Despite the nearly daily arrival of Wizard World PR in our inboxes, we haven’t been the most attentive to running their news; apologies for that. With this weekend’s Wizard World Austin Comic Con coming up, here’s a little of what’s happening and a peek at the most recent SEC filings:
§ Beat pal and already Wizard CEO John Macaluso has been named chairman of the board, succeeding Michael Mathews, who is “stepping down from the board to pursue his passion of early stage technology ventures.”
Mr. Macaluso has overseen Wizard World’s impressive growth in its pop culture Comic Cons in 2012, including enjoying its most highly-attended and successful events in Philadelphia, Chicago and Columbus, Ohio. Macaluso has shifted the company away from the prior management’s singular focus of being the purveyors of the new next thing towards a more fan-centric and balanced approach of delivering a great experience for all constituents – the talent, the sponsors and the attendees. With this shift in strategy and business practices, Wizard World is experiencing growth in all areas of its business, from attendance, to viewership of wizardworld.com, to sponsorship sales and activations, and merchandise sales.
§ Another email announced that Ray “Darth Maul” Park would be joining the nerdlebrity parade at Austin. Park is always a pleasant, obliging guest that fans enjoy interacting with.
§ The programming for Austin was announced, accent on the nerdlebrities, but one or two comics-themed panels are on the docket:
· Interactive celebrity Q&A’s with Stewart, Dushku, Punk, Dean Cain and Lou Ferrigno.
· Eight cast members of “Star Trek: TNG,” on stage for the first time in the U.S., including Stewart (Captain Picard), Jonathan Frakes (Commander William T. Riker), LeVar Burton (Lt. Commander Geordi La Forge), Michael Dorn (Lieutenant Worf), Marina Sirtis (Counselor Deanna Troi), Brent Spiner (Lt. Commander Data) and Gates McFadden (Dr. Beverly Crusher). This is an additional, paid event.
· “The Walking Dead” stars Norman Reedus, Michael Rooker and Jon Bernthal discuss the popular AMC show.
· “Star Trek: TNG” breakout sessions featuring the ladies (Sirtis, McFadden) and a selection of the men (Frakes, Burton, Spiner, Dorn) from the series.
· Creator spotlights with industry giants Neal Adams, Mike McKone, Bernie Wrightson, Humberto Ramos and more.
· Comprehensive discussions of a wide range of topics from vampires to series cancellations to webseries and more.
· Costume contests for adults (Saturday) and Kids (Sunday) for an early start to Halloween.
· Kids Day on Sunday, with a full slate of activities specially designed for the youngsters.In August WIZD issued its latest quarterly report, and it was a mixed bag showing profits from conventions UP from last year, but overall debt growing due to a decrease in stock prices.
Results of Operations For the Three Months Ended June 30, 2012 and 2011: Three Months Ended June 30, June 30, 2012 2011 Convention revenue $ 1,860,253 $ 1,105,416 Gross profit $ 421,889 $ 154,816 Operating expenses $ (661,354 ) $ (1,550,559 ) Loss from operations $ (239,465 ) $ (1,395,743 ) Other income (expenses) $ (2,447,927 ) $ 100,155 Net loss $ (2,687,392 ) $ (1,295,588 ) Income (loss) per common share - basic and diluted $ (0.10 ) $ (0.04 )
Convention Revenue
Convention revenue was $1,860,253 for the three months ended June 30, 2012, as compared to $1,105,416 for the comparable period ended June 30, 2011, an increase of $754,837. The increase in convention revenue is primarily attributable to running well advertised and marketed events. The Company made an effort to decrease the number of live events in order to spend more resources to increase the per show revenue. Average per show revenue increased significantly during the three months ended June 30, 2012, as compared to the three months ended June 30, 2011.
Gross Profit
Gross profit percentage increased from a gross profit of 14% during the three months ended June 30, 2011, to a gross profit of 23% during the three months ended June 30, 2012. The increase is primarily attributable to the Company establishing hard budgets for each show, increasing exhibitor revenues and ticket sales.
Operating Expenses
General and administrative expenses for the three months ended June 30, 2012, was $661,354, as compared to $1,550,559 for the three months ended June 30, 2011. The $889,205 decrease is primarily attributable to a $417,719 decrease in web development fees and a $452,044 decrease in consulting fees paid in both cash and stock.
Income (Loss) from Operations
Loss from operations for the three months ended June 30, 2012, was $239,465, as compared to a loss of $1,395,743 for the three months ended June 30, 2011. The primary decrease in loss from operations is the Company running one profitable event during the three months ended June 30, 2012, as compared to running unprofitable events during the three months ended June 30, 2011. In addition, the Company reduced third party consulting fees, web development costs and stock based compensation during the three months ended June 30, 2012, as compared to the three months ended June 30, 2011.
Other Income (expenses)
Other income (expense) for the three months ended June 30, 2012, was $(2,447,927), as compared to $100,155 for the three months ended June 30, 2011. The Company incurred a loss in change in fair value of derivative liabilities in the amount $(2,383,334) during the three months ended June 30, 2012 as compared to a gain from the change in fair value of derivative liabilities of $80,899 during the comparable three months ended June 30, 2011. In addition, during the three months ended June 30, 2012, the Company recorded $64,593 in interest expense on the Company’s convertible notes issued in August 2011 and amortized debt discounts to interest expense.
Net Loss
Net loss for three months ended June 30, 2012, was $(2,687,392) or loss per share of $(1,295,588), as compared to $(0.10) or income per share of $(0.04), for the three months ended June 30, 2011.
For the Six Months Ended June 30, 2012 and 2011: Six Months Ended June 30, June 30, 2012 2011 Convention revenue $ 2,380,408 $ 1,642,072 Gross profit (loss) $ 575,284 $ 27,666 Operating expenses $ (1,169,773 ) $ (2,439,411 ) Loss from operations $ (594,489 ) $ (2,411,745 ) Other income (expenses) $ (2,396,806 ) $ 1,689,281 Net loss $ (2,991,295 ) $ (722,464 ) Loss per common share - basic and diluted $ (0.11 ) $ (0.02 )
Convention Revenue
Convention revenue was $2,380,408 for the six months ended June 30, 2012, as compared to $1,642,072 for the comparable period ended June 30, 2011, an increase of $738,336. The increase in convention revenue is primarily attributable to running well advertised and marketed events. The Company made an effort to decrease the number of live events in order to spend more resources to increase the per show revenue. Average per show revenue increased significantly during the six months ended June 30, 2012, as compared to the six months ended June 30, 2011.
Gross Profit
Gross profit percentage increased from a gross profit of 2% during the six months ended June 30, 2011, to a gross profit of 24% during the six months ended June 30, 2012. The increase is primarily attributable to the Company establishing hard budgets for each show, increasing exhibitor revenues and ticket sales.
Operating Expenses
General and administrative expenses for the six months ended June 30, 2012, was $1,169,773, as compared to $2,439,411 for the six months ended June 30, 2011. The $1,269,638 decrease is primarily attributable to a $417,719 decrease in web development charges, and a $518,791 decrease in stock based compensation paid to key consultants.
Loss from Operations
Loss from operations for the six months ended June 30, 2012, was $594,489, as compared to a loss of $2,411,745 for the six months ended June 30, 2011. The primary decrease in loss from operations is the Company running more profitable event during the six months ended June 30, 2012, as compared to running unprofitable events during the six months ended June 30, 2011. In addition, the Company reduced third party consulting fees, web development costs and stock based compensation during the six months ended June 30, 2012, as compared to the six months ended June 30, 2011.
Other Income (expenses)
Other income (expense) for the six months ended June 30, 2012, was $(2,396,806), as compared to $1,689,281 for the six months ended June 30, 2011. The Company incurred a loss in change in fair value of derivative liabilities in the amount $(2,157,556) during the six months ended June 30, 2012 as compared to a gain from the change in fair value of derivative liabilities of $1,489,393 during the comparable six months ended June 30, 2011. In addition, during the six months ended June 30, 2012, the Company recorded $239,250 in interest expense on the Company’s convertible notes issued in August 2011 and amortized debt discounts to interest expense.
Net Loss
Net loss for six months ended June 30, 2012, was $(2,991,295) or loss per share of $(0.11), as compared to $(722,464) or income per share of $(0.02), for the six months ended June 30, 2011.
{snip}
Going Concern
As reflected in the accompanying unaudited interim financial statements, the Company had a net loss and net cash used in operations for the six months ended June 30, 2012, and a working capital deficit and stockholders’ deficit, respectively, at June 30, 2012. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The ability of the Company to continue its operations 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.
The Company will require additional funding to finance the growth of its current and expected future operations as well as to achieve its strategic objectives. The Company believes its current available cash along with anticipated revenues may be insufficient to meet its cash needs for the near future. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.
In response to these problems, management continues to the following actions:
� close on additional third party debt and/or equity financing;
� continue with the implementation of the business plan;
� increase product prices and reduce discounts;
� increase revenue from existing live events; and
� increase revenue through sponsorship and advertising deals.
We’re not enough of a financial wiz to be able to parse all of this, but it does appear to be pretty much business as usual in the penny stock game. Wizard’s role in the “comic con” circuit is on the upswing, even if—or really because of being—nerdlebrity-based.
You may wish to change your headline…while convention revenue and profit are up, Wizard is losing 2.5 times more money in the quarter ending June 30th 2012 as compared to June 30th 2011.
In other words, they are in BIG trouble.
“decrease is primarily attributable to a $417,719 decrease in web development charges,” They paid over $400 k for Web development ? That’s a ridiculous sum of money for their Web needs.
The fact is Macaluso is a schmata guy, and knows nothing about comics. He has no passion for nor understands the medium of comics — I’ve spoken to him. He’s clueless and at the mercy of those around him to tell him what to do. Kind of like when John Sculley ran Apple (into the ground).
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