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W Technologies, Inc. – ‘10-K’ for 7/31/08

On:  Thursday, 10/30/08, at 2:13pm ET   ·   For:  7/31/08   ·   Accession #:  1361773-8-50   ·   File #:  0-24520

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

10/30/08  W Technologies, Inc.              10-K        7/31/08    5:266K                                   Westridge Busine… Inc/FA

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-KSB


(MARK ONE)

X

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended July 31, 2008


            TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from _________________ to __________________


Commission file number:  000-24520


W Technologies, Inc.

(Name of small business issuer in its charter)



Delaware

04-3021770

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)



5052 South Jones Blvd., Ste. 100, Las Vegas, Nevada 89118

 (Address of principal executive offices)


(702) 967-6000

Issuer’s telephone number


Securities registered under Section 12(b) of the Exchange Act: None

 

 


Securities registered under Section 12(g) of the Exchange Act:


Common Stock, $.0001 Par Value

(Title of Class)

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act  ?


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




Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. ?  


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


State issuer’s revenues for its most recent fiscal year:  $1,122,098

               


The aggregate market value of the voting stock held by non-affiliates of the registrant as of October 17, 2008 was approximately $90,928, based upon the closing price per share of the Common Stock or $0.0007 on that date.


The number of shares outstanding of each the issuer’s Common Stock as of October 17, 2008:  129,896,450 shares of common stock at $0.0001 Par Value.  The Company also has 502,500,000 shares issued and held as security on a promissory note. These shares would not become outstanding unless the Company defaults on the term of this note.  Currently, the Company does not have the funds to pay the note.




Documents incorporated by reference:  None

Transitional Small Business Disclosure Format (Check One):  Yes   No X

___________________________________________________________________________________







TABLE OF CONTENTS


                    Page


ITEM   1:  DESCRIPTION OF BUSINESS

     4

ITEM   2:  DESCRIPTION OF PROPERTY

     5

ITEM   3:  LEGAL PROCEEDINGS

     6

ITEM   4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     6

ITEM   5:  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     6

ITEM   6:  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                  AND RESULTS OF OPERATIONS

     7

ITEM   7:  FINANCIAL STATEMENTS

     9

ITEM   8:  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING    

                  AND FINANCIAL DISCLOSURES

      22

ITEM 8A: CONTROLS AND PROCEDURES

      22

ITEM   9:  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

      23

ITEM 10:  EXECUTIVE COMPENSATION

      25

ITEM 11:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      27

ITEM 12:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      27

ITEM 13:  EXHIBITS

      28

ITEM 14:  PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                          31















PART I


ITEM 1:  DESCRIPTION OF BUSINESS

 


SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS


This Annual Report on Form 10-KSB contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, that are based on the beliefs of our management as well as assumptions made by and information currently available to us. When we use the words “believe,” “plan,” “will likely result,” “expect,” “intend,” “will continue,” “is anticipated,” “estimate,” “project,” “may,” “could,” “would,” “should,” and similar expressions in this Form 10-KSB as they relate to us or our management, we are intending to identify forward-looking information statements. These statements reflect our current views with respect to expected future plans, initiatives, operating conditions and other potential events and are subject to certain risks, assumptions, and uncertainties. The statements contained herein that are not purely historical are forward-looking statements including without limitation statements regarding our expectations, beliefs, intentions or strategies regarding the future. Such statements include information contained in this Form 10-KSB regarding pending legal proceedings and the results thereof as well as any statements regarding our future product development, governmental or other regulatory approval prospects and related matters. All forward-looking statements included in this document or incorporated by reference herein are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth in “Risk Factors” below.



Business Overview


General

W Technologies, Inc., formally known as Winning Edge International, Inc. and GWIN, Inc. (the "Company"), is headquartered in Las Vegas, Nevada. Effective September 26, 2007 the Company completed the sale of all its operating assets to Betbrokers, PLC. (“Betbrokers”) and discontinued its operations. The Company is now in the process of settling outstanding debts and liabilities.  Presently, the Company does not have sufficient assts to cover all of its outstanding debts and liabilities.  Prior to the asset sale, the Company produced television, radio, and web-based programming related to sports and gaming and provided sports handicapping analysis and advice to sports bettors worldwide through its wholly-owned subsidiary, Global SportsEDGE, Inc. Global SportsEDGE provided professional handicapping advice on professional football games played by the National Football League ("NFL"), professional basketball games played by the National Basketball Association (“NBA”), college football and basketball games, major-league baseball, hockey, NASCAR, and golf. All information and advice was provided for entertainment purposes only.


Corporate Information

We were originally incorporated in Nevada in 1986.  We reincorporated in Massachusetts in 1987 and reincorporated in Delaware in 1996.  In July 2001, we acquired our sports handicapping business, which we operated through our wholly-owned subsidiary, Global SportsEDGE, Inc., a Delaware corporation.




Effective August 22, 2002, we changed our name to GWIN, Inc. and the Board of Directors also approved a change in our fiscal year from a calendar year to one beginning August 1 and ending July 31 effective July 31, 2002.


Effective September 21, 2006 the Company changed its name to Winning Edge International, Inc. to better reflect the brand associated with the nationally aired television and radio programming called “The Winning Edge” or Wayne Allyn Root’s Winning EDGE.”


In September 2007, the Company completed the sale of all of the Company’s operating assets, including the business of Global SportsEDGE, Inc. to Betbrokers. Management of the Company had determined it was unable to support the Company’s ongoing expenses and repay debt. Management determined the Company would have to either cease operations or sell assets to a third party. The Company was able to locate a buyer for the Company’s assets and business and completed the sale effective September 26, 2007. As consideration for the sale of the operating assets, the Company received 64,356,435 shares of Betbrokers stock; Betbrokers stock traded on the London Stock Exchange Alternative Investment Market known as the “AIM.”  Unfortunately, Betbrokers is now in receivership and its stock is no longer trading.  On October 20, 2007 the Company changed its name to W Technologies, Inc. as part of the agreement reached with Betbrokers.  If the Company is not able to obtain some liquidity, either from loans or from private sales of its stock, the Company may be forced to cease all activity and seek bankruptcy protection.  Additionally, the Company may be forced to stop all payments to third parties which would force it to not be able to continue with its SEC reporting obligations and result in it being delisted from the OTC Bulletin Board.

 

Business

Management is currently evaluating what direction to take in attempting to deal with creditors and its ongoing liquidity issues.  Management may determine to liquidate and dissolve the Company or to seek other business opportunities.  At this time, management is focused on trying to settle debts. If the Company is not able to obtain some liquidity, either from loans or sale of its stock, the Company may be forced to cease all activity and seek bankruptcy protection.  


Employees

With the sale of our assets, we have terminated all full-time employees. The Company has one director that also serves as an officer.  The officer continues to work with the Company as part of the ongoing settlement of debts and evaluation of the future direction of the Company.  


Subsidiaries

The Company’s wholly-owned Subsidiary Global SportsEDGE, Inc. operations were discontinued concurrently with the sale of operations to Betbrokers.



ITEM 2:  DESCRIPTION OF PROPERTY


We previously leased office space for our corporate headquarters and sales office in Las Vegas, Nevada. As part of the asset sale with Betbrokers, they entered into a new lease agreement for this space and the Company was released from future obligations.



ITEM 3:  LEGAL PROCEEDINGS


There are no legal proceedings pending; however, the Company is in default on certain note obligations and will soon be in default on other note obligations and



does not have the funds to pay the notes or other creditors.  Accordingly, it is highly likely the Company will be involved in litigation related to these claims.  

ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted during the fourth quarter of our fiscal year to a vote of security holders, through the solicitation of proxies or otherwise.


PART II


ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS


Market Information

Our common stock has traded on the Over-The-Counter ("OTC") Bulletin Board under the symbol “WTCG” since November 15, 2007. Prior, the Company traded under the symbol "WNED" since September 20, 2006 and prior to that as “GWNI” since September 6, 2002.   The table below sets forth for the periods indicated the high and low bid prices per share of our Common Stock, as reported by the OTC Bulletin Board. Quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

 


                                                  HIGH       LOW


         Fiscal Year ended July 31, 2008

           Fourth Quarter ....................   $ .0018     .0003

           Third Quarter .....................   $ .003      .0009

           Second Quarter ....................   $ .007      ..0008

           First Quarter .....................   $ .013      .005

  

         Fiscal Year ended July 31, 2007

           Fourth Quarter ....................   $ .005      .003

           Third Quarter .....................   $ .005      .003

           Second Quarter ....................   $ .02       .01

           First Quarter .....................   $ .05       .02


We consider our common stock to be thinly traded and any reported sale prices may not be a true market-based valuation of our common stock. On October 17, 2008 the closing price of our common stock, as reported on the OTC was $0.0007. There were approximately 461 holders of record of the Company's common stock at that date.


We have not paid any cash dividends since our inception and do not anticipate any dividends in the future.  


Recent Sales of Unregistered Securities

No shares were issued during the year ended July 31, 2008; however Options for 1,500,000 shares were cancelled and warrants for 450,000 shares expired. During the year ended July 31, 2007, we issued 514,000,000 shares of common stock. Included in this are 10,000,000 shares issued in connection with redemptions of warrants, 1,000,000 shares issued for services and 500,000 shares issued for debt renewal. Additionally 1,500,000 options were issued to three independent directors and 300,000 warrants were issued to an outside creditor for renewal of debt. Additionally the Company pledged 502,500,000 shares of common stock (treasury shares) in the event of default under a loan the Company entered into in September 2006 in the amount of $655,000.  Currently, we do not have the funds to pay this note and it is possible the shares will be received by the note holder as a result of a default on the note.




ITEM 6: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Forward Looking Statements

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Shareholders are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, our ability to continue as a going concern. Although we believe the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements contained in the report will prove to be accurate.


With the closing of the asset sale to Betbrokers the Company has ceased all business operations.  The Company currently has no means to pay existing debts or fund ongoing obligations.  The Company is dependent on loans from its sole officer to pay ongoing expenses such as audit cost.  It is unlikely our current officer will be able to continue to pay ongoing costs and the Company may be forced to cease all activity including our SEC reporting obligations and seek bankruptcy protection or just dissolve.  It is likely investors in such situation would receive nothing and the stock of the Company would cease to trade on the Bulletin Board or other exchanges or markets.


Results of Operations for the Year Ended July 31, 2008

Any discussion of results of operations will not be relevant to a reader in analyzing either past or future operations.  With the sale of all of the operating assets, the Company will not be engaged in the prior business and the future operating costs and revenues, if any, will be substantially different then prior operating costs and revenues.



Summary of Cash Flows for the Year ended July 31, 2008

Cash decreased approximately $1,083 during the year ended July 31, 2008. With the termination of operations in September 2007, the Company does not expect to receive any more revenues and the only cash it will receive is loans or stock sales.


Operating Activities

Net cash used by operating activities increased from $519,418 in the year ended July 31, 2007 to $715,864 in the year ended July 31, 2008.  The primary reason was the discontinuation of operations in September 2007. Net income was the result of a gain on the sale of assets of $2,390,323, though these proceeds were received as shares of stock, not cash. Without the gain on sale of assets, we would have had a loss.  The stock received has subsequently been written off.


Investing Activities

Net cash provided by investing activities increased to $780,810 cash provided during the year ended July 31, 2008 from $28,195 cash used during the year ended July 31, 2007. This increase provided in the year ended July 31, 2008 resulted from the sale of 30,492,666 shares of the Betbrokers stock received in the sale of assets.


Financing Activities

Financing activities used net cash of $66,029 during the year ended July 31, 2008 and provided net cash of $344,468 during the year ended July 31, 2007, a net decrease of $410,515.  Included in the amount for the year ended July 31, 2007, was $740,000 received on the issuance of notes payable. Included in the amount for



the year ended July 31, 2008 was note issued for $785,339 offset by payment of notes of $851,368.


Liquidity and Capital resources

Our working capital deficit as of July 31, 2008 was $1,501,399, as compared to $2,120,243 as of July 31, 2007. The decrease in working capital deficit is the result of the asset sale.

 

The Company is experiencing significant liquidity issues. These liquidity issues include not being able to pay ongoing expenses or past due notes and obligations. If the Company is not able to obtain some liquidity, either from loans or from private stock sales, the Company may be forced to cease all activity and seek bankruptcy protection.  Additionally, the Company may be forced to stop all payments to third parties which would force it to not be able to continue with its SEC reporting obligations and result in being delisted from the OTC Bulletin Board. 


The inability to pay ongoing operations may also result in defaults on loans which would result in shares used as security on the loans being received by lenders.  Currently, 502,500,000 shares of the Company are subject to security interest for a note. If the Company defaults on this note, the holder of the note would receive 502,500,000 shares of the Company’s common stock which would substantially dilute all current shareholders. These same note holders also hold a security interest in our preferred stock which could result in additional voting rights for the holders of the note if a default occurs. Currently, the Company does not have the funds to pay this note and if default occurs, it will cause substantial dilution to current shareholders and effectively give the lender voting control over the Company. The lender would be able to control the vote on any matters brought before shareholders and would be able to elect new directors of the Company.  


It is becoming increasingly more difficult for the Company to maintain its corporate status and SEC filing requirements. Combined with the potential default on notes, current shareholders likely will be diluted with the issuance of additional shares and with the decrease in the value of the Betbrokers’ stock, it is not likely that current shareholders will receive any distributions from the Betbrokers’ stock.  Additionally, the lack of liquidity may force the Company to cease all activity resulting in the complete loss of shareholder value.


Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations were based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses. Our significant accounting policies are described in Note 2 to our consolidated financial statements. In response to SEC Release No. 33-8040, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies," we have identified certain policies as being of particular importance to the portrayal of our financial position and results of operations that require the application of significant judgment by management. We analyze our estimates, including those related to revenue recognition, valuation of equity issuances, and contingencies and potential litigation, and base our estimates on historical experience and various other assumptions that we believe reasonable under the circumstances.  

                                  

Actual results may differ from these estimates under different assumptions or conditions.  We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.


Stock Options and Similar Equity Instruments



The Company has adopted Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, (“FAS 123(R)”) which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors; including employee stock options based on estimated fair values.  FAS 123(R) supersedes the Company’s previous accounting under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”) for periods beginning in fiscal 2006. In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) relating to FAS 123(R). The Company has applied the provisions of SAB 107 in its adoption of FAS 123(R).

 

The Company adopted FAS 123(R) using the modified prospective transition method, which requires the application of the accounting standard as of August 1, 2005, the first day of the Company’s fiscal year 2006. The Company’s Consolidated Financial Statements as of and for the fiscal year ended July 31, 2008 reflects the impact of FAS 123(R). In accordance with the modified prospective transition method, the Company’s Consolidated Financial Statements for prior periods have not been restated to reflect, and do not include, the impact of FAS 123(R).

 

 

 

 

 


 


ITEM 7:  FINANCIAL STATEMENTS


                                                            Page

CONSOLIDATED BALANCE SHEET                                   11

CONSOLIDATED STATEMENTS OF OPERATIONS                        12

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT              13

CONSOLIDATED STATEMENTS OF CASH FLOWS                        14

NOTES TO THE FINANCIAL STATEMENTS                            15







MOORE & ASSOCIATES, CHARTERED

           ACCOUNTANTS AND ADVISORS

PCAOB REGISTERED



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors

W Technologies, Inc.


We have audited the accompanying consolidated balance sheet of W Technologies, Inc. as of July 31, 2008, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years ended July 31, 2008 and July 31, 2007. These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.  


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


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of W Technologies, Inc. as of July 31, 2008, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years ended July 31, 2008 and July 31, 2007, in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has a loss from operations of $169,986 for the year ended July 31, 2008, which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ Moore & Associates, Chartered


Moore & Associates Chartered

Las Vegas, Nevada

October 29, 2008


2675 S. Jones Blvd. Suite 109, Las Vegas, NV 89146 (702) 253-7499 Fax (702) 253-7501








W TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEET

JULY 31, 2008

                                      

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

Cash

 

 

$           1,538

     Available for sale securities

 

 

42,330

        Total Current Assets

 

 

43,868

 

 

 

 

Total assets

 

 

$        43,868 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

 

 

$       765,248

     Accounts payable – related parties

 

 

382,968

Accounts payable

 

 

397,051

Total Current Liabilities

 

 

1,545,267

Long-term debt

 

 

--

 

 

 

 

Total liabilities

 

 

1,545,267 

 

 

 

 

Stockholders' deficit:

 

 

 

Preferred stock - $0.0001 par value; 5,000,000 shares authorized;

462,222 series “A” convertible shares issued and outstanding

46

Common stock - $0.0001 par value; 750,000,000 shares authorized;

632,396,450 issued, of which 502,500,000 are Treasury shares (Note 5)

63,240

Additional paid in capital

 

 

27,821,123

Treasury stock

 

 

(50,250)

Unrealized loss in available for sale securities

 

 

(1,659,771)

Accumulated deficit

 

 

(27,675,787)

Total stockholders’ deficit

 

 

(1,501,399)

Total liabilities and stockholders’ deficit

 

 

$        43,868 

                                                                                                                                                                  


                                                                                         

                                The accompanying notes are an integral part of the financial statements.




W TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS


 

 

 

 

 

 

 

Year ended

July 31

 

 

2008

2007

 

 

 

 

Settlement income

 

$     201,644

$        74,243

 

 

 

 

Non-cash financing (costs)

 

--

(10,000)

Interest (expense), including amortization of debt discount

 

(197,493)

(186,798)

Interest (expense) – related parties

 

(55,718)

(23,082)

Professional fees (expense)

 

(71,397)

--

Other (expense)

 

(46,482)

--

(Loss) from continuing operations

 

(169,986)

(145,637)

Income (loss) from discontinued

       operations, net of tax

 

2,399,337

(1,052,867)

Provision for income taxes

 

--

--

 

 

 

 

Net income (loss)

 

$  2,229,351

$ (1,198,504)

 

 

 

 

Basic Income  (loss) per share of common stock

 

 

 

          Continuing operations

 

$ 0.00

$  0.00

          Discontinued operations

 

0.02

 (0.01)

Basic and diluted income (loss) per share

Of common stock

 

$ 0.02

$ (0.01)

 

 

 

 

 

 

 

 

Basic weighted shares of common stock outstanding

 

129,896,450

129,896,450

Diluted weighted shares of common stock outstanding

 

 129,896,450

129,896,450

 

 

 

 


The accompanying notes are an integral part of the financial statements.









W TECHNOLOGIES, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

For the Years Ended July 31,2008

 

                                                                   


 

 

 

 

 

 

 

 

 

 

 

 

 

Series

 A

 

 

 

 

 

 

 

 

 

      Convert

i ble

 

 

 

 

 

 

 

 

 

 Preferred  

 Stock

Common

 Shares

 

 

 

 

Total

 

 

No. of

 

No. of

 

Paid-in

Treasury

Stock

Unrealized loss in available for sale securities

Accumulated

Stockholders

 

 

Shares

$

Shares

$

Capital

$

$

Deficit

Deficit

Balance – July  31, 2006

 

462,222

$  46

118,396,450

$11,840

$27,638,547


--

--

($28,706,634)

($1,056,201)


 

 

 

 

 

 

 

 

 

 

 

Issuance of stock on exercise of warrants

 

--

--

10,000,000

1,000

124,000


--

--

--

125,000

Issuance of stock  for services

 

--

--

1,000,000

100

19,900


--

--

--

20,000

Issuance of treasury stock

 

--

--

502,500,000

50,250

--

(50,250)

--

--

--

Issuance of warrants

 

--

--

--

--

2,806

--

--

--

2,806

Issuance of options for services

 

--

--

--

--

25,920

--

--

--

25,920

Interest expense from issuance of debentures

 

--

--

500,000

50

9,950


--

--

--

10,000

Net (loss) for the twelve months ended July 31, 2007

 

--

--

--

--

--


--

--

(1,198,504)

(1,198,504)

 

 

 

 

 

 

 

 

 

 

 

Balance – July  31, 2007

 

462,222

$  46

632,396,450

$63,240

$27,821,123

($50,250)

--

($29,905,138)

($2,070,979)


 

 

 

 

 

 

 

 

 

 

 

Net income (loss) for the twelve months ended July 31, 2008

 

--

--

--

--

--


--

--

2,229,351

2,229,351

 

 

 

 

 

 

 

 

 

 

 

Unrealized (loss) in available for sale securities

 

--

--

--

--

--

--

(1,659,771)

--

(1,659,771)

 

 

 

 

 

 

 

 

 

 

 

Balance – July  31, 2008

 

462,222

$  46

632,396,450

$63,240

$27,821,123

($50,250)

($ 1,659,771)

($ 27,675,787)

($1,501,399)



The accompanying notes are an integral part of the financial information.









W TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended July 31,


 

 

 

 

2008

 

2007

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

Net income (loss)

 

 

 

$     2,229,351

 

$  (1,198,504)

Adjustments to reconcile net (loss) to net cash used in operations:

 

 

 

 

 

 

     Gain on sale of operations

 

 

 

(2,390,323)

 

--

     Interest expense – issuance of common stock

 

 

 

--

 

10,000

     Interest expense – amortization of debt discount

 

 

 

9,816

 

39,210

     Settlement income

 

 

 

(201,644)

 

--

     Amortization of deferred financial fees

 

 

 

53,413

 

--

Increase (decrease) in:

 

 

 

 

 

 

      Accounts payable

 

 

 

(109,282)

 

--

      Notes payable – related parties

 

 

 

--

 

193,718

Cash used in discontinued operations

 

 

 

(307,195)

 

436,156

Total adjustments

 

 

 

(2,945,215)

 

679,086

Total cash (used in) provided by operating activities

 

 

 

(715,864)

 

(519,418)

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

      Sale of available for sale securities

 

 

 

780,810

 

--

     Cash used in discontinued operations

 

 

 

--

 

(28.195)

Total cash provided by (used in) investing activities

 

 

 

780,810

 

(28,195)

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

      Issuance of notes payable

 

 

 

--

 

740,000

      Issuance of short-term debt & lease obligations

 

 

 

785,339

 

--

      Payments on long-term debt and lease obligations

 

 

 

(851,368)

 

(395,514)

Total cash (used in) provided by financing activities

 

 

 

(66,029)

 

344,486

 

 

 

 

 

 

 

Net (decrease) in cash

 

 

 

(1,083)

 

(203,127)

Cash – beginning of  periods

 

 

 

2,621

 

205,748

Cash - end of  periods

 

 

 

$            1,538

 

$           2,621

 

 

 

 

 

 

 

Supplemental disclosures:

 

 

 

 

 

 

      Cash paid for income taxes

 

 

 

$                  0

 

$                 0

      Cash paid for interest

 

 

 

$          83,644

 

$      168,571


The accompanying notes are an integral part of the financial statements.



W TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


[1] ORGANIZATION AND CHANGES IN CONTROL OF COMPANY


W Technologies, Inc. and subsidiary, formerly known as Winning Edge International, Inc. and GWIN, Inc. (the "Company") provided professional handicapping advice on professional football games played by the National Football League ("NFL"), professional basketball games played by the National Basketball Association ("NBA"), and college football and basketball games, major-league baseball, hockey, NASCAR, and golf.  It advertised such services through the production of branded television, radio, and web-based programming related to sports and gaming.  Substantially all activities of the Company were performed through its wholly-owned subsidiary, Global SportsEDGE, Inc. ("EDGE").


The Company was engaged in a highly seasonal business, with the majority of sales related to football and basketball handicapping.  Due to this seasonality, quarterly results may vary materially between the football and basketball seasons [concentrated in the first and second fiscal quarters] and the remainder of the year [the third and fourth fiscal quarters].


In September 2007, the Company completed the sale of all of the Company’s operating assets, including the business of EDGE to Betbrokers PLC (“Betbrokers”). Management of the Company had determined it was unable to fund operations and pay debts as they became due.  Management determined the Company would have to either cease operations or sell assets to a third party. Management was able to locate a buyer for the Company’s assets and operations and completed the sale on September 26, 2007.  As consideration for the sale of the operating assets, the Company received 64,356,435 shares of Betbrokers stock; Betbrokers stock traded on the London Stock Exchange Alternative Investment Market known as the “AIM.” On October 20, 2007 the Company changed its name to W Technologies, Inc. as part of the agreement reached with Betbrokers.  Betbrokers’ stock is no longer traded on the AIM.


[2] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


PRINCIPLES OF CONSOLIDATION -


The consolidated financial statements include the accounts of the Company and its subsidiary, EDGE, as well as several inactive subsidiaries.  All significant inter-company accounts and transactions have been eliminated in consolidation.


REVENUE RECOGNITION -


The total revenues from discontinued operations during the year ended July 31, 2008 and 2007 were $ 1,122,098 and $5,863,137 respectively. These amounts include the recognition of all revenue that had previously been deferred as of the date of the sale of operations on September 26, 2007.



OPERATING COSTS AND EXPENSES -


All costs of continuing activities, principally interest, professional fees and other expenses have been charged to operations as incurred.


USE OF ESTIMATES -

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported



amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.


CASH AND CASH EQUIVALENTS -


The Company considers all highly liquid investments, with a maturity of three months or less when purchased, to be cash equivalents. At July 31, 2008, the Company did not have any cash equivalents. Cash is deposited in federally insured bank accounts.


BASIC AND DILUTED LOSS PER COMMON SHARE -


The Company has adopted Statement of Financing Accounting Standards ("SFAS") No. 128, "Earnings Per Share."  Under SFAS 128, loss per common share is computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period.  In the Company's present position diluted income (loss) per share is the same as basic income (loss) per share. Securities that could potentially dilute earnings per share in the future include the issuance of common stock in settlement of notes payable and the exercise of stock options and warrants. For the year ended July 31, 2008 and the year ended July 31, 2007 the number of common stock equivalents excluded from the calculation, because they were anti-dilutive, was 19,041,787 and 20,991,787, respectively.


STOCK OPTIONS AND SIMILAR EQUITY INSTRUMENTS -


The Company has adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment,” (“FAS 123(R)”) which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors; including employee stock options based on estimated fair values.  FAS 123(R) supersedes the Company’s previous accounting under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) for periods beginning in fiscal 2006. In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) relating to FAS 123(R). The Company has applied the provisions of SAB 107 in its adoption of FAS 123(R).  


INCOME TAXES -


Pursuant to SFAS No. 109, "Accounting for Income Taxes," income tax expense [or benefit] for the year is the sum of deferred tax expense [or benefit] and income taxes currently payable [or refundable]. Deferred tax expense [or benefit] is the change during the year in a company's deferred tax liabilities and assets. Deferred tax liabilities and assets are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES -


For the twelve months ended July 31, 2008 and 2007, the Company paid $0 for taxes and $83,644 for interest and $0 for taxes and $168,571 for interest, respectively. The Company issued stock and warrants in payment for professional services and settlement costs. For the twelve months ended July 31, 2008 and 2007, the Company issued 0 shares of common stock and 1,500,000shares of common stock, respectively, for services.


[3] GOING CONCERN


The accompanying financial statements have been prepared in conformity with generally accepted accounting principles which contemplate the continuation of the Company as a going concern and realization of assets and settlement of liabilities and commitments in the normal course of business. For the year ended July 31,



2008, the Company has a loss from operations of $169,986, a working capital deficiency of $1,501,399 and an accumulated deficit of $27,675,787.  These conditions raise substantial doubt about the Company's ability to continue as a going concern.


In September 2007, the Company completed the sale of all of the Company’s operating assets, including the business of Global Sports Edge, Inc. to Betbrokers. Management of the Company had determined it was unable to fund operations and pay debts as they became due.  Management determined the Company would have to either cease operations or sell assets to a third party. Management was able to locate a buyer for the Company’s assets and operations and completed the sale on September 26, 2007.  As consideration for the sale of the operating assets, the Company received 64,356,435 shares of Betbrokers stock; Betbrokers stock formerly traded on the London Stock Exchange Alternative Investment Market known as the “AIM.” On October 20, 2007 the Company changed its name to W Technologies, Inc. as part of the agreement reached with Betbrokers. The Company currently has no means to pay existing debts or fund ongoing obligations.  The Company is dependent on loans from its sole officer to pay ongoing expenses such as audit cost.  It is unlikely our current officer will be able to continue to pay ongoing costs and the Company may be forced to cease all activity including our SEC reporting obligations and seek bankruptcy protection or just dissolve.  It is likely investors in such situation would receive nothing and the stock of the Company would cease to trade on the Bulletin Board or other exchanges or markets.

 



[4] CONCENTRATIONS OF CREDIT RISKS


The Company places its cash with high credit quality institutions to limit its credit exposure.  At July 31, 2008 the Company had no funds in excess of insured limits at financial institutions.

                                      

 

[5] CURRENT PORTION LONG-TERM DEBT


Current portion long-term debt is as follows:

 July 31, 2008

 

 

 

Convertible note (20%)

$146,728

Convertible note (18%)

538,520

Other notes (12 – 18%)

80,000

 

 

Total current portion long-term debt

$765,248


In September of 2006 the Company entered into a $655,000 short term loan with a private investor. The note has an 18% interest rate and a maturity date of June 30, 2007.  As collateral, the Company made a general pledge agreement, giving a security interest in the assets of the Company including a specific credit card reserve account. Additionally, the Company pledged its 502,500,000 treasury shares of common stock in the event of default.  CEO Wayne Root also pledged his 462,222 preferred shares in the event of default. On September 26, 2007 the Company amended the loan to extend maturity for nine months, and secured the loan with 10,000,000 shares of Betbrokers stock in the name of W Technologies to be used in the event of default. At April 1, 2008 this note was renewed with a due date of November 7, 2008. At the same time the $28,750 remaining principal balance of a note to a private investor was included in this note. Also included in this note was all accrued interest for both notes as of April 1, 2008, and the note holder’s legal costs. As of July 31, 2008 the outstanding balance on the note was $538,520. This note is in default. As part of the note, the Company agreed to pledge 21,115,436 shares of Betbrokers PLC stock to secure the note. The pledged



Betbrokers’ stock represents almost all of the shares of Betbrokers still held by the Company


In June 2007 the Company received a loan in the amount of $25,000 from Director Roger L. Harrison. This loan has a due date of August 31, 2007, the principal and accrued interest of $ 5,078 are in default. Harrison has not sought repayment or restructuring of this amount.


On September 26, 2007 the Company amended the existing Laurus Master Fund, Ltd note to extend the term for 11 months and to change the interest rate from 13% to 20%. As of July 31, 2008 the outstanding balance on the note was $146,728, and is in default.

                                                                                

During the year ended July 31, 2007 the Company received two loans from J. Wright totalling $60,000 at an interest rate of 12%, due July 31, 2007. In connection with the sale of assets to Betbrokers the principal amount of the Wright note was increased to $65,000 and the interest rate changed to 18%. The due date of the new loan was extended to June 30, 2008. Additionally, 1,250,000 shares of Betbrokers stock in the name of W Technologies was pledged as collateral in the event of default. As of July 31, 2008 the outstanding balance on the note was $55,000 and is currently in default.


[6] ACCOUNTS PAYABLE RELATED PARTIES


Related party accounts payable are as follows:

July 31, 2008

 

 

 

Interest payable

$ 252,615

Accounts payable - officer

130,353

 

 

Total related party accounts payable

$ 382,968


The $252,615 interest is due on demand to Newmarket Investments, Plc, an entity which is associated with a former director of the Company.


[6] ACCOUNTS PAYABLE


July 31, 2008

 

 

 

Trade payables

$  84,267

Accrued interest

68,505

Accrued payroll

244,279

 

 

Total accounts payable

$ 397,051


[7] STOCKHOLDERS' DEFICIT


During the years ended July 31, 2008 and 2007 the following securities activity occurred:


COMMON STOCK AND WARRANTS –


No shares were issued during the year ended July 31, 2008, however Options for 1,500,000 shares were cancelled and warrants for 450,000 shares expired. During the year ended July 31, 2007, we issued 514,000,000 shares of common stock. Included in this are 10,000,000 shares issued in connection with redemptions of warrants, 1,000,000 shares issued for services and 500,000 shares issued for debt renewal. Additionally 1,500,000 options were issued to three independent directors and 300,000 warrants were issued to an outside creditor for renewal of debt. Additionally the Company pledged 502,500,000 shares of common stock (treasury



shares) in the event of default under a loan the Company entered into in September 2006 in the amount of $655,000.  Currently, we do not have the funds to pay this note and it is possible the shares will be received by the note holder as a result of a default on the note.


OPTIONS – At July 31, 2008 there were no options outstanding.


WARRANTS – At July 31, 2008 the Company had 4,449,667 warrants outstanding to individuals at exercise prices of $0.02 to $0.46.


PREFERRED STOCK - The Company is authorized to issue up to 5,000,000 shares of blank-check preferred stock under its certificate of incorporation, and at July 31, 2006 we designated and issued an officer 462,222 series “A” preferred shares to redeem debt. These preferred shares can be converted on demand for 4,622,220 shares of common stock within a three year period.  They also have preferential voting rights equivalent to 115,555,500 common shares; there are no other preferences related to these shares.

 

CONVERTIBLE DEBENTURES - At July 31, 2008 and July 31, 2007 the Company had a total of 9,969,900 shares underlying its outstanding convertible debentures.


OPTIONS AND WARRANTS AT JULY 31, 2008


     STOCK OPTIONS                                    Weighted-Average

                                         Shares        Exercise Price


Outstanding at July 31, 2006                  -0-       $    -0-

Granted                                  1,500,000           0.02

Exercised                                     -0-            -0-

Cancelled                                     -0-            -0-

                                        


OUTSTANDING AT JULY 31, 2007             1,500,000       $   0.02



Granted                                        -0-            -0-

Exercised                                      -0-            -0-

Cancelled                                 1,500,000           0.02

                                         =========          =====


EXERCISABLE AT JULY 31, 2008                   -0-       $    -0-

                                         =========          =====



The Black-Scholes-Merton option valuation model was developed for use in estimating the fair value of options. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility.


     WARRANTS                                       Weighted-Average

                                         Shares     Exercise Price

                                                                                

Outstanding at July 31, 2006            16,085,933     $   .08



Granted                                    300,000        .02

Exercised                              (10,000,000)       .01

Cancelled                              ( 1,486,266)       .08

OUTSTANDING AT JULY 31, 2007             4,899,667      $ .03


EXERCISABLE AT JULY 31, 2007             4,899,667      $ .03

 

Cancelled                                ( 450,000)       .50




OUTSTANDING AT JULY 31, 2008

     4,449,667

  $ .11

 






 

The following table summarizes information about warrants at July 31, 2008:


             Weighted-Average Outstanding and Exercisable Warrants


                       Remaining      Weighted-Average   Weighted-Average

Exercise Prices        Warrants       Contractual Life    Exercise Price


$0.02 - $ .46          4,449,667           1 years             $0.11


The Black-Scholes-Merton option valuation model was developed for use in estimating the fair value of warrants. In addition, warrant valuation models require the input of highly subjective assumptions including the expected stock price volatility.


During the year ended July 31, 2008 the Company had a total of 9,969,900 shares underlying its convertible debentures that were cancelled at the time of the sale of the operations.

 


 [8] PROVISION FOR INCOME TAXES


At July 31, 2008, the Company had generated tax operating losses (assuming all operating loss carry-forwards will be available) that total approximately $14,000,000. Such loss carry-forwards will expire at various dates through 2028. At July 31, 2008, based on the amount of operating loss carry-forwards, the Company would have had a deferred tax asset of approximately $5,800,000.  Because of the uncertainty that the Company will generate income in the future sufficient to fully or partially utilize these carry-forwards, a valuation allowance of $5,800,000 has been established.  This allowance includes an increase of $1,300,000 related to operations during the year ended July 31, 2008. Accordingly, no net deferred tax asset is reflected in these financial statements.


The Company has issued equity securities at various times since inception.  A change in ownership, as defined by Section 382 of the Internal Revenue Code, caused by such issuances of equity would limit the availability of these losses to offset future taxable income, if any.  Management believes that there has been no such change of ownership and that all generated tax operating losses remain available to offset future taxable income, if any.


As part of a previous acquisition, the Company acquired net operating losses of approximately $10,640,000.  Pursuant to Section 382 of the Internal Revenue Code, utilization of these losses will be limited to approximately $240,000 subject to a maximum annual utilization of approximately $15,000 per year through 2021. At July 31, 2008, the Company would have a deferred tax asset of approximately $77,000 from these acquired losses. Because of the uncertainty that the Company would generate income in the future sufficient to fully or partially utilize these carry-forwards, a valuation allowance of approximately $77,000 has been established.  


[9] NEW AUTHORITATIVE ACCOUNTING PRONOUNCEMENTS


In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-and interpretation of FASB Statement No. 60”.  SFAS No. 163 clarifies how Statement 60 applies to



financial guarantee insurance contracts, including the recognition and measurement of  premium revenue and claims liabilities. This statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those years. SFAS No. 163 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.


In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”.  SFAS No. 162 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the more authoritative category will prevail. SFAS No. 162 will become effective 60 days after the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.


In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133.  This standard requires companies to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company has not yet adopted the provisions of SFAS No. 161, but does not expect it to have a material impact on its consolidated financial position, results of operations or cash flows.



[10] LEGAL MATTERS


In the normal course of business, the Company is exposed to a number of asserted and unasserted potential claims.  



[11] FAIR VALUE OF FINANCIAL INSTRUMENTS


SFAS No. 107, "Disclosure About Fair Value of Financial Instruments," requires disclosing fair value, to the extent practicable, for financial instruments which are recognized or unrecognized in the balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement.


In assessing the fair value of these financial instruments, the Company used a variety of methods and assumptions, which were based on estimates of market conditions and risks existing at that time. For certain instruments, including cash and cash equivalents, related party and trade and notes payable, it was assumed that the carrying amount approximated fair value for the majority of these instruments because of their short maturities.


The fair value of long-term debt is based upon current rates at which the Company could borrow funds with similar remaining maturities. It was assumed that the carrying amount approximated fair value for these instruments.


[12] SUBSEQUENT EVENT


On August 22, 2008 Betbrokers LTD was placed into administration and trading of its shares has been temporarily suspended. This would mean that Betbrokers stock being held by the Company could have no value. This would also mean that the Company will not be able to settle debts through the liquidation of this stock. Therefore, the Company may be forced to cease all activity and seek bankruptcy



protection or lose control of the Company to debt holders. Additionally, the Company may be forced to stop all payments to third parties which would force it to discontinue its SEC reporting obligations and result in it being delisted from the OTC Bulletin Board. 


ITEM 8:  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


The Company changed its independent registered public accounting firm, from Moore Stephens, P.C. (“MSPC”) to Moore and Associates, Chartered Accountants and Advisors (“Moore and Associates”) effective February 25, 2008. This change was made solely in an effort to reduce our overall cost given our limited resources.


There had been no disagreements with MSPC on any matter of accounting principles or practices, financial statement disclosures, or auditing scope or procedure, which, if not resolved to the satisfaction of MSPC, would have caused MSPC to make reference to the subject matter in connection with their audit reports on the Company’s consolidated financial statements as of and for the years ended July 31, 2007 and July 31, 2006. In addition, there were no reportable events, as listed in Item 304(a)(1)(iv) of Regulation S-B.


ITEM 8A:  CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls

We evaluated the effectiveness of our disclosure controls and procedures as of the end of the 2008 fiscal year.  This evaluation was conducted with the participation of our chief executive officer and principal accounting officer.


Disclosure controls are controls and other procedures that are designed to ensure that information that we are required to be disclosed in the reports we file pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported.  


Limitations on the Effective of Controls

Our management does not expect that our disclosure controls or our internal controls over financial reporting will prevent all error and fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, but no absolute, assurance that the objectives of a control system are met.  Further, any control system reflects limitations on resources, and the benefits of a control system must be considered relative to its costs.  These limitations also include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of a control.  A design of a control system is also based upon certain assumptions about potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.


Conclusions

Based upon their evaluation of our controls, the chief executive officer and principal accounting officer have concluded that, subject to the limitations noted above, the disclosure controls are effective providing reasonable assurance that material information relating to us is made known to management on a timely basis during the period when our reports are being prepared.  There were no changes in our internal controls that occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls.


(a) Evaluation of disclosure controls and procedures




Since the Company sold its assets in September 2008, the Company has essentially been insolvent, with minimal operations and no revenues.  As a result, we have not had the financial resources to employ a full accounting staff or maintain segregation of duties with our CEO also serving as our Principal Accounting Officer.


The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).


The Company's Chief Executive Officer (acting also as the principal financial and accounting officer) has not evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Report based upon the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  


A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected.  The matters involving internal controls and procedures that the Company's management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of accounting personnel resources to provide reasonable assurance that transactions are recorded as necessary to permit the timely and accurately preparation of financial statements in accordance with generally accepted accounting principles; (2) inadequate segregation of duties consistent with control objectives due to our small size and limited resources and (3) absence of a quarterly or annual financial closing checklist to ensure that all items had been considered for inclusion in our quarterly and annual financial statements.  The aforementioned material weaknesses were identified by the Company's Chief Executive Officer in connection with the audit of our financial statements for the years ended July 31, 2008.  In light of the material weaknesses described above, we performed additional analyses and other post-closing procedures and engaged a consultant to ensure our financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, we believe that the consolidated financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.


This annual report does not include an attestation report of the Company's registered accounting firm regarding internal control over financial reporting. Management's report is not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission


(b) Changes in internal controls


Other than described above, there were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


ITEM 8B:  OTHER INFORMATION

None.


PART III




ITEM 9:   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND     CORPORATEGOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT


DIRECTORS AND EXECUTIVE OFFICERS

Our executive officers and directors and their respective ages as of the date of this annual report are as follows:


Directors and Executive Officer:


Name of Director              Age

Title


Wayne Allyn Root              46    

Director, Chief Executive Officer, and Principal Accounting Officer


WAYNE ALLYN ROOT has served as our Chief Executive Officer and Chairman of our Board of Directors since our reorganization in July 2001. From 1999 to 2001, Mr. Root served as Chairman and Chief Executive Officer of our subsidiary, Global SportsEDGE, Inc. From 1990 to 1999, Mr. Root served as a sports handicapper for National Sports Service. Mr. Root holds a B.A. from Columbia University. Mr. Root does not hold a directorship in any other public company.  


Our Board of Directors held four (4) meetings during the fiscal year ended July 31, 2008.  Each Director attended at least 75% of the aggregate number of meetings held by the Board of Directors during the time each such Director was a member of the Board.


Director Compensation

Commencing in February 2004, our non-employee directors began receiving $1,000 for each meeting of our Board of Directors they attend in person.  These fees may be paid in cash or with restricted shares of common stock at the discretion of the Company.  We also reimburse our directors for out-of-pocket expenses incurred to attend meetings of the board.


Our executive officers hold office until the next annual meeting of directors.

Committees of the Board of Directors

With only one director we have no standing committees.


Code of Ethics


The Board of Directors adopted a Code of Ethics in October 2004, which applies to all of the Company's Executive Officers, Directors and employees.  A copy of the Code of Ethics was attached to our Annual Report on Form 10-KSB for the year ended July 31, 2004.


Section 16(a) Beneficial Ownership Reporting Compliance

Based solely on a review of Forms 3 and 4 and amendments thereto furnished to us during our most recent fiscal year, and Forms 5 and amendments thereto furnished to us with respect to our most recent fiscal year and certain representations, no persons who were either a director, officer, or beneficial owner of more than 10% of our common stock, failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the most recent fiscal year.


ITEM 10:  EXECUTIVE COMPENSATION


The following summary compensation table sets forth information regarding the executive compensation for the Company’s CEO and President during the fiscal years ended July 31, 2008 and July 31, 2007 and each other officer(s)who had total annual salary and bonus in excess of $100,000 during such years.




Name and Principal Position



Year



Salary





Commission    


Stock Award


Option Award

Non-Equity Incentive

Plan Comp


All Other Comp



Total

 

 

 

 

 

 

 

 

 

Wayne Allyn Root, Chairman & CEO



2008

2007



0

$175,000



$41,835

$334,628



0

0



0

0



0

0



0

0



$41,835

$509,628

Douglas R. Miller, President

2008

2007

0

$195,000

0

0

0

0

0

0

0

0

0

0

0

$195,000

 

 

 

 

 

 

 

 

 


Option Grants  

The Company has not issued any options to the employees listed above during the prior two fiscal years.


Employment Agreement

As part of the asset sale to Betbrokers, Mr. Root has entered into an employment agreement with Betbrokers and his employment by the Company ended by mutual consent.


Equity Incentive Plan

A resolution adopting and approving an Equity Incentive Plan (the "Plan"), reserving 25,000,000 shares of common stock for issuance under the Plan was approved on August 18, 2006. On September 19, 2006, the consenting stockholders signed a consent, whereby they approved the adoption of the Plan. Under the Plan, options may be issued to directors, officers, key employees, consultants, agents, advisors, and independent contractors who are in a position to contribute materially to the prosperity of the Company. The Plan provides for the issuance of both incentive stock options, or ISOs, and non-qualified stock options, or NQSOs. ISOs are issued to employees and NQSOs are generally issued to non-employees. The number of shares that are subject to ISOs is limited to the discretion of the Board.

Our board administers the Plan but may delegate such administration to a committee, which shall consist of at least two members of the board. The board or the committee has the authority to determine the number of options to be granted, when the options may be exercised and the exercise price of the options. Options may be granted for terms not exceeding ten years from the date of the grant, except for options granted to persons holding in excess of 10% of the common stock, in which case the options may be granted for a term not to exceed five years from the date of the grant.                                  

The board believes that the Plan will provide greater flexibility in structuring compensation arrangements with management, consultants and employees, and will provide an equity incentive for those who are awarded shares under the Plan. The issuance of common stock as an award under the Plan may have a financially dilutive effect depending on the price paid for such shares, and an absolute dilutive effect due to the increase in issued and outstanding shares.

At July 31, 2008, no options were outstanding.



During the fiscal year ended July 31, 2007, the Company granted 1,500,000 options. These options were cancelled during the year ended July 31, 2008.

Equity Compensation Plan Information


                            Number of

                            securities to be

                            issued upon                               Number of

                            exercise of         Weighted-average      securities

                            outstanding         exercise price of     remaining

                            options, warrants   outstanding options,  available for

Plan category               and rights          warrants and rights   future issuance

             

                                   (a)                  (b)               (c)

Equity compensation

plans approved by security

holders                           None                  N/A                None


Equity compensation

plans not approved by

security holders                  None                  N/A                None


Total                             None                  N/A                None


ITEM 11:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


The following table sets forth the number and percentage of shares of our $.0001 value common stock owned beneficially, as of October 17, 2008, by any person, who is known by us to be the beneficial owner of 5% or more of such common stock, by all Directors and Executive Officers individually, and by all Directors and Executive Officers as a group. For purposes of the chart, the Company has used 128,896,450 shares outstanding and has not included the 502,500,000 treasury shares which securitize one note payable.  If the Company defaults on this note, the shares would be disbursed to CSI Business Services, Inc. making them the largest shareholder of the Company.  If these shares were to be issued, there would be a change in control of the Company with CSI Business Services, Inc. becoming the controlling shareholder.  Such a change in control would limit the Company’s ability to use net operating losses in future periods to offset income. Information as to beneficial ownership is based upon statements furnished to us by such persons.

Name and Address of

Beneficial owner (1)

Amount of Beneficial Ownership

 

Percentage of class

 

 

 

 

Wayne Allyn Root

15,178,148

(2)

11.3%

 

 

 

 

All officers and directors

as a group

15,178,148

 

11.3%


(1)  Unless otherwise noted, the address for each named beneficial owner is 5052 South Jones Blvd., Las Vegas, Nevada 89188.


(2)  Does include 462,222 preferred shares that can be converted to 4,622,220 shares of common stock.


ITEM 12:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In September 2002, we entered into an agreement with Newmarket Investments, PLC ("Newmarket"), which was then a convertible  debenture holder,  which provided that Newmarket invest an additional  $700,000 in the Company by amending the

existing $500,000 convertible  debenture held by Newmarket to reflect a principal amount of $1,200,000. The anti-dilution provisions on the combined $1,200,000 convertible debenture provide that 5,802,199 additional shares be issued upon conversion.  The total Newmarket convertible debenture shares upon conversion were 9,230,769. Newmarket elected to convert the entire debenture into restricted stock of the company in the second quarter of 2004.  In addition, the Company agreed to exchange an existing warrant held by Newmarket to acquire 1,000,000 shares of common stock at $1.00 per share for a warrant to acquire 3,000,000 shares of common stock at $0.13 per share.  This Warrant expired on August 31, 2005. Newmarket also extended an unsecured standby credit facility of $250,000 with a 16% annual interest rate that was originally payable on March 31, 2003. At July 31, 2008, the Company had an outstanding balance of interest totaling $252,615. In connection with these transactions, we also issued to Newmarket a three-year option to purchase 1,500,000 shares at a price per share of $0.50.  The option expired July 31, 2006.  The CEO of Newmarket is a former director of the Company.


The Company has a convertible debenture, originally in the amount of $600,000. The outstanding balance as of July 31, 2008, is approximately $146,728. The principal of the debt is to be repaid at the rate of $18,200 per month plus monthly interest. The note originally matured in October of 2007. At July 31, 2008 no shares have been issued to pay this debt, or fulfill conversion requests. Additionally CEO Wayne Root has personally guaranteed this note. As part of the asset sale dated September 26, 2007 the due date of this note was extended to July 31, 2008, and the note is in default.

 

In September of 2006 the Company entered into a $655,000 short term loan with a private investor. The note has an 18% interest rate and a maturity date of June 30, 2007. As collateral, the Company made a general pledge agreement, giving a security interest in the assets of the company including a specific credit card reserve account. Additionally, the Company pledged 502,500,000 shares of Common Stock in the event of default.  CEO Wayne Root also pledged his 462,222 Preferred Shares in the event of default. As part of the asset sale dated September 26, 2007

the due date of this note was extended to November 7, 2008.  The Company does not have the funds to pay this Note.


In June the Company received a loan in the amount of $25,000 from Director Harrison. This loan has a due date of August 31, 2007 and is in default.


ITEM 13:  EXHIBITS


The following exhibits are filed as part of this report:


Exhibit  

Number

Title of Document



2.         Agreement and Plan of Reorganization dated July 6, 2001

           between Global Sports & Entertainment, Inc. and Turfclub.com,

           Inc. (1)


3.1        Certificate of Incorporation of GWIN, as amended (1)


3.2        Bylaws of GWIN (5)


4.1        Certificate of Designations of Series C Preferred Stock and

           Series C Stock Purchase Agreement  (1)


4.2        Form of Indenture representing 5% Convertible Debentures (1)


4.3      Form of Indenture representing 13% Convertible Debentures (4)                                     

4.4        Form of Common Stock Purchase Warrant included with 5%

                             Convertible Debenture Units (4)


10.1       Financial Advisory Agreement dated September 10, 2001 between

           the GWIN and Keating Investments, LLC  (1)


10.2       Executive Services Agreement dated December 6, 1999 between

           GWIN and Mr. Miller  (1)

 

10.3       Executive Services Agreement dated December 6, 1999 between GWIN

           and Mr. Root  (1)


10.4       Sports Personality Agreement dated March 2, 2000 between GWIN

           and Mr. Root (1)


10.5       Term sheet with British Bloodstock Agency, dated August 21,

           2002 (4)


10.6       Agreement describing voting agreement between Mr. Manner and Mr.

           Root regarding Mr. Keating's board rights  (2)


10.7       Common Stock Purchase Warrant issued to Keating Investments,

           LLC (1)


10.8       Debenture Purchase Agreement dated September 19, 2001 between

           GWIN and Mr. Root (1)


10.9       5% Convertible Debenture dated September 19, 2001 issued to Wayne

           Allyn Root (1)


10.11      Common Stock Purchase Warrant issued to Mr. Root  (1)


10.12      Debenture Purchase Agreement dated August 31, 2001 between GWIN

           and Mr. Manner (1)


10.13      5% Convertible Debenture dated September 19, 2001 issued to Mr.

           Manner (1)


10.14      Common Stock Purchase Warrant issued to Mr. Manner  (1)


10.15      Common Stock Purchase Warrant dated September 4, 2001 between

           GWIN and Keating Partners, L.P. (1)


10.16      Common Stock Purchase Warrant issued to Keating Partners, L.P.(1)


10.17      Promissory Note dated October 23, 2000 issued to Mr. Root (1)


10.18      Letter Agreement dated July 5, 2001 between GWIN and Keating

           Investments, LLC (1)


10.19      Series C Preferred Stock Purchase Agreement dated July 10, 2001

           between Trilium Holdings Ltd. and the Company (1)


10.20      Promissory Note dated November 12, 2001 issued to Mr. Keating.(3)


10.21      Promissory Note dated November 12, 2001 issued to Mr. Root.(3)

                                       

10.22      Securities Purchase Agreement dated June 29, 2002 between  

           Laurus Master Fund, Ltd. and GWIN (4)

 

10.23      2002 Equity Incentive Plan (6)


10.24      Employment Agreement with Wayne Allyn Root dated July 31, 2003 (8)




10.25      Employment Agreement with Douglas R. Miller dated July 31, 2004  

           (10)


10.26      Employment Agreement with Wayne Allyn Root dated July 31, 2004

           (10)


10.27      Securities Purchase Agreement with Laurus Master Fund, Ltd.

           Dated October 29, 2004 (9)


10.28      Secured Convertible Term Note payable to Laurus Master Fund, Ltd.

           For $600,000 (9)


10.29      Amendment to the Asset Purchase Agreement and Undertaking and Covenant        by and Among Winning Edge International, Inc., Global Sports Edge,        Inc., Wayne Allyn Root and Betbrokers, PLC (10)


10.30      Amendment, Termination Agreement and Mutual Release-Winning Edge and CSI Business Finance, Inc. (10)


10.31      Pledge and Security Agreement-CSI Business Finance, Inc. (10)


10.33      Amendment to Promissory Note-Laurus Family of Funds, LLC (10)


10.34      Amendment to the Asset Purchase Agreement by and Among Winning Edge

           International, Inc., Global Sports Edge, Inc., Wayne Allyn Root and

           Betbrokers, PLC (11)


10.35      Asset Purchase Agreement by and Among Winning Edge International, Inc., Global Sports Edge, Inc., Wayne Allyn Root and Betbrokers, PLC (13)


10.36

Amendment Agreement-Inutrition, Inc. (14)


10.37

Pledge and Security Agreement-Inutrition, Inc. (14)


10.38

Promissory Note-Inutrition, Inc. (14)




14         Code of Ethics (11)


21.1       List of Subsidiaries (4)


31.1       Certification of Chief Executive Officer pursuant to Section

           302 of the Sarbanes-Oxley Act of 2002 - Filed herewith

           electronically


31.2       Certification of Chief Financial Officer pursuant to Section

           302 of the Sarbanes-Oxley Act of 2002 - Filed herewith

           electronically


32.1       Certification of Chief Executive Officer pursuant to 18 U.S.C.

           Section 1350 - Filed herewith electronically


32.2       Certification of Chief Financial Officer pursuant to 18 U.S.C.

           Section 1350 - Filed herewith electronically

 



(1) Incorporated by reference to the similarly described exhibit included with the registrant's Quarterly Report for quarter ended September 30, 2001 filed with the SEC on November 19, 2001.


(2) Described in Exhibit 2.1


(3) Incorporated by reference to the similarly described exhibit included with the registrant's Annual Report for the year ended December 31, 2001 filed with the SEC on April 1, 2002 and amended on May 15, 2002.


(4) Incorporated by reference to the similarly described exhibit included with the registrant's registration statement on Form SB 2, 333 99599, filed on September 13, 2002.


(5) Unavailable in electronic format, but will be mailed upon request free of charge.


(6) Incorporated by reference to the Registrants Definitive Information Statement filed with the SEC on July 21, 2002.

                                      

(7) Incorporated by reference to GWIN, Inc. annual report on Form 10 K for the year ended July 31, 2002, as filed with the SEC on October 28, 2002.


(8) Incorporated by reference to GWIN, Inc. annual report on Form 10 KSB for the year ended July 31, 2003, as filed with the SEC on November 10, 2003.

 

(9) Incorporated by reference to the similarly described exhibits included with the Registrant's Form 8-K dated December 1, 2004, as filed with the SEC on December 2, 2004.


(10) Incorporated by reference to the Registrant’s Form 8-K dated September 26, 2007.


(11) Incorporated by reference to the Registration’s Form 8-K dated September 6, 2007


(12) Incorporated by reference to the Registrant’s Form 8-K dated July 3, 2007.


(13) Incorporated by reference to GWIN, Inc. Annual Report on Form 10-KSB for the year ended July 31, 2004, as filed with the SEC on November 1, 2005.


(14)

Incorporated by reference to the Registrant’s form 8-K dated April 21, 2008.

  

ITEM 14:  PRINCIPAL ACCOUNTANT FEES AND SERVICES


Our principal accountants, Moore & Associates, Chartered Accountants and Advisors, billed the following fees for the services indicated:


 

 

Fiscal year ended

July 31, 2008


Audit fees   

       

    

        

   $ 5,000   

Audit-related fees

 

   Nil

Tax fees

 

   Nil

All other fees

 

         Nil      


Audit fees consist of fees related to professional services rendered in connection with the audit of our annual financial statements.  All other fees relate to professional services rendered in connection with the review of the quarterly financial statements.




Our policy is to pre-approve all audit and permissible non-audit services performed by the independent accountants.  These services may include audit services, audit-related services, tax services and other services.  Under our audit committee’s policy, pre-approval is generally provided for particular services or categories of services, including planned services, project based services and routine consultations.  In addition, the audit committee may also pre-approve particular services on a case-by-case basis.  Our audit committee approved all services that our independent accountants provided to us in the past two fiscal years.






SIGNATURES


In accordance with Section 13 of the Exchange Act, the Registrant caused this Report to be signed on its behalf by the undersigned, there unto duly authorized on October 24, 2008.


                                     Winning Edge International, Inc.




                                      By: /s/ Wayne Allyn Root

                                         -----------------------------------

                                         Wayne Allyn Root, Chief Executive

                                         Officer


In accordance with the requirements of Section 13 of the Exchange Act, this Report has been signed below by the following persons on behalf of the Registrant on October 24, 2008 and in the capacities indicated.



/s/ Wayne Allyn Root

---------------------------------------------------

Wayne Allyn Root, Chairman, Chief Executive Officer

(Principal Executive Officer)


 

 

 C: 

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-K’ Filing    Date    Other Filings
12/15/08
11/15/08
11/7/08
Filed on:10/30/08
10/29/08
10/24/08
10/17/08
8/22/08
For Period End:7/31/0810KSB/A
6/30/08
4/21/08
4/1/08
2/25/088-K
11/15/07
10/20/07
9/26/078-K
9/6/078-K
8/31/07
7/31/0710KSB
7/3/078-K
6/30/07
9/21/06
9/20/06
9/19/06
8/18/06
7/31/0610KSB,  NT 10-K,  NT 10-K/A
11/1/05
8/31/05
8/1/05
12/2/048-K
12/1/048-K
10/29/04
7/31/0410KSB,  4,  NT 10-K
11/10/0310KSB
7/31/0310KSB,  10KSB/A,  NTN 10Q
3/31/03
10/28/0210KSB
9/13/02SB-2
9/6/02
8/22/02
8/21/02
7/31/0210KSB
7/21/02
6/29/02
5/15/0210KSB/A,  10QSB
4/1/0210KSB
12/31/0110KSB,  10KSB/A
11/19/0110QSB
11/12/01
9/30/0110QSB,  NT 10-Q
9/19/01
9/10/01
9/4/01
8/31/01
7/10/01
7/6/01
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12/6/99
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