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DOMARK INTERNATIONAL INC. - 10-K - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

August 29, 2014



The following is management's discussion and analysis of certain significant factors that have affected our financial position and operating results during the periods included in the accompanying consolidated financial statements, as well as information relating to the current plans of our management. This report includes forward-looking statements. Generally, the words "believes", "anticipates", "may", "will", "should", "expect", "intend", "estimate", "continue", and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes thereto and other financial information contained elsewhere in this Form 10-K.

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

The Company did not have any revenues for fiscal year ending May 31, 2014 and $37,935 in revenues for the fiscal year ended May 31, 2013. Revenues earned for fiscal year ending May 31, 2013 were related to the sale of Solacases through the Company's wholly owned subsidiary, Solawerks, Inc.

General and administrative expenses for fiscal 2014 increased to $1,027,248 as compared to $542,133 in fiscal 2013. The increase is primarily related to an increase of consultants, and increased professional fees. In fiscal year 2014 the Company placed on hold the sale of Solawerks products. Interest expense for the twelve months ending May 31, 2014 was $511,876 as compared to $44,588 for the period ending May 31, 2013. The Company's operations during fiscal 2014 were funded through convertible promissory notes, through a plethora of lenders.

The operating loss for fiscal 2014 decreased to $3,735,676 as compared to $9,480,407 for fiscal 2013. The primary decrease in the operating loss was due to the impairment of assets totaling $4,605,480 due to a cancellation of a license agreement for our old Solawerks product.

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

LIQUIDITY AND CAPITAL RESOURCES

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

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

Cash used in investing activities was $195,753 for the fiscal year 2014, compared to $0 for the fiscal year 2013.

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

OTHER CONSIDERATIONS

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


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Source: Edgar Glimpses


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