
billboard, and one (1) closing billboard in each Program.
* The notice to be included in the credit roll at the conclusion of the
broadcast of each Program containing the broadcast coverage of the
Events shall be: "This has been a presentation of CBS Sports in
association with The Golf Championships, Inc." As a result of the
Asset Purchase Agreement made effective on March 5, 2012, the CBS
agreement has been assigned to R. Thomas Kidd.
23
On February 29, 2012, the Company entered into a Memorandum of Agreement with
Xiamen Taiyang Neng Gongsi and Michael Franklin. For and in consideration of the
payment of an initial license fee of $10,000, and for the future payment of
royalties of $5.00 per SolaPad unit sold, Xiamen granted an exclusive worldwide
license and joint patent rights to the Company for a solar charging case for
IPAD, including IPAD 3.
On April 1, 2012, the Company entered into a Consulting Agreement with Robert
Hines for six months. As consideration for services related to compliance
matters, the Company agreed to issue 25,000 shares of its common stock. The
shares were issued and valued at market value as of the date of the Agreement in
the amount of $38,250.
On April 1, 2012, the Company entered into a Consulting Agreement with Thomas
Massey for six months. As consideration for development of the wholesale and
distribution market of the Company's solar products, the Company agreed to issue
25,000 shares of its common stock. The shares were issued and valued at market
value as of the date of the Agreement in the amount of $38,250.
On April 1, 2012, the Company entered into a Consulting Agreement with David
Parisi for six months. As consideration for accounting, bookkeeping, and
financial recordation services, the Company agreed to issue 25,000 shares of its
common stock. The shares were issued and valued at market value as of the date
of the Agreement in the amount of $38,250.
On April 1, 2012, the Company entered into a Consulting Agreement with Jason
Burgess for six months. As consideration for web related services, the Company
agreed to issue 25,000 shares of its common stock. The shares were issued and
valued at market value as of the date of the Agreement in the amount of $38,250.
On April 1, 2012, the Company entered into a Consulting Agreement with Brian
Barrilleaux for six months. As consideration for marketing services, the Company
agreed to issue 25,000 shares of its common stock. The shares were issued and
valued at market value as of the date of the Agreement in the amount of $38,250.
On April 1, 2012, the Company entered into a Consulting Agreement with Matthew
Bryant for six months. As consideration for product testing and marketing
services, the Company agreed to issue 10,000 shares of its common stock. The
shares were issued and valued at market value as of the date of the Agreement in
the amount of $15,300.
On April 1, 2012, the Company entered into a Consulting Agreement with Cathryn
Walker for six months. As consideration for accounting and compliance services,
the Company agreed to issue 25,000 shares of its common stock. The shares were
issued and valued at market value as of the date of the Agreement in the amount
of $38,250.
On May 9, 2012, the Company entered into a Consulting Agreement with Thomas
Massey for one year. As consideration for services related to structuring the
Company's operational plan and business model, the Company agrees to issue
100,000 shares of common stock on the effective date of the agreement and
150,000 shares if the Company enters negotiations with any merger or acquisition
target introduced by the efforts of the Consultant. The initial 100,000 shares
were issued and valued at market value as of the date of the Agreement,
resulting in the Company recording an expense in the amount of $275,000. On May
24, 2012, Mr. Massey was awarded the additional 150,000 shares, valued at
$424,500.
24
On May 25, 2012, the Company entered into an employment agreement with an
effective date of June 1, 2012 with its newly appointed President, R. Brentwood
Strasler, for a period of no less than three years. Mr. Strasler is entitled to
an annual salary of $150,000 and 100,000 stock purchase warrants exercisable to
purchase common shares of the Company at $1.00 per share. The warrants are
exercisable for a three year period and can be vested quarterly on a pro rata
basis over twelve months from the date of issue. Additionally, Mr. Strasler will
be enrolled in a long term Executive Option Plan no later than three months
after the effective date of the employment agreement and is entitled to term
life insurance in the face amount of $2,500,000, payable to the beneficiary
designated by Mr. Strasler. The warrants awarded will be valued in accordance
with ASC 718-10-30-9, Measurement Objective - Fair Value at Grant Date. The
Company estimates fair value of the award using the Black-Scholes option pricing
model. Since the effective date of the grant is June 1, 2012, the Company did
not realize or record an estimated fair value of the warrants and therefore
there is no impact to the financial statements for the fiscal period ending May
31, 2012.
On May 29, 2012, the Company entered into a Consulting Agreement with Ian
Nuttall, expiring on June 1, 2013. As consideration for consultation and
advisory services, the Company agreed to issue 1,225,000 shares of common stock
and 775,000 shares of the Company's restricted common stock. The shares were
issued and valued at market value as of the date of the Agreement in the amount
of $2,320,000.
NOTE 7 - LIABILITIES & NOTES PAYABLE
On February 29, 2012, Company entered into a Promissory Note with R. Thomas
Kidd, our then Chief Executive Officer of the Company, and Infinite Funding,
Inc. ("IFI"). This Note replaces four promissory notes issued by IFI to the
Company as more fully described below.
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 Note
was amended three times to extend the due date and was first amended on June 9,
2011, a second time on September 28, 2011, and a third amendment on December 9,
2011. Pursuant to the amendments, the Company agreed to pay extension fees of
$30,000, thereby increasing the principle balance of this Note to $105,000.
Effective June 10, 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 June 10, 2011 (the "IFI Note"). The Note
was amended two times to extend the due date and was first amended on September
28, 2011 and again on December 9, 2011. Pursuant to the amendments, the Company
agreed to pay extension fees of $20,000, thereby increasing the principle
balance of this Note to $95,000.
Effective September 28, 2011, we obtained an unsecured loan in the amount of
$40,000 from Infinite Funding, Inc. ("IFI") as evidenced by a Promissory Note
from the Company to Infinite Funding, Inc. dated September 28, 2011 (the "IFI
Note"). The Note was amended to extend the due date on December 9, 2011.
Pursuant to this amendment, the Company agreed to pay an extension fee of
$10,000, thereby increasing the principle balance of this Note to $50,000.
Effective December 9, 2011, we obtained an unsecured loan in the amount of
$100,000 from Infinite Funding, Inc. ("IFI") as evidenced by a Promissory Note
from the Company to Infinite Funding, Inc. dated December 9, 2011 (the "IFI
Note").
25
As a result of consolidating the aforementioned debt, the Company is now
obligated under a single Promissory Note dated February 29, 2012 in the
aggregate principle amount of $355,645 along with $2,689 in accrued interest.
The Note is due on October 15, 2012 and accrues interest at 3% per annum. In
addition, R Thomas Kidd executed a Personal Guarantee of the Note, whereby Kidd
guarantees the payment of $100,000 of the principle balance in an Event of
Default pursuant to Article III of the Note.
On March 2, 2012, the Company entered into a Master Credit Agreement with
Infinite Funding, Inc. which provides for a non-revolving line of credit. The
Company may request advances under the lending facility by issuing borrowing
certificates to the Lender. Each borrowing certificate, together with simple
interest accrued at 8% per year, becomes payable one year after the date of the
advance received. Infinite Funding has amended the Master Credit Agreement,
increasing the amount of the Lending Facility from $150,000 to $200,000. As of
May 31, 2012, the Company received $190,000 in advances and the Company has
accrued $1,375 in interest.
NOTE 8 - 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
$4,801,271 from inception through May 31, 2012.
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, 2012 are as
follows:
Deferred tax assets:
Federal $ 6,369,716
State 0
-----------
Total Deferred Tax Asset 6,369,716
Less valuation allowance (6,369,716)
-----------
$ 0
===========
The Company has provided a 100% valuation allowance on the deferred tax assets
at May 31, 2012 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 9 - 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
26
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
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 10 - STOCKHOLDER'S DEFICIT
Stock Issued Cash Stock Issued
for Cash Received for Assets
-------- -------- ----------
Twelve months ended May 31, 2012 -- -- --
====== ====== ======
27
On June 20, 2011, the Company issued 550,660 shares of restricted common stock
pursuant to the terms of the agreement entered into with TVA Media Group as
discussed in Note 6. The shares were valued at $0.23 per share for a value of
$125,000. On June 20, 2011 the Company recorded $125,000 in prepaid expense
related to the shares issued TVA Media Group.
On September 1, 2011, the Company issued 79,545 shares of restricted common
stock pursuant to the terms of the agreement entered into with TVA Media Group
as discussed in Note 6. The shares were valued at $1.57 per share for a value of
$125,000. On September 1, 2011 the Company recorded $125,000 in prepaid expense
related to the shares issued TVA Media Group.
On December 15, 2011 the Company issued 75,758 shares of restricted common stock
pursuant to the terms of the agreement entered into with TVA Media Group as
discussed in Note 6. The shares were valued at $1.65 per share for a value of
$125,000. On December 15, 2011 the Company recorded $125,000 in prepaid expense
related to the shares issued TVA Media Group.
Pursuant to the Asset Purchase Agreement made effective on March 5, 2012, the
agreement with TVA Media is no longer enforceable to the Company and the value
in prepaid expense was removed as sold.
On June 15, 2011, Peter Gordon was entitled to 100,000 shares of the Company's
common stock as a signing bonus, valued at $22,000, which will not be earned and
delivered until one full year of service has elapsed under the agreement. Under
ASC 718 "Stock Compensation" the Company has expensed the proportionate value of
the stock compensation as of November 30, 2011 with an offset to
Additional-Paid-in-Capital for $10,186.
On August 1, 2011, Jordan Silverstein was entitled to 100,000 shares of the
Company's common stock as a signing bonus, valued at $150,000, which will not be
earned and delivered until one full year of service has elapsed under the
agreement. Under ASC 718 "Stock Compensation" the Company has expensed the
proportionate value of the stock compensation as of November 30, 2011 with an
offset to Additional-Paid-in-Capital for $50,137.
On August 8, 2011, Anthony Gebbia was entitled to 100,000 shares of the
Company's common stock as a signing bonus, valued at $170,000, which will not be
earned and delivered until one full year of service has elapsed under the
agreement. Under ASC 718 "Stock Compensation" the Company has expensed the
proportionate value of the stock compensation as of November 30, 2011 with an
offset to Additional-Paid-in-Capital for $53,562.
On September 1, 2011, William Seery was entitled to 100,000 shares of the
Company's common stock as a signing bonus, valued at $140,000, which will not be
earned and delivered until one full year of service has elapsed under the
agreement. Under ASC 718 "Stock Compensation" the Company has expensed the
proportionate value of the stock compensation as of November 30, 2011 with an
offset to Additional-Paid-in-Capital for $115,721.
On September 1, 2011, William Seery was entitled to 100,000 shares of the
Company's common stock as a signing bonus, valued at $140,000, which will not be
earned and delivered until six months of service has elapsed under the
agreement. As of February 29, 2012, the shares have fully vested and the Company
has recorded common stock payable. On March 1, 2012, the Company issued 100,000
common shares for a value of $140,000 or $1.40 per share.
28
On September 1, 2011, Joseph Mediate was entitled to 25,000 shares of the
Company's common stock as a signing bonus, valued at $38,750, which will not be
earned and delivered until one full year of service has elapsed under the
agreement. Under ASC 718 "Stock Compensation" the Company has expensed the
proportionate value of the stock compensation as of November 30, 2011 with an
offset to Additional-Paid-in-Capital for $9,661.
On October 2, 2011, Jim Hartley was entitled to 100,000 shares of the Company's
common stock as a signing bonus, valued at $165,000, which will not be earned
and delivered until one full year of service has elapsed under the agreement.
Under ASC 718 "Stock Compensation" the Company has expensed the proportionate
value of the stock compensation as of November 30, 2011 with an offset to
Additional-Paid-in-Capital for $26,301.
On October 31, 2011, Bruce Hopp was entitled to 25,000 shares of the Company's
common stock as a signing bonus, valued at $42,250, which will not be earned and
delivered until one full year of service has elapsed under the agreement. Under
ASC 718 "Stock Compensation" the Company has expensed the proportionate value of
the stock compensation as of November 30, 2011 with an offset to
Additional-Paid-in-Capital for $3,588.
On January 9, 2012, the Company issued 100,000 shares to each of its directors,
Mary Beck, Paul Mangiamele, and Robert Greenway. The shares were valued at
$165,000 or $1.65 per share.
On March 5, 2012, 9,771,500 shares of the Company's common stock were returned
to treasury as consideration for the purchase of the assets of The Golf
Championships. The transaction was valued at book value and the result was
additional capital contributed in excess of net assets sold in the amount of
$754,609.
On March 5, 2012, 50,000 shares of the Company's preferred series A shares were
returned to treasury as consideration for the purchase of the assets of The Golf
Championships.
On April 1, 2012, the Company entered into consulting agreements with seven
consultants. In consideration for services, the Company issued 160,000 shares of
unrestricted common stock pursuant to the S-8 registration statement filed with
the commission on May 1, 2012. The aggregate value of the stock issued was
$244,800 or $1.53 per share.
On May 9, 2012, the Company entered into a consulting agreement. In
consideration for services, the Company issued 100,000 shares of unrestricted
common stock pursuant to the S-8 registration statement filed with the
commission on May 1, 2012. The aggregate value of the stock issued was $275,000
or $2.75 per share.
On May 24, 2012, the Company entered into a consulting agreement. In
consideration for services, the Company issued 150,000 shares of unrestricted
common stock pursuant to the S-8 registration statement filed with the
commission on May 1, 2012. The aggregate value of the stock issued was $424,500
or $2.83 per share.
On May 30, 2012, the Company entered into a consulting agreement. In
consideration for services, the Company issued 800,000 shares of unrestricted
common stock pursuant to the S-8 registration statement filed with the
commission on May 1, 2012. The aggregate value of the stock issued was
$2,320,000 or $2.90 per share.
29
As of May 31, 2012 and 2011, there were no warrants or options outstanding to
acquire any additional shares of common stock.
NOTE 11 - OTHER INCOME AND EXPENSE
On March 5, 2012, the Company wrote off $456 to other income as a result of the
intercompany balance owed by its wholly owned subsidiary, The Golf
Championships, Inc.
At May 31, 2012, the Company has taken an accrued vendor balance no longer owed
and written $4,000 down to Other Income.
NOTE 12 - SUBSEQUENT EVENTS
Effective June 15, 2012, the Company's Shareholders appointed Andrew Ritchie, as
CEO of the Company. Mr. Ritchie shall receive a signing bonus of $10,000, have
an annual salary of $240,000, and entitle to 150,000 stock purchase warrants
exercisable to purchase share in the common stock of the Company at $1.00. The
warrant will be exercisable for a period of three years and can be vested
quarterly on a pro rata basis over twelve months from the date of issue.
On June 20, 2012, the Company formed a new wholly owned subsidiary, MuscleFoot
Inc. in the state of Nevada for the purpose of distributing, marketing, and
acting as sales agent for the patented foot care system, Barefoot Science. This
entity is currently in default with the Nevada Secretary of State.
On June 21, 2012, the Company entered into an exclusive North American marketing
and distribution agreement with Barefoot Science Products & Services Inc.
("Barefoot Science") through its newly formed subsidiary, MuscleFoot Inc.
On June 25, 2012, the Company appointed Patrick Johnson as Vice President of
corporate development.
On June 26, 2012, the Company entered into an employment agreement with Patrick
Johnson.
On June 26, 2012, the Company entered into an agreement with RBL Communications
to manage a complete social media program for the Company's wholly owned
subsidiary, MuscleFoot, Inc.
On July 16, 2012, the Company appointed Sean Pena to the advisory committee of
its wholly owned subsidiary, MuscleFoot, Inc.
On July 19, 2012, the Company, through its wholly owned subsidiary MuscleFoot,
Inc., entered into an endorsement contract with Nick Symmonds.
On July 25, 2012, the Company, through its wholly owned subsidiary MuscleFoot,
Inc., entered into an endorsement contract with Will Claye.
30
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, 2012. 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,
2012.
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, 2012.
31
There were no changes in our internal control over financial reporting that
occurred during the fiscal year ended May 31, 2012 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
It should be noted that any system of controls, however well designed and
operated, can provide only reasonable and not absolute assurance that the
objectives of the system are met. In addition, the design of any control system
is based in part upon certain assumptions about the likelihood of certain
events. Because of these and other inherent limitations of control systems,
there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions, regardless of how remote.
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.
ITEM 9B. OTHER INFORMATION
None
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
DIRECTORS AND EXECUTIVE OFFICERS
Andrew Ritchie is a Director and Chief Executive Officer of the Company.
Mr. Ritchie, age 44, was recruited from Easymed Services Inc. (EZM-CDNX). As CEO
of Easymed, Mr. Ritchie led the restructuring of the global medical information
Technology Company and positioned the company as a global leader in the
TeleMedicine sector. From November 2008 to September 2010, Mr. Ritchie was
Operations Director at Evening Standard Ltd. (UK). From January 2006 to July
2007, Mr. Ritchie was the Publisher of The Winnipeg Free Press, at which he
reported to the Chairman of the Board and was responsible for 1000 staff,
revenue of $120 million, and the leadership of all aspects of the Winnipeg Free
Press operations. From 2003 to 2006, Mr. Ritchie was Vice President of
Operations at The Globe and Mail (Canada), Canada's largest selling national
newspaper with revenues of approximately $300 million. Mr. Ritchie reported
directly to the Publisher/CEO and was responsible for the daily operation of all
aspects of the newspaper.
R. Brentwood Strasler is a Director, President and Corporate Secretary of the
Company. Mr. Strasler, age 45, has more than twenty years experience in both
private industry and the public capital markets and has a broad range of skills
and expertise in corporate governance, corporate finance, and other matters
faced by emerging companies.
From August 2009 to March 2012 Mr. Strasler was Vice President of Clarus
Securities Inc., a Canadian based investment bank. From 2007 to 2008 he was a
Senior Vice President at investment bank Westwind Partners/Thomas Weisel Group.
32
In addition, Mr. Strasler has owned and operated businesses in a variety of
industries focusing on restructurings, financings, mergers and acquisitions. His
leadership has been instrumental in the successful reorganization, development,
and expansion of several private companies in the diversified services,
technology, and industrial manufacturing sectors. Mr. Strasler has been directly
involved in raising over $275 million in public financings for companies engaged
in a wide range of industries and market capitalizations.
Mr. Strasler holds an Economics Degree from the University of Western Ontario
and an MBA in International Finance from the University of Notre Dame.
None of our officers or directors have filed any bankruptcy petition, been
convicted of or been the subject of any criminal proceedings or the subject of
any order, judgment or decree involving the violation of any state or federal
securities law within the past ten (10) years.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act and rules and regulations of the SEC
thereunder require our directors, officers and persons who beneficially own more
than 10% of our common stock, as well as certain affiliates of such persons, to
file initial reports of their ownership of our common stock and subsequent
reports of changes in such ownership with the SEC. Our 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.
We have determined that the following Section 16(a) filings were not made with
the SEC:
* R. Brentwood Strasler, our President, did not file a Form 3 within the
prescribed time period after his appointment as President. Mr.
Strasler was unaware of this requirement.
* Andrew Ritchie, our CEO, did not file a Form 3 within the prescribed
time period after his appointment as CEO.
CORPORATE GOVERNANCE
The Company has adopted a Financial Code of Ethics, an Audit Committee Charter,
a Compensation Committee Charter, and a Policy on Suspected Misconduct,
Dishonesty and Fraud.
LACK OF INDEPENDENT BOARD OF DIRECTORS AND AUDIT COMMITTEE
The directors of the Company are 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.
33
COMMITTEES
The Company has an audit and a compensation committee, each of which is
comprised of the Company's directors.
The Company's audit committee has determined that its members are not "audit
committee financial experts" within the meaning of federal securities
regulations.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Name and
Principal Stock Option All Other
Position Year Salary($) Bonus Awards($) Awards Compensation($) Total($)
-------- ---- --------- ----- --------- ------ --------------- --------
R. Thomas Kidd,
Chairman and CEO(1) 2011 -- -- -- -- -- --
R. Thomas Kidd,
Chairman and CEO(1) 2012 240,000 -- -- -- -- 240,000
William Seery
Chief Financial
Officer (2) 2011 -- -- -- -- -- --
William Seery
Chief Financial
Officer (2) 2012 150,000 -- 140,000 -- -- 290,000
Michael Franklin
Chairman, CEO,
CFO(3) 2012 5,000 -- -- -- -- 5,000
Andrew Ritchie(5) 2011 -- -- -- -- -- --
Andrew Ritchie(5) 2012 240,000 -- 150,000 -- -- 390,000
R. Brentwood
Strasler(4) 2011 -- -- -- -- -- --
R. Brentwood
Strasler(4) 2012 150,000 -- 100,000 -- -- 250,000
----------
(1) R. Thomas Kidd was Chairman of the Board and CEO of the Company until March
5, 2012.
(2) Mr. Seery was Chief Financial Officer until March 5, 2012.
(3) Mr. Franklin was Chairman of the Board , Chief Executive Officer, and Chief
Financial Officer of the Company from March 5, 2012 until May 25, 2012. Mr.
Franklin no longer serves as a member of the Board.
(4) Mr. Strasler was appointed President, Director, and Corporate Secretary of
the Company on May 25, 2012.
(5) Mr. Ritchie was appointed Chief Executive Officer and Director of the
Company on June 15, 2012.
34
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 12, 2012 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 29,005,298 shares outstanding as of May 31, 2012. 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.
Amount and nature of beneficial ownership
-------------------------------------------------
Name and Address Common Stock Preferred Stock Percentage
---------------- ------------ --------------- ----------
CRISTY, LLC, (1) -0- 50,000 63.29% (2)
----------
(1) The address for Cristy Management Limited is Akara Bldg, 24 De Castro
Street, Wickhams Cay 1, Tortola, British Virgin Islands.
(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
On March 5, 2012, Michael Franklin purchased 50,000 shares of the Company's
Series A Preferred Stock from R Thomas Kidd. Our Series A Preferred Stock is
convertible into Common Stock at the rate of 1,000 shares of Common for each
share of Preferred. In addition, our Preferred stock has voting rights
equivalent to 1,000 votes per share. As a result, Mr. Franklin has become the
controlling shareholder of Domark by virtue of his ownership of 50,000 shares of
Preferred Stock with voting rights equivalent to 50,000,000 shares of our Common
Stock.
On May 25, 2012, Michael Franklin sold 50,000 preferred shares of the Company,
in a private transaction, to Cristy Management Limited. As a result, Cristy
Management Limited has become the controlling shareholder of Domark by virtue of
his ownership of 50,000 shares of Preferred Stock with voting rights equivalent
to 50,000,000 shares of our Common Stock.
There are currently no arrangements with any party which may subsequently result
in a change in control of the Company.
35
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
On February 29, 2012, the Company entered into a Memorandum of Agreement with
Xiamen Taiyang Neng Gongsi and Michael Franklin.
On March 5, 2012, the Company's prior Chief Executive Officer returned to
treasury 9,771,500 shares of common stock and 50,000 shares of preferred stock
in connection with an Asset Purchase Agreement dated March 5, 2012.
On March 5, 2012, Michael Franklin purchased 50,000 shares of the Company's
Series A Preferred Stock from R Thomas Kidd. Our Series A Preferred Stock is
convertible into Common Stock at the rate of 1,000 shares of Common for each
share of Preferred. In addition, our Preferred stock has voting rights
equivalent to 1,000 votes per share. Upon the conclusion of the Armada
transaction, Franklin became the controlling shareholder of Domark by virtue of
his ownership of 50,000 shares of Preferred Stock with voting rights equivalent
to 50,000,000 shares of our Common Stock.
From time to time, the Company's officers have provided loans to the Company. At
May 31, 2012, the Company is indebted to Michael Franklin, President of the
Company's wholly owned subsidiary Solawerks, Inc., in the amount of $1,000,
which amount does not bear interest but is due on demand. This amount reflects
advances made to the Company by Mr. Franklin.
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 DeJoya Griffith, LLC for professional services
rendered for the audit of the Company's annual financial statements for fiscal
years ending May 31, 2012 and 2011 was $22,500 and $7,500, respectively.
AUDIT-RELATED FEES
The aggregate fees billed by DeJoya Griffith, LLC 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, 2012
and 2011, and that are not disclosed in the paragraph captioned "Audit Fees"
above, were $1,500 and $0, 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, 2012 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, 2012 and 2011 were $25,600 and $18,000, respectively.
ALL OTHER FEES
The Company has incurred no other fees for audit, audit-related, or tax
services.
36
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 (a) Articles of Incorporation. 1
(b) Amendment to Articles of Incorporation. 2
(c) Amendment to Articles of Incorporation. 3
3.2 Bylaws. 4
10.1 Agreement for the Exchange of Common Stock between the 5
Company and Silk for Less, Inc., dated as of June 3, 2011.
10.2 Media Campaign Agreement between the Company and TVA Media 6
Group, Inc., dated as of June 20, 2011.
10.3 Escrow Agreement between the Company and Armada Sports & 7
Entertainment, Inc., dated as of June 30, 2011.
10.4 Asset Purchase Agreement between the Company and USPT, 8
LLC, dated as of August 21, 2011.
10.6 Memorandum of Agreement between Domark International, Inc. 9
and Xiamen Taiyang Neng Gongsi dated February 29, 2012.
10.7 Master Credit Agreement between Domark International, Inc. 17
and Infinite Funding, Inc. dated March 2, 2012.
10.8 Asset Purchase Agreement between Domark International Inc. 18
and R. Thomas Kidd dated March 5, 2012
10.9 Employment Agreement between Domark International Inc. 19
and R. Brentwood Strasler dated May 25, 2012.
10.10 Employment Agreement between Domark International Inc. 20
and Andrew Ritchie dated June 15, 2012.
14 Financial Code of Ethics 21
21 Subsidiaries 22
37
31.1 Certification of Chief Executive Officer Pursuant to 23
Section 302 of the Sarbanes Oxley Act.*
31.2 Certification of Principal Financial Officer Pursuant to 24
Section 302 of the Sarbanes Oxley Act.*
32.1 Certification of Chief Executive Officer Pursuant to 25
Section 906 of the Sarbanes Oxley Act.*
32.2 Certification of Principal Accounting Officer Pursuant to 26
Section 906 of the Sarbanes Oxley Act.*
99.1 Audit Committee Charter 27
99.2 Compensation Committee Charter 28
101 Interactive data files pursuant to Rule 405 of Regulation S-T. 29
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. Set out in the Company's Form 8-K filed on June 30, 2008 and incorporated
herein by reference.
3. Filed as Exhibit 3.1 in the Company's Form 8-K filed on January 8, 2009 and
incorporated herein by reference.
4. Filed as Exhibit 3.2 to the Company's Form SB-2 filed on August 6, 2006 and
incorporated herein by reference.
5. 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.
6. 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.
7. 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.
8. 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.
15. Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on
February 29, 2012.
17. Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on
March 5, 2012.
18. Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on
March 9, 2012.
19. Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on
May 25, 2012.
20. Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on
June 26, 2012.
21. 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.
22. Filed herewith
23. Filed herewith
24. Filed herewith
25. Filed herewith
26. Filed herewith
27. 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.
28. 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.
29. Filed herewith
38
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: September 27, 2012
By: /s/ Andrew Ritchie
-------------------------------------
Andrew Ritchie
Chief Executive Officer
Date: September 27, 2012
By: /s/ Andrew Ritchie
-------------------------------------
Andrew Ritchie
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 27th day of September.
/s/ Andrew Ritchie
----------------------------------------
Andrew Ritchie
Chief Executive Officer
/s/ Andrew Ritchie
----------------------------------------
Andrew Ritchie
Principal Financial Officer
39