Filing and business context
Important identification issue: The request metadata names Prairie Operating Co., but the supplied filing is Wizard World, Inc.’s Form 10-K. This summary reflects the filing text, not Prairie Operating Co. The report covers the fiscal year ended December 31, 2015; it is an annual report, not a standalone 2015 fourth-quarter report.
Wizard World produces pop-culture conventions and operates the ConBox subscription business. It held 25 conventions in 2015, compared with 17 in 2014. CONtv, its digital-content joint venture, launched in March 2015. The filing was signed April 14, 2016.
Financial performance and liquidity
| Metric | 2015 | 2014 |
|---|---|---|
| Total revenue | $24.03 million | $23.06 million |
| Convention revenue | $22.91 million | $23.06 million |
| ConBox revenue | $1.12 million | None reported |
| Gross profit | $5.27 million | $8.29 million |
| Gross margin | About 22% | About 36% |
| Operating income (loss) | $(2.88) million | $1.47 million |
| Net income (loss) attributable to common shareholders | $(4.25) million | $0.996 million |
| Basic and diluted EPS | $(0.08) | $0.02 |
| Cash from operating activities | $0.44 million | $2.25 million |
Cash and cash equivalents were $4.72 million at year-end, down from $5.79 million. Investing activities used $1.51 million, primarily reflecting CONtv investment and property purchases; financing activities provided $4,000. Current assets were $6.50 million and current liabilities $5.42 million, leaving working capital of $1.08 million, down from $3.84 million. The balance sheet lists no debt; the filing does not provide a separate debt total. Interest expense was $2,909.
Changes, outlook, and material items
- Total revenue increased about 4%, as new ConBox revenue more than offset a small decline in convention revenue. Convention revenue per event averaged $916,225 in 2015 versus $1,356,481 in 2014, according to management.
- Gross profit fell about $3.03 million. Management attributed the margin deterioration to new, less-established markets with lower attendance and significant event costs. Operating expenses rose about $1.32 million, including higher compensation and share-based payments, professional fees, insurance, web development, and travel.
- The company recorded a $1.32 million loss on CONtv in 2015, versus $0.46 million in 2014. Its interest in CONtv was reduced from 47.5% to 10% under a November 2015 amended agreement. The company also agreed to fund ongoing costs of $25,000 per month for 12 months following the agreement’s effective date.
- Management expected to produce 19 live events in 2016 and planned separately ticketed concerts at about seven conventions. It also planned a Wizard World cruise. These are plans, not reported results or formal financial guidance. Management said the digital platform had yet to earn a profit and that some events operated at a deficit.
- Risks include the need for adequate cash and additional capital, event attendance and execution, competition, advertising demand, CONtv monetization, ConBox subscriber retention, and potential dilution. The company reported no off-balance-sheet arrangements and no litigation believed materially adverse.
- Management concluded that disclosure controls and internal control over financial reporting were not effective, citing limited segregation of duties and incomplete documentation of processes. The auditor gave an unqualified opinion on the financial statements but did not audit internal-control effectiveness.
Key facts for investors to verify
- Confirm the issuer identity: the supplied filing is for Wizard World, Inc., not Prairie Operating Co.
- Review the underlying financial statements and notes, including the distinction between the $4.23 million consolidated net loss and the $4.25 million loss attributable to common shareholders.
- Verify CONtv’s revised 10% ownership, remaining funding obligation, and the basis for the $1.32 million joint-venture loss.
- Assess whether operating cash generation, year-end cash, and working capital can support event commitments and planned operations; the filing does not give a formal financing plan or financial forecast.
- Evaluate remediation of the disclosed control deficiencies and the company’s reliance on share-based compensation and related-party relationships.