Real-time Form 4 intelligence. Smarter insider tracking.
YoY shift: Lean +
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.20pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-0.01pp
Flat
Net-tone change vs last year's 10-K.
MD&A
+0.42pp
Lean +
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Risk Factors (Item 1A)
1,878 words
ITEM 1A. RISK FACTORS.
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.
Risks related to our operations
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 achieveprofitability.
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 achieveprofitable operations until we develop sources of revenues from our portfolio of intellectual property (IP) or generate revenues from other sources that are sufficient to offset our operating costs. We may never be to these objectives. Developing IP is very expensive and we may not have sufficient cash available to completely develop our IP to a form where it can be monetized because currently we do not generate revenues.
MD&A (Item 7)
1,073 words
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward Looking Statements
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.
We are dependent upon the success of monetizing our IP assets
After all of our operations were spun off, our success is essentially dependent upon the success of our ability to monetize our IP assets such as our legacy celebrity worlds and our collection of non-fungible tokens. This is a relatively new industry and it is unclear if it will develop and be accepted in the mainstream as items to purchase and/or invest in.
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 cannot guarantee that we will have any meaningful protection of our proprietary technologies.
We cannot be certain of the level of protection, if any that we will be able to provide for our IP.
We may incur substantial costs as a result of litigation or other proceedings relating to our intellectual property rights.
Third parties may challenge the validity of our intellectual property rights, resulting in costlylitigation 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.
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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 injunctionsagainst 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 our key personnel 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.
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.
Risks related to our common stock
Possible issuances of our capital stock would cause dilution to our existing shareholders.
While we currently have 57,112,506 shares of common stock outstanding after implementing the 5 to 1 reverse split in 2018, we are authorized to issue up to 250,000,000 shares of common stock. 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. Shareholders approved the Company’s proposal to increase the authorized capital and/or a reverse split, the risk described above will is 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 15 million post reverse split shares of our common stock upon the exercise of outstanding stock options. Accordingly, in the event he receives and then exercises such options, he will be able to influence the election of our directors and thereby influence or direct our policies.
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No dividends have been paid on our common stock.
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 December 31, 2024, there are outstanding options to purchase an aggregate of 16,600,000 shares of our common stock and more options and warrants will likely be granted in the future to our officers, directors, employees and consultants. The exercise of outstanding stock options 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.
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ITEM 1C. CYBERSECURITY.
The Company’s board of directors oversees, among other things, the adequacy and effectiveness of the Company’s ability to assess, identify, and manage material risks from cybersecurity threats. Management has been informed as to the need to be constantly aware of the possibility of cybersecurity breaches and to inform the board of directors immediately upon receipt of any information with respect to an actual or even a potential breach. In such event, evaluation of the degree of the breach will be made and third-party experts consulted and/or retained, as necessary, to address any such situation. As a technology-based company, management believes that the security it currently has in place to protect its proprietary information, and that the personal information of its employees and customers, is sufficient and appropriate for its current level of business activities. This is a fluid situation and management and the board of directors intends to meet periodically to assess the adequacy of the then-current status and determine if any additional steps are indicated.
As of the date of this report, we are not aware of any cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations or financial condition.
ITEM 2. DESCRIPTION OF PROPERTIES.
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.
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.
Overview
General
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. We also entered into a License Agreement with MariMed Inc. to sublicense patented technologies, which agreement has since expired.
At present, the Company’s anticipated sources of revenue will be from any revenue that may be generated from monetizing our collection of non-fungible tokens and our legacy celebrity virtual reality worlds and from other applications of our technology that we may develop.
Revenues
We generated no operating revenue during the year.
Expenses
We classify our expenses into two broad groups:
cost of revenues; and
selling, general and administration.
Liquidity and Capital Resources
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, prior to the spinoff, was used to enable us to begin upgrading our technology, develop new products and actively solicit additional business, and more recently to protect, increase and enforce our patent portfolio.
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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 be unable to purchase additional patents or otherwise expand operations through acquisition or otherwise.
RESULTS OF OPERATIONS
Year ended December 31, 2024 compared to year ended December 31, 2023
Revenue was $0 for the years ended December 31, 2024 and 2023. Since the termination of our patent infringement lawsuits, the Company’s sources of revenue are anticipated to be from monetizing our collection of non-fungible tokens from our legacy celebrity virtual reality worlds. We still need to raise a sufficient amount of capital to provide the resources required that would enable us to expand our business.
Selling general and administrative expenses increased by $74,466 from $101,451 to $175,917 for the year ended December 31, 2024. The increase is due to increases in our data center costs and related consulting services, audit and legal fees during the year.
Salaries and related expenses increased by $43,971 to $259,555 from $215,584 for the year ended December 31, 2024. Salaries and related expenses are based on the terms of the CEO’s employment agreement.
For the year ended December 31, 2024, the Company had interest expense of $75,910. For the year ended December 31, 2023, the Company had interest expense of $77,625.
For the year ended December 31, 2023, the Company had a gain on sale of marketable securities of $76,839. The Company did not sell any marketable securities for the year ended December 31, 2024.
For the year ended December 31, 2023, the Company had a gain on sale of a URL of $400,000.
As a result of the foregoing, we had 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.
Liquidity and Capital Resources
At December 31, 2024, our cash and cash equivalents were $6,380. We did not raise any additional cash during the year ended December 31, 2024.
At December 31, 2023, our cash and cash equivalents were $244,856.
No capital expenditures were made in 2024 or 2023.
Our primary cash requirements have been used to fund the cost of operations including monetizing our collection of non-fungible tokens and updating our data center.
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Recent Accounting Pronouncements
Recently issued accounting standards
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.
