Business Context and Reporting Period
This Form 8-K is filed by Wizard World, Inc. (not Prairie Operating Co.) on September 6, 2017, reporting a material event that occurred on that date. The filing details a strategic partnership entered into by Wizard World China, LLC, a wholly-owned subsidiary of the registrant.
Key Financial Metrics
The filing does not provide specific revenue, profit, cash flow, margin, debt, or liquidity figures for the reporting period. It outlines a revenue-sharing structure for a new venture:
- Revenue Split: Gross advertising proceeds (minus allowable costs) will be allocated as 40% to Wizard China, 40% to CN Live USA Culture Co. (CNL), and 20% to YMK, LLC.
- Cost Allocation: Wizard China provides content at no cost. CNL is responsible for all costs related to program clearance in the Territory. YMK handles relationship development and translation.
- Advertising Rights: Wizard China retains the exclusive right to sell 100% of the advertising inventory on the "Wizard Channel."
Material Changes
The primary material change is the execution of a binding Memorandum of Understanding (MOU) on August 30, 2017, between Wizard China, CNL, and YMK. This agreement establishes a framework to launch an English-language entertainment channel ("Wizard Channel") distributed via CNL's multichannel video programming platform in the People's Republic of China (including Macau, Taiwan, and Hong Kong). The channel will operate on a free, non-subscription basis.
Guidance, Outlook, and Risks
Outlook and Terms:
- Term: The agreement is for an initial five-year term, commencing 30 days after Wizard China notifies readiness to proceed.
- Renewal: Parties may renew for up to five successive one-year periods.
- Definitive Agreement: The MOU is a precursor to a definitive agreement covering the subject matter.
Risks and Contingencies:
- Regulatory Compliance: CNL is responsible for obtaining governmental permits and ensuring content complies with PRC laws. CNL has the right to review and withdraw non-compliant content.
- Content Discretion: Wizard China retains absolute discretion to withdraw programs that do not comply with regulations.
- Termination: Either Wizard China or CNL may unilaterally terminate the MOU under certain circumstances.
Investor Verification Checklist
- Verify the execution of the definitive agreement referenced in the MOU.
- Confirm the timeline for the launch of the "Wizard Channel" and the 30-day commencement notice.
- Monitor regulatory approvals obtained by CNL for content distribution in the PRC.
- Review the definition of "allowable costs" to understand the net revenue base for the 40/40/20 split.
- Check for any subsequent filings regarding the actual revenue generated from this partnership.