Washington, D.C. 20549
(Former name, former address and former fiscal year, if changed since last report)
See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(1) Organization and Basis of Presentation
Worldwide Strategies Incorporated (the “Company”) was originally incorporated in the state of Nevada on April 6, 1998. On March 1, 2005, Worldwide Business Solutions Incorporated (“WBSI”) was incorporated in the State of Colorado. On July 8, 2005, the Company acquired all the shares of WBSI for 76.8% of the Company’s outstanding stock. The acquisition of WBSI has been accounted for as a recapitalization of WBSI. Therefore the historical information prior to the date of recapitalization is the financial information of WBSI.
The Company is in the development stage in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting by Development Stage Enterprises.” As of April 30, 2012, the Company has devoted substantially all of its efforts to financial planning, raising capital and developing markets.
Interim financial data presented herein are unaudited. The unaudited interim financial information presented herein has been prepared by the Company in accordance with the accounting policies in its audited financial statements for the period ended July 31, 2011, included in its annual report on Form 10-K, and should be read in conjunction with the notes thereto.
In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary to provide a fair presentation of operating results for the interim period presented have been made. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the year.
Going Concern
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, assuming we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At April 30, 2012, the Company had a working capital deficiency of $756,218, net losses of $46,809 and $263,363 for the three and nine months ended April 30, 2012, respectively, and an accumulated deficit of $7,622,701.
The Company has limited financial resources, has been unprofitable since its inception and currently has no source of revenue generating activities. These factors raise substantial doubt about its ability to continue as a going concern. Management plans to rely on advances from certain shareholders to fund its ongoing obligations; however, there is no guarantee that the Company will be able to obtain an adequate amount of funding. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
New Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board (“FASB”) approved the FASB Accounting Standards Codification (the “Codification” or “ASC”) as the single source of authoritative nongovernmental GAAP. All existing accounting standard documents, such as FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other related literature, excluding guidance from the Securities and Exchange Commission (“SEC”), have been superseded by the Codification. All other non-grandfathered, non-SEC accounting literature not included in the Codification has become nonauthoritative. The Codification did not change GAAP, but instead introduced a new structure that combines all authoritative standards into a comprehensive, topically organized online database. The Codification is effective for interim or annual periods ending after September 15, 2009, and impacts our financial statements as all references to authoritative accounting literature will be referenced in accordance with the Codification. Pursuant to the provisions of FASB ASC 105 Topic Generally Accepted Accounting Principles (“ASC 105”) we have updated references to GAAP in our financial statements for the periods ended September 30, 2009. The adoption of ASC 105 did not impact our financial position or results of operations.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Consolidated Condensed Financial Statements
(Unaudited)
Also in June 2009, the FASB issued new accounting guidance related to the accounting and disclosure for transfers of financial assets, which is included in ASC Topic 860, Transfers and Servicing. This guidance will require entities to provide more information about sales of securitized financial assets and similar transactions, particularly if the seller retains some risk with respect to the assets. This guidance is effective for fiscal years beginning after November 15, 2009. We do not anticipate that the adoption of this guidance will have a material impact on our financial position or results of operations.
Also in June 2009, the FASB issued new accounting guidance related to the accounting and disclosure for the consolidation of variable interest entities regarding certain guidance for determining whether an entity is a variable interest entity and modifies the methods allowed for determining the primary beneficiary of a variable interest entity. The guidance is included in ASC Topic 810, Consolidation. The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. The guidance is effective for the first annual reporting period beginning after November 15, 2009. We do not anticipate that the adoption of this guidance will have a material impact on our financial position or results of operations.
In August 2009, the FASB issued an update of ASC Topic 820, Measuring Liabilities at Fair Value. The new guidance provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using prescribed techniques. We adopted the new guidance in the third quarter of 2009 and it did not materially affect our financial position and results of operations.
(2) Accounts payable related parties
At April 30, 2012, the Company was indebted to an officer for expenses incurred on behalf of the Company totaling $3,900.
(3) Accrued compensation
The Company accrued compensation for the CEO and the prior CFO through July 31, 2011. The accrued compensation, totaling $410,625, will only be paid if the Company successfully obtains sufficient financing to fund its plan of operation.
(4) Related party transactions
Accrued liabilities
During the three-month period ended April 30, 2012, $14,896 in various liabilities of the Company were paid personally by the CEO of which $3,000 was reimbursed. This accrual, totaling $105,771 including amounts accrued in prior periods, will be repaid when the Company has sufficient working capital. An additional amount totaling $250 represents accrued interest on notes payable, including amounts accrued in prior periods, to related parties.
Notes payable
During November 2011, the Company issued convertible promissory notes to two related parties totaling for $4,173 of principal. The notes bear interest at 10% and the principal and accrued interest is convertible into common shares at $.07 per share upon the election of the holder. Interest expense for these notes was $104 and $208 for the three-month and nine-month periods ended April 30, 2012.
During April 2012, the Company issued convertible promissory notes to a related party totaling for $5,000 of principal. The note bears interest at 10% and the principal and accrued interest is convertible into common shares at $.04 per share upon the election of the holder. Interest expense for these notes was $42 for the three-month and nine-month periods ended April 30, 2012.
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Consolidated Condensed Financial Statements
(Unaudited)
(5) Notes payable
During November 2009 the Company issued a convertible promissory note to an unrelated third party in exchange for $25,000. The note bears interest at 8% and the principal and accrued interest is convertible, at the option of the note-holder, into non-restricted common stock in an amount equal to the total sum due, based on a mutually agreed discount (not to exceed 50%) to the then market price. Interest expense for this note payable was $500 and $1,500 for the three-month and nine-month periods ended April 30, 2012, respectively.
During February 2010, the Company issued a convertible promissory note to an unrelated third party in exchange for $25,000. The note bears interest at 8% and the principal and accrued interest is convertible, at the option of the note-holder, into non-restricted common stock in an amount equal to the total sum due, based on a mutually agreed discount (not to exceed 50%) to the then market price. Interest expense for this note payable was $500 and $1,500 for the three-month and nine-month periods ended April 30, 2012, respectively.
During May 2010, the Company issued a convertible promissory note to an unrelated third party in exchange for $50,000. The note bears interest at 9% and the principal and accrued interest is convertible into common shares at $.04 per share upon the election of the holder. The note holder extended the due date from September 23, 2010, to January 21, 2011, to May 21, 2011, to September 18, 2011, to January 16, 2012 and to May 15, 2012. Interest expense, including the premium cost on shares issued for the renewal period, for this note payable was $14,250 and $98,650 for the three months and nine months ending April 30, 2012, respectively.
During December 2010, the Company issued a convertible promissory note to an unrelated third party in exchange for $15,000. The note bears interest at 9% and the principal and accrued interest is convertible into common shares at $.04 per share upon the election of the holder. The note holder extended the due date from April 2, 2011, to July 31, 2011, to November 28, 2011, to March 27, 2012, and to July 25, 2012. Interest expense, including the premium cost on shares issued for the renewal period, for this note payable was $4,519 and $15,369 for the three-month and nine-month periods ending April 30, 2012, respectively.
During October 2011, the Company issued a convertible promissory note to an unrelated party in exchange for $15,000. The note, originally due April 25, 2012 and extended to October 25, 2012, bears interest at 10% and the principal and accrued interest is convertible into common shares at $.07 per share upon the election of the holder. Interest expense for this note was $375 and $775 for the three-month and nine-month periods ending April 30, 2012, respectively.
During November 2011, the Company issued a convertible promissory note to an unrelated party in exchange for $2,087 of principal and accrued interest on a due promissory note. The note, due April 30, 2012 and extended to October 31, 2012, bears interest at 10% and the principal and accrued interest is convertible into common shares at $.07 per share upon the election of the holder. Interest expense for this note was $52 and $104 for the three-month and nine-month periods ending April 30, 2012.
During March 2012, the Company issued a convertible promissory note to an unrelated party to replace a note due, including accrued interest, of $15,750. The note, due August 31, 2012, bears interest at 10% and the principal and accrued interest is convertible into common shares at $.07 per share upon the election of the holder. Interest expense for this note was $262 for the three-month and nine month periods ending April 30, 2012.
During March 2012, the Company issued a convertible promissory note to an unrelated party in exchange for $2,150. The note, due September 11, 2012, bears interest at 10% and the principal and accrued interest is convertible into common shares at $.07 per share upon the election of the holder. Interest expense for this note was $30 for both the three-month and nine month periods ending April 30, 2012.
During April 2012, the Company issued convertible promissory notes to four unrelated parties in exchange for a total of $12,000. The notes, due September 30, 2012, bear interest at 10% and the principal and accrued interest is
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Consolidated Condensed Financial Statements
(Unaudited)
convertible into common shares at $.04 per share upon the election of the holder of each note. Interest expense for these notes was $100 for both the three-month and nine month periods ending April 30, 2012.
(6) Shareholders’ Deficit
Preferred stock
The Company is authorized to issue 25,000,000 shares of $0.001 par value preferred stock. The Company’s Board of Directors may divide and issue the preferred shares in series. Each Series, when issued, shall be designated to distinguish them from the shares of all other series. The relative rights and preferences of these series include preference of dividends, redemption terms and conditions, amount payable upon shares of voluntary or involuntary liquidation, terms and condition of conversion as well as voting powers.
Effective December 15, 2008, the Company established a series of 5,000,000 shares of preferred stock to be known as “Series A Convertible Preferred Stock” (“Series A”). The shares of Series A have a par value of $0.001 per share. Shares of Series A may be redeemed, for $0.50 per share, at the Company’s option. Each share of Series A may be converted into 6.25 shares of common stock, at the option of the holder.
Shares of Series A will participate in dividends paid, in cash or other property, to holders of outstanding common stock. In the event the Company declares and pays a dividend to common stockholders, five percent (5%) of the value of such dividend shall be paid to the holders of outstanding Series A shares. After payment of the 5% preference, each outstanding Series A share will participate in the distribution of the remaining 95% of the dividend with the holders of common stock, as if each outstanding Series A share were one share of common stock. Any dividend payable to holders of Series A shares will have the same record and payment date and terms as the dividend payable on the common stock.
Holders Series A shares shall be entitled to vote together with the holders of the common stock as a single class, upon all matters submitted to holders of common stock for a vote. Shares of Series A will vote that number of votes equal to the number of shares of common stock issuable upon conversion of one share of Series A, as adjusted from time-to time.
Whenever holders of Series A are required or permitted to take any action by separate class or series, such action may be taken without a meeting by written consent, setting forth the action so taken and signed by the holders of the outstanding Series A shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.
Common stock
In August 2011, the Company issued 300,000 shares of the Company’s common stock as compensation for members of the Board of Directors in the amount of $36,000. The shares were valued at $.12 per share based on the fair market value of the shares when they were issued.
In September 2011, the Company issued 387,500 shares of the Company’s common stock in exchange for interest and an extension of due date from September 18, 2011 to January 16, 2012 on a note payable. The shares, which were issued at $0.04 as per the note payable agreement, were valued at $0.15 per share based on the fair value of the shares when they were issued. This amount ($62,250) is reflected in the accompanying financial statements as interest over the term of the note extension.
In October 2011, the Company issued 150,000 shares of the Company’s common stock as compensation to the contracted CFO. The shares were valued at $0.4 per share based on the fair value of the shares when they were issued. This amount ($6,000) is reflected in the accompanying financial statements as consulting fees.
In November 2011, the Company issued 116,250 shares of the Company’s common stock in exchange for interest and an extension of due date from November 28, 2011 to March 27, 2012 on a note payable. The shares, which were
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Consolidated Condensed Financial Statements
(Unaudited)
issued at $0.04 as per the note payable agreement, were valued at $0.05 per share based on the fair value of the shares when they were issued. This amount ($5,250) will be reflected in the accompanying financial statements as interest over the term of the note extension.
In December 2011, the Company issued 189,000 shares of the Company’s common stock in exchange for services to be rendered.
In December 2011, the Company issued 15,000 shares of the Company’s common stock in exchange for services to be rendered.
In January 2012, the Company issued 387,500 shares of the Company’s common stock in exchange for interest and an extension of due date from January 16, 2012 to May 15, 2012 on a note payable. The shares, which were issued at $0.04 as per the note payable agreement, were valued at $0.5 per share based on the fair value of the shares when they were issued. This amount ($17,500) is reflected in the accompanying financial statements as interest over the term of the note extension.
In January 2012, the Company issued 100,000 share of the Company’s stock in exchange for services to be rendered.
In March 2012, the Company issued 116,250 shares of the Company’s common stock in exchange for interest and an extension of due date from March 27, 2012 to July 25, 2012 on a note payable. The shares, which were issued at $0.04 as per the note payable agreement, were valued at $0.05 per share based on the fair value of the shares when they were issued. This amount ($5,813) is reflected in the accompanying financial statements as interest over the term of the note extension.
In March 2012, the Company issued 15,000 shares of the Company’s common stock in exchange for services to be rendered. The shares were valued at $.05 per share based on the fair value of the shares when they were issued. The amount ($750) is reflected in the accompanying financial statements as consulting fees.
In March 2012, the Company issued 150,000 shares of the Company’s common stock as compensation to the contracted CFO. The shares were valued at $0.05 per share based on the fair value of the shares when they were issued. This amount ($7,500) is reflected in the accompanying financial statements as consulting fees.
Stock Options and Warrants
Following is a schedule of changes in common stock options and warrants from July 31, 2011 through April 30, 2012:
| | | | | | | | Weighted | | Weighted |
| | | | | | | | Average | | Average |
| | | | | | Exercise | | Exercise | | Remaining |
| | Awards Outstanding | | Price | | Price | | Contractual |
| | Total | | Exercisable | | Per Share | | Per Share | | Life |
| Outstanding at July 31, 2011 | 3,958,329 | | 3,958,329 | | | $0.015-$0.75 | | | $0.16 | | 1.83 Years |
| Granted | 300,000 | | 300,000 | | | $0.15 | | | $0.15 | | 4.70 Years |
| Exercised | — | | — | | | — | | | — | | — |
| Cancelled/Expired | 750,001 | | 750,001 | | | $0.75 | | | — | | — |
| Outstanding at April 30, 2012 | 3,508,328 | | 3,508,328 | | | $0.015-$0.24 | | | $0.16 | | 2.07 Years |
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Consolidated Condensed Financial Statements
(Unaudited)
The following changes occurred in outstanding options and warrants during the period from July 31, 2011 through April 30, 2012:
| | Options | | Warrants | | Awards |
| Outstanding at July 31, 2011 | 3,208,328 | | 750,001 | | 3,958,329 |
| Granted | 300,000 | | — | | 300,000 |
| Exercised | — | | — | | — |
| Cancelled/Expired | — | | 750,001 | | 750,001 |
| Outstanding at April 30, 2012 | 3,508,328 | | — | | 3,508,328 |
(7) Income Taxes
The Company records its income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” The Company incurred net operating losses during all periods presented resulting in a deferred tax asset, which was fully allowed for; therefore, the net benefits and expense resulted in $0 income taxes.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
The following discussion and analysis should be read in conjunction with our financial statements and related footnotes for the year ended July 31, 2011 included in our Annual Report on Form 10-K. The discussion of results, causes and trends should not be construed to imply any conclusion that such results or trends will necessarily continue in the future.
Overview
On July 8, 2005, pursuant to a Share Exchange Agreement with Worldwide Business Solutions Incorporated, a Colorado corporation (“WBSI”), we acquired all of the issued and outstanding capital stock of WBSI, in exchange for 2,573,335 shares of our common stock. As a result of this share exchange, shareholders of WBSI as a group owned approximately 76.8% of the shares then outstanding, and WBSI became our wholly-owned subsidiary.
For accounting purposes, the acquisition of WBSI has been accounted for as a recapitalization of WBSI. Since we had only minimal assets and no operations, the recapitalization has been accounted for as the sale of 778,539 shares of WBSI common stock for our net liabilities at the time of the transaction. Therefore, the historical financial information prior to the date of the recapitalization is the financial information of WBSI.
Effective July 31, 2007, we filed a Certificate of Change Pursuant to NRS 78.209, which decreased the number of our authorized shares of common stock from 100,000,000 to 33,333,333 and reduced the number of common shares issued and outstanding from 17,768,607 to 5,923,106. All shares and per share amounts in our consolidated financial statements and related notes have been retroactively adjusted to reflect the one-for-three reverse stock split for all periods presented.
On July 31, 2007, we acquired 100% of the issued and outstanding shares of Centric in exchange for 2,250,000 shares of our common stock. As a result of the acquisition, Centric became our wholly-owned subsidiary and the results of its operations have been included in our consolidated financial statements since the date of acquisition.
We currently devote substantially all of our efforts to financial planning, raising capital and developing markets as we continue to be in the development stage.
Plan of Operations
On April 28, 2011, we accepted a proposal from Euzkadi Corporation of America, S.A. (“Euzkadi”) to enter into a business combination transaction. It is proposed that Euzkadi would acquire 80% of the then issued and outstanding shares of Worldwide in exchange for all of the issued and outstanding shares of Euzkadi. Consummation of this proposed transaction will be contingent upon the satisfaction of several conditions, including the completion of a satisfactory due diligence investigation and the completion of an audit of Euzkadi’s financial statements that meet the requirements of the reporting rules and regulations of the Securities and Exchange Commission.
Other than the possible acquisition transaction described above, we do not have any definitive proposals for business operations, merger or acquisition. We are in discussions with other firms but have nothing finalized at this time. We must raise additional capital to support our ongoing existence while we search for such opportunities. If we complete any acquisition or merger transactions, we will need to raise additional capital to support the new business. We cannot assure you that we will be able to complete additional financings successfully.
Significant Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to the valuation of accounts receivable and inventories, the impairment of long-lived assets, any potential losses from pending litigation and deferred tax assets or liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions; however, we believe that our estimates, including those for the above-described items, are reasonable.
Development Stage. We are in the development stage in accordance with Statements of Financial Accounting Standards (SFAS) No. 7 “Accounting and Reporting by Development Stage Enterprises”. As of April 30, 2012, we had devoted substantially all of our efforts to financial planning, raising capital and developing markets.
Stock-based Compensation. We account for compensation expense for our stock-based compensation plans using the fair value method prescribed in FASB ASC 718, “Stock Compensation,” which requires us to recognize the cost of services received in exchange for awards of equity instruments based on the grant-date fair value of the awards. The fair value of each option grant is estimated on the date of grant using the Black-Scholes method.
Loss per common share. We report net loss per share using a dual presentation of basic and diluted loss per share. Diluted net loss per share utilizes the average market price per share when applying the treasury stock method in determining common stock equivalents. As of April 30, 2012, after recognition of the one-for-three reverse stock split, there were 3,508,328 and -0- vested common stock options and warrants outstanding, respectively, which were excluded from the calculation of net loss per share-diluted because they were antidilutive.
New accounting pronouncements
Note 1 to the consolidated financial statements includes a complete description of new accounting pronouncements applicable to our Company.
Results of Operations
Three Months Ended April 30, 2012 and 2011. Salaries, benefits and payroll taxes totaled $-0- and $26,875, respectively, for the three-month periods ended April 30, 2012 and 2011. We had been accruing compensation for our CEO and CFO, but the officers agreed to cease future salary accruals pending completion of a transaction.
We incurred $7,500 and $-0-, respectively, of stock-based compensation expense for the three-month periods ended April 30, 2012 and 2011. We issued each of our four non-employee directors 75,000 shares of our common stock as compensation in August 2011, which were valued at $0.12 per share or $36,000 in the aggregate. We also issued 150,000 shares of common stock as compensation for our new CFO in October 2011, which were valued at $0.04 per share, or $6,000 in the aggregate.
Professional and consulting fees totaled $8,019 and $10,244 for the three-month periods ended April 30, 2012 and 2011, respectively. Expenses in 2012 were in line with prior year for outside support services.
Travel expenses totaled $8,850 and $11,172 during the three-month periods ended April 30, 2012 and 2011, respectively. Travel continues to be a significant expense item as our possible acquisition opportunities have involved primarily overseas businesses.
Contract labor expenses totaled $-0- and $18,750 during the three-month periods ended April 30, 2012 and 2011, respectively. In 2011, our CFO was compensated through contract services. Our current CFO is being compensated through the issuance of shares of our common stock at this time.
We did not incur any insurance expense during the three-month periods ended April 30, 2012 and 2011. Our directors’ and officers’ liability insurance was allowed to expire during the previous fiscal year in an effort to reduce recurring costs during the development stage.
No depreciation was recorded during the three-month periods ended April 30, 2012 and 2011, as all of our equipment is now fully depreciated and, therefore, we did not incur any depreciation expense for the current period.
Other general and administrative expenses totaled $1,468 and $1,991 during the three-month periods ended April 30, 2012 and 2011, respectively.
We recorded $20,972 and $65,974 in interest expense for the three-month periods ended April 30, 2012 and 2011, respectively. Effective April 30, 2009, we converted many of our outstanding debts into preferred stock. However, from November 2009 through April 2012, we have issued convertible promissory notes totaling $171,160 that accrue interest at rates ranging from 8% to 10%. In addition, we financed the purchase of insurance policies in the amount of $22,400 in February 2010 for an effective annual interest rate is 9.47%.
Our net loss was $46,809 and $135,006 for three-month periods ended April 30, 2012 and 2011, respectively.
Nine Months Ended April 30, 2012 and 2011. Salaries, benefits and payroll taxes totaled $-0- and $80,625, respectively for the nine-month periods ended April 30, 2012 and 2011. We had been accruing compensation for our CEO and CFO, but the officers agreed to cease future salary accruals pending completion of a transaction.
We incurred $49,500 and $-0- of stock-based compensation expense for the nine-month periods ended April 30, 2012 and 2011. We issued each of our four non-employee directors 75,000 shares of our common stock as compensation in August 2011, which were valued at $0.12 per share or $36,000 in the aggregate. We also issued 150,000 shares of common stock as compensation for our new CFO in October 2011, which were valued at $0.04 per share, or $6,000 in the aggregate.
Professional and consulting fees totaled $61,948 and $40,952 for the nine-month periods ended April 30, 2012 and 2011, respectively. Expenses for the 2012 period were higher, as we incurred consulting fees for investor relations and web services support in advance of anticipated transactions and activities and support on activities in Europe.
Travel expenses totaled $30,711 and $29,606 during the nine-month periods ended April 30, 2012 and 2011, respectively. Travel continues to be a significant expense item as our possible acquisition opportunities have involved primarily overseas businesses.
Contract labor expenses totaled $-0- and $56,250 during the nine-month periods ended April 30, 2012 and 2011, respectively. In fiscal 2011, our CFO was compensated through contract services. Our current CFO is being compensated through the issuance of shares of our common stock at this time.
Insurance expenses totaled $-0- and $11,200 during the nine-month periods ended April 30, 2012 and 2011, respectively. Our directors’ and officers’ liability insurance allowed to expire in an effort to reduce recurring costs during the development stage. Accordingly, no expense was incurred for the 2011 period.
Depreciation of $-0- and $51 was recorded during the nine-month periods ended April 30, 2012 and 2011, respectively. All of our equipment is now fully depreciated and, therefore, we did not incur any depreciation expense for the current period.
Other general and administrative expenses totaled $2,188 and $4,269 during the nine-month periods ended April 30, 2012 and 2011, respectively.
We recorded $119,016 and $107,260 in interest expense for the nine-month periods ended April 30, 2012 and 2011, respectively. Effective April 30, 2009, we converted many of our outstanding debts into preferred stock. However, from November 2009 through January 2012, we have issued convertible promissory notes totaling $171,004 that accrue interest at rates ranging from 8% to 10%. In addition, we financed the purchase of insurance policies in the amount of $22,400 in February 2010 for an effective annual interest rate is 9.47%.
Our net loss was $263,363 and $330,213 for nine-month periods ended April 30, 2012 and 2011, respectively.
March 1, 2005 (inception) to April 30, 2012. For the period from March 1, 2005 (inception) to April 30, 2012, we were engaged primarily in raising capital to implement our business plan. Accordingly, we have earned revenue of only $34,518. We incurred expenses for professional and consulting fees, salaries and payroll taxes, stock-based compensation, travel, contract labor, insurance, interest and other expenses resulting in an accumulated loss of $7,622,701. Approximately 45% of the cumulative net loss is due to the recognition of non-cash stock-based compensation expense for issuing shares, options, and warrants to employees and third parties in the amount of $3,450,703. As we develop our business plan, we expect that cash generated through operations will replace many of the non-cash transaction structures currently utilized to implement our business plan.
Liquidity and Capital Resources
Since inception, we have relied on the sale of equity capital and debt instruments to fund working capital and the costs of developing our business plan. We used $42,084 of cash in operating activities with $50,160 being provided by loans, net of note repayments, for the nine months ended April 30, 2012. We have a working capital deficit of $756,218 at April 30, 2012, as compared to $647,430 at July 31, 2011.
As discussed above, we have had minimal revenues and have accumulated a deficit of $7,622,701 since inception. Furthermore, we have not commenced our planned principal operations. Our future is dependent upon our ability to obtain equity and/or debt financing and upon future profitable operations from the development of our business plan.
Going Concern
Our significant operating losses raise substantial doubt about our ability to continue as a going concern. Historically, we have been able to raise additional capital sufficient to continue as a going concern. However, there can be no assurance that this additional capital will be sufficient for us to implement our business plan or achieve profitability in our operations. Additional equity or debt financing will be required to continue as a going concern. Without such additional capital, there is doubt as to whether we will continue as a going concern.
Off Balance Sheet Arrangements
We do not have any material off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
As required by SEC rules, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures at the end of the period covered by this report. This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer. Based on this evaluation, these officers have concluded that the design and operation of our disclosure controls and procedures were not effective to ensure that all required information is presented in our quarterly report in a timely manner.
Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
During our last fiscal quarter, there were no other changes in our internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except as described above.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Not required of smaller reporting companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
In March 2012, the registrant issued 105,000 shares of its common stock to an accredited investor to extend the maturity date of a promissory note in the principal amount of $15,000 and 11,250 shares to the same person as payment of accrued interest on the note. The shares were issued at $0.04 per share pursuant to the terms of the note, but were valued at $0.05 per share (an aggregate of $5,813) based on the fair value of the shares when they were issued.
Also in March 2012, the registrant issued 15,000 shares of its common stock to a consultant for services to be rendered and 150,000 shares of its common stock as compensation for its chief financial officer. The shares were issued at $0.05 per share ($8,250 in the aggregate), based on the fair value of the shares when they were issued.
No underwriters were used in the above stock transactions. We relied upon the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as the investors were deemed to be sophisticated with respect to the investment in the securities due to their financial condition and involvement in our business. A restrictive legend was placed on the certificates evidencing the securities issued.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
Regulation S-K Number | Exhibit |
| 2.1 | Share Exchange Agreement by and between Worldwide Strategies Incorporated, Centric Rx, Inc., Jim Crelia, Jeff Crelia, J. Jireh, Inc. and Canada Pharmacy Express, Ltd. dated as of June 28, 2007 (1) |
| 3.1 | Amended and Restated Articles of Incorporation (2) |
| 3.2 | Amended Bylaws (2) |
| 3.3 | Articles of Exchange Pursuant to NRS 92A.200 effective July 31, 2007 (3) |
| 3.4 | Certificate of Change Pursuant to NRS 78.209 effective July 31, 2007 (3) |
| 3.5 | Certificate of Designation Pursuant to NRS 78.1955 effective December 8, 2008 (4) |
| 3.6 | Amendment to Certificate of Designation Pursuant to NRS 78.1955 effective December 15, 2008 (5) |
| 10.1 | 2005 Stock Plan (2) |
| 10.2 | Employment Agreement with James P.R. Samuels dated October 12, 2007 (6) |
| 31.1 | Rule 13a-14(a) Certification of James P.R. Samuels |
| 31.2 | Rule 13a-14(a) Certification of Thomas E. McCabe |
Regulation S-K Number | Exhibit |
| 32.1 | Certification of James P.R. Samuels Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002 |
| 32.2 | Certification of Thomas E. McCabe Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002 |
| 101* | Financial statements from the Quarterly Report on Form 10-Q of Worldwide Strategies Incorporated for the quarter ended April 30, 2012, formatted in XBRL: (i) the Balance Sheets; (ii) the Statements of Operations; (iii) the Statements of Changes in Shareholders’ Deficit; (iv) the Statements of Cash Flows; and (v) the Notes to Financial Statements tagged as blocks of text. |
________________________
| (1) | Filed as an exhibit to the Current Report on Form 8-K dated June 28, 2007, filed July 2, 2007. |
| (2) | Filed as an exhibit to the initial filing of the registration statement on Form SB-2, File No. 333-129398, on November 2, 2005. |
| (3) | Filed as an exhibit to the Current Report on Form 8-K dated July 31, 2007, filed August 6, 2007. |
| (4) | Filed as an exhibit to the Current Report on Form 8-K dated December 8, 2008, filed December 10, 2008. |
| (5) | Filed as an exhibit to the Current Report on Form 8-K dated December 15, 2008, filed December 17, 2008. |
| (6) | Filed as an exhibit to the Annual Report on Form 10-KSB, File No. 000-52362, on November 2, 2007. |
*In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | WORLDWIDE STRATEGIES INCORPORATED |
| | | |
| Date: June 12, 2012 | By: | /s/ James P.R. Samuels |
| | | James P.R. Samuels |
| | | Chief Executive Officer |
| | | (Principal Executive Officer) |
| | | |
| Date: June 12, 2012 | By: | /s/ Thomas E. McCabe |
| | | Thomas E. McCabe |
| | | Chief Financial Officer |
| | | (Principal Financial Officer and Principal Accounting Officer) |
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