UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
10-Q
(Mark
one)
x
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended MARCH 31, 2010
¨
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
|
|
For
the transition period from ______________ to
_____________
|
Commission
File Number: 000-50586
MARKETING
WORLDWIDE CORPORATION
(Exact
name of registrant as specified in its charter)
DELAWARE
|
|
68-0566295
|
(State
of incorporation)
|
|
(IRS
Employer ID Number)
|
2212
GRAND COMMERCE DR.
HOWELL,
MICHIGAN 48855
(Address
of principal executive offices)
631-444-
8090
(Registrant's
telephone number, including area code)
NOT
APPLICABLE
(Former
name, former address and former fiscal year,
if
changed since last report)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
x
Yes
¨
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 (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes
o
No
x
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
|
¨
|
Accelerated
filer
¨
|
|
|
|
Non-accelerated
filer
|
¨
|
Smaller
reporting company
x
|
(Do
not check if a smaller reporting
|
|
|
company)
|
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
¨
Yes
x
No
Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date. May 21, 2010: 21,010,091
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
Form 10-Q
for the Quarter ended March 31, 2010
Table of
Contents
|
|
PAGE
|
|
|
|
|
|
PART
I - FINANCIAL INFORMATION
|
|
|
|
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|
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ITEM
1 - FINANCIAL STATEMENTS
|
|
|
|
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Condensed
Consolidated Balance Sheets as of March 31, 2010 (unaudited) and September
30, 2009
|
|
|
F-1
|
|
Condensed
Consolidated Statements of Operations for the three and six month periods
ended March 31, 2010 and 2009 (unaudited)
|
|
|
F-2
|
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Condensed
Consolidated Statements of Cash Flows for the six month periods ended
March 31, 2010 and 2009 (unaudited)
|
|
|
F-3
|
|
Notes
to unaudited Condensed Consolidated Financial Statements
|
|
|
F-4
|
|
ITEM
2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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2
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ITEM
3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
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8
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|
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ITEM
4T - CONTROLS AND PROCEDURES
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PART
II - OTHER INFORMATION
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ITEM
1 - LEGAL PROCEEDINGS
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8
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ITEM
1A – RISK FACTORS
|
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8
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|
ITEM
2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
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8
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ITEM
3 - DEFAULTS UPON SENIOR SECURITIES
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8
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ITEM
5 - OTHER INFORMATION
|
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9
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ITEM
6 - EXHIBITS
|
|
|
9
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|
SIGNATURES
|
|
|
11
|
|
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
March
31,
|
|
|
September
30,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
34,794
|
|
|
$
|
113,539
|
|
Accounts
receivable, net
|
|
|
504,683
|
|
|
|
737,094
|
|
Inventories,
net
|
|
|
374,339
|
|
|
|
543,075
|
|
Other
current assets
|
|
|
20,115
|
|
|
|
24,564
|
|
Current
assets of discontinued operations
|
|
|
-
|
|
|
|
184,833
|
|
Total
current assets
|
|
|
933,931
|
|
|
|
1,603,105
|
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment, net
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
|
2,744,134
|
|
|
|
2,903,520
|
|
Discontinued
operations
|
|
|
-
|
|
|
|
178,352
|
|
Total
property, plant and equipment
|
|
|
2,744,134
|
|
|
|
3,081,872
|
|
|
|
|
|
|
|
|
|
|
Other
assets:
|
|
|
|
|
|
|
|
|
Other
intangible assets
|
|
|
65,000
|
|
|
|
80,000
|
|
Capitalized
finance costs, net
|
|
|
271,785
|
|
|
|
337,750
|
|
Other
assets, net
|
|
|
27,789
|
|
|
|
19,400
|
|
Total
other assets
|
|
|
364,574
|
|
|
|
437,150
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
4,042,639
|
|
|
$
|
5,122,127
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIENCY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Bank
line of credit
|
|
$
|
502,369
|
|
|
$
|
721,224
|
|
Notes
payable and capital leases, current portion
|
|
|
1,859,434
|
|
|
|
1,919,692
|
|
Accounts
payable
|
|
|
1,157,449
|
|
|
|
663,586
|
|
Warranty
liability
|
|
|
66,216
|
|
|
|
66,216
|
|
Other
current liabilities
|
|
|
482,635
|
|
|
|
325,759
|
|
Interest
swap liabilities
|
|
|
80,751
|
|
|
|
82,075
|
|
Due
to supplier
|
|
|
195,000
|
|
|
|
|
|
Current
liabilities of discontinued operations
|
|
|
492,006
|
|
|
|
464,229
|
|
Total
current liabilities
|
|
|
4,835,860
|
|
|
|
4,242,781
|
|
|
|
|
|
|
|
|
|
|
Derivative
liability
|
|
|
2,015,310
|
|
|
|
-
|
|
Capital
leases, long term
|
|
|
-
|
|
|
|
21,247
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
6,851,170
|
|
|
|
4,264,028
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Series
A convertible preferred stock, $0.001 par value; 3,500,000 shares
authorized, issued and outstanding
|
|
|
3,499,950
|
|
|
|
3,499,950
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Deficiency
|
|
|
|
|
|
|
|
|
Series
B convertible preferred stock, $0.001 par value, 10,000,000 authorized;
1,192,308 shares issued and outstanding as of March 31, 2010 and September
30, 2009
|
|
|
1,192
|
|
|
|
1,192
|
|
Common
stock, $0.001 par value, 100,000,000 shares authorized; 21,010,091 and
17,835,091 shares issued and outstanding as of March 31, 2010 and
September 30, 2009, respectively
|
|
|
21,010
|
|
|
|
17,835
|
|
Additional
paid- in- capital
|
|
|
8,182,185
|
|
|
|
9,639,388
|
|
Deficit
|
|
|
(14,375,351
|
)
|
|
|
(12,154,087
|
)
|
Accumulated
other comprehensive (loss)
|
|
|
(80,473
|
)
|
|
|
(107,929
|
)
|
Total
Marketing Worldwide Corporation stockholders' deficiency
|
|
|
(6,251,437
|
)
|
|
|
(2,603,601
|
)
|
Non
controlling interest
|
|
|
(57,044
|
)
|
|
|
(38,250
|
)
|
Total
stockholders' deficiency
|
|
|
(6,308,481
|
)
|
|
|
(2,641,851
|
)
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Deficiency
|
|
$
|
4,042,639
|
|
|
$
|
5,122,127
|
|
See
the accompanying notes to the unaudited condensed consolidated financial
statements
|
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(unaudited)
|
|
|
Three
months ended March 31,
|
|
|
Six
months ended March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
Revenues
|
|
$
|
980,261
|
|
|
$
|
573,939
|
|
|
$
|
2,172,427
|
|
|
$
|
1,706,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of sales
|
|
|
783,959
|
|
|
|
391,870
|
|
|
|
1,489,797
|
|
|
|
1,043,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
196,302
|
|
|
|
182,069
|
|
|
|
682,630
|
|
|
|
662,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses
|
|
|
1,208,890
|
|
|
|
760,535
|
|
|
|
2,107,501
|
|
|
|
1,744,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(1,012,588
|
)
|
|
|
(578,466
|
)
|
|
|
(1,424,871
|
)
|
|
|
(1,081,436
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
(loss)s on change in fair value of derivative liability
|
|
|
3,616,762
|
|
|
|
-
|
|
|
|
(44,195
|
)
|
|
|
-
|
|
Financing
expenses
|
|
|
(91,283
|
)
|
|
|
(27,578
|
)
|
|
|
(205,841
|
)
|
|
|
(181,475
|
)
|
Loss
of disposal of equipment, other income and (expense), net
|
|
|
(2,995
|
)
|
|
|
5,721
|
|
|
|
7,827
|
|
|
|
19,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(Loss) before discontinued operations
|
|
|
2,509,896
|
|
|
|
(600,323
|
)
|
|
|
(1,667,080
|
)
|
|
|
(1,243,193
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from discontinued operations
|
|
|
(265,091
|
)
|
|
|
(262,645
|
)
|
|
|
(377,228
|
)
|
|
|
(435,594
|
)
|
Income
(Loss) before non-controlling interest
|
|
|
2,244,806
|
|
|
|
(862,968
|
)
|
|
|
(2,044,307
|
)
|
|
|
(1,678,787
|
)
|
Income
(Loss) attributable to Non- controlling interest
|
|
|
666
|
|
|
|
8,000
|
|
|
|
(18,794
|
)
|
|
|
44,298
|
|
Income
(loss) after non controlling interest
|
|
|
2,244,140
|
|
|
|
(870,968
|
)
|
|
|
(2,025,513
|
)
|
|
|
(1,723,085
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock dividend
|
|
|
(78,750
|
)
|
|
|
(78,750
|
)
|
|
|
(157,500
|
)
|
|
|
(157,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS
|
|
$
|
2,165,390
|
|
|
$
|
(949,718
|
)
|
|
$
|
(2,183,013
|
)
|
|
$
|
(1880,585
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) per common stock, basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
0.13
|
|
|
$
|
(0.04
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.08
|
)
|
Discontinued
operations
|
|
|
(0.01
|
)
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
|
|
(0.03
|
)
|
Total
|
|
$
|
0.12
|
|
|
$
|
(0.06
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) per common stock, fully diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(0.06
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.08
|
)
|
Discontinued
operations
|
|
|
(0.01
|
)
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
|
|
(0.03
|
)
|
Total
|
|
$
|
(0.05
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common stock outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
19,375,258
|
|
|
|
16,698,352
|
|
|
|
18,861,217
|
|
|
|
16,770,915
|
|
Fully
Diluted
|
|
|
41,352,484
|
|
|
|
16,698,352
|
|
|
|
18,861,217
|
|
|
|
16,770,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
2,165,390
|
|
|
$
|
(949,718
|
)
|
|
$
|
(2,183,013
|
)
|
|
$
|
(1,880,585
|
)
|
Foreign
currency translation, income (loss)
|
|
|
-
|
|
|
|
(7,056
|
)
|
|
|
27,456
|
|
|
|
(7,056
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss
|
|
|
2,165,390
|
|
|
|
(956,774
|
)
|
|
|
(2,155,557
|
)
|
|
|
(1,889,641
|
)
|
Comprehensive
income (loss) attributable to non controlling interest
|
|
|
666
|
|
|
|
8,000
|
|
|
|
(18,794
|
)
|
|
|
44,298
|
|
Comprehensive
loss attributable to Marketing Worldwide Corporation
|
|
$
|
2,166,056
|
|
|
$
|
(948,774
|
)
|
|
$
|
(2,174,351
|
)
|
|
$
|
(1,843,343
|
)
|
See
the accompanying notes to the unaudited condensed consolidated financial
statements
|
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
SIX
MONTHS ENDED MARCH 31, 2010 AND 2009
|
(unaudited)
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net
loss attributable to continuing operations
|
|
$
|
(1,648,285
|
)
|
|
$
|
(1,198,895
|
)
|
Loss
from discontinued operations
|
|
|
(377,228
|
)
|
|
|
(435,594
|
)
|
Adjustments
to reconcile net loss to net cash provided by (used
in) operations:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
210,892
|
|
|
|
208,474
|
|
Amortization
of deferred financing costs
|
|
|
65,965
|
|
|
|
65,965
|
|
Loss
on disposal of property, plant and equipment
|
|
|
10,617
|
|
|
|
|
|
Effect
of adoption of Accounting Standards Codification 810-10
|
|
|
(38,250
|
)
|
|
|
-
|
|
Change
in fair value of derivative liability
|
|
|
44,195
|
|
|
|
-
|
|
Fair
value of vested employee options
|
|
|
3,887
|
|
|
|
92,583
|
|
Common
stock issued for services rendered
|
|
|
434,250
|
|
|
|
-
|
|
Interest
in non controlling entity
|
|
|
(18,794
|
)
|
|
|
(44,298
|
)
|
Fair
value of interest swap
|
|
|
(1,324
|
)
|
|
|
|
|
Changes
in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
232,411
|
|
|
|
378,567
|
|
Inventory
|
|
|
168,736
|
|
|
|
156,312
|
|
Other
current assets
|
|
|
4,449
|
|
|
|
141,187
|
|
Other
assets
|
|
|
(8,389
|
)
|
|
|
19,420
|
|
Accounts
payable
|
|
|
610,313
|
|
|
|
(544,822
|
)
|
Other
current liabilities
|
|
|
156,876
|
|
|
|
(7,698
|
)
|
Net
cash used in continuing operating activities
|
|
|
(149,679
|
)
|
|
|
(1,168,799
|
)
|
Net
cash provided discontinued operating operations
|
|
|
241,960
|
|
|
|
421,211
|
|
Net
cash provided by (used in) operating activities:
|
|
|
92,281
|
|
|
|
(747,588
|
)
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase
of property and equipment, continuing operations
|
|
|
(47,124
|
)
|
|
|
(26,329
|
)
|
Cash
provided by (used) in discontinued investing activities
|
|
|
149,002
|
|
|
|
(23,665
|
)
|
Net
cash provided by (used in) investing activities:
|
|
|
101,878
|
|
|
|
(49,994
|
)
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Distribution
by non controlling entity
|
|
|
-
|
|
|
|
(90,000
|
)
|
(Repayments
of) proceeds from lines of credit
|
|
|
(218,855
|
)
|
|
|
200,000
|
|
Repayments
of notes payable and capital leases
|
|
|
(81,505
|
)
|
|
|
(50,198
|
)
|
Cash
(used in) provided by continuing financing activities
|
|
|
(300,360
|
)
|
|
|
59,802
|
|
Cash
provided by discontinued financing activities
|
|
|
-
|
|
|
|
2,050
|
|
Net
cash (used in) provided by financing activities
|
|
|
(300,360
|
)
|
|
|
61,852
|
|
|
|
|
|
|
|
|
|
|
Effect
of currency rate change on cash:
|
|
|
27,456
|
|
|
|
(7,256
|
)
|
|
|
|
|
|
|
|
|
|
Net
decrease in cash and cash equivalents
|
|
|
(78,745
|
)
|
|
|
(742,986
|
)
|
Cash
and cash equivalents, beginning of period
|
|
|
113,539
|
|
|
|
1,003,071
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, end of period
|
|
$
|
34,794
|
|
|
$
|
260,085
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
|
|
|
Cash
paid during the period for interest
|
|
$
|
195,417
|
|
|
$
|
47,814
|
|
|
|
|
|
|
|
|
|
|
NON-CASH
TRANSACTIONS:
|
|
|
|
|
|
|
|
|
Common
stock issued in settlement of debt
|
|
$
|
78,950
|
|
|
$
|
-
|
|
Common
stock issued for services rendered
|
|
$
|
434,250
|
|
|
$
|
80,000
|
|
See
the accompanying notes to the unaudited condensed consolidated financial
statements
|
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
NOTE
A – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Nature of
Operations
Marketing
Worldwide Corporation (the "Company"), is incorporated under the laws of the
State of Delaware in July 2003. The Company is engaged in North America through
its wholly-owned subsidiary, Marketing Worldwide LLC ("MWWLLC"), in the design,
import and distribution of automotive accessories for motor vehicles in the
automotive aftermarket industry and provides design services for large
automobile manufacturers. The Company operates its wholly- owned subsidiary
Colortek, Inc in Baroda, Michigan.
Basis of
presentation
The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
In the
opinion of management, all adjustments consisting of normal recurring accruals
considered necessary for a fair presentation have been included. Accordingly,
the results from operations for the six month period ended March 31, 2010, are
not necessarily indicative of the results that may be expected for the year
ended September 30, 2010. The unaudited condensed consolidated financial
statements should be read in conjunction with the September 30, 2009 financial
statements and footnotes thereto included in the Company's SEC Form 10K. The
Company has evaluated and included subsequent events through the filing date of
this Form 10-Q.
The
unaudited condensed consolidated financial statements include the accounts
of the Registrant and its wholly-owned subsidiaries, Marketing Worldwide LLC,
Colortek, Inc., MW Global Limited which owns 100% of the outstanding ownership
and economical interest in Modelworxx GmbH. Effective January 1, 2005, the
consolidated financial statements also include a variable interest entity (VIE)
of which the Marketing Worldwide LLC is the primary beneficiary as further
described in Note I. The results of MW Global Limited including Modelworxx GmbH
are shown as discontinued operations in the financial statements. All
significant inter-company transactions and balances, including those involving
the VIE, have been eliminated in consolidation.
NOTE
B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue
Recognition
For
revenue from products and services, the Company recognizes revenue in accordance
with Accounting Standards Codification subtopic 605-10, Revenue Recognition
(“ASC 605-10”). ASC 605-10 requires that four basic criteria must be met before
revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2)
delivery has occurred or services have been rendered; (3) the selling price is
fixed and determinable; and (4) collectability is reasonably assured.
Determination of criteria (3) and (4) are based on management's judgments
regarding the fixed nature of the selling prices of the products
delivered/services rendered and the collectability of those amounts. Provisions
for discounts and rebates to customers, estimated returns and allowances, and
other adjustments are provided for in the same period the related sales are
recorded.
The
Company defers any revenue for which the product has not been delivered or
services has not been rendered or is subject to refund until such time that the
Company and the customer jointly determine that the product has been delivered
or services has been rendered or no refund will be required.
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
NOTE
B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
ASC
605-10 incorporates Accounting Standards Codification subtopic 605-25,
Multiple-Element Arrangements (“ASC 605-25”). ASC 605-25 addresses accounting
for arrangements that may involve the delivery or performance of multiple
products, services and/or rights to use assets. The effect of implementing
605-25 on the Company's financial position and results of operations was not
significant.
Revenues
on the sale of products, net of estimated costs of returns and allowance, are
recognized at the time products are shipped to customers, legal title has
passed, and all significant contractual obligations of the Company have been
satisfied. Products are generally sold on open accounts under credit terms
customary to the geographic region of distribution. The Company performs ongoing
credit evaluations of the customers and generally does not require collateral to
secure the accounts receivable.
The
Company generally warrants its products to be free from material defects and to
conform to material specifications for a period of three (3) years. The cost of
replacing defective products and product returns have been immaterial and within
management's expectations.
Inventories
The
inventory are stated at the lower of cost (first in, first out) or net
realizable value and majority of the inventory consist of work in
process goods substantially ready for resale purposes. The Company
purchases the merchandise on delivered duty paid basis. The amounts for cost of
goods sold during the three and six month periods ended March 31, 2010 and 2009
are removed from inventory on weighted average cost method.
At March
31, 2010 and September 30, 2009, the Company had reserves for inventory of
$290,767 and $290,767, respectively.
Net income (loss) per
share
Basic and
diluted loss per common share is based upon the weighted average number of
common shares outstanding during the fiscal year computed under the provisions
of Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC
260-10”). However, diluted net (loss) per share for the six month periods ended
March 31, 2010 and 2009 do not reflect the effects of 20,772,226 and
18,335,091 shares potentially issuable upon conversion of our convertible
preferred shares as of March 31, 2010 and 2009, respectively, and 1,000,000 and
1,490,000 shares potentially issuable upon the exercise of the Company's stock
options and warrants (calculated using the treasury stock method) as of March
31, 2010 and 2009, respectively. These were not considered for the three and six
month periods ended March 31, 2010 and 2009, respectively, as they would have
been anti-dilutive.
Comprehensive Income
(Loss)
The
Company adopted Statement of Accounting Standards Codification subtopic 220-10,
Comprehensive Income (“ASC 220-10”). ASC 220-10 establishes standards for the
reporting and displaying of comprehensive income and its components.
Comprehensive income is defined as the change in equity of a business during a
period from transactions and other events and circumstances from non-owners
sources. It includes all changes in equity during a period except those
resulting from investments by owners and distributions to owners. ASC 220-10
requires other comprehensive income (loss) to include foreign currency
translation adjustments and unrealized gains and losses on available for sale
securities.
Effect of Related
Prospective Accounting Pronouncement
Effective
October 1, 2009 and in accordance with Accounting Standards Codification
subtopic 815-40, Derivatives
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
NOTE
B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
and
Hedging, Contracts in Entity’s own Equity (“ASC 815-40”), the Company initially
recorded the derivative liability of $1,971,115 with respect to
the reset provision of its Preferred Stock using the
Black-Scholes formula assuming no dividends, a risk-free interest rate of 1.36%,
expected volatility of 265.79%, and expected life of 2.56 years. Changes in fair
value are recorded as non-operating, non-cash income or expense at each
reporting date.
The fair
value of the reset provision of $2,015,310 at March 31, 2010 was determined
using the Black Scholes Option Pricing Model with the following
assumptions:
Dividend
yield:
|
|
|
-0-
|
%
|
Volatility
|
|
|
300.36
|
%
|
Risk
free rate:
|
|
|
1.02
|
%
|
As of the
date of the financial statements, the Company believes an event under the
contract that would create an obligation to settle in cash or other current
assets is remote and has classified the obligation as a long term
liability.
The
change in fair value of the derivative liability resulted in a current period
non operating gain (charge) to operations of $3,616,762 and $(44,195) for the
three and six month periods ended March 31, 2010.
Reclassification
Certain
reclassifications have been made to conform to prior periods' data to the
current presentation. These reclassifications had no effect on reported net
income (loss).
Accounting for variable
interest entities
Accounting
Standards Codification subtopic 810-10, Consolidation (“ASC 810-10”) discusses
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity risk for the
entity to finance its activities without additional subordinated financial
support. ASC 810-10 requires the consolidation of these entities, known as
variable interest entities, by the primary beneficiary of the entity. The
primary beneficiary is the entity, if any, that will absorb a majority of the
entities expected losses, receive a majority of the entity's expected residual
returns, or both.
Pursuant
to the effective date of a related party lease obligation, the Company adopted
ASC 810-10. This resulted in the consolidation of one variable
interest entity (VIE) of which the Company is considered the primary
beneficiary. The Company's variable interest in this VIE is the result of
providing certain secured debt mortgage guarantees on behalf of a limited
liability company that leases warehouse and general offices located in the city
of Howell, Michigan. As a result the Company recorded this VIE as a
non controlling entity in the financial statements.
Implementation of Accounting
Standards Codification subtopic 810-10, Consolation (“ASC
810-10”)
Effective
October 1, 2009, the Company adopted the provisions of ASC 810-10. Pursuant to
ASC 810-10, the following provisions were applied retrospectively to all periods
presented in the financial statements:
|
·
|
The
Company reclassified noncontrolling interests, formerly known as “minority
interests,” from a separate caption between liabilities and stockholders’
equity (“mezzanine section”) to a component of
equity Previously, minority interests generally were reported
in the balance sheet in the mezzanine
section.
|
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
NOTE
B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
·
|
Consolidated
net income and comprehensive income include amounts attributable to both
the Company and the noncontrolling interests. Previously, net income
attributable to the noncontrolling interests was reported as a deduction
in arriving at consolidated net income. This presentation change does not
impact the calculation of basic or diluted earnings per share, which
continue to be calculated based on Net income attributable to the
Company.
|
Pursuant
to ASC 810-10, the following provisions were applied prospectively effective
October 1, 2009:
|
·
|
ASC
810-10 provides that all earnings and losses of a subsidiary should be
attributed to the parent and the noncontrolling interest, even if the
losses attributable to the noncontrolling interest result in a deficit
noncontrolling interest balance. Previously, any losses exceeding the
noncontrolling interest’s investment in the subsidiary were attributed to
the parent. This change did not have a significant impact on the
Company’s condensed consolidated financial statements for the
three and six month period ended March 31,
2010.
|
Recent accounting
pronouncements
In June
2009, the FASB issued new accounting guidance under ASC Topic 810 on
Consolidation to improve financial reporting by enterprises involved with
variable interest entities and to provide more relevant and reliable information
to users of financial statements. The guidance is effective as of the
beginning of each reporting entity’s first annual reporting period that begins
after November 15, 2009, for interim periods within that first annual reporting
period, and for interim and annual periods thereafter. Earlier
adoption is prohibited. The adoption of the guidance did not have a
material impact on the Company’s condensed consolidated financial
statements.
In
January 2010 the FASB issued Update No. 2010-06 “Fair Value Measurements and
Disclosures—Improving Disclosures about Fair Value Measurements” (“2010-06”).
2010-06 requires new disclosures regarding significant transfers between Level 1
and Level 2 fair value measurements, and disclosures regarding purchases, sales,
issuances and settlements, on a gross basis, for Level 3 fair value
measurements. 2010-06 also calls for further disaggregation of all assets and
liabilities based on line items shown in the statement of financial position.
This amendment is effective for fiscal years beginning after December 15, 2010
and interim periods within those fiscal years. The Company is currently
evaluating whether adoption of this standard will have a material impact on its
financial position, results of operations or cash flows.
In January 2010 the FASB issued Update
No. 2010-05 “Compensation—Stock Compensation—Escrowed Share Arrangements and
Presumption of Compensation” (“2010-05”). 2010-05 re-asserts that the Staff of
the Securities
Exchange
Commission (the “SEC Staff”) has stated the presumption that for certain
shareholders escrowed share represent a compensatory arrangement. 2010-05
further clarifies the criteria required to be met to establish a position
different from the SEC Staff’s position. The Company does not believe this
pronouncement will have any material impact on its financial position, results
of operations or cash flows.
In
January 2010 the FASB issued Update No. 2010-04 “Accounting for Various
Topics—Technical Corrections to SEC Paragraphs” (“2010-04”). 2010-04 represents
technical corrections to SEC paragraphs within various sections of the
Codification. Management is currently evaluating whether these changes will have
any material impact on its financial position, results of operations or cash
flows.
In
January 2010 the FASB issued Update No. 2010-02 “Accounting and Reporting for
Decreases in Ownership of a
MARKETING WORLDWIDE CORPORATION AND
SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
NOTE
B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent Accounting
Pronouncements (continued)
Subsidiary—a
Scope Clarification” (“2010-02”) an update of ASC 810 “Consolidation.” 2010-02
clarifies the scope of ASC 810 with respect to decreases in ownership in a
subsidiary to those of a subsidiary or group of assets that are a business or
nonprofit, a subsidiary that is transferred to an equity method investee or
joint venture, and an exchange of a group of assets that constitutes a business
or nonprofit activity to a non-controlling interest including an equity method
investee or a joint venture. Management, does not expect adoption of this
standard to have any material impact on its financial position, results of
operations or operating cash flows. Management does not intend to decrease its
ownership in any of its wholly-owned subsidiaries.
In
January 2010 the FASB issued Update No. 2010-01 “Accounting for Distributions to
Shareholders with Components of Stock and Cash—a consensus of the FASB Emerging
Issues Task Force” (“2010-03”) an update of ASC 505 “Equity.” 2010-03 clarifies
the treatment of stock distributions as dividends to shareholders and their
affect on the computation of earnings per shares. Management does not expect
adoption of this standard to have any material impact on its financial position,
results of operations or operating cash flows.
In
January 2010, the FASB issued new accounting guidance, under ASC Topic 820 on
Fair Value Measurements and Disclosures. The guidance requires some
new disclosures and clarifies some existing disclosure requirements about fair
value measurement. The guidance requires a reporting entity to use
judgment in determining the appropriate classes of assets and liabilities and to
provide disclosures about the valuation techniques and inputs used to measure
fair value for both recurring and nonrecurring fair value
measurements. The guidance is effective for interim and annual
reporting periods beginning after December 15, 2009. As this standard
relates to disclosures, the adoption did not have a material impact on the
Company’s condensed consolidated financial statements.
In
February 2010 the FASB issued Update No. 2010-09 “Subsequent Events (Topic 855)”
(“2010-09”). 2010-09 clarifies the interaction of Accounting Standards
Codification 855 “Subsequent Events” (“Topic 855”) with guidance issued by the
Securities and Exchange Commission (the “SEC”) as well as the intended breadth
of the reissuance disclosure provision related to subsequent events found in
paragraph 855-10-50-4 in Topic 855. This update is effective for annual or
interim periods ending after June 15, 2010. Management is currently evaluating
whether these changes will have any material impact on its financial position,
results of operations or cash flows.
In
February 2010 the FASB issued Update No. 2010-08 “Technical Corrections to
Various Topics” (“2010-08”). 2010-08 represents technical corrections to SEC
paragraphs within various sections of the Codification. Management is currently
evaluating whether these changes will have any material impact on its financial
position, results of operations or cash flows.
In March
2010, the FASB issued new accounting guidance, under ASC Topic 605 on Revenue
Recognition. This standard provides that the milestone method is a
valid application of the proportional performance model for revenue recognition
if the milestones are substantive and there is substantive uncertainty about
whether the milestones will be achieved. Determining whether a
milestone is substantive requires judgment that should be made at the inception
of the arrangement. To meet the definition of a substantive
milestone, the consideration earned by achieving the milestone (1) would have to
be commensurate with either the level of effort required to achieve the
milestone or the enhancement in the value of the item delivered, (2) would have
to relate solely to past performance, and (3) should be reasonable relative to
all deliverables and payment terms in the arrangement. No bifurcation
of an
individual
milestone is allowed and there can be more than one milestone in an
arrangement. The standard is effective for interim and annual periods
beginning on or after June 15, 2010. The Company is currently
evaluating the impact the adoption of this guidance will have on its condensed
consolidated financial statements.
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
NOTE C - GOING CONCERN MATTERS AND
TRIGGERING EVENTS
The
accompanying unaudited condensed consolidated financial statements have
been prepared on a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. As
shown in the accompanying unaudited condensed consolidated financial statements
during the six month period ended March 31, 2010, the Company incurred a loss of
$2,183,013.
On
January 27, 2009, the primary secured lender notified the Company that the
Company was in default of its obligations under the commercial mortgage loan
secured by first deed of trust on real property to JCMD Properties, LLC. The
notification is declaring the debt obligations in default and is therefore
entitling the lender to exercise certain rights and remedies, including but not
limited to, increasing the interest rate to the default rate and demanding
immediate repayment in full of the principal, interest and interest swap
outstanding liability.
The
Company has reduced cash required for operations by reducing operating costs and
reducing staff levels. In addition, the Company is working to manage its current
liabilities while it continues to make changes in operations to improve its cash
flow and liquidity position. An estimated $2,000,000 is needed over the next 12
months for operational and program development purposes.
The
Company's existence is dependent upon management's ability to raise additional
financing and develop profitable operations. The Company cannot predict
whether this additional financing will be in the form of equity or
debt, or be in another form. The Company may not be able to obtain the
necessary additional capital on a
timely basis, on acceptable terms, or at all. If
additional financing is not available or is not available on acceptable terms,
we will have to curtail our operations.
These
conditions raise substantial doubt about the Company’s ability to continue as a
going concern. Accordingly, the accompanying unaudited condensed consolidated
financial statements have been prepared in conformity with accounting principles
generally accepted in the United States of America, which contemplates
continuation of the Company as going concern and the realization of assets and
the satisfaction of liabilities in the normal course of business. The carrying
amounts of assets and liabilities presented in the financial statements do not
necessarily purport to represent realizable or settlement values. These
unaudited condensed consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
NOTE
D - LINE OF CREDIT
In August
2009, Marketing Worldwide, LLC entered into a financing agreement with Summit
Financial Resources L.P. (Summit) for a maximum borrowing of up to $750,000
maturing August 31, 2010. The arrangement is based on recourse factoring of the
Company’s accounts receivables. Substantially all assets of Marketing Worldwide,
LLC have been pledged as collateral for the Summit
facility. Marketing Worldwide Corp has guaranteed the financing
arrangement.
In
September 2009, Marketing Worldwide, LLC entered into an addendum which
increased the maximum borrowing amount to $1,000,000.
Under the
arrangement, Summit typically advances to the Company 85% of the total amount of
accounts receivable factored. Summit retains 15% of the outstanding factored
accounts receivable as a reserve, which it holds until the customer pays the
factored invoice to Summit. The cost of funds for the accounts receivable
portion of the borrowings with Summit includes: (a) a collateral management fee
of 0.65% of the face amount of factored accounts receivable for each period of
fifteen days, or portion thereof, that the factored accounts receivable remains
outstanding until payment in full is applied and (b) interest charged at the
Wall Street Journal prime rate plus 1% divided by 360. The Summit
default rate is the Wall Street Journal prime rate plus 10%. The Company may be
obligated to purchase the receivable back from Summit at the end of 90
days.
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
NOTE
D - LINE OF CREDIT (continued)
The
interest rate at March 31, 2010 was 4.25%
Under the
terms of the recourse provision, the Company is required to repurchase factored
receivables if they are not paid in full or are deemed no longer acceptable.
Accordingly, the Company has accounted for the financing agreement as a secured
borrowing arrangement and not a sale of financial assets.
As
of March 31, 2010, the advance balance due to Summit was $502,369.
NOTE
E - NOTES PAYABLE
As of
March 31, 2010 and September 30, 2009, notes payable consists of the
following:
|
|
March
31,
2010
|
|
|
September 30,
2009
|
|
Guarantee
for the JCMD Mortgage loan payable in monthly principal installments plus
interest. Note secured by first deed of trust on real property and
improvements located in Howell, MI. The JCMD General Partners personally
guarantee the loan. The note is in default. (*)
|
|
$
|
671,285
|
|
|
$
|
683,165
|
|
|
|
|
|
|
|
|
|
|
Guarantee
for the JCMD Mortgage loan payable in 240 monthly principal installments
plus interest. The loan is secured by a second deed of trust on real
property and improvements located in Howell, MI. The JCMD General Partners
personally guarantee the loan The note is in default. (*)
|
|
|
540,688
|
|
|
|
551,850
|
|
|
|
|
|
|
|
|
|
|
Mortgage
loan payable in monthly principal installments of $5,633 with a fixed
interest rate of 5.98% per annum. Note based on a 20 year
amortization. Note is secured by first priority security interest in the
business property of Colortek, Inc, the Company's wholly owned subsidiary.
The note is currently in default. (**)
|
|
|
630,301
|
|
|
|
644,129
|
|
|
|
|
|
|
|
|
|
|
Notes
payable in monthly payments of $1,857.54 per month including interest at
7.25% per annum, unsecured
|
|
|
17,160
|
|
|
|
24,218
|
|
|
|
|
1,859,434
|
|
|
|
1,903,362
|
|
Less
current portion
|
|
|
1,859,434
|
|
|
|
1,903,362
|
|
Long
term portion
|
|
$
|
-0-
|
|
|
$
|
-0-
|
|
(*)
In accordance with the Forbearance Agreement, the secured lender of the JCMD
Mortgage Loans increased the interest rate on unpaid balances to bear interest
at a floating rate of two and quarter percent (2.25%) in excess of the Bank’s
Prime Rate, and upon default shall bear interest at a rate of five and one
quarter percent (5.25%) in excess of the Bank’s Prime Rate. At March 31, 2010,
the effective rate of interest on these loans was 8.25%
(**) In
accordance with the mortgage loan agreement, the Company (as guarantor) is
currently in default of certain loan covenants
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
NOTE
F - CAPITAL STOCK
The
Company is authorized to issue 110,000,000 shares of which stock 100,000,000
shares at par value of $.001 each shall be common stock and 10,000,000 shares at
par value of $.001 each shall be preferred stock.
As of
March 31, 2010 and September 30, 2009, the Company has issued and outstanding
3,500,000 shares of Series A preferred stock, 1,192,308 Series B preferred stock
and 21,010,091 and 17,835,091 shares of common stock, respectively.
Series A Preferred
Stock
On April
23, 2007 the Company issued 3,500,000 shares of Series A Preferred Stock for
gross proceeds of $3,500,000 resulting in net proceeds of
$3,222,450.
PAYMENT
OF DIVIDENDS. Commencing on the date of issuance of the Series A Preferred
Stock, the holders of record of shares of Series A Preferred Stock shall be
entitled to receive, out of any assets at the time legally available therefore
and as declared by the Board of Directors, dividends at the rate of nine percent
(9%) of the stated Liquidation Preference Amount (see below) per share per
annum.., payable quarterly. At March 31, 2010 and September 30, 2009, a total of
$315,000 and $157,500 has been accrued for dividends payable on the Series A
Preferred stock.
As
additional consideration for the purchase of the Series A Preferred Stock, the
Company granted to the holders warrants entitling it to purchase 11,000,000
common shares of the Company's common stock at the price of $0.70 per share,
6,000,000 at $0.85 per share and 6,000,000 at $1.20 per share. The underlying A,
B & C warrants lapse if unexercised by April 23, 2012.
In
accordance with Accounting Standards Codification subtopic 470-20, Debt, Debt
with Conversions and Other Options (“ASC 470-20”), the Company recognized an
imbedded beneficial conversion feature present in the Convertible Series A
Preferred Stock. The Company allocated a portion of the proceeds equal to the
fair value of that feature to additional paid-in capital. The Company recognized
and measured an aggregate of $3,500,000 of the proceeds, which is equal to the
intrinsic value of the embedded beneficial conversion feature, to additional
paid-in capital and a charge as preferred stock dividend. The fair value of the
warrants was determined using the Black-Scholes Option Pricing Model with the
following assumptions: Dividend yield: $-0-; Volatility: 146.64%, risk
free rate: 4.55%.
The
Series A Preferred Stock includes certain redemption features allowing the
holders the right, at the holder’s option, to require the Company to redeem all
or a portion of the holder’s shares of Series A Preferred Stock upon the
occurrence of a Major Transaction or Triggering Event. Major
Transaction is defined as a consolidation or merger; sale or transfer of more
than 50% of the Company assets or transfer of more than 50% of the Company’s
common stock. A Triggering Event is defined as a lapse in the
effectiveness of the related registration statement; suspension from listing;
failure to honor for conversion or going private.
In
accordance with ASC 470-20, the Company has classified the Series A Preferred
Stock outside of permanent equity.
In
addition, The Series A Preferred Stock has reset provisions to the exercise
price if the Company issues equity at a price less than the exercise price and
therefore, as described in Note B above, and in accordance with ASC 815-40 the
Company determined the fair value of the initial reset provision of $1,971,115
at October 1, 2009 and reclassified to liability using the Black-Scholes formula
assuming no dividends, a risk-free interest rate of 1.36%, expected volatility
of 265.79%, and expected life of 2.56 years. The net value of the reset
provision at the date of adoption of ASC 815-40 was recorded as a derivative
liability. Changes in fair value are recorded as non-operating,
non-cash income or expense at each reporting date.
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
NOTE
F - CAPITAL STOCK (continued)
The fair
value of the reset provision of $2,015,310 at March 31, 2010 was determined
using the Black Scholes Option Pricing Model with the following
assumptions:
Dividend
yield:
|
|
|
-0-
|
%
|
Volatility
|
|
|
300.36
|
%
|
Risk
free rate:
|
|
|
1.02
|
%
|
As of
March 31, 2010, the change in fair value of the derivative liability resulted in
a non operating charge to operations of $44,195.
Series B Preferred
stock
On July
10, 2008, the Company filed a Certificate of Designation creating a $0.001 par
value Series B Convertible Preferred stock for 1,200,000 shares.
RANK. The
Series B Preferred Stock shall rank pari passu as to liquidation rights and
other matters to the Company's common stock, par value $0.001 per share (the
"COMMON STOCK"). The Series B Preferred Stock shall be subordinate to and rank
junior to all indebtedness of the Company now or hereafter
outstanding.
PAYMENT
OF DIVIDENDS. If declared by the Company, dividends on the Series B Preferred
Stock shall be on a pro rata basis with the Common Stock and all other equity
securities of the Company ranking pari passu with the Common Stock as to the
payment of dividends.
VOTING
RIGHTS. The holders of Series B Preferred Stock shall have no voting rights with
the exception relating to increasing the number of outstanding shares of Series
A Preferred or modifying the rights of the Series A Preferred
Stock.
LIQUIDATION
AMOUNT. In the event of the liquidation, dissolution or winding up of the
affairs of the Company, whether voluntary or involuntary, the holders of shares
of Series B Preferred Stock then outstanding shall be entitled to receive, out
of the assets of the Company available for Distribution to its stockholders, an
amount per share of Series B Preferred Stock equal to the amount distributable
with respect to that number of shares of the Common Stock into which one share
of the Series B Preferred Stock is then convertible, plus any accrued and unpaid
dividends.
CONVERSION.
At any time on or after the date of the initial issuance of the Series B
Preferred Stock, the holder of any such shares of Series B Preferred Stock may,
at such holder's option, elect to convert all or any portion of the shares of
Series B Preferred Stock held into a number of fully paid and non-assessable
shares of Common Stock for each such share of Series B Preferred Stock equal to
the quotient of: (a) the Original Issue Price, plus any accrued and unpaid
dividends thereon, divided by (b) the Conversion Price in effect as of the date
of the delivery by such holder of its notice of election to convert. The initial
Conversion Price is $16.90, subject to change for events such as stock
splits.
On July
11, 2008, the Company entered an Exchange Agreement with holders of Series F
Common Stock Purchase Warrants and Series J Common Stock Purchase Warrants.
Under the Exchange Agreement, the Company issued 750,000 shares of Series B
Convertible Preferred Stock for the cancellation of 3,500,000 Series A Common
Stock Purchase Warrants, 3,500,000 Series B Common Stock Purchase Warrants,
3,500,000 Series C Common Stock Purchase Warrants, 2,500,000 Series D Common
Stock Purchase Warrants, and 2,500,000 Series E Common Stock Purchase Warrants.
In addition, holders exercised 1,000,000 Series J Warrants and 2,500,000 Series
F Warrants for $525,000 in exchange for 442,308 shares of Series B Convertible
Preferred Stock.
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
NOTE
F - CAPITAL STOCK (continued)
As of
March 31, 2010, the Company has 1,192,308 shares of Series B Preferred Stock
outstanding.
Common
stock
On
October 9, 2009, the Company issued 500,000 shares of common stock in settlement
of outstanding accounts payable of $78,950.
On
October 9, 2009, the Company issued an aggregate of 80,000 shares of common
stock in exchange for services valued at $12,000. These shares were
valued at $0.15 per share which represents the fair value of services received
which did not differ materially from the value of the stock issued.
On February 17, 2010, the
Company issued an aggregate of 1,520,000 shares of common stock in exchange for
services valued at $304,000. These shares were valued at $0.20 per
share which represents the fair value of services received which did not differ
materially from the value of the stock issued.
On March
10, 2010, the Company issued an aggregate of 1,075,000 shares of common stock in
exchange for services valued at $118,250. These shares were valued at
$0.11 per share which represents the fair value of services received which did
not differ materially from the value of the stock issued.
NOTE
G - STOCK OPTIONS AND WARRANTS
Employee Stock
Options
The
following table summarizes the changes in options outstanding and the related
prices for the shares of the Company's common stock issued to employees of the
Company as of March 31, 2010:
|
|
|
|
|
|
|
|
|
Options Exercisable
|
|
|
|
|
|
|
|
Options Outstanding
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
Average
|
|
|
Weighted
|
|
|
|
|
|
Exercise
|
|
Number
|
|
|
Remaining Contractual
|
|
|
Exercise
|
|
|
Number
|
|
|
Average
|
|
|
Price
|
|
Outstanding
|
|
|
Life (Years)
|
|
|
Price
|
|
|
Exercisable
|
|
|
Exercise Price
|
|
$
|
0.26
|
|
|
490,000
|
|
|
|
3.26
|
|
|
$
|
0.26
|
|
|
|
430,000
|
|
|
$
|
0.26
|
|
$
|
0.45
|
|
|
170,000
|
|
|
|
4.15
|
|
|
$
|
0.45
|
|
|
|
170,000
|
|
|
$
|
0.45
|
|
|
|
|
|
660,000
|
|
|
|
3.50
|
|
|
$
|
0.31
|
|
|
|
600,000
|
|
|
$
|
0.32
|
|
Transactions
involving options issued to employees are summarized as follows:
|
|
Number of
Options
|
|
Weighted
Average
Exercise
Price per
Share
|
|
Intrinsic
Value Per
Share
|
Outstanding,
September 30, 2009
|
|
|
660,000
|
|
|
0.31
|
|
$
|
0.00
|
Granted
|
|
|
-
|
|
|
-
|
|
|
|
Exercised
|
|
|
-
|
|
|
-
|
|
|
|
Canceled
or expired
|
|
|
-
|
|
|
-
|
|
|
|
Outstanding,
March 31, 2010
|
|
|
660,000
|
|
$
|
0.31
|
|
$
|
0.00
|
Exercisable,
March 31, 2010
|
|
|
600,000
|
|
$
|
0.32
|
|
$
|
|
The
weighted average fair value of the options on the date of grant, using the fair
value based methodology of the six months ended March 31, 2010 and 2009 was $-0-
and $-0-.
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
NOTE
G - STOCK OPTIONS AND WARRANTS
The
Company recorded as current period expenses the vested portions of the above
employee options of $1,922 and $26,879 or the three month periods ended March
31, 2010 and 2009, respectively, and $3,887 and $92,583 for the six month
periods ended March 31, 2010 and 2009. As of March 31, 2010, total unamortized
value of stock options held by employees was $8,972.
The
unamortized portion will be expensed over a weighted average period of 1.17
years.
Non employee
options
The
following table summarizes the changes in options outstanding and the related
prices for the shares of the Company's common stock issued to non- employees of
the Company as of March 31, 2010:
|
|
|
Options Outstanding
|
|
|
Options Exercisable
|
|
|
|
|
|
|
Weighted Average
Remaining
|
|
|
Weighted
Average
|
|
|
Weighted
|
|
|
|
|
|
|
|
Number
|
|
Contractual
|
|
|
Exercise
|
|
|
Number
|
|
|
Average
|
|
|
Exercise Price
|
|
Outstanding
|
|
Life (Years)
|
|
|
Price
|
|
|
Exercisable
|
|
|
Exercise Price
|
|
$
|
0.10
|
|
1,000,000
|
|
|
2.50
|
|
|
$
|
0.10
|
|
|
|
1,000,000
|
|
|
$
|
0.10
|
|
Transactions
involving options issued to non-employees are summarized as
follows:
|
|
Number
of
Option
s
|
|
|
Weighted
Average
Exercise
Price per
Share
|
|
Intrinsic
Value
|
Outstanding,
September 30, 2009
|
|
|
1,000,000
|
|
|
|
0.10
|
|
$
|
0.00
|
Granted
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
Canceled
or expired
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding,
March 31, 2010
|
|
|
1,000,000
|
|
|
$
|
0.10
|
|
|
0.00
|
Exercisable,
March 31, 2010
|
|
|
1,000,000
|
|
|
$
|
0.10
|
|
|
|
Warrants
The
following table summarizes the changes in warrants outstanding and the related
prices for the shares of the Company's common stock issued to non-employees of
the Company as of March 31, 2010:
|
|
|
Warrants Outstanding
|
|
|
Warrants Exercisable
|
|
|
|
|
|
|
Weighted Average
Remaining
|
|
|
Weighted
Average
|
|
|
Weighted
|
|
|
|
|
|
|
|
Number
|
|
Contractual
|
|
|
Exercise
|
|
|
Number
|
|
|
Average
|
|
|
Exercise Price
|
|
Outstanding
|
|
Life (Years)
|
|
|
Price
|
|
|
Exercisable
|
|
|
Exercise Price
|
|
$
|
0.30
|
|
100,000
|
|
|
1.44
|
|
|
$
|
0.30
|
|
|
|
100,000
|
|
|
$
|
0.30
|
|
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
NOTE
G - STOCK OPTIONS AND WARRANTS (continued)
Transactions
involving warrants are summarized as follows:
|
|
Number of
Warrants
|
|
|
Weighted
Average
Exercise
Price per
Share
|
|
Outstanding,
September 30, 2009
|
|
|
100,000
|
|
|
$
|
0.30
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Canceled
or expired
|
|
|
-
|
|
|
|
-
|
|
Outstanding,
March 31, 2010
|
|
|
100,000
|
|
|
$
|
0.30
|
|
NOTE
H - CONSOLIDATION OF VARIABLE INTEREST ENTITIES
On June
6, 2005 and August 8, 2005, JCMD Properties LLC, an entity controlled by the
Company's Chief Executive and Chief Operating officers respectively ("JCMD"),
entered into a Secured Loan Agreement with a financial institution, in
connection with the financing of real property and improvements ("property").
This agreement is guaranteed by the Company.
The
property is leased to the Company under a long term operating lease beginning on
January 1, 2005. Under the loan agreements, JCMD is obligated to make periodic
payments of principal repayments and interest. The Company has no equity
interest in JCMD or the property.
Based on
the terms of the lending agreement with the above entity, the Company determined
that JCMD was a variable interest entity ("VIE") and the Company was the primary
beneficiary under ASC 810-10 since JCMD does not have sufficient equity at risk
for the entity to finance its activities.
ASC
810-10 requires that an enterprise consolidate a VIE if that enterprise has a
variable interest that will absorb a majority of the entity's expected losses if
they occur. Accordingly, the Company consolidated JCMD as a VIE, regardless of
the Company not having an equity interest in JCMD.
Included
in the Company's unaudited condensed consolidated balance sheets at March
31, 2010 and September 30, 2009 are the following net assets of
JCMD:
|
|
March
31,
2010
|
|
|
September 30,
2009
|
|
ASSETS
(JCMD)
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
9,045
|
|
|
$
|
17,616
|
|
Accounts
receivable, prepaid expenses and other current assets
|
|
|
19,000
|
|
|
|
19,400
|
|
Total
current assets
|
|
|
28,045
|
|
|
|
37,016
|
|
Property,
plant and equipment, net
|
|
|
1,245,224
|
|
|
|
1,241,824
|
|
Total
assets
|
|
|
1,301,314
|
|
|
|
1,278,840
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
|
Current
portion of long term debt
|
|
|
1,211,974
|
|
|
|
1,235,015
|
|
Accounts
payable and accrued liabilities
|
|
|
80,751
|
|
|
|
82,075
|
|
Total
current liabilities
|
|
|
1,292,725
|
|
|
|
1,317,090
|
|
Long
term debt
|
|
|
|
|
|
|
-
|
|
Total
liabilities
|
|
|
1,292,725
|
|
|
|
1,317,090
|
|
Net
assets
|
|
$
|
(8,589
|
)
|
|
$
|
(38,250
|
)
|
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
NOTE
H - CONSOLIDATION OF VARIABLE INTEREST ENTITIES (continued)
Consolidated
results of operations include the following for the three months ended March 31,
2010 and 2009:
|
|
March
31,
2010
|
|
|
March
31,
2009
|
|
Revenues
|
|
$
|
51,000
|
|
|
$
|
43,686
|
|
Cost
and expenses - real estate: Operating expenses
|
|
|
3,293
|
|
|
|
9,891
|
|
Depreciation
|
|
|
8,000
|
|
|
|
8,000
|
|
Interest,
net
|
|
|
40,373
|
|
|
|
33,795
|
|
Total
costs and expenses
|
|
|
51,666
|
|
|
|
51,686
|
|
|
|
|
|
|
|
|
|
|
Operating
income-Real estate
|
|
$
|
(666
|
)
|
|
$
|
(8,000
|
)
|
Consolidated
results of operations include the following for the six months ended March 31,
2010 and 2009:
|
|
March
31,
2010
|
|
|
March
31,
2009
|
|
Revenues
|
|
$
|
102,000
|
|
|
$
|
83,322
|
|
Cost
and expenses - real estate: Operating expenses
|
|
|
6,056
|
|
|
|
17,975
|
|
Depreciation
|
|
|
16,000
|
|
|
|
16,000
|
|
Interest,
net
|
|
|
61,150
|
|
|
|
93,645
|
|
Total
costs and expenses
|
|
|
83,206
|
|
|
|
127,620
|
|
|
|
|
|
|
|
|
|
|
Operating
income-Real estate
|
|
$
|
18,794
|
|
|
$
|
(44,298
|
)
|
During
the three and six month periods ended March 31, 2010 and 2009, JCMC Properties
LLC issued cash distributions to its members totaling $-0- and $90,000,
respectively.
NOTE
I - DERIVATIVE FINANCIAL INSTRUMENTS
The
Company periodically uses foreign exchange contracts for trading purposes. The
Company's short term foreign currency contracts subject the Company to risk due
to foreign exchange rate fluctuations, because gains and losses on these
instruments may have significant impact on the results of
operations.
NOTE
J - FAIR VALUE OF FINANCIAL INSTRUMENTS
ASC
825-10 defines fair value as the price that would be received from selling an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When determining the fair value
measurements for assets and liabilities required or permitted to be recorded at
fair value, the Company considers the principal or most advantageous market in
which it would transact and considers assumptions that market participants would
use when pricing the asset or liability, such as inherent risk, transfer
restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value
hierarchy that requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value. ASC 825-10
establishes three levels of inputs that may be used to measure fair
value:
Level
1 - Quoted prices in active markets for identical assets or
liabilities.
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
NOTE
J - FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
Level 2 -
Observable inputs other than Level 1 prices such as quoted prices for similar
assets or liabilities; quoted prices in markets with insufficient volume or
infrequent transactions (less active markets); or model-derived valuations in
which all significant inputs are observable or can be derived principally from
or corroborated by observable market data for substantially the full term of the
assets or liabilities.
Level 3 -
Unobservable inputs to the valuation methodology that are significant to the
measurement of fair value of assets or liabilities.
To the
extent that valuation is based on models or inputs that are less observable or
unobservable in the market, the determination of fair value requires more
judgment. In certain cases, the inputs used to measure fair value may fall into
different levels of the fair value hierarchy. In such cases, for disclosure
purposes, the level in the fair value hierarchy within which the fair value
measurement is disclosed is determined based on the lowest level input that is
significant to the fair value measurement.
Items
recorded or measured at fair value on a recurring basis in the
accompanying financial statements consisted of the following items as of
March 31, 2010:
|
|
|
|
|
Fair Value Measurements at March 31, 2010 using:
|
|
|
|
March
31,
2010
|
|
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs (Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate swap
|
|
$
|
80,751
|
|
|
|
|
|
|
$
|
80,751
|
|
|
$
|
|
|
Derivative
liability
|
|
|
2,015,310
|
|
|
|
|
|
|
|
|
|
|
|
2,015,310
|
|
The
following table provides a summary of changes in fair value of the Company’s
Level 2 financial liabilities as of March 31, 2010 (in
thousands):
|
|
|
|
|
|
|
|
|
Interest
Rate Swap
|
|
|
Derivative
Liability
|
|
Balance,
October 1, 2009
|
|
$
|
82,075
|
|
|
$
|
1,971,115
|
|
Change
in fair value at March 31, 2010
|
|
|
(1,344
|
)
|
|
|
44,195
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2010
|
|
$
|
80,751
|
|
|
$
|
2,015,310
|
|
Level 3
Liabilities comprised of our bifurcated reset provision contained within our
Series A stock and the fair value of issued reset provisions.
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
NOTE
K – DISCONTINUED OPERATIONS
On
January 1, 2010, the Company discontinued operations in Munich, Germany under
its wholly owned subsidiary; MW Global Limited which owns 100% of the
outstanding ownership and economical interest in Modelworxx GmbH. The
financial results of MW Global are presented separately on the consolidated
income statements as discontinued operations for all periods
presented.
The
assets and liabilities of the discontinued operations as of March 31, 2010 and
September 30, 2009 were as follows:
Assets:
|
|
As
of
|
|
|
As
of
|
|
|
|
March 31, 2010
|
|
|
September 30, 2009
|
|
Cash
|
|
$
|
-
|
|
|
$
|
943
|
|
Accounts
receivable
|
|
|
-
|
|
|
|
107,585
|
|
Inventories
|
|
|
-
|
|
|
|
72,835
|
|
Prepaid
expenses and other assets
|
|
|
-
|
|
|
|
32,820
|
|
Property,
plant and equipment, net
|
|
|
-
|
|
|
|
149,002
|
|
Assets
of discontinued operations
|
|
$
|
-
|
|
|
$
|
363,185
|
|
Liabilities:
|
|
March 31, 2010
|
|
|
September 30, 2009
|
|
Accounts
payable
|
|
$
|
492,006
|
|
|
$
|
445,621
|
|
Line
of credit
|
|
|
-
|
|
|
|
18,608
|
|
Liabilities
of discontinued operations
|
|
$
|
492,006
|
|
|
$
|
464,229
|
|
The
Results of Operations for the three month periods ended March 31, 2010 and 2009
are as follows:
|
|
March 31, 2010
|
|
|
March 31,
2009
|
|
Sales
|
|
$
|
-
|
|
|
$
|
52,439
|
|
Cost
of sales
|
|
|
-
|
|
|
|
173,264
|
|
Gross
profit (loss)
|
|
|
-
|
|
|
|
(120,825
|
)
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling,
general and administrative
|
|
|
-
|
|
|
|
135,163
|
|
Depreciation
and amortization
|
|
|
-
|
|
|
|
10,309
|
|
Total
operating costs
|
|
|
-
|
|
|
|
145,472
|
|
Net
loss from operations
|
|
|
-
|
|
|
|
(266,297
|
)
|
|
|
|
|
|
|
|
|
|
Other
(loss) income
|
|
|
(265,091
|
)
|
|
|
3,652
|
|
Net
loss
|
|
$
|
(265,091
|
)
|
|
$
|
(262,645
|
)
|
MARKETING
WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
NOTE
K – DISCONTINUED OPERATIONS (continued)
The
Results of Operations for the six month periods ended March 31, 2010 and 2009
are as follows:
|
|
March 31,
2010
|
|
|
March 31,
2009
|
|
Sales
|
|
$
|
316,110
|
|
|
$
|
315,857
|
|
Cost
of sales
|
|
|
266,556
|
|
|
|
441,571
|
|
Gross
profit (loss)
|
|
|
49,554
|
|
|
|
(125,714
|
)
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling,
general and administrative
|
|
|
153,543
|
|
|
|
296,392
|
|
Depreciation
and amortization
|
|
|
11,639
|
|
|
|
20,450
|
|
Total
operating costs
|
|
|
165,182
|
|
|
|
316,842
|
|
Net
loss from operations
|
|
|
(115,628
|
)
|
|
|
(442,556
|
)
|
|
|
|
|
|
|
|
|
|
Other
(loss) income
|
|
|
(261,600
|
)
|
|
|
6,962
|
|
Net
loss
|
|
$
|
(377,228
|
)
|
|
$
|
(435,594
|
)
|
NOTE
L – LINE OF CREDIT
On August
31, 2009, the Company entered into a financing agreement with Summit Financial
Resources L.P. (Summit) for a maximum borrowing of up to $750,000 maturing
August 31, 2010. The arrangement is based on recourse factoring of the Company’s
accounts receivables. Substantially all assets of the Company have been pledged
as collateral for the Summit facility. The Company has guaranteed the financing
arrangement. The balance at March 31, 2010 and at September 30, 2009 was
approximately $502,000 and 721,000, respectively.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
THIS
REPORT ON FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING
STATEMENTS IN THIS REPORT ARE INDICATED BY WORDS SUCH AS "ANTICIPATES,"
"EXPECTS," "BELIEVES," "INTENDS," "PLANS," "ESTIMATES," "PROJECTS" AND SIMILAR
EXPRESSIONS. THESE STATEMENTS REPRESENT OUR EXPECTATIONS BASED ON CURRENT
INFORMATION AND ASSUMPTIONS. FORWARD-LOOKING STATEMENTS ARE INHERENTLY SUBJECT
TO RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE WHICH ARE ANTICIPATED OR PROJECTED AS A RESULT OF CERTAIN RISKS
AND UNCERTAINTIES, INCLUDING, BUT NOT LIMITED TO A NUMBER OF FACTORS, SUCH AS
ECONOMIC AND MARKET CONDITIONS; THE PERFORMANCE OF THE AUTOMOTIVE AFTERMARKET
SECTOR; CHANGES IN BUSINESS RELATIONSHIPS WITH OUR MAJOR CUSTOMERS AND IN THE
TIMING, SIZE AND CONTINUATION OF OUR CUSTOMERS' PROGRAMS; THE ABILITY OF OUR
CUSTOMERS TO ACHIEVE THEIR PROJECTED SALES; COMPETITIVE PRODUCT AND PRICING
PRESSURES; INCREASES IN PRODUCTION OR MATERIAL COSTS THAT CANNOT BE RECOUPED IN
PRODUCT PRICING; SUCCESSFUL INTEGRATION OF ACQUIRED BUSINESSES; PRODUCT
LIABILITY, AS WELL AS OTHER RISKS AND UNCERTAINTIES, SUCH AS THOSE
DESCRIBED
UNDER
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK AND THOSE DETAILED
HEREIN AND FROM TIME TO TIME IN OUR FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION. THOSE FORWARD-LOOKING STATEMENTS ARE MADE ONLY AS OF THE DATE
HEREOF, AND WE UNDERTAKE NO OBLIGATION TO UPDATE OR REVISE THE FORWARD-LOOKING
STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO,
INCLUDED ELSEWHERE IN THIS FORM 10-Q
BUSINESS
OVERVIEW
Marketing
Worldwide Corporation (the "Company"), was incorporated under the laws of the
State of Delaware in July 2003. The Company is engaged, through its wholly-owned
subsidiary, Marketing Worldwide LLC ("MWWLLC").
MWW is a
full service design, engineering and manufacturing firm of original equipment
manufacturer ("OEM") components in the automotive accessory market. MWW provides
a number of large foreign and domestic automobile manufacturers' and
independently owned vehicle processing and distribution centers in the US,
Canada and Europe with MWW's components directly at their respective locations.
At the instruction of MWW, the vehicle processing centers' technical teams
install MWW's accessory products on new automobiles, as soon as these new
vehicles arrive from foreign or domestic automobile manufacturers at their
centers. From the vehicle processing or distribution centers the accessorized
automobiles are then delivered into the domestic car dealer distribution systems
throughout the Continental US, Canada and Europe. MWW's relationship is solely
with the vehicle processing and/or distribution centers, which also pay for
MWW's products.
Since its
inception, the continuously increasing demand for the company's products and
services has prompted an ongoing expansion of MWW's infrastructure and staff and
warranted the diversification and expansion of its activities into the design
and engineering of its products in the US and Europe. The company has also
continued to increase vertical integration in manufacturing, in order to address
newly arising market opportunities. Drawing from the experience of its
principals, consultants and management team, strategically utilizing
longstanding relationships in the industry, the company has steadily expanded
its design services, product range, client and employees/contractor base and is
currently aggressively pursuing the expansion of its client roster, in addition
to its existing major clients such as South East Toyota, Gulf States Toyota and
Toyota Canada. In its effort for more vertical integration, the Company has
acquired Colortek, a "Class A" painting facility in Baroda, Michigan,
and Modelworxx GmbH in Munich Germany.
The
Company has established initial relationships with several new major foreign and
domestic automobile manufacturers, has recently begun delivering accessory
programs to KIA Motors America and has received additional Request for Quotes
from Toyota's Scion Group, KIA Motors America, MOBIS (KIA and Hyundai Worldwide)
and Nissan. MWW has been delivering product directly to the Toyota Motor
Manufacturing Corporation assembly plant in Canada for nearly twenty six (26)
months and has been awarded new programs to be delivered to Toyota Canada
International. Through our wholly owned subsidiary Modelworxx in Germany wehave
begun to manufacture and deliver products to Toyota Europe and are currently in
the process to expand our design and logisticsservices in Germany. We have
expanded the number of products designed in Germany for sale to other European
automobile manufacturers and our large customers in the US. We are in various
stages of seeking to provide our accessory programs to other major foreign and
domestic automobile manufacturers such as Ford, GM, Nissan, Subaru and Hyundai
in the US and several large manufacturers and distributors throughout
Europe.
SEASONALITY.
Historically, our operating results have fluctuated by quarter to quarter, with
the greatest sales occurring in the quarters of the fiscal year with the largest
number of automobile manufacturers new model releases. Revenues are generally
being recognized at the time of product shipment. It is in these quarters of new
model releases that demand for our products is typically the highest. As we
expand our business globally, we expect to better able to mitigate these
impacts.
The
limited seasonality of our business offers significant operational challenges in
our manufacturing and distribution functions, based on a partial dependency on
manufacturing abroad. To limit these challenges and to provide a rapid
turnaround time of customer orders, we traditionally keep
somewhat higher inventory levels. New strategies to decrease inventory and
improve inventory turns over rates are currently being implemented. Utilizing
the synergies between our newly acquired companies and the utilization of the
newly created manufacturing capacities here in the US that are now controlled by
us, we are expecting to produce higher levels of efficiency over
time.
CORPORATE
DEVELOPMENTS
On August
31, 2009, Marketing Worldwide, LLC entered into a financing agreement with
Summit Financial Resources L.P. (Summit) for a maximum borrowing of up to
$750,000 maturing August 31, 2010. The arrangement is based on recourse
factoring of the Company’s accounts receivables. Substantially all assets of
Marketing Worldwide, LLC have been pledged as collateral for the Summit
facility. Marketing Worldwide Corp., has guaranteed the financing
arrangement.
Under the
arrangement, Summit typically advances to the Company 85% of the total amount of
accounts receivable factored. Summit retains 15% of the outstanding factored
accounts receivable as a reserve, which it holds until the customer pays the
factored invoice to Summit. The cost of funds for the accounts receivable
portion of the borrowings with Summit includes: (a) a collateral management fee
of 0.65% of the face amount of factored accounts receivable for each period of
fifteen days, or portion thereof, that the factored accounts receivable remains
outstanding until payment in full is applied and (b) interest charged at the
Wall Street Journal prime rate plus 1% divided by 360. The Summit
default rate is the Wall Street Journal prime rate plus 10%. The Company may be
obligated to purchase the receivable back from Summit at the end of 90
days.
In
February, 2010, Modelworxx GmbH filed for insolvency. The final
resolution of this matter has not been determined yet. The Company
estimated the financial impact of this filing and included the impact in the
financial statements as loss from discontinued operations.
LIQUIDITY
AND CAPITAL RESOURCES
OPERATING
ACTIVITIES. During the six months ended March 31, 2010, we provided $92,281 of
cash flow in operations primarily from our net loss of $2,025,513; offset by non
cash depreciation and amortization charges of $276,857, non cash change in fair
value of derivative liability of $44,195, loss on disposal of equipment of
$10,617 fair value of equity based compensation of $434,137, non controlling
interest of $(18,794) and net changes in our operating assets and liabilities of
$961,349 and discontinued operations of $241,960.
INVESTING
ACTIVITIES. During the six months ended March 31 2010, net cash provided from
investing was from discontinued operations of $149,002, net with property plant
and equipment purchased of $47,123.
FINANCING
ACTIVITIES. During the six months ended March 31, 2010, net cash flow used in
financing activities amounted to $300,360. The net cash flow was used to pay
down our credit line of $218,855 and our notes and leases
payable by $81,505.
MWW
expects its regular capital expenditures to be approximately $160,000 for fiscal
2010. Further, MWW expects approximately $140,000 in additional capital
expenditures during fiscal 2010. These anticipated expenditures are for
continued investments in property, tooling, and equipment used in our
business.
The
independent auditors report on our September 30, 2009 financial statements
states that our difficulty in generating sufficient cash flow to meet our
obligations and sustain operations raise substantial doubts about the our
ability to continue as a going concern. The consolidated financial
statements do not include any adjustments that might result should the Company
be unable to continue as a going concern.
The
Company has reduced cash required for operations by reducing operating costs and
reducing staff levels. In addition, the Company is working to manage its current
liabilities while it continues to make changes in operations to improve its cash
flow and liquidity position.
The
Company's existence is dependent upon management's ability to develop profitable
operations. In addition, at March 31, 2010, the Company was in default on
certain secured credit facilities.
As
of March 31, 2010, we had a working capital deficit of approximately
$3,901,929.
RESULTS
OF OPERATIONS
COMPARISON
OF THREE MONTHS ENDED MARCH 31, 2010 TO THE THREE MONTHS ENDED MARCH 31,
2009.
SALES.
Net sales during the second quarter 2010 (three months ending March 31, 2010)
were $980,261 an increase of $406,322, or 71.0 %, compared to $573,939 during
the second quarter 2009. This increase was due to an increase in sales of
certain product categories.
GROSS
MARGINS. Gross margins for the second quarter 2010 decreased to 20.0
% from 31.7 % in the same period of 2009 due to higher costs in the
period.
OPERATING
EXPENSES
SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES.
Selling,
general and administrative expenses increased by $448,355 to $1,208,890 in the
first quarter of 2010, compared to $760,535 in the first quarter of 2009. The
increase was attributable to equity based compensation paid in 2009 of $434,250
to consultants and service providers.
OPERATING
(LOSS). Operating loss increased by $434,122 to a loss of ($1,012,588) in the
second quarter of 2010, compared to a net operating loss of ($578,466) in the
first quarter of 2009. This increase was primarily attributable to equity
based compensation paid to service providers in 2010 and increased costs of
materials..
FINANCING
EXPENSE. For the three months ended March 31, 2010, our financing expense
increased to $91,283 from $27,578, an increase of 229 % over the same period
prior year. The increase was primarily related to the mark to market adjustment
to our interest swap agreement associated with the JCMD Properties, LLC
mortgages and higher costs of borrowing.
GAIN ON
CHANGE IN FAIR VALUE OF DERVIATIVE LIABILITY. As described in
our accompanying financial statements, our Series A Preferred Stock has certain
reset provisions. On October 1, 2009 in accordance with Accounting
Standards Codification subtopic 815-40, Derivatives and Hedging; Contracts in
Entity’s Own Equity (“ASC 815-40”) we record the initial fair value of the reset
provision as a liability with an offset to equity and subsequently mark to
market the reset provision liability at each reporting cycle.
At March
31, 2010, the reset provision liability fair value decreased from $5,632,072 at
December 31, 2009 to $2,015,310 resulting in a noncash income to current period
operations of $3,616,762.
NET
INCOME increased by $3,115,108 to income of $2,165,390 from a loss of
($949,718). The increase was primarily attributed to the gain on the change of
fair value of the derivative liability during the three months ended March 31,
2010.
COMPARISON
OF SIX MONTHS ENDED MARCH 31, 2010 TO THE SIX MONTHS ENDED MARCH 31,
2009.
SALES.
Net sales during the six month period ended March 31, 2010 were $2,172,427 an
increase of $465,746, or 27.3 %, compared to $1,706,681 during the same period
last year. This increase was due to an increase in sales of certain product
categories.
GROSS
MARGINS. Gross margins for the second quarter 2010 decreased to 31 %
from 39 % in the same period of 2009 due to higher costs of
materials.
OPERATING
EXPENSES
SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES.
Selling,
general and administrative expenses increased by $363,221 to $2,107,501 during
the six month period ended March 31,2010, compared to $1,744,280 in the same
period last year. The increase was attributable to equity based compensation
paid in 2009 of $434,250 to consultants and service providers.
OPERATING
(LOSS). Operating loss increased by $343,435 to a loss of ($1,424,871) during
the first six months of 2010, compared to a net operating loss of
($1,081,436) in the same period last year. This increase was
primarily attributable to equity based compensation paid to service
providers in 2010 and higher costs of materials.
FINANCING
EXPENSE. For the six months ended March 31, 2010, our financing expense
increased to $205,841 from $181,475, an increase of 13 % over the same period
prior year. The increase was primarily related to the mark to market adjustment
to our interest swap agreement associated with the JCMD Properties, LLC
mortgages and higher costs of borrowing.
GAIN ON
CHANGE IN FAIR VALUE OF DERVIATIVE LIABILITY. As described in
our accompanying financial statements, our Series A Preferred Stock has certain
reset provisions. On October 1, 2009; in accordance with Accounting
Standards Codification subtopic 815-40, Derivatives and Hedging; Contracts in
Entity’s Own Equity (“ASC 815-40”) we record the initial fair value
of the reset provision as a liability with an offset to equity and
subsequently mark to market the reset provision liability at each reporting
cycle.
At March
31, 2010, the reset provision liability fair value decreased from $1,971,115 at
October 1, 2009 to $2,015,310 resulting in a noncash charge to current period
operations of $44,195.
NET LOSS
increased by $302,428 to a loss of ($2,183,013) from a loss of
($1,880,585).
CRITICAL
ACCOUNTING POLICIES
The
preparation of our financial statements in conformity with accounting principles
generally accepted in the United States requires us to make estimates and
judgments that affect our reported assets, liabilities, revenues, and expenses
and the disclosure of contingent assets and liabilities. We base our estimates
and judgments on historical experience and on various others assumptions we
believe to be reasonable under the circumstances. Future events, however, may
differ markedly from our current expectations and assumptions. While
there are a number of significant accounting policies affecting our consolidated
financial statements; we believe the following critical accounting policies
involve the most complex, difficult and subjective estimates and
judgments:
|
o
|
Accounting
for variable interest entities
|
|
o
|
Revenue
recognition
|
|
o
|
Inventories
|
|
o
|
Allowance
for doubtful accounts
|
|
o
|
Stock
based compensation
|
|
o
|
Derivative
liability
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ACCOUNTING
FOR VARIABLE INTEREST ENTITIES
Accounting
Standards Codification subtopic 810-10, Consolidation (“ASC 810-10”) discusses
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity risk for the
entity to finance its activities without additional subordinated financial
support. ASC 810-10 requires the consolidation of these entities, known as
variable interest entities, by the primary beneficiary of the
entity. The primary beneficiary is the entity, if any, that will
absorb a majority of the entities expected losses, receive a majority of the
entity’s expected residual returns or both.
Pursuant
to the effective date of a related party lease obligation, the Company adopted
ASC 810-10. This resulted in the consolidation of one variable
interest entity (VIE) of which the Company is considered the primary
beneficiary. The Company’s variable interest in this VIE is the
result of providing certain secured debt mortgage guarantees on behalf of a
limited liability company that leases warehouse and general offices located in
the city of Howell, Michigan.
REVENUE
RECOGNITION
For
revenue from products and services, the Company recognizes revenue in accordance
with Accounting Standards Codification subtopic 605-10, Revenue Recognition
(“ASC 605-10”). ASC 605-10 requires that four basic criteria must be
met before revenue can be recognized; (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred or services have been rendered; (3) the
selling price is fixed and determinable; and (4) collectability is reasonably
assured. Determination of criteria (3) and (4) are based on
management’s judgments regarding the fixed nature of the selling prices of the
products delivered/services rendered and the collectability of those
amounts. Provisions for discounts and rebates to customers, estimated
returns and allowances, and other adjustments are provided for in the same
period the related sales are recorded.
The
company defers any revenue for which the product has not been delivered or
services has not been rendered or is subject to refund until such time that the
Company and the customer jointly determine that the product has been delivered
or services has been rendered or no refund will be required.
ASC
605-10 incorporates Accounting Standards Codification subtopic 605-25,
Multiple-Element Arraignments (“ASC 605-25”). ASC 605-25 addresses
accounting for arrangements that may involve the delivery or performance of
multiple products, services and/or rights to use assets. The effect
of implementing 605-25 on the Company’s financial position and results of
operations was not significant.
Revenues
on the sale of products, net of estimated costs of returns and allowance, are
recognized at the time products are shipped to customers, legal title has
passed, and all significant contractual obligations of the Company have been
satisfied. Products are generally sold on open accounts under credit terms
customary to the geographic region of distribution. The Company performs ongoing
credit evaluations of the customers and generally does not require collateral to
secure the accounts receivable.
The
Company generally warrants its products to be free from material defects and to
conform to material specifications for a period of three (3) years. The cost of
replacing defective products and product returns have been immaterial and within
management's expectations. In the future, when the company deems warranty
reserves are appropriate that such costs will be accrued to reflect anticipated
warranty costs.
INVENTORIES
We value
our inventories, which consist primarily of automotive body components, at the
lower of cost or market. Cost is determined on the weighted average cost method
and includes the cost of merchandise and freight. A periodic review of inventory
quantities on hand is performed in order to determine if inventory is properly
valued at the lower of cost or market. Factors related to current inventories
such as future consumer demand and trends in MWW's core business, current aging,
and current and anticipated wholesale discounts, and class or type of inventory
is analyzed to determine estimated net realizable values. A provision is
recorded to reduce the cost of inventories to the estimated net realizable
values, if required. Any significant unanticipated changes in the factors noted
above could have a significant impact on the value of our inventories and our
reported operating results.
ALLOWANCE
FOR UNCOLLECTIBLE ACCOUNTS
We are
required to estimate the collectability of our trade receivables. A considerable
amount of judgment is required in assessing the realization of these receivables
including the current creditworthiness of each customer and related aging of the
past due balances. In order to assess the collectability of these receivables,
we perform ongoing credit evaluations of our customers' financial condition.
Through these evaluations we may become aware of a situation where a customer
may not be able to meet its financial obligations due to deterioration of its
financial viability, credit ratings or bankruptcy. The reserve requirements are
based on the best facts available to us and are reevaluated and adjusted as
additional information is received.
Our
reserves are also based on amounts determined by using percentages applied to
certain aged receivable categories. These percentages are determined by a
variety of factors including, but are not limited to, current economic trends,
historical payment and bad debt write-off experience. We are not able to predict
changes in the financial condition of our customers and if circumstances related
to our customers deteriorate, our estimates of the recoverability of our
receivables could be materially affected and we may be required to record
additional allowances. Alternatively, if we provided more allowances than are
ultimately required, we may reverse a portion of such provisions in future
periods based on our actual collection experience. There was $131,458 allowance
for doubtful accounts at March 31, 2010 and at September 30,
2009.
STOCK-BASED
COMPENSATION
The
Company has adopted the fair value provisions for share-based awards pursuant to
ASC 718-10, using the modified-prospective-transition method. Under that
transition method, compensation cost recognized in 2006 includes (a)
compensation cost for all share-based awards granted prior to, but not yet
vested as of January 1, 2006, based on the attribution method and grant date
fair value estimated in accordance with the original provisions of ASC 718-10,
and (b) compensation cost for all share-based awards granted subsequent to
January 1, 2006, based on the grant-date fair value estimated in accordance with
the provisions of ASC 718-10, all recognized on a straight line basis as the
requisite service periods are rendered. Results for prior periods have not been
restated.
DERIVATIVE
LIABILTY
Accounting
Standards Codification subtopic 815-40, Derivatives and Hedging,; Contracts in
Entity’s own Equity (“ASC 815-40”) became effective for the Company on January
1, 2010. The Company’s Series A Preferred Stock has reset provisions
to the exercise price if the Company issues equity at a price less than the
exercise prices. Upon the effective date, the provisions of ASC
815-40 required a reclassification to liability based on the reset feature of
the agreements if the Company sells equity at a price below the exercise price
of the Series A Preferred Stock.
We have
identified the policies below as critical to our business operations and the
understanding of our results of operations. The impact and any associated risks
related to these policies on our business operations is discussed throughout
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," where such policies affect our reported and expected financial
results. For a detailed discussion on the application of these and other
accounting policies see the Notes to the Financial Statements of our Report on
Form 10K. Note that our preparation of this Quarterly Report on Form 10-Q
requires us to make estimates and assumptions that affect the reported amount of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of our financial statements, and the reported amounts of revenue and
expenses during the reporting period. There can be no assurance that actual
results will not differ from those estimates.
OFF-BALANCE
SHEET ARRANGEMENTS
We do not
have any off-balance sheet arrangements.
ITEM 3. –
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The
Company is a smaller reporting company as defined by Rule 12b-2 under the
Exchange Act and is not required to provide the information required under this
item.
ITEM 4.
CONTROLS AND PROCEDURES
a)
Evaluation of Disclosure Controls and Procedures. As of December 31, 2009, the
Company's management carried out an evaluation, under the supervision of the
Company's Chief Executive Officer and the Chief Financial Officer of the
effectiveness of the design and operation of the Company's system of disclosure
controls and procedures pursuant to the Securities and Exchange Act, Rule
13a-15(e) and 15d-15(e) under the Exchange Act). Based on the evaluation of
these disclosure controls and procedures, and in light of the material
weaknesses previously found in our internal controls, the Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures were not effective.
b)
Changes in internal controls. There were no changes in internal controls over
financial reporting, known to the Chief Executive Officer or Chief Financial
Officer that occurred during the period covered by this report that has
materially affected, or is likely to materially effect, the Company's internal
control over financial reporting.
PART II -
OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
There are
no current legal proceedings.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 5.
OTHER INFORMATION
None.
ITEM 6.
EXHIBITS
(a)
EXHIBIT(S) DESCRIPTION
(3)(i)
Certificate of Incorporation * (3)(ii) Bylaws *
(4)(1)
Form of Common Stock Certificate *
(4)(2)
Common Stock Purchase Warrant with Wendover Investments Limited *
(4)(3)
Stock Option Agreement with Richard O. Weed *
(5)
Opinion on Legality *****
(10)(1)
Consulting Agreement with Rainer Poertner ***
(10)(2)
Fee Agreement with Weed & Co. LLP *
(10)(3)
Purchase Agreement MWW and MWWLLC *
(10)(4)
Amendment to Purchase Agreement between MWW and MWWLLC **
(10)(5)
Employment Agreement with CEO Michael Winzkowski **
(10)(6)
Employment Agreement with COO/CFO James Marvin **
(10)(7)
Loan Agreement with Key Bank N.A. ***
(10)(8)
Amendment to Consulting Agreement with Rainer Poertner ***
(10)(10)
Real Property Lease Agreement for 11224 Lemen Road, Suite A ****
(10)(11)
Real Property Lease Agreement for 11236 Lemen Road ****
(10)(12)
Supplier and Warranty Agreement ****
(10)(13)
Business Loan Agreement April 4, 2006 with KeyBank N.A. ******
(10)(14)
Supplier and Warranty Agreement ****
(10)(15)
Blanket Purchase Order, Non-Disclosure and Confidentiality Agreement
******
1(0)(16)
Lease Agreement and Amendment to Lease Agreement with JCMD Properties, LLC
******
(10)(17)
Consulting Agreement with Rainer Poertner dated July 1, 2006 ******
(10)(18)
Waiver of Cashless Exercise Provisions in Warrant by Wendover Investments Ltd.
*******
(10)(19)
Waiver of Cashless Exercise Provisions in Stock Option by Richard O. Weed
*******
(10)(20)
Extension of Employment Agreement with Michael Winzkowski dated October 15,
2006
(10)(21)
Extension of Employment Agreement with James Marvin dated (21) Subsidiaries of
Registrant *
(31)(1)
Certification of Chief Executive Officer pursuant to Section302 of the
Sarbanes-Oxley Act of 2002.
(31)(2)
Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
(32)(1)
Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, furnished under Exhibit 32 of Item 601 of Regulation
S-K.
(32)(2)
Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, furnished under Exhibit 32 of Item 601 of Regulation
S-K.
*
Previously filed on February 11, 2005 as part of the Registration Statement on
Form 10-SB12G of Marketing Worldwide Corporation SEC File 0-50586 Accession
Number 1019687-4-279.
**
previously filed on August 10, 2005 as part of the Registration Statement on
Form 10-SB12G/A Amendment No. 1 of Marketing Worldwide Corporation SEC File
0-50586 Accession Number 0001019687-04-001719.
***
previously filed on November 9, 2005 as part of the Registration Statement on
Form 10-SB12G/A Amendment No. 2 of Marketing Worldwide Corporation SEC File
0-50586 Accession Number 0001019687-04-002436.
****
Previously filed on January 31, 2006 as part of the Form 10-KSB for the year
ended September 30, 2005 of Marketing Worldwide Corporation SEC File 0-50586
Accession Number 0001019687-05-000207.
*****
previously filed on March 17, 2006 as part of the Form SB-2 of Marketing
Worldwide Corporation SEC File 333-123380 Accession Number
0001019687-05-000728.
******
previously filed on September 15, 2006 as part of the Form SB-2 of Marketing
Worldwide Corporation SEC File 333-123380 Accession Number
0001019687-05-002649.
*******
previously filed on December 7, 2006 as part of the Form SB-2 of Marketing
Worldwide Corporation SEC File 333-123380 Accession Number
0001019687-05-003367.
(31)(1)
Certification of Chief Executive Officer pursuant to Section302 of the
Sarbanes-Oxley Act of 2002.
(31)(2)
Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
(32)(1)
Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, furnished under Exhibit 32 of Item 601 of Regulation
S-K.
(32)(2)
Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, furnished under Exhibit 32 of Item 601 of Regulation
S-K.
Pursuant
to the requirements of section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
MARKETING
WORLDWIDE CORPORATION
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BY:
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/s/
MICHAEL WINZKOWSKI
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NAME:
MICHAEL WINZKOWSKI
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TITLE:
CHIEF EXECUTIVE OFFICER
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Date:
May 24,
2010
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Pursuant
to requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
BY:
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/s/
MICHAEL WINZKOWSKI
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NAME:
MICHAEL WINZKOWSKI
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TITLE:
CHIEF EXECUTIVE OFFICER,
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SECRETARY
AND DIRECTOR
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Date:
May 24, 2010
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BY:
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/s/
JAMES E. DAVIS
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NAME:
JAMES E. DAVIS
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TITLE:
CHIEF FINANCIAL OFFICER
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AND
DIRECTOR
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Date:
May 24,
2010
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