U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB


  X      Quarterly report pursuant to Section 13 or 15(d) of the Securities Act
----     of 1934

For the quarterly period ended September 30, 1999



_____    Transition report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934


For the transition period from ______________________ to ______________________


Commission File number 2-31876


                                   WORLDS INC.
                                  ------------
        (Exact Name of Small Business Issuer as Specified in its Charter)



                   New Jersey                                22-184316
          ------------------------------                 ----------------
         (State or Other Jurisdiction of                 (I.R.S. Employer
         Incorporation or Organization)                  Identification No.)


                   15 Union Wharf, Boston, Massachusetts 0210
                   ------------------------------------------
                    (Address of Principal Executive Offices)

                                 (617) 725-8900
                  ---------------------------------------------
                 (Issuer's Telephone Number Including Area Code)

 -------------------------------------------------------------------------------
               Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report

         Check whether the issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.       Yes   X    No _____.


         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: At November 12, 1999,
Issuer had outstanding 17,636,631 shares of Common Stock.



<PAGE>



                                      INDEX


                                                                            Page
                                                                            ----
PART I: FINANCIAL INFORMATION..................................................3

     Item 1. Financial Statements..............................................3

             Balance Sheets (unaudited) at September 30, 1999 and
             December 31, 1998.................................................4

             Statements of Operations (unaudited) for the three months
             ended September 30, 1999 and September 30, 1998 and for
             the nine months ended September 30, 1999 and September
             30, 1998 and cumulative period from April 8, 1997 to
             September 30, 1999................................................5

             Statements of Stockholders' Equity (Deficit) from
             April 8, 1997 to September 30, 1999...............................6

             Statements of Cash Flows (unaudited) for the nine months
             ended September 30, 1999 and September 30, 1998 and
             cumulative period from April 8, 1997 to September 30, 1999........7

             Summary of Accounting Policies....................................8

             Notes to Financial Statements (unaudited)........................13

    Item 2.  Management's Discussion and Analysis or Plan of Operations.......17

PART II. OTHER INFORMATION ...................................................24

    Item 2.  Sale of Unregistered Securities..................................24

    Item 6.  Exhibits and Reports on Form 8-K.................................26

SIGNATURES....................................................................27




                                        2

<PAGE>



PART I    :       FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS

                                       WORLDS INC., doing business as WORLDS.COM

                                                            (A DEVELOPMENT STAGE
                                                                     ENTERPRISE)

================================================================================

                                                            FINANCIAL STATEMENTS

                                       PERIODS ENDED SEPTEMBER 30, 1998 AND 1999



                                       3
<PAGE>


                                                                      WORLDS.COM

                                                (A DEVELOPMENT STAGE ENTERPRISE)

                                                                  BALANCE SHEETS
================================================================================
<TABLE>
                                                                           December 31,
                                                                               1998              September 30, 1999

 ------------------------------------------------------------------ --------------------------- ----------------------
 ASSETS                                                                                              (unaudited)
 CURRENT:
<S>                                                                          <C>                       <C>
    Cash and cash equivalents                                                $ 1,581,764               $   2,044,722
    Accounts receivable                                                                -                     106,355
    Prepaid expenses and other current assets                                     53,486                      32,229
    Inventory                                                                     58,516                     162,556
 ------------------------------------------------------------------ --------------------------- ----------------------
         TOTAL CURRENT ASSETS                                                  1,693,766                   2,345,862
 PROPERTY, EQUIPMENT AND SOFTWARE DEVELOPMENT COSTS, NET OF
    ACCUMULATED DEPRECIATION AND AMORTIZATION                                    214,246                     651,176
 OTHER ASSETS (NOTE 5)                                                                 -                     703,095
 ------------------------------------------------------------------ --------------------------- ----------------------
                                                                             $ 1,908,012               $   3,700,133
 ------------------------------------------------------------------ --------------------------- ----------------------
 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 CURRENT:

    Accounts payable                                                        $    319,906              $      107,721
    Accrued expenses                                                             446,333                     831,351
    Current maturities of notes payable                                          246,648                     269,148
 ------------------------------------------------------------------ --------------------------- ----------------------
         TOTAL CURRENT LIABILITIES                                             1,012,887                   1,208,220
 LONG-TERM PORTION, NOTES PAYABLE                                              1,875,018                   1,852,518
 ------------------------------------------------------------------ --------------------------- ----------------------
         TOTAL LIABILITIES                                                     2,887,905                   3,060,738
 ------------------------------------------------------------------ --------------------------- ----------------------
 CONTINGENCIES (NOTE 4)

 STOCKHOLDERS' EQUITY (DEFICIT) (NOTES 2 AND 3):

    Common stock, $.001 par value - shares authorized 30,000,000;
       outstanding 18,031,996 and 17,542,281                                      18,032                      17,542
    Additional paid-in capital                                                 8,401,970                  12,801,091
    Deficit accumulated during the development stage                          (9,335,152)                (12,179,238)
 ------------------------------------------------------------------ --------------------------- ----------------------
                                                                                (915,150)                    639,395
    Treasury stock, at cost, 113,465 shares in 1998 (Notes 2 and
       4)                                                                        (64,743)                         --
 ------------------------------------------------------------------ --------------------------- ----------------------
         TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                   (979,893)                    639,395
 ------------------------------------------------------------------ --------------------------- ----------------------
                                                                             $ 1,908,012               $   3,700,133
 ------------------------------------------------------------------ --------------------------- ----------------------
</TABLE>
                                 SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES
                                              AND NOTES TO FINANCIAL STATEMENTS.

                                       4
<PAGE>

                                                 WORLDS.COM

                                                (A DEVELOPMENT STAGE ENTERPRISE)

                                            STATEMENTS OF OPERATIONS (UNAUDITED)

 ===============================================================================
<TABLE>
                                                                                                                     Cumulative
                                                                                                                      period from
                                                        Three months ended               Nine months ended            April 8, 1997
                                                           September 30,                    September 30,            (inception) to
                                                       ----------------------      ----------------------------       September 30,
                                                        1998            1999             1998             1999            1999 (a)
                                                       ---------   ------------      ------------     ------------   ---------------
<S>                                                 <C>            <C>               <C>              <C>            <C>
 NET REVENUES                                       $         -    $    148,682      $     16,132     $    241,607   $    272,137
 COSTS AND EXPENSES:
    Cost of revenues                                          -         (98,428)          (25,101)        (168,783)      (198,062)
    Selling, general and administrative                (683,969)       (962,228)       (1,991,494)      (2,852,723)    (6,178,456)
    Research and development                           (353,504)              -          (887,932)               -       (992,932)
    Acquired research and development                         -               -                 -                -     (6,135,538)
                                                       ---------   ------------      ------------     ------------   -------------
         OPERATING LOSS                              (1,037,473)       (911,974)       (2,888,395)      (2,779,899)   (13,232,851)
 OTHER INCOME (EXPENSES):
    Gain resulting from reversal of
    certain predecessor liabilities                           -               -                 -                -        810,140
    Interest income                                      37,825          20,053           114,817           38,019        175,618
    Interest expense                                    (35,656)        (33,284)         (107,768)        (102,206)      (230,468)
                                                       ---------   ------------      ------------     ------------   -------------
         LOSS BEFORE EXTRAORDINARY ITEM              (1,035,304)       (925,205)       (2,881,346)      (2,844,086)   (12,477,561)
 EXTRAORDINARY ITEM - GAIN ON DEBT SETTLEMENT            20,893               -           172,547                -        298,323
                                                       ---------   ------------      ------------     ------------   -------------
 NET LOSS                                           $(1,014,411)   $   (925,205)     $ (2,708,799)    $ (2,844,086)  $(12,179,238)
                                                    ===========    ============      ============     ============   ============
 LOSS PER SHARE (BASIC AND DILUTED):
    Loss before extraordinary item                  $      (.06)   $      (0.06)     $       (.17)    $      (0.16)
    Extraordinary item                                        -               -                .01               -
                                                    -----------    ------------      ------------     ------------
         NET LOSS PER SHARE (BASIC AND DILUTED)     $      (.06)   $      (0.06)     $       (.16)    $      (0.16)
                                                    ===========    ============      ============     ============
 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
    Basic and diluted                                17,868,531      16,083,709        16,917,657       17,300,203
                                                    ===========    ============      ============      ===========
</TABLE>

--------------

(a)  Includes the results of  Predecessor  and Academic  (from December 4, 1997)
     which   were    merged    into   the   Company   on   December   3,   1997.


                                 SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES
                                              AND NOTES TO FINANCIAL STATEMENTS.

                                       5
<PAGE>

                                                                     WORLDS.COM

                                                (A DEVELOPMENT STAGE ENTERPRISE)

                                    STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
================================================================================

 PERIOD FROM APRIL 8, 1997 (INCEPTION) TO SEPTEMBER 30, 1999
--------------------------------------------------------------------------------
<TABLE>

                                                                                Deficit
                                                                                accumulated                  Total
                                            Common stock        Additional      during the     Treasury   Stockholders'
                                       -----------------------   paid-in        development                 (equity)
                                         Shares      Amount       capital          Stage         Stock      (deficit)
                                       ------------ ---------- -------------- ---------------- ---------- --------------
<S>               <C>                  <C>           <C>       <C>            <C>              <C>        <C>
 BALANCE, JANUARY 1, 1998              16,119,996    $16,120   $  6,661,582   $  (6,686,471)   $           $    (8,769)
 Sale of shares in private offering
    memorandum (January 1998)              30,000         30        26,470               -             -        26,500
 Sale of shares in public offering
    of common stock, net (June 1998)    1,832,000      1,832     1,713,968               -             -     1,715,800
 Conversion of 113,465 shares to
    certain stockholders (June 1998)            -          -             -               -       (64,743)      (64,743)
 Conversion of employee stock
    options into shares (October
    1998)                                  50,000         50           (50)              -             -             -
 Net loss for the year ended
    December 31, 1998                           -          -             -      (2,648,681)            -    (2,648,681)
                                       ----------   --------   -----------    -------------    ---------  ------------
 BALANCE, DECEMBER 31, 1998            18,031,996     18,032     8,401,970      (9,335,152)      (64,743)     (979,893)
 Issuance of warrants for consulting
    services (April 1999)                       -          -       465,000               -             -       465,000
 Contribution of 1,500,000 shares by
    founders to treasury (April 1999)           -          -             -               -             -             -
 Exercise of stock options
    (April 1999)                           75,000         75        74,925               -             -        75,000
 Issuance of shares for content
    supply agreement (June 1999)           93,750         93       374,907               -             -       375,000
 Issuance of shares to agent for
    supply agreement (July 1999)           50,000         50       199,950               -             -       200,000
 Sale of shares in private offering
    memorandum, net (June through
    September 1999)                       885,000        885     3,263,089               -             -     3,263,974
 Issuance of options for consulting
    services (August and
    September 1999)                             -          -         4,400               -             -         4,400
 Issuance of shares for legal and
    consulting services (September
    1999)                                  20,000         20        79,980               -             -        80,000
 Cancellation of treasury shares
    (September 1999)                   (1,613,465)    (1,613)      (63,130)              -        64,743             -
 Net loss for the nine months ended
    September 30, 1999 (unaudited)              -          -             -      (2,844,086)            -    (2,844,086)
                                       ----------   --------   -----------    ------------     ---------    ----------
 BALANCE, SEPTEMBER 30, 1999
    (UNAUDITED)                        17,542,281    $17,542   $12,801,091    $(12,179,238)    $       -   $   639,395
                                       ==========   ========   ===========    ============     =========   ===========
</TABLE>

                                 SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES
                                              AND NOTES TO FINANCIAL STATEMENTS.

                                       6
<PAGE>


                                                                      WORLDS.COM

                                                (A DEVELOPMENT STAGE ENTERPRISE)

                                            STATEMENTS OF CASH FLOWS (UNAUDITED)
================================================================================
<TABLE>
                                                                                                        Cumulative
                                                                                                        period from
                                                                                                       April 8, 1997
                                                                Nine months ended September 30,       (inception) to
                                                                -------------------------------        September 30,
                                                                   1998                1999                1999
                                                                -------------      ------------        ------------
 CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                             <C>                <C>                 <C>
    Net loss                                                    $ (2,708,799)      $ (2,844,086)       $(12,179,238)
                                                                -------------      ------------        ------------
    Adjustments to reconcile net loss to net
      cash used in operating activities:
         Loss on disposal of fixed assets                                  -                  -              54,041
         Depreciation and amortization                               136,012            160,113             306,188
         Gain resulting from reversal of certain
            predecessor liabilities                                        -                  -            (810,140)
         Gain on debt settlement                                    (172,547)                 -            (298,323)
         Acquired research and development                                 -                  -           6,135,538
         Issuance of warrants for consulting services                      -            465,000             465,000
         Issuance of options for consulting services                       -              4,400               4,400
         Issuance of shares for legal and consulting
            services                                                       -             80,000              80,000
         Changes in operating assets and liabilities, net
            of effects from merger with Predecessor and
            Academic:
               Trade receivable                                          538           (106,355)           (106,355)
               Inventory                                                   -           (104,040)           (162,556)
               Prepaid expenses and other assets                      29,403           (106,838)              7,567
               Accounts payable and accrued expenses                 (10,306)           172,833             539,023
                                                                -------------      ------------       -------------
                 TOTAL ADJUSTMENTS                                   (16,900)           565,113           6,214,383
                                                                -------------      ------------       -------------
                 NET CASH USED IN OPERATING ACTIVITIES            (2,725,699)        (2,278,973)         (5,964,855)
                                                                -------------      ------------       -------------
 CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment                            (14,590)           (23,178)            (51,765)
    Additions to software development costs                                -           (573,865)           (733,865)
                                                                -------------      ------------       -------------
                 NET CASH USED IN INVESTING ACTIVITIES               (14,590)          (597,043)           (785,630)
                                                                -------------      ------------       -------------
 CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from sale of common stock to founding
       stockholders                                                        -                  -             204,000
    Proceeds from sale of common stock in private offering
       memorandum                                                     26,500          3,263,974           6,985,150
    Proceeds from exercise of options                                      -             75,000              75,000
    Proceeds from sale of common stock in public offering          1,715,800                  -           1,715,800
    Payment of conversion price of shares to certain
       stockholders                                                  (64,743)                 -             (64,743)
    Payments on note payable                                        (116,000)                 -            (120,000)
                                                                -------------      ------------       -------------
                 NET CASH PROVIDED BY FINANCING ACTIVITIES         1,561,557          3,338,974           8,795,207
                                                                -------------      ------------       -------------
 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS             (1,178,732)           462,958           2,044,722
 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                    3,541,829          1,581,764                   -
                                                                -------------      ------------       -------------
 CASH AND CASH EQUIVALENTS, END OF PERIOD                        $ 2,363,097        $ 2,044,722       $   2,044,722
                                                                =============      ============       =============
</TABLE>
                                 SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES
                                              AND NOTES TO FINANCIAL STATEMENTS.

                                       7
<PAGE>


                                                                      WORLDS.COM

                                                (A DEVELOPMENT STAGE ENTERPRISE)

                                                  SUMMARY OF ACCOUNTING POLICIES
================================================================================

Definitions         The Company is the resulting  entity of two  contemporaneous
                    mergers   (the   "Mergers")   of  Worlds  Inc.,  a  Delaware
                    corporation   ("Predecessor"),    with   and   into   Worlds
                    Acquisition Corp., a Delaware  corporation  ("WAC"), and WAC
                    with and into Academic Computer Systems,  Inc., a New Jersey
                    corporation  ("Academic"),  which changed its name to Worlds
                    Inc. (see Note 2). While  Academic was the legal entity that
                    survived the  mergers,  WAC was the  accounting  acquiror in
                    both mergers. The Company's fiscal year-end is December 31.

                    The  term  the  "Company,"  as used  herein,  refers  to the
                    consolidated  entity resulting from the two  contemporaneous
                    mergers,  as  well  the  pre-merger  Predecessor,   WAC  and
                    Academic;  however,   Predecessor,   WAC  and  Academic  are
                    hereinafter  sometimes referred to separately as the context
                    requires.  The Company is doing business as Worlds.com.


Nature of Business  WAC was incorporated on April 8, 1997 to design, develop and
                    market  three-dimensional  ("3D") music oriented Internet
                    sites on the World  Wide Web.  These web sites are
                    utilizing 3D technologies developed by Predecessor.


Basis of            The   accompanying  financial  statements   are  unaudited;
Presentation        however,  in the  opinion  of  management,  all  adjustments
                    necessary  for a fair  statement of  financial  position and
                    results for the stated  periods  have been  included.  These
                    adjustments  are  of a  normal  recurring  nature.  Selected
                    information and footnote  disclosures  normally  included in
                    financial  statements  prepared in accordance with generally
                    accepted  accounting   principles  have  been  condensed  or
                    omitted.  Results  for interim  periods are not  necessarily
                    indicative  of the  results  to be  expected  for an  entire
                    fiscal year. It is suggested that these condensed  financial
                    statements be read in conjunction with the audited financial
                    statements  and  accompanying  notes for the Company for the
                    year ended December 31, 1998 and for the Predecessor for the
                    period ended December 3, 1997.


                                       8
<PAGE>


                                                                      WORLDS.COM

                                                (A DEVELOPMENT STAGE ENTERPRISE)

                                                  SUMMARY OF ACCOUNTING POLICIES
================================================================================

                    The financial  statements include the results of Predecessor
                    and Academic from December 4, 1997,  the date of the Mergers
                    (the "Merger Date").

                    The  financial  statements  have been prepared in accordance
                    with the  provisions  of Statement  of Financial  Accounting
                    Standards  ("SFAS")  No. 7,  "Accounting,  and  Reporting by
                    Development Stage Enterprises,"  which requires  development
                    stage  enterprises to employ the same accounting  principles
                    as operating companies.


Fair Value of       The  carrying  amounts of financial  instruments,  including
Financial           cash and  short-term  debt,  approximated  fair  value as of
Instruments         September 30, 1999 because of the relatively  short maturity
                    of the  instruments.  The carrying value of long-term  debt,
                    including the current portion, approximates fair value as of
                    September  30 1999,  based upon  estimates  for similar debt
                    issues.


Use of Estimates    The  preparation of financial  statements in conformity with
                    generally accepted accounting principles 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       Cash and cash  equivalents  are  comprised of highly  liquid
Equivalents         money market instruments,  which have original maturities of
                    three months or less at the time of purchase.


Property and        Property and equipment are stated at cost.  Depreciation  is
Equipment           calculated using the straight-line method over the estimated
                    useful  lives of the  assets,  which  range from two to five
                    years.

                                       9
<PAGE>


                                                                      WORLDS.COM

                                                (A DEVELOPMENT STAGE ENTERPRISE)

                                                  SUMMARY OF ACCOUNTING POLICIES
================================================================================

Revenue             Revenue from technology  development and licensing contracts
Recognition         is recognized upon the attainment of contractual  milestones
                    (approximating the  percentage-of-completion  method).  Cash
                    received  in  advance  of  revenues  earned is  recorded  as
                    deferred revenue.


Inventory           Inventory  consists  of  merchandise  held for resale and is
                    valued  at the  lower  of  cost  or  market  on a  first-in,
                    first-out (FIFO) basis.


Software            In   accordance   with  the   provisions  of  SFAS  No.  86,
Development Cost    "Accounting  for the Costs of Computer  Software to be Sold,
                    Leased, or Otherwise  Marketed",  software development costs
                    incurred  by  the   Company   subsequent   to   establishing
                    technological   feasibility  of  the  resulting  product  or
                    enhancement  and until the product is available  for general
                    release to  customers  are  capitalized  and  carried at the
                    lower  of  unamortized  cost or net  realizable  value.  Net
                    realizable  value is determined based on estimates of future
                    revenues to be derived from the sale of the software product
                    reduced  by the costs of  completion  and  disposing  of the
                    product.  During the fourth  quarter of 1998,  technological
                    feasibility of the Company's  software was  established.  In
                    this  regard,  $160,000  was  capitalized  and  included  in
                    property,  equipment and software development as of December
                    31, 1998. During the nine months ended September 30, 1999, a
                    further   $574,000   was   capitalized   in   this   regard.
                    Amortization of the costs capitalized commenced in the first
                    quarter of 1999,  based on current  and  anticipated  future
                    revenues  for each  product  or  enhancement  with an annual
                    minimum  equal  to  straight-line   amortization   over  the
                    remaining   estimated   economic  life  of  the  product  or
                    enhancement.


Research and        Research and development  costs are expensed as incurred.
Development Costs

                                       10

<PAGE>


                                                                      WORLDS.COM

                                                (A DEVELOPMENT STAGE ENTERPRISE)

                                                  SUMMARY OF ACCOUNTING POLICIES
================================================================================

Income Taxes        The Company  uses the  liability  method of  accounting  for
                    income taxes in  accordance  with SFAS No. 109,  "Accounting
                    for   Income   Taxes."   Deferred   income  tax  assets  and
                    liabilities   are   recognized   based   on  the   temporary
                    differences  between the financial  statement and income tax
                    bases of assets, liabilities and carryforwards using enacted
                    tax  rates.  Valuation  allowances  are  established,   when
                    necessary,  to reduce  deferred  tax  assets  to the  amount
                    expected to be realized.


Loss Per Share      In 1997, the Financial Accounting Standards Board's ("FASB")
                    SFAS No. 128, "Earnings per Share," replaced the calculation
                    of primary and fully diluted  earnings (loss) per share with
                    basic and diluted earnings (loss) per share.  Unlike primary
                    earnings per share,  basic  earnings per share  excludes any
                    dilutive  effects  of  options,   warrants  and  convertible
                    securities.  Diluted  earnings  per share is very similar to
                    the previously  reported  fully diluted  earnings per share.
                    The loss per share amounts have been presented to conform to
                    SFAS No.  128  requirements.  The common  stock  equivalents
                    which  would arise from the  exercise  of stock  options and
                    warrants are excluded from  calculation  of diluted loss per
                    share since their effect is  anti-dilutive.  Therefore,  the
                    amounts  reported  for basic and diluted  loss per share are
                    the same.


Stock-Based         In October 1995, the FASB issued SFAS No. 123, "Accounting
Compensation        for  Stock-Based  Compensation".  SFAS  No.  123  encourages
                    entities  to adopt  the fair  value  method  in place of the
                    provisions  of Accounting  Principles  Board Opinion No. 25,
                    "Accounting   for  Stock  Issued  to  Employees",   for  all
                    arrangements  under which employees  receive shares of stock
                    or other equity  instruments of the employer or the employer
                    incurs  liabilities  to  employees  in amounts  based on the
                    price of its stock.  The  Company  has not  adopted the fair
                    value method encouraged by SFAS No. 123 and will continue to
                    account for such transactions in accordance with APB No. 25.

                                       11
<PAGE>


                                                                      WORLDS.COM

                                                (A DEVELOPMENT STAGE ENTERPRISE)

                                                  SUMMARY OF ACCOUNTING POLICIES
================================================================================

Comprehensive       Effective January 1, 1998, the Company adopted SFAS No. 130,
Income              "Reporting    Comprehensive   Income",   which   establishes
                    standards for reporting and display of comprehensive income,
                    its  components  and  accumulated  balances.   Comprehensive
                    income is defined to include  all  changes in equity  except
                    those resulting from investments by owners and distributions
                    to owners.  Adoption  of the  standard  has had no effect on
                    financial statement disclosures since there were no items of
                    comprehensive income during the periods presented.


                                       12
<PAGE>

                                                                     WORLDS.COM
                                                (A DEVELOPMENT STAGE ENTERPRISE)

                                                  NOTES TO FINANCIAL STATEMENTS
===============================================================================

1.  Going Concern   As  discussed  in Notes 2 and 3,  the  Company  completed  a
                    private  placement during the fourth quarter of 1997 raising
                    gross proceeds of $4,415,000, consummated a merger agreement
                    during  December 1997 with a development  stage  enterprise,
                    Predecessor,  completed  a  public  offering  in  June  1998
                    raising  gross  proceeds  of  $1,832,000,  and  completed  a
                    private placement during the third quarter of 1999,  raising
                    gross proceeds of $3,540,000.  Predecessor had not generated
                    significant  revenues from operations and had an accumulated
                    deficit from inception to the Merger Date of $21,236,139 and
                    a  capital   deficit  of  $4,135,538.   The  acquisition  of
                    Predecessor  by the Company was accounted for as a purchase.
                    Accordingly,   $6,135,538,   the  portion  of  the  purchase
                    allocable to in-process  research and  development  projects
                    that had not reached  technological  feasibility  and had no
                    probable  alternative  future  uses,  was  expensed  by  the
                    Company at the date of merger.

                    The  accompanying  financial  statements  have been prepared
                    assuming that the Company will continue as a going  concern.
                    The Company is in the development  stage and has had minimal
                    revenues  from   operations   since  the  series  of  merger
                    transactions.  The Company anticipates that it currently has
                    only a portion of the funds  necessary  to complete  product
                    development and commercialization. There can be no assurance
                    that the  Company  will be able to  obtain  the  substantial
                    additional   capital  resources   necessary  to  pursue  its
                    business  plan  or  that  any  assumptions  relating  to its
                    business  plan will  prove to be  accurate.  The  Company is
                    pursuing sources of additional financing and there can be no
                    assurance  that any such  financing will be available to the
                    Company on  commercially  reasonable  terms,  or at all. Any
                    inability  to  obtain  additional   financing  will  have  a
                    material adverse effect on the Company,  including  possibly
                    requiring  the  Company  to  significantly  curtail or cease
                    operations.

                    These factors raise  substantial  doubt about the ability of
                    the Company to continue as a going  concern.  The  financial
                    statements do not include any adjustments  that might result
                    from the outcome of this uncertainty.

                                       13


<PAGE>

                                                                     WORLDS.COM
                                                (A DEVELOPMENT STAGE ENTERPRISE)

                                                  NOTES TO FINANCIAL STATEMENTS
===============================================================================

2.   The Mergers    On  December 3, 1997,  Predecessor  was merged with and into
                    WAC in a series of  related  transactions  which  included a
                    simultaneous  capital  transaction  between  the Company and
                    Academic  (the  "Mergers")  and a private  offering of WAC's
                    securities  (the  "Private  Placement").  In both the merger
                    with Predecessor and the capital  transaction with Academic,
                    WAC was the acquiror for accounting purposes.

                    The  acquisition  of  Predecessor  was  accounted  for  as a
                    purchase  whereby all of the common and  preferred  stock of
                    Predecessor  were exchanged for 1,999,996 shares of WAC. The
                    shares   issued  to   Predecessor   common   and   preferred
                    shareholders   were   valued  at  $1.00   per  share   which
                    represented  the share value in the private  placement  that
                    occurred  during  this time  period (see Note 3); a purchase
                    price of  approximately  $2,000,000.  The exchange ratio was
                    determined after extensive negotiation between management of
                    Predecessor  and WAC.  Predecessor  was a development  stage
                    company,   had  not  generated   significant  revenues  from
                    operations and had an accumulated  deficit from inception to
                    December  3, 1997 of  $21,236,139  and a capital  deficit of
                    $4,135,538.   The  assets  acquired  of  Predecessor  (cash,
                    prepaid  expenses,  property and equipment) were recorded at
                    fair market value which  approximated book value at December
                    3,  1997,   and,  as  discussed  in  Note  1  above,   since
                    technological   feasibility   of  the  various   Predecessor
                    technologies  acquired had not been established,  the excess
                    purchase  price  over   Predecessor's   capital  deficit  of
                    $6,135,538   was   expensed   as   acquired   research   and
                    development.

                    Academic  was an inactive  company with no  operations.  The
                    value   assigned  to  the  910,000  shares  in  the  capital
                    transaction  with  Academic on December 3, 1997  represented
                    Academic's net tangible assets (primarily cash) of $558,026.
                    During  June  1998,  113,465  shares  of common  stock  were
                    converted  at $0.57  per  share  ($64,743)  as a  result  of
                    certain   stockholders   dissenting   with  respect  to  the
                    Academic/WAC  capital  transaction of December 3, 1997. Such
                    reacquired  shares had been classified as treasury stock and
                    were cancelled during the third quarter of 1999.

                    While  no  trading  market  existed  for the  securities  of
                    Academic,  the  Company's  common  stock  is  traded  on the
                    Bulletin Board.

                                       14
<PAGE>

                                                                     WORLDS.COM
                                                (A DEVELOPMENT STAGE ENTERPRISE)

                                                  NOTES TO FINANCIAL STATEMENTS
===============================================================================


3.  Private         The  Private  Placement  called  for WAC to offer for sale a
    Placements      maximum of 50 units (57-1/2 with the  over-allotment),  each
    and Public      consisting  of  120,000  shares of WAC's  common  stock (the
    Offering        "Units") at a price of $120,000 per Unit. In connection with
                    the Private  Placement,  the placement  agent was to receive
                    one warrant to purchase  one share of WAC's  common stock at
                    $1 per share for every $40 of gross  proceeds  from the sale
                    of the Units.  On November  21,  1997,  WAC sold 31.67 Units
                    with gross  proceeds of $3,800,000  (3,800,000  shares) (the
                    "Initial Private Placement Closing") and the placement agent
                    was issued 425,000  shares of common stock.  On December 31,
                    1997,  the  Company  sold 4.88 Units with gross  proceeds of
                    $585,000  (585,000  shares).  On January 2, 1998,  a further
                    30,000  shares were  issued with gross  proceeds of $30,000.
                    Cumulative net proceeds,  after  commissions and expenses of
                    the offering, aggregated $3,721,176.

                    WAC agreed to include the shares of common stock  underlying
                    the  Units  sold  in the  Private  Placement  (the  "Private
                    Placement  Shares") in a registration  statement to be filed
                    with the  Securities  and Exchange  Commission  (the "SEC").
                    Such registration statement was declared effective on May 1,
                    1998.  During  June  1998,  WAC sold  1,832,000  shares in a
                    public  offering of its stock and received gross proceeds of
                    $1,832,000.   Net  proceeds,   after   commissions  of  this
                    offering, aggregated $1,715,800.

                    During the second and third  quarters  of 1999,  the Company
                    sold 885,000 shares in a private offering and received gross
                    proceeds  of  $3,540,000.   Broker-dealers  assisting  the
                    Company in the sale of its  securities were issued warrants
                    to purchase 48,000 shares of  common  stock of the Company.
                    Net  proceeds,  after  commissions  and  expenses  of  this
                    offering, aggregated $3,263,974.

                                       15
<PAGE>

                                                                     WORLDS.COM
                                                (A DEVELOPMENT STAGE ENTERPRISE)

                                                  NOTES TO FINANCIAL STATEMENTS
===============================================================================

4. Contingencies    On March 23,  1999,  the Company  entered  into a three-year
                    financial  advisory and  consulting  agreement  (that became
                    effective   during  April  1999)  with  a  consulting   firm
                    controlled  by the  Company's  Chairman that provides for an
                    annual fee of $120,000,  escalating to $300,000  annually if
                    the Company  raises $5 million in cash and the market  value
                    of the Company's  issued and outstanding  common stock is no
                    less than $100  million.  In addition,  the Company  granted
                    warrants to such firm to purchase 1,000,000 shares of common
                    stock  at $.50 per  share.  Such  warrants  were  valued  at
                    $465,000 and charged to selling,  general and administrative
                    expenses in the quarter  ended June 30,  1999.  The warrants
                    are   exercisable   through   April  13,  2006  and  contain
                    anti-dilution  provisions and both "demand" and "piggy-back"
                    registration rights.

                    Further, in connection with the above consulting  agreement,
                    three founding  stockholders  of WAC  contributed  1,500,000
                    shares to the capital of the  Company.  Such shares had been
                    classified as treasury stock and were  cancelled  during the
                    third quarter of 1999.


5. Content Supply   During June 1999, the Company  entered into a content supply
   Agreement        agreement  for a 3D  internet  site  offered by an  Internet
                    service  provider (the  "Provider").  Under the terms of the
                    agreement,  the  Company  paid  $125,000  and issued  93,750
                    shares of  common  stock  upon  signing  (included  in other
                    assets aggregating  $500,000).  The brokerage agent of such
                    agreement was issued 50,000 sshares of common stock during
                    July 1999 ($200,000).  A further $125,000 was paid and
                    93,750 shares were issued  during  November  1999  upon
                    launch of the site.



                                       16

<PAGE>

ITEM 2.     MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION OR PLAN OF
            OPERATION.

Forward-Looking Statements

         When used in this Form 10-QSB and in future filings by the Company with
the Commission, the words or phrases "will likely result," "management expects"
or "the Company expects," "will continue," "is anticipated," "estimated" 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.


         The following discussion should be read in conjunction with the
financial statements and related notes which are included under Item 1.
Statements made below which are not historical facts are forward-looking
statements. Forward-looking statements involve a number of risks and
uncertainties including, but not limited to, general economic conditions, our
ability to complete development and then market our products, competitive
factors and other risk factors as stated in other of our public filings with the
Securities and Exchange Commission.

Background

         Our predecessor was formed in April 1994 to design, develop and
commercialize 3D multi-user tools and technologies for the Internet market. From
inception through 1997, our predecessor's operations were limited and consisted
primarily of start-up activities, including recruiting personnel, raising
capital, custom production work, and research and development. In the third
quarter of 1996, our predecessor launched its first commercial user-oriented 3D
chat site, Worlds Chat 1.0, and began selling the client interface software
through direct sales channels. These sales were nominal. In October 1996, our
predecessor introduced its first commercial toolset for developing 3D multi-user
applications. In the first quarter of 1997, after an unsuccessful effort to
raise capital, our predecessor became insolvent and terminated most of its
personnel, and management sought to sell the Company and/or its technology. Our
predecessor did not generate significant revenues.

         While we have completed development and market testing of our base
technology and have introduced our first Internet sites, we will not generate
significant revenues until after we successfully attract and retain a
significant number of paying community members, sponsors, advertisers and e-
commerce customers. We anticipate continuing to incur significant losses until,
at the earliest, we generate sufficient revenues to offset the substantial
up-front expenditures and operating costs associated with developing and further
commercializing our proposed products. There can be no assurance that we will be
able to attract and retain a sufficient number of paying subscribers and
advertisers to generate significant revenues or achieve profitable operations or
that our products and services will prove to be commercially viable.

         We classify our expenses into three broad groups: (1) research and
development; (2) cost of revenues; and (3) selling, general and administration.
Historical revenues prior to 1998 were generated primarily through production
service activities and sales of technology licenses. Current revenues are


                                       17

<PAGE>



generated primarily through VIP membership sign-ups and e-commerce sales from
our online recording artist merchandise stores.

         Software development costs, consisting primarily of salaries and
related expenses, incurred prior to establishing technological feasibility are
expensed in accordance with Financial Accounting Standards Board (FASB)
Statement No. 86. In accordance with FASB 86, we will capitalize software
development costs at such time as the technological feasibility of the product
has been established. We began capitalizing our software costs in the fourth
quarter of 1998 with the commercial release of three products, AnimalHouse.com,
BowieWorld and Worlds Ultimate 3D Chat. For the first nine months of 1999,
approximately $574,000 of such expenditures were capitalized.

Plan of Operation

         During the fourth quarter of 1998, we completed the development of our
Gamma development tool kit. This technology is the foundation of our existing
and planned product offerings. To date, we have introduced six products based on
this technology:

         o Our first product release was AnimalHouse.com, a 3D environment
created for Universal/Hyundai, targeting the college market. Our 3D technology
is encoded on an enhanced CD with audio tracks of 10 Universal musical artists
and distributed to college students through a variety of Universal distribution
outlets. Our agreement with Universal called for the manufacture and
distribution by Universal of up to 1,000,000 CDs.

         o Our second product release was for David Bowie's BowieNet, the first
artist created ISP, or Internet service provider. Our product is named
BowieWorlds and has been released in the US as well as the U.K. by UltraStar
Internet Services LLP, the owners of BowieNet.

         o Our third product release was Worlds Ultimate 3D Chat which is being
primarily marketed via our web site, Worlds.com, and our e-commerce site,
WorldsStore.com. Worlds Ultimate 3D Chat is built on our Gamma platform and
incorporates e-commerce, voice-to-voice chat, articulated, customizable avatars
(personification of the on-line user) and video and audio streaming. We also
reached an agreement with BowieNet, to have Worlds Ultimate 3D Chat software
distributed on CD- ROM to BowieNet members.

         o Our fourth product release was made pursuant to our agreement with
Hansonopoly Inc. in May, 1999. We integrated our 3D technology on a CD+ that was
distributed in June and July 1999 to members of the Hanson fan club.

         o Our fifth product release was made in October 1999. We created and
host NYYankeesWorld.com, the first 3D virtual reality world to be created for a
major sports team.

         o Our sixth product release was made in October 1999. We created and
packaged more than 700,000 enhanced CDs containing our Worlds Ultimate 3D Chat
software with the November 1999 issue of GQ.

         We have also been actively pursuing strategic alliances with a number
of companies that can provide exposure and distribution of our products and
technology. We recently entered into agreements with three major companies in
the Internet arena. These companies are:


                                       18

<PAGE>



         o Excite, the number three portal site on the Internet.  We provide
Excite with select e-commerce content;

         o Road Runner, the high-speed online service owned by Time Warner,
MediaOne Group, Microsoft, Compaq Computers and Advance/ Newhouse. We provide
Road Runner with a co-branded 3D environment accessible by Road Runner
subscribers through its music channel; and

         o Freeserve, the leading Internet service provider in the United
Kingdom. We provide Freeserve with co-branded 2D and 3D interactive chat
environments accessible by Freeserve subscribers.

         We currently have eleven full-time employees and are working with six
independent software contractors who were former employees of our predecessor.
We do not anticipate hiring additional employees or purchasing additional plant
or equipment other than that needed on a day-to-day basis until product sales
increase significantly and/or additional financing is obtained.

         In June and August 1999, we consummated two tranches of a private
placement, selling an aggregate of 59 units. Each unit cost $60,000 and
consisted of 15,000 shares of common stock and warrants to purchase 7,500 shares
of common stock. At September 30, 1999, we had raised gross proceeds of
$3,540,000 in the private placement.

Results of Our Operations

Nine Months Ended September 30, 1999 Compared to the Nine Months Ended September
30, 1998

         The following data extracted from the attached unaudited financial
statements compares the results of our operations for the nine months ended
September 30, 1999 to the nine months ended September 30, 1998.


                                                 Nine months ended September 30,
                                                --------------------------------
                                                           (Unaudited)
                                                     1999               1998
                                                     ----               ----
Net Revenue .............................      $      241,607     $     16,132

Costs & Expenses:
      Cost of revenues ..................           (  168,783)     (   25,101)
      Selling, general & administrative..           (2,852,723)     (1,991,434)
      Research & development.............                  -        (  887,932)

Operating Loss..........................       $    (2,779,899)   $ (2,888,395)

Other Income (Expense):
      Interest Income...................                38,019         114,817
      Interest expense..................            (  102,206)     (  107,768)

Loss before extraordinary item..........            (2,844,086)     2,881,346

Extraordinary item-- gain on debt settlement.             -            172,547

Net Loss...............................        $     (2,844,086)  $ (2,708,799)

         In the first nine months of 1999, we continued to upgrade our core
technology and began production on new projects in anticipation of reaching



                                       19

<PAGE>


agreements with other entities with whom we are in negotiation. No assurance can
be given that any negotiations will lead to the consummation of any additional
agreements. In the first nine months of 1999, we continued the implementation of
our new business plan. Significant expenditure was incurred towards completion
of the Gamma technology and also with legal and professional fees.

         Revenues are nominal and are derived primarily from Worlds sales from
our 33 e-commerce web sites that currently operate artists and artist-related
merchandise stores, such as DavidBowieStore.com, RickyMartinStore.com,
U2Store.com, EltonJohnStore.com, BruceSpringsteenStore.com and others.  In
addition, Worlds reasized revenue from its VIP subscription services on Worlds
Ultimate 3-D Chat, Freeserve and Roadrunner. Nominal revenue was realized from
licensing royalties for Worlds technology from third party licensces. Revenue
was $241,607 and had associated direct costs of $168,783 for the nine months
ended September 30, 1999, compared to $16,132 in revenue and $25,101 of direct
costs for the same period in 1998.

         Selling, general and administrative expenses were $2,852,723 for the
nine months ended September 30, 1999. This represented an increase of $861,229
from $1,991,494 compared to the nine months ended September 30, 1998. This
increase was directly attributable to the higher costs associated with
maintaining our new-commerce site, retaining expert software developers to
improve and upgrade our existing products.

         We incurred no research and development costs during the nine months
ended September 30, 1999 as compared to $887,932 for the nine months ended
September 30, 1998. This is directly attributable to the fact that since our
technology is now technologically feasible, (i.e., it works), all expenses for
research and development are now capitalized. For the first nine months of 1999,
$573,865 of such expenditures were capitalized.

         Other income included $38,019 of interest income in the nine months to
September 30, 1999 earned from the remainder of the proceeds of our share
offerings as compared to $114,817 in the nine months ended September 30, 1998.
Other expenses included interest expense of $102,206 directly attributable to
our predecessor's notes payable in the nine months to September 30, 1999.
Interest expense in the nine months to September 30, 1998 was $107,768.

         As a result of the foregoing we incurred a net loss of $2,844,086 for
the nine months ended September 30, 1999, compared to a loss of $2,708,799 for
the nine months ended September 30, 1998, an increase of $135,287. The loss in
the 1998 period was after an extraordinary gain of $172,547.

Three Months Ended September 30, 1999 Compared with Three Months Ended September
30, 1998

                                                      Three Months Ended
                                                ------------------------------
                                                9/30/99               9/30/98
                                                -------               -------

Net Revenue ............................      $  148,682        $        --

Costs & Expenses:
     Cost of revenues ..................        ( 98,428)                --
     Selling, general & administrative..        (962,228)            (683,969)
     Research & development.............            -                (353,504)

Operating Loss..........................      $ (911,974)       $  (1,037,473)

Other Income (Expense):
     Interest Income....................          20,053               37,825
     Interest expense...................         (33,284)             (35,656)

Loss before extraordinary item..........        (925,205)          (1,035,304)

Extraordinary Item-- gain on debt settlement.       -                  20,893

Net Loss................................     $  (925,205)       $   1,014,411


                                       20

<PAGE>


          Revenues are nominal and are derived primarily from Worlds sales from
our 33 e-commerce web sites that currently operate artists and artist-related
merchandise stores, such as DavidBowieStore.com, RickyMartinStore.com,
U2Store.com, EltonJohnStore.com, BruceSpringsteenStore.com and others.  In
addition, Worlds reasized revenue from its VIP subscription services on Worlds
Ultimate 3-D Chat, Freeserve and Roadrunner. Nominal revenue was realized from
licensing royalties for Worlds technology from third party licensces. Revenue
was $148,682 and had associated direct costs of $98,428 for the three months
ended September 30, 1999, compared to none in revenue and none of direct costs
for the same period in 1998.

         Selling, general and administrative expenses were $962,228 for the
three months ended September 30, 1999. This represented an increase of $278,259
from $683,969 compared to the three months ended September 30, 1998. This
increase was directly attributable to the higher costs associated with
maintaining our new e-commerce site, retaining expert software developers to
improve and upgrade our existing products and costs involved in beginning work
on some of the new projects discussed above.

         We incurred no research and development costs during the three months
ended September 30, 1999 as compared to $353,504 for the three months ended
September 30, 1998. This decrease is directly attributable to the fact that
since our technology is now technologically feasible, i.e., it works, all
expenses previously charged to research and development are capitalized. For the
first quarter of 1999, $214,000 for the second and third quarters $225,000 and
$135,000, respectively of such expenditures were capitalized.

         Other income included $20,053 of interest income in the three months to
September 30, 1999 earned from the remainder of the proceeds of our share
offerings as compared to $37,825 in the three months ended September 30, 1998.
Other expenses included interest expense of $33,284 directly attributable to the
Predecessor's notes payable in the three months to September 30, 1999. Interest
expense in the three months to September 30, 1998 was $35,656.

         As a result of the foregoing we incurred a net loss of $925,205 for the
three months ended September 30, 1999, compared to a loss of $1,014,411 for the
three months ended September 30, 1998, an decrease of $89,206. The loss in the
1998 period was after an extraordinary gain of $20,893.
See Statement of Operations on Page 5.


Liquidity and Capital Resources of the Company

         Net cash provided from financing activities, net of operating and
investing activities from January 1, 1999 through September 30, 1999 was
$462,958. At September 30, 1999, we had working capital of $1,137,642 and cash
and cash equivalents in the amount of $2,044,722.

         On December 3, 1997, the Mergers were deemed to close as well as the
first round of a private placement of our common stock raising gross proceeds of
$3.8 million, by selling 3.8 million shares, of which we netted approximately
$3,000,000. We also acquired approximately an additional $560,000 from one of
the other parties to the mergers. In addition, as a result of the Mergers by
operation of law, we assumed predecessor's then liabilities of approximately
$4.6 million, the majority of which has since been paid or renegotiated. At
September 30, 1999, our total liabilities were approximately $3,061,000 million,
including the long term portion of notes payable of $1,852,000.




                                       21

<PAGE>


         Prior to the Mergers, we had 910,000 shares outstanding. Effective
December 31, 1997, we closed on an additional $585,000 of gross proceeds from
the private offering, of which we netted $529,000, and issued an additional
585,000 shares of common stock and on January 2, 1998 received an additional
$30,000, of which we netted $26,500, and issued an additional 30,000 shares. In
June 1998, we closed on a secondary offering of $1,832,000 gross proceeds, of
which we netted $1,715,800 by selling 1,832,000 shares at $1.00 per share.

         In June and August 1999, we consummated two tranches of a private
placement, selling an aggregate of 59 units. Each unit cost $60,000 and
consisted of 15,000 shares of common stock and warrants to purchase 7,500 shares
of common stock. At September 30, 1999, we had raised gross proceeds of
$3,540,000.

         Our capital requirements relating to the commercialization of our
technology and the development of our web sites and related content have been
and will continue to be significant. Satisfactory completion of product
development and commercialization will require capital resources substantially
greater than what we have now currently available to us. During the periods that
we experience net losses, we expect to be dependent upon sales of our capital
stock and debt securities to finance our working capital requirements. Based
upon our current plans and assumptions relating to our business plan, we
anticipate that our existing capital resources will satisfy our capital
requirements through at least March 2000. However, if our plans change or our
assumptions prove to be inaccurate, we may need to seek additional financing
sooner than currently anticipated or curtail our operations. Accordingly, we
will need to raise additional capital during 2000, which may be in the form of
equity or debt financing. Any issuance of equity securities would dilute the
interest of our shareholders. Additionally, if we incur debt, our company will
become subject to risks that interest rates may fluctuate and cash flow may be
insufficient to pay the principal and interest on any such debt. While we hope
to raise additional financing, we have no current arrangements with respect to,
or sources of, additional financing and there can be no assurance that any such
financing, particularly the significant amounts of financing that would be
required, will be available to us on commercially reasonable terms, or at all.
Any inability to obtain additional financing will have a material adverse effect
on our business, including possibly requiring us to significantly curtail or
cease operations.


Effect of Recent Accounting Pronouncements


         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133"), which requires companies
to recognize all derivatives as either assets or liabilities in the


                                       22

<PAGE>



statement of financial position and measure those instruments at fair value.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999. The
Company does not presently enter into any transactions involving derivative
financial instruments and, accordingly, does not anticipate the new standard
will have any effect on its financial statements.


Year 2000 Disclosure

         We are Year 2000 compliant and we do not anticipate any internal
problems. In the event any internal problems should arise, we have many expert
computer technicians on our payroll and we believe that we will be able to
satisfactorily address any such problems. However, we are dependent on the
integrity of the Internet being maintained to derive income from the sale of
merchandise on our own e-commerce site and through links to the products we
create. We have employed a redundancy system as a safeguard to protect the
viability of our site by having our site hosted by two of the larger Internet
Service Providers. Thus, in the event one of our hosts should fail, we could
continue uninterrupted on the other Internet Service Provider. We have been
advised that our hosts are addressing the Year 2000 issue and hope to be
compliant. We use Wells Fargo to process our e-mail transactions. Wells Fargo
processes a significant portion of all Internet e-commerce transactions and if
it fails due to Year 2000 problems we will be negatively impacted, but not
likely more than many other e-commerce vendors. In summary, we are totally
dependent upon third parties for hosting and processing our e-commerce
activities and while we cannot control the actions of these third parties, we
believe that given our redundant safeguards, the availability of other hosts and
processors to switch to in the event our current hosts and/or processor crashes
and the fact that we only see nominal revenue from our e-commerce at this time,
we do not believe that our profitability or operations will be materially
affected by the Year 2000 problem.




                                       23

<PAGE>



PART II:    OTHER INFORMATION

ITEM 2:     SALES OF UNREGISTERED SECURITIES

<TABLE>
<CAPTION>
                                                            Consideration
                                                             received and
                                                            description of
                                                         Underwriting or other    Exemption      If option, warrant or
                                                          discounts to market        from        convertible security,
      Date of                               Number         price offered to      registration    terms of exercise or
       Sale          Title of Security       Sold             Purchasers           claimed            conversions
     --------        -----------------      ------      ----------------------   ------------   ------------------------
<S>   <C>            <C>                        <C>     <C>                           <C>       <C>
      6/25/99        Units: Each unit           41      $60,000 per unit in           4(2)       Warrant underlying
                     consisting 15,000                  connection with private                  Units Exercisable until
                     shares of Common                   placement                                6/30/02 at an exercise
                     Stock and warrants                                                          price of $5.00 per
                     to purchase 7,500                                                           share.
                     shares of Common
                     Stock

      6/25/99        Common Stock           93,750      Issued in connection          4(2)                 N/A
                                                        with agreement with
                                                        Internet service provider

      7/28/99        Common Stock           50,000      Issued to brokerage           4(2)                 N/A
                                                        agent for services in
                                                        connection with agreement
                                                        with Internet service
                                                        provider

      8/10/99        Common Stock          120,000      Options granted under         4(2)       Vest 1/3 on 9/3/00; 1/3
                                                        1997 Stock Option                        on 9/3/01 and 1/3 on
                                                        Plan; no cash                            9/3/02.  Exercisable for
                                                        consideration received                   five years from date of
                                                        by Company until                         grant at an exercise
                                                        exercise                                 price of $2.46 per
                                                                                                 share.

      8/10/99        Common Stock          345,000      Options granted under         4(2)       Vest monthly based
                                                        1997 Stock Option                        upon number of hours
                                                        Plan; no cash                            worked. Exercisable for
                                                        consideration received                   five years from date of
                                                        by Company until                         grant at an exercise
                                                        exercise                                 price of $2.46 per
                                                                                                 share.

      9/3/99         Common Stock          274,500      Options granted under         4(2)       Vest 1/3 on 9/3/00; 1/3
                                                        1997 Stock Option                        on 9/3/01 and 1/3 on
                                                        Plan; no cash                            9/3/02.  Exercisable for
                                                        consideration                            five years from date of
                                                        received by Company                      grant at an exercise
                                                        until exercise                           price of $4.00 per
                                                                                                 share.

      9/3/99         Common Stock          50,000       Options granted under         4(2)       Vest 1/3 on 9/3/00; 1/3
                                                        1997 Stock Option                        on 9/3/01; 1/3 on
                                                        Plan; no cash                            9/3/02.  Exercisable for
                                                        consideration received                   five years from date of
                                                        by Company until                         grant at an exercise
                                                        exercise                                 price of $7.50 per
                                                                                                 share.

      9/3/99        Common Stock           50,000      Options granted under         4(2)       Vest 1/3 on 9/3/00; 1/3
                                                        1997 Stock Option                        on 9/3/01; 1/3 on
                                                        Plan; no cash                            9/3/02.  Exercisable for
                                                        consideration received                   five years from date of
                                                        by Company until                         grant at an exercise
                                                        exercise                                 price of $10.00 per
                                                                                                 share.
</TABLE>


                                       24

<PAGE>


<TABLE>
<CAPTION>
                                                            Consideration
                                                             received and
                                                            description of
                                                         Underwriting or other    Exemption      If option, warrant or
                                                          discounts to market        from        convertible security,
      Date of                               Number         price offered to      registration    terms of exercise or
       Sale          Title of Security       Sold             Purchasers           claimed            conversions
     --------        -----------------      ------      ----------------------   ------------   ------------------------
<S>   <C>            <C>                        <C>     <C>                           <C>       <C>
      6/26/99-       Units: Each unit           18      $60,000 per unit in           4(2)       Warrants underlying
      9/13/99        consisting 15,000                  connection with private                  Units exercisable until
                     shares of Common                   placement                                6/30/02 at an exercise
                     Stock and warrants                                                          price of $5.00 per
                     to purchase 7,500                                                           share.
                     shares of Common
                     Stock

      6/26/99-       Units: Each unit          11/3     Issued to professionals       4(2)       Warrants underlying
      9/13/99        consisting 15,000                  and consultants for                      Units exercisable until
                     shares of Common                   services rendered in                     6/30/02 at an exercise
                     Stock and warrants                 connection with private                  price of $5.00 per
                     to purchase 7,500                  placement                                share.
                     shares of Common
                     Stock

      6/26/99-       Warrants to              48,000    Issued to broker-             4(2)       Exercisable until
      9/13/99        purchase Common                    dealers in consideration                 6/30/02 at an exercise
                     Stock                              for selling Units in                     price of $5.00 per
                                                        private placement                        share.
-------------------  --------------------  ------------ ------------------------ --------------  -----------------------
</TABLE>






                                       25

<PAGE>



ITEM 6:    EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                  27.      Financial Data Schedule (9/30/99)

         (b)      Reports on Form 8-K

                  None



                                       26

<PAGE>



                                   SIGNATURES


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                          WORLDS INC.
                                          -----------
                                          (Registrant)





Dated:   November 19, 1999                 By:  /s/Thomas Kidrin
                                              -------------------------
                                              Thomas Kidrin
                                              President and Chief Financial and
                                              Accounting Officer






                                       27

<PAGE>



                                  EXHIBIT INDEX

Exhibit
Number            Description                                         Page

27                Financial Data Schedule (9/30/99)                    29
                                                                       --



                                       28