Monday, March 31, 2008

Buyback Details and New Shareholder List

I am providing the details of the Initial Buyback of shares, which took place on march 30, 2008 - 10 days after the delisting of DDE from the WSE, as well as the new shareholder list, effective today, April 1, 2008. The new fiscal year commences today as well, with the first dividend to be payed out by May 5th, and the 5th of every subsequent month. Details of dividend payments and updated shareholders lists will be available as we go along.

As I have mentioned before - the remaining shares will be subject to "mandatory buyback" over the coming months as per the schedule I have laid out:
1st Quarter: 2.50L per share
2nd Quarter: 2.75 per share
3rd Quarter: 3.00L per share
4th and subsequent Quarters: 3.25L per share.

As you will see - three investors assisted me in providing cash to complete the buyback of shares - Vitall Beck, Eliale Morigi, and logansan Oh - I am extremely grateful that these three stepped forward to make this all possible. The shares they have purchased as part of this buyback will be considered "reserve" shares - they will not be subject to a buyback until all other shares of DDE have been bought, and will be eligible to receive dividends.

The initial buyback was of 747,253 shares, and the total amount paid out was 1,955,676L. There are now 51 DDE shareholders.

If at any time, any shareholder wishes to cash out their holdings of DDE, I will strive to make this possible. Although I cannot guarantee that I will be able to fulfill the request, I am confident that in most cases, this will be possible.

Click here to see the details of the Initial Buyback

Click here to see the new shareholders list, as of April 1, 2008


Once again - thanks to all. Onward and upward!

dd

Sunday, March 30, 2008

Initial Buyout Complete

It is done...

Phew.

The initial buy back of shares was completed today - with some last minute messages from some large investors that wanted to cash out, the number of shares bought back today swelled to almost 750,000 shares, and I distributed almost 2,000,000L to shareholders. That's a LOT of zeroes!

First, I want to thank three investors who made this possible by providing more than half of the cash necessary to do this buyback, and have thereby increased their stake in the new DDE.

Second, there are a number of shareholders whose accounts no longer exist in SL - or who have not logged on for over three months (yes, I checked them all - lol). I did not buy shares from these accounts (which total about 22,000 shares or about 0.5%), but am keeping the money in reserve as I try to ascertain their status - most of these shareholders have few shares, but I do not want to throw money into dead accounts, so it is worth a bit of time to try to contact those that I can.

Third, I am going to post a new list of shareholders and their holdings tomorrow - I know I promised it today, but I don't have all of the final numbers yet, and want to make sure that it is right before it is posted. I will be posting specifics about how many shares were bought, from whom , for how much. Although I am sensitive to the privacy of my shareholders, at this point I think the need for transparency outweighs it, and i want everyone to know exactly what I am doing every step of the way.

The last 10 days since DDE delisted from the WSE have been... a whirlwind. I have been overwhelmed by the support shown to my by my investors - whether they continue to hold shares in the company or were bought out today - you have all been wonderful. I will continue to work hard for you to maximize the value you get out of being a part of my little business.

Today I am sad, as I learned yesterday of the passing of my friend, Geyl Fapp, who died too young, but left a legacy of hope and trust for us in SL. She made me realize that all of this means nothing if we don't treat each other well, and seek friendship and love and community in Second Life.

Please visit the memorial site for Geyl and see what this remarkable woman created to mark her own passing.

Thank you all for being part of the DDE family and community. In Geyl's memory, let's always remember to treat each other well and work together for the common good of all.

dd

Saturday, March 29, 2008

Final Plan

First of all, I want to thank DDE investors for just being so damned amazing! You guys rock! After a lot of thought and consultation, here is the final plan.

1. All shareholders with 5000 or fewer shares are being bought out tomorrow for 3L per share. This amounts to a total of 135,086 shares, to be bought out for 405,258L

2. All shareholders with more that 5000 shares were given the offer to sell the first 5000 shares at 3L per share and their remaining shares immediately at 2.50L per share. A number of shareholders contacted me, and in total, there are 5 shareholders that are selling a total of 383,926 shares (25,000 @ 3L per share, the rest at 2.50L per share), for a total buyout price of 972,315L.

3. So, in total, 519,012 shares are being bought back for 1,377,573L. This will happen tomorrow, Sunday, March 30, 2008 (the delisting happened on March 20 - I apologize for taking so long to get this ironed out)

4. I was able to raise personal cash to cover 877,573L of this total. I contacted three major shareholders who had exhibited an interest in providing capital for this buyback, and they will provide the other 600,000 Lindens, and be given the proportional amount of shares.

5. After this initial buyout - I will institute the following procedure:

A. I will collect a monthly salary of 250k Lindens.
B. All remaining profits will be distributed as dividends monthly. My expectation is that this will result in a monthly dividend of between 0.1L and 0.15L.
C. With my share of the dividends, and my salary, I will do a mandatory buy back of shares at rates on the following schedule (the new fiscal year for DDE starts on April 1, 2008):
- First quarter: 2.50L per share
- Second quarter: 2.75L per share
- Third quarter: 3.00L per share
- Fourth and subsequent quarters: 3.25 per share

All shareholders will have a proportion of their shares bought back each month, in order to be fair. The one exception to this is the shares bought by the three investors today - that are providing the cash to make this possible. They will have the option to keep these shares until all other shares have been bought back, before they are subject to the mandatory buyback.

I cannot guarantee being able to buy any more shares than the monthly dividends and salary allow. However, if at any time, a shareholder wants to liquidate their shares, i will do whatever I can to make this possible, and would be willing to try to broker a deal with another shareholder for a transfer of shares. I am confident that if shareholders need to sell their shares quickly I can find a way to make it possible - so please contact me.

I will post details of all of this tomorrow, including which shareholders sold how many shares, and for how much, and will provide an up-to-date list of shareholders. I am having to learn how to put up web pages - so some patience may be needed with format and so on, but the information will be available tomorrow.

Again, I just want to thank the DDE shareholders for your support and good wishes - I have been overwhelmed by how positive and just plain amazing you have all been. It is humbling, to be sure, and it of course just makes me want to work that much harder to make DDE successful and profitable for you in the next year so that you can all maximize your investment returns.

As always, I am open to comments, questions, thoughts, advice, etc... Please feel free to contact me inworld by IM or notecard, or leave a comment on the blog here.

DD




Wednesday, March 26, 2008

Missing the point! LOL

Ok, people - I think you are missing the point here! lol

So far, I have had a dozen people contact me that want to reinvest in DDE with at least 100,000 more shares. Almost no-one has indicated that they wish to sell out! Now, while on the one hand this is gratifying, on the other hand, it doesn't help my plan very much! hahaha

I appreciate the support however...

I need to know from shareholders that want to sell off their shares immediately - if there aren't any - then there is no real need for reinvestment - except for the "forced" buyout of shareholders with fewer than 5000 shares. I will post this in the group as well, but please contact me with if you want to sell your shares.

On an administrative note - I have been contacted by a number of shareholders about discrepancies in the list of shareholders that I posted yesterday. This list was taken on March 20, 2008 - the day that I delisted from the WSE. However, there appears to have been some movement of shares after the WSE closed - some shares have been moved to other accounts, and the avatars that have had shares removed, it seems, had it done without their knowledge or consent - with one exception.

Fortunately, I took a list of shareholders on the day that the WSE closed in January - so i am going to revert to using this list as the authoritative source for shares.

The link has been updated with the January 5th shareholder list here.


dd

Monday, March 24, 2008

Proposal 2: New and Improved

Hi all,
thanks very much for the thoughtful posts, as well as the IM conversations and notecards that you have all sent. I am truly humbled by your responses and the trust that you have shown.

So... Here's what I am concluding from what I have received and read:
1. No liquidation - nobody so far has suggested this and almost all have counseled against it.
2. All shareholders are to be treated fairly - whether they own 1 share or 400,000 - i.e. given the same opportunities. I am trying to do this, but I will have to reduce the number of small shareholders quickly in order to manager this.
3. There are a significant number of investors who want to stay invested, or even increase their stake in DDE. Many are willing to invest cash in order to buy out those that want to take money for their shares now.
4. There are some who want to cash out immediately, and I want to ensure they get the best deal possible in the current situation.
5. People like me. They really do. lmao


So, here is the new proposal, that takes all of your suggestions, and my own thoughts, and puts them together:

1. I will raise what cash I can without liquidating significantly (sell off mainland, perhaps one or two of the least profitable islands)

2. Once this is complete, I will seek investors that want to increase their stake in DDE. I am going to have a threshold of investment of 100,000L - this is the minimum amount for a "buy-in" to this process. In order to keep control of things - I will need all transactions to go through me - I don't want people making side deals. At this point, I do not have a good sense of how much capital will be needed for immediate share buy backs.

3. For anyone that owns fewer than 5000 shares, I am going to make a one-time payout of 3L per share for the shares you own. This is not optional. In order to be fair - I will offer a one-time pay-out of 3L per share for up to 5000 shares of any other shareholder that wants to take advantage of this. This will cost between 400,000L and 800,000L, and will reduce the number of shareholders to a maximum of 60.

4. Using the cash raised as per above, I will provide a one-time payout of 2.50L per share for all those that wish to cash out now, above the 5000 shares mentioned above.

5. After the initial buyout of those that want to sell their shares immediately - I will institute the following procedure:

A. I will collect a monthly salary of 250k Lindens.
B. All remaining profits will be distributed as dividends monthly. My expectation is that this will result in a monthly dividend of between 0.1L and 0.15L.
C. With my share of the dividends, and my salary, I will do a buy back of shares at rates on the following schedule:
- First quarter: 2.50L per share
- Second quarter: 2.75L per share
- Third quarter: 3.00L per share
- Fourth and subsequent quarters: 3.25 per share
D. As I have said a few times - I want to move toward obtaining full ownership of DDE with a view to eventually winding it down and getting out of the land business. It is looking more and more like this is going to have to be some time down the road - but I need you all to understand where that is going. Therefore, the buy back each month will be structured so that the full amount of my salary + dividends will be used to buy back shares. If I can get enough people that want to sell them voluntarily at the prevailing rate, then all is good. If not - I will buy back a equal proportion of everyone's shares at that rate until the cash is used up.

Under this model - people that need cash at any time can opt out at a fair price (remember that the liquidation value per share was 1.66L - and the going share price at the time of WSE closure was only 2.84). However, those that want to hold onto their shares could make a significant profit - shares sold after a year, at 3.25, will have likeley earned enough dividends that the total yield on them will approach 5L per share.

Now - this is all contingent on finding investors that want to increase their stake - those of you that have already indicated this to me will be contacted. anyone else that wants to "buy-in" should contact me as soon as possible.

It is also contingent on enough people wanting to sell immediately to make it worthwhile. To date I have messages from people indicating only about 350,000 shares that want to sell out immediately.

The advantage that I see in this plan is that it provides fair value all the way along. Smaller investors are provided with a premium price immediately (higher than either IPO or price or the last share price on WSE). Those that stay can opt-out any time - but the longer they stay, the more they make both in dividends and share price. As I reflected on things - I thought that is likely what would have happened if the company had remained on an exchange - a gradual increase in the share price over time, and decent dividends all the way along.

So I hope that this plan is a win-win for both investors and for me. Unfortunately - there is no reliable method for me to put this to a vote and know who is voting for what - (or to know that who is voting is who they say they are - lol) so I am going to have to ask major shareholders to either contact me inworld or to leave a message on the blog indicating their support or refusal of the plan. IF I get strong support for this, I will put it into motion.

Phew.

DD

PS: HERE IS THE LINK TO A LIST OF SHAREHOLDERS

Saturday, March 22, 2008

Initial DDE Plan for discussion

Initial Plan for DDE:

I am proposing a multi-phased approach to winding down DDE operations and providing shareholders with the opportunity to choose from among a number of options to cash out of DDE. These plans basically involve a buyback strategy and there would be no expectations of additional dividends from DDE, with the ultimate goal of my acquiring total ownership of all DDE assets. However, there is still the possibility of a liquidation and one-time payment for shareholders, as outlined below.

First, a bit of background.

DDE was formed in April 2006, with the purchase of my first sim in Second Life. It operated privately for almost a year. DDE went public in march 2007 with an initial public offering of 1,000,001 shares - of which 500,000 were offered for sale at 1L per share. Anyone lucky enough to have bought shares at that time would have made an equal amount in dividends per share, plus 10% - DDE disbursed 1.1L per share in 12 months, which represents over 3,000,000L in dividends alone. Subsequently, DDE made two secondary offers. the first, of 1,000,000 shares in June 2007 at a price of 2.50L per share, and the second of 2,000,000 shares in November of 2007, at a price of 2.75L per share. Finally - DDE acquired Delicious Skins in December, 2007, and all shares of DSE were rolled into DDE at a conversion rate of 3:1, leaving DDE with a total of 4,432,439 shares.

The DDE share price has moved between 1.75 and 4L per share during the history of its trading, with a NAV of between 2L and 6L per share - depending on the month and the value of land in SL at the time, and the number of shares outstanding. The overall average price of DDE trades is in the neighbourhood of 2.75L per share.

My foremost aim in all of this is to be fair, and i need my shareholders' feedback about what is the fairest way to deal with the delisting of DDE and the subsequent winding down of the public operations of the company. I have always posted financial reports of assets based on the purchase price of estates, and the prevailing price of mainland. Financial reports were not posted as liquidation value. In order to provide shareholders with a fair liquidation value of DDE - i provide the following:

Shares outstanding: 4,432,439
Estates owned: 23 (19 regular and 4 low-prim sims)
Liquidation value per sim: $1300 USD per regular, $350 per low-prim sim
Cost of island transfer: 100x21 = 2100 USD
Total estimated liquidation value: $24,000 USD = approx 6.500,000L
Mainland owned: 94,412m
Estimate value on disposition: 850,000L

Other assets held in trust, but not liquid:
WSE assets: approx 500,000L in cash and HCL & WTF shares

Available cash on hand - 0L - current cash balance (662,000L) must be used kept in reserve and used to pay tier and transfer fees on estates and mainland during a possible liquidation - if I default on tier payments - everybody loses ;-)

Total liquidation value of DDE: 7,350,000L
Total liquidation value per share: 1.66L per share.

This assumes rapid liquidation of all assets at a lower price than normal in order to expedite sale, and may be slightly higher or slightly lower depending on how the sale of assets proceeds.

In terms of operations, in broad strokes, DDE takes in approximately 2.5 - 3.0 million Lindens per month in revenue and has costs of approximately 2m Lindens per month - for an estimated monthly profit of between 500,000L and 1,000,000L per month.

So, I guess the first question to ask is - should DDE liquidate and provide the maximum possible to shareholders in the short term (within a month in all likelihood). This would not be my preferred approach - selling what i have built over two years in a fire-sale is not an appealing prospect to me. But if the majority of shareholder votes want this option then I will consider it seriously.

My preferred approach would be to offer shareholders two options to cash out of DDE. For those that wanted to cash out immediately - i would sell off some parts of my holdings in order to provide a buy-out of 1L per share within the next two weeks, if at all possible - of course it depends on the number that want to take this option - but at any rate as quickly as possible. Although this is less than the liquidation value - it is not much less, and would provide any investors that need to cash out quickly at least an option. For those that wish to remain shareholders in order to receive a higher value for their shares, I would propose to use most of my operating profits to buy back shares at 3L per share as cash becomes available. I would expect this to take about 12 months – but it would provide shareholders with ongoing payments over that time. It is all dependent, of course, on the continued cooperation of Linden Research in not changing land policies dramatically.

This would also provide shareholders that bought shares in the initial or a secondary offer at either 1.00L per share or 2.50L per share or 2.75L per share the chance to make a profit on the shares, in addition to the dividends that they have already received. It is also higher than the last market price of DDE (2.84L per share on January 6th, 2008, when the WSE closed)

Shares would be bought back in proportion to the number of shares owned. For example, in a fictional company with 5 shareholders holding 500,000 shares, and a monthly profit of 120,000L:

Fictional Unlisted Company (FUC - lol): total shares: 500,000
Shareholders
A 250,000 shares: 50%
B 150,000 shares: 30%
C 50,000 shares: 10%
D 40,000 shares: 8%
E 10,000 shares: 2%
Total: 500,000 shares: 100%

Profit for buyback: 120,000L at 3L per share
shares would be bought back as follows:
A 20,000 shares bought, 60,000L received
B 12,000 shares bought, 36,000L received
C 4,000 shares bought, 12,000L received
D 3,200 shares bought, 9,600L received
E 800 shares bought, 2,400L received
Total: 40,000 shares bought, 120,000L received

New share totals:
A 138,000 shares: 30%
B 46,000 shares: 10%
C 230,000 shares: 50%
D 9,200 shares: 2%
E 36,800 shares: 8%
Total: 460,000 shares: 100%

It may be possible during the approximately 12 months to make "one-time" offers to buy back shares at somewhere between 1L per share and 3L per share depending on when the buyout would be requested, but I cannot promise this. I would also prefer to buyout all small shareholders (<1,000 shares first) simply to keep managing the books easier. There are a total of 309 DDE shareholders, of which 200 hold fewer than 1,000 shares. It would be far easier for me if I could buy out all of these shareholders first, at a total cost of under 100,000L at 3L per share.

I am open to other models - but this is the one I am proposing now as a way to ensure that shareholders receive a decent return, and I am not forced to lose everything i have built during the two years i have been building DDE. Hopefully shareholders think this is a fair offer.

Other possible options include a graduated buyout. I have not thought this through entirely, and would need to model the numbers more exactly – but I want the idea out there for discussion:
Tier 1, immediate: 1L per share
Tier 2, within 3 months: 1.50L per share
Tier 3, within 6 months: 2.0L per share
Tier 4, within 9 months: 2.50L per share
Tier 5, within 12 months: 3L per share

In addition, I might consider retaining a SMALL number of large investors in DDE moving forward (fewer than 10 would be ideal). If anyone is interested in this – please let me know – but I would expect each to have no less than 200,000 shares, and it would have to predicated on a plan that allows for me to control at least 50% +1 of DDE shares.

I would like to keep everything transparent and open by posting details of all transactions - I am considering options for creating a web page to do that - but i am not very technical - lol - so we will see what i come up with. I will need all investors that are participating in this to join the Delicious Demar
Enterprises group - since this will be the only inworld method of communication. Details will also be posted on the blog - and possibly on the new web page mentioned above.

So... hang on to your hats, people, it's going to be a fun ride - I really want to provide you all with fair value for your trust in me, and am happy to answer any questions of concerns that you might have. Please feel free to IM me inworld, or leave a comment on my blog at http://deliciousdemar.blogspot.com . This is also listed on my profile. It may take me a little while to answer – I have been, and expect to be, a little swamped with messages.

I will be calling a few shareholder meetings – but since they are typically very poorly attended, i think we will have to rely on email, offlines messages, etc.. to do this.

Thursday, March 20, 2008

DDE is delisting from the WSE

After careful thought and consideration, I have decided to delist Delicious Demar Enterprises (DDE) from the WSE.DDE's time on WSE has been tremendous - the exchange has allowed the business to grow rapidly over the last year, and as you all know, we have met with some success and revenues and profits have for the most part been on a steady increase over that time.

With the launch of WSE 4.0 around the corner, WSE is entering a new phase of growth by rapidly expanding the user base, and I think the opportunities for companies on the exchange are excellent. I think that they will be able to leverage the new pool of fictional currency that will be available, and take their companies to the next level.

Over the last year, my commitments in real life have grown, and as I have mentioned in the past, DDE has entered a holding pattern - the business is at a manageable size now - just! I have decided that I do not want to expand DDE any more, because I simply can't afford the time to give expansion the attention it would need to succeed. At some point in the future, I will be planning a slow and ordered withdrawal from the land business. It has been a great run, but eventually it will be time to move on to something new in Second Life. Because of this, and in light of recent events surrounding DDE, in good conscience, I cannot stay on the WSE any longer.

I encourage all shareholders to join the Delicious Demar Enterprises group - I will be calling shareholder meetings through this group in the coming days/weeks to decide how to manage shareholder interests privately, and will seek your advice on how to proceed to ensure that your interests and investment are protected. I will be contacting major shareholders directly as well. You can trust me to treat you all fairly, and keep the same high ethical standards that have always been the hallmark of DDE.

Please feel free to leave questions or comments here. Thank you all for everything. Best of luck to all of the companies on the WSE. See you in the metaverse!

Yours Sincerely,
Delicious Demar