NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JANUARY 31, 2023 and
2022
(Unaudited)
Note 1 – Organization and Basis
of Presentation
Organization
and Basis of Presentation
Worldwide Strategies Incorporated (“WWSG”
or the “Company”) was incorporated under the laws of the State of Nevada on April 6, 1998 and ceased operations in 2015. On
July 10, 2019, the Company filed a Certificate of Reinstatement with the state of Nevada. Today, the Company operates the Fitwell app,
a mobile fitness and wellness software platform which includes mobile apps native to the iOS and Android operating systems. The software
enables video-based fitness curriculums, which provide beginner, intermediate and advanced cardiovascular and strength training programs,
in easy to follow short-format instructional videos. Currently, content on our mobile app is available on a freemium model, with a small
library of content offered for free, and unlimited access offered on a subscription basis.
The accompanying financial statements
are prepared on the basis of accounting principles generally accepted in the United States of America (“GAAP”) and have been
prepared assuming the continuation of the Company as a going concern. The Company has not yet established an ongoing source of revenues
sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations. Management of the Company
is making efforts to raise additional funding until a registration statement relating to an equity funding facility is in effect. While
management of the Company believes that it will be successful in its capital formation and planned operating activities, there can be
no assurance that the Company will be able to raise additional equity capital or be successful in the development and commercialization
of the products it develops or initiates collaboration agreements thereon. The accompanying financial statements do not include any adjustments
to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities
that may result from the possible inability of the Company to continue as a going concern.
Note 2 – Summary of significant
accounting policies
Cash and Cash Equivalents
The Company doesn’t maintain any
bank accounts and does not have any cash in hand. For day-to-day business activities, the Company depends upon the directors’ personal
accounts. For purposes of reporting within the statements of cash flows, the Company considers all cash on hand, cash accounts not subject
to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be
cash and cash equivalents.
Use of Estimates
The preparation
of financial statements in conformity with accounting principles generally accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could
differ from those estimates.
Foreign Currency
The Company translates all assets and
liabilities of foreign amounts to U.S. dollars at the current exchange rate as of the applicable balance sheet date. Revenue and expenses
are translated at the average exchange rate prevailing during the period in which the transactions occur. The effects of foreign currency
translations are recorded in accumulated other comprehensive income (loss) as a separate component of stockholders’ equity in the
accompanying balance sheets. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a
currency other than the functional currency of the recording entity are presented as other income (expense) in the statements of
operations.
Property and Equipment
Property and equipment are stated at
cost less accumulated depreciation and amortization. Depreciation is calculated on a straight-line basis over the estimated useful lives
of the assets. Maintenance and repairs that do not extend the life or improve an asset are expensed in the period incurred.
The estimated useful lives
of property and equipment are as follows:
| Schedule of estimated useful lives of property and equipment |
|
| Computer hardware |
3 years |
| Purchased software |
3 years |
Revenue Recognition
The Company recognizes
revenue from services in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 606, Revenue from
Contracts with Customers (“ASC 606”). Under ASC 606, the Company recognizes revenue when or as the Company’s
performance obligations are satisfied by transferring control of the promised services to customers in an amount that reflects the
consideration to which the Company expects to be entitled in exchange for those services. To determine revenue recognition for
arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps as prescribed
by ASC 606:
| |
(i) |
identify the contract(s) with a customer; |
| |
(ii) |
identify the performance obligations in the contract; |
| |
(iii) |
determine the transaction price; |
| |
(iv) |
allocate the transaction price to the performance obligations in the contract; and |
| |
(v) |
recognize revenue when (or as) the entity satisfies performance obligations. |
The Company applies the five-step model to contracts when
it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.
At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised
within each contract and determine those that are performance obligations and assess whether each promised good or service is distinct.
The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation
when (or as) the performance obligation is satisfied.
Revenue is primarily derived in the form of recurring subscriptions.
Subscription revenue is presented net of taxes, refunds and credit card chargebacks. This revenue is initially deferred and is recognized
using the straight-line method over the term of the applicable subscription period.
As permitted under the practical expedient available under
ASC 606, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected
length of one year or less.
Loss per Common Share
Net loss per common share is computed
by dividing net loss by the weighted average number of common shares outstanding for the period. As a result, diluted loss per common
share is the same as basic loss per common share for the six months ended January 31, 2023 and 2022. Excluded from the weighted average
common shares outstanding amount is convertible preferred stock equivalent to 204 million shares and convertible debt equivalent to 47.3
million common shares as the effect of these on the computation of net loss per share would have been anti-dilutive.
Income Taxes
The Company accounts for income taxes
pursuant to FASB ASC Topic 740, Income Taxes. Under FASB ASC Topic 740, deferred tax assets and liabilities are determined
based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The
deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating
the differences.
The Company maintains a valuation allowance
with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the
deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period.
Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under
the Federal tax laws.
Changes in circumstances, such as the
Company generating taxable income, could cause a change in judgment about the reliability of the related deferred tax asset. Any change
in the valuation allowance will be included in income in the year of the change in estimate.
Fair Value of Financial Instruments
On August 1, 2012, the Company adopted
ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a three-level valuation hierarchy for
disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
| |
☐ |
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| |
☐ |
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
| |
☐ |
Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement. |
The following tables represent
our assets and liabilities by level measured at fair value on a recurring basis at January 31, 2023 and July 31, 2022:
| Schedule of assets and liabilities measured at fair value | |
| | | |
| | | |
| | |
| | |
Fair Value Measurements at January 31, 2023 | |
| | |
Level 1 | | |
Level 2 | | |
Level 3 | |
| Description | |
| | | |
| | | |
| | |
| Convertible Debt | |
$ | – | | |
$ | 492,406 | | |
$ | – | |
| Total Liabilities | |
| – | | |
| 492,406 | | |
| – | |
| Totals | |
$ | – | | |
$ | 492,406 | | |
$ | – | |
| | |
Fair Value Measurements at July 31, 2022 | |
| | |
Level 1 | | |
Level 2 | | |
Level 3 | |
| Description | |
| | | |
| | | |
| | |
| Convertible Debt | |
$ | – | | |
$ | 492,406 | | |
$ | – | |
| Total Liabilities | |
| – | | |
| 492,406 | | |
| – | |
| Totals | |
$ | – | | |
$ | 492,406 | | |
$ | – | |
Reclassifications
Certain reclassifications
have been made to the prior year presentation to conform to the current year presentation.
Recent Accounting Pronouncements
The Company reviewed all the recently
issued, but not yet effective, accounting pronouncements and we do not believe any of these pronouncements will have a material impact
on the Company.
Note 3-
Going Concern
For the six months ended January 31,
2023 and 2022 we incurred net losses of approximately $388,000 and $42,000 respectively. As of January 31, 2023, we had no cash on hand
and current liabilities of approximately $1.6 million. As of July 31, 2022, we had no cash on hand and current liabilities of approximately
$1.0 million. These losses combined with our current liabilities cast significant doubt on the company’s ability to operate under
the going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future
and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when
they come due. Management intends to finance operating costs over the next twelve months with loans from directors and/or private placement
of common stock. The failure to achieve the necessary levels of profitability or obtaining additional funding would be detrimental to
the Company.
Note 4 – Property
and Equipment
On October 18, 2022 the Company entered
into an asset purchase agreement with Fitwell Limited, for the purchase of a copy of its native mobile fitness application. The purchase
price for the software application was $0.5 million to be payable upon the earlier of October 18, 2023 or the Company completing a capital
raise, under Regulation A which generates no less than $2 million in proceeds to the Company and shares of the Company in the amount of
$0.5 million. On October 18, 2022 and in connection with the purchase of the Fitwell assets, the Company issued a promissory note for
$0.5 million and issued approximately 2 million shares of common stock as consideration.
Property and equipment represents purchased
software which had a cost of approximately $684,000 and accumulated depreciation of approximately $64,000 as of January 31, 2023.
Note 5 – Related party transactions
The Company’s CFO has provided
office space at no cost to the Company. Our CEO and CFO incurred expenses on behalf of the Company amounting to approximately $36,000
during the six months ending January 31, 2023. As of January 31, 2023 total amounts due to our CEO and CFO are approximately $81,000.
These amounts are due on June 30, 2023 and bear interest at eight percent per annum.
As of January 31, 2023 and July 31,
2022, the Company had a convertible promissory note in the principal outstanding balance of $40,000, payable to a shareholder. Such note
bears interest at nine percent per annum with a maturity date of July 31, 2015. The principal and accrued interest is convertible, at
the option of the holder, into common shares at $.01 per share.
Note 6 – Convertible Notes
Payable
The Company has convertible promissory
notes that in the aggregate result in a principal outstanding balance of $161,000 as of January 31, 2023 and July 31, 2022, respectively.
Interest on these notes range from nine to ten percent per annum and such notes had maturity dates of July 31, 2015. The principal and
accrued interest is convertible, at the option of the holder, into common shares at $.01 per share.
The Company has convertible promissory
notes that in the aggregate result in a principal outstanding balance of $158,000 as of January 31, 2023 and July 31, 2022, respectively.
Interest on these notes range from eight to ten percent per annum and such notes had maturity dates of July 31, 2015. The principal and
accrued interest is convertible, at the option of the holder, into common shares at $.04 per share.
The Company has convertible promissory
notes that in the aggregate result in a principal outstanding balance of $50,000 as of January 31, 2023 and July 31, 2022, respectively.
Interest on these notes are 8% per annum and such notes had maturity date of March 31, 2015. The principal and accrued interest is convertible,
at the option of the 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 Company has convertible promissory
notes that in the aggregate result in a principal outstanding balance of $45,000 as of January 31, 2023 and July 31, 2022, respectively.
Interest on these notes are 10% per annum and such notes had maturity dates ranging from July 31, 2015 to December 31, 2015. The principal
and accrued interest is convertible, at the option of the holder, into common shares at $.07 per share.
The Company has convertible promissory
notes that in the aggregate result in a principal outstanding balance of $39,000 as of January 31, 2023 and July 31, 2022, respectively.
Interest on these notes are 10% per annum and such notes had maturity dates ranging from July 31, 2015 to December 31, 2015. The principal
and accrued interest is convertible, at the option of the holder, into common shares at $.10 per share.
Accrued interest on such notes total
$447,000 and $423,000 as of January 31, 2023 and July 31, 2022, respectively and are included within accrued liabilities on the accompanying
balance sheet. Based on the maturity dates of the promissory notes, all promissory notes are in default.
Notes Payable
In October 2022 we entered into a promissory
note in the amount of $0.5 million in connection with the purchase of software from Fitwell Limited. The promissory note bears interest
at one-tenth of one percent per annum and is due and payable upon the earlier of October 18, 2023 or the Company completing a capital
raise, under Regulation A which generates no less than $2 million in proceeds to the Company and shares of the Company in the amount of
$0.5 million. As this note is a related party note, the Company imputes interest at 8% per annum which was approximately $10,000 for the
three and six months ended January 31, 2023.
Note 7 – Shareholders’
Equity
Preferred stock
The Company has two classes of preferred
stock and 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.
Series A Preferred Stock
The Company is authorized to issue 5,000,000
shares of Convertible Series A Preferred Stock at a par value of $0.001. Each share of Series A Preferred Stock 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. On October 22, 2022, approximately 1.2 million shares of Series
A Preferred Stock were cancelled pursuant to the termination of a license agreement for intellectual property.
Series B Preferred Stock
The Company is authorized to issue 5,000,000
shares of Convertible Series B Preferred Stock at a par value of $0.001. Each share of Series B Preferred Stock is convertible into 1,000
shares of common stock at the election of the holder. On October 22, 2022, approximately 90,000 shares of Series B Preferred Stock were
cancelled pursuant to the termination of a license agreement for intellectual property.
Common stock
As of January 31, 2023 and July 31,
2022, the Company was authorized to issue 975,000,000 shares of common stock respectively. During October 2022, the Company issued approximately
2 million shares in connection with the purchase of software from Fitwell Limited. These shares were valued based on the stock price on
the date of grant for an aggregate consideration of approximately $108,000. In addition, we issued 4.8 million restricted shares for services
rendered to certain individuals and recognized stock compensation of approximately $257,000 which represented the total grant value on
the date of grant.
Total shares outstanding at January
31, 2023 and July 31, 2022 were 26,580,678 and 19,830,679, respectively.
Note 8 - Income taxes
The Company accounts for income taxes
under FASB ASC Topic 740, which requires use of the liability method. FASB ASC Topic 740 provides that deferred tax assets and liabilities
are recorded based on the differences the tax basis of assets and liabilities and their carrying amounts for financial reporting purposes,
referred to as temporary differences. As of January 31, 2023, the Company incurred a net operating loss and, accordingly, no provision
for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization
of any tax assets.
Based on the available objective evidence,
including the Company's history of losses, management believes it is more likely than not, the net deferred tax assets will not be fully
realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at January 31, 2023 and
July 31, 2022. The Company had no uncertain tax positions as of January 31, 2023 and July 31, 2022.
Note 9 - Supplemental Disclosure of Noncash
Activities
As noted in Note 4, the Company purchased software from Fitwell
Limited in the amount of approximately $684,000 through the issuance of common shares and promissory notes.