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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-K
 
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Fiscal Year Ended May 31, 2014

 OR
 
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from __________ to __________
 
Commission File Number: 333-136247
 
DOMARK INTERNATIONAL, INC.
(Name of small business issuer as specified in its charter)
 
Nevada
 
20-4647578
(State of Incorporation)
 
(IRS Employer Identification No.)
 
34 King Street Suite 1102
Toronto, Ontario, Canada M5C1E9
(Address of principal executive offices)
 
321-250-4996
(Registrant's telephone number, including Area Code)
 
Securities registered pursuant to Section 12(b) of the Act: None
 
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001 Par Value
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer o Smaller Reporting Company x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act. Yes o No x
 
The aggregate market value of voting stock held by non-affiliates of the registrant on May 31, 2014 was $3,500,000.
 
As of May 31, 2014 there were 801,626,781 shares of Common Stock, $0.001 par value per share, issued and outstanding and there were 50,000 shares of Preferred Stock, $0.001 par value per share, issued and outstanding.
 


 
 

 
 
TABLE OF CONTENTS
 
PART I
     
         
ITEM 1.
BUSINESS
    3  
ITEM 1A.
RISK FACTORS
    4  
ITEM 1B.
UNRESOLVED STAFF COMMENTS
    4  
ITEM 2.
PROPERTIES
    4  
ITEM 3.
LEGAL PROCEEDINGS
    4  
ITEM 4.
MINE SAFETY DISCLOSURES
    4  
           
PART II
       
           
ITEM 5.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    5  
ITEM 6.
SELECTED FINANCIAL DATA
    6  
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    6  
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    6  
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    7  
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    34  
ITEM 9A.
CONTROLS AND PROCEDURES
    34  
ITEM 9B.
OTHER INFORMATION
    34  
           
PART III
       
           
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
    35  
ITEM 11.
EXECUTIVE COMPENSATION
    36  
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    37  
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    38  
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
    39  
           
PART IV
       
           
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    40  
           
SIGNATURES
    42  
 
 
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. On May 21, 2009, the Company entered into an acquisition agreement for the exchange of common stock (the "Victory Lane Agreement") with Victory Lane Financial Elite, LLC ("Victory Lane") with respect to a real estate lifestyle business known as Victory Lane (the "Victory Lane Business"). Shortly thereafter, a dispute arose between the Company and the principals of Victory Lane regarding the representations of the principals of Victory Lane and the Victory Lane Business and the Victory Lane Agreement. Litigation between the Company and various parties pertaining to the Victory Lane Business remains outstanding. (Refer to "Item 3, Legal Proceedings" below).
 
During the last half of 2009, the Company sold two of its operating subsidiaries, Javaco, Inc. and ECFO Corporation and effected rescissions of acquisition transactions on the remainder of its operating businesses. Between October 2009 and May 2011, the Company had no material ongoing operations. The business of the Company during the period from October 2009 through May 2011 was to seek out new acquisitions and to conduct the litigation with Victory Lane.
 
On May 31, 2011, the Company formed a wholly owned subsidiary, Armada Sports & Entertainment, Inc. Armada is a sports marketing and management company engaged in owning, developing, and conducting made-for-television sports and entertainment events. On March 5, 2012, the Company entered into an Asset Purchase Agreement with its then controlling shareholder, R. Thomas Kidd, for the sale of Armada, and certain assets related thereto.
 
On February 29, 2012, the Company formed a new wholly owned subsidiary, SolarWerks, Inc. in the state of Nevada, for the purposes of entering the business of marketing specialized solar consumer electronics.
 
On June 20, 2012, the Company formed a new wholly owned subsidiary, MuscleFoot Inc. in the state of Nevada for the purpose of distributing, marketing, and acting as sales agent for the patented foot care system, Barefoot Science. This entity is currently in default with the Nevada Secretary of State.
 
On July 20, 2012, the Company formed a new wholly owned subsidiary, Domark Canada Inc. in the province of Ontario for the purpose of supporting the Company’s corporate operations based in Toronto, Ontario, Canada.
 
In December 2012, we entered into a global sales and distribution agreement with BioHarmonics Technology to develop and sell the new patent pending IR charger for all Apple iPhone® models and Samsung SIII and S4 models. The IR charger has a high density backup battery which is designed to double the battery life of a smartphone. The IR charger cell can be used to recharge the phone in emergency by sun or normal room lights. This product will have a range of different lines from a low cost model up to designer products. We are aiming to launch the product later this year.
 
On February 28, 2013, the Company entered into a Memorandum of Understanding to purchase 44% of Zaktek Ltd. (“Zaktek”). Zaktek’s main product is the phonepad+, an Apple Inc. approved tablet device that works with smartphones including the Apple iPhone® and Samsung Galaxy to improve functionality including video and gaming abilities.
 
On April 23, 2013, the Company received notification that Zaktek was ending discussions in regards to the definitive purchase agreement with DoMark.

In June 2013, the Company entered into an agreement to purchase 29% of Imagic for stock and cash. Imagic is a UK company that has patented, or patent pending, smartphone products. Domark is actively involved with the management and marketing direction of Imagic. Domark increased its holding in Imagic to 34% in September 2013.
 
 
3

 

EMPLOYEES
 
As of fiscal years ending May 31, 2014, and May 31, 2013 the Company conducts its business through independent contractors.
 
ITEM 1A. RISK FACTORS
 
Not applicable to smaller reporting companies.
 
ITEM 1B. UNRESOLVED STAFF COMMENTS
 
Not applicable to smaller reporting companies.
 
ITEM 2. PROPERTIES

In August 2013, we relocated our corporate office to Toronto, Canada. As a result, the Company rented 1347 square feet of office space in Toronto. This lease is for a five year period. This office has 1347 square feet of office space. Our rent expense is approximately $1,600 per month, which increases to approximately $1,900 for the following year, and approximately $2,100 for succeeding years. We believe that this space is adequate for our current needs.
 
ITEM 3. LEGAL PROCEEDINGS

On May 21, 2009, the Company entered into an Agreement for the Exchange of Common Stock (the "Victory Lane Agreement") with Victory Lane Financial Elite, LLC ("Victory Lane") with respect to a real estate lifestyle business known as Victory Lane (the "Victory Lane Business") pursuant to which the Company intended to purchase the Victory Lane Business. Shortly thereafter, a dispute arose between the Company and Victory Lane regarding alleged misrepresentations made by Victory Lane in connection with the Victory Lane Agreement.

In August, 2009, Victory Lane Financial Elite, LLC, Legacy Development, LLC and Patrick Costello filed suit in the Superior Court of Tattnall County, Georgia (Civ. No. 2009-V-381-JW) against the Company, R. Thomas Kidd and various officers and directors of the Company, alleging that the Company was in breach of the Victory Lane Agreement and that the Company and certain of the individual defendants had committed various torts against the plaintiffs and that certain of the individual defendants had violated various fiduciary and other duties owed to the plaintiffs in connection with the Victory Lane Agreement and the handling of the Victory Lane Business (the "VLFE Case"). The plaintiffs sought a declaratory judgment to the effect that the Victory Lane Agreement had not been executed, as well as money damages from the Company and the individual defendants. The Company and Mr. Kidd have answered the Complaint, denying any liability for the plaintiff's claims and have asserted various counterclaims including fraud and other torts. In July 2010 the court dismissed all of the individual defendants, other than R. Thomas Kidd, in response to a motion to dismiss for lack of jurisdiction. The case has since been stayed.

In December, 2009, AHIFO-21, LLC filed a lawsuit in the Superior Court of Tattnall County, Georgia (Civ. No. 2009-V-672-JS) against Victory Lane, LLC, Patrick J. Costello and Stephen Brown (the "Victory Lane Defendants") alleging that the Victory Lane Defendants owe the plaintiff more than $7,740,000 in respect of one or more loans made by the plaintiff to certain Victory Lane Defendants in connection with the Victory Lane Business (the "AHIFO Case"). In February 2010, the Victory Lane Defendants filed a Third Party Complaint against the Company and R. Thomas Kidd, claiming that the Company and Mr. Kidd should be liable for any amounts the Victory Lane Defendants are required to pay to the plaintiff in this case. The Company and Mr. Kidd have answered the Complaint, denying any liability for the plaintiff's claims and Mr. Kidd has asserted various counterclaims including fraud and other torts. The Company and Mr. Kidd filed a motion to dismiss the Third Party Complaint, but the entire case was subsequently stayed.

Because each of the VLFE Case and the AHIFO Case have been stayed and because discovery in those cases is not complete, the Company has determined that the probability of any loss is remote and that the amount of any damages, if any were determined adverse to the Company, would not be reasonably estimable. The Company believes that it has meritorious claims against the opposing parties with respect to the Victory Lane Agreement and that the claims asserted against it are not meritorious. The Company intends to defend itself vigorously.
 
On January 24, 2012, the Company was made aware by its former Chief Executive Officer that a complaint had been filed against the Company for approximately $534,000 by the United States Trustee for the Middle District of Florida to claim against funds we owed to our former Chief Executive Officer and his wife. On January 23, 2012, the Trustee's Motion for Approval and Notice of Compromise was filed to obtain the approval of the court of a settlement of the matters that were the subject of the complaint. On April 24, 2012, the Company was advised that the complaint, which was never served, was dismissed with prejudice by the US Trustee.
 
ITEM 4. MINE SAFETY DISCLOSURES
 
Not applicable.
 
 
4

 
 
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 is quoted on the OTCQB quotation service operated by OTC Markets Group, Inc.
 
There were 801,626,781 and 54,615,298 shares of our common stock issued and outstanding, as of May 31, 2014 and May 31, 2013 respectively. There were approximately 100 shareholders of record of the Company's common stock.
 
The following table sets forth for the periods indicated the high and low bid quotations for our common stock. These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown or commission and may not represent actual transactions.
 
FISCAL YEAR ENDED MAY 31, 2013
 
   
F/Y 2014
   
F/Y 2013
 
   
High
   
Low
   
High
   
Low
 
                             
First Quarter (June - August)
 
$
0.14
   
$
0.05
   
$
0.23
   
$
0.07
 
Second Quarter (September - November)
 
$
0.07
   
$
0.01
   
$
0.30
   
$
0.13
 
Third Quarter (December - February)
 
$
0.02
   
$
0.01
   
$
0.26
   
$
0.04
 
Fourth Quarter (March - May)
 
$
0.001
   
$
0.001
   
$
0.14
   
$
0.04
 
 
DIVIDENDS
 
The Company has never paid dividends on any shares of its common stock, nor does the Company anticipate paying dividends at any time in the foreseeable future. Any profits received by the Company will be reinvested in its business.
 
RECENT SALES OF UNREGISTERED SECURITIES

On June 17, 2013, the Company issued 2,500,000 shares of common stock for a related party loan conversion.

On June 18, 2013, the Company issued 3,160,000 shares of common stock for consulting services.

On June 29, 2013, the Company issued 2,500,000 shares of common stock for consulting services.

On July 5, 2013, the Company issued 250,000 shares of common stock for consulting services.

On July 17, 2013, the Company issued 575,000 shares of common stock for consulting services.

On July 22, 2013, the Company issued 7,500,000 shares of common stock purchased 100% of South Hill Ltd., an English private limited company, which owned 19% of Zaktek.

On July 24, 2013, the Company issued 2,874,550 shares of common stock for a related party loan conversion.

On August 14, 2013, the Company issued 500,000 shares of common stock for patent purchased on April 16, 2013 and settled the stock payable 500,000 shares recorded as of May 31, 2013. The aggregate value of the stock at time of issuance was $40,000.

On August 26, 2013, the Company issued 2,000,000 shares of common stock for consulting services.

On August 28, 2013, the Company issued 1,114,206 shares of common stock for conversion of Asher convertible note.

The Company claims an exemption from registration for the above issuances pursuant to Section 4(a)(2) of the Securities Act due to the small number of purchasers and their sophistication in financial and business matters. The Company claims an exemption under Section 3(a)(9) of the Securities Act for issuances of common stock pursuant to each note conversion described above.
 
 
5

 

ITEM 6. SELECTED FINANCIAL DATA
 
Not applicable to smaller reporting companies.
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
 
The following is management's discussion and analysis of certain significant factors that have affected our financial position and operating results during the periods included in the accompanying consolidated financial statements, as well as information relating to the current plans of our management. This report includes forward-looking statements. Generally, the words "believes", "anticipates", "may", "will", "should", "expect", "intend", "estimate", "continue", and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.
 
The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes thereto and other financial information contained elsewhere in this Form 10-K.

FISCAL YEAR ENDED MAY 31, 2014 COMPARED TO FISCAL YEAR ENDED MAY 31, 2013

The Company did not have any revenues for fiscal year ending May 31, 2014 and $37,935 in revenues for the fiscal year ended May 31, 2013. Revenues earned for fiscal year ending May 31, 2013 were related to the sale of Solacases through the Company's wholly owned subsidiary, Solawerks, Inc.
 
General and administrative expenses for fiscal 2014 increased to $1,027,248 as compared to $542,133 in fiscal 2013. The increase is primarily related to an increase of consultants, and increased professional fees. In fiscal year 2014 the Company placed on hold the sale of Solawerks products. Interest expense for the twelve months ending May 31, 2014 was $511,876 as compared to $44,588 for the period ending May 31, 2013. The Company’s operations during fiscal 2014 were funded through convertible promissory notes, through a plethora of lenders.
 
The operating loss for fiscal 2014 decreased to $3,735,676 as compared to $9,480,407 for fiscal 2013. The primary decrease in the operating loss was due to the impairment of assets totaling $4,605,480 due to a cancellation of a license agreement for our old Solawerks product.

No tax benefit was recorded for fiscal 2014 or fiscal 2013 as required by ASC Standard 740-25, Accounting for Income Taxes. The Company has provided for a 100% allowance of its deferred tax assets, as it is uncertain that there will be sufficient net profits in the future to fully realize the tax benefit of its net operating loss carry-forwards.

LIQUIDITY AND CAPITAL RESOURCES

Our operating requirements have been funded primarily through financing facilities and sales of our common stock. The Company will continue to require financing from loans and notes payable until such time our business has generated income sufficient to carry our operating costs.

Cash used in operating activities for the fiscal year 2014 was $1,323,233 compared to $430,595 for the fiscal year 2013. Depreciation and amortization expense for fiscal year 2013 was $62,685 as compared to $3,703 for fiscal 2013. The increase was due primarily to paying the officers of the Company.
 
Cash used in investing activities was $195,753 for the fiscal year 2014, compared to $0 for the fiscal year 2013.

Cash provided by financing activities was $1,519,426 for fiscal year 2014 as compared to $378,346 for fiscal 2013. Financing activities consisted of cash received from shareholders and notes payable.

OTHER CONSIDERATIONS

There are numerous factors that affect the Company’s business and the results of its operations. Sources of these factors include general economic and business conditions, federal and state regulation of business activities, the level of demand for services, the level and intensity of competition in the, and our ability to continue to improve our infrastructure, including personnel and systems, to keep pace with our anticipated rapid growth in the development of our business.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Not applicable to smaller reporting companies.
 
 
6

 
 
ITEM 8. FINANCIAL STATEMENTS
 
DOMARK INTERNATIONAL, INC.
 
TABLE OF CONTENTS
 
   
Page
 
       
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   
8
 
         
CONSOLIDATED FINANCIAL STATEMENTS:
       
         
Consolidated Balance Sheets at May 31, 2014 and 2013
   
9-10
 
         
Consolidated Statements of Operations for the years ended May 31, 2014 and 2013
   
11
 
         
Consolidated Statements of Stockholders' Deficit for the years ended May 31, 2014 and 2013
   
12-18
 
         
Consolidated Statements of Cash Flows for the years ended May 31, 2014 and 2013
   
19-20
 
 
       
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   
21-23
 
 
 
7

 
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Stockholders of
Domark, International Inc.
Longwood, Florida
 
We have audited the accompanying consolidated balance sheets of Domark International Inc. as of May 31, 2014 and 2013, and the related statements of operations, stockholders’ deficit and cash flows for each of the years in the two year period ended May 31, 2014. Domark International Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Domark International Inc. as of May 31, 2014, and 2013, and the results of its operations and its cash flows for each of the years in the two year period ended May 31, 2014, in conformity with accounting principles generally accepted in the United States of America.
 
 
/s/ ZBS Group, LLP
 
 
Plainview, NY
August 29, 2014
 
 
8

 
 
DOMARK INTERNATIONAL, INC.
 
CONSOLIDATED BALANCE SHEETS
 
   
May 31,
   
May 31,
 
   
2014
   
2013
 
             
ASSETS
 
CURRENT ASSETS
           
Cash and cash equivalents
  $ 460     $ 20  
Loan receivable from consultant
    36,203       -  
Prepaid expenses
    4,500       17,823  
TOTAL CURRENT ASSETS
    41,163       17,843  
                 
INVESTMENTS
    1,144,166       -  
                 
OTHER ASSETS
               
Patents, net of accumulated amortization of $3,605 and $0, respectively
    66,897       40,000  
Licenses, net of accumulated amortization of $60,898 and $1,818, respectively
    249,102       8,182  
TOTAL OTHER ASSETS
    315,999       48,182  
                 
TOTAL ASSETS
  $ 1,501,328     $ 66,025  
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
9

 
 
DOMARK INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS (CONTINUED)
 
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
 
CURRENT LIABILITIES
           
Note payable to bank
  $ 180,000     $ -  
Accounts payable and accrued expenses
    56,940       209,179  
Amounts due under Licensing Agreement with Wazzamba SA
    224,925       -  
Loans payable to related parties, consultants and stockholders
    188,972       45,288  
Convertible notes payable (net of unamortized discounts of $674,886 and $59,301, respectively)
    67,414       148,691  
Derivative liability for convertible notes payable
    1,748,982       237,578  
TOTAL LIABILITIES
    2,467,233       640,736  
                 
STOCKHOLDERS' DEFICIT
               
Preferred stock, $0.001 par value, authorized 10,000,000 shares:
               
Series A convertible preferred stock - issued and outstanding
               
50,000 shares, as of May 31, 2014 and 2013
    50       50  
Convertible preferred stock series B, $0.0001 par value,
               
Authorized: 10,000,000     -       -  
Common stock, $0.001 par value, authorized 2,000,000,000 shares:
               
801,626,781 and 179,435,100 shares issued,
               
and 676,806,979 and 54,615,298 shares outstanding,
               
respectively, as of May 31, 2014 and 2013
    801,627       179,435  
                 
Less: Treasury stock (124,819,802 shares) as of May 31, 2014 and 2013
    (124,820 )     (124,820 )
Common stock payable
    858,000       858,000  
Additional paid in capital
    43,529,923       40,816,440  
Accumulated deficit
    (46,030,685 )     (45,303,816 )
TOTAL STOCKHOLDERS' DEFICIT
    (965,905 )     (574,711 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
  $ 1,501,328     $ 66,025  
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
10

 

DOMARK INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
 
   
For the Years Ended
 
   
May 31,
 
   
2014
   
2013
 
             
Sales
  $ -     $ 37,935  
Cost of sles
    -       31,775  
Gross profit
    -       6,160  
                 
Operating expenses:
               
General and administrative
    1,027,248       542,133  
Stock-based compensation - Consultants
    666,755       1,205,448  
Stock-based compensation - Salaries and wages
    156,600       1,037,758  
Amortization of Barefoot - Science license fee
    -       1,394,520  
Impairment of Barefoot - Science license fee
    -       4,605,480  
Depreciation  and amortization expense
    62,685       3,703  
Bad debts expense
    -       1,456  
Loss (income) on settlement of debt
    -       413,903  
Total operating expenses
    1,913,288       9,204,401  
                 
Loss from operations
    (1,913,288 )     (9,198,241 )
                 
Other income (expense):
               
Other income
    -       -  
Revaluation of derivative liability for convertible notes
    (1,213,154 )     (237,578 )
Interest expense
    (511,876 )     (44,588 )
Total other income (expense)
    (1,725,030 )     (282,166 )
                 
Net Loss
    (3,638,318 )     (9,480,407 )
                 
Statement of Comperhansive Income:
               
Net Loss
    (3,638,318 )     (9,480,407 )
                 
Other Comprehensive loss
               
Foreign currancy adjustment     (88,551 )     -  
      (88,551 )     -  
                 
Total Comperhansive Loss
  $ (3,726,869 )   $ (9,480,407 )
                 
Net loss per common shares, basic and diluted
  $ (0.01 )   $ (0.06 )
Weighted average common shares outstanding
    298,705,632       156,961,456  
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
11

 
 
DOMARK INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED MAY 31, 2013 AND 2014
 
 
Preferred stock
 
Preferred Stock
         
Additional
 
Common
                     
 
Series A
 
Series B
 
Common Stock
 
Paid-in
 
Stock
 
Accumulated
 
Treasury Stock
     
Stockholders'
 
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
Capital
 
Payable
 
Deficit
 
Shares
 
Amount
 
OCI
 
Deficit
 
                                                     
Balance, May 31, 2012
  50,000     50             153,825,100     153,825     31,499,029     738,000     (32,823,409 )   (124,819,802 )   (124,820 )       (557,325 )
Preferred stock issued for
                                                                       
distribution agreement
  -     -     2,500,000     6,000,000     -     -     -     -     -                     6,000,000  
Preferred stock converted into
                                                                           
shares of common stock
  -     -     (2,500,000 )   (6,000,000 )   5,000,000     5,000     5,995,000     -     -                     -  
Common stock issued for
                                                                           
stock payable
  -     -     -     -     100,000     100     21,900     (22,000 )   -                     -  
Common stock issued for
                                                                           
compensation
  -     -     -     -     8,110,000     8,110     1,094,998     -     -                     1,103,108  
Common stock issued to settle
                                                                           
loan payable
  -     -     -     -     7,400,000     7,400     578,700     -     -                     586,100  
Common stock issued for
                                                                           
salaries and wages
  -     -     -     -     5,000,000     5,000     400,000     -     -                     405,000  
Stock payable for stock-based
                                                                           
compensation
  -     -     -     -     -     -     -     102,000     -                     102,000  
Warrants granted to officers
  -     -     -     -     -     -     633,098     -     -                     633,098  
Settlement of related party debt
  -     -     -     -     -     -     575,715     -     -                     575,715  
Convertible note payable -
                                                                           
beneficial conversion feature
  -     -     -     -     -     -     18,000     -     -                     18,000  
Stock payable for
                                                                           
patent acquisition
  -     -     -     -     -     -     -     40,000     -                     40,000  
Net loss
  -     -     -     -     -     -     -     -     (9,480,407 )   -     -     -     (9,480,407 )
Balance, May 31, 2013
  50,000     50     -     -     179,435,100     179,435     40,816,440     858,000     (42,303,816 )   (124,819,802 )   (124,820 )   -     (574,711 )
 
 
12

 
 
   
Preferred stock
Series A
   
Preferred Stock
Series B
   
Common Stock
   
Additional
Paid-in
   
Common
Stock
   
Accumulated
   
Treasury Stock
         
Stockholders'
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Payable
   
Deficit
   
Shares
   
Amount
   
OCI
   
Deficit
 
                                                                               
Common stock issued to settle
                                                                             
loan payable
  -     -     -     -     2,500,000     2,500     47,500     -     -                       50,000  
Common stock issued for
                                                                             
consulting services
  -     -     -     -     2,500,000     2,500     247,500     -     -                       250,000  
Common stock issued for
        -                                                                    
consulting services
  -     -     -     -     250,000     250     22,250     -     -                       22,500  
Common stock issued for
                                                                             
consulting services
  -     -     -     -     75,000     75     6,600     -     -                       6,675  
Common stock issued for
                                                                             
consulting services
  -     -     -     -     500,000     500     41,150     -     -                       41,650  
Common stock issued to
                                                                             
settle loan payable
  -     -     -     -     2,874,550     2,875     54,616     -     -                       57,491  
Common stock issued for
                                                                             
investment in Imagic Ltd.
  -     -     -     -     7,500,000     7,500     690,000     -     -                       697,500  
Common stock issued for
                                                                             
patents acquisition
  -     -     -     -     500,000     500     35,000     -     -                       35,500  
Common stock issued for
                                                                             
consulting services
  -     -     -     -     2,000,000     2,000     131,000     -     -                       133,000  
Common stock issued in
                                                                             
satisfaction of convertible
                                                                             
notes payable
  -     -     -     -     1,114,206     1,114     38,886     -     -                       40,000  
Common stock issued in
                                                                             
satisfaction of convertible
                                                                             
notes payable
  -     -     -     -     856,164     856     24,144     -     -                       25,000  
Common stock issued for
                                                                             
consulting services
  -     -     -     -     1,000,000     1,000     44,600     -     -                       45,600  
Common stock issued for
                                                                             
consulting services
  -     -     -     -     250,000     250     12,250     -     -                       12,500  
Common stock issued in
                                                                             
satisfaction of convertible
                                                                             
notes payable
  -     -     -     -     903,261     903     13,594     -     -                       14,497  
 
 
13

 
 
   
Preferred stock
Series A
   
Preferred Stock
Series B
   
Common Stock
   
Additional
Paid-in
   
Common
Stock
   
Accumulated
   
Treasury Stock
         
Stockholders'
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Payable
   
Deficit
   
Shares
   
Amount
   
OCI
   
Deficit
 
                                                                               
Common stock issued in
                                                                             
satisfaction of convertible
                                                                             
notes payable
  -     -     -     -     1,153,846     1,154     13,847     -     -                       15,001  
Common stock issued in
                                                                             
satisfaction of loan payable
  -     -     -     -     3,500,000     3,500     49,000     -     -                       52,500  
Common stock issued in
                                                                             
satisfaction of convertible
                                                                             
notes payable
  -     -     -     -     1,630,435     1,630     13,371     -     -                       15,001  
Common stock issued in
                                                                             
satisfaction of convertible
                                                                             
notes payable
  -     -     -     -     3,999,200     3,999     9,198     -     -                       13,197  
Common stock issued for
                                                                             
consulting services
  -     -     -     -     175,000     175     1,575     -     -                       1,750  
Common stock issued in
                                                                             
satisfaction of convertible
                                                                             
notes payable
  -     -     -     -     3,456,597     3,457     16,588     -     -                       20,045  
Common stock issued in
                                                                             
satisfaction of convertible
                                                                             
notes payable
  -     -     -     -     8,850,572     8,851     13,275     -     -                       22,126  
Common stock issued for
                                                                             
investment in Imagic Ltd.
  -     -     -     -     8,000,000     8,000     91,200     -     -                       99,200  
Common stock issued in
                                                                             
satisfaction of convertible
                                                                             
notes payable
  -     -     -     -     7,072,457     7,072     7,780     -     -                       14,852  
Common stock issued in
                                                                             
satisfaction of convertible
                                                                             
notes payable
  -     -     -     -     5,445,005     5,445     5,990     -     -                       11,435  
Common stock issued in
                                                                             
satisfaction of convertible
                                                                             
notes payable
  -     -     -     -     4,166,667     4,167     15,833     -     -                       20,000  
Common stock issued in
                                                                             
satisfaction of convertible
                                                                             
notes payable
  -     -     -     -     4,791,667     4,792     18,208     -     -                       23,000  
 
 
14

 
 
   
Preferred stock
Series A
   
Preferred Stock
Series B
   
Common Stock
   
Additional
Paid-in
   
Common
Stock
   
Accumulated
   
Treasury Stock
       
Stockholders'
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Payable
   
Deficit
   
Shares
   
Amount
   
OCI
   
Deficit
 
                                                                               
Common stock issued in
                                                                             
satisfaction of convertible
                                                                             
notes payable
  -     -     -     -     1,305,556     1,306     5,744     -     -                       7,050  
Common stock issued in
                                                                             
satisfaction of convertible
                                                                             
notes payable
  -     -     -     -     6,198,762     6,199     6,818     -     -                       13,017  
Common stock issued in
                                                                             
satisfaction of convertible
                                                                             
notes payable
  -     -     -     -     6,436,781     6,437     7,563     -     -                       14,000  
Common stock issued in
                                                                             
satisfaction of convertible
                                                                             
notes payable
  -     -     -     -     7,498,890     7,499     7,499     -     -                       14,998  
Common stock issued in
                                                                             
satisfaction of convertible
                                                                             
notes payable
  -     -     -     -     4,900,000     4,900     12,250     -     -                       17,150  
Common stock issued in
                                                                             
satisfaction of convertible