##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended
    December 31, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to          .   Commission file number: 0-21878
  SIMON WORLDWIDE, INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

04-3081657(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   5200 W. Century Boulevard, Los Angeles, California
    90045
 (Address of principal executive
    office)
  (310) 417-4660
 (Registrants telephone number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
 NONE
  Securities registered pursuant to Section 12(g) of the
    Act:
  Name of each exchangeTitle of each class

on which registeredCommon Stock, $0.01 Par Value Per Share

NONE   o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K: þ
    Large accelerated filer
    o

Accelerated filer
    o

Non-accelerated filer
    o

Smaller reporting company
    þ(Do not check if a smaller
    reporting company)   Rule 12b-2 o þ




---



##### 





SIMON
    WORLDWIDE, INC.FORM 10-K
    FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008
  INDEX
  PART I


3Item 1.


Business


3Item 1A.


Risk Factors


6Item 1B.


Unresolved Staff Comments


7Item 2.


Properties


7Item 3.


Legal Proceedings


7Item 4.


Submission of Matters to a Vote of Security
    Holders


7PART II


8Item 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


8Item 6.


Selected Financial Data


9Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


10Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


19Item 8.


Financial Statements and Supplementary Data


20Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


21Item 9A.


Controls and Procedures


21Item 9A(T).


Controls and Procedures


21Item 9B.


Other Information


21PART III


22Item 10.


Directors, Executive Officers and Corporate
    Governance


22Item 11.


Executive Compensation


24Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


29Item 13.


Certain Relationships, Related Transactions and
    Director Independence


31Item 14.


Principal Accounting Fees and Services


31PART IV


32Item 15.


Exhibits and Financial Statement Schedules


32SIGNATURES


33EX-31 SECTION 302 CERTIFICATION OF CEO/CFOEX-32 SECTION 906 CERT OF CEO/CFO   2




---



##### Table of Contents



PART I  Item 1.
    Business  General
    25-year
       3




---



##### Table of Contents



brick-and-mortar e-commerce EITF 03-16,
           4




---



##### Table of Contents



and/or
      2001 Sale
    of Business
         5




---



##### Table of Contents



Item 1A.
    Risk
    Factors    Uncertain
    Outlook
    Dependence
    on Key Personnel
   6




---



##### Table of Contents



Investments
  e-business
  Forward
    Looking Information
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties  12-month
  Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   7




---



##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  mark-up,
  2008


2007High


Low


High


LowFirst quarter

$
0.43


$
0.30


$
0.40


$
0.28Second quarter


0.51



0.30



0.45



0.31Third quarter


0.45



0.29



0.50



0.35Fourth quarter


0.40



0.15



0.41



0.31        8




---



##### Table of Contents



Stock
    Performance Graph
      Comparison
    of Cumulative Total Return
  
  Fiscal Year Ended2003


2004


2005


2006


2007


2008SWWI


$
100



$
217



$
367



$
483



$
667



$
617NASDAQ



100




109




110




121




132




79Russell 2000



100




109




114




132




129




84     Item 6.
    Selected
    Financial Data   9




---



##### Table of Contents



For the Years Ended December 31,2008


2007


2006


2005


2004(In thousands, except share data)Selected income statement data:Continuing operations:Net sales

$



$



$



$



$
Net loss


(1,156
)


(2,093
)


(2,625
)


(2,684
)


(3,625
)Income (loss) per common share available to common shareholders:Basic


0.65



(0.21
)


(0.23
)


(0.23
)


(0.29
)Diluted


0.62



(0.21
)


(0.23
)


(0.23
)


(0.29
)Discontinued operations:Net sales


















Net income (loss)


1,777



312



707



(478
)


24,261
(a)Income (loss) per common share available to common shareholders:Basic


0.07



0.02



0.04



(0.03
)


1.46Diluted


0.06



0.02



0.04



(0.03
)


1.46   December 31,2008


2007


2006


2005


2004(In thousands)Selected balance sheet data:Cash and cash equivalents(b)

$
16,660


$
16,134


$
17,637


$
16,473


$
18,892Total assets


17,946



20,427



26,590



31,822



26,123Redeemable preferred stock



(c)


33,696



32,381



31,118



29,904Stockholders equity (deficit)


16,922



(14,868
)


(7,236
)


(841
)


(7,749
)     (a)
    
    In connection with the Companys settlement of its
    litigation with McDonalds and related entities, the
    Company received net cash proceeds, after attorneys fees,
    of approximately $13,000 and due to the elimination of
    liabilities associated with the settlement of approximately
    $12,000, the Company recorded a gain of approximately $25,000.(b)
    
    Includes only non-restricted cash and cash included in
    discontinued operations in the balance sheets of $84 for
    December 31, 2008, and $408 and $163 as of
    December 31, 2006 and 2005, respectively.(c)
    
    At a special meeting held on September 18, 2008, the
    stockholders of the Company approved amendments to the
    Companys certificate of incorporation in order to effect a
    recapitalization of the Company wherein the Company issued
    37,940,756 shares of common stock in exchange for
    34,717 shares of preferred stock (representing all
    outstanding preferred shares) with a carrying value of
    $34.7 million.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Forward-Looking
    Statements and Associated Risks
   10




---



##### Table of Contents



Business
    Conditions
    25-year
       11




---



##### Table of Contents



Critical
    Accounting Policies
      Long-Term
    Investments
  e-business
     12




---



##### Table of Contents



brick-and-mortar e-commerce
  No. 03-16,
        Contingencies
     13




---



##### Table of Contents



Recently
    Issued Accounting Standards
    FAS 157-2,
   14




---



##### Table of Contents



Significant
    Contractual Obligations
    Payments Due by PeriodLess Than


1-3


4-5


After 5Total


1 Year


Years


Years


Years(In thousands)Operating leases(a)

$
47


$
47


$



$



$
     (a)
    
    Payments for operating leases are recognized as an expense in
    the consolidated statement of operations on a straight-line
    basis over the term of the lease.  Other
    Commercial Commitments
    TotalCommitted atDecember 31,


Total Committed at end of2008


1 Year


2 Years


3 Years


4 Years


5 Years


Thereafter(In thousands)Standby letters of credit

$
36


$
36


$
36


$
36


$
36


$
36


$
36     Results
    of Continuing and Discontinued Operations
   15




---



##### Table of Contents



Continuing
    Operations
  2008
    Compared to 2007
               16




---



##### Table of Contents



2007
    Compared to 2006
            Discontinued
    Operations
  2008
    Compared to 2007
       17




---



##### Table of Contents



2007
    Compared to 2006
          Liquidity
    and Capital Resources
        Continuing
    Operations
       18




---



##### Table of Contents



Discontinued
    Operations
              Off-Balance
    Sheet Arrangements
    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk     19




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  Description

PageReport of Independent Registered Public
    Accounting Firm


F-1Consolidated Balance Sheets as of
    December 31, 2008 and 2007


F-2Consolidated Statements of Operations for the
    years ended December 31, 2008, 2007 and 2006


F-3Consolidated Statements of Stockholders
    Equity (Deficit) for the years ended December 31, 2008, 2007 and
    2006


F-4Consolidated Statements of Cash Flows for the
    years ended December 31, 2008, 2007 and 2006


F-5Notes to Consolidated Financial Statements


F-6  20




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures    Item 9A(T).
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
    Report of
    Management on Internal Control Over Financial
    Reporting
  Rules 13a-15(f) 15d-15(f)
        Changes
    in Internal Control Over Financial Reporting
    Item 9B.
    Other
    Information   21




---



##### Table of Contents



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance          Year TermName

Age

Class

Expires

Service as DirectorJoseph W. Bartlett


75



I



2009


1993 to presentAllan I. Brown


68



I



2009


1999 to presentGreg Mays


62



II



2010


2004 to presentBrad Nugent


29



II



2010


2009Ira Tochner


47



II



2010


2006 to presentTerrence Wallock


64



III



2008


2006 to present     Business
    History of Directors and Executive Officers
  Mr. Bartlett
  Mr. Brown
 22




---



##### Table of Contents



Mr. Mays
  Mr. Nugent
  Mr. Tochner
  Mr. Wallock
    Section 16(a)
    Beneficial Ownership Reporting Compliance
    Code of
    Ethics
    Audit
    Committee Financial Expert
   23




---



##### Table of Contents



Item 11.
    Executive
    Compensation  Compensation
    Discussion and Analysis
  Overview
    
    to discharge the Board of Directors responsibilities
    relating to the compensation of the Companys directors,
    officers and key employees;
    to be responsible for the administration of the Companys
    incentive compensation and stock plans;
    to be responsible for the review and recommendation to the Board
    of Directors of the Companys Compensation Discussion and
    Analysis; and
    to be responsible for the production of an annual report on
    executive compensation for inclusion in the Companys proxy
    statement or
    Form 10-K,
    as applicable.    Compensation
    Philosophy and Objectives
    
    provide competitive compensation that will attract and retain
    qualified officers and key employees;
    reward officers and key employees for their contributions to the
    Company; and
    align officers and key employees interests with the
    interests of shareholders.    Setting
    Executive Compensation
      2008
    Executive Compensation Components
   24




---



##### Table of Contents



Tax
    and Accounting Implications
  Deductibility
    of Executive Compensation:
    Nonqualified
    Deferred Compensation:
    Accounting
    for Stock-Based Compensation:
    Summary
    Compensation Table
    (b)(a)


All OtherName and Principal Position

Year


Salary


Compensation


TotalJ. Anthony Kouba


2008


$
266,374
(c)

$
411,500
(d)

$
677,874Former Chief Executive Officer


2007



350,000



78,000
(e)


428,000and former Director


2006



350,000



88,000
(f)


438,000Greg Mays


2008



210,000



74,000
(g)


284,000Chief Executive Officer,


2007



210,000



66,000
(h)


276,000Chief Financial Officer, and Director


2006



210,000



289,467
(i)


499,467  25




---



##### Table of Contents



(a)
    
    All cash compensation received by each individual in their
    capacity as an executive officer consists of salary.(b)
    
    In accordance with the rules of the Securities and Exchange
    Commission, other compensation in the form of perquisites and
    other personal benefits have been omitted for all of the
    individuals in the table because the aggregate amount of such
    perquisites and other personal benefits was less than $10,000.(c)
    
    On September 30, 2008, J. Anthony Kouba resigned from his
    positions as Chief Executive Officer and Director of the
    Company, effective as of the close of business on
    September 30, 2008.(d)
    
    Amount consists of $37,500 for board retainer, $24,000 for board
    meeting fees, and $350,000 severance.(e)
    
    Amount consists of $50,000 for board retainer and $28,000 for
    board meeting fees.(f)
    
    Amount consists of $50,000 for board retainer and $38,000 for
    board meeting fees.(g)
    
    Amount consists of $50,000 for board retainer and $24,000 for
    board meeting fees.(h)
    
    Amount consists of $50,000 for board retainer and $16,000 for
    board meeting fees.(i)
    
    Consists of $210,000 for severance paid for termination of 2003
    Executive Services Agreement, $48,077 for board retainer,
    $26,000 for board meeting fees, and $5,390 for other accrued
    compensation paid. The Company and Mr. Mays subsequently
    entered into a new agreement in March 2006 which provided for
    the same annual salary and is terminable by either party upon
    90 days notice.  Grants of
    Plan-Based Awards
    Executive
    Services Agreements with Officers
           26




---



##### Table of Contents



Outstanding
    Equity Awards at Fiscal Year-End
    Number of Securities


Option


OptionUnderlying Unexercised


Exercise


ExpirationName and Principal Position

Options Exercisable


Price


DateGreg Mays


10,000


$
0.10



05/09/13Chief Executive Officer, Chief Financial Officer, and Director     Option
    Exercises and Stock Vested
    Post-Employment
    Compensation
    Potential
    Payments upon Termination
  Voluntary
    Termination:
    Involuntary
    Termination:
  90-day
  Retirement:
    Change in
    Control:
    Health
    Insurance Benefits:
  18-month
 27




---



##### Table of Contents



Directors
    Compensation
    FeesEarnedor PaidName

in Cash(a)


TotalJoseph Bartlett

$
99,500
(b)

$
99,500Allan Brown


99,000
(c)


99,000Erika Paulson


62,000
(d)


62,000Ira Tochner


72,000
(e)


72,000Terry Wallock


74,000
(f)


74,000     (a)
    
    Directors are paid an annual retainer of $50,000. Directors also
    receive a fee of $2,000 for each Board of Directors, Audit and
    Compensation Committee meeting attended. The chairmen of the
    Audit and the Compensation Committees also receive annual
    retainers of $7,500 and $5,000, respectively, plus an additional
    $500 for each committee meeting they chair.(b)
    
    Amount consists of $50,000 for board retainer, $30,000 for board
    meeting fees, $12,000 in other board fees, and $7,500 for Audit
    Committee chair fee. Mr. Bartlett held 65,000 stock
    options, all of which were vested, at December 31, 2008.(c)
    
    Amount consists of $50,000 for board retainer, $32,000 for board
    meeting fees, $12,000 in other board fees, and $5,000 for
    Compensation Committee chair fee. Mr. Brown held 20,000
    stock options, all of which were vested, at December 31,
    2008.(d)
    
    Amount consists of $50,000 for board retainer and $12,000 for
    board meeting fees. Ms. Paulson resigned from the
    Companys Board of Directors effective January 31,
    2009.(e)
    
    Amount consists of $50,000 for board retainer and $22,000 for
    board meeting fees.(f)
    
    Amount consists of $50,000 for board retainer and $24,000 for
    board meeting fees. Mr. Wallock held 5,000 stock options,
    all of which were vested, at December 31, 2008.  Executive
    Services Agreements with Directors
   28




---



##### Table of Contents



Compensation
    Committee Interlocks and Insider Participation
    Compensation
    Committee Report
  Form 10-K. Form 10-K.
      10-K
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Security
    Ownership of Certain Beneficial Owners
    Number of SharesName and Address

of Common Stock


Percentage ofof Beneficial Owner(a)

Beneficially Owned


ClassYucaipa and affiliates(b)(c)(d)
    Overseas Toys, L.P.
    OA3, LLC Multi-Accounts, LLC
    Ronald W. Burkle


37,940,756



70.0
%Everest Special
    Situations Fund L.P.(c)(d)
    Maoz Everest Fund Management Ltd.
    Elchanan Maoz
    Platinum House
    21 H arba a Street
    Tel Aviv 64739 Israel


2,823,233



5.2
%     (a)
    
    The number of shares beneficially owned by each stockholder is
    determined in accordance with the rules of the Securities and
    Exchange Commission and is not necessarily indicative of
    beneficial ownership for any other 29




---



##### Table of Contents



purpose. Under these rules, beneficial ownership includes those
    shares of common stock that the stockholder has sole or shared
    voting or investment power and any shares of common stock that
    the stockholder has a right to acquire within sixty
    (60) days after March 9, 2009, through the exercise of
    any option, warrant or other right. The percentage ownership of
    the outstanding common stock, however, is based on the
    assumption, expressly required by the rules of the Securities
    and Exchange Commission, that only the person or entity whose
    ownership is being reported has converted options, warrants or
    other rights into shares of common stock.(b)
    
    Overseas Toys, L.P. is an affiliate of Yucaipa. Multi-Accounts,
    LLC is the sole general partner of Overseas Toys, L.P., and OA3,
    LLC is the sole managing member of Multi-Accounts, LLC. Ronald
    W. Burkle is the sole managing member of OA3, LLC. The address
    of each of Overseas Toys, L.P., Multi-Accounts, LLC, OA3, LLC,
    and Ronald W. Burkle is 9130 West Sunset Boulevard, Los
    Angeles, California 90069.(c)
    
    Based on 54,201,080 shares of common stock outstanding as
    of March 9, 2009.(d)
    
    The information concerning these holders is based solely on
    information contained in filings pursuant to the Securities
    Exchange Act of 1934.  Security
    Ownership of Management
    Number of SharesName and Address

of Common Stock


Percentage ofof Beneficial Owner(a)

Beneficially Owned


Class(b)Allan I. Brown(c)


1,133,023



2.1
%Joseph W. Bartlett(d)


65,000




*Greg Mays(e)


10,000




*Brad Nugent






Ira Tochner






Terrence Wallock(f)


5,000




*All directors and executive officers as a group (6 persons)


1,213,023



2.2
%     *
    
    Represents less than 1%(a)
    
    The address of each of the directors and executive officers is
    c/o Simon
    Worldwide, Inc., 5200 W. Century Boulevard,
    Suite 420, Los Angeles, California, 90045. The number of
    shares beneficially owned by each stockholder is determined in
    accordance with the rules of the Securities and Exchange
    Commission and is not necessarily indicative of beneficial
    ownership for any other purpose. Under these rules, beneficial
    ownership includes those shares of common stock that the
    stockholder has sole or shared voting or investment power and
    any shares of common stock that the stockholder has a right to
    acquire within sixty (60) days after March 9, 2009,
    through the exercise of any option, warrant or other right. The
    percentage ownership of the outstanding common stock, however,
    is based on the assumption, expressly required by the rules of
    the Securities and Exchange Commission, that only the person or
    entity whose ownership is being reported has converted options,
    warrants or other rights.(b)
    
    Based on 54,201,080 shares of common stock outstanding as
    of March 9, 2009.(c)
    
    Includes 20,000 shares issuable pursuant to stock options
    exercisable within 60 days of March 9, 2009.
    Mr. Brown has the sole power to vote, or to direct the vote
    of, and the sole power to dispose, or to direct the disposition
    of, 1,113,023 shares of common stock.(d)
    
    The 65,000 shares are issuable pursuant to stock options
    exercisable within 60 days of March 9, 2009.(e)
    
    The 10,000 shares are issuable pursuant to stock options
    exercisable within 60 days of March 9, 2009.(f)
    
    The 5,000 shares are issuable pursuant to stock options
    exercisable within 60 days of March 9, 2009. 30




---



##### Table of Contents



Securities
    Authorized for Issuance Under Equity Compensation
    Plans
    Number of Sharesof Common StockNumber of Shares



Available forof Common Stock

Weighted-

Future Issuanceto be Issued Upon

Average

(excluding thoseExercise of

Exercise Price

in column (a))Outstanding Stock

of Outstanding

Under the StockOptions

Stock Options

Option PlansPlans Approved by Stockholders

100,000

$2.59 per share

NonePlans Not Approved by Stockholders

Not applicable

Not applicable

Not applicableTotal

100,000

$2.59 per share

None   Item 13.
    Certain
    Relationships, Related Transactions and Director
    Independence  Rule 10A-3(b)(1)
  Item 14.
    Principal
    Accounting Fees and Services    Fiscal Year2008


2007(In thousands)Audit fees(a)

$
168


$
131Audit-related fees(b)






Tax fees(c)


40



35All other fees(d)






Total

$
208


$
166     (a)
    
    Audit fees are related to the audit of the Companys
    consolidated annual financial statements, review of the interim
    consolidated financial statements, and services normally
    provided by the Companys independent registered public
    accounting firm in connection with statutory and regulatory
    filings and engagements.(b)
    
    Audit-related fees are for assurance and related services that
    are reasonably related to the performance of the audit or review
    of the Companys consolidated financial statements and are
    not reported under Audit fees.(c)
    
    Tax fees are related to tax compliance, planning, and consulting.(d)
    
    All other fees are for services other than those reported in the
    other categories. 31




---



##### Table of Contents



Policy on
    Audit Committee Pre-Approval of Audit and Non-Audit Services of
    Independent Auditor
   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  Documents Filed as Part of this Report
    
    Consolidated Balance Sheets as of December 31, 2008 and 2007
    Consolidated Statements of Operations for the years ended
    December 31, 2008, 2007 and 2006
    Consolidated Statements of Stockholders Equity (Deficit)
    for the years ended December 31, 2008, 2007 and 2006
    Consolidated Statements of Cash Flows for the years ended
    December 31, 2008, 2007 and 2006
    Notes to Consolidated Financial Statements    Exhibits
   32




---



##### Table of Contents



SIGNATURES      
          /s/  Joseph
    W. BartlettJoseph
    W. Bartlett

Director

March 27, 2009/s/  Allan
    I. BrownAllan
    I. Brown

Director

March 27, 2009/s/  Greg
    MaysGreg
    Mays

Director, Chief Executive Officer, and Chief Financial Officer

March 27, 2009/s/  Brad
    NugentBrad
    Nugent

Director

March 27, 2009/s/  Ira
    TochnerIra
    Tochner

Director

March 27, 2009/s/  Terrence
    WallockTerrence
    Wallock

Director

March 27, 2009  33




---



##### Table of Contents



EXHIBITS
  ExhibitNumber

Description2
.1(4)

Securities Purchase Agreement dated September 1, 1999,
    between the Registrant and Overseas Toys, L.P.2
.2(6)

Purchase Agreement between the Company and Rockridge Partners,
    Inc., dated January 20, 2001, as amended by Amendment
    No. 1 to the Purchase Agreement, dated February 15,
    20012
.3(7)

March 12, 2002, Letter Agreement between Cyrk and Simon, as
    amended by Letter Agreement dated as of March 22, 20022
.4(7)

Mutual Release Agreement between Cyrk and Simon2
.5(8)

Letter Agreement Between Cyrk and Simon, dated December 20,
    20022
.6(10)

Settlement Agreement and Mutual General Release between Cyrk and
    Simon dated January 31, 20062
.7(10)

Subordinated Promissory Note in the principal amount of
    $1,410,000 from Cyrk to Simon dated January 31, 20063
.1(11)

Restated Certificate of Incorporation of the Registrant3
.2(10)

Amended and Restated By-laws of the Registrant, effective
    March 27, 20063
.3(5)

Certificate of Designation for Series A Senior Cumulative
    Participating Convertible Preferred Stock4
.1(1)

Specimen certificate representing Common Stock10
.1(2)(3)

1993 Omnibus Stock Plan, as amended10
.10(5)

Registration Rights Agreement between the Company and Overseas
    Toys, L.P.10
.18(6)

Subordinated Promissory Note by Rockridge Partners, Inc. in
    favor of the Company dated February 15, 200110
.28(9)

February 7, 2003, letter agreements with J. Anthony Kouba
    and Greg Mays regarding 2002 and 2003 compensation10
.29(9)

May 30, 2003, Executive Services Agreements with Joseph
    Bartlett, Allan Brown, J. Anthony Kouba, Gregory Mays, and
    Terrence Wallock10
.30(10)

May 3, 2004, Amendment No. 1 to Executive Services
    Agreements with Messrs. Bartlett, Brown, and Kouba,
    (replaces previously filed copies of these amendments)10
.31(10)

March 27, 2006, Amendment No. 2 to Wallock Executive
    Services Agreement10
.32(10)

March 27, 2006, New Executive Services Agreement with
    Mr. Mays31


Certifications pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934 (the Exchange
    Act), filed herewith32


Certifications pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to section 906 of the Sarbanes- Oxley Act
    of 2002, filed herewith     Footnotes:
  (1)
    
    Filed as an exhibit to the Registrants Registration
    Statement on
    Form S-1
    (Registration
    No. 33-63118)
    or an amendment thereto and incorporated herein by reference.(2)
    
    Management contract or compensatory plan or arrangement.(3)
    
    Filed as an exhibit to the Annual Report on
    Form 10-K
    for the year ended December 31, 1994, and incorporated
    herein by reference.(4)
    
    Filed as an exhibit to the Registrants Report on
    Form 8-K
    dated September 1, 1999, and incorporated herein by
    reference.(5)
    
    Filed as an exhibit to the Annual Report on
    Form 10-K
    for the year ended December 31, 1999, and incorporated
    herein by reference.(6)
    
    Filed as an exhibit to the Registrants Report on
    Form 8-K
    dated February 15, 2001, and incorporated herein by
    reference.(7)
    
    Filed as an exhibit to the Registrants original Report on
    Form 10-K
    for the year ended December 31, 2001, filed on
    March 29, 2002, and incorporated herein by reference. 34




---



##### Table of Contents



(8)
    
    Filed as an exhibit to the Registrants Report on
    Form 10-K/A
    for the year ended December 31, 2001, filed on
    April 18, 2003, and incorporated herein by reference.(9)
    
    Filed as an exhibit to the Registrants Report on
    Form 10-K
    for the year ended December 31, 2002, filed on
    July 29, 2003, and incorporated herein by reference.(10)
    
    Filed as an exhibit to the Registrants Report on
    Form 10-K
    for the year ended December 31, 2005, filed on
    March 31, 2006, and incorporated herein by reference.(11)
    
    Filed as an exhibit to the Registrants Report on
    Form 10-Q
    for the quarter ended December 31, 2008, filed on
    November 13, 2008, and incorporated herein by reference. 35




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  Board of
    Directors and Stockholders
          06-5 Bulletin No. 85-4.
        F-1




---



##### Table of Contents



PART IV 
    FINANCIAL INFORMATION
  SIMON WORLDWIDE, INC.
 CONSOLIDATED BALANCE SHEETS
  December 31,


December 31,2008


2007(In thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents

$
16,576


$
16,134Prepaid expenses and other current assets


180



295Other receivable


350



Assets from discontinued operations to be disposed
    of  current (Note 4)


84



27Total current assets


17,190



16,456Investments


295



3,003Other assets


25



64Assets from discontinued operations to be disposed
    of  non-current (Note 4)


436



904Total non-current assets


756



3,971$
17,946


$
20,427LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Accounts payable:Trade

$
125


$
196Affiliates






190Accrued expenses and other current liabilities


379



314Liabilities from discontinued operations  current
    (Note 4)


520



899Total current liabilities


1,024



1,599Commitments and contingenciesRedeemable preferred stock, Series A1 senior cumulative
    participating convertible, $.01 par value, 0 shares
    issued and outstanding at December 31, 2008, and
    33,696 shares issued and outstanding at December 31,
    2007, stated at redemption value of $1,000 per share
    (liquidation preference of $33,886 at December 31, 2007)






33,696Stockholders equity (deficit):Common stock, $.01 par value; 100,000,000 shares
    authorized; 54,201,080 shares issued and outstanding net of
    412,869 treasury shares at par value at December 31, 2008,
    and 16,260,324 shares issued and outstanding net of 412,869
    treasury shares at par value at December 31, 2007


542



163Additional paid-in capital


153,303



138,506Deficit


(137,055
)


(156,385
)Accumulated other comprehensive income


132



2,848Total stockholders equity (deficit)


16,922



(14,868
)$
17,946


$
20,427    F-2




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
 (Unaudited)
  2008


2007


2006(In thousands, except per share data)Revenue

$



$



$
General and administrative expenses


3,560



2,896



3,488Operating loss from continuing operations


(3,560
)


(2,896
)


(3,488
)Interest income


330



800



879Loss on settlement


(50
)






Investment income (impairment) (Note 5)


23



3



(16
)Equity in Yucaipa AEC earnings (Note 5)


2,101







Loss from continuing operations before income taxes


(1,156
)


(2,093
)


(2,625
)Income tax provision










Net loss from continuing operations


(1,156
)


(2,093
)


(2,625
)Income from discontinued operations, net of tax (Note 4)


1,777



312



707Net income (loss)


621



(1,781
)


(1,918
)Excess of carrying value of preferred stock over fair value of
    common stock issued (Note 9)


19,688







Preferred stock dividends (Note 9)


(979
)


(1,322
)


(1,270
)Net income (loss) available to common stockholders

$
19,330


$
(3,103
)

$
(3,188
)Income (loss) per share from continuing operations available to
    common stockholders:Income (loss) per common share  basic

$
0.65


$
(0.21
)

$
(0.23
)Income (loss) per common share  diluted

$
0.62


$
(0.21
)

$
(0.23
)Weighted average shares outstanding  basic


27,041



16,465



16,665Weighted average shares outstanding  diluted


30,054



16,465



16,665Income per share from discontinued operations:Income per common share  basic

$
0.07


$
0.02


$
0.04Income per common share  diluted

$
0.06


$
0.02


$
0.04Weighted average shares outstanding  basic


27,041



16,465



16,665Weighted average shares outstanding  diluted


30,054



16,465



16,665Net income (loss) available to common stockholders:Income (loss) per common share  basic

$
0.72


$
(0.19
)

$
(0.19
)Income (loss) per common share  diluted

$
0.68


$
(0.19
)

$
(0.19
)Weighted average shares outstanding  basic


27,041



16,465



16,665Weighted average shares outstanding  diluted


30,054



16,465



16,665    F-3




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
 For
    the years ended December 31, 2008, 2007, and 2006
  AccumulatedCommon











OtherStock


Additional





Comprehensive


Comprehensive


Total($.01 Par


Paid-in


Retained


Income


Income


StockholdersValue)


Capital


Deficit


(Loss)


(Loss)


Equity (Deficit)(In thousands)Balance, December 31, 2005

$
167


$
138,500


$
(150,802
)





$
11,294


$
(841
)Comprehensive loss:Net loss










(1,918
)

$
(1,918
)






(1,918
)Other comprehensive loss:Unrealized loss on investments














(3,209
)


(3,209
)


(3,209
)Comprehensive loss













$
(5,127
)Exercise of stock options






2















2Dividends on preferred stock










(1,270
)










(1,270
)Balance, December 31, 2006


167



138,502



(153,990
)






8,085



(7,236
)Change in accounting principle










708











708Treasury shares


(4
)


4















Comprehensive loss:Net loss










(1,781
)

$
(1,781
)






(1,781
)Other comprehensive loss:Unrealized loss on investments














(5,237
)


(5,237
)


(5,237
)Comprehensive loss













$
(7,018
)Dividends on preferred stock










(1,322
)










(1,322
)Balance, December 31, 2007


163



138,506



(156,385
)






2,848



(14,868
)Conversion of preferred stock to common stock


379



14,797



19,688











34,864Comprehensive loss:Net income










621


$
621







621Other comprehensive loss:Unrealized loss on investments














(2,716
)


(2,716
)


(2,716
)Comprehensive loss













$
(2,095
)Dividends on preferred stock










(979
)










(979
)Balance, December 31, 2008

$
542


$
153,303


$
(137,055
)





$
132


$
16,922    F-4




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  2008


2007


2006(In thousands)Cash flows from operating activities:Net income (loss)

$
621


$
(1,781
)

$
(1,918
)Income from discontinued operations


1,777



312



707Loss from continuing operations


(1,156
)


(2,093
)


(2,625
)Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities:Depreciation










4Gain on investment


(119
)






Charge for impaired investment


30



2



16Cash provided by discontinued operations


1,867



391



718Cash transferred from (to) discontinued operations


(103
)


387



(266
)Increase (decrease) in cash from changes in working capital
    items:Prepaid expenses and other current assets


115



(91
)


112Accounts payable


(262
)


57



(34
)Accrued expenses and other current liabilities


66



18



(77
)Net cash provided by (used in) operating activities


438



(1,329
)


(2,152
)Cash flows from investing activities:Increase in restricted cash










2,818Cash provided by discontinued operations






208



234Other, net


4



26



19Net cash provided by investing activities


4



234



3,071Net increase (decrease) in cash and cash equivalents


442



(1,095
)


919Cash and cash equivalents, beginning of period


16,134



17,229



16,310Cash and cash equivalents, end of period

$
16,576


$
16,134


$
17,229Supplemental disclosure of cash flow information:Cash paid during the period for:Income taxes

$
11


$
57


$
3    F-5




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Nature of
    Business, Loss of Customers, Resulting Events, Going Concern and
    Managements Plans    25-year
       F-6




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      2.
    Significant
    Accounting Policies  Principles
    of Consolidation
    Change
    in Accounting Principle
  06-5, Bulletin No. 85-4 (EITF 06-5). EITF 06-5 EITF 06-5 EITF 06-5
  Stock-Based
    Compensation
   F-7




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Use of
    Estimates
    Concentration
    of Credit Risk
    Financial
    Instruments
    Cash
    Equivalents
    Investments
    No. 03-16,
  Income
    Taxes
   F-8




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Earnings
    (Loss) Per Common Share
    Recently
    Issued Accounting Standards
    FAS 157-2,
     F-9




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    3.
    Commitments
    and Contingencies           F-10




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        4.
    Discontinued
    Operations   F-11




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    December 31,


December 31,2008


2007Assets:Cash and cash equivalents

$
84


$
Note receivable (Note 3)






27Total current assets


84



27Other assets


436



904Assets from discontinued operations to be disposed of

$
520


$
931Liabilities:Accrued expenses and other current liabilities

$
520


$
899Total current liabilities


520



899Liabilities from discontinued operations

$
520


$
899     2008


2007


2006Net sales

$



$



$
Cost of sales










Gross profit










General and administrative expenses


548



47



Gain on settlements


(2,380
)


(314
)


(675
)Operating income


1,832



267



675Interest income


19



45



59Other expense










(27
)Net income from discontinued operations


1,851



312



707Income tax provision


(74
)






Net income

$
1,777


$
312


$
707   General
    and Administrative Expenses
    Loss
    (Gain) on Settlement of Obligations
   F-12




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        Interest
    Income
    Other
    Expense
    5.
    Investments  Yucaipa
    AEC Associates
  brick-and-mortar e-commerce
  EITF 03-16,
   F-13




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Other
    Investments
      6.
    Lease
    Obligations and Other Commercial Commitments     F-14




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    7.
    Income
    Taxes      2008


2007Deferred tax assets:Net operating losses

$
25,313


$
25,576Capital losses


295



10,085Other asset reserves


9,324



9,470AMT credit


649



649Deferred compensation


36



9Depreciation


1



1Valuation allowance


(35,618
)


(45,790
)$



$
       2008


2007


2006Federal tax (benefit) rate


(34
)%


(34
)%


(34
)%Increase (decrease) in taxes resulting from:State income taxes


(6
)


(6
)


(6
)Effect of foreign income or loss










(128
)Change in valuation allowance


40



37



166Life insurance






3



20
%


0
%


0
%  F-15




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    8.
    Accrued
    Expenses and Other Current Liabilities    Discontinued


ContinuingOperations


Operations


TotalAs of December 31,2008


2007


2008


2007


2008


2007(In thousands)Accrued payroll, related items and deferred compensation

$



$



$
28


$
23


$
28


$
23Contingent loss






460



167







167



460Professional fees










119



291



119



291Insurance premiums


520



439











520



439Income taxes payable










65







65



$
520


$
899


$
379


$
314


$
899


$
1,213   9.
    Redeemable
    Preferred Stock         F-16




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    10.
    Stock
    Plan  1993
    Omnibus Stock Plan
        1997
    Acquisition Stock Plan
   F-17




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    2008


2007


2006Weighted





Weighted





WeightedExercise





Exercise





ExerciseShares


Price


Shares


Price


Shares


PriceOutstanding at the beginning of year


175,000


$
4.40



180,000


$
4.62



215,000


$
4.51Granted






















Exercised


















20,000



0.10Expired/Forfeited


75,000



6.82



5,000



12.25



15,000



9.10Outstanding at end of year


100,000



2.59



175,000



4.40



180,000



4.62Options exercisable at year-end


100,000



2.59



175,000



4.40



180,000



4.62Options available for future grant


















1,000,000
(a)Weighted average fair value of options granted during the year


Not
    applicable







Not
    applicable







Not
    applicable     (a)
    
    Available for issuance under the 1997 Plan. The 1997 Plan
    expired on April 4, 2007.    Options Outstanding


Options ExercisableWeightedAverage


Weighted


Aggregate





Weighted


AggregateNumber


Remaining


Average


Intrinsic


Number


Average


IntrinsicRange of Exercise Prices

Outstanding


Contractual Life


Price


Value


Exercisable


Price


Value$0.10 - $1.99


55,000



4.35


$
0.10


$
14,850



55,000


$
0.10


$
14,850$2.00 - $5.38


35,000



0.44



4.89







35,000



4.89



$7.56 - $8.81


10,000



0.74



8.19







10,000



8.19



$0.10 - $8.81


100,000



2.62


$
2.59







100,000


$
2.59     11.
    Related
    Party Transactions   F-18




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
          and/or
      12.
    Segments
    and Related Information     F-19




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  13.
    Earnings
    per Share Disclosure      2008


2007


2006Weighted average shares outstanding  basic


27,041,304



16,465,062



16,665,248Convertible preferred stock


3,012,392







Weighted average shares outstanding  diluted


30,053,696



16,465,062



16,665,248    F-20




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    2008


2007


2006Income


Shares


Per Share


Income


Shares


Per Share


Income


Shares


Per Share(Numerator)


(Denominator)


Amount


(Numerator)


(Denominator)


Amount


(Numerator)


(Denominator)


AmountBasic EPS:Loss from continuing operations

$
(1,156
)









$
(2,093
)









$
(2,625
)Excess of carrying value of preferred stock over fair value of
    common stock issued


19,688























Preferred stock dividends


(979
)










(1,322
)










(1,270
)Income (loss) from continuing operations available to common
    stockholders

$
17,553



27,041,304


$
0.65


$
(3,415
)


16,465,062


$
(0.21
)

$
(3,895
)


16,665,248


$
(0.23
)Income from discontinued operations

$
1,777



27,041,304


$
0.07


$
312



16,465,062


$
0.02


$
707



16,665,248


$
0.04Net income (loss)

$
621










$
(1,781
)









$
(1,918
)Excess of carrying value of preferred stock over fair value of
    common stock issued


19,688























Preferred stock dividends


(979
)










(1,322
)










(1,270
)Net income (loss) available to common stockholders

$
19,330



27,041,304


$
0.72


$
(3,103
)


16,465,062


$
(0.19
)

$
(3,188
)


16,665,248


$
(0.19
)Diluted EPS:Loss from continuing operations

$
(1,156
)









$
(2,093
)









$
(2,625
)Excess of carrying value of preferred stock over fair value of
    common stock issued


19,688























Preferred stock dividends














(1,322
)










(1,270
)Income (loss) from continuing operations available to common
    stockholders

$
18,532



30,053,696


$
0.62


$
(3,415
)


16,465,062


$
(0.21
)

$
(3,895
)


16,665,248


$
(0.23
)Income from discontinued operations

$
1,777



30,053,696


$
0.06


$
312



16,465,062


$
0.02


$
707



16,665,248


$
0.04Net income (loss)

$
621










$
(1,781
)









$
(1,918
)Excess of carrying value of preferred stock over fair value of
    common stock issued


19,688























Preferred stock dividends














(1,322
)










(1,270
)Net income (loss) available to common stockholders

$
20,309



30,053,696


$
0.68


$
(3,103
)


16,465,062


$
(0.19
)

$
(3,188
)


16,665,248


$
(0.19
)    F-21




---



##### Table of Contents



SIMON
    WORLDWIDE, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  14.
    Quarterly
    Results of Operations (Unaudited)    First


Second


Third


Fourth2008

Quarter


Quarter


Quarter


Quarter(In thousands, except per share data)Continuing operations:Net sales

$



$



$



$
Gross profit














Net income (loss)


(811
)


1,154



(1,296
)


(203
)Income (loss) per common share available to common
    stockholders  basic


(0.07
)


0.05



0.85



Income (loss) per common share available to common
    stockholders  diluted


(0.07
)


0.04



0.74



Discontinued operations:Net sales

$



$



$



$
Gross profit














Net income (loss)


(36
)


406



1,571



(164
)Income (loss) per common share available to common
    stockholders  basic






0.02



0.08



Income (loss) per common share available to common
    stockholders  diluted






0.02



0.06



   First


Second


Third


Fourth2007

Quarter


Quarter


Quarter


Quarter(In thousands, except per share data)Continuing operations:Net sales

$



$



$



$
Gross profit














Net loss


(430
)


(485
)


(644
)


(534
)Loss per common share available to common
    stockholders  basic and diluted


(0.05
)


(0.05
)


(0.06
)


(0.05
)Discontinued operations:Net sales

$



$



$



$
Gross profit














Net income


78



105



91



38Income per common share available to common
    stockholders  basic and diluted


0.005



0.006



0.006



0.005  F-22