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Wizard World's Current Cash Reserves Insufficient For 2017

Published Tue, 22 Nov 2016 13:00:29 -0600

Last updated Sat, 26 Nov 2016 16:46:03 -0600

It's the day before Thanksgiving. All the comic book journalists are busy making travel plans, family plans, turkey plans, Black Friday plans.

Which means it's left to the hacks, rumour mongers and people who like wrestling too much, to look through the SEC filings of Wizard World, made yesterday.

And, ho boy.

This paragraph sticks out half a mile.

The Company estimates the cash and cash equivalents currently on hand as of November 21, 2016 is insufficient to fund its operations on a long term basis past December 31, 2016.

So there's that.

In order to fund operations past that date is dependent on management's plans, which include the raising of capital through debt and/or equity markets with some additional funding from other traditional financing sources, including term notes, or the significant reduction of operating expenses until such time that funds provided by operations are sufficient to fund working capital requirements.

Which is a shame, really, as Wizard World has been doing significantly better in 2016 than in 2015. According to these figures, last year they made a net income loss of over two millon, this year a positive net income of over three quarters of a million. So that meant they didn't have to pay any taxes.

But for the quarter, gross sales (turnover) was down because they held fewer shows. Several shows are money losers,

We expect to produce 19 live events during the year ending December 31, 2016. Historically, we have operated profitable live events in Philadelphia, Chicago, New Orleans, Columbus, Portland, Nashville, Austin, Sacramento, Louisville, Minneapolis, San Antonio, Atlanta, Tulsa, Reno and St. Louis, but we have operated at a deficit in other events

…as is their digital strategy.

In order for the Company to grow the digital business, we must attract unique users and drive traffic to our online site. To date, we have exhausted considerable resources developing our media platform, but we have yet to earn a profit from the platform.

But with fewer shows, they still brought in twenty million in revenue, and two thirds of a million from their subscription box ConBox (no longer ComicCon Box after words with m'learned friends at San Diego.) How? They increased ticket prices and increased attendance overall.

They also reduced employee headcount and reduced executive compensation.

Losses from their ConTV streaming video operation dropped from close to a million to a hundred and fifty thousand as the Company's ownership interest in ConTV was reduced to 10%, though they are "obligated to fund on-going costs in the amount of $25,000 in cash on an on-going monthly basis for a period of 12 months".

They also co-created the company ButtaFyngas, which has been PR'ed as Norman Reedus' app, which makes your phone sound like Dwight. They own 50%.

They also mention that their offices are subleased from Bristol Capital Advisors, "an entity controlled by the Company's Chairman of the Board. The term of the Sublease is for 5 years and 3 months beginning on July 1, 2016 with monthly payments of $8,118. Upon execution of the Sublease, the Company paid a security deposit of $9,137 and $199,238 for prepaid rent." Which, I guess, keeps things in the family.

Talking of which, we covered the lawsuit against Chief Marketing Officer and Wizard founder Stephen Shamus, and scooped the news on his counterclaim. They state "the lawsuit is in an early stage and the Company intends to thoroughly pursue its claims and establish a rigorous defense against the Counterclaim. In the event we fail to defend against the Counterclaim, we may be subject to a judgment which could materially impact our financial condition."

Basically, Shamus wants a million.

But even if it all goes their way, they still need additional funding to continue into 2017…

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