Worlds Inc (OTCBB:WDDD)’s Legal Battle Continues

On July 22, just two and a bit weeks ago, Worlds Inc (OTCBB:WDDD) came up with what should have been a great announcement. They said that they have retained a financial advisory service that will help them change their share structure which would, in turn, enable them to have their stock listed on one of the senior exchanges. In addition to this, due to some more restructuring, they will be able to delete a large portion of their debt from their next financial statement. Normally, this sort of news would send the share price sky high, but what happened in the case of WDDD?

Hardly anything, really. Volume was generally above the average, but the value hardly moved and when it did, it was mostly in the wrong direction. WDDD managed to bounce a little during the first sessions of August, but overall, it would appear that traders remained somewhat indifferent to the optimistic piece of news. There is a very simple reason for this.

WDDD‘s shareholders aren’t that bothered about the financial statement at the moment. In fact, their shares are currently worth around $0.26 and they’ve no idea if the company is even going to register any revenues. The only thing that they’re interested at the moment is the patent infringement lawsuit against Activision Blizzard, Inc. (NASDAQ:ATVI).

As we mentioned a couple of months ago, WDDD filed a total of fifty-nine claims against the video games giant and, apparently, that was enough for the traders to start paying attention to the ticker. Trading really intensified in March and as soon as people heard about the whole patent infringement lawsuit, the price rose dramatically, it managed to reached around $0.40 per share and it hovered there for some time.

Then, towards the end of June, the Court decided to postpone the hearing by about two months which resulted in quite a crash. The losses within just four sessions amounted to around 35% and WDDD was under the $0.30 per share mark for the first time in a while.

Still, there were some investors who believed that the lawsuit will eventually be won which would inevitably give the price a push and that’s probably why the ticker regained some of its dignity somewhat and it managed to avoid heavy crashes… until yesterday.

The trading volume was over 2.3 million shares and that’s the first time since the June drop that we’ve seen so much stock changing hands in a day. More worryingly, when the closing bell rang, the ticker was around 16% below its previous value and an hour of trading today has resulted in a further 10% in losses. Is there a reason for this?

Of course, there is. And this time, it might put quite a lot more people off. Apparently, WDDD filed the lawsuit against Activision hoping that a settlement agreement will be reached quickly and painlessly. They probably thought that ATVI will pay them some money as compensation in order to ensure that not much noise is generated and that everything will be over in a jiffy.

Activision had other ideas. The hearing has been postponed once already and this document suggests that ATVI are trying to reschedule it once again, which could put even more question marks around the outcome of the case. More worryingly, WDDD‘s opposition suggest that the judge is inclined to satisfy ATVI‘s motion which will (if it hasn’t already) have a devastating effect on the price.

Unfortunately, we weren’t able to find the full copy of ATVI‘s motion to postpone the hearing but from what we read in WDDD‘s document, we gather than Activision might have switched to attack mode, suggesting that WDDD is nothing more than a “non-practicing patent assertion company”. The Court will decide whether that’s true or not, but, as WDDD admit themselves, they did transfer most of their operations to another penny stock venture – Worlds Online Inc. (OTCBB:WORX) – a company that, as we wrote about a month ago, is run by the same people.

It’s certainly interesting to see what will happen in the fierce legal battle that’s raging on between the video games giant and the small cap patent play, but whatever the outcome is, you should be absolutely sure to weigh the risks carefully before investing any money in WDDD.