See accompanying notes to the consolidated financial statements.
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 |
(1)Organization, Basis of Presentation, and Summary of Significant Accounting Policies
Organization and Basis of Presentation
Worldwide Strategies Incorporated (the “Company”"Company") was originally incorporated in the state of Nevada on April 6, 1998. On March 1, 2005, as Worldwide Business Solutions Incorporated (“WBSI”("WBSI") was incorporated in the State of Colorado. TheOn July 8, 2005, 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. Underacquired all the termsshares of WBSI for 76.8% of the Agreement, BEC agreed to acquire all of the issued andCompany's 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 recapitaliza tion has been accounted for as the salea recapitalization of 778,539 shares of WBSI common stock for the net liabilities of BEC.WBSI. 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”("Centric") in exchange for 2,250,000 shares of the Company’sCompany's common stock. As a result of the acquisition, Centric is nowbecame a wholly owned subsidiary of the Company and the results of its operation have been included in the Company’sCompany's consolidated financial statements since the date of acquisition.
Development Stage
In June 2014, the FASB issued ASU No. 2014-10: Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements to improve financial reporting by reducing cost and complexity associated with the incremental reporting requirements of development stage entities. The changes eliminate the need for inception to date reporting and other disclosure requirements. The amendments are effective for annual reporting periods beginning after December 15, 2014. Early adoption is permitted. The Company and its subsidiaries are in the development stage in accordance with Statementshas elected early adoption of Financial Accounting Standards (SFAS) No. 7 “Accounting and Reporting by Development Stage Enterprises”. As of July 31, 2010, the Company has devoted substantially all of its efforts to financial planning, raising capital and developing markets.these amendments.
Going Concern
The accompanying consolidated 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 $339,638, $464,456,$232,681, $347,772, and $6,858,944$7,977,949 for the years ended July 31, 2010, July 31, 20092013 and 2012 and for the period from March 1, 2005 (inception) through July 31, 2010,2013, respectively. In addition, the Company has incurred liabilities in excess of assets over the past year and, as of July 31, 2010, and2013, has an accumulated deficit of $6,858,944.$7,977,949. These matters, among others, raise substantial doubt about its ability to continue as a going concern.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
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’sCompany'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 been able to raise additional capital. During the year ended July 31, 2010,2013, the Company obtained an additional $2,240 as partial payment of item (ii) in the NMKT letter of intent. Additionally during the year ended July 31, 2010, the Company issued preferred stock for $1,600 and convertible promissory notes in exchange for $120,000.$49,550.
The consolidated 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’sCompany'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, 2010.2013 or 2012.
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.
| | | July 31, | |
| | | 2010 | | | 2009 | |
| Office equipment | | $ | 10,600 | | | $ | 10,600 | |
| Software | | | 12,023 | | | | 12,023 | |
| | | | 22,623 | | | | 22,623 | |
| Accumulated depreciation | | | 2,572 | | | | 21,953 | |
| Property and equipment - net | | $ | 51 | | | $ | 670 | |
| | | July 31, | |
| | | 2013 | | | 2012 | |
| Office equipment | | $ | 10,600 | | | $ | 10,600 | |
| Software | | | 12,023 | | | | 12,023 | |
| | | | 22,623 | | | | 22,623 | |
| Accumulated depreciation | | | 22,623 | | | | 22,623 | |
| Property and equipment - net | | $ | 0 | | | $ | 0 | |
Depreciation expense for the years ended July 31, 2010, July 31, 20092013 and 2012 and for the period from March 1, 2005 (inception) through July 31, 20102013 totaled $619, $1,859$-0-, $-0-, and $140,227,$140,278, respectively.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
Impairment of Long-Lived Assets
The Company evaluates the carrying value of its long-lived assets under the provisions of SFAS No. 144, "Accountinghas adopted ASC 360, "Accounting for the Impairment or Disposal of Long-Lived Assets". Statement No. 144Assets," which requires impairment lossesthat long-lived assets to be recorded on long-lived assets usedheld be reviewed for impairment whenever events or changes in operations when indicators of impairment are present and the undiscounted future cash flows estimated to be generated by those assets are less than the assets' carrying amount. If such assets are impaired, the impairment to be recognized is measured by the amount by whichcircumstances indicate that the carrying amount of thean asset may not be recoverable. ASC 360 establishes a single auditing model for long-lived assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying value or fair value, less costs to sell.
Offering Costs
The Company defers offering costs, such as legal, commissions and printing costs, until such time as the offering is completed. At that time, the Company offsets the offering costs against the proceeds from the offering. If an offering unsuccessful, the costs are charged to operations at that time.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the recorded book basis and the tax basis of assets and liabilities for financial and income tax reporting. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income and tax credits that are available to offset future federal income taxes.
Revenue Recognition
The Company provides its call center services under contract arrangements. The Company recognizes revenue as services are provided (based on an hourly rate) over the term of the contract.by sale.
Loss per Common Share
The Company reports net loss per share using a dual presentation of basic and diluted loss per share. Basic lossearnings (loss) per share includesare computed by dividing the impactnet income (loss) by the weighted-average number 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 utilizesand common stock equivalents (primarily outstanding options and convertible preferred stock). Common stock equivalents represent the average market price per share when applyingdilutive effect of the assumed exercise of the outstanding stock options and convertible preferred stock, using the treasury stock method in determining commonmethod. The calculation of fully diluted earnings (loss) per share assumes the dilutive effect of the exercise of outstanding options and convertible preferred stock equivalents. Asat either the beginning of the respective period presented or the date of issuance, whichever is later. At July 31, 2010 there were 6,391,3562013 and 2,043,333 vested2012, the Company had outstanding options equivalent to 4,333,328 and 3,508,328 common shares respectively and convertible preferred stock options and warrants outstanding, respectively, which were excluder from the calculation of net loss per share-diluted because they are antidilutive.equivalent to 9,323,400 common shares.
Stock-based Compensation
The Company accounts for all stock-based payments to employees and non-employees under ASC 718 "Effective February 1, 2006,Stock Compensation," using the Company adopted SFAS No. 123R, “Share Based Payment”. SFAS 123R requires a public entity to measurefair value based method. Under the cost of employee services received in exchange for an award of equity instruments based onfair value method, stock-based payments are measured at the grant-date fair value of the award (with limited exceptions). In prior years, employee stock-based compensation awards were measured based onconsideration received, or the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), and complied with the disclosure provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), and SFAS No. 148, “ Accounting for Stock-Based Compensation-Transition and Disclosure”. Under APB 25, compensation expense of fixed stock options was based on the difference, if any, on the date of the grant between the deemed fair value of the Company’s stockequity 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 exercise price ofgrant date is measured and recognized at that date.
Beneficial Conversion Features
From time to time, the option. Compensation expense was recognizedCompany may issue convertible notes that contain an imbedded beneficial conversion feature. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of grant or on the straight-line basisunderlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of warrants, if related warrants have been granted. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the option-vesting period. The Company accounts for stock issued to non-employees in accordance with the provisions of SFAS 123 and EITF Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”. As a resultlife of the change in accounting policy,note using the effective interest method.
Fair Value of Financial Instruments
On August 1, 2012, the Company recorded $26,250, $184,750,adopted ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
| · | Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| · | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
$3,401,203 as stock-based compensation on the stock options granted during the years ended July 31, 2010, July 31, 2009 and for the period from March 1, 2005 (inception) through July 31, 2010.
Loss per Common Share| · | Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement. |
The Company reports net loss per share usingfollowing table represents our assets and liabilities by level measured at fair value on a dual presentation of basic and diluted loss per share. Basic net loss per share excludes the impact of 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 ofrecurring basis at July 31, 2010, after recognition of the one for three reverse stock split, there were 6,391,356 and 2,043,333 vested common stock options and warrants outstanding, respectively, which were excluded from the calculation of net loss per share-diluted because they were antidilutive.2013:
| Description | | Level 1 | | | Level 2 | | | Level 3 | | | Total
Realized
Loss | |
| $ | - | | $ | - | | $ | - | | $ | - | |
| Totals | $ | - | | $ | - | | $ | - | | $ | - | |
Fiscal Year-end
The Company’sCompany's year-end is July 31.
New Accounting Pronouncements
In June 2009,2014, the FASB issued SFAS No. 168, "The FASB Accounting Standards Codification™ andASU 2014-10, Development Stage Entities. The amendments in this update remove the Hierarchy of Generally Accepted Accounting Principles - a replacement of FASB Statement No. 162". Statement 167 amends the evaluation criteria to identify the primary beneficiarydefinition of a variable interestdevelopment stage entity provided by FASB Interpretation No. 46(R) , Consolidation of Variable Interest Entities-An Interpretation of ARB No. 51 . Additionally, Statement 167 requires ongoing reassessments of whether an enterprise isfrom the primary beneficiaryMaster Glossary of the variable interest entity.ASC thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments in this update are applied retrospectively. The adoption of ASU 2014-10 removed the development stage entity financial reporting requirements from the Company.
In July 2013, the FASB 166issued ASU No. 2013-11: Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry forward, a Similar Tax Loss, or a Tax Credit Carry forward Exists. The new guidance
requires that unrecognized tax benefits be presented on a net basis with the deferred tax assets for such carry forwards. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2013. We do not expectedexpect the adoption of the new provisions to have a material impact on the Company'sour financial statements.condition or results of operations.
In June 2009,February 2013, the FASB issued SFASASU No. 167, "Amendments2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to FASB Interpretation No. 46(R)". Statement 167 amendsimprove the evaluation criteria to identifytransparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the primary beneficiary of a variable interest entity provided by FASB Interpretation No. 46(R) , Consolidation of Variable Interest Entities-An Interpretation of ARB No. 51 . Additionally, Statement 167 requires ongoing reassessments of whether an enterprise isASU do not change the primary beneficiarycurrent requirements for reporting net income or other comprehensive income in financial statements. All of the variable interest entity.information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:
| · | Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and |
| · | Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense. |
The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments were effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption was permitted. The adoption of FASB 166 isASU No. 2013-02 did not expected to have a material impact on the Company'sour financial statements.
position or results of operations.
In June 2009,January 2013, the FASB issued SFASASU No. 166, "Accounting for Transfers2013-01, Balance Sheet (Topic 210): Clarifying the Scope of FinancialDisclosures about Offsetting Assets - an amendment of FASB Statement No. 140".and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The objective of this Statement is to improvenew ASU addresses preparer concerns that the relevance, representation faithfulness, and comparabilityscope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information that a reporting entity provides in itsto analyze the most significant presentation differences between financial statements about a transfer of financial assets;prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the effects of a transferamendments in this update were effective for fiscal periods beginning on, its financial position, financial performance, and cash flows; and a transferor's continuing involvement.or after January 1, 2013. The adoption of FASB 166 isASU 2013-01 did not expected to have a material impact on the Company'sour financial statements.
position or results of operations.
In May 2009,October 2012, the FASB issued SFAS No. 165, "Subsequent Events"ASU 2012-04, Technical Corrections and Improvements. The objectiveamendments in this update cover a wide range of this statement is to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In this statement it sets forth the period after the balance sheet date during which management of reporting entity should evaluate events or transactions that may occur for potential recognition or disclosureTopics in the financial statements. UnderAccounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this circumstance, the entity should recognize events or transactions occurringupdate were effective for fiscal periods beginning after the balance sheet date in its financial statements, and disclosures events or transactions that occurred after the balance sheet date. In accordance with this statement, an entity should apply the requirements to interim or annual f inancial period ending after JuneDecember 15, 2009.2012. The adoption of FASB 165 isASU 2012-04 did not expected to have a material impact on our financial position or results of operations.
In August 2012, the Company'sFASB issued ASU 2012-03, Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update). This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 did not have a material impact on our financial statements.position or results of operations.
In July 2012, the FASB issued ASU 2012-02, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. This update amends ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess
qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments were effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption was permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity's financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, had not yet been made available for issuance. The adoption of ASU 2012-02 did not have a material impact on our financial position or results of operations.
Beneficial Conversion Feature
From time to time, the Company may issue convertible notes that contain an imbedded beneficial conversion feature. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of warrants, if related warrants have been granted. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method.
Financial Instruments
On August 1, 2012, the Company adopted Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures ("Topic 820"). Topic 820 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
(2) · | Accounts payable related partiesLevel 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| · | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
| · | Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement. |
The following table represents our assets and liabilities by level measured at fair value on a recurring basis at July 31, 2013:| Description | | Level 1 | | | Level 2 | | | Level 3 | | | Total
Realized
Loss | |
| $ | - | | $ | - | | $ | - | | $ | - | |
| Totals | $ | - | | $ | - | | $ | - | | $ | - | |
(2)Accounts payable related parties
At July 31, 2010,2013 and 2012, the Company was indebted to related parties for expenses incurred on behalf of the Company totaling $4,269.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements$3,900.
At July 31, 2013 and 2012, accrued compensation totaled $-0- and $410,625 respectively. The CEO and former CFO forgave this liability in exchange for convertible promissory notes totaling $45,500 in value, including amounts related to Accrued Liabilities forgiven. The difference was recorded to Paid In Capital on the balance sheet.
(4)Related party transactions
Accrued liabilities
At July 31, 2013 and 2012, accrued liabilities totaled $1,544 and $100,523 respectively. During the 2013 fiscal year the CEO incurred $8,321 expenses related to Company efforts. The CEO forgave accrued expenses of $108,844 in exchange for convertible promissory notes totaling $45,500 in value, including amounts related to Accrued Liabilities forgiven. The difference was recorded to Paid In Capital on the balance sheet. An additional amount of $1,065 represents accrued interest expense on notes payable to related parties for 2013.
Notes payable
During May 2010, the Company issued a convertible promissory note to a related 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 also provide for renewal in 120-day cycles, assuming issuing of common stock as a renewal premium. Interest expense for this note payable was $3,188 and $4,500 and the renewal premium recorded as interest expense for this note was $20,050 and $101,592 for the years ended July 31, 2013 and 2012, respectively. This note was exchanged in April 2013 for new promissory notes bearing interest at 10% and convertible into common shares at $.01 per share with a 120-day renewal cycle and identical renewal premium. The new promissory notes allow the Company to call the note and pay it off, a feature not available in the prior promissory note.
During December 2010, the Company issued a convertible promissory note to a related 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 also provide for renewal in 120-day cycles, assuming issuing of common stock as a renewal premium. Interest expense for this note payable was $956 and $1,350 and the renewal premium recorded as interest expense for this note was $13,400 and $17,799 for the years ended July 31, 2013 and 2012, respectively. This note was exchanged in April 2013 for new promissory notes bearing interest at 10% and convertible into common shares at $.01 per share with a 120-day renewal cycle and identical renewal premium. The new promissory notes allow the Company to call the note and pay it off, a feature not available in the prior promissory note.
During May 2011, the Company issued two convertible promissory notes to related parties in exchange for a total of $4,000. 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. In November 2011 these notes were exchanged for new convertible promissory notes totaling $4,173 in principal and accrued interest.
During November 2011, the Company issued two convertible promissory notes to related parties in exchange for $4,173 of principal and accrued interest on due promissory notes. 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 holders, as did the notes being replaced. Interest expense for these notes was $418 and $313 for the years ended July 31, 2013 and 2012, respectively. Based on the initial valuation the Company has recorded a debt discount of $2,340, all of which was amortized in the fiscal year ending July 31, 2012. The original maturity date on these notes was April 30, 2012. The holders have extended both notes to July 31, 2015.
During April 2012, the Company issued a convertible promissory note to a related party in exchange for a total of $5,000. 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 this note was $500 and $167 for the years ended July 31, 2013 and 2012, respectively. Based on the initial valuation the Company has recorded a debt discount of $1,250, $831 of which was amortized in the fiscal year ended July 31, 2012 and the remaining $419 amortized in the fiscal year ending July 31, 2013. The original maturity date on this note was September 30, 2012. The holder has extended the note to July 31, 2015.
During December 2012, the Company issued two promissory notes to two related parties totaling $2,000. The notes bear interest at 10% and the principal and accrued interest are convertible into common shares at $.01 per share. Interest expense for these notes was accrued in the amount of $123 for the year ended July 31, 2013. Based on the
initial valuation the Company has recorded a debt discount of $2,000, all of which was amortized in the fiscal year ending July 31, 2013. The original maturity date on these notes was June 30, 2013. The holders have extended the notes to July 31, 2015.
During February 2013, the Company issued one promissory note to a related party for $500. The note bears interest at 10% and the principal and accrued interest are convertible into common shares at $.01 per share. This note was related to company expenses paid. Interest expense for this note was accrued in the amount of $25 for the year ended July 31, 2013. Based on the initial valuation the Company has recorded a debt discount of $500, $427 of which was amortized in the fiscal year ended July 31, 2013. The original maturity date on this note was August 31, 2013. The holder has extended the note to July 31, 2015.
During April 2013, the Company issued five convertible promissory notes to related parties in exchange for two promissory notes totaling $65,000. The notes bear interest at 10% and the principal and accrued interest is convertible into common shares at $.01 per share upon the election of the holder. These notes have a 120-day term and are renewed with payment of accrued interest in common stock as well as a renewal fee of 455,000 shares. The common shares for this renewal fee were issued May 14, 2013 and valued at $13,577. Interest expense for these notes was $1,896 for the year ended July 31, 2013. These notes were replaced through renewal July 2013.
During July 2013, the Company issued one promissory note to a related party for $28,500. The note bears interest at 10% and the principal and accrued interest are convertible into common shares at $.01 per share. This note was in exchange for accrued and owed salary of $241,875 and accrued and owed expense of $108,844. There was no interest expense for this note for the year ended July 31, 2013. Based on the initial valuation the Company has recorded a debt discount of $28,500, none of which was amortized in the fiscal year ended July 31, 2013. The original maturity date on this note was January 31, 2014. The holder has extended the note to July 31, 2015.
During July 2013, the Company issued one promissory note to a related party for $17,000. The note bears interest at 10% and the principal and accrued interest are convertible into common shares at $.01 per share. This note was in exchange for accrued and owed salary of $168,750 to the Company's former CFO. There was no interest expense for this note for the year ended July 31, 2013. Based on the initial valuation the Company has recorded a debt discount of $17,000, none of which was amortized in the fiscal year ended July 31, 2013. The original maturity date on this note was January 31, 2014. As of this time the holder has not responded to a request to extend the note maturity date and the note is in default and payable on demand by the holder.
During July 2013, the Company issued five convertible promissory notes to related parties in exchange for five promissory notes totaling $65,000. The notes bear interest at 10% and the principal and accrued interest is convertible into common shares at $.01 per share upon the election of the holder. These notes have a 120-day term and are renewed with payment of accrued interest in common stock as well as a renewal fee of 455,000 shares. The common shares for this renewal fee were issued August 5, 2013 and valued at $26,845. Interest expense for these notes was $1,896 for the year ended July 31, 2013. These notes matured December 11, 2013 and the holders chose not to renew per the note terms. The notes are in default and payable on demand of the holders.
As of July 31, 2013, the Company had outstanding convertible promissory notes to nine related parties totaling $122,173. The notes bear interest at 10% and the principal and accrued interest is convertible into common shares, with $4,173 convertible at $.07 per share, $5,000 convertible at $.04 per share and $113,000 convertible at $.01 per share upon the election of the holder. Interest expense for these notes was $7,105 and $6,330 for the years ended July 31, 2013 and 2012 respectively. The Company reported Debt Discount of $51,590 on these notes of which $3,171 and $2,846 was amortized in the fiscal years ended July 31, 2012 and July 31, 2009 accrued compensation totals $228,125 and $45,6252013 respectively. The accrued compensation will only be paid if the Company successfully obtains sufficient financing to fund its plan$45,573 Debt Discount remains unamortized as of operation.July 31, 2013.
(4) | Related party transactions |
Preferred stock
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
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 Stockstock
In April 2009,August 2011, the Company issued 2,200,000300,000 shares of the Company’sCompany's common stock in exchange for uncompensated services provided to the Company by two officers, valued at $154,000.four directors. The shares were valued at $.07$.12 per share based on the fair value of the shares on the date of grant and areday they were granted. This amount ($36,000) is reflected in the accompanying financial statements as stock based compensation.
In December 2008,August 2011, the Company approved issuance of 300,000 shares of the Company's common stock in February 2012 in exchange for uncompensated services provided to the Company by four directors during Fiscal 2013. Issuance of these shares was not done and Stock Payable of $54,000 and $55,500 as of July 31, 2013 and 2012 respectively has been recorded based on the value of the unissued shares at those dates.
In September 2011, the Company issued a total of 425,000387,500 shares of the Company’sCompany's common stock in exchange for accrued interest and an extension of due date from September 18, 2011 to January 16, 2012 on a note payable. The shares related to the accrued interest were issued at $.04 per share and the shares related to the extension were issued at $.15 per share (fair market value) on the day they were granted, per the terms of the agreement. This amount ($54,000) is reflected in the accompanying financial statements as interest.
In November 2011, the Company issued 116,250 shares of the Company's common stock in exchange for accrued interest and an extension of due date from November 28, 2011 to March 27, 2012 on a note payable. The shares related to the accrued interest were issued at $.04 per share and the shares related to the extension were issued at $.05 per share (fair market value) on the day they were granted, per the terms of the agreement. This amount ($5,700) will be reflected in the accompanying financial statements as interest.
In December 2011, the Company issued 150,000 shares of the Company's common stock in exchange for uncompensated services provided to the Company by two officers and five directors.the VP Finance & CFO. The shares were valued at $.03$.04 per share based on the fair value of the shares inon the monthday they were issued.granted. This amount ($12,750)6,000) is reflected in the accompanying financial statements as stock based compensation.
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 $.003 per share. In connection with the stock sales,January 2012, the Company issued one warrant for each common share purchased. The warrants allow387,500 shares of the holder to purchase one share ofCompany's common stock in exchange for accrued interest and an extension of due date from January 16, 2012 to May 15, 2012 on a note payable. The shares related to the accrued interest were issued at a price$.04 per share and the shares related to the extension were issued at $.05 per share (fair market value) on the day they were granted, per the terms of $.75 per share. The warrants expire on April 30, 2010.the agreement. This amount ($19,000) is reflected in the accompanying financial statements as interest.
During October 2009,In March 2012, the Company issued a convertible promissory note to an unrelated third party150,000 shares of the Company's common stock in exchange for $20,000.uncompensated services provided to the Company by the VP Finance & CFO. The note andshares were valued at $.05 per share based on the fair value of the shares on the day they were granted. This amount ($7,500) is reflected in the accompanying financial statements as stock based compensation.
In March 2012, the Company issued 116,250 shares of the Company's common stock in exchange for accrued interest at 12% wasand an extension of due date from March 27, 2012 to July 25, 2012 on April 9, 2010.a note payable. The principal andshares related to the accrued interest was converted into 42,400 Series A shareswere issued at $.50$.04 per share uponand the electionshares related to the extension were issued at $.05 per share (fair market value) on the day they were granted, per the terms of the holder. Interest expenseagreement. This amount ($5,700) is reflected in the accompanying financial statements as interest.
In May 2012, the Company issued 387,500 shares of the Company's common stock in exchange for thisaccrued interest and an extension of due date from July 25, 2012 to September 12, 2012 on a note payable was $1,200payable. The shares related to the accrued interest were issued at $.04 per share and the shares related to the extension were issued at $.03 per share (fair market value) on the day they were granted, per the terms of the agreement. This amount ($12,000) is reflected in the accompanying financial statements as interest.
In August 2012, the Company issued 150,000 shares of the Company's common stock in exchange for uncompensated services provided to the year endedcompany by the VP Finance & CFO. The shares were valued at $.01 per share based on the fair value of the shares on the day they were granted. This amount ($1,500) is reflected in the accompanying financial statements as stock based compensation.
In August 2012, the Company issued 116,250 shares of the Company's common stock in exchange for accrued interest and an extension of due date from July 31, 2010.25, 2012 to November 22, 2012 on a note payable. The shares related to the accrued interest were issued at $.04 per share and the shares related to the extension were issued at $.01 per share (fair market value) on the day they were granted, per the terms of the agreement. This amount ($1,500) will be reflected in the accompanying financial statements as interest.
In September 2012, the Company issued 387,500 shares of the Company's common stock in exchange for accrued interest and an extension of due date from September 12, 2012 to January 10, 2013 on a note payable. The shares related to the accrued interest were issued at $.04 per share and the shares related to the extension were issued at $.01 per share (fair market value) on the day they were granted, per the terms of the agreement. This amount ($5,000) is reflected in the accompanying financial statements as interest.
In December 2012, the Company issued 116,250 shares of the Company's common stock in exchange for accrued interest and an extension of due date from November 22, 2012 to January 10, 2013 on a note payable. The shares related to the accrued interest were issued at $.04 per share and the shares related to the extension were issued at $.03 per share (fair market value) on the day they were granted, per the terms of the agreement. This amount ($3,488) will be reflected in the accompanying financial statements as interest.
In February 2013, the Company issued 387,500 shares of the Company's common stock in exchange for accrued interest and an extension of due date from January 10, 2013 to May 10, 2013 on a note payable. The shares related to the accrued interest were issued at $.04 per share and the shares related to the extension were issued at $.03 per share (fair market value) on the day they were granted, per the terms of the agreement. This amount ($11,625) will be reflected in the accompanying financial statements as interest.
In March 2013, the Company issued 116,250 shares of the Company's common stock in exchange for accrued interest and an extension of due date from March 22, 2013 to July 20, 2013 on a note payable. The shares related to the accrued interest were issued at $.04 per share and the shares related to the extension were issued at $.05 per share (fair market value) on the day they were granted, per the terms of the agreement. This amount ($3,600) will be reflected in the accompanying financial statements as interest.
In May 2013, the Company issued 330,021 shares of the Company's common stock in exchange for accrued interest and an exchange for replacement on two notes payable. The shares related to the accrued interest were issued at $.04 per share and the shares related to the extension were issued at $.05 per share (fair market value) on the day they were granted, per the terms of the agreement. This amount ($16,182) is reflected in the accompanying financial statements as interest.
In June 2014, the FASB issued ASU No. 2014-10: Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements to improve financial reporting by reducing cost and complexity associated with the incremental reporting requirements of development stage entities. The changes eliminate the need for inception to date reporting and other disclosure requirement. The amendments are effective for annual reporting periods beginning after December 15, 2014. Early adoption is permitted. The Company has elected early adoption of these amendments.
(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 which became due and payable on May 21, 2010 was extended to December 31, 2010. The note which bears interest at 8% is due on December 31, 2010 and the principal and accrued interest is convertible, into Series A shares at $.50 per share upon the electionoption of the holder.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 $1,233$3,000 and $2,000 for the yearyears ended July 31, 2013 and 2012, respectively. The original maturity date on this note was May 31, 2010. The holder has extended the note to March 31, 2015.
During February 2010, the Company issued a convertible promissory note to an unrelated third party in exchange for $25,000. The note which became due and payable on July 31, 2010 was extended to December 31, 2010. The note which 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 Decembera mutually agreed discount (not to exceed 50%) to the then market price. Interest expense for this note payable was $3,000 and $2,000 for the years ended July 31, 20102013 and 2012, respectively. The original maturity date on this note was July 31, 2010. The holder has extended the note to March 31, 2015.
During October 2011, the Company issued a convertible promissory note to an unrelated party in exchange for $15,000. The note bears interest at 10% and the principal and accrued interest is convertible into Series Acommon shares at $.50$.07 per share upon the election of the holder. Interest expense for this note payable was $1,000$1,500 and $1,150 for the yearyears ended July 31, 2010.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
During February 2010,2013 and 2012, respectively. The original maturity date on this note was April 25, 2012. The holder has extended the Company issued a promissory note to an unrelated third party in exchange for $20,160. The note which bears interest at 9.47% is payable in monthly installments of $2,104.54 with the final payment in December 2010. Interest expense for this note payable was $531 for the year ended July 31, 2010.2015.
During May 2010,November 2011, the Company issued a convertible promissory note to an unrelated third party in exchange for $50,000.$2,087 of principal and accrued interest on a due promissory note. The terms of the new note match those of the note being replaced. The note whichbear interest at 10% and the principal and accrued interest is convertible into common shares at $.07 per share upon the election of the holder, as did the notes being replaced. Interest expense for the note was $209 and $157 for the years ended July 31, 2013 and 2012, respectively. The original maturity date on this note was April 30, 2012. The holder has extended the note to July 31, 2015.
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 terms of the new note match those of the note being replaced. The note bears interest at 9%10% and the principal and accrued interest is dueconvertible into common shares at $.07 per share upon the election of the holder. Interest expense for this note was $1,575 and $656 for the years ended July 31, 2013 and 2012, respectively. The original maturity date on this note was August 31, 2012. The holder has extended the note to July 31, 2015.
During March 2012, the Company issued a convertible promissory note to an unrelated party in exchange for $2,150. The note 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 $215 and $84 for the years ended July 31, 2013 and 2012, respectively. The original maturity date on this note was September 23, 201012, 2012. The holder has extended the note to July 31, 2015.
During April 2012, the Company issued convertible promissory notes to four unrelated parties in exchange for a total of $12,000. The notes bear interest at 10% and the principal and accrued interest is convertible into common shares at $.04 per share upon the election of the holder of each note. Interest expense for these notes was $1,200 and $400 for the years ended July 31, 2013 and 2012, respectively. Based on the initial valuation the Company has recorded a debt discount of $4,750, $3,158 of which was amortized in the fiscal year ended July 31, 2012 and $1,592 amortized in the fiscal year ended July 31, 2013. The original maturity date on these notes was September 30, 2012. The holders have extended the notes to July 31, 2015.
During July 2012, the Company issued a convertible promissory note to an unrelated party in exchange for $15,000. The note bears interest at 10% and the principal and accrued interest is convertible into common shares at $.01 per share upon the election of the holder. Interest expense for this note payable was $814$1,529 and $0 for the years ended July 31, 2013 and 2012, respectively. The original maturity date on this note was January 31, 2013. The holder has extended the note December 31, 2014.
During October 2012, the Company issued convertible promissory notes to five unrelated parties in exchange for a total of $7,500. The notes bear interest at 10% and the principal and accrued interest is convertible into common shares at $.01 per share upon the election of the holder of each note. Interest expense for these notes was $625 for the year ended July 31, 2010.2013. The original maturity date on these notes was March 31, 2013. The holders have extended the notes to July 31, 2015.
During January 2013, the Company issued three promissory notes to one unrelated party for a total of $12,500. The notes bear interest at 10% and the principal and accrued interest is convertible into common shares at $.01 per share upon the election of the holder of each note. Interest expense for these notes was $649 for the year ended July 31, 2013. Based on the initial valuation the Company has recorded a debt discount of $12,500, all of which was amortized in the fiscal year ended July 31, 2013. The original maturity date on these notes was July 31, 2013. The holder has extended the notes to December 31, 2014.
During June 2013, the Company issued convertible promissory notes to three unrelated parties in exchange for a total of $8,500. The notes bear interest at 10% and the principal and accrued interest is convertible into common shares at $.01 per share upon the election of the holder of each note. Interest expense for these notes was $122 for the year ended July 31, 2013. Based on the initial valuation the Company has recorded a debt discount of $8,500, $2,558 of which was amortized in the fiscal year ended July 31, 2013. The original maturity date on these notes was November 30, 2013. The holders have extended the notes to December 31, 2014.
During June 2013, the Company issued a convertible promissory note to an unrelated party valued at $3,550 as compensation for consulting services. The note bears interest at 10% and the principal and accrued interest is convertible into common shares at $.01 per share upon the election of the holder. Interest expense for this note was $46 for the year ended July 31, 2013. Based on the initial valuation the Company has recorded a debt discount of $3,550, $848 of which was amortized in the fiscal year ended July 31, 2013. The original maturity date on this notes was December 31, 2013. The holder has extended the note to December 31, 2014.
(6) Shareholders’Shareholders' Equity
Preferred stock
The Company is authorized to issue 25,000,000 shares of $.001 par value preferred stock. The Company’sCompany'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”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.
Effective January 31, 2009, the Company issued 658,589 Series A shares at $.50 in full settlement of notes payable and accrued interest in the amount of $329,294.
Also effective January 31, 2009, an additional 16,000 Series A shares were issued for $8,000 in cash.
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.
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.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
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 2006,2011, the Company issued 104,170189,000 shares of the Company’sCompany's common stock, valued at $9,450, in exchange for services valued at $25,000.to be rendered. 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,December 2011, the Company issued 16,66915,000 shares of the Company’sCompany's common stock, valued at $750, in exchange for services valued at $3,000.to be rendered. 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 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.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
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 2009,2012, the Company issued 100,000 shares of the Company’s commonCompany's 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 stockvalued at $5,000, in exchange for services valued at $2,000.to be rendered. 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,March 2012, the Company issued 200,00015,000 shares of the Company’sCompany'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 granted. The amount ($750) is reflected in the accompanying financial statements as consulting fees.
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 $.03 per share based on the fair value of the shares when they were granted. The amount ($450) is reflected in the accompanying financial statements as consulting fees.
In July 2012, the Company issued 300,000 shares of the Company's common stock in exchange for services rendered. The shares were valued at $.04 per share based on the fair value of the shares when they were granted. The amount ($12,000) is reflected in the accompanying financial statements as consulting fees.
In September 2012, the Company issued 350,000 shares of the Company's common stock in exchange for services valued at $10,000.$3,500. The shares were valued based on the fair value on the date of grant, $.03 per share, and are reflected in the accompanying financial statements as professional and consulting fees.
In October 2009,December 2012, the Company issued 20,00035,000 shares of the Company’sCompany's common stock to two individuals in exchange for services valued at $1,600.$3,500. 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 April 2010, the Company issued 25,000 shares of the Company’s common stock in exchange for services valued at $7,500. The shares were valued based on the fair value on the date of grant$.01 per share, and are reflected in the accompanying financial statements as professional and consulting fees.
Options granted to employees, accounted for under the fair value method
Effective February 1, 2006, the Company adopted SFAS No. 123R, “ShareASC 718 Stock Based Payment”. SFAS 123RPayment which 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).
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
On March 16, 2006,In November 2011, the Company granted the VP Finance & CFO options to an officer to purchase an aggregate of 100,000150,000 shares of the Company’sCompany'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 costs resulted from the modif ication. 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:
Risk-free interest rate | 4.60% |
Dividend yield | 0.00% |
Volatility factor | 140.00% |
Weighted average expected life | 5 years |
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 $.06$.15 per share, in exchange for accrued compensation andunpaid services expenses. All 2,529,029150,000 options were fully vested on the grant date. The quoted market price of the stock was $.84$.04 per share on the grant date. The Company valued the options at $.84$.04 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.$6,000. 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:
| Risk-free interest rate | 4.97%0.90% |
| Dividend yield | 0.00% |
| Volatility factor | Ranging from
139.92% to 140.00%
302.56% |
| Weighted average expected life | 5 years |
In April 2007,March 2012, the Company granted the VP Finance & CFO options to various officers, directors, and employees to purchase an aggregate of 933,338150,000 shares of the Company’sCompany'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:
Risk-free interest rate | 4.97% |
Dividend yield | 0.00% |
Volatility factor | 202.07% |
Weighted average expected life | 5 years |
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:
Risk-free interest rate | 4.97% |
Dividend yield | 0.00% |
Volatility factor | 220.80% |
Weighted average expected life | 5 years |
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 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:
Risk-free interest rate | 4.97% |
Dividend yield | 0.00% |
Volatility factor | 268.16% |
Weighted average expected life | 7 years |
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:
Risk-free interest rate | 4.97% |
Dividend yield | 0.00% |
Volatility factor | 268.16% |
Weighted average expected life | 7 years |
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:
Risk-free interest rate | 4.97% |
Dividend yield | 0.00% |
Volatility factor | 336.38% |
Weighted average expected life | 5 years |
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 $.015$.15 per share, in exchange for unpaid services expenses. All 600,000150,000 options were fully vested on the grant date. The quoted market price of the stock was $.02$.04 per share on the grant date. The Company valued the options at $.02$.04 per share, or $12,000.$6,000. 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:
| Risk-free interest rate | 4.97%0.90% |
| Dividend yield | 0.00% |
| Volatility factor | 139.92%281.50% |
| Weighted average expected life | 5 years |
Options granted to employees, accounted for under the intrinsic value method
On April 30, 2005,In August 2012, the Company granted two officers and four directors options to purchase an aggregate of 120,000500,000 shares of the Company’sCompany'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.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
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.
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:
Risk-free interest rate | 2.70% |
Dividend yield | 0.00% |
Volatility factor | 0.00% |
Weighted average expected life | 5 years |
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:
| | | | | | | | | March 1, 2005 | |
| | | Year | | | Year | | | (Inception) | |
| | | Ended | | | Ended | | | Through | |
| | | July 31, 2010 | | | July 31, 2009 | | | July 31, 2010 | |
| Net loss, as reported | | $ | (339,638 | ) | | $ | (464,456 | ) | | $ | (6,858,944 | ) |
| Decrease due to: | | | | | | | | | | | | |
| Employee stock options | | | - | | | | - | | | | (29,453 | ) |
| Pro forma net loss | | $ | (339,638 | ) | | $ | (464,456 | ) | | $ | (6,888,397 | ) |
| | | | | | | | | | | | | |
| As reported: | | | | | | | | | | | | |
| Net loss per share - basic and diluted | | $ | (0.016 | ) | | $ | (0.036 | ) | | | | |
| Pro Forma: | | | | | | | | | | | | |
| Net loss per share - basic and diluted | | $ | (0.016 | ) | | $ | (0.036 | ) | | | | |
The following schedule reflects the calculation of the pro forma compensation expense on employee stock options:
| Date of Grant | | Number of Options Granted | | | Total Fair Value | | | Options Vested Through July 31, 2008 | | | Fair Value Incurred Through July 31, 2008 | |
| 4/30/2005 | | | 100,000 | | | $ | 11,160 | | | | 100,000 | | | $ | 6,510 | |
| 8/18/2005 | | | 233,334 | | | | 21,700 | | | | 233,334 | | | | 15,721 | |
| 9/30/2005 | | | 30,000 | | | | 12,600 | | | | 30,000 | | | | 7,222 | |
| | | | 363,334 | | | $ | 45,460 | | | | 363,334 | | | $ | 29,453 | |
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
$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.
Options granted to non-employees, accounted for under the fair value method
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:
Risk-free interest rate | 4.97% |
Dividend yield | 0.00% |
Volatility factor | 268.16% |
Weighted average expected life | 7 years |
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:
Risk-free interest rate | 4.97% |
Dividend yield | 0.00% |
Volatility factor | 268.16% |
Weighted average expected life | 7 years |
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:
Risk-free interest rate | 4.97% |
Dividend yield | 0.00% |
Volatility factor | 220.80% |
Weighted average expected life | 5 years |
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:
Risk-free interest rate | 4.97% |
Dividend yield | 0.00% |
Volatility factor | 202.07% |
Weighted average expected life | 5 years |
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 $.06$.01 per share, in exchange for accruedunpaid services expenses. All 325,000500,000 options were fully vested on the grant date. The quoted market price of the stock was $.84$.01 per share on the grant date. The Company valued the options at $.82$.01 per share, or $267,248.$5,000. 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:
| Risk-free interest rate | 4.97%0.63% |
| Dividend yield | 0.00% |
| Volatility factor | 139.92%273.47% |
| Weighted average expected life | 7 years |
In August 2012, the Company granted the VP Finance & CFO options to purchase an aggregate of 150,000 shares of the Company's common stock at an exercise price of $.01 per share, in exchange for unpaid services expenses. All 150,000 options were fully vested on the grant date. The quoted market price of the stock was $.01 per share on the grant date. The Company valued the options at $.01 per share, or $1,500. 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:
| Risk-free interest rate | 0.45% |
| Dividend yield | 0.00% |
| Volatility factor | 271.79% |
| Weighted average expected life | 7 years |
In July 2013, the Company granted the CEO and four directors options to purchase an aggregate of 500,000 shares of the Company's common stock at an exercise price of $.05 per share, in exchange for unpaid services expenses. All 500,000 options were fully vested on the grant date. The quoted market price of the stock was $.12 per share on the grant date. The Company valued the options at $.12 per share, or $60,000. 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:
| Risk-free interest rate | 0.59% |
| Dividend yield | 0.00% |
| Volatility factor | 314.40% |
| Weighted average expected life | 5 years |
In August 2012, the Company granted the VP Finance & CFO options to purchase an aggregate of 150,000 shares of the Company's common stock at an exercise price of $.05 per share, in exchange for unpaid services expenses. All 150,000 options were fully vested on the grant date. The quoted market price of the stock was $.12 per share on the grant date. The Company valued the options at $.12 per share, or $18,000. 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: | Risk-free interest rate | 0.59% |
| |
| |
| |
WORLDWIDE STRATEGIES INCORPORATED30
(A Development Stage Company)
Notes to Financial Statements
| |
| Dividend yield | 0.00% |
| Volatility factor | 314.40% |
| Weighted average expected life | 5 years |
Following is a schedule of changes in common stock options and warrants from March 1, 2005 (inception) through July 31, 2010:
| | | Total | | | Exercisable | | | Per Share | | | Per Share | | | Value | | | Life | |
| Outstanding at March 31, 2005 (Inception) | | | - | | | | - | | | $ | - | | | $ | - | | | | - | | | | - | |
| Granted | | | 3,026,667 | | | | 3,026,667 | | | $ | 0.75 | | | $ | 0.75 | | | | - | | | .79 years | |
| Exercised | | | - | | | | - | | | $ | - | | | $ | - | | | | - | | | | N/A | |
| Cancelled/Expired | | | (20,000 | ) | | | (20,000 | ) | | $ | - | | | $ | - | | | | - | | | | N/A | |
| Outstanding at July 31, 2005 | | | 3,006,667 | | | | 3,006,667 | | | $ | 0.75 | | | $ | 0.75 | | | | - | | | .79 years | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Granted | | | 4,793,029 | | | | 4,793,029 | | | $ | 0.06-$3.36 | | | $ | 0.35 | | | | 256,863 | | | 1.69 years | |
| Exercised | | | - | | | | - | | | $ | - | | | $ | - | | | | - | | | | N/A | |
| Cancelled/Expired | | | - | | | | - | | | $ | - | | | $ | - | | | | - | | | | N/A | |
| Outstanding at July 31, 2006 | | | 7,799,696 | | | | 7,799,696 | | | $ | 0.06-$3.36 | | | $ | 0.50 | | | | 256,863 | | | 1.34 years | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Granted | | | 2,883,363 | | | | 2,883,363 | | | $ | 0.18-$0.75 | | | $ | 0.35 | | | | - | | | 4.09 years | |
| Exercised | | | - | | | | - | | | $ | - | | | $ | - | | | | - | | | | N/A | |
| Cancelled/Expired | | | - | | | | - | | | $ | - | | | $ | - | | | | - | | | | N/A | |
| Outstanding at July 31, 2007 | | | 10,683,059 | | | | 10,683,059 | | | $ | 0.06-$3.36 | | | $ | 0.46 | | | | 256,863 | | | 2.08 years | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Granted | | | 475,000 | | | | 475,000 | | | $ | 0.11 | | | $ | 0.11 | | | | - | | | 3.83 years | |
| Exercised | | | - | | | | - | | | $ | - | | | $ | - | | | | - | | | | N/A | |
| Cancelled/Expired | | | - | | | | - | | | $ | - | | | $ | - | | | | - | | | | N/A | |
| Outstanding at July 31, 2008 | | | 11,158,059 | | | | 11,158,059 | | | $ | 0.06-$3.36 | | | $ | 0.45 | | | | 256,863 | | | 2.16 years | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Granted | | | 600,000 | | | | 600,000 | | | $ | 0.02 | | | $ | 0.02 | | | | - | | | | 4.36 | |
| Exercised | | | - | | | | - | | | $ | - | | | $ | - | | | | - | | | | N/A | |
| Cancelled/Expired | | | - | | | | - | | | $ | - | | | $ | - | | | | - | | | | N/A | |
| Outstanding at July 31, 2009 | | | 11,758,059 | | | | 11,758,059 | | | $ | 0.015-$3.36 | | | $ | 0.42 | | | | 256,863 | | | 2.27 years | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Granted | | | - | | | | - | | | $ | - | | | $ | - | | | | - | | | | N/A | |
| Exercised | | | - | | | | - | | | $ | - | | | $ | - | | | | - | | | | N/A | |
| Cancelled/Expired | | | 3,323,370 | | | | 3,323,370 | | | $ | 0.75 | | | $ | 0.75 | | | | - | | | | N/A | |
| Outstanding at July 31, 2010 | | | 8,434,689 | | | | 8,434,689 | | | $ | 0.015-$3.36 | | | $ | 0.42 | | | | 256,863 | | | 1.86 years | |
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
Common stock awards consistedThe Company accounts for income taxes under FASB ASC Topic 740, which requires use of the following optionsliability method. FASB ASC Topic 740 provides that deferred tax assets and warrants duringliabilities are recorded based on the period from March 1, 2005 (inception) through July 31, 2010:
| | | | | | | | | Total |
| Description | | Options | | | Warrants | | | Awards |
| Outstanding at March 31, 2005 (inception) | | | - | | | | - | | | | - |
| Granted | | | 120,000 | | | | 2,906,667 | | | | 3,026,667 |
| Exercised | | | - | | | | - | | | | - |
| Cancelled/Expired | | | (20,000 | ) | | | - | | | | (20,000 |
| Outstanding at July 31, 2005 | | | 100,000 | | | | 2,906,667 | | | | 3,006,667 |
| | | | | | | | | | | | |
| Granted | | | 3,416,362 | | | | 1,376,667 | | | | 4,793,029 |
| Exercised | | | - | | | | - | | | | - |
| Cancelled/Expired | | | - | | | | - | | | | - |
| Outstanding at July 31, 2006 | | | 3,516,362 | | | | 4,283,334 | | | | 7,799,696 |
| | | | | | | | | | | | |
| Granted | | | 2,133,333 | | | | 750,030 | | | | 2,883,363 |
| Exercised | | | - | | | | - | | | | - |
| Cancelled/Expired | | | - | | | | - | | | | - |
| Outstanding at July 31, 2007 | | | 5,649,695 | | | | 5,033,364 | | | | 10,683,059 |
| | | | | | | | | | | | |
| Granted | | | 475,000 | | | | - | | | | 475,000 |
| Exercised | | | - | | | | - | | | | - |
| Cancelled/Expired | | | - | | | | - | | | | - |
| Outstanding at July 31, 2008 | | | 6,124,695 | | | | 5,033,364 | | | | 11,158,059 |
| | | | | | | | | | | | |
| Granted | | | 600,000 | | | | - | | | | 600,000 |
| Exercised | | | - | | | | - | | | | - |
| Cancelled/Expired | | | - | | | | - | | | | - |
| Outstanding at July 31, 2009 | | | 6,724,695 | | | | 5,033,364 | | | | 11,758,059 |
| | | | | | | | | | | | |
| Granted | | | - | | | | - | | | | - |
| Exercised | | | - | | | | - | | | | - |
| Cancelled/Expired | | | 333,339 | | | | 2,990,031 | | | | 3,323,370 |
| Outstanding at July 31, 2010 | | | 6,391,356 | | | | 2,043,333 | | | | 8,434,689 |
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notesdifferences the tax basis of assets and liabilities and their carrying amounts for financial reporting purposes, referred to Financial Statements
(7) Income Taxesas temporary differences.
A reconciliationAs of U.S. statutory federalJuly 31, 2013, the Company incurred a net operating loss and, accordingly, no provision for income tax ratetaxes has been recorded. In addition, no benefit for income taxes has been recorded due to the effective rate follows:uncertainty of the realization of any tax assets. The Company has approximately $3,267,261 and $3,297,620 of federal net operating loss carry forwards at July 31, 2013 and 2012, respectively. The net operating loss carry forwards, if not utilized, will begin to expire in 2031.
| | | For The Years Ended | |
| | | July 31, | |
| | | 2010 | | | 2009 | |
| U.S. statutory federal rate, graduated | | | 34.00 | % | | | 34.00 | % |
| State income tax rate, net of federal | | | 3.06 | % | | | 3.06 | % |
| Net operating loss (NOL) for which | | | | | | | | |
| no tax benefit is currently available | | | -37.06 | % | | | -37.06 | % |
| | | | 0.00 | % | | | 0.00 | % |
At July 31, 2010,The Components of the Company fully allowed for anyCompany's deferred tax asset that it may haveare as a resultfollows:
| | December 31 | | December 31, | |
| | 2013 | | 2012 | |
| | | | | |
Deferred tax assets: Net operating loss carry forwards | | $ | 3,267,261 | | | $ | 3,297,620 | |
| | | | | | | | | |
| Net deferred tax assets before valuation allowance | | $ | 1,110,869 | | | $ | 1,121,191 | |
| Less: Valuation allowance | | | (1,110,869 | ) | | | (1,121,191 | ) |
| Net Deferred tax assets | | $ | - | | | $ | - | |
Based on the available objective evidence, including the Company's history of its accumulated losses, of $6,858,944. The valuation allowance offsets the net deferred tax asset for whichmanagement believes it is more likely than not, that the net deferred tax assets will not be realized. The net operating loss carryforward expires throughfully realizable. Accordingly, the year 2030.
TheCompany provided for a full 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 theagainst its net deferred tax assets isat December 31, 2013 and 2012. The Company had no longer impaireduncertain tax positions as of December 31, 2013 and the allowance is no longer required.2012.
ShouldA reconciliation between the Company undergo an ownership change as defined in Section 382amounts of income tax benefit determined by applying the Internal Revenue Code, the Company’sfederal and state statutory income tax net operatingrate to pre-tax 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) Acquisition of Centric Rx, Inc.
The Company entered into a Share Exchange Agreement dated June 28, 2007 with Centric, whereby the Company acquired 100% of the issued and outstanding shares of Centric. Centric’s primary business will be the distribution of health services and prescription drug discount cards. The Company plans to contract with call centers to provide ongoing service and support to organizations and individuals that utilize these cards. Centric will receive commissions based upon the utilization of these cards.
The transaction closed on July 31, 2007 and is accounted for using the purchase method. Under the terms of the Share Exchange Agreement the Company acquired 100% of the issued and outstanding share capital of Centric in exchange for 2,250,000 post reverse shares of the Company’s common stock. The acquisition is valued at the fair value of the net assets acquired.
| Cash | | $ | 6 | |
| Software | | | 116,667 | |
| Liability due to related party | | | (75,000 | ) |
| | | | | |
| Paid by issuance of 2,250,000 post-reverse-split | | | | |
| shares of the Company’s common stock | | $ | 41,673 | |
As Centric was acquired on July 31, 2007, the operations of Centric are included in the consolidated financial statements for year ended July 31, 2010.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
(9) Letters of Intent
NewMarket Technology, Inc.
In February 2008, the Company entered into a letter of intent with NewMarket Technology, Inc. (“NMKT”). Pursuant to the letter of intent, NMKT was to acquire a 51% in the Company in exchange for (i) the assumption of all of the Company’s outstanding debts and (ii) the payment of $100,000. NMKT’s ownership interest was to be protected from dilution for three years. The transaction was to be subject to the execution of a mutually satisfactory definitive stock purchase agreement and the completion of due diligence. Withdrawal from the transaction by either party would subject the withdrawing party to a claim for the legal and due diligence expenses of the other party, not to exceed $100,000.
Through July 31, 2010, the Company received $77,240 from NMKT as partial payment of item (ii) in the letter of intent. The Company 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.
E-nnovation.com Limited
In September 2006, the Company signed a Heads of Agreement to purchase 100% of the issued capital of E-nnovation.com Limited, which owned 100% of the issued capital stock of Innovation Software Limited (“ISL”). The proposed purchase price was ₤1,000,000 to be settled in one cash payment at the date of completion. On April 4, 2007, the Company decided to discontinue its efforts to acquire Innovation Software Limited when ISL terminated its relationship with the Company and withdrew from further negotiations. As a result, the Company recorded $31,016 as a loss on failed acquisitions during the year ended July 31, 2007.
Cascade
On September 29, 2005, the Company entered into a Letter of Intent (“LOI”) with Cascade Callworks, Inc. (“Cascade”), a Washington corporation. Under the terms of the LOI, the Company would acquire Cascade for $2.5 million, subject to detailed due diligence and satisfactory negotiation of other terms. The Company made a $100,000 deposit toward the purchase price in October 2005. The remaining balance on the purchase price was to be due at closing, which was to occur no later than April 30, 2006.
In addition, as part of the purchase price the Company would issue Cascade warrants to purchase 133,334 shares of the Company’s common stock, exercisable over a period of three years as follows:
a. | 33,334 shares at $1.50 per share; |
b. | 100,000 shares at $2.25 per share. |
| | | December 31, | | | December 31, | |
| | | 2013 | | | 2012 | |
| Federal and state statutory rate | | | 37.06 | % | | | 37.06 | % |
| Change in valuation allowance on deferred taxes | | | (37.06 | %) | | | (37.06 | %) |
In July 2006, the Company terminated the agreement set forth in the Letter of Intent and amendments to that letter. Accordingly, the Company wrote-off the $100,000 deposit to “Loss on failed acquisition” and issued three year warrants to purchase 83,334 shares of the Company’s common stock exercisable at $.75.
TouchStar
On October 18, 2005, the Company entered into a Letter of Intent (“LOI”) with the management of TouchStar Software Corporation (“TouchStar”). TouchStar owns a majority of the issued and outstanding common shares of TouchStar International Sales Limited (“TISL”), a Delaware corporation. Under the terms of the LOI, the Company would issue to TouchStar that number of shares at the market price per share on the date of transfer representing a $500,000 investment in the Company. In exchange, TouchStar would issue to the Company 50,000 shares of TISL. Following the exchange, the Company would own five percent of the issued and outstanding common shares of TISL.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
The Company agreed that it would register at least 666,667 shares of its common stock pursuant to a Registration Statement in order to ensure the registration of a sufficient number of shares to meet the $500,000 valuation of shares issued to TouchStar.
The Company agreed that either through itself, a subsidiary, affiliate, or third party, it would cause the shares issued to TouchStar to be repurchased from TouchStar within 30 days after the effective date of the Registration Statement at a purchase price equal to the greater of (a) the market price of the shares held by TouchStar, or (b) $500,000. If the repurchase did not occur within the stated period, each party would return all shares included in the original exchange.
Cascade and TouchStar are affiliates with common management; however, neither entity is related to the Company.
In February 2006, the Company issued 666,667 shares of its common stock to Touchstar under the terms of the above agreement. On April 19, 2006, the Company rescinded the transaction, cancelled the shares, and restored the status of the shares as authorized but unissued.
(10) Business Process Provider Agreement
On April 28, 2005, the Company entered into a Business Process Provider Agreement (the “Agreement”) with Cleave Global E-Services Limited (“CGESL”), an Indian corporation. Under the agreement, the Company was to market the services provided by CGESL in the United States, United Kingdom and throughout the world on a non-exclusive basis. Contract prices for services provided by the Company to CGESL were to be based on future negotiations. In addition, the Company was to acquire a 20% equity interest in CEGSL. On April 15, 2005, the value of CGESL’s business was estimated at $4 million; however, the final cost was to be established once the Company had the resources to close the acquisition. Upon signing the agreement, the Company paid CGESL a $50,000 deposi t toward the acquisition.
On September 21, 2005, the parties terminated the agreement and the Company wrote-off the $50,000 deposit to “Loss on failed acquisition”.
(11) (8)Commitments
Beginning February 2007, the Company commenced a month-to-month lease on a “virtual”"virtual" office at a rate of $150 per month. Rent expense for the years ended July 31, 20102013 and 2009,2012 and for the period from March 1, 2005 (inception) through July 31, 20102013 totaled $1,800, $1,800 and $51,231,$56,731, respectively.
(12)
(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”("FDIC"). At July 31, 2010,2013 and 2012, 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.
(13) Subsequent Events(10)Restatement of 2012 Financial Statements
In February 2014 the Company identified several errors in the previously issued consolidated financial statements that required restatement. Three areas of concern were identified for adjustment: common shares for directors' fees that should have been but were not issued in the 2012 fiscal year, the recording of Prepaid Expenses related to extension fees due to the holder of a promissory note, and the recording of the conversion feature on the Company's promissory notes where the conversion rate is below the market price of the common stock.
| | | | | | | | | | |
| CONSOLIDATED BALANCE SHEET AS OF JULY 31, 2012 | | | | | | | |
| | | | | | | | | | |
| | | July 31, 2012 | | | | | | | |
| | | As Previouly | | | As | |
| | | Reported | | | Adjustments | | | Restated | |
| Assets | | | | | | | | | |
| Current Assets: | | | | | | | | | |
| Cash | $ | | 4,710 | | $ | | (1 | ) | $ | | 4,709 | |
| Prepaid expenses | | | 3,738 | | | | (3,738 | ) | | | — | |
| Total current assets | | | 8,448 | | | | (3,739 | ) | | | 4,709 | |
| | | | | | | | | | | | | |
| Deposits | | | 150 | | | | — | | | | 150 | |
| | | | | | | | | | | | | |
| Total assets | $ | | 8,598 | | $ | | (3,739 | ) | $ | | 4,859 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Liabilities and Shareholders' Deficit | | | | | | | | | | | | |
| Current Liabilities: | | | | | | | | | | | | |
| Accounts and notes payable: | | | | | | | | | | | | |
| Accounts payable | $ | | 80,464 | | $ | | — | | $ | | 80,464 | |
| Accounts payable, related party | | | 3,900 | | | | — | | | | 3,900 | |
| Accrued compensation, related party | | | 410,625 | | | | — | | | | 410,625 | |
| Accrued liabilities | | | 15,597 | | | | (2,768 | ) | | | 12,829 | |
| Accrued liabilities, related party | | | 100,523 | | | | 2,318 | | | | 102,841 | |
| Notes payable, related party, net of unamortized discount of $419 | | | — | | | | 73,755 | | | | 73,755 | |
| Note payable, net of unamortized discount of $1,592 | | | 171,161 | | | | (75,766 | ) | | | 95,395 | |
| | | | | | | | | | | | | |
| Total current liabilities | | | 782,270 | | | | (2,461 | ) | | | 779,809 | |
| | | | | | | | | | | | | |
| Shareholders' deficit: | | | | | | | | | | | | |
| Preferred stock, $.001 par value; 25,000,000 shares authorized, | | | | | | | | | |
| 1,491,743 shares issued and outstanding | | | 1,492 | | | | — | | | | 1,492 | |
| Common stock, $.001 par value, 33,333,333 shares authorized | | | | | |
| 16,870,234 shares issued and outstanding | | | 16,871 | | | | — | | | | 16,871 | |
| Stock Payable | | | — | | | | 55,500 | | | | 55,500 | |
| Additional paid-in capital | | | 6,884,345 | | | | 12,110 | | | | 6,896,455 | |
| Accumulated Deficit | | | (7,676,380 | ) | | | (68,888 | ) | | | (7,745,268 | ) |
| | | | | | | | | | | | | |
| Total shareholders' deficit | | | (773,672 | ) | | | (1,278 | ) | | | (774,950 | ) |
| | | | | | | | | | | | | |
| Total liabilities and shareholders' deficit | $ | | 8,598 | | $ | | (3,739 | ) | $ | | 4,859 | |
| | | | | | | | | | | | | |
34
32
| CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDING JULY 31, 2012 | | |
| | | | | | | | | | | |
| | | July 31 2012 | | | | | | | | |
| | | As Previously | | | As | | |
| | | Reported | | | Adjustments | | | Restated | | |
| | | | | | | | | | | |
| Sales | $ | | — | | $ | | — | | $ | | — | | |
| Cost of sales | | | — | | | | — | | | | — | | |
| | | | | | | | | | | | | | |
| | | | — | | | | — | | | | — | | |
| | | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | | |
| Professional and consulting fees | | | 155,923 | | | | 50,960 | | | | 206,883 | | |
| Travel | | | 22,008 | | | | 2 | | | | 22,010 | | |
| Other general and administrative expenses | | | 4,192 | | | | — | | | | 4,192 | | |
| | | | | | | | | | | | | | |
| Total operating expenses | | | 182,123 | | | | 50,962 | | | | 233,085 | | |
| Loss from operations | | | (182,123 | ) | | | (50,962 | ) | | | (233,085 | ) | |
| | | | | | | | | | | | | | |
| Other expense: | | | | | | | | | | | | | |
| Interest expense | | | (134,918 | ) | | | 20,231 | | | | (114,687 | ) | |
| | | | | | | | | | | | | | |
| Loss before income taxes | | | (317,041 | ) | | | (30,731 | ) | | | (347,772 | ) | |
| | | | | | | | | | | | | | |
| Income tax provision | | | — | | | | — | | | | — | | |
| | | | | | | | | | | | | | |
| Net loss | $ | | (317,041 | ) | | $ | (30,731 | ) | $ | | (347,772 | ) | |
| | | | | | | | | | | | | | |
| Basic and diluted loss per share | | | (0.01 | ) | | | | | | | (0.01 | ) | |
| | | | | | | | | | | | | | |
| Basic and diluted weighted average | | | | | | | | | | |
| common shares outstanding | | | 24,985,016 | | | | | | | | 24,985,016 | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
(11)Subsequent Events
In August 2013, the Company issued 503,750 shares of the Company's common stock in exchange for accrued interest and renewal of five Promissory Notes.
In September 2013, the Company issued 167,917 additional shares of the Company's common stock in exchange for accrued interest and renewal of the five Promissory Notes noted above.
In September 2013, the Company issued a convertible promissory note to an unrelated party in exchange for $3,000.
In December 2013, the Company issued convertible promissory notes to related parties in exchange for $16,000.
In October 2013, the Company was notified by Hamilton, P.C. that it had resigned as the Company's independent public accountant.
In October 2013, the Company appointed M&K CPAS, PLLC in Houston, Texas, as the registered independent public accountant for the fiscal years ended July 31, 2013 and 2012.
In March 2014, the Company issued 300,000 shares of common stocks to Directors as compensation for services provided. These shares, approved August 2011, were to be issued February 2012. The liability for this transaction had been accrued to the date granted.
ITEM 9. | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ThereOn October 21, 2013, we were no changes in or disagreements with accountants duringnotified by Hamilton, P.C. ("Hamilton") that it was resigning as our independent public accountants. Hamilton had audited our financial statements for the fiscal yearyears ended July 31, 2009. On October 16, 2009, we appointed2010, 2011 and 2012.
The reports of Hamilton P.C. (“Hamilton”) in Denver, Colorado as the registered independent public accountanton our consolidated financial statements for the two most recent fiscal yearyears ended July 31, 2009. On October 16, 2009, we dismissed Cordovano2011 and Honeck LLP (“C&H”)2012 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as its registered independent public accountant. The decisions to appoint Hamilton and dismiss C&H were approved by our Board of Directors on October 16, 2009.uncertainty, audit scope, or accounting principles.
During the fiscal years ended July 31, 20082011 and 20072012, and through the subsequent interim period up through the date of dismissal (October 16, 2009),ending October 21, 2013, there were no disagreements with C&HHamilton on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of C&H,Hamilton, would have caused C&HHamilton to make reference thereto in its report on our financial statements for such years. Further, there were no reportable events as described in Item 304(a)(1)(iv) or (v) of Regulation S-K occurring within the our two most recent fiscal years and the subsequent interim period up through the date of dismissal (October 16, 2009).ending October 21, 2013.
The audit report of C&HOn October 31, 2013, we appointed M&K CPAS, PLLC ("M&K") in Houston, Texas as our registered independent public accountant for our financial statements as ofthe fiscal years ended July 31, 2008, contained a separate paragraph stating:
“2013 and 2012. The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1decision to the financial statements, the Company has incurred recurring losses, incurred liabilities in excessappoint M&K was approved by our Board of assets over the past year and has an accumulated deficit of $6,054,850. Based upon current operating levels, the Company may be required to obtain additional capital or significant reconfiguration of its operations to sustain its operations beyond JulyDirectors on October 31, 2009. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Further information and management’s plans in regard to this uncertainty are also described in Note 1. The financial statements do not include any adjustment s that might result from the outcome of this uncertainty.”2013.
During our two most recent fiscal years and the subsequent interim period up through the date of engagement of HamiltonM&K (October 16, 2009)31, 2013), neither we nor anyone on our behalf consulted HamiltonM&K regarding the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on our financial statements. Further, HamiltonM&K has not provided us with written or oral advice that was an important factor that we considered in reaching a decision as to any accounting, auditing or financial reporting issues.
C&H furnished us with a letter addressed to the Securities and Exchange Commission stating whether or not it agreed with the statements in our 8-K, a copy of which was filed with our Form 8-K containing this same disclosure.
ITEM 9A.CONTROLS9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required by SEC rules, we have evaluatedof July 31, 2013 an evaluation was performed under the supervision and with the participation of the Company's management, including James P.R. Samuels, the Company's President and Chief Executive Officer ("CEO"), and Thomas E. McCabe, the Company's Chief Financial Officer, of the effectiveness of the design and operation of ourthe Company's disclosure controls and procedures at the end of the period covered by this report. This evaluation was carried out(as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the supervisionSecurities and with the participationExchange Act 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.1934 (the "Exchange Act"))
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, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s AnnualManagement's Report on Internal Control overControls Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, our chiefthe Company's principal executive and principal financial officerofficers and implementedeffected by our board of directors,the Company's Board, 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 accounting principles generally accepted accounting principles.in the United States of America and includes those policies and procedures that:
Our evaluation| - | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions of the company; |
| - | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and |
| - | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting includes an analysis under the COSO framework, an integrated framework for themay not prevent or detect misstatements. Projections of any evaluation of internal controls issuedeffectiveness to identify the risks and control objectives relatedfuture periods are subject to the evaluationrisk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, environmentthere is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
As of July 31, 2013, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, management concluded that, during the period covered by this report, such internal controls and procedures were not effective based on the COSO criteria. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our ability to prepare accurate and timely financial statements, which are considered to be material weaknesses.
BasedAs a public company with listed equity securities, we need to comply with laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act or the Dodd-Frank Act, and related regulations of the SEC, which we would not be required to comply with as a private company. Complying with these statutes, regulations and requirements occupies a significant amount of time of our board of directors and management and significantly increases our costs and expenses.
The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of adequate resources so as to remain compliant with our periodic filings as required by the Securities and Exchange Commission; and (2) failure to perform adequate timely review of specific transactions as recorded. The aforementioned material weaknesses were identified by our management in connection with the audit of our financial statements as of July 31, 2013.
Management believes that the material weaknesses set forth above did not have an effect on our evaluationfinancial results. See, "Management's Remediation Initiatives."
Attestation Report of the Registered Public Accounting Firm
This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to the Dodd-Frank Act and the Company only provided management's report in this annual report.
Management's Remediation Initiatives
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we are in the process of formulating a plan to remediate our material weaknesses in internal controls. That plan includes the following:
As of the date of this report, we believe that adequate resources are available so as to properly staff the financial reporting process. We are further studying best practices in internal controls over financial reporting and designing other internal controls to implement that will help remediate our weaknesses.
Changes in internal controls over financial reporting
Other than as described above, our management has concluded thatthere have been no significant changes in our internal control over financial reporting was effective during the fiscal yearquarter ended July 31, 2010.2013 that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.
Respectfully,
James P.R. Samuels, Chief Executive Officer
W. Earl Somerville, Chief Financial Officer
ITEM 9B.OTHER9B. 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:
Name | Age | Position |
| James P.R. Samuels | 6366 | President, Chief Executive Officer and Director |
W. Earl SomervilleThomas E. McCabe | 7256 | VP Finance, Chief Financial Officer, Secretary Treasurer and Director |
| Frank J. Deleo | 5457 | Director |
| Robert T. Kane | 6768 | Director |
| Edward J. Weisberg | 5356 | Director |
| Gregory Kinney | 4851 | Director |
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 19 851985 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’sBachelor's degree in Business Administration from Lowell Technological Institute in 1970, and a Master of Business Administration degree in 1972 f romfrom Suffolk University, Boston, Massachusetts. He completed an executive program in strategic market management through Harvard University in Switzerland in 1984.
We believe that Mr. Samuels should serve on the board because of his previous experience in management and with publicly held companies.
W. Earl Somerville,Thomas E. McCabe, VP Finance and Chief Financial Officer Secretary and Treasurer. Earl SomervilleThomas McCabe has been our chief financial officer secretary and treasurer since June 2005 and became a director in October 2010.2011. He has over 3725 years of experience in accounting. He has been self-employed aspublic and privately held companies. Mr. McCabe's corporate leadership roles include President, CFO, General Manager, Senior Vice President, Vice President of Administration, Vice President Information Technology, Manufacturing Manager and Controller. His educational background includes a chartered accountantBS in Oakville, Ontario, Canada, since 1992. From 1984Math/Business from Wake Forest University and an MBA from the University of Florida. Mr. McCabe started TEM Associates in 2009 with a primary focus on providing C-level guidance, support and services to 1991, he was a vice president of financestart-up, early-stage and small/medium sized companies, focusing primarily on CFO related activities. TEM Associates also provides investment evaluation services to Private Equity investors, support for Facet of Canada Inc., a Canadian holding company whose subsidiaries were engaged in the manufactureacquisition execution 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 Account ants of Ontario.assorted project and interim C-level support.
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 .America. Mr. Deleo received a bachelors degree in psychology from University of Stony Brook University in 1977.
We believe that Mr. Deleo should serve on the board because of his previous experience in financial services and management with publicly held companies.
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.
We believe Mr. Kane should serve on the board because of his experience in corporate oversight, litigation and general corporate law practice.
Edward J. Weisberg, Director. Mr. Weisberg has been a director since September 2005. He has been theis currently Vice President of Online Marketing for CCAand Business Development at GXT Green, a division of Global Partners, Inc.,Exchange Technologies. GXT Green develops and sells carbon offsets globally, as well as offers a privately-held company, since August 2010. CCA Global is a parent organization that provides its member companies with access toset of sustainability services and products, systems and services.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, a nan 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’scompany's efforts toward direct web-based sales of products and services. From 1995 until April 2003, he co-founded and served as president of BX.comPureCommerce, 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.
We believe Mr. Weisberg should serve on the board because of his previous experience in management, marketing, emerging technology and with publicly held companies.
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 Int ernationalInternational Theological Seminary in Bradenton Florida.
We believe Mr. Kinney should serve on the board because of his previous experience in management and with the technology sector.
Committees
Audit Committee. Our only audit committee member at this time ismembers are Edward J. Weisberg.Weisberg and Robert T. Kane. 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 CommitteeWe believe that until such time as the Company acquires a business that it is seekingnot necessary to identify itshave a financial expert.expert serving on the audit committee.
Compensation Committee. Our compensation committee members are Frank J. Deleo and Robert T. Kane.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.
Nominating Committee. Our nominating committee members are Gregory Kinney and Frank J. Deleo. The Nominating Committee is appointed by the Board of Directors to identify, review credentials of and recommend membership of new board members.
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 t oto 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.stockholders and approved by the Nominating Committee. Any such recommendation for the annual meeting of stockholders should be provided to our corporate secretary by December 31, 2010.2013. 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’scandidate's work experience fo rfor the prior five years and the number of shares of our stock beneficially owned by the candidate.
The board of directorsNominating Committee 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’sCompany'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 duringthrough the most recently completed fiscal year:year ended July 31, 2013:
| Reporting Person | Date Report Due | Date Report Filed |
| Christensen , Donald A. | Form 4 due December 16, 2008 | Not yet filed |
| Christensen , Donald A. | Form 4 due December 30, 2008 | Not yet filed |
| Christensen , Donald A. | Form 4 due February 5, 2009 | Not yet filed |
| Christensen, Donald A. | Form 4 due May 21, 2010 | Not yet filed |
| Deleo, Frank J. | Form 4 due December 16, 2008 | Not yet filed |
| Deleo, Frank J. | Form 4 due December 30, 2008 | Not yet filed |
| Deleo, Frank J. | Form 4 due May 21, 2010 | Not yet filed |
| Deleo, Frank J. | Form 4 due August 12, 2011 | Not yet filed |
| Deleo, Frank J. | Form 4 due April 3, 2012 | Not yet filed |
| Deleo, Frank J. | Form 4 due September 5, 2012 | Not yet filed |
| Deleo, Frank J. | Form 4 due July 16, 2013 | Not yet filed |
| Kane, Robert T. | Form 4 due December 16, 2008 | Not yet filed |
| Kane, Robert T. | Form 4 due December 30, 2008 | Not yet filed |
Reporting Person | Date Report Due | Date Report Filed |
| Kane, Robert T. | Form 4 due February 5, 2009 | Not yet filed |
| Reporting Person | Date Report Due | Date Report Filed |
| Kane, Robert T. | Form 4 due May 21, 2010 | Not yet filed |
| Kane, Robert T. | Form 4 due August 12, 2011 | Not yet filed |
| Kane, Robert T. | Form 4 due November 3, 2011 | Not yet filed |
| Kane, Robert T. | Form 4 due September 5, 2012 | Not yet filed |
| Kane, Robert T. | Form 4 due July 16, 2013 | Not yet filed |
| Kane, Robert T. | Form 4 due December 3, 2013 | Not yet filed |
| Kinney, Gregory | Form 4 due December 16, 2008 | Not yet filed |
| Kinney, Gregory | Form 4 due December 30, 2008 | Not yet filed |
| Kinney, Gregory | Form 4 due May 21, 2010 | Not yet filed |
| Kinney, Gregory | Form 4 due August 12, 2011 | Not yet filed |
| Kinney, Gregory | Form 4 due November 3, 2011 | Not yet filed |
| Kinney, Gregory | Form 4 due September 5, 2012 | Not yet filed |
| Kinney, Gregory | Form 4 due December 26, 2012 | Not yet filed |
| Kinney, Gregory | Form 4 due July 16, 2013 | Not yet filed |
| Kinney, Gregory | Form 4 due December 3, 2013 | Not yet filed |
| McCabe, Thomas E. | Form 3 due November 11, 2011 | Not yet filed |
| McCabe, Thomas E. | Form 4 due March 20, 2012 | Not yet filed |
| McCabe, Thomas E. | Form 4 due September 5, 2012 | Not yet filed |
| McCabe, Thomas E. | Form 4 due July 16, 2013 | Not yet filed |
| Samuels, James P.R. | Form 4 due December 16, 2008 | Not yet filed |
| Samuels, James P.R. | Form 4 due December 30, 2008 | Not yet filed |
| Samuels, James P.R. | Form 4 due February 5, 2009 | Not yet filed |
| Samuels, James P.R. | Form 4 due May 4, 2009 | Not yet filed |
| Samuels, James P.R. | Form 4 due July 6, 2009 | Not yet filed |
| Samuels, James P.R. | Form 4 due May 21, 2010 | Not yet filed |
| Samuels, James P.R. | Form 4 due September 5, 2012 | Not yet filed |
| Samuels, James P.R. | Form 4 due February 5, 2013 | Not yet filed |
| Samuels, James P.R. | Form 4 due July 16, 2013 | Not yet filed |
| Samuels, James P.R. | Form 4 due August 5, 2013 | Not yet filed |
| Somerville, W. Earl | Form 4 due December 16, 2008 | Not yet filed |
| Somerville, W. Earl | Form 4 due December 30, 2008 | Not yet filed |
| Somerville, W. Earl | Form 4 due February 5, 2009 | Not yet filed |
| Somerville, W. Earl | Form 4 due May 4, 2009 | Not yet filed |
| Somerville, W. Earl | Form 4 due May 21, 2010 | Not yet filed |
| Rudolf and Monique van den Brink | Form 3 due December 13, 2010 | Not yet filed |
| Rudolf and Monique van den Brink | Form 4 due January 27, 2011 | Not yet filed |
| Rudolf and Monique van den Brink | Form 4 due July 13, 2011 | Not yet filed |
| Rudolf and Monique van den Brink | Form 4 due October 10, 2011 | Not yet filed |
| Rudolf and Monique van den Brink | Form 4 due December 6, 2011 | Not yet filed |
| Rudolf and Monique van den Brink | Form 4 due January 23, 2012 | Not yet filed |
| Rudolf and Monique van den Brink | Form 4 due March 20, 2012 | Not yet filed |
| Rudolf and Monique van den Brink | Form 4 due May 22, 2012 | Not yet filed |
| Rudolf and Monique van den Brink | Form 4 due July 16, 2013 | Not yet filed |
| Weisberg, Edward J. | Form 4 due December 16, 2008 | Not yet filed |
| Weisberg, Edward J. | Form 4 due December 30, 2008 | Not yet filed |
| Weisberg, Edward J. | Form 4 due February 5, 2009 | Not yet filed |
| Weisberg, Edward J. | Form 4 due May 21, 2010 | Not yet filed |
Philip VergesWeisberg, Edward J. | Form 34 due June 26, 2008August 12, 2011 | Not yet filed |
Philip VergesWeisberg, Edward J. | Form 4 due December 16, 2008September 5, 2012 | Not yet filed |
Philip VergesWeisberg, Edward J. | Form 4 due December 30, 200826, 2012 | Not yet filed |
| Weisberg, Edward J. | Form 4 due July 16, 2013 | Not yet filed |
ITEM 11.EXECUTIVE11. 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 $100,000 per annum during any part of the last two completed fiscal years ending July 31, 2010.2013.
Summary Compensation Table
Name and principal position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($) | Total ($) |
| James P.R. Samuels, President and CEO | 2013 2012 | -0- -0- | - - | - - | 12,000 (1) - | - - | 12,000 -0- |
| Name and principal position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($)(1) | All Other Compensation ($) | Total ($) |
| James P.R. Samuels, President and CEO | 2010 | $107,500 | - | - | - | - | $107,500 |
| 2009 | $81,025 | - | $87,000 | $2,000 | - | $170,025 |
| W. Earl Somerville, CFO | 2010 | $75,000 | - | - | - | - | $75,000 |
| 2009 | $56,250 | - | $73,000 | $2,000 | - | $131,250 |
| (1) | AllOn July 12, 2013, Mr. Samuels was granted five-year options to purchase 100,000 shares at $0.05 per share. These options were valued using the Black-Scholes option pricing model using various assumptions as listed in the footnotes to the Outstanding Equity Awards at 2010 Fiscal Year-End Table.following assumptions: expected options life: 5 years; risk-free interest rate: 0.59%; annual rate of quarterly dividends: 0.00%; and volatility: 314.40%. |
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 the full amount of Mr. Samuel’s and Mr. Somerville’s salaries during the first quarter of the 2009 fiscal year. During the year ended July 31, 2009, Mr. Samuels received cash compensation of approximately $400. Effective January 31, 2009, Mr. Samuels and Mr. Somerville forgave $642,537 of accrued compensation. We did not accrue Mr. Samuels’ and Mr. Somerville’s compensation again until the fourth quarter of the 2009 fiscal year, and then only at half of their contract values. We continued to accrue Mr. Samuels’ and Mr. Somerville’s compensation at half of their contract val ues for the 2010 fiscal year. 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 $100,000 per annum as of the end of the last completed fiscal year ending July 31, 2010. The number of options granted and exercise prices have been retroactively restated to reflect the 3-to-1 reverse-stock-split of our common stock.2013.
Outstanding Equity Awards at 2010 Fiscal Year-End Table
| Option Awards |
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date |
James P.R. Samuels | 100,000(1) 100,000 (1) 100, | - - - | - - - | $0.05 $0.01 $0.015 | 07/12/2018 08/31/2019 12/10/2013 |
| 133,333 | - | - | 0.24 | 6/22/2014 |
| 133,333 | - | - | 0.18 | 4/17/2014 |
Option Awards |
Name | Number of Securities Underlying Unexercised Options
(#) Exercisable
| Number of Securities Underlying Unexercised Options
(#) Unexercisable
| Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price
($)
| Option Expiration Date |
James P.R. Samuels | 100,000 (1) | - | - | $0.015 | 12/10/2013 |
125,000 (2) | - | - | $0.11 | 5/29/2013 |
133,334 (3) | - | - | $0.24 | 6/22/2014 |
133,334 (4) | - | - | $0.18 | 4/17/2014 |
591,667 (5) | - | - | $0.06 | 6/01/2011 |
90,000 (6) | - | - | $0.15 | 7/21/2011 |
W. Earl Somerville | 100,000 (1) | - | - | $0.015 | 12/10/2013 |
125,000 (2) | - | - | $0.11 | 5/29/2013 |
133,334 (3) | - | - | $0.24 | 6/22/2014 |
133,334 (4) | - | - | $0.18 | 4/17/2014 |
335,000 (5) | - | - | $0.06 | 6/01/2011 |
67,000 (6) | - | - | $0.15 | 7/21/2011 |
_____________________________________________________________________
| (1) | These options were valued using the following assumptions: expected options life: 5 years; risk-free interest rate: 0.59%; annual rate of quarterly dividends: 0.00%; and volatility: 314.40%. |
| (2) | These options were valued using the following assumptions: expected options life: 7 years; risk-free interest rate: 0.63%; annual rate of quarterly dividends: 0.00%; and volatility: 273.47%. |
| (3) | These options were valued using the following assumptions: expected option life: 5 years; risk-free interest rate: 4.97%; annual rate of quarterly dividends: 0.00%; and volatility: 367.96%139.92%. |
(2) (4) | These options were valued using the following assumptions: expected option life: 5 years; risk-free interest rate: 4.97%; annual rate of quarterly dividends: 0.00%; and volatility: 336.4%. |
(3) | These options were valued using the following assumptions: expected option life: 7 years; risk-free interest rate: 4.97%; annual rate of quarterly dividends: 0.00%; and volatility: 220.8%268.16%. |
(4) (5) | These options were valued using the following assumptions: expected option life: 7 years; risk-free interest rate: 4.97%; annual rate of quarterly dividends: 0.00%; and volatility: 202.1%268.16%. |
(5) | These options were valued using the following assumptions: expected option life: 5 years; risk-free interest rate: 4.97%; annual rate of quarterly dividends: 0.00%; and volatility: 140%. |
(6) | These options were valued using the following assumptions: expected option life: 5 years; risk-free interest rate: 4.97%; annual rate of quarterly dividends: 0.00%; and volatility: 139.92%. |
41
The following table sets forth information regarding the remuneration of our directors, other than those already mentioned in the Summary Compensation Table, during the last completed fiscal year.
Director Compensation Table
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | |
| Donald A. Christensen | - | $3,750 | - | - | $3,750 | |
| Frank J. Deleo | - | $3,750 | - | - | $3,750 | - | - | $12,000 | - | $12,000 | |
| Robert T. Kane | - | $3,750 | - | - | $3,750 | - | - | $12,000 | - | $12,000 | |
| Edward J. Weisberg | - | $3,750 | - | - | $3,750 | - | - | $12,000 | - | $12,000 | |
| Gregory Kinney | - | $3,750 | - | - | $3,750 | - | - | $12,000 | - | $12,000 | |
(1) | On May 19, 2010, the Board of Directors authorized the issuance of 7,500 shares of Series A Preferred Stock to each officer and director for services rendered to the Company. The shares were valued at $0.50 per share. |
In July 2013, the Company issued 5-year options to purchase 100,000 shares of common stock at $0.05 per share to each of the four directors identified in the above table for their services. We valued the options at $0.12 per share. The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: expected option life: 5 years; risk-free interest rate: 0.59%; annual rate of quarterly dividends: 0.00%; and volatility: 314.40%
Options Exercised in the Last Fiscal Year
No options were exercised in the fiscal year ended July 31, 2010.2013.
Long-Term Incentive Plan Awards
No long-term incentive plan awards were granted in the fiscal year ended July 31, 2010.2013.
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:basis, as of November 14, 2014:
Name and Address of Beneficial Owner (1) | Number of Common Shares Owned | Number of Preferred Shares Owned | Total Voting Shares (2) | Percent of Class (2) |
Rudolf and Monique van den Brink Rua Ribeira das Vinhas, 4 Apt – 2(dto) 2750-477 Cascais Portugal | 6,965,438 (3) | 0 | 6,965,438 | 22.6% |
James P.R. Samuels 3801 East Florida Avenue, #400 Denver, Colorado 80210 | 4,656,667 (4) | 351,755 | 6,855,136 | 21.3% |
Dirk Van Keulen Heemraadslag 14 Gouda, Netherlands 2805DP | 331,655 | 507,065 | 3,500,811 | 12.0% |
W. Earl Somerville 182 Tilford Road Oakville, Ontario L6L 4Z3 Canada | 2,883,334 (5) | 30,117 | 3,071,565 | 10.0% |
Donald A. Christensen 48 S Evanston Way Aurora, Colorado 80012 | 829,286 (6) | 275,268 | 2,549,711 | 8.6% |
Gregory Kinney 2107 Geddes Rd. Rockford, Illinois 61103 | 1,904,810 (7) | 7,500 | 1,951,685 | 6.3% |
Name and Address of Beneficial Owner (1) | Number of Common Shares Owned | Number of Preferred Shares Owned | Total Voting Shares (2) | Percent of Class (2) |
James P.R. Samuels 3801 East Florida Avenue, #400 Denver, Colorado 80210 | 2,821,669 (3) | 351,755 | 5,020,138 | 21.8% |
Dirk Van Keulen Heemraadslag 14 Gouda, Netherlands 2805DP | 588,323 (4) | 507,065 | 3,757,479 | 17.1% |
Donald A. Christensen 48 S Evanston Way Aurora, Colorado 80012 | 901,666 (5) | 275,268 | 2,622,091 | 11.7% |
W. Earl Somerville 182 Tilford Road Oakville, Ontario L6L 4Z3 Canada | 2,217,001 (6) | 30,117 | 2,405,232 | 10.6% |
Dirk S. Nye 2119 Larimer St #2 Denver, Colorado 80205 | 965,002 (7) | 144,904 | 1,870,652 | 8.4% |
Edward J. Weisberg 18 Whispering Pine Road Sudbury, Massachusetts 01776 | 504,999 (8) | 16,697 | 609,358 | 2.7% |
Robert T. Kane 3620 Main Street Munhall, Pennsylvania 15120 | 474,999 (9) | 18,997 | 593,729 | 2.7% |
Frank J. Deleo 1517 Tennison Parkway Colleyville, Texas 76034 | 474,999 (10) | 7,500 | 521,874 | 2.3% |
Name and Address of Beneficial Owner (1) | Number of Common Shares Owned | Number of Preferred Shares Owned | Total Voting Shares (2) | Percent of Class (2) |
Robert T. Kane 3620 Main Street Munhall, Pennsylvania 15120 | 1,054,810 (8) | 18,997 | 1,173,540 | 3.9% |
Thomas E. McCabe 10108 S Hudson Ave Tulsa, Oklahoma 74137 | 1,050,000 (9) | -0- | 1,050,000 | 3.5% |
Edward J. Weisberg 18 Whispering Pine Road Sudbury, Massachusetts 01776 | 550,000 (10) | 16,697 | 654,359 | 2.2% |
Frank J. Deleo 1517 Tennison Parkway Colleyville, Texas 76034 | 550,000 (11) | 7,500 | 596,875 | 2.0% |
| All officers and directors as a group (6 persons) | 9,766,287 (12) | 402,449 | 12,281,595 | 39.2% |
Name and Address of
Beneficial Owner (1)
| Number of Common
Shares Owned
| Number of Preferred
Shares Owned
| Total Voting
Shares (2)
| Percent of
Class (2)
|
Gregory Kinney 2107 Geddes Rd. Rockford, Illinois 61103 | 125,000 (11) | 7,500 | 171,875 | 0.8% |
| All officers and directors as a group (8 persons) | 6,618,667 (12) | 432,566 | 9,322,206 | 40.9% |
_________________
| (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’sperson'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 September 13, 2010,November 14, 2014, 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 21,819,62929,154,067 shares of common stock that may be outstanding after conversion or exercise, without further consideration, of our outstanding Preferred Stock. This amount includes 12,496,23419,830,673 shares of common stock and 9,323,3959,323,394 shares of common stock issuable upon exercise of the outstanding Preferred Stock. |
| (3) | Includes 66,6671,600,000 shares of common stock issuable upon the exerciseconversion of warrants and 1,173,335outstanding notes. |
| (4) | Includes 200,000 shares issuable upon the exercise of vested stock options.options and 2,900,000 shares of common stock issuable upon conversion of outstanding notes. |
(4) (5) | Includes 73,334 shares of common stock held by Mr. Van Keulen’s wife, 133,3341,700,000 shares issuable upon exerciseconversion of warrantsoutstanding notes. |
| (6) | Includes 569,286 shares issuable upon conversion of which 66,667 are held by his wife, and 50,000outstanding notes. |
| (7) | Includes 200,000 shares issuable upon the exercise of vested stock options.options and 1,479,810 shares issuable upon conversion of outstanding notes. |
(5) (8) | Includes 66,667200,000 shares issuable upon exercise of warrantsvested stock options and 574,999629,810 shares issuable upon conversion of outstanding notes. |
| (9) | Includes 600,000 shares issuable upon exercise of vested stock options. |
(6) (10) | Includes 66,667 shares issuable upon exercise of warrants and 893,666 shares issuable upon exercise of vested stock options. |
(7) | Includes 66,667 shares of common stock held by DSN Enterprises Ltd., 220,000 shares of common stock held by Mr. Nye’s wife, 20,420 shares of preferred stock held by Mr. Nye’s wife, 66,667 shares issuable upon exercise of warrants, and 511,668200,000 shares issuable upon exercise of vested stock options and 125,000 shares issuable upon conversion of which 195,000 are held by DSN Enterprises Ltd.outstanding notes. |
(8) (11) | Includes 429,999200,000 shares issuable upon exercise of vested stock options.options and 125,000 shares issuable upon conversion of outstanding notes. |
(9) (12) | Includes 399,9991,600,000 shares issuable upon exercise of vested stock options. |
(10) | Includes 399,999options and 5,259,620 shares issuable upon exerciseconversion of vested stock options. |
(11) | Includes 50,000 shares issuable upon exercise of vested stock options. |
(12) | Includes 133,334 shares issuable upon exercise of warrants and 3,346,998 shares issuable upon exercise of vested stock options.outstanding notes. |
James P.R. Samuels may be deemed to be the “parent”"parent" of our company within the meaning of the rules and regulations of the Securities and Exchange Commission.
Changes in Control
We are not awareOn December 14, 2012, Worldwide Strategies Incorporated ("Worldwide") executed a stock exchange agreement with Jorge Zamacona Pliego, the President of any arrangements that might result in a change in controlEuzkadi Corporation of America S.A. de C.V. ("Euzkadi") and other principal owners of Euzkadi ("Euzkadi Principals"). Under the terms of the Company.stock exchange agreement, Euzkadi Principals would assign and transfer Euzkadi shares to Worldwide such that Worldwide would then own 10% of Euzkadi, and Worldwide would issue shares of its common stock to Euzkadi Principals, such that they would then own 80% of Worldwide.
Equity Compensation Plan Information
The following table sets forth information as of the end of the most recently completed fiscal year, July 31, 2010:2013:
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance |
| Equity compensation plans approved by security holders | -0- | -0- | 500,000 | -0- | -0- | 500,000 |
| Equity compensation plans not approved by security holders | 6,391,356 | $0.42 | -0- | 4,333,328 | 0.12 | -0- |
| Total | 6,391,356 | -0- | 500,000 | 4,333,328 | | 500,000 |
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”"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”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,
2010,2013, 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.
Debt.Accrued Liabilities Effective January. At July 31, 2009, two of our officers forgave $642,537 of accrued2013 and unpaid salaries. In addition, in April 2009, we borrowed $10,000 from2012, $-0- and $100,044, respectively, was owed to James P.R. Samuels and issuedfor amounts paid by him on behalf of the Company. Effective July 2013, Mr. Samuels agreed to forgive this debt, in addition to accrued salaries owed him, in exchange for a convertible promissory note.note of $28,500.
ConversionConvertible Notes. In December 2012, Greg Kinney and Ed Weisberg loaned the Company $1,500 and $500 respectively. The notes bear interest at 10% per annum and are convertible into shares of Loansthe Company's common stock at the conversion price of $0.01.
In February 2013, James P.R. Samuels receive a convertible promissory note of $500 for Company expenses paid personally by him. The note bears interest at 10% per annum and is convertible into Preferred Stock. Effective January 31, 2009, we converted $322,981shares of related-party debt into Series A Convertible Preferred Stock (“Series A”) sharesthe Company's common stock at $0.50 per share. We issued 645,963 Series A sharesthe conversion price of $0.01.
In July 2013, James P.R. Samuels receive a convertible promissory note of $28,500 in exchange for forgiveness of accrued compensation of $241,875 and accrued expenses of $108,844 owed to him by the releaseCompany. The note bears interest at 10% per annum and is convertible into shares of the debt. Dirk Van Keulen and Dirk Nye, who own more than 5%Company's common stock at the conversion price of the voting stock of the Company, also converted their notes totaling $300,174 into 600,349 shares of Series A. In July 2009, James P.R. Samuels and Linda Nye converted their notes totaling $20,420 into 40,840 shares of Series A.$0.01.
The following table identifies Interest expense was $1,065 and $406, respectively, for the number of Series A shares we issued to our officersyears ended July 31, 2013 and directors, Mr. Van Keulen and the Nye’s as payment for their notes:
Name | Preferred Shares |
Dirk Van Keulen | 497,065 |
James P.R. Samuels | 344,255 |
Donald A. Christensen | 267,768 |
Dirk S. Nye & Linda Nye | 123,704 |
W. Earl Somerville | 22,617 |
Robert T. Kane | 11,497 |
2012.
Name | Preferred Shares |
Edward J. Weisberg | 9,198 |
Total | 1,287,152 |
Common Stock. See Item 11 regarding the issuance of common stock and options to purchase common stock to our officers and directors in exchange for services.
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.PRINCIPAL14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The fees billed for professional services rendered by our principal accountant are as follows:
| FISCAL | | AUDIT-RELATED | | |
| YEAR | AUDIT FEES | FEES | TAX FEES | ALL OTHER FEES |
| 2009 | $17,561 | -0- | -0- | -0- |
| 2010 | $9,000 | -0- | -0- | -0- |
| | | | |
FISCAL YEAR | AUDIT FEES | | TAX FEES | ALL OTHER FEES |
| 2012 | $10,500 | -0- | -0- | -0- |
| 2013 | $8,000 | -0- | -0- | -0- |
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.EXHIBITS,15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Regulation S-B 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 AgreementAcknowledgement of Debt Satisfaction and Full Release with James P.R. Samuels dated October 12, 2007 (6)as of July 31, 2013 |
| 10.3 | Employment AgreementAcknowledgement of Debt Satisfaction and Full Release with W. Earl Somerville dated October 12, 2007 (6)as of July 31, 2013 |
| 21 | List of Subsidiaries |
| 31.1 | Rule 113a-14(a)13a-14(a) Certification of James P.R. Samuels |
| 31.2 | Rule 13a-14(a) Certification of W. Earl SomervilleThomas E. McCabe |
| 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 SomervilleThomas E. McCabe Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002 |
| 101 | Interactive Data Files |
___________________
| (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.
| | WORLDWIDE STRATEGIES INCORPORATED |
| | | |
| | | |
| | | |
Date: October 29, 2010November 20, 2014 | By: | /s//s/ James P.R. Samuels |
| | | James P.R. Samuels |
| | | Chief Executive Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date |
/s/ James P.R. Samuels | Chief Executive Officer and Director (Principal Executive Officer) | October 29, 2010November 20, 2014 |
| James P.R. Samuels | | |
/s/ W. Earl SomervilleThomas E. McCabe | Chief Financial Officer, Secretary, Treasurer and DirectorVice President of Finance (Principal Financial Officer and Principal Accounting Officer) | October 29, 2010November 20, 2014 |
W. Earl SomervilleThomas E. McCabe | | |
| | | |
/s/ Frank J. Deleo | Director | October __, 2010November 20, 2014 |
| Frank J. Deleo | | |
| | | |
/s/ Robert T. Kane | Director | October 29, 2010November 20, 2014 |
| Robert T. Kane | | |
| | | |
/s/ Edward J. Weisberg | Director | October 29, 2010November 20, 2014 |
| Edward J. Weisberg | | |
| | | |
/s/ Gregory Kinney | Director | October __, 2010November 20, 2014 |
| Gregory Kinney | | |
46