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WORLDS ONLINE INC. - 10-Q/A - Management's Discussions and Analysis of Financial Condition and Results of Operations
(Edgar Glimpses Via Acquire Media NewsEdge) Forward Looking Statements
When used in this form 10-Q and in future filings by the Company with the
Commission, the words or phrases such as "anticipate," "believe," "could,"
"estimate," "expect," "intend," "may," "plan," "predict," "project," "will" or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Readers are
cautioned not to place undue reliance on any such forward looking statements,
each of which speak only as of the date made. Such statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from historical earnings and those presently anticipated or
projected. The Company has no obligation to publicly release the result of any
revisions which may be made to any forward-looking statements to reflect
anticipated or unanticipated events or circumstances occurring after the date of
such statements.
These forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause actual results to be materially different.
These factors include, but are not limited to, changes that may occur to general
economic and business conditions; changes in 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; the
availability of Wifi in more public areas; general disruptions to Internet
service; and the loss of customer faith in the Internet as a means of commerce.
The following discussion should be read in conjunction with the unaudited
financial statements and related notes which are included under Item 1.
We do not undertake to update our forward-looking statements or risk factors to
reflect future events or circumstances.
Overview
General
The Company was formed on January 25, 2011 as a wholly-owned subsidiary of
Worlds Inc. (formerly known as Worlds.com Inc.). Effective May 16, 2011 Worlds
Inc. transferred to us the majority of its operations and related operational
assets, except for its patent portfolio. Worlds Inc. has also given us a
perpetual world-wide license to its patented technology. Pursuant to the
license, we have the right to issue unlimited sublicenses to the licensed
technology, subject to Worlds Inc.'s reasonable consent.
The assets transferred to us include: Worlds Inc.'s technology platform, Worlds
Chat, Aerosmith World, DMC Worlds, Cinema Virtual, Pearson contracts and related
revenue, the following 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.
Revenues
Revenue that was generated resulted from VIP subscriptions to the Worlds
Ultimate 3-D Chat service, software development fees to provide a site for a 3-D
world under a deferred revenue agreement and consulting revenue from a
consulting agreement whereby the Company is advising on the licensing of patents
and virtual world technologies.
Expenses
We classify our expenses into two broad groups:
o cost of revenues; and
o selling, general and administration.
Liquidity and Capital Resources
In May 2011, we raised $300,070 through the issuance of 526,315 shares of our
common stock at a price of $0.57 per share. The funds raised in the financing,
have been, and will be, used to develop new products and services, pay salaries
to management and pay professional fees to our attorneys and auditors to prepare
and file reports with the Securities and Exchange Commission and other legal
expenses arising from our day-to-day operations and acquisitions, if any. We
hope to raise additional funds to be used for advertising our existing products
and services and to fund the development of additional products and services. No
assurances can be given that we will be able to raise any additional funds. As
described above, we are currently negotiating with various musical artists,
educational companies and other entities to develop worlds for them. While no
assurance can be given that any of these deals will be concluded, if successful
they would likely generate additional cash flows.
(12)
Table of Contents
RESULTS OF OPERATIONS
Our net revenues for the three months ended September 30, 2011 was $25,237. Our
net revenue for the period from formation, January 25, 2011, through September
30, 2011 was $75,546.
Three months and the for the period from formation (January 25, 2011) ending
September 30, 2011
Revenue was $25,237 for the three months ended September 30, 2011. Revenue was
comprised of consulting revenue from an agreement to provide advice on licensing
of patents and virtual world technologies and VIP subscriptions. For the period
from formation (January 25, 2011) through September 30, 2011 revenue was
$75,546. The Company's revenue was from software development fees to provide a
site for a 3-D world under a deferred revenue agreement, consulting revenue from
a consulting agreement whereby the Company is advising on the licensing of
patents and virtual world technologies and VIP subscriptions. We need to raise a
sufficient amount of capital to provide the resources required that would enable
us to continue running the business.
Cost of revenues for the three months ended September 30, 2011 was $10,575. This
includes software development and hosting fees. Cost of revenue from the period
of formation through September 30, 2011 was $12,675.
Selling general and administrative (SG&A) was $113,017 for the three months
ended September 30, 2011. For the period from formation through September 30,
2011 SG&A costs were $232,568.
Other expenses for the three months ended September 30, 2011 were $0. Other
expenses for the period from formation through September 30, 2011 include
options expense of $195,615.
As a result of the foregoing, for the three months ended September 30, 2011, we
realized a net loss of $98,355. For the period from January 25, 2011 through
September 30, 2011 we had a loss of $365,312.
For comparative purposes, while we will be almost seamlessly continuing the
business and operations of Worlds Inc., we will not have any of the expenses
relating to enforcement of the patents or increasing the patent portfolio.
Liquidity and Capital Resources
Our unrestricted cash and cash equivalents was $75,546 at September 30, 2011.
There were no capital expenditures in the period from formation through
September 30, 2011.
In May 2011, we raised $300,070 through the issuance of 526,315 shares of our
common stock at a price of $0.57 per share.
The funds raised in the May financing have been, and are being, used to develop
new products and services, pay salaries to management and pay professional fees
to our attorneys and auditors to prepare and file reports with the Securities
and Exchange Commission and other legal expenses arising from our day-to-day
operations and acquisitions, if any. We hope to raise additional funds to be
used for advertising our existing products and services and to fund the
development of additional products and services. No assurances can be given that
we will be able to raise any additional funds. As described above, we are
currently negotiating with various musical artists, educational companies and
other entities to develop worlds for them. While no assurance can be given that
any of these deals will be concluded, if successful they would likely generate
additional cash flows.
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