PINX:WWSG Worldwide Strategies Inc Quarterly Report 10-Q Filing - 4/30/2012

Effective Date 4/30/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2012

o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________

Commission file number: 000-52362

Worldwide Strategies Incorporated
(Exact name of registrant as specified in its charter)

Nevada
41-0946897
(State or other jurisdiction of incorporation or organization)
(I.R.S.  Employer Identification No.)
   
3801 East Florida Avenue, Suite 400, Denver, Colorado
80210
(Address of principal executive offices)
(Zip Code)

(303) 991-5887
(Registrant’s telephone number, including area code)

Not applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ý   No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ý   No o

See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  o
Accelerated filer  o
Non-accelerated filer  o
Smaller reporting company  ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ý   No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:  As of June 8, 2012 – 16,167,734 shares of common stock


 
 

 

WORLDWIDE STRATEGIES INCORPORATED

FORM 10-Q
FOR THE FISCAL QUARTER ENDED
APRIL 30, 2012

INDEX

   
Page
PART I.  FINANCIAL INFORMATION
     
Item 1.
Financial Statements
 
     
 
Consolidated Condensed Balance Sheets (unaudited)
2
     
 
Consolidated Condensed Statements of Operations (unaudited)
3
     
 
Consolidated Condensed Statement of Changes in Shareholders’ Deficit (unaudited)
4
     
 
Consolidated Condensed Statements of Cash Flows (unaudited)
5
     
 
Notes to Consolidated Condensed Financial Statements (unaudited)
6
     
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
12
     
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
15
     
Item 4.
Controls and Procedures
15
     
     
PART II.  OTHER INFORMATION
     
Item 1.
Legal Proceedings
17
     
Item 1A.
Risk Factors
17
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
17
     
Item 3.
Defaults Upon Senior Securities
17
     
Item 4.
Mine Safety Disclosures
17
     
Item 5.
Other Information
17
     
Item 6.
Exhibits
17
     
SIGNATURES
18

 
1

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Consolidated Condensed Balance Sheets

   
April 30,
   
July 31,
 
   
2012
   
2011
 
   
(unaudited)
   
audited
 
Assets
           
Current Assets:
           
 Cash
  $ 8,243     $ 166  
Prepaid expenses
    5,648       28,167  
                 
Total current assets
    13,891       28,333  
                 
Office equipment, net of accumulated depreciation of $22,623
    -       -  
Deposits
    150       150  
                 
Total assets
  $ 14,041     $ 28,483  
                 
                 
Liabilities and Shareholders’ Deficit
               
Current Liabilities:
               
Accounts and notes payable:
               
Accounts payable
  $ 64,943     $ 57,126  
Accounts payable, related party(Note 2)
    3,900       3,900  
Accrued compensation(Note 3)
    410,625       410,625  
Accrued liabilities (Note 5)
    13,460       7,275  
Accrued liabilities, related party (Note 4)
    106,021       75,837  
Notes payable (Note 5)
    171,160       121,000  
                 
Total current liabilities
    770,109       675,763  
                 
Shareholders’ deficit (Note 6):
               
Preferred stock, $.001 par value; 25,000,000 shares authorized,
               
1,491,743 shares issued and outstanding
    1,492       1,492  
Common stock, $.001 parvalue, 33,333,333 shares authorized
               
15,886,484 and 14,241,234 shares issued and outstanding respectively.
    16,169       14,242  
Additional paid-in capital
    6,848,972       6,696,324  
Deficit accumulated during development stage
    (7,622,701 )     (7,359,338 )
                 
Total shareholders’ deficit
    (756,068 )     (647,280 )
                 
Total liabilities and shareholders' deficit
  $ 14,041     $ 28,483  
 
See accompanying notes to consolidated condensed financial statements

 
2

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Consolidated Condensed Statement of Operations
(Unaudited)
                               
                           
March 1, 2005
 
                           
(Inception)
 
   
Nine Months Ended
   
Three Months Ended
   
Through
 
   
April 30,
   
April 30,
   
April 30,
 
   
2012
   
2011
   
2012
   
2011
   
2012
 
                               
Sales
  $     $     $     $     $ 34,518  
Cost of sales
                            30,568  
                                         
                              3,950  
                                         
Operating expenses:
                                       
Salaries, benefits and payroll taxes
          80,625             26,875       1,108,375  
Stock based compensation
    49,500             7,500             3,450,703  
Professional and consulting fees
    61,948       40,952       8,019       10,244       1,006,065  
 Travel
    30,711       29,606       8,850       11,172       319,033  
Contract labor
          56,250             18,750       558,000  
Insurance
          11,200                   253,506  
Depreciation
          51                   140,278  
Loss on failed acquisition
                            181,016  
Other general and administrative expenses
    2,188       4,269       1,468       1,991       213,951  
                                         
Total operating expenses
    144,347       222,953       25,837       69,032       7,230,927  
Loss from operations
    (144,347 )     (222,953 )     (25,837 )     (69,032 )     (7,226,977 )
                                         
Other expense:
                                       
    Interest expense
    (119,016 )     (107,260 )     (20,972 )     (65,974 )     (395,724 )
                                         
Loss before income taxes
    (263,363 )     (330,213 )     (46,809 )     (135,006 )     (7,622,701 )
                                         
Income tax provision (Note 7)
                             
                                         
Net loss
  $ (263,363 )   $ (330,213 )   $ (46,809 )   $ (135,006 )   $ (7,622,701 )
                                         
Basic and diluted loss per share
  $ (0.011 )   $ (0.015 )   $ (0.002 )   $ (0.006 )        
                                         
Basic and diluted weighted average
                                       
  common shares outstanding
    24,682,343       22,056,852       25,306,753       22,416,201          
 
See accompanying notes to consolidated condensed financial statements
 
3

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Consolidated Condensed Statement of Changes in Shareholders' Deficit
(Unaudited)
                                 
Deficit
       
                           
 
   
Accumulated
       
                            Additional     During        
     Preferred Stock    
Common Stock
    Paid-In     Development        
   
Shares
   
Par Value
   
Shares
   
Par Value
   
Capital
   
Stage
   
Total
 
                                           
Balance at July 31, 2011
    1,491,743     $ 1,492       14,241,234     $ 14,242     $ 6,696,324     $ (7,359,338 )   $ (647,280 )
                                                         
Common stock issued in exchange for
                                                 
    extension of due date on note payable
              910,000       910       79,590               80,500  
Common stock issued in exchange for
                                                 
   interest on note payable
                    97,500       98       8,527               8,625  
Common stock issued in exchange for
                                                 
   board member services
                    300,000       300       35,700               36,000  
Common stock issued in exchange for
                                                 
   CFO compensation
                    300,000       300       13,200               13,500  
Common stock issued for consulting
                                                       
services
                    319,000       319       15,631               15,950  
                                                         
                                                         
Net loss
                                            (263,363 )     (263,363 )
                                                         
Balance at April 30, 2012
    1,491,743     $ 1,492       16,167,734     $ 16,169     $ 6,848,972     $ (7,622,701 )   $ (756,068 )
 
See accompanying notes to consolidated condensed financial statements

 
4

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Consolidated Condensed Statement of Cash Flows
(Unaudited)
               
March 1, 2005
 
               
(Inception)
 
   
For the Nine Months Ended
   
Through
 
   
April 30,
   
January 31,
 
   
2012
   
2011
   
2012
 
                   
Cash flows from operating activities:
                 
  Net loss
  $ (263,363 )   $ (330,213 )   $ (7,622,701 )
    Adjustments to reconcile net loss to net cash
                 
   used in operating activities:
                       
Depreciation
          51       140,278  
Loss on failed acquisition
                150,000  
Stock based compensation (Notes 4 and 5)
    49,500             3,450,703  
Consulting expense paid in common stock
    15,950       28,710       112,550  
Consulting expenses paid in perferred stock
                7,500  
Expenses paid with capital contribution
                93,042  
Interest expense paid in common stock(Note 5)
    89,126       99,840       310,807  
Interest expense paid in preferred stock(Note 4 and 5 )
                4,745  
Interest expense capitalized as principal
    260             54,293  
Net liabilities acquired in Barnett recapitalization
                49  
Changes in current assets and liabilities:
                       
 Receivables, prepaid expenses and other current assets
    22,519       (11,866 )     (55,895 )
Accounts payable
    7,817       17,871       68,843  
Accrued liabilities
    36,108       172,902       1,089,527  
Net cash used in operating activities
    (42,083 )     (22,705 )     (2,196,259 )
                         
Cash flows from investing activities:
         
`
         
  Cash acquired in Centric acquisition
                6  
  Purchases of equipment
                (23,612 )
  Deposit paid on Cascade acquisition
                (100,000 )
Net cash used in investing activities
                (123,606 )
                         
Cash flows from financing activities:
                       
  Proceeds from sale of preferred stock
                9,600  
  Proceeds from sale of common stock
                1,587,706  
  Deposit on proposed acquisition
                77,240  
  Payments for offering costs
                (150,339 )
  Proceeds from notes payable, related party
    9,174       4,000       299,475  
  Proceeds from notes payable
    61,986       4,477       546,471  
  Payment of notes payable
    (21,000 )           (42,045 )
Net cash provided by financing activities
    50,160       8,477       2,328,108  
                         
Net change in cash.
    8,077       (14,228 )     8,243  
                         
Cash, beginning of period
    166       20,237        
                         
Cash, end of period
  $ 8,243     $ 6,009     $ 8,243  
                         
Supplemental disclosure of cash flow information:
                 
  Cash paid during the period for:
                       
  Income taxes
  $     $     $  
Interest
  $     $     $ 7,518  
Non-cash investing/financing activities
                       
  Preferred stock issued to repay notes
  $     $     $ 652,274  
  Common stock issued to repay loan
  $     $     $ 75,000  
  Common stock issued to acquire Centric
  $     $     $ 41,673  
  Offering costs exchanged for stock
  $     $     $ 6,500  
 
See accompanying notes to consolidated condensed financial statements

 
5

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Consolidated Condensed Financial Statements
(Unaudited)


(1)           Organization and Basis of Presentation

Worldwide Strategies Incorporated (the “Company”) was originally incorporated in the state of Nevada on April 6, 1998.  On March 1, 2005, Worldwide Business Solutions Incorporated (“WBSI”) was incorporated in the State of Colorado.  On July 8, 2005, the Company acquired all the shares of WBSI for 76.8% of the Company’s outstanding stock.  The acquisition of WBSI has been accounted for as a recapitalization of WBSI.  Therefore the historical information prior to the date of recapitalization is the financial information of WBSI.

The Company is in the development stage in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting by Development Stage Enterprises.”  As of April 30, 2012, the Company has devoted substantially all of its efforts to financial planning, raising capital and developing markets.

Interim financial data presented herein are unaudited.  The unaudited interim financial information presented herein has been prepared by the Company in accordance with the accounting policies in its audited financial statements for the period ended July 31, 2011, included in its annual report on Form 10-K, and should be read in conjunction with the notes thereto.

In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary to provide a fair presentation of operating results for the interim period presented have been made.  The results of operations for the periods presented are not necessarily indicative of the results to be expected for the year.

Going Concern

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, assuming we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At April 30, 2012, the Company had a working capital deficiency of $756,218, net losses of $46,809 and $263,363 for the three and nine months ended April 30, 2012, respectively, and an accumulated deficit of $7,622,701.  

The Company has limited financial resources, has been unprofitable since its inception and currently has no source of revenue generating activities.  These factors raise substantial doubt about its ability to continue as a going concern.  Management plans to rely on advances from certain shareholders to fund its ongoing obligations; however, there is no guarantee that the Company will be able to obtain an adequate amount of funding.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

New Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (“FASB”) approved the FASB Accounting Standards Codification (the “Codification” or “ASC”) as the single source of authoritative nongovernmental GAAP. All existing accounting standard documents, such as FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other related literature, excluding guidance from the Securities and Exchange Commission (“SEC”), have been superseded by the Codification. All other non-grandfathered, non-SEC accounting literature not included in the Codification has become nonauthoritative. The Codification did not change GAAP, but instead introduced a new structure that combines all authoritative standards into a comprehensive, topically organized online database. The Codification is effective for interim or annual periods ending after September 15, 2009, and impacts our financial statements as all references to authoritative accounting literature will be referenced in accordance with the Codification. Pursuant to the provisions of FASB ASC 105 Topic Generally Accepted Accounting Principles (“ASC 105”) we have updated references to GAAP in our financial statements for the periods ended September 30, 2009.  The adoption of ASC 105 did not impact our financial position or results of operations.


 
6

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Consolidated Condensed Financial Statements
(Unaudited)


Also in June 2009, the FASB issued new accounting guidance related to the accounting and disclosure for transfers of financial assets, which is included in ASC Topic 860, Transfers and Servicing. This guidance will require entities to provide more information about sales of securitized financial assets and similar transactions, particularly if the seller retains some risk with respect to the assets. This guidance is effective for fiscal years beginning after November 15, 2009. We do not anticipate that the adoption of this guidance will have a material impact on our financial position or results of operations.

Also in June 2009, the FASB issued new accounting guidance related to the accounting and disclosure for the consolidation of variable interest entities regarding certain guidance for determining whether an entity is a variable interest entity and modifies the methods allowed for determining the primary beneficiary of a variable interest entity. The guidance is included in ASC Topic 810, Consolidation. The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. The guidance is effective for the first annual reporting period beginning after November 15, 2009. We do not anticipate that the adoption of this guidance will have a material impact on our financial position or results of operations.

In August 2009, the FASB issued an update of ASC Topic 820, Measuring Liabilities at Fair Value. The new guidance provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using prescribed techniques. We adopted the new guidance in the third quarter of 2009 and it did not materially affect our financial position and results of operations.

(2)           Accounts payable related parties

At April 30, 2012, the Company was indebted to an officer for expenses incurred on behalf of the Company totaling $3,900.

(3)           Accrued compensation

The Company accrued compensation for the CEO and the prior CFO through July 31, 2011. The accrued compensation, totaling $410,625, 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 three-month period ended April 30, 2012, $14,896 in various liabilities of the Company were paid personally by the CEO of which $3,000 was reimbursed. This accrual, totaling $105,771 including amounts accrued in prior periods, will be repaid when the Company has sufficient working capital. An additional amount totaling $250 represents accrued interest on notes payable, including amounts accrued in prior periods, to related parties.

Notes payable

During November 2011, the Company issued convertible promissory notes to two related parties totaling for $4,173 of principal. The notes 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 $104 and $208 for the three-month and nine-month periods ended April 30, 2012.

During April 2012, the Company issued convertible promissory notes to a related party totaling for $5,000 of principal. The note bears interest at 10% and the principal and accrued interest is convertible into common shares at $.04 per share upon the election of the holder. Interest expense for these notes was $42 for the three-month and nine-month periods ended April 30, 2012.
 
 
7

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Consolidated Condensed Financial Statements
(Unaudited)
 
(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.  Interest expense for this note payable was $500 and $1,500 for the three-month and nine-month periods ended April 30, 2012, 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. Interest expense for this note payable was $500 and $1,500 for the three-month and nine-month periods ended April 30, 2012, 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, to September 18, 2011, to January 16, 2012 and to May 15, 2012. Interest expense, including the premium cost on shares issued for the renewal period, for this note payable was $14,250 and $98,650 for the three months and nine months ending April 30, 2012, 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, to November 28, 2011, to March 27, 2012, and to July 25, 2012. Interest expense, including the premium cost on shares issued for the renewal period, for this note payable was $4,519 and $15,369 for the three-month and nine-month periods ending April 30, 2012, respectively.

During October 2011, the Company issued a convertible promissory note to an unrelated party in exchange for $15,000. The note, originally due April 25, 2012 and extended to October 25, 2012, 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 $375 and $775 for the three-month and nine-month periods ending April 30, 2012, respectively.

During November 2011, the Company issued a convertible promissory note to an unrelated party in exchange for $2,087 of principal and accrued interest on a due promissory note. The note, due April 30, 2012 and extended to October 31, 2012, 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 $52 and $104 for the three-month and nine-month periods ending April 30, 2012.

During March 2012, the Company issued a convertible promissory note to an unrelated party to replace a note due, including accrued interest, of $15,750.  The note, due August 31, 2012, 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 $262 for the three-month and nine month periods ending April 30, 2012.

During March 2012, the Company issued a convertible promissory note to an unrelated party in exchange for $2,150.  The note, due September 11, 2012, 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 $30 for both the three-month and nine month periods ending April 30, 2012.

During April 2012, the Company issued convertible promissory notes to four unrelated parties in exchange for a total of $12,000.  The notes, due September 30, 2012, bear interest at 10% and the principal and accrued interest is
 
 
 
8

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Consolidated Condensed Financial Statements
(Unaudited)
 
convertible into common shares at $.04 per share upon the election of the holder of each note.  Interest expense for these notes was $100 for both the three-month and nine month periods ending April 30, 2012.

(6)           Shareholders’ Deficit

Preferred stock

The Company is authorized to issue 25,000,000 shares of $0.001 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.

Effective December 15, 2008, the Company established a series of 5,000,000 shares of preferred stock to be known as “Series A Convertible Preferred Stock” (“Series A”).  The shares of Series A have a par value of $0.001 per share.  Shares of Series A may be redeemed, for $0.50 per share, at the Company’s option.  Each share of Series A may be converted into 6.25 shares of common stock, at the option of the holder.

Shares of Series A will participate in dividends paid, in cash or other property, to holders of outstanding common stock.  In the event the Company declares and pays a dividend to common stockholders, five percent (5%) of the value of such dividend shall be paid to the holders of outstanding Series A shares. After payment of the 5% preference, each outstanding Series A share will participate in the distribution of the remaining 95% of the dividend with the holders of common stock, as if each outstanding Series A share were one share of common stock. Any dividend payable to holders of Series A shares will have the same record and payment date and terms as the dividend payable on the common stock.

Holders Series A shares shall be entitled to vote together with the holders of the common stock as a single class, upon all matters submitted to holders of common stock for a vote. Shares of Series A will vote that number of votes equal to the number of shares of common stock issuable upon conversion of one share of Series A, as adjusted from time-to time.

Whenever holders of Series A are required or permitted to take any action by separate class or series, such action may be taken without a meeting by written consent, setting forth the action so taken and signed by the holders of the outstanding Series A shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

Common stock

In August 2011, the Company issued 300,000 shares of the Company’s common stock as compensation for members of the Board of Directors in the amount of $36,000.  The shares were valued at $.12 per share based on the fair market value of the shares when they were issued.

In September 2011, the Company issued 387,500 shares of the Company’s common stock in exchange for interest and an extension of due date from September 18, 2011 to January 16, 2012 on a note payable. The shares, which were issued at $0.04 as per the note payable agreement, were valued at $0.15 per share based on the fair value of the shares when they were issued.  This amount ($62,250) is reflected in the accompanying financial statements as interest over the term of the note extension.

In October 2011, the Company issued 150,000 shares of the Company’s common stock as compensation to the contracted CFO.  The shares were valued at $0.4 per share based on the fair value of the shares when they were issued.  This amount ($6,000) is reflected in the accompanying financial statements as consulting fees.

In November 2011, the Company issued 116,250 shares of the Company’s common stock in exchange for interest and an extension of due date from November 28, 2011 to March 27, 2012 on a note payable. The shares, which were
 
 
9

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Consolidated Condensed Financial Statements
(Unaudited)
 
issued at $0.04 as per the note payable agreement, were valued at $0.05 per share based on the fair value of the shares when they were issued.  This amount ($5,250) will be reflected in the accompanying financial statements as interest over the term of the note extension.

In December 2011, the Company issued 189,000 shares of the Company’s common stock in exchange for services to be rendered.

In December 2011, the Company issued 15,000 shares of the Company’s common stock in exchange for services to be rendered.

In January 2012, the Company issued 387,500 shares of the Company’s common stock in exchange for interest and an extension of due date from January 16, 2012 to May 15, 2012 on a note payable. The shares, which were issued at $0.04 as per the note payable agreement, were valued at $0.5 per share based on the fair value of the shares when they were issued.  This amount ($17,500) is reflected in the accompanying financial statements as interest over the term of the note extension.

In January 2012, the Company issued 100,000 share of the Company’s stock in exchange for services to be rendered.

In March 2012, the Company issued 116,250 shares of the Company’s common stock in exchange for interest and an extension of due date from March 27, 2012 to July 25, 2012 on a note payable. The shares, which were issued at $0.04 as per the note payable agreement, were valued at $0.05 per share based on the fair value of the shares when they were issued.  This amount ($5,813) is reflected in the accompanying financial statements as interest over the term of the note extension.

In March 2012, the Company issued 15,000 shares of the Company’s common stock in exchange for services to be rendered.  The shares were valued at $.05 per share based on the fair value of the shares when they were issued.  The amount ($750) is reflected in the accompanying financial statements as consulting fees.

In March 2012, the Company issued 150,000 shares of the Company’s common stock as compensation to the contracted CFO.  The shares were valued at $0.05 per share based on the fair value of the shares when they were issued.  This amount ($7,500) is reflected in the accompanying financial statements as consulting fees.

Stock Options and Warrants

Following is a schedule of changes in common stock options and warrants from July 31, 2011 through April 30, 2012:

             
Weighted
 
Weighted
             
Average
 
Average
         
Exercise
 
Exercise
 
Remaining
 
Awards Outstanding
 
Price
 
Price
 
Contractual
 
Total
 
Exercisable
 
Per Share
 
Per Share
 
Life
Outstanding at July 31, 2011
3,958,329
 
3,958,329
   
$0.015-$0.75
   
$0.16
 
1.83 Years
Granted
300,000
 
300,000
   
$0.15
   
$0.15
 
4.70 Years
Exercised
 
   
   
 
Cancelled/Expired
750,001
 
750,001
   
$0.75
   
 
Outstanding at April 30, 2012
3,508,328
 
3,508,328
   
$0.015-$0.24
   
$0.16
 
2.07 Years



 
10

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Consolidated Condensed Financial Statements
(Unaudited)


The following changes occurred in outstanding options and warrants during the period from July 31, 2011 through April 30, 2012:

 
Options
 
Warrants
 
Awards
Outstanding at July 31, 2011
3,208,328
 
750,001
 
3,958,329
Granted
300,000
 
 
300,000
Exercised
 
 
Cancelled/Expired
 
750,001
 
750,001
Outstanding at April 30, 2012
3,508,328
 
 
3,508,328

(7)           Income Taxes

The Company records its income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.”  The Company incurred net operating losses during all periods presented resulting in a deferred tax asset, which was fully allowed for; therefore, the net benefits and expense resulted in $0 income taxes.






 
11

 

Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

The following discussion and analysis should be read in conjunction with our financial statements and related footnotes for the year ended July 31, 2011 included in our Annual Report on Form 10-K.  The discussion of results, causes and trends should not be construed to imply any conclusion that such results or trends will necessarily continue in the future.

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.

Plan of Operations

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 the then issued and outstanding shares of Worldwide 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.

Other than the possible acquisition transaction described above, we do not have any definitive proposals for business operations, merger or acquisition.  We are in discussions with other firms but have nothing finalized at this time.  We must raise additional capital to support our ongoing existence while we search for such opportunities.  If we complete any acquisition or merger transactions, we will need to raise additional capital to support the new business.  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
 
 
12

 
 
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 April 30, 2012, we had devoted substantially all of our efforts to financial planning, raising capital and developing markets.

Stock-based Compensation.  We account for compensation expense for our stock-based compensation plans using the fair value method prescribed in FASB ASC 718, “Stock Compensation,” which requires us to recognize the cost of services received in exchange for awards of equity instruments based on the grant-date fair value of the awards.  The fair value of each option grant is estimated on the date of grant using the Black-Scholes method.

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 April 30, 2012, after recognition of the one-for-three reverse stock split, there were 3,508,328 and -0- 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.

Results of Operations

Three Months Ended April 30, 2012 and 2011.  Salaries, benefits and payroll taxes totaled $-0- and $26,875, respectively, for the three-month periods ended April 30, 2012 and 2011.  We had been accruing compensation for our CEO and CFO, but the officers agreed to cease future salary accruals pending completion of a transaction.

We incurred $7,500 and $-0-, respectively, of stock-based compensation expense for the three-month periods ended April 30, 2012 and 2011.  We issued each of our four non-employee directors 75,000 shares of our common stock as compensation in August 2011, which were valued at $0.12 per share or $36,000 in the aggregate.  We also issued 150,000 shares of common stock as compensation for our new CFO in October 2011, which were valued at $0.04 per share, or $6,000 in the aggregate.

Professional and consulting fees totaled $8,019 and $10,244 for the three-month periods ended April 30, 2012 and 2011, respectively.  Expenses in 2012 were in line with prior year for outside support services.

Travel expenses totaled $8,850 and $11,172 during the three-month periods ended April 30, 2012 and 2011, respectively.  Travel continues to be a significant expense item as our possible acquisition opportunities have involved primarily overseas businesses.

Contract labor expenses totaled $-0- and $18,750 during the three-month periods ended April 30, 2012 and 2011, respectively.  In 2011, our CFO was compensated through contract services.  Our current CFO is being compensated through the issuance of shares of our common stock at this time.
 
 
13

 

 
We did not incur any insurance expense during the three-month periods ended April 30, 2012 and 2011.  Our directors’ and officers’ liability insurance was allowed to expire during the previous fiscal year in an effort to reduce recurring costs during the development stage.

No depreciation was recorded during the three-month periods ended April 30, 2012 and 2011, as all of our equipment is now fully depreciated and, therefore, we did not incur any depreciation expense for the current period.

Other general and administrative expenses totaled $1,468 and $1,991 during the three-month periods ended April 30, 2012 and 2011, respectively.

We recorded $20,972 and $65,974 in interest expense for the three-month periods ended April 30, 2012 and 2011, respectively.  Effective April 30, 2009, we converted many of our outstanding debts into preferred stock.  However, from November 2009 through April 2012, we have issued convertible promissory notes totaling $171,160 that accrue interest at rates ranging from 8% to 10%.  In addition, we financed the purchase of insurance policies in the amount of $22,400 in February 2010 for an effective annual interest rate is 9.47%.

Our net loss was $46,809 and $135,006 for three-month periods ended April 30, 2012 and 2011, respectively.

Nine Months Ended April 30, 2012 and 2011.  Salaries, benefits and payroll taxes totaled $-0- and $80,625, respectively for the nine-month periods ended April 30, 2012 and 2011.  We had been accruing compensation for our CEO and CFO, but the officers agreed to cease future salary accruals pending completion of a transaction.

We incurred $49,500 and $-0- of stock-based compensation expense for the nine-month periods ended April 30, 2012 and 2011.  We issued each of our four non-employee directors 75,000 shares of our common stock as compensation in August 2011, which were valued at $0.12 per share or $36,000 in the aggregate.  We also issued 150,000 shares of common stock as compensation for our new CFO in October 2011, which were valued at $0.04 per share, or $6,000 in the aggregate.

Professional and consulting fees totaled $61,948 and $40,952 for the nine-month periods ended April 30, 2012 and 2011, respectively.  Expenses for the 2012 period were higher, as we incurred consulting fees for investor relations and web services support in advance of anticipated transactions and activities and support on activities in Europe.

Travel expenses totaled $30,711 and $29,606 during the nine-month periods ended April 30, 2012 and 2011, respectively.  Travel continues to be a significant expense item as our possible acquisition opportunities have involved primarily overseas businesses.

Contract labor expenses totaled $-0- and $56,250 during the nine-month periods ended April 30, 2012 and 2011, respectively.  In fiscal 2011, our CFO was compensated through contract services.  Our current CFO is being compensated through the issuance of shares of our common stock at this time.

Insurance expenses totaled $-0- and $11,200 during the nine-month periods ended April 30, 2012 and 2011, respectively.  Our directors’ and officers’ liability insurance allowed to expire in an effort to reduce recurring costs during the development stage.  Accordingly, no expense was incurred for the 2011 period.

Depreciation of $-0- and $51 was recorded during the nine-month periods ended April 30, 2012 and 2011, respectively.  All of our equipment is now fully depreciated and, therefore, we did not incur any depreciation expense for the current period.

Other general and administrative expenses totaled $2,188 and $4,269 during the nine-month periods ended April 30, 2012 and 2011, respectively.

 
14

 
We recorded $119,016 and $107,260 in interest expense for the nine-month periods ended April 30, 2012 and 2011, respectively.  Effective April 30, 2009, we converted many of our outstanding debts into preferred stock.  However, from November 2009 through January 2012, we have issued convertible promissory notes totaling $171,004 that accrue interest at rates ranging from 8% to 10%.  In addition, we financed the purchase of insurance policies in the amount of $22,400 in February 2010 for an effective annual interest rate is 9.47%.

Our net loss was $263,363 and $330,213 for nine-month periods ended April 30, 2012 and 2011, respectively.

March 1, 2005 (inception) to April 30, 2012.  For the period from March 1, 2005 (inception) to April 30, 2012, we were engaged primarily in raising capital to implement our business plan.  Accordingly, we have earned revenue of only $34,518.  We incurred expenses for professional and consulting fees, salaries and payroll taxes, stock-based compensation, travel, contract labor, insurance, interest and other expenses resulting in an accumulated loss of $7,622,701.  Approximately 45% of the cumulative net loss is due to the recognition of non-cash stock-based compensation expense for issuing shares, options, and warrants to employees and third parties in the amount of $3,450,703.  As we develop our business plan, we expect that cash generated through operations will replace many of the non-cash transaction structures currently utilized to implement our business plan.

Liquidity and Capital Resources

Since inception, we have relied on the sale of equity capital and debt instruments to fund working capital and the costs of developing our business plan.  We used $42,084 of cash in operating activities with $50,160 being provided by loans, net of note repayments, for the nine months ended April 30, 2012.  We have a working capital deficit of $756,218 at April 30, 2012, as compared to $647,430 at July 31, 2011.

As discussed above, we have had minimal revenues and have accumulated a deficit of $7,622,701 since inception.  Furthermore, we have not commenced our planned principal operations.  Our future is dependent upon our ability to obtain equity and/or debt financing and upon future profitable operations from the development of our business plan.

Going Concern

Our significant operating losses raise substantial doubt about our ability to continue as a going concern.  Historically, we have been able to raise additional capital sufficient to continue as a going concern.  However, there can be no assurance that this additional capital will be sufficient for us to implement our business plan or achieve profitability in our operations.  Additional equity or debt financing will be required to continue as a going concern.  Without such additional capital, there is doubt as to whether we will continue as a going concern.

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 3.       Quantitative and Qualitative Disclosures about Market Risk

Not required for smaller reporting companies.

Item 4.       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 were not effective to ensure that all required information is presented in our quarterly report in a timely manner.

 
15

 
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.

During our last fiscal quarter, there were no other changes in our internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except as described above.


 
16

 

Part II.  OTHER INFORMATION

Item 1.         Legal Proceedings

None.

Item 1A.      Risk Factors

Not required of smaller reporting companies.

Item 2.         Unregistered Sales of Equity Securities and Use of Proceeds

In March 2012, the registrant issued 105,000 shares of its common stock to an accredited investor to extend the maturity date of a promissory note in the principal amount of $15,000 and 11,250 shares to the same person as payment of accrued interest on the note.  The shares were issued at $0.04 per share pursuant to the terms of the note, but were valued at $0.05 per share (an aggregate of $5,813) based on the fair value of the shares when they were issued.

Also in March 2012, the registrant issued 15,000 shares of its common stock to a consultant for services to be rendered and 150,000 shares of its common stock as compensation for its chief financial officer.  The shares were issued at $0.05 per share ($8,250 in the aggregate), based on the fair value of the shares when they were issued.

No underwriters were used in the above stock transactions.  We relied upon the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as the investors were deemed to be sophisticated with respect to the investment in the securities due to their financial condition and involvement in our business.  A restrictive legend was placed on the certificates evidencing the securities issued.

Item 3.         Defaults Upon Senior Securities

None.

Item 4.         Mine Safety Disclosures

Not applicable.

Item 5.         Other Information

None.

Item 6.         Exhibits

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)
31.1
Rule 13a-14(a) Certification of James P.R. Samuels
31.2
Rule 13a-14(a) Certification of Thomas E. McCabe
 
 
 
17

 
 
Regulation
S-K Number
Exhibit
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 Thomas E. McCabe Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002
101*
Financial statements from the Quarterly Report on Form 10-Q of Worldwide Strategies Incorporated for the quarter ended April 30, 2012, formatted in XBRL: (i) the Balance Sheets; (ii) the Statements of Operations; (iii) the Statements of Changes in Shareholders’ Deficit; (iv) the Statements of Cash Flows; and (v) the Notes to Financial Statements tagged as blocks of text.
________________________
(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.

*In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

SIGNATURES

Pursuant to the requirements 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.

 
WORLDWIDE STRATEGIES INCORPORATED
     
Date:  June 12, 2012
By:
/s/ James P.R. Samuels
   
James P.R. Samuels
   
Chief Executive Officer
   
(Principal Executive Officer)
     
Date:  June 12, 2012
By:
/s/ Thomas E. McCabe
   
Thomas E. McCabe
   
Chief Financial Officer
   
(Principal Financial Officer and Principal
Accounting Officer)

 
 
 
18
 
 


 

PINX:WWSG Worldwide Strategies Inc Quarterly Report 10-Q Filling

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PINX:WWSG Worldwide Strategies Inc Quarterly Report 10-Q Filing - 4/30/2012
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