x
|
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o
|
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
New Jersey
|
22-1848316
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(I.R.S.
Employer
Identification
No.)
|
Title of Each Class
|
Name
Of Each Exchange
On Which Registered
|
None
|
Not
Applicable
|
PART I | ||
Item
1
|
Business
|
4
|
Item
1A
|
Risk
Factors
|
10
|
Item
1B
|
Unresolved
Staff Comments
|
NA
|
Item
2
|
Properties
|
16
|
Item
3
|
Legal
Proceedings
|
16
|
Item
4
|
Submissions
of Matters to a Vote of Security Holders
|
16
|
|
||
PART
II
|
|
|
|
||
|
||
Item
5
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
17
|
Item
6
|
Selected
Financial Data
|
NA
|
Item
7
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
18
|
Item
7A
|
Quantitative
and Qualitative Disclosures About Market Risk
|
NA
|
Item
8
|
Financial
Statements
|
23
|
Item
9
|
Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosure
|
33
|
Item
9A(T)
|
Controls
and Procedures
|
33
|
Item
9B
|
Other
Information
|
33
|
PART
III
|
||
Item
10
|
Directors,
Executive Officers and Corporate Governance
|
34
|
Item
11
|
Executive
Compensation
|
37
|
Item
12
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
39
|
Item
13
|
Certain
Relationships and Related Transaction, and Director
Independence
|
40
|
Item
14
|
Principal
Accountant Fees and Services
|
40
|
Item
15
|
Exhibits
|
41
|
●
|
WorldsShaper:
WorldsShaper is the visual authoring component of our platform. It allows
for quick assembly of pieces to create multi-user, shared state, virtual
worlds. The WorldsShaper is an advanced compositing 3D building tool that
integrates pre-existing or custom content, such as 3D models, textures or
images created in Adobe's Photoshop, or midi or wave sound files, with
architectural geometry and interactive behaviors and actions written in
Java. The architectural building blocks for creating 3D worlds, the
flexibility and power of integrating professional modeling and imaging
tools, and the extensibility via Java make the WorldsShaper a tool
well-suited for rapid creation of 3D
environments.
|
●
|
WorldsBrowser:
WorldsBrowser is used to access the 3D environments. The browser is
optimized for speed, delivering relatively fast frame rates per second in
highly textured virtual 3D worlds.
|
●
|
WorldsPlayer™: The WorldsPlayer allows
users to view and experience our multi-user, interactive technology. Any
world created with the WorldsShaper will be viewable and navigable with
the WorldsPlayer. The WorldsPlayer has a high frame rate for fast, quality
graphics, an easy-to-use graphic user interface, 2D web browser
integration, automatic upgrade capability over the internet and a complete
communication tool set including text chat, voice-to-voice chat, e-mail
and animation.
|
●
|
Worlds
Gamma Libraries: The Worlds Gamma Libraries are composed of sample worlds,
textures, models, avatars, actions, sensors, sounds, motion sequences, and
other behaviors.
|
●
|
Producing
interactive multimedia 3D sites. We believe that music and entertainment
brands readily lend themselves to exploitation through web sites utilizing
our technology. We also believe that the highly graphic, interactive
nature of sites using our technology appeals to users drawn to music and
entertainment based sites, differentiates such sites from other non-3D
music and entertainment based sites and thereby encourages repeat
visitation. Because our technology allows for the creation of multiple
worlds accessible from a web site, it allows such sites to segregate users
of different tastes and
demographics.
|
●
|
Creating
effective offline distribution partnerships with recording artists and
their record companies. We are now actively seeking to enter into
alliances with recording artists and their record
companies
|
●
|
Creating
Brand Identity for Worlds.com. Public awareness of our site and products
is critical to our success. We are now actively seeking to build this
awareness by entering into co-branding arrangements with other
high-profile Internet companies and music and entertainment
companies.
|
●
|
Creating
Other Services Using Our Interactive 3D
Technology.
|
-
|
Music/entertainment
|
-
|
Publishing
|
-
|
Web
to Mobile interface
|
-
|
Hispanic
language markets
|
-
|
Eastern
Europe
|
-
|
Education
– Distant learning
|
-
|
Health
and rehabilitation
|
●
|
longer
operating histories and greater financial, technical, marketing and other
resources;
|
●
|
a
wider range of services and financial
products;
|
●
|
greater
name recognition and larger customer
bases;
|
●
|
more
extensive promotional activities;
and
|
●
|
cooperative
relationships among themselves and with third parties to enhance services
and products.
|
Year
Ended December 31, 2008:
|
High
|
Low
|
||||||
3/31/2008
|
$ | 0.45 | $ | 0.15 | ||||
6/30/2008
|
$ | 0.45 | $ | 0.20 | ||||
9/30/2008
|
$ | 0.40 | $ | 0.16 | ||||
12/31/2008
|
$ | 0.27 | $ | 0.11 | ||||
Year
Ended December 31, 2007:
|
High
|
Low
|
||||||
3/31/2007
|
$ | 0.001 | $ | 0.001 | ||||
6/30/2007
|
$ | 0.004 | $ | 0.004 | ||||
9/30/2007
|
$ | 0.008 | $ | 0.008 | ||||
12/31/2007
|
$ | 0.020 | $ | 0.015 |
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding
options
|
Weighted-average
exercise price of outstanding options
|
Number
of securities remaining available for future issuance under equity
compensation plans
|
|||||||||
2007
Stock Option Plan, not yet approved by stockholders
|
15,887,500
|
$
|
0.063
|
8,812,500
|
||||||||
Stock
option grants approved by stockholders
|
0
|
$
|
N/A
|
-
|
||||||||
Total
|
15,887,500
|
$
|
0.063
|
8,812,500
|
●
|
cost
of revenues; and
|
●
|
selling,
general and administration.
|
CONTENTS
|
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
24
|
BALANCE
SHEETS
|
25
|
STATEMENTS
OF OPERATIONS
|
26
|
STATEMENTS
OF CASH FLOWS
|
27
|
STATEMENT
OF STOCKHOLDERS’ DEFICIT
|
28
|
NOTES
TO FINANCIAL STATEMENTS
|
29-32
|
Worlds.com,
Inc.
|
||||||||
Balance
Sheets
|
||||||||
As
of December 31, 2008 and 2007
|
||||||||
2008
|
2007
|
|||||||
Current
Assets
|
||||||||
Cash
and cash equivalents
|
$ | 84 | $ | 271,334 | ||||
Certificate
of deposit
|
166,451 | - | ||||||
Deferred
costs
|
- | 55,695 | ||||||
Prepaid
expenses
|
- | 9,860 | ||||||
Total
Current Assets
|
166,535 | 336,889 | ||||||
Property
and equipment, net of accumulated depreciation
|
7,387 | 9,375 | ||||||
TOTAL
ASSETS
|
$ | 173,922 | $ | 346,264 | ||||
Liabilities
|
||||||||
Current
Liabilities
|
||||||||
Accounts
payable
|
$ | 19,300 | $ | 180,813 | ||||
Accrued
expenses
|
280,000 | 525,484 | ||||||
Deferred
revenue
|
631,950 | 631,950 | ||||||
Current
maturities notes payable
|
- | 773,281 | ||||||
Total
Current Liabilities
|
931,250 | 2,111,528 | ||||||
Stockholders'
(Deficit)
|
||||||||
Common
stock (Par value $.001, authorized 65,000,000 shares, issued and
outstanding 52,387,749 and 44,824,314 at December 31, 2008 and 2007,
respectively)
|
52,387 | 44,824 | ||||||
Common
stock subscribed but not yet issued (none and 5,411,764 common shares at
December 31, 2008 and 2007, respectively)
|
- | 5,411 | ||||||
Additional
paid in capital
|
21,858,603 | 21,140,760 | ||||||
Accumulated
deficit
|
(22,668,318 | ) | (22,956,259 | ) | ||||
Total
stockholders' deficit
|
(757,328 | ) | (1,765,264 | ) | ||||
Total
Liabilities and stockholders' deficit
|
$ | 173,922 | $ | 346,264 |
Worlds.com,
Inc.
|
|||||||||
Statements
of operations
|
|||||||||
For
the years ended December 31, 2008 and 2007
|
|||||||||
2008
|
2007
|
||||||||
Revenues
|
|||||||||
Revenue
|
$ | 92,549 | $ | 5,269 | |||||
Total
|
92,549 | 5,269 | |||||||
Cost
and Expenses
|
|||||||||
Cost
of Revenue
|
201,132 | 57,312 | |||||||
Selling
General & Administrative
|
590,690 | 510,958 | |||||||
Operating
loss
|
(699,273 | ) | (563,001 | ) | |||||
Other
Income/Expense
|
|||||||||
Interest
Income
|
1,451 | - | |||||||
Interest
Expense
|
|
- | (115,383 | ) | |||||
Financing
Fee
|
(20,000 | ) | - | ||||||
Gain
on Debt Forgiveness
|
|
1,005,763 | 2,740,751 | ||||||
Net
Income
|
$ | 287,941 | $ | 2,062,367 |
Worlds.com,
Inc.
|
||||||||
Statements
of Cash Flows
|
||||||||
For
the years ended December 31, 2008 and 2007
|
||||||||
2008
|
2007
|
|||||||
Cash
flows from operating activities
|
||||||||
Net
income
|
$ | 287,941 | $ | 2,062,367 | ||||
Adjustments
to reconcile net income to net cash used in
operating activities
|
||||||||
Depreciation
|
3,504 | - | ||||||
Common
stock issued for services rendered
|
31,098 | - | ||||||
Fair
value of stock options issued
|
85,292 | 296,506 | ||||||
Forgiveness
of notes payable
|
(650,683 | ) | (904,447 | ) | ||||
Deferred
costs
|
55,695 | (55,695 | ) | |||||
Prepaid
expenses and other current assets
|
9,860 | (9,860 | ) | |||||
Accounts
payable and accrued expenses
|
(406,997 | ) | (1,660,203 | ) | ||||
Net
cash used in operating activities
|
(584,291 | ) | (271,332 | ) | ||||
Cash
flows from investing activities
|
||||||||
Acquisition
of property and equipment
|
(1,516 | ) | (9,375 | ) | ||||
Net
cash used in investing activities
|
(1,516 | ) | (9,375 | ) | ||||
Cash
flows from financing activities
|
||||||||
Proceeds
from sale of common stock
|
481,007 | 550,000 | ||||||
Net
cash provided from investing activities
|
481,007 | 550,000 | ||||||
Net
increase (decrease) in cash
|
(104,800 | ) | 269,293 | |||||
Cash
beginning of year
|
271,334 | 2,041 | ||||||
Cash
end of year
|
$ | 166,534 | $ | 271,334 | ||||
Supplemental
disclosure of cash flow information:
|
||||||||
Cash
paid during the year for
|
||||||||
Interest
|
- | - | ||||||
Income
taxes
|
- | - | ||||||
Non-cash
financing activities:
|
||||||||
Conversion
of debt to equity
|
$ | 122,598 | $ | - |
Worlds.com,
Inc.
|
||||||||||||||||||||||||||||
Statement
of Stockholders' Deficit
|
||||||||||||||||||||||||||||
For
the Years Ending December 31, 2008 and 2007
|
||||||||||||||||||||||||||||
Common
|
Common
|
|||||||||||||||||||||||||||
Shares
|
Stock
|
Total
|
||||||||||||||||||||||||||
Additional
|
Subscriber
|
Subscriber
|
Accumulated
|
stockholders'
|
||||||||||||||||||||||||
Common
stock
|
Paid-in
|
but
not
|
but
not
|
Deficit
|
equity
|
|||||||||||||||||||||||
Shares
|
Amount
|
capital
|
Issued
|
Issued
|
(deficit)
|
|||||||||||||||||||||||
Balance,
January 1, 2007
|
33,824,314 | $ | 33,824 | $ | 20,146,723 | - | $ | - | $ | (25,018,626 | ) | $ | (4,838,079 | ) | ||||||||||||||
Equity
investment
|
11,000,000 | 11,000 | 539,000 | - | - | - | 550,000 | |||||||||||||||||||||
Conversion
of note payable
|
- | - | 69,589 | 411,764 | 411 | - | 70,000 | |||||||||||||||||||||
Conversion
of officer loan payable
|
- | - | 88,942 | 5,000,000 | 5,000 | - | 93,942 | |||||||||||||||||||||
Issuance
of options
|
- | - | 296,506 | - | - | 296,506 | ||||||||||||||||||||||
Net
Income for the year ended December 31, 2007
|
- | - | - | - | - | 2,062,367 | 2,062,367 | |||||||||||||||||||||
Balances,
December 31, 2007
|
44,824,314 | $ | 44,824 | $ | 21,140,760 | $ | 5,411,764 | $ | 5,411 | $ | (22,956,259 | ) | $ | (1,765,264 | ) | |||||||||||||
Issuance
of common stock previously subscribed in prior year
|
411,764 | 411 | - | (411,764 | ) | (411 | ) | - | - | |||||||||||||||||||
Issuance
of common stock previously subscribed in prior year
|
5,000,000 | 5,000 | - | (5,000,000 | ) | (5,000 | ) | - | - | |||||||||||||||||||
Conversion
of debt to equity
|
400,000 | 400 | 122,198 | - | - | - | 122,598 | |||||||||||||||||||||
Common
stock issued for services rendered
|
142,256 | 142 | 30,956 | - | - | - | 31,098 | |||||||||||||||||||||
Equity
investment
|
1,609,415 | 1,610 | 479,397 | - | - | - | 481,007 | |||||||||||||||||||||
Issuance
of stock options at fair value
|
- | - | 85,292 | - | - | 85,292 | ||||||||||||||||||||||
Net
Income for the year ended December 31, 2008
|
- | - | - | - | - | 287,941 | 287,941 | |||||||||||||||||||||
Balances,
December 31, 2008
|
52,387,749 | $ | 52,387 | $ | 21,858,603 | - | - | $ | (22,668,318 | ) | $ | (757,328 | ) |
Name
|
Age
|
Position
|
Thomas
Kidrin
|
56
|
President,
Chief Executive Officer, Secretary, Treasurer, Director
|
Christopher
J. Ryan
|
48
|
Vice
President- Finance, Principal Accounting and Chief Financial
Officer
|
Bernard
Stolar
|
62
|
Director
|
Jay
Coleman
|
58
|
Director
|
Robert
Fireman
|
60
|
Director
|
|
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
|
|
Compliance
with applicable governmental laws, rules and
regulations
|
|
The
prompt internal reporting of violations of the code to an appropriate
person or persons identified in the
code
|
|
Accountability
for adherence to the code
|
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)
|
Thomas
Kidrin
President
and CEO
|
2008
|
$200,000
|
0
|
0
|
0
|
0
|
$
|
|
2007
|
$71,100
|
0
|
0
|
$252,932
|
15,000,000
|
0
|
$324,032
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
|||||||||||||||||||
|
|
|||||||||||||||||||||||||
Thom
Kidrin
|
10,000,000 | 5,000,000 |
(1)
|
0 | $ |
0.05
|
08-31-12 |
(1)
|
The
balance vests on 8/31/09.
|
Name
|
Fees
Earned
or Paid
in Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)
(1)
|
All Other
Compensation
($)
|
Total
($)
|
||||||||||||
Jay
Coleman
|
0 | 0 | 892 | 892 | |||||||||||||
Robert
Fireman
|
0 | 0 | 0 | 0 | |||||||||||||
Bernard
Stolar
|
0 | 0 | 0 | 0 |
Name
& Address of Beneficial Owner(1)
|
Amount
& Nature of Beneficial Owner
|
%
of Class(2)
|
Thomas
Kidrin
|
11,290,000(3)
|
21.55%
|
Jay
Coleman
|
175,000(4)
|
0.3%
|
Robert
Fireman
|
150,000(4)
|
0.3%
|
Bernard
Stolar
|
150,000(4)
|
0.3%
|
All
directors and executive officers as a group (one person)
|
11,765,000(5)
|
22.46%
|
Year Ended December 31
|
2008
|
2007
|
|||||||||||
Bongiovanni
|
Bongiovanni
|
||||||||||||
Audit
Fees (1)
|
$
|
17,000
|
(3)
|
$
|
10,000
|
(2)
|
|||||||
Audit-Related
Fees (4)
|
--
|
||||||||||||
Tax
Fees (5)
|
$
|
5,000
|
7,000
|
||||||||||
All
Other Fees (6)
|
--
|
||||||||||||
Total
Accounting Fees and Services
|
$
|
22,000
|
$
|
17,000
|
(1)
|
Audit Fees. These are
fees for professional services for the audit of our annual financial
statements, and for the review of the financial statements included in our
filings on Form 10-QSB, and for services that are normally provided in
connection with statutory and regulatory filings or
engagements.
|
(3)
|
The
amounts shown for Bongiovanni in 2008 and 2007 relate to (i) the audit of
our annual financial statements for the years ended December 31, 2008 and
2007, and (ii) the review of the financial statements included in our
filings on Form 10-Q for the first, second and third quarters of 2008 and
2007.
|
(4)
|
Audit-Related Fees.
These are fees for the assurance and related services reasonably related
to the performance of the audit or the review of our financial
statements.
|
(5)
|
Tax Fees. These are
fees for professional services with respect to tax compliance, tax advice,
and tax planning.
|
(6)
|
All Other Fees. These
are fees for permissible work that does not fall within any of the other
fee categories, i.e., Audit Fees, Audit-Related Fees, or Tax
Fees.
|
3.1
|
Certificate
of Incorporation (a)
|
3.1.1
|
Certificate
of Amendment of the Certificate of Incorporation (b)
|
3.2
|
By-Laws
- Restated as Amended (c)
|
4.1
|
2007
Stock Option Plan (d)
|
10.1
|
Consulting
Agreement between the Registrant and SGC Advisory, Inc. (b)
|
14.1.
|
Code of Ethics (e)
|
31.1.
|
|
31.2.
|
|
32.1.
|
Section 1350 Certifications of Chief Executive Officer ** |
32.2.
|
(a)
|
Filed
previously as an exhibit to Registrant's Registration Statement No.
2-31876, and incorporated herein by
reference.
|
(b)
|
Filed
previously as an exhibit to Registrant's Annual Report on Form 10-KSB
filed on March 30, 2000, and incorporated herein by
reference.
|
(c)
|
Filed
previously as an exhibit to Registrant's Post-Effective Amendment No. 3 to
Registration Statement on Form SB-2 (File No. 333-10838), and incorporated
herein by reference.
|
(d)
|
Filed
previously as an exhibit to Registrant's Current Report on Form 8-K filed
on September 7, 2007, and incorporated herein by
reference.
|
(e)
|
Filed
previously as an exhibit to Registrant's Annual Report on Form 10-KSB
filed on April 3, 2008, and incorporated herein by
reference.
|
WORLDS.COM INC. | |||
(Registrant) | |||
Dated:
April 15, 2009
|
By:
|
/s/ Thomas Kidrin | |
Thomas Kidrin | |||
President and Chief Executive Officer | |||
Signatures
|
Title
|
Date
|
/s/
Thomas Kidrin
|
President,
Chief Executive Officer and Director
|
April
15, 2009
|
Thomas
Kidrin
|
|
|
|
||
/s/
Christopher J. Ryan
|
Vice
President - Finance and
|
April
15, 2009
|
Christopher
J. Ryan
|
Principal
Accounting and
|
|
|
Financial
Officer
|
|
/s/
Bernard Stolar
|
Director
|
April
15, 2009
|
Bernard
Stolar
|
||
/s/
Jay Coleman
|
Director
|
April
15, 2009
|
Jay
Coleman
|
||
/s/
Robert Fireman
|
Director
|
April
15, 2009
|
Robert
Fireman
|