form10qsb.htm

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Condensed Balance Sheets as of March 31, 2003		3
Condensed Statements of Operations for the three months ended March 31, 2003 and 2002		4
Condensed Statement of cash flows for the three months ended March 31, 2003 and 2002		5
Notes to Financial Statements		6-9

Worlds.com, Inc. Balance Sheets (Unaudited) As of March 31, 2003
Current Assets
Cash and cash equivalents	$	5,372


Total Current Assets		5,372

Property and equipment net of
accumulated depreciation		-


TOTAL ASSETS	$	5,372



Current Liabilities
Accounts payable		1,145,704
Accrued expenses		819,912
Deferred Revenue		631,950
Current maturities notes payable		2,221,969

Total Current Liabilities		4,819,536


Stockholders Equity (Deficit)

Common stock		33,824
Additional Paid in Capital		20,146,723
Accumulated Deficit		(24,994,709	)

Total stockholders deficit	$	(4,814,163	)

Total Liabilities and stockholders deficit	$	5,372
The accompanying notes are an integral part of these financial statements.

Worlds.com, Inc. Statements of operations (Unaudited) For the three months ended March 31, 2003 and 2002
		Three months ended March 31,
		2003			2002

Revenues
	Revenue	$	-		$	83,948.00


Cost and Expenses

	Cost of Revenue		11,080			14,514
	Selling General & Admin		2,298			1,816

	Operating income (loss)		(13,379	)		67,618


Other Income Expense
	Interest Income		-			-
	Interest Expense		38,461			38,461
	Offering Expense		-			-


Net Gain/(Loss)		$	(51,840	)	$	29,157
The accompanying notes are an integral part of these financial statements.

Worlds.com, Inc. Statements of cash flows (Unaudited) For the three months ended March 31, 2003 and 2002
	2003			2002
Cash flows from operating activities
Net Income/(loss)	$	(51,840	)	$	29,157
Adjustments to reconcile net loss to net cash used
in operating activities		-			-
Dep & amort					-
Accretion of deferred revenue		-			(66,937	)
Accounts receivable					-
Prepaid expenses and other current assets		-			-
inventories
accounts payable and accrued expenses		38,461			38,596
Loan		6,000			-

Net cash used in operating activities		(7,379	)		816

Cash flows from investing activities
Acquisition of property and equipment		-			-


Net cash used in investing activities		-			-


Cash flows from financing activities

Net cash provided from investing activities
		-			-
Net increase(decrease) in cash		(7,379	)		816

Cash beginning of period		12,750			5,888

Cash end of period	$	5,372		$	6,704


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

Quarter Ended March 31, 2003

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.

Property and Equipment

There is no property or equipment owned by the Company as of March 31, 2003.

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.

Worlds.com, Inc.

NOTES TO FINANCIAL STATEMENTS

Quarter Ended March 31, 2003

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 March 31, 2003 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.

NOTE 2 - GOING CONCERN

Since 2001 the Company has had to significantly curtail and essentially cease operations due to lack of resources. 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 permanently 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 March 31, 2003 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 andentertainment 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 permanently halt all operations for an indefinite period of time.

RESULTS OF OPERATIONS

Our net revenues for each of the three months ended March 31, 2003 and 2002 were $0 and $83,948, respectively. Management believes that this decrease was due to the Company having to halt operations due to lack of liquidity.

Three months ended March 31, 2003 compared to three months ended March 31, 2002

Revenue decreased by $83,948, to $0 for the three months ended March 31, 2003 from $83,948 in the prior year. The business has been running in a severely diminished mode and at times had to halt operations 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 three months ended March 31, 2003 and 2002 are primarily comprised of (1) cost of goods sold 83% and 89%, respectively, (2) selling general and administrative expenses 17% and 11%, respectively. Cost of sales on a consolidated basis decreased $3,434, or 24%, to $11,080 for the three months ended March 31, 2003, from $14,514 in the three months ended December 31, 2002. Management believes the decrease is in line with reductions in the operations of the Company as liquidity gets worse due to no revenue.

Selling general and administrative expenses increased by approximately $482, from $1,816 to $2,298 for the three months ended March 31, 2002 and 2003, respectively. The balances are so low that any change is irrelevant to the operations of the Company.

Other expenses include interest expense of $38,461 directly attributable to the notes payable in the three months ended March 31, 2003. Interest expense in the three months ended March 31, 2002 was also $38,461.

As a result of the foregoing we incurred a net loss of $51,840 for the three months ended March 31, 2004 compared to net income of $29,157 in the three months ended March 31, 2002.

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 $5,372 at March 31, 2003. Cash, cash equivalents, short-term marketable securities and equity securities were $6,704 at March 31, 2002. This decrease of $1,332 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 completely 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.

None.

Item 2. Changes in Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities.

During the quarter covered by this Report, we defaulted on $2,178,488 payment of principal and $385,219 of interest with respect to outstanding promissory notes. As of the date of the filing of this report we have $759,872 outstanding in arrearages.

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