Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

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 ☒ 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 ☒☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act. (check one):

☐~~Large Accelerated Filer~~ ☐ ~~Accelerated Filer~~ ☐~~Non-Accelerated Filer~~ ☒~~Smaller reporting company~~

~~(Do~~If an emerging growth company, indicate by check mark if the registrant has elected not ~~check if a smaller reporting company)~~

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 Act.) Yes ☐ No ☒☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked closing price of such common equity, as of June 30, ~~2015~~2019 (closing price was ~~$0.11)~~$0.2801) was approximately ~~$12,527,709.~~$15,913,834.

As of ~~April 12, 2016, 120,193,050~~March 23, 2020, 56,814,833 shares of the Issuer's Common Stock were outstanding.

This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements involve risks and uncertainties and our actual results could differ significantly from those discussed herein. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "believe," and similar language, including those set forth in the discussion under "Description of Business," "Risk Factors" and "Management's Discussion and Analysis or Plan of Operation" as well as those discussed elsewhere in this Form 10-K. We base our forward-looking statements on information currently available to us, and we believe that the assumption and expectations reflected in such forward-looking statements are reasonable, and we assume no obligation to update them. Statements contained in this Form 10-K that are not historical facts are forward-looking statements that are subject to the "safe harbor" created by the Private Securities Litigation Reform Act of 1995.

On March 31, 2011, it was announced that our board had determined it would be in the best interest of our shareholders to transfer all of our online and operational technologies to our subsidiary, Worlds Online Inc. (currently called MariMed Inc.). The assets were ~~transfered~~transferred as of May 16, 2011 and included:Worlds’ technology platform, Worlds Ultimate Chat, Aerosmith World,DMC Worlds,,Cinema Virtual,,Pearson contracts and related revenue,, URLs: Worlds.com,, Cybersexworld.com,,Hang.com, and Worldsfunds.com, a digital inventory of over 10,000 3D objects, animation sequences, an extensive avatar library, texture maps and virtual world architectures. The Company also entered into a License Agreement with MariMed Inc. to sublicense its patented technologies, which License expired upon the expiration of the underlying patents.

Worlds Inc. has retained all of its related Intellectual Property (IP) consisting of the nine existing patents, 6,219,045; 7,181,690; 7,493,558; 7,945,856; 8,082,501; 8,145,998; 8,161,385, 8,407,592 and 8,640,028 and all continuance claims currently before the USPTO including any to be filed going forward. While the last of these patents expired in 2016, we continue to pursue infringement we believe occurred during the lifetime of the patents.

We intend to endeavor to prosecute our issued patents and any future issued patents against all parties that the company and our legal counsel believe to be infringing on said patents.

Enforcement actions are subject to the analysis of all relevant prior art and the costs associated with litigation.

We may also seek to acquire additional patents we believe will enhance our portfolio position in the markets within which our existing patents cover.

There can be no assurance that we will be successful in our ability to prosecute our IP portfolio or that we will be able to acquire additional patents.

As of December 31, ~~2015,~~2019, we own an approximately ~~9.5% equity interest in Worlds Online.~~

~~On May 16, 2011, the Company transferred, through a spin-off to its then wholly owned subsidiary, Worlds Online~~2,994,697 shares of 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.

Before the spin-off, Worlds was a leading 3D entertainment portal which leveraged its proprietary technology, which we retained through our patent portfolio, to offer visitors a network of virtual, multi-user environments which we call "worlds". These worlds are visually engaging online environments featuring animation, motion and content where people can come together and, by navigating through the website, shop, interact with others, attend events and be entertained. In support of this portal and the overall business strategy, we design and develop software, content and related technology for the creation of interactive, three-dimensional ("3D") Internet web sites. Using our technology, we created our own Internet sites, as well as sites available through third-party online service providers.

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

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 PTAB. The Petition for Inter Partes Review, Case No. IPR2015-01319 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 tocancel issued claims from the Company’s patents.

On ~~May 8, 2015,~~January 14, 2020, the PTAB completed its review of the questions posed by the United States Court of Appeals for the Federal Circuit , and determined the questions in the Company’s favor. The PTAB determined that Bungie failed to convincingly show that its Petitions were not time-barred. As a result, the Board dismissed the remaining three IPR Petitions filed by Bungie. The Board also vacated its prior Decisions to Institute in these cases, and terminated the IPR proceedings initiated by Bungie without issuing final written decisions.

On January 15, 2020, the Company ~~issued convertible debentures~~asked Judge Casper to ~~an accredited investor. The total principal amount~~lift the stay and allow the Company to proceed in its lawsuit for patent infringement against the Activision entities.

On September 20, 2019, the Company filed a lawsuit against Linden Research, Inc., d/b/a Linden Lab (“Linden”) in the U.S. District Court for the District of ~~the debenture is $300,000 with maturity date of November 8, 2015 and a zero percent interest rate. The debenture is convertible into shares~~Delaware for patent infringement of the Company’s ~~common stock at~~U.S. Patent No. 7,181,690. This case was assigned to Judge Maryellen Noreika. On December 2, 2019, Linden answered the ~~lower of~~Complaint, denying that it has committed patent infringement. On January 8, 2020, the ~~fixed price ($0.89) or fifty five percent (55%) of the average of the three lowest trading price~~Court entered a Scheduling Order, setting deadlines for ~~20 trading days prior to conversion.~~

Fact Discovery and Contentions, Claim Construction, Expert Discovery, Summary Judgment, and Trial Phase. The ~~Company signed a Forbearance Agreement on October 26, 2015 for the 10% Convertible Debenture with the principal amount of $300,000 that was due November 8, 2015. The new maturity~~scheduled trial date ~~of the debenture~~ is ~~May 8, 2016.~~

On October 30, 2015, the company entered into a new Debenture with the same Lender with a face amount of $405,000 having similar terms as the first Convertible Debenture with a maturity date of April 30, 2016. The debenture included a forbearance fee of $90,000 and had an original issue discount of 10%.January 31, 2022.

In April 2015 we issued six Promissory Notes totaling $135,000. One of the Promissory Notes in the amount $25,000 was in lieu of payment of cash for an outstanding balance due to a consultant of the Company.

The promissory notes carry a 6% annual interest rate and are payable upon the earlier of (a) 24 months from the date of the promissory notes or (b) the Company reaching a settlement(s) on a patent infringement claim(s) and receiving an aggregate of at least $2 million net proceeds from such settlement(s).

The holders of the promissory notes shall receive repayment in the full face amount of the notes from the initial $500,000 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 holders shall receive a preferred return (i) in an amount equal to up to 200% of the initial face amount of the notes 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 notes 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.

On March 24, 2016 we filed a preliminary proxy with the Securities and Exchange Commission seeking approval of, among other things, increasing our authorized common shares from 150 Million shares to 250 Million shares and to implement a reverse split in the range of 1:2 - 1:20.

We used our technology to produce three-dimensional portals and web sites. We believe that our core technology delivers a considerably faster frame rate for user experiences and, in some cases, a meaningful productivity increase in art production and integration over its previous generation production tools. Our technology permits the development of virtual worlds which have broad applications. These applications include but are not limited to:

~~• a 3D e-commerce store (where merchandise can be viewed in 3D and purchased online); and~~

•	a virtual classroom (where content can be viewed via video streaming and then discussed in real time).

Our core technology has substantial elements written in Sun Microsystem's programming language, Java, including WorldsBrowser and WorldsShaper, so we expect that it can be made portable across Windows and UNIX Platforms because of Java's platform independence.

Worlds Inc. will be focused solely on expanding our patent portfolio and to enforce our rights where it believes parties are infringing on its IP portfolio.

We have contracted to Worlds Online Inc. a perpetual world-wide license to our patented technology. Pursuant to the license, Worlds Online has the right to issue unlimited sublicenses to the licensed technology, subject to our reasonable consent. The sublicenses are subject to a revenue share negotiated between the two Companies.

Since all operations were transferred to Worlds Online and our business is now the expansion of our patented technology, the Company does not have any direct competition as it did in the past. However, inasmuch as we believe that multi-user, interactive 3D is becoming a “hot” area, we expect other companies, many with far more resources than us, to move into this space.

Currently, there are many companies collaborating to establish standardization of 3D usage on the Internet, the adoption of which may require changes to our technology.

U.S. Patents: Worlds has been granted U.S patent 6,219,045, 7,181,690, 7,493,558, 7,945,856, 8,082,501, 8,145,998, 8,161,385, 8,407,592 and 8,640,028 for multi-server technology for 3D applications, which is our core technology. ~~We are now~~While the patents have all expired, we continue looking into the implications and breadth of the patent in order to maximize ~~its~~there benefits. The description of the initial patent is as follows:

"The present invention provides a highly scalable architecture for a three dimensional, multi-user, interactive virtual world system. In a preferred embodiment a plurality of users interact in the three-dimensional, computer-generated graphical space where each user executes a client process to view a virtual world from the perspective of that user. The virtual world shows Avatars representing the other users who are neighbors of the user viewing the virtual world. In order that the view can be updated to reflect the motion of the remote user's Avatar, motion information is transmitted to a central server process that provides position updates to client processes for neighbors of the user at that client process. The client process also uses an environment database to determine which background objects to render as well as to limit the number of displayable Avatars to a maximum number of Avatars displayable by that client."

Trademark: Worldsplayer - The WorldsPlayer is especially designed to allow users to view and experience the multi-user, interactive Worlds Gamma technology. Any world created with the WorldsShaper will be viewable and navigable with WorldsPlayer. Utilizing the WorldsPlayer, a user assumes a persona (via a digital actor, or Avatars), and can then move, view, chat, play, express one's self via gestures and animations, voice chat, send email, join discussion groups, listen to music, shop at Worlds 3D stores, and watch videos, all in the company of users from around the world, within the 3D environment. The WorldsPlayer boasts high frame rate for fast, high quality graphics, an easy to use graphic user interface, seamless 2D Web browser integration, auto-upgrade capability over the Internet, and a complete communication tool set including chat, voice-to-voice chat, email and animation. The WorldsPlayer offers users the unique and creative experience of customizing their Avatars, while maintaining the ability to animate and activate their Avatars.

~~In addition to our patents and trademark, we intend to enter into confidentiality agreements with key employees and consultants to protect our IP and general know-how.~~

As of December 31, ~~2015,~~2019, we had one full time employee, our president and chief executive officer, Thomas ~~Kidrin, who divided his time between us and Worlds Online.~~Kidrin.

We were formed as a result of the contemporaneous mergers on December 3, 1997 of Worlds Inc., a Delaware corporation formed on April 26, 1994 with and into Worlds Acquisition Corp., a Delaware corporation formed on April 8, 1997 and of Worlds Acquisition Corp. with and into Academic Computer Systems, Inc., a New Jersey corporation formed on May 20, 1968 (the "Mergers"). Academic Computer Systems changed its name to Worlds Inc. after the Mergers. In December 1999, we changed our name from Worlds Inc. to Worlds.com Inc. in order to better reflect our business as a consumer Internet web site that offers virtual "worlds" in which consumers interact, conduct e-commerce and receive entertainment.

The Company created a wholly-owned subsidiary named Worlds Online Inc. on January 25, 2011. On May 16, 2011, Worlds Inc. transferred to Worlds Online Inc. the majority of its operations and related operational assets, except for its patent portfolio. Worlds Online Inc. changed its name to MariMed Inc. in 2017.

Our business is subject to numerous risks, including but not limited to those set forth below. Our operations and performance could also be subject to risks that do not exist as of the date of this report but emerge thereafter as well as risks that we do not currently deem material.

Our auditors have expressed doubt about our ability to continue as a going concern. If we do not generate substantial revenue from our patent litigation and are also unable to obtain capital from other resources, we will significantly curtail our operations or halt them entirely.

Our capital requirements have been and will continue to be significant. Historically, we have been dependent on financings to fund our development and working capital needs. As of December 31, 2015, we had only limited cash or cash equivalents. Accordingly, if we do not develop sources of revenues from our patent portfolio, we would have to severely diminish our operations or halt them entirely. The opinion of our auditors contains an explanatory paragraph regarding our ability to continue as a going concern.

We have experienced relatively large losses during our development and, without significant increases in the market penetration of our services and improvements to our operating margins, we will not achieve profitability.

Since inception we have incurred significant net losses as set forth in the financial information included herein. We anticipate that we will continue to incur significant losses for at least the short-term. We will not achieve profitable operations until we successfully develop sources of revenues from our patent portfolio or generate revenues from other sources that are sufficient to offset our operating costs. We may never be able to accomplish these objectives. Patent litigation is very expensive and we may not have sufficient cash available to pursue any patent litigation to its conclusion because currently we do not generate revenues.

After all of our operations were spun off, our success is essentially dependent upon the success of our patent infringement lawsuits and if we are unsuccessful we will likely cease operations and due to the coronavirus, courts are closing down completely and/or only addressing emergency matters and therefore further prosecution of our lawsuits are delayed indefinitely.

It will be difficult for you to evaluate us based on our past performance because we have a relatively new business strategy with a limited operating history.

We have been actively engaged in the business of being an IP company for a relatively short period of time and, accordingly, have only limited financial results on which you can evaluate our company and its new operations. We are subject to, and have not been successful in addressing, the risks typically encountered by new enterprises and companies operating in the rapidly evolving Internet marketplace, including those risks relating to:

~~• an inability to grow and adapt our business and technology to evolving consumer demand.~~

~~Our limited resources may restrict our ability to manage any growth we may experience.~~

Growth of our business may place a significant strain on our management systems and resources and may require us to implement new operating and financial systems, procedures and controls. Our failure to manage our growth and expansion could adversely affect our business, results of operations and financial condition. Failure to implement new systems effectively or within a reasonable period of time could adversely affect our business, results of operations and financial condition.

~~If we are unable to protect our intellectual property rights, competitors may be able to use our technology or trademarks, which could weaken our competitive position.~~

In addition to our patents, we rely on a combination of copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. We also intend to enter into confidentiality or license agreements with our employees, consultants and customers, and control access to and distribution of our software, documentation and other proprietary information. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our products or technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States.

We cannot guarantee that the patents issued to us will be broad enough to provide any meaningful protection ~~nor can we assure you that one~~ of ~~our competitors may not develop more effective technologies, designs or methods without infringing our intellectual property rights or that one of our competitors might not design around~~ our proprietary technologies.

If we are not able to protect our proprietary technology, trade secrets and know-how, our competitors may use our inventions to develop competing products. We own certain patents relating to the multi-user 3D technology. However, these patents may not protect us against our competitors, and patent litigation is very expensive. We may not have sufficient cash available to pursue any patent litigation to its conclusion because currently we do not generate revenues.

We cannot rely solely on our current patents to be successful. The standards that the U.S. Patent and Trademark Office and foreign patent office's use to grant patents, and the standards that U.S. and foreign courts use to interpret patents, are not the same and are not always applied predictably or uniformly and can change, particularly as new technologies develop. As such, the degree of patent protection obtained in the U.S. may differ substantially from that obtained in various foreign countries. In some instances, patents have been issued in the U.S. while substantially less or no protection has been obtained in Europe or other countries.

We cannot be certain of the level of protection, if any that will be provided by our patents if we attempt to enforce them and they are challenged in court where our competitors may raise defenses such as invalidity, ~~unenforceability~~ or ~~possession of a valid license.~~unenforceability. In addition, the type and extent of any patent claims that may be issued to us in the future are uncertain. Any patents which are issued may not contain claims that will permit us to stop competitors from using similar technology.

We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights.

Third parties have, and others may, challenge the validity of our patents and other intellectual property rights, resulting in costly litigation or other time-consuming and expensive proceedings, which could deprive us of valuable rights. If we become involved in any intellectual property litigation, interference or other judicial or administrative proceedings, we may incur substantial expenses and the diversion of financial resources and technical and management personnel. An adverse determination may subject us to significant liabilities or require us to seek licenses that may not be available from third parties on commercially favorable terms, if at all. Further, if such claims are proven valid, through litigation or otherwise, we may be required to pay substantial financial damages, which can be tripled if the infringement is deemed willful, or be required to discontinue or significantly delay development, marketing, selling and licensing of the affected products and intellectual property rights.

Our competitors may have filed, and may in the future file, patent applications covering technology similar to ours. There may be third-party patents, patent applications and other intellectual property relevant to our potential products that may block or compete with our products or processes. If another party has filed a United States patent application on inventions similar to ours, we may have to participate in an interference proceeding declared by the United States Patent and Trademark Office to determine priority of invention in the United States. The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful, resulting in a loss of our United States patent position with respect to such inventions. In addition, we cannot assure you that we would prevail in any of these suits or that the damages or other remedies if any, awarded against us would not be substantial. Claims of intellectual property infringement may require us to enter into royalty or license agreements with third parties that may not be available on acceptable terms, if at all. We may also become subject to injunctions against the further development and use of our technology, which would have a material adverse effect on our business, financial condition and results of operations.

Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations.

If we lose ~~any of~~ our key personnel ~~or fail to hire and retain other talented employees,~~ our operations could be harmed.

Our success is currently dependent, in large part, on the personal efforts of Thomas Kidrin, our president and chief executive officer. The loss of Mr. Kidrin's services could have a material adverse effect on our business and prospects. Our success is also dependent upon our ability to hire and retain additional qualified management, marketing, technical, financial, and other personnel, if and when our business grows. Competition for qualified personnel is intense and we may not be able to hire or retain additional qualified personnel. Any inability to attract and retain qualified management and other personnel would have a material adverse effect on our ability to grow our business and operations.

We may not be able to economically comply with any new government regulation that may be adopted with respect to the Internet.

New Internet legislation or regulation, or the application of existing laws and regulations to the Internet and e-commerce could add additional costs and risks to doing business on the Internet. We are subject to regulations applicable to businesses generally and laws or regulations directly applicable to communications over the Internet and access to e-commerce. Although there are currently few laws and regulations directly applicable to e-commerce, it is possible that a number of laws and regulations may be adopted with respect to the Internet, covering issues such as user privacy, pricing, content, copyrights, distribution, antitrust, taxation and characteristics and quality of products and services.

Possible issuances of our capital stock would cause dilution to our existing shareholders.

While we currently have ~~120,193,050~~56,814,833 shares of common stock outstanding after implementing the 5 to 1 reverse split in 2018, we are authorized to issue up to ~~150,000,000~~250,000,000 shares of common stock. ~~Therefore, we will be able to issue a substantial number of additional shares without obtaining shareholder approval.~~ In the event we elect to issue additional shares of common stock in connection with any financing, acquisition or otherwise, current shareholders could find their holdings substantially diluted, which means they will own a smaller percentage of our company. There are also 5 million shares of preferred stock that the board can issue under any terms it wants and without any shareholder approval. ~~In the event the shareholders approve~~Shareholders approved the Company’s ~~proposals~~proposal to increase the authorized capital and/or a reverse split, the risk described above will beis heightened even more.

Certain shareholders control a substantial portion of our outstanding common stock.

Our chief executive officer owns a significant portion of the outstanding shares of our common stock and Mr. Kidrin may be issued an additional ~~7.5~~5 million post reverse split shares of our common stock upon the exercise of outstanding stock options. Accordingly, he will be able to influence the election of our directors and thereby influence or direct our policies.

To date, we have not paid any cash dividends on our common stock and we do not expect to declare or pay dividends on the common stock in the foreseeable future. In addition, the payment of cash dividends may be limited or prohibited by the terms of any future loan agreements.

We are subject to "penny stock" regulations which may adversely impact the liquidity and price of our common stock.

Our common stock is currently deemed a "penny stock." Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information on penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, broker-dealers who sell such securities to persons other than established customers and accredited investors (generally, those persons with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse), the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction.

These requirements could reduce the level of trading activity, if any, in the secondary market for our common stock. As a result of the foregoing, our shareholders may find it more difficult to sell their shares.

The exercise or conversion of outstanding options into common stock will dilute the percentage ownership of our other shareholders. The sale of such common stock or other common stock in the open market could adversely affect the market price of our common stock.

As of ~~March 15, 2016,~~December 31, 2019, there are outstanding options ~~and warrants~~ to purchase an aggregate of ~~9,350,000~~11,140,000 shares of our common stock and more options and warrants will likely be granted in the future to our officers, directors, employees and consultants. Also, on such date there are outstanding warrants to purchase an aggregate of 4,480,000 shares of our common stock. The exercise of outstanding stock options and warrants and conversion of notes will dilute the percentage ownership of our other shareholders. Sales, or the expectation of sales, of a substantial number of shares of our common stock in the public market, including shares of our common stock issuable upon exercise of our stock options, could adversely affect the prevailing market price of our common stock.

We do not own any property nor do we have any contracts or options to acquire any property in the future. Presently, we are operating out of offices in our president's residence at 11 Royal Road, Brookline, Massachusetts 02445, where we occupy approximately 800 square feet. This space is adequate for our present and our planned future operations. We currently pay no rent to our president for use of this space, although when funds are available we may do so in the future. In addition we have no written agreement or formal arrangement with our president pertaining to the use of this space. We have no current plans to occupy other or additional office space.

The Federal case before Judge Denise Casper has been stayed pending the outcome of the Inter Partes Review (“IPR”) appeals to the United States Court of Appeals for the Federal Circuit (“CAFC”) and, in view of the Company’s victory at the CAFC, the subsequent remand to the Patent Trial and Appeal Board (“PTAB”). With the remand proceedings now complete, the Company has asked that Judge Casper lift the stay and allow the Company to proceed in its lawsuit for patent infringement of the Company’s patents against Activision Blizzard, Inc., Blizzard Entertainment, Inc., and Activision Publishing, Inc. (collectively, the “Activision entities”). The Company has also filed an additional complaint for patent infringement against Linden Research, Inc., d/b/a Linden Lab.

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 IPR2015-01264, 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 IPR2015-01268, 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 IPR2015-01269, 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 IPR2015-01319, 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 IPR2015-01321, 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 IPR2015-01325, 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, IPR2015-01269, 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 were consolidated before the CAFC.

After receiving briefing and holding an oral hearing, the CAFC issued a favorable ruling on the Company’s behalf on September 7, 2018. The ruling, written by the Chief Judge of the CAFC, vacated the USPTO’s Patent and Trial Board’s (PTAB) invalidity rulings against three of Worlds’ patents, and remanded these cases back to the PTAB with instructions to re-evaluate whether Bungie was permitted to file its petitions for inter partes review (IPR) of Worlds’ patents in view of the evidence establishing its business relationship with the Activision entities.

Since February 22, 2019, this briefing on remand before the PTAB has been complete.

On January 14, 2020, the PTAB completed its review of the questions posed by the CAFC, and determined the questions in the Company’s favor. The PTAB determined that Bungie failed to convincingly show that its Petitions were not time-barred. As a result, the Board dismissed the remaining three IPR Petitions filed by Bungie. The Board also vacated its prior Decisions to Institute in these cases, and terminated the IPR proceedings initiated by Bungie without issuing final written decisions.

On January 15, 2020, the Company asked Judge Casper to lift the stay and allow the Company to proceed in its lawsuit for patent infringement against the Activision entities.

On September 20, 2019, the Company filed a lawsuit against Linden Research, Inc., d/b/a Linden Lab (“Linden”) in the U.S. District Court for the District of ~~Massachusetts has issued the Joint Pretrial Schedule~~Delaware for ~~the Worlds Inc. vs. Activision Blizzard Inc. et al~~ patent infringement ~~lawsuit with the following dates:~~

On the Inter Party Review matter before the Patent Trial Board (PTAB), the company has submitted Preliminary Response’s to the PTAB and anticipates a determination on whether a full review will be initiated before the end of the ~~year.~~

Company’s U.S. Patent No. 7,181,690. This case was assigned to Judge Maryellen Noreika. On December 2, 2019, Linden answered the Complaint, denying that it has committed patent infringement. On January ~~23, 2015 we~~8, 2020, the Court entered into an agreement with Hudson Bay IP Opportunities Master Fund LP to, among other things, terminate the litigation between us, terminate all agreements between us, cancel all warrants we have previously issued to them as well as the outstanding balance of the Class C Note, providea Scheduling Order, setting deadlines for ~~mutual releases~~Fact Discovery and our delivery of eight million shares of our common stock, of which seven million shares will be subject to certain volume limitations upon resale. In order to have sufficient shares to deliver, we implemented the previously authorized amendment to our certificate of incorporationContentions, Claim Construction, Expert Discovery, Summary Judgment, and ~~increased our authorized common stock to one hundred fifty million shares. We entered into essentially similar agreements with the other holders of our Class C Notes, albeit for less shares.~~Trial Phase. The scheduled trial date is January 31, 2022.

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock began trading on the OTC Bulletin Board on October 20, 1998 under the symbol "WLDI." On February 11, 2000, in connection with the change in our name from Worlds Inc. to Worlds.com Inc., our symbol was changed to "WDDD." During 2001, our stock was no longer quoted on the OTC Bulletin Board and was quoted on the Pink Sheets, but returned to the Bulletin Board in the third quarter of 2008. The following table sets forth, for the periods indicated, the high and low bids for our common stock as reported on the OTC Bulletin Board or the Pink Sheets ~~(representing~~(rounded to two decimals and representing interdealer quotations, without retail mark-ups, mark-downs or commissions, and may not necessarily represent actual transactions):. The bids below reflect the reverse 5 to 1 stock split implemented in February 2018.

As of December 31, ~~2015,~~2019, we had ~~618~~613 shareholders of record of our common ~~stock.~~stock and an unknown, but assumed to be significant, number of additional holders in “street name”.

We have never paid a cash dividend on our common stock and do not anticipate paying any dividends in the near future.

On May 8, 2015, the Company issued convertible debentures to certain accredited investors. The total principal amount of the debentures is $300,000 with a maturity date of November 8, 2015 with a zero percent interest rate. The debentures are convertible into shares of the Company’s common stock at the lower of the fixed price ($0.89) or fifty five percent (55%) of the average if the three lower trading price for 20 trading days prior to conversion.

The Company signed a Forbearance Agreement on October 26, 2015 for the 10% Convertible Debenture with the principal amount of $300,000 that was due November 8, 2015. The new maturity date of the debenture is May 8, 2016.

On October 30, 2015, the company entered into a new Debenture with the same Lender, face amount of $405,000 having similar terms as the first Convertible Debenture with a maturity date of April 30, 2016. The debenture included a forbearance fee of $90,000 and had an original issue discount of 10%.

~~The Company issued promissory notes in the amount of $135,000 during~~During the year ended December 31, ~~2015. One~~2019 we did not raise any funds through the sale of equity securities.

During the ~~Promissory Notes in~~year ended December 31, 2018, the amount $25,000 was in lieu of payment of cash for an outstanding balance due to a consultant of the Company. The promissory notes carry a 6% annual interest rate and are payable upon the earlier of (a) 24 monthsCompany raised $875,000 from the ~~date~~exercise of ~~the promissory note or (b) the Company reaching a settlement(s) on a patent infringement claim(s) and receiving an aggregate of at least $2 million net proceeds from such settlement(s).~~common stock warrants.

All of these issuances were exempt from registration in as much as they were all sold to accredited investors in private offerings without the use of advertising.

The following table sets forth information as of December 31, ~~2015~~2019 with respect to compensation plans (including individual compensation arrangements) under which equity securities of the Company are authorized for issuance.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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

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

The following discussion should be read in conjunction with the financial statements and related notes which are included in this report under Item 8.

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

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 named 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~~MariMed Inc. to sublicense patented ~~technologies.~~technologies, which agreement has since expired.

~~The~~At present, the Company’s anticipated sources of revenue ~~after the spin off~~ will be from ~~sublicenses of the patented technology by Worlds Online and~~ any revenue that may be generated from enforcing its ~~patents in litigation or otherwise.~~patents.

~~The Company’s sources of~~We generated no revenue ~~after~~during the ~~spin off will be from sublicenses~~year because we transferred the operations of the ~~patented technology by Worlds Online~~Company to MariMed Inc. and our other anticipated revenue generation streams did not produce any ~~revenue that may be generated from enforcing its patents in litigation or otherwise.~~

~~Prior to~~income during the ~~spin-off we generated only modest revenue from VIP subscriptions to the Worlds Ultimate 3-D Chat service.~~quarter.

We have had to limit our operations since mid 2001 due to a lack of liquidity. However, we were able to issue equity and convertible debt in the last few years and raise small amounts of capital from time to time that, ~~enabled~~prior to the spinoff, was used to enable us to begin upgrading our technology, develop new products and actively solicit additional ~~business. We~~business, and more recently to protect, increase and enforce our patent portfolio. Although we have been able to generate funds through our sale of shares of MariMed Inc., 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, raise more funds through the sale of shares of MariMed Inc., or start to generate sufficient revenues, we may ~~need~~be unable to ~~once again scale back operations.~~purchase additional patents or otherwise expand operations through acquisition or otherwise.

Our net revenues for each of the years ended December 31, ~~2015~~2019 and ~~2014~~2018 were $0. All the operations were transferred over to ~~Worlds Online~~MariMed Inc. in the spin off. The Company’s ~~future~~ sources of revenue ~~after the spinoff~~ are anticipated to be ~~from sublicenses of the patented technology to Worlds Online Inc.’s customers and any revenue that may be generated~~ from enforcing our patents in litigation or otherwise. ~~Inasmuch as the expiration date on the Company’s patents is November 16, 2016, the Company does not expect any material amount of revenues from sublicense.~~

Year ended December 31, ~~2015~~2019 compared to year ended December 31, ~~2014~~2018

Revenue was $0 for the years ended December 31, ~~2015~~2019 and ~~2014.~~2018. All the operations were transferred over to ~~Worlds Online~~MariMed 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~~We still need to raise a sufficient amount of capital to provide the resources required that would enable us to ~~continue running the~~expand our business.

Selling general and administrative (S, G & A) expenses decreased by ~~$67,988~~$340,430 from ~~$455,613~~$971,085 to ~~$387,625~~$630,655 for the year ended December 31, ~~2015. Expenses are primarily professional fees~~2019. $178,340 of the decrease is attributable to costs incurred in the prior year related to the Company exploring potential opportunities in the augmented reality space and ~~business consulting including broker fees. Expenses decreased during~~crypto currencies. The balance of the ~~year~~decrease is due to ~~the~~a decrease in ~~activity~~professional service fees related to ~~financings of~~ the ~~Company and all the activity surrounding those financings which inflated SG&A expenses in 2014.~~patent infringement lawsuit.

Salaries and related expenses ~~increased~~decreased by ~~$9,153~~$81,596 to ~~$225,025~~$214,208 from ~~$215,872~~$295,804 for the year ended December 31, ~~2015. Increase~~2019. Decrease is ~~primarily~~ due to the CEO ~~working under an employment agreement whereby he is to receive~~receiving a ~~10% increase each year.~~

Common stock issued for services rendered increased by $34,492 to $110,400 in 2014 compared to $75,908 in 2014. Increase is due to a strategic business consulting agreement valued at a slightly greater expenselarger portion of his previously accrued salary from prior years last year than in ~~2014.~~2019.

For the year ended December 31, ~~2015,~~2019, the Company recorded an option expense of ~~$47,007,~~$309,783 equal to the increase in estimated fair value of the unvested options at December 31, 2019. For the year ended December 31, 2018, the Company recorded an option expense of $415,383, equal to the estimated fair value of the options at the date of grants. The option expense ~~was~~is due to ~~600,000~~5,800,000 options granted to ~~the Company’s directors and~~ an officer and directors of the company. The directors, Bernard Stolar, Robert Fireman and Edward Gildea each received 100,000 options for serving as board members in 2015. Christopher Ryan, an officer of the company received 300,000 options.

For the year ended December 31, ~~2014,~~2018, the Company recorded ~~an option~~a warrant expense of ~~$66,451,~~$1,211,403, equal to the estimated fair value of the ~~options~~warrants at the date of grants. The ~~option~~warrant expense was due to ~~450,000 options~~3,400,000 warrants granted to investors of the ~~Company’s directors. The directors, Bernard Stolar, Robert Fireman and Edward Gildea each received 100,000 options for serving as board members~~company. There was no warrant expense in ~~2014. Edward Gildea joined~~ the ~~board on January 10, 2014 and received an additional 150,000 options for joining the Company’s board.~~year ended December 31, 2019.

For the year ended December 31, ~~2015~~2018 we had a ~~loss~~gain on ~~settlement~~sale of ~~convertible notes~~marketable securities of ~~$2,313,151.~~$4,692,990. The Company sold shares in the spin-off company Worlds Online Inc. now called MariMed Inc. in 2018. The company did not sell any shares during the year ended December 31, 2019.

For the year ended December 31, ~~2015,~~2019 the Company had ~~a loss on change in fair value of derivative liability of $761,722 and~~ interest expense of ~~$61,935.~~$82,858. For the year ended December 31, ~~2014,~~2018 the Company had ~~a gain on change in fair value of derivative liability of $199,102 and~~ interest expense of ~~$358,835.~~ $45,000. Increase is due to accruing interest on old notes payable that are well past the statute of limitations and for which the Company never expects to pay back.

For the year ended December 31, ~~2015,~~2019 the Company had ~~a debt issuance expense~~interest income of ~~$130,500 related to the two debentures signed during the year.~~$3,033.

As a result of the foregoing, we ~~realized~~had a net loss of ~~$4,037,365~~$1,234,471 for the year ended December 31, ~~2015~~2019 compared to a ~~loss~~net income of ~~$982,577 in~~$1,754,315 for the year ended December 31, ~~2014, an increase in net losses of $2,969,236.~~2018.

At December 31, ~~2015,~~2019, our cash and cash equivalents were ~~$26,298.~~$1,570,844. We ~~raised an aggregate of $479,000 from issuing notes and convertible notes payable~~did not raise any additional cash during the year ended December 31, ~~2015.~~2019.

~~Our~~At December 31, 2018, our cash and cash equivalents were ~~$27,661 at December 31, 2014.~~$3,846,120. We raised ~~an aggregate~~$875,000 from the exercise of ~~$100,000 from issuing notes payable~~common stock warrants during the year ended December 31, ~~2014.~~

2018. We raised an additional $4,692,990 through the sale of shares of stock that the Company retained in the spin off company MariMed Inc.

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

The funds raised in our ~~2015~~2018 financings and ~~2014 financings~~from our sale of shares of common stock of MariMed Inc. 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.~~Commission and to explore new business opportunities. 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.~~funds or implement any of these plans.

~~The company received an additional $56,500 in January and~~Effective February ~~under the Convertible Debenture signed on October 30, 2015 with the face amount of $405,000.~~

~~We issued promissory notes in the amount of $140,000 during January and February of 2016. The promissory notes carry~~21, 2019, Mr. Edward Gildea voluntarily resigned as a 6% annual interest rate and are payable upon the earlier of (a) 12 months from the date of the promissory note or (b) the Company reaching a settlement(s) on a patent infringement claim(s) and receiving an aggregate of at least $2 million net proceeds from such settlement(s).

~~The convertible debt holder converted $125,000 worth of debentures~~director for ~~11,271,666 shares of common stock during the first quarter of 2016.~~

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements ~~up to ASU 2014-05,~~ 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.

We have audited the accompanying balance sheets of Worlds, Inc. (the ~~“Company”)~~Company) as of December 31, ~~2015~~2019 and ~~2014~~2018, and the related statements of operations, stockholders’ deficit, and cash flows for each of the ~~two~~ years ~~then ended.~~ in the two-year period ended December 31, 2019, and the related notes and schedules (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on ~~these~~the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States).~~PCAOB. Those standards require that we plan and perform the ~~audits~~audit to obtain reasonable assurance about whether the financial statements are free of material ~~misstatement.~~misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. ~~Our~~As part of our audits, ~~included consideration~~we are required to obtain an understanding of internal control over financial reporting, ~~as a basis for designing audit procedures that are appropriate in the circumstances,~~ but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. ~~An audit also includes~~

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence ~~supporting~~regarding the amounts and disclosures in the financial ~~statements, assessing~~statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial ~~statement presentation.~~statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Worlds Inc. (a Delaware corporation) as of December 31, 2015 and 2014 and the results of its operations and its cash flows for two years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. ~~The~~As discussed in Note 1 to the financial statements the Company has suffered ~~recurring operating~~net losses ~~has an accumulated stockholders’ deficit, has negative working capital, has had minimal revenues~~ from operations and has ~~yet to generate an internal cash flow that~~a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. ~~Management's~~Management’s plans ~~in regard to these~~regarding those matters are ~~described~~discussed in Note 2.1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Table~~As reflected in the accompanying financial statements, the Company has a working capital deficiency of ~~Contents~~$1,648,020 and a stockholder’s deficiency of $1,444,987 and used $1,322,243 of cash in operations for the year ended December 31, 2019. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Management believes that the actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.

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.~~

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~~As the ~~Company's ability to continue as a going concern. For the past year~~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 ~~performing primarily consulting services and licensing software~~ and using consultants to perform any additional work that may be required.

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 ~~are comprised of~~includes highly liquid money market instruments, which have original maturities of three months or less at the time of purchase.

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

Effective ~~for~~January 1, 2018, the Company adopted ASC 606. There was no impact in adopting ASC 606 as the Company has no revenue at this time. In the second quarter of 2011, the Company spun off its online businesses to ~~Worlds Online~~MariMed Inc. The Company’s sources of revenue after the ~~spin off will~~spinoff was expected to be from sublicenses of the patented technology by Worlds Online and any revenue that may be generated from enforcing its patents. Prior to the spin-off, the Company had the following sources of revenue: (1) consulting/licensing revenue from the performance of development work performed on behalf of the Company, licensing revenue or from the sale of certain software to third parties; and (2) VIP subscriptions to our Worlds Ultimate 3-D Chat service. The Company recognizes revenue ~~when all of~~by applying the following ~~criteria are met: evidence of an arrangement exists such as~~steps: (1) identify the contract with a ~~signed contract, delivery has occurred,~~customer; (2) identify the ~~price is fixed or determinable, and collectability is reasonable assured. This will usually be~~performance obligations in the ~~form of a receipt of a customer’s acceptance indicating~~contract; (3) determine the ~~product has been completed~~transaction price; (4) allocate the transaction price to ~~their satisfaction except for development work~~each performance obligation in the contract; and ~~service revenue which is recognized when the services have been performed. Deferred revenue represents cash payments received in advance to be recorded as~~(5) recognize revenue when ~~earned. The corresponding cost associated with those contracts~~each performance obligation is ~~also deferred as deferred costs until the revenue is ultimately recognized.~~satisfied.

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.

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 ~~2015~~2019 and ~~2014.~~2018.

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~~award (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.

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.

The Company has $773,279 in short term notes outstanding at December 31, ~~2015~~2019 and ~~2014.~~December 31, 2018. 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~~Company had an additional ~~$410,000 and $275,000~~$750,000 in ~~notes, and $349,500 (net of $21,000 discount) and $11,803 in convertible~~short term notes outstanding at December 31, ~~2015~~2018. The Company paid off these notes during the first quarter and ~~2014, respectively.~~the balance is $0 at December 31, 2019.

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.

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 December 31, ~~2015,~~2019 and December 31, 2018, there were ~~9,050,000~~11,140,000 options and no4,480,000 warrants outstanding whose effect is anti-dilutive and not included in diluted net loss per share for December 31, ~~2015.~~2019 or for December 31, 2018. The options and warrants may dilute future earnings per share.

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

During 2000 the Company was involved in a lawsuit relating to unpaid consulting services. In April, 2001 a judgment against the Company was rendered for approximately $205,000. As of December 31, ~~2015,~~2019, and ~~2014~~December 31, 2018 the Company recorded a reserve of $205,000 for this lawsuit, which is included in accrued expenses in the accompanying balance sheets.

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.

The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the ~~years~~year ended December 31, ~~2015 or 2014.~~

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.

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~~Warrant and option expense was measured by using level ~~3. See Note 5.~~3 valuation.

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.

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.

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

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements, ~~up to ASU 2015-16,~~ 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.

In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Company adopted the new lease guidance effective January 1, 2019. The Company is not a party to any leases and therefore is not showing any asset or liability related to leases in the current period or prior periods.

The Company imputed interest of $74,843 on the notes during the year ended December 31, 2019. The Company repaid the $600,000 in notes payable and $150,000 in notes payable related party with accrued interest totaling $189,118 during the first quarter of 2019.

~~The accompanying financial statements have been prepared assuming that~~All common stock numbers and exercise prices in this Note are reflected on a post reverse split (5 to 1) basis. As a result of the reverse split on February 9, 2018, 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~~issue an additional ~~capital resources~~167 shares due to fully implement its business plan or that any assumptions relating to its business plan will prove to be accurate. The Company is pursuing sources of additional financing and there can be no assurance that any such financing will be available to the Company on commercially reasonable terms, or at all. Any inability to obtain additional financing will likely have a material adverse effect on the Company, including possibly requiring the Company to reduce and/or cease operations.

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

During the year ended December 31, ~~2015,~~2019, the ~~company issued 15,608,696 common shares to~~Company recorded an option expense of $309,783 representing the ~~Class C Note holders in order to terminate the litigation between us, terminate all agreements between us, cancel all warrants we have previously issued to them as well as the outstanding balance~~amortization of the ~~Class C Notes. In order to~~value of the options issued in 2018 that have ~~sufficient shares to deliver, we implemented the previously authorized amendment to our certificate of incorporation and increased our authorized common stock to one hundred fifty million shares.~~not yet vested.

During the year ended December 31, ~~2015,~~2018 the Company received an additional $875,000 upon the exercise of 7,000,000 warrants to purchase 7,000,000 shares of the Company’s common stock at $0.0125 per share.

During the year ended December 31, 2018 the Company issued ~~an aggregate~~460,000 shares of ~~804,000 shares of~~the Company’s common stock as payment for services rendered, an aggregate value of ~~$80,400~~$99,372.

During the year ended December 31, ~~2015,~~2018, the Company issued ~~182,057 shares to an officer of the company as payment for an accrued expense in the amount of $24,506.07.~~

~~During the year ended December 31, 2015, the Company issued 6,746,356 shares of common stock by converting $150,000 of the principal of convertible notes payable.~~

~~During the year ended December 31, 2014, the Company issued 3,128,592 common shares by converting $424,375 of the convertible notes payable and accrued interest into common stock.~~

During the year ended December 31, 2014, the Company issued an aggregate of 450,000 shares of common stock as payment for services rendered with an aggregate value of $63,300. The Company also recognized stock issued for services in the amount of $12,609 for shares issued in year 2013 but amortized in this period.

~~During the year ended December 31, 2014, the Company issued 63,526 shares to an officer of the company as payment for an accrued expense in the amount of $9,625.~~

We issued an aggregate of $2.4 million face amount of Senior Secured Convertible Notes (the “Notes”). The Notes are divided into Series A, Series B and Series C with the Series A and B Notes aggregating to $1.95 million and the Series C Notes aggregating to $450,000. The Series A and Series B Notes were exchanged by the return of the face amount of the Notes for 7 million shares of common stock of the Company. The remaining Series C Note carried a 14% annual interest rate upon default and is payable on March 13, 2016. The Company had determined that the conversion feature of the Notes represent an embedded derivative since the Notes are convertible into a variable number of shares upon conversion. On January 23, 2015 we entered into an agreement with the Series C note holders to, among other things, terminate the litigation between us, terminate all agreements between us, cancel all warrants we have previously issued to them as well as the outstanding balance of the Class C Note, provide for mutual releases and delivery of fifteen million six hundred and eight thousand and six hundred and ninety six shares of our common stock. In order to have sufficient shares to deliver, we implemented the previously authorized amendment to our certificate of incorporation and increased our authorized common stock to one hundred fifty million shares.

~~The Notes are classified as a derivative liability and not a note payable, see Note 9 below.~~

We issued promissory notes in the amount of $135,000 during the year ended December 31, 2015. One of the promissory notes in the amount of $25,000 was in lieu of payment of cash for an outstanding balance due to a consultant of the Company. The promissory notes carry a 6% annual interest rate and are payable upon the earlier of (a) 24 months from the date of the promissory note or (b) the Company reaching a settlement(s) on a patent infringement claim(s) and receiving an aggregate of at least $2 million net proceeds from such settlement(s).

The holders of the promissory notes shall receive repayment in the full face amount of the note from the initial $500,000 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 form $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.

We had issued promissory notes in the amount of $275,000 during the year ended December 31, 2014. One of the promissory notes in the amount $50,000 was in lieu of payment of cash for an outstanding balance due to a consultant of the Company. The promissory notes carry the same terms as the notes issued in 2015.

On October 30, 2015, the company entered into a new Debenture with the same Lender, with a face amount of $405,000 having similar terms as the first Convertible Debenture with a maturity date of April 30, 2016. The debenture included a forbearance fee of $90,000 and had an original issue discount of 10%.

~~During the year ended December 31, 2015, the Company issued 6,746,356 shares of common stock by converting $150,000 of the principal of convertible notes payable.~~

~~As of December 31, 2015, the aggregate carrying value of the debentures was $370,500.~~

~~The debt discount was recorded in 2015 and pertains to convertible debt issued that contains ratchet features that are required to be reported at fair value.~~

~~Amortization of debt discount on notes payable for the year ended December 31, 2015 and December 31, 2014 was $144,322 and $318,642, respectively.~~

The Company identified conversion features embedded within convertible debt issued in May 8, 2015. The Company has determined that the features associated with the embedded conversion option, in the form a ratchet provision, should be accounted for at fair value, as a derivative liability, as the Company cannot determine if a sufficient number of shares would be available to settle all potential future conversion transactions.

~~As a result of the application of ASC No. 815, the fair value of the ratchet feature related to convertible debt and warrants is summarized as follow:~~

~~The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions as of December 31, 2015:~~

On January 23, 2015 we entered into an agreement with Hudson Bay IP Opportunities Master Fund LP to, among other things, terminate the litigation between us, terminate all agreements between us, cancel all warrants we have previously issued to them as well as the outstanding balance of the Class C Note, provide for mutual releases and our delivery of eight million shares of our common stock, of which seven million shares will be subject to certain volume limitations upon resale. In order to have sufficient shares to deliver, we implemented the previously authorized amendment to our certificate of incorporation and increased our authorized common stock to one hundred fifty million shares. We entered into essentially similar agreements with the other holders of our Class C Notes, albeit for less shares. As a result of the settlement, the company recorded a loss on settlement of convertible notes of $2,313,151 during the year ended December 31, 2015.

On March 20, 2013 the Company entered into strategic financing agreements with several institutional investors that could provide the Company with up to $2.3 million of debt financing based upon the amount of conversions and redemptions. The transaction documents provide, among other things, that (i) the investors will receive five year warrants in an amount equal to 100% of the number of shares of our common stock the investors would receive if the Notes (defined below) were converted on March 13, 2013, at an exercise price of $0.50 per share, (ii) $1.950 million of the funds will deposited in one of our bank accounts but will be subject to a control account agreement which will provide that the Company can only withdraw funds from the account as the investors convert or redeem the Notes, (iii) the investors have demand and piggy-back registration rights for the shares of common stock underlying the warrants and Notes, (iv) the Notes will be secured by a first priority security interest in all of our assets, other than our patents, (v) each investor may not convert any Note or exercise any warrants if doing so will cause the investor to own more than 4.99% of our outstanding common stock at any time, although under certain circumstances they can each own up to 9.99% of our outstanding common stock, (vi) we paid $40,000 of the investors’ legal fees incurred with respect to this transaction, and (vii) for the next three years the investors have a right to participate in up to 50% of any of our future financings. The warrants and Notes contain standard anti-dilution provisions and the Securities Purchase Agreements contains standard covenants for a financing of this nature. In the event the Company acquires any subsidiaries while the Notes are outstanding, such subsidiaries will be obligated to guaranty the Notes and any other obligations we owe to the investors pursuant to the transaction documents.

On July 15, 2013 we entered into Amendment and Exchange Agreements with each of the existing holders of our Series A, B and C Senior Secured Convertible Notes and related warrants to purchase our common stock, which securities were originally issued pursuant to that certain Securities Purchase Agreement dated as of March 14, 2013 (“Securities Purchase Agreement”), by and among us and such holders.

The Company has determined that the conversion feature of the Note represent an embedded derivative since the Note is convertible into a variable number of shares upon conversion. Accordingly, the Note is not considered to be conventional debt under EITF 00-19 and the embedded conversion feature must be bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of this derivative instrument has been recorded as a liability on the balance sheet with the corresponding amount recorded as a discount to the Note. Such discount will be accreted from the grant date to the maturity date of the Note. The change in the fair value of the derivative liability will be recorded in other income or expenses in the statement of operations at the end of each period, with the offset to the derivative liability on the balance sheet. The beneficial conversion feature included in the Note resulted in an initial debt discount of $450,000 and an initial loss on the valuation of derivative liabilities of $96,119 based on the initial fair value of the derivative liability of $546,119. The fair value of the embedded derivative liability was calculated at grant date utilizing the following assumptions:

During the year ended December 31, 2015 the Company settled a lawsuit brought forth by the note holders, effectively terminating and canceling all remaining agreements, warrants and notes. As a result of the settlement, the company recorded a loss on settlement of convertible notes of $2,336,035 during the year ended December 31, 2015.

As of the date of the settlement with the noteholders, the Company revalued the embedded derivative liability and recorded a loss on change in fair value of derivative liability of $143,383. For the period from December 31, 2014 to December 31, 2015, the Company decreased this derivative liability to $0.

The Company identified options issued to directors and officers are a derivative liability due to a lack of number of authorized shares to cover all the options issued by the Company if they are all exercised as of December 31, 2015.

Therefore, the fair value of the options have been recorded as liabilities on the balance sheet. The change in the fair value of the derivative liabilities will be recorded in other income or expenses in the statement of operations at the end of each period, with the offset to the derivative liabilities on the balance sheet. The fair value of the embedded derivative liabilities was determined using the Black-Scholes valuation model on the issuance dates with the assumptions in the table below.

~~As a result of the application of ASC No. 815, the fair value of the options is summarized as follow:~~

~~The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions as of December 31, 2015:~~

On December 31, 2015, the Company had convertible promissory notes entitled to be converted at a discount to market price. As a result, the existing 8,450,000 exercisable options shall be reclassified from equity to liabilities. Please refer to Note 7 for further discussion.

During the year ended December 31, 2015, the Company issued 300,000 options to the Company’s directors. The directors, Bernard Stolar, Robert Fireman and Edward Gildea each received 100,000 options for serving as board members in 2015. An additional 300,0005,500,000 options. 5,000,000 options were issued to ~~Christopher Ryan~~Thom Kidrin, the Chief ~~Financial~~Executive Officer and President of the Company and 500,000 options were issued to Directors of the Company.

~~During the year ended December 31, 2015, the~~The Company recorded an option expense of ~~$47,007~~$368,728 in 2018 and $19,173 in the first quarter of 2019 equal to the estimated fair value of the options at the date of grants. The fair market value was calculated using the ~~Black-Scholes options pricing model,~~Black Scholes method assuming approximately ~~1.63%~~2.73% risk-free interest, 0% dividend yield, ~~175%~~104% volatility, an exercise price of $0.25 per share for Thom Kidrin’s options and $0.24 per share for the Directors options with a current market price of $0.24 and an expected life of 5 years.

~~No stock~~ Mr. Kidrin’s options ~~were exercised during~~vest 2,000,000 on the date of grant, August 28, 2018, 1,500,000 on August 28, 2019 and 1,500,000 on August 28, 2020. The Director’s options vest one year ~~ended December 31, 2015.~~

~~On January 23, 2015 we entered into an agreement with~~from the Class C note holders who held four million five hundred thirty five thousand seven hundred and fourteen warrants to purchase our common stock. The settlement agreement, among other things, cancelled all warrants we have previously issued to them.date of grant.

During the year ended December 31, ~~2014,~~2018, the Company issued ~~450,000 options~~3,400,000 warrants as part of the subscription agreement that included the sale of 7,000,000 shares of common stock. Each warrant entitles the holder to ~~the Company’s directors.~~purchase one share of common stock at a price of $0.325. The ~~directors, Bernard Stolar, Robert Fireman and Edward Gildea each received 100,000 options for serving as board members~~warrants expire in ~~2014. Edward Gildea joined the board on January 10, 2014 and received an additional 150,000 options for joining the Company’s board.~~

~~During the year ended December 31, 2014, the~~five years. The warrants can be exercised at any time within those five years. The Company recorded ~~an option~~a warrant expense of ~~$66,451~~$1,211,403 equal to the estimated fair value of the ~~options~~warrants at the date of ~~grants.~~issuance. The fair market value was calculated using the ~~Black-Scholes options pricing model,~~Black Scholes method assuming approximately ~~0.93%~~2.52% risk-free interest, 0% dividend yield, ~~210%~~153% volatility, exercise price of $0.325 per share with a current market price of $0.385 and an expected life of 5 years.

For the year ended December 31, 2019, the Company recorded an option expense of $309,783, equal to the increase in estimated fair value of the unvested options at December 31, 2019.

At December 31, ~~2014,~~2019, the Company had federal and state net operating loss carry forwards of approximately ~~$40,000,000~~$44,000,000 that expire in various years through the year ~~2035.~~2039.

Due to net operating loss carry forwards and operating losses, there is no provision for current federal or state income taxes for the ~~year~~years ended December 31, ~~2015~~2019 and ~~2014.~~2018.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for federal and state income tax purposes.

The Company’s deferred tax asset at December 31, ~~2014~~2019 consists of net operating loss carry forwards calculated using federal and state effective tax rates equating to approximately ~~$15,695,872~~$16,954,008 less a valuation allowance in the amount of approximately ~~$15,695,872.~~$16,954,008. Because of the Company’s lack of earnings history, the deferred tax asset has been fully offset by a valuation allowance. The valuation allowance decreased by approximately $1,841,265 for the year ended December 31, 2018 and increased by approximately ~~$1,575,000 and $383,000~~$1,192,252 for the ~~years~~year ended December 31, ~~2015 and 2014, respectively.~~2019.

The Company’s total deferred tax asset as of December 31, ~~2015 is~~2019 and 2018 are as follows:

The reconciliation of income taxes computed at the federal and state statutory income tax rate to total income taxes for the years ended December 31, ~~2015~~2019 and ~~2014~~2018 is as follows:

On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the Tax Act) was enacted into law and the new legislation contains several key tax provisions that affected us, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. We are required to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, remeasuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax asset and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date.

The Company is committed to an employment agreement with its President and CEO, Thom Kidrin. The agreement, dated as of August ~~30, 2012,~~28, 2018, is for five years with a one-year renewal option held by Mr. Kidrin. The agreement provides for a base salary of ~~$175,000,~~$200,000, 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~~5 million shares of Worlds Inc. common stock at an exercise price of ~~$0.070~~$0.25 per share, ~~all~~2 million of which vested on August ~~30, 2012;~~28, 2018, 1.5 million shall vest on August 28, 2019 and the remaining 1.5 million shall vest on August 28, 2020 ; a death benefit of at least $2 million dollars; and a payment equal to 2.99 times his base amount (as defined in the agreement) in the event of a Change of Control (as defined in the agreement). The agreement also provides that Mr. Kidrin can be terminated for cause (as defined in the agreement) and that he is subject to restrictive covenants for 12 months after termination.

~~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~~paid $150,000 in notes payables with accrued interest to ~~continue to increase and to more aggressively enforce against alleged infringers.~~related parties during the first quarter of 2019. The Company ~~also entered into a License Agreement with Worlds Online Inc.~~paid $176,785 in accrued salary to ~~sublicense its patented technologies.~~

Due to related party is comprised of cash payments for operating expenses made by worlds Online Inc. on behalf of Worlds Inc. The balance at December 31, 2015 is $36,310 and at December 31, 2014 is $9,416.

~~During 2014, we issued a promissory note to a related party,~~ the CEO, Thom Kidrin and paid $35,000 to the CFO, Chris Ryan over the year ended December 31, 2019.

See note 11 for a discussion on the convertible note receivable from the related party.

The balance in the ~~amount of $50,000. The promissory note carry the same terms as all the other notes issued.~~accrued expense attributable to related parties is $66,518 and $329,624 at December 31, 2019 and December 31, 2018, respectively.

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.~~are expensed by the Company.

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.

When Worlds Inc. spun off Worlds Online Inc. in January ~~and February under the Convertible Debenture signed on October 30, 2015 with the face amount of $405,000.~~

We issued promissory notes in the amount of $140,000 during January and February of 2016. The promissory notes carry a 6% annual interest rate and are payable upon the earlier of (a) 12 months from the date of the promissory note or (b)2011, the Company ~~reaching a settlement(s) on a patent infringement claim(s) and receiving an aggregate of at least $2 million net proceeds from such settlement(s).~~

~~The convertible debt holder converted $125,000 worth of debentures for 11,271,666~~retained 5,936,115 shares of common stock ~~during~~in Worlds Online Inc. (now named MariMed Inc.). Those shares were retained on the ~~first quarter~~books of ~~2016.~~the Company with a book value of $0. During the twelve months ended December 31, 2018, the Company sold 1,842,116 shares at an average price of $1.64 per share raising $3,017,790. The proceeds from the sale are treated as a gain on sale of marketable securities in the financial statements. No shares were sold in the year ended December 31, 2019.

Accrued expenses is comprised of ~~Contents~~$66,518 owed to related parties. $205,000 is related to a judgment against the Company relating to unpaid consulting services dating back to April of 2001. $1,305,009 is related to old accruals for which the statute of limitations has passed and therefore the Company does not expect it will ever have to repay those amounts. The balance of $61,008 is related to accruals for recurring operating expenses.

The Company made an investment in the form of a convertible note in the amount of $200,000 to Canadian American Standard Hemp (CASH). The convertible note has a 7% annual interest rate and matures in 2 years. Interest and principle is payable at maturity. The note can be converted at any time, either all or part of the amount due can be converted into the borrowers equity at a price of $0.50 per share. If converted into common stock, the Company would own 1% of CASH. Messrs. Kidrin, Toboroff, Christos and Ryan are Directors of CASH and Mr. Kidrin is the CEO and Mr. Ryan is the CFO of CASH.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

~~None.~~The Company was informed by its independent registered public accounting firm, L&L CPAs, P.A. (“L&L”), of its intent to resign for reason that it would not be able to comply with Section 10A of the Securities Exchange Act of 1934 and Section 203 of the Sarbanes-Oxley Act of 2002 which prohibit a registered public accounting firm from providing audit services to an issuer if the audit partner having primary responsibility for the audit, or the audit partner responsible for reviewing the audit, has performed audit services for that issuer in each of the five previous fiscal years of that issuer. Consequently, on December 12, 2018, L&L resigned as the Company’s independent registered public accounting firm.

On December 12, 2018, the Company’s Board of Directors engaged M&K CPAs, PLLC (“M&K”) as the Company’s independent registered public accounting firm for the fiscal years ending December 31, 2019 and 2018.

~~Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures~~

~~Under~~We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer ~~we conducted an evaluation~~of the effectiveness of our disclosure controls and procedures as ~~such term is~~ defined ~~under Rule 13a-15(e) promulgated~~in Rules 13a – 15(e) under the Securities Exchange Act of 1934, as amended ~~(the~~ (“Exchange ~~Act). Disclosure~~Act”) as of the end of the period covered by this annual report on Form 10-K. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures ~~include, without limitation, controls and procedures designed~~were not effective to ensure that information required to be disclosed ~~by an issuer~~ in ~~the~~ reports ~~that it files or submits~~filed under the Exchange Act is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to ~~the issuer’s~~our management, including ~~its~~our principal executive ~~and principal financial officers, or persons performing similar functions~~officer, as appropriate to allow timely decisions regarding required disclosure.

~~Based upon~~Our principal executive officer and principal financial officer does not expect that ~~evaluation,~~ our ~~Chief Executive Officer~~disclosure controls or internal controls will prevent all error and ~~Chief Financial Officer concluded that as of December 31, 2015~~all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our principal executive officer and principal financial officer has determined that our disclosure controls and procedures are effective ~~inasmuch as~~at doing so, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the ~~previous weakness was identified~~objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and ~~corrected. The above statement notwithstanding, you are cautioned~~the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no ~~system is foolproof.~~assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Furthermore, smaller reporting companies may face additional limitations. Smaller reporting companies often employ fewer individuals and find it difficult to properly segregate duties. Often, one or two individuals control every aspect of the Company’s operation and are in a position to override any system of internal control. Additionally, smaller reporting companies may utilize general accounting software packages that lack a rigorous set of software controls.

Management’s Annual Report on Internal Control over Financial ~~Reporting~~Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule ~~13a-15(f) and 15d-15(f)~~13a- 15(f) under the Securities Exchange ~~Act. Our internal control over financial reporting are designed to provide reasonable assurance regarding~~Act, as amended. Management, with the ~~reliability~~participation of ~~financial reporting and~~ the preparation of consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

~~(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;~~

(ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of our consolidated financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.

~~Management assessed~~Chief Executive Officer, evaluated the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2015.~~2018. In making this assessment, management used the criteria set forth ~~in Internal Control Over Financial Reporting — Guidance for Smaller Public Companies issued~~ by the ~~Committee~~committee of Sponsoring Organizations of the Treadway ~~Commission.~~Commission (COSO) in Internal Control – Integrated Framework (2013 Framework). A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. We have identified the following material weaknesses:

Because of these material weaknesses, management has concluded that ~~our~~the Company did not maintain effective internal ~~controls over financial reporting was effective at December 31, 2015 at the reasonable assurance level.~~

~~Internal~~ control over financial reporting ~~cannot provide absolute assurance~~as of ~~achieving financial reporting objectives because of its inherent limitations, including~~December 31, 2019 based on the ~~possibility of human error and circumvention~~criteria established in “Internal Control-Integrated Framework” issued by collusion or overriding of controls. Accordingly, even an effective internal control system may not prevent or detect material misstatements on a timely basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, our internal controls and procedures are designed to provide reasonable assurance of achieving their objectives.COSO.

WeThere have ~~made~~been no ~~change~~changes in ~~our~~the Company’s internal control over financial reporting during the ~~fourth~~ quarter ended December 31, 2019, that ~~has~~ materially affected, or isare reasonably likely to materially affect, ~~our~~the Company’s internal control over financial reporting.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report on Form 10-K.

The following table sets forth the name, age and position of our directors and executive officers. Our directors are elected annually and serve until the next annual meeting of stockholders. Except for Mr. Kidrin, all of our directors are independent.

Thomas Kidrin became a director on October 1997 and has been president, secretary and treasurer from December 1997 through July 2007 then added the title chief executive officer since August 2007. Mr. Kidrin was also president and a director of Worlds Acquisition Corp. from April 1997 to December 1997. He has been the chairman and president of Datastream Corporation, a designer and developer of interactive products and services, since 1993. From December 1991 to June 1996, Mr. Kidrin was a founder, director, and President of UC Television Network Corp., a company engaged in the design and manufacture of interactive entertainment/advertising networks in the college market under the brand name College Television Network, the largest private network on college campuses in the United States sold to MTV in 1996 now operating under MTVU. Mr. Kidrin is a director of MariMed Inc. and was its CEO from its inception in 2011 until July 20, 2017. Mr. Kidrin has attended Drake University and the New School of Social Research.

Christopher J. Ryan has been Vice President-Finance since May 2000 and principal accounting and finance officer since August 2000. From August 1991 through April 2000, Mr. Ryan held a variety of financial management positions at Reuters America, an information services company. From 2001 through 2003, Mr. Ryan was the founder and President of CJR Advisory Services, a personal corporation through which he provided financial consulting services to various entities. From 2004 to 2010, Mr. Ryan was the CFO of Peminic, Inc. From 2008 to 2012 Mr. Ryan served as the CFO of Conversive Inc. ~~and since 2012~~ Mr. Ryan ~~has been~~was the CFO of ~~GlobalServe~~MariMed Inc. from its inception in 2011 until July 20, 2017. Mr. Ryan is an inactive certified public accountant. He is a graduate of Montclair State University in New Jersey and received an M.B.A. degree from Fordham University.

Bernard Stolar became a director on September 11, 2007 and is noted for his expertise in both identifying and developing market-driving content and forging successful business partnerships, brings to the board over twenty years of senior-level experience within the interactive entertainment industry in all phases of company operations, including sales and marketing, product development, licensing, distribution, strategic planning and management. Mr. Stolar has served in high profile leadership roles at publicly and privately held interactive entertainment companies. Currently, Mr. Stolar is Dean of Games and Game Evangelist for Google, Inc. From February 2006 until its purchase by Google, Inc. in February 2007, Mr. Stolar was the Chairman of the Board of Adscape Media. Prior to this, he was president and chief operating office of BAM! Entertainment, where he transformed the company from a hand-held content company to a developer and marketer of interactive entertainment for next generation video game consoles. In 2000, Mr. Stolar joined Mattel, Inc. as president of Mattel Interactive, where he was responsible for directing and reorganizing the $1 billion Mattel Interactive division. From 1996 to 1999, Mr. Stolar served as president and chief operating officer of Sega of America, Inc. where he helped increase sales from $200 million to over $1 billion in three years, and orchestrated the launch of the Sega Dreamcast(TM), the fastest selling video game console in US history at that time. Mr. Stolar also served as executive vice president of Sony Computer Entertainment of America, where he was a key leader of the Sony Playstation® launch team, directing all third-party publishing in the U.S. Prior to that, Mr. Stolar served as president of Atari America's game division. Mr. Stolar is a director of MariMed Inc.

Robert Fireman became a director on September 11, 2007 and is a seasoned executive in the building of technology and consumer driven companies. He brings to Worlds vast experience in the development of real time, loyalty based, stored value products and services. Mr. Fireman was a founder and former Director and General Manager of SmartSource Direct, Inc., a subsidiary of News America Marketing (News Corp). Mr. Fireman was responsible for the development, marketing and distribution of card-based loyalty, financial, and database products & services in retail, grocery and drug store chains encompassing over 50,000 stores throughout the U.S. Mr. Fireman is a director of MariMed Inc. and has been its CEO since July 20, 2017. Mr. Fireman has been a practicing attorney for over 25 years and is the managing attorney of Fireman & Associates LLP.

~~Mr. Gildea~~Leonard Toborff became a Director on August 28, 2018. He is a Director of Asset Alliance Corp., an alternative investment company since April 2011 and of NOVT Corporation, a developer of advanced medical treatments for coronary and vascular disease since April of 2006. He was a founder and director ~~on January 10, 2014~~of Steel Partners Acquisition Corp. from June 2007 to June 2009. He was Executive Director of Corinthian Capital Group, LLC a private equity fund from October 2005 to June 2008. He was Director and ~~contributes expertise~~Vice Chairman of Varsity Brands, Inc. (formally Riddell Sports Inc.) a provider of goods and services to the school spirit industry, from April 1998 until it was sold in ~~areas of mergers & acquisitions, strategic planning, funding, business development and executive leadership.~~September 2003. He ~~has many years of experience as a board member. Mr. Gildea~~ was ~~the CEO, President, and~~Vice Chairman of the Board ~~Of Directors~~ of ~~Converted Organics~~Allis-Chalmers Energy Inc. a provider of products and services to the oil and gas industry from May 1988 and served as Executive Vice President from May 1989 until February 2002. He has served as Chairman or Vice Chairman of American Bakeries Co., Ameriscribe Corporation and Saratoga Spring Water Co. and as a ~~publicly held company that manufactures organic fertilizer by recycling food waste, from January 2006 until June 2013. He was also~~Director of ENGEX Corp, a lawyer for, and COO of, QualityMetric Inc. (healthcare) from 2000-2005 and Grolier Incorporated (publishing) from1980-1989. He spent 10 years at the Kellogg Company (1990-2000) as their vice president of legal where he managed and supervised a legal team responsible for executing mergers, acquisitions and divestitures. He is currently a member of the board of directors of Finjan Holdings Inc. (Intellectual property security software) and WPCS International Inc. (wireless communications and Bitcoin exchange).closed-end mutual fund. He received his undergraduate degree from ~~The College of the Holy Cross~~Syracuse University and his law degree from ~~Suffolk University.~~ the University of Michigan Law School. He is a member of the U.S. Supreme Court Historical Society.

Peter N. Christosbecame a director on August 28, 2018. He is the founder (June 2005) and Executive Chairman of Abacos Ventures, LLC. Since June 2015, he has been Chairman of Real Brands, Inc. an owner, developer and acquirer of consumer brands, and in 2018 became a founding Independent Director of Canadian American Standard Hemp, Inc. As a former Wall Street executive with 30+ years of experience, andan entrepreneur,he has been a co-founder in both private and public companies including but not limited to: Co-founder, Executive Chairman of DealerCats, Inc.; a co-founder, Chairman and CEO of AND Interactive Communications Corp., a private software company acquired in 1994 by TCI Technology Ventures, Inc., a wholly-owned subsidiary of TCI, now Comcast Corp. on NASDAQ; a co-founder of AquaCare Systems, Inc., a start-up that completed several acquisitions prior and post its IPO on NASDAQ; TransAmerican Waste Industries, Inc., from start-up to IPO on NASDAQ and then acquired via merger in 1998 by USA Waste Industries, Inc. now Waste Management, Inc. on the NYSE; Sparta Pharmaceuticals, Inc., from start-up to IPO on NASDAQ and was acquired in 1999 by SuperGen, Inc. on NASDAQ; and CTN Media Group, Inc., aka College Television Network, from start-up to IPO on NASDAQ and acquired in 2002 by MTV Networks, division of Viacom, Inc. on the NYSE. He has been a Managing Director of Investment Banking firms in NYC including but not limited to the founding Chairman/CEO of Adelphia Capital, LLC, a former (NASD/FINRA) member firm, and Adelphia Holdings, LLC, and Adelphia Partners, LLC, and for nearly 10 years managed investment banking, and all direct investments for Adelphia related entities. He was an EVP, Partner and co-head of the NYC office of the investment banking firm of Bannon & Co., which was subsequently sold to French bank Société Générale, which merged with Cowen & Company. Prior to, he was a Managing Director of the Corporate Finance Department and the Managing Director of the New Venture Group of D. H. Blair Investment Banking Corp. and its predecessor NYSE member firm. Prior to, he worked as a Managing Director in the Corporate Finance Department of Muller & Company, Inc. a NYSE member firm.

Effective February 21, 2019, Mr. Edward Gildea voluntarily resigned as a director for personal reasons.

The board of directors ~~did not meet during 2015 but~~ acted by written consent ~~five times~~one time during the ~~year.~~year ended 2019. The board does not have any standing committees and when necessary, the entire board acts to perform such functions.

AThe Federal ~~District~~case before Judge Denise Casper has been stayed pending the outcome of the Inter Partes Review (“IPR”) appeals to the United States Court ~~issued a ruling on March 13, 2014 on~~of Appeals for the ~~Motion for Summary Judgment~~Federal Circuit (“~~MSJ”~~CAFC”) ~~hearing~~and, in view of the Company’s victory at the CAFC, the subsequent remand to the Patent Trial and Appeal Board (“PTAB”). With the remand proceedings now complete, the Company has asked that ~~allowed~~Judge Casper lift the ~~company~~stay and allow the Company to proceed ~~with~~in its lawsuit for patent infringement ~~suit~~of the Company’s patents against Activision Blizzard, Inc., Blizzard Entertainment, Inc., and Activision Publishing, Inc.~~'s (collectively, “Activision”).~~ The ~~MSJ hearing held October 17, 2013 addressed Activision's dispute~~Company has also filed an additional complaint for patent infringement against Linden Research, Inc., d/b/a Linden Lab.

On May 26, 2015, Bungie, Inc. filed three Petitions for Inter Partes Review with the U.S. Patent & Trademark Office (“USPTO”), a developer of the video game Destiny distributed by Activision filed a petition for an Inter Party Review (IPR) at the USPTO seeking to invalidate Worlds’ patents. On June 26, 2015, U.S. District Judge Denise J. Casper issued a Markman order upholding claim construction of Worlds’ major patent claims. On November 30, 2015 the USPTO instituted IPR on Worlds’ patents as filed by Bungie Inc. Worlds filed its formal response on March 15, 2016 and ~~oral arguments before~~specifically, the Patent Trial and Appeal Board ~~is scheduled~~(“PTAB”). These Petitions for ~~August~~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 PTAB. The Petition for Inter Partes Review, Case No. IPR2015-01319 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 tocancel issued claims from the Company’s patents.

On November 10, 2016, ~~with a~~the PTAB issued its final ~~ruling to issue by~~written decision in IPR2015-01264, canceling claim 1 of Company’s U.S. Patent No. 7,945,856.

On November 30, ~~2016.~~ 2016, the PTAB issued its final written decision in IPR2015-01268, 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 ~~February 11,~~November 28, 2016, the PTAB issued its final written decision in IPR2015-01269, canceling claims 4, 6, 8, and 9 of Company’s U.S. ~~District Judge Denise J. Casper entered order granting Motion to Stay pending IPR proceedings for 3 months. Counsel are to file a joint status report by May 11, 2016.~~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 IPR2015-01319, 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 IPR2015-01321, canceling claims 1-3, 7, 8, 12-18, and 20 of Company’s U.S. Patent No. 8,145,998.

Since February 22, 2019, this briefing on remand before the PTAB has been complete.

On January 15, 2020, the Company has asked that Judge Casper lift the stay and allow the Company to proceed in its lawsuit for patent infringement against the Activision entities.

On September 20, 2019, the Company filed a lawsuit against Linden Research, Inc., d/b/a Linden Lab (“Linden”) in the U.S. District Court for the District of Delaware for patent infringement of the Company’s U.S. Patent No. 7,181,690. This case was assigned to Judge Maryellen Noreika. On December 2, 2019, Linden answered the Complaint, denying that it has committed patent infringement. On January 8, 2020, the Court entered a Scheduling Order, setting deadlines for Fact Discovery and Contentions, Claim Construction, Expert Discovery, Summary Judgment, and Trial Phase. The scheduled trial date is January 31, 2022.

We do not have a separately designated standing audit committee. Pursuant to Section 3(a)(58)(B) of the Exchange Act, the entire Board of Directors acts as an audit committee for the purpose of overseeing the accounting and financial reporting processes, and audits of our financial statements. The Commission recently adopted new regulations relating to audit committee composition and functions, including disclosure requirements relating to the presence of an "audit committee financial expert" serving on its audit committee. We are not in a position at this time to attract, retain and compensate additional directors in order to acquire a director who qualifies as an "audit committee financial expert" or to so designate one of our current directors, but we intend to either retain an additional director who will qualify as such an expert or designate one of our current directors as such an expert, as soon as reasonably practicable. Our current directors, by virtue of their past employment experience, have considerable knowledge of financial statements, finance, and accounting, and have significant employment experience involving financial oversight responsibilities. Accordingly, we believe that our current directors capably fulfill the duties and responsibilities of an audit committee in the absence of such a designated expert at this time.

We have adopted a code of ethic (the "Code of Ethics") that applies to our principal chief executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the Code of Ethics was filed as Exhibit 14.1 to a previous annual report. The Code of Ethics is being designed with the intent to deter wrongdoing, and to promote the following:

~~Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships~~

~~Full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the Commission and in other public communications we make~~

Under Section 16(a) of the Exchange Act, all executive officers, directors, and each person who is the beneficial owner of more than 10% of the common stock of a company that files reports pursuant to Section 12 of the Exchange Act, are required to report the ownership of such common stock, options, and stock appreciation rights (other than certain cash-only rights) and any changes in that ownership with the Commission. Specific due dates for these reports have been established, and we are required to report, in this Form 10-K, any failure to comply therewith during the fiscal year ended December 31, ~~2015. Except as disclosed below, we~~2019. We believe that all of these filing requirements were satisfied by its executive officers, directors and by the beneficial owners of more than 10% of our common ~~stock.~~stock except that each director did not file one Form 4. In making this statement, we have relied solely on copies of any reporting forms received by us, and upon any written representations received from reporting persons that no Form 5 (Annual Statement of Changes in Beneficial Ownership) was required to be filed under applicable rules of the Commission. ~~Each of our directors and one officer did not timely file one Form 4.~~

The following table sets forth the compensation paid by us during the fiscal periods ending December 31, ~~2015,~~2019, and ~~2014,~~2018, to our chief executive officer, chief financial officer and to our other most highly compensated executive officers whose compensation exceeded $100,000 for those fiscal periods.

(1) The above compensation does not include other personal benefits, the total value of which do not exceed $10,000.

(2) Pursuant to the regulations promulgated by the SEC, the table omits columns reserved for types of compensation not applicable to us.

(3) Mr. Kidrin has an employment agreement effective August 30, ~~2012~~2018 with a base annual salary of ~~$175,000~~$200,000 with annual 10% increases every September 1. AIn prior years a large portion of his compensation ~~has~~was deferred due to lack of funds. During the year a significant portion of his deferred salary was paid to Mr. Kidrin.

(4) Mr. Ryan received limited compensation in prior years. His compensation was been deferred due to lack of funds. Mr. Ryan’s compensation in 2019 and 2018 includes a portion of that deferral.

The following table sets forth information as of December 31, ~~2015~~2019 concerning unexercised options, unvested stock and equity incentive plan awards on a post reverse split 5 for 1 basis for the executive officers named in the Summary Compensation Table.

On September 5, 2007, the Board of Directors adopted a compensation program for the directors whereby each director will receive compensation in the form of stock options for serving on the board. Five-year non-qualified stock options to purchase 100,000 shares of the Corporation’s common stock are to be granted annually on January 1 to each director then in office at an exercise price equal to the last reported trading price of our common stock on that day, with such option to vest in 12 months, provided the director serves for at least six months, following the date of grant. In addition, every director upon first joining our board receives 150,000 stock options that vest immediately and are exercisable for five years at a price equal to the last reported trading price of our common stock on that day. No stock options were issued during the year ended December 31, 2019.

The following table sets forth information concerning the compensation paid to each of our non-employee directors during ~~2015~~2019 for their services rendered as directors.

(1) This column represents the dollar amount recognized for financial statement reporting purposes with respect to the ~~2015~~2019 fiscal year for the fair value of stock options granted to the named director in fiscal year ~~2015,~~2019, in accordance with SFAS 123R. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. These amounts reflect our accounting expense for these awards, and do not correspond to the actual value that will be recognized from these awards by the named director.

The Company is committed to an employment agreement with its President and CEO, Thom Kidrin. The agreement, dated as of August ~~30, 2012,~~28, 2018, is for five years with a one-year renewal option held by Mr. Kidrin. Mr. Kidrin exercised his one-year renewal option. The agreement provides for a base salary of ~~$175,000,~~$200,000, 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~~5 million shares of Worlds Inc. common stock at an exercise price of ~~$0.070~~$0.25 per share, ~~all of which~~2 million shares vested on ~~October 1, 2012;~~August 28, 2018, 1.5 million shares vest on August 28, 2019 and 1.5 million shares vest on August 28, 2020; a death benefit of at least $2 million dollars; and a payment equal to 2.99 times his base amount (as defined in the agreement) in the event of a Change of Control (as defined in the agreement). The agreement also provides that Mr. Kidrin can be terminated for cause (as defined in the agreement) and that he is subject to restrictive covenants for 12 months after termination.

On September 4, 2007, our board of directors adopted the 2007 Stock Option Plan which was presented to our shareholders for their approval at ~~our next~~an annual meeting. The plan provides for the issuance of up to 25 million options of which not more than 22 million can be incentive stock options.

~~All~~Three of our ~~officers and~~ directors currently hold the same positions with our former subsidiary, Worlds Online ~~Inc,~~Inc. (currently named MariMed Inc.), although it is the intent that our current non-employee directors will only serve during a transition period not to exceed 12 months that transition has extended longer than initially anticipated. In addition, our CEO was the CEO of MariMed from inception in 2011 until July 20, 2017 when he was replace by another of our directors and our CFO was the CFO of MariMed from inception in 2011 until July 20, 2017. We do not have a compensation committee and all of our directors perform the function of a compensation committee, except that Mr. Kidrin, our president and CEO, does not participate in any deliberations with respect to his compensation and physically removes himself from the presence of the other directors while they deliberate over his compensation and bonuses. Accordingly, Mr. Kidrin, who is both our president and CEO and was a director of ~~Worlds Online~~MariMed Inc. until June 2019, and until July 20, 2017 was also its CEO and Mr. Fireman who is one of our directors and is a director of MariMed Inc. and its CEO since July 20, 2017 may be deemed to fall within the parameters of a compensation committee interlock. To address this situation, as described above, Mr. Kidrin recuses himself from all deliberations of the board with respect to his compensation.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS ON A POST REVERSE SPLIT (5:1) BASIS

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth as of March ~~20, 2016,~~23, 2020, certain information with respect to the beneficial ownership of Common Stock by (i) each Director, nominee and executive officer of us; (ii) each person who owns beneficially more than 5% of the common stock; and (iii) all Directors, nominees and executive officers as a group. The percentage of shares beneficially owned is based on there having been ~~120,193,050~~56,814,833 shares of common stock outstanding as of ~~March 20, 2016.~~such date.

(1) Unless stated otherwise, the business address for each person named is Worlds Inc., 11 Royal Road, Brookline, MA 02445.

(2) Calculated pursuant to Rule 13d-3(d) (1) of the Securities Exchange Act of 1934. Under Rule 13d-3(d), shares not outstanding which are subject to options, warrants, rights or conversion privileges exercisable within 60 days are deemed outstanding for the purpose of calculating the number and percentage owned by a person, but not deemed outstanding for the purpose of calculating the percentage owned by each other person listed. We believe that each individual or entity named has sole investment and voting power with respect to the shares of common stock indicated as beneficially owned by them (subject to community property laws where applicable) and except where otherwise noted.

(3) Includes ~~7.5~~8.5 million currently exercisable stock options and 1.5 million which are not currently exercisable.

~~(4) Includes 300,000 currently exercisable stock options and 300,000 options not currently exercisable.~~

(5) Consists of ~~300,000~~40,000 stock options which are currently exercisable and 100,000 stock options which are currently not ~~currently~~ exercisable.

(6) Consists of ~~350,000~~250,000 stock options ~~250,000 of~~ which are currently not exercisable.

(7) Does not include 100,000 options issuable as director compensation in 2019 and 2020.

(8) Includes 8,820,000 currently exercisable stock options and ~~100,000~~2,150,000 stock options that are currently not exercisable, but excludes 800,000 shares underlying stock options which are ~~not currently exercisable.~~

~~(7) Includes 8,750,000 currently exercisable stock options.~~owed but unissued.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

We are not currently subject to the requirements of any stock exchange or inter-dealer quotation system with respect to having a majority of “independent directors” although we believe that we meet that standard inasmuch as Messrs. Stolar, Fireman Toboroff and ~~Gildea~~Christos are “independent” and only Mr. Kidrin, by virtue of being our president and CEO, is not independent. Although we are not currently subject to such rule, the independence of our directors meets the definition of such term as contained in NASDAQ Rule 5605(a)(2).

We currently own ~~9.5%~~less than 1.5% of the outstanding common stock of our former wholly-owned subsidiary, ~~Worlds Online~~MariMed Inc., and it has ~~officers and~~ directors which mirror ours and its former and current CEOs are our directors, although it is the intent that our current non-employee directors will only serve during a transition period.

The following table represents the aggregate fees billed for professional audit services rendered toby the independent ~~auditor, L&L~~auditors, M&K CPAS ~~P.A.~~PLLC (“~~L&L”~~M&K”), for our audit of the annual financial statements for the years ended December 31, ~~2015~~2019 and ~~2014.~~ 2018. M&K was retained on December 12, 2018 afterthe Company was informed by L&L of its intent to resign for reason that it would not be able to comply with Section 10A of the Securities Exchange Act of 1934 and Section 203 of the Sarbanes-Oxley Act of 2002 which prohibit a registered public accounting firm from providing audit services to an issuer if the audit partner having primary responsibility for the audit, or the audit partner responsible for reviewing the audit, has performed audit services for that issuer in each of the five previous fiscal years of that issuer.L&L (then operating under its previous name) was retained as our auditor in 2007. Audit fees and other fees of auditors are listed as follows:

We do not have a standing audit committee, and the full Board performs all functions of an audit committee, including the pre-approval of all audit and non-audit services before we engage an accountant. All of the services rendered to us by M&K CPAS PLLC and L&L CPAS, P.A. were pre-approved by our Board of Directors.

We are presently working with our legal counsel to establish formal pre-approval policies and procedures for future engagements of our accountants. The new policies and procedures will be detailed as to the particular service, will require that the Board or an audit committee thereof be informed of each service, and will prohibit the delegation of pre-approval responsibilities to management. It is currently anticipated that our new policy will provide (i) for an annual pre-approval, by the Board or audit committee, of all audit, audit-related and non-audit services proposed to be rendered by the independent auditor for the fiscal year, as specifically described in the auditor's engagement letter, and (ii) that additional engagements of the auditor, which were not approved in the annual pre-approval process, and engagements that are anticipated to exceed previously approved thresholds, will be presented on a case-by-case basis, by the President, ~~or Controller,~~ for pre-approval by the Board or audit committee, before management engages the auditors for any such purposes. The new policy and procedures may authorize the Board or audit committee to delegate, to one or more of its members, the authority to pre-approve certain permitted services,provided that the estimated fee for any such service does not exceed a specified dollar amount (to be determined). All pre-approvals shall be contingent on a finding, by the Board, audit committee, or delegate, as the case may be, that the provision of the proposed services is compatible with the maintenance of the auditor's independence in the conduct of its auditing functions. In no event shall any non-audit related service be approved that would result in the independent auditor no longer being considered independent under the applicable rules and regulations of the Securities and Exchange Commission.

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

In accordance with the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


Delaware		22-1848316
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

Large Accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☒	Emerging growth company ☐

				Part I		Page #

Item 1			Business			3
	Item 1A			Risk Factors	8		7
	Item 1B			Unresolved Staff Comments			N/A
	Item 2	~~Properties~~	12	Properties			10
	Item 3			Legal Proceedings	12		10
	Item 4			Mine Safety Disclosures	12		11

				Part II
	Item 5			Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	13		12
	Item 6			Selected Financial Data			N/A
	Item 7			Management’s Discussion and Analysis of Financial Condition and Results of Operations	14		13
	Item 7A			Quantitative and Qualitative Disclosures About Market Risk			N/A
	Item 8			Financial Statements and Supplementary Data	18		17
	Item 9			Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	38		33
	Item 9A			Controls and Procedures	38		33
	Item 9B			Other Information	39		34

				Part III
	Item 10			Directors, Executive Officers and Corporate Governance			35
	Item 11			Executive Compensation			40
~~Item 11~~	~~Executive Compensation~~	43
Item 12			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	46		43
	Item 13			Certain Relationships and Related Transactions, and Director Independence	47		44
	Item 14			Principal Accountant Fees and Services	47		44
	Item 15			Exhibits and Financial Statements Schedules	49		46

Year Ended December 31, 2015:	High		Low
Year Ended December 31, 2019:					High		Low
First quarter	$	0.19	$	0.12	$	0.29	$	0.20
Second quarter	$	0.15	$	0.08	$	0.32	$	0.21
Third quarter	$	0.13	$	0.06	$	0.29	$	0.23
Fourth quarter	$	0.09	$	0.02	$	0.27	$	0.21

Year Ended December 31, 2014:	High		Low
First quarter	$	0.26	$	0.13
Second quarter	$	0.21	$	0.13
Third quarter	$	0.26	$	0.15
Fourth quarter	$	0.21	$	0.14

1.	~~Fact discovery to be completed by 2/1/16.~~
2.	~~Opening expert reports by 3/1/16.~~
3.	~~Rebuttal expert reports by 4/1/16.~~
4.	~~Expert discovery to be completed by 4/22/16.~~
5.	~~Dispositive/Daubert Motions to be filed by 5/20/16.~~
6.	~~Opposition to Dispositive/Daubert Motions to be filed by 6/20/16.~~
7.	~~Reply ISO Dispositive/Daubert Motions to be filed by 7/11/16.~~
8.	~~Hearing on Dispositive/Daubert Motions set for 7/20/16 at 2:00PM.~~
9.	~~Initial Pretrial Conference set for 9/29/16 at 2:00PM.~~

Year Ended December 31, 2018:	High		Low
First quarter	$	0.43	$	0.24
Second quarter	$	0.30	$	0.21
Third quarter	$	0.29	$	0.22
Fourth quarter	$	0.29	$	0.19

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights			Number of securities remaining available for future issuance under equity compensation plans	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by stockholders		9,050,000		$	0.40	15,950,000		11,140,000	$	0.21		13,860,000
Equity compensation plans not approved by stockholders		0		$	N/A	—		4,480,000	$	0.29		—
Total		9,050,000		$	0.40	15,950,000		16,620,000	$	0.23		13,860,000

CONTENTS


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	19	18

BALANCE SHEETS	20	19

STATEMENTS OF OPERATIONS	21	20

STATEMENT OF STOCKHOLDERS’ DEFICIT	22	21

STATEMENTS OF CASH FLOWS	23	22

NOTES TO FINANCIAL STATEMENTS	24	23

Worlds Inc.
Balance Sheets
December 31, 2019 and 2018

	Audited			Audited
	December 31, 2019			December 31, 2018

ASSETS:
Current Assets
Cash and cash equivalents	$	1,570,844		$	3,846,120

Total Current Assets		1,570,844			3,846,120

Convertible Note Receivable – related party		200,000			—
Accrued interest receivable		3,033			—
Total assets	$	1,773,877		$	3,846,120


LIABILITIES AND STOCKHOLDERS' DEFICIT:
Current Liabilities
Accounts payable	$	840,674		$	797,908
Accrued expenses		1,604,911			2,120,075
Notes payable exceeding statute of limitations		773,279			773,279
Notes Payable		—			600,000
Notes Payable - related party		—			150,000
Total Current Liabilities		3,218,864			4,441,262

Total Liabilities		3,218,864			4,441,262

Common stock (Par value $0.001 authorized 250,000,000 shares, issued and outstanding 56,814,833 shares at December 31, 2019 and at December 31, 2018, reflecting the reverse split, respectively)		56,815			56,815
Additional paid in capital		40,897,142			40,512,516
Common stock-warrants		1,206,913			1,206,913
Accumulated deficit		(43,605,857	)		(42,371,386	)
Total stockholders deficit		(1,444,987	)		(595,142	)

Total Liabilities and stockholders' deficit	$	1,773,877		$	3,846,120


The accompanying notes are an integral part of these financial statements

Worlds Inc.
Balance Sheets
December 31, 2015 and December 31, 2014
	Audited			Audited
	December 31, 2015			December 31, 2014

ASSETS:
Current Assets
Cash and cash equivalents	$	26,298		$	27,661

Total Current Assets		26,298			27,661

Total assets	$	26,298		$	27,661


LIABILITIES AND STOCKHOLDERS' DEFICIT:
Current Liabilities
Accounts payable	$	797,908		$	797,908
Accrued expenses		2,335,074			2,287,977
Due to related party		36,310			9,416
Derivative liability		415,706			426,591
Notes payable - related party		50,000			50,000
Notes payable		773,279			773,279
Notes payables		410,000			275,000
Convertible notes payable (net of $21,000 and $13,822 discount at December 31, 2015 and 2014, respectively)		349,500			11,803

Total Current Liabilities		5,167,777			4,631,973


Stockholders' (Deficit)

Common stock (Par value $0.001 authorized 150,000,000 shares, issued and outstanding 120,193,050 and 96,851,941 at December 31, 2015 and December 31, 2014, respectively)		120,193			96,852
Common stock subscribed but not yet issued 750,000 and 0 at December 31, 2015 and December 31, 2014, respectively)		750			—
Additional paid in capital		34,908,856			31,409,427
Common stock - warrants		97,869			97,869
Accumulated deficit		(40,245,826	)		(36,208,461	)
Total stockholders deficit		(5,141,478	)		(4,604,312	)

Total Liabilities and stockholders' deficit	$	26,298		$	27,661

The accompanying notes are an integral part of these financial statements

Worlds Inc.
Statements of Operations
For the Year Ended December 31, 2019 and 2018

	Audited			Audited
	December 31,			December 31,
	2019			2018
Revenues
Revenue	$	—		$	—

Total Revenue		—			—


Cost and Expenses

Cost of Revenue		—			—

Gross Profit/(Loss)		—			—


Warrant expense		—			1,211,403
Option expense		309,783			415,383
Selling, General & Admin.		630,655			971,085
Salaries and related		214,208			295,804

Operating loss		(1,154,646	)		(2,893,675	)


Other Income (Expense)
Gain on sale of marketable securities		—			4,692,990
Interest income		3,033			—
Interest expense		(82,858	)		(45,000	)
Net Income/(Loss)	$	(1,234,471	)		1,754,315

Weighted Average Income/(Loss) per share - basic	$	(0.02	)		0.03
Weighted Average Income/(Loss) per share - fully diluted		(0.02	)		0.03
Weighted Average Common Shares Outstanding (reflecting the reverse stock split) - basic		56,814,833			53,172,203
Weighted Average Common Shares Outstanding (reflecting the reverse stock split) - fully diluted		56,814,833			57,652,203


The accompanying notes are an integral part of these financial statements

Worlds Inc.
Statement of Stockholders' Deficit
For the Years Ended December 31, 2018 and 2019

												Total
	Common		Common		Additional		Common		Accumulated			stockholders'
	stock		stock		Paid-in		Stock		Deficit			equity
	Shares		Amount		capital		Warrants					(deficit)

Balances, December 31, 2017		49,354,666		49,355		37,918,817		1,206,913		(44,125,701	)		(4,950,616	)

Exercise of warrants to common stock		7,000,000		7,000		2,207,420		—		—			2,214,420
Issuance of stock options		—		—		287,367		—		—			287,367
Issuance of common stock for services rendered		460,000		460		98,912		—		—			99,372
Misc. additional shares due to reverse split rounding		167		—		—		—		—			—
Net Income		—		—		—		—		1,754,315			1,754,315

Balances, December 31, 2018		56,814,833		56,815		40,512,516		1,206,913		(42,371,386	)		(595,142	)

Stock options expense		—		—		309,783		—		—			309,783
Imputed Interest		—		—		74,843		—		—			74,843
Net Income		—		—		—		—		(1,234,471	)		(1,234,471	)

Balances, December 31, 2019		56,814,833		56,815		40,897,142		1,206,913		(43,605,857	)		(1,444,987	)


The accompanying notes are an integral part of these financial statements

Worlds Inc.
Statements of Operations
Years Ended December 31, 2015 and 2014
	Audited			Audited
	2015			2014

Revenues
Revenue	$	—		$	—

Total Revenue		—			—

Cost and Expenses

Cost of Revenue		—			—

Gross Profit/(Loss)		—			—

Option Expense		47,007			66,451
Bad debt expense					2,000
Common Stock issued for services rendered		110,400			75,908
Selling, General & Admin.		387,625			455,613
Salaries and related		225,025			215,872
Operating loss		(700,057	)		(815,844	)

Other Income (Expense)
Loss on settlement of convertible notes		(2,313,151	)		—
Gain (Loss) on change in fair value of derivative liability		(761,722	)		199,102
Impairment loss on intangible asset		—			(7,000	)
Interest Expense		(61,935	)		(358,835	)
Debt issuance expense		(130,500	)		—
Net Income/(Loss)	$	(4,037,365	)	$	(982,577	)

Weighted Average Loss per share	$	(0.04	)	$	(0.01	)
Weighted Average Common Shares Outstanding		111,597,071			95,756,447

The accompanying notes are an integral part of these financial statements

Worlds Inc.
Statement of Stockholders' Deficit
For the Years Ended December 31, 2015 and 2014
											Common		Common
											Shares		Stock									Total
	Common		Common		Additional		Common				Subscribed		Subscribed									stockholders'
	stock		stock		Paid-in		stock		Subscription		but not		but not			Deferred			Accumulated			equity
	Shares		Amount		capital		Warrants		Receivable		Issued		Issued			compensation			Deficit			(deficit)

Balances, December 31, 2013		93,209,823	$	93,210	$	30,287,412	$	97,869	$	—		—	$	(0	)	$	(12,609	)	$	(35,225,884	)	$	(4,760,002	)

Conversion of note payable to common stock		3,128,592		3,129		421,246																	424,375
Issuance of common stock for services rendered		450,000		450		62,850																	63,300
Stock issued for accrued expense		63,526		64		9,561																	9,625
Adjustment to derivative liability for value of conversion						561,907																	561,907
Amortization of Deferred Compensation																	12,609						12,609
Issuance of stock options						66,451																	66,451
Net loss																				(982,577	)		(982,577	)
Balances, December 31, 2014		96,851,941	$	96,852	$	31,409,427	$	97,869	$	—		—	$	—		$	—		$	(36,208,461	)	$	(4,604,312	)

Conversion of note payable to common stock		6,746,356		6,746		143,254																	150,000
Issuance of common stock for services rendered		804,000		804		108,846						750,000		750									110,400
Stock issued for accrued expense		182,057		182		24,324																	24,506
Adjustment to derivative liability for value of conversion						202,633																	202,633
Settlement of convertible notes		15,608,696		15,609		2,950,044																	2,965,653
Issuance of stock options						47,007																	47,007
Net loss																				(4,037,365	)		(4,037,365	)
Balances, December 31, 2015		120,193,050	$	120,193	$	34,885,535	$	97,869	$	—		750,000	$	750		$	—		$	(40,245,826	)	$	(5,141,478	)

The accompanying notes are an integral part of these financial statements

Worlds Inc.
Statements of Cash Flows
Year Ended December 31, 2019 and 2018

	Audited			Audited
	12/31/19			12/31/18
Cash flows from operating activities:
Net gain/(loss)	$	(1,234,471	)	$	1,754,315
Adjustments to reconcile net loss to net cash (used in) operating activities
Fair value of stock options issued		309,783			415,383
Imputed interest		74,843			—
Fair value of warrants issued		—			1,211,403
Fair value of shares issued for services		—			99,372
Realized gain on sale of marketable securities		—			(4,692,990	)
Accounts payable and accrued expenses		(472,398	)		(693,580	)
Due from/to related party		—			15,998
Net cash (used in) operating activities:		(1,322,243	)		(1,890,099	)

Cash flows from investing activities:
Convertible note receivable - related party		(200,000	)		—
Accrued interest receivable - related party		(3,033	)		—
Cash received from sale of marketable securities		—			4,692,990
Cash provided from (used in) investing activities:		(203,033	)		4,692,990

Cash flows from financing activities
Repayment of notes payable		(600,000	)		—
Repayent of notes payable related party		(150,000	)		—
Proceeds from exercise of warrants		—			875,000
Net cash provided by (used in) financing activities		(750,000	)		875,000

Net increase/(decrease) in cash and cash equivalents		(2,275,276	)		3,677,891

Cash and cash equivalents, including restricted, beginning of year		3,846,120			168,229

Cash and cash equivalents, including restricted, end of period	$	1,570,843		$	3,846,120

Non-cash financing activities		—			—


Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest	$	—		$	—
Income taxes	$	—		$	—

The accompanying notes are an integral part of these financial statements

Worlds Inc.
Statements of Cash Flows
Year Ended December 31, 2015 and 2014
	Audited			Audited
	12/31/15			12/31/14
Cash flows from operating activities:
Net (loss)	$	(4,037,365	)	$	(982,577	)
Adjustments to reconcile net loss to net cash (used in) operating activities
Loss on settlement of convertible notes		2,313,151			—
Fair value of stock options issued		47,007			66,451
Common stock issued for services rendered		110,400			75,908
Amortization of discount to note payable		144,322			318,642
Bad debt expense		—			2,000
Impairment loss on intangible expense		—			7,000
Changes in fair value of derivative liabilities		761,722			(199,102	)
Accounts payable and accrued expenses		153,504			310,876
Due from/to related party		26,894			305,328
Net cash (used in) operating activities:		(480,365	)		(95,473	)

Cash flows from financing activities
Proceeds from issuance of note payable		110,000			50,000
Proceeds from issuance of note payable - related party					50,000
Proceeds from convertible note payable		369,000			—
Cash contribution		—			1,000
Net cash provided by financing activities		479,000			101,000

Net increase/(decrease) in cash and cash equivalents		(1,365	)		5,527

Cash and cash equivalents, including restricted, beginning of year		27,661			22,132

Cash and cash equivalents, including restricted, end of period	$	26,298		$	27,661

Non-cash financing activities
Issuance of 15,608,696 shares of common stock to retire notes payable and warrant		629,181			—
Issuance of 6,746,356 shares of common stock to retire convertible notes payable		150,000			—
Issuance of 182,057 shares of Common stock to retire accrued expense		24,506
Converting 25,000 of accrued expense to promissory note		25,000

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

Notes payable at December 31, 2019 consist of the following:
Unsecured note payable bearing 8% interest,
entire balance of principal and unpaid interest due on demand	$	124,230
Unsecured note payable bearing 10% interest,
entire balance of principal and unpaid interest due on demand	$	649,049
Total notes	$	773,279
2019	$	773,279
2020	$	-0-
2021	$	-0-
2022	$	-0-
2023	$	-0-
	$	773,279

Notes payable at December 31, 2015 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	$	410,000
Notes Payable - related party	$	50,000
Total current	$	1,233,279

2015	$	1,233,279
2016	$	-0-
2017	$	-0-
2018	$	-0-
2019	$	-0-
	$	1,233,279

	September 30, 2015
Debt discount as of December 31, 2014	$	13,822
Debt issuance cost during 2015		(151,500	)
Amortization due to settlement		(13,822	)
Amortization of debt issuance cost during 2015		(130,500	)
Debt discount as of December 31, 2015	$	21,000

	Derivative Liabilities
Fair value at the commitment date-November 8, 2015	$	446,282
Fair value mark to market adjustment		(18,698	)
Reclassified to Additional paid in capital due to conversion		(202,633	)
Balances as of December 31, 2015		224,951

	Commitment Date		Remeasurement Date
Expected dividends		0%		0%
Expected volatility		183%		183%
Expected term		0.5 years		0.45years
Risk free interest rate		0.34%		0.49%

	~~(i)~~	~~Various restrictive provisions of the Securities Purchase Agreement and the Class C Senior Secured Convertible Notes were either eliminated by amendment or waived;~~
	~~(ii)~~	the related warrants, initially exercisable into an aggregate of 4,535,714 shares of Common Stock at an initial exercise price of $0.50, were exchanged for new warrants, initially exercisable into an aggregate of 4,535,714 shares of Common Stock at an initial exercise price of $1.00; and
	~~(iii)~~	the Series A and B Senior Secured Convertible Notes, with an aggregate original principal amount of $1,950,000, were exchanged for an aggregate of 7 million shares of our common stock and the payment by the Company to such holders of an aggregate of approximately $1,951,400 (the remaining cash amount held in a control account pursuant to the terms and conditions of the Series A and B Senior Secured Convertible Notes)

Grant Date		Fair Value		Term (Years)		Assumed Conversion Price		Market Price on Grant Date		Volatility Percentage			Risk-free Rate
	3/20/2013	$	546,119		3.0	$	0.326	$	0.465		238	%		0.0038

	Derivative Liabilities
Fair value at the commitment date - November 8, 2015	$	468,814
Fair value mark to market adjustment		(278,059	)
Balances as of December 31, 2015		190,755

Stock Warrants and Options
Stock warrants/options outstanding and exercisable on December 31, 2015 are as follows:

Exercise Price per Share		Shares Under Option/warrant		Remaining Life in Years

	Outstanding
$	0.19		200,000		2.00
$	0.155		200,000		3.00
$	0.14		250,000		3.00
$	0.115		300,000		1.75
$	0.11		300,000		4.50
$	0.03		300,000		4.50
$	0.070		7,500,000		1.75
$
	Exercisable
$	0.19		200,000		2.00
$	0.155		200,000		3.00
$	0.14		250,000		3.00
$	0.115		300,000		1.75
$	0.070		7,500,000		1.75

~~Net operating loss carry forwards~~	$	~~$15,695,872~~
~~Valuation allowance~~		~~($15,695,872~~	)

~~Net deferred tax asset~~	$	—

	2019			2018
Net operating loss carry forwards		16,954,008			16,552,502
Valuation allowance		(16,954,008	)		(16,552,502	)

Net deferred tax asset		-			-

Name		Age		Position
Thomas Kidrin	63		67	President, Chief Executive Officer, Secretary, Treasurer, Director
Christopher J. Ryan	55		59	Vice President-Finance, Principal Accounting and Chief Financial Officer
Bernard Stolar	69		73	Director
Robert Fireman	67		71	Director
~~Edward Gildea~~Peter N. Christos	63		62	Director
Leonard Toboroff			90	Director

SUMMARY COMPENSATION TABLE (1)(2)	SUMMARY COMPENSATION TABLE (1)(2)														SUMMARY COMPENSATION TABLE (1)(2)
Name and principal position (a)		Year (b)		Salary ($) (c)		Bonus ($) (d)	Stock Awards ($) (e)	Option Awards ($) (f)	Securities underlying options (g)		All Other Compensation ($) (i)		Total ($) (j)			Year (b)		Salary ($) (c)			Bonus ($) (d)	Stock Awards ($) (e)	Option Awards ($) (f)		Securities underlying options (g)	All Other Compensation ($) (i)		Total ($) (j)

Thomas Kidrin President and CEO		2015	$	91,578	(3)							$	91,578	(3)			2019	$	295,375	(3)			$	0			$	295,375	(3)
		2014	$	125,482								$	125,482				2018	$	857,386	(3)			$	1,241,868			$	2,099,254	(3)

Chris Ryan, CFO		2015						31,244		$	10,000	$	41,244				2019	$	35,000	(4)			$	0			$	35,000
		2014															2018	$	45,000	(4)			$	0			$	45,000

Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plans Awards: Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price		Option Expiration Date	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plans Awards: Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price		Option Expiration Date

Thom Kidrin		7,500,000		0		0	$	0.070	09-30-17		5,000,000		0		0	$	0.15	09-30-22

Thom Kidrin											3,500,000		1,500,000		0	$	0.25	08-27-23
Christopher Ryan		300,000		0		0	$	0.115	09-30-17		220,000		0		0	$	0.15	09-30-22
Christopher Ryan				300,000			$	0.110	06-29-20		60,000		0		0	$	0.55	06-29-20

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	Option Awards ($) (1)	All Other Compensation ($)	Total ($)	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($) (1)		All Other Compensation ($)	Total ($)

Bernard Stolar	0	0	10,462		10,462		0		0		0		$0
Robert Fireman	0	0	10,462		10,462		0		0		0		$0
Edward Gildea	0	0	10,462		10,462		0		0		0		$0
Leonard Toboroff							0		0		0		$0
Peter N.Christos							0		0		0		$0

Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options(#) Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date

Thom Kidrin											3,500,000		1,500,000		0	$	0.25	08-28-23
Thom Kidrin		7,500,000		0		0	$	0.070	09-30-17		5,000,000		0		0	$	0.15	09-30-22
Christopher Ryan		300,000		0		0	$	0.115	09-30-17		220,000		0		0	$	0.15	09-30-22
Christopher Ryan											60,000		0		0	$	0.55	06-29-20

Name & Address of Beneficial Owner(1)	Amount & Nature of Beneficial Owner	% of Class(2)	Amount & Nature of Beneficial Owner				% of Class(2)

Thomas Kidrin	12,990,000(3)	10.3%		11,000,000		(3)		16.5	%
Christopher Ryan	1,669,076 (4)	1.4%		653,252		(4)		1.1	%
Robert Fireman	664,484 (5)	*		140,000		(5)(7)		*
Bernard Stolar	400,000(5)	*		140,000		(5)(7)		*
Edward Gildea	350,000(6)	*
Steven Chrust	6,023,661	5.1%
Leonard Toboroff				250,000		(6)(7)		*
Peter N. Christos					250,000	(6)(7)	*

All directors and executive officers as a group (one person)	16,073,560 (7)			12,433,252		(8)

Year Ended December 31	2015			2014		2019				2018
		L&L			L&L		M&K			M&K/L&L

Audit Fees (1)	$	26,500	(2)	$	26,500		$	12,500	(2)	$	12,500
Audit-Related Fees (3)		15,000			15,000			10,500			10,500
Tax Fees (4)	$	1,500		$	1,500			—		$	1,500
All Other Fees (5)		—			—			—			—
Total Accounting Fees and Services	$	43,000		$	43,000		$	23,000		$	24,500