NOTES TO FINANCIAL STATEMENTS
Six Months Ended June 30, 2022
(Unaudited)
NOTE 1 – GOING CONCERN
As reflected in the accompanying financial statements,
the Company has a working capital deficiency of $2,876,914 and a stockholder’s deficiency of $2,876,914 and used $606,544 of cash
in operations for the six months ended June 30, 2022. This raises substantial doubt about its ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and
implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable
to continue as a going concern.
Management believes that the actions presently being
taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern,
although no assurance can be given that the Company will be successful.
NOTE 2 – DESCRIPTION OF BUSINESS AND SUMMARY
OF ACCOUNTING POLICIES
Description of Business
On May 16, 2011, the Company transferred, through
a spin-off to its then wholly owned subsidiary, Worlds Online Inc. (currently called MariMed Inc.), the majority of its operations and
related operational assets. The Company retained its patent portfolio and is looking to expand on its legacy celebrity worlds and its
collection of non-fungible tokens.
Basis of Presentation
The accompanying financial statements have been prepared
in conformity with accounting principles generally accepted in the United States of America ("US GAAP"). The Company has incurred
significant losses since its inception and has had minimal revenues from operations. The Company will require substantial additional funds
for its expansion of its legacy celebrity worlds and its collection of non-fungible tokens. There can be no assurance that the Company
will be able to obtain the substantial additional capital resources to pursue its business plan or that any assumptions relating to its
business plan will prove to be accurate. The Company has not been able to generate sufficient revenue or obtain sufficient financing which
has had a material adverse effect on the Company, including requiring the Company to reduce operations. As the Company has focused its
attention historically on increasing its patent portfolio and enforcing it, and more recently on its expansion of its legacy celebrity
worlds and its collection of non-fungible tokens, the Company has been operating at a reduced capacity, with only one employee and using
consultants to perform any additional work that may be required.
Use of Estimates
The preparation of financial statements in conformity
with US GAAP 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 Equivalents
Cash and cash equivalents include highly liquid money
market instruments, which have original maturities of three months or less at the time of purchase.
Revenue Recognition
Effective January 1, 2018, the Company adopted ASC
606. There was no impact in adopting ASC 606 as the Company has no revenue at this time. In the second quarter of 2011, the Company spun
off its online businesses to MariMed Inc. The Company’s sources of revenue after the spinoff was expected to be from sublicenses
of the patented technology by Worlds Online and any revenue that may be generated from enforcing its patents. Commencing in the first
half of 2022, the Company expects that its revenues will come from its expansion of its legacy celebrity worlds and its collection of
non-fungible tokens. The Company recognizes revenue by applying the following steps: (1) identify the contract with a customer; (2) identify
the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance
obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
Research and Development Costs
Research and development costs are charged to operations
as incurred.
Property and Equipment
Property and equipment are stated at cost. Depreciation
is provided on a straight line basis over the estimated useful lives of the assets ranging from three to five years. When assets are retired
or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in
income. Maintenance and repairs are charged to expense in the period incurred.
Impairment of Long Lived Assets
The Company evaluates the recoverability of its fixed
assets and other assets in accordance with section 360-10-15 of the Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) for disclosures about Impairment or Disposal of Long-Lived Assets. Disclosure requires recognition
of impairment of long-lived assets in the event the net book value of such assets exceeds its expected cash flows. If so, it is considered
to be impaired and is written down to fair value, which is determined based on either discounted future cash flows or appraised values.
The Company adopted the statement on inception. No impairments of these types of assets were recognized during the first quarters of 2022
and 2021.
Stock-Based Compensation
The Company accounts for stock-based compensation
using the fair value method following the guidance set forth in section 718-10 of the FASB ASC for disclosure about Stock-Based Compensation.
This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments
based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an
employee is required to provide service in exchange for the award (usually the vesting period). No compensation cost is recognized for
equity instruments for which employees do not render the requisite service.
Income Taxes
The Company accounts for income taxes under Section
740-10-30 of the FASB ASC. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting
and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely
than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the consolidated statements of operations in the period that includes
the enactment date.
ASC 740 prescribes a comprehensive model for how companies
should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on
a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the
position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as
the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority
assuming full knowledge of the position and relevant facts.
Notes Payable
The Company has $773,279 in short term notes outstanding
at June 30, 2022 and December 31, 2021. These are old notes payable for which the statute of limitations has passed and therefore the
Company does not expect it will ever have to repay those notes.
Comprehensive Income (Loss)
The Company reports comprehensive income and its components
following guidance set forth by section 220-10 of the FASB ASC which establishes standards for the reporting and display of comprehensive
income and its components in the financial statements. There were no items of comprehensive income (loss) applicable to the Company during
the period covered in the financial statements.
Loss Per Share
Net loss per common share is computed pursuant
to section 260-10-45 of the FASB ASC. Basic net loss per share is computed by dividing net loss by the weighted average number of
shares of common stock outstanding during the period. As of June 30, 2022, there were 27,620,000
options and 4,380,000
warrants outstanding and as of June 30, 2021, there were 11,720,000
options and 4,380,000
warrants outstanding whose effect is anti-dilutive and not included
in diluted net loss per share for June 30, 2022 or for June 30, 2021. The options and warrants may dilute future earnings per
share.
Commitments and Contingencies
The Company follows subtopic 450-20 of the FASB ASC
to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result
in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such
contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal
proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived
merits of
any legal proceedings or unasserted claims as well
as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that
it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would
be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not
probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate
of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally
not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon
information available at this time, that these matters will have a material adverse effect on the Company’s financial position,
results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s
business, financial position, and results of operations or cash flows.
During 2000 the Company was involved in a lawsuit
relating to unpaid consulting services. In April, 2001 a judgment against the Company was rendered for approximately $205,000. As of June
30, 2022, and December 31, 2021 the Company recorded a reserve of $205,000 for this lawsuit, which is included in accrued expenses in
the accompanying balance sheets.
Risk and Uncertainties
The Company is subject to risks common to companies
in the technology industries, including, but not limited to, litigation, development of new technological innovations and dependence on
key personnel.
Off Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
Uncertain Tax Positions
The Company did not take any uncertain tax positions
and had no adjustments to unrecognized income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the year
ended December 31, 2021.
Fair Value of Financial Instruments
The Company measures assets and liabilities at fair
value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount
that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between
market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability.
The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring
or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.
The following are the hierarchical levels of inputs
to measure fair value:
| • |
Level 1 - Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities. |
| • |
Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
| • |
Level 3 - Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. |
The carrying amounts of the Company’s financial
assets and liabilities, such as cash, other receivables, accounts payable & accrued expenses, due to related party, notes payable
and notes payables, approximate their fair values because of the short maturity of these instruments. The Company's convertible notes
payable are measured at amortized cost.
Warrant and option expense was measured by using level
3 valuation.
Embedded Conversion Features
The Company evaluates embedded conversion features
within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should
be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings.
If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt
with Conversion and Other Options” for consideration of any beneficial conversion feature.
Derivative Financial Instruments
The Company does not use derivative instruments to
hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including stock
purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative
financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is
then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income.
For option-based simple derivative financial instruments,
the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates.
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed
at the end of each reporting period.
Recent Accounting Pronouncements
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.
The Company accounts for stock-based compensation
for employees and directors in accordance with Accounting Standards Codification 718, Compensation (“ASC 718”) as issued by
the FASB. ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the
statement of operations based on their fair values. Under the provisions of ASC 718, stock-based compensation costs are measured at the
grant date, based on the fair value of the award, and are recognized as an expense over the employee’s requisite service period
(generally the vesting period of the equity grant). The fair value of the Company’s common stock options are estimated using the
Black Scholes option-pricing model with the following assumptions: expected volatility, dividend rate, risk free interest rate and the
expected life. The Company expenses stock-based compensation by using the straight-line method. In accordance with ASC 718 and, excess
tax benefits realized from the exercise of stock-based awards are classified as cash flows from operating activities. All excess tax benefits
and tax deficiencies (including tax benefits of dividends on share-based payment awards) are recognized as income tax expense or benefit
in the condensed consolidated statements of operations. The Company accounts for stock-based compensation awards issued to non-employees
for services, as prescribed by ASC 718-10, at either the fair value of the services rendered or the instruments issued in exchange for
such services, whichever is more readily determinable, using the measurement date guidelines enumerated in Accounting Standards Update
(“ASU”) 2018-07.
In February 2016, the FASB issued ASU 2016-02, “Leases”
Topic 842, which amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability
most significantly by requiring the recognition by lessees of right-of-use assets and lease liabilities on the balance sheet for all leases
longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to
assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or
operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Company adopted
the new lease guidance effective January 1, 2019. The Company is not a party to any leases and therefore is not showing any asset
or liability related to leases in the current period or prior periods.
NOTE 3 - NOTES PAYABLE
| Notes payable at June 30, 2022 consist of the following: | |
|
| Unsecured note payable bearing 8% interest, entire balance of principal and unpaid interest due on demand | |
$ | 124,230 | |
| | |
| | |
| Unsecured note payable bearing 10% interest, entire balance of principal and unpaid interest due on demand | |
$ | 649,049 | |
| Total notes | |
$ | 773,279 | |
| 2022 | |
$ | 773,279 | |
| 2023 | |
$ | -0- | |
| 2024 | |
$ | -0- | |
| 2025 | |
$ | -0- | |
| 2026 | |
$ | -0- | |
| | |
$ | 773,279 | |
The Company imputed interest of $18,919 on the notes
during the quarter ended June 30, 2022.
NOTE 4 - EQUITY
All common stock numbers and exercise prices in this
Note are reflected on a post reverse split (5 to 1) basis, which reverse split was effectuated on February 9, 2018.
During the six months ended June 30, 2022, the
Company issued 15,900,000 options. Another 900,000 options were re-issued to Directors at a new price and an extended term..
As consideration for the IP in the Asset Purchase
Agreement between the Company and Mr. Kidrin, Mr Kidrin was granted 15,000,000 options at an exercise price of $0.07 per share for three
years. The Company recorded an option expense of $751,744. The fair market value for Mr. Kidrin’s options was calculated using
the Black Scholes method assuming a risk free interest of 1.35%, 0% dividend yield, volatility of 174%, and an exercise price of $0.07
per share with a market price of $0.07 per share at issuance date and an expected life of 3 years. The options vested on January 18, 2022.
The active directors of the Company received 300,000
options each on January 3, 2022. The options were for service performed during 2019, 2021 and 2022 which were never
issued. The Company recorded an option expense for these options of $31,108
for the six months ended June 30, 2022. The fair market value for these options was calculated using the Black Scholes method assuming
a risk free interest of 1.37%, 0%
dividend yield, volatility of 142%,
and an exercise price of $0.05
per share with a market price of $0.05
per share at issuance date and an expected life of 5
years. The options vest six
months from the date of grant.
The active directors of the Company had their
existing options repriced and the terms extended another 5
years. The total number of options that were repriced on February 16, 2022 was 900,000.
The Company recorded an option expense for these options of $38,444
for the six months ended June 30, 2022. The fair market value for these options was calculated using the Black Scholes method assuming
a risk free interest of 1.90%, 0%
dividend yield, volatility of 153%,
and an exercise price of $0.08
per share with a market price of $0.08
per share at issuance date and an expected life of 5
years. The options are all vested upon date of grant.
During the six months ended June 30, 2021, the
Company issued 297,673 shares of common stock as settlement of accounts payable to a related party. The value of the shares at the date
of issuance was $70,810 resulting in a loss of $8,685.
During the six months ended June 30, 2021, the Company
recorded an option expense of $109,874 representing the amortization of the value of the options issued in 2020 that have not yet vested.
During the six months ended June 30, 2022, the Company
recorded an option expense of $821,296.
| Stock Warrants and Options |
| Stock warrants/options outstanding and exercisable on June 30, 2022 are as follows |
| Exercise
Price per Share |
|
Shares
Under Option/warrant |
|
Remaining
Life in Years |
| Outstanding |
|
|
|
|
| $ |
0.325 |
|
|
|
3,400,000 |
|
|
|
0.58 |
|
| $ |
0.15 |
|
|
|
5,220,000 |
|
|
|
0.25 |
|
| $ |
0.15 |
|
|
|
580,000 |
|
|
|
0.50 |
|
| $ |
0.05 |
|
|
|
200,000 |
|
|
|
0.50 |
|
| $ |
0.30 |
|
|
|
200,000 |
|
|
|
0.50 |
|
| $ |
0.25 |
|
|
|
5,000,000 |
|
|
|
1.16 |
|
| $ |
0.24 |
|
|
|
200,000 |
|
|
|
1.16 |
|
| $ |
0.07 |
|
|
|
15,000,000 |
|
|
|
2.55 |
|
| $ |
0.27 |
|
|
|
300,000 |
|
|
|
3.45 |
|
| $ |
0.3 |
|
|
|
100,000 |
|
|
|
3.50 |
|
| $ |
0.05 |
|
|
|
900,000 |
|
|
|
4.50 |
|
| $ |
0.08 |
|
|
|
900,000 |
|
|
|
4.63 |
|
| Total |
|
|
|
|
32,000,000 |
|
|
|
|
|
| Exercisable |
|
|
|
|
|
|
|
|
|
|
| $ |
0.325 |
|
|
|
3,400,000 |
|
|
|
0.58 |
|
| $ |
0.15 |
|
|
|
5,220,000 |
|
|
|
0.25 |
|
| $ |
0.15 |
|
|
|
580,000 |
|
|
|
0.50 |
|
| $ |
0.05 |
|
|
|
200,000 |
|
|
|
0.50 |
|
| $ |
0.30 |
|
|
|
200,000 |
|
|
|
0.50 |
|
| $ |
0.25 |
|
|
|
5,000,000 |
|
|
|
1.16 |
|
| $ |
0.24 |
|
|
|
200,000 |
|
|
|
1.16 |
|
| $ |
0.07 |
|
|
|
15,000,000 |
|
|
|
2.55 |
|
| $ |
0.27 |
|
|
|
300,000 |
|
|
|
3.45 |
|
| $ |
0.03 |
|
|
|
100,000 |
|
|
|
3.50 |
|
| $ |
0.08 |
|
|
|
900,000 |
|
|
|
4.63 |
|
| Total |
|
|
|
|
31,100,000 |
|
|
|
|
|
NOTE 5 - COMMITMENTS AND CONTINGENCIES
The Company is committed to an employment agreement
with its President and CEO, Thom Kidrin. The agreement, dated as of August 28, 2018, is for five
years with a one-year
renewal option held by Mr. Kidrin. The agreement provides for a base salary of $200,000,
which increases 10%
on September 1 of each year; a monthly car allowance of $500;
an annual bonus equal to 2.5% of Pre-Tax Income (as defined in
the agreement); an additional bonus as follows: $75,000,
if Pre-Tax Income for the year is between 150%
and 200% of the prior fiscal year’s
Pre-Tax Income or (B) $100,000,
if Pre-Tax Income for the year is between 201%
and 250%
of the prior fiscal year’s Pre-Tax Income or (C) $200,000,
if Pre-Tax Income for the year is 251%
or greater than the prior fiscal year’s Pre-Tax Income, but in no event shall this additional bonus exceed five (5%)
percent of Pre-Tax Income for such year; payment of up to $10,000
in life insurance premiums; options to purchase 5
million shares of Worlds Inc. common stock at an exercise price of $0.25
per share, 2
million of which vested on August 28, 2018, 1.5
million vested on August 28, 2019 and the remaining 1.5
million vested on August 28, 2020 ; a death benefit of at least $2
million dollars; and a payment equal to 2.99 times
his base amount (as defined in the agreement) in the event of a Change of Control (as defined in the agreement). The agreement
also provides that Mr. Kidrin can be terminated for cause (as defined in the agreement) and that he is subject to restrictive covenants
for 12 months after termination.
NOTE 6 - RELATED PARTY TRANSACTIONS
During the six months ended June 30, 2022, the Company
entered into an asset purchase agreement with Thom Kidrin the CEO of the Company. The Company purchased certain IP which was transferred
to Worlds Online Inc., now called MariMed Inc.. Mr. Kidrin received the IP as part of a settlement agreement he signed with MariMed Inc.
The purchase price was 15 million options to purchase Worlds Inc. common stock at $0.07 per share for three years, the closing market
price on the date of the agreement.
During the six months ended June 30, 2021, the
Company issued 297,673
shares of common stock to Chris Ryan the CFO as settlement of amounts previously recorded. The value of the shares on the date of
issuance was $70,810. The Company recorded a loss of $8,685
on the issuance of the shares.
During the six months ended June 30, 2021, the Company
recorded a gain on forgiveness of accounts payable related party due to the Company’s CFO in the amount of $16,401.
The balance in the accrued expense attributable to
related parties is $46,438 and $33,899 at June 30, 2022 and December 31, 2021, respectively.
See note 9 for a discussion on the convertible note
receivable from the related party.
NOTE 7 - PATENTS
Worlds Inc. currently has nine
patents, 6,219,045 - 7,181,690
- 7,493,558 – 7,945,856,
- 8,082,501, – 8,145,9988,161,383, – 8,407,592 and 8,640,028.
NOTE 8 – ACCRUED EXPENSES
Accrued expenses is comprised of (i) $46,438 owed
to related parties, (ii) $205,000 related to a judgment against the Company relating to unpaid consulting services dating back to April
of 2001, (iii) $1,305,009 related to old accruals for which the statute of limitations has passed and therefore the Company does not expect
it will ever have to repay those amounts, and (iv) $2,972 related to accruals for recurring operating expenses.
NOTE 9 – CONVERTIBLE NOTE RECEIVABLE –
RELATED PARTY
The Company made an investment in the form of a convertible
note in the amount of $200,000 to Canadian American Standard Hemp (CASH). The convertible note has a 7% annual interest rate and matures
in 2 years. Interest and principle is payable at maturity. The note can be converted at any time, either all or part of the amount due
can be converted into the borrower’s equity. During the year ended December 31, 2020, CASH merged with Real Brands, Inc. The note
was amended with a new maturity date of October 15, 2023. All other terms remained the same. As consideration for the extension, the Company
received one million warrants to purchase Real Brands, Inc. common stock at $0.05 per share. The convertible note and accrued interest
of $38,500 can be converted into 29,303,395 shares of Real Brands common stock at a conversion price of $0.008139. If converted into common
stock, the Company would own approximately 1% of Real Brands Inc. Messrs. Kidrin, Toboroff and Christos are Directors of Real Brands and
Mr. Kidrin is the CEO and Mr. Ryan is the CFO of Real Brands.
During the six months ended June 30, 2022, the Company
earned $7,039 in interest on the note.
During the six months ended June 30, 2021, the Company
earned $7,039 in interest on the note.
NOTE 10 – SALE OF MARKETABLE SECURITIES
When Worlds Inc. spun off Worlds Online Inc. in January
2011, the Company retained 5,936,115 shares of common stock in Worlds Online Inc. (now named MariMed Inc.). Those shares were retained
on the books of the Company with a book value of $0.
During the six months ended June 30, 2022 the
Company generated net cash of $606,136 from the sale of 900,000 shares of MariMed Inc. common stock. The average price was $0.70 per share.
During the six months ended June 30, 2021 the Company
generated net cash of $864,926 from the sale of 1,095,000 shares of MariMed Inc. common stock during the six months ended June 30, 2021
and 100,000 shares of MariMed Inc. common stock at the end of December 2020 which was not transferred to the Company’s bank account
until January of 2021. The average price per share was $0.79 per share.
As of June 30, 2022, the Company still owns approximately
850,000 shares of MariMed Inc. common stock.
NOTE 11 – SUBSEQUENT EVENTS
The Company evaluates events that have occurred after
the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any additional
recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements.