-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L2vwh0RM8X5r5sWOIAA2ksRGdOXCeiGXcDRrDbICyp5O5Wm6LGrTfdiICnRhUKHv OjH3BasvDKE83gnsNlFirg== 0001165527-08-000523.txt : 20080915 0001165527-08-000523.hdr.sgml : 20080915 20080915093814 ACCESSION NUMBER: 0001165527-08-000523 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20080531 FILED AS OF DATE: 20080915 DATE AS OF CHANGE: 20080915 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Domark International Inc. CENTRAL INDEX KEY: 0001365160 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS REPAIR SERVICES [7600] IRS NUMBER: 204647578 STATE OF INCORPORATION: NV FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-136247 FILM NUMBER: 081070639 BUSINESS ADDRESS: STREET 1: 1809 E. BROADWAY #125 CITY: OVIEDO STATE: FL ZIP: 32765 BUSINESS PHONE: 757-572-9241 MAIL ADDRESS: STREET 1: 1809 E. BROADWAY #125 CITY: OVIEDO STATE: FL ZIP: 32765 FORMER COMPANY: FORMER CONFORMED NAME: DoMar Exotic Furnishings Inc. DATE OF NAME CHANGE: 20060605 10-K 1 g2559a.txt ANNUAL REPORT FOR THE YEAR ENDED 5-31-08 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended May 31, 2008 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from N/A to N/A Commission File Number: 333-136247 DoMark International, Inc. (Name of small business issuer as specified in its charter) Nevada 20-4647578 State of Incorporation IRS Employer Identification No. 1809 East Broadway #125, Oviedo, Florida 32765 (Address of principal executive offices) Registrant's telephone number, including Area Code: (757) 572-9241 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001 Par Value Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ ] Yes [ ] No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. [ ] Yes [ ] ? No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Small Business Issuer [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act. Yes [ ] No [X] The aggregate market value of voting stock held by non-affiliates of the registrant on September 12, 2008 was approximately $3,515,000 State the number of shares outstanding of each of the issuer's classes of equity securities, as of the latest practicable date: As September 12, 2008, there were 17,750,000 shares of Common Stock, $0.001 par value per share issued and outstanding. Documents Incorporated By Reference None TABLE OF CONTENTS PART I ITEM 1. BUSINESS 3 ITEM 1A. RISK FACTORS 4 ITEM 2. PROPERTIES 9 ITEM 3. LEGAL PROCEEDINGS 9 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 9 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 10 ITEM 6. SELECTED FINANCIAL DATA 12 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 12 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 17 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 17 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 40 ITEM 9A. CONTROLS AND PROCEDURES 41 ITEM 9B. OTHER INFORMATION 42 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT. 42 ITEM 11. EXECUTIVE COMPENSATION 43 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 45 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 47 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 49 SIGNATURES 50 2 PART I ITEM 1. BUSINESS Except for historical information contained herein, the following discussion contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements include, but are not limited to, statements regarding future events and the Company's plans and expectations. Actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed elsewhere in this Form 10-K or incorporated herein by reference, including those set forth in MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. HISTORY AND GENERAL OVERVIEW DOMARK INTERNATIONAL, INC. ("DoMark" or "Company") was incorporated under the laws of the State of Nevada on March 30, 2006. The Company was formed to engage in the acquisition and refinishing of aged furniture using exotic materials and then reselling it through interior decorators, high-end consignment shops and online sales. The Company has abandoned it prior business of exotic furniture sales and is acquiring operating entities through acquisition that will bring value to the company and then providing marketing and management services in support of the acquired entities. SportsQuest, Inc. ("SportsQuest") is a majority owned subsidiary of DoMark whose business is the creation, development, and management of high end sports events, as well as executing a growth strategy involving acquisition of diverse and effective sports marketing platforms. SportsQuest was incorporated in April 3, 1986 in Delaware under the name Bay Head Ventures, Inc. The Company has been managing the US Pro Golf Tour and anticipates it will continue to manage USPGT for the foreseeable future. SportsQuest trades on the Pink Sheets under "SPQS.PK". SportsQuest holds significant value in content media and is pursuing its business model. On July 16, 2008, DoMark executed a purchase agreement with JAVACO, Inc. an Ohio corporation ("Javaco") whereby pursuant to the terms and conditions of that Agreement we completed the purchase of all the issued and outstanding shares of Javaco. Judith Vazquez, the President of Javaco, is the sister-in-law of R. Thomas Kidd, our Chief Executive Officer. The Closing of the transaction occurred on July 18, 2008. As consideration for all the issued and outstanding shares of Javaco, we issued the shareholders of Javaco, seven hundred and fifty thousand shares of our common stock, and common stock purchase warrants as follows: 20,000 common stock purchase warrants at an exercise price of $3.00 per share, expiring on December 31, 2008; 20,000 common stock purchase warrants at an exercise price of $4.00. JAVACO is a wholly owned subsidiary of DoMark but is not a consolidated subsidiary as of May 31, 2008. On July 24, 2008, we executed an asset purchase agreement (the "Agreement") with TotalMed Systems, Inc., a Florida corporation ("TotalMed"), whereby pursuant to the terms and conditions of that Agreement, we completed the purchase of certain assets and assumed certain liabilities. The Closing of the transaction occurred on August 6, 2008 (the "Closing"). As consideration for the certain assets of TotalMed, we agreed to pay TotalMed issued and outstanding shares of our common stock that will have the aggregate value of six million Dollars ($6,000,000), determined by dividing the average closing price for the 5 days prior to the Closing ($2.34), which sum may be reduced based on contingencies described in the Agreement. This agreement was subsequently rescinded and the stock not issued. 3 On August 17, 2007, SportsQuest, Inc. entered into a Stock Issuance, Assumption and Release Agreement (the "Assumption Agreement"), by and among SportsQuest, Inc. and Greens Worldwide Incorporated ("Greens") and AJW Partners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC and New Millennium Capital Partners II, LLC (collectively, the "Greens Worldwide Investors"). The transactions contemplated by the Assumption Agreement included the following: The issuance by Greens of 390,000 shares of its Series A Convertible Preferred Stock, par value $10.00 per share, to SportsQuest, Inc; and; The assumption by SportsQuest, Inc. of 50% of Greens indebtedness to the Greens Worldwide Investors under a Securities Purchase Agreement, dated as of March 22, 2007, by and among Greens and the Greens Worldwide Investors (the "Greens Worldwide Agreement"). Under the terms of the Assumption Agreement, the Greens Worldwide Investors will release Greens from its obligations under the notes described above. In consideration for such release, SportsQuest, Inc. issued to the SportsQuest Investors (who are the successors to the Greens Investors) callable secured convertible notes with an aggregate face amount of $3,903,750, including interest (collectively, the "Assumption Notes"), and Greens issued to the Greens Investors callable secured convertible notes with an aggregate face amount of $3,903,750, including interest. The Assumption Notes have the same terms and conditions as the notes described above, except that the Assumption Notes are convertible into the Company's common stock. The Company has elected to account for the investment at cost since Greens does not currently have common shares for the Company to convert its preferred. In the event that Greens has sufficient common shares available for conversion, and the Company was to exercise its conversion rights, the Company would not own more than 50% of the voting common shares of Greens. ADDITIONAL INFORMATION DoMark files reports and other materials with the Securities and Exchange Commission. These documents may be inspected and copied at the Commission's Public Reference Room at 100 F Street, N.E., Washington, D.C., 20549. You can obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. You can also get copies of documents that the Company files with the Commission through the Commission's Internet site at www.sec.gov. EMPLOYEES As of fiscal year end May 31, 2008, the Company had one employee. ITEM 1A.RISK FACTORS You should carefully consider the following risk factors before making an investment decision. If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected. In such cases, the trading price of our common stock could decline and you may lose all or a part of your investment. 4 OUR COMMON STOCK IS SUBJECT TO PENNY STOCK REGULATION Our shares are subject to the provisions of Section 15(g) and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly referred to as the "penny stock" rule. Section 15(g) sets forth certain requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act. The Commission generally defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 provides that any equity security is considered to be penny stock unless that security is: registered and traded on a national securities exchange meeting specified criteria set by the Commission; authorized for quotation on the NASDAQ Stock Market; issued by a registered investment company; excluded from the definition on the basis of price (at least $5.00 per share) or the registrant's net tangible assets; or exempted from the definition by the Commission. Since our shares are deemed to be "penny stock", trading in the shares will be subject to additional sales practice requirements on broker/dealers who sell penny stock to persons other than established customers and accredited investors. WE MAY NOT HAVE ACCESS TO SUFFICIENT CAPITAL TO PURSUE OUR BUSINESS AND THEREFORE WOULD BE UNABLE TO ACHIEVE OUR PLANNED FUTURE GROWTH: We intend to pursue a growth strategy that includes development of the Company business and technology. Currently we have limited capital which is insufficient to pursue our plans for development and growth. Our ability to implement our growth plans will depend primarily on our ability to obtain additional private or public equity or debt financing. We are currently seeking additional capital. Such financing may not be available at all, or we may be unable to locate and secure additional capital on terms and conditions that are acceptable to us. Our failure to obtain additional capital will have a material adverse effect on our business. OUR SIGNIFICANT FOCUS ON ACQUISITIONS IN OUR BUSINESS SUBJECTS INVESTORS TO A GREATER RISK OF LOSSES A significant portion of our efforts are focused on the development and growth of the Company and its subsidiaries by acquisitions. Although the Company believes there are significant acquisition opportunities available, we can make no assurances that the Company will be able to execute its acquisition strategy. WE DO NOT INTEND TO PAY DIVIDENDS We do not anticipate paying cash dividends on our common stock in the foreseeable future. We may not have sufficient funds to legally pay dividends. Even if funds are legally available to pay dividends, we may nevertheless decide in our sole discretion not to pay dividends. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors our board of directors may consider relevant. There is no assurance that we will pay any dividends in the future, and, if dividends are rapid, there is no assurance with respect to the amount of any such dividend. BECAUSE WE ARE QUOTED ON THE OTCBB INSTEAD OF AN EXCHANGE OR NATIONAL QUOTATION SYSTEM, OUR INVESTORS MAY HAVE A TOUGHER TIME SELLING THEIR STOCK OR EXPERIENCE NEGATIVE VOLATILITY ON THE MARKET PRICE OF OUR STOCK. 5 Our common stock is traded on the OTCBB. The OTCBB is often highly illiquid, in part because it does not have a national quotation system by which potential investors can follow the market price of shares except through information received and generated by a limited number of broker-dealers that make markets in particular stocks. There is a greater chance of volatility for securities that trade on the OTCBB as compared to a national exchange or quotation system. This volatility may be caused by a variety of factors, including the lack of readily available price quotations, the absence of consistent administrative supervision of bid and ask quotations, lower trading volume, and market conditions. Investors in our common stock may experience high fluctuations in the market price and volume of the trading market for our securities. These fluctuations, when they occur, have a negative effect on the market price for our securities. Accordingly, our stockholders may not be able to realize a fair price from their shares when they determine to sell them or may have to hold them for a substantial period of time until the market for our common stock improves. FAILURE TO ACHIEVE AND MAINTAIN EFFECTIVE INTERNAL CONTROLS IN ACCORDANCE WITH SECTION 404 OF THE SARBANES-OXLEY ACT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND OPERATING RESULTS. It may be time consuming, difficult and costly for us to develop and implement the additional internal controls, processes and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal auditing and other finance staff in order to develop and implement appropriate additional internal controls, processes and reporting procedures. If we are unable to comply with these requirements of the Sarbanes-Oxley Act, we may not be able to obtain the independent accountant certifications that the Sarbanes-Oxley Act requires of publicly traded companies. If we fail to comply in a timely manner with the requirements of Section 404 of the Sarbanes-Oxley Act regarding internal control over financial reporting or to remedy any material weaknesses in our internal controls that we may identify, such failure could result in material misstatements in our financial statements, cause investors to lose confidence in our reported financial information and have a negative effect on the trading price of our common stock. Pursuant to Section 404 of the Sarbanes-Oxley Act and current SEC regulations, beginning with our annual report on Form 10-K for our fiscal period ending December 31, 2007, we will be required to prepare assessments regarding internal controls over financial reporting and beginning with our annual report on Form 10-K for our fiscal period ending December 31, 2008, furnish a report by our management on our internal control over financial reporting. We have begun the process of documenting and testing our internal control procedures in order to satisfy these requirements, which is likely to result in increased general and administrative expenses and may shift management time and attention from revenue-generating activities to compliance activities. While our management is expending significant resources in an effort to complete this important project, there can be no assurance that we will be able to achieve our objective on a timely basis. There also can be no assurance that our auditors will be able to issue an unqualified opinion on management's assessment of the effectiveness of our internal control over financial reporting. Failure to achieve and maintain an effective internal control environment or complete our Section 404 certifications could have a material adverse effect on our stock price. In addition, in connection with our on-going assessment of the effectiveness of our internal control over financial reporting, we may discover "material weaknesses" in our internal controls as defined in standards established by the Public Company Accounting Oversight Board, or the PCAOB. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The PCAOB defines "significant deficiency" as a deficiency that results in more than a remote likelihood that a misstatement of the financial statements that is more than inconsequential will not be prevented or detected. 6 In the event that a material weakness is identified, we will employ qualified personnel and adopt and implement policies and procedures to address any material weaknesses that we identify. However, the process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. We cannot assure you that the measures we will take will remediate any material weaknesses that we may identify or that we will implement and maintain adequate controls over our financial process and reporting in the future. Any failure to complete our assessment of our internal control over financial reporting, to remediate any material weaknesses that we may identify or to implement new or improved controls, or difficulties encountered in their implementation, could harm our operating results, cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements. Any such failure could also adversely affect the results of the periodic management evaluations of our internal controls and, in the case of a failure to remediate any material weaknesses that we may identify, would adversely affect the annual auditor attestation reports regarding the effectiveness of our internal control over financial reporting that are required under Section 404 of the Sarbanes-Oxley Act. Inadequate internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock. THE REPORT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM CONTAINS EXPLANATORY LANGUAGE THAT SUBSTANTIAL DOUBT EXISTS ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN The independent auditor's report on our financial statements contains explanatory language that substantial doubt exists about our ability to continue as a going concern. The report states that we depend on the continued contributions of our executive officers to work effectively as a team, to execute our business strategy and to manage our business. The loss of key personnel, or their failure to work effectively, could have a material adverse effect on our business, financial condition, and results of operations. If we are unable to obtain sufficient financing in the near term or achieve profitability, then we would, in all likelihood, experience severe liquidity problems and may have to curtail our operations. If we curtail our operations, we may be placed into bankruptcy or undergo liquidation, the result of which will adversely affect the value of our common shares. OPERATING HISTORY AND LACK OF PROFITS WHICH COULD LEAD TO WIDE FLUCTUATIONS IN OUR SHARE PRICE. THE PRICE AT WHICH YOU PURCHASE OUR COMMON SHARES MAY NOT BE INDICATIVE OF THE PRICE THAT WILL PREVAIL IN THE TRADING MARKET. YOU MAY BE UNABLE TO SELL YOUR COMMON SHARES AT OR ABOVE YOUR PURCHASE PRICE, WHICH MAY RESULT IN SUBSTANTIAL LOSSES TO YOU. THE MARKET PRICE FOR OUR COMMON SHARES IS PARTICULARLY VOLATILE GIVEN OUR STATUS AS A RELATIVELY UNKNOWN COMPANY WITH A SMALL AND THINLY TRADED PUBLIC FLOAT, LIMITED The market for our common shares is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in our share price is attributable to a number of factors. First, as noted above, our common shares are sporadically and thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our 7 common shares are sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Secondly, we are a speculative or "risky" investment due to our limited operating history and lack of profits to date, and uncertainty of future market acceptance for our potential products. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer. Many of these factors are beyond our control and may decrease the market price of our common shares, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common shares will be at any time, including as to whether our common shares will sustain their current market prices, or as to what effect that the sale of shares or the availability of common shares for sale at any time will have on the prevailing market price. Shareholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price. VOLATILITY IN OUR COMMON SHARE PRICE MAY SUBJECT US TO SECURITIES LITIGATION, THEREBY DIVERTING OUR RESOURCES THAT MAY HAVE A MATERIAL EFFECT ON OUR PROFITABILITY AND RESULTS OF OPERATIONS. As discussed in the preceding risk factors, the market for our common shares is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may in the future be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management's attention and resources. FORWARD-LOOKING STATEMENTS This Annual Report contains certain forward-looking statements regarding management's plans and objectives for future operations including plans and objectives relating to our planned marketing efforts and future economic performance. The forward-looking statements and associated risks set forth in this Annual Report include or relate to, among other things, (a) our growth strategies, (b) anticipated trends in our industry, (c) our ability to obtain and retain sufficient capital for future operations, and (d) our anticipated needs for working capital. These statements may be found under "Management's Discussion and Analysis or Plan of Operations" and "Business," as well as in this Annual Report generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in this Annual Report generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Annual Report will in fact occur. 8 The forward-looking statements herein are based on current expectations that involve a number of risks and uncertainties. Such forward-looking statements are based on assumptions described herein. The assumptions are based on judgments with respect to, among other things, future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Accordingly, although we believe that the assumptions underlying the forward-looking statements are reasonable, any such assumption could prove to be inaccurate and therefore there can be no assurance that the results contemplated in forward-looking statements will be realized. In addition, as disclosed elsewhere in the "Risk Factors" section of this prospectus, there are a number of other risks inherent in our business and operations which could cause our operating results to vary markedly and adversely from prior results or the results contemplated by the forward-looking statements. Management decisions, including budgeting, are subjective in many respects and periodic revisions must be made to reflect actual conditions and business developments, the impact of which may cause us to alter marketing, capital investment and other expenditures, which may also materially adversely affect our results of operations. In light of significant uncertainties inherent in the forward-looking information included in this prospectus, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives or plans will be achieved. Some of the information in this prospectus contains forward-looking statements that involve substantial risks and uncertainties. Any statement in this prospectus and in the documents incorporated by reference into this prospectus that is not a statement of an historical fact constitutes a "forward-looking statement". Further, when we use the words "may", "expect", "anticipate", "plan", "believe", "seek", "estimate", "internal", and similar words, we intend to identify statements and expressions that may be forward- looking statements. We believe it is important to communicate certain of our expectations to our investors. Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions that could cause our future results to differ materially from those expressed in any forward-looking statements. Many factors are beyond our ability to control or predict. You are accordingly cautioned not to place undue reliance on such forward-looking statements. Important factors that may cause our actual results to differ from such forward-looking statements include, but are not limited to, the risk factors discussed herein. ITEM 2. PROPERTIES As of fiscal year end May 31, 2008, the Company maintains its corporate executive office in Oviedo, Florida. The CEO of the Company has been providing the office space at no charge to the Company as a courtesy to the Company. ITEM 3. LEGAL PROCEEDINGS The Company may become involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, except as discussed above, the ultimate disposition of these matters will not have a material adverse effect on the Company's financial position, results of operations, or liquidity. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Company submitted no matters to a vote of its security holders during the fiscal year ended May 31, 2008. 9 PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS DoMark common stock is traded in the over-the-counter market, and quoted in the National Association of Securities Dealers Inter-dealer Quotation System ("Electronic Bulletin Board) and can be accessed on the Internet at www.otcbb.com under the symbol "DOMK.OB" At May 31, 2008, there were 8,500,000 shares of common stock of DoMark outstanding and there were approximately 40 shareholders of record of the Company's common stock. The following table sets forth for the periods indicated the high and low bid quotations for DoMark's common stock. These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown or commission and may not represent actual transactions. High Low ---- --- Fiscal Year Ended May 31, 2008 First Quarter (June - August, 2007) $ 0 $ 0 Second Quarter (September - November 2007) $ 0 $ 0 Third Quarter (December - February 2008) $ 0 $ 0 Fourth Quarter (March - May 2008) $3.80 $1.60 On August 31, 2008, the closing bid price of our common stock was $.3.80 DIVIDENDS DoMark has never paid dividends on any of its common stock shares. DoMark does not anticipate paying dividends at any time in the foreseeable future and any profits will be reinvested in DoMark's business. DoMark's Transfer Agent and Registrar for the common stock is Signature Stock Transfer, 2301 Ohio Drive Suite 100, Plano, TX 75093-3956 RECENT SALES OF UNREGISTERED SECURITIES Stock issued Stock issued for Cash Cash Received for Assets -------- ------------- ---------- Year Ended May 31, 2007 1,000,000 $50,000 -- Year Ended May 31, 2008 -- -- 6,500,000 During the year ended May 31, 2007 the Company issued 1,000,000 shares of its common stock for $50,000. The shares were issued to third parties in a private placement of the Company's common stock. The offer and sale of such shares of our common stock were effected in reliance on the exemptions for sales of securities not involving a public offering, as set forth in Rule 506 promulgated under the Securities Act and in Section 4(2) of the Securities Act, based on the following: (a) the investors confirmed to us that they were "accredited 10 investors," as defined in Rule 501 of Regulation D promulgated under the Securities Act and had such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities; (b) there was no public offering or general solicitation with respect to the offering; (c) the investors were provided with certain disclosure materials and all other information requested with respect to our company; (d) the investors acknowledged that all securities being purchased were "restricted securities" for purposes of the Securities Act, and agreed to transfer such securities only in a transaction registered under the Securities Act or exempt from registration under the Securities Act; and (e) a legend was placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequent registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act. The Company has issued 6,500,000 shares of its common stock as consideration for the fair value of the assets delivered. The offer and sale of such shares of our common stock were affected in reliance on the exemptions for sales of securities not involving a public offering, as set forth in Rule 506 promulgated under the Securities Act and in Section 4(2) of the Securities Act. A legend was placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequently registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act. TRANSFER AGENT The Company engaged Signature Stock Transfer, 2301 Ohio Drive, Suite 100, Plano, TX 75093-3956 to serve in the capacity of transfer agent. STOCK SPLITS On June 27, 2008, the Company enacted a 2-for-1 forward split and share data in this report has not been adjusted to reflect the stock split relating to the Company's common stock. 11 ITEM 6. SELECTED FINANCIAL DATA. The following information has been summarized from financial information included elsewhere and should be read in conjunction with such financial statements and notes thereto. Summary of Statements of Operations of DOMK Year Ended May 31, 2008 and 2007 Years Ended Years Ended May 31, 2008 May 31, 2007 ------------ ------------ Statement of Operations Data Revenues $ 15,750 $ -- Operating and Other Expenses (1,434,920) (12,460) ------------ ------------ Net Loss $ (1,419,170) $ (12,460) ============ ============ Balance Sheet Data: Current Assets $ 165,181 $ 43,104 Total Assets 14,796,347 43,400 Current Liabilities 3,993,436 1,200 Non Current Liabilities 988,513 -- Total Liabilities 4,981,949 1,200 Working Capital (Deficit) (3,828,255) 41,904 Shareholders'Equity (Deficit) $ 9,814,398 $ 42,200 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OR PLAN OF OPERATION. The following is management's discussion and analysis of certain significant factors that have affected our financial position and operating results during the periods included in the accompanying consolidated financial statements, as well as information relating to the plans of our current management. This report includes forward-looking statements. Generally, the words "believes," "anticipates," "may," "will," "should," "expect," "intend," "estimate," "continue," and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements. 12 The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes thereto and other financial information contained elsewhere in this Form 10-K. CRITICAL ACCOUNTING POLICIES AND ESTIMATES We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Our management periodically evaluates the estimates and judgments made. Management bases its estimates and judgments on historical experience and on various factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates as a result of different assumptions or conditions. The following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Company's consolidated financial statements. STOCK BASED COMPENSATION In December 2004, the FASB issued a revision of SFAS No. 123 ("SFAS No. 123(R)") that requires compensation costs related to share-based payment transactions to be recognized in the statement of operations. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards will be re-measured each reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the award. SFAS No. 123(R) replaces SFAS No. 123 and is effective as of the beginning of January 1, 2006. Based on the number of shares and awards outstanding as of December 31, 2005 (and without giving effect to any awards which may be granted in 2006), we do not expect our adoption of SFAS No. 123(R) in January 2006 to have a material impact on the financial statements. FSP FAS 123(R)-5 was issued on October 10, 2006. The FSP provides that instruments that were originally issued as employee compensation and then modified, and that modification is made to the terms of the instrument solely to reflect an equity restructuring that occurs when the holders are no longer employees, then no change in the recognition or the measurement (due to a change in classification) of those instruments will result if both of the following conditions are met: (a). There is no increase in fair value of the award (or the ratio of intrinsic value to the exercise price of the award is preserved, that is, the holder is made whole), or the antidilution provision is not added to the terms of the award in contemplation of an equity restructuring; and (b). All holders of the same class of equity instruments (for example, stock options) are treated in the same manner. The provisions in this FSP shall be applied in the first reporting period beginning after the date the FSP is posted to the FASB website. The Company has adopted SP FAS 123(R)-5 but it did not have a material impact on its consolidated results of operations and financial condition. ACCOUNTING POLICIES AND ESTIMATES The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our management periodically evaluates the estimates and judgments made. Management bases its estimates and 13 judgments on historical experience and on various factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates as a result of different assumptions or conditions. As such, in accordance with the use of accounting principles generally accepted in the United States of America, our actual realized results may differ from management's initial estimates as reported. A summary of significant accounting policies are detailed in notes to the financial statements which are an integral component of this filing. REVENUES We have adopted the Securities and Exchange Commission's Staff Accounting Bulletin (SAB) No. 104, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. RECENT DEVELOPMENTS On May 15, 2008, we executed an agreement with R. Thomas Kidd (the "Agreement"), whereby pursuant to the terms and conditions of that Agreement by and between our company and Kidd we completed the purchase of 100,000 Series A Preferred Convertible Shares of SportsQuest, Inc., a Delaware corporation from R. Thomas Kidd. On a fully diluted basis, the 100,000 Series A Preferred Convertible Shares of SportsQuest, Inc., represent approximately seventy-nine percent (79%) of the capital stock of SportsQuest, Inc. The Closing of the transaction occurred on May 20, 2008 ("Closing"). As consideration for the 100,000 Series A Preferred Convertible Shares of SportsQuest, Inc., we issued R. Thomas Kidd the sum of six million, five hundred thousand (6,500,000) shares of our common stock. Effective June 27, 2008, DoMark International, Inc., a Nevada corporation (the "Company"), changed its name from DoMark Exotic Furnishings Inc. to DoMark International, Inc, increased the authorized common stock of the Corporation to 200,000,000 shares, created and authorized 2,000,000 shares of preferred stock, the rights and preferences of which can be designated by the Board of Directors and enacted a forward stock split of our common stock on a two for one basis, payable upon surrender of our shareholders' stock certificates. Our authorized stock is as follows: The number of shares of common stock authorized that may be issued by the Corporation is Two Hundred Million (200,000,000) shares, with a par value of One Tenth of One Cent ($0.001) per share and Two Million (2,000,000) shares of Preferred Stock, $0.001 par value, the rights and preferences of which may be determined by the Board of Directors. Said shares may be issued by the Corporation from time to time for such considerations as may be fixed by the Board of Directors. On July 16, 2008, we executed an agreement with JAVACO, Inc, an Ohio corporation ("Javaco") and Judith Vazquez (the "Agreement"), whereby pursuant to the terms and conditions of that Agreement we completed the purchase of all the issued and outstanding shares of Javaco. Judith Vazquez is the sister-in-law of R. Thomas Kidd, our Chief Executive Officer. The Closing of the transaction occurred on July 18, 2008 (the "Closing"). As consideration for all the issued and outstanding shares of Javaco, we issued the shareholders of Javaco, seven hundred and fifty thousand shares of our common stock, and common stock purchase warrants as follows: 20,000 common stock purchase warrants at an exercise price of $3.00 per share, expiring on December 31, 2008; 20,000 common stock purchase warrants at an exercise price of $4.00 per share, expiring on 40,000 common stock purchase warrants at an exercise price of $5.00 per share, expiring on December 31, 2010. On July 24, 2008, we executed an asset purchase agreement (the "Agreement") with TotalMed Systems, Inc., a Florida corporation ("TotalMed"), whereby pursuant to the terms and conditions of that Agreement, we completed the purchase of certain 14 assets. The Closing of the transaction occurred on August 6, 2008 (the "Closing"). As consideration for the certain assets of TotalMed, we agreed to pay TotalMed issued and outstanding shares of our common stock that will have the aggregate value of six million Dollars ($6,000,000), determined by dividing the average closing price for the 5 days prior to the Closing ($2.34), which sum may be reduced based on contingencies described in the Agreement. This agreement was subsequently rescinded and the stock was not issued. On August 4, 2008, DoMark entered into an investment agreement and registration rights agreement with Dutchess Private Equities, LTD. The investment agreement, in the form of an equity funding commitment, provides for the right by the company at its discretion to require Dutchess to purchase up to $50 million of the Company's common stock at a seven percent discount to market over the 36 months following the registration statement being declared effective by the Securities and Exchange Commission. DoMark intends to file a registration statement in the near future. On August 18, 2008, DoMark retained E & E Communications, Laguna Hills, Ca. to assist with its investor and public relations activities. RESULTS OF OPERATIONS FISCAL YEAR ENDED MAY 31, 2008, COMPARED TO FISCAL YEAR ENDED MAY 31, 2007 Revenues for Fiscal 2008 increased to $15,750 from $0.00 during fiscal 2007. This increase in revenue is directly the result of changes in the Company's strategic direction in core operations. We continue to aggressively pursue and devote its resources and focus its direction in building asset value. We have further refocused in new acquisitions to increase our revenues and cash flow. General and administrative expenses for the fiscal 2008 increased to $1,007,027 as compared to fiscal 2007 of $12,460. This increase is attributed to the Company's increase in acquisitions and issuance of stock for assets delivered. Interest expense for fiscal 2008 increased to $245,643 as compared to fiscal 2007. This increase is a result of embedded warrants in certain bond and loan payables of our subsidiary SportsQuest, Inc. which required us to accrue for the beneficial conversations feature in theses derivatives. The loss for fiscal 2007 increased to ($1,419,170) as compared to fiscal 2007 of ($12,460). The increase is due to the increase in non cash transactions for assets delivered. No tax benefit was recorded on the expected operating loss for fiscal 2008 and 2007 as required by Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. For the year ended we do not expect to realize a deferred tax asset and it is uncertain, therefore we have provided a 100% valuation of the tax benefit and assets until we are certain to experience net profits in the future to fully realize the tax benefit and tax assets. 15 LIQUIDITY AND CAPITAL RESOURCES Our operating requirements have been funded primarily on its sale of media content, financing facilities, and sales of our common stock. During the fiscal 2008, our net proceeds from the media content were $15,000 as compared to fiscal 2007 of $28,183. We have received $0.00 in fiscal 2008 as compared to Fiscal 2007 of $50,000 in proceeds from the sale of common stock. We believe that the cash flows are inadequate to repay the capital obligations and have relied upon the sale of common stock to sustain its operations. Cash provided (used) operating activities for the fiscal year 2008 was $75,490 compared to ($14,027) for fiscal year 2007. We have focus on core operations results in an increase in acquisitions. However we are still operating in a deficit. We have depreciation expenses for fiscal 2008 of $449 as compared to fiscal 2007 of $5.00 Cash (used) provided in investing activities was ($724,569) for fiscal 2008, compared to $(302) for Fiscal 2007. We have advanced financing to affiliates of $717,076, and purchased new equipment of $7,493. Cash provided by financing activities was $647,313 for fiscal 2008 as compared to $50,000 for fiscal 2007. Financing activities primarily consisted of proceeds from bond and loan payables from third parties. We do not have adequate cash flows to satisfy its obligations although have improved cash flow and anticipates have adequate cash flows in the upcoming fiscal period. We received proceeds from the our bond issuance of $733,308 we received proceeds from our loan payables of $255,205 and have advanced proceeds to our affiliate of ($341,200) On August 4, 2008, DoMark has entered into an investment agreement and registration rights agreement with Dutchess Private Equities, LTD. The investment agreement, in the form of an equity funding commitment, provides for the right by the company at its discretion to require Dutchess to purchase up to $50 million of the Company's common stock at a seven percent discount to market over the 36 months following the registration statement being declared effective by the Securities and Exchange Commission. DoMark intends to file a registration statement in the near future. On August 23, 2007, SportsQuest, Inc., our majority owned subsidiary, entered into an investment agreement and registration rights agreement with Dutchess Private Equities, LTD. The investment agreement, in the form of an equity funding commitment, provides for the right by Sportsquest at its discretion to require Dutchess to purchase up to $50 Million of SportsQuest common stock at a seven percent discount to market over the 36 months following the registration statement being declared effective by the Securities and Exchange Commission. SportsQuest filed an SB-2 registration statement on September 17, 2007. OTHER CONSIDERATIONS There are numerous factors that affect the business and the results of its operations. Sources of these factors include general economic and business conditions, federal and state regulation of business activities, the level of demand for product services, the level and intensity of competition in the media content industry, and the ability to develop new services based on new or evolving technology and the market's acceptance of those new services, our ability to timely and effectively manage periodic product transitions, the services, customer and geographic sales mix of any particular period, and our ability to continue to improve our infrastructure including personnel and systems to keep pace with our anticipated rapid growth. 16 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We do hold any derivative instruments but do not engage in any hedging activities. We are in the business of acquiring successfully operating subsidiaries to build the value of our Company. ITEM 8. FINANCIAL STATEMENTS DOMARK INTERNATIONAL, INC. TABLE OF CONTENTS Page ---- INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM: Kramer Weisman and Associates LLP 18 CONSOLIDATED FINANCIAL STATEMENTS: Consolidated Balance Sheet at May 31, 2008 and 2007 19 Consolidated Statements of Operations for the years ended May 31, 2008 and 2007 20 Consolidated Statements of Stockholders' Equity for the years ended May 31, 2008 and 2007 21 Consolidated Statements of Cash Flows for the years ended May 31, 2008 and 2007 22 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 23 17 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of DOMARK INTERNATIONAL, INC. We have audited the accompanying consolidated balance sheet of DoMark International, Inc. and Subsidiaries as of May 31, 2008, and the related consolidated statements of operations, changes in shareholders' deficiency and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements of DoMark International, Inc. and Subsidiaries as of May 31, 2007 were audited by other auditors whose report dated August 8, 2008, expressed an unqualified opinion, with an explanatory paragraph relating to the assumption the Company will continue as a going concern, on those statements. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provided a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of DoMark International, Inc., Inc and Subsidiaries, as of May 31, 2008, and the results of their operations and their cash flows for the period then ended in conformity with accounting principles generally accepted in the United States of America. These consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has operating and liquidity concerns, has incurred an accumulated deficit of approximately $1,431,970 through the period ended May 31, 2008, and current liabilities exceeded current assets by approximately $3,828,255 at May 31, 2008. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans as to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties. /s/ Kramer Weisman and Associates LLP - -------------------------------------------- Kramer Weisman and Associates LLP Davies, Florida September 15, 2008 18 DOMARK INTERNATIONAL, INC. CONSOLIDATED BALANCES SHEETS FOR YEARS ENDED MAY 31, 2008 AND 2007 - --------------------------------------------------------------------------------
2008 2007 ------------ ------------ ASSETS: CURRENT ASSETS Cash $ 38,906 $ 40,672 Inventory 1,232 1,232 Prepaid expenses and other current assets 125,043 1,200 ------------ ------------ Total current assets 165,181 43,104 PROPERTY AND EQUIPMENT, net 7,340 296 Due from affiliate 717,076 -- Intangible assets - media content 10,000,000 -- Investment in unconsolidated subsidiary 3,903,750 -- Deposits 3,000 -- ------------ ------------ TOTAL ASSETS $ 14,796,347 $ 43,400 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY: CURRENT LIABILITIES: Accounts payable $ 73,739 $ -- Accrued expenses and other liabilities 15,947 -- Notes from affiliates 3,903,750 1,200 ------------ ------------ Total current liabilities 3,993,436 1,200 Convertible notes payable 255,205 -- Bond payable 733,308 -- ------------ ------------ Total liabilities 4,981,949 1,200 ------------ ------------ COMMITMENTS AND CONTINGENCIES: -- -- STOCKHOLDERS' EQUITY: Common stock, $.001 par value, 75,000,000 shares authorized, 8,500,000 and 2,000,000 issued and outstanding as 8,500 2,000 of May 31, 2008 and 2007 Additional Paid-in capital 8,425,568 53,000 Common stock subscribed, not issued 2,812,300 -- Accumulated deficit (1,431,970) (12,800) ------------ ------------ Total stockholders' equity 9,814,398 42,200 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,796,347 $ 43,400 ============ ============
The accompanying notes are an integral part of these consolidated financial statements. 19 DOMARK INTERNATIONAL, INC. CONSOLIDATED STATEMENT OF OPERATIONS FOR YEARS ENDED MAY 31, 2008 AND 2007 - -------------------------------------------------------------------------------- 2008 2007 ----------- ----------- REVENUES: Revenue $ 15,750 $ -- ----------- ----------- 15,750 -- OPERATING EXPENSES: General and administrative expenses 1,007,027 12,460 Depreciation and amortization 449 -- ----------- ----------- Total operating expenses 1,007,476 12,460 ----------- ----------- OPERATING LOSS (INCOME) (991,726) (12,460) ----------- ----------- OTHER (INCOME) AND EXPENSES Interest expense 245,653 -- Impairment of assets 189,534 -- Gain on the sale of assets (7,743) -- ----------- ----------- Total other expense (income) 427,444 -- ----------- ----------- NET (LOSS) INCOME $(1,419,170) $ (12,460) =========== =========== NET (LOSS) INCOME PER SHARE: Basic and diluted: $ (0.70) $ (0.01) =========== =========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic and diluted: 2,037,931 1,230,137 =========== =========== The accompanying notes are an integral part of these consolidated financial statements. 20 DOMARK INTERNATIONAL, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR YEARS ENDED MAY 31, 2008 AND 2007 - --------------------------------------------------------------------------------
Common Stock Common Stock Paid-in Accumulated Subscribed Shares Amount Capital Deficit Not Issued Total ------ ------ ------- ------- ---------- ----- MAY 31, 2006 1,000,000 $ 1,000 $ 4,000 $ (340) $ -- $ 4,660 Common stock issued for cash 1,000,000 1,000 49,000 50,000 Net income -- -- -- (12,460) (12,460) --------- ------- ---------- ----------- ---------- ----------- MAY 31, 2007 2,000,000 $ 2,000 $ 53,000 $ (12,800) $ -- $ 42,200 ========= ======= ========== =========== ========== =========== Common stock issued for asset 6,500,000 6,500 7,322,788 7,329,288 Warrants issued 804,800 804,800 Bond issuance 170,000 170,000 Common stock subscribed, not issued 2,812,300 2,812,300 Common stock issued for compensation 74,980 74,980 Net loss (1,419,170) (1,419,170) --------- ------- ---------- ----------- ---------- ----------- MAY 31, 2008 8,500,000 $ 8,500 $8,425,568 $(1,431,970) $2,812,300 $ 9,814,398 ========= ======= ========== =========== ========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 21 DOMARK INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR YEARS ENDED MAY 31, 2008 AND 2007 - --------------------------------------------------------------------------------
2008 2007 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $(1,419,170) $ (12,460) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 449 5 Common stock issued for services 74,980 Common stock subscribed, not issued 2,812,300 Commons stock issued for assets (2,330,712) -- Bond issuance 170,000 -- Warrants issued 804,800 -- Changes in operating assets and liabilities: Prepaid and other current assets (123,843) (2,432) Accounts payable 73,739 (340) Accrued expenses and other liabilities 15,947 1,200 Deposits (3,000) -- ----------- ----------- Net cash provided (used) in operating activities 75,490 (14,027) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchasing of equipment (7,493) (301) Note receivable affiliates (717,076) -- ----------- ----------- Net cash (used in) provided by investing activities (724,569) (301) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash received on bond payable 733,308 -- Advances from related party (341,200) -- Cash received on loans payable 255,205 -- Proceeds from sale of common stock -- 50,000 ----------- ----------- Net cash provided by financing activities 647,313 50,000 ----------- ----------- (DECREASE) INCREASE IN CASH (1,766) 35,672 CASH, BEGINNING OF YEAR 40,672 5,000 ----------- ----------- CASH, END OF YEAR $ 38,906 $ 40,672 =========== =========== SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 245,643 $ -- =========== =========== Common stock issued for services $ 75,000 $ -- =========== =========== Value of warrants from convertible note payable $ 804,800 $ -- =========== =========== Common stock subscribed, not issued $ 2,812,300 $ -- =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 22 DOMARK INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MAY 31, 2008 AND 2007 - -------------------------------------------------------------------------------- NOTE 1 - BACKGROUND The consolidated financial statements of DoMark International, Inc. include the accounts of its majority owned subsidiary, SportsQuest of 79%. DoMark International, Inc. ("DoMark" or "Company") was incorporated under the laws of the State of Nevada on March 30, 2006. The Company was formed to engage in the acquisition and refinishing of aged furniture using exotic materials and then reselling it through interior decorators, high-end consignment shops and online sales. The Company has abandoned it prior business of exotic furniture sales and is acquiring through acquisition and reverse merger operating entities that will bring value to the company. SportsQuest, Inc. ("SportsQuest") is a majority, 79%, owned subsidiary of DoMark. The Sportsquest business was created to develop, own and manage high end sports events and their operating entities, as well as executing a growth strategy involving acquisition of diverse and effective sports marketing platforms. SportsQuest was incorporated in April 3, 1986 in Delaware under the name Bay Head Ventures, Inc. The Company has been managing the US Pro Golf Tour and anticipates it will continue to manage USPGT for the foreseeable future. SportsQuest trades on the Pink Sheets under "SPQS.PK". SportsQuest holds significant value in content media and is refocusing is business model. On July 16, 2008, we closed an agreement with JAVACO, Inc, an Ohio corporation ("Javaco") whereby JAVACO became a wholly owned subsidiary of DoMark but is not a consolidated subsidiary as of May 31, 2008. On July 24, 2008, we executed an asset purchase agreement with TotalMed Systems, Inc., a Florida corporation. However, TotalMed assets are not included in the financial statements of the Company at May 31, 2008. This agreement was subsequently rescinded and the stock was not issued. On August 17, 2007,SportsQuest, Inc., a majority owned subsidiary of the Company, entered into a Stock Issuance, Assumption and Release Agreement (the "Assumption Agreement"), by and among SportsQuest, Inc. and Greens Worldwide Incorporated ("Greens") and AJW Partners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC and New Millennium Capital Partners II, LLC (collectively, the "Greens Worldwide Investors"). The transactions contemplated by the Assumption Agreement include the following: The issuance by Greens of 390,000 shares of its Series A Convertible Preferred Stock, par value 10.00 per share, to SportsQuest, Inc.; and; The assumption by SportsQuest of 50% of Greens indebtedness to the Greens Worldwide Investors under a Securities Purchase Agreement, dated as of March 22, 2007, by and among Greens and the Greens Worldwide Investors (the "Greens Worldwide Agreement"). Greens is an unconsolidated subsidiary of SportsQuest, Inc. NOTE 2 - GOING CONCERN The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which 23 contemplate continuation of the Company as a going concern. However, the Company has year end losses from operations and had minimal revenues from operations in 2007 and 2007. During the year ended May 31, 2008 and 2007 the Company incurred net loss of $1,659,170 and net income of $18,425, respectively and an accumulated loss of $2,011,874. Further, the Company has inadequate working capital to maintain or develop its operations, and is dependent upon funds from private investors and the support of certain stockholders. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. In this regard, Management is planning to raise any necessary additional funds through loans and additional sales of its common stock. There is no assurance that the Company will be successful in raising additional capital. NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are as follows: PRINCIPLES OF CONSOLIDATION The accompanying financial statements represent the consolidated financial position and results of operations of the Company and include the accounts and results of operations of the Company and its majority owned subsidiary. The accompanying financial statements include only the active entity of DoMark International, Inc. and SportsQuest, Inc. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates. The primary management estimates included in these financial statements are the impairment reserves applied to various long-lived assets, allowance for doubtful accounts for gateway access fees and licensing fees, and the fair value of its stock tendered in various non-monetary transactions. RECLASSIFICATION Certain prior period amounts have been reclassified to conform to current year presentations. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At May 31, 2008 and 2007, cash and cash equivalents include cash on hand and cash in the bank. 24 PROPERTY AND EQUIPMENT Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using principally the straight-line method. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized thereon. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized. The range of estimated useful lives used to calculated depreciation for principal items of property and equipment are as follow: Depreciation/ Asset Category Amortization Period -------------- ------------------- Computer Equipment 3 Years Office equipment 5 Years INCOME TAXES Deferred income taxes are provided based on the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"), to reflect the tax effect of differences in the recognition of revenues and expenses between financial reporting and income tax purposes based on the enacted tax laws in effect at May 31, 2008 and 2007, respectively. NET LOSS PER SHARE Basic earnings per share is computed in accordance with FASB No. 128 EARNINGS PER SHARE, by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. As of May 31, 2008 and 2007, there were no potential dilutive instruments that could result in share dilution. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties other than in a forced sale or liquidation. The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: Cash and cash equivalents, licensing receivable, prepaid expenses, other assets, and accounts payable, income tax payable, and other current liabilities carrying amounts approximate fair value due to their most maturities. STOCK-BASED COMPENSATION Financial Statement Position ("FSP") FAS No. 123(R)-5 was issued on October 10, 2006. The FSP provides that instruments that were originally issued as employee compensation and then modified, and that modification is made to the terms of the instrument solely to reflect an equity restructuring that occurs when the holders are no longer employees, then no change in the recognition or the measurement (due to a change in classification) of those instruments will result 25 if both of the following conditions are met: (a). There is no increase in fair value of the award (or the ratio of intrinsic value to the exercise price of the award is preserved, that is, the holder is made whole), or the antidilution provision is not added to the terms of the award in contemplation of an equity restructuring; and (b). All holders of the same class of equity instruments (for example, stock options) are treated in the same manner. The provisions in this FSP shall be applied in the first reporting period beginning after the date the FSP is posted to the FASB website. The Company has adopted SP FAS No. 123(R)-5 but it did not have a material impact on its consolidated results of operations and financial condition. GOODWILL AND OTHER INTANGIBLE ASSETS The Company adopted Statement of Financial Accounting Standard ("SFAS No.") No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS, effective July 1, 2002. As a result, the Company discontinued amortization of goodwill, and instead annually evaluates the carrying value of goodwill and other intangible assets for impairment, in accordance with the provisions of SFAS No. 142. There was no impairment of goodwill or other intangible assets in Fiscal 2008 IMPAIRMENT OF LONG-LIVED ASSETS In accordance with SFAS No. 144, long-lived assets, such as property, plant, and equipment, and purchased intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Goodwill and other intangible assets are tested for impairment annually. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. There were no events or changes in circumstances that necessitated a review of impairment of long lived assets. CONCENTRATION OF CREDIT RISK The Company maintains its operating cash balances in banks in Oviedo Florida. The Federal Depository Insurance Corporation (FDIC) insures accounts at each institution up to $100,000. Financial instruments that potentially subject the Company to concentrations of credit risk are primarily trade accounts receivable. The trade accounts receivable are due primarily from small business customers in numerous geographical locations throughout the United States. The Company estimates and provides an allowance for uncollectible accounts receivable. REVENUE RECOGNITION Revenue includes sponsorship and media sales. The Company recognizes revenue from product sales in accordance with Staff Accounting Bulletin (SAB) No. 104, "Revenue Recognition in Financial Statement" which is at the time customers are invoiced at shipping point, provided title and risk of loss has passed to the customer, evidence of an arrangement exists, fees are contractually fixed or determinable, collection is reasonably assured through historical collection results and regular credit evaluations, and there are no uncertainties regarding customer acceptance. 26 RECENT ACCOUNTING PRONOUNCEMENTS DETERMINING WHETHER INSTRUMENTS GRANTED IN SHARE-BASED PAYMENT TRANSACTIONS ARE PARTICIPATING SECURITIES In June 2008, the FASB issued FSP Emerging Issues Task Force ("EITF") Issue No. 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities." The FSP addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method. The FSP affects entities that accrue dividends on share-based payment awards during the awards' service period when the dividends do not need to be returned if the employees forfeit the award. This FSP is effective for fiscal years beginning after December 15, 2008. The Company is currently assessing the impact of FSP EITF 03-6-1 on its consolidated financial position and results of operations. DETERMINING WHETHER AN INSTRUMENT (OR AN EMBEDDED FEATURE) IS INDEXED TO AN ENTITY'S OWN STOCK In June 2008, the FASB ratified EITF Issue No. 07-5, "Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entity's Own Stock" (EITF 07-5). EITF 07-5 provides that an entity should use a two step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument's contingent exercise and settlement provisions. It also clarifies on the impact of foreign currency denominated strike prices and market-based employee stock option valuation instruments on the evaluation. EITF 07-5 is effective for fiscal years beginning after December 15, 2008. The Company is currently assessing the impact of EITF 07-5 on its consolidated financial position and results of operations. ACCOUNTING FOR CONVERTIBLE DEBT INSTRUMENTS THAT MAY BE SETTLED IN CASH UPON CONVERSION (INCLUDING PARTIAL CASH SETTLEMENT) In May 2008, the FASB issued FSP Accounting Principles Board ("APB") Opinion No. 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)." The FSP clarifies the accounting for convertible debt instruments that may be settled in cash (including partial cash settlement) upon conversion. The FSP requires issuers to account separately for the liability and equity components of certain convertible debt instruments in a manner that reflects the issuer's nonconvertible debt (unsecured debt) borrowing rate when interest cost is recognized. The FSP requires bifurcation of a component of the debt, classification of that component in equity and the accretion of the resulting discount on the debt to be recognized as part of interest expense in our consolidated statement of operations. The FSP requires retrospective application to the terms of instruments as they existed for all periods presented. The FSP is effective as of January 1, 2009 and early adoption is not permitted. The Company is currently evaluating the potential impact of FSP APB 14-1 upon its consolidated financial statements. THE HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles" (FAS No.162). SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements. SFAS No. 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles". The implementation of this standard will not have a material impact on the Company's consolidated financial position and results of operations. 27 DETERMINATION OF THE USEFUL LIFE OF INTANGIBLE ASSETS In April 2008, the Financial Accounting Standards Board ("FASB") issued FASB Staff Position on Financial Accounting Standard ("FSP FAS") No. 142-3, "Determination of the Useful Life of Intangible Assets", which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of intangible assets under SFAS No. 142 "Goodwill and Other Intangible Assets". The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of the expected cash flows used to measure the fair value of the asset under SFAS No. 141 (revised 2007) "Business Combinations" and other U.S. generally accepted accounting principles. The Company is currently evaluating the potential impact of FSP FAS No. 142-3 on its consolidated financial statements. DISCLOSURE ABOUT DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES In March 2008, the FASB issued SFAS No. 161, "Disclosure about Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133", (SFAS 161). This statement requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. The Company is required to adopt SFAS No. 161 on January 1, 2009. The Company is currently evaluating the potential impact of SFAS No. 161 on the Company's consolidated financial statements. DELAY IN EFFECTIVE DATE In February 2008, the FASB issued FSP FAS No. 157-2, "Effective Date of FASB Statement No. 157". This FSP delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The impact of adoption was not material to the Company's consolidated financial condition or results of operations. BUSINESS COMBINATIONS In December 2007, the FASB issued SFAS No. 141(R) "Business Combinations" (SFAS 141(R)). This Statement replaces the original SFAS No. 141. This Statement retains the fundamental requirements in SFAS No. 141 that the acquisition method of accounting (which SFAS No. 141 called the PURCHASE METHOD) be used for all business combinations and for an acquirer to be identified for each business combination. The objective of SFAS No. 141(R) is to improve the relevance, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. To accomplish that, SFAS No. 141(R) establishes principles and requirements for how the acquirer: a. Recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. b. Recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase. c. Determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008 and may not be applied before that date. The Company does not expect the effect that its adoption of SFAS No. 141(R) will have on its consolidated results of operations and financial condition. 28 NONCONTROLLING INTERESTS IN CONSOLIDATED FINANCIAL STATEMENTS--AN AMENDMENT OF ARB NO. 51 In December 2007, the FASB issued SFAS No. 160 "Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51" (SFAS No. 160). This Statement amends the original Accounting Review Board (ARB) No. 51 "Consolidated Financial Statements" to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This Statement is effective for fiscal years and interim periods within those fiscal years, beginning on or after December 15, 2008 and may not be applied before that date. The does not expect the effect that its adoption of SFAS No. 160 will have on its consolidated results of operations and financial condition. FAIR VALUE OPTION FOR FINANCIAL ASSETS AND FINANCIAL LIABILITIES In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of SFAS No. 115" (SFAS No. 159), which becomes effective for the Company on February 1, 2008, permits companies to choose to measure many financial instruments and certain other items at fair value and report unrealized gains and losses in earnings. Such accounting is optional and is generally to be applied instrument by instrument. The Company does not anticipate that the election, of this fair-value option will have a material effect on its consolidated financial condition, results of operations, cash flows or disclosures. FAIR VALUE MEASUREMENTS In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS No. 157). SFAS No. 157 provides guidance for using fair value to measure assets and liabilities. SFAS No. 157 addresses the requests from investors for expanded disclosure about the extent to which companies' measure assets and liabilities at fair value, the information used to measure fair value and the effect of fair value measurements on earnings. SFAS No. 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value, and does not expand the use of fair value in any new circumstances. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and will be adopted by the Company in the first quarter of fiscal year 2008. The Company is unable at this time to determine the effect that its adoption of SFAS No. 157 will have on its consolidated results of operations and financial condition. ACCOUNTING CHANGES AND ERROR CORRECTIONS In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections" (SFAS No. 154), which replaces Accounting Principles Board (APB) Opinion No. 20, "Accounting Changes," and SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements - An Amendment of APB Opinion No. 28". SFAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections, and it establishes retrospective application, or the latest practicable date, as the required method for reporting a change in accounting principle and the reporting of a correction of an error. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company adopted SFAS No. 154 in the first quarter of fiscal year 2007 and does not expect it to have a material impact on its consolidated results of operations and financial condition. 29 NOTE 4 - PROPERTY AND EQUIPMENT Property and equipment, net at May 31, consist of the following: Years 2008 2007 ----- ---- ---- Computer Equipment 3 $ 8,402 $ 301 Total property and equipment 8,402 296 ------- ------- Less: accumulated depreciation (1,060) (5) ------- ------- $ 7,340 $ 296 ======= ======= The depreciation expense for the years ended May 31, 2008 and 2007 was $449 and $5, respectively. The Company occupies premises under month to month rental arrangements Total rental payments under the lease agreement totaled $12,000 and $24,000 for the years ended in May 31, 2008 and 2007, respectively. NOTE 5 - INTANGIBLE ASSETS Property and equipment, net at May 31, consist of the following: Years 2008 2007 ----- ---- ---- Media content 3 $10,000,000 $ -- Total intangible assets 10,000,000 -- ----------- -------- Less: accumulated amortization -- -- ----------- -------- $10,000,000 $ -- =========== ======== The Company has not amortized these assets as they were purchased late in the year and have not been placed in services as of May 31, 2008. NOTE 6 - NOTE PAYABLE Notes payable comprise the following: * On February 26, 2008, SportsQuest, Inc. entered into a Securities Purchase Agreement (the "Purchase Agreement"), by and among SportsQuest, Inc. ("Parent"), and SportsQuest Management Group, Inc. (the "Subsidiary"). The Parent SportsQuest, Inc., and Subsidiary, SQ Mgt Group are collectively referred to as the "Company" and the secured party's signatory and their respective endorsees, transferees and assigns are collectively the "Secured Party". The transactions contemplated by the Purchase Agreement resulted in a funding of a total of $250,000 into the Company. The Callable Secured Convertible Notes issued for the $250,000 resulted in a beneficial conversion factor that was valued at $170,000 on the date of issuance which was accounted for as additional paid in capital and the value of this beneficial conversion factor will be amortized over the conversion or when a note is converted during the period available for conversion. 30 The Purchase Agreement provided that the Parent shall issue to the Secured Party certain of SportsQuest 8% Callable Secured Convertible Notes, due three years from the date of issue, which are convertible into shares of SportsQuest Common Stock, par value $0.0001 per share and the Parent shall issue the Secured Party certain Common Stock purchase warrants. AJW Master Fund or its registered assigns, is entitled to purchase from SportsQuest 2,000,000 fully paid and non-assessable shares of the Company's Common Stock, par value $0.0001 per share, at an exercise price per share equal to $0.003. AJW Partners, LLC or its registered assigns, is entitled to purchase from SportsQuest 2,000,000 fully paid and non-assessable shares of the Company's Common Stock, par value $0.0001 per share, at an exercise price per share equal to $0.003. New Millennium Capital Partners II, LLC or its registered assigns, is entitled to purchase from the Company SportsQuest, Inc. 6,000,000 fully paid and non-assessable shares of Common Stock, par value $0.0001 per share, at an exercise price per share equal to $0.003. * On August 16, 2007, SportsQuest, Inc. entered into a Securities Purchase Agreement (the "Purchase Agreement"), by and among the Company and AJW Partners, LLC, AJW Master Fund, Ltd. and New Millennium Capital Partners II, LLC (collectively, the "Air Brook Investors"). The transactions contemplated by the Purchase Agreement will result in a funding of a total of $1,500,000 into the Company. The Purchase Agreement provided for the sale by SportsQuest to the SportsQuest Investors of callable secured convertible notes with an aggregate face amount of $1,500,000, plus interest (the "Facility Notes"). The Air Brook Investors purchased from the Company at closing Facility Notes with an aggregate face amount of $500,000 and are required to purchase additional Facility Notes with an aggregate face amount of $500,000 from the Company upon each of (i) the filing of the registration statement required by the Registration Rights Agreement and (iii) the declaration of effectiveness of such registration statement by the Securities and Exchange Commission. The Facility Notes accrue interest at a rate of 8% per year, require quarterly interest payments in certain circumstances related to the market price of the Company's common stock, and are due and payable on August 16, 2010 (the "Maturity Date"). The Company is not required to make any principal payments until the Maturity Date, but it has the option to prepay the amounts due under the Facility Notes in whole or in part at any time, subject to the payment of varying prepayment penalties depending on the time of such prepayment, as set forth in the Facility Notes. The Facility Notes are convertible into common stock of the Company at a discount to the then current fair market value of the Company's common stock, as set forth in the Facility Notes. In addition, the Purchase Agreement provided for the issuance by SportsQuest to the SportsQuest Investors of warrants to purchase 10,000,000 shares of SportsQuest common stock (the "Warrants"). Each Warrant permits its holder to acquire shares of SportsQuest common stock at an exercise price of $0.25 per share at any time through August 16, 2014. SportsQuest allocated the proceeds received between the Facility Notes issued and the warrant based on the relative fair values at the time of issuance in accordance with APB Opinion 14, ACCOUNTING FOR CONVERTIBLE DEBT 31 AND DEBT ISSUED WITH STOCK PURCHASE WARRANTS. The Company then further allocated the proceeds received to the beneficial conversion feature in accordance with EITF Issue No. 98-5, ACCOUNTING FOR CONVERTIBLE SECURITIES WITH BENEFICIAL CONVERSION FEATURES OR CONTINGENTLY ADJUSTABLE CONVERSION RATIOS, and the guidance in EITF Issue No. 00-27, APPLICATION OF ISSUE NO. 98-5 TO CERTAIN CONVERTIBLE INSTRUMENTS. The fair value of the warrant was estimated on the date of issuance using the Black-Scholes valuation model and the assumptions described in the table below: Fair value of underlying stock at date of issuance $ 0.51 Exercise price $ 0.25 Expected life 7 years Expected dividend yield 0% Risk-free interest rate 4.39% Volatility 62.08% As of a result of the above allocations, the Company recorded discounts of $833,333 related to the $1,000,000 worth of Facility Notes issued during 2007. These discounts have been reflected as additional paid in capital in the accompany statement of stockholders' equity. During 2007, the Company recorded approximately $496,193 of interest expense related to the amortization of the discounts. As a condition to entering into the Purchase Agreement, SportsQuest and the SportsQuest Investors entered into a Registration Rights Agreement, dated as of August 16, 2007. As set forth in the Registration Rights Agreement, SportsQuest has agreed to file a registration statement with the Securities and Exchange Commission, within 30 days, to cover the resale by the SportsQuest Investors of the shares of SportsQuest common stock into which the Facility Notes are convertible. The Company has further agreed to use its best efforts to have such registration statement declared effective and to keep such registration statement effective until the earlier of (i) the date on which all of the securities covered by the registration statement have been sold and (ii) the date on which such securities may be immediately sold to the public without registration or restriction. The Company has also granted piggyback registration rights to the SportsQuest Investors, to the extent that it files a registration statement for its own account, for the same period. * On August 16, 2007, SportsQuest loaned $500,000 to Lextra Management Group, Inc. ("Lextra"), as set forth in a callable secured note (the "Lextra Note") containing terms substantially similar to the Facility Notes. The Lextra Note, however, does not contain any provision for the outstanding amount due under it to be converted into Lextra's stock. This note was satisfied during the period through the Asset Purchase Agreement referred to in note 9. * On August 17, 2007, SportsQuest entered into a Stock Issuance, Assumption and Release Agreement (the "Assumption Agreement"), by and among the Company and Greens Worldwide Incorporated ("Greens Worldwide") and AJW Partners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC and New Millennium Capital Partners II, LLC (collectively, the "Greens Worldwide Investors"). The transactions contemplated by the Assumption Agreement include the following: * The issuance by Greens Worldwide of 390,000 shares of its Series A Convertible Preferred Stock, par value $10.00 per share (the "Series A Preferred Stock"), to SportsQuest; and 32 * The assumption by SportsQuest of 50% of Greens Worldwide's indebtedness to the Greens Worldwide Investors under a Securities Purchase Agreement, dated as of March 22, 2007, by and among Greens Worldwide and the Greens Worldwide Investors (the "Greens Worldwide Agreement"). Under the terms of the Assumption Agreement, the Greens Worldwide Investors will release Greens Worldwide from its obligations under the notes described above. In consideration for such release, SportsQuest will issue to the SportsQuest Investors (who are the successors to the Greens Worldwide Investors) callable secured convertible notes with an aggregate face amount of $3,903,750, including interest (collectively, the "Assumption Notes"), and Greens Worldwide will issue to the SportsQuest Investors callable secured convertible notes with an aggregate face amount of $3,903,750, including interest. The Assumption Notes have the same terms and conditions as the notes described above, except that the Assumption Notes are convertible into SportsQuest common stock. SportsQuest has elected to account for the investment at cost since Greens Worldwide does not have common shares for SportsQuest to convert its preferred and it is unlikely that Greens Worldwide will have common shares in the short term. In the event that Greens Worldwide has sufficient common shares available for conversion, and SportsQuest was to exercise its conversion rights, SportsQuest would not own more than 50% of the voting common shares of Greens Worldwide. * On September 25, 2007, SportsQuest entered into an Exchange Agreement that stipulated that the Company shall pay ZCE the sum of $150,000 in cash at the closing (the "Closing Cash Payment"). Under the Bring Down and Amendment, the parties acknowledged that the Closing Cash Payment was intended to be used to pay off certain debts of ZCE (the Debt"). Pursuant to the Bring Down and Amendment, the parties agreed that the Closing Cash Payment would be paid to ZCE at closing. Instead, the parties amended the cash payment and SportsQuest agreed to service the Debt after closing according to the then current monthly schedule and pursuant to the terms of the Bring Down and Amendment. SportsQuest agreed in the Bring Down and Amendment to pay off the Debt in full on the closing of the sale of callable secured convertible notes in the aggregate principal amount of $500,000 to AJW Master Fund, Ltd., AJW Partners, LLC (collectively, "NIR") pursuant to the Securities Purchase Agreement, dated August 16, 2007, among the Company and NIR, which closing shall occur within five business days after the declaration of the effectiveness of the Form SB-2 registration Statement filed by the Company with the Securities and Exchange Commission on September 14, 2007. NOTE 7 - STOCKHOLDER'S EQUITY During the year ended May 31, 2008 and 2007: Stock issued Stock issued for Cash Cash Received for Assets -------- ------------- ---------- Year Ended May 31, 2007 1,000,000 $50,000 -- Year Ended May 31, 2008 -- -- 6,500,000 During the year ended May 31, 2007 the Company issued 1,000,000 shares of its common stock for $50,000. The shares were issued to third parties in a private placement of the Company's common stock. 33 The Company has issued shares of its common stock as consideration for the fair value of the assets delivered. During the year ended May 31, 2008, the Company issued 6,500,000 shares of common stock. NOTE 8 - INCOME TAXES The provision (benefit) for income taxes from continued operations for the years ended May 31, 2008 and 2007 consist of the following: 2008 2007 --------- --------- Current: Federal $(564,264) $ (6,264) State -- -- --------- --------- (564,264) (6,264) Deferred: Federal 564,264 6,264 State -- -- --------- --------- 564,264 6,264 Benefit from the operating loss carryforward -- -- --------- --------- (Benefit) provision for income taxes, net $ -- $ -- ========= ========= The difference between income tax expense computed by applying the federal statutory corporate tax rate and actual income tax expense is as follows: May 31, -------------------------- 2008 2007 ------ ------ Statutory federal income tax rate 34.0% 34.0% State income taxes and other 0.0% 0.0% ------ ------ Effective tax rate 34% 34% ====== ====== Deferred income taxes result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes. The tax effect of these temporary differences representing deferred tax asset and liabilities result principally from the following: May 31, ------------------------------ 2008 2007 ----------- ----------- Net operating loss carryforward $ 1,431,970 $ 12,800 (1,431,970) (12,800) ----------- ----------- Deferred income tax asset $ -- $ -- =========== =========== The Company has a net operating loss carryforward of approximately $1,431,970 available to offset future taxable income through 2028. 34 NOTE 9 - COMMITMENTS AND CONTINGENCIES ZCE, INC. On September 27, 2007, the Company completed an Exchange Agreement entered into on August 20, 2007 with Zaring-Cioffi Entertainment, LLC, a California limited liability company ("Zaring-Cioffi"), ZCE, Inc., a California corporation ("ZCE"), and Q-C Entertainment, LLC, a Washington limited liability company ("Q-C"). Pursuant to a Bring Down Agreement and Amendment (the "Bring Down and Amendment"), dated September 25, 2007, among the Company, Zaring/Cioffi Entertainment, Inc., Zce, David Quin ("Quin") and Jeff Merriman Cohen ("Cohen"), Quin and Cohen, the sole members of Q-C, assumed the rights, obligations and liabilities of Q-C under the Exchange Agreement, as amended by the Bring Down and Amendment. Under the terms of the Exchange Agreement, as amended by the Bring Down and Amendment, the Company purchased 100% of the issued and outstanding shares of Zaring-Cioffi from its shareholders, ZCE, Quin and Cohen, in exchange for the issuance of 409,836 shares of restricted common stock of the Company to ZCE and 409,836 shares of restricted common stock of the Company to Cohen and Quin, which stock in the aggregate was valued at $500,000. In addition, the Company issued warrants (the "Warrants") to purchase an aggregate 400,000 shares of restricted common stock of the Company to the shareholders of Zaring-Cioffi according to the following Schedule: 50,000 shares to each of ZCE and Quin Cohen at a strike price of $0.50 per share expiring December 31, 2007; 50,000 shares to each ZCE and Quin and Cohen at a strike price of $1.00 per share expiring December 31, 2008; and 100,000 shares to each of ZCE and Quin and Cohen at a strike price of $1.50 per share expiring December 31, 2009. Furthermore, Quin and Cohen received, at no cost, a Bronze Level sponsorship position (or its equivalent) at all Zaring-Cioffi events through 2009. Under the Bring Down and Amendment, the Company, Zaring-Cioffi, ZCE, Cohen and Quin also made the representations and warranties set forth in the Exchange Agreement as of closing and agreed that the representations and warranties would not survive the closing. This matter is presently in litigation and the Company has been assured by its counsel that it will prevail in this matter. NOTE 10 - NET LOSS PER SHARE Net loss per share is calculated using the weighted average number of shares of common stock outstanding during the year. The company considers the outstanding warrants granted for diluted earnings per share for the year ended May 31, 2008 and 2007 respectively because the effect of their inclusion would be anti-dilutive. NOTE 11 - RELATED PARTY TRANSACTIONS On February 15, 2008, SportsQuest issued 500,000 of its common shares to a Company Director as compensation for a value of $75,000, or $.15 per share. 35 The 2007, Air Brook Limousine notified us that it had experienced extraordinary increases in the cost of performing the agreements and advised us of its intent to cancel the contracts. As part of a settlement of issues, we entered into an Agreement and Plan of Reorganization dated March 8, 2007, pursuant to which, among other things, we agreed that A.B. Park & Fly would be merged with and into a wholly-owned subsidiary of Air Brook Limousine, wherein the separate existence of A.B. Park & Fly would cease. In consideration for the preceding, Air Brook Limousine agreed to deliver to us 150,000 shares of our common stock, which we canceled as outstanding shares. This merger was completed on March 15, 2007. On August 16, 2007, Lextra Management Group, Inc., an event management company, acquired 51.16% of our issued and outstanding common stock pursuant to an Agreement dated June 26, 2007 by and among Lextra, our company and certain of our principal stockholders. Pursuant to the terms of this agreement, at the closing, Lextra acquired (a) 1,165,397 shares representing 51.16% of the issued and outstanding shares of our common stock from the selling stockholders for an aggregate purchase price of $116,500 and (b) an outstanding accounts receivable due to Air Brook Limousine by us in the amount of $340,000. At the closing, Air Brook Limousine cancelled the agreement dated August 10, 1993 under which Air Brook Limousine stipulated that it would fund our operations for as long as Air Brook Limousine deemed necessary and as long as it was financially able. The Company has chosen to account for the acquisition of its wholly owned subsidiary, ZCE, Inc., as an unconsolidated investment in the subsidiary as the Exchange Agreement and Bring Down and Amendment agreement is in question and may be settled or rescinded once the Company determines which course of action is in the best interest of the Company and its shareholders during litigation. Effective January 1, 2008, the Company entered into a consulting agreement with Rick Altmann, one of the Company's directors. The agreement is for a term of five years. As compensation for services, he will receive a monthly fee of $6000, payable on the first and 15th of each month for 2008, $7000 per month for 2009, and $8000 per month for 2010 and thereafter. The Company may pay up to a mutually agreeable amount of fees in common stock of the Company. The Consultant is responsible for all expenses that may be incurred in performing the consulting services, including, but not limited to, travel, third party expenses, and copying and mailing expenses unless otherwise pre-approved by the Company. Mr. Altmann also received 500,000 shares of Common stock as compensation for serving as a Director. On January 8, 2008, the Company executed an Executive Employment Agreement with its President and Chief Executive Officer for a term of five years. The agreement provides for an annual base salary of $240,000, payable in accordance with the Company's generally applicable payroll practices and policies, but not less frequently than twice per month in arrears. Annual base salary will increase 10% per year automatically. The Executive is also eligible to receive a bonus from the Company, and to participate in any of the Company's bonus plan(s) that may be adopted for the benefit of executives of the Company. The award of any discretionary bonus under this section shall be determined by the Board of Directors of the Company. The Executive is also entitled to receive such stock options as may be granted to other executives of the Company as adopted by the Board of Directors. As a signing bonus, the Company agreed to issue 100,000 shares of Series A Convertible Preferred shares, convertible at the rate of one share of preferred for each 500 shares of common stock of the Company, with voting rights as if converted. The Executive has been serving SportsQuest since August 17, 2007 through May 31, 2008. The Company has accrued the sum of $150,000 for the period and agrees to pay the accrued amount upon receiving funding in an amount sufficient to pay the accrual. 36 The Executive and Executive's dependants are eligible for medical health insurance and Executive will receive five weeks of paid vacation after one year of service, seven sick days, six personal days, and six major holidays per year as well as any other benefits that are available generally to other executives of the Company. The Company shall pay or reimburse Executive for all reasonable expenses incurred or paid by the Executive in the performance of Executive's duties. On August 16, 2007, 6,800,000 shares were issued for a value of $340,000 in exchange for release from debt to the Company's affiliate. As of October 31, 2007, there was a balance due to Zaring Cioffi Entertainment of $150,000. Pursuant to the Bring Down and Amendment, the Company would service the debt of ZCE on a monthly basis until the registration statement was declared effective by the SEC and the Company had received its third tranche of funding in the amount of $500,000 under the callable notes dated August 17, 2007. In addition, the Company has the right of offset for the sum of $20,000 already advanced to ZCE on August 30, 2007, before the closing. NOTE 12 - STOCK BASED COMPENSATION The Company issues stock options from time to time to executives, key employees and members of the Board of Directors. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," and continues to account for stock based compensation using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees". Accordingly, no compensation cost has been recognized for the stock options granted to employees. In December 2004, the FASB issued a revision of SFAS No. 123 ("SFAS No. 123(R)") that requires compensation costs related to share-based payment transactions to be recognized in the statement of operations. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards will be re-measured each reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the award. SFAS No. 123(R) replaces SFAS No. 123 and is effective as of the beginning of January 1, 2006. Based on the number of shares and awards outstanding as of December 31, 2005 (and without giving effect to any awards which may be granted in 2006), we do not expect our adoption of SFAS No. 123(R) in January 2006 to have a material impact on the financial statements. Financial Statement Position ("FSP") FAS No. 123(R)-5 was issued on October 10, 2006. The FSP provides that instruments that were originally issued as employee compensation and then modified, and that modification is made to the terms of the instrument solely to reflect an equity restructuring that occurs when the holders are no longer employees, then no change in the recognition or the measurement (due to a change in classification) of those instruments will result if both of the following conditions are met: (a). There is no increase in fair value of the award (or the ratio of intrinsic value to the exercise price of the award is preserved, that is, the holder is made whole), or the antidilution provision is not added to the terms of the award in contemplation of an equity restructuring; and (b). All holders of the same class of equity instruments (for example, stock options) are treated in the same manner. The provisions in this FSP shall be applied in the first reporting period beginning after the date the FSP is posted to the FASB website. The Company has adopted SP FAS No. 123(R)-5 but it did not have a material impact on its consolidated results of operations and financial condition. 37 There were no options granted in the year ended May 31, 2008 and 2007 and all options previously granted have been fully vested and therefore there is no pro forma effect for the year then ended. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company accounts for stock awards issued to nonemployees in accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force ("EITF") Issue No. 96-18 ACCOUNTING FOR EQUITY INSTRUMENTS THAT ARE ISSUED TO OTHER THAN EMPLOYEES FOR ACQUIRING, OR IN CONJUNCTION WITH SELLING GOODS OR SERVICES. Under SFAS No. 123 and EITF 96-18, stock awards to nonemployees are accounted for at their fair value as determined under Black-Scholes option pricing model. On July 16, 2008, we executed an agreement with JAVACO, Inc, an Ohio corporation ("Javaco") whereby pursuant to the terms and conditions of that Agreement we completed the purchase of all the issued and outstanding shares of Javaco. Judith Vazquez is the sister-in-law of R. Thomas Kidd, our Chief Executive Officer. The Closing of the transaction occurred on July 18, 2008. As consideration for all the issued and outstanding shares of Javaco, we issued the shareholders of Javaco, seven hundred and fifty thousand shares of our common stock, and common stock purchase warrants as follows: 20,000 common stock purchase warrants at an exercise price of $3.00 per share, expiring on December 31, 2008; 20,000 common stock purchase warrants at an exercise price of $4.00. JAVACO is a wholly owned subsidiary of DoMark but is not a consolidated subsidiary as of May 31, 2008. On July 24, 2008, we executed an asset purchase agreement (the "Agreement") with TOTALMED SYSTEMS, INC., a Florida corporation ("TotalMed"), whereby pursuant to the terms and conditions of that Agreement, we completed the purchase of certain assets. The Closing of the transaction occurred on August 6, 2008 (the "Closing"). This agreement was subsequently rescinded and the stock was not issued As consideration for the certain assets of TotalMed, we agreed to pay TotalMed issued and outstanding shares of our common stock that will have the aggregate value of six million Dollars ($6,000,000), determined by dividing the average closing price for the 5 days prior to the Closing ($2.34), which sum may be reduced based on contingencies described in the Agreement. On May 20, 2008, DoMark Exotic Furnishings, Inc. (OTCBB DMXF) acquired 100,000 preferred shares held by our President and CEO, in exchange for 6.5 million of DMXF common shares. This transaction represented a change in control of the Company; however effective control of the Company's subsidiary SportsQuest is unchanged due to a beneficial interest in SportsQuest via DoMark. DoMark changed its name to DoMark International, Inc. and now trades on the OTC Bulletin Board under the stock symbol DOMK. NOTE 13 - SUBSEQUENT EVENTS On August 23, 2008, SportsQuest entered into an Investment Agreement (the "Investment Agreement") with Dutchess Private Equities Fund, Ltd., a Cayman Islands exempted company ("Dutchess"). The Investment Agreement provides for the Company's right, subject to certain conditions, to require Dutchess to purchase up to $50,000,000 of SportsQuest common stock at a seven percent discount to market over the 36 month period following a registration statement covering such common stock being declared effective by the Securities and Exchange Commission. As a condition to entering into the Investment Agreement, SportsQuest and Dutchess entered into a Registration Rights Agreement, dated as of August 23, 2007 (the "Registration Rights Agreement"). As set forth in the Registration Rights Agreement, the Company has agreed to file a registration statement with the Securities and Exchange Commission within 45 days after the date of the Registration Rights Agreement to cover the resale by Dutchess of the shares of 38 the Company's common stock issued pursuant to the Investment Agreement. SportsQuest has agreed to initially register for resale 10,000,000 shares of its common stock which would be issuable on the date preceding the filing of the registration statement based on the closing bid price of SportsQuest common stock on such date and the amount reasonably calculated that represents common stock issuable to other parties as set forth in the Investment Agreement except to the extent that the Securities and Exchange Commission requires the share amount to be reduced as a condition of effectiveness. SportsQuest has further agreed to use all commercially reasonable efforts to cause the registration statement to be declared effective by the Securities and Exchange Commission within 120 days after the date of the Registration Rights Agreement and to keep such registration statement effective until the earlier to occur of the date on which (a) Dutchess shall have sold all of the shares of common stock issued or issuable pursuant to the Investment Agreement; or (b) Dutchess has no right to acquire any additional shares of common stock under the Investment Agreement. 39 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. On September 8, 2008, Kramer Wiseman and Associates, LLP ("KWA") was appointed as the independent auditor for DoMark International, Inc. (the "Company") commencing with the year ending May 31, 2008, and Chang G. Park, CPA, Ph.D. ("Chang") were dismissed as the independent auditors for the Company as of September 8, 2008. The decision to change auditors was approved by the Board of Directors on September 8, 2008. The report of Chang on the financial statements for either of the one most recent completed fiscal years did not contain any adverse opinion or disclaimer of opinion or was qualified or modified as to uncertainty, audit scope or accounting principles, except for the following: "The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the accumulation of losses and shortage of capital raise substantial doubt about its ability to continue as a going concern. Management's plans concerning these matters are also described in Note 3. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern. During the Company's one most recent interim quarter February 28, 2008, November 30, 2007, August 31, 2007, and annual report May 31, 2007, and three prior interim quarters August 31, 2006, November 30, 2006, and February 29, 2007, there were no disagreements with Chang on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of Chang, would have caused it to make reference to the subject matter of the disagreements in connection with its report with respect to the financial statements of the Company. During the Company's one most recent interim quarter February 28, 2008, November 30, 2007, August 31, 2007, and annual report May 31, 2007, and three prior interim quarters August 31, 2006, November 30, 2006, and February 29, 2007, there were no "reportable events" as such term is described in Item 304(a)(1)(v) of Regulation S-B under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with respect to the Company. During the Company's one most recent interim quarter February 28, 2008, November 30, 2007, August 31, 2007, and annual report May 31, 2007, and three prior interim quarters August 31, 2006, November 30, 2006, and February 29, 2007, the Company did not consult with KWA with respect to the Company regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements, (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-B under the Exchange Act and the related instructions to Item 304 of Regulation S-B) or a "reportable event" (as such term is described in Item 304(a)(1)(v) of Regulation S-B), or (iii) any of the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-B. The Company has furnished a copy of this Report to Chang and requested them to furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the statements made by the Company herein in response to Item 304(a) of Regulation S-K and, if not, stating the respects in which it does not agree. The letter from Chang will be submitted when received with an amended filing. 40 ITEM 9A. CONTROLS AND PROCEDURES Our management team, under the supervision and with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of the last day of the fiscal period covered by this report, May 31, 2008. The term disclosure controls and procedures means our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of May 31, 2008. Our principal executive officer and our principal financial officer, are responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Management is required to base its assessment of the effectiveness of our internal control over financial reporting on a suitable, recognized control framework, such as the framework developed by the Committee of Sponsoring Organizations (COSO). The COSO framework, published in INTERNAL CONTROL-INTEGRATED FRAMEWORK, is known as the COSO Report. Our principal executive officer and our principal financial officer, have has chosen the COSO framework on which to base its assessment. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of May 31, 2008. This annual report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report on Form 10-K. There were no changes in our internal control over financial reporting that occurred during the last quarter of 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. This annual report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Our principal executive officer and our principal financial officer, report was not subject to attestation by the company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this annual report. It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of certain events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. 41 CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING During the fiscal quarter ended May 31, 2008, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. DIRECTORS AND EXECUTIVE OFFICER Mr. R. Thomas Kidd as of May 2008 accepted the position of Chief Executive Officer and Director of the Company. Information representing Mr. Kidd R. Thomas Kidd 61 Chairman, President, Chief Executive Officer, and Chief Financial Officer Richard Altmann 58 Director Scott Sieck 49 Director The Chief Executive Officer of the Company will hold office until additional members or officers are duly elected and qualified. The background and principal occupations of the sole officer and director of the Company is as follows: R. Thomas Kidd, Chief Executive Officer, of DoMark Since August, 2007, R. Thomas Kidd is the President and Chief Executive Officer of SportsQuest, Inc., a Delaware corporation that creates, develops, owns and manages high end sports events and related operating entities. From January 2007 until August 2007, Mr. Kidd was the Chief Executive Officer of Lextra Management Group, Inc., whose assets were acquired by SportsQuest, Inc. Prior thereto from July 2005 through November 2006 he served as the Chief Executive Officer and Director of Greens Worldwide Incorporated, a publicly held company, and its subsidiary U.S. Golf Tour, primarily involved in the development of a new golf organization and sports enterprise. Prior thereto, from April 1999 through October 2004, Mr. Kidd served as Chief Executive Officer and President of ASGA, Inc., and the American Senior Golf Association. For approximately the past thirty (30) years, Mr. Kidd has been engaged in various capacities in developing sports organizations including, among others, two (2) national professional golf tours and one (1) senior golf tour. RICHARD ALTMANN, DIRECTOR Rick Altmann has served as a member of the Board of Directors of SportsQuest, Inc. since September 14, 2007. Mr. Altmann has served as the President of American Lawn keepers since 1996. 42 SCOTT SIECK, DIRECTOR MR. SCOTT SIECK has been a Director of our company since inception. From 2000 to present, Mr. Sieck has been self employed as a day trader, managing his own investment portfolio. Mr. Sieck is a graduate of Penn State University with a BA in Labor Relations and graduate studies at John Hopkins University (Master's of Administrative Sciences) COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT 9.A. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS: The Company is aware that all filings of Form 4 and 5 required of Section 16(a) of the Exchange Act of Directors, Officers or holders of 10% of the Company's shares have not been timely and the Company has instituted procedures to ensure compliance in the future. ITEM 11. EXECUTIVE COMPENSATION 2008 SUMMARY COMPENSATION TABLE
Change in Pension Value and Non-Equity Nonqualified Incentive Deferred All Name and Plan Compen- Other Principal Stock Option Compen- sation Compen- Position Year Salary($) Bonus($) Awards($) Awards($) sation($) Earnings($) sation($) Totals($) -------- ---- --------- -------- --------- --------- --------- ----------- --------- --------- R. Thomas Kidd 2008 -- -- -- -- -- -- -- -- Chief Executive 2007 -- -- -- -- -- -- -- -- Officer
SUMMARY COMPENSATION TABLE The following table sets forth the cash compensation paid by the Company to its Chief Executive Officer and to all other executive officers for services rendered from May 20, 2008 through May 31, 2008. Currently, R. Thomas Kidd is the Chairman, Chief Executive Officer, President and Principle Financial Officer. 2007 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
Option Awards Stock Awards ----------------------------------------------------------------- --------------------------------------------------- Equity Equity Incentive Equity Incentive Plan Awards: Incentive Plan Awards: Market or Plan Awards: Market Number of Payout Value Number of Number of Number of Number of Value of Unearned of Unearned Securities Securities Securities Shares or Shares or Shares, Units Shares, Units Underlying Underlying Underlying Units of Units of or Other or Other Unexercised Unexercised Unexercised Option Option Stock That Stock That Rights That Rights That Options(#) Options(#) Unearned Exercise Expiration Have Not Have Not Have Not Have Not Exercisable Unexercisable Options(#) Price($) Date Vested(#) Vested($) Vested(#) Vested(#) ----------- ------------- ---------- -------- ---- --------- --------- --------- --------- R.Thomas Kidd -- -- -- -- -- -- -- -- --
43 2008 OPTION EXERCISES AND STOCK VESTED TABLE 2008 PENSION BENEFITS TABLE
Number of Present Years Value of Payments Plan Credited Accumulated During Last Name Name Service(#) Benefit($) Fiscal Year($) - ---- ---- ---------- ---------- -------------- R.Thomas Kidd -- -- -- -- Chief Executive Officer
2008 NONQUALIFIED DEFERRED COMPENSATION TABLE
Eecutive Registrant Aggregate Aggregate Contributions Contributions Earnings Aggregate Balance at in Last in Last in Last Withdrawals/ Last Fiscal Name Fiscal Year($) Fiscal Year($) Fiscal Year($) Distributions($) Year-end($) ---- -------------- -------------- -------------- ---------------- ----------- R.Thomas Kidd -- -- -- -- -- Chief Executive Officer
2008 DIRECTOR COMPENSATION TABLE
Change in Pension Value and Fees Non-Equity Nonqualified Earned Incentive Deferred Paid in Stock Option Plan Compensation All Other Name Cash($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Total($) ---- ------- --------- --------- --------------- ----------- --------------- -------- R. Thomas Kidd -- -- -- -- -- -- -- Chief Executive Officer
44 2008 ALL OTHER COMPENSATION TABLE
Prequisites Company Change and Other Contributions Severance in Control Personal Tax Insurance to Retirement Payments/ Payments/ Name Year Benefits($) Reimbursements($) Premiums($) and 401(k) Plans($) Accruals($) Accruals($) Total($) ---- ---- ----------- ----------------- ----------- ------------------- ----------- ----------- -------- R.Thomas Kidd 2008 -- -- -- -- -- -- -- Chief Executive 2007 -- -- -- -- -- -- -- Officer
2008 PERQUISITES TABLE
Total Perquisites Personal Use Financial and Other of Company Planning Executive Personal Name Year Car/parking Legal Fees Club Dues Relocation Benefits ---- ---- ----------- ---------- --------- ---------- -------- R.Thomas Kidd 2008 -- -- -- -- -- Chief Executive Officer 2007 -- -- -- -- --
2008 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLE
Before After Change Change in Change in Control Control Termination Termination w/o Cause w/o Cause or for or for Voluntary Change in Name Benefit Good Reason Good Reason Termination Death Disability Control ---- ------- ----------- ----------- ----------- ----- ---------- ------- R. Thomas Kidd Basic salary -- -- -- -- -- -- Chief Executive Officer
COMPENSATION OF DIRECTORS Mr. Kidd is also a member of the board of directors of the Company and is not compensated for those services. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information regarding beneficial ownership of the common stock as of May 31, 2008 by (i) each person who is known by the Company to own beneficially more than 5% of the any classes of outstanding Stock, (ii) each director of the Company, (iii) each of the Chief Executive Officers and the two (2) most highly compensated executive officers who earned in excess of $100,000 for all services in all capacities (collectively, the "Named Executive Officers") and (iv) all directors and executive officers of the Company as a group. 45 The number and percentage of shares beneficially owned is determined in accordance with Rule 13d-3 and 13d-5 of the Exchange Act, and the information is not necessarily indicative of beneficial ownership for any other purpose and is based on 8,500,000 shares beneficially owned as of May 31, 2008. We believe that each individual or entity named has sole investment and voting power with respect to the securities indicated as beneficially owned by them, subject to community property laws, where applicable, except where otherwise noted. Unless otherwise stated, the address of each person; 1809 East Broadway # 125, Oviedo, FL 32795. Name and Address Shares Owned (1) Common Stock ---------------- ---------------- ------------ R. Thomas Kidd & Joan Kidd 6.5 million 76.47% 1809 East Broadway # 125 Oviedo, Fl 32795 Richard Altmann 0 0% 1809 East Broadway # 125 Oviedo, Fl 32795 Scott and Maureen Doyle Sieck 1.0 million 11.76% 1624 Tioga Trail Winter Park, Fl 32789 All such directors as a group (3 persons) 7.5 million 88.23% CHANGES IN CONTROL We are not aware of any arrangements that may result in a change in control of the Company. DESCRIPTION OF SECURITIES GENERAL Our authorized capital stock consists of 75,000,000 shares of common stock, par value $ .001. COMMON STOCK The shares of our common stock presently outstanding, and any shares of our common stock issues upon exercise of stock options and/or warrants, will be fully paid and non-assessable. Each holder of common stock is entitled to one vote for each share owned on all matters voted upon by shareholders, and a majority vote is required for all actions to be taken by shareholders. In the event we liquidate, dissolve or wind-up our operations, the holders of the common stock are entitled to share equally and ratably in our assets, if any, remaining after the payment of all our debts and liabilities and the liquidation preference of any shares of preferred stock that may then be outstanding. The common stock has no preemptive rights, no cumulative voting rights, and no redemption, sinking fund, or conversion provisions. Since the holders of common stock do not have cumulative voting rights, holders of more than 50% of the outstanding shares can elect all of our Directors, and the holders of the remaining shares by themselves cannot elect any Directors. Holders of common 46 stock are entitled to receive dividends, if and when declared by the Board of Directors, out of funds legally available for such purpose, subject to the dividend and liquidation rights of any preferred stock that may then be outstanding. DIVIDEND POLICY We have never declared any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future. OPTIONS AND WARRANTS As of May 31, 2008 there were no options or warrants outstanding to acquire shares of the Company's common stock. CONVERTIBLE SECURITIES At May 31, 2008 we have no convertible securities, except those convertible securities as disclosed outstanding with SportsQuest, Inc. AMENDMENT OF OUR BYLAWS Our bylaws may be adopted, amended or repealed by the affirmative vote of a majority of our outstanding shares. Subject to applicable law, our bylaws also may be adopted, amended or repealed by our board of directors. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDPENDENCE March 2007, Air Brook Limousine notified us that it had experienced extraordinary increases in the cost of performing the agreements and advised us of its intent to cancel the contracts. As part of a settlement of issues, we entered into an Agreement and Plan of Reorganization dated March 8, 2007, pursuant to which, among other things, we agreed that A.B. Park & Fly would be merged with and into a wholly-owned subsidiary of Air Brook Limousine, wherein the separate existence of A.B. Park & Fly would cease. In consideration for the preceding, Air Brook Limousine agreed to deliver to us 150,000 shares of our common stock, which we canceled as outstanding shares. This merger was completed on March 15, 2007. On February 15, 2008, SportsQuest issued 500,000 of its common shares to a SportsQuest Director as compensation for a value of $75,000, or $.15 per share. On August 16, 2007, Lextra Management Group, Inc., an event management company, acquired 51.16% of our issued and outstanding common stock pursuant to an Agreement dated June 26, 2007 by and among Lextra, our company and certain of our principal stockholders. Pursuant to the terms of this agreement, at the closing, Lextra acquired (a) 1,165,397 shares representing 51.16% of the issued and outstanding shares of our common stock from the selling stockholders for an aggregate purchase price of $116,500 and (b) an outstanding accounts receivable due to Air Brook Limousine by us in the amount of $340,000. At the closing, Air Brook Limousine cancelled the agreement dated August 10, 1993 under which Air Brook Limousine stipulated that it would fund our operations for as long as Air Brook Limousine deemed necessary and as long as it was financially able. 47 SportsQuest has chosen to account for the acquisition of its wholly owned subsidiary, ZCE, Inc., as an unconsolidated investment in the subsidiary as the Exchange Agreement and Bring Down and Amendment agreement is in question and may be settled or rescinded once the Company determines which course of action is in the best interest of the Company and its shareholders during litigation. Effective January 1, 2008, SportsQuest entered into a consulting agreement with Rick Altmann, one of the Company's directors. The agreement is for a term of five years. As compensation for services, he will receive a monthly fee of $6000, payable on the first and 15th of each month for 2008, $7000 per month for 2009, and $8000 per month for 2010 and thereafter. The Company may pay up to a mutually agreeable amount of fees in common stock of the Company. The Consultant is responsible for all expenses that may be incurred in performing the consulting services, including, but not limited to, travel, third party expenses, and copying and mailing expenses unless otherwise pre-approved by the Company. Mr. Altmann also received 500,000 shares of Common stock as compensation for serving as a Director. On January 8, 2008, SportsQuest executed an Executive Employment Agreement with its President and Chief Executive Officer for a term of five years. The agreement provides for an annual base salary of $240,000, payable in accordance with the Company's generally applicable payroll practices and policies, but not less frequently than twice per month in arrears. Annual base salary will increase 10% per year automatically. The Executive is also eligible to receive a bonus from the Company, and to participate in any of the Company's bonus plan(s) that may be adopted for the benefit of executives of the Company. The award of any discretionary bonus under this section shall be determined by the Board of Directors of the Company. The Executive is also entitled to receive such stock options as may be granted to other executives of the Company as adopted by the Board of Directors. As a signing bonus, SportsQuest agreed to issue 100,000 shares of Series A Convertible Preferred shares, convertible at the rate of one share of preferred for each 500 shares of common stock of the Company, with voting rights as if converted. The Executive has been serving SportsQuest since August 17, 2007 through May 31, 2008. SportsQuest has accrued the sum of $150,000 for the period and agrees to pay the accrued amount upon receiving funding in an amount sufficient to pay the accrual. The Executive and Executive's dependants are eligible for medical health insurance and Executive will receive five weeks of paid vacation after one year of service, seven sick days, six personal days, and six major holidays per year as well as any other benefits that are available generally to other executives of the Company. SportsQuest shall pay or reimburse Executive for all reasonable expenses incurred or paid by the Executive in the performance of Executive's duties. On August 16, 2007, 6,800,000 shares were issued for a value of $340,000 in exchange for release from debt to the Company's affiliate. As of October 31, 2007, there was a balance due to Zaring Cioffi Entertainment of $150,000. Pursuant to the Bring Down and Amendment, SportsQuest would service the debt of ZCE on a monthly basis until the registration statement was declared effective by the SEC and SportsQuest had received its third tranche of funding in the amount of $500,000 under the callable notes dated August 17, 2007. In addition, SportsQuest has the right of offset for the sum of $20,000 already advanced to ZCE on August 30, 2007, before the closing. 48 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES AUDIT FEES. The aggregate fees billed by Kramer Weisman and Associates LLP for professional services rendered for the audit of the Company's annual financial statements for fiscal years ended May 31, 2008 approximated $7,500 and $0.00 respectively. The aggregate fees billed by Kramer Weisman and Associates LLP for the review of the financial statements included in the Company's Forms 10-Q for fiscal year 2008 approximated $0 per year. AUDIT-RELATED FEES. The aggregate fees billed by Kramer Weisman and Associates LLP for assurance and related services that are reasonably related to the performance of the audit or review of the Company's financial statements for the fiscal years ended May 31, 2008 and 2007, and that are not disclosed in the paragraph captioned "Audit Fees" above, were $7,500 and $0, respectively. TAX FEES. The aggregate fees billed by Kramer Weisman and Associates LLP for professional services rendered for tax compliance, tax advice and tax planning for the fiscal year ended May 31, 2008 and 2007 were $0. ALL OTHER FEES. The aggregate fees billed by Kramer Weisman and Associates LLP for products and services, other than the services described in the paragraphs "Audit Fees," "Audit-Related Fees," and "Tax Fees" above for the fiscal years ended May 31, 2008 and 2007 approximated $0 and $0 respectively. PART IV ITEM 15. EXHIBITS AND REPORTS Exhibits 3.1 Articles of Incorporation (1) 3.1 Amendments to Articles of Incorporation - Fourth Article (1) 3.1 Amendment to Articles of Incorporation - Name Change (1) 14.1 Code of Ethics (2) 21 Subsidiaries (2) 23.3 Consent of Chang Park CPA Ph.D. (2) 31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act. (2) 31.2 Certification of Principal Accounting Officer Pursuant to Section 302 of the Sarbanes Oxley Act (2) 32.1 Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes Oxley Act. (2) 32.2 Certification of Principal Accounting Officer Pursuant to Section 906 of the Sarbanes Oxley Act (2) 99.1 Audit Committee Charter (2) 99.2 Compensations Committee Charter (2) - ---------- (1) Incorporated by reference to the same exhibit filed with the Company's Annual Report on Form 10-KSB for the year ending May 31, 2006. (2) Filed herewith. 49 SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized. DOMARK INTERNATIONAL, INC., Registrant Date: September 12, 2008 By: /s/ R. Thomas Kidd ------------------------------------------- R. Thomas Kidd Chairman, President Chief Executive Officer Date: September 12, 2008 By: /s/ R. Thomas Kidd ------------------------------------------- R. Thomas Kidd Principal Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 12th day of September 2008. /s/ R. Thomas Kidd Chief Executive Officer, Principal Financial - -------------------------------- Officer and Director R. Thomas Kidd /s/ Richard Altmann Director - -------------------------------- R. Richard Altmann /s/ Scott Sieck Director - -------------------------------- Scott Sieck 50 EX-14.1 2 ex14-1.txt CODE OF ETHICS EXHIBIT 14.1 DOMARK INTERNATIONAL, INC. FINANCIAL CODE OF ETHICS As a public company, it is of critical importance that DOMARK INTERNATIONAL, INC. (DOMARK) filings with the Securities and Exchange Commission be accurate and timely. Depending on their position with DOMARK, employees may be called upon to provide information to assure that DOMARK's public reports are complete, fair, and understandable. DOMARK expects all of its employees to take this responsibility seriously and to provide prompt and accurate answers to inquiries related to DOMARK's public disclosure requirements. DOMARK's Finance Department bears a special responsibility for promoting integrity throughout DOMARK, with responsibilities to stakeholders both inside and outside of DOMARK. The Chief Executive Officer (CEO), Chief Financial Officer (CFO), and Finance Department personnel have a special role both to adhere to the principles of integrity and also to ensure that a culture exists throughout DOMARK as a whole that ensures the fair and timely reporting of DOMARK's financial results and conditions. Because of this special role, the CEO, CFO, and all members of DOMARK's Finance Department are bound by DOMARK's Financial Code of Ethics, and by accepting the Financial Code of Ethics, each agrees that they will: - - Act with honesty and integrity, avoiding actual or Domark conflicts of interest in personal and professional relationships. - - Provide information that is accurate, complete, objective, relevant, timely and understandable to ensure full, fair, accurate, timely, and understandable disclosure in the reports and documents that DOMARK files with, or submits to, government agencies and in other public communications. - - Comply with the rules and regulations of federal, state and local governments, and other appropriate private and public regulatory agencies. - - Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing one's independent judgment to be subordinated. - - Respect the confidentiality of information acquired in the course of one's work, except when authorized or otherwise legally obligated to disclose. Confidential information acquired in the course of one's work will not be used for personal advantage. - - Share job knowledge and maintain skills important and relevant to stakeholders needs. - - Proactively promote and be an example of ethical behavior as a responsible partner among peers, in the work environment and in the community. - - Achieve responsible use of, and control over, all DOMARK assets and resources employed by, or entrusted to yourself, and your department. - - Receive the full and active support and cooperation of DOMARK's Officers, Sr. Staff, and all employees in the adherence to this Financial Code of Ethics. - - Promptly report to the CEO or CFO any conduct believed to be in violation of law or business ethics or in violation of any provision of this Code of Ethics, including any transaction or relationship that reasonably could be expected to give rise to such a conflict. Further, to promptly report to the Chair of DOMARK's Audit Committee or the Board of Directors prior to the formation of the Audit Committee, such conduct if by the CEO or CFO or if they fail to correct such conduct by others in a reasonable period of time. EX-21 3 ex21.txt SUBSIDIARIES EXHIBIT 21 Sportsquest, Inc. Javaco, Inc. Totalmed Systems - This transaction has been subsequently rescinded EX-23.3 4 ex23-3.txt CONSENT OF CHANG G. PARK EXHIBIT 23.3 Chang G. Park, CPA, Ph. D. * 2667 CAMINO DEL RIO S. PLAZA B * SAN DIEGO * CALIFORNIA 92108 * * TELEPHONE (858)722-5953 * FAX (858) 761-0341 * FAX (858) 764-5480 * E-MAIL changgpark@gmail.com * September 12, 2008 To Whom It May Concern: The firm of Chang G. Park, CPA consents to the inclusion of our report of August 28, 2007 on the audited financial statements of DoMar Exotic Furnishings Inc.as of May 31, 2007 in any filings that are necessary now or in the near future with the U.S. Securities and Exchange Commission. Very Truly Yours, /s/ Chang G. Park - --------------------------- CHANG G. PARK, CPA San Diego, CA Member of the California Society of Certified Public Accountants Registered with the Public Company Accounting Oversight Board EX-31.1 5 ex31-1.txt CEO SECTION 302 CERTIFICATION EXHIBIT 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULES 13A-14 AND 15D-14 OF THE SECURITIES EXCHANGE ACT OF 1934 I, R. Thomas Kidd, certify that: 1. I have reviewed this annual report on Form 10-K of DoMark International, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. DOMARK INTERNATIONAL, INC. By /s/ R. Thomas Kidd ---------------------------- R. Thomas Kidd Chairman, CEO September 12, 2008 EX-31.2 6 ex31-2.txt CFO SECTION 302 CERTIFICATION EXHIBIT 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULES 13A-14 AND 15D-14 OF THE SECURITIES EXCHANGE ACT OF 1934 I, R. Thomas Kidd, certify that: 1. I have reviewed this annual report on Form 10-K of DoMark International, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. DOMARK INTERNATIONAL, INC. By /s/ R. Thomas Kidd ---------------------------- R. Thomas Kidd Principal Financial Officer September 12, 2008 EX-32.1 7 ex32-1.txt CEO SECTION 906 CERTIFICATION EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of DoMark International, Inc. (the "Company") on Form 10-K for the period ended May 31, 2008 and 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, R. Thomas Kidd, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, That to the best of my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. DOMARK INTERNATIONAL, INC. By /s/ R. Thomas Kidd ---------------------------------------- R. Thomas Kidd Chairman, CEO (Sole executive officer of the registrant) September 12, 2008 EX-32.2 8 ex32-2.txt CFO SECTION 906 CERTIFICATION EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of DoMark International, Inc., (the "Company") on Form 10-K for the period ended May 31, 2008 and 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, R. Thomas Kidd, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, That to the best of my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. DOMARK INTERNATIONAL, INC. By /s/ R. Thomas Kidd -------------------------------- R. Thomas Kidd Principal Financial officer September 12, 2008 EX-99.1 9 ex99-1.txt AUDIT COMMITTEE CHARTER EXHIBIT 99.1 AUDIT COMMITTEE CHARTER I. APPOINTMENT OF AUDIT COMMITTEE The Company's By-Laws authorize the Board of Directors to appoint committees having the authority to perform such duties as the Board may determine. The Board of Directors has appointed or will appoint an Audit Committee to serve the purposes set forth in this Charter, and has delegated or will delegate the duties and responsibilities set forth in this Charter to the Audit Committee. The Audit Committee, once formed, will report to the Board of Directors as provided in this Charter. II. PURPOSE (1) The Audit Committee shall assist the Board of Directors in fulfilling its fiduciary and oversight responsibilities relating to the Company's financial reporting standards and practices and the integrity of the Company's financial statements. (2) The Audit Committee shall monitor the adequacy of and promote the Company's continued emphasis on internal controls. (3) The Audit Committee shall assist the Board's oversight of the performance of the Company's internal audit function and independent auditors, and the independent auditor's qualifications and independence. (4) The Audit Committee shall maintain open, continuing and direct communication between the Board of Directors, the Audit Committee and both the Company's independent auditors and its internal auditors. (5) The Audit Committee shall monitor the Company's compliance with legal and regulatory requirements and shall have the authority to initiate any special investigations of conflicts of interest, and compliance with federal, state and local laws and regulations, including the Foreign Corrupt Practices Act, as may be warranted. (6) The Audit Committee shall prepare the annual Audit Committee Report required by the rules and regulations of the Securities and Exchange Commission to be included in the Company's annual proxy statement. III. OPERATING POLICIES (1) The Audit Committee shall be composed of three or more independent members of the Board of Directors. A director's independence, including any additional qualifications applicable to Audit Committee members, shall be determined in accordance with the Company's Principles of Corporate Governance. The Corporate Governance and Responsibility Committee will recommend to the Board the directors to be members of, and to fill any vacancies on, the Audit Committee (including the position of Audit Committee Chair), as provided in the Principles of Corporate Governance. The Board may remove a member from the Audit Committee at any time, with or without cause. (2) The Audit Committee shall hold such meetings as it shall deem advisable but shall meet a minimum of six times per calendar year of which at least one meeting shall occur at least once every quarter. Minutes of all Audit Committee meetings shall be taken and approved by subsequent action. The Audit Committee shall circulate the minutes of the Audit Committee meetings to the Board for review. (3) The Audit Committee shall meet at such times and places as the Audit Committee shall deem advisable on the call of the Chairman of the Audit Committee, the Chairman of the Board, the Chief Executive Officer, or, in their absence, by any member of the Audit Committee. The presence of a majority of the members of the Audit Committee then in office shall constitute a quorum for the transaction of business. The Audit Committee shall determine its rules of procedure in accordance with the Company's Principles of Corporate Governance. (4) Upon the request of the Company's independent auditors or the Company's internal auditor, the Chairman of the Audit Committee shall convene a meeting of the Audit Committee to consider any matters such auditors believe should be brought to the attention of the Audit Committee, directors or shareholders. (5) At each regular Board meeting held following an Audit Committee meeting, the Audit Committee shall report to the Board regarding the action taken by the Audit Committee. (6) The Audit Committee has the authority to retain independent, outside counsel or other professional services as it deems necessary, without seeking Board approval. The Audit Committee also has the authority to direct and supervise an investigation into any matter, without seeking Board approval. (7) The Company shall provide such funding as the Audit Committee determines is necessary for payment of compensation to the independent auditor and any counsel or other advisors employed by the Audit Committee and for the ordinary administrative expenses of the Audit Committee in the performance of its duties. IV. DUTIES AND RESPONSIBILITIES (1) The Audit Committee is directly responsible for the appointment, compensation, retention, termination and oversight of the work (including the resolution of any disagreements between management and the independent auditor regarding financial reporting) of any independent auditor engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company, subject (if applicable) to subsequent shareholder ratification. The independent auditor engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company shall be a "registered public accounting firm," as provided in the Sarbanes-Oxley Act of 2002 and the regulations thereunder, and shall report directly to the Audit Committee. (2) The Audit Committee shall review with the independent auditors their audit plans and scope for the coming year and any non-audit services to be performed by such independent auditor. The Audit Committee shall review the compensation to be paid to the independent auditors for all audit and non-audit services to be performed. Subject to a de minimis exception relating to non-audit services, which is described in the following sentence, ALL audit and non-audit services to be performed for the Company by the independent auditor must be pre-approved by the Audit Committee or entered into pursuant to pre-approval policies and procedures established by the Audit Committee. Pre-approval of non-audit services shall not be required if: (a) the aggregate amount of all non-audit services provided to the Company does not exceed 5% of the total amount of revenues paid by the audit client to its independent auditor during the fiscal year in which the non-audit services are provided; (b) the services were not recognized by the Company at the time of the engagement to be non-audit services; and (c) the services are promptly brought to the attention of the Audit Committee and approved by the Audit Committee prior to completion of the audit. Any pre-approval policies and procedures established by the Audit Committee: (a) must be detailed as to the particular services; (b) must provide that the Audit Committee will be informed of each service; and (c) may not delegate the Audit Committee's responsibilities to management. The Audit Committee may delegate this pre-approval function to one or more members of the Audit Committee. The decisions of any Audit Committee member to whom pre-approval authority has been delegated shall be presented to the Audit Committee at its regularly scheduled meetings. Any non-audit service pre-approved by the Audit Committee (or any member to whom authority has been delegated) and any non-audit service entered into pursuant to pre-approval policies and procedures established by the Audit Committee shall be disclosed by the Company as required by law. (3) At least annually, the Audit Committee shall obtain and review a report by the independent auditor describing: (a) the firm's internal quality-control procedures; (b) any material issues raised by the firm's most recent internal quality-control review, or peer review, of the firm, or by any inquiry or 2 investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues; and (c) all relationships between the independent auditor and the Company. (4) After reviewing the report discussed in (3) above and the independent auditor's work throughout the year, the Audit Committee shall evaluate the independent auditor's qualifications, performance and independence. The evaluation will include a review and evaluation of the lead partner of the independent auditor assigned to the Company's audit. The evaluation also will consider the opinions of management and the Company's internal auditors. The audit partners shall be rotated as required by law. The Audit Committee shall present the results of its evaluation of the independent auditor to the Board. (5) To assist the Audit Committee in effectively performing its oversight function, the Audit Committee shall meet periodically in separate sessions with management, the internal auditors and with the independent auditors. (6) The Audit Committee shall regularly review with the independent auditor any problems or difficulties that the independent auditor encounters in the course of the audit work, including management's response. The review shall include a review of any restrictions on the scope of the independent auditor's activities or on access to requested information and any significant disagreements with management. The Audit Committee also shall review with the independent auditors: (a) the audit report and their comments arising from the audit; (b) all critical accounting policies and practices to be used; (c) all alternative treatments within generally accepted accounting principles for policies and practices related to material items that have been discussed with Company management, including the ramifications of the use of such alternative disclosures and treatments and the treatment preferred by the independent auditor; and (d) other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences. (7) The Audit Committee shall review with the Company's internal auditors the internal audit organization and the internal audit goals and plans and discuss the findings and recommendations resulting from internal audits. (8) The Audit Committee shall review with the Company's Controller the adequacy of the Company's overall systems of internal control and the responses taken with respect to the audit findings. In addition, the Audit Committee shall review specifically with each of the Chief Executive Officer, the Chief Financial Officer and the independent auditor their assessments of the Company's internal controls, as required by applicable law. (9) The Audit Committee shall discuss the annual audited financial statements and the quarterly unaudited financial statements with management and the independent auditor prior to their filing with the Securities and Exchange Commission in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The discussion of the annual and quarterly financial information also shall include a review of the Company's disclosures in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations." (10) Periodically, the Audit Committee shall have a general discussion regarding earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies. These discussions need not occur in advance of each earnings release or instance in which the Company may provide financial information or earnings guidance. (11) The Audit Committee shall review with the Company's financial management on a periodic basis (a) issues regarding accounting principles and financial statement presentations, including any significant changes in the Company's selection or application of accounting principles, and (b) the effect of any regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Company. (12) The Audit Committee shall review with the Company's financial management any unusual, non-operating and/or non-recurring items and the general quality of earnings reported by the Company. 3 (13) The Audit Committee shall review any analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects on the financial statements of alternative methods under generally accepted accounting principles. (14) The Audit Committee shall review periodically, but at least once each year, all material agreements between the Company and any business organization wherein a Company director or officer is also a director or officer of such organization to assure that such are fair to the Company and its shareholders. (15) The Audit Committee shall ensure that the independent auditors submit on a periodic basis to the Audit Committee a formal written statement delineating all relationships between such auditors and the Company. The Audit Committee also shall actively engage in dialogues with the independent auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of such auditors, and recommend that the Board of Directors take appropriate action in response to the independent auditors' reports to satisfy itself of such auditors' independence. (16) The Audit Committee shall recommend to the Board of Directors policies and procedures to be developed for dealing with various matters as to which conflicts of interest may arise and periodically review the application of such policies and procedures. (17) The Audit Committee shall have responsibility for monitoring the Company's policies for compliance with federal, state, local and foreign laws and regulations as well as the Company's policies on corporate conduct. The Audit Committee shall have the authority to review the Company's legal and ethical compliance program and to institute any changes or revisions to such program as may be deemed warranted or desirable by the Audit Committee. The Audit Committee shall be responsible for reviewing and determining whether to grant any requests by directors or executive officers for waivers of the Company's Business Ethics and Conduct Policy. Any such waiver shall be disclosed to shareholders, as required by law. In addition, the Audit Committee shall establish procedures for: (a) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and (b) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters. (18) As appropriate, the Audit Committee shall obtain advice and assistance from outside legal, accounting or other advisors. (19) Periodically, the Audit Committee shall discuss guidelines and policies with respect to risk assessment and risk management. The discussion will include a review of the Company's major financial risk exposures and the steps management has taken to monitor and control such exposures. (20) The Audit Committee shall set clear hiring policies for employees or former employees of the Company's independent auditor. (21) The Audit Committee shall conduct an annual self-evaluation, which will be incorporated into the Corporate Governance and Responsibility Committee's annual report to the Board on Board and committee performance. 4 EX-99.2 10 ex99-2.txt COMPENSATION COMMITTEE CHARTER EXHIBIT 99.2 COMPENSATION COMMITTEE CHARTER I. APPOINTMENT OF COMPENSATION COMMITTEE The Company's By-Laws authorize the Board of Directors to appoint committees having the authority to perform such duties as the Board may determine. The Board of Directors has appointed or will appoint the Compensation Committee to serve the purposes set forth in this Charter, and has delegated or will delegate the duties and responsibilities set forth in this Charter to the Compensation Committee. The Compensation Committee, once formed, will report to the Board of Directors as provided in this Charter. II. PURPOSE (1) The Compensation Committee shall assist the Board of Directors in fulfilling its fiduciary responsibilities relating to the Company's compensation and benefit plans, including, as appropriate, compensation and benefit plans of the Company's ventures and affiliates. (2) The Compensation Committee shall determine the appropriate policy for the Company's executive pay and benefit programs, including, as appropriate, executive pay and benefit programs for the Company's ventures and affiliates. (3) The Compensation Committee shall review the adequacy of the Company's management succession plans. (4) The Compensation Committee shall review the performance of the Chief Executive Officer. (5) The Compensation Committee shall discharge the Board's responsibilities relating to compensation of the Company's executives and produce an annual report on executive compensation for inclusion in the Company's annual proxy statement, in accordance with applicable rules and regulations. III. OPERATING POLICIES (1) The Compensation Committee shall be composed of three or more independent directors. A director's independence shall be determined in accordance with the Company's Principles of Corporate Governance. The Corporate Governance and Responsibility Committee will recommend to the Board the directors to be members of, and to fill any vacancies on, the Compensation Committee (including the position of Compensation Committee Chair), as provided in the Company's Principles of Corporate Governance. The Board may remove a member from the Compensation Committee at any time, with or without cause. (2) The Compensation Committee shall meet at such times and places as the Compensation Committee shall deem advisable on the call of the Chairman of the Compensation Committee, the Chairman of the Board, the Chief Executive Officer, or, in their absence, by any member of the Compensation Committee. The presence of a majority of the members of the Compensation Committee then in office shall constitute a quorum for the transaction of business. (3) The Compensation Committee shall take the minutes of all Compensation Committee meetings and approve them by subsequent action. The Compensation Committee shall circulate the minutes of the Compensation Committee meetings to the Board for review. (4) The Compensation Committee shall determine its rules of procedure in accordance with the Company's Principles of Corporate Governance. (5) At each regular Board meeting held following a Compensation Committee meeting, the Compensation Committee shall report to the Board regarding the action taken by the Compensation Committee. (6) The Compensation Committee has the authority to retain independent, outside counsel or other professional services as it deems necessary, without seeking Board approval. (7) The Company shall provide such funding as the Compensation Committee determines is necessary for payment of compensation to any counsel or other advisors employed by the Compensation Committee. IV. DUTIES AND RESPONSIBILITIES (1) The Compensation Committee shall review periodically the Company's philosophy regarding executive compensation. Annually, the Compensation Committee shall assess the Company's competitive position for the Company's components of executive compensation. (2) The Compensation Committee shall adopt, amend, administer and terminate compensation and benefit plans and policies (other than those relating to non-employee directors) as it deems advisable (including any such plan qualifying under Rule 16b-3 under the Securities Exchange Act of 1934). (3) The Compensation Committee may delegate, as the Compensation Committee deems advisable, certain responsibilities to an appropriate management or administrative committee of the Company; provided, however, that the Compensation Committee shall have the sole authority to retain, terminate and approve the fees and other retention terms of any compensation consultant retained to assist in the evaluation of Chief Executive Officer compensation or other executive compensation. (4) The Compensation Committee shall review periodically and, as appropriate under the terms of the relevant joint venture agreements, approve the executive compensation plans and policies of the Company's ventures and affiliates. (5) The Compensation Committee shall review periodically reports from management regarding funding of the Company's pension plans. (6) The Compensation Committee shall review management and make recommendations to the Board as to management succession plans, including assessments of management at the Company's ventures and affiliates. (7) Annually, the Compensation Committee shall review and approve corporate goals and objectives relating to Chief Executive Officer compensation. (8) On behalf of the Board and the shareholders, the Compensation Committee shall evaluate the performance of the Chief Executive Officer annually in light of the corporate goals and objectives. As part of this evaluation, the Compensation Committee will seek input from the other non-employee directors on the Chief Executive Officer's performance. (9) The Compensation Committee will summarize and present the results of the evaluation of the Chief Executive Officer's performance to the Board during an executive session of the non-employee directors. (10) The Compensation Committee will incorporate the performance evaluation results in setting the Chief Executive Officer's compensation level and will make pay decisions for all officers, including the Chief Executive Officer, subject to final review with the Board. (11) The Compensation Committee shall review executive performance and prepare an annual report on executive compensation for inclusion in the Company's annual proxy statement, in accordance with applicable rules and regulations. (12) The Compensation Committee shall conduct an annual self-evaluation, which will be incorporated into the Corporate Governance and Responsibility Committee's annual report to the Board on Board and committee performance. 2 -----END PRIVACY-ENHANCED MESSAGE-----