Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 17, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | WORLDS INC | |
Entity File Number | 000-24115 | |
Entity Central Index Key | 0000001961 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Is Entity Emerging Growth Company? | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 56,814,833 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 |
Balance Sheets
Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash and cash equivalents | $ 1,932,708 | $ 3,846,120 |
Total Current Assets | 1,932,708 | 3,846,120 |
Total Assets | 1,932,708 | 3,846,120 |
Current Liabilities | ||
Accounts payable | 813,980 | 797,908 |
Accrued expenses | 1,571,018 | 1,790,451 |
Accrued expenses related party | 63,714 | 329,624 |
Notes payable exceeding statue of limitations | 773,279 | 773,279 |
Notes payable | 600,000 | |
Notes payable - related party | 150,000 | |
Total Current Liabilities | 3,221,991 | 4,441,262 |
Total Liabilities | 3,221,991 | 4,441,262 |
Stockholders (Deficit) | ||
Common stock (Par value $0.001 authorized 250,000,000 shares, issued and outstanding 56,814,833 at September 30, 2019 and December 31, 2018, respectively) | 56,815 | 56,815 |
Additional paid in capital | 40,820,219 | 40,512,516 |
Common stock-warrants | 1,206,913 | 1,206,913 |
Accumulated deficit | (43,373,230) | (42,371,386) |
Total stockholders deficit | (1,289,283) | (595,142) |
Total Liabilities and stockholders deficit | $ 1,932,708 | $ 3,846,120 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 250,000,000 | 250,000,000 |
Common Stock, shares issued | 56,814,833 | 56,814,833 |
Common Stock, shares outstanding | 56,814,833 | 56,814,833 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues | ||||
Revenue | ||||
Total Revenue | ||||
Cost and Expenses | ||||
Cost of Revenue | ||||
Gross Profit/(Loss) | ||||
Warrant expense | 1,339,420 | |||
Options expense | 253,232 | 1,316,380 | 307,703 | 1,316,380 |
Selling, General & Admin. | 178,091 | 246,176 | 524,763 | 693,947 |
Salaries and related | 59,098 | 63,640 | 161,363 | 204,560 |
Operating loss | (490,421) | (1,626,196) | (993,829) | (3,554,307) |
Other Income (Expense) | ||||
Gain on sale of marketable securities | 1,678,288 | 3,017,790 | ||
Interest Expense | (11,343) | (8,015) | (33,658) | |
Net Income/ (Loss) | $ (490,421) | $ 40,749 | $ (1,001,844) | $ (570,175) |
Weighted Average Loss per share - basic | $ (0.01) | $ (0.02) | $ (0.01) | |
Weighted Average Loss per share - fully diluted | $ (0.01) | $ (0.02) | $ (0.01) | |
Weighted Average Common Shares Outstanding (refelecting the reverse stock split) - basic | 56,814,833 | 56,631,137 | 56,814,833 | 51,944,650 |
Weighted Average Common Shares Outstanding (reflecting the reverse stock split) - fully diluted | 56,814,833 | 69,851,137 | 56,814,833 | 51,944,650 |
Shareholders Equity (Unaudited)
Shareholders Equity (Unaudited) - USD ($) | Common Stock | Additional Paid-In Capital | Common Stock Warrants | Retained Earnings / Accumulated Deficit | Total |
Beginning Balance, shares at Dec. 31, 2017 | 49,354,666 | ||||
Beginning Balance, amount at Dec. 31, 2017 | $ 49,355 | $ 37,918,817 | $ 1,206,913 | $ (44,125,701) | $ (4,950,616) |
Exercise of warrants to common stock, shares | 7,000,000 | ||||
Exercise of warrants to common stock, amount | $ 7,000 | $ 2,207,420 | $ 2,214,420 | ||
Issuance of shares for accounts payable, shares | 460,000 | ||||
Issuance of shares for accounts payable, amount | $ 460 | $ 98,912 | 99,374 | ||
Issuance of stock options | $ 1,335,008 | $ 1,335,008 | |||
Misc. additional shares due to reverse split rounding | 167 | ||||
Fair value of stock options | |||||
Net Income/(loss) | $ (570,175) | $ (570,175) | |||
Ending Balance, shares at Sep. 30, 2018 | 56,814,833 | ||||
Ending Balance, amount at Sep. 30, 2018 | $ 56,815 | $ 41,560,157 | $ 1,206,913 | $ (44,695,876) | $ (1,871,989) |
Beginning Balance, shares at Dec. 31, 2018 | 56,814,833 | ||||
Beginning Balance, amount at Dec. 31, 2018 | $ 56,815 | $ 40,512,516 | $ 1,206,913 | $ (42,371,386) | $ (595,142) |
Exercise of warrants to common stock, shares | |||||
Exercise of warrants to common stock, amount | |||||
Issuance of shares for accounts payable, shares | |||||
Issuance of shares for accounts payable, amount | |||||
Issuance of stock options | |||||
Misc. additional shares due to reverse split rounding | |||||
Fair value of stock options | $ 307,703 | $ 307,703 | |||
Net Income/(loss) | $ (1,001,844) | $ (1,001,844) | |||
Ending Balance, shares at Sep. 30, 2019 | 56,814,833 | ||||
Ending Balance, amount at Sep. 30, 2019 | $ 56,815 | $ 40,820,219 | $ 1,206,913 | $ (43,373,230) | $ (1,289,283) |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net gain/(loss) | $ (1,001,844) | $ (570,175) |
Adjustments to reconcile net (loss) to net cash (used in) operating activities | ||
Realized gain on sale of marketable securities | 3,017,790 | |
Fair value of warrants issued | 1,339,420 | |
Fair value of stock options issued | 307,703 | 1,335,008 |
Accounts payable and accrued expenses | (469,271) | (595,184) |
Due from/to related party | (5,000) | |
Net cash provided by/(used in) operating activities: | (1,163,412) | 4,521,859 |
Cash flows from investing activities | ||
Cash received from sale of marketable securities | (3,017,790) | |
Net cash (used in) investing activities | (3,017,790) | |
Cash flows from financing activities | ||
Repayment of notes payable | (600,000) | |
Repayment of notes payable - related party | (150,000) | |
Proceeds from exercise of warrants | 875,000 | |
Issuance of common stock as payment for account payable | 99,374 | |
Net cash provided by/(used in) financing activities | (750,000) | 974,374 |
Net increase/(decrease) in cash and cash equivalents | (1,913,412) | 2,478,443 |
Cash and cash equivalents, including restricted, beginning of year | 3,846,120 | 168,229 |
Cash and cash equivalents, including restricted, end of period | 1,932,708 | 2,646,672 |
Supplemental disclosure of cash flow information: | ||
Interest | 189,118 | |
Income taxes |
NOTE 1 - DESCRIPTION OF BUSINES
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF ACCTING POLICIES | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF ACCTING POLICIES | NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF ACCOUNTING POLICIES Description of Business On May 16, 2011, the Company transferred, through a spin-off to its then wholly owned subsidiary, Worlds Online Inc. (currently called MariMed Inc.), Basis of Presentation The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("US GAAP"). The Company 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. As the Company has focused its attention on increasing its patent portfolio and enforcing it, the Company has been operating at a reduced capacity, with only one employee and using consultants to perform any additional work that may be required. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Cash and Cash Equivalents Cash and cash equivalents includes highly liquid money market instruments, which have original maturities of three months or less at the time of purchase. Revenue Recognition Effective 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 MariMed Inc. The Company’s sources of revenue after the 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. The Company recognizes revenue by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. Research and Development Costs Research and development costs are charged to operations as incurred. Property and Equipment Property and equipment are stated at cost. Depreciation is provided on a straight line basis over the estimated useful lives of the assets ranging from three to five years. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income. Maintenance and repairs are charged to expense in the period incurred. Impairment of Long Lived Assets The Company evaluates the recoverability of its fixed assets and other assets in accordance with section 360-10-15 of the FASB Accounting Standards Codification for disclosures about Impairment or Disposal of Long-Lived Assets. Disclosure requires recognition of impairment of long-lived assets in the event the net book value of such assets exceeds its expected cash flows. If so, it is considered to be impaired and is written down to fair value, which is determined based on either discounted future cash flows or appraised values. The Company adopted the statement on inception. No impairments of these types of assets were recognized during 2019 and 2018. Stock-Based Compensation The Company accounts for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. Income Taxes The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of operations in the period that includes the enactment date. ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. Notes Payable The Company has $773,279 in short term notes outstanding at September 30, 2019 and 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 had an additional $750,000 in short term notes outstanding at December 31, 2018. The Company paid off these notes during the first quarter and the balance is $0 at September 30, 2019. Comprehensive Income (Loss) The Company reports comprehensive income and its components following guidance set forth by section 220-10 of the FASB Accounting Standards Codification which establishes standards for the reporting and display of comprehensive income and its components in the financial statements. There were no items of comprehensive income (loss) applicable to the Company during the period covered in the financial statements. Loss Per Share Net loss per common share is computed pursuant to section 260-10-45 of the FASB ASC. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. As of September 30, 2019 and December 31, 2018, there were 11,140,000 options and 4,480,000 warrants outstanding whose effect is anti-dilutive and not included in diluted net loss per share for September 30, 2019 or for December 31, 2018. The options and warrants may dilute future earnings per share. Commitments and Contingencies The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. During 2000 the Company was involved in a lawsuit relating to unpaid consulting services. In April, 2001 a judgment against the Company was rendered for approximately $205,000. As of September 30, 2019, and 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. Risk and Uncertainties The Company is subject to risks common to companies in the technology industries, including, but not limited to, litigation, development of new technological innovations and dependence on key personnel. Off Balance Sheet Arrangements The Company does not have any off-balance sheet arrangements. Uncertain Tax Positions The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the year ended December 31, 2018. Fair Value of Financial Instruments The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value: • Level 1 - Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities. • Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. • Level 3 - Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. The carrying amounts of the Company’s financial assets and liabilities, such as cash, other receivables, accounts payable & accrued expenses, due to related party, notes payable and notes payables, approximate their fair values because of the short maturity of these instruments. The Company's convertible notes payable are measured at amortized cost. Warrant and option expense was measured by using level 3 valuation. Embedded Conversion Features The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion feature. Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based simple derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Recent Accounting Pronouncements The Company has reviewed all recently issued, but not yet effective, accounting pronouncements, and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations. In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases |
NOTE 2 - NOTES PAYABLE
NOTE 2 - NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
NOTE 2 - NOTES PAYABLE | NOTE 2 - NOTES PAYABLE Notes payable at September 30, 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 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. |
NOTE 3 - EQUITY
NOTE 3 - EQUITY | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
NOTE 3 - EQUITY | NOTE 3 - EQUITY 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 had to issue an additional 167 shares due to rounding. During the nine months ended September 30, 2019, the Company recorded an option expense of $307,703 representing the amortization of the value of the options issued in 2018 that have not yet vested. During the year ended December 31, 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 460,000 shares of the Company’s common stock as payment for services rendered, an aggregate value of $99,372. During the year ended December 31, 2018, the Company issued 5,500,000 options. 5,000,000 options were issued to Thom Kidrin, the Chief Executive Officer and President of the Company and 500,000 options were issued to Directors of the Company. The Company recorded an option expense of $368,728 in 2018 and $19,173 in the 1 st During the year ended December 31, 2018, the Company issued 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 purchase one share of common stock at a price of $0.325. The warrants expire in five years. The warrants can be exercised at any time within those five years. The Company recorded a warrant expense of $1,211,403 equal to the estimated fair value of the warrants at the date of issuance. The fair market value was calculated using the Black Scholes method assuming approximately 2.52% risk-free interest, 0% dividend yield, 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 nine months ended September 30, 2019, the Company recorded an option expense of $307,703, equal to the increase in estimated fair value of the unvested options at September 30, 2019. Stock Warrants and Options Stock warrants/options outstanding and exercisable on September 30, 2019 are as follows: Exercise Price per Share Shares Under Option/warrant Remaining Life in Years Outstanding $ 0.325 3,500,000 4.33 $ 0.15 5,220,000 3.00 $ 0.15 580,000 1.45 $ 0.05 200,000 3.20 $ 0.30 200,000 3.20 $ 0.55 60,000 0.75 $ 0.65 60,000 0.75 $ 0.25 5,000,000 3.92 $ 0.24 800,000 3.92 Exercisable $ 0.325 3,500,000 4.33 $ 0.15 5,220,000 3.00 $ 0.15 580,000 1.45 $ 0.05 200,000 3.20 $ 0.30 200,000 3.20 $ 0.55 60,000 0.75 $ 0.65 60,000 0.75 $ 0.25 2,000,000 3.92 $ 0.24 800,000 3.92 |
NOTE 4 - COMMITMENTS AND CONTIN
NOTE 4 - COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 4 - COMMITMENTS AND CONTINGENCIES | NOTE 4 - COMMITMENTS AND CONTINGENCIES The Company is committed to an employment agreement with its President and CEO, Thom Kidrin. The agreement, dated as of August 28, 2018, is for five years with a one-year renewal option held by Mr. Kidrin. The agreement provides for a base salary of $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 5 million shares of Worlds Inc. common stock at an exercise price of $0.25 per share, 2 million of which vested on August 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. |
NOTE 5 - RELATED PARTY TRANSACT
NOTE 5 - RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
NOTE 5 - RELATED PARTY TRANSACTIONS | NOTE 5 - RELATED PARTY TRANSACTIONS The Company paid $150,000 in notes payables with accrued interest to related parties during the first quarter of 2019. The Company paid $176,785 in accrued salary to the CEO, Thom Kidrin and paid $24,000 to the CFO, Chris Ryan over the nine months ended September 30, 2019. The balance in the accrued expense attributable to related parties is $63,714 and $329,624 at September 30, 2019 and December 31, 2018, respectively. |
NOTE 6 - PATENTS
NOTE 6 - PATENTS | 9 Months Ended |
Sep. 30, 2019 | |
Note 6 - Patents | |
NOTE 6 - PATENTS | NOTE 6 - PATENTS Worlds Inc. currently has nine patents, 6,219,045 - 7,181,690 - 7,493,558 – 7,945,856, - 8,082,501, – 8,145,998 – 8,161,383, – 8,407,592 and 8,640,028. On March 30, 2012, the Company filed a patent infringement lawsuit against Activision Bizzard Inc., Blizzard Entertainment Inc. and Activision Publishing Inc. in the United States District Court for the District of Massachusetts. Susman Godfrey LLP is lead counsel for the Company. The costs to prosecute those parties that the Company and our legal counsel believe to be infringing on said patents were capitalized under patents until a resolution is reached. There can be no assurance that the Company will be successful in its ability to prosecute its IP portfolio or that we will be able to acquire additional patents. |
NOTE 7 - SALE OF MARKETABLE SEC
NOTE 7 - SALE OF MARKETABLE SECURITIES | 9 Months Ended |
Sep. 30, 2019 | |
Marketable Securities [Abstract] | |
NOTE 7 - SALE OF MARKETABLE SECURITIES | NOTE 7 - SALE OF MARKETABLE SECURITIES When Worlds Inc. spun off Worlds Online Inc. in January 2011, the Company retained 5,936,115 shares of common stock in Worlds Online Inc. (now named MariMed Inc.). Those shares were retained on the books of the Company with a book value of $0. During the nine months ended September 30, 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 nine months ended September 30, 2019. |
NOTE 8 - ACCRUED EXPENSES
NOTE 8 - ACCRUED EXPENSES | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
NOTE 8 - ACCRUED EXPENSES | NOTE 8 – ACCRUED EXPENSES Accrued expenses is comprised of $174,500 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 $61,400 is related to accruals for recurring operating expenses. |
NOTE 9 - SUBSEQUENT EVENTS
NOTE 9 - SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
NOTE 9 - SUBSEQUENT EVENTS | NOTE 9 – SUBSEQUENT EVENTS 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 to be 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. Messrs. Kidrin, Toboroff, Christos and Ryan are Directors of CASH and Mr. Kidrin is the CEO and Mr. Ryan is the CFO of CASH. |
NOTE 1 - DESCRIPTION OF BUSIN_2
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF ACCTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business On May 16, 2011, the Company transferred, through a spin-off to its then wholly owned subsidiary, Worlds Online Inc. (currently called MariMed Inc.), the majority of its operations and related operational assets. The Company retained its patent portfolio which it intends to continue to increase and to more aggressively enforce against alleged infringers. |
Basis of Presentation | Basis of Presentation The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("US GAAP"). The Company 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. As the Company has focused its attention on increasing its patent portfolio and enforcing it, the Company has been operating at a reduced capacity, with only one employee and using consultants to perform any additional work that may be required. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents includes highly liquid money market instruments, which have original maturities of three months or less at the time of purchase. |
Revenue Recognition | Revenue Recognition Effective 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 MariMed Inc. The Company’s sources of revenue after the 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. The Company recognizes revenue by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. |
Research and Development Costs | Research and Development Costs Research and development costs are charged to operations as incurred. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation is provided on a straight line basis over the estimated useful lives of the assets ranging from three to five years. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income. Maintenance and repairs are charged to expense in the period incurred. |
Impairment of Long Lived Assets | Impairment of Long Lived Assets The Company evaluates the recoverability of its fixed assets and other assets in accordance with section 360-10-15 of the FASB Accounting Standards Codification for disclosures about Impairment or Disposal of Long-Lived Assets. Disclosure requires recognition of impairment of long-lived assets in the event the net book value of such assets exceeds its expected cash flows. If so, it is considered to be impaired and is written down to fair value, which is determined based on either discounted future cash flows or appraised values. The Company adopted the statement on inception. No impairments of these types of assets were recognized during 2019 and 2018. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. |
Income Taxes | Income Taxes The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of operations in the period that includes the enactment date. ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. |
Notes Payable | Notes Payable The Company has $773,279 in short term notes outstanding at September 30, 2019 and 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 had an additional $750,000 in short term notes outstanding at December 31, 2018. The Company paid off these notes during the first quarter and the balance is $0 at September 30, 2019. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) The Company reports comprehensive income and its components following guidance set forth by section 220-10 of the FASB Accounting Standards Codification which establishes standards for the reporting and display of comprehensive income and its components in the financial statements. There were no items of comprehensive income (loss) applicable to the Company during the period covered in the financial statements. |
Loss Per Share | Loss Per Share Net loss per common share is computed pursuant to section 260-10-45 of the FASB ASC. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. As of September 30, 2019 and December 31, 2018, there were 11,140,000 options and 4,480,000 warrants outstanding whose effect is anti-dilutive and not included in diluted net loss per share for September 30, 2019 or for December 31, 2018. The options and warrants may dilute future earnings per share. |
Commitments and Contingencies | Commitments and Contingencies The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. During 2000 the Company was involved in a lawsuit relating to unpaid consulting services. In April, 2001 a judgment against the Company was rendered for approximately $205,000. As of September 30, 2019, and 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. |
Risk and Uncertainties | Risk and Uncertainties The Company is subject to risks common to companies in the technology industries, including, but not limited to, litigation, development of new technological innovations and dependence on key personnel. |
Off Balance Sheet Arrangements | Off Balance Sheet Arrangements The Company does not have any off-balance sheet arrangements. |
Uncertain Tax Positions | Uncertain Tax Positions The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the year ended December 31, 2018. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value: • Level 1 - Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities. • Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. • Level 3 - Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. The carrying amounts of the Company’s financial assets and liabilities, such as cash, other receivables, accounts payable & accrued expenses, due to related party, notes payable and notes payables, approximate their fair values because of the short maturity of these instruments. The Company's convertible notes payable are measured at amortized cost. Warrant and option expense was measured by using level 3 valuation. |
Embedded Conversion Features | Embedded Conversion Features The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion feature. |
Derivative Financial Instruments | Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based simple derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company has reviewed all recently issued, but not yet effective, accounting pronouncements, and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations. In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases |
NOTE 2 - NOTES PAYABLE (Tables)
NOTE 2 - NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Notes payable | Notes payable at September 30, 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 |
NOTE 1 - DESCRIPTION OF BUSIN_3
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF ACCTING POLICIES (Details Narrative) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Short term notes outstanding | $ 773,279 | $ 773,279 |
Options | $ 11,140,000 | |
Warrants | 4,480,000 | |
Reserve for litigation | $ 205,000 |
NOTE 4 - COMMITMENTS AND CONT_2
NOTE 4 - COMMITMENTS AND CONTINGENCIES (Details Narrative) | Aug. 28, 2018USD ($)majorshareholders$ / sharesshares |
Term of employment agreement | majorshareholders | 5 |
Officer compensation | $ 200,000 |
Yearly increase | 10.00% |
Car allowance | $ 500 |
Annual bonus | 0.025 |
Additional bonus | $ 75,000 |
Pre-tax income range | 1.50 |
Pre-tax income range | 2 |
Llife insurance premium | $ 10,000 |
Option to purchase stock | shares | 5,000,000 |
Exercise price per share | $ / shares | $ 0.25 |
Death benefit | $ 2,000,000 |
Payment of base amount | 2.99 |
Restrictive convenants time | majorshareholders | 12 |
Additional bonus 1 | |
Additional bonus | $ 100,000 |
Pre-tax income range | 2.01 |
Pre-tax income range | 2.50 |
Additional bonus 2 | |
Annual bonus | 0.05 |
Additional bonus | $ 200,000 |
Pre-tax income | 2.51 |
NOTE 5 - RELATED PARTY TRANSA_2
NOTE 5 - RELATED PARTY TRANSACTIONS (Details Narrative) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Related Party Transactions [Abstract] | |
Repayments to related parties | $ 200,785 |
NOTE 7 - SALE OF MARKETABLE S_2
NOTE 7 - SALE OF MARKETABLE SECURITIES (Details Narrative) | Jan. 31, 2011shares |
Marketable Securities [Abstract] | |
Shares issued to spin off Company | 5,936,115 |
NOTE 2 - NOTES PAYABLE (Detail
NOTE 2 - NOTES PAYABLE (Details) | Sep. 30, 2019USD ($) |
Debt Disclosure [Abstract] | |
Entire balance of principal and unpaid interest due on demand 1 | $ 124,230 |
Entire balance of principal and unpaid interest due on demand 2 | 649,049 |
Promissory notes balance | 773,279 |
Total notes | 773,279 |
Notes payable due within 2019 | 773,279 |
Notes payable due within 2020 | 0 |
Notes payable due within 2021 | 0 |
Notes payable due within 2022 | 0 |
Notes payable due within 2023 | 0 |
Notes Payable Total | $ 773,279 |
NOTE 3 - EQUITY - Stock warrant
NOTE 3 - EQUITY - Stock warrant and option table (Details) | Sep. 30, 2018$ / sharesshares |
Outstanding (1) | |
Shares under options | shares | 3,500,000 |
Price per shares | $ / shares | $ 0.325 |
Remaining life in years | 4.33 |
Outstanding (2) | |
Shares under options | shares | 5,220,000 |
Price per shares | $ / shares | $ 0.15 |
Remaining life in years | 3 |
Outstanding (3) | |
Shares under options | shares | 580,000 |
Price per shares | $ / shares | $ 0.15 |
Remaining life in years | 1.45 |
Outstanding (4) | |
Shares under options | shares | 200,000 |
Price per shares | $ / shares | $ 0.05 |
Remaining life in years | 3.20 |
Outstanding (5) | |
Shares under options | shares | 200,000 |
Price per shares | $ / shares | $ 0.30 |
Remaining life in years | 3.20 |
Outstanding (6) | |
Shares under options | shares | 60,000 |
Price per shares | $ / shares | $ 0.55 |
Remaining life in years | 0.75 |
Outstanding (7) | |
Shares under options | shares | 60,000 |
Price per shares | $ / shares | $ 0.65 |
Remaining life in years | 0.75 |
Outstanding (8) | |
Shares under options | shares | 5,000,000 |
Price per shares | $ / shares | $ 0.25 |
Remaining life in years | 3.92 |
Outstanding (9) | |
Shares under options | shares | 800,000 |
Price per shares | $ / shares | $ 0.24 |
Remaining life in years | 3.92 |
Exercisable (1) | |
Shares under options | shares | 3,500,000 |
Price per shares | $ / shares | $ 0.325 |
Remaining life in years | 4.33 |
Exercisable (2) | |
Shares under options | shares | 5,220,000 |
Price per shares | $ / shares | $ 0.15 |
Remaining life in years | 3 |
Exercisable (3) | |
Shares under options | shares | 580,000 |
Price per shares | $ / shares | $ 0.15 |
Remaining life in years | 1.45 |
Exercisable (4) | |
Shares under options | shares | 200,000 |
Price per shares | $ / shares | $ 0.05 |
Remaining life in years | 3.20 |
Exercisable (5) | |
Shares under options | shares | 200,000 |
Price per shares | $ / shares | $ 0.30 |
Remaining life in years | 3.20 |
Exercisable (6) | |
Shares under options | shares | 60,000 |
Price per shares | $ / shares | $ 0.55 |
Remaining life in years | 0.75 |
Exercisable (7) | |
Shares under options | shares | 60,000 |
Price per shares | $ / shares | $ 0.65 |
Remaining life in years | 0.75 |
Exercisable (8) | |
Shares under options | shares | 2,000,000 |
Price per shares | $ / shares | $ 0.25 |
Remaining life in years | 3.92 |
Exercisable (9) | |
Shares under options | shares | 800,000 |
Price per shares | $ / shares | $ 0.24 |
Remaining life in years | 3.92 |