UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended March 31, 2013
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission File number 0-24115
WORLDS INC.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 22-1848316 |
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
11
Royal Road
Brookline, MA 02445
(Address of Principal Executive Offices)
(617) 725-8900
(Registrant's Telephone Number, Including Area Code)
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. Yes [X] 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ X ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] 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). Yes [ ] No [X]
As of May 20, 2013, 83,238,071 shares of the Issuer's Common Stock were outstanding.
Worlds Inc.
| Page | |
| Balance Sheets as of March 31, 2013 (unaudited) and December 31, 2012 (audited) | 3 |
| Statements of Operations for the three months ended March 31, 2013 and 2012 (unaudited) | 4 |
| Statements of Cash Flows for the three months ended March 31, 2013 and 2012 (unaudited) | 5 |
| Notes to Financial Statements | 6 |
| (1) |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
| Worlds Inc. | ||||||||
| Balance Sheets | ||||||||
| March 31, 2013 and December 31, 2012 | ||||||||
| Unaudited | Audited | |||||||
| March 31, 2013 | December 31, 2012 | |||||||
| ASSETS: | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 248,003 | $ | 95,069 | ||||
| Restricted cash and cash equivalents | 1,950,000 | - | ||||||
| Due from related party | 236,774 | 134,654 | ||||||
| Total Current Assets | 2,434,777 | 229,724 | ||||||
| Patents | 7,000 | 7,000 | ||||||
| Total assets | $ | 2,441,777 | $ | 236,724 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT: | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 797,908 | $ | 797,908 | ||||
| Accrued expenses | 1,884,550 | 1,953,934 | ||||||
| Derivative liability | 2,345,621 | 0 | ||||||
| Notes payable | 773,279 | 773,279 | ||||||
| Convertible notes payable, net | 21,918 | 0 | ||||||
| Total Current Liabilities | 5,823,276 | 3,525,121 | ||||||
| Stockholders' (Deficit) | ||||||||
| Common stock (Par value $0.001 authorized 100,000,000 shares, issued and outstanding 83,238,071and 79,813,071 at March 31, 2013 and December 31, 2012, respectively) | 83,238 | 79,813 | ||||||
| Common stock subscribed but not yet issued (523,333 and 1,500,000 at March 31, 2013 and December 31, 2012, respectively) | 523 | 1,500 | ||||||
| Subscription receivable | 0 | (10,000 | ) | |||||
| Additional paid in capital | 27,096,002 | 26,580,244 | ||||||
| Common stock-warrants | 132,831 | 203,237 | ||||||
| Deferred compensation | (232,037 | ) | (12,500 | ) | ||||
| Accumulated deficit | (30,462,057 | ) | (30,130,692 | ) | ||||
| Total stockholders deficit | (3,381,498 | ) | (3,288,398 | ) | ||||
| Total Liabilities and stockholders' deficit | $ | 2,441,777 | $ | 236,723 | ||||
See Notes to Condensed Financial Statements
| (2) |
| Worlds Inc. | ||||||||
| Statements of Operations | ||||||||
| Three Months Ended March 31, 2013 and 2012 | ||||||||
| Unaudited | Unaudited | |||||||
| 2013 | 2012 | |||||||
| Revenues | ||||||||
| Revenue | $ | — | $ | — | ||||
| Total Revenue | — | — | ||||||
| Cost and Expenses | ||||||||
| Cost of Revenue | — | |||||||
| Gross Profit/(Loss) | — | — | ||||||
| Common Stock issued for services rendered | 62,263 | 207,035 | ||||||
| Selling, General & Admin. | 248,936 | 50,160 | ||||||
| Salaries and related | 47,026 | 48,315 | ||||||
| Operating loss | (358,225 | ) | (305,510 | ) | ||||
| Other Income (Expense) | ||||||||
| Gain on change in fair value of derivative liability | 54,379 | — | ||||||
| Interest Expense | (27,518 | ) | — | |||||
| Net (Loss) | $ | (331,364 | ) | $ | (305,510 | ) | ||
| Weighted Average Loss per share | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted Average Common Shares Outstanding | 81,832,238 | 75,071,122 | ||||||
See Notes to Condensed Financial Statements
| (3) |
| Worlds Inc. | ||||||||
| Statements of Cash Flows | ||||||||
| Three Months Ended March 31, 2013 and 2012 | ||||||||
| Unaudited | Unaudited | |||||||
| 2013 | 2012 | |||||||
| Cash flows from operating activities: | ||||||||
| Net (loss) | $ | (331,364 | ) | $ | (305,510 | ) | ||
| Adjustments to reconcile net loss to net cash (used in) operating activities | ||||||||
| Common stock issued for services rendered | 62,263 | 207,035 | ||||||
| Amortization of discount to note payable | 21,918 | — | ||||||
| Derivative expenses | 512,637 | — | ||||||
| Changes in fair value of derivative liabilities | (567,016 | ) | — | |||||
| Accounts payable and accrued expenses | (69,384 | ) | 9,100 | |||||
| Due from related party | (102,120 | ) | (12,296 | ) | ||||
| Net cash (used in) operating activities: | (473,066 | ) | (101,671 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Patent | — | (7,000 | ) | |||||
| Net cash (used in) investing activities: | — | (7,000 | ) | |||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of common stock | 97,500 | 250,000 | ||||||
| Proceeds from exercise of warrants | 78,500 | |||||||
| Proceeds from issuance of note payable | 2,400,000 | — | ||||||
| Net cash provided by financing activities | 2,576,000 | 250,000 | ||||||
| Net increase/(decrease) in cash and cash equivalents | 2,102,934 | 141,329 | ||||||
| Cash and cash equivalents, beginning of year | 95,069 | 152,526 | ||||||
| Cash and cash equivalents, end of year | $ | 2,198,003 | $ | 293,855 | ||||
| Non-cash financing activities | ||||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid during the year for: | ||||||||
| Interest | $ | — | $ | — | ||||
| Income taxes | $ | — | $ | — | ||||
See Notes to Condensed Financial Statements
| (4) |
Worlds Inc.
NOTES TO FINANCIAL STATEMENTS
Three Months Ended March 31, 2013
(Unaudited)
NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF ACCOUNTING POLICIES
Description of Business
On May 16, 2011, the Company transferred, through a spin-off to its then wholly owned subsidiary, Worlds Online Inc., the majority of its operations and related operational assets. The Company retained its patent portfolio which it intends to continue to increase and to more aggressively enforce against alleged infringers. The Company also entered into a License Agreement with Worlds Online Inc. to sublicense its patented technologies.
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 enforcement of its patent portfolio. There can be no assurance that the Company will be able to obtain the substantial additional capital resources 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 sufficient financing which has had a material adverse effect on the Company, including requiring the Company to reduce operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. For the past year the Company has been operating at a significantly reduced capacity, with only one full time employee, performing primarily consulting services and licensing software and using consultants to perform any additional 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.
Due from Related Party
Due from related party is comprised of cash payments made by Worlds Inc. on behalf of Worlds Online Inc. for shared operating expenses.
Revenue Recognition
Effective for the second quarter of 2011, the Company spun off its online businesses to Worlds Online Inc. The Company’s sources of revenue after the spin off will be from sublicenses of the patented technology by Worlds Online and any revenue that may be generated from enforcing its patents. Prior to the spin-off, the Company had the following sources of revenue: (1) consulting/licensing revenue from the performance of development work performed on behalf of the Company and licensing revenue or from the sale of certain software to third parties; and (2) VIP subscriptions to our Worlds Ultimate 3-D Chat service. Following the spin-off we expect to receive revenue from royalties on licenses of our IP and from litigation settlements from infringers of our IP. The Company recognizes revenue when all of the following criteria are met: evidence of an arrangement exists such as a signed contract, delivery has occurred, the price is fixed or determinable, and collectibility is reasonable assured. This will usually be in the form of a receipt of a customer’s acceptance indicating the product has been completed to their satisfaction except for development work and service revenue which is recognized when the services have been performed. Deferred revenue represents cash payments received in advance to be recorded as revenue when earned. The corresponding cost associated with those contracts is also deferred as deferred costs until the revenue is ultimately recognized.
Research and Development Costs
Research and development costs are charged to operations as incurred.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided on a straight line basis over the estimated useful lives of the assets ranging from three to five years. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income. Maintenance and repairs are charged to expense in the period incurred.
Impairment of Long Lived Assets
The Company evaluates the recoverability of its fixed assets and other assets in accordance with section 360-10-15 of the FASB Accounting Standards Codification for disclosures about Impairment or Disposal of Long-Lived Assets. Disclosure requires recognition of impairment of long-lived assets in the event the net book value of such assets exceeds its expected cash flows. If so, it is considered to be impaired and is written down to fair value, which is determined based on either discounted future cash flows or appraised values. The Company adopted the statement on inception. No impairments of these types of assets were recognized during the three months ended March 31, 2013 and 2012.
Stock-Based Compensation
The Company accounts for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.
Income Taxes
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of operations in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
Notes Payable
The Company has $773,279 in short term notes outstanding at March 31, 2013.
Deferred Revenue
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. $355,000 has been amortized into income since then. The balance was transferred over to Worlds Online Inc. and no longer appears on the Company’s balance sheet.
Call Option Agreements
The Company has entered into call option agreements with 13 of its major shareholders. The call options give the Company the right to purchase up to 4,150,000 shares of stock back at prices ranging from $0.15 per share up to $0.40 per share. The Company issued an aggregate of 680,000 shares of stock to these shareholders as an inducement to enter into these call option agreements. The call option agreements have expiration dates of 1 and 2 years. In 2011, 12 of the call options were extended for 1 year. The Company issued 315,000 additional shares as an inducement to enter into the 1 year extensions. At December 31, 2012 all call options have expired
Comprehensive Income (Loss)
The Company reports comprehensive income and its components following guidance set forth by section 220-10 of the FASB Accounting Standards Codification which establishes standards for the reporting and display of comprehensive income and its components in the consolidated financial statements. There were no items of comprehensive income (loss) applicable to the Company during the period covered in the consolidated financial statements.
Loss Per Share
Net loss per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. There were no potentially dilutive shares outstanding as of March 31, 2013 and 2012.
Commitments and Contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
During 2000 the Company was involved in a lawsuit relating to unpaid consulting services. In April, 2001 a judgment against the Company was rendered for approximately $205,000. As of December 31, 2012, and 2011 the Company recorded a reserve of $205,000 for this lawsuit, which is included in accrued expenses in the accompanying balance sheets.
Risk and Uncertainties
The Company is subject to risks common to companies in the technology industries, including, but not limited to, litigation, development of new technological innovations and dependence on key personnel.
Off Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
Uncertain Tax Positions
The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the years ended December 31, 2012 or 2011.
| (5) |
Recent Accounting Pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
In May 2011, FASB issued Accounting Standards Update No. 2011-04, “Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”). ASU 2011-04 changes the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements to ensure consistency between U.S. GAAP and IFRS. ASU 2011-04 also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This new guidance is to be applied prospectively. The Company anticipates that the adoption of this standard will not materially expand its financial statement note disclosures.
In June 2011, FASB issued ASU No. 2011-05, “Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income” (“ASU 2011-05”), which amends current comprehensive income guidance. This accounting update eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity. Instead, the Company must report comprehensive income in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. ASU 2011-05 will be effective for public companies during the interim and annual periods beginning after December 15, 2011, with early adoption permitted. The Company is reviewing ASU 2011-05 to ascertain its impact on the Company’s financial position, results of operations or cash flows as it only requires a change in the format of the current presentation.
In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment”, which allows, but does not require, an entity when performing its annual goodwill impairment test the option to first do an initial assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount for purposes of determining whether it is even necessary to perform the first step of the two-step goodwill impairment test. Accordingly, based on the option created in ASU 2011-08, the calculation of a reporting unit’s fair value is not required unless, as a result of the qualitative assessment, it is more likely than not that fair value of the reporting unit is less than its carrying amount. If it is less, the quantitative impairment test is then required. ASU 2011-08 also provides for new qualitative indicators to replace those currently used. Prior to ASU 2011-08, entities were required to test goodwill for impairment on at least an annual basis, by first comparing the fair value of a reporting unit with its carrying amount. If the fair value of a reporting unit is less than its carrying amount, then the second step of the test is performed to measure the amount of impairment loss, if any. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The Company adopted ASU 2011-08 during the first quarter of fiscal 2013. The adoption of ASU 2011-08 did not impact the Company’s results of operations or financial condition.
In December 2011, FASB issued Accounting Standards Update 2011-11, “Balance Sheet - Disclosures about Offsetting Assets and Liabilities” to enhance disclosure requirements relating to the offsetting of assets and liabilities on an entity's balance sheet. The update requires enhanced disclosures regarding assets and liabilities that are presented net or gross in the statement of financial position when the right of offset exists, or that are subject to an enforceable master netting arrangement. The new disclosure requirements relating to this update are retrospective and effective for annual and interim periods beginning on or after January 1, 2013. The update only requires additional disclosures, as such, the Company does not expect that the adoption of this standard will have a material impact on its results of operations, cash flows or financial condition.
In July 2012, the FASB issued ASU No. 2012-02, “Testing Indefinite-Lived Intangible Assets for Impairment”. The guidance allows companies to perform a “qualitative” assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary, similar in approach to the goodwill impairment test. ASU 2012-02 allows companies the option to first assess qualitatively whether it is more likely than not that an indefinite-lived intangible asset is impaired, before determining whether it is necessary to perform the quantitative impairment test. An entity is not required to calculate the fair value of an indefinite-lived intangible asset and perform the quantitative impairment test unless the entity determines that it is more likely than not that the asset is impaired. Companies can choose to perform the qualitative assessment on none, some, or all of its indefinite-lived intangible assets or choose to only perform the quantitative impairment test for any indefinite-lived intangible in any period.ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The Company is in the process of evaluating the guidance and the impact ASU 2012-02 will have on its financial statements.
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 periods where it had only minimal revenues from operations. There can be no assurance that the Company will be able to obtain the additional capital resources to fully implement 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 likely have a material adverse effect on the Company, including possibly requiring the Company to reduce and/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 - PRIVATE PLACEMENTS OF EQUITY
During the three months ended March 31, 2013, the Company sold 875,000 common shares for a cash investment of $87,500. The company received $10,000 for stock issued in 2012 and recorded as subscription receivable.
During the three months ended March 31, 2013, the Company raised $78,500 with the exercise of warrants covering 523,333 shares of its common stock at a price of $0.15 per share.
During the three months ended March 31, 2013, the Company issued an aggregate of 1,050,000 shares of common stock as payment for services rendered with an aggregate value of $281,800, $232,037 of which was recorded as deferred compensation as of March 31, 2013.
During the three months ended March 31, 2013, the Company issued 1,500,000 common shares for a cash investment of $150,000 which was received in 2012. The shares were not issued as of December 31, 2012, and were recorded as common stock subscribed but not yet issued at December 31, 2012.
During the three months ended March 31, 2012, the Company sold 1,000,000 common shares for a cash investment of $250,000.
During the three months ended March 31, 2012, the Company issued an aggregate of 417,952 shares of common stock and will issue 637,276 shares of common stock as payment for services rendered with an aggregate value of $207,035.
| (6) |
NOTE 4 - NOTES PAYABLE
We issued an aggregate of $2.4 million face amount of Senior Secured Convertible Notes (the “Notes”). The Notes are divided into Series A, Series B and Series C with the Series A and B Notes aggregating to $1.95 million and the Series C Notes aggregating to $450,000. All of the Notes carry a 14% annual interest rate upon default and are payable on March 13, 2016. The Company has determined that the conversion feature of the Notes represent an embedded derivative since the Notes are convertible into a variable number of shares upon conversion. These Notes are classified as a derivative liability and not a note payable, see Note 11 below.
|
Notes payable at March 31, 2013 consist of the following: |
||||
| Unsecured note payable to a shareholder bearing 8% interest. | ||||
| Entire balance of principal and unpaid interest due on demand | $ | 124,230 | ||
| Unsecured note payable to a shareholder bearing 10% interest | ||||
| Entire balance of principal and unpaid interest due on demand | $ | 649,049 | ||
| Total current | $ | 773,279 | ||
| 2013 | $ | 773,279 | ||
| 2014 | $ | -0- | ||
| 2015 | $ | -0- | ||
| 2016 | $ | -0- | ||
|
2017
|
$ | -0- | ||
| $ | 773,279 | |||
NOTE 5- PROPERTY AND EQUIPMENT
The detail composition of property and equipment at March 31, 2013 and December 31, 2012 is as follows:
| 31-Mar | 31-Dec | |||||||
| 2013 | 2012 | |||||||
| Computer equipment | $ | 10,891 | $ | 10,891 | ||||
| Less: accumulated depreciation | 10,891 | 10,891 | ||||||
| $ | 0 | $ | 0 |
Depreciation expense recorded for the three months ended March 31, 2013 and 2012 was $0 and $0, respectively.
NOTE 6 – STOCK OPTIONS
During the three months ended March 31, 2013, the Company issued 4,535,714 warrants as part of the senior secured convertible notes. No stock options were issued. During the three months ended March 31, 2013, 523,333 stock options were exercised for cash proceeds of $78,500.
During the three months ended March 31, 2012, no stock options or warrants were exercised.
| Stock Warrants and Options | ||||||||
| Stock warrants/options outstanding and exercisable on March 31, 2013 are as follows: | ||||||||
| Exercise Price per Share | Shares Under Option/warrant | Remaining Life in Years | ||||||
| Outstanding | ||||||||
| $ | 0.50 | 4,535,714 | 4.96 | |||||
| $ | 0.35 | 212,500 | 0.75 | |||||
| $ | 0.20 | 300,000 | 0.75 | |||||
| $ | 0.15 | 1,014,167 | 1.75 | |||||
| $ | 0.115 | 500,000 | 4.58 | |||||
| $ | 0.11 | 150,000 | 2.05 | |||||
| $ | 0.11 | 300,000 | .05 | |||||
| $ | 0.076 | 7,500,000 | 1.00 | |||||
| $ | 0.05 | 600,000 | .60 | |||||
| Exercisable | ||||||||
| $ | 0.50 | 4,535,714 | 4.96 | |||||
| $ | 0.35 | 212,500 | 0.75 | |||||
| $ | 0.20 | 300,000 | 0.75 | |||||
| $ | 0.15 | 1,014,167 | 1.75 | |||||
| $ | 0.11 | 150,000 | 2.05 | |||||
| $ | 0.11 | 300,000 | .05 | |||||
| $ | 0.076 | 7,500,000 | 1.00 | |||||
| $ | 0.05 | 600,000 | .60 | |||||
NOTE 7 - INCOME TAXES
At March 31, 2013, the Company had federal and state net operating loss carry forwards of approximately $41,400,000 that expire in various years through the year 2026.
Due to operating losses, there is no provision for current federal or state income taxes for the three months ended March 31, 2013 and 2012.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for federal and state income tax purposes.
The Company’s deferred tax asset at March 31, 2013 consists of net operating loss carry forwards calculated using federal and state effective tax rates equating to approximately $16,146,000 less a valuation allowance in the amount of approximately $16,146,000. Because of the Company’s lack of earnings history, the deferred tax asset has been fully offset by a valuation allowance. The valuation allowance increased by approximately $86,000 and $38,000 for the three months ended March 31, 2013 and 2012, respectively.
The Company’s total deferred tax asset as of March 31, 2013 is as follows:
| Net operating loss carry forwards | $ | 16,146,000 | ||
| Valuation allowance | (16,146,000) | |||
| Net deferred tax asset | $ | — |
The reconciliation of income taxes computed at the federal and state statutory income tax rate to total income taxes for the three months ended March 31, 2013 and 2012 is as follows:
| Income tax computed at the federal statutory rate | 34% |
| Income tax computed at the state statutory rate | 5% |
| Valuation allowance | (39%) |
| Total deferred tax asset | 0% |
NOTE 8 - COMMITMENTS AND CONTINGENCIES
The Company is committed to an employment agreement with its President and CEO, Thom Kidrin. The agreement, dated as of August 30, 2012, is for five years with a one-year renewal option held by Mr. Kidrin. The agreement provides for a base salary of $175,000, which increases 10% on September 1 of each year; a monthly car allowance of $500; an annual bonus equal to 2.5% of Pre-Tax Income (as defined in the agreement); an additional bonus as follows: $75,000, if Pre-Tax Income for the year is between 150% and 200% of the prior fiscal year’s Pre-Tax Income or (B) $100,000, if Pre-Tax Income for the year is between 201% and 250% of the prior fiscal year’s Pre-Tax Income or (C) $200,000, if Pre-Tax Income for the year is 251% or greater than the prior fiscal year’s Pre-Tax Income, but in no event shall this additional bonus exceed five (5%) percent of Pre-Tax Income for such year; payment of up to $10,000 in life insurance premiums; options to purchase 7.5 million shares of Worlds Inc. common stock at an exercise price of $0.076 per share, all of which vested on August 30, 2012; a death benefit of at least $2 million dollars; and a payment equal to 2.99 times his base amount (as defined in the agreement) in the event of a Change of Control (as defined in the agreement). The agreement also provides that Mr. Kidrin can be terminated for cause (as defined in the agreement) and that he is subject to restrictive covenants for 12 months after termination.
The Company is committed to a consulting agreement with an unrelated business consultant. The contract is dated January 1, 2012, calls for monthly payments in the amounts of $5,000 for the 24 month term of the contract and expires on January 1, 2014
| (7) |
NOTE 9 - RELATED PARTY TRANSACTIONS
On May 16, 2011, the Company transferred, through a spin-off to its then wholly owned subsidiary, Worlds Online Inc., the majority of its operations and related operational assets. The Company retained its patent portfolio which it intends to continue to increase and to more aggressively enforce against alleged infringers. The Company also entered into a License Agreement with Worlds Online Inc. to sublicense its patented technologies.
Due from related party is comprised of cash payments made by Worlds Inc. on behalf of Worlds Online Inc. for shared operating expenses. The balance due at March 31, 2013 is $236,774.
NOTE 10 - PATENTS
Worlds Inc. currently has seven patents, 6,219,045 - 7,181,690 - 7,493,558 – 7,945,856, - 8,082,501, 8,145,998 and 8,161,383. On March 30, 2012, the Company filed a patent infringement lawsuit against Activision Bizzard Inc., Blizzard Entertainment Inc. and Activision Publishing Inc. in the United States District Court for the District of Massachusetts. Susman Godfrey LLP is lead counsel for the Company. The costs to prosecute those parties that the Company and our legal counsel believe to be infringing on said patents were capitalized under patents until a resolution is reached.
There can be no assurance that the Company will be successful in its ability to prosecute its IP portfolio or that we will be able to acquire additional patents.
NOTE 11 – DERIVATIVE LIABILITIES
On March 20, 2013 the Company entered into strategic financing agreements with several institutional investors that could provide the Company with up to $2.3 million of debt financing based upon the amount of conversions and redemptions. The transaction documents provide, among other things, that (i) the investors will receive five year warrants in an amount equal to 100% of the number of shares of our common stock the investors would receive if the Notes (defined below) were converted on March 13, 2013, at an exercise price of $0.50 per share, (ii) $1.950 million of the funds will deposited in one of our bank accounts but will be subject to a control account agreement which will provide that the Company can only withdraw funds from the account as the investors convert or redeem the Notes, (iii) the investors have demand and piggy-back registration rights for the shares of common stock underlying the warrants and Notes, (iv) the Notes will be secured by a first priority security interest in all of our assets, other than its patents, (v) each investor may not convert any Note or exercise any warrants if doing so will cause the investor to own more than 4.99% of our outstanding common stock at any time, although under certain circumstances they can each own up to 9.99% of our outstanding common stock, (vi) we paid $40,000 of the investors’ legal fees incurred with respect to this transaction, and (vii) for the next three years the investors have a right to participate in up to 50% of any of our future financings. The warrants and Notes contain standard anti-dilution provisions and the Securities Purchase Agreements contains standard covenants for a financing of this nature. In the event the Company acquires any subsidiaries while the Notes are outstanding, such subsidiaries will be obligated to guaranty the Notes and any other obligations we owe to the investors pursuant to the transaction documents.
The Company has determined that the conversion feature of the Notes represent an embedded derivative since the Notes are convertible into a variable number of shares upon conversion. Accordingly, the Notes are not considered to be conventional debt under EITF 00-19 and the embedded conversion feature must be bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of this derivative instrument has been recorded as a liability on the balance sheet with the corresponding amount recorded as a discount to the Notes. Such discount will be accreted from the grant date to the maturity date of the Notes. The change in the fair value of the derivative liability will be recorded in other income or expenses in the statement of operations at the end of each period, with the offset to the derivative liability on the balance sheet. The beneficial conversion feature included in the Notes resulted in an initial debt discount of $2,400,000 and an initial loss on the valuation of derivative liabilities of $512,637 based on the initial fair value of the derivative liability of $2,912,637. The fair value of the embedded derivative liability was calculated at grant date utilizing the following assumptions:
|
Grant Date |
Fair Value |
Term (Years) |
Assumed Conversion Price | Market Price on Grant Date |
Volatility Percentage |
Risk-free Rate |
| 3/20/13 | $2,912,637 | 3.0 | $0.326 | $0.465 | 238% | 0.0038 |
At March 31, 2013, the Company revalued the embedded derivative liability. For the period from the grant date to March 31, 2013, the Company decreased the derivative liability of $2,912,637 by $567,016 resulting in a derivative liability of $2,345,621 at March 31, 2013.
The fair value of the embedded derivative liability was calculated at March 31, 2013 utilizing the following assumptions:
|
Fair Value |
Term (Years) |
Assumed Conversion Price |
Volatility Percentage |
Risk-free Rate |
| $2,345,621 | 2.97 | $0.352 | 234% | 0.0036 |
The carrying value of the Notes was $2,345,621 as of March 31, 2013. The Company recorded interest expense related to this note of $5,600 and amortization of the debt discount in the amount of $21,198 during the period ended March 31, 2013.
| (8) |
Item 2. Management's Discussions and Analysis of Financial Condition and Results of Operations
Forward Looking Statements
When used in this Form 10-Q 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 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; 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 unaudited financial statements and related notes which are included under Item 1.
We do not undertake to update our forward-looking statements or risk factors to reflect future events or circumstances.
Overview
General
Starting in mid-2001 we were not able to generate enough revenue to sustain full operations and other sources of capital were not available. As a result, we have had to significantly curtail our operations since that time and at times almost halt them all together. Since mid-2007, as more funds became available from our financings, we were able to increase operations and become more active operationally.
On May 16, 2011, we transferred, through a spin-off to our then wholly owned subsidiary, Worlds Online Inc., the majority of our operations and related operational assets. We retained our patent portfolio which we intend to continue to increase and to more aggressively enforce against alleged infringers. We also entered into a License Agreement with Worlds Online Inc. to sublicense patented technologies.
At present, the Company’s anticipated sources of revenue after the spin off will be from sublicenses of the patented technology by Worlds Online and any revenue that may be generated from enforcing its patents.
Revenues
We generated no revenue during the quarter because we transferred the operations of the Company to Worlds Online Inc.
We classify our expenses into two broad groups:
| O | cost of revenues; and |
| O | selling, general and administration. |
Liquidity and Capital Resources
We have had to limit our operations since mid 2001 due to a lack of liquidity. However, we were able to issue equity and convertible debt in the last few years and raise small amounts of capital from time to time that enabled us to begin upgrading our technology, develop new products and actively solicit additional business. We continue to pursue additional sources of capital though we have no current arrangements with respect to, or sources of, additional financing at this time and there can be no assurance that any such financing will become available. If we cannot raise additional capital, form an alliance of some nature with another entity, or start to generate sufficient revenues, we may need to once again scale back operations.
RESULTS OF OPERATIONS
Our net revenues for each of the three months ended March 31, 2013 and 2012 were $0 and $0, respectively. The Company’s sources of revenue after the spin off is currently anticipated to be from sublicenses of the patented technology to Worlds Online Inc.’s customers and any revenue that may be generated from enforcing our patents.
| (9) |
Three months ended March 31, 2013 compared to three months ended March 31, 2012
Revenue is $0 for the three months ended March 31, 2013 and 2012. We need to raise a sufficient amount of capital to provide the resources required that would enable us to continue running the business.
Cost of revenues is $0 in the three months ended March 31, 2013 and 2012.
Selling general and administrative (SG&A) expenses increased by $198,776 from $50,160 to $248,936 for the three months ended March 31, 2012 and 2013, respectively. Increase is due to an increase in the overall level of activity surrounding the lawsuit and compared to last year with an increase in professional service fees and consultants and with the activity around closing the strategic financing agreement.
Salaries and related decreased by $1,289 to $47,026 from $48,315 for the three months ended March 31, 2013 and 2012, respectively. The CEO’s salary for the three months ended March 31, 2013 is in line with the amount allocated to Worlds Inc. in the prior year.
Common stock issued for services rendered decreased by $144,772 to $62,263 from $207,035 for the three months ended March 31, 2013 and 2012 respectively. The Company is still signing strategic business consulting and advice agreements for common stock however the agreements have decreased in value.
For the three months ended March 31, 2013, the Company had a gain on change in fair value of derivative liability and interest expense of $27,518, both related to the issuance of the senior secured convertible notes that are required to be recorded as a derivative liability.
As a result of the foregoing, we realized a net loss of $331,354 for the three months ended March 31, 2013 compared to a net loss of $305,510 in the three months ended March 31, 2012.
Liquidity and Capital Resources
Our financial and liquidity position has improved substantially from the prior year period due primarily to the issuance of the convertible notes payable entered into on March 20, 2013. Our cash and cash equivalents were $248,003 and our restricted cash and cash equivalents were $1,950,000 at March 31, 2013. We raised an aggregate of $2,300,000 from issuing the convertible notes payable; we raised $97,500 from a private placement of common stock; and we raised $78,500 from the exercising of warrants for common stock in the three months ended March 31, 2013.
At March 31, 2012 our unrestricted cash was $43,855 and our restricted cash, being cash held in an escrow account until the common share certificates from the private placement are issued, was $250,000.
During the three months ended March 31, 2012 we raised an aggregate of $250,000 from a private placement of common stock.
There were no capital expenditures in the three months ended March 31, 2013 or in the three months ended March 31, 2012.
Historically, our primary cash requirements have been to fund the cost of operations, to keep the Company in compliance with its reporting requirements, 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 from mid-2001 through most of 2007. We were able to find a small source of additional capital in each of 2007 - 2010. There can be no assurance that any significant financing would become available to us at this time. The additional capital that we secured in previous years enabled us to bid on new business. There can be no assurance that any such new business would be sold in the future.
On March 30, 2012, the Company filed a patent infringement lawsuit against Activision Bizzard Inc., Blizzard Entertainment Inc. and Activision Publishing Inc. in the United States District Court for the District of Massachusetts. Susman Godfrey LLP is lead counsel for the Company
Item 4. Controls And Procedures
As of March 31, 2013, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2012. The above statement notwithstanding, you are cautioned that no system is foolproof.
Changes in Internal Control Over Financial Reporting
During the quarter covered by this report there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| (10) |
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
In Cosmo Communications v. Worlds Inc. (our former name) 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 in April 2001, is approximately $205,000, of which the full amount 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 .
Item 1A. Risk Factors
We are not obligated to disclose our risk factors in this report, however, limited information regarding our risk factors appears in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Forward-Looking Statements” contained in this Quarterly Report on Form 10-Q and in “Item 1A. RISK FACTORS” of our 2012 Annual Report on Form 10-K. There have been no material changes from the risk factors previously disclosed in our 2012 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the first quarter of 2013 the Company completed a private placement of 975,000 shares of unregistered common stock at a price per share of $0.10 for aggregate proceeds of $97,500. The investors were “accredited” investors, no public advertising was used, and the stock certificates issued contained a restrictive legend.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosure
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
| 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. | |
| 101.INS* XBRL | Instance Document | |
| 101.SCH*XBRL | Taxonomy Extension Schema | |
| 101.CAL*XBRL | Taxonomy Extension Calculation Linkbase | |
| 101.DEF* XBRL | Taxonomy Extension Definition Linkbase | |
| 101.LAB*XBRL | Taxonomy Extension Label Linkbase | |
| 101.PRE* XBRL | Taxonomy Extension Presentation Linkbase |
| (11) |
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: May 20, 2013
WORLDS INC.
| By:
/s/ Thomas Kidrin Thomas Kidrin President and CEO By: /s/ Christopher Ryan Christopher Ryan Chief Financial Officer |
| (12) |
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. | |
| 101.INS* XBRL | Instance Document | |
| 101.SCH* XBRL | Taxonomy Extension Schema | |
| 101.CAL* XBRL | Taxonomy Extension Calculation Linkbase | |
| 101.DEF* XBRL | Taxonomy Extension Definition Linkbase | |
| 101.LAB* XBRL | Taxonomy Extension Label Linkbase | |
| 101.PRE* XBRL |
Taxonomy Extension Presentation Linkbase |
EXHIBIT 31.1
Certifications
I, Thomas Kidrin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Worlds Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 20, 2013
/s/ Thomas Kidrin
Thomas Kidrin
Chief Executive Officer
EXHIBIT 31.2
Certifications
I, Christopher J. Ryan, Principal Accounting and Financial Officer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Worlds Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 20, 2013
/s/ Christopher J. Ryan
Christopher J. Ryan
Principal Accounting and Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Worlds Inc. (the "Company") on Form 10-Q for the three months ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Thomas Kidrin, Chief Executive Officer of the Company, certifies, pursuant to 18 U.S.C. 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, our financial condition and result of operations. |
| WORLDS, INC | |
| (Registrant) | |
| Date: May 20, 2013 | By:/s/ Thomas Kidrin |
| Christopher J. Ryan | |
| Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Worlds Inc. (the "Company") on Form 10-Q for the three months ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Christopher J. Ryan, Principal Accounting and Financial Officer of the Company, certifies, pursuant to 18 U.S.C. 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, our financial condition and result of operations. |
| WORLDS, INC | |
| (Registrant) | |
| Date: May 20, 2013 | By:/s/ Christopher J. Ryan |
| Christopher J. Ryan | |
| Principal Accounting and Financial Officer |
|
NOTE 5 - PROPERTY AND EQUIPMENT (Details) (USD $)
|
Mar. 31, 2013
|
Dec. 31, 2012
|
|---|---|---|
| Note 5 - Property And Equipment Details | ||
| Computer equipment | $ 10,891 | $ 10,891 |
| Less: accumulated depreciation | $ 10,891 | $ 10,891 |