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EX-32.1 - EXH 32-1 CERTIFICATION - WORLDWIDE STRATEGIES INCexh32-1_certification.htm
EX-32.2 - EXH 32-2 CERTIFICATION - WORLDWIDE STRATEGIES INCexh32-2_certification.htm
EX-31.2 - EXH 31-2 CERTIFICATION - WORLDWIDE STRATEGIES INCexh31-2_certification.htm
EX-31.1 - EXH 31-1 CERTIFICATION - WORLDWIDE STRATEGIES INCexh31-1_certification.htm
 


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

FORM 10-K

ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended July 31, 2011

¨  
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to ______________________

Commission File Number: 000-52362

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

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

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

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ¨   No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes ¨   No ý

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ¨   No ¨ (Not Applicable)

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 
 

 


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

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter:  $1,825,602 on January 31, 2011

Indicate the number of shares outstanding of each of the registrant’s classes of common equity, as of the latest practicable date: 14,424,984 on October 17, 2011

FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K contains “forward-looking statements.”  All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements.  In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “believe,” or “continue” or the negative thereof or variations thereon or similar terminology.  In assessing forward-looking statements contained in this report, readers are urged to read carefully all cautionary statements, including those contained in other sections of this report.  Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove to be correct.  Important factors that could cause actual results to differ materially from our expectations (“Cautionary Statements”) include, but are not limited to:

·     
our ability to generate sufficient capital to complete planned acquisitions;
·     
our ability to successfully operate our business upon completion of any or all planned acquisitions;
·     
the lack of liquidity of our common stock;
·     
our ability to find and retain skilled personnel;
·     
availability of capital;
·     
the strength and financial resources of our competitors;
·     
general economic conditions; and
·     
the securities or capital markets and other factors disclosed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report.

All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements.  We assume no duty to update or revise our forward-looking statements based on changes in internal estimates or expectations or otherwise.


 
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WORLDWIDE STRATEGIES INCORPORATED

FORM 10-K
FOR THE FISCAL YEAR ENDED
JULY 31, 2011

INDEX

   
Page
PART I
Item 1.
Business
4
Item 1A.
Risk Factors
5
Item 1B.
Unresolved Staff Comments
6
Item 2.
Properties
6
Item 3.
Legal Proceedings
7
Item 4.
(Removed and Reserved)
7
     
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
7
Item 6.
Selected Financial Data
8
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
8
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
10
Item 8.
Financial Statements and Supplementary Data
10
Item 9.
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
33
Item 9A.
Controls and Procedures
33
Item 9B.
Other Information
33
     
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
34
Item 11.
Executive Compensation
37
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
39
Item 13.
Certain Relationships and Related Transactions, and Director Independence
41
Item 14.
Principal Accounting Fees and Services
41
     
PART IV
Item 15.
Exhibits, Financial Statement Schedules
42



 
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PART I

ITEM 1.BUSINESS

Business Development

Worldwide Strategies Incorporated (“we”, “us”, or “our”) was originally incorporated in the State of Nevada on April 6, 1998 as Boyd Energy Corporation for the purpose of developing a mechanical lifting device that would enhance existing stripper well production.  We were unable to raise sufficient capital to carry out this business and focused instead on leasing properties and exploring for oil and gas.  We changed our name to Barnett Energy Corporation on July 17, 2001.

On July 8, 2005, pursuant to a Share Exchange Agreement with Worldwide Business Solutions Incorporated, a Colorado corporation (“WBSI”), we acquired all of the issued and outstanding capital stock of WBSI, in exchange for 2,573,335 shares of our common stock.  As a result of this share exchange, shareholders of WBSI as a group owned approximately 76.8% of the shares then outstanding, and WBSI became our wholly-owned subsidiary.  We changed our name to Worldwide Strategies Incorporated as of June 14, 2005.

For accounting purposes, the acquisition of WBSI was accounted for as a recapitalization of WBSI.  Since we had only minimal assets and no operations, the recapitalization has been accounted for as the sale of 778,539 shares of WBSI common stock for our net liabilities at the time of the transaction.  Therefore, the historical financial information prior to the date of the recapitalization is the financial information of WBSI.  WBSI was incorporated on March 1, 2005 to provide Business Process Outsourcing services.

WBSI incorporated a subsidiary, Worldwide Business Solutions Limited, in the United Kingdom under the Companies Acts 1985 and 1989, on May 31, 2005.  This U.K. subsidiary was formed for the purpose of supporting sales and marketing efforts in English-speaking countries.  While the subsidiary has a temporary office and bank accounts established, it does not yet have any employees.

On July 31, 2007, we acquired 100% of the issued and outstanding shares of Centric Rx, Inc., a Nevada corporation (“Centric”) in exchange for 2,250,000 post-reverse-split shares of our common stock.  We filed Articles of Exchange Pursuant to NRS 92A.200 effective July 31, 2007.  Centric does not conduct any operations.

Effective July 31, 2007, we filed a Certificate of Change Pursuant to NRS 78.209, which decreased the number of our authorized shares of common stock from 100,000,000 to 33,333,333 and reduced the number of common shares issued and outstanding immediately prior to filing from 17,768,607 to 5,923,106.

Our Business Plans

We originally intended to offer call center services, such as technical support, language interpreting, debt collections, and help desk solutions.  Then, with the acquisition of Centric, we planned to enter the business of distributing health services and prescription drug discount cards.  As of the date hereof, our only plan is to search for merger or acquisition opportunities.  We are attempting to market the Company as a “shell company” as we believe that its status as a reporting company whose stock is quoted on the OTC Link has value.  We cannot assure you that we will be successful in this effort.

On April 28, 2011, we accepted a proposal from Euzkadi Corporation of America, S.A. (“Euzkadi”) to enter into a business combination transaction.  It is proposed that Euzkadi would acquire 80% of our then issued and outstanding shares in exchange for all of the issued and outstanding shares of Euzkadi.

Consummation of this proposed transaction will be contingent upon the satisfaction of several conditions, including the completion of a satisfactory due diligence investigation and the completion of an audit of Euzkadi’s financial statements that meet the requirements of the reporting rules and regulations of the Securities and Exchange Commission.

 
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Employees

As of October 28, 2011, we employed a total of 2 persons, both of which were full-time.  None of our employees is covered by a collective bargaining agreement.

ITEM 1A.RISK FACTORS

Risks Relating To Our Business and Marketplace

We must obtain financing to continue operations.  We must engage in debt and/or equity financing in order to continue operations.  We do not know the terms on which any financing might be available or if such financing is available on any terms.  Such terms may be detrimental to the interests of our existing shareholders.  The value of an investment in our common stock could be reduced.  Interest on debt securities could increase costs and negatively impacts operating results.  Preferred stock could be issued in series from time to time with such designations, rights, preferences, and limitations as needed to raise capital.  The terms of preferred stock could be more advantageous to those investors than to the holders of common stock.  In addition, if we need to raise more equity capital from the sale of common stock, institutional or other investors may negotiate terms at least as, and possibly more, favorable than the terms given to our current investors.  Shares of common stock that we sell could be sold into the market, which could adversely affect market price.

We are seeking other merger and acquisition opportunities.  We may not be able to successfully acquire or merge with another business.  Any acquisition or merger that we undertake will require an unspecified amount of additional capital expenditure in the form of planning, due diligence, legal, and accounting fees.  We have no substantial experience in completing acquisitions of or mergers with other businesses, and we may be unable to successfully complete such a transaction.  Any acquisition or merger we undertake may result in a potentially dilutive issuance of equity securities, the issuance of debt and incurrence of expenses related to the transaction.

We have limited operating history and we cannot assure you that we will succeed or be profitable.  From March 1, 2005 (inception) through July 31, 2011, we generated revenues of only $34,518.  We are in the development stage, as that term is defined by certain financial accounting standards.  This means that as of July 31, 2011, our planned principal operations had not commenced, as we had devoted substantially all of our efforts to financial planning, raising capital, and developing markets.  We cannot assure you that we will be successful or profitable.

We do not have sufficient working capital to pay our debts or our costs of continuing operations.  We do not currently have sufficient working capital to pay our debts as they become due or our costs of operating our business.  As of July 31, 2011, our working capital deficiency was $647,430.  We are dependent upon additional debt or equity financing to pay our debts and the costs of operation.  If we are unsuccessful in raising additional funds, we may not be able to begin our planned operations or continue as a going concern, and we may have to either liquidate our company or file for bankruptcy protection from our creditors.

We have significant financial obligations pursuant to employment agreements that we may not be able to pay.  In addition to our debt obligations, we have employment agreements that place significant monthly salary obligations on us.  Once we have raised sufficient capital to begin operation and begin paying our employees pursuant to the employment agreements, we may not be able to pay or otherwise satisfy the obligations under the employment agreements.  If we cannot pay the obligations under the employment agreements, we may lose our employees.

Risks Factors Relating To Our Common Stock

Future equity transactions, including exercise of options or warrants, could result in dilution.  In order to raise sufficient capital to implement our planned operations, from time to time, we intend to sell restricted stock, warrants, and convertible debt to investors in private placements.  Because the stock will be restricted, the stock will likely be sold at a greater discount to market prices compared to a public stock offering, and the exercise price of the warrants is likely to be at or even lower than market prices.  These transactions will cause dilution to existing stockholders.  Also, from time to time, options will be issued to officers, directors, or employees, with exercise
 
 
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prices equal to market.  Exercise of in-the-money options and warrants will result in dilution to existing stockholders.  The amount of dilution will depend on the spread between the market and exercise price, and the number of shares involved.  In addition, such shares would increase the number of shares in the “public float” and could depress the market price for our common stock.

Our common stock is subject to SEC “Penny Stock” rules.  Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment of our common stock.  Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10.  Those rules require broker-dealers, before effecting transactions in any penny stock, to:

 l
Deliver to the customer, and obtain a written receipt for, a disclosure document;
 l
Disclose certain price information about the stock;
 l
Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;
 l
Send monthly statements to customers with market and price information about the penny stock; and
 l
In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.

Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities.  These additional procedures could also limit our ability to raise additional capital in the future.

Since our shares are quoted on the OTC Link, trading volumes and prices may be sporadic because it is not an exchange.  Our common shares are currently quoted on the OTC Link.  The trading price of our common shares has been subject to wide fluctuations.  Trading prices of our common shares may fluctuate in response to a number of factors, many of which will be beyond our control.  The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with limited business operations.  There can be no assurance that trading prices and price earnings ratios previously experienced by our common shares will be matched or maintained.  Broad market and industry factors may adversely affect the market price of our common shares, regardless of our operating performance.

In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted.  Such litigation, if instituted, could result in substantial costs for us and a diversion of management’s attention and resources.

We are subject to SEC regulations and changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations and other trading market rules, are creating uncertainty for public companies.  We are committed to maintaining high standards of corporate governance and public disclosure.  As a result, we intend to invest appropriate resources to comply with evolving standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

ITEM 1B.UNRESOLVED STAFF COMMENTS

Not required for smaller reporting companies.

ITEM 2.PROPERTIES

Our principal offices are located at 3801 East Florida Avenue, Suite 400, Denver, Colorado.  We lease these offices pursuant to a month-to-month lease.  The base rent on the lease is $150 per month.

Our legal address for our U.K. subsidiary is that of the accountant and financial firm Wilkins Kennedy, 77-79 High Street, Egham, Surrey TW20 9HY, UK.

 
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ITEM 3.LEGAL PROCEEDINGS

There are no legal proceedings pending against us.  To the best of our knowledge, there are no legal proceedings threatened or contemplated against us.

ITEM 4.(REMOVED AND RESERVED)


PART II

ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is currently quoted in the OTC Link on the OTCQB tier under the symbol “WWSG.”  The following table sets forth the range of high and low bid quotations for each fiscal quarter for the last two completed fiscal years and have been adjusted to reflect the effects of reverse stock splits.  These quotations reflect inter-dealer prices without retail mark-up, mark-down, or commissions and may not necessarily represent actual transactions.

Fiscal Quarter Ending
High Bid
Low Bid
October 31, 2009
$0.35
$0.05
January 31, 2010
$0.30
$0.01
April 30, 2010
$0.45
$0.01
July 31, 2010
$0.35
$0.05
October 31, 2010
$0.16
$0.06
January 31, 2011
$0.24
$0.06
April 30, 2011
$0.15
$0.06
July 31, 2011
$0.14
$0.07

On October 27, 2011, the last trading price for the common stock on the OTC Link was $0.04.

Holders and Dividends

As of October 17, 2011, there were 76 record holders of our common stock.  Since our inception, no cash dividends have been declared on our common stock.

Recent Sales of Unregistered Securities

During the quarter ended July 31, 2011, we issued and sold unregistered securities set forth in the table below.
Date
Persons or Class of Persons
Securities
Consideration
May 2011
1 accredited investor
387,500 shares of common stock
Interest and loan renewal fees valued at $54,250
July 2011
1 consultant
250,000 shares of common stock
Services valued at $37,500
July 2011
1 accredited investor
116,250 shares of common stock
Interest and loan renewal fees valued at $8,138

No underwriters were used in the above stock transactions.  We relied upon the exemption from registration contained in Section 4(2) and/or Regulation S as to all of the transactions, as the investors were either deemed to be sophisticated with respect to the investment in the securities due to their financial condition and involvement in our business or were accredited investors.  Additionally, none of these investors were U.S. Persons.  Restrictive legends were placed on the certificates evidencing the securities issued in all of the above transactions.

 
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ITEM 6.
SELECTED FINANCIAL DATA

Not required for smaller reporting companies.

ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and plan of operation should be read in conjunction with our Consolidated Financial Statements and related notes appearing elsewhere in this report.

Overview

On July 8, 2005, pursuant to a Share Exchange Agreement with Worldwide Business Solutions Incorporated, a Colorado corporation (“WBSI”), we acquired all of the issued and outstanding capital stock of WBSI, in exchange for 2,573,335 shares of our common stock.  As a result of this share exchange, shareholders of WBSI as a group owned approximately 76.8% of the shares then outstanding, and WBSI became our wholly-owned subsidiary.

For accounting purposes, the acquisition of WBSI has been accounted for as a recapitalization of WBSI.  Since we had only minimal assets and no operations, the recapitalization has been accounted for as the sale of 778,539 shares of WBSI common stock for our net liabilities at the time of the transaction.  Therefore, the historical financial information prior to the date of the recapitalization is the financial information of WBSI.

Effective July 31, 2007, we filed a Certificate of Change Pursuant to NRS 78.209, which decreased the number of our authorized shares of common stock from 100,000,000 to 33,333,333 and reduced the number of common shares issued and outstanding from 17,768,607 to 5,923,106.  All shares and per share amounts in our consolidated financial statements and related notes have been retroactively adjusted to reflect the one-for-three reverse stock split for all periods presented.

On July 31, 2007, we acquired 100% of the issued and outstanding shares of Centric in exchange for 2,250,000 shares of our common stock.  As a result of the acquisition, Centric became our wholly-owned subsidiary and the results of its operations have been included in our consolidated financial statements since the date of acquisition.

We currently devote substantially all of our efforts to financial planning, raising capital and developing markets as we continue to be in the development stage.

Results of Operations

During the years ended July 31, 2011 and 2010, we had no revenue.

Salaries, benefits and payroll taxes totaled $107,500 for each of the years ended July 31, 2011 and 2010.

We incurred non-cash stock-based compensation expense of $-0- and $26,250 during the years ended July 31, 2011 and 2010, respectively, as a result of issuing shares to our employees, directors and consultants for services in 2010.

Professional and consulting fees were $96,292 and $73,096 for the years ended July 31, 2011 and 2010, respectively.

Travel expenses totaled $40,950 and $18,957 for the years ended July 31, 2011 and 2010, respectively.

Contract labor was $75,000 for each of the years ended July 31, 2011 and 2010.

Insurance expenses totaled $11,200 and $22,145 for the years ended July 31, 2011 and 2010, respectively.

 
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For the years ended July 31, 2011 and 2010, we incurred other general and administrative expenses of $4,975 and $11,293, respectively.

Interest expense was $164,426 and $4,778 for the years ended July 31, 2011 and 2010, respectively.  Interest for the 2011 period was significantly higher than for the 2010 period, as we incurred new debt of $21,000 and renewed existing notes payable in the total principal amount of $115,000.

March 1, 2005 to July 31, 2011.  For the period from March 1, 2005 to July 31, 2011, we were engaged primarily in raising capital to implement our business plan.  Accordingly, we incurred expenses for professional and consulting fees, salaries and payroll taxes, travel, and contract labor, resulting in a net loss of $7,359,338 for the period.

Liquidity and Capital Resources

Since our inception through July 31, 2011, we have relied on the sale of equity capital and debt instruments to fund working capital and the costs of developing our business plan.  Net cash provided by financing activities of $2,277,948 offset the $2,154,176 used in operating activities and $123,606 used in investing activities.  For the year ended July 31, 2011, $10,477 provided by financing activities partially offset $30,548 used in operating activities.

We had deficiency in working capital of $647,430 at July 31, 2011, primarily as a result of accrued salaries and outstanding notes classified as current liabilities as their maturity dates are within one year of the balance sheet date.  Of our current liabilities totaling $675,763, accrued compensation is $410,625.  The officers for whom compensation has been accrued have agreed that this compensation will be paid only if the Company successfully obtains sufficient financing to fund its plan of operation.

During the year ended July 31, 2011, we borrowed $21,000.  During the 2010 fiscal year, we borrowed $141,045 and sold 3,200 shares of preferred stock for $1,600.  We also received $2,240 from NewMarket Technology, Inc. (“NMKT”) pursuant to its $100,000 deposit obligation under the letter of intent.  Through July 31, 2010, NMKT had paid us $77,240 of its $100,000 deposit obligation pursuant to the letter of intent.  The deposit was accounted for as a capital contribution because we were not obligated to pay back the deposit.  We terminated any further negotiations with NMKT on June 30, 2010, as no significant progress had been made since entering into the letter of intent in February 2008.

Going Concern

The report of our independent registered public accounting firm on the financial statements for the year ended July 31, 2011, includes an explanatory paragraph relating to the uncertainty of our ability to continue as a going concern.  We have incurred recurring losses, incurred liabilities in excess of assets over the past year, and have an accumulated deficit of $7,359,338.  Based upon current operating levels, we will be required to obtain additional capital or reconfigure our operations in order to sustain our operations through July 31, 2012.

Contractual Obligations

We lease office space on a month-to-month basis at a rate of $150 per month.  We have no other contractual commitments.

Plan of Operations

As of the date hereof, we do not have any plans for business operations, merger or acquisition.

We must raise additional capital to support our ongoing existence while we search for other merger opportunities.  We cannot assure you that we will be able to complete additional financings successfully.

 
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Significant Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities.  On an ongoing basis, we evaluate our estimates, including those related to the valuation of accounts receivable and inventories, the impairment of long-lived assets, any potential losses from pending litigation and deferred tax assets or liabilities.  We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions; however, we believe that our estimates, including those for the above-described items, are reasonable.

Development Stage.  We are in the development stage in accordance with Statements of Financial Accounting Standards (SFAS) No. 7 “Accounting and Reporting by Development Stage Enterprises”.  As of July 31, 2011, we had devoted substantially all of our efforts to financial planning, raising capital and developing markets.

Stock-based Compensation.  The Company accounts for all stock-based payments to employees and non-employees under ASC 718 “Stock Compensation,” using the fair value based method. Under the fair value method, stock-based payments are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The cost of stock-based payments to non-employees that are fully vested and non-forfeitable at the grant date is measured and recognized at that date.

Loss per common share.  We report net loss per share using a dual presentation of basic and diluted loss per share.  Diluted net loss per share utilizes the average market price per share when applying the treasury stock method in determining common stock equivalents.  As of July 31, 2011, after recognition of the one-for-three reverse stock split, there were 3,208,328 and 750,001 vested common stock options and warrants outstanding, respectively, which were excluded from the calculation of net loss per share-diluted because they were antidilutive.

New accounting pronouncements

Note 1 to the consolidated financial statements includes a complete description of new accounting pronouncements applicable to our Company.

Off Balance Sheet Arrangements

We do not have any material off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 
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WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Index to Consolidated Financial Statements

   
Page
     
Report of Independent Registered Public Accounting Firm
12
     
Consolidated Balance Sheet
13
     
Consolidated Statements of Operations
14
     
Consolidated Statements of Changes in Shareholders’ Deficit
15
     
Consolidated Statements of Cash Flows
17
     
Notes to Consolidated Financial Statements
18


 
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Hamilton PC


2223 S. Olive St.
Denver, CO  80224
P: (303) 548-8072
F: (888) 466-4216
cpaeah@msn.com



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Stockholders
Worldwide Strategies Incorporated

We have audited the accompanying balance sheets of Worldwide Strategies Incorporated., as of July 31, 2011 and 2010, and the related statements of operations, stockholders’ equity (deficit) and cash flows for the years in the period ended July 31, 2011 and 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Worldwide Strategies Incorporated. as of July 31, 2011 and 2010, and the results of its operations and its cash flows for the years in the period ended July 31, 2011 and 2010, in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that Worldwide Strategies Incorporated will continue as a going concern. As discussed in Note 1 to the financial statements, Worldwide Strategies Incorporated suffered recurring losses from operations which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Hamilton, PC

/s/ Hamilton, PC

 
Denver, Colorado
October 28, 2011




 
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WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Consolidated Balance Sheet
July 31, 2011


Assets
       
Current Assets:
       
Cash
  $ 166    
Prepaid expenses
    28,167    
Total current assets
    28,333    
           
Office equipment, net of accumulated depreciation of $22,623(Note 1)
       
Deposits
    150    
Total assets
  $ 28,483    
           
           
Liabilities and Shareholders’ Deficit
         
Current Liabilities:
         
Accounts and notes payable:
         
Accounts payable
  $ 57,126    
Accounts payable, related party(Note 2)
    3,900    
Accrued compensation(Note 3)
    410,625    
Accrued liabilities (Note 5)
    7,275    
Accrued liabilities, related party (Note 4)
    75,837    
Notes payable (Note 5)
    117,000    
Notes payable, related party (Note 4)
    4,000    
Total current liabilities
    675,763    
           
Shareholders’ deficit (Note 4 and 6):
         
Preferred stock, $.001 par value; 25,000,000 shares authorized,
         
1,491,743 shares issued and outstanding
    1,492    
Common stock, $.001 parvalue, 33,333,333 shares authorized
         
14,241,234 shares issued and outstanding
    14,242    
Additional paid-in capital
    6,696,324    
Deficit accumulated during development stage
    (7,359,338 )  
Total shareholders’ deficit
    (647,280 )  
Total liabilities and shareholders' deficit
  $ 28,483    


See accompanying notes to the consolidated financial statements.

 
13

 

WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Consolidated Statements of Operations


               
March 1, 2005
 
               
(Inception)
 
   
For the Year Ended
   
Through
 
   
July 31,
   
July 31,
 
   
2011
   
2010
   
2011
 
                   
Sales
  $     $     $ 34,518  
Cost of sales
                30,568  
                         
                  3,950  
                         
Operating expenses:
                       
 Salaries, benefits and payroll taxes
    107,500       107,500       1,108,375  
 Stock based compensation
          26,250       3,401,203  
 Professional and consulting fees
    96,292       73,096       944,117  
  Travel
    40,950       18,957       288,322  
 Contract labor
    75,000       75,000       558,000  
Insurance
    11,200       22,145       253,506  
   Depreciation
    51       619       140,278  
 Loss on failed acquisition
                181,016  
 Other general and administrative expenses
    4,975       11,293       211,763  
Total operating expenses
    335,968       334,860       7,086,580  
Loss from operations
    (335,968 )     (334,860 )     (7,082,630 )
                         
Other expense:
                       
 Interest expense
    (164,426 )     (4,778 )     (276,708 )
                         
Loss before income taxes
    (500,394 )     (339,638 )     (7,359,338 )
                         
Income tax provision (Note 7)
                 
                         
Net loss
  $ (500,394 )   $ (339,638 )   $ (7,359,338 )
                         
Basic and diluted loss per share
  $ (0.022 )   $ (0.016 )        
                         
Basic and diluted weighted average
                       
 common shares outstanding
    22,257,993       21,093,731          

See accompanying notes to the consolidated financial statements.

 
14

 

WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Consolidated Statements of Changes in Shareholders’ Deficit
 

                                 
Deficit
       
                                 
Accumulated
       
                           
Additional
   
During
       
   
Preferred Stock
   
Common Stock
    Paid-In    
Development
       
   
Shares
   
Par Value
   
Shares
   
Par Value
   
Capital
   
Stage
   
Total
 
Balance at March 1, 2005 (inception)
        $           $     $     $     $  
                                                         
March 1, 2005, sale of common stock to founders
                1,733,402       1,733       3,467             5,200  
April through June 2005, sale of common stock in private offering at $.75 per share, net of $65,089 of offering costs
                840,033       840       564,071             559,911  
July 2005, stock issued in recapitalization with Barnett Energy Corp.
                778,539       779       (828 )           (49 )
                                                         
July 8, 2005, following recapitalization
                3,351,974       3,352       566,710             565,062  
                                                         
July 2005, sale of common stock in private offering at $.75 per share, net of $25,000 of offering costs
                333,347       333       224,667             225,000  
Net loss, March 1, 2005 (Inception) through July 31, 2005
                                  (323,298 )     (323,298 )
Balance at July 31, 2005
                3,685,321       3,685       791,377       (323,298 )     466,764  
                                                         
August 2005, collection of common stock subscriptions
                                            5,000  
August 2005, sale of common stock in private offering at $.75 per share, net of $49,500 of offering costs
                660,026       660       444,840             445,500  
July 2006, sale of common stock in private offering at $.15 per share, net of $9,500 of offering costs
                633,359       634       84,866             85,500  
Stock options issued in exchange for expenses
                            2,498,113             2,498,113  
Stock warrants issued in exchange for the Cascade Letter of Intent termination
                            49,500             49,500  
Net loss for the year ended July 31, 2006
                                  (3,659,020 )     (3,659,020 )
Balance at July 31, 2006
                4,978,706       4,979       3,868,696       (3,982,318 )     (108,643 )
                                                         
August 2006, sale of common stock in private offering at $.15 per share, net of $10,750 of offering costs
                750,030       750       100,999             101,749  
Common stock  issued in exchange for commission and interest
                73,531       74       17,651             17,725  
Common stock  issued in exchange for consulting fees
                120,839       121       27,879             28,000  
Stock options vesting in period
                            583,990             583,990  
Common stock  issued in exchange for all the outstanding stock of Centric Rx Inc.
                2,250,000       2,250       39,423             41,673  
Net loss for the year ended July 31, 2007
                                  (1,226,319 )     (1,226,319 )
Balance at July 31, 2007
                8,173,106       8,174       4,638,638       (5,208,637 )     (561,825 )
 
 
 
15

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Consolidated Statements of Changes in Shareholders’ Deficit
 
                                              Deficit          
                                              Accumulated          
                                      Additional       During          
      Preferred Stock       Common Stock       Paid-In       Development          
      Shares       Par Value       Shares       Par Value       Capital       Stage       Total  
August 2007, common stock issued at $.15 to pay promissory note
                500,000       500       74,500             75,000  
Common stock issued in exchange for interest
                160,105       160       12,890             13,050  
Common stock issued in exchange for unpaid effort
                450,000       450       19,800             20,250  
Capital contribution
                            50,000             50,000  
Stock options vesting in period
                            38,350             38,350  
Expenses paid-capital contribution
                            1,797             1,797  
Net loss for the year ended July 31, 2008
                                    (846,213 )     (846,213 )
Balance at July 31, 2008
                9,283,211       9,284       4,835,975       (6,054,850 )     (1,209,591 )
                                                         
Common stock issued in exchange for interest
                18,023       18       2,451             2,469  
Deposit on proposed acquisition
                            25,000             25,000  
Expenses paid-capital contribution
                            395             395  
Common stock issued in exchange for unpaid effort
                2,925,000       2,925       176,825             179,750  
Stock options vesting in period
                            12,000             12,000  
Preferred stock issued in exchange for convertible promissory notes
    1,362,643       1,363                   679,958             681,321  
Preferred stock issued for cash
    16,000       16                   7,984             8,000  
Accrued salaries forgiven
                            642,537             642,537  
Net loss for the year ended July 31, 2009
                                  (464,456 )     (464,456 )
Balance at July 31, 2009
    1,378,643       1,379       12,226,234       12,227       6,383,125       (6,519,306 )     (122,575 )
                                                         
Common stock issued in exchange for consulting fees
                    270,000       270       20,830               21,100  
Deposit on proposed acquisition
                                    2,240               2,240  
Preferred stock issued in exchange for convertible promissory notes
    42,400       42                       21,158               21,200  
Preferred stock issued for cash
    3,200       3                       1,597               1,600  
Preferred stock issued in exchange for unpaid effort
    67,500       68                       33,682               33,750  
Net loss for the year ended July 31, 2010                                             (339,638     (339,638
Balance at July 31, 2010
    1,491,743       1,492       12,496,234       12,497       6,462,632       (6,858,944 )     (382,323 )
                                                         
Common stock issued in exchange for interest (Note 6)
                    1,395,000       1,395       186,542               187,937  
Common stock issued in exchange for consulting fees (Note 6)
                    350,000       350       47,150               47,500  
Net loss for the year ended July 31, 2011                                             (500,394     (500,394
Balance at July 31, 2011
    1,491,743     $ 1,492       14,241,234     $ 14,242     $ 6,696,324     $ (7,359,338 )   $ (647,280 )

See accompanying notes to the consolidated financial statements.

 
16

 

WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Consolidated Statements of Cash Flows


               
March 1, 2005
 
               
(Inception)
 
   
For the Year Ended
   
Through
 
   
July 31,
   
July 31,
 
   
2011
   
2010
   
2011
 
                   
Cash flows from operating activities:
                 
Net loss
  $ (500,394 )   $ (339,638 )   $ (7,359,338 )
Adjustments to reconcile net loss to net cash
                       
used in operating activities:
                       
Depreciation
    51       619       140,278  
Loss on failed acquisition
                150,000  
Stock based compensation
          26,250       3,401,203  
Consulting expense paid in common stock
    47,500       21,100       96,600  
Consulting expense paid in preferred stock
          7,500       7,500  
Expenses paid with capital contribution
                93,042  
Interest expense paid in common stock(Note 6)
    187,937             221,681  
Interest expense paid in preferred stock
          1,200       4,745  
Interest expense capitalized as principal
                54,033  
Net liabilities acquired in Barnett recapitalization
                49  
Changes in current assets and liabilities:
                       
Receivables, prepaid expenses and other
                       
current assets
    (16,613 )     (10,217 )     (78,414 )
Accounts payable
    22,929       (23,561 )     61,026  
Accrued liabilities
    228,042       202,448       1,053,419  
Net cash used in
                       
operating activities
  $ (30,548 )   $ (114,299 )   $ (2,154,176 )
                         
Cash flows from investing activities:
                       
Cash acquired in Centric acquisition
                6  
Purchases of equipment
                (23,612 )
Deposit paid on Cascade acquisition
                (100,000 )
Net cash used in
                       
investing activities
                (123,606 )
                         
Cash flows from financing activities:
                       
Proceeds from sale of preferred stock
          1,600       9,600  
Proceeds from sale of common stock
                1,587,706  
Deposit on proposed acquisition
          2,240       77,240  
Payments for offering costs
                (150,339 )
Proceeds from notes payable, related party (Note 4)
    4,000             290,301  
Proceeds from notes payable (Note 5)
    17,000       141,045       484,485  
Payment of note payable
    (10,523 )     (10,522 )     (21,045 )
Net cash provided by
                       
financing activities
    10,477       134,363       2,277,948  
                         
Net change in cash
    (20,071 )     20,064       166  
                         
Cash, beginning of period
    20,237       173        
                         
Cash, end of period
  $ 166     $ 20,237     $ 166  
                         
Supplemental disclosure of cash flow information:
                       
Cash paid during the period for:
                       
Income taxes
  $     $     $  
Interest
  $     $     $ 7,518  
Non-cash investing/financing activities
                       
Preferred stock issued to repay notes
  $     $ 20,000     $ 652,274  
Common stock issued to repay loan
  $     $     $ 75,000  
Common stock issued to acquire Centric
  $     $     $ 41,673  
Offering costs exchanged for stock
  $     $     $ 6,500  

See accompanying notes to the consolidated financial statements.

 
17

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

 
(1)           Organization, Basis of Presentation, and Summary of Significant Accounting Policies

Organization and Basis of Presentation

Worldwide Strategies Incorporated (the “Company”) was incorporated on March 1, 2005 as Worldwide Business Solutions Incorporated (“WBSI”) in the State of Colorado.  The Company intends to provide call center software platforms to client centers and to outsource selected client services to multi-lingual international centers.

On May 13, 2005, Barnett Energy Corporation (“BEC”), a Nevada corporation, entered into a Share Exchange Agreement (the “Agreement”) with WBSI. Under the terms of the Agreement, BEC agreed to acquire all of the issued and outstanding common stock of WBSI in exchange for 778,539 shares of its common stock.  The acquisition closed on July 8, 2005.  Following the acquisition, the former shareholders of WBSI held approximately 76.8 percent of BEC’s outstanding common stock, resulting in a change of control.  In addition, WBSI became a wholly owned subsidiary of BEC.  However, for accounting purposes, the acquisition has been treated as a recapitalization of WBSI, with BEC the legal surviving entity.  Since BEC had minimal assets and no operations, the recapitalization has been accounted for as the sale of 778,539 shares of WBSI common stock for the net liabilities of BEC.  Therefore, the historical financial information prior to the date of the recapitalization is the financial information of WBSI.

On June 14, 2005, BEC changed its name to Worldwide Strategies Incorporated.

Effective July 31, 2007 the Company filed a Certificate of Change Pursuant to NRS 78.209, which decreased the number of its authorized shares of common stock from 100,000,000 to 33,333,333 and reduced the number of common shares issued and outstanding from 17,768,607 to 5,923,106.

All shares and per share amounts in these Consolidated Financial Statements and related notes have been retroactively adjusted to reflect the reverse stock split for all periods presented.

On July 31, 2007, the Company acquired 100% of the issued and outstanding shares of Centric Rx, Inc., (“Centric”) in exchange for 2,250,000 shares of the Company’s common stock.  As a result of the acquisition, Centric became a wholly owned subsidiary of the Company and the results of its operation have been included in the Company’s consolidated financial statements since the date of acquisition.

Development Stage

The Company and its subsidiaries are in the development stage in accordance with Statements of Financial Accounting Standards (SFAS) No. 7 “Accounting and Reporting by Development Stage Enterprises”.  As of July 31, 2011, the Company has devoted substantially all of its efforts to financial planning, raising capital and developing markets.

Going Concern

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States, which contemplate continuation of the Company as a going concern.  However, the Company experienced net losses of $500,394, $339,638, and $7,359,338 for the years ended July 31, 2011, July 31, 2010 and for the period from March 1, 2005 (inception) through July 31, 2011, respectively.  In addition, the Company has incurred liabilities in excess of assets over the past year and, as of July 31, 2011, and has an accumulated deficit of $7,359,338. These matters, among others, raise substantial doubt about its ability to continue as a going concern.
 
In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon the Company’s ability to generate sufficient sales volume to cover its operating expenses and to raise sufficient capital to meet its payment obligations.  Historically, management has
 
 
 
18

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
 
been able to raise additional capital. During the year ended July 31, 2011, the Company issued convertible promissory notes, in exchange for $21,000.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

Principles of Consolidation

The accompanying Consolidated Financial Statements include the Company’s accounts and those of its wholly owned subsidiaries.  All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with original maturities of three months or less when acquired to be cash equivalents.  The Company had no cash equivalents at July 31, 2011.

Financial Instruments

The carrying amounts of cash and current liabilities approximate fair value due to the short-term maturity of the instruments.

Property and Equipment

Property and equipment are stated at cost.  Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets, currently ranging from three to five years.  Expenditures for additions and improvements are capitalized, while repairs and maintenance costs are expensed as incurred.  The cost and related accumulated depreciation of property and equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is recorded in the year of disposal.
 
   
July 31,
 
   
2011
   
2010
 
Office equipment
 
$
10,600
   
$
10,600
 
Software
   
12,023
     
12,023
 
     
22,623
     
22,623
 
Accumulated depreciation
   
22,623
     
22,572
 
Property and equipment - net
 
$
0
   
$
51
 
 
Depreciation expense for the years ended July 31, 2011, July 31, 2010 and for the period from March 1, 2005 (inception) through July 31, 2011 totaled $51, $619, and $140,278, respectively.

Impairment of Long-Lived Assets

The Company has adopted ASC 360, “Accounting for the Impairment or Disposal of Long-Lived Assets”, which requires that long-lived assets to be held be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  ASC 360 establishes a single auditing model for long-lived assets to be disposed of by sale.
 
 
19

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
 
Loss per Common Share

The Company reports net loss per share using a dual presentation of basic and diluted loss per share. Basic loss per share includes the impact of issuing 1,491,743 shares of Series A Convertible Preferred Stock and excludes the impact of other contingently exercisable common stock equivalents. Diluted net loss per share utilizes the average market price per share when applying the treasury stock method in determining common stock equivalents. As of July 31, 2011 there were 3,208,328 and 750,001 vested common stock options and warrants outstanding, respectively, which were excluded from the calculation of net loss per share-diluted because they are antidilutive.

Stock-based Compensation

The Company accounts for all stock-based payments to employees and non-employees under ASC 718 “Stock Compensation,” using the fair value based method. Under the fair value method, stock-based payments are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The cost of stock-based payments to non-employees that are fully vested and non-forfeitable at the grant date is measured and recognized at that date.

Fiscal Year-end

The Company’s year-end is July 31.

New Accounting Pronouncements

In January 2010, the FASB issued ASU 2010-06, “Improving Disclosures about Fair Value measurements,” which amends ASC 820, “Fair Value Measures and Disclosures.” ASU 2010-06 requires disclosure of transfers into and out of Level 1 and Level 2 fair value measurements, and also requires more detailed disclosure about the activity within Level 3 fair value measurements. The changes to the ASC as a result of this update are effective for annual and interim reporting periods beginning after December 15, 2009, except for requirements related to Level 3 disclosures, which are effective for annual and interim reporting periods beginning after December 15, 2010. This guidance requires new disclosures only, and had no impact on our financial statements. In February 2010, the FASB issued ASU 2010-09, “Subsequent Events (Topic 855).” This update provides amendments to Subtopic 855-10-50-4 and related guidance within U.S. GAAP to clarify that an SEC registrant is not required to disclose the date through which subsequent events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and the SEC’s requirements. The Company has adopted this standard and it had no impact on this financial statements.
 
In December 2010, the FASB issued ASU 2010-29, which contains updated accounting guidance to clarify the acquisition date that should be used for reporting pro forma financial information when comparative financial statements are issued. This update requires that a company should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. This update also requires disclosure of the nature and amount of material, nonrecurring pro forma adjustments. The provisions of this update, which are to be applied prospectively, are effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010, with early adoption permitted. The impact of this update on the Company’s financial statements will depend on the size and nature of future business combinations.
 
(2)           Accounts payable related parties

At July 31, 2011, the Company was indebted to related parties for expenses incurred on behalf of the Company totaling $3,900.

 
20

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
 
 
(3)           Accrued compensation

At July 31, 2011 and July 31, 2010, accrued compensation totals $410,623 and $228,125, respectively. The accrued compensation will only be paid if the Company successfully obtains sufficient financing to fund its plan of operation.

(4)           Related party transactions

Accrued liabilities

During the year various liabilities of the Company were paid personally by the CEO. This accrual, totaling $75,764 including amounts accrued in prior periods, will be repaid when the Company has sufficient working capital. An additional amount of $73 represents accrued interest on notes payable to related parties.

Notes payable

During May 2011, the Company issued convertible promissory notes to two related parties in exchange for $4,000. The notes, due November 1, 2011, bear interest at 10% and the principal and accrued interest is convertible into common shares at $.07 per share upon the election of the holder. Interest expense for these notes was $73 for the year ended July 31, 2011.
 
Preferred stock

In December 2008, outstanding notes, including accrued interest which was capitalized, totaling $322,981 were repaid with the issuance of 645,962 shares of preferred stock. An additional note in the amount of $10,000 was issued to the CEO for cash in April 2009. The note, including $210 in accrued interest, was repaid by issuing 20,420 shares of preferred stock in July 2009.

In May 2010, five directors and two officers were each issued 7,500 preferred shares totaling 52,500 shares in exchange for uncompensated services. This amount ($26,250) is reflected in the accompanying financial statements as stock based compensation.

Common stock

On March 1, 2005, the Company sold 1,733,402 shares of its common stock to its officers, directors and other founders for $5,200, or $.003 per share.  In connection with the stock sales, the Company issued one warrant for each common share purchased.  The warrants allow the holder to purchase one share of common stock at a price of $.75 per share.  The warrants expired on April 30, 2010.

In December 2008, the Company issued a total of 425,000 shares of the Company’s common stock in exchange for uncompensated services provided to the Company by two officers and five directors.  The shares were valued at $.03 per share based on the fair value of the shares in the month they were issued. This amount ($12,750) is reflected in the accompanying financial statements as stock based compensation.

In April 2009, the Company issued 2,200,000 shares of the Company’s common stock in exchange for uncompensated services, provided to the Company by two officers, valued at $154,000. The shares were valued at $.07 per share based on the fair value on the date of grant and are reflected in the accompanying financial statements as stock based compensation.

(5)           Notes payable

During November 2009, the Company issued a convertible promissory note to an unrelated third party in exchange for $25,000. The note bears interest at 8% and the principal and accrued interest is convertible, at the option of the note-holder, into non-restricted common stock in an amount equal to the total sum due, based on a mutually agreed discount (not to exceed 50%) to the then market price .The note holder extended the original due date from May 31,
 
 
 
21

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
 
2010 to December 31, 2010, extended again to July 31, 2011 and extended again to June 30, 2012. Interest expense for this note payable was $2,150 and $1,233 for the years ended July 31, 2011 and July 31, 2010, respectively.

During February 2010, the Company issued a convertible promissory note to an unrelated third party in exchange for $25,000. The note bears interest at 8% and the principal and accrued interest is convertible, at the option of the note-holder, into non-restricted common stock in an amount equal to the total sum due, based on a mutually agreed discount (not to exceed 50%) to the then market price. The note holder extended the original due date from July 31, 2010 to December 31, 2010, extended again to July 31, 2011 and extended again to June 30, 2012. Interest expense for this note payable was $2,000 and $1,000 for the years ended July 31, 2011 and July 31, 2010, respectively.

During May 2010, the Company issued a convertible promissory note to an unrelated third party in exchange for $50,000. The note bears interest at 9% and the principal and accrued interest is convertible into common shares at $.04 per share upon the election of the holder. The note holder extended the due date from September 23, 2010 to January 21, 2011, to May 21, 2011, and then to September 18, 2011. Interest expense, including the premium cost on shares issued for the renewal period, for this note payable was $149,724 and $814 for the years ended July 31, 2011 and July 31, 2010, respectively.

During December 2010, the Company issued a convertible promissory note to an unrelated third party in exchange for $15,000. The note bears interest at 9% and the principal and accrued interest is convertible into common shares at $.04 per share upon the election of the holder. The note holder extended the due date from April 2, 2011 to July 31, 2011, and from July 31, 2011 an additional 120 days. Interest expense, including the premium cost on shares issued for the renewal period, for this note payable was $10,088 and $0 for the years ended July 31, 2011 and July 31, 2010, respectively.

During May 2011, the Company issued a convertible promissory note to an unrelated party in exchange for $2000. The note, due November 1, 2011, bears interest at 10% and the principal and accrued interest is convertible into common shares at $.07 per share upon the election of the holder. Interest expense for this note was $37 for the year ended July 31, 2011.

(6)           Shareholders’ Equity

Preferred stock

The Company is authorized to issue 25,000,000 shares of $.001 par value preferred stock. The Company’s Board of Directors may divide and issue the preferred shares in series. Each Series, when issued, shall be designated to distinguish them from the shares of all other series. The relative rights and preferences of these series include preference of dividends, redemption terms and conditions, amount payable upon shares of voluntary or involuntary liquidation, terms and condition of conversion as well as voting powers.
 
In December 2008, the Company designated 5,000,000 shares of preferred stock as Series A Convertible Preferred Stock (”Series A”). Each share of Series A is convertible into 6.25 shares of common stock at the election of the holder. Each Series A share is entitled to 6.25 votes in any vote of the common stock holders. Series A shares are redeemable by the Company at $.50 per share with 15 days written notice. Series A shares are entitled to a 5% dividend preference and a participation interest in the remaining 95% dividend.
 
In July 2009, the Company issued 37,672 Series A shares at $.50 in full settlement of notes payable and accrued interest in the amount of $18,836.
 
In May 2010, the Company issued 3,200 preferred shares at $.50 for cash in the amount of $1,600.

In May 2010, a consultant was issued 15,000 preferred shares in exchange for consulting services. This amount ($7,500) is reflected in the accompanying financial statements as professional and consulting fees.

In June 2010, an outstanding note, including accrued interest, which was capitalized, totaling $21,200 was repaid with the issuance of 42,400 shares of preferred stock. 
 
 
22

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
 
Common stock

From April through June 2005, the Company conducted a private placement offering whereby it sold 840,033 units at a price of $.75 per unit.  Each unit consisted of one share of the Company’s common stock and one warrant to purchase another share of common stock at $.75 per share.  The warrants may be exercised over a period of five years.  The Company received net proceeds of $559,911, after deducting offering costs of $65,089.  $5,000 was collected after July 31, 2005 and is reported in the accompanying financial statements as common stock subscriptions receivable on that date.  The offering was made in reliance on exemptions from registration contained in Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder.

In July 2005, the Company conducted a private placement offering whereby it sold 333,347 units at a price of $.75 per unit.  Each unit consisted of one share of the Company’s common stock and one warrant to purchase another share of common stock at $.75 per share.  The warrants may be exercised over a period of five years.  The Company received net proceeds of $225,000, after deducting offering costs of $25,000.  The offering was made in reliance on exemptions from registration contained in Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder.

In August 2005, the Company conducted a private placement offering whereby it sold 660,026 units at a price of $.75 per unit.  Each unit consisted of one share of the Company’s common stock and one warrant to purchase another share of common stock at $.75 per share.  The warrants may be exercised over a period of five years.  The Company received net proceeds of $445,500, after deducting offering costs of $49,500.  The offering was made in reliance on exemptions from registration contained in Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder.

In July 2006, the Company conducted a private placement offering whereby it sold 633,359 units at a price of $.15 per unit. Each unit consisted of one share of the Company’s common stock and one warrant to purchase another share of common stock at $.75 per share.  The warrants may be exercised over a period of five years. The Company received net proceeds of $88,500, after deducting offering costs of $6,500.  The offering was made in reliance on exemptions from registration contained in Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder.

In August 2006, the Company conducted a private placement offering whereby it sold 750,030 units at a price of $.15 per unit.  Each unit consisted of one share of the Company’s common stock and one warrant to purchase another share of common stock at $.75 per share.  The warrants may be exercised over a period of five years. The Company received net proceeds of $112,500, after deducting offering costs of $10,700. The offering was made in reliance on exemptions from registration contained in Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder.

In August 2006, the Company issued 43,336 shares of the Company’s common stock in exchange for commissions valued at $6,500. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as additional paid in capital.

In October 2006, the Company issued 13,687 shares of the Company’s common stock in exchange for $7,000 in interest on a convertible note payable November 11, 2006. The shares were valued based on the fair value of the shares in the period interest was accrued and are reflected in the accompanying financial statements as interest expense.

In December 2006, the Company issued 104,170 shares of the Company’s common stock in exchange for services valued at $25,000. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.
 
In April 2007, the Company issued 16,669 shares of the Company’s common stock in exchange for services valued at $3,000. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.
 
 
 
23

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

In May 2007, the Company issued 16,508 shares of the Company’s common stock in exchange for $4,225 in interest on a convertible note payable November 11, 2007.  The shares were valued based on the fair value of the shares in the period interest was accrued.

On July 31, 2007, the Company issued 2,250,000 shares of the Company’s common stock to acquired 100% of the issued and outstanding shares of Centric.

Effective July 31, 2007, the Company filed a Certificate of Change Pursuant to NRS 78.209, which decreased the number of its authorized shares of common stock from 100,000,000 to 33,333,333 and reduced the number of common shares issued and outstanding from 17,768,607 to 5,923,106.

In August 2007, the Company issued 500,000 shares of the Company’s common stock to a noteholder at $.15, which was the fair value of the stock on the transaction date, in full payment for an outstanding $75,000 note payable on the completion of the Centric acquisition

In September 2007, the Company issued a total of 18,695 shares of the Company’s common stock in exchange for $3,937 in interest on three convertible notes payable November 2007, April 2008 and June 2008.  The shares were valued based on the fair value of the shares in the period interest was accrued.

In November 2007, the Company issued a total of 22,987 shares of the Company’s common stock in exchange for $2,813 in interest on two convertible notes payable May 2008 and April 2008.  The shares were valued based on the fair value of the shares in the period interest was accrued.

In January 2008, the Company issued 450,000 shares of the Company’s common stock at $.045 to two officers, five directors, an employee and a contractor as compensation for unpaid services.  The shares were valued based on their fair value when the share issuance was authorized.

In February 2008, the Company issued a total of 86,909 shares of the Company’s common stock in exchange for $4,275 in interest on four convertible notes payable May 2008, June 2008, September 2008 and October 2008.  The shares were valued based on the fair value of the shares in the period interest was accrued.

In May 2008, the Company issued a total of 31,514 shares of the Company’s common stock in exchange for $2,025 in interest on three convertible notes payable September 2008, October 2008 and December 2008.  The shares were valued based on the fair value of the shares in the period interest was accrued

In August 2008, the Company issued a total of 18,023 shares of the Company’s common stock in exchange for $2,469 in interest on five convertible notes payable May 2008, September 2008, October 2008 , December 2008 and January 2009.  The shares were valued based on the fair value of the shares in the period interest was accrued

In December 2008, the Company issued a total of 200,000 shares of the Company’s common stock in exchange for uncompensated services provided to the Company by one employee and four consultants. The shares were valued at $.03 per share based on the fair value of the shares in the month they were issued. This amount ($6,000) is reflected in the accompanying financial statements as stock based compensation

In April 2009, the Company issued 100,000 shares of the Company’s common stock in exchange for a $7,000 premium on a promissory note. This expense is reflected in the financial statements as interest expense.

In August 2009, the Company issued 25,000 shares of the Company’s common stock in exchange for services valued at $2,000. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.

In September 2009, the Company issued 200,000 shares of the Company’s common stock in exchange for services valued at $10,000. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.
 
 
24

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

In October 2009, the Company issued 20,000 shares of the Company’s common stock in exchange for services valued at $1,600. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.

In April 2010, the Company issued 25,000 shares of the Company’s common stock in exchange for services valued at $7,500. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.

In September 2010, the Company issued 50,000 shares of the Company’s common stock in exchange for services valued at $3,000. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.

In September 2010, the Company issued 387,500 common shares in payment for interest and renewal fees. The shares were valued at $.06 per share based on the fair value of the shares when they were issued. This amount ($23,250) is reflected in the accompanying financial statements as interest.

In January 2011, the Company issued 387,500 common shares in payment for interest and renewal fees. The shares were valued at $.24 per share based on the fair value of the shares when they were issued. This amount ($93,000) is reflected in the accompanying financial statements as interest.

In February 2011, the Company issued 50,000 shares of the Company’s common stock in exchange for services valued at $7,000. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.

In April 2011, the Company issued 116,250 common shares in payment for interest and renewal fees. The shares were valued at $.08 per share based on the fair value of the shares when they were issued. This amount ($9,300) is reflected in the accompanying financial statements as interest

In May 2011, the Company issued 387,500 common shares in payment for interest and renewal fees. The shares were valued at $.14 per share based on the fair value of the shares when they were issued. This amount ($54,250) is reflected in the accompanying financial statements as $33,834 interest and $20,416 prepaid expenses, representing the amount to be amortized over the term of the renewal.

In July 2011, the Company issued 250,000 shares of the Company’s common stock in exchange for services valued at $37,500. The shares were valued based on the fair value on the date of grant and are reflected in the accompanying financial statements as professional and consulting fees.

In July 2011, the Company issued 116,250 common shares in payment for interest and renewal fees. The shares were valued at $.07 per share based on the fair value of the shares when they were issued. This amount ($8,138) is reflected in the accompanying financial statements as $8,138 interest and $7,350 prepaid expenses, representing the amount to be amortized over the term of the renewal.

Options granted to employees, accounted for under the fair value method

Effective February 1, 2006, the Company adopted SFAS No. 123R, “Share Based Payment”.  SFAS 123R requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions).

On March 16, 2006, the Company granted options to an officer to purchase an aggregate of 100,000 shares of the Company’s common stock at an exercise price of $1.53 per share. 33,333 options were fully vested on the grant date, an additional 33,333 options vest on March 16, 2007, and the remaining 33,334 options vest on March 16, 2008.  All of the options expire on March 16, 2011.  In February 2007, the Company accelerated the vesting date to November 30, 2006; the date the officer left employment, and recognized $137,000 as stock based compensation in the accompanying financial statements to reflect the vested portion during the year ended July 31, 2007.  The total compensation costs for the modified share options were measured on the date of modification and no incremental
 
 
 
25

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
 
costs resulted from the modification.  Therefore compensation costs reflected on the accompanying financial statements reflect the grant date fair value of the original award for which the requisite services have been rendered.  The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
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 per share, in exchange for accrued compensation and expenses.  All 2,529,029 options were fully vested on the grant date.  The quoted market price of the stock was $.84 per share on the grant date.  The Company valued the options at $.84 per share, or $2,079,620.  This amount is reflected in the accompanying financial statements as stock based compensation.

In July 2006, the Company granted three of its officer options to purchase an aggregate of 199,000 shares of the Company’s common stock at an exercise price of $.15 per share, in exchange for accrued compensation and expenses.  All 199,000 options were fully vested on the grant date.  The quoted market price of the stock was $.75 per share on the grant date.  The Company valued the options at $.72 per share, or $143,101.  This amount is reflected in the accompanying financial statements as stock based compensation.  The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
Risk-free interest rate
4.97%
Dividend yield
0.00%
Volatility factor
Ranging from 139.92% to 140.00%
Weighted average expected life
5 years

In April 2007, the Company granted options to various officers, directors, and employees to purchase an aggregate of 933,338 shares of the Company’s common stock at an exercise price of $.18 per share.  All 933,338 were fully vested on the grant date.  The options had a fair value of $.18 per share or $164,360.  The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
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

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
 
 
 
26

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
 
On September 13, 2007, the Company extended the life of the options, originally granted April 17, 2007 to purchase 933,338 common shares of the Company, from a 5 year term to a 7 year term.  The options had a fair value of $.16 per share or $149,240.  No expense was recorded, as the revised fair value is less than the fair value originally recorded.  The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
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 per share, in exchange for unpaid services expenses.  All 600,000 options were fully vested on the grant date.  The quoted market price of the stock was $.02 per share on the grant date.  The Company valued the options at $.02 per share, or $12,000.  This amount is reflected in the accompanying financial statements as stock based compensation.  The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
Risk-free interest rate
4.97%
Dividend yield
0.00%
Volatility factor
139.92%
Weighted average expected life
5 years

Options granted to employees, accounted for under the intrinsic value method

On April 30, 2005, the Company granted four directors options to purchase an aggregate of 120,000 shares of the Company’s common stock at an exercise price of $.75 per share.  40,000 options were fully vested on the grant date, an additional 40,000 options vest on April 30, 2006, and the remaining 40,000 options vest on April 30, 2007.  All of the options expire on April 30, 2010.  The exercise price of the options equaled the price at which the Company was selling the stock to unrelated third parties on the grant date.  The Company’s common stock had no quoted market price on the grant date.  No stock-based compensation was recorded on the options through January 31, 2006.  The options had a fair value of $.093 per share, or $11,160.  Effective February 1, 2006, the Company adopted SFAS No. 123R, “Share Based Payment” and recognized $2,093 and $1,395 as stock based compensation in the accompanying financial statements to reflect the vested portion during the period from the effective date through July 31, 2007 and July 31, 2006.

On August 18, 2005, the Company granted three officers options to purchase an aggregate of 233,334 shares of the Company’s common stock at an exercise price of $.75 per share.  100,000 options were fully vested on the grant date, an additional 100,000 options vest on April 30, 2006, and the remaining 33,334 options vest on April 30, 2007.  All of the options expire on April 30, 2010.  The exercise price of the options equaled the price at which the Company was selling the stock to unrelated third parties on the grant date.  The Company’s common stock had no quoted market price on the grant date.  No stock-based compensation was recorded on the options through January 31, 2006.  The options had a fair value of $.093 per share, or $21,700.  Effective February 1, 2006, the Company adopted SFAS No. 123R, “Share Based Payment” and recognized $1,329 and $4,650 as stock based compensation in the accompanying financial statements to reflect the vested portion during the period from the effective date through July 31, 2007 and July 31, 2006.
 
 
27

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

On September 30, 2005, the Company granted a director options to purchase an aggregate of 30,000 shares of the Company’s common stock at an exercise price of $3.36 per share.  10,000 options were fully vested on the grant date, an additional 10,000 options vest on September 30, 2006, and the remaining 10,000 options vest on September 30, 2007.  All of the options expire on September 30, 2010.  The exercise price of the options equaled the traded market price of the stock on the grant date.  No stock-based compensation was recorded on the options through January 31, 2006.  The options had a fair value of $.42 per share, or $12,600.  Effective February 1, 2006, the Company adopted SFAS No. 123R, “Share Based Payment” and recognized $2,928 and $2,100 as stock based compensation in the accompanying financial statements to reflect the vested portion during the period from the effective date through July 31, 2007 and July 31, 2006.

The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
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, 2011
   
July 31, 2010
   
July 31, 2011
 
Net loss, as reported
 
$
(500,394
)
 
$
(339,638
)
 
$
(7,359,338
)
   Decrease due to:
                       
       Employee stock options
   
-
     
-
     
(29,453
)
Pro forma net loss
 
$
(500,394
)
 
$
(339,638
)
 
$
(7,388,791
)
                         
As reported:
                       
    Net loss per share - basic and diluted
 
$
(0.022
)
 
$
(0.016
)
       
Pro Forma:
                       
    Net loss per share - basic and diluted
 
$
(0.022
)
 
$
(0.016
)
       

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
 

$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.
 
 
28

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

Options granted to non-employees, accounted for under the fair value method

In June 2006, the Company granted two consultants options to purchase an aggregate of 325,000 shares of the Company’s common stock at an exercise price of $.06 per share, in exchange for accrued expenses.  All 325,000 options were fully vested on the grant date.  The quoted market price of the stock was $.84 per share on the grant date.  The Company valued the options at $.82 per share, or $267,248.  This amount is reflected in the accompanying financial statements as stock based compensation.  The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
Risk-free interest rate
4.97%
Dividend yield
0.00%
Volatility factor
139.92%
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 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

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

Following is a schedule of changes in common stock options and warrants from March 1, 2005 (inception) through July 31, 2010:

 
29

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



             
Weighted
 
Weighted
             
Average
 
Average
         
Exercise
 
Exercise
 
Remaining
 
Awards Outstanding
 
Price
 
Price
 
Contractual
 
Total
 
Exercisable
 
Per Share
 
Per Share
 
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
 
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
 
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
 
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
 
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
 
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
 
1.86 years
                   
Granted
-
 
-
 
$-
 
$-
 
N/A
Exercised
-
 
-
 
$-
 
$-
 
N/A
Cancelled/Expired
4,476,360
  
4,476,360
 
$0.06-$3.36
 
$-
 
N/A
Outstanding at July 31, 2011
3,958,329
 
3,958,329
 
$0.015-$0.75
 
$0.23
 
1.09 years
 
 
 
30

 
WORLDWIDE STRATEGIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
 
Common stock awards consisted of the following options and warrants during the period from March 1, 2005 (inception) through July 31, 2011:
               
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
   
 -