10-Q 1 aims10q063009.htm FORM 10Q QUARTERLY REPORT 10Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


(Mark One)


 X . QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended June 30, 2009.

or


     . TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from _______________________ to ___________________________


Commission file number 333-86711


AIMS™ WORLDWIDE, INC.

(Exact name of small business issuer as specified in its charter)


NEVADA

87-0567854

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)


10400 EATON PLACE, #203, FAIRFAX, VA 22030

(Address of principal executive offices)


703-621-3875, x2254

(Issuer’s telephone number, including area code)

_______________________________________________________

(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  X . No


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      . (Do not check if a smaller reporting company)

 Smaller reporting company  X .


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


APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:


Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.     . Yes      . No


APPLICABLE ONLY TO CORPORATE ISSUERS


State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 56,514,198 shares of August 14, 2009.




FORM 10-Q

AIMS™ WORLDWIDE, INC.


INDEX

Page

 

 

PART I. Financial Information

3

 

 

Item 1. Consolidated Financial Statements

3

 

 

Condensed, Consolidated Balance Sheet at June 30, 2009 (Unaudited) and December 31, 2008 (Audited)

4

 

 

Condensed, Consolidated Statements of Operations for the Six Months Ended

 

 June 30, 2009 and 2008 (Unaudited)

6

 

 

Condensed, Consolidated Statements of Operations for the Three Months Ended

 

 June 30, 2009 and 2008 (Unaudited)

7

 

 

Condensed, Consolidated Statements of Changes in Shareholders’ Deficit

 

– From January 1, 2009, through June 30, 2009 (Unaudited)

8

 

 

Condensed, Consolidated Statements of Cash Flows for the Six Months Ended

 

 June 30, 2009 and 2008 (Unaudited)

9

 

 

Notes to Condensed, Consolidated Financial Statements (Unaudited)

10

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

14


Item 3. Quantitative and Qualitative Disclosures About Market Risk

21


Item 4T. Controls and Procedures

21


PART II. Other Information

22

 

 

Item 1. Legal Proceedings

22

 

 

Item 1A. Risk Factors

22


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

24

 

 

Item 3. Defaults upon Senior Securities

24

 

 

Item 4. Submission of Matters to a Vote of Security Holders

24

 

 

Item 5. Other Information.

24

 

 

Item 6. Exhibits

25

 

 

Signatures

26


(Inapplicable items have been omitted)



2



PART I - Financial Information


ITEM 1. Financial Statements (unaudited)


The accompanying balance sheet of AIMS™ Worldwide, Inc. at June 30, 2009, and the related statements of operations, shareholders deficit and cash flows, for the three and six month periods ended June 30, 2009 and 2008 have been prepared by our management in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.


Operating results for the six months ended June 30, 2009, are not necessarily indicative of the results that can be expected for the year ending December 31, 2009.




3



AIMS Worldwide, Inc.

Condensed, Consolidated Balance Sheets


Assets

 

 

June 30

 

December 31

 

 

2009

 

2008

 

 

(Unaudited)

 

(Audited)

Current assets

 

 

 

 

  Cash

$

165,969

$

145,440

  Accounts receivable, net of allowances of $176,669 and $204,263

 


683,692

 


363,692

  Loans to employees

 

74,437

 

76,500

  Inventory

 

5,899

 

6,324

  Prepaid expense

 

104,539

 

5,950

  Work In Progress

 

173,618

 

-

Total current assets

 

1,208,154

 

597,906

 

 

 

 

 

Property and equipment

 

 

 

 

  At cost, net of accumulated depreciation of $105,986  and $67,674

 


128,811

 


155,298

 

 

 

 

 

Other assets

 

 

 

 

  Deposits

 

21,237

 

12,249

  Other assets

 

10,000

 

78,722

  Prepaid offering costs

 

402,064

 

402,064

  Prepaid software costs

 

112,000

 

112,000

  Goodwill, net of impairment of $87,431

 

4,863,382

 

3,908,755

  Intangible assets, net of accumulated amortization of $853,135 and $680,625

 


1,367,903

 


1,540,413

Total other assets

 

6,776,586

 

6,054,203

 

 

 

 

 

Total assets

$

8,113,551

$

6,807,406


See accompanying notes to condensed, consolidated financial statements



4



AIMS Worldwide, Inc.

Condensed, Consolidated Balance Sheets


Liabilities and Stockholders’ Deficit

 

 

June 30

 

December 31

 

 

2009

 

2008

 

 

(Unaudited)

 

(Audited)

Current liabilities

 

 

 

 

  Accounts payable

$

739,207

$

468,488

  Accounts payable - related parties

 

67,714

 

92,714

  Accrued expenses

 

180,760

 

96,316

  Deferred revenue

 

306,675

 

23,234

  Current portion of long term debt

 

352,759

 

354,104

  Notes payable

 

1,704,894

 

1,633,659

  Notes payable - related parties

 

1,987,583

 

1,045,971

  Accrued interest payable

 

1,209,759

 

1,123,506

  Accrued interest payable - related parties

 

937,130

 

906,711

Total current liabilities

 

7,486,751

 

5,744,702

  Long term debt

 

205,995

 

221,362

Total liabilities

 

7,692,566

 

5,966,064


Minority interest

 


(285,630)

 


(235,734)

 

 

 

 

 

Stockholders' equity

 

 

 

 

  Preferred stock held in escrow, $.001 par value,

 

 

 

 

    20,000,000 shares authorized, 7,193,750 shares

 

 

 

 

    issued and outstanding, including shares in escrow

 

7,194

 

7,194

  Common stock, $.001 par value, 200,000,000 shares

 

 

 

 

    authorized, 54,670,286 shares issued and outstanding

 

54,670

 

52,131

  Additional paid-in capital – preferred stock

 

3,638,835

 

3,638,835

  Additional paid-in capital – common stock

 

11,747,123

 

11,176,593

  Stock subscription receivable

 

(252,500)

 

(252,500)

  Deficit retained

 

(14,488,706)

 

(13,545,178)

Total stockholders' equity

 

706,616

 

1,077,075

 

 

 

 

 

Total liabilities and stockholders' equity

$

8,113,551

$

6,807,406


See accompanying notes to condensed, consolidated financial statements




5



AIMS Worldwide, Inc.

Condensed, Consolidated Statements of Operations

(unaudited)


 

 

Six Months Ended

 

 

June 30,

 

 

2009

 

2008

 

 

 

 

 

Revenue

$

2,304,523

$

2,697,503

 

 

 

 

 

Operating expenses

 

 

 

 

 Cost of sales

 

665,553

 

85,524

 General and administrative expenses

 

2,451,327

 

3,454,890

 

 

3,116,880

 

3,540,414

 

 

 

 

 

 Operating loss

 

(812,357)

 

(842,911)

 

 

 

 

 

Interest expense, net

 

(150,648)

 

(148,387)

Interest expense, net - related parties

 

(30,419)

 

(30,587)

Minority interest

 

49,896

 

37,024

 

 

 

 

 

 Loss before provision for income taxes

 

(943,528)

 

(984,861)

 

 

 

 

 

Income taxes

 

-

 

-

 

 

 

 

 

 Net loss

$

(943,528)

$

(984,861)

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per share

$

(0.02)

$

(0.02)

 

 

 

 

 

Weighted average number of

 

 

 

 

 shares outstanding

 

52,337,148

 

46,006,306


See accompanying notes to condensed, consolidated financial statements



6



AIMS Worldwide, Inc.

Condensed, Consolidated Statements of Operations

(unaudited)


 

 

Three Months Ended

 

 

June 30,

 

 

2009

 

2008

 

 

 

 

 

Revenue

$

1,363,034

 

1,453,920

 

 

 

 

 

Operating expenses

 

 

 

 

 Cost of sales

 

480,791

 

53,679

 General and administrative expenses

 

1,159,219

 

1,685,654

 

 

1,640,010

 

1,739,333

 

 

 

 

 

 Operating loss

 

(276,976)

 

(286,043)

 

 

 

 

 

Interest expense, net

 

(73,057)

 

(86,741)

Interest expense, net - related parties

 

(15,294)

 

(15,294)

Minority interest

 

(13,071)

 

2,697

 

 

 

 

 

 Loss before provision for income taxes

 

(378,397)

 

(385,381)

 

 

 

 

 

Income taxes

 

-

 

-

 

 

 

 

 

 Net loss

$

(378,397)

 

(385,381)

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per share

$

(0.01)

$

(0.01)

 

 

 

 

 

Weighted average number of shares outstanding

 

52,538,776

 

46,763,091


See accompanying notes to condensed, consolidated financial statements




7



AIMS Worldwide, Inc.

Condensed, Consolidated Statements of Changes in Shareholders’ Deficit

(unaudited)


 

Pref Shares

Pref Shares

Pref Shares

Com Shares

Com Shares

Com Shares

Com Shares

 

 

 

 

 

Addl.

 

 

Addl.

Stock

 

 

 

 

Par

Paid-in

 

Par

Paid-in

Subscr.

Deficit

 

 

Shares

Value

Capital

Shares

Value

Capital

Rec'vble

Retained

Total

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2007

7,100,000

$       7,100

$3,488,929

44,586,575

$      44,587

$  9,920,486

$   (50,000)

$(12,270,671)

$1,140,431

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash

 

 

 

6,161,111

6,161

1,055,113

(202,500)

-

858,774

 

 

 

 

 

 

 

 

 

 

Preferred stock issued for cash

93,750

94

149,906

 

 

 

 

-

150,000

 

 

 

 

 

 

 

 

 

 

Common stock issued for

 

 

 

 

 

 

 

 

 

 services,

 including

 campaign

 

 

 

 

 

 

 

 

 

 media buying

 

 

 

 

 

 

 

 

 

 participants

-

-

-

1,383,593

1,384

200,994

-

-

202,378

 

 

 

 

 

 

 

 

 

 

Net loss for year

-

-

-

-

-

-

-

(1,274,507)

(1,274,507)

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2008

7,193,750

7,194

3,638,835

52,131,279

52,131

11,176,593

(252,500)

(13,545,178)

1,077,075

 

 

 

 

 

 

 

 

 

 

Common stock issued for acquisitions

-

-

-

1,600,000

1,600

318,400

-

-

320,000

 

 

 

 

 

 

 

 

 

 

Common stock issued for loan guarantees

-

-

-

375,000

375

74,625

-

-

75,000

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash

-

-

-

388,890

389

60,459

-

-

60,848

 

 

 

 

 

 

 

 

 

 

Common stock issued for services

-

-

-

175,117

175

47,851

-

-

48,026

 

 

 

 

 

 

 

 

 

 

Common stock issued for debt extinguishment

-

-

-

-

-

4,300

-

-

4,300

 

 

 

 

 

 

 

 

 

 

Warrants issued with debt financing

-

-

-

-

-

64,895

-

-

64,895

 

 

 

 

 

 

 

 

 

 

Net loss for period

-

-

-

-

-

-

-

(943,528)

(943,528)

 

 

 

 

 

 

 

 

 

 

Balance, June 30,

 2009

7,193,750

$       7,194

$3,638,835

54,670,286

$      54,670

$11,747,123

$ (252,500)

$(14,488,706)

$   706,616


See accompanying notes to condensed, consolidated financial statements



8



AIMS Worldwide, Inc.

Condensed, Consolidated Statements of Cash Flows

(unaudited)

 

 

Six Months Ended

 

 

March 31,

 

 

2009

 

2008

Cash flows from operating activities:

 

 

 

 

 Net loss

$

(943,528)

 

(984,861)

 Adjustments to reconcile net loss to net

 

 

 

 

  cash used in operating activities:

 

 

 

 

    Depreciation and amortization

 

202,505

 

198,192

    Loss from equity investments

 

68,722

 

-

    Income from minority interest

 

(49,896)

 

(37,024)

    Stock issued to employees and others for services

 

48,026

 

92,758

 

 

(674,171)

 

(730,935)

Changes in current assets and liabilities:

 

 

 

 

 Accounts receivable and other current assets

 

58,948

 

26,953

 Accounts payable and other current liabilities

 

250,289

 

222,534

Net cash (used in) operating activities

 

(364,935)

 

(481,448)

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 Purchase of equipment

 

-

 

(26,995)

 Investment in operating units and equity investments

 

(800,000)

 

-

 Cash acquired in acquisition

 

50,410

 

-

Net cash (used in) investing activities

 

(749,590)

 

(26,995)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 Proceeds from sale of common stock

 

61,000

 

487,200

 Offering costs for sale of stock

 

(152)

 

(686)

 Proceeds of notes payable, net

 

1,140,000

 

21,572

 Repayments of notes payable

 

(65,794)

 

-

Net cash provided (used in) by financing activities

 

1,135,054

 

(508,086)

 

 

 

 

 

Net increase (decrease) in cash

 

20,529

 

(357)

 

 

 

 

 

Cash, beginning of period

 

145,440

 

138,593

Cash, end of period

$

165,969

$

138,236

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 Interest

$

56,120

$

17,755

 Income taxes

$

-

$

-

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

 Stock issued for acquisitions

$

395,000

$

-

 Stock issued to settle debt

$

-

$

-


See accompanying notes to condensed, consolidated financial statements



9



AIMS™ WORLDWIDE, INC.

Notes to Condensed, Consolidated Financial Statements

(Unaudited)


NOTE A: BASIS OF PRESENTATION


The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions for 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, the financial statements contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented. Prior periods have been restated to reclassify discontinued from continuing operations.


The results for the six months ended June 30, 2009, are not necessarily indicative of the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the financial statements and footnotes thereto included in the Company’s Form 10-K, filed with the Securities and Exchange Commission for the year ended December 31, 2008.


NOTE B: OPERATING UNITS AND EQUITY INVESTMENTS


As part of its corporate development core competency acquisition strategy, AIMS™ Worldwide, Inc., owns the following operating units: AIMS Interactive, Inc.; ATB Media, Inc.; Barbara Overhoff, Inc., d/b/a/ Bill Main and Associates; BrandStand Group, Inc.; Harrell, Woodcock, and Linkletter; Streetfighter Marketing, Inc.; Target America, Inc.; and 55% of IKON Public Affairs Group, LLC.


Acquisition of BrandStand Group Inc.


On June 26, 2009, the Company completed the acquisition of the common stock of BrandStand Group, Inc. Consideration of the acquisition was 1,600,000 shares of AIMS common stock, a one year note payable in the amount of $400,000 and a cash payment of $400,000, of which $50,000 had previously been placed on deposit. The shares are valued at fair value of $.20 per share determined by the market price on the date of the agreement, June 26, 2009 for a total value of $320,000. This acquisition was recorded as a purchase, transaction costs were charged to expense and operations were included in Company operations from the date of the acquisition, June 26, 2009. The purchase price was allocated to the acquired assets and assumed liabilities based on the fair value of the assets and liabilities and recorded as follows:


Current assets

$

633,066

Property and equipment

 

4,000

Goodwill

 

954,627

 Total assets acquired

 

1,591,693

Current liabilities

 

(471,693)

 Total liabilities assumed

 

(471,693)

Net assets acquired

$

1,120,000


BrandStand Group, Inc. is a premier provider of restaurant brand positioning, management and communication strategies, helping restaurant and food service owners and franchisees to develop and differentiate their brand, assisting them to align and deliver their brand promise and helping them in communicating their message. BrandStand Group, Inc. clients include national and regional accounts such as Silver Diner, Burger King, Schlotzsky’s and Z-Pizza. BrandStand researched, developed and utilizes a scientific approach to build client retail establishment traffic, new customer trial, customer frequency and loyal customer sales and revenues. BrandStand Group applies a scientific methodology to build client customers and revenues at the lowest possible cost. Its use of science on a micro basis parallels the model that AIMS Worldwide developed and applies to the marketing paradigm. It is for this micro-to-macro perspective that AIMS Worldwide acquired and secured BrandStand Group.


Management of AIMS determined, while evaluating this potential acquisition, that the primary value to be acquired was the work product of the business. Accordingly, the substantial value was allocated to Goodwill to reflect the on-going earning power of the business as a whole.


Pro forma results of operations had BrandStand Group, Inc., been included in operations for the six months ended June 30, 2009, are as follows:



10




 

 

AIMS

 

BrandStand

 

Pro Forma

Worldwide

 

January 1 to

 

As Reported

 

June 26, 2009

 

Six Months 2009

 

 

 

 

 

 Revenue

$

2,304,523

$

1,104,725

$

3,409,248

 Operating income (loss)

 

(812,357)

 

191,402

 

(620,955)

 Net income (loss)

 

(943,528)

 

191,402

 

(752,126)

 Net loss per share

 

(.02)

 

 

 

(.02)


NOTE C: CONTINGENCIES


The Internal Revenue Service is auditing IKON Holdings, Inc, the corporation from which AIMS acquired the 55% interest in IKON Public Affairs Group, LLC. The examination is not complete, and no expense to AIMS is expected as a result of the examination.


NOTE D: NOTES PAYABLE


In conjunction with the acquisition of Brandstand Group, Inc. ("BrandStand" or "BGI"), the Company issued a promissory note in the amount of $400,000. The note yields 8% interest per annum and payments are due quarterly in the amount of $105,049.50 with the first payment due September 26, 2009 and quarterly thereafter with the balance due on or before June 26, 2010 (the “Note”). The note is secured by a pledge and security agreement under which the Company pledged 100% of the issued and outstanding shares in BGI (the “Pledge Agreement”). James P. Gregory and Thomas W. Cady each received 100,000 shares of AIMS common stock in exchange for acting a co-makers with respect to financing an interim step in the transaction in which Gregory and Cady purchased 32% of the BGI stock from Timothy C. Cusick in exchange for their promissory note in the same amount and bearing the same terms and conditions as the Note, followed by a sale of the BGI Shares to the Company in exchange for the Note and Pledge Agreement. The value of the 200,000 shares of common stock issued as a guarantee fee was valued at current market at $0.20 per share or $40,000. This fee was recorded as a prepaid asset and will be amortized over the term of the note.


In addition to the Note described above, AIMS borrowed $350,000 to finance the transaction. AIMS borrowed $350,000 at 18% interest per annum payable interest only on a quarterly basis beginning September 26, 2009 with the full balance due on June 26, 2010 (the “Loans”). An origination fee and cost reimbursement in the amount of $35,000 is due at maturity (unless extended in which case it is due on the extended maturity date). The lenders received a warrant to purchase 350,000 shares of AIMS common stock at $0.352 per share over a five year period. The Company has the right to extend the maturity date for six months. If it elects to do so the lenders will receive an additional warrant to purchase 175,000 shares of AIMS common stock at $0.352 and an additional origination fee and cost reimbursement in the amount of $17,500 due and payable on the extended maturity date. The company issued 175,000 shares of common stock as a guarantee fee for this note. The shares were valued at current market at $0.20 per share or $35,000. This fee was recorded as a prepaid asset and will be amortized over the term of the note.


Warrants to purchase 350,000 shares of common stock at $0.352 for a period of five years were granted in conjunction with the $350,000 notes payable. The quoted market price of the stock was $0.20 per share. The Company valued the warrants at an average of $0.16 per share, or $56,594, in accordance with SFAS 123(R). The expense of $56,594 was recorded as share-based payments related to debt financing and charged as discount to notes payable in the accompanying financial statements. It will be amortized to interest expense over the term of the note.


The fair value of the warrants was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Risk-free interest rate

3%

Dividend yield

0.00%

Volatility factor

251%

Weighted average expected life

3 years


NOTE E: INCOME TAXES


The Company records its income taxes in accordance with Statement of Financial Accounting Standard No. 109, "Accounting for Income Taxes." The Company incurred net operating losses during the periods shown on the condensed consolidated financial statements resulting in a deferred tax asset, which was fully allowed for, therefore the net benefit and expense result in $-0- income taxes.



11



NOTE F: COMMON EQUITY TRANSACTIONS


During the three months ended June 30, 2009, we issued 152,602 shares of common stock for services valued at $39,191. Fair value of shares issued for services was determined by the board of directors, taking into consideration the fair market value on the date the shares were issued. We issued 1,975,000 shares as part of the BrandStand Group,, Inc., acquisition and associated loans, valued at $395,000. Also, we issued 388,890 shares for cash totaling $61,000 less $152 in associated costs; the price of shares sold for cash were negotiated with the unrelated investors. We also issued warrants valued at $56,594, which were recorded as discount on notes payable and will be amortized as interest expense over the term of the loan, and at $8,301 for offering costs.


During the three months ended March 31, 2009, we issued 22,515 shares of common stock for services valued at $8,835. Fair value of shares issued for services was determined by the board of directors, taking into consideration the fair market value on the date the shares were issued. The price of shares sold for cash were negotiated with the unrelated investors. We also issued warrants valued at $8,276 as an expense related to a loan from a shareholder.


NOTE G: SEGMENT INFORMATION


We report the following information on our business segments as of and for the six months ended June 30, 2009:


 

 

Media Properties

 

Consulting Services

 

Strategy & Planning

 

Public Affairs

 

Digital Marketing

 

Corporate Overhead

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

-

$

76,171

$

244,681

$

1,478,727

$

504,944

$

-

$

2,304,523

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

$

(268)

$

5,950

$

(208,862)

$

(101,850)

$

23,814

$

(531,142)

$

(812,357)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

(116,940)

$

(32,906)

$

(225,343)

$

(60,985)

$

23,787

$

(531,142)

$

(943,528)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Identifiable assets, net

$

-

$

333,028

$

2,321,741

$

2,867,773

$

2,047,477

$

543,532

$

8,113,551


We report the following information on our business segments as of and for the six months ended June 30, 2008:


 

 

Media

 

Consulting

 

Strategy &

 

Public

 

Digital

 

Corporate

 

 

 

 

Properties

 

Services

 

Planning

 

Affairs

 

Marketing

 

Overhead

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

-

$

32,895

$

491,000

$

1,434,886

$

738,722

$

-

$

2,697,503

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 operations

$

-

$

(32,862)

$

(124,439)

$

(55,678)

$

59,216

$

(689,148)

$

(842,911)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

(118,569)

$

(33,212)

$

(155,321)

$

(45,251)

$

56,639

$

(689,147)

$

(984,861)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Identifiable assets, net

$

-

$

289,557

$

986,559

$

2,920,735

$

2,055,099

$

411,544

$

6,663,594


NOTE H: RELATED PARTY TRANSACTIONS


During the three months ended June 30, 2009, the Company cancelled a trade debt in the amount of $25,000 owed to a vendor that was a related party with the agreement of the vendor.


Board member Thomas W. Cady participated in the acquisition of BrandStand Group, Inc. by being a party to a stock purchase agreement whereby AIMS Worldwide, Inc., acquired 32% of Brandstand’s outstanding stock in exchange for a promissory note in the amount of $400,000 to Mr. Cady and another individual unrelated to AIMS, both of whom became BrandStand stockholders as an intermediary step in the purchase transaction. The note yields 8% interest per annum and payments are due quarterly in the amount of $105,049.50 with the first payment due September 26, 2009, and quarterly thereafter with the balance due on or before June 26, 2010 (the “Note”). The note is secured by a pledge and security agreement under which the Company pledged 100% of the issued and outstanding shares in BGI (the “Pledge Agreement”) to Mr. Cady and the other party who is unrelated to AIMS Worldwide, Inc.



12



Mr. Cady and the unrelated party each received 100,000 shares of AIMS common stock in exchange for acting as co-makers with respect to providing their guarantee in the transaction in which they purchased 32% of the BGI stock from Timothy C. Cusick in exchange for their promissory note in the same amount and bearing the same terms and conditions as the Note, followed by a sale of the BGI shares to the Company in exchange for the Note and Pledge Agreement. Mr. Cady's shares are included in AIMS stock certificate #2037.


In addition to the Note, AIMS borrowed $350,000 to finance the acquisition, $100,000 of which came from Mr. Cady. The Note is at 18% interest per annum payable interest only on a quarterly basis beginning September 26, 2009 with the full balance due on June 26, 2010.


Mr. Cady also received an origination fee and cost reimbursement in the amount of $10,000 which is due at maturity (unless extended in which case it is due on the extended maturity date).


And, Mr. Cady received a guarantee fee and cost reimbursement in the amount of $10,000 has been paid via AIMS Worldwide, Inc., restricted common stock; he received 50,000 shares for providing a portion of the loans; Mr. Cady's shares are included in AIMS stock certificate #2037 dated July 7, 2009, but are included in the Company's June 30, 2009, second quarter closing accounting.


The lenders, who include Mr. Cady, also received warrants to purchase a total of 350,000 shares of AIMS common stock at $0.352 per share over a five year period: Mr. Cady received Warrant No. A-5 for 100,000 shares. The Company has the right to extend the maturity date of the loans for six months. If it elects to do so the lenders will receive an additional warrant to purchase shares at $0.352 and an additional origination fee and cost reimbursement due and payable on the extended maturity date.


Also, the Company recorded $5,391 receivable from Mr. Vincent, Chairman, and $6,052 receivable from Mr. Summers, CFO, which were both paid in full during July 2009. At June 30, 2009, an additional $30,000 was lent to the Company by Christine Garcia, the spouse of the Chief Executive Officer, at -0- interest rate. The Company also recorded interest in the amount of $14,959 to related party Charles Brunie on the note that is due to him.


During the three months ended March 31, 2009, the Company obtained a 90-day loan totaling $200,000 from Charles Brunie. a primary shareholder (holds more than 5% of issued and outstanding). The original principal plus 2.5 percent per month interest remains due, in addition to $70,000 which remained unpaid to the spouse of a related party, at March 31, 2009.


NOTE I: CONVERTIBLE PREFERRED EQUITY AND CONTINGENCY


As of June 30, 2009, the Company is continuing its efforts to secure financing to complete core competency acquisitions and to fund its organic growth plan. The Company is in discussions with Maxim Group, LLC, to provide financing. However, there is no guarantee or assurance that these discussions will result in a financing alternative that can be obtained on reasonable terms or at all.


In accordance with Emerging Issues Task Force Issue 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios ("EITF 98-5"), the Company recognized an imbedded beneficial conversion feature present in the convertible preferred stock. The Company recognized and measured an aggregate of $2,500,000, which is equal to the intrinsic value of the imbedded beneficial conversion feature, to additional paid-in capital and a return to the convertible preferred stock holders. Since the preferred shares were convertible at the date of issuance, the return to the preferred shareholders attributed to the beneficial conversion feature has been recognized in full at the date the convertible preferred stock was issued.


NOTE J: SUBSEQUENT EVENTS


We evaluated our activity after June 30, 2009, until the date of issuance, August 14, 2009, for recognized and unrecognized subsequent events not discussed elsewhere in these footnotes and determined that there were none.



13



ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations


Forward Looking Statements


This report contains certain forward-looking statements as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934. AIMS™ Worldwide, Inc., cautions readers that expressions of future goals and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements. Words such as “May,” “Will,” “Expect,” “Believe,” “Anticipate,” “Intend,” and comparable terminology are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those currently anticipated or discussed in this report. Factors that may affect our results include, but are not limited to, market acceptance of our products and technologies, our ability to secure financing, potential competition from other companies with greater technical and marketing resources, and other factors described in our filings with the Securities and Exchange Commission.


General


We incorporated in the State of Nevada on March 7, 1996, under the name B & R Ventures, Inc. On March 28, 1999, we acquired all of the common stock of Enjoy The Game, Inc., a Missouri corporation, and changed our name to EtG Corporation. At that time we began operating as a media and merchandising company to promote the positive aspects of athletic competition. EtG Corporation conducted its operations through its subsidiary, Enjoy the Game, Inc., which had been incorporated in the state of Missouri on May 28, 1998. Enjoy the Game, Inc. failed to achieve profitable operations, and on November 15, 2002, we sold the subsidiary back to its president.


On December 17, 2002, we acquired AIMS Worldwide, Inc., incorporated in Nevada on October 7, 2002, as Accurate Integrated Marketing Solutions Worldwide, Inc., to act as the successor to AIMS™ Group, LLC which was organized in Virginia in November 2001. As a result of this acquisition, we changed our name to AIMS Worldwide, Inc.


Our principal executive offices are at 10400 Eaton Place, #203, Fairfax, VA 22030. Our telephone number is 703/621-3875 and our fax number is 703/621-3870. Our URL is www.aimsworldwide.com


Our Business


AIMS Worldwide, Inc. (“AIMS™ or “AIMS”), is a vertically integrated marketing communications consultancy providing organizations with its AIMSolutions branded focused marketing solutions at the lowest possible cost. AIMS™ (Accurate Integrated Marketing Solutions) increases the accuracy of the strategic and tactical direction of its client's marketing program, improves results and reduces the cost, by refocusing "mass marketing" to a more strategic "One-2-One™" relationship with the ideal customer. To further differentiate from the rest of the market, AIMS™ places intense focus on the Return on Marketing Investment, or "ROMI™." The Company's goal is to provide clients with a measurable return by first conducting an audit of the client's existing marketing strategy in order to deliver an increased return on their investment. AIMS™ is accelerating its growth by targeting and acquiring a group of core competency media and marketing communications services companies.


Our Company structure consists of seven major business units ("MBUs"): AIMSolutions Consulting, Advertising Services, Strategy and Planning, Public Affairs, Public Relations, Digital Marketing and Media Properties. To this end we have entered into strategic partnerships, acquired certain operating units, and are in the process of acquiring additional core competency companies to achieve our desired organization.


-

AIMSolutions Consulting Group focuses on the use and application of the AIMS™ ROMI™ scientific process to provide marketing research, analysis, and reports from which to initiate strategies, plans, measurement tools, and manage AIMS™ marketing programs for its clients.


-

AIMS™ Advertising Services Group and strategic partner KassUehling, Inc., focus on full service advertising, creative design, advertising production, direct response and strategic media planning for its clients.


-

AIMS™ Strategy and Planning Group, through its operating units Harrell Woodcock Linkletter, Street Fighter Marketing, Bill Main & Associates, and BrandStand Group, Inc., provides marketing research, strategy, planning, consulting, and training programs that provide cost effective methods and techniques to clients in advertising their services and products, plus effective selling and telemarketing skills.



14



-

AIMS™ Public Affairs Group, via its subsidiary IKON Public Affairs Group, LLC, concentrates on bringing the best and latest information and ideas from around the United States concerning candidates, public issues, public policy, legislation, state and local ballot measures. This group provides solutions to finding information on issues and organizations concerning local, state and national governments.


-

AIMS™ Public Relations Group will concentrate on creating public relations, publicity, promotions, and special events through various media, networking, and promotions for its clients.


-

AIMS™ Digital Marketing Group, via its subsidiary Target America, Inc., focuses its activities on using and applying digital technologies for improving ROMI™ for AIMSolutions Consulting Group clients.


-

AIMS™ Media Group includes the Company’s operating units AIMS™ Interactive, Inc., and ATB Media, Inc., which owns a 40% participating interest in Radio Station KCAA in Loma Linda/San Bernardino, California.


AIMSolutions during the past six years has been a research and development consulting practice refining its accurate integrated marketing solutions scientific processes to “go to market” and sell the marketing solution product to fee-paid clients. AIMSolutions has undertaken a number of client beta-tests in the on-going development of its vertically integrated marketing solution process. Beta-test clients have been in a number of applications industries including but not limited to public policy issues, political campaign marketing, consumer electronics, medical and health care, distribution services, consumer package goods, restaurant, food service, and hospitality, etc. The scope of these industry development activities has established a platform of knowledge, processes, and intellectual properties, sufficient as a proof-of-concept to introduce AIMSolutions. Based on the aforementioned, management believes that we have completed our research and development stage, and AIMSolutions is entering its going-concern revenue-driven consulting practice.


Trademarks and Licenses


We hold common law trademarks on AIMS™ and ROMI™, and One-2-One™. AIMS™ is a unique doctrine, process, intellectual property, delivery system and corporate development method integrated into what we believe is a powerful client/customer centric professional service model.


AIMS™ is an audio-logical-acronym for Accurate Integrated Marketing Solutions. AIMS™ is a proprietary marketing service, process, and delivery system designed to improve the aim, reduce the cost and focus the reach to target a market on a “one-to-one” basis. We believe AIMS™ and its consultancy brand AIMSolutions will achieve a client company’s goals and objectives, maximizing the client’s Return On Marketing Investment (“ROMI™”).


AIMS™ is a marketing system and process that is designed to vertically integrate horizontal services into a focused “one-to-one” marketing program/campaign. One-2-One™ is also a trademark/service mark owned by AIMS. We believe this system can meet and exceed a client company’s goals and objectives to expand their top line revenues, market and Customer Relationship Management (“CRM”™) at lower cost than legacy advertising and marketing communications programs.


Our website, www.aimsworldwide.com is the registered internet domain names owned and controlled by AIMS.


We also hold a technology license agreement with Advocast, Inc., a proprietary public issues digital marketing application service provider.


Operating Units


As part of its corporate development core competency acquisition strategy, AIMS Worldwide, Inc., owns the following operating units:


Harrell Woodcock Linkletter & Vincent, Inc.


On April 15, 2005, AIMS Worldwide, Inc. acquired Harrell Woodcock Linkletter & Vincent, Inc., a Florida corporation (“HWL&V”). HWL&V, a strategy, planning and marketing consulting group offering innovative new business and new market development services, is now named “Harrell, Woodcock, and Linkletter.”



15



ATB Media, Inc.


On April 19, 2004, we acquired ATB Media, Inc. ("ATB"). ATB was formed to acquire radio broadcast properties and/or invest in companies that had previously acquired radio broadcast properties in small and medium-sized markets and to use innovative techniques and low cost, engineering-driven strategies to upgrade these properties into successful radio stations by relocating such properties to larger markets, increasing authorized power and/or authorized hours of operation. ATB owns rights to receive income participation from one or more radio stations and other businesses.


ATB currently owns a 40% participating interest in Radio Station KCAA in Loma Linda/San Bernardino, California and owns rights to receive income participation from one or more radio stations if and when acquired. KCAA operates in a 24-hour broadcast cycle. On March 19, 2008, station management received approval from the FCC for a construction permit that would allow station management to expand the current facility to support daytime broadcasts at 10,000 watts.


AIMS™ and Broadcast Management Systems in Houston, the majority interest and operating owner of KCAA-AM Radio Station in Loma Lind/San Bernardino, California, are actively seeking a buyer for the station now that a 10,000 watt approval has been received from the FCC.


Streetfighter Marketing, Inc.


On October 24, 2006, the Company entered an agreement with the shareholders of Streetfighter Marketing, Inc. (d/b/a Street Fighter Marketing), whereby the Company acquired 100% of the issued and outstanding stock of Streetfighter.


Streetfighter Marketing, Inc., headquartered in Columbus, Ohio, specializes in speaking, motivation, and publishing, training businesses how to market, promote and increase sales on a shoestring budget. The Streetfighter client list includes AT&T, American Express, Walt Disney, Pizza Hut, Honda, Sony, Goodyear, Marvel Comics, The City of Dallas, the State of Arkansas, and the Country of India.


Bill Main and Associates


On May 16, 2007, the Company completed the purchase of Barbara Overhoff, Inc., d/b/a Bill Main and Associates, in Chico, Calif. Bill Main and Associates is a leading strategy, planning, publishing, and consulting firm in the restaurant, food service, and hospitality industry. A published author and noted speaker, Chairman Tucker W. “Bill” Main is a recognized authority in restaurant marketing, operations, and management. He is a former President of the California Restaurant Association. Their client roster includes Johnny Rockets, Hooters, Popeyes, Shakeys, Taco Johns, Famous Dave’s, and Buffalo Wild Wings. Among distributor clients are SYSCO Food Services, Abbott Foods, Nabisco, Perdue, and US Foodservice.


BrandStand Group, Inc.


On June 26, 2009, AIMS Worldwide, Inc., entered into agreements whereby it acquired 100% of the outstanding stock of BrandStand Group, Inc. ("BrandStand" or “BGI”) owned by founder Timothy C. Cusick. BrandStand is a branding, marketing and customer-generating service to the restaurant and retail industry; clients include national and regional accounts such as Silver Diner, Burger King, Schlotzsky’s and Z-Pizza. Mr. Cusick continues in the employ of BGI post-closing on a full-time basis through November 30, 2009, as the chief executive officer. Thereafter, Mr. Cusick will provide part-time services to BGI.


Target America, Inc.


Acquired July 26, 2007, with a base in Fairfax, Virginia, and offices in Indianapolis and Chicago, Target America, Inc. was founded in 1995 under the laws of the Commonwealth of Virginia to meet the rapidly changing needs of not-for-profit charity and philanthropy fundraising professionals. The company is a constant innovator in the field of contributor and donor prospect research, developing and launching a completely online prospect screening service in 2003. Target America continues to upgrade and develop this tool, which now includes a wide range of services from automated Internet research and Target Tiger™, and internet search engine, to an integrated management system to serve not only the not-for profit community, but business, commerce database profiles, retail, and financial institutions as well.



16



IKON Public Affairs Group, LLC


On July 26, 2007, AIMS Worldwide, Inc., acquired 55% of IKON Public Affairs Group, LLC, a limited liability company formed under the of Delaware laws. Post-closing, IPAG, through its offices in Washington, D.C., and Denver, continues the business previously conducted by IKON Holdings, Inc., providing consulting services in connection with political campaigns and issue advocacy. Management of AIMS determined, while evaluating this potential acquisition, that the primary value to be acquired was the value of the customer list and services of the two principals, including the reputation and work product and methods of those individuals.


Competition


Marketing and Media services in its various forms are one of the most competitive segments of business, commerce and enterprise management. With its recent introduction, changes and dynamics caused by new online/ interactive digital communication technologies to the traditional/offline communications mediums (broadcast, satellite cast, print, post and telephone) the marketing landscape has become one of the most complex competitive and revolutionary tapestries in the world.


Our internal research indicates that an estimated worldwide $1 trillion plus is spent annually on the full range of marketing, marketing communications, marketing services, media, and delivery systems. This is a massive, diverse and fragmented service industry. As such, globally there can be little doubt as to the competition in the marketing services space in which the leading companies, agencies and firms are better established, positioned, branded, staffed and capitalized than our Company.


AIMS™ management has undertaken comprehensive industry research including evaluation of the full scope of marketing services including, but not limited to, advertising (Top 100), direct marketing (Top 20), sales promotion (Top 20), public relations (Top 20), market research (Top 25) and marketing support services (Top 200). Based on our analysis, AIMS™ believes that traditional media and marketing services, while with far greater financial and human resources than the company, do not currently offer the integrated solutions AIMS™ provides.


Regulation


Our business is not regulated by any governmental agency and approval from any governmental agency is not required for us to market or sell our products. However, some of our acquisitions may be subject to regulatory oversight. For example, the Federal Communications Commission regulates the radio property.


Employees


AIMS Worldwide, Inc., corporate headquarters has four employees, and, including our operating units, has a total of approximately thirty-two employees. We plan to hire additional personnel on an as-needed basis as our operations expand. As of June 30, 2009, we continued to have no formal employment agreements in place at the corporate level.


Description of Property


Our executive offices are located at 10400 Eaton Place, Suite 203, Fairfax, Virginia 22030. Our operating units which have separate offices are located as follows: Bill Main and Associates has one office located in Chico, California; BrandStand Group, Inc., is located in Lewisberry, Penn.; IKON Public Affairs Group has two main offices, one located in Arlington, Virginia, and the other in Denver; Streetfighter Marketing, Inc., has one office located in Gahanna, Ohio; and Target America has its base office in Fairfax, Virginia.


Three Month Periods Ended June 30, 2009 and 2008


We had $1,363,034 in revenue for the three months ended June 30, 2009, compared with $1,453,920 in revenue for the same three month period of 2008. Cost of sales was $480,791 for the second three-month period of 2009 compared to cost of sales of $53,679 for the same three month period of 2008.


Our general and administrative expenses were $1,159,219 for three months ended June 30, 2009, compared to general and administrative expense of $1,685,654 for the same period in 2008.


Our operating loss for the three months ended June 30, 2009, was $276,976 compared to $286,043 for the same period in 2008.


Six Month Periods Ended June 30, 2009 and 2008


We had $2,304,523 in revenue for the six months ended June 30, 2009, compared with $2,697,503 in revenue for the same six month period of 2008. Cost of sales was $665,553 compared to cost of sales of $85,524 for the same six month period of 2008.



17



Our general and administrative expenses were $2,451,327 for six months ended June 30, 2009, compared to general and administrative expense of $3,454,890 for the same period in 2008.


Our operating loss for the six months ended June 30, 2009, was $812,357 compared to $842,911 for the same period in 2008.


Regarding our first six months 2009 operations comments from operating units management include the following:


Bill Main and Associates management reports that reduced revenue in the first six months of 2009 as compared to the first six months of 2008 can be attributed to a permanent reduction in staff which effectively eliminated proactive marketing efforts, a downturn in the economy which seriously impacted marketing consulting, workshops, and speaking budgets for the existing client base.


IKON's performance in the first two quarter of 2008 and 2009 are substantially similar, with slightly higher revenues in 2009 but slightly higher expenses, as well, attributable to the move of the headquarters office.


Streetfighter Marketing, Inc. management indicated that though they had a decrease in speaking engagements in the latter half of 2008 and into 2009 due to sudden downturn in business meetings and conferences, they have seen increased interest in the projects and consulting due to a need for clients to market with fewer dollars. In recent months there has been an increase in speaker booking with a little pressure on fee levels. Though gross sales are down from the previous year, primary due to economic conditions, management senses that clients are now feeling more comfortable allocating resources for Streetfighter services and expects their number of engagements to slowly increase as the economy improves and as their development team becomes more aggressive in their efforts.


Target America management reports that they have been able to maintain a positive bottom line in the first half of 2009 in spite of the economic crisis that many of their nonprofit clients are experiencing due to the wide economic downturn affecting charitable giving. Adjustments to expenses were implemented in the fourth quarter of 2008 in anticipation of a possible decline in 2009 revenues, and management prepared for the potential decrease.


Target America experienced their highest individual month sales in March of 2008. March 2009 sales were 50% lower in the recessed economy. The major reason for the drastic change is that nonprofit organizations had major budget cuts starting in 2009 to adjust to decreased 2008 donations. Management says that "recent nonprofit giving statistics/reports showed philanthropic giving dropped more than at any other time in half a century and most resembles the mid '70s. The 2008 findings show giving dropped 5.7 % compared to the previous low decline in 1974 with a 5.4% drop. Nonprofits financial investments were effected with the market decline. The organizations have responded to the economic decrease by . . .an overall decrease in spending." Although Target America’s new nonprofit sales were not what were expected, client renewal sales as well as expense controls are allowing Target America to maintain its presence in the nonprofit market.


At corporate headquarters management continues to work to decrease overhead costs to help work toward better operating margins in 2009; and, at the same time, management is seeking new revenue platforms and initiatives to overcome slight revenue declines in the first half of the year.


Corporate management anticipates that revenues in the third and fourth quarters 2009 will be higher than that first half of the year due to regularly occurring seasonal trends for IKON Public Affairs Group, LLC. Management also expects gains due to the acquisition of BrandStand Group, Inc.


BrandStand Group, Inc., Acquisition


On June 26, 2009, AIMS Worldwide, Inc., entered into agreements whereby it acquired 100% of the outstanding stock of BrandStand Group, Inc. (“BGI”) for a total of $1,120,000. The acquisition was completed in two transactions.


Transaction #1 of 2


In the first transaction, the Company entered into a stock purchase agreement for the acquisition of 32% of Brandstand’s outstanding stock in exchange for a promissory note to stock owners Thomas W. Cady and James P. Gregory in the amount of $400,000. The note yields 8% interest per annum and payments are due quarterly in the amount of $105,050 with the first payment due September 26, 2009, and quarterly thereafter with the balance due on or before June 26, 2010 (the “Note”).


The note is secured by a pledge and security agreement under which the Company pledged 100% of the issued and outstanding shares in BGI (the “Pledge Agreement”) to Thomas W. Cady and James Gregory.



18



James P. Gregory and Thomas W. Cady each received 100,000 shares of AIMS common stock in exchange for acting as co-makers with respect to financing the above described "interim step" in the transaction in which Gregory and Cady purchased 32% of the BGI stock from Timothy C. Cusick in exchange for their promissory note in the same amount and bearing the same terms and conditions as the Note, followed by a sale of the BGI shares to the Company in exchange for the Note and Pledge Agreement. The cost associated with these shares will be recorded as a financing cost (a prepaid asset with a credit to paid-in capital), amortized over one year ($20,000 for Mr. Cady's shares and $20,000 for Mr. Gregory's shares).


Mr. Cady's 100,000 shares are included in AIMS stock certificate #2037. Mr. Gregory's 100,000 shares are included in AIMS stock certificate #2036.


Transaction #2 of 2


In the second transaction, the Company contributed a $50,000 deposit on March 16, 2009, followed on June 26, 2009, with $400,000 in cash and 1,600,000 shares of AIMS common stock to its newly formed, wholly-owned subsidiary, AIMS MS 1 Corporation (“AIMS MS 1”), a Pennsylvania corporation. The Company and AIMS MS 1 entered into an acquisition agreement and an agreement and plan of merger with BGI, pursuant to which AIMS MS 1 merged with BGI, with BGI the surviving corporation. Timothy C. Cusick, owner of the remaining 68% of the outstanding shares in BGI exchanged these shares for 1,500,000 shares of AIMS common stock and $350,000.00 in cash. Mr. Cusick's shares are held via AIMS Worldwide, Inc. restricted common stock certificate #2032 dated June 23, 2009.


The Company exchanged its 32% of the shares in BGI and 100% of its shares in AIMS MS 1 for 1,000 shares of BGI. Post-closing, the Company owns 1,000 shares of BGI common stock. These shares constitute 100% of the issued and outstanding shares in BGI. 100,000 shares of AIMS common stock was retained by BGI to use as incentive compensation to key employees. These additional shares were distributed via AIMS Worldwide, Inc., restricted stock certificate #2033 dated June 23, 2009, in the name of BrandStand Group, Inc.


In addition to the Note described in Transaction #1 above, AIMS borrowed $350,000 to finance the acquisition:


$

200,000

 

from James Gregory (via Chris Findlater / FG Investments)

 

100,000

 

from Thomas W. Cady

 

36,500

 

from Barbara Nappy

 

13,500

 

from Chris Petersen

$

350,000

 

 


at 18% interest per annum payable interest only on a quarterly basis beginning September 26, 2009 with the full balance due on June 26, 2010.


An origination fee and cost reimbursement in the amount of $35,000 is due at maturity (unless extended in which case it is due on the extended maturity date):


for Chris Findlater Promissory Note

$

20,000

for Thomas W. Cady Promissory Note

 

10,000

for Barbara Nappy Promissory Note

 

3,650

for Chris Petersen Promissory Note

 

1,350

 

$

35,000


A guarantee fee and cost reimbursement in the amount of $35,000 has been paid via AIMS Worldwide, Inc., restricted common stock via certificate nos. 2036, 2037, and 2038:


James P. Gregory received 100,000 shares of AIMS common stock in exchange for his guaranty (via Mr. Findlater) of a portion of the loans; Mr. Gregory's shares are included in AIMS stock certificate #2036.


Thomas W. Cady received 50,000 shares of AIMS common stock for providing a portion of the loans; Mr. Cady's shares are included in AIMS stock certificate #2037.


Chris Petersen received 25,000 shares of AIMS common stock for providing a portion of the loans; Mr. Petersen's shares are included in AIMS stock certificate #2038.



19



The lenders also received warrants to purchase a total of 350,000 shares of AIMS common stock at $0.352 per share over a five year period:


Mr. Cady received Warrant No. A-5 for 100,000 shares

Mr. Gregory, in the name of Chris Findlater, received Warrant No. A-4 for 200,000 shares

Mr. Petersen received Warrant No. A-6 for 50,000 shares


The Company has the right to extend the maturity date of the loans for six months. If it elects to do so the lenders will receive an additional warrant to purchase 175,000 shares of AIMS common stock at $0.352 and an additional origination fee and cost reimbursement in the amount of $17,500 due and payable on the extended maturity date.


Timothy C. Cusick will continue in the employ of BGI post-closing on a full-time basis through November 30, 2009, as the chief executive officer. Thereafter, Mr. Cusick will provide part-time services to BGI.


Calculation of Goodwill


Assumptions: BrandStand's equity balance on closing date was $165,373.


Investment

 

 

68% interest

 

 

Down payment paid March 16, 2009

$

50,000

Cash paid on June 26, 2009

 

350,000

1.6 million shares at 20 cents

 

320,000

32% interest

 

400,000

Total paid for investment

 

1,120,000

 

 

 

Equity acquired - restated at fair value

 

165,373

Premium paid

$

954,627


Subsequent Events


On July 23, the Company reported the following information via an SEC Form 8-K:


On July 23, 2009 the Company accepted the resignation of Chairman B. Joseph Vincent from the Board of Directors. Mr. Vincent has been named chair emeritus and chief strategist of the Company and will focus on strategy and core competency merger and acquisition development.


Also on July 23, 2009, Mr. Gerald Garcia was named Chairman of the Board of Directors. Mr. Garcia resigned as President but remains as Chief Executive Officer with a mandate to strengthen technologies, management systems, planning, reporting, compliance, executive leadership, and organizational development.


Effective July 23, 2009, Mr. Thomas W. Cady, a director of the Company, was appointed to serve as the new President and Chief Operating Officer. Mr. Cady will focus on operations, operational efficiency, assimilation, quality, and growth.


Mr. Cady, a senior executive with an extensive background in the information technology industry, works with various technology companies on their product, market, distribution, and funding initiatives. He has in-depth general management experience, with expertise in marketing and sales leadership developed over twenty-seven years in both corporate and entrepreneurial environments. His career began with a strong foundation built at Xerox and IBM, where he continuously progressed through positions of increased responsibility in sales, marketing, and general management. More recently, Mr. Cady spent several years in the broadband communications industry, serving as Chief Marketing Officer for XO Communications and Adelphia Communications, President/ COO & co-founder of BroadStreet Communications, and President & CEO of two early stage software companies focused on broadband service providers. Mr. Cady holds a B.S. degree in Business Administration from Virginia Tech and an MBA from the University of Richmond.


On July 24, the Company reported the following information via an SEC Form 8-K:


AIMS Worldwide, Inc. intends to present and/or distribute to interested investors and analysts a presentation which is attached as Exhibit 99.1, and is incorporated herein by reference.



20



Liquidity and Capital Resources


At June 30, 2009, we had total current assets of $1,208,154 consisting of $165,969 in cash, $683,692 accounts receivable, $74,437 in loans to employees, $5,899 of inventory, $104,539 in prepaid expenses, and $173,618 in work in progress. Equipment, net of accumulated depreciation was $128,811; and other assets included $21,237 in deposits, $10,000 in other assets, $402,064 in prepaid offering costs, $112,000 in software costs, $4,863,382 in goodwill net of an impairment, and $1,367, 903 in intangible assets net of amortization.


Our liabilities at June 30, 2009, totaled $7,692,566 and consisted of $739,207 in accounts payable from non-related parties, $67,714 in accounts payable from related parties, $180,760 in accrued expenses, $306,675 in deferred revenue, $ 352,759 in current portion of long-term debt, $1,704,894 in notes payable to non-related parties, $1,987,583 in notes payable to related parties, $1,209,759 in accrued interest payable, $937,130 in accrued interest to related parties. Our long-term debt totaled $205,995.


During the second quarter of 2009, the spouse of the Chief Executive Officer loaned the Company an additional $30,000 in the form of a Promissory Note originally dated November 2008, bearing no interest. To finance the BrandStand acquisition, the Company was loaned $400,000 from James P. Gregory and Board member Thomas W. Cady, and was loaned $200,000 from James P. Gregory / Chris Findlater, $100,000 from Board member Thomas W. Cady, $36,500 from Barbara Nappy and $13,500 from Chris Petersen. Terms for the BrandStand financing are explained in detail in the previous section of this report. The Company also received $61,000 in exchange for restricted common stock.


We continue to implement our business plan. Due to our lack of profitable operations, our auditors have expressed substantial doubt about our ability to continue as a going concern. We do not have any long-term capital commitments. However, because of our engagement with investment banker Maxim Group, LLC, we anticipate developing a long-term capital program. We believe that our immediate needs can be met with a combination of cash on hand and through ongoing operations. We realize that we will require additional capital to fully implement our business plan and anticipate achievement once the Maxim capital program is initiated. We are currently negotiating to acquire more companies that fit into our marketing and digital platform. We will have to raise additional capital during the coming year for acquisition costs, growth capital, and other expenses. We will also have ongoing legal and auditing expenses as well as office and lease expenses. If we cannot generate sufficient capital through ongoing operations and these capital raising programs, we will likely sell common stock, seek advances from officers or explore other debt financing strategies.


Company management is currently seeking capital to purchase another group of profitable operating companies which have been identified. In accordance with the Company business plan, the target companies are currently financially healthy operating entities that, once acquired, will help fulfill AIMS' unique mission of organically growing a viable network of affiliated marketing and digital operating units.


ITEM 3. Quantitative and Qualitative Disclosures about Market Risk.


Not required by smaller reporting companies.


ITEM 4T. Controls and Procedures.


(a) Evaluation of Disclosure Controls and Procedures.


The term "disclosure controls and procedures" is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). This term refers to the controls and procedures of a Company that are designed to ensure that information required to be disclosed by a Company in the reports that it files under the Exchange Act is recorded, processed, summarized, and reported within the required time periods. Our Chief Executive Officer and Principal Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this quarterly report. During Management's evaluation of the effectiveness of internal controls, Management concluded that there are material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.


Based on our evaluation under COSO, management concluded that our internal control over financial reporting was not effective as of June 30, 2009, due to control deficiencies in three areas that we believe should be considered material weaknesses. A material weakness is defined within the Public Company Accounting Oversight Board's Auditing Standard No. 5 as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.



21



1)

The company did not sufficiently segregate duties over incompatible functions.


The company’s inability to sufficiently segregate duties is due to a lack of accounting staff. Further, management has increased the frequency of independent reconciliations of significant accounts, which mitigates the lack of segregation of duties until the accounting department is fully staffed.


Also, during 2009, the CFO has also been the Controller for the operating units, which has increased the level of control over the accounting function. However, this also increased the concentration of risk that a material misstatement of the financial statements will not be prevented or detected due to the lack of segregation of duties.


2)

In conjunction with the lack of segregation of duties, the company did not institute specific anti-fraud controls.


While management found no evidence of fraudulent activity, the chief accounting officer has access to both accounting records and corporate assets, principally the operating bank account. Management believes this exposure to fraudulent activity is not material either to the operations of the company or to the financial reporting; however, management has instituted Key Controls specifically designed to prevent and detect—on a timely basis—any potential loss due to fraudulent activity.


Further, the nature of the autonomous operating units is such that the operating units’ management may fail to report accurately and timely significant transactions.


The CEO and CFO have been working with the operating units more closely and continue to integrate a review and approval process to mitigate the possibility that transactions may go unreported.


3)

The operating units accounting staff lack the depth of accounting education and knowledge to properly apply Generally Accepted Accounting Principles.


As stated above, the CFO’s duties have increased in respect to the direct supervision of the operating units’ accounting staff, which management believes is sufficient to mitigate the lack of expertise to properly apply GAAP. This Key Control will be strengthened when the accounting function is fully staffed.


Management believes that the reason for three weaknesses noted above is the lack of accounting staff at the corporate level and lack of experienced accounting staff at the subsidiary level. The material weaknesses identified did not result in the restatement of any previously reported financial statements or any other related financial disclosure, nor does management believe that it had any effect on the accuracy of the Company's financial statements for the current reporting period.


PART II - Other Information


ITEM 1. Legal Proceedings


Jose R. Trujillo v. Michael L. Foudy, AIMS Worldwide, Inc., American Institute for Full Employment, The Committee for Good Common Sense, et al., in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida, case No. 502005CA005603XXXXMB, affidavit filed December 9, 2005.


In this case, an individual in Florida named Jose Trujillo sued several corporations and individuals, including AIMS, alleging breach of contract. AIMS management disputes that it should be a party to this suit because Mr. Foudy did not have the authority to bind the Company to any agreement. Management expects a summary judgment to be granted and the case to be dismissed.


The case is being handled by the following local Florida counsel: Carl A. Cascio, Esquire, Carl A. Cascio, P.A., 525 N.E. Third Avenue, #102, Delray Beach, Florida 33444. Phone is 561-274-7473. 561-274-8305 is facsimile; e-mail: casciolw@bellsouth.net.


ITEM 1A. Risk Factors


The Company's business is subject to numerous risk factors, including the following:


We have incurred losses since inception and may incur future losses.


We incurred operating losses of $812,357 during the first six months of 2009. We do not expect to have consistent profitable operations until later in 2009, and we cannot assure that we will ever achieve or attain profitability. If we cannot achieve operating profitability, we will not be able to meet our working capital requirements, which would have a material adverse effect on our business and impair our ability to continue as a going concern.



22



We will encounter risks and difficulties frequently encountered by early-stage companies.


Some of these risks include the need to:


-

attract new AIMSolutions marketing clients and maintain current client relationships,

-

offer competitive pricing,

-

maintain and expand our network of advertising space through which we deliver the advertising component of our AIMSolutions-,

-

achieve marketing solution campaign results that meet our clients’ objectives,

-

identify, attract, retain and motivate qualified personnel,

-

successfully implement our organic and acquisition business model,

-

manage our expanding operations, and

-

maintain our reputation and build trust with our clients.

-

locate, negotiate, and assimilate core competency acquisitions

-

attract and package the appropriate corporate finance and investment capital to underwrite our core competency acquisition corporate development.


AIMSolutions


Because AIMSolutions (our consulting service offered at the corporate level) client contracts generally can be cancelled by the client with little or no notice or penalty in accordance with the terms and conditions specified in the professional consulting service contract, the termination of one or more large contracts could result in an immediate decline in our revenues.


Harrell, Woodcock, and Linkletter


Although Harrell, Woodcock, and Linkletter has no current on-going operation, we may ultimately get no return on our investment due to lack of acquisitions even though the Company has acquired in this core competency platform Bill Main and Associates and Street Fighter Marketing.


We must introduce new products and services to grow our business.


Our success depends on our ability to develop and introduce new services that address our clients’ changing demands. Any new products or services that we develop will have a high degree of risk and need to meet the requirements of our current and prospective clients and may not achieve significant market acceptance. The introduction of new products and services by our competitors, and the emergence of new industry standards, could render our existing products and services obsolete and unmarketable or require unanticipated investments in research and development. If revenues generated from the use of our technologies do not cover these development costs, our operating results could be adversely affected.


Our failure to protect our intellectual property rights could diminish the value of our services, weaken our competitive position, and reduce our revenues.


Our success depends in large part on our proprietary rights. In addition, we believe that our service marks and trademarks are key to identifying and differentiating our products and services from those of our competitors. We rely on a combination of copyright, patent, trademark and trade secret laws, confidentiality procedures and licensing arrangements to establish and protect our proprietary rights. These steps taken by us to protect our intellectual property may not prevent misappropriation of our technology or deter independent third-party development of similar technologies.


Our intellectual property currently includes AIMS™ (Accurate Integrated Marketing Solutions) “One-2-One”, referring to one to one marketing relationship in that the trade expression provides a stepped-up marketing power to the number 2, strengthening our clients’ relationship with their customers, end-users, households and communities.


Also included is our trademark “ROMI™”, our trade expression providing out clients with a measurable, accountable return on their marketing dollars which are invested in building sales and revenues.



23



If we do not retain our senior management and key employees, we may not be able to achieve our business objectives.


Our future success is substantially dependent on the continued service of our senior management and other key employees, particularly Gerald Garcia, Jr., our Chairman and Chief Executive Officer, Thomas W. Cady, our President and COO, and Patrick J. Summers, our Chief Financial Officer and Recording Secretary. We may be unable to retain existing management, technical, sales and client support personnel that are critical to our success, resulting in harm to key client relationships, loss of key information, expertise or know-how and unanticipated recruitment and training costs. The loss of the services of our senior management or other key employees could make it more difficult to successfully operate our business and pursue our business goals.


We expect to pursue acquisitions or other investments, which may require significant resources and may be unsuccessful.


Part of our business strategy is to acquire or make investments in other businesses, or acquire products and technologies, to complement our current business. Any future acquisition or investment may require us to use significant amounts of cash, issue potentially dilutive equity securities, or incur debt. We may not be able to identify, negotiate, or finance any future acquisition successfully. Even if we do succeed in acquiring a business, product, or technology, we have limited experience in integrating an acquisition into our business. Acquisitions involve many risks, any of which could disrupt our business and reduce the likelihood that we will receive the expected benefits of the acquisition, including:


-

difficulties in integrating the operations, technologies, services and personnel of acquired businesses,

-

ineffectiveness or incompatibility of acquired technologies or services,

-

diversion of management’s attention from other business concerns,

-

unavailability of favorable financing for future acquisitions,

-

potential loss of key employees of acquired businesses,

-

inability to maintain the key business relationships and the reputations of acquired businesses,

-

responsibility for liabilities of acquired businesses, and

-

increased fixed costs.


We may need additional financing in the future, which may not be available on favorable terms, if at all.


We may need additional funds to finance our operations, as well as to enhance our services, fund our expansion, respond to competitive pressures or acquire complementary businesses or technologies. However, our business may not generate the cash needed to finance such requirements. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our existing shareholders would be reduced, and these securities may have rights, preferences, or privileges senior to those of our common stock. If adequate funds are not available or are not available on acceptable terms, our ability to enhance our services, fund our expansion, respond to competitive pressures or take advantage of business opportunities would be significantly limited, and we might need to significantly restrict our operations.


ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds


Unless otherwise noted the following shares were sold in private transactions and issued in reliance of the exemption provided by Section 4(2) of the Securities Act of 1933. The transactions do not involve any public offering or broker and no commissions were paid on the transaction.


During the three months ended June 30, 2009, we issued 152,602 shares of common stock for services valued at $39,191; in addition, warrants valued at $64,895 were issued for services. Fair value of shares issued for services was determined by the board of directors in relation to the fair market value on the date the shares were issued. In addition, 1,975,000 shares were issued in connection with the BrandStand acquisition, valued at $395,000. 388,090 shares were issued for cash in the total amount of $61,000.


ITEM 3. Defaults upon Senior Securities.


None


ITEM 4. Submission of Matters to a Vote of Security Holders.

 

No matters were submitted during the period covered by this report to a vote of security holders.


ITEM 5. Other Information.


None



24



ITEM 6. Exhibits


Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K:


Exhibit No.

SEC Ref. No.

Title of Document

Location

 

 

 

 

1

31.1

Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Attached

 

 

 

 

2

31.2

Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Attached

 

 

 

 

3

32.1

Certification of the Principal Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906of the Sarbanes-Oxley Act of 2002*

Attached

 

 

 

 

4

32.2

Certification of the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906of the Sarbanes-Oxley Act of 2002*

Attached


* The Exhibit attached to this Form 10-Q shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to liability under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.



25



SIGNATURES


In accordance with the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


AIMS™ WORLDWIDE, INC.


/s/ Gerald Garcia Jr.                           

Gerald Garcia, Jr. / August 14, 2009

Chief Executive Officer



/s/ Patrick J. Summers                         

Patrick J. Summers / August 14, 2009

Chief Financial Officer




26