10-K: Worlds Inc. Reports Net Loss for 2024, Cites Ongoing Efforts to Monetize IP Assets

Worlds Inc. reports a net loss of $511,382 for the year ended December 31, 2024, as it focuses on monetizing its intellectual property and legacy virtual reality assets.

Summary

• Worlds Inc. reported a net loss of $511,382 for the year ended December 31, 2024, compared to a net income of $82,179 for the year ended December 31, 2023.
• The company's revenue was $0 for both 2024 and 2023.
• Selling, general, and administrative expenses increased by $74,466 to $175,917 in 2024.
• Salaries and related expenses increased by $43,971 to $259,555 in 2024.
• The company had interest expense of $75,910 in 2024.
• As of December 31, 2024, the company's cash and cash equivalents were $6,380.
• The company is focused on monetizing its collection of non-fungible tokens and legacy celebrity virtual reality worlds.
• The company owns 349,697 shares of MariMed Inc. common stock as of December 31, 2024.
• The company had approximately 606 shareholders of record as of December 31, 2024.
• The company has identified material weaknesses in its internal control over financial reporting.

Sentiment

Score: 3

Explanation: The document presents a negative outlook due to the company's net loss, low cash reserves, and material weaknesses in internal controls. The auditor's going concern warning further contributes to the negative sentiment.

Positives

• The company is actively seeking business partners to leverage its intellectual property.
• Worlds Inc. owns a significant number of shares in MariMed Inc.
• The company has net operating loss carryforwards that could reduce future tax liabilities.

Negatives

• The company experienced a significant net loss of $511,382 in 2024.
• Revenue remains at $0, indicating a lack of current operational income.
• Cash and cash equivalents are very low at $6,380.
• The company has a working capital deficiency of $3,653,545.
• Material weaknesses exist in the company's internal control over financial reporting.
• The company's auditor has raised substantial doubt about its ability to continue as a going concern.

Risks

• The company's ability to continue as a going concern is dependent on raising additional capital and implementing its business plan.
• The success of the company is dependent on its ability to monetize its IP assets, which is a relatively new and uncertain industry.
• The company may not have sufficient cash to fully develop its IP.
• The company is dependent on the services of its CEO, Thomas Kidrin.
• Possible issuances of capital stock could cause dilution to existing shareholders.
• The company's common stock is subject to 'penny stock' regulations, which may adversely impact liquidity and price.
• The company has identified material weaknesses in its internal control over financial reporting.

Future Outlook

The company anticipates that its sources of revenue will be from monetizing its collection of non-fungible tokens and its legacy celebrity virtual reality worlds, as well as from other applications of its technology that it may develop.

Management Comments

• 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.

Industry Context

The company is operating in the emerging market of non-fungible tokens and virtual reality, which is characterized by rapid technological changes and evolving consumer preferences. The company faces competition from other companies seeking to establish standardization of 3D usage on the Internet.

Comparison to Industry Standards

• It is difficult to compare Worlds Inc.'s performance to industry standards due to its unique business model and focus on monetizing legacy IP in the emerging NFT and VR space.
• Many companies in the technology sector are investing heavily in research and development, while Worlds Inc. has limited resources for this purpose.
• Unlike many of its peers, Worlds Inc. is not generating revenue from ongoing operations and is heavily reliant on external funding and potential monetization of its IP assets.
• MariMed Inc., the company's former subsidiary, operates in the cannabis industry, which has different financial and operational characteristics.

Corporate Governance

Legal Proceedings

• 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, 2024, and December 31, 2023, the Company recorded a reserve of $205,000 for this lawsuit, which is included in accrued expenses in the accompanying balance sheets.
• As part of the judgement on March 18, 2022, the Company was required to reimburse litigation fees in the amount of $ 17,780.

Related Party Transactions

• During the year ended December 31, 2023, Mr. Kidrin the CEO of the Company loaned to the Company $47,000 to cover operating expenses.
• The Company repaid Mr. Kidrin $20,000 in April of 2023 and $27,000 in November of 2023 with accrued interest of $1,742.
• The balance in the accrued expense attributable to related parties is comprised of accrued salary due the CEO based on an employment agreement for $228,077 and an accrued consulting fee to the CFO in the amount of $88,688 for a total of $316,765 at December 31, 2024.
• The balance in the accrued expense attributable to related parties is comprised of accrued salary due the CEO based on an employment agreement for $91,963 and an accrued consulting fee to the CFO in the amount of $56,188 for a total of $148,151 at December 31, 2023.

Stakeholder Impact

• Shareholders face the risk of further dilution if the company issues additional shares.
• Employees are subject to the risk of job insecurity due to the company's financial difficulties.
• Creditors face the risk of non-payment due to the company's limited cash reserves.
• The company's ability to innovate and compete in the market is limited by its financial constraints.

Next Steps

• The company will continue to seek business partners to leverage its intellectual property.
• The company will focus on monetizing its collection of non-fungible tokens and legacy celebrity virtual reality worlds.
• The company will attempt to raise additional capital to fund its operations and business plan.
• The company will need to address the material weaknesses in its internal control over financial reporting.

Key Dates

Keywords

non-fungible tokens, virtual reality, intellectual property, monetization, net loss, financial statements, Worlds Inc, MariMed Inc, NFTs, VR