form10qsb.htm

Table of Contents		Page

Condensed Balance Sheets as of September 30, 2001		3
Condensed Statements of Operations for the three and nine months ended September 30, 2001 and 2000		4
Condensed Statements of Cash Flows for the nine months ended September 30, 2001 and 2000		5
Notes to Condensed Financial Statements		6-9

Worlds.com, Inc. Balance Sheets (Unaudited) As of September 30, 2001
Current Assets
Cash and cash equivalents	$	26,478
Accounts recievable		28,209
Prepaid Expenses		30,525
Inventory		52,727


Total Current Assets		137,939

Property, equipment software dev net of
accumulated depreciation		1,195,837


TOTAL ASSETS	$	1,333,776



Current Liabilities
Accounts payable		1,145,796
Accrued expenses		623,534
Deferred Revenue		698,887
Current maturities notes payable		2,173,304

Total Current Liabilities		4,641,521


Stockholders Equity (Deficit)

Common stock		33,824
Additional Paid in Capital		20,146,723
Accumulated Deficit		(23,488,291	)
	$
Total stockholders deficit		(3,307,745	)

Total Liabilities and stockholders deficit	$	1,333,776

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

Worlds.com, Inc. Statements of Operations (Unaudited) For the three and nine months ended September 30, 2001 and 2000

		Nine months ended September 30,						Three months ended September 30,
		2001			2000			2001			2000

Revenues
	Revenue	$	587,560		$	918,710		$	57,013		$	404,946
	Revenue from terminated K		834,722			-			-			-
Total			1,422,282			918,710			57,013			404,946


Cost and Expenses

	Cost of Revenue		224,675			339,713			1,438			127,401
	Selling General & Admin		2,024,821			6,851,421			51,750			2,032,432

	Operating income (loss)		(827,214	)		(6,272,424	)		3,826			(1,754,887	)


Other Income Expense
	Interest Income		6,061			83,045			8			14,992
	Interest Expense		863,696			130,260			38,461			44,487
	Offering Expense		208,880			-			-			-


Net Loss		$	(1,893,729	)	$	(6,319,639	)	$	(34,627	)	$	(1,784,382	)

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

Worlds.Com, Inc. Statements of Cash Flows (Unaudited) For six months ended January through September 2001
	2001			2000

Cash flows from operating activities
Net Income/(loss)	$	(1,893,729	)	$	(6,319,639	)
Adjustments to reconcile net loss to net cash used
in operating activities		-			-
Dep & amort		185,989			994,284
Accretion of deferred revenue		(774,639	)		-
Consulting expense related to the
issuance of stock options		165,000			172,695
Interest expense on beneficial conversion
feature in private placement		746,381			-
Placement fee and bonus expense paid
with convertible notes		95,000			-

Changes in operating assets and liabilities
Accounts receivable		205,398			(6,331	)
Prepaid expenses and other current assets		232,732			(192,853	)
inventories		83,978			(54,852	)
Long term deposit		-			(25,000	)
accounts payable and accrued expenses		(219,036	)		853,662
Deferred revenue		-			230,454
Loans

Net cash used in operating activities		(1,172,927	)		(4,347,580	)

Cash flows from investing activities
Addition to software development costs		(90,404	)		(496,055	)
Acquisition of property and equitpment		-			(106,830	)


Net cash used in investing activities		(90,404	)		(602,885	)


Cash flows from financing activities

Proceeds from sale of convertible notes		1,250,000			3,708,957
Proceeds from exercise of options		-			135,500
Net Cash provided from financing activities		1,250,000			3,844,457

Net increase(decrease) in cash		(13,332	)		(1,106,008	)
		-
Cash beginning of period		40,489			1,821,180

Cash end of period	$	27,158		$	715,172


Supplemental disclosure of cash flow information:
Cash paid during the year for
Interest		-			-
Income taxes		-			-
The accompanying notes are an integral part of these financial statements.

Worlds.com, Inc.

NOTES TO FINANCIAL STATEMENTS

Nine Months Ended September 30, 2001

NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF ACCOUNTING POLICIES

Description of Business

Worlds.com, Inc. (the "Company") designs and develops software content and related technologies for the creation of interactive, three-dimensional ("3D") Internet sites on the World Wide Web. Using in-house technology the Company creates its own Internet sites, as well as sites available through third party on-line service providers.

Basis of Presentation

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("US GAAP"), which contemplates continuation of the Company as a going concern. The Company has always been considered a developmental stage business, has incurred significant losses since its inception and has had minimal revenues from operations. The Company will require substantial additional funds for development and marketing of its products. There can be no assurance that the Company will be able to obtain the substantial additional capital resources necessary to pursue its business plan or that any assumptions relating to its business plan will prove to be accurate. The Company has not been able to generate sufficient revenue or obtain additional financing which has had a material adverse effect on the Company, including requiring the Company to severely diminish operations and at times halting them entirely. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company has been operating at a significantly reduced capacity with no full time employees and performing primarily consulting services and licensing software using consultants to perform any work that may be required.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Cash and Cash Equivalents

Cash and cash equivalents are comprised of highly liquid money market instruments, which have original maturities of three months or less at the time of purchase.

Income Recognition

The Company has the following sources of revenue: (1) consulting/licensing revenue from the performance of development work performed on behalf of the Company or from the sale of certain software to third parties; and (2) VIP subscriptions to our Worlds Ultimate 3-D Chat service.

Deferred revenue represents cash payments received in advance to be recorded as licensing revenue as earned.

Income Taxes

The Company uses the liability method of accounting for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes." Deferred income tax assets and liabilities are recognized based on the temporary differences between the financial statement and income tax bases of assets, liabilities and net operating loss carry forwards using enacted tax rates. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

Commitments and Contingencies

During 2000 the Company was involved in a lawsuit relating to unpaid consulting services. On March 20, 2001 a judgment against the Company was rendered for approximately $205,000. As of September 30, 2001 the Company recorded a reserve of $205,000 for this lawsuit, which is included in accrued expenses in the accompanying balance sheet.

Impairment of Long Lived Assets

The Company reviews the carrying value of long-lived assets to determine if circumstances exist indicating whether there has been any impairment of the carrying value of property and equipment or whether the depreciation periods should be modified. Long-lived assets are reviewed for impairment whenever events or changes in business circumstances indicate that the carrying value of the assets may not be fully recoverable. The Company as of the date of the financial statements has no long lived assets.

Worlds.com, Inc.

NOTES TO FINANCIAL STATEMENTS

Nine Months Ended September 30, 2001

NOTE 2 - GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Since its inception, the Company has had minimal revenues from operations. There can be no assurance that the Company will be able to obtain the substantial additional capital resources necessary to pursue its business plan or that any assumptions relating to its business plan will prove to be accurate. The Company is pursuing sources of additional financing and there can be no assurance that any such financing will be available to the Company on commercially reasonable terms, or at all. Any inability to obtain additional financing will have a material adverse effect on the Company, including possibly requiring the Company to significantly curtail or cease operations.

These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3 – DEFERRED REVENUE

Deferred revenue represents advance payments for the license, the design and development of the software, content and related technology for the creation of an interactive, three-dimensional ("3D") entertainment portal on the internet.

NOTE 4 – NOTES PAYABLE

Short-term debt at September 30, 2001 consists of the following:

The Company has promissory notes payable due to four shareholders. The principal amounts are, $124,230, $635,642, $631,950 and $350,000 with interest accruing at 8% per annum, 10% per annum 5% per annum, and 6% per annum respectively. The principal amounts plus all accrued interest are past due.

As part of a debt refinancing in 2000, $631,950 of debt was renegotiated to deferred revenue representing future services to be provided by the Company.

Item 2. Management's Discussions and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

When used in this form 10-QSB and in future filings by the Company with the Commission, the words or phrases such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "will" or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on any such forward looking statements, each of which speak only as of the date made. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company has no obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different. These factors include, but are not limited to, changes that may occur to general economic and business conditions; changes in current pricing levels that we can charge for our services or which we pay to our suppliers and business partners; changes in political, social and economic conditions in the jurisdictions in which we operate; changes to regulations that pertain to our operations; changes in technology that render our technology relatively inferior, obsolete or more expensive compared to others; foreign currency fluctuations; changes in the business prospects of our business partners and customers; increased competition, including from our business partners; delays in the delivery of broadband capacity to the homes and offices of persons who use our services; general disruptions to Internet service; and the loss of customer faith in the Internet as a means of commerce.

The following discussion should be read in conjunction with the financial statements and related notes which are included under Item 1, as well as with the audited financial statements and related notes and risk factors included in out Annual Report on Form 10-KSB for the most recently completed fiscal year.

We do not undertake to update our forward-looking statements or risk factors to reflect future events or circumstances.

Overview

General

Worlds.com is a leading 3D entertainment portal which leveraged our proprietary technology to offer visitors a network of virtual, multi-user environments which we call "worlds". These worlds are visually engaging online environments featuring animation, motion and content where people can come together and, by navigating through the website, shop, interact with others, attend events and be entertained.

Sites using our technology allow numerous simultaneous visitors to enter, navigate and share interactive "worlds". Our 3D Internet sites are designed to promote frequent, repeat and prolonged visitation by users by providing them with unique online communities featuring dynamic graphics, highly useful and entertaining information content, and interactive capabilities. We believe that our sites are highly attractive to advertisers because they offer access to demographic-specific user bases comprised of people that visit the site frequently and stay for relatively long periods of time.

Starting in mid 2001 we were not able to generate enough revenue to sustain operations and other sources of capital were not available. We have had to essentially curtail our operations in order to remain alive.

Revenues

We generated very little or no revenue during the quarter as we have significantly curtailed operations since mid 2001. The revenue that was generated since that time was generated in the following manner:

o the production of 3D promotion sites for third parties;

o VIP subscriptions to our Worlds Ultimate 3-D Chat service; and/or

o development, licensing and operation of 3D chat and entertainment sites for third parties;

Expenses

We classify our expenses into two broad groups:

o cost of revenues; and

o selling, general and administration.

During the quarter, our operations were minimal.

Liquidity and Capital Resources

We have had to severely diminish our operations since mid 2001 due to a lack of liquidity. We intend to try to continue to operate in this manner until we find an additional source of capital. We have no current arrangements with respect to, or sources of, additional financing and there can be no assurance that any such financing would become available. We may need to completely halt all operations for an indefinite period of time.

RESULTS OF OPERATIONS

Our net revenues for each of the nine months ended September 30, 2001 and 2000 were $1,422,282 and $918,709, respectively. In 1999 we entered into a content supply agreement to provide customized websites using our 3D technology. Under the terms of the agreement we received $500,000 upon signing the agreement in 1999, $633,342 during 2000 and $55,547 in 2001. The payments were being amortized over the life of the website or as earned based on the agreement. In March 2001 we learned that the websites under the agreement were being terminated. As a result of this termination, these non-refundable payments have been recognized as revenue in the amount of $834,722 in the period ending March 31, 2001. Revenue for the nine months ended September 30, 2001 without this revenue is $587,560.

Nine months ended September 30, 2001 compared to nine months ended September 30, 2000

Revenue increased by $503,573, to $1,422,282 for the nine months ended September 30, 2001 from $918,709 in the prior year. As noted above $834,723 of the increase is due to a customer terminating their agreement with us resulting in revenue from non-refundable payments. Without this revenue from the terminated contract revenue from operations would have decreased by $331,149 or 36%. Due to the deteriorating internet market, our customers have stopped their internet expansions plans which included our worlds. This resulted in a lack of liquidity from no revenue. The business is running in a severely diminished mode and may cease to operate due to the lack of liquidity. We expect minimal operating results until such time, if ever, that we can raise additional capital to provide the resources required to generate sales.

Our cost of revenues during the nine months ended September 30, 2001 and 2000 are primarily comprised of (1) cost of goods sold (2) selling general and administrative expenses. Cost of sales on a consolidated basis decreased $115,038, or 34%, to $224,675 for the nine months ended September 30, 2001, from $339,713 in the nine months ended September 30, 2000. Main reason for this decrease was due to our customers canceling their internet plans forcing us to severely cut back on operations in 2001.

Selling general and administrative expenses was $2,024,821 for the nine months ended September 30, 2001. For the nine months ended September 30, 2000 selling general and administrative expenses was $6,817,723 for a reduction of $4,792,902 or 71%. Reduction in expenses is due to very limited marketing and advertising in 2001 in contrast to the major marketing campaign we ran in 2000 and because of the deteriorating internet market we severely cut back on all expenses as we reduced our operations.

Other expenses include interest expense of $863,696 directly attributable to the notes payable and offering expenses of $208,880 relating to the round of financing in the first quarter for the nine months ended September 30, 2001. Other expenses include interest expense in the nine months ended September 30, 2000 was $130,259. Other income includes interest income of $6,061 for the nine months ended September 30, 2001 compared to $83,045 for the nine months ended September 30, 2000.

As a result of the foregoing we incurred a net loss of $1,893,729 for the nine months ended September 30, 2001, compared to a loss of $6,285,940 in the nine months ended September 30, 2000.

Liquidity and Capital Resources

Our financial and liquidity position remained weak as exhibited by our cash, cash equivalents, short-term marketable securities and marketable equity securities of $26,478 at September 30, 2001. Cash, cash equivalents, short-term marketable securities and equity securities were $715,172 at September 30, 2000. This decrease of $596 was the net result of cash used in operating activities. There were no capital expenditures and no financing activities.

Historically, our primary cash requirements have been used to fund the cost of operations, development of our products and patent protection, with additional funds having been used in promotion and advertising and in connection with the exploration of new business lines.

We have had to severely diminish our operations due to a lack of liquidity. We intend to try to continue to operate in this manner until we find an additional source of capital. We have no current arrangements with respect to, or sources of, additional financing and there can be no assurance that any such financing would become available. We may need to permanemtly halt all operations.

Item 3. Controls And Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized and reported within the specified time periods. Our Chief Executive Officer and our Chief Financial Officer (collectively, the “Certifying Officers”) are responsible for maintaining our disclosure controls and procedures. The controls and procedures established by us are designed to provide reasonable assurance that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

During the first quarter of 2008 our Certifying Officers evaluated the effectiveness of our disclosure controls and procedures. Based on the evaluation, the Certifying Officers concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required as of the end of the period covered by this report to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure.

PART II OTHER INFORMATION

Item 1. Legal Proceedings.

In Cosmo Communications v. Worlds, Inc. (our predecessor) in the Superior Court Of New Jersey Law Division, Bergen County, the court rendered a decision in favor of the plaintiff, Cosmo Communications on February 13, 2001. The judgment amount entered on March 20, 2001, is approximately $205,000 of which $205,000 is accrued. The judgment related to a consulting agreement for raising capital. The court ruled that the terms of the contract are binding on successors of the company and that Worlds.com is a successor company. We have appealed the decision.

Item 2. Changes in Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

None.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

None.

(b) Reports on Form 8-K

None.

SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused this Report to be signed on its behalf by the undersigned thereto duly authorized.

Date: March 4, 2008

WORLDS.COM, INC.

By: /s/ Thomas Kidrin

Thomas Kidrin

President, CEO and Treasurer

By: /s/ Christopher Ryan

Christopher Ryan

Chief Financial Officer and

Principal Accounting Officer

INDEX TO EXHIBITS

Exhibit No.		Description

31.1		Certification of Chief Executive Officer

31.2		Certification of Chief Financial Officer

32.1		Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.