Business context and reporting period
The supplied filing is Wizard World, Inc.’s unaudited Form 10-Q for the quarter and six months ended June 30, 2014. This differs from the request metadata, which names Prairie Operating Co.; investors should verify the intended issuer. Wizard World produces pop-culture conventions across North America, with revenue from admissions, exhibitor space, sponsorships, and advertising.
Financial performance and liquidity
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Revenue | $7.11 million, versus $2.90 million in 2013 | $12.28 million, versus $4.69 million in 2013 |
| Gross profit / margin | $2.76 million / 38.9%, versus $0.57 million / 19.5% | $4.68 million / 38.1%, versus $1.38 million / 29.4% |
| Operating income (loss) | $0.76 million, versus $(0.29) million | $1.45 million, versus $(0.17) million |
| Net income (loss) attributable to common shareholders | $0.76 million ($0.01 per share), versus $(3.18) million ($(0.09) per share) | $1.45 million ($0.03 per share), versus $(2.08) million ($(0.06) per share) |
| Operating cash flow | Not separately presented for the quarter | $2.00 million, versus $0.31 million |
At June 30, cash was $5.62 million, current assets $6.83 million, current liabilities $2.80 million, and working capital $4.03 million. Total liabilities consisted of current liabilities; the balance sheet presents no borrowings. Current liabilities included $0.95 million of unearned convention revenue. Cash increased $1.98 million during the first half. The company reported no off-balance-sheet arrangements.
Changes versus the prior comparable period
- Revenue rose about 145% in Q2 and 162% for the first half. The company held four events in Q2 versus two a year earlier, and eight in the first half versus four. Management cited stronger marketing, higher admission prices, and larger events; average revenue per event also increased.
- Gross margins improved, and operating results turned profitable. Management attributed the improvement to more events and better event profitability.
- Operating expenses increased to $2.00 million in Q2 and $3.22 million in the first half, primarily from higher compensation, headcount, and share-based payments. The company accrued approximately $500,000 in CEO bonuses.
- Prior-year net losses included substantial noncash derivative-liability fair-value expense and, for common-shareholder results, deemed preferred-stock dividends. Those derivative liabilities ceased to exist after preferred stock converted to common stock in 2013; current-period other expense was minimal.
Outlook, risks, contingencies, and unusual items
- Management expected to produce 16 live events in 2014. It said some markets had produced profitable events while others operated at a deficit; success depends on attendance, exhibitor sales, sponsorship, and advertising.
- The digital platform had not yet generated a profit. Management described ongoing efforts to build the digital strategy, audience, and online presence, without providing financial guidance.
- Convention deposits may be fully or partially refundable under contract terms. The company reported no material litigation and no material changes to the risk factors in its prior annual report.
- The company disclosed a seven-year office lease with related-party lessors affiliated with a director and the CEO/significant stockholder. Future minimum payments were $476,100, including related tax.
- Substantially all cash was held at major financial institutions, and balances at certain accounts exceeded FDIC insurance limits. The company reported no losses and believed the risk was not significant.
- There were no reportable subsequent events. Management concluded disclosure controls were effective and reported no material quarterly change in internal control over financial reporting.
Important facts for investors to verify
- Confirm the issuer: the filing is for Wizard World, Inc., not Prairie Operating Co.
- Assess whether convention growth and improved margins are repeatable across the planned 16 events, particularly in markets that had operated at a deficit.
- Review the accrued CEO bonus, rising compensation and share-based costs, and the terms and dilution effects of outstanding stock options. Common shares outstanding were 51,341,524 at August 8, 2014.
- Evaluate the collection and refundability of receivables and convention deposits, cash concentration above FDIC limits, and the related-party lease obligations.
- Consider that interim results are unaudited and may not indicate full-year performance; the filing provides no quantified forward earnings or revenue guidance.