ITEM 1.BUSINESS
Business Development
Worldwide Strategies Incorporated (“we”, “us”, or “our”) was originally incorporated in the State of Nevada on April 6, 1998 as Boyd Energy Corporation for the purpose of developing a mechanical lifting device that would enhance existing stripper well production. We were unable to raise sufficient capital to carry out this business and focused instead on leasing properties and exploring for oil and gas. We changed our name to Barnett Energy Corporation on July 17, 2001.
On July 8, 2005, pursuant to a Share Exchange Agreement with Worldwide Business Solutions Incorporated, a Colorado corporation (“WBSI”), we acquired all of the issued and outstanding capital stock of WBSI, in exchange for 2,573,335 shares of our common stock. As a result of this share exchange, shareholders of WBSI as a group owned approximately 76.8% of the shares then outstanding, and WBSI became our wholly-owned subsidiary. We changed our name to Worldwide Strategies Incorporated as of June 14, 2005.
For accounting purposes, the acquisition of WBSI was accounted for as a recapitalization of WBSI. Since we had only minimal assets and no operations, the recapitalization has been accounted for as the sale of 778,539 shares of WBSI common stock for our net liabilities at the time of the transaction. Therefore, the historical financial information prior to the date of the recapitalization is the financial information of WBSI. WBSI was incorporated on March 1, 2005 to provide Business Process Outsourcing services.
WBSI incorporated a subsidiary, Worldwide Business Solutions Limited, in the United Kingdom under the Companies Acts 1985 and 1989, on May 31, 2005. This U.K. subsidiary was formed for the purpose of supporting sales and marketing efforts in English-speaking countries. While the subsidiary has a temporary office and bank accounts established, it does not yet have any employees.
On July 31, 2007, we acquired 100% of the issued and outstanding shares of Centric Rx, Inc., a Nevada corporation (“Centric”) in exchange for 2,250,000 post-reverse-split shares of our common stock. We filed Articles of Exchange Pursuant to NRS 92A.200 effective July 31, 2007. Centric does not conduct any operations.
Effective July 31, 2007, we filed a Certificate of Change Pursuant to NRS 78.209, which decreased the number of our authorized shares of common stock from 100,000,000 to 33,333,333 and reduced the number of common shares issued and outstanding immediately prior to filing from 17,768,607 to 5,923,106.
Our Business Plans
We originally intended to offer call center services, such as technical support, language interpreting, debt collections, and help desk solutions. Then, with the acquisition of Centric, we planned to enter the business of distributing health services and prescription drug discount cards. As of the date hereof, our only plan is to search for merger or acquisition opportunities. We are attempting to market the Company as a “shell company” as we believe that its status as a reporting company whose stock is quoted on the OTC Link has value. We cannot assure you that we will be successful in this effort.
On April 28, 2011, we accepted a proposal from Euzkadi Corporation of America, S.A. (“Euzkadi”) to enter into a business combination transaction. It is proposed that Euzkadi would acquire 80% of our then issued and outstanding shares in exchange for all of the issued and outstanding shares of Euzkadi.
Consummation of this proposed transaction will be contingent upon the satisfaction of several conditions, including the completion of a satisfactory due diligence investigation and the completion of an audit of Euzkadi’s financial statements that meet the requirements of the reporting rules and regulations of the Securities and Exchange Commission.
Employees
As of October 28, 2011, we employed a total of 2 persons, both of which were full-time. None of our employees is covered by a collective bargaining agreement.
ITEM 1A.
ITEM 1A.RISK FACTORS
Risks Relating To Our Business and Marketplace
We must obtain financing to continue operations. We must engage in debt and/or equity financing in order to continue operations. We do not know the terms on which any financing might be available or if such financing is available on any terms. Such terms may be detrimental to the interests of our existing shareholders. The value of an investment in our common stock could be reduced. Interest on debt securities could increase costs and negatively impacts operating results. Preferred stock could be issued in series from time to time with such designations, rights, preferences, and limitations as needed to raise capital. The terms of preferred stock could be more advantageous to those investors than to the holders of common stock. In addition, if we need to raise more equity capital from the sale of common stock, institutional or other investors may negotiate terms at least as, and possibly more, favorable than the terms given to our current investors. Shares of common stock that we sell could be sold into the market, which could adversely affect market price.
We are seeking other merger and acquisition opportunities. We may not be able to successfully acquire or merge with another business. Any acquisition or merger that we undertake will require an unspecified amount of additional capital expenditure in the form of planning, due diligence, legal, and accounting fees. We have no substantial experience in completing acquisitions of or mergers with other businesses, and we may be unable to successfully complete such a transaction. Any acquisition or merger we undertake may result in a potentially dilutive issuance of equity securities, the issuance of debt and incurrence of expenses related to the transaction.
We have limited operating history and we cannot assure you that we will succeed or be profitable. From March 1, 2005 (inception) through July 31, 2011, we generated revenues of only $34,518. We are in the development stage, as that term is defined by certain financial accounting standards. This means that as of July 31, 2011, our planned principal operations had not commenced, as we had devoted substantially all of our efforts to financial planning, raising capital, and developing markets. We cannot assure you that we will be successful or profitable.
We do not have sufficient working capital to pay our debts or our costs of continuing operations. We do not currently have sufficient working capital to pay our debts as they become due or our costs of operating our business. As of July 31, 2011, our working capital deficiency was $647,430. We are dependent upon additional debt or equity financing to pay our debts and the costs of operation. If we are unsuccessful in raising additional funds, we may not be able to begin our planned operations or continue as a going concern, and we may have to either liquidate our company or file for bankruptcy protection from our creditors.
We have significant financial obligations pursuant to employment agreements that we may not be able to pay. In addition to our debt obligations, we have employment agreements that place significant monthly salary obligations on us. Once we have raised sufficient capital to begin operation and begin paying our employees pursuant to the employment agreements, we may not be able to pay or otherwise satisfy the obligations under the employment agreements. If we cannot pay the obligations under the employment agreements, we may lose our employees.
Risks Factors Relating To Our Common Stock
Future equity transactions, including exercise of options or warrants, could result in dilution. In order to raise sufficient capital to implement our planned operations, from time to time, we intend to sell restricted stock, warrants, and convertible debt to investors in private placements. Because the stock will be restricted, the stock will likely be sold at a greater discount to market prices compared to a public stock offering, and the exercise price of the warrants is likely to be at or even lower than market prices. These transactions will cause dilution to existing stockholders. Also, from time to time, options will be issued to officers, directors, or employees, with exercise
prices equal to market. Exercise of in-the-money options and warrants will result in dilution to existing stockholders. The amount of dilution will depend on the spread between the market and exercise price, and the number of shares involved. In addition, such shares would increase the number of shares in the “public float” and could depress the market price for our common stock.
Our common stock is subject to SEC “Penny Stock” rules. Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment of our common stock. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to:
l
Deliver to the customer, and obtain a written receipt for, a disclosure document;
l
Disclose certain price information about the stock;
l
Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;
l
Send monthly statements to customers with market and price information about the penny stock; and
l
In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.
Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future.
Since our shares are quoted on the OTC Link, trading volumes and prices may be sporadic because it is not an exchange. Our common shares are currently quoted on the OTC Link. The trading price of our common shares has been subject to wide fluctuations. Trading prices of our common shares may fluctuate in response to a number of factors, many of which will be beyond our control. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with limited business operations. There can be no assurance that trading prices and price earnings ratios previously experienced by our common shares will be matched or maintained. Broad market and industry factors may adversely affect the market price of our common shares, regardless of our operating performance.
In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs for us and a diversion of management’s attention and resources.
We are subject to SEC regulations and changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations and other trading market rules, are creating uncertainty for public companies. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, we intend to invest appropriate resources to comply with evolving standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.
ITEM 1B.
ITEM 1B.UNRESOLVED STAFF COMMENTS
Not required for smaller reporting companies.
ITEM 2.
ITEM 2.PROPERTIES
Our principal offices are located at 3801 East Florida Avenue, Suite 400, Denver, Colorado. We lease these offices pursuant to a month-to-month lease. The base rent on the lease is $150 per month.
Our legal address for our U.K. subsidiary is that of the accountant and financial firm Wilkins Kennedy, 77-79 High Street, Egham, Surrey TW20 9HY, UK.
ITEM 3.
ITEM 3.LEGAL PROCEEDINGS
There are no legal proceedings pending against us. To the best of our knowledge, there are no legal proceedings threatened or contemplated against us.
ITEM 4.
ITEM 4.(REMOVED AND RESERVED)
PART II
ITEM 5.
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock is currently quoted in the OTC Link on the OTCQB tier under the symbol “WWSG.” The following table sets forth the range of high and low bid quotations for each fiscal quarter for the last two completed fiscal years and have been adjusted to reflect the effects of reverse stock splits. These quotations reflect inter-dealer prices without retail mark-up, mark-down, or commissions and may not necessarily represent actual transactions.
On October 27, 2011, the last trading price for the common stock on the OTC Link was $0.04.
Holders and Dividends
As of October 17, 2011, there were 76 record holders of our common stock. Since our inception, no cash dividends have been declared on our common stock.
Recent Sales of Unregistered Securities
During the quarter ended July 31, 2011, we issued and sold unregistered securities set forth in the table below.
No underwriters were used in the above stock transactions. We relied upon the exemption from registration contained in Section 4(2) and/or Regulation S as to all of the transactions, as the investors were either deemed to be sophisticated with respect to the investment in the securities due to their financial condition and involvement in our business or were accredited investors. Additionally, none of these investors were U.S. Persons. Restrictive legends were placed on the certificates evidencing the securities issued in all of the above transactions.
ITEM 6.
ITEM 6.
SELECTED FINANCIAL DATA
Not required for smaller reporting companies.
ITEM 7.
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and plan of operation should be read in conjunction with our Consolidated Financial Statements and related notes appearing elsewhere in this report.
Overview
On July 8, 2005, pursuant to a Share Exchange Agreement with Worldwide Business Solutions Incorporated, a Colorado corporation (“WBSI”), we acquired all of the issued and outstanding capital stock of WBSI, in exchange for 2,573,335 shares of our common stock. As a result of this share exchange, shareholders of WBSI as a group owned approximately 76.8% of the shares then outstanding, and WBSI became our wholly-owned subsidiary.
For accounting purposes, the acquisition of WBSI has been accounted for as a recapitalization of WBSI. Since we had only minimal assets and no operations, the recapitalization has been accounted for as the sale of 778,539 shares of WBSI common stock for our net liabilities at the time of the transaction. Therefore, the historical financial information prior to the date of the recapitalization is the financial information of WBSI.
Effective July 31, 2007, we filed a Certificate of Change Pursuant to NRS 78.209, which decreased the number of our authorized shares of common stock from 100,000,000 to 33,333,333 and reduced the number of common shares issued and outstanding from 17,768,607 to 5,923,106. All shares and per share amounts in our consolidated financial statements and related notes have been retroactively adjusted to reflect the one-for-three reverse stock split for all periods presented.
On July 31, 2007, we acquired 100% of the issued and outstanding shares of Centric in exchange for 2,250,000 shares of our common stock. As a result of the acquisition, Centric became our wholly-owned subsidiary and the results of its operations have been included in our consolidated financial statements since the date of acquisition.
We currently devote substantially all of our efforts to financial planning, raising capital and developing markets as we continue to be in the development stage.
Results of Operations
During the years ended July 31, 2011 and 2010, we had no revenue.
Salaries, benefits and payroll taxes totaled $107,500 for each of the years ended July 31, 2011 and 2010.
We incurred non-cash stock-based compensation expense of $-0- and $26,250 during the years ended July 31, 2011 and 2010, respectively, as a result of issuing shares to our employees, directors and consultants for services in 2010.
Professional and consulting fees were $96,292 and $73,096 for the years ended July 31, 2011 and 2010, respectively.
Travel expenses totaled $40,950 and $18,957 for the years ended July 31, 2011 and 2010, respectively.
Contract labor was $75,000 for each of the years ended July 31, 2011 and 2010.
Insurance expenses totaled $11,200 and $22,145 for the years ended July 31, 2011 and 2010, respectively.
For the years ended July 31, 2011 and 2010, we incurred other general and administrative expenses of $4,975 and $11,293, respectively.
Interest expense was $164,426 and $4,778 for the years ended July 31, 2011 and 2010, respectively. Interest for the 2011 period was significantly higher than for the 2010 period, as we incurred new debt of $21,000 and renewed existing notes payable in the total principal amount of $115,000.
March 1, 2005 to July 31, 2011. For the period from March 1, 2005 to July 31, 2011, we were engaged primarily in raising capital to implement our business plan. Accordingly, we incurred expenses for professional and consulting fees, salaries and payroll taxes, travel, and contract labor, resulting in a net loss of $7,359,338 for the period.
Liquidity and Capital Resources
Since our inception through July 31, 2011, we have relied on the sale of equity capital and debt instruments to fund working capital and the costs of developing our business plan. Net cash provided by financing activities of $2,277,948 offset the $2,154,176 used in operating activities and $123,606 used in investing activities. For the year ended July 31, 2011, $10,477 provided by financing activities partially offset $30,548 used in operating activities.
We had deficiency in working capital of $647,430 at July 31, 2011, primarily as a result of accrued salaries and outstanding notes classified as current liabilities as their maturity dates are within one year of the balance sheet date. Of our current liabilities totaling $675,763, accrued compensation is $410,625. The officers for whom compensation has been accrued have agreed that this compensation will be paid only if the Company successfully obtains sufficient financing to fund its plan of operation.
During the year ended July 31, 2011, we borrowed $21,000. During the 2010 fiscal year, we borrowed $141,045 and sold 3,200 shares of preferred stock for $1,600. We also received $2,240 from NewMarket Technology, Inc. (“NMKT”) pursuant to its $100,000 deposit obligation under the letter of intent. Through July 31, 2010, NMKT had paid us $77,240 of its $100,000 deposit obligation pursuant to the letter of intent. The deposit was accounted for as a capital contribution because we were not obligated to pay back the deposit. We terminated any further negotiations with NMKT on June 30, 2010, as no significant progress had been made since entering into the letter of intent in February 2008.
Going Concern
The report of our independent registered public accounting firm on the financial statements for the year ended July 31, 2011, includes an explanatory paragraph relating to the uncertainty of our ability to continue as a going concern. We have incurred recurring losses, incurred liabilities in excess of assets over the past year, and have an accumulated deficit of $7,359,338. Based upon current operating levels, we will be required to obtain additional capital or reconfigure our operations in order to sustain our operations through July 31, 2012.
Contractual Obligations
We lease office space on a month-to-month basis at a rate of $150 per month. We have no other contractual commitments.
Plan of Operations
As of the date hereof, we do not have any plans for business operations, merger or acquisition.
We must raise additional capital to support our ongoing existence while we search for other merger opportunities. We cannot assure you that we will be able to complete additional financings successfully.
Significant Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to the valuation of accounts receivable and inventories, the impairment of long-lived assets, any potential losses from pending litigation and deferred tax assets or liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions; however, we believe that our estimates, including those for the above-described items, are reasonable.
Development Stage. We are in the development stage in accordance with Statements of Financial Accounting Standards (SFAS) No. 7 “Accounting and Reporting by Development Stage Enterprises”. As of July 31, 2011, we had devoted substantially all of our efforts to financial planning, raising capital and developing markets.
Stock-based Compensation. The Company accounts for all stock-based payments to employees and non-employees under ASC 718 “Stock Compensation,” using the fair value based method. Under the fair value method, stock-based payments are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The cost of stock-based payments to non-employees that are fully vested and non-forfeitable at the grant date is measured and recognized at that date.
Loss per common share. We report net loss per share using a dual presentation of basic and diluted loss per share. Diluted net loss per share utilizes the average market price per share when applying the treasury stock method in determining common stock equivalents. As of July 31, 2011, after recognition of the one-for-three reverse stock split, there were 3,208,328 and 750,001 vested common stock options and warrants outstanding, respectively, which were excluded from the calculation of net loss per share-diluted because they were antidilutive.
New accounting pronouncements
Note 1 to the consolidated financial statements includes a complete description of new accounting pronouncements applicable to our Company.
Off Balance Sheet Arrangements
We do not have any material off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
ITEM 7A.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8.
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Index to Consolidated Financial Statements
Hamilton PC
2223 S. Olive St.
Denver, CO 80224
P: (303) 548-8072
F: (888) 466-4216
cpaeah@msn.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Worldwide Strategies Incorporated
We have audited the accompanying balance sheets of Worldwide Strategies Incorporated., as of July 31, 2011 and 2010, and the related statements of operations, stockholders’ equity (deficit) and cash flows for the years in the period ended July 31, 2011 and 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Worldwide Strategies Incorporated. as of July 31, 2011 and 2010, and the results of its operations and its cash flows for the years in the period ended July 31, 2011 and 2010, in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that Worldwide Strategies Incorporated will continue as a going concern. As discussed in Note 1 to the financial statements, Worldwide Strategies Incorporated suffered recurring losses from operations which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Hamilton, PC
/s/ Hamilton, PC
Denver, Colorado
October 28, 2011
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Consolidated Balance Sheet
July 31, 2011
See accompanying notes to the consolidated financial statements.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Consolidated Statements of Operations
See accompanying notes to the consolidated financial statements.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Consolidated Statements of Changes in Shareholders’ Deficit
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Consolidated Statements of Changes in Shareholders’ Deficit
See accompanying notes to the consolidated financial statements.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Consolidated Statements of Cash Flows
See accompanying notes to the consolidated financial statements.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
(1) Organization, Basis of Presentation, and Summary of Significant Accounting Policies
Organization and Basis of Presentation
Worldwide Strategies Incorporated (the “Company”) was incorporated on March 1, 2005 as Worldwide Business Solutions Incorporated (“WBSI”) in the State of Colorado. The Company intends to provide call center software platforms to client centers and to outsource selected client services to multi-lingual international centers.
On May 13, 2005, Barnett Energy Corporation (“BEC”), a Nevada corporation, entered into a Share Exchange Agreement (the “Agreement”) with WBSI. Under the terms of the Agreement, BEC agreed to acquire all of the issued and outstanding common stock of WBSI in exchange for 778,539 shares of its common stock. The acquisition closed on July 8, 2005. Following the acquisition, the former shareholders of WBSI held approximately 76.8 percent of BEC’s outstanding common stock, resulting in a change of control. In addition, WBSI became a wholly owned subsidiary of BEC. However, for accounting purposes, the acquisition has been treated as a recapitalization of WBSI, with BEC the legal surviving entity. Since BEC had minimal assets and no operations, the recapitalization has been accounted for as the sale of 778,539 shares of WBSI common stock for the net liabilities of BEC. Therefore, the historical financial information prior to the date of the recapitalization is the financial information of WBSI.
On June 14, 2005, BEC changed its name to Worldwide Strategies Incorporated.
Effective July 31, 2007 the Company filed a Certificate of Change Pursuant to NRS 78.209, which decreased the number of its authorized shares of common stock from 100,000,000 to 33,333,333 and reduced the number of common shares issued and outstanding from 17,768,607 to 5,923,106.
All shares and per share amounts in these Consolidated Financial Statements and related notes have been retroactively adjusted to reflect the reverse stock split for all periods presented.
On July 31, 2007, the Company acquired 100% of the issued and outstanding shares of Centric Rx, Inc., (“Centric”) in exchange for 2,250,000 shares of the Company’s common stock. As a result of the acquisition, Centric became a wholly owned subsidiary of the Company and the results of its operation have been included in the Company’s consolidated financial statements since the date of acquisition.
Development Stage
The Company and its subsidiaries are in the development stage in accordance with Statements of Financial Accounting Standards (SFAS) No. 7 “Accounting and Reporting by Development Stage Enterprises”. As of July 31, 2011, the Company has devoted substantially all of its efforts to financial planning, raising capital and developing markets.
Going Concern
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States, which contemplate continuation of the Company as a going concern. However, the Company experienced net losses of $500,394, $339,638, and $7,359,338 for the years ended July 31, 2011, July 31, 2010 and for the period from March 1, 2005 (inception) through July 31, 2011, respectively. In addition, the Company has incurred liabilities in excess of assets over the past year and, as of July 31, 2011, and has an accumulated deficit of $7,359,338. These matters, among others, raise substantial doubt about its ability to continue as a going concern.
In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon the Company’s ability to generate sufficient sales volume to cover its operating expenses and to raise sufficient capital to meet its payment obligations. Historically, management has
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
been able to raise additional capital. During the year ended July 31, 2011, the Company issued convertible promissory notes, in exchange for $21,000.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.
Principles of Consolidation
The accompanying Consolidated Financial Statements include the Company’s accounts and those of its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with original maturities of three months or less when acquired to be cash equivalents. The Company had no cash equivalents at July 31, 2011.
Financial Instruments
The carrying amounts of cash and current liabilities approximate fair value due to the short-term maturity of the instruments.
Property and Equipment
Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets, currently ranging from three to five years. Expenditures for additions and improvements are capitalized, while repairs and maintenance costs are expensed as incurred. The cost and related accumulated depreciation of property and equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is recorded in the year of disposal.
Depreciation expense for the years ended July 31, 2011, July 31, 2010 and for the period from March 1, 2005 (inception) through July 31, 2011 totaled $51, $619, and $140,278, respectively.
Impairment of Long-Lived Assets
The Company has adopted ASC 360, “Accounting for the Impairment or Disposal of Long-Lived Assets”, which requires that long-lived assets to be held be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. ASC 360 establishes a single auditing model for long-lived assets to be disposed of by sale.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
Loss per Common Share
The Company reports net loss per share using a dual presentation of basic and diluted loss per share. Basic loss per share includes the impact of issuing 1,491,743 shares of Series A Convertible Preferred Stock and excludes the impact of other contingently exercisable common stock equivalents. Diluted net loss per share utilizes the average market price per share when applying the treasury stock method in determining common stock equivalents. As of July 31, 2011 there were 3,208,328 and 750,001 vested common stock options and warrants outstanding, respectively, which were excluded from the calculation of net loss per share-diluted because they are antidilutive.
Stock-based Compensation
The Company accounts for all stock-based payments to employees and non-employees under ASC 718 “Stock Compensation,” using the fair value based method. Under the fair value method, stock-based payments are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The cost of stock-based payments to non-employees that are fully vested and non-forfeitable at the grant date is measured and recognized at that date.
Fiscal Year-end
The Company’s year-end is July 31.
New Accounting Pronouncements
In January 2010, the FASB issued ASU 2010-06, “Improving Disclosures about Fair Value measurements,” which amends ASC 820, “Fair Value Measures and Disclosures.” ASU 2010-06 requires disclosure of transfers into and out of Level 1 and Level 2 fair value measurements, and also requires more detailed disclosure about the activity within Level 3 fair value measurements. The changes to the ASC as a result of this update are effective for annual and interim reporting periods beginning after December 15, 2009, except for requirements related to Level 3 disclosures, which are effective for annual and interim reporting periods beginning after December 15, 2010. This guidance requires new disclosures only, and had no impact on our financial statements. In February 2010, the FASB issued ASU 2010-09, “Subsequent Events (Topic 855).” This update provides amendments to Subtopic 855-10-50-4 and related guidance within U.S. GAAP to clarify that an SEC registrant is not required to disclose the date through which subsequent events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and the SEC’s requirements. The Company has adopted this standard and it had no impact on this financial statements.
In December 2010, the FASB issued ASU 2010-29, which contains updated accounting guidance to clarify the acquisition date that should be used for reporting pro forma financial information when comparative financial statements are issued. This update requires that a company should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. This update also requires disclosure of the nature and amount of material, nonrecurring pro forma adjustments. The provisions of this update, which are to be applied prospectively, are effective for 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, 2010, with early adoption permitted. The impact of this update on the Company’s financial statements will depend on the size and nature of future business combinations.
(2) Accounts payable related parties
At July 31, 2011, the Company was indebted to related parties for expenses incurred on behalf of the Company totaling $3,900.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
(3) Accrued compensation
At July 31, 2011 and July 31, 2010, accrued compensation totals $410,623 and $228,125, respectively. The accrued compensation will only be paid if the Company successfully obtains sufficient financing to fund its plan of operation.
(4) Related party transactions
Accrued liabilities
During the year various liabilities of the Company were paid personally by the CEO. This accrual, totaling $75,764 including amounts accrued in prior periods, will be repaid when the Company has sufficient working capital. An additional amount of $73 represents accrued interest on notes payable to related parties.
Notes payable
During May 2011, the Company issued convertible promissory notes to two related parties in exchange for $4,000. The notes, due November 1, 2011, bear interest at 10% and the principal and accrued interest is convertible into common shares at $.07 per share upon the election of the holder. Interest expense for these notes was $73 for the year ended July 31, 2011.
Preferred stock
In December 2008, outstanding notes, including accrued interest which was capitalized, totaling $322,981 were repaid with the issuance of 645,962 shares of preferred stock. An additional note in the amount of $10,000 was issued to the CEO for cash in April 2009. The note, including $210 in accrued interest, was repaid by issuing 20,420 shares of preferred stock in July 2009.
In May 2010, five directors and two officers were each issued 7,500 preferred shares totaling 52,500 shares in exchange for uncompensated services. This amount ($26,250) is reflected in the accompanying financial statements as stock based compensation.
Common stock
On March 1, 2005, the Company sold 1,733,402 shares of its common stock to its officers, directors and other founders for $5,200, or $.003 per share. In connection with the stock sales, the Company issued one warrant for each common share purchased. The warrants allow the holder to purchase one share of common stock at a price of $.75 per share. The warrants expired on April 30, 2010.
In December 2008, the Company issued a total of 425,000 shares of the Company’s common stock in exchange for uncompensated services provided to the Company by two officers and five directors. The shares were valued at $.03 per share based on the fair value of the shares in the month they were issued. This amount ($12,750) is reflected in the accompanying financial statements as stock based compensation.
In April 2009, the Company issued 2,200,000 shares of the Company’s common stock in exchange for uncompensated services, provided to the Company by two officers, valued at $154,000. The shares were valued at $.07 per share based on the fair value on the date of grant and are reflected in the accompanying financial statements as stock based compensation.
(5) Notes payable
During November 2009, the Company issued a convertible promissory note to an unrelated third party in exchange for $25,000. The note bears interest at 8% and the principal and accrued interest is convertible, at the option of the note-holder, into non-restricted common stock in an amount equal to the total sum due, based on a mutually agreed discount (not to exceed 50%) to the then market price .The note holder extended the original due date from May 31,
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
2010 to December 31, 2010, extended again to July 31, 2011 and extended again to June 30, 2012. Interest expense for this note payable was $2,150 and $1,233 for the years ended July 31, 2011 and July 31, 2010, respectively.
During February 2010, the Company issued a convertible promissory note to an unrelated third party in exchange for $25,000. The note bears interest at 8% and the principal and accrued interest is convertible, at the option of the note-holder, into non-restricted common stock in an amount equal to the total sum due, based on a mutually agreed discount (not to exceed 50%) to the then market price. The note holder extended the original due date from July 31, 2010 to December 31, 2010, extended again to July 31, 2011 and extended again to June 30, 2012. Interest expense for this note payable was $2,000 and $1,000 for the years ended July 31, 2011 and July 31, 2010, respectively.
During May 2010, the Company issued a convertible promissory note to an unrelated third party in exchange for $50,000. The note bears interest at 9% and the principal and accrued interest is convertible into common shares at $.04 per share upon the election of the holder. The note holder extended the due date from September 23, 2010 to January 21, 2011, to May 21, 2011, and then to September 18, 2011. Interest expense, including the premium cost on shares issued for the renewal period, for this note payable was $149,724 and $814 for the years ended July 31, 2011 and July 31, 2010, respectively.
During December 2010, the Company issued a convertible promissory note to an unrelated third party in exchange for $15,000. The note bears interest at 9% and the principal and accrued interest is convertible into common shares at $.04 per share upon the election of the holder. The note holder extended the due date from April 2, 2011 to July 31, 2011, and from July 31, 2011 an additional 120 days. Interest expense, including the premium cost on shares issued for the renewal period, for this note payable was $10,088 and $0 for the years ended July 31, 2011 and July 31, 2010, respectively.
During May 2011, the Company issued a convertible promissory note to an unrelated party in exchange for $2000. The note, due November 1, 2011, bears interest at 10% and the principal and accrued interest is convertible into common shares at $.07 per share upon the election of the holder. Interest expense for this note was $37 for the year ended July 31, 2011.
(6) Shareholders’ Equity
Preferred stock
The Company is authorized to issue 25,000,000 shares of $.001 par value preferred stock. The Company’s Board of Directors may divide and issue the preferred shares in series. Each Series, when issued, shall be designated to distinguish them from the shares of all other series. The relative rights and preferences of these series include preference of dividends, redemption terms and conditions, amount payable upon shares of voluntary or involuntary liquidation, terms and condition of conversion as well as voting powers.
In December 2008, the Company designated 5,000,000 shares of preferred stock as Series A Convertible Preferred Stock (”Series A”). Each share of Series A is convertible into 6.25 shares of common stock at the election of the holder. Each Series A share is entitled to 6.25 votes in any vote of the common stock holders. Series A shares are redeemable by the Company at $.50 per share with 15 days written notice. Series A shares are entitled to a 5% dividend preference and a participation interest in the remaining 95% dividend.
In July 2009, the Company issued 37,672 Series A shares at $.50 in full settlement of notes payable and accrued interest in the amount of $18,836.
In May 2010, the Company issued 3,200 preferred shares at $.50 for cash in the amount of $1,600.
In May 2010, a consultant was issued 15,000 preferred shares in exchange for consulting services. This amount ($7,500) is reflected in the accompanying financial statements as professional and consulting fees.
In June 2010, an outstanding note, including accrued interest, which was capitalized, totaling $21,200 was repaid with the issuance of 42,400 shares of preferred stock.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
Common stock
From April through June 2005, the Company conducted a private placement offering whereby it sold 840,033 units at a price of $.75 per unit. Each unit consisted of one share of the Company’s common stock and one warrant to purchase another share of common stock at $.75 per share. The warrants may be exercised over a period of five years. The Company received net proceeds of $559,911, after deducting offering costs of $65,089. $5,000 was collected after July 31, 2005 and is reported in the accompanying financial statements as common stock subscriptions receivable on that date. The offering was made in reliance on exemptions from registration contained in Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder.
In July 2005, the Company conducted a private placement offering whereby it sold 333,347 units at a price of $.75 per unit. Each unit consisted of one share of the Company’s common stock and one warrant to purchase another share of common stock at $.75 per share. The warrants may be exercised over a period of five years. The Company received net proceeds of $225,000, after deducting offering costs of $25,000. The offering was made in reliance on exemptions from registration contained in Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder.
In August 2005, the Company conducted a private placement offering whereby it sold 660,026 units at a price of $.75 per unit. Each unit consisted of one share of the Company’s common stock and one warrant to purchase another share of common stock at $.75 per share. The warrants may be exercised over a period of five years. The Company received net proceeds of $445,500, after deducting offering costs of $49,500. The offering was made in reliance on exemptions from registration contained in Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder.
In July 2006, the Company conducted a private placement offering whereby it sold 633,359 units at a price of $.15 per unit. Each unit consisted of one share of the Company’s common stock and one warrant to purchase another share of common stock at $.75 per share. The warrants may be exercised over a period of five years. The Company received net proceeds of $88,500, after deducting offering costs of $6,500. The offering was made in reliance on exemptions from registration contained in Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder.
In August 2006, the Company conducted a private placement offering whereby it sold 750,030 units at a price of $.15 per unit. Each unit consisted of one share of the Company’s common stock and one warrant to purchase another share of common stock at $.75 per share. The warrants may be exercised over a period of five years. The Company received net proceeds of $112,500, after deducting offering costs of $10,700. The offering was made in reliance on exemptions from registration contained in Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder.
In August 2006, the Company issued 43,336 shares of the Company’s common stock in exchange for commissions valued at $6,500. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as additional paid in capital.
In October 2006, the Company issued 13,687 shares of the Company’s common stock in exchange for $7,000 in interest on a convertible note payable November 11, 2006. The shares were valued based on the fair value of the shares in the period interest was accrued and are reflected in the accompanying financial statements as interest expense.
In December 2006, the Company issued 104,170 shares of the Company’s common stock in exchange for services valued at $25,000. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.
In April 2007, the Company issued 16,669 shares of the Company’s common stock in exchange for services valued at $3,000. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
In May 2007, the Company issued 16,508 shares of the Company’s common stock in exchange for $4,225 in interest on a convertible note payable November 11, 2007. The shares were valued based on the fair value of the shares in the period interest was accrued.
On July 31, 2007, the Company issued 2,250,000 shares of the Company’s common stock to acquired 100% of the issued and outstanding shares of Centric.
Effective July 31, 2007, the Company filed a Certificate of Change Pursuant to NRS 78.209, which decreased the number of its authorized shares of common stock from 100,000,000 to 33,333,333 and reduced the number of common shares issued and outstanding from 17,768,607 to 5,923,106.
In August 2007, the Company issued 500,000 shares of the Company’s common stock to a noteholder at $.15, which was the fair value of the stock on the transaction date, in full payment for an outstanding $75,000 note payable on the completion of the Centric acquisition
In September 2007, the Company issued a total of 18,695 shares of the Company’s common stock in exchange for $3,937 in interest on three convertible notes payable November 2007, April 2008 and June 2008. The shares were valued based on the fair value of the shares in the period interest was accrued.
In November 2007, the Company issued a total of 22,987 shares of the Company’s common stock in exchange for $2,813 in interest on two convertible notes payable May 2008 and April 2008. The shares were valued based on the fair value of the shares in the period interest was accrued.
In January 2008, the Company issued 450,000 shares of the Company’s common stock at $.045 to two officers, five directors, an employee and a contractor as compensation for unpaid services. The shares were valued based on their fair value when the share issuance was authorized.
In February 2008, the Company issued a total of 86,909 shares of the Company’s common stock in exchange for $4,275 in interest on four convertible notes payable May 2008, June 2008, September 2008 and October 2008. The shares were valued based on the fair value of the shares in the period interest was accrued.
In May 2008, the Company issued a total of 31,514 shares of the Company’s common stock in exchange for $2,025 in interest on three convertible notes payable September 2008, October 2008 and December 2008. The shares were valued based on the fair value of the shares in the period interest was accrued
In August 2008, the Company issued a total of 18,023 shares of the Company’s common stock in exchange for $2,469 in interest on five convertible notes payable May 2008, September 2008, October 2008 , December 2008 and January 2009. The shares were valued based on the fair value of the shares in the period interest was accrued
In December 2008, the Company issued a total of 200,000 shares of the Company’s common stock in exchange for uncompensated services provided to the Company by one employee and four consultants. The shares were valued at $.03 per share based on the fair value of the shares in the month they were issued. This amount ($6,000) is reflected in the accompanying financial statements as stock based compensation
In April 2009, the Company issued 100,000 shares of the Company’s common stock in exchange for a $7,000 premium on a promissory note. This expense is reflected in the financial statements as interest expense.
In August 2009, the Company issued 25,000 shares of the Company’s common stock in exchange for services valued at $2,000. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.
In September 2009, the Company issued 200,000 shares of the Company’s common stock in exchange for services valued at $10,000. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
In October 2009, the Company issued 20,000 shares of the Company’s common stock in exchange for services valued at $1,600. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.
In April 2010, the Company issued 25,000 shares of the Company’s common stock in exchange for services valued at $7,500. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.
In September 2010, the Company issued 50,000 shares of the Company’s common stock in exchange for services valued at $3,000. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.
In September 2010, the Company issued 387,500 common shares in payment for interest and renewal fees. The shares were valued at $.06 per share based on the fair value of the shares when they were issued. This amount ($23,250) is reflected in the accompanying financial statements as interest.
In January 2011, the Company issued 387,500 common shares in payment for interest and renewal fees. The shares were valued at $.24 per share based on the fair value of the shares when they were issued. This amount ($93,000) is reflected in the accompanying financial statements as interest.
In February 2011, the Company issued 50,000 shares of the Company’s common stock in exchange for services valued at $7,000. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.
In April 2011, the Company issued 116,250 common shares in payment for interest and renewal fees. The shares were valued at $.08 per share based on the fair value of the shares when they were issued. This amount ($9,300) is reflected in the accompanying financial statements as interest
In May 2011, the Company issued 387,500 common shares in payment for interest and renewal fees. The shares were valued at $.14 per share based on the fair value of the shares when they were issued. This amount ($54,250) is reflected in the accompanying financial statements as $33,834 interest and $20,416 prepaid expenses, representing the amount to be amortized over the term of the renewal.
In July 2011, the Company issued 250,000 shares of the Company’s common stock in exchange for services valued at $37,500. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.
In July 2011, the Company issued 116,250 common shares in payment for interest and renewal fees. The shares were valued at $.07 per share based on the fair value of the shares when they were issued. This amount ($8,138) is reflected in the accompanying financial statements as $8,138 interest and $7,350 prepaid expenses, representing the amount to be amortized over the term of the renewal.
Options granted to employees, accounted for under the fair value method
Effective February 1, 2006, the Company adopted SFAS No. 123R, “Share Based Payment”. SFAS 123R requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions).
On March 16, 2006, the Company granted options to an officer to purchase an aggregate of 100,000 shares of the Company’s common stock at an exercise price of $1.53 per share. 33,333 options were fully vested on the grant date, an additional 33,333 options vest on March 16, 2007, and the remaining 33,334 options vest on March 16, 2008. All of the options expire on March 16, 2011. In February 2007, the Company accelerated the vesting date to November 30, 2006; the date the officer left employment, and recognized $137,000 as stock based compensation in the accompanying financial statements to reflect the vested portion during the year ended July 31, 2007. The total compensation costs for the modified share options were measured on the date of modification and no incremental
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
costs resulted from the modification. Therefore compensation costs reflected on the accompanying financial statements reflect the grant date fair value of the original award for which the requisite services have been rendered. The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
In June 2006, the Company granted ten of its officers, directors, and employees options to purchase an aggregate of 2,529,029 shares of the Company’s common stock at an exercise price of $.06 per share, in exchange for accrued compensation and expenses. All 2,529,029 options were fully vested on the grant date. The quoted market price of the stock was $.84 per share on the grant date. The Company valued the options at $.84 per share, or $2,079,620. This amount is reflected in the accompanying financial statements as stock based compensation.
In July 2006, the Company granted three of its officer options to purchase an aggregate of 199,000 shares of the Company’s common stock at an exercise price of $.15 per share, in exchange for accrued compensation and expenses. All 199,000 options were fully vested on the grant date. The quoted market price of the stock was $.75 per share on the grant date. The Company valued the options at $.72 per share, or $143,101. This amount is reflected in the accompanying financial statements as stock based compensation. The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
In April 2007, the Company granted options to various officers, directors, and employees to purchase an aggregate of 933,338 shares of the Company’s common stock at an exercise price of $.18 per share. All 933,338 were fully vested on the grant date. The options had a fair value of $.18 per share or $164,360. The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
In June 2007, the Company granted options to various officers, directors, and employees to purchase an aggregate of 933,338 shares of the Company’s common stock at an exercise price of $.24 per share. All 933,338 were fully vested on the grant date. The options had a fair value of $.24 per share or $221,200. The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
On September 13, 2007, the Company extended the life of the options, originally granted June 22, 2007 to purchase 933,338 common shares of the Company, from a 5 year term to a 7 year term. The options had a fair value of $.16 per share or $149,240. No expense was recorded, as the revised fair value is less than the fair value originally recorded. The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
On September 13, 2007, the Company extended the life of the options, originally granted April 17, 2007 to purchase 933,338 common shares of the Company, from a 5 year term to a 7 year term. The options had a fair value of $.16 per share or $149,240. No expense was recorded, as the revised fair value is less than the fair value originally recorded. The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
In May 2008, the Company granted options to various officers, directors, and employees to purchase an aggregate of 475,000 shares of the Company’s common stock at an exercise price of $.11 per share. All 475,000 were fully vested on the grant date. The options had a fair value of $.08 per share or $38,000. The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
In December 2008, the Company granted two officers, five directors, one employee and four consultants options to purchase an aggregate of 600,000 shares of the Company’s common stock at an exercise price of $.015 per share, in exchange for unpaid services expenses. All 600,000 options were fully vested on the grant date. The quoted market price of the stock was $.02 per share on the grant date. The Company valued the options at $.02 per share, or $12,000. This amount is reflected in the accompanying financial statements as stock based compensation. The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
Options granted to employees, accounted for under the intrinsic value method
On April 30, 2005, the Company granted four directors options to purchase an aggregate of 120,000 shares of the Company’s common stock at an exercise price of $.75 per share. 40,000 options were fully vested on the grant date, an additional 40,000 options vest on April 30, 2006, and the remaining 40,000 options vest on April 30, 2007. All of the options expire on April 30, 2010. The exercise price of the options equaled the price at which the Company was selling the stock to unrelated third parties on the grant date. The Company’s common stock had no quoted market price on the grant date. No stock-based compensation was recorded on the options through January 31, 2006. The options had a fair value of $.093 per share, or $11,160. Effective February 1, 2006, the Company adopted SFAS No. 123R, “Share Based Payment” and recognized $2,093 and $1,395 as stock based compensation in the accompanying financial statements to reflect the vested portion during the period from the effective date through July 31, 2007 and July 31, 2006.
On August 18, 2005, the Company granted three officers options to purchase an aggregate of 233,334 shares of the Company’s common stock at an exercise price of $.75 per share. 100,000 options were fully vested on the grant date, an additional 100,000 options vest on April 30, 2006, and the remaining 33,334 options vest on April 30, 2007. All of the options expire on April 30, 2010. The exercise price of the options equaled the price at which the Company was selling the stock to unrelated third parties on the grant date. The Company’s common stock had no quoted market price on the grant date. No stock-based compensation was recorded on the options through January 31, 2006. The options had a fair value of $.093 per share, or $21,700. Effective February 1, 2006, the Company adopted SFAS No. 123R, “Share Based Payment” and recognized $1,329 and $4,650 as stock based compensation in the accompanying financial statements to reflect the vested portion during the period from the effective date through July 31, 2007 and July 31, 2006.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
On September 30, 2005, the Company granted a director options to purchase an aggregate of 30,000 shares of the Company’s common stock at an exercise price of $3.36 per share. 10,000 options were fully vested on the grant date, an additional 10,000 options vest on September 30, 2006, and the remaining 10,000 options vest on September 30, 2007. All of the options expire on September 30, 2010. The exercise price of the options equaled the traded market price of the stock on the grant date. No stock-based compensation was recorded on the options through January 31, 2006. The options had a fair value of $.42 per share, or $12,600. Effective February 1, 2006, the Company adopted SFAS No. 123R, “Share Based Payment” and recognized $2,928 and $2,100 as stock based compensation in the accompanying financial statements to reflect the vested portion during the period from the effective date through July 31, 2007 and July 31, 2006.
The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
Had compensation expense been recorded based on the fair value at the grant date, and charged to expense over vesting periods, for periods prior to February 1, 2006, the Company’s net loss and net loss per share would have increased to the pro forma amounts indicated below:
The following schedule reflects the calculation of the pro forma compensation expense on employee stock options:
$4,650 of the stock options’ total fair value incurred through July 31, 2008 ($29,453) was recognized during the period from March 1, 2005 (Inception) through July 31, 2005.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
Options granted to non-employees, accounted for under the fair value method
In June 2006, the Company granted two consultants options to purchase an aggregate of 325,000 shares of the Company’s common stock at an exercise price of $.06 per share, in exchange for accrued expenses. All 325,000 options were fully vested on the grant date. The quoted market price of the stock was $.84 per share on the grant date. The Company valued the options at $.82 per share, or $267,248. This amount is reflected in the accompanying financial statements as stock based compensation. The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
In April 2007, the Company granted options to a consultant to purchase an aggregate of 133,334 shares of the Company’s common stock at an exercise price of $.18 per share. All 133,334 were fully vested on the grant date. The options had a fair value of $0.06 per share or $23,480. The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
In June 2007, the Company granted options to a consultant to purchase an aggregate of 133,334 shares of the Company’s common stock at an exercise price of $.24 per share. All 133,334 were fully vested on the grant date. The options had a fair value of $.24 per share or $31,600. The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
On September 13, 2007 the Company extended the life of the options, originally granted June 22, 2007 to purchase 133,334 common shares of the Company, from a 5 year term to a 7 year term. The options had a fair value of $.24 per share or $21,320. No expense was recorded as the revised fair value is less than the fair value originally recorded. The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
On September 13, 2007 the Company extended the life of the options, originally granted April 17, 2007 to purchase 133,334 common shares of the Company, from a 5 year term to a 7 year term. The options had a fair value of $.24 per share or $21,320. No expense was recorded, as the revised fair value is less than the fair value originally recorded. The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
Following is a schedule of changes in common stock options and warrants from March 1, 2005 (inception) through July 31, 2010:
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
Common stock awards consisted of the following options and warrants during the period from March 1, 2005 (inception) through July 31, 2011:
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
(7) Income Taxes
A reconciliation of U.S. statutory federal income tax rate to the effective rate follows:
At July 31, 2011, the Company fully allowed for any deferred tax asset that it may have as a result of its accumulated losses of $7,359,338. The valuation allowance offsets the net deferred tax asset for which it is more likely than not that the deferred tax assets will not be realized. The net operating loss carryforward expires through the year 2031.
The valuation allowance will be evaluated at the end of each year, considering positive and negative evidence about whether the deferred tax asset will be realized. At that time, the allowance will either be increased or reduced; reduction could result in the complete elimination of the allowance if positive evidence indicates that the value of the deferred tax assets is no longer impaired and the allowance is no longer required.
Should the Company undergo an ownership change as defined in Section 382 of the Internal Revenue Code, the Company’s tax net operating loss carryforwards generated prior to the ownership change will be subject to an annual limitation, which could reduce or defer the utilization of these losses.
(8) Commitments
Beginning February 2007, the Company commenced a month-to-month lease on a “virtual” office at a rate of $150 per month. Rent expense for the years ended July 31, 2011 and 2010, and for the period from March 1, 2005 (inception) through July 31, 2011 totaled $1,800, $1,800 and $53,031, respectively.
(9) Concentration of Credit Risk for Cash
The Company has concentrated its credit risk for cash by maintaining deposits in a financial institution, which may at times exceed the amounts covered by insurance provided by the United States Federal Deposit Insurance Corporation (“FDIC”). At July 31, 2011, the loss that would have resulted from that risk totaled $-0-. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk to cash.
(10) Subsequent Events
In August 2011, the Company issued a total of 300,000 shares to its four non-employee directors as compensation for services rendered for the fiscal year ended July 31, 2011.
ITEM 9.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There were no changes in or disagreements with accountants during the last two completed fiscal years and the interim period ending as of the date of this report.
ITEM 9A.
ITEM 9A.CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required by SEC rules, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures at the end of the period covered by this report. This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer. Based on this evaluation, these officers have concluded that the design and operation of our disclosure controls and procedures are effective.
Disclosure controls and procedures are 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 under the Exchange Act is accumulated and communicated to our management, including principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Controls over Financial Reporting
Our principal executive officer and principal financial officer have concluded that there were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended July 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, our chief financial officer and implemented by our board of directors, management and other personnel, 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.
Our evaluation of internal control over financial reporting includes an analysis under the COSO framework, an integrated framework for the evaluation of internal controls issued to identify the risks and control objectives related to the evaluation of the control environment by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on our evaluation described above, our management has concluded that our internal control over financial reporting was effective during the fiscal year ended July 31, 2011.
Respectfully,
James P.R. Samuels, Chief Executive Officer
W. Earl Somerville, Chief Financial Officer
ITEM 9B.
ITEM 9B.OTHER INFORMATION
None.
PART III
ITEM 10.
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Executive Officers and Directors
Our executive officers and directors are:
Our articles of incorporation and bylaws provide for the maximum indemnification of our officer and director allowable under Nevada corporate law. Our shareholders elect our directors annually and our board of directors appoints our officers annually. Vacancies in our board are filled by the board itself. Set forth below are brief descriptions of the recent employment and business experience of our executive officers and directors.
James P.R. Samuels, Chief Executive Officer and Director. Mr. Samuels founded Worldwide Business Solutions Incorporated in March 2005 and has been the chief executive officer and a director of the company since June 2005. From May 1996 to March 2004, he served as vice president-finance, treasurer and chief financial officer of Rentech, Inc., a publicly-held company headquartered in Denver, Colorado. Rentech develops and markets processes for conversion of low-value carbon-bearing solids or gases into high-value hydrocarbons. From December 1995 through April 1998, he provided consulting services in finance and securities law compliance to Telepad Corporation, Herndon, Virginia, a company engaged in systems solutions for field force computing. From 1991 through August 1995, he served as chief financial officer, vice president-finance, treasurer and director of Top Sources, Inc., Palm Beach Gardens, Florida, a development stage company engaged in developing and commercializing technologies for the transportation, industrial and petrochemical markets. From 1989 to 1991, he was vice president and general manager of the automotive group of BML Corporation, Mississauga, Ontario, a privately-held company engaged in auto rentals, car leasing, and automotive insurance. From 1989 to 1991, he was vice president and general manager of the automotive group of BML Corporation, Mississauga, Ontario, a privately-held company engaged in auto rentals, car leasing, and automotive insurance. From 1983 through 1989, Mr. Samuels was employed by Purolator Products Corporation, a large manufacturer and distributor of automotive parts. He was president of the Mississauga, Ontario branch from 1985 to 1989; a director of marketing from 1984 to 1985; and director of business development and planning during 1983 for the Rahway, New Jersey filter division headquarters of Purolator Products Corporation. From 1975 to 1983, he was employed by Bendix Automotive Group, Southfield, Michigan, a manufacturer of automotive filters, electronics and brakes. He served in various capacities, including group director for management consulting services on the corporate staff, director of market research and planning, manager of financial analysis and planning, and plant controller at its Fram Autolite division. From 1973 to 1974, he was employed by Bowmar Ali, Inc., of Acton, Massachusetts, in various marketing and financial positions, and in 1974 he was managing director of its division in Wiesbaden, Germany. He received a Bachelor’s degree in Business Administration from Lowell Technological Institute in 1970, and a Master of Business Administration degree in 1972 from Suffolk University, Boston, Massachusetts. He completed an executive program in strategic market management through Harvard University in Switzerland in 1984.
W. Earl Somerville, Chief Financial Officer, Secretary and Treasurer. Earl Somerville has been our chief financial officer, secretary and treasurer since June 2005 and became a director in October 2010. He has over 37 years of experience in accounting. He has been self-employed as a chartered accountant in Oakville, Ontario, Canada, since 1992. From 1984 to 1991, he was a vice president of finance for Facet of Canada Inc., a Canadian holding company whose subsidiaries were engaged in the manufacture and distribution of automotive products. He was the divisional controller for Canadian Fram Limited from 1974 to 1991, a manufacturer of auto parts. Mr. Somerville is a member of the Institute of Chartered Accountants of Ontario.
Frank J. Deleo, Director. Mr. Deleo has been a director since June 2005. Since September 2007, Mr. Deleo has served as president of Rioath Group. Mr. Deleo was with Citigroup Inc. from 1978 to September 2007. He was with CitiFinancial Branch Network from 1996, first as a vice president/regional manager and since March 2002 as a managing director over Texas, New Mexico, Oklahoma, and Kansas. CitiFinancial, which is part of Citigroup Inc., a financial services company listed on the New York Stock Exchange, offers consumer loan products and services, including real estate, personal loans, and loans to finance consumer goods. From 1979 to 1996, he was employed by Associates Corporation of North America. Mr. Deleo received a bachelors degree in psychology from University of Stony Brook University in 1977.
Robert T. Kane, Director. Robert Kane has been a director since June 2005. He has been a practicing attorney in Munhall, Pennsylvania, since 1970. Mr. Kane received his J.D. degree from Villanova University in 1970 and his B.S. degree from Pennsylvania State University in 1965.
Edward J. Weisberg, Director. Mr. Weisberg has been a director since September 2005. He is currently Vice President of Marketing and Business Development at GXT Green, a division of Global Exchange Technologies. GXT Green develops and sells carbon offsets globally, as well as offers a set of sustainability services and products, including ECOgrade photodegradable shopping bags. Mr. Weisberg has also been the Managing Partner of Ecommerce Expertise, a consulting practice dedicated to assisting companies with Internet marketing and improving eCommerce profitability, since September 2008. From December 2009 to August 2010, he held the position of Director of Business Development at Keyword Connects, LLC, an online lead generation company based in Waltham, Massachusetts. From January 2008 to October 2009, he was Vice President of Innovaro (formerly UTEK) Corporation, a public corporation based in Tampa, Florida, which provides innovation and patent licensing services. From April 2004 to July 2007, he was the vice president of eCommerce of iBasis, Inc., a publicly-held company based in Burlington, Massachusetts, that provides international Voice over Internet Protocol (VoIP) services. He was responsible for leading that company’s efforts toward direct web-based sales of products and services. From 1995 until April 2003, he co-founded and served as president of PureCommerce, Inc. (formerlyBX.COM Inc.), a Providence, Rhode Island company that provides eCommerce web site development, hosting, and Internet marketing support. Prior to founding BX.com, he held various key marketing, planning, and sales roles at Paradigm Management Consulting Group, Inc., BASF Corporation, Data General Corporation, and Wang Laboratories, Inc. Mr. Weisberg is also on the board of advisors of Sustainable Minds, LLC, and ZebraTickets, LLC, both privately-held companies. Mr. Weisberg has a Masters degree in management from MIT/Sloan School of Management and a bachelors degree in social psychology from the University of Pennsylvania.
Gregory Kinney, Director. Formerly a director of Centric, Mr. Kinney was appointed to serve as a director on August 1, 2007. Since April 1997 to the present, Mr. Kinney has served as Vice-President of Operations of Kristel, LP, a privately held organization operating in Illinois. Kristel designs and manufactures LCD and CRT displays. From 1984 to 1997, Mr. Kinney worked in a variety of positions with The Bradley Group, American Instruments, Strand Lighting Company, Northrop, and Amistar. Between 1980 and 1984, Mr. Kinney served in the United States Navy. Mr. Kinney has received a B.A., M.A., and Ph.D. in Clinical Christian Counseling from International Theological Seminary in Bradenton Florida.
Committees
Audit Committee. Our only audit committee member at this time is Edward J. Weisberg. The Audit Committee is appointed by the Board of Directors to assist the Board in fulfilling its responsibility to oversee (1) the integrity of our financial statements, controls and disclosure; (2) the qualifications and independence of our independent accountants; (3) the performance of our independent accountants and of its internal audit staff; and (4) our compliance with legal and regulatory requirements.
The Audit Committee has the sole authority to appoint our independent accountants, subject to any shareholder ratification. The Audit Committee also prepares the annual Audit Committee report required by the rules and regulations of the Securities and Exchange Commission to be included in our annual proxy statement.
The Audit Committee is seeking to identify its financial expert.
Compensation Committee. Our compensation committee members are Frank J. Deleo, Robert T. Kane and Gregory Kinney. The Compensation Committee is appointed by the Board of Directors to (1) discharge the responsibilities of the Board of Directors relating to compensation of our executives and (2) produce an annual report on executive compensation for inclusion in our proxy statement in accordance with applicable rules and regulations.
Family Relationships
There is no family relationship between any director, executive or person nominated or chosen by us to become a director or executive officer of our company.
Conflicts of Interest
Members of our management are associated with other firms involved in a range of business activities. Consequently, there are potential inherent conflicts of interest in their acting as officers and directors of our company. While the officers and directors are engaged in other business activities, we anticipate that such activities will not interfere in any significant fashion with the affairs of our business, in terms of having adequate time to devote to the business of the company.
Our officers and directors are now and may in the future become shareholders, officers or directors of other companies, which may be formed for the purpose of engaging in business activities similar to us. Accordingly, additional direct conflicts of interest may arise in the future with respect to such individuals acting on behalf of us or other entities. Moreover, additional conflicts of interest may arise with respect to opportunities which come to the attention of such individuals in the performance of their duties or otherwise. Currently, we do not have a right of first refusal pertaining to opportunities that come to their attention and may relate to our business operations.
Our officers and directors are, so long as they are our officers or directors, subject to the restriction that all opportunities contemplated by our plan of operation which come to their attention, either in the performance of their duties or in any other manner, will be considered opportunities of, and be made available to us and the companies that they are affiliated with on an equal basis. A breach of this requirement will be a breach of the fiduciary duties of the officer or director. If we or the companies with which the officers and directors are affiliated both desire to take advantage of an opportunity, then said officers and directors would abstain from negotiating and voting upon the opportunity. However, all directors may still individually take advantage of opportunities if we should decline to do so. Except as set forth above, we have not adopted any other conflict of interest policy with respect to such transactions.
Code of Ethics
We have not yet adopted a code of ethics that applies to our principal executive officers, principal financial officer, principal accounting officer or controller, or persons performing similar functions, since we have been focusing our efforts on obtaining financing for the company. We expect to adopt a code by the end of the current fiscal year.
Procedure for Nominating Directors
There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors.
The board of directors will consider candidates for director positions that are recommended by any of our stockholders. Any such recommendation for the annual meeting of stockholders should be provided to our corporate secretary by December 31, 2011. The recommended candidate should be submitted to us in writing addressed to 3801 East Florida Avenue, Suite 400, Denver, Colorado 80210. The recommendation must include the following information: name of candidate; address, phone, and fax number of candidate; a statement signed by the candidate certifying that the candidate wishes to be considered for nomination to our board of directors and stating why the candidate believes that he or she would be a valuable addition to our board of directors; a summary of the
candidate’s work experience for the prior five years and the number of shares of our stock beneficially owned by the candidate.
The board of directors will evaluate any recommended candidate and determine whether or not to proceed with the candidate in accordance with our procedures. We reserve the right to change our procedures at any time to comply with the requirements of applicable laws.
Section 16(a) Beneficial Ownership Reporting Compliance
Officers and directors, and persons who own more than 10% of a registered class of the Company’s equity securities, are required to file reports of ownership and changes in ownership with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934. The following table sets forth reports that were not filed on a timely basis during the most recently completed fiscal year:
ITEM 11.
ITEM 11.EXECUTIVE COMPENSATION
The following table sets forth information regarding the remuneration of our chief executive officer and any executive officers that earned in excess of $100,000 per annum during any part of the last two completed fiscal years ending July 31, 2011.
Summary Compensation Table
_____________________
(1)
All options were valued using the Black-Scholes option pricing model using various assumptions as listed in the footnotes to the Outstanding Equity Awards at 2011 Fiscal Year-End Table.
Our Board of Directors has approved employment agreements for James P.R. Samuels and W. Earl Somerville with salaries of $215,000 and $150,000 per year, respectively. We accrued Mr. Samuels’ and Mr. Somerville’s compensation at half of their contract values for the 2010 and 2011 fiscal years. Mr. Samuels and Mr. Somerville will not receive any payments on accrued compensation until the Company develops or acquires operations and begins to record revenue.
On December 10, 2008, the Board of Directors authorized the issuance of options to purchase 100,000 shares of common stock to each of Mr. Samuels and Mr. Somerville. The options were exercisable for five years at a price of $0.015 per share.
On December 24, 2008, our Board of Directors authorized the issuance of 100,000 shares to each of Mr. Samuels and Mr. Somerville for services rendered to the Company. The shares were valued at $0.03 per share, the closing market price on the date of the issuance.
On April 28, 2009, the Board of Directors authorized a further issuance of shares for services rendered in the amount of 1,200,000 shares to Mr. Samuels and 1,000,000 shares to Mr. Somerville. These shares were valued at $0.07 per share, the closing market price on the date of the issuance.
We have formed a Compensation Committee comprised of members of the Board of Directors. The compensation committee reviewed and approved the employment agreements described above. The current members of the Compensation Committee are Frank J. Deleo and Robert T. Kane.
The following table sets forth information concerning unexercised options and equity incentive plan awards on a grant by grant basis for our chief executive officer and any executive officers that earned in excess of $100,000 per annum as of the end of the last completed fiscal year ending July 31, 2011. The number of options granted and exercise prices have been retroactively restated to reflect the 3-to-1 reverse-stock-split of our common stock.
Outstanding Equity Awards at 2011 Fiscal Year-End Table
___________________
(1)
These options were valued using the following assumptions: expected option life: 5 years; risk-free interest rate: 4.97%; annual rate of quarterly dividends: 0.00%; and volatility: 139.92%.
(2)
These options were valued using the following assumptions: expected option life: 5 years; risk-free interest rate: 4.97%; annual rate of quarterly dividends: 0.00%; and volatility: 336.4%.
(3)
These options were valued using the following assumptions: expected option life: 7 years; risk-free interest rate: 4.97%; annual rate of quarterly dividends: 0.00%; and volatility: 220.8%.
(4)
These options were valued using the following assumptions: expected option life: 7 years; risk-free interest rate: 4.97%; annual rate of quarterly dividends: 0.00%; and volatility: 202.1%.
The following table sets forth information regarding the remuneration of our directors, other than those already mentioned in the Summary Compensation Table, during the last completed fiscal year.
Director Compensation Table
Subsequent to the end of the last completed fiscal year, the Company authorized the issuance of 75,000 shares of common stock to each of the four directors identified in the above table for their services.
Options Exercised in the Last Fiscal Year
No options were exercised in the fiscal year ended July 31, 2011.
Long-Term Incentive Plan Awards
No long-term incentive plan awards were granted in the fiscal year ended July 31, 2011.
ITEM 12.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table provides certain information as to the officers and directors, individually and as a group, and the holders of more than 5% of the Common Stock and Preferred Stock on a combined basis:
_________________
(1)
To our knowledge, except as set forth in the footnotes to this table and subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to the shares set forth opposite such person’s name.
(2)
Where persons listed on this table have the right to obtain additional shares of common stock through the exercise or conversion of other securities within 60 days from October 17, 2011, the additional shares are deemed to be outstanding for the purpose of computing the percentage of common stock owned by such persons, but are not deemed to be outstanding for the purpose of computing the percentage owned by any other person. Percentages are based on 23,748,378 shares of common stock that may be outstanding after conversion or exercise, without further consideration, of our outstanding Preferred Stock. This amount includes 14,424,984 shares of common stock and 9,323,394 shares of common stock issuable upon exercise of the outstanding Preferred Stock.
(3)
Includes 491,666 shares issuable upon the exercise of vested stock options.
(4)
Includes 73,334 shares of common stock held by Mr. Van Keulen’s wife and 50,000 shares issuable upon the exercise of vested stock options.
(5)
Includes 1,757,837 shares of common stock issuable upon conversion of outstanding notes.
(6)
Includes 100,000 shares of common stock held by Mr. Nye’s wife, 20,420 shares of preferred stock held by Mr. Nye’s wife, 316,666 shares issuable upon exercise of vested stock options, and 29,699 shares issuable upon conversion of outstanding notes.
(7)
Includes 316,666 shares issuable upon exercise of vested stock options and 29,699 shares issuable upon conversion of outstanding notes.
(8)
Includes 316,666 shares issuable upon exercise of vested stock options.
(9)
Includes 50,000 shares issuable upon exercise of vested stock options and 29,699 shares issuable upon conversion of outstanding notes.
(10)
Includes 1,983,330 shares issuable upon exercise of vested stock options and 59,398 shares issuable upon conversion of outstanding notes.
James P.R. Samuels may be deemed to be the “parent” of our company within the meaning of the rules and regulations of the Securities and Exchange Commission.
Changes in Control
We are not aware of any arrangements that might result in a change in control of the Company.
Equity Compensation Plan Information
The following table sets forth information as of the end of the most recently completed fiscal year, July 31, 2011:
Stock Option Plan
By written consent dated May 13, 2005, our shareholders adopted the 2005 Stock Plan. Under the Plan up to 500,000 shares of our common stock (the “Available Shares”) that may be purchased pursuant to the exercise of incentive stock options, non-qualified stock options, stock grants and stock-based awards (“Stock Rights”) which may be granted to our employees, directors and consultants. This Plan will terminate on May 13, 2015, unless terminated at an earlier date by vote of the shareholders.
The 2005 Stock Plan is intended to (i) encourage ownership of shares by our employees and directors of and certain consultants to the company; (ii) induce them to work for the benefit of the company; and (iii) provide additional incentive for such persons to promote the success of the company.
As of July 31, 2011, no Stock Rights had been granted under the Plan.
ITEM 13.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Other than described below, none of our present directors, officers or principal shareholders, nor any family member of the foregoing, nor, to the best of our information and belief, any of our former directors, officers or principal shareholders, nor any family member of such former directors, officers or principal shareholders, has or had any material interest, direct or indirect, in any transaction, or in any proposed transaction which has materially affected or will materially affect us.
Accrued Liabilities. At July 31, 2011 and 2010, $75,837 and $34,523, respectively, was owed to James P.R. Samuels for amounts paid by him on behalf of the Company and for accrued interest on notes payable.
Convertible Notes. In May 2011, Robert Kane and Greg Kinney each loaned $2,000 to the Company. The loans are due November 1, 2011, bear interest at 10% per annum and are convertible into shares of the Company’s common stock at the conversion price of $0.07. Interest expense was $73 for the year ended July 31, 2011.
Future Transactions. All future affiliated transactions will be made or entered into on terms that are no less favorable to us than those that can be obtained from any unaffiliated third party. A majority of the independent, disinterested members of our board of directors will approve future affiliated transactions.
Director Independence. Frank J. Deleo, Robert T. Kane, Edward J. Weisberg, and Gregory Kinney are considered independent directors. We define director independence pursuant to NASDAQ Marketplace Rule 5605(a)(2).
ITEM 14.
ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES
The fees billed for professional services rendered by our principal accountant are as follows:
Pre-Approval Policies and Procedures
The Audit Committee must pre-approve any use of our independent accountants for any non-audit services. All services of our auditors are approved by our whole Board and are subject to review by our whole Board.
PART IV
ITEM 15.
ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Regulation S-K Number
Exhibit
2.1
Share Exchange Agreement by and between Worldwide Strategies Incorporated, Centric Rx, Inc., Jim Crelia, Jeff Crelia, J. Jireh, Inc. and Canada Pharmacy Express, Ltd. dated as of June 28, 2007 (1)
3.1
Amended and Restated Articles of Incorporation (2)
3.2
Amended Bylaws (2)
3.3
Articles of Exchange Pursuant to NRS 92A.200 effective July 31, 2007 (3)
3.4
Certificate of Change Pursuant to NRS 78.209 effective July 31, 2007 (3)
3.5
Certificate of Designation Pursuant to NRS 78.1955 effective December 8, 2008 (4)
3.6
Amendment to Certificate of Designation Pursuant to NRS 78.1955 effective December 15, 2008 (5)
10.1
2005 Stock Plan (2)
10.2
Employment Agreement with James P.R. Samuels dated October 12, 2007 (6)
10.3
Employment Agreement with W. Earl Somerville dated October 12, 2007 (6)
List of Subsidiaries
31.1
Rule 13a-14(a) Certification of James P.R. Samuels
31.2
Rule 13a-14(a) Certification of W. Earl Somerville
32.1
Certification of James P.R. Samuels Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002
32.2
Certification of W. Earl Somerville Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002
_________________
(1)
Filed as an exhibit to the Current Report on Form 8-K dated June 28, 2007, filed July 2, 2007.
(2)
Filed as an exhibit to the initial filing of the registration statement on Form SB-2, File No. 333-129398, on November 2, 2005.
(3)
Filed as an exhibit to the Current Report on Form 8-K dated July 31, 2007, filed August 6, 2007.
(4)
Filed as an exhibit to the Current Report on Form 8-K dated December 8, 2008, filed December 10, 2008.
(5)
Filed as an exhibit to the Current Report on Form 8-K dated December 15, 2008, filed December 17, 2008.
(6)
Filed as an exhibit to the Annual Report on Form 10-KSB, File No. 000-52362, on November 2, 2007.
SIGNATURES
Pursuant to the requirements of 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, thereunto duly authorized.
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 and on the dates indicated.