Worlds Inc (WDDD)

[EVBargainHunter]

1) Treble damages are assumed in the analysis that I linked to, and based my numbers on

2) My dilution assumes cash needs that IMHO reflect a conservative estimate of future needs, simply from looking at Kidrin's compensation package

3) Income tax is factored in, and tax losses are not material to the price target

4/5/6) The analysis is extremely neutral. It simply examines potential damages under two frameworks for damage calculations, EMVR & Apportionment. The assumptions are all reasonable, if not excessively optimistic, and reflect best practice in estimating damages. Worldwide 2007-2014 revenue from WoW & Cod of $21B were allocated to the US at 50%, the revenue base was apportioned at 45% (generous), a royalty rate of 7% applied to the apportionment base (generous given average software royalty rate is 5% per KPMG - see link below), and adjusted to reflect 3x treble damages for willful infringement. Future ATVI royalties were grown by 3% a year. Final assumptions include 35% legal fees, and 35% income tax on damages.

4/5/6 Cont) The only assumption I made was to estimate follow on damages at 50% of the ATVI damages, rough estimate considering ATVI has the largest revenue pool at risk compared to other publishers, but also their titles are relatively the most reliant upon virtual world technology

7) Correct me if I'm wrong, but we've been getting funding at a discount to the stock's market value. The terms of the last funding round weren't particularly favorable

(https://assets.kpmg.com/content/dam/kpmg/pdf/2015/09/gvi-profitability.pdf)


In response to the Pump & Dump comment.....are you joking? I'm not sure how a 40x-90x return constitutes a pump, given that the entire investment will be lost if these returns don't materialize. If anything, this is a smoke signal to newcomers considering the stock. As BigG said; 40x return doesn't justify the uncertainty, time horizon, and opacity borne by shareholders. Please don't read that post and think 'OMG I must buy NOW!!!"

A dip to .01 would jack the return multiple up to 170x-370x of invested capital, once again providing adequate compensation to fund what is in essence a living stipend for Kidrin while he waits out the appeal process.

Kidrin needs to either partner with a creative financier capable of lowering dilution's impact on the value of existing equity, or defer his salary to avoid said dilution.

Absent either of those actions (or short term appreciation based on a favorable ruling in WiFI One) this is ending in a dilution induced death spiral wherein the stock price is so hammered that WDDD can't meet its operating costs, and is no longer to operate as a going concern.

I'm very concerned that people haven't thought that possibility through to the logical conclusion.....