Thing have been looking pretty turbulent over at convention company Wizard World, with cash flow problems and office shut downs, but chairman Paul Kessler, who has been on the board since 2013 and was named Chairman in April of this year, has just come to the rescue via financing agreement with his company Bristol Investment Fund, Ltd. The fund is already one of the largest shareholders in WW and a long term investor. According to SEC filings, the financing was for $2.5 million, and terms were very favorable to Bristol.
Effective December 1, 2016, Wizard World, Inc. (the “ Company ”) entered into a securities purchase agreement (the “ Purchase Agreement ”) with Bristol Investment Fund, Ltd. (the “ Purchaser ”), an entity controlled by the Chairman of the Company’s Board of Directors, for the sale of the Company’s securities, comprised of (i) $2,500,000 of convertible debentures convertible at a price of $0.15 per share (the “ Debenture ”), (ii) warrants (the “ Series A Warrants ”) to acquire 16,666,667 shares of the Company’s common stock, par value $0.0001 ( the “ Common Stock ”), at an exercise price of $0.15 per share (the “ Series A Initial Exercise Price ”), and (iii) warrants (the “ Series B Warrants ” and together with the Series A Warrants, the “ Warrants ”) to acquire 16,666,650 shares of Common Stock at an exercise price of $0.0001 per share (the “ Series B Initial Exercise Price ”). As a condition to Purchaser entering into the Purchase Agreement, the Company entered into a Security Agreement (the “ Security Agreement ”) in favor of the Purchaser, granting a security interest in substantially all of the property of the Company, whether presently owned or existing or hereafter acquired or coming into existence, including but not limited to, its ownership interests in its subsidiaries, to secure the prompt payment, performance and discharge in full of all of the Company’s obligations under the Debenture. For a description of significant terms of the sale, and related transaction documents, see the discussion under Item 3.02, below, which is incorporated herein by reference.
A report at Bleeding Cool suggests that there is some stockholder unrest over the company’s recent moves, including diluting the stock and a high cost for the investment.
Wizard World stock hit an all time low last weekend at $0.13 but has rebounded a teeny bit with this announcement. In the world of “penny stocks” like Wizard World, a few pennies are all that’s needed to make a profit, so as incremental as it is, it all counts.
The official statements:
Paul Kessler, a well-regarded financier, investor and operator serves as both the portfolio manager of Bristol and the Chairman of Wizard World. Mr. Kessler stated: “I have been involved in the day-to-day operations of Wizard World since late spring with a focus on operations, strategy, internal controls, and governance. With the guidance of our external legal and financial advisors, which include Lucosky Brookman LLP, Olshan Frome Wolosky LLP, DLA Piper, Freeh Group International Solutions, LLC, Redwood Capital, and Brio Financial Group each of whom we acknowledge and to whom we express gratitude, we have made, and continue to make, progress in each of these areas. I believe we have assembled a highly-regarded and exceptionally qualified management team during this time of transition. The financing by Bristol provides a solid fiscal foundation enabling the Company to drive toward future success by focusing on the existing business as well as some new business extensions. We have great plans on the table for Wizard World.”
Wizard World is scheduled to produce 16 shows in 2017. John D. Maatta, President and Chief Executive Officer of Wizard World, stated: “The investment by Bristol insures the Company’s ability to aggressively move forward into 2017, and beyond. The second half of 2016 was a re-set and rebuilding period during which the Company moved aggressively to professionalize its operations and systems while containing costs and greatly enhancing the entertainment value at its shows. The Company is being actively converted from a “mom and pop” road show carnival culture into a significant live event and entertainment company. While continuing to revamp the existing business operations, the Company, during the first two quarters of 2017, plans to move into new vertical brand extensions designed and contemplated to compliment and grow the existing business. We have cut costs, restructured the executive roster, and re-imagined the core nature of the company. In a material break from the past, the Company is now operated professionally, by professionals in the entertainment space”
Maatta continued: “With the new investment in the company comes the renewed commitment and continuing obligation that we all have to do everything that we can do as a company to enhance value for the shareholders, produce extraordinary events for the fans, while respecting our employees and enhancing revenue and aggressively containing costs. It is a new and very positive day at Wizard World.”
“Mom and pop” could possibly refer to the Shamsu family involvement, i.e. starting the company and running it for a few decades.
While it may be a positive day, as rounded up in a report by convention watcher Rob Salkowitz, there are still a lot of questions about where Wizard goes from here. Salkowitz raises something I’d wondered about myself: why file a potentially costly and revealing lawsuit against ex-exec Stephen Shamus as opposed to just getting rid of him? There was also this public declaration of interest in acquiring WW by Jerrick Media Holdings, although they are a lightweight company and this was just to boost their own profile.
Wizard World could be an attractive acquisition for a big media company that has experience in the events space. For all their woes, they have a well established brand and connections and I don’t think comic cons are going away….just the bad ones.
Anyhoo, developing, and if you have any beans to spill, feel free to drop us a line.