Worlds Inc (WDDD)

[Lowhndcpr]

On or about September 9, 2014, Hudson Bay IP Opportunities Master Fund L.P. (“Hudson Bay”) commenced a lawsuit against the Company in the Supreme Court of the State of New York, New York County, seeking preliminary and permanent injunctive relief, and damages based on the Company’s purported extension of Mr. Kidrin’s 7.5 million stock options for a two year period from March 2014 to March 2016. Hudson Bay contends that the purported extension of options constitutes a “dilutive issuance” of shares under a warrant issued to it by the Company. The Company has denied the substantive allegations of the complaint, and is vigorously contesting the lawsuit, including Hudson Bay’s motion for a preliminary injunction which is scheduled to be heard by the court on November 24, 2014. The Company has taken the position that the lawsuit is based on an error of fact – the purported extension of Mr. Kidrin’s stock options was done in error since his options do not expire prior to August 31, 2017 – and is in any event based on a misinterpretation of the parties’ contract.

On November 14, 2014, Hudson Bay filed an amended complaint adding Mr. Kidrin as a defendant, and adding actions for fraudulent inducement, and a declaratory judgment based on alleged subsequent dilutive issuances. The Company has until December 15 to respond to the amended complaint and intends to vigorously oppose the claims asserted therein.