UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



FORM 10-Q



(Mark one)

| | x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ---------------------------------------------------------------------------------



For the quarterly period ended June 30,
2012



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



For the transition period from ______________
to _____________



Commission File Number: 000-50586



MARKETING WORLDWIDE CORPORATION

(Exact name of registrant as specified in
its charter)



|DELAWARE                 |  | 68-0566295              
|------------------------ |  | ------------------------
|(State of incorporation) |  | (IRS Employer ID Number)



2212 GRAND COMMERCE DR.

HOWELL, MICHIGAN 48855

(Address of principal executive offices)



631-444- 8090

(Registrant's telephone number, including
area code)



NOT APPLICABLE

(Former name, former address and former
fiscal year,

if changed since last report)



Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   x Yes  o 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 oNo x



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of
the Exchange Act:



|Large accelerated filer o                     |  | Accelerated filer o        
|--------------------------------------------- |  | ---------------------------
|                                              |  |                            
|Non-accelerated filer o                       |  | Smaller reporting company x
|(Do not check if a smaller reporting company) |  |                            



Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).

o Yes    x
No



Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date, August 16, 2012: 4,246,397











MARKETING WORLDWIDE CORPORATION



Form 10-Q for the Quarter ended June 30,
2012



Table of Contents



|                                                                                                                       | PAGE
|---------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                       |     
|PART I - FINANCIAL INFORMATION                                                                                         |     
|                                                                                                                       |     
|ITEM 1 - FINANCIAL STATEMENTS                                                                                          |     
|Condensed Consolidated Balance Sheets as of June 30, 2012 (unaudited) and September 30, 2011                           | 3   
|Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2012 and 2011 (unaudited) | 4   
|Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 2012 and 2011 (unaudited)           | 5   
|Notes to Condensed Consolidated Financial Statements (unaudited)                                                       | 6   
|                                                                                                                       |     
|ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                         | 39  
|                                                                                                                       |     
|ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                    | 46  
|                                                                                                                       |     
|ITEM 4T - CONTROLS AND PROCEDURES                                                                                      | 47  
|                                                                                                                       |     
|PART II - OTHER INFORMATION                                                                                            | 47  
|                                                                                                                       |     
|ITEM 1 - LEGAL PROCEEDINGS                                                                                             | 47  
|                                                                                                                       |     
|ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                                   | 47  
|                                                                                                                       |     
|ITEM 3 - DEFAULTS UPON SENIOR SECURITIES                                                                               | 47  
|                                                                                                                       |     
|ITEM 4 - MINING SAFETY DISCLOSURES                                                                                     | 47  
|                                                                                                                       |     
|ITEM 5 - OTHER INFORMATION                                                                                             | 47  
|                                                                                                                       |     
|ITEM 6 - EXHIBITS                                                                                                      | 48  
|                                                                                                                       |     
|SIGNATURES                                                                                                             | 50  



2









MARKETING WORLDWIDE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                                                                                                                         |  | June 30,    |             |   | September 30, |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ----------- | - | ------------- | -
|                                                                                                                                                                                                                                                         |  | 2012        |             |   | 2011          |  
|                                                                                                                                                                                                                                                         |  | (unaudited) |             |   |               |  
|ASSETS                                                                                                                                                                                                                                                   |  |             |             |   |               |  
|Current assets:                                                                                                                                                                                                                                          |  |             |             |   |               |  
|Cash and cash equivalents                                                                                                                                                                                                                                |  | $           | 15,868      |   |               | $
|Accounts receivable, net                                                                                                                                                                                                                                 |  |             | 84,016      |   |               |  
|Inventories, net                                                                                                                                                                                                                                         |  |             | 83,862      |   |               |  
|Total current assets                                                                                                                                                                                                                                     |  |             | 183,746     |   |               |  
|                                                                                                                                                                                                                                                         |  |             |             |   |               |  
|Property, plant and equipment, net                                                                                                                                                                                                                       |  |             | 957,018     |   |               |  
|                                                                                                                                                                                                                                                         |  |             |             |   |               |  
|Other assets:                                                                                                                                                                                                                                            |  |             |             |   |               |  
|Capitalized finance costs, net                                                                                                                                                                                                                           |  |             | -           |   |               |  
|                                                                                                                                                                                                                                                         |  |             |             |   |               |  
|Total assets                                                                                                                                                                                                                                             |  | $           | 1,140,764   |   |               | $
|                                                                                                                                                                                                                                                         |  |             |             |   |               |  
|LIABILITIES AND  DEFICIENCY                                                                                                                                                                                                                              |  |             |             |   |               |  
|Current liabilities:                                                                                                                                                                                                                                     |  |             |             |   |               |  
|Bank line of credits                                                                                                                                                                                                                                     |  | $           | -           |   |               | $
|Notes payable and capital leases, current portion                                                                                                                                                                                                        |  |             | 1,433,736   |   |               |  
|Accounts payable                                                                                                                                                                                                                                         |  |             | 1,789,767   |   |               |  
|Warranty liability                                                                                                                                                                                                                                       |  |             | 75,000      |   |               |  
|Other current liabilities                                                                                                                                                                                                                                |  |             | 1,004,809   |   |               |  
|Current liabilities of discontinued operations                                                                                                                                                                                                           |  |             | 492,006     |   |               |  
|Total current liabilities                                                                                                                                                                                                                                |  |             | 4,795,318   |   |               |  
|                                                                                                                                                                                                                                                         |  |             |             |   |               |  
|Long term debt:                                                                                                                                                                                                                                          |  |             |             |   |               |  
|Derivative liability                                                                                                                                                                                                                                     |  |             | 6,637,168   |   |               |  
|Warrant liability                                                                                                                                                                                                                                        |  |             | 513,636     |   |               |  
|                                                                                                                                                                                                                                                         |  |             |             |   |               |  
|Total liabilities                                                                                                                                                                                                                                        |  |             | 11,946,122  |   |               |  
|                                                                                                                                                                                                                                                         |  |             |             |   |               |  
|Temporary equity:                                                                                                                                                                                                                                        |  |             |             |   |               |  
|Series A convertible preferred stock, $0.001 par value;3,500,000 shares designated;  nil and 3,500,000 shares issued and outstanding as of June 30, 2012 and September 30, 2011, respectively                                                            |  |             | -           |   |               |  
|                                                                                                                                                                                                                                                         |  |             |             |   |               |  
|Permanent equity:                                                                                                                                                                                                                                        |  |             |             |   |               |  
|Deficiency                                                                                                                                                                                                                                               |  |             |             |   |               |  
|Preferred stock, $0.001 par value; 10,000,000 shares authorized                                                                                                                                                                                          |  |             |             |   |               |  
|Series B convertible preferred stock, $0.001 par value, 1,200,000 shares designated; nil and 1,192,308 shares issued and outstanding as of June 30, 2012 and September 30, 2011, respectively                                                            |  |             | -           |   |               |  
|Series C convertible preferred stock, $0.001 par value, 1,000,000 shares designated; nil and 100 shares issued and outstanding as of June 30, 2012 and September 30, 2011, respectively                                                                  |  |             | -           |   |               |  
|Series D super voting preferred stock, $0.001 par value, 1,000,000 shares designated,  90,002 and nil issued and outstanding as of June 30, 2012 and September 30, 2011, respectively                                                                    |  |             | 90          |   |               |  
|Series E 6% convertible preferred stock, $0.001 par value, 15,000 shares designated, 11,563.5 and nil shares issued and outstanding as of June 30, 2012 and September 30, 2011, respectively                                                             |  |             | 12          |   |               |  
|Common stock, $0.00001 par value, 5,900,000,000 and 500,000,000 shares authorized as of June 30, 2012 and September 30, 2011, respectively; 2,539,879 and 238,316 shares issued and outstanding as of June 30, 2012 and September 30, 2011, respectively |  |             | 25          |   |               |  
|Additional paid in capital                                                                                                                                                                                                                               |  |             | 13,233,796  |   |               |  
|Deficit                                                                                                                                                                                                                                                  |  |             | (23,372,366 | ) |               |  
|Accumulated other comprehensive loss                                                                                                                                                                                                                     |  |             | (148,873    | ) |               |  
|Total Marketing Worldwide Corporation stockholders' deficiency                                                                                                                                                                                           |  |             | (10,287,316 | ) |               |  
|Non controlling interest                                                                                                                                                                                                                                 |  |             | (518,042    | ) |               |  
|Total  deficiency                                                                                                                                                                                                                                        |  |             | (10,805,358 | ) |               |  
|                                                                                                                                                                                                                                                         |  |             |             |   |               |  
|Total Liabilities and  Deficiency                                                                                                                                                                                                                        |  | $           | 1,140,764   |   |               | $



See the accompanying notes to the unaudited
condensed consolidated financial statements



3







MARKETING WORLDWIDE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS

(unaudited)



|                                                             |  | Three months ended June 30, |            |   | Nine months ended June 30, |  
|------------------------------------------------------------ |  | --------------------------- | ---------- | - | -------------------------- | -
|                                                             |  | 2012                        |            |   | 2011                       |  
|Revenue                                                      |  | $                           | 175,871    |   |                            | $
|                                                             |  |                             |            |   |                            |  
|Total cost of sales                                          |  |                             | 291,673    |   |                            |  
|                                                             |  |                             |            |   |                            |  
|Gross (loss) profit                                          |  |                             | (115,802   | ) |                            |  
|                                                             |  |                             |            |   |                            |  
|Operating expenses:                                          |  |                             |            |   |                            |  
|Selling, general and administrative expenses                 |  |                             | 292,342    |   |                            |  
|Total operating expenses                                     |  |                             | 292,342    |   |                            |  
|                                                             |  |                             |            |   |                            |  
|Loss from operations                                         |  |                             | (408,144   | ) |                            |  
|                                                             |  |                             |            |   |                            |  
|(Loss) gain on change in fair value of derivative liability  |  |                             | (3,623,835 | ) |                            |  
|Financing expenses                                           |  |                             | (718,466   | ) |                            |  
|Loss on settlement of debt                                   |  |                             | (382,596   | ) |                            |  
|Other income (expense), net                                  |  |                             | -          |   |                            |  
|                                                             |  |                             |            |   |                            |  
|Net loss                                                     |  |                             | (5,133,041 | ) |                            |  
|                                                             |  |                             |            |   |                            |  
|(Loss) income attributable to Non-controlling interest       |  |                             | (10,407    | ) |                            |  
|                                                             |  |                             |            |   |                            |  
|Loss attributable to Company                                 |  |                             | (5,122,634 | ) |                            |  
|                                                             |  |                             |            |   |                            |  
|Preferred stock dividend                                     |  |                             | (17,500    | ) |                            |  
|                                                             |  |                             |            |   |                            |  
|NET LOSS AVAILABLE TO COMMON STOCKHOLDERS                    |  | $                           | (5,140,134 | ) |                            | $
|                                                             |  |                             |            |   |                            |  
|Loss per common share, basic and diluted                     |  | $                           | (3.09      | ) |                            | $
|                                                             |  |                             |            |   |                            |  
|Weighted average common stock outstanding, basic and diluted |  |                             | 1,663,183  |   |                            |  



See the accompanying notes to the unaudited
condensed consolidated financial statements



4







MARKETING WORLDWIDE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS

(unaudited)



|                                                                                             |  | Nine months ended June 30, |           
|-------------------------------------------------------------------------------------------- |  | -------------------------- | ----------
|                                                                                             |  | 2012                       |           
|                                                                                             |  |                            |           
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                        |  |                            |           
|Net Loss                                                                                     |  | $                          | (6,318,411
|Adjustments to reconcile net loss to cash used in operations:                                |  |                            |           
|Depreciation and amortization                                                                |  |                            | 148,527   
|Amortization of deferred financing costs                                                     |  |                            | 111,496   
|Amortization of debt discounts                                                               |  |                            | 1,064,112 
|Non cash interest                                                                            |  |                            | 888,736   
|Loss on settlement of debt                                                                   |  |                            | 382,596   
|Change in fair value of derivative liability                                                 |  |                            | 2,538,814 
|Fair value of vested employee options                                                        |  |                            | 16,500    
|Stock based compensation                                                                     |  |                            | 70,500    
|Cancelation of previously issued common stock for services                                   |  |                            | (120,000  
|(Increase) decrease in operating assets:                                                     |  |                            |           
|Accounts receivable                                                                          |  |                            | 117,460   
|Inventory                                                                                    |  |                            | 9,441     
|Other current assets                                                                         |  |                            | -         
|Other assets                                                                                 |  |                            | -         
|Increase (decrease) in operating liabilities:                                                |  |                            |           
|Accounts payable and other current liabilities                                               |  |                            | 672,820   
|Cash used in operating activities                                                            |  |                            | (417,409  
|                                                                                             |  |                            |           
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                        |  |                            |           
|Purchase of property and equipment                                                           |  |                            | (12,859   
|Cash used in investing activities                                                            |  |                            | (12,859   
|                                                                                             |  |                            |           
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                        |  |                            |           
|Proceeds from sale of Series C preferred stock                                               |  |                            | -         
|Repayments of lines of credit                                                                |  |                            | (21,428   
|Proceed from issuance of notes                                                               |  |                            | 495,500   
|Repayments of notes payable                                                                  |  |                            | (32,948   
|Cash provided by financing activities                                                        |  |                            | 441,124   
|                                                                                             |  |                            |           
|Net increase in cash and cash equivalents                                                    |  |                            | 10,856    
|Cash and cash equivalents, beginning of period                                               |  |                            | 5,012     
|                                                                                             |  |                            |           
|Cash and cash equivalents, end of period                                                     |  | $                          | 15,868    
|                                                                                             |  |                            |           
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                           |  |                            |           
|Cash paid during year for interest                                                           |  | $                          | -         
|Cash paid during year for income taxes                                                       |  | $                          | -         
|                                                                                             |  |                            |           
|NON-CASH INVESTING AND FINANCING TRANSACTIONS:                                               |  |                            |           
|Common stock issued in settlement of debt                                                    |  | $                          | 1,783,509 
|Common stock issued in settlement of preferred stock dividends                               |  | $                          | 80,000    
|Accounts payable settled via issuance of notes payable                                       |  | $                          | 134,500   
|Preferred dividends declared                                                                 |  | $                          | 137,318   
|Note payable issued in exchange for Series C preferred stock                                 |  | $                          | 100,000   
|Issuance of Series E Preferred Stock in settlement of Series A and Series B Preferred Stocks |  | $                          | 2,095,413 
|Common stock issued upon conversion of Series A preferred stock                              |  | $                          | 1,808,099 
|Common stock issued upon conversion of Series E preferred stock                              |  | $                          | 89,118    



See the accompanying notes to the unaudited
condensed consolidated financial statements



5


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION



Nature of Operations



Marketing Worldwide Corporation (the "Company"),
was incorporated under the laws of the State of Delaware in July 2003. The Company is engaged in North America through its wholly-owned
subsidiaries, Marketing Worldwide LLC ("MWW"), and Colortek, Inc. (“CT”) in the design, manufacturing, painting
and distribution of automotive accessories for motor vehicles in the automotive aftermarket industry and provides design services
for large automobile manufacturers.  The Company has a wholly owned subsidiary in Germany, Modelworxx, GmbH, which, in
February, 2010, filed insolvency in the German courts.  As of the date of this filing, the Company has not received the
final determination from the German Courts. The Company has reclassified Modelworxx, GmbH fiscal year ended September 30, 2011
balances to reflect them as discontinued operations.



Basis of presentation



The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete financial statements.



In the opinion of management, all adjustments
consisting of normal recurring accruals considered necessary for a fair presentation have been included. Accordingly, the results
from operations for the nine month period ended June 30, 2012, are not necessarily indicative of the results that may be expected
for the year ending September 30, 2012. The unaudited condensed consolidated financial statements should be read in conjunction
with the September 30, 2011 consolidated financial statements and footnotes thereto included in the Company's SEC Form 10-K.



The unaudited condensed consolidated financial
statements include the accounts of the Company and its wholly-owned subsidiaries and Variable Interest Entity (“VIE”),
JCMD, LLC (See note 11). All significant inter-company transactions and balances, including those involving the VIE, have been
eliminated in consolidation.



NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Net income (loss) per share



Basic and diluted income (loss) per common
share is based upon the weighted average number of common shares outstanding during the period computed under the provisions of
Accounting Standards Codification subtopic 260-10, Earnings per Share (“ASC 260-10”).  For the three and
nine months ended June 30, 2012 and 2011, all primary dilutive common shares have been excluded since the inclusion would be anti-dilutive.



Such shares consist of the following at June 30, 2012 and 2011:



|                                       |  | 2012 |            |  | 2011 | 
|-------------------------------------- |  | ---- | ---------- |  | ---- | 
|Convertible debt                       |  |      | 23,818,435 |  |      | 
|Conversion of Series A preferred stock |  |      | -          |  |      | 
|Conversion of Series B preferred stock |  |      | -          |  |      | 
|Conversion of Series C preferred stock |  |      | -          |  |      | 
|Conversion of Series E preferred stock |  |      | 38,480,865 |  |      | 
|Options                                |  |      | 8,967      |  |      | 
|Warrants                               |  |      | 16,250     |  |      | 
|Totals                                 |  |      | 62,324,517 |  |      | 



6


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




Foreign currency



The functional currency of the Company
is the U. S. dollar. When a transaction is executed in a foreign currency, it is re-measured into U. S. dollars based on appropriate
rates of exchange in effect at the time of the transaction. At each balance sheet date, recorded balances that are denominated
in a currency other than the functional currency of the Companies are adjusted to reflect the current exchange rate. The related translation
adjustments are included in other comprehensive income and were not material during the nine months ended June 30, 2012. The resulting
foreign currency transactions gains (losses), which were not material, are included in selling, general and administration
expenses in the accompanying unaudited condensed consolidated statements of operations.



Fair value of financial instruments



Cash, accounts receivable, accounts payable
and accrued expenses approximate fair value because of their short-term nature. The fair value of notes payable and short-term
debt is estimated to approximate fair market value based on the current rates available to companies such as MWW.



Accounting for bad debt and allowances



Bad debts and allowances are provided based
on historical experience and management's evaluation of outstanding accounts receivable. Management evaluates past due or delinquency
of accounts receivable based on the open invoices aged on due date basis. The allowance for doubtful accounts at June 30, 2012
and September 30, 2011 approximated $17,200 and $20,000, respectively.



Reclassification



Certain reclassifications have been made
to conform the prior period’s data to the current presentation. These reclassifications had no effect on reported net loss.



Accounting for variable interest entities



Accounting Standards Codification subtopic
810-10, Consolidation (“ASC 810-10”) discusses certain entities in which equity investors do not have the characteristics
of a controlling financial interest or do not have sufficient equity risk for the entity to finance its activities without additional
subordinated financial support. ASC 810-10 requires the consolidation of these entities, known as variable interest entities, by
the primary beneficiary of the entity. The primary beneficiary is the entity, if any, that will absorb a majority of the entity’s
expected losses, receive a majority of the entity's expected residual returns, or both.



Pursuant to the effective date of a related
party lease obligation, the Company adopted ASC 810-10.  This resulted in the consolidation of one variable interest
entity (VIE) of which the Company is considered the primary beneficiary. The Company's variable interest in this VIE is the result
of providing certain secured debt mortgage guarantees on behalf of a limited liability company that leases warehouse and general
offices located in the city of Howell, Michigan.



The Variable Interest Entity included in
these unaudited condensed consolidated financial statements sold the only asset it owned, which was real estate subject to a lease
with the Company, for $800,000 on November 30, 2010.  This sale resulted in a loss of approximately $400,000 and
left a remaining liability to the Small Business Administration of approximately $500,000 which is guaranteed by the Company.  As
of the date of this filing, the Company has not received any specific demands or requests for payment on this loan. This loss was
recorded as an impairment loss in the September 30, 2010 consolidated financial statements.



7


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012






Deferred financing costs



Deferred financing costs represent costs
incurred in connection with obtaining the debt financing.  These costs are amortized to financing expenses over the term
of the related debt using the interest rate method. The amortization for the three and nine month periods ended June 30, 2012 was
$18,971 and $111,496, respectively, and for the three and nine months ended June 30, 2011 was $32,983 and $98,948, respectively. 
Accumulated amortization of deferred financing costs was $712,715 and $601,219 at June 30, 2012 and September 30, 2011, respectively.



Recent accounting pronouncements



There were various updates recently issued,
most of which represented technical corrections to the accounting literature or application to specific industries and are not
expected to a have a material impact on the Company's unaudited condensed consolidated financial position, results of operations
or cash flows.



NOTE 3 - GOING CONCERN MATTERS AND TRIGGERING
EVENTS



The Company has incurred substantial recurring
losses.  The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities and commitments
in the normal course of business.  As shown in the accompanying unaudited condensed consolidated financial statements
during the nine month period ended June 30, 2012, the Company incurred a net loss attributable to common stockholders of approximately
$6,287,000. The Company has available cash of approximately $16,000 at June 30, 2012.  During the nine months
ended June 30, 2012, the Company’s operating activities used cash of approximately $417,000.  The Company’s
working capital deficiency was approximately $4,612,000 and $4,074,000 as of June 30, 2012 and September 30, 2011, respectively.  The
Company’s accumulated deficit was approximately $23,372,000 and $16,948,000 as of June 30, 2012 and September 30, 2011, respectively.  In
addition, the Company has a stockholders’ deficit of approximately $10,805,000 and $8,056,000 at June 30, 2012 and September
30, 2011, respectively.  The Company has pledged all of its assets to Summit Financial Resources (Summit) as security
for the Summit loan agreement.



The Company has reduced cash required for
operations by reducing operating costs and reducing staff levels. In addition, the Company is working to manage its current liabilities
while it continues to make changes in operations to improve its cash flow and liquidity position.



CT is a Class A Original Equipment painting
facility and operates in a 46,000 square foot owned building in Baroda, which is in South Western Michigan. The Company invested
approximately $2 million into this paint facility and expects the majority of future growth to come from this business.  The
Company has restructured the management of this subsidiary and even though revenues are down, the Company has successfully gained
more business opportunities than ever before.  These opportunities take time to develop before converted to revenue.
CT is aggressively beginning to diversify to non-automotive paint applications (industrial equipment) which we believe will help
stabilize the Company going forward.  CT currently has submitted quotes for new business opportunities aggregating approximately
$20 million in revenue.



If the Company runs out of available capital,
it might be required to pursue additional highly dilutive equity or debt issuances to finance its business in a difficult and hostile
market, including possible equity financings at a price per share that might be much lower than the per share price invested by
current shareholders.  No assurance can be given that any source of additional cash would be available to the Company.  If
no source of additional cash is available to the Company, then the Company would be forced to significantly reduce the scope of
its operations.



There can be no assurance that such funding
initiatives will be successful and any equity placement could result in substantial dilution to current stockholders.  The
above factors raise substantial doubt about the Company’s ability to continue as a going concern.  The unaudited
condensed consolidated financial statements do not include any adjustments relating to the recoverability of the recorded assets
or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.





8


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




NOTE 4 – INVENTORIES



The inventories are stated at the lower
of cost or market using the first-in, first-out method of valuation. The inventories at June 30, 2012 and September 30, 2011 are
as follows:



|                               |  | June 30, |          |   | September 30, |  
|------------------------------ |  | -------- | -------- | - | ------------- | -
|                               |  | 2012     |          |   | 2011          |  
|Work in process                |  | $        | 290,772  |   |               | $
|Finished goods                 |  |          | 61,724   |   |               |  
|Total inventory before reserve |  |          | 352,496  |   |               |  
|Less inventory reserve         |  |          | (268,634 | ) |               |  
|Net inventory                  |  | $        | 83,862   |   |               | $



The inventory reserve is determined after
an exhaustive review and analysis of all inventories on hand.  The Company examines the likelihood of salability of each
inventory item, and if there is more than 6 months supply of an item on hand, an appropriate reserve is recorded against such inventory;
for cancelled or completed programs, existing inventory is 100 % reserved for.  At June 30, 2012 and September 30, 2011,
the majority of the inventory reserve is for supply of product no longer in production or demand from existing customers.



NOTE 5 - PROPERTY, PLANT AND EQUIPMENT



At June 30, 2012 and September 30, 2011, property, plant and
equipment consist of the following:



|                                  |  | June 30,   2012 |            |   | September 30,   2011 |   |            | Range of  Estimated Life | 
|--------------------------------- |  | --------------- | ---------- | - | -------------------- | - | ---------- | ------------------------ | 
|Land                              |  | $               | 150,000    |   |                      | $ | 150,000    |                          | 
|Building                          |  |                 | 800,000    |   |                      |   | 800,000    |                          | 
|Office equipment                  |  |                 | 34,645     |   |                      |   | 34,645     |                          | 
|Tooling and other equipment       |  |                 | 1,430,499  |   |                      |   | 1,417,640  |                          | 
|Subtotal                          |  |                 | 2,415,144  |   |                      |   | 2,402,285  |                          | 
|Less accumulated depreciation     |  |                 | (1,458,126 | ) |                      |   | (1,309,599 | )                        | 
|Net property, plant and equipment |  | $               | 957,018    |   |                      | $ | 1,092,686  |                          | 



Depreciation expense included as a charge
to operations of $37,737 and $148,527 for the three and nine months ended June 30, 2012, respectively, and $60,528 and $186,977
for the three and nine months ended June 30, 2011 respectively.



NOTE 6 - LINE OF CREDIT



In August, 2009, the Company entered into
a financing agreement with Summit Financial Resources L.P. (Summit) for a maximum borrowing of up to $1,000,000 maturing August
31, 2010. The arrangement is based on recourse factoring of the Company’s accounts receivables. Substantially all assets
within the consolidation group have been pledged as collateral for the Summit facility.   The financing agreement
was extended for one year through August 31, 2012.  The Company is evaluating the necessity of continuing this agreement
and may terminate the relationship by August 31, 2012.



Under the arrangement, Summit typically
advances to the Company 75% of the total amount of accounts receivable factored. Summit retains 25% of the outstanding factored
accounts receivable as a reserve, which it holds until the customer pays the factored invoice to Summit. The cost of funds for
the accounts receivable portion of the borrowings with Summit includes: (a) a collateral management fee of 0.65% of the face amount
of factored accounts receivable for each period of fifteen days, or portion thereof, that the factored accounts receivable remains
outstanding until payment in full is applied and (b) interest charged at the Wall Street Journal prime rate plus 1% divided by
360.  The Summit default rate is the Wall Street Journal prime rate plus 10%. The Company may be obligated to purchase
the receivable back from Summit at the end of 90 days.





9


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




Under the terms of the recourse provision,
the Company is required to repurchase factored receivables if they are not paid in full or are deemed no longer acceptable. Accordingly,
the Company has accounted for the financing agreement as a secured borrowing arrangement and not a sale of financial assets.



As of June 30, 2012, the advance balance
due to Summit was $nil.



NOTE 7 - NOTES PAYABLE



At June 30, 2012 and September 30, 2011,
notes payable consists of the following:



|                                                                                                                                                                                                                                                                                                             |  | June 30,  2012 |         |  | September 30,  2011 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------- | ------- |  | ------------------- | -
|                                                                                                                                                                                                                                                                                                             |  |                |         |  |                     |  
|JCMD Mortgage loan payable in 240 monthly principal installments plus interest. The loan was secured by a second deed of trust on real property and improvements located in Howell, MI. In addition to the Company the JCMD General Partners personally guarantee the loan. The note is in default. (*)      |  | $              | 489,755 |  |                     | $
|Colortek Mortgage loan payable in monthly principal installments of $5,961 with a fixed interest rate of 6.75% per annum.  Note based on a 20 year amortization. Note is secured by first priority security interest in the business property of Colortek, Inc, the Company's wholly owned subsidiary.  (**) |  |                | 561,579 |  |                     |  
|Note payable issued February 19, 2011, due contingent on certain events with interest at 5% per annum, unsecured, net of unamortized debt discount of  $66,214                                                                                                                                               |  |                | -       |  |                     |  
|Note payable issued March 22, 2011, due on December 28, 2011 with interest at 8% per annum, unsecured, net of unamortized debt discount of $7,918                                                                                                                                                            |  |                | -       |  |                     |  
|Note payable issued May 6, 2011, due February 10, 2012 with interest at 8% per annum, unsecured, net of unamortized debt discount of $14,250                                                                                                                                                                 |  |                | -       |  |                     |  
|Note payable issued on June 29, 2011, due July 1, 2012, with interest at 8% per annum, unsecured, net of unamortized debt discount of $nil and $186,821, respectively.                                                                                                                                       |  |                | 138,000 |  |                     |  
|Note payable, issued on January 10, 2011, due July 10, 2011, with interest at 7% per annum, unsecured                                                                                                                                                                                                        |  |                | -       |  |                     |  
|Note payable issued on July 1, 2011, due  July 1, 2012, with interest at 16% per annum, unsecured, net of unamortized debt discount of $nil and $18,135, respectively.                                                                                                                                       |  |                | 25,000  |  |                     |  
|Note payable issued on July 15, 2011, due  July 15, 2012, with interest at 16% per annum, unsecured, net of unamortized debt discount of $78,904                                                                                                                                                             |  |                | -       |  |                     |  
|Note payable issued on July 20, 2011, due  July 20, 2012, with interest at 16% per annum, unsecured, net of unamortized debt discount of $781 and $12,041, respectively                                                                                                                                      |  |                | 14,219  |  |                     |  
|Note payable issued on July 21, 2011, due  July 21, 2012, with interest at 16% per annum, unsecured, net of unamortized debt discount of $1,918 and $28,192, respectively                                                                                                                                    |  |                | 33,082  |  |                     |  
|Note payable issued on July 20, 2011, due  January 31, 2012, with interest at 5% per annum, unsecured, net of unamortized debt discount of nil and  $19,720, respectively                                                                                                                                    |  |                | -       |  |                     |  
|Note payable issued August 16, 2011, due August 15, 2012 with interest at 16% per annum, unsecured, net of unamortized debt discount of $23,753                                                                                                                                                              |  |                | -       |  |                     |  
|Note payable issued September 28, 2011, due  September 27, 2012 with interest at 16% per annum, unsecured, net of unamortized debt discount of $29,836                                                                                                                                                       |  |                | -       |  |                     |  
|Note payable, issued December 6, 2011, due September 8, 2012, with interest at 8% per annum, unsecured, net of unamortized debt discount of $6,191                                                                                                                                                           |  |                | 18,309  |  |                     |  





10


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




|                                                                                                                                                         |  | June 30,  2012 |            |   | September 30,  2011 |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ---------- | - | ------------------- | -
|Note payable, issued on February 1, 2012, November 2, 2012, with interest at 8% per annum, unsecured, net of unamortized debt discount of $16,434        |  |                | 31,066     |   |                     |  
|Note payable, issued on February 15, 2012, due February 15, 2013, with interest at 10% per annum, unsecured, net of unamortized debt discount of $31,370 |  |                | 18,630     |   |                     |  
|Note payable, issued on February 22, 2012, due November 22, 2012, with interest at 8% per annum, unsecured, net of unamortized debt discount of $54,418  |  |                | 48,082     |   |                     |  
|Note payable, issued on April 25, 2012, due January 30, 2013, with interest at 8% per annum, unsecured, net of unamortized debt discount of $34,393      |  |                | 10,607     |   |                     |  
|Note payable, issued on May 16, 2012, due December 31, 2012, with interest at 6% per annum, unsecured, net of unamortized debt discount of $64,279       |  |                | 15,721     |   |                     |  
|Note payable, issued on May 16, 2012, due December 31, 2012, with interest at 6% per annum, unsecured, net of unamortized debt discount of $64,279       |  |                | 15,721     |   |                     |  
|Note payable, issued on May 22, 2012, due on demand, with interest at 6% per annum, unsecured                                                            |  |                | 1,000      |   |                     |  
|Notes payable, issued on June 1, 2012, due December 31, 2012, with interest at 6% per annum, unsecured, net of unamortized debt discount of $82,264      |  |                | 12,965     |   |                     |  
|Total                                                                                                                                                    |  |                | 1,433,736  |   |                     |  
|Less current portion                                                                                                                                     |  |                | (1,433,736 | ) |                     |  
|Long term portion                                                                                                                                        |  | $              | -          |   |                     | $



(*) In accordance with the Forbearance
Agreement, the secured lender of the JCMD Mortgage Loans increased the interest rate on unpaid balances to bear interest at a floating
rate of two and quarter percent (2.25%) in excess of the Bank’s Prime Rate, and upon default shall bear interest at a rate
of five and one quarter percent (5.25%) in excess of the Bank’s Prime Rate.  On November 30, 2010, the real estate
securing the mortgage loan payable was sold and the first deed of trust was fully retired.  The proceeds from the sale
of real estate did not retire the balance of the loan secured by the second deed of trust.  There is a shortfall of approximately
$490,000 that will continue to be carried as a liability to SBA and will be adjusted once the offer in compromise has been accepted.  The
sale of real estate for $800,000 which was less than the carrying value of $1,210,000, resulted in the Company recording an impairment
charge of approximately $410,000 for the year ended September 30, 2010.



(**) In accordance with the mortgage loan agreement, the Company
is currently in default of certain loan covenants.



Note issued October 7, 2011



On October 7, 2011, the Company issued
a $53,000 Convertible Promissory Note that matures on July 11, 2012. The note bears interest at a rate of 8% and is convertible
into the Company’s common stock at any time at the holder’s option, at the conversion rate of 55% of the lowest three
trading days 10 days prior to notice of conversion.



The Company identified embedded derivatives
related to the Convertible Promissory Note entered into on October 7, 2011.  These embedded derivatives included certain
conversion features.  The accounting treatment of derivative financial instruments requires that the Company record the
fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each
subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company determined a fair value
of $91,801 of the embedded derivative.  The fair value of the embedded derivative was determined using the Binomial Lattice
Model based on the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 425.63 | %
|Risk free rate: |  |  | 0.11   | %





11


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




The initial fair value of the embedded
debt derivative of $91,801 was allocated as a debt discount up to the proceeds of the note ($53,000) with the remainder ($38,801)
charged to current period operations as interest expense.



During the three and nine months ended
June 30, 2012, the Company amortized $19,446 and $53,000 to current period operations as interest expense, respectively.



During the nine months ended June 30, 2012,
the Company issued an aggregate of 231,838 shares of its common stock in settlement of the note payable and accrued interest.



Note issued November 28, 2011



On November 28, 2011, the Company issued
a $127,000 Convertible Promissory Note payable on demand. The note bears interest at a rate of 7% and is convertible into the Company’s
common stock at any time at the holder’s option, at the conversion rate of 25% of the average bid price 5 days prior to notice
of conversion with a floor of $2.10 per share.



The Company identified embedded derivatives
related to the Convertible Promissory Note entered into on November 28, 2011.  These embedded derivatives included certain
conversion features.  The accounting treatment of derivative financial instruments requires that the Company record the
fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each
subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company determined a fair value
of $146,682 of the embedded derivative.  The fair value of the embedded derivative was determined using the Binomial
Lattice Model based on the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 403.66 | %
|Risk free rate: |  |  | 0.20   | %



The initial fair value of the embedded
debt derivative of $146,682 was allocated as a debt discount up to the proceeds of the note ($127,000) with the remainder ($19,682)
charged to current period operations as interest expense.



During the three and nine months ended
June 30, 2012, the Company amortized and wrote off (upon conversion) a total of $1,086 and $127,000 to current period operations
as interest expense, respectively.



During the nine months ended June 30, 2012,
the Company issued an aggregate of 195,229 shares of common stock in settlement the convertible note and related interest.



Note issued November 29, 2011



On November 29, 2011, the Company issued
a $19,005 Convertible Promissory Note that matures on November 28, 2012. The note bears interest at a rate of 8% and is convertible
into the Company’s common stock at any time at the holder’s option, at the fixed conversion rate of $0.66 per share.



Due to the nature of other existing convertible
promissory notes, the Company could not insure sufficient shares available upon conversion demands, therefore the Company identified
embedded derivatives related to the Convertible Promissory Note entered into on November 29, 2011.  These embedded derivatives
included certain conversion features.  The accounting treatment of derivative financial instruments requires that the
Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the
fair value as of each subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company
determined a fair value of $43,572 of the embedded derivative.  The fair value of the embedded derivative was determined
using the Binomial Lattice Model based on the following assumptions:



12


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 398.61 | %
|Risk free rate: |  |  | 0.14   | %



The initial fair value of the embedded
debt derivative of $43,572 was allocated as a debt discount up to the proceeds of the note ($19,005) with the remainder ($24,567)
charged to current period operations as interest expense.



During the three and nine months ended
June 30, 2012, the Company amortized and wrote off (upon conversion) $ nil and $19,005 to current period operations as interest
expense, respectively.



During the nine months ended June 30, 2012,
the Company issued an aggregate of 28,796 shares of common stock in full settlement of the convertible note and related interest.



Note issued December 6, 2011



On December 6, 2011, the Company issued
a $37,500 Convertible Promissory Note that matures on September 8, 2012. The note bears interest at a rate of 8% and is convertible
into the Company’s common stock at any time at the holder’s option, at the conversion rate of 51% of the lowest three
trading days 10 days prior to notice of conversion.



The Company identified embedded derivatives
related to the Convertible Promissory Note entered into on December 6, 2011.  These embedded derivatives included certain
conversion features.  The accounting treatment of derivative financial instruments requires that the Company record the
fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each
subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company determined a fair value
of $76,924 of the embedded derivative.  The fair value of the embedded derivative was determined using the Binomial Lattice
Model based on the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 399.15 | %
|Risk free rate: |  |  | 0.11   | %



The initial fair value of the embedded
debt derivative of $76,924 was allocated as a debt discount up to the proceeds of the note ($37,500) with the remainder ($39,424)
charged to current period operations as interest expense.



During the three and nine months ended
June 30, 2012, the Company amortized and wrote off (upon conversion) $15,605 and $31,309 to current period operations as interest
expense, respectively.



The fair value of the described embedded
derivative of $74,872 at June 30, 2012 was determined using the Binomial Lattice Model with the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 277.93 | %
|Risk free rate: |  |  | 0.095  | %



During the nine months ended June 30, 2012,
the Company issued an aggregate of 149,840 shares of common stock in settlement of $13,000 of the convertible note.



At June 30, 2012, the Company adjusted
the recorded fair value of the derivative liability to market resulting in non-cash, non-operating loss of $18,725 for the three
months ended June 30, 2012.





13


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




Note issued December 27, 2011



On December 27, 2011, the Company issued
a $10,887 Convertible Promissory Note that matures on December 26, 2012. The note bears interest at a rate of 8% and is convertible
into the Company’s common stock at any time at the holder’s option, at the fixed conversion rate of $0.60 per share.



Due to the nature of other existing convertible
promissory notes, the Company could not insure sufficient shares available upon conversion demands, therefore the Company identified
embedded derivatives related to the Convertible Promissory Note entered into on December 27, 2011.  These embedded derivatives
included certain conversion features.  The accounting treatment of derivative financial instruments requires that the
Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the
fair value as of each subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company
determined a fair value of $47,591 of the embedded derivative.  The fair value of the embedded derivative was determined
using the Binomial Lattice Model based on the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 376.40 | %
|Risk free rate: |  |  | 0.12   | %



The initial fair value of the embedded
debt derivative of $47,591 was allocated as a debt discount up to the proceeds of the note ($10,887) with the remainder ($36,704)
charged to current period operations as interest expense.



During the three and nine months ended
June 30, 2012, the Company amortized and wrote off (upon conversion) $nil and $10,887 to current period operations as interest
expense, respectively.



During the nine months ended June 30, 2012,
the Company issued an aggregate of 18,145 shares of common stock in full settlement of the convertible note and related interest.



Note issued January 3, 2012



On January 3, 2012, the Company issued
a $8,998 Convertible Promissory Note that matures on January 3, 2013. The note bears interest at a rate of 8% and is convertible
into the Company’s common stock at any time at the holder’s option, at the fixed conversion rate of $0.90 per share.



Due to the nature of other existing convertible
promissory notes, the Company could not insure sufficient shares available upon conversion demands, therefore the Company identified
embedded derivatives related to the Convertible Promissory Note entered into on January 3, 2012.  These embedded derivatives
included certain conversion features.  The accounting treatment of derivative financial instruments requires that the
Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the
fair value as of each subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company
determined a fair value of $20,206 of the embedded derivative.  The fair value of the embedded derivative was determined
using the Binomial Lattice Model based on the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 379.14 | %
|Risk free rate: |  |  | 0.12   | %



The initial fair value of the embedded
debt derivative of $20,206 was allocated as a debt discount up to the proceeds of the note ($8,998) with the remainder ($11,208)
charged to current period operations as interest expense.



During the three and nine months ended
June 30, 2012, the Company amortized and wrote off (upon conversion) $nil and $8,998 to current period operations as interest
expense, respectively.



14


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




During the nine months ended June 30, 2012,
the Company issued an aggregate of 10,000 shares of common stock in full settlement of the convertible note and related interest.



Note issued January 17, 2012



On January 17, 2012, the Company issued
a $11,212 Convertible Promissory Note that matures on January 17, 2013. The note bears interest at a rate of 8% and is convertible
into the Company’s common stock at any time at the holder’s option, at the fixed conversion rate of $0.90 per share.



Due to the nature of other existing convertible
promissory notes, the Company could not insure sufficient shares available upon conversion demands, therefore the Company identified
embedded derivatives related to the Convertible Promissory Note entered into on January 17, 2012.  These embedded derivatives
included certain conversion features.  The accounting treatment of derivative financial instruments requires that the
Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the
fair value as of each subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company
determined a fair value of $36,112 of the embedded derivative.  The fair value of the embedded derivative was determined
using the Binomial Lattice Model based on the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 372.71 | %
|Risk free rate: |  |  | 0.11   | %



The initial fair value of the embedded
debt derivative of $36,112 was allocated as a debt discount up to the proceeds of the note ($11,212) with the remainder ($24,900)
charged to current period operations as interest expense.



During the three and nine months ended
June 30, 2012, the Company amortized and wrote off (upon conversion) $nil and $11,212 to current period operations as interest
expense, respectively.



During the nine months ended June 30, 2012,
the Company issued an aggregate of 12,667 shares of common stock in full settlement of the convertible note and related interest.



Note issued February 1, 2012



On February 1, 2012, the Company issued
a $47,500 Convertible Promissory Note that matures on November 2, 2012. The note bears interest at a rate of 8% and is convertible
into the Company’s common stock at any time at the holder’s option, at the conversion rate of 51% of the lowest three
trading days 10 days prior to notice of conversion.



The Company identified embedded derivatives
related to the Convertible Promissory Note entered into on February 1, 2012.  These embedded derivatives included certain
conversion features.  The accounting treatment of derivative financial instruments requires that the Company record the
fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each
subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company determined a fair value
of $121,282 of the embedded derivative.  The fair value of the embedded derivative was determined using the Binomial
Lattice Model based on the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 350.13 | %
|Risk free rate: |  |  | 0.13   | %



The initial fair value of the embedded
debt derivative of $121,282 was allocated as a debt discount up to the proceeds of the note ($47,500) with the remainder ($73,282)
charged to current period operations as interest expense.





15


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




During the three and nine months ended
June 30, 2012, the Company amortized $11,964 and $19,721 to current period operations as interest expense, respectively.



The fair value of the described embedded
derivative of $152,254 at June 30, 2012 was determined using the Binomial Lattice Model with the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 277.93 | %
|Risk free rate: |  |  | 0.09   | %



At June 30, 2012, the Company adjusted
the recorded fair value of the derivative liability to market resulting in non-cash, non-operating loss of $76,455 for the three
months ended June 30, 2012.



Note issued February 2, 2012



On February 2, 2012, the Company issued
a $20,000 Convertible Promissory Note that matures on February 1, 2013. The note bears interest at a rate of 8% and is convertible
into the Company’s common stock at any time at the holder’s option, at the fixed conversion rate of $0.90 per share.



Due to the nature of other existing convertible
promissory notes, the Company could not insure sufficient shares available upon conversion demands, therefore the Company identified
embedded derivatives related to the Convertible Promissory Note entered into on February 2, 2012.  These embedded derivatives
included certain conversion features.  The accounting treatment of derivative financial instruments requires that the
Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the
fair value as of each subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company
determined a fair value of $50,783 of the embedded derivative.  The fair value of the embedded derivative was determined
using the Binomial Lattice Model based on the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 350.18 | %
|Risk free rate: |  |  | 0.31   | %



The initial fair value of the embedded
debt derivative of $50,783 was allocated as a debt discount up to the proceeds of the note ($20,000) with the remainder ($30,783)
charged to current period operations as interest expense.



During the three and nine months ended
June 30, 2012, the Company amortized and wrote off (upon conversion) $nil and $20,000 to current period operations as interest
expense, respectively.



During the nine months ended June 30, 2012,
the Company issued an aggregate of 22,333 shares of common stock in full settlement of the convertible note and related interest.



Note issued February 15, 2012



On February 15, 2012, the Company issued
a $100,000 Convertible Promissory Note that matures on December 31, 2012 in exchange for 100 shares of Series C Preferred stock.
The note bears interest at a rate of 8% and is convertible into the Company’s common stock at any time at the holder’s
option, at the fixed conversion rate of $2.25 per share.



16


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




Due to the nature of other existing convertible
promissory notes, the Company could not insure sufficient shares available upon conversion demands, therefore the Company identified
embedded derivatives related to the Convertible Promissory Note entered into on February 15, 2012.  These embedded derivatives
included certain conversion features.  The accounting treatment of derivative financial instruments requires that the
Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the
fair value as of each subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company
determined a fair value of $52,677 of the embedded derivative.  The fair value of the embedded derivative was determined
using the Binomial Lattice Model based on the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 325.00 | %
|Risk free rate: |  |  | 0.18   | %



The initial fair value of the embedded
debt derivative of $52,677 was allocated as a debt discount up to the proceeds of the note.



During the three and nine months ended
June 30, 2012, the Company amortized and wrote off (upon conversion) $nil and $52,677 to current period operations as interest
expense, respectively.



During the nine months ended June 30, 2012,
the Company issued an aggregate of 44,649 shares of common stock in full settlement of the convertible note and related interest.



Note issued February 15, 2012



On February 15, 2012, the Company issued
a $50,000 Convertible Promissory Note that matures on February 15, 2013. The note bears interest at a rate of 10% and is convertible
into the Company’s common stock at any time at the holder’s option, at the conversion rate of 65% of the lowest two
trading days 10 days prior to notice of conversion.



The Company identified embedded derivatives
related to the Convertible Promissory Note entered into on February 15, 2012.  These embedded derivatives included certain
conversion features.  The accounting treatment of derivative financial instruments requires that the Company record the
fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each
subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company determined a fair value
of $72,072 of the embedded derivative.  The fair value of the embedded derivative was determined using the Binomial Lattice
Model based on the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 325.00 | %
|Risk free rate: |  |  | 0.18   | %



The initial fair value of the embedded
debt derivative of $72,072 was allocated as a debt discount up to the proceeds of the note ($50,000) with the remainder ($22,072)
charged to current period operations as interest expense.



During the three and nine months ended
June 30, 2012, the Company amortized $12,466 and $18,630 to current period operations as interest expense, respectively.



The fair value of the described embedded
derivative of $131,307 at June 30, 2012 was determined using the Binomial Lattice Model with the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 277.93 | %
|Risk free rate: |  |  | 0.16   | %





17


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




At June 30, 2012, the Company adjusted
the recorded fair value of the derivative liability to market resulting in non-cash, non-operating loss of $61,702 for the three
months ended June 30, 2012.



Note issued February 21, 2012



On February 21, 2012, the Company issued
a $64,398 Convertible Promissory Note that matures on February 1, 2013. The note bears interest at a rate of 8% and is convertible
into the Company’s common stock at any time at the holder’s option, at the conversion rate of 52% of the lowest trading
day 10 days prior to notice of conversion.



The Company identified embedded derivatives
related to the Convertible Promissory Note entered into on February 21, 2012.  These embedded derivatives included certain
conversion features.  The accounting treatment of derivative financial instruments requires that the Company record the
fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each
subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company determined a fair value
of $123,822 of the embedded derivative.  The fair value of the embedded derivative was determined using the Binomial
Lattice Model based on the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 318.85 | %
|Risk free rate: |  |  | 0.17   | %



The initial fair value of the embedded
debt derivative of $123,822 was allocated as a debt discount up to the proceeds of the note ($64,398) with the remainder ($59,424)
charged to current period operations as interest expense.



During the three and nine months ended
June 30, 2012, the Company amortized and wrote off (upon conversion) $nil and $64,398 to current period operations as interest
expense, respectively.



During the nine months ended June 30, 2012,
the Company issued an aggregate of 113,667 shares of common stock in full settlement of the convertible note and related interest.



Note issued February 22, 2012



On February 22, 2012, the Company issued
a $102,500 Convertible Promissory Note that matures on February 22, 2013. The note bears interest at a rate of 8% and is convertible
into the Company’s common stock at any time at the holder’s option, at the conversion rate of 65% of the lowest three
trading days 10 days prior to notice of conversion.



The Company identified embedded derivatives
related to the Convertible Promissory Note entered into on February 22, 2012.  These embedded derivatives included certain
conversion features.  The accounting treatment of derivative financial instruments requires that the Company record the
fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each
subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company determined a fair value
of $204,223 of the embedded derivative.  The fair value of the embedded derivative was determined using the Binomial
Lattice Model based on the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 318.85 | %
|Risk free rate: |  |  | 0.17   | %



The initial fair value of the embedded
debt derivative of $204,223 was allocated as a debt discount up to the proceeds of the note ($102,500) with the remainder ($101,723)
charged to current period operations as interest expense.





18


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




During the three and nine months ended
June 30, 2012, the Company amortized $33,918 and $48,082 to current period operations as interest expense, respectively.



The fair value of the described embedded
derivative of $338,472 at June 30, 2012 was determined using the Binomial Lattice Model with the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 277.93 | %
|Risk free rate: |  |  | 0.16   | %



At June 30, 2012, the Company adjusted
the recorded fair value of the derivative liability to market resulting in non-cash, non-operating loss of $171,572 for the three
months ended June 30, 2012.



Note issued April 10, 2012



On April 10, 2012, the Company issued a
$16,615 Convertible Promissory Note that matures on April 9, 2013. The note bears interest at a rate of 8% and is convertible into
the Company’s common stock at any time at the holder’s option, at the fixed conversion rate of $0.2931 per share.



Due to the nature of other existing convertible
promissory notes, the Company could not insure sufficient shares available upon conversion demands, therefore the Company identified
embedded derivatives related to the Convertible Promissory Note entered into on April 10, 2012.  These embedded derivatives
included certain conversion features.  The accounting treatment of derivative financial instruments requires that the
Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the
fair value as of each subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company
determined a fair value of $27,192 of the embedded derivative.  The fair value of the embedded derivative was determined
using the Binomial Lattice Model based on the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 240.82 | %
|Risk free rate: |  |  | 0.19   | %



The initial fair value of the embedded
debt derivative of $27,192 was allocated as a debt discount up to the proceeds of the note ($16,615) with the remainder ($10,577)
charged to current period operations as interest expense.



During the three and nine months ended
June 30, 2012, the Company amortized and wrote off (upon conversion) $16,615 to current period operations as interest expense.



During the nine months ended June 30, 2012,
the Company issued an aggregate of 56,667 shares of common stock in full settlement of the convertible note and related interest.



Note issued April 25, 2012



On April 25, 2012, the Company issued a
$45,000 Convertible Promissory Note that matures on January 30, 2013. The note bears interest at a rate of 8% and is convertible
into the Company’s common stock at any time at the holder’s option, at the conversion rate of 51% of the lowest three
trading days 10 days prior to notice of conversion.



The Company identified embedded derivatives
related to the Convertible Promissory Note entered into on April 25, 2012.  These embedded derivatives included certain
conversion features.  The accounting treatment of derivative financial instruments requires that the Company record the
fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each
subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company determined a fair value
of $84,798 of the embedded derivative.  The fair value of the embedded derivative was determined using the Binomial Lattice
Model based on the following assumptions:





19


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 257.63 | %
|Risk free rate: |  |  | 0.18   | %



The initial fair value of the embedded
debt derivative of $84,798 was allocated as a debt discount up to the proceeds of the note ($45,000) with the remainder ($39,798)
charged to current period operations as interest expense.



During the three and nine months ended
June 30, 2012, the Company amortized $10,607 to current period operations as interest expense.



The fair value of the described embedded
derivative of $153,595 at June 30, 2012 was determined using the Binomial Lattice Model with the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 277.93 | %
|Risk free rate: |  |  | 0.16   | %



At June 30, 2012, the Company adjusted
the recorded fair value of the derivative liability to market resulting in non-cash, non-operating loss of $68,797 for the three
months ended June 30, 2012.



Note issued May 16, 2012



On May 16, 2012, the Company issued a $80,000
Convertible Promissory Note that matures on December 31, 2012. The note bears interest at a rate of 6% and is convertible into
the Company’s common stock at any time at the holder’s option, at the conversion rate of 50% of the lowest bid price
5 trading days prior to notice of conversion. The note includes a redemption premium up to 120% of the face of the note for early
payoff.



The Company identified embedded derivatives
related to the Convertible Promissory Note entered into on May 16, 2012.  These embedded derivatives included certain
conversion features.  The accounting treatment of derivative financial instruments requires that the Company record the
fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each
subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company determined a fair value
of $174,938 of the embedded derivative.  The fair value of the embedded derivative was determined using the Binomial
Lattice Model based on the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 258.13 | %
|Risk free rate: |  |  | 0.20   | %



The initial fair value of the embedded
debt derivative of $174,938 was allocated as a debt discount up to the proceeds of the note ($80,000) with the remainder ($94,938)
charged to current period operations as interest expense.



During the three and nine months ended
June 30, 2012, the Company amortized $15,721 to current period operations as interest expense.



The fair value of the described embedded
derivative of $274,010 at June 30, 2012 was determined using the Binomial Lattice Model with the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 277.93 | %
|Risk free rate: |  |  | 0.16   | %





20


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




At June 30, 2012, the Company adjusted
the recorded fair value of the derivative liability to market resulting in non-cash, non-operating loss of $99,072 for the three
months ended June 30, 2012.



Note issued May 16, 2012



On May 16, 2012, the Company issued a $80,000
Convertible Promissory Note that matures on December 31, 2012. The note bears interest at a rate of 6% and is convertible into
the Company’s common stock at any time at the holder’s option, at the conversion rate of 50% of the lowest bid price
5 trading days prior to notice of conversion. The note includes a redemption premium up to 120% of the face of the note for early
payoff.



The Company identified embedded derivatives
related to the Convertible Promissory Note entered into on May 16, 2012.  These embedded derivatives included certain
conversion features.  The accounting treatment of derivative financial instruments requires that the Company record the
fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each
subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company determined a fair value
of $174,938 of the embedded derivative.  The fair value of the embedded derivative was determined using the Binomial
Lattice Model based on the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 258.13 | %
|Risk free rate: |  |  | 0.20   | %



The initial fair value of the embedded
debt derivative of $174,938 was allocated as a debt discount up to the proceeds of the note ($80,000) with the remainder ($94,938)
charged to current period operations as interest expense.



During the three and nine months ended
June 30, 2012, the Company amortized $15,721 to current period operations as interest expense.



The fair value of the described embedded
derivative of $274,010 at June 30, 2012 was determined using the Binomial Lattice Model with the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 277.93 | %
|Risk free rate: |  |  | 0.16   | %



At June 30, 2012, the Company adjusted
the recorded fair value of the derivative liability to market resulting in non-cash, non-operating loss of $99,072 for the three
months ended June 30, 2012.



Note issued May 22, 2012



On May 22, 2012, the Company issued a $25,000
Convertible Promissory Note that is due on demand. The note bears interest at a rate of 5% and is convertible into the Company’s
common stock at any time at the holder’s option, at the conversion rate of 50% of the average of the three lowest bid prices,
10 trading days prior to notice of conversion.



The Company identified embedded derivatives
related to the Convertible Promissory Note entered into on May 22, 2012.  These embedded derivatives included certain
conversion features.  The accounting treatment of derivative financial instruments requires that the Company record the
fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each
subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company determined a fair value
of $24,478 of the embedded derivative.  The fair value of the embedded derivative was determined using the Binomial Lattice
Model based on the following assumptions:





21


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 271.22 | %
|Risk free rate: |  |  | 0.08   | %



The initial fair value of the embedded
debt derivative of $24,478 was allocated as a debt discount of the note.



During the three and nine months ended
June 30, 2012, the Company amortized $24,478 to current period operations as interest expense.



During the nine months ended June 30, 2012,
the Company issued an aggregate of 281,351 shares of common stock in settlement of $24,000 of the outstanding note payable.



The fair value of the described embedded
derivative of $3,192 at June 30, 2012 was determined using the Binomial Lattice Model with the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 277.93 | %
|Risk free rate: |  |  | 0.09   | %



At June 30, 2012, the Company adjusted
the recorded fair value of the derivative liability to market resulting in non-cash, non-operating loss of $22,058 for the three
months ended June 30, 2012.



Notes issued June 1, 2012



On June 1, 2012, the Company issued an
aggregate of $95,229 of Convertible Promissory Notes that matures on December 31, 2012. The notes bear interest at a rate of 6%
and is convertible into the Company’s common stock at any time at the holder’s option, at the conversion rate of 50%
of the lowest bid price 5 trading days prior to notice of conversion. The note includes a redemption premium up to 120% of the
face of the note for early payoff.



The Company identified embedded derivatives
related to the Convertible Promissory Notes entered into on June 1, 2012.  These embedded derivatives included certain
conversion features.  The accounting treatment of derivative financial instruments requires that the Company record the
fair value of the derivatives as of the inception date of the Convertible Promissory Notes and to adjust the fair value as of each
subsequent balance sheet date.  At the inception of the Convertible Promissory Notes, the Company determined a fair value
of $222,153 of the embedded derivative.  The fair value of the embedded derivative was determined using the Binomial
Lattice Model based on the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 272.05 | %
|Risk free rate: |  |  | 0.12   | %



The initial fair value of the embedded
debt derivative of $222,153 was allocated as a debt discount up to the proceeds of the note ($95,229) with the remainder ($126,924)
charged to current period operations as interest expense.



During the three and nine months ended
June 30, 2012, the Company amortized $12,965 to current period operations as interest expense.



The fair value of the described embedded
derivative of $326,172 at June 30, 2012 was determined using the Binomial Lattice Model with the following assumptions:





22


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 277.93 | %
|Risk free rate: |  |  | 0.16   | %



At June 30, 2012, the Company adjusted
the recorded fair value of the derivative liability to market resulting in non-cash, non-operating loss of $104,019 for the three
months ended June 30, 2012.



Settlement of previously issued Convertible Promissory Notes



During the nine months ended June 30, 2012,
the Company issued an aggregate of 690,105 shares of common stock in full settlement of $729,340 of convertible notes and related
accrued interest.



NOTE 8 – OTHER CURRENT LIABILITIES



Other current liabilities consist of the following at June 30,
2012 and September 30, 2011:



|                            |  | June 30,  2012 |           |  | September 30, 2011 |  
|--------------------------- |  | -------------- | --------- |  | ------------------ | -
|Preferred dividends payable |  | $              | 393,750   |  |                    | $
|Consulting fees             |  |                | 109,153   |  |                    |  
|Interest                    |  |                | 219,000   |  |                    |  
|Payroll and other           |  |                | 282,906   |  |                    |  
|Total                       |  | $              | 1,004,809 |  |                    | $



NOTE 9 - WARRANT LIABILITY



The Company issued warrants in conjunction
with the issuance with certain convertible promissory notes.  These warrants contained certain reset provisions. Therefore,
in accordance with ASC 815-40, the Company reclassified the fair value of the warrant from equity to a liability at the
date of issuance.  Subsequent to the initial issuance date, the Company is required to adjust to fair value the warrant
as an adjustment to current period operations.



The Company estimated the fair value at
date of issue of the warrants issued in connection with the issuance of the convertible promissory notes to be $187,496 using the
Binomial Lattice formula assuming no dividends, a risk-free interest rate of 0.99% to 1.80%, expected volatility of 406.84% to
430.39%, and expected warrant life of five years. Since the warrants have reset provisions, pursuant to ASC 815-40, the Company
has recorded the fair value of the warrants as a derivative liability. The net value of the warrants at the date of issuance was
recorded as a warrant liability in the amount of $187,496. Until conversion and expiration of the warrants, changes in fair
value were recorded as non-operating, non-cash income or expense at each reporting date.



The fair value of the warrant liability
of $513,636 as of June 30, 2012 was determined using the Binomial Lattice formula assuming no dividends, a risk-free interest rate
of 0.72%, expected volatility of 277.93%, and expected remaining warrant life of 4.00 to 4.24 years.



The Company adjusted the recorded fair
values of the warrants to market from September 30, 2011 resulting in a non-cash, non-operating gain of $185,784 for the nine months
ended June 30, 2012.





23


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




NOTE 10 - CAPITAL STOCK



On May 1, 2011, the Company, by agreement
of a majority of shareholders, amended the Certificate of Incorporation to increase the authorized shares of common stock .The
total number of shares of stock which the corporation shall have authority to issue is: Five Hundred Ten Million (510,000,000)
of which Five Hundred Million (500,000,000) shares of the par value of $.001 each shall be common stock and of which Ten Million
(10,000,000) shares of the par value of $.001 each shall be preferred stock.  Further, the board of directors of this
corporation, by resolution only and without further action or approval, may cause the corporation to issue one or more classes
or one or more series of preferred stock within any class thereof and which classes or series may have such voting powers, full
or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights,
and qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted
by the board of directors, and to fix the number of shares constituting any classes or series and to increase or decrease the number
of shares of any such class or series.



On May 1, 2012, four persons holding majority
voting power of the Company took action by written consent to increase the authorized capital stock of the Company to consist of
Five Billion Nine Hundred Ten Million (5,910,000,000) shares of which stock Five Billion Nine Hundred Million (5,900,000,000) shares
of the par value of $.00001 each shall be common stock and of which Ten Million (10,000,000) shares of the par value of $.001 each
shall be preferred stock.



On July 9, 2012, subsequent to these financial
statements, the Company affected a three hundred-to-one (300 to 1) reverse stock split of its issued and outstanding shares of
common stock, $0.00001 par value (whereby every three hundred shares of Company’s common stock will be exchanged for
one share of the Company's common stock). All references in the unaudited condensed consolidated financial statements and the notes
to unaudited condensed consolidated financial statements, number of shares, and share amounts have been retroactively restated
to reflect the reverse split.



Series A Preferred stock



As of June 30, 2012 and September 30, 2011,
the Company had nil and 3,500,000 shares issued and outstanding, respectively.



On January 5, 2012, the Company issued
an aggregate of 15,000 shares of common stock in exchange for 1,808,099 shares of Series A Preferred Stock.



On May 22, 2012, the Company entered a
Securities Exchange Agreement with two investors. The Company exchanged the remaining outstanding shares of Series A Convertible
Preferred Stock (1,691,901shares) and Series B Convertible Preferred Stock (1,192,308 shares) for 11,923 shares of the Company’s
Series E 6% Convertible Preferred Stock.



In connection
with the settlement of the remaining Series A Preferred stock, the Company recorded a loss on settlement of debt of $382,596. The
fair value of the issued Series E Preferred stock of $2,095,401 was determined using theBinomial Lattice Model with the
following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 271.65 | %
|Risk free rate: |  |  | 0.21   | %



Payment of Dividends: Commencing on the
date of issuance of the Series A Preferred Stock, the holders of record of shares of Series A Preferred Stock shall be entitled
to receive, out of any assets at the time legally available therefore and as declared by the Board of Directors, dividends at the
rate of nine percent (9%) of the stated Liquidation Preference Amount (see below) per share per annum payable quarterly. On March
5, 2012 and April 18, 2012, the Company issued an aggregate of 83,333 shares of common stock in payment of $80,000 of accrued dividends.





24


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




In accordance with Accounting Standards
Codification subtopic 470-20, Debt, Debt with Conversions and Other Options (“ASC 470-20”), the Company recognized
an imbedded beneficial conversion feature present in the Convertible Series A Preferred Stock. The Company allocated a portion
of the proceeds equal to the fair value of that feature to additional paid-in capital. The Company recognized and measured an aggregate
of $3,500,000 of the proceeds, which is equal to the intrinsic value of the imbedded beneficial conversion feature to additional
paid-in capital and a charge as preferred stock dividend. The fair value of the imbedded beneficial conversion feature was
determined using the Black-Scholes Option Pricing Model which approximates the fair value measured using the Binomial Lattice Model
with the following assumptions: Dividend yield: $-0-; Volatility: 434.88%, risk free rate: 0.06%.



The Series A Preferred Stock
included certain redemption features allowing the holders the right, at the holder’s option, to require the Company to
redeem all or a portion of the holder’s shares of Series A Preferred Stock upon the occurrence of a Major Transaction
or Triggering Event.  Major Transaction is defined as a consolidation or merger; sale or transfer of more than 50%
of the Company assets or transfer of more than 50% of the Company’s common stock.  A Triggering Event is
defined as a lapse in the effectiveness of the related registration statement; suspension from listing; failure to honor for
conversion or going private.



In accordance with ASC 470-20, the Company
has classified the Series A Preferred Stock outside of permanent equity.



In June 2008, the FASB finalized ACS 815,
“Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity’s Own Stock.” Under ASC 815,
instruments which do not have fixed settlement provisions are deemed to be derivative instruments.  The Company has determined
that it needs to account for these imbedded beneficial conversion features, issued to investors in 2007 for its Series A Convertible
Preferred Stock, as derivative liabilities, and apply the provisions of ASC 815.  The instruments have a ratchet provision
(that adjusts the exercise price in the event of a subsequent offering of equity at a lower exercise price).  As
a result, the ratchet provision has been accounted for as derivative liabilities, in accordance with ASC 815.  ASC
815, “Accounting for Derivative Instruments and Hedging Activities” (“ASC 815”) requires that the fair
value of these liabilities be re-measured at the end of every reporting period with the change in fair value reported in the consolidated
statement of  operations.



ASC 815 was implemented in the first quarter
of Fiscal 2010 and is reported as the cumulative effect of a change in accounting principles. At October 1, 2009, the cumulative
effect on the embedded conversion feature was recorded as decrease in accumulated deficit of $1,971,115. During the nine months
ended June 30, 2012, the Company converted/settled all the Series A Preferred Stock. As of the date of the conversion /settlement,
derivative liability associated with the embedded conversion features of the Series A Preferred stock was revalued, the gain in
the derivative liability of $141,740 for the nine months ended June 30, 2012 is included as a decrease of a loss on change of fair
value of derivative liabilities in the Company’s unaudited condensed consolidated statement of operations.



Series B Convertible Preferred stock



As of June 30, 2012 and September 30, 2011,
the Company had nil and 1,192,308 shares of Series B Convertible Preferred stock issued and outstanding, respectively.



As described above under Series A Preferred
stock, On May 22, 2012, the Company exchanged all the outstanding Series B Preferred stock for Series E 6% Convertible Preferred
Stock.





25


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012






Series C Preferred stock



On May 4, 2011, the Company designated the issuance of a Series
C preferred stock with the following attributes:



|Par value:     |  |  | $0.001 per share | 
|-------------- |  |  | ---------------- | 
|               |  |  |                  | 
|Stated value:  |  |  | $1,000 per share | 
|               |  |  |                  | 
|Voting rights: |  |  | None             | 



On February 15, 2012, the Company issued
a $100,000 convertible note payable in exchange for all the outstanding Series C Preferred stock.



As of June 30, 2012 and September 30, 2011,
the Company has nil and 100 shares of Series C Preferred stock issued and outstanding, respectively.



Conversion rights:  Each share
of Series C Preferred stock is convertible at a conversion price of $45.00 per share based on the initial stated value at issuance.



Liquidation rights:  Upon any
liquidation, dissolution or winding up of the Company, the holders shall be entitled to receive out of the assets an amount equal
to the Stated Value, plus any accrued and unpaid dividends before payment is made to the holders of junior securities.   Junior
securities is defined as common stock or all other common stock equivalents of the Company other than those securities which are
explicitly senior or pari passu to the preferred stock.



Series D Super Voting Preferred stock



On April 11, 2012. the Company designated
1,000,000 authorized preferred shares as Series D Super Voting Preferred stock with the following attributes:



|Par value:     | $0.001 per share                                                                     
|-------------- | -------------------------------------------------------------------------------------
|               |                                                                                      
|Stated value:  | $0.001 per share                                                                     
|               |                                                                                      
|Voting rights: | 10,000 votes per share when  voting on matters with the Company's common stockholders



Conversion rights:  none.



Dividend rights: none



Liquidation rights:  Upon any
liquidation, dissolution or winding up of the Company, the holders shall be entitled to receive out of the assets an amount equal
to the Stated Value.



On April 12, 2012, the Company issued 90,002
shares of Series D Super Voting Preferred stock to key officers, employees and consultants, valued at $40,501.



Series E 6% Convertible Preferred Stock



On May 24, 2012. the Company designated
15,000 authorized preferred shares as Series E Convertible Preferred Stock with the following attributes:.



|Par value:     |  |  | $0.001 per share | 
|-------------- |  |  | ---------------- | 
|               |  |  |                  | 
|Stated value:  |  |  | $100 per share   | 
|               |  |  |                  | 
|Voting rights: |  |  | None             | 





26


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




Conversion rights:  Each share
of Series E 6% Convertible Preferred stock is convertible at any time at the election of the holder into that number of shares
of the Company's common stock determined by dividing the Stated value of such shares of preferred stock into the conversion price.
The conversion price is defined as fifty percent (50%) of the lowest closing bid price of the Company's common stock during five
(5) trading days immediately preceding a conversion date.



Dividend rights: Holders share be entitled
to receive cumulative dividends at a rate per share of 6% per annum, payable in arrears on June 30 and December 31 and on each
conversion date in cash or at the Company's irrevocable option, shares of the Company's common stock. The number of shares issuable
is defined as 50% of the previous ten (10) day variable weighted average price of the Company's common stock, with certain limitations



Dividends on the Series E 6% Convertible
Preferred stock shall accrue daily commencing on the original issuance date and shall be deemed to accrue from such date whether
or not earned or declared and whether or not there are profits, surplus or other funds of the Company legally available for the
payment of dividends.



Liquidation rights:  Upon any
liquidation, dissolution or winding up of the Company, the holders shall be entitled to receive out of the assets an amount equal
to the Stated Value, plus any accrued and unpaid dividends before payment is made to the holders of junior securities.   Junior
securities is defined as common stock or all other common stock equivalents of the Company other than those securities which are
explicitly senior or pari passu to the preferred stock.



On May 24, 2012, the Company issued an
aggregate of 11,923 shares of Series E 6% Convertible Preferred stock in exchange for all of the outstanding Series A Preferred
stock and Series B Preferred stock.



The Company identified embedded derivatives
related to the Series E 6% Convertible Preferred stock issued on May 24, 2012.  These embedded derivatives included certain
conversion features.  The accounting treatment of derivative financial instruments requires that the Company record the
fair value of the derivatives as of the issuance date of the Series E 6% Convertible Preferred stock and to adjust the fair value
as of each subsequent balance sheet date.  At the inception of the Convertible Promissory Note, the Company determined
a fair value of $2,095,401 of the embedded derivative.  The fair value of the embedded derivative was determined using
the Binomial Lattice Model based on the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 271.65 | %
|Risk free rate: |  |  | 0.21   | %



The Company allocated the determined fair
value of the Series E 6% Convertible Preferred stock based on the carrying value of the Series B preferred stock and the fair value
of the Series A preferred stock (based on the underlying conversion feature) and accordingly recorded a loss on settlement of debt
associated Series A preferred stock (debt) of $382,596 and a charge to equity of $19,774 associated with the Series B preferred
stock.



During the nine months ended June 30, 2012,
the Company issued an aggregate of 336,970 shares of its common stock in exchange for 359.5 shares of Series E 6% Convertible Preferred
stock.



At June 30, 2012, the fair value of the
described embedded derivative of $4,256,068 was determined using the Binomial Lattice Model with the following assumptions:



|Dividend yield: |  |  | -0-    | %
|--------------- |  |  | ------ | -
|Volatility      |  |  | 277.93 | %
|Risk free rate: |  |  | 0.21   | %



At June 30, 2012, the Company adjusted
the recorded fair value of the derivative liability to market resulting in non-cash, non-operating loss of $2,160,667 for the three
months ended June 30, 2012.





27


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




Common stock



On October 3, 2011, the Company issued
6,494 shares of common stock in exchange for a convertible note and related accrued interest of $15,000.  These shares
were valued at $4.20 per share, which was the trading price on October 3, 2011.



On October 5, 2011, the Company issued
5,556 shares of common stock in exchange for a convertible note and related accrued interest of $10,000.  These shares
were valued at $3.60 per share, which was the trading price on October 5, 2011.



On October 7, 2011, the Company issued
11,087 shares of common stock in exchange for a convertible note and related accrued interest of $28,000.  These shares
were valued at $3.61 per share, which was the trading price on October 7, 2011.



On October 26, 2011, the Company issued
12,064 shares of common stock in exchange for a convertible note and related accrued interest of $26,160.  These shares
were valued at $3.10 per share, which was the trading price on October 26, 2011.



On October 27, 2011, the Company issued
2,075 shares of common stock in exchange for a convertible note and related accrued interest of $4,500.  These shares
were valued at $3.10 per share, which was the trading price on October 27, 2011.



On November 8, 2011, the Company issued
6,667 shares of common stock in exchange for services valued at $10,000.  These shares were valued at $1.50 per share,
which was the trading price on November 8, 2011



On November 11, 2011, the Company issued
10,000 shares of common stock in exchange for a convertible notes and related accrued interest of $30,000.  These shares
were valued at $3.10 per share, which was the trading price on November 11, 2011.



On November18, 2011, the Company received
2,000 shares of common stock previously issued for services valued at $120,000.  These returned shares were canceled
and returned to authorized and were valued at $60.00 per share, which was the trading price at initial issuance on February 17,
2010.



On November 21, 2011, the Company issued
an aggregate of 18,931 shares of common stock in exchange for convertible notes and related accrued interest of $19,800.  These
shares were valued at $2.10 per share, which was the trading price on November 21, 2011.



On November 22, 2011, the Company issued
8,642 shares of common stock in exchange for a convertible note and related accrued interest of $7,000.  These shares
were valued at $1.50 per share, which was the trading price on November 22, 2011.



On November 28, 2011, the Company issued
8,000 shares of common stock in exchange for a convertible note and related accrued interest of $6,000.  These shares
were valued at $1.53 per share, which was the trading price on November 28, 2011.



On November 29, 2011, the Company issued
an aggregate of 33,462 shares of common stock in exchange for convertible notes and related accrued interest of $22,505.  These
shares were valued at $1.50 per share, which was the trading price on November 29, 2011.



On November 30, 2011, the Company issued
an aggregate of 14,227 shares of common stock in exchange for convertible notes and related accrued interest of $11,500.  These
shares were valued at $1.74 per share, which was the trading price on November 29, 2011.





28


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




On December 6, 2011, the Company issued
an aggregate of 2,464 shares of common stock in exchange for convertible notes and related accrued interest of $500.  These
shares were valued at $1.20 per share, which was the trading price on December 6, 2011.



On December 15, 2011, the Company issued
6,667 shares of common stock in exchange for services valued at $20,000.  These shares were valued at $3.00 per share,
which was the trading price on December 15, 2011



On December 19, 2011, the Company issued
an aggregate of 8,791 shares of common stock in exchange for convertible notes and related accrued interest of $6,000.  These
shares were valued at $1.02 per share, which was the trading price on December 19, 2011.



On December 19, 2011, the Company issued
an aggregate of 8,791 shares of common stock in exchange for convertible notes and related accrued interest of $6,000.  These
shares were valued at $1.56 per share, which was the trading price on December 19, 2011.



On December 27, 2011, the Company issued
18,145 shares of common stock in exchange for a convertible note and related accrued interest of $10,887.  These shares
were valued at $2.70 per share, which was the trading price on December 27, 2011.



On January 3, 2012, the Company issued
12,554 shares of common stock in exchange for a convertible note and related accrued interest of $14,500.  These shares
were valued at $2.10 per share, which was the trading price on January 3, 2012.



On January 5, 2012, the Company issued
an aggregate of 15,000 shares of common stock in exchange for 1,808,099 shares of Series A Preferred stock.



On January 12, 2012, the Company issued
17,460 shares of common stock in exchange for a convertible note and related accrued interest of $22,000.  These shares
were valued at $3.00 per share, which was the trading price on January 12, 2012.



On January 12, 2012, the Company issued
10,000 shares of common stock in exchange for a convertible note and related accrued interest of $8,998.  These shares
were valued at $3.00 per share, which was the trading price on January 12, 2012.



On January 24, 2012, the Company issued
12,667 shares of common stock in exchange for a convertible note and related accrued interest of $11,212.  These shares
were valued at $2.25 per share, which was the trading price on January 24, 2012.



On January 24, 2012, the Company issued
44,309 shares of common stock in exchange for a convertible note and related accrued interest of $58,760.  These shares
were valued at $2.25 per share, which was the trading price on January 24, 2012.



On February 2, 2012, the Company issued
22,333 shares of common stock in exchange for a convertible note and related accrued interest of $20,000.  These shares
were valued at $2.10 per share, which was the trading price on February 2, 2012.



On February 10, 2012, the Company issued
49,069 shares of common stock in exchange for a convertible note and related accrued interest of $58,000.  These shares
were valued at $1.80 per share, which was the trading price on February 10, 2012.



On February 16, 2012, the Company issued
25,000 shares of common stock in exchange for a convertible note and related accrued interest of $19,744.  These shares
were valued at $1.50 per share, which was the trading price on February 16, 2012.





29


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




On February 21, 2012, the Company issued
30,000 shares of common stock in exchange for a convertible note and related accrued interest of $18,000.  These shares
were valued at $1.50 per share, which was the trading price on February 21, 2012.



On February 23, 2012, the Company issued
88,265 shares of common stock in exchange for a convertible note and related accrued interest of $107,990.  These shares
were valued at $1.20 per share, which was the trading price on February 23, 2012.



On February 27, 2012, the Company issued
26,423 shares of common stock in exchange for a convertible note and related accrued interest of $23,781.  These shares
were valued at $1.23 per share, which was the trading price on February 27, 2012.



On February 28, 2012, the Company issued
17,027 shares of common stock in exchange for a true up of a convertible note and related accrued interest.  These shares
were valued at $1.20 per share, which was the trading price on February 28, 2012.



On February 29, 2012, the Company issued
27,333 shares of common stock in exchange for a convertible note and related accrued interest of $19,988.  These shares
were valued at $1.20 per share, which was the trading price on February 29, 2012.



On March 5, 2012, the Company issued 32,110
shares of common stock in exchange for a convertible note and related accrued interest of $72,249.  These shares were
valued at $1.41 per share, which was the trading price on March 5, 2012.



On March 5, 2012, the Company issued 33,333
shares of common stock as payment on Series A Preferred stock dividend of $50,000.  These shares were valued at $1.50
per share, which was the trading price on March 5, 2012.



On March 7, 2012, the Company issued 35,667
shares of common stock in exchange for a convertible note and related accrued interest of $21,398.  These shares were
valued at $1.50 per share, which was the trading price on March 7, 2012.



On March 15, 2012, the Company issued 26,667
shares of common stock in exchange for a convertible note and related accrued interest of $12,740.  These shares were
valued at $0.78 per share, which was the trading price on March 15, 2012.



On March 15, 2012, the Company issued 12,539
shares of common stock in exchange for a convertible note and related accrued interest of $28,214.  These shares were
valued at $0.78 per share, which was the trading price on March 15, 2012.



On March 19, 2012, the Company issued 48,000
shares of common stock in exchange for a convertible note and related accrued interest of $25,000.  These shares were
valued at $1.02 per share, which was the trading price on March 19, 2012.



On March 19, 2012, the Company issued 44,397
shares of common stock in exchange for a convertible note and related accrued interest of $21,000.  These shares were
valued at $1.02 per share, which was the trading price on March 19, 2012.



On March 19, 2012, the Company issued 11,121
shares of common stock in exchange for a convertible note and related accrued interest of $5,260.  These shares were
valued at $1.02 per share, which was the trading price on March 19, 2012.



On March 27, 2012, the Company issued 23,333
shares of common stock in exchange for a convertible note and related accrued interest of $8,645.  These shares were
valued at $0.90 per share, which was the trading price on March 27, 2012.





30


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




On March 27, 2012, the Company issued
56,834 shares of common stock in exchange for a convertible note and related accrued interest of $20,000.  These shares
were valued at $0.90 per share, which was the trading price on March 27, 2012.



On April 16, 2012, the Company issued 26,799
shares of common stock in exchange for a convertible note and related accrued interest of $8,884.  These shares were
valued at $0.60 per share, which was the trading price on April 16, 2012.



On April 18, 2012, the Company issued 54,545
shares of common stock in exchange for a convertible note and related accrued interest of $18,000.  These shares were
valued at $1.35 per share, which was the trading price on April 18, 2012.



On April 18, 2012, the Company issued 50,000
shares of common stock as payment on Series A Preferred stock dividend of $30,000.  These shares were valued at $0.60
per share, which was the trading price on April 18, 2012.



On April 18, 2012, the Company issued 56,667
shares of common stock in exchange for a convertible note and related accrued interest of $16,615.  These shares were
valued at $1.05 per share, which was the trading price on April 18, 2012.



On April 23, 2012, the Company issued 28,070
shares of common stock in exchange for a convertible note and related accrued interest of $8,000.  These shares were
valued at $0.52 per share, which was the trading price on April 23, 2012.



On April 25, 2012, the Company issued 28,736
shares of common stock in exchange for a convertible note and related accrued interest of $7,500.  These shares were
valued at $0.47 per share, which was the trading price on April 25, 2012.



On April 26, 2012, the Company issued 28,736
shares of common stock in exchange for a convertible note and related accrued interest of $7,500.  These shares were
valued at $0.47 per share, which was the trading price on April 26, 2012.



On April 27, 2012, the Company issued 27,027
shares of common stock in exchange for a convertible note and related accrued interest of $6,000.  These shares were
valued at $0.40 per share, which was the trading price on April 27, 2012.



On April 27, 2012, the Company issued 27,397
shares of common stock in exchange for a convertible note and related accrued interest of $6,000.  These shares were
valued at $0.40 per share, which was the trading price on April 27, 2012.



On May 1, 2012, the Company issued 27,397
shares of common stock in exchange for a convertible note and related accrued interest of $6,000.  These shares were
valued at $0.40 per share, which was the trading price on May 1, 2012.



On May 2, 2012, the Company issued 27,397
shares of common stock in exchange for a convertible note and related accrued interest of $6,000.  These shares were
valued at $0.40 per share, which was the trading price on May 2, 2012.



On May 3, 2012, the Company issued 25,114
shares of common stock in exchange for a convertible note and related accrued interest of $5,500.  These shares were
valued at $0.40 per share, which was the trading price on May 3, 2012.



On May 4, 2012, the Company issued 11,963
shares of common stock in exchange for a convertible note and related accrued interest of $500.  These shares were valued
at $0.40 per share, which was the trading price on May 4, 2012.





31


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




On May 8, 2012, the Company issued 26,667
shares of common stock in exchange for a convertible note and related accrued interest of $6,600.  These shares were
valued at $0.45 per share, which was the trading price on May 8, 2012.



On May 17, 2012, the Company issued 26,794
shares of common stock in exchange for a convertible note and related accrued interest of $8,400.  These shares were
valued at $0.81 per share, which was the trading price on May 17, 2012.



On May 25, 2012, the Company issued 27,273
shares of common stock in exchange for a convertible note and related accrued interest of $12,000.  These shares were
valued at $0.81 per share, which was the trading price on May 25, 2012.



On May 30, 2012, the Company issued 77,519
shares of common stock in exchange for a convertible note and related accrued interest of $12,000.  These shares were
valued at $0.45 per share, which was the trading price on May 30, 2012.



On May 30, 2012, the Company issued 146,970
shares of common stock in exchange for 242.50 shares of Series E 6% Convertible Preferred stock.  These shares were valued
at $0.39 per share, which was the trading price on May 30, 2012.



On June 5, 2012, the Company issued 131,313
shares of common stock in exchange for a convertible note and related accrued interest of $26,000.  These shares were
valued at $0.36 per share, which was the trading price on June 5, 2012.



On June 14, 2012, the Company issued 72,917
shares of common stock in exchange for a convertible note and related accrued interest of $7,000.  These shares were
valued at $0.15 per share, which was the trading price on June 14, 2012.



On June 15, 2012, the Company issued 100,000
shares of common stock in exchange for 90.0 shares of Series E 6% Convertible Preferred stock.  These shares were valued
at $0.21 per share, which was the trading price on June 15, 2012.



On June 18, 2012, the Company issued 88,889
shares of common stock in exchange for a convertible note and related accrued interest of $8,000.  These shares were
valued at $0.21 per share, which was the trading price on June 18, 2012.



On June 18, 2012, the Company issued 76,923
shares of common stock in exchange for a convertible note and related accrued interest of $6,000.  These shares were
valued at $0.15 per share, which was the trading price on June 18, 2012.



On June 26, 2012, the Company issued 114,943
shares of common stock in exchange for a convertible note and related accrued interest of $4,000.  These shares were
valued at $0.12 per share, which was the trading price on June 26, 2012.



On June 26, 2012, the Company issued 90,000
shares of common stock in exchange for 27.0 shares of Series E 6% Convertible Preferred stock.  These shares were valued
at $0.12 per share, which was the trading price on June 26, 2012.



As of June 30, 2012 and September 30, 2011,
the Company has 2,539,879 and 238,316 shares of common stock issued and outstanding, respectively.





32


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




NOTE 11 - STOCK OPTIONS AND WARRANTS



Employee Stock Options



The following table summarizes the options
outstanding and the related prices for the shares of the Company's common stock issued to employees of the Company as of June 30,
2012:



|               |       |  |                    |  |       | Options Outstanding                                 |  |  | Options Exercisable             | 
|-------------- | ----- |  | ------------------ |  | ----- | --------------------------------------------------- |  |  | ------------------------------- | 
|Exercise Price |       |  | Number Outstanding |  |       | Weighted Average Remaining Contractual Life (Years) |  |  | Weighted Average Exercise Price | 
|$              | 5.10  |  |                    |  | 7,333 |                                                     |  |  | 8.90                            | 
|$              | 90.00 |  |                    |  | 1,633 |                                                     |  |  | 5.15                            | 
|$              | 20.57 |  |                    |  | 8,966 |                                                     |  |  | 8.22                            | 



The fair value of all employee options
vesting charged to operations in the three and nine months ended June 30, 2012 was $5,500 and $16,500, respectively and $3,008
and $6,148 for the three and nine months ended June 30, 2011.



Transactions involving options issued to employees are summarized
as follows:



|                                |  | Weighted Average  |       |   | Weighted Average Exercise |  
|------------------------------- |  | ----------------- | ----- | - | ------------------------- | -
|                                |  | Number of Options |       |   | Price per Share           |  
|Outstanding, September 30, 2010 |  |                   | 1,967 |   |                           | $
|Granted                         |  |                   | 7,333 |   |                           |  
|Exercised                       |  |                   | -     |   |                           |  
|Canceled or expired             |  |                   | (334  | ) |                           |  
|Outstanding, September 30, 2011 |  |                   | 8,966 |   |                           |  
|Granted                         |  |                   | -     |   |                           |  
|Exercised                       |  |                   | -     |   |                           |  
|Canceled or expired             |  |                   | -     |   |                           |  
|Outstanding, June 30, 2012      |  |                   | 8,966 |   |                           | $



Warrants



The following table summarizes the warrants outstanding as of
June 30, 2012:



|               |       |  | Warrants Outstanding |  |        | Warrants Exercisable         | 
|-------------- | ----- |  | -------------------- |  | ------ | ---------------------------- | 
|               |       |  |                      |  |        | Weighted  Average  Remaining | 
|               |       |  | Number               |  |        | Contractual                  | 
|Exercise Price |       |  | Outstanding          |  |        | Life (Years)                 | 
|$              | 6.00  |  |                      |  | 10,000 |                              | 
|$              | 12.00 |  |                      |  | 6,250  |                              | 
|$              | 8.31  |  |                      |  | 16,250 |                              | 





33


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




Transactions involving warrants are summarized as follows:



|                                 |  | Weighted  Average  Number of  Shares |         |   | Price per  Share |  
|-------------------------------- |  | ------------------------------------ | ------- | - | ---------------- | -
|Outstanding, September 30, 2010  |  |                                      | 333     |   |                  | $
|Granted                          |  |                                      | 41,250  |   |                  |  
|Exercised                        |  |                                      | (16,667 | ) |                  |  
|Canceled or expired              |  |                                      | (333    | ) |                  |  
|Outstanding, September  30, 2011 |  |                                      | 24,583  |   |                  |  
|Granted                          |  |                                      | -       |   |                  |  
|Exercised                        |  |                                      | -       |   |                  |  
|Canceled or expired              |  |                                      | (8,333  | ) |                  |  
|Outstanding, June 30, 2012       |  |                                      | 16,250  |   |                  | $



In connection with the issuance of promissory
notes, the Company issued an aggregate of 16,250 warrants (net of cancelations of 8,333) exercisable five years from the date of
issuance at $6.00 to $12.00 per share with certain reset provisions. The fair value of the warrants were determined at the
date of issuance and adjusted to fair value to current period operations at June 30, 2012 with the offset to warrant liability
using the binomial lattice model.



NOTE 12 - CONSOLIDATION OF VARIABLE INTEREST ENTITIES



On June 6, 2005 and August 8, 2005, JCMD
Properties LLC, an entity controlled by the Company's former Chief Executive and Chief Operating officers respectively ("JCMD"),
entered into a Secured Loan Agreement with a financial institution, in connection with the financing of real property and improvements
("property"). This agreement is guaranteed by the Company.



The property was leased to the Company
under a long term operating lease beginning on January 1, 2005. Under the loan agreements, JCMD is obligated to make periodic payments
of principal repayments and interest. The Company has no equity interest in JCMD or the property.



Based on the terms of the lending agreement,
the Company determined that JCMD was a variable interest entity ("VIE") and the Company was the primary beneficiary under
ASC 810-10 since JCMD did not have sufficient equity at risk for the entity to finance its activities.



ASC 810-10 requires that an enterprise
consolidate a VIE if that enterprise has a variable interest that will absorb a majority of the entity's expected losses if they
occur. Accordingly, the Company adopted ASC 810-10 and consolidated JCMD as a VIE, regardless of the Company not having an equity
interest in JCMD.  Since JCMD is owned by two of the former principals of MWW, MWW has guaranteed the indebtedness of
JCMD for the real estate occupied by MWW, and the two principals of JCMD do not have the ability to repay the loan, the Company,
in accordance with ASC 810-10 has consolidated the activities of JCMD into the presented unaudited condensed consolidated financial
statements.



Included in the Company's unaudited condensed
consolidated balance sheets at June 30, 2012 and September 30, 2011are the following net assets of JCMD:





34


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




|                                                               |  | June 30,
2012 |          |   | September 30, 2011 |  
|-------------------------------------------------------------- |  | ------------- | -------- | - | ------------------ | -
|ASSETS (JCMD)                                                  |  |               |          |   |                    |  
|Accounts receivable, prepaid expenses and other current assets |  | $             | 193,433  |   |                    | $
|Total current assets                                           |  |               | 193,433  |   |                    |  
|Total assets                                                   |  | $             | 193,433  |   |                    | $
|                                                               |  |               |          |   |                    |  
|LIABILITIES:                                                   |  |               |          |   |                    |  
|Current portion of long term debt                              |  | $             | 489,755  |   |                    | $
|Accounts payable and accrued liabilities                       |  |               | 221,720  |   |                    |  
|Total current liabilities                                      |  |               | 711,475  |   |                    |  
|Total deficit                                                  |  |               | (518,042 | ) |                    |  
|Total liabilities and deficit                                  |  | $             | 193,433  |   |                    | $



Consolidated results of operations for the three months ended
June 30, 2012 and 2011 include the following:



|                                                         |  | 2012 |         |   | 2011 |  
|-------------------------------------------------------- |  | ---- | ------- | - | ---- | -
|Revenues                                                 |  | $    | -       |   |      | $
|Cost and expenses - real estate: Operating expenses, net |  |      | -       |   |      |  
|Interest, net                                            |  |      | (10,407 | ) |      |  
|Total costs and expenses                                 |  |      | 10,407  |   |      |  
|                                                         |  |      |         |   |      |  
|Operating (loss) income-Real estate                      |  | $    | (10,407 | ) |      | $



Consolidated results of operations for
the nine months ended June 30, 2012 and 2011 include the following:



|                                                         |  | 2012 |         |   | 2011 |  
|-------------------------------------------------------- |  | ---- | ------- | - | ---- | -
|Revenues                                                 |  | $    | -       |   |      | $
|Cost and expenses - real estate: Operating expenses, net |  |      | -       |   |      |  
|Interest, net                                            |  |      | (31,222 | ) |      |  
|Total costs and expenses                                 |  |      | 31,222  |   |      |  
|                                                         |  |      |         |   |      |  
|Operating (loss) income-Real estate                      |  | $    | (31,222 | ) |      | $



The Variable Interest Entity owned by JCMD
and included in these unaudited condensed consolidated financial statements sold the only asset it owned, which was real estate
that was under a lease with the Company, for $800,000 on November 30, 2010.  This sale resulted in a net loss of approximately
$400,000 and left a remaining liability to the Small Business Administration of approximately $500,000 which is guaranteed by the
Company.  This loss of $409,823 was recorded as an impairment loss in the September 30, 2010 consolidated financial statements.



NOTE 13- FAIR VALUE OF FINANCIAL INSTRUMENTS



ASC 825-10 defines fair value as the price
that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded
at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions
that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk
of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs
and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be
used to measure fair value:



35


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




Level 1 - Quoted prices in active
markets for identical assets or liabilities.



Level 2 - Observable inputs other than
Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent
transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived
principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.



Level 3 - Unobservable inputs to the valuation
methodology that are significant to the measurement of fair value of assets or liabilities.



To the extent that valuation is based on
models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases,
for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined
based on the lowest level input that is significant to the fair value measurement.



Items recorded or measured at fair value
on a recurring basis in the accompanying unaudited condensed consolidated financial statements consisted of the following
items as of June 30, 2012:



|                            |  |               |           |  | Fair Value Measurements at June 30, 2012 using:                          | 
|--------------------------- |  | ------------- | --------- |  | ------------------------------------------------------------------------ | 
|                            |  | June 30, 2012 |           |  | Quoted Prices   in Active   Markets for   Identical   Assets   (Level 1) | 
|Liabilities:                |  |               |           |  |                                                                          | 
|Debt derivative liabilities |  | $             | 6,637,168 |  |                                                                          | 
|Warrant liabilities         |  | $             | 513,636   |  |                                                                          | 



The debt derivative  and warrant
liabilities are measured at fair value using quoted market prices and estimated volatility factors based on historical prices for
the Company’s common stock and are classified within Level 3 of the valuation hierarchy.





36


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




The following table provides a summary
of changes in fair value of the Company’s Level 3 financial liabilities as of June 30, 2012:



|                                                                                               |  | Debt Derivative Liability |            |   | Warrant Liability |  
|---------------------------------------------------------------------------------------------- |  | ------------------------- | ---------- | - | ----------------- | -
|Balance, October 1, 2010                                                                       |  | $                         | 1,186,670  |   |                   | $
|Initial fair value of debt derivatives at note issuances                                       |  |                           | 1,484,806  |   |                   |  
|Initial fair value of warrant liability                                                        |  |                           | -          |   |                   |  
|Mark-to market at September 30, 2011:                                                          |  |                           |            |   |                   |  
|-Embedded debt derivatives                                                                     |  |                           | (367,912   | ) |                   |  
|-Reset provisions relating to Series A preferred stock                                         |  |                           | (1,044,930 | ) |                   |  
|-Reset provisions related to warrants                                                          |  |                           | -          |   |                   |  
|Balance, September 30, 2011                                                                    |  |                           | 1,258,634  |   |                   |  
|Transfers to (from) liabilities due to conversions                                             |  |                           | (866,141   | ) |                   |  
|Initial fair value of debt derivatives at note and preferred stock issuances                   |  |                           | 3,891,645  |   |                   |  
|Mark-to-market at June 30, 2012:                                                               |  |                           |            |   |                   |  
|- Embedded debt derivatives                                                                    |  |                           | 334,103    |   |                   |  
|- Reset provisions relating to Series A preferred stock                                        |  |                           | (141,740   | ) |                   |  
|-Reset provisions relating to Series E preferred stock                                         |  |                           | 2,160,667  |   |                   |  
|-Reset provisions relating to warrants                                                         |  |                           | -          |   |                   |  
|                                                                                               |  |                           |            |   |                   |  
|Balance, June 30, 2012                                                                         |  | $                         | 6,637,168  |   |                   | $
|                                                                                               |  |                           |            |   |                   |  
|Net loss for the period included in earnings relating to the liabilities held at June 30, 2012 |  | $                         | (2,353,030 | ) |                   | $



Level 3 Liabilities are comprised of our
bifurcated convertible debt features on our convertible notes and reset provisions contained within our Series A Preferred stock,
Series E Preferred stock and certain warrants.



NOTE 14– DISCONTINUED OPERATIONS



On February 25, 2010, the Company discontinued
operations of its wholly owned subsidiary; MW Global Limited which owns 100% of the outstanding ownership and economic interest
in Modelworxx GmbH.  The financial results of MW Global are presented separately in the consolidated statements of operations
as discontinued operations for all periods presented. The assets and liabilities of this business are reflected as assets and liabilities
from discontinued operations in the consolidated balance sheets for all periods presented.  The Company does not expect
to incur any ongoing costs associated with this discontinued operations.



The assets and liabilities of the discontinued
operations as of June 30, 2012 and September 30, 2011 were as follows:



Assets:



|                                        |  | June 30, 2012 |         |  | September 30, 2011 |  
|--------------------------------------- |  | ------------- | ------- |  | ------------------ | -
|Cash                                    |  | $             | -       |  |                    | $
|Accounts receivable                     |  |               | -       |  |                    |  
|Inventories                             |  |               | -       |  |                    |  
|Prepaid expenses and other assets       |  |               | -       |  |                    |  
|Total current assets                    |  | $             | -       |  |                    | $
|Other assets of discontinued operations |  |               | -       |  |                    |  
|Assets of discontinued operations       |  | $             | -       |  |                    | $
|Liabilities:                            |  |               |         |  |                    |  
|Accounts payable                        |  |               | 492,006 |  |                    |  
|Line of credit                          |  |               | -       |  |                    |  
|Liabilities of discontinued operations  |  | $             | 492,006 |  |                    | $





37


MARKETING WORLDWIDE CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2012




There were no operation activities for operations for the periods
presented.



NOTE 15 - SUBSEQUENT EVENTS



In July and August 2012, the Company
issued an aggregate of 588,327 shares of its common stock in settlement of $7,450 of convertible notes and related interest.



In July and August 2012, the Company issued
an aggregate of 1,117,941 shares of its common stock in conversion of 134.35 shares of the Company's Series E 6% Convertible Preferred
stock.



On July 31, 2012, the Company issued a
$50,000 convertible promissory note due March 31, 2013 with interest at 8% per annum, due at maturity.



On August 2, 2012, the Company issued a
$20,000 convertible promissory note due May 6, 2013 with interest at 8% per annum, due at maturity.





38







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



THIS REPORT ON FORM 10-Q CONTAINS FORWARD-LOOKING
STATEMENTS. FORWARD-LOOKING STATEMENTS IN THIS REPORT ARE INDICATED BY WORDS SUCH AS "ANTICIPATES," "EXPECTS,"
"BELIEVES," "INTENDS," "PLANS," "ESTIMATES," "PROJECTS" AND SIMILAR EXPRESSIONS.
THESE STATEMENTS REPRESENT OUR EXPECTATIONS BASED ON CURRENT INFORMATION AND ASSUMPTIONS. FORWARD-LOOKING STATEMENTS ARE INHERENTLY
SUBJECT TO RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE  WHICH ARE ANTICIPATED OR PROJECTED
AS A RESULT OF CERTAIN RISKS AND UNCERTAINTIES, INCLUDING, BUT NOT LIMITED TO A NUMBER OF FACTORS, SUCH AS ECONOMIC AND MARKET
CONDITIONS; THE PERFORMANCE OF THE AUTOMOTIVE AFTERMARKET SECTOR; CHANGES IN BUSINESS RELATIONSHIPS WITH OUR MAJOR CUSTOMERS AND
IN THE TIMING, SIZE AND CONTINUATION OF OUR CUSTOMERS' PROGRAMS; THE ABILITY OF OUR CUSTOMERS TO ACHIEVE THEIR PROJECTED SALES;
COMPETITIVE PRODUCT AND PRICING PRESSURES; INCREASES IN PRODUCTION OR MATERIAL COSTS THAT CANNOT BE RECOUPED IN PRODUCT PRICING;
SUCCESSFUL INTEGRATION OF ACQUIRED BUSINESSES; PRODUCT LIABILITY, AS WELL AS OTHER RISKS AND UNCERTAINTIES, SUCH AS THOSE DESCRIBEDUNDER
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK AND THOSE DETAILED HEREIN AND FROM TIME TO TIME IN OUR FILINGS WITH
THE SECURITIES AND EXCHANGE COMMISSION. THOSE FORWARD-LOOKING STATEMENTS ARE MADE ONLY AS OF THE DATE HEREOF, AND WE UNDERTAKE
NO OBLIGATION TO UPDATE OR REVISE THE FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING
THE NOTES THERETO, INCLUDED ELSEWHERE IN THIS FORM 10-Q



Marketing Worldwide Corporation



Marketing Worldwide Corporation, a Delaware
corporation ("MWWC” "We" "Us" "Our" or the "Company"), was incorporated on July
21, 2003. MWWC's headquarters are in Howell, Michigan. MWWC operates through the holding company structure and conducts its business
operations through our wholly owned subsidiaries Colortek, Inc. (“CT”) and Marketing Worldwide, LLC (“MWW”).



In previous reporting periods, the Company
had a 100 % German subsidiary, Modelworxx, GmbH (“MWX”).  As the direct result from the world-wide economic
recession, MWX was forced to file insolvency in the German legal system.  This filing was done in February, 2010 and
MWWC has not been provided any final determination from the German courts and does not expect to receive any further communication..  The
Company reported this transaction as discontinued operations in the reported consolidated financial statements.



Marketing Worldwide, LLC (“MWW”)



MWW is a global design, engineering, manufacturer
and fulfillment firm serving some of the world’s leading automotive and industrial manufacturers, providing products and
services to Automotive and Industrial Original Equipment Manufacturers along with accessories for the customization of vehicles
and delivers its products to certain Vehicle Processing Centers primarily in North America.  MWW operates in a 23,000
square foot leased building in Howell Michigan.



The primary automotive accessory products
provided by MWW are blow-molded spoilers (bridge and lip), front and rear fascia systems, side skirts, door panels, extruded body-side
moldings and interior dash components.  During 2011, we have identified several new business partners to drive more product
sales and expect fiscal year 2012 to be greater than 2011.





39







MWW’s programs are sold not only
to Automotive and Industrial Original Equipment Manufacturers but also directly to vehicle processing centers and distributors
located primarily in North America. These vehicle processing centers and distributors receive a continuous stream of new vehicles
from the foreign and domestic automobile manufacturers for accessorization, customization, and subsequently, distribution into
the domestic dealer distribution network. Distributors also sell MWW’s accessories directly to their dealers and end customers.  The
industrial partners are expecting just-in time inventory delivery to their large assembly plants in the U.S. and Europe.



MWW's business model empowers its customers
to make the selection of various accessories (sold by MWW) later in the production cycle, thus improving time to market for their
automobiles and faster reaction to the dynamically changing demand of its customers. The principal MWW products sold during the
last two fiscal years include Automotive Body Components such as:



* Rear Deck Spoilers

* Body Side Moldings

* Front Fascia Systems

* Side Skirts

* Door Panels

* Interior Components



Several of the vehicles MWW currently provides
accessories to are changing models next year and will provide additional growth opportunities. Based on expertise and space
available in its Baroda plant,  MWW is also negotiating to provide fulfillment activities for new customers, going beyond
the Company’s original business plan, meaning MWW will receive, store and ship products that are designed and manufactured
by other unrelated companies.



Colortek, Inc. (“CT”)



CT is a wholly owned Class A Original Equipment
painting facility and operates in a 46,000 square foot owned building in Baroda, which is in South Western Michigan. We invested
approximately $2 million into this paint facility and expect the majority of our future growth to come from this business.  We
have restructured the management of this subsidiary and have successfully gained more business opportunities than ever before.  CT
is aggressively beginning to diversify to non-automotive paint applications (household goods and construction equipment) which
we believe will help stabilize the Company going forward during 2012.



GENERAL OVERVIEW



MWW operates in a niche market of the supply
chain for new passenger motor vehicles primarily in the United States and Canada. MWW participates in the design of new automobiles
and the building of show cars and is a designer and manufacturer of accessories for the customization of cars, sport utility vehicles
and light trucks.



MWW's revenues are derived through the
sales of its products and services to large automotive companies. As a consequence, MWW is dependent upon the acceptance of its
products in the first instance by the automotive industry. As a result of this dependence MWW's business is vulnerable to actions
which impact the automotive industry in general, including but not limited to, current fuel costs, and new environmental regulations.
Growth opportunities for the Company include expanding its geographical coverage and increasing its penetration of existing markets
through internal growth and expanding into new product markets, adding additional customers and acquiring companies in its core
industry that supplement and compliment the currently existing capabilities.



Challenges currently facing the Company
include managing its growth and controlling costs. Escalating costs of audits, Sarbanes-Oxley compliance, health care and commercial
insurance are also challenges for the Company at this time.





40







The following specific factors could affect
our revenues and earnings in a particular quarter or over several quarterly or annual periods:



·           Ability
to continue increasing sales opportunities

·           Ability
to convert sales opportunities to actual revenue

·           Ability
to continue controlling our selling, general and administrative costs

·           Ability
to obtain funding adequate to satisfy past obligations and grow future opportunities



The requirements for our products are complex,
and before buying them, customers spend a great deal of time reviewing and testing them. Our customers' evaluation and purchase
cycles do not necessarily match our report periods, and if by the end of any quarter or year we have not sold enough new products,
our orders and revenues could fall below our plan for a period of time. Like many companies in the automotive accessory industry,
a large proportion of our business is attributable to our largest customers. As a result, if any order, and especially a large
order, is delayed beyond the end of a fiscal period, our orders and revenue for that period could be below our plan.



The accounting rules we are required to
follow permit us to recognize revenue only when certain criteria are met.



CRITICAL ACCOUNTING POLICIES



The preparation of our consolidated financial
statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments
that affect our reported assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities. We
base our estimates and judgments on historical experience and on various others assumptions we believe to be reasonable under the
circumstances. Future events, however, may differ markedly from our current expectations and assumptions.  While there
are a number of significant accounting policies affecting our consolidated financial statements; we believe the following critical
accounting policies involve the most complex, difficult and subjective estimates and judgments:



o      Accounting
for variable interest entities

o      Revenue
recognition

o      Inventories

o      Allowance
for doubtful accounts

o      Stock
based compensation

o     
Derivative liabilities



ACCOUNTING FOR VARIABLE INTEREST ENTITIES



Accounting Standards Codification subtopic
810-10, Consolidation (“ASC 810-10”) discusses certain entities in which equity investors do not have the characteristics
of a controlling financial interest or do not have sufficient equity risk for the entity to finance its activities without additional
subordinated financial support. ASC 810-10 requires the consolidation of these entities, known as variable interest entities, by
the primary beneficiary of the entity.  The primary beneficiary is the entity, if any, that will absorb a majority of
the entities expected losses, receive a majority of the entity’s expected residual returns or both.



Pursuant to the effective date of a related
party lease obligation, the Company adopted ASC 810-10.  This resulted in the consolidation of one variable interest
entity (VIE) of which the Company is considered the primary beneficiary.  The Company’s variable interest in this
VIE is the result of providing certain secured debt mortgage guarantees on behalf of a limited liability company that leases warehouse
and general offices located in the city of Howell, Michigan.



41







REVENUE RECOGNITION



For revenue from products and services,
the Company recognizes revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC
605-10”).  ASC 605-10 requires that four basic criteria must be met before revenue can be recognized; (1) persuasive
evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the selling price is fixed and
determinable; and (4) collectability is reasonably assured.  Determination of criteria (3) and (4) are based on management’s
judgments regarding the fixed nature of the selling prices of the products delivered/services rendered and the collectability of
those amounts.  Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments
are provided for in the same period the related sales are recorded.



The Company defers any revenue for which
the product has not been delivered or services has not been rendered or is subject to refund until such time that the Company and
the customer jointly determine that the product has been delivered or services has been rendered or no refund will be required.



ASC 605-10 incorporates Accounting Standards
Codification subtopic 605-25, Multiple-Element Arrangements (“ASC 605-25”).  ASC 605-25 addresses accounting
for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets.  The
effect of implementing 605-25 on the Company’s financial position and results of operations was not significant.



Revenues on the sale of products, net of
estimated costs of returns and allowance, are recognized at the time products are shipped to customers, legal title has passed,
and all significant contractual obligations of the Company have been satisfied. Products are generally sold on open accounts under
credit terms customary to the geographic region of distribution. The Company performs ongoing credit evaluations of the customers
and generally does not require collateral to secure the accounts receivable.



The Company generally warrants its products
to be free from material defects and to conform to material specifications for a period of three (3) years. The cost of replacing
defective products and product returns have been immaterial and within management's expectations. In the future, when the company
deems warranty reserves are appropriate that such costs will be accrued to reflect anticipated warranty costs.



INVENTORIES



We value our inventories, which consist
primarily of automotive body components, at the lower of cost or market. Cost is determined on the weighted average cost method
and includes the cost of merchandise and freight. A periodic review of inventory quantities on hand is performed in order to determine
if inventory is properly valued at the lower of cost or market. Factors related to current inventories such as future consumer
demand and trends in MWW's core business, current aging, and current and anticipated wholesale discounts, and class or type of
inventory is analyzed to determine estimated net realizable values. A provision is recorded to reduce the cost of inventories to
the estimated net realizable values, if required. Any significant unanticipated changes in the factors noted above could have a
significant impact on the value of our inventories and our reported operating results.



ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS



We are required to estimate the collectability
of our trade receivables. A considerable amount of judgment is required in assessing the realization of these receivables including
the current creditworthiness of each customer and related aging of the past due balances. In order to assess the collectability
of these receivables, we perform ongoing credit evaluations of our customers' financial condition. Through these evaluations we
may become aware of a situation where a customer may not be able to meet its financial obligations due to deterioration of its
financial viability, credit ratings or bankruptcy. The reserve requirements are based on the best facts available to us and are
reevaluated and adjusted as additional information is received.





42







Our reserves are also based on amounts
determined by using percentages applied to certain aged receivable categories. These percentages are determined by a variety of
factors including, but are not limited to, current economic trends, historical payment and bad debt write-off experience. We are
not able to predict changes in the financial condition of our customers and if circumstances related to our customers deteriorate,
our estimates of the recoverability of our receivables could be materially affected and we may be required to record additional
allowances. Alternatively, if we provided more allowances than are ultimately required, we may reverse a portion of such provisions
in future periods based on our actual collection experience. There was $17,200 and $20,000 allowance for doubtful accounts at June
30, 2012 and September 30, 2011, respectively.



STOCK BASED COMPENSATION



At times we issue stock in exchange for
payment of certain liabilities or payment of services, including employees in the form of compensation or professional service
providers in the form of consulting or other fees.  We value the stock issued at the price in which it is trading on
the open market.



DERIVATIVE LIABILITIES



The Company’s Series A and E Preferred
Stock, convertible debt and certain warrants have reset provisions to the exercise price if the Company issues equity, or a right
to receive equity, at a price less than the exercise prices. The Company utilizes the Binomial Lattice Model formula for determining
the estimated fair value.



COMPARISON OF THE THREE MONTHS ENDED JUNE
30, 2012 TO THE THREE MONTHS ENDED JUNE 30, 2011



REVENUES



Net revenues were $175,871 for the three
months ended June 30, 2012. Our revenues decreased by $273,364 from the three months ended June 30, 2011. This decrease is attributable
to the fact that some of the new programs that had already been awarded have been significantly delayed.  We are re-focusing
on our core business, have restructured certain divisions of the Company and accordingly had lower production output during this
transitional period. The Company is now quoting again on numerous new paint projects and has commenced production with new programs
for the 2012 and 2013 periods that are expected to provide continued revenue growth.



GROSS LOSS



For the three months ended June 30, 2012,
MWW's gross loss was $115,802 (65.8%) compared to gross profit of $78,766 (17.5%) for the three months ended June 30, 2011. MWW
sold a greater percentage of its lower margin products in 2012 than in 2011, had significant “start-up” costs for new
projects that have not been offset by revenues yet and did not recognize any profit from the re-evaluation of derivatives
compared to the same period the year before.



The primary components of cost of sales are
direct labor and cost of parts and materials.  The cost of parts and materials has been consistent from year to year.



OPERATING EXPENSES



Selling, general, and administrative expenses were $292,342
(166.2% of revenues) in 2012 compared to $359,580 (80.0% of revenues) during 2011. The decrease in costs is attributable to management’s
stringent efforts to reduce overhead costs throughout the Company. Management intends to keep costs low, so increasing product
volume and revenue will result in improving profit margins and eventually net profits. Significant components of operating expenses
consist of professional fees, salaries, and impairment losses.





43









OTHER INCOME (EXPENSES)



Financing expenses were $718,466 for the
three months ended June 30, 2012 compared to $585,146 during same period last year. We incurred non cash interest expense and amortization
of debt discounts and non cash interest costs relating to our convertible notes of $278,700 for the three months ended June 30,
2012 compared to $91,129 for the three months ended June 30, 2011.



(LOSS) GAIN ON CHANGE IN FAIR VALUE OF
DERIVATIVE LIABILITY.   As described in our accompanying unaudited condensed consolidated financial statements,
we issued convertible notes with certain conversion features, reset warrants and Series A and E Preferred Stock that have
certain reset provisions.  All of which, we are required to bifurcate from the host financial instrument and mark to
market each reporting period. We recorded the initial fair value of the reset provision as a liability with an offset to equity
or debt discount and subsequently mark to market the reset provision liability at each reporting cycle.



For the three months ended June 30, 2012,
we recorded a net loss of $3,623,835 in change in fair value of the derivative liability as compared to a gain of $317,837 for
the same period the previous year.  The changes in the market price of our common stock have affected the fair value
of the derivative liability.



COMPARISON OF THE NINE MONTHS ENDED JUNE
30, 2012 TO THE NINE MONTHS ENDED JUNE 30, 2011



REVENUES



Net revenues were $574,018 for the nine
months ended June 30, 2012. Our revenues decreased by $735,080 from the nine months ended June 30, 2011. This 56.2% decrease is
attributable to the fact that some of the new programs that had already been awarded have been significantly delayed.  We
are re-focusing on our core business, have restructured certain divisions of the Company and accordingly had lower production output
during this transitional period. The Company is now quoting again on numerous new paint projects and has commenced production with
new programs for the 2012 and 2013 periods that are expected to provide continued revenue growth.



GROSS (LOSS) PROFIT



For the nine months ended June 30, 2012,
MWW's gross loss was $(339,544) (59.2%) compared to gross profit of $183,585 (14.0%) for the nine months ended June 30, 2011. MWW
sold a greater percentage of its lower margin products in 2012 than in 2011, had significant “start-up” costs for new
projects that have not been offset by revenues yet and did not recognize any profit from the re-evaluation of derivatives
compared to the same period the year before.



The primary components of cost of sales are
direct labor and cost of parts and materials.  The cost of parts and materials has been consistent from year to year.



OPERATING EXPENSES



Selling, general, and administrative expenses were $908,909
(158.3 % of revenues) in 2012 compared to $1,267,348 (96.8 % of revenues) during 2011. The decrease in costs is attributable to
management’s stringent efforts to reduce overhead costs throughout the Company. Management intends to keep costs low, so
increasing product volume and revenue will result in improving profit margins and eventually net profits. Significant components
of operating expenses consist of professional fees, salaries, and impairment losses.



Significant components of operating expenses
consist of professional fees, salaries, and impairment losses.





44







OTHER INCOME (EXPENSES)



Financing expenses were $2,154,232
for the nine months ended June 30, 2012 compared to $971,688 during same period last year. We incurred non cash interest
expense and amortization of debt discounts and non cash interest costs relating to our convertible notes of $1,064,112 for
the nine months ended June 30, 2012 compared to $126,084 for the nine months ended June 30, 2011.



(LOSS) GAIN ON CHANGE IN FAIR VALUE OF
DERIVATIVE LIABILITY.   As described in our accompanying unaudited condensed consolidated financial statements,
we issued convertible notes with certain conversion features, reset warrants and Series A Preferred Stock that have certain
reset provisions.  All of which, we are required to bifurcate from the host financial instrument and mark to market each
reporting period. We recorded the initial fair value of the reset provision as a liability with an offset to equity or debt discount
and subsequently mark to market the reset provision liability at each reporting cycle.



For the nine months ended June 30, 2012,
we recorded a net loss of $2,538,814 in change in fair value of the derivative liability as compared to a gain of $923,703 for
the same period the previous year.  The changes in the market price of our common stock have affected the fair value
of the derivative liability.



LIQUIDITY AND CAPITAL RESOURCES



As of June 30, 2012 we had working capital
deficit of $4,611,572. We reported negative cash flow from operating activities of ($417,409), cash used in investing of $(12,859)
and positive cash flow from financing activities of $441,124.



The negative cash flow from operating activities
consists of $6,318,411 net loss, net with $148,527 depreciation and amortization expenses, $111,496 in amortization of deferred
financing costs, $1,064,112 in amortization of debt discounts, $888,736 non cash interest,  $16,500 stock based compensation,
a loss on change in fair value of derivative liability of $2,538,814, a loss on settlement of debt of $382,596, common stock issued
for services of $70,500, net with cancelation of previously issued common stock for services of $120,000. Changes in operating
assets were a $117,460 decrease in accounts receivable, $9,441 decrease in inventory, $672,820 increase in accounts payable and
other current liabilities.



Cash flows used in investing activities
of $12,859 was primarily acquisition of property and equipment.



Cash flows from financing activities were
primarily from issuance of notes payable of $495,500, net with repayments of $54,376.



On January 27, 2009, the Key Bank notified
the Company it was in default of its obligations under the line of credit agreement and commercial mortgage loan secured by second
deed of trust on real property to JCMD Properties, LLC. The notification is declaring the debt obligations in default and is therefore
entitling the lender to exercise certain rights and remedies, including but not limited to, increasing the interest rate to the
default rate and demanding immediate repayment in full of the principal, interest and interest swap outstanding liability.  Further,
the lender notified the Company that the line of credit maturing on February 1, 2009 will not be renewed and no further advances
are available on the line of credit.  As discussed in Note 7, the Company has entered into a Forbearance Agreement through
August 31, 2009. As of September 30, 2009, the Key Bank line of credit was repaid through the Company securing the below financing
with Summit Financial Resources, L.P.



In September, 2009, Marketing Worldwide,
LLC entered into a financing agreement with Summit Financial Resources L.P. (Summit) for a maximum borrowing of up to $1 million
maturing August 31, 2011. The arrangement is based on recourse factoring of the Company’s accounts receivables. Substantially
all assets of Marketing Worldwide, LLC have been pledged as collateral for the Summit facility. Marketing Worldwide Corp. has guaranteed
the financing arrangement. The financing arrangement has been extended through August 31, 2012.





45







Under the arrangement, Summit typically
advances to the Company 75% of the total amount of accounts receivable factored. Summit retains 25% of the outstanding factored
accounts receivable as a reserve, which it holds until the customer pays the factored invoice to Summit. The cost of funds for
the accounts receivable portion of the borrowings with Summit includes: (a) a collateral management fee of 0.65% of the face amount
of factored accounts receivable for each period of fifteen days, or portion thereof, that the factored accounts receivable remains
outstanding until payment in full is applied and (b) interest charged at the Wall Street Journal prime rate plus 1% divided by
360.  The Summit default rate is the Wall Street Journal prime rate plus 10%. The Company may be obligated to purchase
the receivable back from Summit at the end of 90 days.



MWW expects its regular capital expenditures
to be approximately $100,000 for fiscal 2012. These anticipated expenditures are for continued investments in tooling and equipment
used in our business.



The independent registered public accounting
firm’s report on our September 30, 2011 consolidated financial statements included in our Form 10-K states that our difficulty
in generating sufficient cash flow to meet our obligations and sustain operations raise substantial doubts about the our ability
to continue as a going concern.  The consolidated financial statements do not include any adjustments that might result
should the Company be unable to continue as a going concern.



The Company has reduced cash required for
operations by reducing operating costs and reducing staff levels. In addition, the Company is working to manage its current liabilities
while it continues to make changes in operations to improve its cash flow and liquidity position.



The Company's existence is dependent upon
management's ability to continue developing profitable business opportunities and their ability to obtain adequate financing to
fund anticipated growth.



The Company's existence is dependent upon
management's ability to raise additional financing and develop profitable operations. Additional financing transactions may
include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading
price of our common stock and the downturn in the U.S. stock and debt markets could make it more difficult to obtain financing
through the issuance of equity or debt securities. Further, if we issue additional equity or debt securities, stockholders may
experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing
holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to
curtail our operations



RECENT ACCOUNTING PRONOUNCEMENTS



For information regarding recent accounting
pronouncements and their effect on the Company, see “Recent Accounting Pronouncements” in Note 2 of the Notes to Unaudited
Condensed Consolidated Financial Statements contained herein.



OFF-BALANCE SHEET ARRANGEMENTS



We do not have any off-balance sheet arrangements.



ITEM 3. – Quantitative and Qualitative Disclosures about
Market Risk



The Company is a smaller reporting company
as defined by Rule 12b-2 under the Exchange Act and is not required to provide the information required under this item.





46







ITEM 4T. Controls and Procedures



a) Evaluation of Disclosure Controls and
Procedures. As of June 30, 2012, the Company's management carried out an evaluation, under the supervision of the Company's Chief
Executive Officer and the Chief Financial Officer of the effectiveness of the design and operation of the Company's system of disclosure
controls and procedures pursuant to the Securities and Exchange Act, Rule 13a-15(e) and 15d-15(e) under the Exchange Act). Based
on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses previously found in our
internal controls, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures
were not effective.



b) Changes in internal controls. There
were no changes in internal controls over financial reporting, known to the Chief Executive Officer or Chief Financial Officer
that occurred during the period covered by this report that has materially affected, or is likely to materially effect, the Company's
internal control over financial reporting.



PART II - OTHER INFORMATION



ITEM 1. Legal Proceedings



There are no current legal proceedings.



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



None.



ITEM 3. Defaults upon Senior Securities



None.



ITEM 4.Mine Safety Disclosures



Not applicable



Item 5. Other Information



Material Modification to Rights of Security
Holders



On May 1, 2012,four persons holding majority voting power of Marketing Worldwide Corporation (the “Company”)took action by written consent to increase the authorized capital stock of the Company to consist of Five Billion NineHundred Ten Million (5,910,000,000) shares of which stock Five Billion Nine Hundred Million (5,900,000,000) shares of the par value
of $.00001 each shall be common stock and of which Ten Million (10,000,000) shares of the par value of $.001 each shall be preferred
stock. A copy of the Certificate of Amendment to the Certificate of Incorporation ofMarketing Worldwide Corporation is
attached to this report as Exhibit.



Based upon covenants in certain Securities
Purchase Agreements and Convertible Promissory Notes, the Company is required to reserve shares of its common stock for future
issuance. The significant increase in the amount of authorized shares was made by the four persons holding majority voting power
to accommodate the requirements of the covenants in certain Securities Purchase Agreements and Convertible Promissory Notes. For
example, the Company has secured cash for operations under several Securities Purchase Agreements and Convertible Promissory Notes
entered between the Company and Asher Enterprises Inc. that require the Company to reserve shares of common stock for future issuance.





47







On April 17, 2012, the Company received
funding of $47,500 from Asher Enterprises Inc. and was required to reserve 1,366,667 shares of common stock for future issuance
under the conversion features of the Convertible Promissory Note. Moreover, the Company had 475,333 shares of common stock reserved
pursuant three prior convertible promissory notes in favor of Asher Enterprises Inc. dated October 7, 2011, December б, 2011,
and February 1, 2012, respectively. Even though as of May 1, 2012, the total debt due in favor of Asher Enterprises Inc. is $183,000,
the Company is required to reserve 1,842,000 shares of common stock (with approximate value, based upon May 1, 2012 closing price
of $0.48, being $884,160) to honor the Company’s covenants under the Securities Purchase Agreements and Convertible Promissory
Notes.



At May 1, 2012, the Company had 1,327,733
shares issued and outstanding and 1,842,000 shares reserved for possible future issuances to Asher Enterprises Inc. Moreover, at
May 1, 2012, the Company has outstanding debt to seven Investors with conversion terms that (based upon May 1, 2012 closing price)
might require the future issuance of 2,394,354 or more shares of common stock. Under the terms of the Company’s Series A
Convertible Preferred Stock owned by Vision Opportunity Master Fund, Ltd. and Vision Capital Advantage Fund, L.P., the Company
will need to issue 156,540 shares of common stock to pay accrued dividends and convert the Series A shares into common stock.



The Company’s Series D stockholders,
who hold majority voting power, the board and management are taking actions based upon their informed business judgment to continue
operations for the benefit of the creditors and shareholders of the Company. Since the Company is in the zone of insolvency, the
Company must consider the interests of both shareholders and creditors. As the Company strives to repay its debt and secure capital
to support higher revenue in future periods, there will be dilution to existing stockholders caused by the issuance of common stock
for cash and in exchange for debt. While management seeks to minimize the dilution to existing stockholders, multiple factors beyond
management’s control, such as general economic conditions, the availability of and terms available for debt and equity funding,
and the trading price of the Company’s common stock, have a significant impact on this effort. The Company’s effort
to restructure its operations and to report positive cash flow and profits is expected to take 6-18 months. Investors are cautioned
that these efforts may not be successful.



ITEM 6. Exhibits



(a) EXHIBIT(S) DESCRIPTION



(3)(i) Certificate of Incorporation * (3)(ii)
Bylaws *

(4)(1) Form of Common Stock Certificate
*

(4)(2) Common Stock Purchase Warrant with
Wendover Investments Limited *

(4)(3) Stock Option Agreement with Richard
O. Weed *

(5) Opinion on Legality *****

(10)(1) Consulting Agreement with Rainer
Poertner ***

(10)(2) Fee Agreement with Weed & Co.
LLP *

(10)(3) Purchase Agreement MWW and MWWLLC
*

(10)(4) Amendment to Purchase Agreement
between MWW and MWWLLC **

(10)(5) Employment Agreement with CEO Michael
Winzkowski **

(10)(6) Employment Agreement with COO/CFO
James Marvin **

(10)(7) Loan Agreement with Key Bank N.A.
***

(10)(8) Amendment to Consulting Agreement
with Rainer Poertner ***

(10)(10) Real Property Lease Agreement
for 11224 Lemen Road, Suite A ****

(10)(11) Real Property Lease Agreement
for 11236 Lemen Road ****

(10)(12) Supplier and Warranty Agreement
****

(10)(13) Business Loan Agreement
April 4, 2006 with KeyBank N.A. ******

(10)(14) Supplier and Warranty Agreement
****

(10)(15) Blanket Purchase Order, Non-Disclosure
and Confidentiality Agreement ******

(10)(16) Lease Agreement and Amendment
to Lease Agreement with JCMD Properties, LLC ******

(10)(17) Consulting Agreement with Rainer
Poertner dated July 1, 2006 ******





48







(10)(18) Waiver of Cashless Exercise
Provisions in Warrant by Wendover Investments Ltd. *******

(10)(19) Waiver of Cashless Exercise Provisions
in Stock Option by Richard O. Weed *******

(10)(20) Extension of Employment Agreement
with Michael Winzkowski dated October 15, 2006

(10)(21) Extension of Employment Agreement
with James Marvin dated (21) Subsidiaries of Registrant *

(31)(1) Certification of Chief Executive
Officer pursuant to Section302 of the Sarbanes-Oxley Act of 2002.

(31)(2) Certification of Chief Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(32)(1) Certification of Chief Executive
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished under Exhibit 32 of Item 601 of Regulation S-K.

(32)(2) Certification of Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished under Exhibit 32 of Item 601 of Regulation S-K.



* Previously filed on February 11, 2005
as part of the Registration Statement on Form 10-SB12G of Marketing Worldwide Corporation SEC File 0-50586 Accession Number 1019687-4-279.



** previously filed on August 10, 2005
as part of the Registration Statement on Form 10-SB12G/A Amendment No. 1 of Marketing Worldwide Corporation SEC File 0-50586 Accession
Number 0001019687-04-001719.



*** previously filed on November 9, 2005
as part of the Registration Statement on Form 10-SB12G/A Amendment No. 2 of Marketing Worldwide Corporation SEC File 0-50586 Accession
Number 0001019687-04-002436.



**** Previously filed on January 31, 2006
as part of the Form 10-KSB for the year ended September 30, 2005 of Marketing Worldwide Corporation SEC File 0-50586 Accession
Number 0001019687-05-000207.



***** previously filed on March 17, 2006
as part of the Form SB-2 of Marketing Worldwide Corporation SEC File 333-123380 Accession Number 0001019687-05-000728.



****** previously filed on September 15,
2006 as part of the Form SB-2 of Marketing Worldwide Corporation SEC File 333-123380 Accession Number 0001019687-05-002649.



******* previously filed on December 7,
2006 as part of the Form SB-2 of Marketing Worldwide Corporation SEC File 333-123380 Accession Number 0001019687-05-003367.



(31)(1) Certification of Chief Executive
Officer pursuant to Section302 of the Sarbanes-Oxley Act of 2002.



(31)(2) Certification of Chief Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



(32)(1) Certification of Chief Executive
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished under Exhibit 32 of Item 601 of Regulation S-K.



(32)(2) Certification of Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished under Exhibit 32 of Item 601 of Regulation S-K.



(10)(22) $50,000 convertible note, dated
Feb 16, 2011, Asher

(10)(23) $25,000 convertible note, dated
March 22, 2011, Asher

(10)(24) $30,000 convertible note, dated
May 6, 2011, Asher

(10)(25) $127,000 convertible promissory
note, dated Jan. 10, 2011, RBSM, LLP

(10)(26) $250,000 senior convertible debenture,
dated June 29, 2011, Hillair



(10)(27) $260,120 promissory note and stock
pledge agreement, dated Feb 19, 2011, Rainer Poertner

(10)(28) Series C convertible preferred stock agreement, dated
April 29, 2011, Southridge

(10)(29) Series C convertible preferred stock agreement, dated
May 17, 2011, Southridge

(10)(30) Public relations, promotion and marketing agreement,
April 28, 2011 – August 28, 2011, Stock Vest

(10)(31) $45,000 convertible note, dated April 17, 2012, Asher

(10)(32) Certificate of Amendment to the Certificate of Incorporation





49







SIGNATURES



Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



|MARKETING WORLDWIDE CORPORATION
|-------------------------------
|                               
|BY:                            
|                               
|                               
|                               



Pursuant to requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.



|BY: | /s/ CHARLES PINKERTON                                  | 
|--- | ------------------------------------------------------ | 
|    | NAME: CHARLES PINKERTON                               
|    | TITLE: CHIEF EXECUTIVE OFFICER/CHIEF FINANCIAL OFFICER
|    | Date: August 20, 2012                                  | 



50