0001264931-17-000092.txt : 20171114 0001264931-17-000092.hdr.sgml : 20171114 20171114143449 ACCESSION NUMBER: 0001264931-17-000092 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 42 CONFORMED PERIOD OF REPORT: 20170930 FILED AS OF DATE: 20171114 DATE AS OF CHANGE: 20171114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WORLDS INC CENTRAL INDEX KEY: 0000001961 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 221848316 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24115 FILM NUMBER: 171200624 BUSINESS ADDRESS: STREET 1: 11 ROYAL ROAD CITY: BROOKLINE STATE: MA ZIP: 02445 BUSINESS PHONE: 617-725-8900 MAIL ADDRESS: STREET 1: 11 ROYAL ROAD CITY: BROOKLINE STATE: MA ZIP: 02445 FORMER COMPANY: FORMER CONFORMED NAME: Worlds.com, Inc. DATE OF NAME CHANGE: 20080521 FORMER COMPANY: FORMER CONFORMED NAME: WORLDS COM INC DATE OF NAME CHANGE: 20000519 FORMER COMPANY: FORMER CONFORMED NAME: WORLDS INC DATE OF NAME CHANGE: 19980213 10-Q 1 wdddq32017.htm FORM 10-Q

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 September 30, 2017

( ) 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 Emerging growth company
(Do not check if a smaller reporting company)    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

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 October 30, 2017, 246,773,331 shares of the Issuer's Common Stock were outstanding.  

 

 

Worlds Inc.

 

Table of Contents

    Page  
Balance Sheets as of September 30, 2017 (Unaudited) and December 31, 2016 (Audited)   2  
Statements of Operations for the three months and nine months ended September 30, 2017 and 2016 (Unaudited)   3  
Statements of Cash Flows for the nine months ended September 30, 2017 and 2016 (Unaudited)   4  
Notes to Financial Statements   5  

 

 

 (1) 

 

  

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

 

Worlds Inc.      
Balance Sheets      
September 30, 2017 and December 31, 2016      
   Unaudited  Audited
   September 30, 2017  December 31, 2016
ASSETS:          
Current Assets          
Cash and cash equivalents  $37,976   $93,378 
Due from related party   10,095    —   
           
Total Current Assets   48,071    93,378 
           
Total assets  $48,071   $93,378 
           
           
LIABILITIES AND STOCKHOLDERS' DEFICIT:          
Current Liabilities          
Accounts payable  $797,908   $797,908 
Accrued expenses   2,691,762    2,545,672 
Due to related party   —      5,053 
Notes payable   773,279    773,279 
Notes Payable   25,000    750,000 
           
Total Current Liabilities   4,287,949    4,871,912 
           
Long Term Liabilities          
Notes payable   725,000    —   
           
Total Long Term Liabilities   725,000    —   
           
Stockholders' (Deficit)          
           
Common stock (Par value $0.001 authorized 250,000,000 shares, issued and outstanding 246,773,331 and 210,156,148 at September 30, 2017 and December 31, 2016, respectively)   246,773    210,156 
Common stock subscribed but not yet issued (0 at September 30, 2017 and 11,350,000 at December 31, 2016)   —      11,350 
Additional paid in capital   35,464,894    35,171,780 
Common stock-warrants   1,206,913    1,206,913 
Accumulated deficit   (41,883,459)   (41,378,732)
Total stockholders deficit   (4,964,877)   (4,778,533)
           
Total Liabilities and stockholders' deficit  $48,071   $93,378 
           
           
The accompanying notes are an integral part of these financial statements

 

 

 (2) 

 

 

Worlds Inc.              
Statements of Operations              
For the Three and Nine Months Ended September 30, 2017 and 2016           
   Unaudited    Unaudited
   Nine months ended September 30   

Three months ended

September 30

   2017  2016    2017  2016
Revenues                      
Revenue  $—     $—       $—     $—   
                       
Total Revenue   —      —        —      —   
                       
                       
Cost and Expenses                      
                       
Cost of Revenue   —      —        —      —   
                       
Gross Profit/(Loss)   —      —        —      —   
                       
                       
Warrant expense   —      1,109,044      —      1,109,044 
Option expense   —      —        —      —   
Selling, General & Admin.   332,166    539,256      78,797    136,448 
Salaries and related   192,163    176,635      64,054    60,172 
                       
Operating loss   (524,329)   (1,824,935)     (142,852)   (1,305,664)
                       
                       
Other Income (Expense)                      
Gain on sale of marketable securities   58,655    —        58,655    —   
Gain (Loss) on change in fair value of derivative liability   —      (364,191)     —      71,860 
Interest Expense   (33,658)   (75,796)     (11,342)   (21,536)
Loss on conversion of payable to common stock   (5,394)   —        —      —   
Net Income/(Loss)  $(504,726)  $(2,264,922)    $(95,540)  $(1,255,340)
                       
Weighted Average Loss per share  $ **   $(0.02)      **    $(0.01)
Weighted Average Common Shares Outstanding   245,047,227    145,427,831      246,773,331    113,268,877 
                       
**=less than $0.01                      
                       
The accompanying notes are an integral part of these financial statements

  

 

 (3) 

 

Worlds Inc.      
Statements of Cash Flows      
Nine Months Ended September 30, 2017 and 2016      
    
   Unaudited  Unaudited
   9/30/17  9/30/16
Cash flows from operating activities:          
Net gain/(loss)  $(504,726)  $(2,264,922)
Adjustments to reconcile net loss to net cash (used in) operating activities          
Fair value of warrants issued   —      1,109,044 
Amortization of discount to note payable   —      (12,334)
Changes in fair value of derivative liabilities   —      415,706 
Accounts payable and accrued expenses   146,089    124,541 
Due from/to related party   (15,148)   (36,766)
Net cash (used in) operating activities:   (373,785)   (664,731)
           
           
Cash flows from financing activities          
Proceeds from issuance of note payable   —      290,000 
Proceeds from issuance of convertible note payable   —      156,500 
Cash paid to repurchase convertible note payable        (110,257)
Proceeds from issuance of common stock        350,000 
Proceeds from exercise of warrants   292,800    —   
Issuance of common stock as payment for account payable   25,582    —   
Net cash provided by financing activities   318,382    686,243 
           
Net increase/(decrease) in cash and cash equivalents   (55,404)   21,512 
           
Cash and cash equivalents, including restricted, beginning of year   93,378    26,298 
           
Cash and cash equivalents, including restricted, end of period  $37,976   $47,812 
           
Non-cash financing activities          
Issuance of 54,963,098 shares of common stock to retire convertible notes payable   —      384,159 
           
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

 

 

 (4) 

 

Worlds Inc.

NOTES TO FINANCIAL STATEMENTS

Nine Months Ended September 30, 2017

(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. (currently called MariMed 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. As the Company has focused its attention on increasing its patent portfolio and enforcing it, the Company has been operating at a significantly reduced capacity, with only one full time employee 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 includes highly liquid money market instruments, which have original maturities of three months or less at the time of purchase.

 

Due to Related Party

 

Due to related party is comprised of cash payments made by Worlds Online Inc. on behalf of Worlds Inc. for shared operating expenses.

 

 (5) 

 

 

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 are from any revenue that may be generated from enforcing its patents. The Company recognizes revenue when all of the following criteria are met: evidence of an arrangement exists such as a signed agreement or contract or a final court decision, delivery has occurred, the price is fixed or determinable, and collectability 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.

 

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 2016 and 2015 or the first nine months of 2017.

 

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.

 

 (6) 

 

 

Notes Payable

 

The Company has $773,279 in short term notes outstanding at September 30, 2017 and December 31, 2016. These are old notes payable for which the statute of limitations has passed and therefore the Company does not expect it will ever have to repay those notes.

 

The Company has an additional $725,000 in long term notes and $25,000 in short term notes outstanding at September 30, 2017. The Company had $750,000 in short term notes outstanding at December 31, 2016. All of the notes were extended during the quarter.

 

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 financial statements. There were no items of comprehensive income (loss) applicable to the Company during the period covered in the financial statements.

 

Loss Per Share

 

Net loss per common share is computed pursuant to section 260-10-45 of the FASB ASC. 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. As of September 30, 2017, there were 26,250,000 options and no warrants, whose effect is anti-dilutive and not included in diluted net loss per share for September 30, 2017. The options and warrants may dilute future earnings per share.

 

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 September 30, 2017, and December 31, 2016 the Company recorded a reserve of $205,000 for this lawsuit, which is included in accrued expenses in the accompanying balance sheets.

 

 (7) 

 

 

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 year ended December 31, 2016.

 

Fair Value of Financial Instruments

 

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.

 

The following are the hierarchical levels of inputs to measure fair value:

 

  Level 1 – Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.

 

  Level 2 – Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

  Level 3 – Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, other receivables, accounts payable & accrued expenses, due to related party, notes payable and notes payables, approximate their fair values because of the short maturity of these instruments. The Company's convertible notes payable are measured at amortized cost.

 

The Company accounts for its derivative liabilities, at fair value, on a recurring basis under level 3. See Note 5.

 

 (8) 

 

 

Embedded Conversion Features 

 

The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion feature.

 

Derivative Financial Instruments

 

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income.

 

For option-based simple derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

 

Subsequent Events

 

The Company evaluated for subsequent events through the issuance date of the Company’s financial statements.

 

Recent Accounting Pronouncements

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements, and does 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.   

 

 (9) 

 

 

 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 completely 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 - EQUITY

 

During the nine months ended September 30, 2017 the Company received an additional $292,800 upon the exercise of 24,400,000 warrants to purchase 24,400,000 shares of the Company’s common stock at $0.012 per share. During the nine months ended September 30, 2017 the Company issued 750,000 shares of the Company’s common stock as payment for services rendered, an aggregate value of $18,000. The expense was recorded in a prior year and the shares were listed as common stock subscribed but not yet issued until the shares were issued during the nine months ended September 30, 2017.

 

During the nine months ended September 30, 2016, the Company issued 35,000,000 shares of common stock at a price of $0.01 per share raising $350,000. In connection with this raise, the Company issued 35,000,000 warrants with each to purchase one share of common stock at a price of $0.012. All of the warrants have been exercised as of September 30, 2017.

 

During the nine months ended September 30, 2016, the Company issued 54,963,098 shares of common stock by converting $384,159 of the principal of convertible notes payable.

 

 

NOTE 4 - NOTES PAYABLE

  

Notes payable at September 30, 2017 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  
Promissory notes   $ 700,000  
Notes Payable - related party   $ 50,000  
Total notes   $ 1,523,279  
2017   $ 773,279  
2018   $ 25,000  
2019   $ 725,000  
2020   $ -0-  
2021   $ -0-  
    $ 1,523,279  

 

We issued promissory notes in the amount of $290,000 during the nine months ended September 30, 2016. The promissory notes carry a 6% annual interest rate. All of the promissory notes had reached their maturity date and extension agreements have been signed for all of the $750,000 in notes. The holders of the promissory notes shall receive repayment in the full face amount of the note from the initial $750,000 the Company actually receives from the net proceeds of its patent infringement claim(s) or from the net proceeds of a public offering. In addition the holder shall receive a preferred return (i) in an amount equal to up to 200% of the initial face amount of the note out of available cash by sharing with all other investors in this series of notes in the allocation of 50% of the available cash received by the Company from $2M - $4M and (ii) in an amount equal to up to 100% of the initial face amount of the note out of available cash by sharing with all other investors in this series of notes in the allocation of 25% of the available cash received by the Company from $4M - $6M. In other words, if the Company collects $6M in the net proceeds of available cash, the holder will receive a return equal to 400% of its investment.  

 

 (10) 

 

 

NOTE 5 – STOCK OPTIONS

 

The Company issued 25,000,000 shares of common stock with an exercise price of $0.03 per share during the nine months ended September 30, 2017 and no stock options were exercised during the nine months ended September 30, 2017.

 

No stock options were issued during the nine months ended September 30, 2016 and no stock options were exercised during the nine months ended September 30, 2016. 

 

Stock Warrants and Options
Stock warrants/options outstanding and exercisable on September 30, 2017 are as follows:
 
Exercise Price per Share   Shares Under Option/warrant   Remaining Life in Years
  Outstanding                  
$ 0.19       200,000       0.25  
$ 0.155       200,000       1.25  
$ 0.14       250,000       1.25  
$ 0.11       300,000       2.75  
$ 0.03       300,000       2.75  
$ 0.03       25,000,000       5.00  

 

Exercise Price per Share   Shares Under Option/warrant   Remaining Life in Years
   Exercisable                  
$ 0.19       200,000       0.25  
$ 0.155       200,000       1.25  
$ 0.14       250,000       1.25  
$ 0.11       300,000       2.75  
$ 0.03       300,000       2.75  

 

NOTE 6 - 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 option portion of Mr. Kidrin’s employment agreement has expired and has been replace by an option agreement giving Mr. Kidrin the option to purchase 25,000,000 million shares of Worlds Inc. common stock at an exercise price of $0.03 per share, all of which vest on October 1, 2017. The remaining parts of the agreement have been renewed by Mr. Kidrin for one year. 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.  

 

 (11) 

 

 

NOTE 7 - 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.

 

Due to and due from related party accounts is comprised of cash payments for operating expenses made by Worlds Online Inc. on behalf of Worlds Inc. or made by Worlds Inc on behalf of Worlds Online Inc. The balance at September 30, 2017 is a due from related party of $10,095 and the balance on December 31, 2016 is a due to related party of $5,053.

 

NOTE 8 - PATENTS

 

Worlds Inc. currently has nine patents, 6,219,045 - 7,181,690 - 7,493,558 – 7,945,856, - 8,082,501, – 8,145,998 – 8,161,383, – 8,407,592 and 8,640,028. 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 9 – SALE OF MARKETABLE SECURITIES

 

When Worlds Inc. spun off Worlds Online Inc. in January 2011, the Company retained 5,936,115 shares of common stock in Worlds Online Inc. Those shares were retained on the books of the Company with a book value of $0. During the quarter the Company sold 120,472 shares at an average price of $0.49 per share raising $58,654.57. The proceeds from the sale was treated as a gain on sale of marketable securities in the financial statements.

 

 (12) 

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 other 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 license our technology; 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. (currently called MariMed 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 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. and our other anticipated revenue generation streams did not produce any income during the quarter.

 

Expenses

 

We classify our expenses into two broad groups:

 

 •  Cost of revenues; and

 

 •  selling, general and administration.

 

 

 (13) 

 

 

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, prior to the spinoff was used to enable us to begin upgrading our technology, develop new products and actively solicit additional business, and more recently to protect, increase and enforce our patent portfolio.  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 September 30, 2017 and 2016 were $0.  All the operations were transferred over to Worlds Online Inc. in the spin off. The Company’s future sources of revenue after the spin off are anticipated to be from enforcing our patents in litigation or otherwise.

 

Three months ended September 30, 2017 compared to the three months ended September 30, 2016

 

Revenue is $0 for the three months ended September 30, 2017 and 2016. All the operations were transferred over to Worlds Online Inc. in the spin off. The business up to the spin off continued to run in a severely diminished mode due to the lack of liquidity. Post spin off we still 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 September 30, 2017 and 2016.

 

Selling general and administrative (SG&A) expenses decreased by $57,651 from $136,448 to $78,797 for the three months ended September 30, 2016 and 2017, respectively. Decrease is due to professional service fees surrounding the patent infringement lawsuit and raising funds last year with limited activity this year.

 

Salaries and related increased by $3,882 to $64,054 from $60,172 for the three months ended September 30, 2017 and 2016, respectively. The increase is due to an increase in the CEO’s salary based on the terms of his employment agreement. 

 

For the three months ended September 30, 2017, the Company had a gain on sale of marketable securities of $58,655 from the sale of Worlds Online Inc. common stock.

 

For the three months ended September 30, 2016, we had a warrant expense of $1,109,440.

 

For the three months ended September 30, 2017, the Company had interest expense of $11,342 compared to an interest expense of $21,536 for the three months ended September 30, 2016.

 

For the three months ended September 30, 2016, the Company had a gain on change in fair value of derivative liability of $71,860 related to the issuance of secured convertible notes and the outstanding options that are required to be recorded as a derivative liability.

 

As a result of the foregoing, we realized a net loss of $95,540 for the three months ended September 30, 2017 compared to a net loss of $1,255,340 in the three months ended September 30, 2016.

 

 (14) 

 

 

Nine months ended September 30, 2017 compared to nine months ended September 30, 2016

 

Revenue is $0 for the nine months ended September 30, 2017 and 2016. All the operations were transferred over to Worlds Online Inc. in the spin off. The business up to the spin off continued to run in a severely diminished mode due to the lack of liquidity. Post spin off we still 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 nine months ended September 30, 2017 and 2016.

 

Selling general and administrative (SG&A) expenses decreased by $207,090 from $539,256 to $332,166 for the nine months ended September 30, 2016 and 2017, respectively. Decrease is due to a decrease in professional service fees related to the patent infringement lawsuit and raising of funds last year compared to limited activity this year.

 

Salaries and related increased by $15,528 to $192,163 from $176,635 for the nine months ended September 30, 2017 and 2016, respectively. The increase is due to an increase in the CEO’s salary based on the terms of his employment agreement.

 

For the nine months ended September 30, 2017, the Company had a gain on sale of marketable securities of $58,655 from the sale of Worlds Online Inc. common stock.

 

For the nine months ended September 30, 2016, we had a warrant expense of $1,109,440.

 

For the nine months ended September 30, 2017, the Company had interest expense of $33,658 compared to $75,796 for the comparable period in 2016.

 

For the nine months ended September 30, 2016, the Company had a loss on change in fair value of derivative liability of $364,191. The derivative liabilities are in connection with the issuance of the secured convertible notes which are required to be recorded as a derivative liability and for 2016, the options which are required to be recorded as a derivative liability.

 

As a result of the foregoing, we realized a net loss of $504,726 for the nine months ended September 30, 2017 compared to a net loss of $2,264,922 in the nine months ended September 30, 2016.

 

 (15) 

 

 

Liquidity and Capital Resources

 

At September 30, 2017, our cash and cash equivalents were $37,976.  During the nine months ended September 30, 2017, we raised an aggregate of $292,800 from warrants being exercised for common stock and $58,655 from the sale of marketable securities.

 

During the nine months ended September 30, 2016, we raised an aggregate of $290,000 from issuing notes payable, $156,500 was raised from a convertible note payable; and an aggregate of $350,000 from issuing thirty five million shares of common stock.

 

There were no capital expenditures in the nine months ended September 30, 2017 or in the nine months ended September 30, 2016.

 

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 connection with the exploration of new business lines.

 

The funds raised in our 2017 and 2016 financings were and will be used to enhance our patent portfolio, pay salaries to management and pay professional fees to our attorneys and auditors to prepare and file reports with the Securities and Exchange Commission.  We hope to raise additional funds to be used for further developing our portfolio of patents and to document our technology in order to enforce our patents where there is infringement.  No assurances can be given that we will be able to raise any additional funds.  

 

Item 4. Controls And Procedures

 

As of September 30, 2017, 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 September 30, 2017. 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.

 

 (16) 

 

 

PART II OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

The Federal case before Judge Denise Casper has been stayed pending the outcome of the IPR appeal to the United States Court of Appeals for the Federal Circuit (“CAFC”).

 

On May 26, 2015, Bungie, Inc. filed three Petitions for Inter Partes Review with the U.S. Patent & Trademark Office (“USPTO”), and specifically, the Patent Trial and Appeal Board (“PTAB”). These Petitions for Inter Partes Review, Case Nos. IPR2015-01264, -01268, and -01269 respectively contained validity challenges of three U.S. patents assigned to the Company.  On June 1, 2015, Bungie, Inc. filed three additional Petitions for Inter Partes Review with the USPTO, and specifically the PTAB. The Petition for Inter Partes Review, Case No. IPR201501319 contained validity challenges of one additional U.S. patent assigned to the Company. The Petitions for Inter Partes Review, Case Nos. IPR2015-01321 and 01325 contained validity challenges of one additional U.S. patent assigned to the Company. In each Inter Partes Review, Bungie, Inc. was asking the PTAB to cancel issued claims from the Company’s patents.

 

The Company’s legal counsel represented the Company before the USPTO with regard to these six Petitions for Inter Partes Review, Case Nos. IPR2015-01264, -01268, -01269, -01319, -01321, and -01325, instituted against the five U.S. patents assigned to the Company.  The Company vigorously contested each Inter Partes Review.  

On November 10, 2016, the PTAB issued its final written decision in IPR201501264, canceling claim 1 of Company’s U.S. Patent No. 7,945,856.

 

On November 30, 2016, the PTAB issued its final written decision in IPR201501268, canceling claims 1-3, 5-7, 10-12, 14, 15, 17, and 19 of Company’s U.S. Patent No. 7,181,690.  Of the claims reviewed, the PTAB did not cancel claims 4, 8, 13, and 16. 

 

On November 28, 2016, the PTAB issued its final written decision in IPR201501269, canceling claims 4, 6, 8, and 9 of Company’s U.S. Patent No. 7,493,558. Of the claims reviewed, the PTAB did not cancel claims 5 and 7. 

 

On December 6, 2016, the PTAB issued its final written decision in IPR201501319, canceling claims 1-8, 10, 12, and 14-16 of Company’s U.S. Patent No. 8,082,501.

 

On November 28, 2016, the PTAB issued its final written decision in IPR201501321, canceling claims 1-3, 7, 8, 12-18, and 20 of Company’s U.S. Patent No. 8,145,998.

 

On November 28, 2016, the PTAB issued its final written decision in IPR201501325, canceling claims 1 and 20 of Company’s U.S. Patent No. 8,145,998.  Of the claims reviewed, the PTAB did not cancel claims 2-3, 7, 8, and 11-18 in this proceeding. 

 

The Company did not appeal the final written decisions in IPR2015-01268, IPR201501269, and IPR2015-01325. 

On January 12, 2017, February 7, 2017, and January 30, 2017, respectively, Company appealed the outcomes in IPR2015-01264, IPR2015-01319, and IPR2015-01321 to the United States Court of Appeals for the Federal Circuit (“CAFC”).  These three cases have been consolidated.

The company filed formal appeal briefs with the United States Court of Appeals for the Federal Circuit (“CAFC”) on June 26, 2017.

On June 19, 2017 Appelle, Bungie Inc., filed an extension request to respond which the CAFC granted on June 27, 2017. 

 (17) 

 

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 2015 Annual Report on Form 10-K. There have been no material changes from the risk factors previously disclosed in our 2015 Annual Report on Form 10-K.

 

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

 

During the nine months ended September 30, 2017 we raised an aggregate of $292,800 from warrants being exercised for common stock.

 

During the nine months ended September 30, 2016, we raised an aggregate of $350,000 from issuing thirty five million shares of common stock to accredited investors in exempt private offerings without the use of public advertising or the payment of commissions. During the nine months ended September 30, 2016, we raised an aggregate of $446,500 from issuing notes payable and convertible notes payable to accredited investors in exempt private offerings without the use of public advertising or the payment of commissions.

 

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

 

 

 (18) 

 

  

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: November 14, 2017

WORLDS INC.

 

By: /s/Thomas Kidrin

Thomas Kidrin

President and CEO

 

By: /s/Christopher Ryan

Christopher Ryan

Chief Financial Officer 

 

 (19) 

 

 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

 

 

 (20) 

EX-31.1 2 ex31_1.htm CERTIFICATIONS

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: November 14, 2017

 

/s/ Thomas Kidrin

Thomas Kidrin

Chief Executive Officer

EX-31.2 3 ex31_2.htm CERTIFICATIONS

EXHIBIT 31.2 

 

Certifications

I, Christopher J. Ryan, 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: November 14, 2017

/s/ Christopher J. Ryan

Christopher J. Ryan

Chief Financial Officer

 

EX-32.1 4 ex32_1.htm CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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 September 30, 2017 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: November 14, 2017 By:/s/ Thomas Kidrin
  Thomas Kidrin
  Chief Executive Officer 

EX-32.2 5 ex32_2.htm CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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 September 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Christopher J. Ryan, Chief 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: November 14, 2017 By:/s/ Christopher J. Ryan
  Christopher J. Ryan
  Chief Financial Officer

 

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Document and Entity Information - shares
9 Months Ended
Sep. 30, 2017
Oct. 30, 2017
Document And Entity Information    
Entity Registrant Name Worlds Inc.  
Entity Central Index Key 0000001961  
Document Type 10-Q  
Document Period End Date Sep. 30, 2017  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Is Entity a Well-known Seasoned Issuer? No  
Is Entity a Voluntary Filer? No  
Is Entity's Reporting Status Current? Yes  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   246,773,331
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2017  
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Balance Sheets - USD ($)
Sep. 30, 2017
Dec. 31, 2016
Current Assets    
Cash and cash equivalents $ 37,976 $ 93,378
Due from related party 10,095
Total Current Assets 48,071 93,378
Total Assets 48,071 93,378
Current Liabilities    
Accounts payable 797,908 797,908
Accrued expenses 2,691,762 2,545,672
Due to related party 5,053
Notes payable 773,279 773,279
Notes payables 25,000 750,000
Total Current Liabilities 4,287,949 4,871,912
Long Term Liabilities    
Note payable 725,000
Total Long Term Liabilities 725,000
Stockholders (Deficit)    
Common stock (Par value $0.001 authorized 250,000,000 shares, issued and outstanding 246,773,331 and 210,156,148 at September 30, 2017 and December 31, 2016, respectively) 246,773 210,156
Common stock subscribed but not yet issued (0 at September 30, 2017 and 11,350,000 at December 31, 2016) 11,350
Additional paid in capital 35,464,894 35,171,780
Common stock-warrants 1,206,913 1,206,913
Accumulated deficit (41,883,459) (41,378,732)
Total stockholders deficit (4,964,877) (4,778,533)
Total Liabilities and stockholders deficit $ 48,071 $ 93,378
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Sep. 30, 2017
Dec. 31, 2016
Common Stock, par value $ 0.001 $ 0.001
Common Stock, shares authorized 250,000,000 250,000,000
Common Stock, shares issued 246,773,331 210,156,148
Common Stock, shares outstanding 246,773,331 210,156,148
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3 Months Ended 9 Months Ended
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Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
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Revenue
Total Revenue
Cost and Expenses        
Cost of Revenue
Gross Profit/(Loss)
Warrant expense 1,109,044 1,109,044
Option expense
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Salaries and related 64,054 60,172 192,163 176,635
Operating (loss) (142,852) (1,305,664) (524,329) (1,824,935)
Other Income Expense        
Gain on sale of marketable securities 58,655 58,655
Gain (Loss) on change in fair value of derivative liability 71,860 (364,191)
Interest Expense (11,342) (21,536) (33,658) (75,796)
Loss on conversion of payable to common stock (5,394)
Net Income/ (Loss) $ (95,540) $ (1,255,340) $ (504,726) $ (2,264,922)
Weighted Average (Loss) per share $ (0.01) $ (0.02)
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Statements of Cash Flows - USD ($)
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Cash flows from operating activities:    
Net gain/(loss) $ (504,726) $ (2,264,922)
Adjustments to reconcile net (loss) to net cash (used in) operating activities    
Fair value of warrants issued 1,109,044
Amortization of discount to note payable (12,334)
Changes in fair value of derivative liabilities 415,706
Accounts payable and accrued expenses 146,089 124,541
Due from/to related party (15,148) (36,766)
Net cash (used in) operating activities: (373,785) (664,731)
Cash flows from financing activities    
Proceeds from issuance of note payable 290,000
Proceeds from issuance of convertible note payable 156,500
Cash paid to repurchase convertible note payable (110,257)
Proceeds from issuance of common stock 350,000
Proceeds from exercise of warrants 292,800
Issuance of common stock as payment for account payable 25,582
Net cash provided by financing activities 318,382 686,243
Net increase/(decrease) in cash and cash equivalents (55,404) 21,512
Cash and cash equivalents, including restricted, beginning of year 93,378 26,298
Cash and cash equivalents, including restricted, end of period 37,976 47,812
Non-cash financing activities    
Issuance of 54,963,098 shares of common stock to retire convertible notes payable 384,159
Supplemental disclosure of cash flow information:    
Interest
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Statements of Cash Flows (Parenthetical)
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shares
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NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF ACCTING POLICIES
9 Months Ended
Sep. 30, 2017
Note 1 - Description Of Business And Summary Of Accting Policies  
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF ACCTING POLICIES

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. (currently called MariMed 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. As the Company has focused its attention on increasing its patent portfolio and enforcing it, the Company has been operating at a significantly reduced capacity, with only one full time employee 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 includes highly liquid money market instruments, which have original maturities of three months or less at the time of purchase.

 

Due to Related Party

 

Due to related party is comprised of cash payments made by Worlds Online Inc. on behalf of Worlds 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 are from any revenue that may be generated from enforcing its patents. The Company recognizes revenue when all of the following criteria are met: evidence of an arrangement exists such as a signed agreement or contract or a final court decision, delivery has occurred, the price is fixed or determinable, and collectability 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.

 

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 2016 and 2015 or the first nine months of 2017.

 

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 September 30, 2017 and December 31, 2016. These are old notes payable for which the statute of limitations has passed and therefore the Company does not expect it will ever have to repay those notes.

 

The Company has an additional $725,000 in long term notes and $25,000 in short term notes outstanding at September 30, 2017. The Company had $750,000 in short term notes outstanding at December 31, 2016. All of the notes were extended during the quarter.

 

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 financial statements. There were no items of comprehensive income (loss) applicable to the Company during the period covered in the financial statements.

 

Loss Per Share

 

Net loss per common share is computed pursuant to section 260-10-45 of the FASB ASC. 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. As of September 30, 2017, there were 26,250,000 options and no warrants, whose effect is anti-dilutive and not included in diluted net loss per share for September 30, 2017. The options and warrants may dilute future earnings per share.

 

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 September 30, 2017, and December 31, 2016 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 year ended December 31, 2016.

 

Fair Value of Financial Instruments

 

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.

 

The following are the hierarchical levels of inputs to measure fair value:

 

  Level 1 – Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.

 

  Level 2 – Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

  Level 3 – Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, other receivables, accounts payable & accrued expenses, due to related party, notes payable and notes payables, approximate their fair values because of the short maturity of these instruments. The Company's convertible notes payable are measured at amortized cost.

 

The Company accounts for its derivative liabilities, at fair value, on a recurring basis under level 3. See Note 5.

 

Embedded Conversion Features 

 

The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion feature.

 

Derivative Financial Instruments

 

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income.

 

For option-based simple derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

 

Subsequent Events

 

The Company evaluated for subsequent events through the issuance date of the Company’s financial statements.

 

Recent Accounting Pronouncements

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements, and does 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.

XML 19 R8.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 2 - GOING CONCERNS
9 Months Ended
Sep. 30, 2017
Note 2 - Going Concerns  
NOTE 2 - GOING CONCERNS

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 completely 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.

 

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 3 - EQUITY
9 Months Ended
Sep. 30, 2017
Note 3 - Equity  
NOTE 3 - EQUITY

NOTE 3 - EQUITY 

During the nine months ended September 30, 2017 the Company received an additional $292,800 upon the exercise of 24,400,000 warrants to purchase 24,400,000 shares of the Company’s common stock at $0.012 per share. During the nine months ended September 30, 2017 the Company issued 750,000 shares of the Company’s common stock as payment for services rendered, an aggregate value of $18,000. The expense was recorded in a prior year and the shares were listed as common stock subscribed but not yet issued until the shares were issued during the nine months ended September 30, 2017.

 

During the nine months ended September 30, 2016, the Company issued 35,000,000 shares of common stock at a price of $0.01 per share raising $350,000. In connection with this raise, the Company issued 35,000,000 warrants with each to purchase one share of common stock at a price of $0.012. All of the warrants have been exercised as of September 30, 2017.

 

During the nine months ended September 30, 2016, the Company issued 54,963,098 shares of common stock by converting $384,159 of the principal of convertible notes payable.

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 4 - NOTES PAYABLE
9 Months Ended
Sep. 30, 2017
Debt Disclosure [Abstract]  
NOTE 4 - NOTES PAYABLE

NOTE 4 - NOTES PAYABLE 

 

Notes payable at September 30, 2017 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  
Promissory notes   $ 700,000  
Notes Payable - related party   $ 50,000  
Total notes   $ 1,523,279  
2017   $ 773,279  
2018   $ 25,000  
2019   $ 725,000  
2020   $ -0-  
2021   $ -0-  
    $ 1,523,279  

 

We issued promissory notes in the amount of $290,000 during the nine months ended September 30, 2016. The promissory notes carry a 6% annual interest rate. All of the promissory notes had reached their maturity date and extension agreements have been signed for all of the $750,000 in notes. The holders of the promissory notes shall receive repayment in the full face amount of the note from the initial $750,000 the Company actually receives from the net proceeds of its patent infringement claim(s) or from the net proceeds of a public offering. In addition the holder shall receive a preferred return (i) in an amount equal to up to 200% of the initial face amount of the note out of available cash by sharing with all other investors in this series of notes in the allocation of 50% of the available cash received by the Company from $2M - $4M and (ii) in an amount equal to up to 100% of the initial face amount of the note out of available cash by sharing with all other investors in this series of notes in the allocation of 25% of the available cash received by the Company from $4M - $6M. In other words, if the Company collects $6M in the net proceeds of available cash, the holder will receive a return equal to 400% of its investment. 

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 5 - STOCK OPTIONS
9 Months Ended
Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
NOTE 5 - STOCK OPTIONS

NOTE 5 – STOCK OPTIONS

 

The Company issued 25,000,000 shares of common stock with an exercise price of $0.03 per share during the nine months ended September 30, 2017 and no stock options were exercised during the nine months ended September 30, 2017.

 

No stock options were issued during the nine months ended September 30, 2016 and no stock options were exercised during the nine months ended September 30, 2016. 

 

Stock Warrants and Options
Stock warrants/options outstanding and exercisable on September 30, 2017 are as follows:
 
Exercise Price per Share   Shares Under Option/warrant   Remaining Life in Years
  Outstanding                  
$ 0.19       200,000       0.25  
$ 0.155       200,000       1.25  
$ 0.14       250,000       1.25  
$ 0.11       300,000       2.75  
$ 0.03       300,000       2.75  
$ 0.03       25,000,000       5.00  

 

Exercise Price per Share   Shares Under Option/warrant   Remaining Life in Years
   Exercisable                  
$ 0.19       200,000       0.25  
$ 0.155       200,000       1.25  
$ 0.14       250,000       1.25  
$ 0.11       300,000       2.75  
$ 0.03       300,000       2.75  

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 6 - COMMITMENTS AND CONTINGENCIES
9 Months Ended
Sep. 30, 2017
Commitments and Contingencies Disclosure [Abstract]  
NOTE 6 - COMMITMENTS AND CONTINGENCIES

NOTE 6 - 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 option portion of Mr. Kidrin’s employment agreement has expired and has been replace by an option agreement giving Mr. Kidrin the option to purchase 25,000,000 million shares of Worlds Inc. common stock at an exercise price of $0.03 per share, all of which vest on October 1, 2017. The remaining parts of the agreement have been renewed by Mr. Kidrin for one year. 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. 

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 7 - RELATED PARTY TRANSACTIONS
9 Months Ended
Sep. 30, 2017
Related Party Transactions [Abstract]  
NOTE 7 - RELATED PARTY TRANSACTIONS

NOTE 7 - 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.

 

Due to and due from related party accounts is comprised of cash payments for operating expenses made by Worlds Online Inc. on behalf of Worlds Inc. or made by Worlds Inc. on behalf of Worlds Online Inc. The balance at September 30, 2017 is a due from related party of $10,095 and the balance on December 31, 2016 is a due to related party of $5,053.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 8 - PATENTS
9 Months Ended
Sep. 30, 2017
Note 8 - Patents  
NOTE 8 - PATENTS

NOTE 8 - PATENTS

 

Worlds Inc. currently has nine patents, 6,219,045 - 7,181,690 - 7,493,558 – 7,945,856, - 8,082,501, – 8,145,998 – 8,161,383, – 8,407,592 and 8,640,028. 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.

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 9 - SALE OF MARKETABLE SECURITIES
9 Months Ended
Sep. 30, 2017
Note 9 - Sale Of Marketable Securities  
NOTE 9 - SALE OF MARKETABLE SECURITIES

NOTE 9 – SALE OF MARKETABLE SECURITIES

 

When Worlds Inc. spun off Worlds Online Inc. in January 2011, the Company retained 5,936,115 shares of common stock in Worlds Online Inc. Those shares were retained on the books of the Company with a book value of $0. During the quarter the Company sold 120,472 shares at an average price of $0.49 per share raising $58,654.57. The proceeds from the sale was treated as a gain on sale of marketable securities in the financial statements.

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF ACCTING POLICIES (Policies)
9 Months Ended
Sep. 30, 2017
Accounting Policies [Abstract]  
Description of Business

Description of Business

 

On May 16, 2011, the Company transferred, through a spin-off to its then wholly owned subsidiary, Worlds Online Inc. (currently called MariMed 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

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. As the Company has focused its attention on increasing its patent portfolio and enforcing it, the Company has been operating at a significantly reduced capacity, with only one full time employee and using consultants to perform any additional work that may be required.

Use of Estimates

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

 

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

Due to Related Party

Due to Related Party

 

Due to related party is comprised of cash payments made by Worlds Online Inc. on behalf of Worlds Inc. for shared operating expenses.

Revenue Recognition

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 are from any revenue that may be generated from enforcing its patents. The Company recognizes revenue when all of the following criteria are met: evidence of an arrangement exists such as a signed agreement or contract or a final court decision, delivery has occurred, the price is fixed or determinable, and collectability 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.

 

Research and Development Costs

Research and Development Costs

 

Research and development costs are charged to operations as incurred.

Property and Equipment

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

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 2016 and 2015 or the first nine months of 2017.

Stock-Based Compensation

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

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

Notes Payable

 

The Company has $773,279 in short term notes outstanding at September 30, 2017 and December 31, 2016. These are old notes payable for which the statute of limitations has passed and therefore the Company does not expect it will ever have to repay those notes.

 

The Company has an additional $725,000 in long term notes and $25,000 in short term notes outstanding at September 30, 2017. The Company had $750,000 in short term notes outstanding at December 31, 2016. All of the notes were extended during the quarter.

Comprehensive Income (Loss)

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 financial statements. There were no items of comprehensive income (loss) applicable to the Company during the period covered in the financial statements.

Loss Per Share

Loss Per Share

 

Net loss per common share is computed pursuant to section 260-10-45 of the FASB ASC. 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. As of September 30, 2017, there were 26,250,000 options and no warrants, whose effect is anti-dilutive and not included in diluted net loss per share for September 30, 2017. The options and warrants may dilute future earnings per share.

Commitments and Contingencies

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 September 30, 2017, and December 31, 2016 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

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

Off Balance Sheet Arrangements

 

The Company does not have any off-balance sheet arrangements.

Uncertain Tax Positions

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 year ended December 31, 2016.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.

 

The following are the hierarchical levels of inputs to measure fair value:

 

  Level 1 – Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.

 

  Level 2 – Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

  Level 3 – Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, other receivables, accounts payable & accrued expenses, due to related party, notes payable and notes payables, approximate their fair values because of the short maturity of these instruments. The Company's convertible notes payable are measured at amortized cost.

 

The Company accounts for its derivative liabilities, at fair value, on a recurring basis under level 3. See Note 5.

Embedded Conversion Features

Embedded Conversion Features

 

The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion feature.

Derivative Financial Instruments

Derivative Financial Instruments

 

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income.

 

For option-based simple derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

Subsequent Events

Subsequent Events

The Company evaluated for subsequent events through the issuance date of the Company’s financial statements.

Recent Accounting Pronouncements

Recent Accounting Pronouncements 

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements, and does 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. 

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 4 - NOTES PAYABLE (Tables)
9 Months Ended
Sep. 30, 2017
Debt Disclosure [Abstract]  
Notes payable

Notes payable at September 30, 2017 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  
Promissory notes   $ 700,000  
Notes Payable - related party   $ 50,000  
Total notes   $ 1,523,279  
2017   $ 773,279  
2018   $ 25,000  
2019   $ 725,000  
2020   $ -0-  
2021   $ -0-  
    $ 1,523,279  

XML 29 R18.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 5 - STOCK OPTIONS (Tables)
9 Months Ended
Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock option table

Stock Warrants and Options
Stock warrants/options outstanding and exercisable on September 30, 2017 are as follows:
 
Exercise Price per Share   Shares Under Option/warrant   Remaining Life in Years
  Outstanding                  
$ 0.19       200,000       0.25  
$ 0.155       200,000       1.25  
$ 0.14       250,000       1.25  
$ 0.11       300,000       2.75  
$ 0.03       300,000       2.75  
$ 0.03       25,000,000       5.00  

 

Exercise Price per Share   Shares Under Option/warrant   Remaining Life in Years
   Exercisable                  
$ 0.19       200,000       0.25  
$ 0.155       200,000       1.25  
$ 0.14       250,000       1.25  
$ 0.11       300,000       2.75  
$ 0.03       300,000       2.75  

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF ACCTING POLICIES (Details Narrative) - USD ($)
Sep. 30, 2017
Dec. 31, 2016
Note 1 - Description Of Business And Summary Of Accting Policies    
Short term notes outstanding $ 773,279 $ 773,279
Long term notes 725,000
Notes outstanding 25,000 750,000
Options 26,250,000
Reserve for litigation $ 205,000 $ 205,000
XML 31 R20.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 3 - EQUITY (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Note 3 - Equity    
Company received additional funds $ 292,800 $ 350,000
Warrants exercised 24,400,000 35,000,000
Shares purchased 24,400,000
Price per share $ 0.012 $ 0.0012
Commmon stock for services 750,000
Aggregated value $ 18,000
Shares issued   35,000,000
Price per share issued   $ 0.01
Common stock issued for conversion   54,963,098
Conversion amount   $ 384,159
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 4 - NOTES PAYABLE (Details Narrative)
9 Months Ended
Sep. 30, 2017
USD ($)
Debt Disclosure [Abstract]  
Promissory notes $ 290,000
Promissory note in lieu of payment to consultant of the Company
Promissory note - annual interest 6.00%
Net proceeds from settlements $ 2,000,000
Holder of promissory note shall receive payment of $ 750,000
Holder shall receive a preferred return 200.00%
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 6 - COMMITMENTS AND CONTINGENCIES (Details Narrative)
Aug. 30, 2012
USD ($)
shareholders
$ / shares
shares
Term of employment agreement | shareholders 5
Officer compensation $ 175,000
Yearly increase 10.00%
Car allowance $ 500
Annual bonus 0.025
Additional bonus $ 75,000
Pre-tax income 150
Pre-tax income 200
Llife insurance premium $ 10,000
Option to purchase stock | shares 7,500,000
Exercise price per share | $ / shares $ 0.076
Death benefit $ 2,000,000
Payment of base amount 2.99
Restrictive convenants time | shareholders 12
Additional bonus 1  
Additional bonus $ 100,000
Pre-tax income 201
Pre-tax income 250
Additional bonus 2  
Annual bonus 0.05
Additional bonus $ 200,000
Pre-tax income 251
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 7 - RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
Sep. 30, 2017
Dec. 31, 2016
Related Party Transactions [Abstract]    
Due from related party $ 10,095
Due to related party $ 5,053
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 9 - SALE OF MARKETABLE SECURITIES (Details Narrative) - USD ($)
3 Months Ended
Sep. 30, 2017
Jan. 31, 2011
Note 9 - Sale Of Marketable Securities Details Narrative    
Shares retained from company spin off 5,936,115
Shares sold 120,472  
Price per share $ 0.49  
Proceeds from sale $ 58,655  
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 4 - NOTES PAYABLE (Details)
Sep. 30, 2017
USD ($)
Debt Disclosure [Abstract]  
Entire balance of principal and unpaid interest due on demand 1 $ 124,230
Entire balance of principal and unpaid interest due on demand 2 649,049
Promissory notes 700,000
Notes payable - related party 50,000
Total current 1,523,279
Notes payable due within 2017 773,279
Notes payable due within 2018 25,000
Notes payable due within 2019 725,000
Notes payable due within 2020 0
Notes Payable Total $ 1,523,279
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTE 5 - STOCK OPTIONS - Stock option table (Details)
Sep. 30, 2017
$ / shares
shares
Outstanding (1)  
Shares under options | shares 200,000
Price per shares | $ / shares $ 0.019
Remaining life in years 0.25
Outstanding (2)  
Shares under options | shares 200,000
Price per shares | $ / shares $ 0.155
Remaining life in years 1.25
Outstanding (3)  
Shares under options | shares 250,000
Price per shares | $ / shares $ 0.14
Remaining life in years 1.25
Outstanding (4)  
Shares under options | shares 300,000
Price per shares | $ / shares $ 0.11
Remaining life in years 2.75
Outstanding (5)  
Shares under options | shares 300,000
Price per shares | $ / shares $ 0.03
Remaining life in years 2.75
Outstanding (6)  
Shares under options | shares 25,000,000
Price per shares | $ / shares $ 0.03
Remaining life in years 5.00
Exercisable (1)  
Shares under options | shares 200,000
Price per shares | $ / shares $ 0.19
Remaining life in years 0.25
Exercisable (2)  
Shares under options | shares 200,000
Price per shares | $ / shares $ 0.155
Remaining life in years 1.25
Exercisable (3)  
Shares under options | shares 250,000
Price per shares | $ / shares $ 0.14
Remaining life in years 1.25
Exercisable (4)  
Shares under options | shares 300,000
Price per shares | $ / shares $ 0.11
Remaining life in years 2.75
Exercisable (5)  
Shares under options | shares 300,000
Price per shares | $ / shares $ 0.03
Remaining life in years 2.75
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