0001493152-21-011634.txt : 20210517 0001493152-21-011634.hdr.sgml : 20210517 20210517061132 ACCESSION NUMBER: 0001493152-21-011634 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 61 CONFORMED PERIOD OF REPORT: 20210331 FILED AS OF DATE: 20210517 DATE AS OF CHANGE: 20210517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WIZARD BRANDS, INC. CENTRAL INDEX KEY: 0001162896 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-AMUSEMENT & RECREATION SERVICES [7900] IRS NUMBER: 980357690 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-33383 FILM NUMBER: 21927310 BUSINESS ADDRESS: STREET 1: 3960 HOWARD HUGHES PARKWAY STREET 2: SUITE 500 CITY: LAS VEGAS STATE: NV ZIP: 89169 BUSINESS PHONE: 6049618878 MAIL ADDRESS: STREET 1: 3960 HOWARD HUGHES PARKWAY STREET 2: SUITE 500 CITY: LAS VEGAS STATE: NV ZIP: 89169 FORMER COMPANY: FORMER CONFORMED NAME: WIZARD ENTERTAINMENT, INC. DATE OF NAME CHANGE: 20181009 FORMER COMPANY: FORMER CONFORMED NAME: Wizard World, Inc. DATE OF NAME CHANGE: 20110125 FORMER COMPANY: FORMER CONFORMED NAME: GOENERGY INC DATE OF NAME CHANGE: 20011129 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: March 31, 2021

 

OR

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission File Number: 000-33383

 

WIZARD BRANDS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   98-0357690

(State or other jurisdiction

of incorporation)

 

(IRS Employer

Identification No.)

 

2700 Homestead Road, Suite 50

Park City, UT 84098

(Address of principal executive offices)

 

435-900-1WIZ

(Registrant’s telephone number, including area code)

 

n/a

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
n/a   n/a   n/a

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files. Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [  ] Smaller reporting company [X]
    Emerging Growth Company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

 

As of May 14, 2021, there were 3,506,752 shares outstanding of the registrant’s common stock.

 

 

 

 
 

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION  
     
Item 1. Financial Statements F-1
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 3
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
     
Item 4. Controls and Procedures 14
     
PART II – OTHER INFORMATION 14
     
Item 1. Legal Proceedings 14
     
Item 1A. Risk Factors 15
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15
     
Item 3. Defaults Upon Senior Securities 15
     
Item 4. Mine Safety Disclosures 15
     
Item 5. Other Information 15
     
Item 6. Exhibits 16
     
Signatures   17
     
2
 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

Wizard Brands, Inc.

 

March 31, 2021

 

Index to the Condensed Consolidated Financial Statements

 

Contents   Page(s)
     
Condensed Consolidated Balance Sheets at March 31, 2021 (unaudited) and December 31, 2020   F-2
     
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020 (unaudited)   F-3
     
Condensed Consolidated Statements of Stockholders’ Deficit for the Three Months Ended March 31, 2021 and 2020 (unaudited)   F-4
     
Condensed Consolidated Statements of Cash Flows for Three Months Ended March 31, 2021 and 2020 (unaudited)   F-5
     
Notes to the Condensed Consolidated Financial Statements (unaudited)   F-6

 

F-1
 

 

Wizard Brands, Inc.

Condensed Consolidated Balance Sheets

 

   March 31, 2021   December 31, 2020 
   (unaudited)     
Assets          
           
Current Assets          
Cash and cash equivalents  $2,635,325   $1,897,703 
Accounts receivable, net   -    33,452 
Inventory   305,475    220,641 
Prepaid convention expenses   -    3,625 
Prepaid expenses   360,106    62,066 
           
Total Current Assets   3,330,906    2,217,487 
           
Property and equipment, net   51,550    58,501 
           
Intangibles, net   128,700    132,000 
           
Operating lease right of use asset, net   212,259    244,072 
           
Security deposits   22,850    18,303 
           
Total Assets  $3,716,265   $2,670,363 
           
Liabilities and Stockholders’ Deficit          
           
Current Liabilities          
Accounts payable and accrued expenses  $3,401,351   $3,474,061 
Unearned revenue   572,755    758,847 
Operating lease liability   108,713    108,713 
Convertible promissory note – related party, net   2,500,000    2,500,000 
Due to CONtv joint venture   -    224,241 
           
Total Current Liabilities   6,582,819    7,065,862 
           
Operating lease liability, net   105,381    137,694 
Notes payable, net   545,162    347,500 
Convertible debenture, net   2,034,396    1,964,216 
Total Liabilities   9,267,757    9,515,272 
           
Commitments and contingencies          
           
Stockholders’ Deficit          
Preferred stock-Series A Cumulative and Convertible par value $0.0001: 500,000 shares authorized; 217,293 and 173,974 shares issued and outstanding, respectively   21    17 
Preferred stock par value $0.0001: 4,500,000 shares authorized; 5,000 and 288,448 shares issued and outstanding, respectively   1    - 
Common stock par value $0.0001: 100,000,000 shares authorized; 3,506,752 and 3,506,752 shares issued and outstanding, respectively   351    351 
Additional paid-in capital   26,968,654    23,206,367 
Accumulated deficit   (32,508,021)   (30,039,146)
Non-controlling interest   (12,498)   (12,498)
Total Stockholders’ Deficit   (5,551,492)   (6,844,909)
           
Total Liabilities and Stockholders’ Deficit  $3,716,265   $2,670,363 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

F-2
 

 

Wizard Brands, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

 

   For the Three Months Ended 
   March 31, 2021   March 31, 2020 
         
Revenues  $379,174   $2,602,419 
           
Cost of revenues   297,546    2,024,282 
           
Gross margin   81,628    578,137 
           
Operating expenses          
           
Share-based compensation   97,429    21,171 
Salaries and benefits   454,004    235,550 
Consulting fees   1,740,008    117,807 
General and administrative   863,486    230,882 
           
Total operating expenses   3,154,927    605,410 
           
Loss from operations   (3,073,299)   (27,273)
           
Other income (expenses)          
Interest expense   (224,092)   (156,341)
Other income   828,516    - 
           
Total other income (expenses)   604,424    (156,341)
           
Loss before income tax provision   (2,468,875)   (183,614)
           
Income tax provision   -    - 
           
Net loss   (2,468,875)   (183,614)
           
Series A Preferred dividends   56,898    - 
           
Net loss attributable to common stockholders  $(2,411,977)  $(183,614)
           
Loss per share - basic  $(0.69)  $(0.05)
           
Loss per share - diluted  $(0.69)  $(0.05)
           
Weighted average common shares outstanding – basic   3,506,752    3,506,752 
           
Weighted average common shares outstanding – diluted   3,506,752    3,506,752 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

F-3
 

 

Wizard Brands, Inc.

Condensed Consolidated Statement of Stockholders’ Deficit

(unaudited)

 

For the Three Months Ended March 31, 2021

 

   

Series A Preferred Stock

Par value $0.0001

   

Preferred Stock

Par value $0.0001

   

Common Stock

Par value $0.0001

    Additional
Paid In
    Accumulated     Non-controlling     Stockholders’  
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit     Interest     Deficit  
                                                             
Balance, December 31, 2020     173,974     $ 17       -     $ -       3,506,752     $ 351     $ 21,854,134     $ (28,098,745 )   $ (12,498 )   $ (6,256,729 )
                                                                                 
Share-based compensation     43,300       4       -       -       -       -       531,305       -       -       531,305  
                                                                                 
Warrants issued for services     -       -       -       -       -       -       1,562,881       -       -       1,562,881  
                                                                                 
Issuance of Series B preferred shares and warrants – net of offering costs     -       -       5,000       1       -       -       1,724,999       -       -       1,725,000  
                                                                                 
Series A Preferred declared dividends     -       -       -       -       -       -       (56,898 )     -       -       (56,898 )
                                                                                 
Net loss     -       -       -       -       -       -       -       (2,468,875 )     -       (2,468,875 )
                                                                                 
Balance, March 31, 2021     217,274     $ 21       5,000     $ 1       3,506,752     $ 351     $ 26,968,654     $ (32,508,021 )   $ (12,498 )   $ (5,551,492 )

 

For the Three Months Ended March 31, 2020

 

   Series A Preferred Stock
Par value $0.0001
   Preferred Stock
Par value $0.0001
   Common Stock
Par value $0.0001
   Additional
Paid In
   Accumulated   Non-controlling   Stockholders’ 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Interest   Deficit 
                                         
Balance, December 31, 2019   -   $-    288,448   $29    3,506,752   $351   $21,854,134   $(28,098,745)  $(12,498)  $     (6,256,729)
                                                   
Share-based compensation   -    -    -    -    -    -    21,171    -    -    21,171 
                                                   
Net loss   -    -    -    -    -    -    -    (183,614)   -    (183,614)
                                                   
Balance, March 31, 2020           -   $-    288,448   $29    3,506,752   $351   $21,875,305   $(28,282,359)  $(12,498)  $(6,419,172)

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

F-4
 

 

Wizard Brands, Inc.

Condensed Consolidated Statements of Cash Flows

 

   For the Three Months Ended 
   March 31, 2021   March 31, 2020 
   (unaudited)   (unaudited) 
         
Cash Flows From Operating Activities:          
Net loss  $(2,468,875)  $(183,614)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   10,251    7,940 
Accretion of debt discount   70,180    7,567 
Right-of-use asset amortization   (500)   297 
Share-based compensation   2,094,190    21,171 
Gain on write-off of CONtv joint venture   (224,241)   - 
Changes in operating assets and liabilities:          
Accounts receivable   33,452    (40,852)
Inventory   (84,834)   - 
Prepaid convention expenses   3,625    342,283 
Prepaid expenses   (298,040    6,850 
Security deposits   (4,547)   - 
Accounts payable and accrued expenses   (129,608)   368,878 
Unearned revenue   (186,092)   (907,313)
           
Net Cash Used In Operating Activities   (1,185,040)   (376,793)
           
Cash Flows from Investing Activities:          
Purchase of property and equipment   -    (665)
           
Net Cash Used In Investing Activities   (156,733)   (665)
           
Cash Flows from Investing Activities:          
Proceeds from issuance of Series B preferred shares and warrants - net   1,725,000    - 
Proceeds from notes payable   197,662    - 
           
Net Cash Provided by Financing Activities   1,922,662    - 
           
Net change in cash and cash equivalents   737,622    (377,458)
           
Cash and cash equivalents at beginning of reporting period   1,897,703    2,777,654 
           
Cash and cash equivalents at end of reporting period  $2,635,325    2,400,196 
           
Supplemental disclosures of cash flow information:          
Interest paid  $-   $- 
Income tax paid  $-   $- 
           
Supplemental disclosure of noncash investing and financing activities:          
Deemed dividend  $56,898   $- 

 

See accompanying notes to the unaudited condensed financial statements.

 

F-5
 

 

Wizard Brands, Inc.

March 31, 2021

Notes to the Condensed Consolidated Financial Statements

 

Note 1 – Organization and Operations

 

Wizard Brands, Inc.

 

Wizard Brands, Inc., formerly GoEnergy, Inc., Wizard World, Inc., and Wizard Entertainment, Inc. (“Wizard Brands” or the “Company”) was incorporated on May 2, 2001, under the laws of the State of Delaware. The Company, through its operating subsidiary, is a producer of pop culture and live multimedia conventions across North America. Effective October 5, 2018, the Company changed its name to Wizard Entertainment, Inc. On July 29, 2020, the Company changed its name to Wizard Brands, Inc.

 

Recent Developments

 

On April 28, 2020 the Company, through one of its wholly-owned operating subsidiaries, acquired the assets of the creator of the Jevo machine, which is a patent protected first-mover application for the creation of gelatin shots. With Jevo, the Company will diversify its revenue generation capabilities by manufacturing, marketing and selling Jevo units and related consumables, both nationally and internationally to bars, restaurants, clubs, casinos, hotels, cruise lines, resorts and other establishments that serve beverages (both alcoholic and non-alcoholic) to the public. In addition to food and beverage applications the Company has identified other market segments where the Jevo units can be marketed including but not limited to the healthcare industry. The acquisition of Jevo is the Company’s initial entry into M&A activity intended to broaden the Company’s revenue base. Following the closing of the merger transaction, Jevo’s financial statements as of the closing were consolidated with the financial statements of the Company.

 

Note 2 – Going Concern Analysis

 

Going Concern Analysis

 

The Company had a loss from operations of $3,077,678 and $27,273 for the three months ended March 31, 2021 and 2020, respectively. On March 31, 2021, we had cash and cash equivalents of approximately $2.6 million and a working capital deficit of approximately $3.2 million. We have evaluated the significance of these conditions in relation to our ability to meet our obligations, which had previously raised doubts about the Company’s ability to continue as a going concern through March 2022. However, the Company believes that the effects of the expansion of virtual activities and e-commerce along with the entry into new business verticals will guide the Company in a positive direction as we continue to strive to attain profitability.

 

However, because of the current situation with the Covid-19 virus, the Company was unable to produce any live events after the First Quarter of 2020. At present it is unclear how many live events will actually be produced by the Company in 2021. It is presently unknowable how long the current situation with Covid-19 will continue and what impact the Covid-19 situation will ultimately have upon the Company in 2021. At this point, the Company has postponed all of the live shows that it has scheduled for 2021. In the face of the impact of Covid-19 on live events generally, the Company has focused on producing virtual events. The first such virtual event was an interactive fan experience which took place on March 31, 2020 and since that time the Company has produced approximately 200 virtual events. In addition, the Company has moved into e-commerce with online sales of collectables and the creation of the “Wizard World Vault” as a site for consumers to purchase pop-culture memorabilia and collectables.

 

F-6
 

 

On March 29, 2021, the Company entered into a Securities Purchase Agreement (the “Leviston Purchase Agreement”) with Leviston Resources LLC (“Leviston”) dated March 26, 2021, pursuant to which the Company sold to Leviston, and the Leviston purchased from the Company, 5,000 shares of the Company’s Series B Preferred Stock, par value $0.0001 per share Series B Preferred Stock with an aggregate stated value of $5,400,000, a Series B Preferred Stock Purchase Warrant to purchase 5,000 shares of Series B Preferred Stock, having a term expiring on March 26, 2023 and a per share exercise price (subject to adjustment for stock splits, reverse stock splits, mergers or reorganizations, and similar changes affecting shares of the Company’s common stock, par value $0.0001 per share and/or securities entitling the holder thereof to acquire shares of Common Stock, as applicable) of $1,000 (the “Series 1 Warrant”), and a Series B Preferred Stock Purchase Warrant to purchase 5,000 shares of Series B Preferred Stock, having a term expiring on March 26, 2024 and a per share exercise price (subject to adjustment for stock splits, reverse stock splits, mergers or reorganizations, and similar changes affecting shares of Common Stock and/or securities entitling the holder thereof to acquire shares of Common Stock, as applicable) of $1,000 (the “Series 2 Warrant” and together with the Series 1 Warrant, the “Warrants,” and together with the Closing Shares, the “Securities”). The aggregate purchase price for the Securities is $5,000,000, which Leviston will pay as follows: $2,000,000 on the Closing Date; $500,000 on or before the date that is three business days from the date that the Company files a registration statement relating to the shares of Common Stock issuable upon conversion of the Closing Shares and the shares of Series B Preferred Stock issuable upon exercise of the Warrants; and $2,500,000 on or before the date that is three business days from the date that such registration statement is declared effective in accordance with the terms and provisions of the Registration Rights Agreement.

 

In addition to its cost containment strategies, the Company identified opportunities to rapidly move into the areas of (i) retailing collectables, (ii) providing virtual opportunities to fans to interact with celebrities, (iii) creating live and virtual events and conferences focused on new subject matter and affinities, and (iv) engaging in M&A opportunities. The company initiated these activities in 2020.

 

Additionally, if necessary, management believes that both related parties (management and members of the Board of Directors of the Company) and potential external sources of debt and/or equity financing may be obtained based on management’s history of being able to raise capital from both internal and external sources coupled with current favorable market conditions, It is understood however, that although there is a recent history of related-parties providing a source of financing, there is no absolute certainty that any such related-party financing can be obtained on a going-forward basis. Therefore, the accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

 

The condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the matters discussed herein. While the Company believes in the viability of management’s strategy to generate sufficient revenue, control costs and the ability to raise additional funds if necessary, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon the ability to further implement the business plan, generate sufficient revenues and to control operating expenses.

 

Note 3 – Significant and Critical Accounting Policies and Practices

 

The management of the Company is responsible for the selection and use of appropriate accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

 

Basis of Presentation - Unaudited Interim Financial Information

 

The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited condensed consolidated financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2020 and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 29, 2021.

 

F-7
 

 

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

Principles of Consolidation

 

The condensed consolidated financial statements include all accounts of the entities as of the reporting period ending date(s) and for the reporting period(s).

 

All inter-company balances and transactions have been eliminated. Non–controlling interest represents the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interest.

 

As of March 31, 2021 and December 31, 2020, the aggregate non-controlling interest in ButtaFyngas was ($12,498). The non-controlling interest is separately disclosed on the Condensed Consolidated Balance Sheet.

 

Cash and Cash Equivalents

 

The Company considers investments with original maturities of three months or less to be cash equivalents.

 

The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits.

 

Fair Value of Financial Instruments

 

For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amount of the Company’s short-term financial instruments approximates fair value due to the relatively short period to maturity for these instruments.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company generally does not require collateral to support customer receivables. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. The maximum accounting loss from the credit risk associated with accounts receivable is the amount of the receivable recorded, which is the face amount of the receivable net of the allowance for doubtful accounts. As of March 31, 2021 and December 31, 2020, the allowance for doubtful accounts was $0 and $0, respectively.

 

F-8
 

 

Inventories

 

Inventories are stated at average cost using the first-in, first-out (FIFO) valuation method. Inventory was comprised of the following:

 

   March 31, 2021   December 31, 2020 
Finished goods  $305,475   $220,641 

 

Property and Equipment

 

Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the respective assets as follows:

 

   Estimated Useful
Life (Years)
 
     
Computer equipment   3 
      
Equipment   2-5 
      
Furniture and fixture   7 
      
Leasehold improvements   * 

 

(*) Amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever period is shorter.

 

Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the condensed consolidated statements of operations.

 

Intangible assets

 

Intangible assets represent intangible assets acquired in connection with the Company’s purchase of Jevo patents and technology. The transaction was not a business combination or acquisition of a business.

 

The intangible assets are amortized using a straight-line method consistent with the expected future cash flows related to the intangible asset, which has been determined to be ten (10) years. Amortized intangible assets are reviewed for impairment whenever events or changes in circumstances exist that indicate the carrying amount of an asset may not be recoverable. When indicators of impairment exist, an estimate of undiscounted net cash flows is used in measuring whether the carrying amount of the asset or related asset group is recoverable.

 

Measurement of the amount of impairment, if any, is based upon the difference between the asset or asset group’s carrying value and fair value. Fair value is determined through various valuation techniques, including market and income approaches as considered necessary. No impairment has been recorded as of March 31, 2021.

 

Investments - Cost Method, Equity Method and Joint Venture

 

In accordance with sub-topic 323-10 of the FASB ASC (“Sub-topic 323-10”), the Company accounts for investments in common stock of an investee for which the Company has significant influence in the operating or financial policies even though the Company holds 50% or less of the common stock or in-substance common stock.

 

Method of Accounting

 

Investments held in stock of entities other than subsidiaries, namely corporate joint ventures and other non-controlled entities usually are accounted for by one of three methods: (i) the fair value method (addressed in Topic 320), (ii) the equity method (addressed in Topic 323), or (iii) the cost method (addressed in Subtopic 325-20). Pursuant to Paragraph 323-10-05-5, the equity method tends to be most appropriate if an investment enables the investor to influence the operating or financial policies of the investee.

 

F-9
 

 

Investment in CONtv

 

The Company currently holds a limited and passive interest of 10% in CONtv, a joint venture with third parties and Bristol Capital, LLC (a related party controlled by a member of the Board). CONtv is a digital network devoted to fans of pop culture entertainment and is inactive.

 

For the three months ended March 31, 2021 and 2020, the Company recognized $0 losses from this venture, respectively.

 

As of March 31, 2021 and December 31, 2020, the investment in CONtv was $0.

 

As of March 31, 2021 and December 31, 2020, the amount due to CONtv was $0 and $224,241, respectively.

 

Fair Value of Measurements

 

The Company follows ASC 820-10 of the FASB Accounting Standards Codification to measure the fair value of its financial instruments and disclosures about fair value of its financial instruments. ASC 820-10 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820-10 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by ASC 820-10 are described below:

 

Level 1   Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
     
Level 2   Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
     
Level 3   Pricing inputs that are generally unobservable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, inventory, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values because of the short maturity of these instruments.

 

Transactions involving related parties typically cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. However, in the case of the convertible promissory note discussed in Note 5, the Company obtained a fairness opinion from an independent third party which supports that the transaction was carried out at an arm’s length basis.

 

F-10
 

 

Revenue Recognition and Cost of Revenues

 

The Company follows the FASB Accounting Standards Codification ASC 606 for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met:

 

1) Identify the contract with a customer

 

A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.

 

2) Identify the performance obligations in the contract

 

Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation.

 

3) Determine the transaction price

 

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts as of March 31, 2021 contained a significant financing component.

 

4) Allocate the transaction price to performance obligations in the contract

 

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.

 

5) Recognize revenue when or as the Company satisfies a performance obligation

 

The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.

 

Convention revenue is generally earned upon completion of the convention. Unearned convention revenue is deposits received for conventions that have not yet taken place, which are fully or partially refundable depending upon the terms and conditions of the agreements.

 

F-11
 

 

The Company recognizes cost of revenues in the period in which the revenues was earned. In the event the Company incurs cost of revenues for conventions that are yet to occur, the Company records such amounts as prepaid expenses and such prepaid expenses are expensed during the period the convention takes place.

 

Disaggregation of Revenue from Contracts with Customers. The following table disaggregates gross revenue by significant revenue stream for the three months ended March 31, 2021 and 2020:

 

   For the Three Months Ended 
   March 31, 2021   March 31, 2020 
Conventions  $-   $2,583,404 
Virtual   191,962    19,015 
Vault   172,698    - 
Jevo   14,514    - 
Total revenue  $379,174   $2,602,419 

 

Shipping and Handling Costs

 

The Company accounts for shipping and handling fees in accordance with paragraph 605-45-45-19 of the FASB Accounting Standards Codification. While amounts charged to customers for shipping products are included in revenues, the related costs are classified in cost of revenue as incurred.

 

Shipping and handling costs were $0 and $0 for the three and three months ended March 31, 2021 and 2020, respectively.

 

Equity–based compensation

 

The Company recognizes compensation expense for all equity–based payments in accordance with ASC 718 “Compensation – Stock Compensation”. Under fair value recognition provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

 

Restricted stock awards are granted at the discretion of the Company. These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods, typically over a four-year period (vesting on a straight–line basis). The fair value of a stock award is equal to the fair market value of a share of Company stock on the grant date.

 

The fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are input into the model. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is calculated based on the historical volatility of the Company’s Common stock over the expected option life and other appropriate factors. The expected option term is computed using the “simplified” method as permitted under the provisions of ASC 718-10-S99. The Company uses the simplified method to calculate expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on the Common stock of the Company and does not intend to pay dividends on the Common stock in the foreseeable future. The expected forfeiture rate is estimated based on historical experience.

 

Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, the equity–based compensation could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If the actual forfeiture rate is materially different from the Company’s estimate, the equity–based compensation could be significantly different from what the Company has recorded in the current period.

 

F-12
 

 

Income Taxes

 

The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

 

FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of March 31, 2021 and December 31, 2020. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of March 31, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

 

The Company may be subject to potential examination by federal, state, and city taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions, and compliance with federal, state, and city tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

 

The Company is no longer subject to tax examinations by tax authorities for years prior to 2018.

 

Earnings per Share

 

Earnings per share (“EPS”) is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to Section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.

 

The following table shows the outstanding dilutive common shares excluded from the diluted net income (loss) per share calculation as they were anti-dilutive:

 

   Contingent shares issuance
arrangement, stock options
or warrants
 
   For the Three Months
Ended
March 31, 2021
   For the Three Months
Ended
March 31, 2020
 
         
Convertible note   833,333    833,333 
Common stock options   789,250    226,000 
Common stock warrants   11,000,000    1,133,333 
           
Total contingent shares issuance arrangement, stock options or warrants   12,622,583    2,192,666 

 

F-13
 

 

Reclassification

 

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Recently Adopted Accounting Guidance

 

In December 2019, the FASB issued ASU 2019-12, Income Taxes(Topic 740): “Simplifying the Accounting for Income Taxes”, which is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by clarifying and amending existing guidance to improve consistent application. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. Certain amendments within this ASU are required to be applied on a retrospective basis, certain other amendments are required to be applied on a modified retrospective basis and all other amendments on a prospective basis. The adoption of ASU 2019-12 did not have a material impact on the Company’s financial statement presentation or disclosures.

 

Recently Issued Accounting Pronouncements

 

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedients and exceptions to account for contracts, hedging relationships and other transactions that reference LIBOR or another reference rate if certain criteria are met. The amendments of ASU No. 2020-04 are effective immediately, as of March 12, 2020, and may be applied prospectively to contract modifications made and hedging relationships entered into on or before December 31, 2022. The Company is evaluating the impact that the amendments of this standard would have on the Company’s consolidated financial statements.

 

In August 2020, the FASB issued ASU 2020-06, Debt—”Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity, and also improves and amends the related EPS guidance for both Subtopics. The ASU will be effective for annual reporting periods after December 15, 2021 and interim periods within those annual periods and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

 

Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective accounting pronouncements, when adopted, will have a material impact on the financial statements of the Company.

 

Note 4 – Property and Equipment

 

Property and equipment stated at cost, less accumulated depreciation and amortization, consisted of the following:

 

   March 31, 2021   March 31, 2020 
Computer Equipment  $36,525   $36,525 
Equipment   474,069    474,069 
Furniture and Fixtures   65,465    65,465 
Vehicles   15,000    15,000 
Leasehold Improvements   27,095    27,094 
    618,154    618,153 
Less: Accumulated depreciation   (566,604)   (559,652)
   $51,550   $58,501 

 

Depreciation expense was $6,722 and $7,940 for the three months ended March 31, 2021 and 2020, respectively.

 

F-14
 

 

Note 5 – Related Party Transactions

 

Consulting Agreement

 

On December 29, 2016, the Company entered into a Consulting Services Agreement (the “Consulting Agreement”) with Bristol Capital, LLC, a Delaware limited liability company (“Bristol”) managed by Paul L. Kessler, the Chairman of the Company. Pursuant to the Consulting Agreement, Mr. Kessler will serve as Executive Chairman of the Company. The initial term of the Agreement is from December 29, 2016 through March 28, 2017 (the “Initial Term”). The term of the Consulting Agreement will be automatically extended for additional terms of 90-day periods each (each a “Renewal Term” and together with the Initial Term, the “Term”), unless either the Company or Bristol gives prior written notice of non-renewal to the other party no later than thirty (30) days prior to the expiration of the then current Term.

 

During the Term, the Company will pay Bristol a monthly fee (the “Monthly Fee”) of Eighteen Thousand Seven Hundred Fifty and No/100 Dollars ($18,750). This agreement has been amended so that the monthly fee owed to Bristol may now, at the option of the Company, be paid in preferred stock.

 

In addition, upon execution of the Consulting Agreement, the Company granted to Bristol options to purchase up to an aggregate of 30,000 shares of the Company’s common stock.

 

During the three months ended March 31, 2021 and 2020, the Company incurred expenses of approximately $225,000 and $56,000, for each period for services provided by Bristol, respectively. On November 22, 2018, the Board of Directors of the Company decided to issue 210,982 shares of Preferred stock (“2018 Bristol shares”) for settlement of the outstanding fees due to Bristol totaling $496,875. At March 31, 2021 and December 31, 2019, the Company accrued $0 and $0, respectively, of net monthly fees due to Bristol. On August 3, 2020, the Board of Directors resolved to convert the total amount of debt owed to Bristol of $384,375, as of July 31, 2020, into 38,438 shares of Series A Preferred stock. In addition, on August 3, 2020, as ratified on August 21, 2020 the Board of Directors elected to cancel the 2018 Bristol shares and issue a new total of 88,125 shares of Series A Preferred stock (see Note 8). The Company issued 22,500 shares of Preferred series A stock for the services provided during the three months ended March 31, 2021.

 

Operating Sublease

 

On June 16, 2016, the Company entered into a Standard Multi-Tenant Sublease (“Sublease”) with Bristol Capital Advisors, LLC (“Bristol Capital Advisors”), an entity controlled by the Company’s Chairman of the Board. The leased premises are owned by an unrelated third party and Bristol Capital Advisors passes the lease costs down to the Company. The term of the Sublease is for 5 years and 3 months beginning on July 1, 2016 commencing with monthly payments of $8,118. During the three months ended March 31, 2021 and 2020, the Company paid lease obligations $13,034 and $23,812, respectively, under the Sublease. See Note 8.

 

Loan from officer

 

During the year ended December 31, 2019, the CEO made a non-interest bearing loan to the Company of $100,000. On August 3, 2020 the Board of Directors resolved to convert the total amount of debt (including loans made to the Company and deferred compensation) owed to John D. Maatta, as of July 31, 2020, into 35,074 shares of Series A Preferred Stock. In addition, on August 3, 2020, as ratified on August 21, 2020 the Board of Directors elected to cancel the 2018 Maatta shares previously issued for outstanding deferred compensation and issue a new total of 85,868 shares of Series A Preferred stock. As of March 31, 2021 and December 31, 2020 the outstanding balance under the loan payable was $0.

 

Securities Purchase Agreement

 

Effective December 1, 2016, the Company entered into the Purchase Agreement with Bristol Investment Fund, Ltd. (the “Purchaser”), an entity controlled by the Chairman of the Company’s Board of Directors, pursuant to which the Company sold to the Purchaser, for a cash purchase price of $2,500,000, securities comprising: (i) the Debenture, (ii) Series A Warrants, and (iii) Series B Warrants. Pursuant to the Purchase Agreement, the Company paid $25,000 to the Purchaser and issued to the Purchaser 25,000 shares of Common Stock with a grant date fair value of $85,000 to cover the Purchaser’s legal fees. The Company recorded as a debt discount of $25,791 related to the cash paid and the relative fair value of the shares issued to Purchaser for legal fees.

 

F-15
 

 

(i) Debenture

 

The Debenture with an initial principal balance of $2,500,000, due December 30, 2018 (the “Maturity Date”), will accrue interest on the aggregate unconverted and then outstanding principal amount of the Debenture at the rate of 12% per annum. Interest is payable quarterly on (i) January 1, April 1, July 1 and October 1, beginning on January 1, 2017, (ii) on each date the Purchaser converts, in whole or in part, the Debenture into Common Stock (as to that principal amount then being converted), and (iii) on the day that is 20 days following the Company’s notice to redeem some or all of the of the outstanding principal of the Debenture (only as to that principal amount then being redeemed) and on the Maturity Date. The Debenture is convertible into shares of the Company’s Common Stock at any time at the option of the holder, at an initial conversion price of $3.00 (as converted) per share, subject to adjustment. In the event of default occurs, the conversion price shall be the lesser of (i) the initial conversion price of $3.00 and (ii) 50% of the average of the 3 lowest trading prices during the 20 trading days immediately prior to the applicable conversion date. The debenture contains a “ratchet” provisions that adjusts the conversion rate of the debenture to the lowest rate the Company has agreed to issue stock. The effect of repricing board and employee options to $0.25 reset the conversion rates of the debenture to $0.25. In light of the financial stress Covid-19 has placed on the Company the holder of the debenture has agreed to not require payment due under each of the outstanding debenture until December 31, 2022.

 

(ii) Series A Warrants

 

The Series A Warrants to acquire up to 833,333 shares of Common Stock at the Series A Initial Exercise Price of $3.00 and expiring on December 1, 2021. The Warrants may be exercised immediately upon the issuance date, upon the option of the holder. The exercise price has now been adjusted to $0.25 and the exercise date has been extended.

 

(iii) Series B Warrants

 

The Series B Warrants to acquire up to 833,333 shares of Common Stock at the Series B Initial Exercise Price of $0.0001 and expiring on December 1, 2021. The Series B Warrants were exercised immediately upon the issuance date. The Company received gross proceeds of $1,667 upon exercise of the warrants.

 

Upon issuance of the note, the Company valued the warrants using the Black-Scholes Option Pricing model and accounted for it using the relative fair value of $1,448,293 as debt discount on the condensed consolidated balance sheet. The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the effective interest method which approximates the interest method. The amortization of debt discount is included as a component of interest expense in the condensed consolidated statements of operations. There was unamortized debt discount of $0 as of March 31, 2021 and December 31, 2020, which includes the debt discount recorded upon execution of the Securities Purchase Agreement discussed above.

 

Investment in CONtv

 

The Company currently holds a limited and passive interest of 10% in CONtv, a joint venture with third parties and Bristol Capital, LLC (a related party controlled by a member of the Board). CONtv is a digital network devoted to fans of pop culture entertainment and is inactive.

 

For the three months ended March 31, 2021 and 2020, the Company recognized $0 losses from this venture, respectively.

 

As of March 31, 2021 and December 31, 2020, the investment in CONtv was $0.

 

As of March 31, 2021 and December 31, 2020, the amount due to CONtv was $0 and $224,241, respectively.

 

F-16
 

 

Note 6 – Notes Payable

 

Paycheck Protection Program

 

On March 27, 2020 the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted and included a provision for the Small Business Administration (“SBA”) to implement its Paycheck Protection Program (“PPP”). The PPP provides small businesses with funds to pay payroll costs, including some benefits over a covered period of up to 24 weeks. Funds received under the PPP may also be used to pay interest on mortgages, rent, and utilities. Subject to certain criteria being met, all or a portion of the loan may be forgiven. The loans bear interest at an annual rate of one percent (1%), are due two (2) years from the date of issuance, and all payments are deferred for the first six (6) months of the loan. Any unforgiven balance of loan principal and accrued interest at the end of the six (6) month loan deferral period is amortized in equal monthly installments over the remaining 18-months of the loan term. On April 30, 2020, the Company closed a $197,600 SBA guaranteed PPP loan. The Company expects to use the loan proceeds as permitted and apply for and receive forgiveness for the entire loan amount. As of March 31, 2021, the outstanding balance under the loan was $197,600.

 

On February 25, 2021, the Company closed on a $197,662 SBA guaranteed PPP2 loan. The Company expects to use the loan proceeds as permitted and apply for and receive forgiveness for the entire loan amount. As of March 31, 2021, the outstanding balance under the loan was $197,662.

 

Small Business Administration Loan

 

On June 9, 2020, the Company executed a loan agreement with the SBA. The Company received aggregate proceeds of $149,900 under the loan which shall accrue interest at a rate of 3.75% and will mature in June 2050. As of March 31, 2021 and December 31, 2020, the outstanding balance under the loan was $149,900.

 

Note 7 – Convertible Debenture

 

Securities Purchase Agreement

 

Effective December 19, 2019, the Company entered into the Purchase Agreement with a Purchaser, pursuant to which the Company sold to the Purchaser, for a cash purchase price of $2,500,000, securities comprising: (i) the Debenture and (ii) Series A Warrants. Pursuant to the Purchase Agreement, the Company paid $25,400 to the Purchaser to cover the Purchaser’s legal fees. The Company recorded as a debt discount of $25,400 related to the cash paid and the relative fair value of the shares issued to Purchaser for legal fees.

 

(i) Debenture

 

The Debenture with an initial principal balance of $2,500,000, due December 30, 2021 (the “Maturity Date”), will accrue interest on the aggregate unconverted and then outstanding principal amount of the Debenture at the rate of 12% per annum. Interest is payable quarterly on (i) January 1, April 1, July 1 and October 1, beginning on January 1, 2020, (ii) on each date the Purchaser converts, in whole or in part, the Debenture into Common Stock (as to that principal amount then being converted), and (iii) on the day that is 20 days following the Company’s notice to redeem some or all of the of the outstanding principal of the Debenture (only as to that principal amount then being redeemed) and on the Maturity Date. The Debenture is convertible into shares of the Company’s Common Stock at any time at the option of the holder, at an initial conversion price of $2.50 (as converted) per share, subject to adjustment. In the event of default occurs, the conversion price shall be the lesser of (i) the initial conversion price of $2.50 and (ii) 50% of the average of the 3 lowest trading prices during the 20 trading days immediately prior to the applicable conversion date. In July 2020, the Purchaser agreed to extend the debenture a year as well as forbear any collection on the debenture up to December 30, 2022. The subject debenture contains a “ratchet” provisions that adjusts the conversion rates of the notes to the lowest rate the Company has agreed to issue stock. The effect of repricing board and employee options to $0.25 reset the conversion rates the note to $0.25. In light of the financial stress Covid-19 has placed on the Company the holder of the debenture has agreed to not require payment due under the outstanding debenture until December 31, 2022.

 

F-17
 

 

(ii) Warrants

 

The Series A Warrants to acquire up to 300,000 shares of Common Stock at the Series A Initial Exercise Price of $2.50 and expiring on December 1, 2024. The Warrants may be exercised immediately upon the issuance date, upon the option of the holder. The exercise price has now been adjusted to $0.25.

 

Upon issuance of the note, the Company valued the warrants using the Black-Scholes Option Pricing model and accounted for it using the relative fair value of $545,336 as debt discount on the condensed consolidated balance sheet. The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the effective interest method which approximates the interest method. The amortization of debt discount is included as a component of interest expense in the condensed consolidated statements of operations. There was unamortized debt discount of $465,604 and $510,384 as of March 31, 2021 and December 31, 2020, respectively, which includes the debt discount and debt issuance costs recorded upon execution of the Securities Purchase Agreement discussed above.

 

Note 8 – Commitments and Contingencies

 

Separation and Consulting Agreement

 

On February 20, 2021, the Company entered into a Separation and Consulting Agreement with Mr. John D. Maatta, the former President and Chief Executive Officer. Pursuant to the agreement, Mr. Maatta resigned from his position within the Company and will provide services on behalf of the Company and be paid a monthly fee of $10,000. In addition, the Company granted 8,500 shares series A preferred stock for accrued and unpaid salary and vacation time.

 

Consulting Agreement

 

As discussed in Note 6, on December 29, 2016, the Company entered into a Consulting Services Agreement (the “Consulting Agreement”) with Bristol managed by Paul L. Kessler, the Chairman of the Company. Pursuant to the Consulting Agreement, Mr. Kessler will serve as Executive Chairman of the Company. The initial term of the Agreement is from December 29, 2016 through March 28, 2017 (the “Initial Term”). The term of the Consulting Agreement will be automatically extended for additional terms of 90-day periods each (each a “Renewal Term” and together with the Initial Term, the “Term”), unless either the Company or Bristol gives prior written notice of non-renewal to the other party no later than thirty (30) days prior to the expiration of the then current Term.

 

During the Term, the Company will pay Bristol a monthly fee (the “Monthly Fee”) of $18,750. For services rendered by Bristol prior to entering into the Consulting Agreement, the Company will pay Bristol the Monthly Fee, pro-rated, for the time between September 1, 2016 and December 29, 2016. Bristol may also receive an annual bonus as determined by the Compensation Committee of the Company’s Board of Directors (the “Board”) and approved by the Board. Bristol has deferred payment of the monthly fees due from the Company as defined under the Consulting Agreement. On November 22, 2018, the Board of Directors of the Company decided to issue 201,982 shares of Preferred stock for settlement of the outstanding fees due to Bristol totaling $496,875. The Company’s consulting agreement with Bristol Capital, LLC has been amended so that the monthly fee may now, at the option of the Company, be paid in preferred stock. On August 3, 2020 the Board of Directors resolved to convert the total amount of debt owed to Bristol of $384,375, as of July 31, 2020, into 38,438 shares of Series A Preferred stock. In addition, on August 3, 2020, the Board of Directors elected to cancel the 2018 Bristol shares and issue 49,698 shares of Series A Preferred stock. In March 2021, the Company granted an additional 22,500 shares of series A preferred stock for consulting services provided by Bristol during the three months ended March 31, 2021.

 

Appointment of Chief Executive Officer

 

On March 1, 2021, the Board of Directors approved the Employment Agreement, effective as of November 24, 2020 (the “Effective Date”), with Scott D. Kaufman to serve as the Company’s Chief Executive Officer for a term of two years, subject to automatic renewal for additional terms of one year unless either party gives prior written notice of non-renewal to the other party no later than 60 days prior to the expiration of the then-current term. Mr. Kaufman will receive an annual base salary of $250,000, provided that until such time as the Company has positive net income on a consolidated basis with its subsidiaries for a period of six months, the Company, in its sole discretion, may elect to pay Mr. Kaufman his Base Salary, in whole or in part, in the form of the Company’s Series A Preferred Stock. Mr. Kaufman is also eligible to receive an annual bonus as determined by the Compensation Committee of the Board and as approved by the Board. The Board also agreed, during the term of Mr. Kaufman’s employment, to take reasonable steps to appoint him to the Board, to maintain such appointment, and to nominate him as a director for the purposes of any meeting or consent of the Company’s stockholders electing directors during the term of his employment.

 

F-18
 

 

Appointment of Chief Financial Officer

 

On March 1, 2021, the Board of Directors also approved the Employment Agreement, effective as of November 24, 2020 (the “Effective Date”), with Heidi C. Bowman to serve as the Company’s Chief Financial Officer for a term of two years, subject to automatic renewal for additional terms of one year unless either party gives prior written notice of non-renewal to the other party no later than 60 days prior to the expiration of the then-current term. Ms. Bowman will receive an annual base salary of $120,000, provided that until such time as the Company has positive net income on a consolidated basis with its subsidiaries for a period of six months, the Company in its sole discretion, may elect to pay Ms. Bowman her Base Salary, in whole or in part, in the form of the Company’s Series A Preferred Stock. Ms. Bowman is also eligible to receive an annual bonus as determined by the Compensation Committee of the Board and as approved by the Board.

 

Financial Advisory Agreement

 

On March 24, 2021 the Company entered into an agreement with Kingswood Capital Markets (“Kingswood”), a division of Benchmark Investments, Inc. in connection with providing general financial advisory to the Company. Kingswood is a broker-dealer registered under Section 15 of the US Securities Exchange Act of 1934 and state law and a member of the Financial Industry Regulatory Authority (“FINRA”). The Company issued 300,000 warrants to Kingswood exercisable at $1.00 for a period of three years. The fair value so the warrants issued was determined by using the Black-Scholes-Merton method of valuation and resulted in the Company recording $1,592,517 of consulting expense on its books.

 

Legal proceedings

 

The Company is from time to time involved in legal proceedings in the ordinary course of business. It is not involved in any disputes and does not have any litigation matters pending which the Company believes could have a materially adverse effect on the Company’s financial condition or results of operations.

 

Note 9 – Operating Leases

 

On June 16, 2016, the Company entered into a Standard Multi-Tenant Sublease (“Sublease”) with Bristol Capital Advisors, an entity controlled by the Company’s Chairman of the Board. The leased premises are owned by an unrelated third party and Bristol Capital Advisors passes the lease costs down to the Company. The term of the Sublease is for 5 years and 3 months beginning on July 1, 2016 commencing with monthly payments of $8,118. During the three months ended March 31, 2021 and 2020, the Company paid lease obligations $__ and $23,812, respectively, under the Sublease.

 

On April 28, 2020, upon acquisition of the Jevo assets, the Company entered into a lease agreement with a third party. The term of the lease is for 5 years beginning on May 1, 2020 commencing with a three-month rent holiday followed by monthly payments of $3,900 with an approximate 2% escalation clause. During the three months ended March 31, 2021 and 2020, the Company paid lease obligations $3,060 and $0, respectively, under the lease.

 

We determine if an arrangement contains a lease at inception. Right of use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

 

Our leases consist of leaseholds on office space. We utilized a portfolio approach in determining our discount rate. The portfolio approach takes into consideration the range of the term, the range of the lease payments, the category of the underlying asset and our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. We also give consideration to our recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating our incremental borrowing rates.

 

F-19
 

 

Our lease term includes options to extend the lease when it is reasonably certain that we will exercise that option. Leases with a term of 12 months or less are not recorded on the balance sheet, per the election of the practical expedient noted above.

 

We recognize lease expense for these leases on a straight-line basis over the lease term. We recognize variable lease payments in the period in which the obligation for those payments is incurred. Variable lease payments that depend on an index or a rate are initially measured using the index or rate at the commencement date, otherwise variable lease payments are recognized in the period incurred.

 

The components of lease expense were as follows:

 

   For the Three
Months Ended
   For the Three
Months Ended
 
   March 31, 2021   March 31, 2020 
Operating lease  $16,594   $26,812 
Sublease income   -    (9,000)
Total net lease cost  $16,594   $17,812 

 

Supplemental cash flow and other information related to leases was as follows:

 

   For the Three
Months Ended
   For the Three
Months Ended
 
   March 31, 2021   March 31, 2020 
Cash paid for amounts included in the measurement of lease liabilities:          
Operating cash flows from operating leases  $-   $- 
           
ROU assets obtained in exchange for lease liabilities:          
Operating leases  $-   $- 
           
Weighted average remaining lease term (in years):          
Operating leases   3.15    1.42 
           
Weighted average discount rate:          
Operating leases   12%   12%

 

The following table presents the maturity of the Company’s lease liabilities as of March 31, 2021:

 

For the twelve months ending March 31:    
2022  $103,224 
2023   48,532 
2024   49,502 
2025   50,492 
2026   8,444 
    260,194 
Less: Imputed interest   (46,101)
Present value  $214,093 

 

Note 10 – Stockholders’ Equity (Deficit)

 

Reverse Stock Split

 

Following the board of directors’ approval, the Company filed a Certificate of Change to its Articles of Incorporation (the “Amendment”), with the Secretary of State of the State of Delaware to effectuate a one-for-twenty (1:20) reverse stock split (the “Reverse Stock Split”) for all classes of its stock, par value $0.0001 per share, without any change to its par value. The Amendment became effective on January 23, 2020. No fractional shares were issued in connection with the Reverse Stock Split as all fractional shares were “rounded up” to the next whole share.

 

All share and per share amounts for the common stock have been retroactively restated to give effect to the reverse splits.

 

The Company’s authorized capital stock consists of 105,000,000 shares, of which 100,000,000 are for shares of common stock, par value $0.0001 per share, and 5,000,000 are for shares of preferred stock, par value $0.0001 per share, of which 500,000 have been designated as Series A Cumulative Convertible Preferred Stock (“Series A”).

 

F-20
 

 

As of March 31, 2021 and December 31, 2020, there were 217,274 and 173,974 shares of Series A preferred stock issued and outstanding, respectively.

 

As of March 31, 2021 and December 31, 2020, there were 5,000 and 0 shares of preferred stock issued and outstanding, respectively.

 

As of March 31, 2021 and December 31, 2020, there were 3,506,752 and 3,506,752 shares of common stock issued and outstanding, respectively. Each share of the common stock entitles its holder to one vote on each matter submitted to the shareholders.

 

The following is a summary of the Company’s option activity:

 

   Options  

Weighted

Average

Exercise Price

 
        (as converted) 
Outstanding – December 31, 2020   789,250   $1.75 
Exercisable – December 31, 2020   451,448   $2.69 
Granted   -   $- 
Exercised   -   $- 
Forfeited/Cancelled   -   $- 
Outstanding – March 31, 2021   789,250   $1.75 
Exercisable – March 31, 2021   589,781   $2.15 

 

Options Outstanding  Options Exercisable
Exercise Price  Number
Outstanding
  

Weighted

Average

Remaining

Contractual Life
(in years)

 

Weighted

Average

Exercise Price

  

Number

Exercisable

 

Weighted

Average

Exercise Price

 
                           
$   0.25 – 18.80    789,250   3.72 years  $1.75   589,781  $2.15 

 

At March 31, 2021, the total intrinsic value of options outstanding and exercisable was $2,581,488 and $1,811,220, respectively.

 

During the three months ended March 31, 2021 and 2020, the Company recorded total stock-based compensation expense related to options of approximately $97,429 and $21,171, respectively. The unrecognized compensation expense at March 31, 2021 was approximately $203,500.

 

Stock Warrants

 

The following is a summary of the Company’s warrant activity:

 

   Warrants   Weighted
Average
Exercise Price
 
        (as converted) 
Outstanding – December 31, 2020   10,300,000   $3.00 
Exercisable – December 31, 2020   10,300,000   $3.00 
Granted   700,000   $0.86 
Exercised   -   $- 
Forfeited/Cancelled   -   $- 
Outstanding – March 31, 2021   11,000,000   $2.86 
Exercisable – March 31, 2021   10,600,000   $2.94 

 

Warrants Outstanding  Warrants Exercisable
Exercise Price  Number
Outstanding
   Weighted
Average
Remaining
Contractual Life
(in years)
  Weighted
Average
Exercise Price
   Number
Exercisable
  Weighted
Average
Exercise Price
 
                           
$   0.50 – 3.00    11,000,000   1.79 years  $2.86   10,600,000  $2.94 

 

F-21
 

 

At March 31, 2021 the total intrinsic value of warrants outstanding and exercisable was $17,450,000 and $14,935,000, respectively.

 

On March 24, 2021 the Company entered into an agreement with Kingswood Capital Markets (“Kingswood”), a division of Benchmark Investments, Inc. in connection with providing general financial advisory to the Company. The Company issued 300,000 warrants to Kingswood exercisable at $1.00 for a period of three years. The fair value so the warrants issued was determined by using the Black-Scholes-Merton method of valuation and resulted in the Company recording $1,592,517 of expense on its books.

 

On March 29, 2021 the Company filed a Form D – Notice of Exempt Offerings of Securities with the Securities and Exchange Commission. The total offering amount was $5,000,000. The Company received proceeds of approximately $1,700,000 and paid a commission to Kingswood of $170,000.

 

On March 29, 2021, the Company entered into a Securities Purchase Agreement (the “Leviston Purchase Agreement”) with Leviston Resources LLC (“Leviston”) dated March 26, 2021, pursuant to which the Company sold to Leviston, and the Leviston purchased from the Company, 5,000 shares of the Company’s Series B Preferred Stock, par value $0.0001 per share Series B Preferred Stock with an aggregate stated value of $5,400,000, a Series B Preferred Stock Purchase Warrant to purchase 5,000 shares of Series B Preferred Stock, having a term expiring on March 26, 2023 and a per share exercise price (subject to adjustment for stock splits, reverse stock splits, mergers or reorganizations, and similar changes affecting shares of the Company’s common stock, par value $0.0001 per share and/or securities entitling the holder thereof to acquire shares of Common Stock, as applicable) of $1,000 (the “Series 1 Warrant”), and a Series B Preferred Stock Purchase Warrant to purchase 5,000 shares of Series B Preferred Stock, having a term expiring on March 26, 2024 and a per share exercise price (subject to adjustment for stock splits, reverse stock splits, mergers or reorganizations, and similar changes affecting shares of Common Stock and/or securities entitling the holder thereof to acquire shares of Common Stock, as applicable) of $1,000 (the “Series 2 Warrant” and together with the Series 1 Warrant, the “Warrants,” and together with the Closing Shares, the “Securities”). The aggregate purchase price for the Securities is $5,000,000, which Leviston will pay as follows: $2,000,000 on the Closing Date; $500,000 on or before the date that is three business days from the date that the Company files a registration statement relating to the shares of Common Stock issuable upon conversion of the Closing Shares and the shares of Series B Preferred Stock issuable upon exercise of the Warrants; and $2,500,000 on or before the date that is three business days from the date that such registration statement is declared effective in accordance with the terms and provisions of the Registration Rights Agreement.

 

On March 29, 2021, the Registrant filed with the Delaware Secretary of State a Certificate of Designation of Preferences, Rights and Limitations of Series B Preferred Stock (the “Series B Certificate of Designation”) pursuant to which the Registrant’s Board of Directors, pursuant to authority granted under the Registrant’s Amended and Restated Certificate of Incorporation, designated 20,000 shares of the 5,000,000 authorized shares of the Registrant’s preferred stock as Series B Preferred Stock.

 

Each share of Series B Preferred Stock has a stated value of $1,080, is entitled to receive cumulative dividends in cash, or at the holder’s option, in shares of Series B Preferred Stock (with one share of Series B Preferred Stock issued for each $993 in accrued dividends), at the rate of 5% per annum, payable quarterly on January 1, April 1, July 1 and October 1 (beginning on the first such date after the original issue date), on each conversion date (with respect to the shares of Series B Preferred Stock being converted), and on each optional redemption date (with respect to the shares of Series B Preferred Stock being redeemed), and is entitled to participate in any dividend or other distribution to holders of Common Stock to the same extent that the holder of Series B Preferred Stock would have participated therein if such holder had held the number of shares of Common Stock issuable upon complete conversion of such holder’s shares of Series B Preferred Stock (without regard to any limitations on exercise thereof, including any beneficial ownership limitations) immediately before the record date for such distribution or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined to receive the distribution, provided that if the distribution would result in the holder exceeding then-applicable beneficial ownership limitation, the holder shall not be entitled to participate in such distribution to such extent and such distribution to such extent shall be held in abeyance until such time, if ever, as the holder’s right thereto would not result in the holder exceeding the then-applicable beneficial ownership limitation.

 

Note 11 – Credit Risk

 

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents. As of March 31, 2021 and December 31, 2020, substantially all of the Company’s cash and cash equivalents were held by major financial institutions and the balance in certain accounts exceeded the maximum amount insured by the Federal Deposits Insurance Corporation (“FDIC”). However, the Company has not experienced losses on these accounts and management believes that the Company is not exposed to significant risks on such accounts.

 

Note 12 – Subsequent Events

 

On April 26, 2021 the Company filed a Form S-1 registration statement with the Securities and Exchange Commission consisting of 10,800,000 shares of common stock issuable upon the automatic conversion of the Series B Preferred Stock issuable upon the exercise of warrants issued in a private placement in March 2021, and up to 5,400,000 shares of common stock issuable upon the conversion of the Series B Preferred Stock issued in the March 2021 private placement. The Company received approximately $460,000 on April 26, 2021 as a result of the March 2021 private placement.

 

F-22
 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

THE FOLLOWING DISCUSSION OF OUR PLAN OF OPERATION AND RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND RELATED NOTES TO THE FINANCIAL STATEMENTS INCLUDED ELSEWHERE IN THIS REPORT. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT RELATE TO FUTURE EVENTS OR OUR FUTURE FINANCIAL PERFORMANCE. THESE STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE OUR ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. THESE RISKS AND OTHER FACTORS INCLUDE, AMONG OTHERS, THOSE LISTED UNDER “FORWARD-LOOKING STATEMENTS” AND “RISK FACTORS” AND THOSE INCLUDED ELSEWHERE IN THIS REPORT.

 

We intend that this discussion will provide information that will assist in understanding our financial statements, the changes in certain key items in those financial statements, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our financial statements. This discussion should be read in conjunction with our financial statements and accompanying notes for the quarters ended March 31, 2021 and 2020, included elsewhere in this report.

 

Prior to the onset of the age of Covid-19 the Company produced live pop culture conventions (“Comic Conventions”) across the United States providing a social networking and entertainment venue for enthusiasts of movies, TV shows, video games, technology, toys, social networking, gaming, comic books, and graphic novels. Our Comic Conventions have provided an opportunity for companies in the entertainment, toy, gaming, publishing and retail business to carry out sales, marketing, product promotion, public relations, advertising, and sponsorship efforts. However, at present, because of the substantial uncertainties concerning the course and scope of the current situation with the Covid-19 virus, it is currently clear that no live events will be produced by the Company during the second fiscal quarter of 2021. It is presently unknowable how long the current situation with Covid-19 will continue and what impact the Covid-19 situation will ultimately have upon the Company. Because of the Covid-19 situation, the Company has not been able to produce a live event since March 8, 2020 in Cleveland, Ohio. Events that had been planned for 2020 following the March 8, 2020, event and for 2021 have been postponed. Currently no live events are scheduled for the remainder of 2021.

 

3
 

 

Despite the unprecedented challenges experienced by the global economy this past year, the Company’s businesses, specifically in the hospitality industries (in which the Jevo machine plays), weathered the seismic shift in March of 2020 when live events and many hospitality venues shut down due to COVID. Despite the decimation of these sectors, we successfully pivoted our business models to continue to bring in steady revenue while expanding our consumer base. The businesses of the Company currently consist of: (i) Live Event Comic Conventions, (ii) Virtual pop-culture events, (iii) Sales of memorabilia and collectibles; and, (iii) Manufacturing and sale of the Jevo appliance.

 

As we move into the remainder of 2021, our strategies continue to evolve. The Company is repositioning its approach: after completing over 200 streaming virtual online events, Wizard Virtual will continue to create and build global interactive online communities for affinity groups by sourcing, producing, marketing, and streaming exclusive proprietary events and Signature Series content. At Jevo, we’re introducing the machine into new verticals - all actions that should help us thrive in a still-uncertain marketplace.

 

Strategy

 

There has recently been considerable interest in a consumer category of digital products known as NFTs (Non-Fungible Tokens). NFTs are collectibles where various objects (including pictures, music and video) are digitized. The digital version of the object is sold as a unique, blockchain-authenticated collectible.

 

In recent months many companies have entered this space. However, Wizard Brands, Inc., because of its existing enterprises, is perhaps uniquely situated to enter the NFT marketplace on a scale at which no other new market entrant into this space can achieve.

 

We continue to augment our digital programming with the eCommerce site, the Wizard World Vault. The Vault features the best in pop culture memorabilia from Wizard World events, along with items from the top artists and exhibitors in the memorabilia world. We have begun the process of transforming tangible memorabilia into digital collectibles that can be purchased alongside the physical item.

 

Although the NFT market is currently gaining considerable attention in the press, and is achieving traction with consumers, it is impossible to know the ultimate size and significance of the NFT marketplace.

 

Wizard Brands, Inc., having captured thousands of hours of video elements, consisting of millions of desirable frames of content, and possessing an extensive collection of celebrity collectables and its current market position in the pop-culture consumer products, is likely favorably-positioned to attract attention and market share as it enters this sector. Additionally, the fan base that comprises Wizard’s largest constituency is already active in the digital space and the brand extension into digital collectibles is a natural progression into a new and vibrant marketplace. Because Wizard already owns content, and has the marketing and distribution apparatus already in place, the potential for the Company to realize impressive margins in the NFT space is manifest.

 

Due largely to the enormous changes in society during the past year, online activity and connection through virtual communities are more important than ever. We see great opportunity to build on our established equity as the online destination for like-minded affinity groups.

 

Through its digital initiatives Wizard Brands desires to become the online destination for affinity groups to gain behind-the-scenes and unique experiences they can’t otherwise access.

 

As we continue to grow of Subscription Series, subjects that we are currently sourcing and looking to produce as Signatures Series will include:

 

  Horror and Special Effects;
     
  Nostalgia television and movies;
     
  CosPlay and Costuming;
     
  Anime and Magna;
     
  eSports and Video Gaming;
     
  Authors;
     
  Sci-Fi;
     
  Music;
     
  Animation;
     
  Current television and movies; and
     
  Fantasy and Supernatural.

 

4
 

 

Everyone who participates in the Signature Series will benefit: from the fans who gain direct, personal, and interactive access to talent and influencers, to the talent and influencers who will realize vast opportunities (including financial) to connect and expand their fan bases. Wizard Virtual, which will own content, collect live and residual income and constantly generate new merchandising opportunities, will see its affinity communities continue to grow as we expand our offerings.

 

The opportunities these Signature Series will open up to monetization are compelling. From collectors’ items to limited release products, from insider access to early release products to retail tie-ins, sponsorships and advertising — the possibilities are exponential.

 

As we continue to develop our subscription-based series model for our intensely engaged and loyal communities, we aim to achieve five objectives:

 

  Increased and residual revenue;
     
  Digital product sales and cross-promotions with other businesses;
     
  Platform for influencers to increase their base, earn money, and amplify their message;
     
  Further grow our base of consumers to whom we can market content, merchandise, and experiences; and
     
  Enrich content library across a wide swath of interests.

 

Our objective is to continue to create an expanded and qualitatively enhanced digital presence to leverage the Company’s digital extensions to become a dominant voice and destination for pop culture enthusiasts across multiple media platforms. Key elements of our strategy include:

 

  producing high quality Comic Conventions events across the United States to entertain fans and to allow for promotion of consumer products and entertainment;
     
  produce rich content and leveraging the content created at the Comic Conventions through digital media outlets such as websites, apps, emails, newsletters, Facebook, Twitter, Instagram and YouTube, among others, and producing new virtual experiences; and
     
  obtaining sponsorships and promotions from media and entertainment companies for our Comic Conventions, including: (i) expanding our relationships with entertainment and media companies; and (ii) Continue efforts to control all costs including corporate overhead and convention production costs.

 

Finally, during March 2020 and 2021, the Company has utilized internal controls, operating procedures and techniques to control costs. These operating changes have included staff cuts and the realignment of various operating functions within the Company.

 

Results of Operations

 

Summary of Statements of Operations for the Three Months Ended March 31, 2021 and 2020:

 

   Three Months Ended 
   March 31, 2021   March 31, 2020 
Revenues  $379,174   $2,602,419 
Cost of revenues  $297,546   $2,024,282 
Gross margin  $81,628   $578,137 
Operating expenses  $3,154,927   $605,410 
Loss from operations  $(3,073,299)  $(27,273)
Other income (expenses)  $604,424   $(156,341)
Net loss attributable to common shareholder  $(2,411,977)  $(183,614)
Loss per common share – basic  $(0.69)  $(0.05)
Loss per common share – diluted  $(0.69)  $(0.05)

 

5
 

 

Revenue

 

Revenue was $379,174 for the period ended March 31, 2021 as compared to $2,602,419 for the three months ended March 31, 2020, a decrease of $2,223,245. The decrease is revenue was a result of the impact of Covid-19 on the ability of Company to produce live events.

 

Because of the Covid-19 situation the Company produced no live events during the quarter ended March 31, 2021. Rather, the Company focused on the production of virtual events. During the quarter ended March 31, 2021, the Company produced approximately 23 virtual events.

 

In addition to the virtual events that were produced, the Company also engaged in e-commerce through the Wizard World Vault and on the eBay platform. During the quarter ended March 31, 2021, the revenue contributed by e-commerce was $172,698.

 

Gross Profit

 

Gross profit percentage, after considering cost of revenues, was 22% for the three months ended March 31, 2021 and 2020.

 

Operating Expenses

 

Operating expenses for the three months ended March 31, 2021, were $3,154,927, as compared to $605,410 for the three months ended March 31, 2020. The increase is primarily attributable to the integration of the Jevo operations which increased the consulting fees and general and administrative expenses in addition to an increase of stock-based compensation.

 

Loss from Operations

 

Loss from operations for the three months ended March 31, 2021, was $3,077,299 as compared to a loss from operations of $27,273 for the three months ended March 31, 2020. The negative variance was primarily attributable to the integration of the Jevo operations and an increase in consulting fees recorded as stock-based compensation of $1,592,000.

 

Other Income (Expenses)

 

Other income (expenses) for the three months ended March 31, 2021 was $604,424, as compared to $(156,341) for the three months ended March 31, 2020. In each case, the expense was interest expense related to convertible notes and corresponding debt discount. During the 2021 period, the Company wrote-off the outstanding payable due to CONtv totaling $224,241.

 

6
 

 

Net Loss Attributable to Common Stockholder

 

Net loss attributable to common stockholders for the three months ended March 31, 2021, was $2,411,977 or loss per basic share of $0.69, compared to a net loss of $183,614 or loss per basic share of $0.05 for the three months ended March 31, 2020.

 

Inflation did not have a material impact on the Company’s operations for the applicable period. Other than the foregoing, management knows of no trends, demands, or uncertainties that are reasonably likely to have a material impact on the Company’s results of operations.

 

Liquidity and Capital Resources

 

The following table summarizes total current assets, liabilities and working capital at March 31, 2021 compared to December 31, 2020:

 

   March 31, 2021   December 31, 2020   Increase/(Decrease) 
Current Assets  $3,300,906   $2,217,487   $1,083,419 
Current Liabilities  $6,582,819   $7,065,862   $(483,043)
Working Capital (Deficit)  $(3,281,913)  $(4,848,375)  $1,566,462 

 

At March 31, 2021, we had a working capital deficit of $3,281,913 as compared to working capital deficit of $4,848,375 at March 31, 2020, a change of $1,566,462. The change in working capital is primarily attributable to increases in cash and cash equivalents, inventories, and prepaid expenses and decreases in accounts payable and accrued expenses, unearned revenue and Due to CONtv joint venture offset by a decrease in accounts receivable and prepaid convention expenses.

 

Net Cash

 

Net cash used in operating activities for the three months ended March 31, 2021 and 2020 was $1,185,040 and $376,793, respectively. The net loss for the quarter ended March 31, 2021 and 2020, was $2,468,875 and $183,614, respectively.

 

Going Concern Analysis

 

The Company had a loss from operations of $3,073,299 and $27,273 for the three months ended March 31, 2021 and 2020, respectively. On March 31, 2021, we had cash and cash equivalents of approximately $2.6 million and a working capital deficit of approximately $3.2 million. We have evaluated the significance of these conditions in relation to our ability to meet our obligations, which had previously raised doubts about the Company’s ability to continue as a going concern through March 2022. However, the Company believes that the effects of its cost savings efforts with regard to corporate overhead and show production expenses together with the initiation of virtual activities and e-commerce, will guide the Company in a positive direction as we continue to strive to attain profitability.

 

However, because of the current situation with the Covid-19 virus, the Company was unable to produce any live events after the First Quarter of 2020. At present it is unclear how many live events will actually be produced by the Company in 2021. It is presently unknowable how long the current situation with Covid-19 will continue and what impact the Covid-19 situation will ultimately have upon the Company in 2021. At this point, the Company has postponed all of the live shows that it has scheduled for 2021. In the face of the impact of Covid-19 on live events generally, the Company has focused on producing virtual events. The first such virtual event was an interactive fan experience which took place on March 31, 2020 and since that time the Company has produced approximately 200 virtual events. In addition, the Company has moved into e-commerce with online sales of collectables and the creation of the “Wizard World Vault” as a site for consumers to purchase pop-culture memorabilia and collectables.

 

In addition to its cost containment strategies, the Company identified opportunities to rapidly move into the areas of (I) retailing collectables, (ii) providing virtual opportunities to fans to interact with celebrities, (iii) creating live and virtual events and conferences focused on new subject matter and affinities, and (iv) engaging in M&A opportunities.

 

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On December 19, 2019, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with Barlock 2019 Fund, LP (the “Purchaser”), for the sale of the Company’s securities, comprised of (I) a $2,500,000 convertible debenture, convertible at a price of $2.50 per share, and (ii) warrants to acquire 300,000 shares of the Company’s common stock at an exercise price of $2.50 per share. The warrants are now exercisable at $0.25 per share due to anti-dilution protections contained in the securities. As a condition to Purchaser entering into the Purchase Agreement, the Company entered into a 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. The security interest is on equal footing with certain other creditors of the Company. The Company received $2,500,000 in cash from the offering of the securities but was required to pay out of the closing proceeds Purchaser’s attorney’s fees in the amount of $25,000. The Company has agreed with the Purchaser that the funds received will be restricted and utilized only for M&A opportunities, new business ventures, brand extensions and the creation of new vertical opportunities by the Company. The subject debenture contains a “ratchet” provision that adjusts the conversion rates of the notes to the lowest rate the Company has agreed to issue stock. The effect of repricing board and employee options to $0.25 reset the conversion rates the note to $0.25. In light of the financial stress Covid-19 has placed on the Company the holder of the note has agreed to not require payment due under the outstanding notes until December 31, 2022. The debenture contains a “ratchet” provisions that adjusts the conversion rate of the debenture to the lowest rate the Company has agreed to issue stock. The effect of repricing board and employee options to $0.25 reset the conversion rates of the debenture to $0.25. In light of the financial stress Covid-19 has placed on the Company the holder of the debenture has agreed to not require payment due under each of the outstanding debenture until December 31, 2022.

 

On March 29, 2021, the Company entered into a Securities Purchase Agreement (the “Leviston Purchase Agreement”) with Leviston Resources LLC (“Leviston”) dated March 26, 2021, pursuant to which the Company sold to Leviston, and the Leviston purchased from the Company, 5,000 shares of the Company’s Series B Preferred Stock, par value $0.0001 per share Series B Preferred Stock with an aggregate stated value of $5,400,000, a Series B Preferred Stock Purchase Warrant to purchase 5,000 shares of Series B Preferred Stock, having a term expiring on March 26, 2023 and a per share exercise price (subject to adjustment for stock splits, reverse stock splits, mergers or reorganizations, and similar changes affecting shares of the Company’s common stock, par value $0.0001 per share and/or securities entitling the holder thereof to acquire shares of Common Stock, as applicable) of $1,000 (the “Series 1 Warrant”), and a Series B Preferred Stock Purchase Warrant to purchase 5,000 shares of Series B Preferred Stock, having a term expiring on March 26, 2024 and a per share exercise price (subject to adjustment for stock splits, reverse stock splits, mergers or reorganizations, and similar changes affecting shares of Common Stock and/or securities entitling the holder thereof to acquire shares of Common Stock, as applicable) of $1,000 (the “Series 2 Warrant” and together with the Series 1 Warrant, the “Warrants,” and together with the Closing Shares, the “Securities”). The aggregate purchase price for the Securities is $5,000,000, which Leviston will pay as follows: $2,000,000 on the Closing Date; $500,000 on or before the date that is three business days from the date that the Company files a registration statement relating to the shares of Common Stock issuable upon conversion of the Closing Shares and the shares of Series B Preferred Stock issuable upon exercise of the Warrants; and $2,500,000 on or before the date that is three business days from the date that such registration statement is declared effective in accordance with the terms and provisions of the Registration Rights Agreement.

 

On March 24, 2021 the Company entered into an agreement with Kingswood Capital Markets (“Kingswood”), a division of Benchmark Investments, Inc. in connection with providing general financial advisory to the Company. The Company issued 300,000 warrants to Kingswood exercisable at $1.00 for a period of three years. The fair value so the warrants issued was determined by using the Black-Scholes-Merton method of valuation and resulted in the Company recording $1,592,517 of expense on its books.

 

On March 29, 2021 the Company filed a Form D – Notice of Exempt Offerings of Securities with the Securities and Exchange Commission. The total offering amount was $5,000,000. The Company received proceeds of approximately $1,700,000 and paid a commission to Kingswood of $170,000.

 

Additionally, if necessary, management believes that both related parties (management and members of the Board of Directors of the Company) and potential external sources of debt and/or equity financing may be obtained based on management’s history of being able to raise capital from both internal and external sources coupled with current favorable market conditions, It is understood however, that although there is a recent history of related-parties providing a source of financing, there is no absolute certainty that any such related-party financing can be obtained on a going-forward basis. Therefore, the accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

 

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The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the matters discussed herein. While the Company believes in the viability of management’s strategy to generate sufficient revenue, control costs and the ability to raise additional funds if necessary, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon the ability to further implement the business plan, generate sufficient revenues and to control operating expenses.

 

Off-Balance Sheet Arrangements

 

As of March 31, 2021, the Company had no off-balance sheet arrangements.

 

Critical Accounting Policies

 

We believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this “Management’s Discussion and Analysis of Financial Condition and Results of Operation.” Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

 

Basis of Presentation

 

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

Principles of Consolidation

 

The consolidated financial statements include all accounts of the entities as of the reporting period ending date(s) and for the reporting period(s).

 

Property and Equipment

 

Property and equipment is stated at historical cost less accumulated depreciation and amortization. Depreciation and amortization is computed on a straight-line basis over the estimated useful lives of the assets, varying from 2 to 7 years or, when applicable, the life of the lease, whichever is shorter.

 

The impairment charges, if any, are included in operating expenses in the accompanying statements of operations.

 

Intangible assets

 

Intangible assets represent intangible assets acquired in connection with the Company’s purchase of Jevo patents and technology. The transaction was not a business combination or acquisition of a business.

 

The intangible assets are expected to be amortized using a straight-line method consistent with the expected future cash flows related to the intangible asset. Amortized intangible assets are reviewed for impairment whenever events or changes in circumstances exist that indicate the carrying amount of an asset may not be recoverable. When indicators of impairment exist, an estimate of undiscounted net cash flows is used in measuring whether the carrying amount of the asset or related asset group is recoverable.

 

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Measurement of the amount of impairment, if any, is based upon the difference between the asset or asset group’s carrying value and fair value. Fair value is determined through various valuation techniques, including market and income approaches as considered necessary.

 

Impairment of Long-Lived Assets

 

Long-lived assets are comprised of intangible assets and property and equipment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An estimate of undiscounted future cash flows produced by the asset, or the appropriate grouping of assets, is compared to the carrying value to determine whether an impairment exists, pursuant to the provisions of FASB ASC 360-10 “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of”. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows and fundamental analysis. The Company reports an asset to be disposed of at the lower of its carrying value or its estimated net realizable value. The Company did not record any impairment for the quarters ended March 31, 2021 and 2020, as there were no triggering events or changes in circumstances that indicate that the carrying amount of an asset may not be recoverable.

 

Leases

 

On January 1, 2019, the Company adopted ASC 842 using the modified retrospective approach and recognized a right of use (“ROU”) asset and liability in the consolidated balance sheet in the amount of $252,980 related to the operating lease for office space. Results for the three months ended March 31, 2021 and 2020 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with the legacy accounting guidance under ASC Topic 840, Leases.

 

As part of the adoption, we elected the practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to:

 

  1. Continue applying our current policy for accounting for land easements that existed as of, or expired before, January 1, 2019.
     
  2. Not separate non-lease components from lease components and instead to account for each separate lease component and the non-lease components associated with that lease component as a single lease component.
     
  3. Not to apply the recognition requirements in ASC 842 to short-term leases.
     
  4. Not record a right of use asset or right of use liability for leases with an asset or liability balance that would be considered immaterial.

 

Revenue Recognition

 

The Company follows the FASB Accounting Standards Codification ASC 606 for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met:

 

1) Identify the contract with a customer

 

A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.

 

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2) Identify the performance obligations in the contract

 

Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation.

 

3) Determine the transaction price

 

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts as of December 31, 2019 contained a significant financing component.

 

4) Allocate the transaction price to performance obligations in the contract

 

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.

 

5) Recognize revenue when or as the Company satisfies a performance obligation

 

The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.

 

Convention revenue is generally earned upon completion of the convention. Unearned convention revenue is deposits received for conventions that have not yet taken place, which are fully or partially refundable depending upon the terms and conditions of the agreements.

 

The Company recognizes cost of revenues in the period in which the revenues was earned. In the event the Company incurs cost of revenues for conventions that are yet to occur, the Company records such amounts as prepaid expenses and such prepaid expenses are expensed during the period the convention takes place.

 

Equity–based compensation

 

The Company recognizes compensation expense for all equity–based payments in accordance with ASC 718 “Compensation – Stock Compensation”. Under fair value recognition provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

 

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Restricted stock awards are granted at the discretion of the Company. These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods, typically over a four-year period (vesting on a straight–line basis). The fair value of a stock award is equal to the fair market value of a share of Company stock on the grant date.

 

The fair value of option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are input into the model. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is calculated based on the historical volatility of the Company’s Common stock over the expected option life and other appropriate factors. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on our Common stock and does not intend to pay dividends on our Common stock in the foreseeable future. The expected forfeiture rate is estimated based on historical experience.

 

Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, our equity–based compensation could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If our actual forfeiture rate is materially different from our estimate, the equity–based compensation could be significantly different from what the Company has recorded in the current period.

 

Fair Value Measurements

 

The Company follows ASC 820-10 of the FASB Accounting Standards Codification to measure the fair value of its financial instruments and disclosures about fair value of its financial instruments. ASC 820-10 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820-10 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by ASC 820-10 are described below:

 

Level 1   Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
     
Level 2   Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
     
Level 3   Pricing inputs that are generally unobservable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, inventory, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values because of the short maturity of these instruments.

 

Transactions involving related parties typically cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. However, in the case of the convertible promissory note discussed in Note 5, the Company obtained a fairness opinion from an independent third party which supports that the transaction was carried out at an arm’s length basis.

 

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Income Taxes

 

The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

 

FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of March 31, 2021 and December 31, 2020. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties at March 31, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

 

The Company may be subject to potential examination by federal, state, and city taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions, and compliance with federal, state, and city tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

 

The Company is no longer subject to tax examinations by tax authorities for years prior to 2018.

 

Recently Adopted Accounting Guidance

 

In December 2019, the FASB issued ASU 2019-12, Income Taxes(Topic 740): “Simplifying the Accounting for Income Taxes”, which is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by clarifying and amending existing guidance to improve consistent application. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. Certain amendments within this ASU are required to be applied on a retrospective basis, certain other amendments are required to be applied on a modified retrospective basis and all other amendments on a prospective basis. The adoption of ASU 2019-12 did not have a material impact on the Company’s financial statement presentation or disclosures.

 

Recently Issued Accounting Pronouncements

 

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedients and exceptions to account for contracts, hedging relationships and other transactions that reference LIBOR or another reference rate if certain criteria are met. The amendments of ASU No. 2020-04 are effective immediately, as of March 12, 2020, and may be applied prospectively to contract modifications made and hedging relationships entered into on or before December 31, 2022. The Company is evaluating the impact that the amendments of this standard would have on the Company’s consolidated financial statements.

 

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In August 2020, the FASB issued ASU 2020-06, Debt—”Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity, and also improves and amends the related EPS guidance for both Subtopics. The ASU will be effective for annual reporting periods after December 15, 2021 and interim periods within those annual periods and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

 

Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective accounting pronouncements, when adopted, will have a material impact on the financial statements of the Company.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

We do not hold any derivative instruments and do not engage in any hedging activities.

 

Item 4. Controls and Procedures.

 

(a) Evaluation of Disclosure Controls and Procedures.

 

Pursuant to Rule 13a- 15(b) under the Exchange Act, the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s PEO and PFO concluded that the Company’s disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s PEO and PFO, as appropriate, to allow timely decisions regarding required disclosure.

 

(b) Changes in Internal Control over Financial Reporting.

 

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

The Company is committed to improving financial organization. As part of this commitment, management and the Board perform reviews of the Company’s policies and procedures as they relate to financial reporting in an effort to mitigate future risks of potential misstatements. The Company will continue to focus on developing and documenting internal controls and procedures surrounding the financial reporting process, primarily through the use of account reconciliations, and supervision.

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

The Company is not involved in any disputes and does not have any litigation matters pending which the Company believes could have a materially adverse effect on the Company’s financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or of our Company’s or our Company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

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However, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

 

Item 1A. Risk Factors.

 

We believe there are no changes that constitute material changes from the risk factors previously disclosed in our Annual Report on Form 10-K, filed with the SEC on March 29, 2021. However, at present, because of the substantial uncertainties concerning the course and scope of the current situation with the Covid-19 virus, it is currently unclear how many live events will actually be produced by the Company in 2021. It is presently unknowable how long the current situation with Covid-19 will continue and what impact the Covid-19 situation will ultimately have upon the Company in 2021.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

There were no unregistered sales of the Company’s equity securities during the quarter ended March 31, 2021, that were not otherwise disclosed in a Current Report on Form 8-K.

 

Item 3. Defaults Upon Senior Securities.

 

There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of the Company.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

Up until the age of Covid-19, the Company had a single revenue stream rooted in the sale of exhibitor booths, sponsorships, and tickets for public mass events. The virus has interrupted that revenue stream and it is uncertain when the situation will get back to normal. The Company’s work force has been reduced to a handful of employees who have continued to provide services while, at times, receiving only a portion of their salaries. In recognition of this fact, the Company’s board of directors repriced options that had been previously authorized (including those grants of 1/23/19 and 4/4/20) to $0.25 per share. Options previously granted to board members (including those grants of 9/5/18, 9/12/19 and 4/4/20, as well as the preferred conversion price for the conversion of all of the existing debt held by Mr. Kessler and Mr. Maatta into preferred stock, for which preferred shares have or will be issued) were like wise priced at $0.25 per share.

 

On March 1, 2021, we issued shares of our Series A Preferred Stock as follows: 8,500 shares to Mr. Maatta in satisfaction of an aggregate of $84,947.55 due and owing to Mr. Maatta under his Separation Agreement; 22,500 shares to Bristol Capital, LLC in satisfaction of $225,000 due and owing to Bristol Capital, LLC for additional consulting services rendered and to be rendered by Mr. Kessler from July 1, 2020 through April 1, 2021; 8,300 shares to Scott D. Kaufman, our Chief Executive Officer, in satisfaction of $83,333 of compensation payable to Mr. Kaufman under his Employment Agreement through April 1, 2021; and 4,000 shares to Heidi C. Bowman, our Chief Financial Officer, in satisfaction of $40,000 of compensation payable to Ms. Bowman under her Employment Agreement through April 1, 2021. Each share of our Series A Preferred Stock is convertible into a number of shares of our Common Stock determined by dividing the aggregate stated value for the Series A Preferred Stock being converted (initially $10.00 per share, subject to adjustment as set forth in the currently effective Series A Certificate of Designation) by the then-applicable conversion price (initially $0.25 per share, subject to adjustment as set forth in the currently effective Series A Certificate of Designation). We issued the foregoing securities in reliance on the exemption from registration provided under Section 4(a)(2) of the Securities Act.

 

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On March 1, 2021, we issued warrants to purchase shares of Common Stock to our advisors and consultants as follows: two warrants to purchase 100,000 shares vesting 50% per year over two years from and after March 1, 2021, with an exercise price of $0.50 per share and a term of five years; and two warrants to purchase 100,000 shares vesting 50% per year over two years from and after March 1, 2021, with an exercise price of $1.00 per share and a term of five years. We issued the foregoing securities in reliance on the exemption from registration provided under Section 4(a)(2) of the Securities Act.

 

On March 29, 2021, we consummated the transactions contemplated by the securities purchase agreement with Leviston Resources LLC, pursuant to which, we issued in a private placement: (i) 5,000 shares of Series B Preferred Stock, convertible at the Series B Conversion Price, subject to conversion price floor of $1.00; and (ii) a warrant to acquire 5,000 shares of the Series B Preferred Stock at an exercise price of $1,000 per share of Series B Preferred Stock, which became exercisable immediately upon issuance and which expires on March 26, 2023; and (iii) a warrant to acquire 5,000 shares of the Series B Preferred Stock at an exercise price of $1,000 per share of Series B Preferred Stock, which became exercisable immediately upon issuance and which expires on March 26, 2024. Pursuant to the terms of the 2021 Warrants, the Series B Preferred Stock issuable upon exercise of the 2021 Warrants are automatically convertible into shares of Common Stock at the Series B Conversion Price. These securities were issued and sold in reliance upon the exemption from registration contained in Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder.

 

Item 6. Exhibits.

 

Exhibit No.   Description
     
3.1   Amended and Restated Certificate of Incorporation**
     
3.2   Certificate of Amendment to the Amended and Restated Certificate of Incorporation**
     
3.3   Certificate of Designation and Restatement of Rights, Preferences and Restrictions of Series A Preferred Stock.**
     
3.4   Certificate of Designation of Preferences, Rights and Limitations of Series B Preferred Stock, filed with the Secretary of State of the State of Delaware on March 29, 2021. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on April 2, 2021.)
     
10.1  

Employment Agreement dated as of March 1, 2021 but effective as of November 24, 2020, by and between Wizard Brands, Inc. and Scott D. Kaufman. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 3, 2021.)++

     
10.2  

Employment Agreement dated as of March 1, 2021 but effective as of November 24, 2020, by and between Wizard Brands, Inc. and Heidi C. Bowman. (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on March 3, 2021.)++

     
10.3  

Separation Agreement entered into as of February 20, 2021 between Wizard Brands, Inc. and John D. Maatta. (Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on March 3, 2021.)

     
10.4  

Securities Purchase Agreement dated March 26, 2021, between Wizard Brands, Inc. and Leviston Resources LLC. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on April 2, 2021.)

     
10.5  

Registration Rights Agreement dated March 26, 2021, between Wizard Brands, Inc. and Leviston Resources LLC. (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on April 2, 2021.)

     
10.6   Series B Preferred Stock Purchase Warrant (Series 1) issued to Leviston Resources LLC. (Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on April 2, 2021.)
     
10.7   Series B Preferred Stock Purchase Warrant (Series 2) issued to Leviston Resources LLC. (Incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on April 2, 2021.)
     
31.1   Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)). *
     
31.2   Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)). *
     
32.1   Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
     
32.2   Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
     
101.INS   XBRL Instance Document *
     
101.SCH   XBRL Taxonomy Extension Schema *
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase *
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase *
     
101.LAB   XBRL Taxonomy Extension Label Linkbase *
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase *

 

* Filed herewith.

 

** Filed on August 14, 2020, as an exhibit to the Company’s quarterly report on Form 10-Q.

 

++ Indicates management contract or compensatory plan.

 

16
 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  WIZARD ENTERTAINMENT, INC.
     
Date: May 14, 2021 By: /s/ Scott D. Kaufman
  Name:  Scott D. Kaufman
  Title: Chief Executive Officer and President

 

17

 

EX-31.1 2 ex31-1.htm

 

 

Exhibit 31.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Scott D. Kaufman, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Wizard Brands, Inc.;

 

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this quarterly report is being prepared;
     
  b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
     
  d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

 

  a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
     
  b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

 

Date: May 14, 2021 By: /s/ Scott D. Kaufman
   

Scott D. Kaufman

Principal Executive Officer

 

 

 

EX-31.2 3 ex31-2.htm

 

Exhibit 31.2

 

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Heidi C. Bowman, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Wizard Brands, Inc.;

 

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this quarterly report is being prepared;
     
  b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
     
  d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

 

  a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
     
  b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

 

Date: May 14, 2021 By: /s/ Heidi C. Bowman
   

Heidi C. Bowman

Principal Financial Officer

 

 

 

EX-32.1 4 ex32-1.htm

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

 

In connection with this Quarterly Report of Wizard Brands, Inc. (the “Company”), on Form 10-Q for the period ended March 31, 2021, as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Scott D. Kaufman, Principal Executive Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1) Such Quarterly Report on Form 10-Q for the period ended March 31, 2021, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  (2) The information contained in such Quarterly Report on Form 10-Q for the period ended March 31, 2021, fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: May 14, 2021 By: /s/ Scott D. Kaufman
    Scott D. Kaufman
    Principal Executive Officer

 

 

 

EX-32.2 5 ex32-2.htm

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

 

In connection with this Quarterly Report of Wizard Brands, Inc. (the “Company”), on Form 10-Q for the period ended March 31, 2021, as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Heidi C. Bowman, Principal Financial Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1) Such Quarterly Report on Form 10-Q for the period ended March 31, 2021, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  (2) The information contained in such Quarterly Report on Form 10-Q for the period ended March 31, 2021, fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: May 14, 2021 By: /s/ Heidi C. Bowman
    Heidi C. Bowman
    Principal Financial Officer

 

 

 

 

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Commercial Contract [Member] Common Stock Par Value $0.0001 [Member] Common Stock Warrants [Member] ConBox [Member] Consulting Agreement [Member] Consulting Services Agreement [Member] Consulting Services Agreement [Member] Conventions [Member] Convertible Debenture [Member] Convertible Note [Member] Cross-Complaint [Member] Debenture [Member] Deemed dividend. Deferred compensation outstanding, shares. Employee and Consultants [Member] Employee Options [Member] Employment Agreement [Member] Prepaid convention expenses. Jevo Holdings, LLC (formerly Wizard Immersive, LLC) [Member] Jevo LLC [Member] Jevo [Member] John D. Maatta [Member] Kick The Can Corp [Member] Kicking the Can L.L.C. [Member] Lease Agreement [Member] Loan Agreement SBA [Member] Members of Board [Member] Method of Accounting [Policy Text Block] Mr. Maatta [Member] Operating Agreement [Member] Operating lease, escalation clause. Right-of-use asset amortization. Schedule of Supplemental Cash Flow and Other Information Related Leases [Table Text Block] Operating sublease, rent expense. Paycheck Protection Program [Member] Preferred Stock Par Value $0.0001 [Member] Prepaid convention expenses. Previously Reported [Member] Randall Malinoff [Member] Ratchet [Member] Recently Issued Accounting Pronouncements. Revised Reported [Member] Revisions [Member] Schedule of estimated useful life [Table Text Block]. Schedule of Information Regarding Stock Warrants Outstanding [Table Text Block] Securities Purchase Agreement II [Member] Securities Purchase Agreement [Member] Series A Convertible Preferred Stock [Member] Series A Cumulative and Convertible Preferred Stock [Member] Series A Cumulative Convertible Preferred Stock [Member] Series A Warrants [Member] Series B Warrants [Member] Series B Warrants [Member] Series A Preferred dividends. The number of Exercised made during the period on other than stock (or unit) option plans (for example, phantom stock or unit plan, stock or unit appreciation rights plan, performance target plan). Weighted average fair value as of the grant date of equity-based award plans other than stock (unit) option plans that were exercised into effect as a result of the occurrence of a terminating event. The number of Exercisable made during the period on other than stock (or unit) option plans. The weighted average fair value at Exercisable date for nonvested equity-based awards issued during the period on other than stock (or unit) option plans. Share based compensation shares authorized under stock warrants plans exercise price. Share Exchange Agreement [Member] Shipping and handling costs. Shipping and Handling Costs [Policy Text Block] Silverman Complaint [Member] Tax Reform Bill [Member] Third Party [Member] 3 Member of Board [Member] 2018 Bristol Shares [Member] 2018 Bristol Shares [Member] 2011 Incentive Stock and Award Plan [Member] Vault [Member] Vehicles. Virtual [Member] Warrant expiring date. Wiz Wizard Llc [Member]. Wizard Immersive, LLC [Member] Wizard Special Events, LLC [Member] Wizard World China, LLC [Member] Wizard World Digital Inc [Member] Wizard World, LLC [Member] Working capital. Series 1 Warrant [Member] Series 2 Warrant [Member] Three Business Days from the Date [Member] On or Before the Date [Member] Term of warrant. Consulting expenses. Financial Advisory Agreement [Member] Total intrinsic value of warrants outstanding. Total intrinsic value of warrants exercisable. Commission. March 2021 Private Placement [Member] Proceeds from issuance of Series B preferred shares and warrants - net. Leviston Resources LLC [Member] Series 1 Warrants [Member] Series 2 Warrants [Member] Purchase price issuable upon exercise of warrants. Purchase price payables. Closing Date [Member] Series A Preferred Stock [Member] [Default Label] $0.01-$1.99 SeriesBWarrantMember Share-based Payment Arrangement [Member] Assets, Current Assets [Default Label] Liabilities, Current Liabilities Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest Liabilities and Equity Gross Profit Operating Expenses Interest Expense Nonoperating Income (Expense) Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest Income Tax Expense (Benefit) Net Income (Loss) Attributable to Parent Shares, Outstanding Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture Stock or Unit Option Plan Expense Gain (Loss) on Disposition of Business Increase (Decrease) in Accounts Receivable Increase (Decrease) in Inventories IncreaseDecreaseInPrepaidConventionExpenses Increase (Decrease) in Prepaid Expense Increase (Decrease) in Security Deposits Increase (Decrease) in Accounts Payable and Accrued Liabilities Increase (Decrease) in Contract with Customer, Liability Net Cash Provided by (Used in) Operating Activities Payments to Acquire Property, Plant, and Equipment Net Cash Provided by (Used in) Investing Activities Net Cash Provided by (Used in) Financing Activities Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Including Disposal Group and Discontinued Operations Property, Plant and Equipment, Policy [Policy Text Block] Property, Plant and Equipment, Gross Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment Sublease Income Lease, Cost Lessee, Operating Lease, Liability, to be Paid Lessee, Operating Lease, Liability, Undiscounted Excess Amount Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price Share-based Payment Arrangement, Option, Exercise Price Range, Exercisable, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsExercisedWeightedAverageGrantDateFairValue Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value EX-101.PRE 11 wizd-20210331_pre.xml XBRL PRESENTATION FILE XML 12 R1.htm IDEA: XBRL DOCUMENT v3.21.1
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2021
May 14, 2021
Cover [Abstract]    
Entity Registrant Name WIZARD BRANDS, INC.  
Entity Central Index Key 0001162896  
Document Type 10-Q  
Document Period End Date Mar. 31, 2021  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business Flag true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   3,506,752
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2021  
XML 13 R2.htm IDEA: XBRL DOCUMENT v3.21.1
Condensed Consolidated Balance Sheets - USD ($)
Mar. 31, 2021
Dec. 31, 2020
Current Assets    
Cash and cash equivalents $ 2,635,325 $ 1,897,703
Accounts receivable, net 33,452
Inventory 305,475 220,641
Prepaid convention expenses 3,625
Prepaid expenses 360,106 62,066
Total Current Assets 3,330,906 2,217,487
Property and equipment, net 51,550 58,501
Intangibles, net 128,700 132,000
Operating lease right of use asset, net 212,259 244,072
Security deposits 22,850 18,303
Total Assets 3,716,265 2,670,363
Current Liabilities    
Accounts payable and accrued expenses 3,401,351 3,474,061
Unearned revenue 572,755 758,847
Operating lease liability 108,713 108,713
Convertible promissory note - related party, net 2,500,000 2,500,000
Due to CONtv joint venture 224,241
Total Current Liabilities 6,582,819 7,065,862
Operating lease liability, net 105,381 137,694
Notes payable, net 545,162 347,500
Convertible debenture, net 2,034,396 1,964,216
Total Liabilities 9,267,757 9,515,272
Commitments and contingencies
Stockholders' Deficit    
Preferred stock, value 1
Common stock par value $0.0001: 100,000,000 shares authorized; 3,506,752 and 3,506,752 shares issued and outstanding, respectively 351 351
Additional paid-in capital 26,968,654 23,206,367
Accumulated deficit (32,508,021) (30,039,146)
Non-controlling interest (12,498) (12,498)
Total Stockholders' Deficit (5,551,492) (6,844,909)
Total Liabilities and Stockholders' Deficit 3,716,265 2,670,363
Series A Cumulative and Convertible Preferred Stock [Member]    
Stockholders' Deficit    
Preferred stock, value $ 21 $ 17
XML 14 R3.htm IDEA: XBRL DOCUMENT v3.21.1
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Mar. 31, 2021
Dec. 31, 2020
Preferred stock, par value $ 0.0001 $ 0.0001
Preferred stock, shares authorized 4,500,000 4,500,000
Preferred stock, shares issued 5,000 288,448
Preferred stock, shares outstanding 5,000 288,448
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 3,506,752 3,506,752
Common stock, shares outstanding 3,506,752 3,506,752
Series A Cumulative and Convertible Preferred Stock [Member]    
Preferred stock, par value $ 0.0001 $ 0.0001
Preferred stock, shares authorized 500,000 500,000
Preferred stock, shares issued 217,293 173,974
Preferred stock, shares outstanding 217,293 173,974
XML 15 R4.htm IDEA: XBRL DOCUMENT v3.21.1
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Income Statement [Abstract]    
Revenues $ 379,174 $ 2,602,419
Cost of revenues 297,546 2,024,282
Gross margin 81,628 578,137
Operating expenses    
Share-based compensation 97,429 21,171
Salaries and benefits 454,004 235,550
Consulting fees 1,740,008 117,807
General and administrative 863,486 230,882
Total operating expenses 3,154,927 605,410
Loss from operations (3,073,299) (27,273)
Other income (expenses)    
Interest expense (224,092) (156,341)
Other income 828,516
Total other income (expenses) 604,424 (156,341)
Loss before income tax provision (2,468,875) (183,614)
Income tax provision
Net loss (2,468,875) (183,614)
Series A Preferred dividends 56,898
Net loss attributable to common stockholders $ (2,411,977) $ (183,614)
Loss per share - basic $ (0.69) $ (0.05)
Loss per share - diluted $ (0.69) $ (0.05)
Weighted average common shares outstanding - basic 3,506,752 3,506,752
Weighted average common shares outstanding - diluted 3,506,752 3,506,752
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.21.1
Condensed Consolidated Statement of Stockholders' Deficit (Unaudited) - USD ($)
Series A Preferred Stock [Member]
Preferred Stock [Member]
Common Stock [Member]
Additional Paid In Capital [Member]
Accumulated Deficit [Member]
Non-controlling Interest [Member]
Total
Balance at Dec. 31, 2019 $ 29 $ 351 $ 21,854,134 $ (28,098,745) $ (12,498) $ (6,256,729)
Balance, shares at Dec. 31, 2019 288,448 3,506,752        
Share-based compensation 21,171 21,171
Net loss (183,614) (183,614)
Balance at Mar. 31, 2020 $ 29 $ 351 21,875,305 (28,282,359) (12,498) (6,419,172)
Balance, shares at Mar. 31, 2020 288,448 3,506,752        
Balance at Dec. 31, 2020 $ 17 $ 351 21,854,134 (28,098,745) (12,498) (6,844,909)
Balance, shares at Dec. 31, 2020 173,974 3,506,752        
Share-based compensation $ 4 531,305 531,305
Share-based compensation, shares 43,300        
Warrants issued for services 1,562,881 1,562,881
Issuance of Series B preferred shares and warrants - net of offering costs $ 1 1,724,999 1,725,000
Issuance of Series B preferred shares and warrants - net of offering costs, shares 5,000        
Series A Preferred declared dividends (56,898) (56,898)
Net loss (2,468,875) (2,468,875)
Balance at Mar. 31, 2021 $ 21 $ 1 $ 351 $ 26,968,654 $ (32,508,021) $ (12,498) $ (5,551,492)
Balance, shares at Mar. 31, 2021 217,274 5,000 3,506,752        
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.21.1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Cash Flows From Operating Activities:    
Net loss $ (2,468,875) $ (183,614)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 10,251 7,940
Accretion of debt discount 70,180 7,567
Right-of-use asset amortization (500) 297
Share-based compensation 2,094,190 21,171
Gain on write-off of CONtv joint venture (224,241)
Changes in operating assets and liabilities:    
Accounts receivable 33,452 (40,852)
Inventory (84,834)
Prepaid convention expenses 3,625 342,283
Prepaid expenses (298,040) 6,850
Security deposits (4,547)
Accounts payable and accrued expenses (129,608) 368,878
Unearned revenue (186,092) (907,313)
Net Cash Used In Operating Activities (1,185,040) (376,793)
Cash Flows from Investing Activities:    
Purchase of property and equipment (665)
Net Cash Used In Investing Activities (156,733) (665)
Cash Flows from Investing Activities:    
Proceeds from issuance of Series B preferred shares and warrants - net 1,725,000
Proceeds from notes payable 197,662
Net Cash Provided by Financing Activities 1,922,662
Net change in cash and cash equivalents 737,622 (377,458)
Cash and cash equivalents at beginning of reporting period 1,897,703 2,777,654
Cash and cash equivalents at end of reporting period 2,635,325 2,400,196
Supplemental disclosures of cash flow information:    
Interest paid
Income tax paid
Supplemental disclosure of noncash investing and financing activities:    
Deemed dividend $ 56,898
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.21.1
Organization and Operations
3 Months Ended
Mar. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Operations

Note 1 – Organization and Operations

 

Wizard Brands, Inc.

 

Wizard Brands, Inc., formerly GoEnergy, Inc., Wizard World, Inc., and Wizard Entertainment, Inc. (“Wizard Brands” or the “Company”) was incorporated on May 2, 2001, under the laws of the State of Delaware. The Company, through its operating subsidiary, is a producer of pop culture and live multimedia conventions across North America. Effective October 5, 2018, the Company changed its name to Wizard Entertainment, Inc. On July 29, 2020, the Company changed its name to Wizard Brands, Inc.

 

Recent Developments

 

On April 28, 2020 the Company, through one of its wholly-owned operating subsidiaries, acquired the assets of the creator of the Jevo machine, which is a patent protected first-mover application for the creation of gelatin shots. With Jevo, the Company will diversify its revenue generation capabilities by manufacturing, marketing and selling Jevo units and related consumables, both nationally and internationally to bars, restaurants, clubs, casinos, hotels, cruise lines, resorts and other establishments that serve beverages (both alcoholic and non-alcoholic) to the public. In addition to food and beverage applications the Company has identified other market segments where the Jevo units can be marketed including but not limited to the healthcare industry. The acquisition of Jevo is the Company’s initial entry into M&A activity intended to broaden the Company’s revenue base. Following the closing of the merger transaction, Jevo’s financial statements as of the closing were consolidated with the financial statements of the Company.

XML 19 R8.htm IDEA: XBRL DOCUMENT v3.21.1
Going Concern Analysis
3 Months Ended
Mar. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Going Concern Analysis

Note 2 – Going Concern Analysis

 

Going Concern Analysis

 

The Company had a loss from operations of $3,077,678 and $27,273 for the three months ended March 31, 2021 and 2020, respectively. On March 31, 2021, we had cash and cash equivalents of approximately $2.6 million and a working capital deficit of approximately $3.2 million. We have evaluated the significance of these conditions in relation to our ability to meet our obligations, which had previously raised doubts about the Company’s ability to continue as a going concern through March 2022. However, the Company believes that the effects of the expansion of virtual activities and e-commerce along with the entry into new business verticals will guide the Company in a positive direction as we continue to strive to attain profitability.

 

However, because of the current situation with the Covid-19 virus, the Company was unable to produce any live events after the First Quarter of 2020. At present it is unclear how many live events will actually be produced by the Company in 2021. It is presently unknowable how long the current situation with Covid-19 will continue and what impact the Covid-19 situation will ultimately have upon the Company in 2021. At this point, the Company has postponed all of the live shows that it has scheduled for 2021. In the face of the impact of Covid-19 on live events generally, the Company has focused on producing virtual events. The first such virtual event was an interactive fan experience which took place on March 31, 2020 and since that time the Company has produced approximately 200 virtual events. In addition, the Company has moved into e-commerce with online sales of collectables and the creation of the “Wizard World Vault” as a site for consumers to purchase pop-culture memorabilia and collectables.

 

On March 29, 2021, the Company entered into a Securities Purchase Agreement (the “Leviston Purchase Agreement”) with Leviston Resources LLC (“Leviston”) dated March 26, 2021, pursuant to which the Company sold to Leviston, and the Leviston purchased from the Company, 5,000 shares of the Company’s Series B Preferred Stock, par value $0.0001 per share Series B Preferred Stock with an aggregate stated value of $5,400,000, a Series B Preferred Stock Purchase Warrant to purchase 5,000 shares of Series B Preferred Stock, having a term expiring on March 26, 2023 and a per share exercise price (subject to adjustment for stock splits, reverse stock splits, mergers or reorganizations, and similar changes affecting shares of the Company’s common stock, par value $0.0001 per share and/or securities entitling the holder thereof to acquire shares of Common Stock, as applicable) of $1,000 (the “Series 1 Warrant”), and a Series B Preferred Stock Purchase Warrant to purchase 5,000 shares of Series B Preferred Stock, having a term expiring on March 26, 2024 and a per share exercise price (subject to adjustment for stock splits, reverse stock splits, mergers or reorganizations, and similar changes affecting shares of Common Stock and/or securities entitling the holder thereof to acquire shares of Common Stock, as applicable) of $1,000 (the “Series 2 Warrant” and together with the Series 1 Warrant, the “Warrants,” and together with the Closing Shares, the “Securities”). The aggregate purchase price for the Securities is $5,000,000, which Leviston will pay as follows: $2,000,000 on the Closing Date; $500,000 on or before the date that is three business days from the date that the Company files a registration statement relating to the shares of Common Stock issuable upon conversion of the Closing Shares and the shares of Series B Preferred Stock issuable upon exercise of the Warrants; and $2,500,000 on or before the date that is three business days from the date that such registration statement is declared effective in accordance with the terms and provisions of the Registration Rights Agreement.

 

In addition to its cost containment strategies, the Company identified opportunities to rapidly move into the areas of (i) retailing collectables, (ii) providing virtual opportunities to fans to interact with celebrities, (iii) creating live and virtual events and conferences focused on new subject matter and affinities, and (iv) engaging in M&A opportunities. The company initiated these activities in 2020.

 

Additionally, if necessary, management believes that both related parties (management and members of the Board of Directors of the Company) and potential external sources of debt and/or equity financing may be obtained based on management’s history of being able to raise capital from both internal and external sources coupled with current favorable market conditions, It is understood however, that although there is a recent history of related-parties providing a source of financing, there is no absolute certainty that any such related-party financing can be obtained on a going-forward basis. Therefore, the accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

 

The condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the matters discussed herein. While the Company believes in the viability of management’s strategy to generate sufficient revenue, control costs and the ability to raise additional funds if necessary, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon the ability to further implement the business plan, generate sufficient revenues and to control operating expenses.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.21.1
Significant and Critical Accounting Policies and Practices
3 Months Ended
Mar. 31, 2021
Accounting Policies [Abstract]  
Significant and Critical Accounting Policies and Practices

Note 3 – Significant and Critical Accounting Policies and Practices

 

The management of the Company is responsible for the selection and use of appropriate accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

 

Basis of Presentation - Unaudited Interim Financial Information

 

The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited condensed consolidated financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2020 and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 29, 2021.

 

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

Principles of Consolidation

 

The condensed consolidated financial statements include all accounts of the entities as of the reporting period ending date(s) and for the reporting period(s).

 

All inter-company balances and transactions have been eliminated. Non–controlling interest represents the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interest.

 

As of March 31, 2021 and December 31, 2020, the aggregate non-controlling interest in ButtaFyngas was ($12,498). The non-controlling interest is separately disclosed on the Condensed Consolidated Balance Sheet.

 

Cash and Cash Equivalents

 

The Company considers investments with original maturities of three months or less to be cash equivalents.

 

The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits.

 

Fair Value of Financial Instruments

 

For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amount of the Company’s short-term financial instruments approximates fair value due to the relatively short period to maturity for these instruments.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company generally does not require collateral to support customer receivables. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. The maximum accounting loss from the credit risk associated with accounts receivable is the amount of the receivable recorded, which is the face amount of the receivable net of the allowance for doubtful accounts. As of March 31, 2021 and December 31, 2020, the allowance for doubtful accounts was $0 and $0, respectively.

 

Inventories

 

Inventories are stated at average cost using the first-in, first-out (FIFO) valuation method. Inventory was comprised of the following:

 

    March 31, 2021     December 31, 2020  
Finished goods   $ 305,475     $ 220,641  
                 

 

Property and Equipment

 

Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the respective assets as follows:

 

    Estimated Useful
Life (Years)
 
       
Computer equipment     3  
         
Equipment     2-5  
         
Furniture and fixture     7  
         
Leasehold improvements     *  

 

(*) Amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever period is shorter.

 

Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the condensed consolidated statements of operations.

 

Intangible assets

 

Intangible assets represent intangible assets acquired in connection with the Company’s purchase of Jevo patents and technology. The transaction was not a business combination or acquisition of a business.

 

The intangible assets are amortized using a straight-line method consistent with the expected future cash flows related to the intangible asset, which has been determined to be ten (10) years. Amortized intangible assets are reviewed for impairment whenever events or changes in circumstances exist that indicate the carrying amount of an asset may not be recoverable. When indicators of impairment exist, an estimate of undiscounted net cash flows is used in measuring whether the carrying amount of the asset or related asset group is recoverable.

 

Measurement of the amount of impairment, if any, is based upon the difference between the asset or asset group’s carrying value and fair value. Fair value is determined through various valuation techniques, including market and income approaches as considered necessary. No impairment has been recorded as of March 31, 2021.

 

Investments - Cost Method, Equity Method and Joint Venture

 

In accordance with sub-topic 323-10 of the FASB ASC (“Sub-topic 323-10”), the Company accounts for investments in common stock of an investee for which the Company has significant influence in the operating or financial policies even though the Company holds 50% or less of the common stock or in-substance common stock.

 

Method of Accounting

 

Investments held in stock of entities other than subsidiaries, namely corporate joint ventures and other non-controlled entities usually are accounted for by one of three methods: (i) the fair value method (addressed in Topic 320), (ii) the equity method (addressed in Topic 323), or (iii) the cost method (addressed in Subtopic 325-20). Pursuant to Paragraph 323-10-05-5, the equity method tends to be most appropriate if an investment enables the investor to influence the operating or financial policies of the investee.

 

Investment in CONtv

 

The Company currently holds a limited and passive interest of 10% in CONtv, a joint venture with third parties and Bristol Capital, LLC (a related party controlled by a member of the Board). CONtv is a digital network devoted to fans of pop culture entertainment and is inactive.

 

For the three months ended March 31, 2021 and 2020, the Company recognized $0 losses from this venture, respectively.

 

As of March 31, 2021 and December 31, 2020, the investment in CONtv was $0.

 

As of March 31, 2021 and December 31, 2020, the amount due to CONtv was $0 and $224,241, respectively.

 

Fair Value of Measurements

 

The Company follows ASC 820-10 of the FASB Accounting Standards Codification to measure the fair value of its financial instruments and disclosures about fair value of its financial instruments. ASC 820-10 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820-10 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by ASC 820-10 are described below:

 

Level 1   Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
     
Level 2   Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
     
Level 3   Pricing inputs that are generally unobservable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, inventory, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values because of the short maturity of these instruments.

 

Transactions involving related parties typically cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. However, in the case of the convertible promissory note discussed in Note 5, the Company obtained a fairness opinion from an independent third party which supports that the transaction was carried out at an arm’s length basis.

 

Revenue Recognition and Cost of Revenues

 

The Company follows the FASB Accounting Standards Codification ASC 606 for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met:

 

1) Identify the contract with a customer

 

A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.

 

2) Identify the performance obligations in the contract

 

Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation.

 

3) Determine the transaction price

 

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts as of March 31, 2021 contained a significant financing component.

 

4) Allocate the transaction price to performance obligations in the contract

 

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.

 

5) Recognize revenue when or as the Company satisfies a performance obligation

 

The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.

 

Convention revenue is generally earned upon completion of the convention. Unearned convention revenue is deposits received for conventions that have not yet taken place, which are fully or partially refundable depending upon the terms and conditions of the agreements.

 

The Company recognizes cost of revenues in the period in which the revenues was earned. In the event the Company incurs cost of revenues for conventions that are yet to occur, the Company records such amounts as prepaid expenses and such prepaid expenses are expensed during the period the convention takes place.

 

Disaggregation of Revenue from Contracts with Customers. The following table disaggregates gross revenue by significant revenue stream for the three months ended March 31, 2021 and 2020:

 

    For the Three Months Ended  
    March 31, 2021     March 31, 2020  
Conventions   $ -     $ 2,583,404  
Virtual     191,962       19,015  
Vault     172,698       -  
Jevo     14,514       -  
Total revenue   $ 379,174     $ 2,602,419  

 

Shipping and Handling Costs

 

The Company accounts for shipping and handling fees in accordance with paragraph 605-45-45-19 of the FASB Accounting Standards Codification. While amounts charged to customers for shipping products are included in revenues, the related costs are classified in cost of revenue as incurred.

 

Shipping and handling costs were $0 and $0 for the three and three months ended March 31, 2021 and 2020, respectively.

 

Equity–based compensation

 

The Company recognizes compensation expense for all equity–based payments in accordance with ASC 718 “Compensation – Stock Compensation”. Under fair value recognition provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

 

Restricted stock awards are granted at the discretion of the Company. These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods, typically over a four-year period (vesting on a straight–line basis). The fair value of a stock award is equal to the fair market value of a share of Company stock on the grant date.

 

The fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are input into the model. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is calculated based on the historical volatility of the Company’s Common stock over the expected option life and other appropriate factors. The expected option term is computed using the “simplified” method as permitted under the provisions of ASC 718-10-S99. The Company uses the simplified method to calculate expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on the Common stock of the Company and does not intend to pay dividends on the Common stock in the foreseeable future. The expected forfeiture rate is estimated based on historical experience.

 

Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, the equity–based compensation could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If the actual forfeiture rate is materially different from the Company’s estimate, the equity–based compensation could be significantly different from what the Company has recorded in the current period.

 

Income Taxes

 

The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

 

FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of March 31, 2021 and December 31, 2020. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of March 31, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

 

The Company may be subject to potential examination by federal, state, and city taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions, and compliance with federal, state, and city tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

 

The Company is no longer subject to tax examinations by tax authorities for years prior to 2018.

 

Earnings per Share

 

Earnings per share (“EPS”) is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to Section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.

 

The following table shows the outstanding dilutive common shares excluded from the diluted net income (loss) per share calculation as they were anti-dilutive:

 

    Contingent shares issuance
arrangement, stock options
or warrants
 
    For the Three Months
Ended
March 31, 2021
    For the Three Months
Ended
March 31, 2020
 
             
Convertible note     833,333       833,333  
Common stock options     789,250       226,000  
Common stock warrants     11,000,000       1,133,333  
                 
Total contingent shares issuance arrangement, stock options or warrants     12,622,583       2,192,666  

 

Reclassification

 

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Recently Adopted Accounting Guidance

 

In December 2019, the FASB issued ASU 2019-12, Income Taxes(Topic 740): “Simplifying the Accounting for Income Taxes”, which is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by clarifying and amending existing guidance to improve consistent application. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. Certain amendments within this ASU are required to be applied on a retrospective basis, certain other amendments are required to be applied on a modified retrospective basis and all other amendments on a prospective basis. The adoption of ASU 2019-12 did not have a material impact on the Company’s financial statement presentation or disclosures.

 

Recently Issued Accounting Pronouncements

 

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedients and exceptions to account for contracts, hedging relationships and other transactions that reference LIBOR or another reference rate if certain criteria are met. The amendments of ASU No. 2020-04 are effective immediately, as of March 12, 2020, and may be applied prospectively to contract modifications made and hedging relationships entered into on or before December 31, 2022. The Company is evaluating the impact that the amendments of this standard would have on the Company’s consolidated financial statements.

 

In August 2020, the FASB issued ASU 2020-06, Debt—”Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity, and also improves and amends the related EPS guidance for both Subtopics. The ASU will be effective for annual reporting periods after December 15, 2021 and interim periods within those annual periods and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

 

Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective accounting pronouncements, when adopted, will have a material impact on the financial statements of the Company.

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.21.1
Property and Equipment
3 Months Ended
Mar. 31, 2021
Property, Plant and Equipment [Abstract]  
Property and Equipment

Note 4 – Property and Equipment

 

Property and equipment stated at cost, less accumulated depreciation and amortization, consisted of the following:

 

    March 31, 2021     March 31, 2020  
Computer Equipment   $ 36,525     $ 36,525  
Equipment     474,069       474,069  
Furniture and Fixtures     65,465       65,465  
Vehicles     15,000       15,000  
Leasehold Improvements     27,095       27,094  
      618,154       618,153  
Less: Accumulated depreciation     (566,604 )     (559,652 )
    $ 51,550     $ 58,501  

 

Depreciation expense was $6,722 and $7,940 for the three months ended March 31, 2021 and 2020, respectively.

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.21.1
Related Party Transactions
3 Months Ended
Mar. 31, 2021
Related Party Transactions [Abstract]  
Related Party Transactions

Note 5 – Related Party Transactions

 

Consulting Agreement

 

On December 29, 2016, the Company entered into a Consulting Services Agreement (the “Consulting Agreement”) with Bristol Capital, LLC, a Delaware limited liability company (“Bristol”) managed by Paul L. Kessler, the Chairman of the Company. Pursuant to the Consulting Agreement, Mr. Kessler will serve as Executive Chairman of the Company. The initial term of the Agreement is from December 29, 2016 through March 28, 2017 (the “Initial Term”). The term of the Consulting Agreement will be automatically extended for additional terms of 90-day periods each (each a “Renewal Term” and together with the Initial Term, the “Term”), unless either the Company or Bristol gives prior written notice of non-renewal to the other party no later than thirty (30) days prior to the expiration of the then current Term.

 

During the Term, the Company will pay Bristol a monthly fee (the “Monthly Fee”) of Eighteen Thousand Seven Hundred Fifty and No/100 Dollars ($18,750). This agreement has been amended so that the monthly fee owed to Bristol may now, at the option of the Company, be paid in preferred stock.

 

In addition, upon execution of the Consulting Agreement, the Company granted to Bristol options to purchase up to an aggregate of 30,000 shares of the Company’s common stock.

 

During the three months ended March 31, 2021 and 2020, the Company incurred expenses of approximately $225,000 and $56,000, for each period for services provided by Bristol, respectively. On November 22, 2018, the Board of Directors of the Company decided to issue 210,982 shares of Preferred stock (“2018 Bristol shares”) for settlement of the outstanding fees due to Bristol totaling $496,875. At March 31, 2021 and December 31, 2019, the Company accrued $0 and $0, respectively, of net monthly fees due to Bristol. On August 3, 2020, the Board of Directors resolved to convert the total amount of debt owed to Bristol of $384,375, as of July 31, 2020, into 38,438 shares of Series A Preferred stock. In addition, on August 3, 2020, as ratified on August 21, 2020 the Board of Directors elected to cancel the 2018 Bristol shares and issue a new total of 88,125 shares of Series A Preferred stock (see Note 8). The Company issued 22,500 shares of Preferred series A stock for the services provided during the three months ended March 31, 2021.

 

Operating Sublease

 

On June 16, 2016, the Company entered into a Standard Multi-Tenant Sublease (“Sublease”) with Bristol Capital Advisors, LLC (“Bristol Capital Advisors”), an entity controlled by the Company’s Chairman of the Board. The leased premises are owned by an unrelated third party and Bristol Capital Advisors passes the lease costs down to the Company. The term of the Sublease is for 5 years and 3 months beginning on July 1, 2016 commencing with monthly payments of $8,118. During the three months ended March 31, 2021 and 2020, the Company paid lease obligations $13,034 and $23,812, respectively, under the Sublease. See Note 8.

 

Loan from officer

 

During the year ended December 31, 2019, the CEO made a non-interest bearing loan to the Company of $100,000. On August 3, 2020 the Board of Directors resolved to convert the total amount of debt (including loans made to the Company and deferred compensation) owed to John D. Maatta, as of July 31, 2020, into 35,074 shares of Series A Preferred Stock. In addition, on August 3, 2020, as ratified on August 21, 2020 the Board of Directors elected to cancel the 2018 Maatta shares previously issued for outstanding deferred compensation and issue a new total of 85,868 shares of Series A Preferred stock. As of March 31, 2021 and December 31, 2020 the outstanding balance under the loan payable was $0.

 

Securities Purchase Agreement

 

Effective December 1, 2016, the Company entered into the Purchase Agreement with Bristol Investment Fund, Ltd. (the “Purchaser”), an entity controlled by the Chairman of the Company’s Board of Directors, pursuant to which the Company sold to the Purchaser, for a cash purchase price of $2,500,000, securities comprising: (i) the Debenture, (ii) Series A Warrants, and (iii) Series B Warrants. Pursuant to the Purchase Agreement, the Company paid $25,000 to the Purchaser and issued to the Purchaser 25,000 shares of Common Stock with a grant date fair value of $85,000 to cover the Purchaser’s legal fees. The Company recorded as a debt discount of $25,791 related to the cash paid and the relative fair value of the shares issued to Purchaser for legal fees.

 

(i) Debenture

 

The Debenture with an initial principal balance of $2,500,000, due December 30, 2018 (the “Maturity Date”), will accrue interest on the aggregate unconverted and then outstanding principal amount of the Debenture at the rate of 12% per annum. Interest is payable quarterly on (i) January 1, April 1, July 1 and October 1, beginning on January 1, 2017, (ii) on each date the Purchaser converts, in whole or in part, the Debenture into Common Stock (as to that principal amount then being converted), and (iii) on the day that is 20 days following the Company’s notice to redeem some or all of the of the outstanding principal of the Debenture (only as to that principal amount then being redeemed) and on the Maturity Date. The Debenture is convertible into shares of the Company’s Common Stock at any time at the option of the holder, at an initial conversion price of $3.00 (as converted) per share, subject to adjustment. In the event of default occurs, the conversion price shall be the lesser of (i) the initial conversion price of $3.00 and (ii) 50% of the average of the 3 lowest trading prices during the 20 trading days immediately prior to the applicable conversion date. The debenture contains a “ratchet” provisions that adjusts the conversion rate of the debenture to the lowest rate the Company has agreed to issue stock. The effect of repricing board and employee options to $0.25 reset the conversion rates of the debenture to $0.25. In light of the financial stress Covid-19 has placed on the Company the holder of the debenture has agreed to not require payment due under each of the outstanding debenture until December 31, 2022.

 

(ii) Series A Warrants

 

The Series A Warrants to acquire up to 833,333 shares of Common Stock at the Series A Initial Exercise Price of $3.00 and expiring on December 1, 2021. The Warrants may be exercised immediately upon the issuance date, upon the option of the holder. The exercise price has now been adjusted to $0.25 and the exercise date has been extended.

 

(iii) Series B Warrants

 

The Series B Warrants to acquire up to 833,333 shares of Common Stock at the Series B Initial Exercise Price of $0.0001 and expiring on December 1, 2021. The Series B Warrants were exercised immediately upon the issuance date. The Company received gross proceeds of $1,667 upon exercise of the warrants.

 

Upon issuance of the note, the Company valued the warrants using the Black-Scholes Option Pricing model and accounted for it using the relative fair value of $1,448,293 as debt discount on the condensed consolidated balance sheet. The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the effective interest method which approximates the interest method. The amortization of debt discount is included as a component of interest expense in the condensed consolidated statements of operations. There was unamortized debt discount of $0 as of March 31, 2021 and December 31, 2020, which includes the debt discount recorded upon execution of the Securities Purchase Agreement discussed above.

 

Investment in CONtv

 

The Company currently holds a limited and passive interest of 10% in CONtv, a joint venture with third parties and Bristol Capital, LLC (a related party controlled by a member of the Board). CONtv is a digital network devoted to fans of pop culture entertainment and is inactive.

 

For the three months ended March 31, 2021 and 2020, the Company recognized $0 losses from this venture, respectively.

 

As of March 31, 2021 and December 31, 2020, the investment in CONtv was $0.

 

As of March 31, 2021 and December 31, 2020, the amount due to CONtv was $0 and $224,241, respectively.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.21.1
Notes Payable
3 Months Ended
Mar. 31, 2021
Payables and Accruals [Abstract]  
Notes Payable

Note 6 – Notes Payable

 

Paycheck Protection Program

 

On March 27, 2020 the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted and included a provision for the Small Business Administration (“SBA”) to implement its Paycheck Protection Program (“PPP”). The PPP provides small businesses with funds to pay payroll costs, including some benefits over a covered period of up to 24 weeks. Funds received under the PPP may also be used to pay interest on mortgages, rent, and utilities. Subject to certain criteria being met, all or a portion of the loan may be forgiven. The loans bear interest at an annual rate of one percent (1%), are due two (2) years from the date of issuance, and all payments are deferred for the first six (6) months of the loan. Any unforgiven balance of loan principal and accrued interest at the end of the six (6) month loan deferral period is amortized in equal monthly installments over the remaining 18-months of the loan term. On April 30, 2020, the Company closed a $197,600 SBA guaranteed PPP loan. The Company expects to use the loan proceeds as permitted and apply for and receive forgiveness for the entire loan amount. As of March 31, 2021, the outstanding balance under the loan was $197,600.

 

On February 25, 2021, the Company closed on a $197,662 SBA guaranteed PPP2 loan. The Company expects to use the loan proceeds as permitted and apply for and receive forgiveness for the entire loan amount. As of March 31, 2021, the outstanding balance under the loan was $197,662.

 

Small Business Administration Loan

 

On June 9, 2020, the Company executed a loan agreement with the SBA. The Company received aggregate proceeds of $149,900 under the loan which shall accrue interest at a rate of 3.75% and will mature in June 2050. As of March 31, 2021 and December 31, 2020, the outstanding balance under the loan was $149,900.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.21.1
Convertible Debenture
3 Months Ended
Mar. 31, 2021
Related Party Transactions [Abstract]  
Convertible Debenture

Note 7 – Convertible Debenture

 

Securities Purchase Agreement

 

Effective December 19, 2019, the Company entered into the Purchase Agreement with a Purchaser, pursuant to which the Company sold to the Purchaser, for a cash purchase price of $2,500,000, securities comprising: (i) the Debenture and (ii) Series A Warrants. Pursuant to the Purchase Agreement, the Company paid $25,400 to the Purchaser to cover the Purchaser’s legal fees. The Company recorded as a debt discount of $25,400 related to the cash paid and the relative fair value of the shares issued to Purchaser for legal fees.

 

(i) Debenture

 

The Debenture with an initial principal balance of $2,500,000, due December 30, 2021 (the “Maturity Date”), will accrue interest on the aggregate unconverted and then outstanding principal amount of the Debenture at the rate of 12% per annum. Interest is payable quarterly on (i) January 1, April 1, July 1 and October 1, beginning on January 1, 2020, (ii) on each date the Purchaser converts, in whole or in part, the Debenture into Common Stock (as to that principal amount then being converted), and (iii) on the day that is 20 days following the Company’s notice to redeem some or all of the of the outstanding principal of the Debenture (only as to that principal amount then being redeemed) and on the Maturity Date. The Debenture is convertible into shares of the Company’s Common Stock at any time at the option of the holder, at an initial conversion price of $2.50 (as converted) per share, subject to adjustment. In the event of default occurs, the conversion price shall be the lesser of (i) the initial conversion price of $2.50 and (ii) 50% of the average of the 3 lowest trading prices during the 20 trading days immediately prior to the applicable conversion date. In July 2020, the Purchaser agreed to extend the debenture a year as well as forbear any collection on the debenture up to December 30, 2022. The subject debenture contains a “ratchet” provisions that adjusts the conversion rates of the notes to the lowest rate the Company has agreed to issue stock. The effect of repricing board and employee options to $0.25 reset the conversion rates the note to $0.25. In light of the financial stress Covid-19 has placed on the Company the holder of the debenture has agreed to not require payment due under the outstanding debenture until December 31, 2022.

 

(ii) Warrants

 

The Series A Warrants to acquire up to 300,000 shares of Common Stock at the Series A Initial Exercise Price of $2.50 and expiring on December 1, 2024. The Warrants may be exercised immediately upon the issuance date, upon the option of the holder. The exercise price has now been adjusted to $0.25.

 

Upon issuance of the note, the Company valued the warrants using the Black-Scholes Option Pricing model and accounted for it using the relative fair value of $545,336 as debt discount on the condensed consolidated balance sheet. The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the effective interest method which approximates the interest method. The amortization of debt discount is included as a component of interest expense in the condensed consolidated statements of operations. There was unamortized debt discount of $465,604 and $510,384 as of March 31, 2021 and December 31, 2020, respectively, which includes the debt discount and debt issuance costs recorded upon execution of the Securities Purchase Agreement discussed above.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.21.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 8 – Commitments and Contingencies

 

Separation and Consulting Agreement

 

On February 20, 2021, the Company entered into a Separation and Consulting Agreement with Mr. John D. Maatta, the former President and Chief Executive Officer. Pursuant to the agreement, Mr. Maatta resigned from his position within the Company and will provide services on behalf of the Company and be paid a monthly fee of $10,000. In addition, the Company granted 8,500 shares series A preferred stock for accrued and unpaid salary and vacation time.

 

Consulting Agreement

 

As discussed in Note 6, on December 29, 2016, the Company entered into a Consulting Services Agreement (the “Consulting Agreement”) with Bristol managed by Paul L. Kessler, the Chairman of the Company. Pursuant to the Consulting Agreement, Mr. Kessler will serve as Executive Chairman of the Company. The initial term of the Agreement is from December 29, 2016 through March 28, 2017 (the “Initial Term”). The term of the Consulting Agreement will be automatically extended for additional terms of 90-day periods each (each a “Renewal Term” and together with the Initial Term, the “Term”), unless either the Company or Bristol gives prior written notice of non-renewal to the other party no later than thirty (30) days prior to the expiration of the then current Term.

 

During the Term, the Company will pay Bristol a monthly fee (the “Monthly Fee”) of $18,750. For services rendered by Bristol prior to entering into the Consulting Agreement, the Company will pay Bristol the Monthly Fee, pro-rated, for the time between September 1, 2016 and December 29, 2016. Bristol may also receive an annual bonus as determined by the Compensation Committee of the Company’s Board of Directors (the “Board”) and approved by the Board. Bristol has deferred payment of the monthly fees due from the Company as defined under the Consulting Agreement. On November 22, 2018, the Board of Directors of the Company decided to issue 201,982 shares of Preferred stock for settlement of the outstanding fees due to Bristol totaling $496,875. The Company’s consulting agreement with Bristol Capital, LLC has been amended so that the monthly fee may now, at the option of the Company, be paid in preferred stock. On August 3, 2020 the Board of Directors resolved to convert the total amount of debt owed to Bristol of $384,375, as of July 31, 2020, into 38,438 shares of Series A Preferred stock. In addition, on August 3, 2020, the Board of Directors elected to cancel the 2018 Bristol shares and issue 49,698 shares of Series A Preferred stock. In March 2021, the Company granted an additional 22,500 shares of series A preferred stock for consulting services provided by Bristol during the three months ended March 31, 2021.

 

Appointment of Chief Executive Officer

 

On March 1, 2021, the Board of Directors approved the Employment Agreement, effective as of November 24, 2020 (the “Effective Date”), with Scott D. Kaufman to serve as the Company’s Chief Executive Officer for a term of two years, subject to automatic renewal for additional terms of one year unless either party gives prior written notice of non-renewal to the other party no later than 60 days prior to the expiration of the then-current term. Mr. Kaufman will receive an annual base salary of $250,000, provided that until such time as the Company has positive net income on a consolidated basis with its subsidiaries for a period of six months, the Company, in its sole discretion, may elect to pay Mr. Kaufman his Base Salary, in whole or in part, in the form of the Company’s Series A Preferred Stock. Mr. Kaufman is also eligible to receive an annual bonus as determined by the Compensation Committee of the Board and as approved by the Board. The Board also agreed, during the term of Mr. Kaufman’s employment, to take reasonable steps to appoint him to the Board, to maintain such appointment, and to nominate him as a director for the purposes of any meeting or consent of the Company’s stockholders electing directors during the term of his employment.

 

Appointment of Chief Financial Officer

 

On March 1, 2021, the Board of Directors also approved the Employment Agreement, effective as of November 24, 2020 (the “Effective Date”), with Heidi C. Bowman to serve as the Company’s Chief Financial Officer for a term of two years, subject to automatic renewal for additional terms of one year unless either party gives prior written notice of non-renewal to the other party no later than 60 days prior to the expiration of the then-current term. Ms. Bowman will receive an annual base salary of $120,000, provided that until such time as the Company has positive net income on a consolidated basis with its subsidiaries for a period of six months, the Company in its sole discretion, may elect to pay Ms. Bowman her Base Salary, in whole or in part, in the form of the Company’s Series A Preferred Stock. Ms. Bowman is also eligible to receive an annual bonus as determined by the Compensation Committee of the Board and as approved by the Board.

 

Financial Advisory Agreement

 

On March 24, 2021 the Company entered into an agreement with Kingswood Capital Markets (“Kingswood”), a division of Benchmark Investments, Inc. in connection with providing general financial advisory to the Company. Kingswood is a broker-dealer registered under Section 15 of the US Securities Exchange Act of 1934 and state law and a member of the Financial Industry Regulatory Authority (“FINRA”). The Company issued 300,000 warrants to Kingswood exercisable at $1.00 for a period of three years. The fair value so the warrants issued was determined by using the Black-Scholes-Merton method of valuation and resulted in the Company recording $1,592,517 of consulting expense on its books.

 

Legal proceedings

 

The Company is from time to time involved in legal proceedings in the ordinary course of business. It is not involved in any disputes and does not have any litigation matters pending which the Company believes could have a materially adverse effect on the Company’s financial condition or results of operations.

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.21.1
Operating Leases
3 Months Ended
Mar. 31, 2021
Leases [Abstract]  
Operating Leases

Note 9 – Operating Leases

 

On June 16, 2016, the Company entered into a Standard Multi-Tenant Sublease (“Sublease”) with Bristol Capital Advisors, an entity controlled by the Company’s Chairman of the Board. The leased premises are owned by an unrelated third party and Bristol Capital Advisors passes the lease costs down to the Company. The term of the Sublease is for 5 years and 3 months beginning on July 1, 2016 commencing with monthly payments of $8,118. During the three months ended March 31, 2021 and 2020, the Company paid lease obligations $__ and $23,812, respectively, under the Sublease.

 

On April 28, 2020, upon acquisition of the Jevo assets, the Company entered into a lease agreement with a third party. The term of the lease is for 5 years beginning on May 1, 2020 commencing with a three-month rent holiday followed by monthly payments of $3,900 with an approximate 2% escalation clause. During the three months ended March 31, 2021 and 2020, the Company paid lease obligations $3,060 and $0, respectively, under the lease.

 

We determine if an arrangement contains a lease at inception. Right of use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

 

Our leases consist of leaseholds on office space. We utilized a portfolio approach in determining our discount rate. The portfolio approach takes into consideration the range of the term, the range of the lease payments, the category of the underlying asset and our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. We also give consideration to our recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating our incremental borrowing rates.

 

Our lease term includes options to extend the lease when it is reasonably certain that we will exercise that option. Leases with a term of 12 months or less are not recorded on the balance sheet, per the election of the practical expedient noted above.

 

We recognize lease expense for these leases on a straight-line basis over the lease term. We recognize variable lease payments in the period in which the obligation for those payments is incurred. Variable lease payments that depend on an index or a rate are initially measured using the index or rate at the commencement date, otherwise variable lease payments are recognized in the period incurred.

 

The components of lease expense were as follows:

 

    For the Three
Months Ended
    For the Three
Months Ended
 
    March 31, 2021     March 31, 2020  
Operating lease   $ 16,594     $ 26,812  
Sublease income     -       (9,000 )
Total net lease cost   $ 16,594     $ 17,812  

 

Supplemental cash flow and other information related to leases was as follows:

 

    For the Three
Months Ended
    For the Three
Months Ended
 
    March 31, 2021     March 31, 2020  
Cash paid for amounts included in the measurement of lease liabilities:                
Operating cash flows from operating leases   $ -     $ -  
                 
ROU assets obtained in exchange for lease liabilities:                
Operating leases   $ -     $ -  
                 
Weighted average remaining lease term (in years):                
Operating leases     3.15       1.42  
                 
Weighted average discount rate:                
Operating leases     12 %     12 %

 

The following table presents the maturity of the Company’s lease liabilities as of March 31, 2021:

 

For the twelve months ending March 31:      
2022   $ 103,224  
2023     48,532  
2024     49,502  
2025     50,492  
2026     8,444  
      260,194  
Less: Imputed interest     (46,101 )
Present value   $ 214,093  
XML 27 R16.htm IDEA: XBRL DOCUMENT v3.21.1
Stockholders' Equity (Deficit)
3 Months Ended
Mar. 31, 2021
Equity [Abstract]  
Stockholders' Equity (Deficit)

Note 10 – Stockholders’ Equity (Deficit)

 

Reverse Stock Split

 

Following the board of directors’ approval, the Company filed a Certificate of Change to its Articles of Incorporation (the “Amendment”), with the Secretary of State of the State of Delaware to effectuate a one-for-twenty (1:20) reverse stock split (the “Reverse Stock Split”) for all classes of its stock, par value $0.0001 per share, without any change to its par value. The Amendment became effective on January 23, 2020. No fractional shares were issued in connection with the Reverse Stock Split as all fractional shares were “rounded up” to the next whole share.

 

All share and per share amounts for the common stock have been retroactively restated to give effect to the reverse splits.

 

The Company’s authorized capital stock consists of 105,000,000 shares, of which 100,000,000 are for shares of common stock, par value $0.0001 per share, and 5,000,000 are for shares of preferred stock, par value $0.0001 per share, of which 500,000 have been designated as Series A Cumulative Convertible Preferred Stock (“Series A”).

 

As of March 31, 2021 and December 31, 2020, there were 217,274 and 173,974 shares of Series A preferred stock issued and outstanding, respectively.

 

As of March 31, 2021 and December 31, 2020, there were 5,000 and 0 shares of preferred stock issued and outstanding, respectively.

 

As of March 31, 2021 and December 31, 2020, there were 3,506,752 and 3,506,752 shares of common stock issued and outstanding, respectively. Each share of the common stock entitles its holder to one vote on each matter submitted to the shareholders.

 

The following is a summary of the Company’s option activity:

 

    Options    

Weighted

Average

Exercise Price

 
            (as converted)  
Outstanding – December 31, 2020     789,250     $ 1.75  
Exercisable – December 31, 2020     451,448     $ 2.69  
Granted     -     $ -  
Exercised     -     $ -  
Forfeited/Cancelled     -     $ -  
Outstanding – March 31, 2021     789,250     $ 1.75  
Exercisable – March 31, 2021     589,781     $ 2.15  

 

Options Outstanding   Options Exercisable
Exercise Price   Number
Outstanding
   

Weighted

Average

Remaining

Contractual Life
(in years)

 

Weighted

Average

Exercise Price

   

Number

Exercisable

 

Weighted

Average

Exercise Price

 
                                         
$     0.25 – 18.80       789,250     3.72 years   $ 1.75     589,781   $ 2.15  

 

At March 31, 2021, the total intrinsic value of options outstanding and exercisable was $2,581,488 and $1,811,220, respectively.

 

During the three months ended March 31, 2021 and 2020, the Company recorded total stock-based compensation expense related to options of approximately $97,429 and $21,171, respectively. The unrecognized compensation expense at March 31, 2021 was approximately $203,500.

 

Stock Warrants

 

The following is a summary of the Company’s warrant activity:

 

    Warrants     Weighted
Average
Exercise Price
 
            (as converted)  
Outstanding – December 31, 2020     10,300,000     $ 3.00  
Exercisable – December 31, 2020     10,300,000     $ 3.00  
Granted     700,000     $ 0.86  
Exercised     -     $ -  
Forfeited/Cancelled     -     $ -  
Outstanding – March 31, 2021     11,000,000     $ 2.86  
Exercisable – March 31, 2021     10,600,000     $ 2.94  

 

Warrants Outstanding   Warrants Exercisable
Exercise Price   Number
Outstanding
    Weighted
Average
Remaining
Contractual Life
(in years)
  Weighted
Average
Exercise Price
    Number
Exercisable
  Weighted
Average
Exercise Price
 
                                         
$     0.50 – 3.00       11,000,000     1.79 years   $ 2.86     10,600,000   $ 2.94  

 

At March 31, 2021 the total intrinsic value of warrants outstanding and exercisable was $17,450,000 and $14,935,000, respectively.

 

On March 24, 2021 the Company entered into an agreement with Kingswood Capital Markets (“Kingswood”), a division of Benchmark Investments, Inc. in connection with providing general financial advisory to the Company. The Company issued 300,000 warrants to Kingswood exercisable at $1.00 for a period of three years. The fair value so the warrants issued was determined by using the Black-Scholes-Merton method of valuation and resulted in the Company recording $1,592,517 of expense on its books.

 

On March 29, 2021 the Company filed a Form D – Notice of Exempt Offerings of Securities with the Securities and Exchange Commission. The total offering amount was $5,000,000. The Company received proceeds of approximately $1,700,000 and paid a commission to Kingswood of $170,000.

 

On March 29, 2021, the Company entered into a Securities Purchase Agreement (the “Leviston Purchase Agreement”) with Leviston Resources LLC (“Leviston”) dated March 26, 2021, pursuant to which the Company sold to Leviston, and the Leviston purchased from the Company, 5,000 shares of the Company’s Series B Preferred Stock, par value $0.0001 per share Series B Preferred Stock with an aggregate stated value of $5,400,000, a Series B Preferred Stock Purchase Warrant to purchase 5,000 shares of Series B Preferred Stock, having a term expiring on March 26, 2023 and a per share exercise price (subject to adjustment for stock splits, reverse stock splits, mergers or reorganizations, and similar changes affecting shares of the Company’s common stock, par value $0.0001 per share and/or securities entitling the holder thereof to acquire shares of Common Stock, as applicable) of $1,000 (the “Series 1 Warrant”), and a Series B Preferred Stock Purchase Warrant to purchase 5,000 shares of Series B Preferred Stock, having a term expiring on March 26, 2024 and a per share exercise price (subject to adjustment for stock splits, reverse stock splits, mergers or reorganizations, and similar changes affecting shares of Common Stock and/or securities entitling the holder thereof to acquire shares of Common Stock, as applicable) of $1,000 (the “Series 2 Warrant” and together with the Series 1 Warrant, the “Warrants,” and together with the Closing Shares, the “Securities”). The aggregate purchase price for the Securities is $5,000,000, which Leviston will pay as follows: $2,000,000 on the Closing Date; $500,000 on or before the date that is three business days from the date that the Company files a registration statement relating to the shares of Common Stock issuable upon conversion of the Closing Shares and the shares of Series B Preferred Stock issuable upon exercise of the Warrants; and $2,500,000 on or before the date that is three business days from the date that such registration statement is declared effective in accordance with the terms and provisions of the Registration Rights Agreement.

 

On March 29, 2021, the Registrant filed with the Delaware Secretary of State a Certificate of Designation of Preferences, Rights and Limitations of Series B Preferred Stock (the “Series B Certificate of Designation”) pursuant to which the Registrant’s Board of Directors, pursuant to authority granted under the Registrant’s Amended and Restated Certificate of Incorporation, designated 20,000 shares of the 5,000,000 authorized shares of the Registrant’s preferred stock as Series B Preferred Stock.

 

Each share of Series B Preferred Stock has a stated value of $1,080, is entitled to receive cumulative dividends in cash, or at the holder’s option, in shares of Series B Preferred Stock (with one share of Series B Preferred Stock issued for each $993 in accrued dividends), at the rate of 5% per annum, payable quarterly on January 1, April 1, July 1 and October 1 (beginning on the first such date after the original issue date), on each conversion date (with respect to the shares of Series B Preferred Stock being converted), and on each optional redemption date (with respect to the shares of Series B Preferred Stock being redeemed), and is entitled to participate in any dividend or other distribution to holders of Common Stock to the same extent that the holder of Series B Preferred Stock would have participated therein if such holder had held the number of shares of Common Stock issuable upon complete conversion of such holder’s shares of Series B Preferred Stock (without regard to any limitations on exercise thereof, including any beneficial ownership limitations) immediately before the record date for such distribution or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined to receive the distribution, provided that if the distribution would result in the holder exceeding then-applicable beneficial ownership limitation, the holder shall not be entitled to participate in such distribution to such extent and such distribution to such extent shall be held in abeyance until such time, if ever, as the holder’s right thereto would not result in the holder exceeding the then-applicable beneficial ownership limitation.

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.21.1
Credit Risk
3 Months Ended
Mar. 31, 2021
Risks and Uncertainties [Abstract]  
Credit Risk

Note 11 – Credit Risk

 

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents. As of March 31, 2021 and December 31, 2020, substantially all of the Company’s cash and cash equivalents were held by major financial institutions and the balance in certain accounts exceeded the maximum amount insured by the Federal Deposits Insurance Corporation (“FDIC”). However, the Company has not experienced losses on these accounts and management believes that the Company is not exposed to significant risks on such accounts.

XML 29 R18.htm IDEA: XBRL DOCUMENT v3.21.1
Subsequent Events
3 Months Ended
Mar. 31, 2021
Subsequent Events [Abstract]  
Subsequent Events

Note 12 – Subsequent Events

 

On April 26, 2021 the Company filed a Form S-1 registration statement with the Securities and Exchange Commission consisting of 10,800,000 shares of common stock issuable upon the automatic conversion of the Series B Preferred Stock issuable upon the exercise of warrants issued in a private placement in March 2021, and up to 5,400,000 shares of common stock issuable upon the conversion of the Series B Preferred Stock issued in the March 2021 private placement. The Company received approximately $460,000 on April 26, 2021 as a result of the March 2021 private placement.

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.21.1
Significant and Critical Accounting Policies and Practices (Policies)
3 Months Ended
Mar. 31, 2021
Accounting Policies [Abstract]  
Basis of Presentation - Unaudited Interim Financial Information

Basis of Presentation - Unaudited Interim Financial Information

 

The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited condensed consolidated financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2020 and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 29, 2021.

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Principles of Consolidation

Principles of Consolidation

 

The condensed consolidated financial statements include all accounts of the entities as of the reporting period ending date(s) and for the reporting period(s).

 

All inter-company balances and transactions have been eliminated. Non–controlling interest represents the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interest.

 

As of March 31, 2021 and December 31, 2020, the aggregate non-controlling interest in ButtaFyngas was ($12,498). The non-controlling interest is separately disclosed on the Condensed Consolidated Balance Sheet.

Cash and Cash Equivalents

Cash and Cash Equivalents

 

The Company considers investments with original maturities of three months or less to be cash equivalents.

 

The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amount of the Company’s short-term financial instruments approximates fair value due to the relatively short period to maturity for these instruments.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts

 

Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company generally does not require collateral to support customer receivables. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. The maximum accounting loss from the credit risk associated with accounts receivable is the amount of the receivable recorded, which is the face amount of the receivable net of the allowance for doubtful accounts. As of March 31, 2021 and December 31, 2020, the allowance for doubtful accounts was $0 and $0, respectively.

Inventories

Inventories

 

Inventories are stated at average cost using the first-in, first-out (FIFO) valuation method. Inventory was comprised of the following:

 

    March 31, 2021     December 31, 2020  
Finished goods   $ 305,475     $ 220,641  
Property and Equipment

Property and Equipment

 

Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the respective assets as follows:

 

    Estimated Useful
Life (Years)
 
       
Computer equipment     3  
         
Equipment     2-5  
         
Furniture and fixture     7  
         
Leasehold improvements     *  

 

(*) Amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever period is shorter.

 

Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the condensed consolidated statements of operations.

Intangible assets

Intangible assets

 

Intangible assets represent intangible assets acquired in connection with the Company’s purchase of Jevo patents and technology. The transaction was not a business combination or acquisition of a business.

 

The intangible assets are amortized using a straight-line method consistent with the expected future cash flows related to the intangible asset, which has been determined to be ten (10) years. Amortized intangible assets are reviewed for impairment whenever events or changes in circumstances exist that indicate the carrying amount of an asset may not be recoverable. When indicators of impairment exist, an estimate of undiscounted net cash flows is used in measuring whether the carrying amount of the asset or related asset group is recoverable.

 

Measurement of the amount of impairment, if any, is based upon the difference between the asset or asset group’s carrying value and fair value. Fair value is determined through various valuation techniques, including market and income approaches as considered necessary. No impairment has been recorded as of March 31, 2021.

Investments - Cost Method, Equity Method and Joint Venture

Investments - Cost Method, Equity Method and Joint Venture

 

In accordance with sub-topic 323-10 of the FASB ASC (“Sub-topic 323-10”), the Company accounts for investments in common stock of an investee for which the Company has significant influence in the operating or financial policies even though the Company holds 50% or less of the common stock or in-substance common stock.

Method of Accounting

Method of Accounting

 

Investments held in stock of entities other than subsidiaries, namely corporate joint ventures and other non-controlled entities usually are accounted for by one of three methods: (i) the fair value method (addressed in Topic 320), (ii) the equity method (addressed in Topic 323), or (iii) the cost method (addressed in Subtopic 325-20). Pursuant to Paragraph 323-10-05-5, the equity method tends to be most appropriate if an investment enables the investor to influence the operating or financial policies of the investee.

Investment in CONtv

Investment in CONtv

 

The Company currently holds a limited and passive interest of 10% in CONtv, a joint venture with third parties and Bristol Capital, LLC (a related party controlled by a member of the Board). CONtv is a digital network devoted to fans of pop culture entertainment and is inactive.

 

For the three months ended March 31, 2021 and 2020, the Company recognized $0 losses from this venture, respectively.

 

As of March 31, 2021 and December 31, 2020, the investment in CONtv was $0.

 

As of March 31, 2021 and December 31, 2020, the amount due to CONtv was $0 and $224,241, respectively.

Fair Value of Measurements

Fair Value of Measurements

 

The Company follows ASC 820-10 of the FASB Accounting Standards Codification to measure the fair value of its financial instruments and disclosures about fair value of its financial instruments. ASC 820-10 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820-10 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by ASC 820-10 are described below:

 

Level 1   Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
     
Level 2   Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
     
Level 3   Pricing inputs that are generally unobservable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, inventory, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values because of the short maturity of these instruments.

 

Transactions involving related parties typically cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. However, in the case of the convertible promissory note discussed in Note 5, the Company obtained a fairness opinion from an independent third party which supports that the transaction was carried out at an arm’s length basis.

Revenue Recognition and Cost of Revenues

Revenue Recognition and Cost of Revenues

 

The Company follows the FASB Accounting Standards Codification ASC 606 for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met:

 

1) Identify the contract with a customer

 

A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.

 

2) Identify the performance obligations in the contract

 

Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation.

 

3) Determine the transaction price

 

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts as of March 31, 2021 contained a significant financing component.

 

4) Allocate the transaction price to performance obligations in the contract

 

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.

 

5) Recognize revenue when or as the Company satisfies a performance obligation

 

The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.

 

Convention revenue is generally earned upon completion of the convention. Unearned convention revenue is deposits received for conventions that have not yet taken place, which are fully or partially refundable depending upon the terms and conditions of the agreements.

 

The Company recognizes cost of revenues in the period in which the revenues was earned. In the event the Company incurs cost of revenues for conventions that are yet to occur, the Company records such amounts as prepaid expenses and such prepaid expenses are expensed during the period the convention takes place.

 

Disaggregation of Revenue from Contracts with Customers. The following table disaggregates gross revenue by significant revenue stream for the three months ended March 31, 2021 and 2020:

 

    For the Three Months Ended  
    March 31, 2021     March 31, 2020  
Conventions   $ -     $ 2,583,404  
Virtual     191,962       19,015  
Vault     172,698       -  
Jevo     14,514       -  
Total revenue   $ 379,174     $ 2,602,419  
Shipping and Handling Costs

Shipping and Handling Costs

 

The Company accounts for shipping and handling fees in accordance with paragraph 605-45-45-19 of the FASB Accounting Standards Codification. While amounts charged to customers for shipping products are included in revenues, the related costs are classified in cost of revenue as incurred.

 

Shipping and handling costs were $0 and $0 for the three and three months ended March 31, 2021 and 2020, respectively.

Equity-based compensation

Equity–based compensation

 

The Company recognizes compensation expense for all equity–based payments in accordance with ASC 718 “Compensation – Stock Compensation”. Under fair value recognition provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

 

Restricted stock awards are granted at the discretion of the Company. These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods, typically over a four-year period (vesting on a straight–line basis). The fair value of a stock award is equal to the fair market value of a share of Company stock on the grant date.

 

The fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are input into the model. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is calculated based on the historical volatility of the Company’s Common stock over the expected option life and other appropriate factors. The expected option term is computed using the “simplified” method as permitted under the provisions of ASC 718-10-S99. The Company uses the simplified method to calculate expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on the Common stock of the Company and does not intend to pay dividends on the Common stock in the foreseeable future. The expected forfeiture rate is estimated based on historical experience.

 

Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, the equity–based compensation could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If the actual forfeiture rate is materially different from the Company’s estimate, the equity–based compensation could be significantly different from what the Company has recorded in the current period.

Income Taxes

Income Taxes

 

The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

 

FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of March 31, 2021 and December 31, 2020. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of March 31, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

 

The Company may be subject to potential examination by federal, state, and city taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions, and compliance with federal, state, and city tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

 

The Company is no longer subject to tax examinations by tax authorities for years prior to 2018.

Earnings per Share

Earnings per Share

 

Earnings per share (“EPS”) is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to Section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.

 

The following table shows the outstanding dilutive common shares excluded from the diluted net income (loss) per share calculation as they were anti-dilutive:

 

    Contingent shares issuance
arrangement, stock options
or warrants
 
    For the Three Months
Ended
March 31, 2021
    For the Three Months
Ended
March 31, 2020
 
             
Convertible note     833,333       833,333  
Common stock options     789,250       226,000  
Common stock warrants     11,000,000       1,133,333  
                 
Total contingent shares issuance arrangement, stock options or warrants     12,622,583       2,192,666  
Reclassification

Reclassification

 

Certain prior period amounts have been reclassified to conform to current period presentation.

Recently Adopted Accounting Guidance

Recently Adopted Accounting Guidance

 

In December 2019, the FASB issued ASU 2019-12, Income Taxes(Topic 740): “Simplifying the Accounting for Income Taxes”, which is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by clarifying and amending existing guidance to improve consistent application. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. Certain amendments within this ASU are required to be applied on a retrospective basis, certain other amendments are required to be applied on a modified retrospective basis and all other amendments on a prospective basis. The adoption of ASU 2019-12 did not have a material impact on the Company’s financial statement presentation or disclosures.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

 

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedients and exceptions to account for contracts, hedging relationships and other transactions that reference LIBOR or another reference rate if certain criteria are met. The amendments of ASU No. 2020-04 are effective immediately, as of March 12, 2020, and may be applied prospectively to contract modifications made and hedging relationships entered into on or before December 31, 2022. The Company is evaluating the impact that the amendments of this standard would have on the Company’s consolidated financial statements.

 

In August 2020, the FASB issued ASU 2020-06, Debt—”Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity, and also improves and amends the related EPS guidance for both Subtopics. The ASU will be effective for annual reporting periods after December 15, 2021 and interim periods within those annual periods and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

 

Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective accounting pronouncements, when adopted, will have a material impact on the financial statements of the Company.

XML 31 R20.htm IDEA: XBRL DOCUMENT v3.21.1
Significant and Critical Accounting Policies and Practices (Tables)
3 Months Ended
Mar. 31, 2021
Accounting Policies [Abstract]  
Schedule of Inventories

Inventory was comprised of the following:

 

    March 31, 2021     December 31, 2020  
Finished goods   $ 305,475     $ 220,641  
Schedule of Estimated Useful Lives of Property

Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the respective assets as follows:

 

    Estimated Useful
Life (Years)
 
       
Computer equipment     3  
         
Equipment     2-5  
         
Furniture and fixture     7  
         
Leasehold improvements     *  

 

(*) Amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever period is shorter.

Schedule Disaggregation of Revenue from Contracts with Customers

The following table disaggregates gross revenue by significant revenue stream for the three months ended March 31, 2021 and 2020:

 

    For the Three Months Ended  
    March 31, 2021     March 31, 2020  
Conventions   $ -     $ 2,583,404  
Virtual     191,962       19,015  
Vault     172,698       -  
Jevo     14,514       -  
Total revenue   $ 379,174     $ 2,602,419  
Schedule of Contingent Share Issuance Arrangements, Stock Options and Warrants

The following table shows the outstanding dilutive common shares excluded from the diluted net income (loss) per share calculation as they were anti-dilutive:

 

    Contingent shares issuance
arrangement, stock options
or warrants
 
    For the Three Months
Ended
March 31, 2021
    For the Three Months
Ended
March 31, 2020
 
             
Convertible note     833,333       833,333  
Common stock options     789,250       226,000  
Common stock warrants     11,000,000       1,133,333  
                 
Total contingent shares issuance arrangement, stock options or warrants     12,622,583       2,192,666  
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.21.1
Property and Equipment (Tables)
3 Months Ended
Mar. 31, 2021
Property, Plant and Equipment [Abstract]  
Schedule of Property and Equipment

Property and equipment stated at cost, less accumulated depreciation and amortization, consisted of the following:

 

    March 31, 2021     March 31, 2020  
Computer Equipment   $ 36,525     $ 36,525  
Equipment     474,069       474,069  
Furniture and Fixtures     65,465       65,465  
Vehicles     15,000       15,000  
Leasehold Improvements     27,095       27,094  
      618,154       618,153  
Less: Accumulated depreciation     (566,604 )     (559,652 )
    $ 51,550     $ 58,501  
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.21.1
Operating Leases (Tables)
3 Months Ended
Mar. 31, 2021
Leases [Abstract]  
Schedule of Lease Expenses

The components of lease expense were as follows:

 

    For the Three
Months Ended
    For the Three
Months Ended
 
    March 31, 2021     March 31, 2020  
Operating lease   $ 16,594     $ 26,812  
Sublease income     -       (9,000 )
Total net lease cost   $ 16,594     $ 17,812  
Schedule of Supplemental Cash Flow and Other Information Related Leases

Supplemental cash flow and other information related to leases was as follows:

 

    For the Three
Months Ended
    For the Three
Months Ended
 
    March 31, 2021     March 31, 2020  
Cash paid for amounts included in the measurement of lease liabilities:                
Operating cash flows from operating leases   $ -     $ -  
                 
ROU assets obtained in exchange for lease liabilities:                
Operating leases   $ -     $ -  
                 
Weighted average remaining lease term (in years):                
Operating leases     3.15       1.42  
                 
Weighted average discount rate:                
Operating leases     12 %     12 %
Schedule of Maturities of Operating Lease Liabilities

The following table presents the maturity of the Company’s lease liabilities as of March 31, 2021:

 

For the twelve months ending March 31:      
2022   $ 103,224  
2023     48,532  
2024     49,502  
2025     50,492  
2026     8,444  
      260,194  
Less: Imputed interest     (46,101 )
Present value   $ 214,093  
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.21.1
Stockholders' Equity (Deficit) (Tables)
3 Months Ended
Mar. 31, 2021
Equity [Abstract]  
Summary of Stock Option Activity

The following is a summary of the Company’s option activity:

 

    Options    

Weighted

Average

Exercise Price

 
            (as converted)  
Outstanding – December 31, 2020     789,250     $ 1.75  
Exercisable – December 31, 2020     451,448     $ 2.69  
Granted     -     $ -  
Exercised     -     $ -  
Forfeited/Cancelled     -     $ -  
Outstanding – March 31, 2021     789,250     $ 1.75  
Exercisable – March 31, 2021     589,781     $ 2.15  
Schedule of Information Regarding Stock Options Outstanding
Options Outstanding   Options Exercisable
Exercise Price   Number
Outstanding
   

Weighted

Average

Remaining

Contractual Life
(in years)

 

Weighted

Average

Exercise Price

   

Number

Exercisable

 

Weighted

Average

Exercise Price

 
                                         
$     0.25 – 18.80       789,250     3.72 years   $ 1.75     589,781   $ 2.15  
Summary of Stock Warrants Activity

The following is a summary of the Company’s warrant activity:

 

    Warrants     Weighted
Average
Exercise Price
 
            (as converted)  
Outstanding – December 31, 2020     10,300,000     $ 3.00  
Exercisable – December 31, 2020     10,300,000     $ 3.00  
Granted     700,000     $ 0.86  
Exercised     -     $ -  
Forfeited/Cancelled     -     $ -  
Outstanding – March 31, 2021     11,000,000     $ 2.86  
Exercisable – March 31, 2021     10,600,000     $ 2.94  
Schedule of Information Regarding Stock Warrants Outstanding
Warrants Outstanding   Warrants Exercisable
Exercise Price   Number
Outstanding
    Weighted
Average
Remaining
Contractual Life
(in years)
  Weighted
Average
Exercise Price
    Number
Exercisable
  Weighted
Average
Exercise Price
 
                                         
$     0.50 – 3.00       11,000,000     1.79 years   $ 2.86     10,600,000   $ 2.94  
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.21.1
Going Concern Analysis (Details Narrative) - USD ($)
3 Months Ended
Mar. 29, 2021
Mar. 29, 2020
Mar. 31, 2021
Mar. 31, 2020
Dec. 31, 2020
Loss from operations     $ (3,073,299) $ (27,273)  
Cash and cash equivalents     2,635,325   $ 1,897,703
Working capital deficit     $ 3,200,000    
Preferred stock, par value     $ 0.0001   $ 0.0001
Issuance of preferred shares, value $ 5,000,000   $ 1,725,000    
Common stock, par value     $ 0.0001   $ 0.0001
Securities Purchase Agreement [Member]          
Purchase price of securities   $ 5,000,000 $ 2,000,000    
Securities Purchase Agreement [Member] | Three Business Days from the Date [Member]          
Purchase price of securities     500,000    
Securities Purchase Agreement [Member] | On or Before the Date [Member]          
Purchase price of securities     $ 2,500,000    
Securities Purchase Agreement [Member] | Series 1 Warrant [Member]          
Warrant to purchase of preferred stock 1,000        
Securities Purchase Agreement [Member] | Series 2 Warrant [Member]          
Warrant to purchase of preferred stock 1,000        
Series B Preferred Stock [Member]          
Preferred stock, par value   $ 1,080      
Series B Preferred Stock [Member] | Securities Purchase Agreement [Member]          
Issuance of preferred shares   5,000      
Preferred stock, par value $ 0.0001        
Issuance of preferred shares, value   $ 5,400,000      
Warrant to purchase of preferred stock 5,000        
Warrants expiration date Mar. 26, 2023        
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.21.1
Significant and Critical Accounting Policies and Practices (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Dec. 31, 2020
Non-controlling interest $ (12,498)   $ (12,498)
Allowance for doubtful accounts $ 0   0
Intangible asset, useful life 10 years    
Percentage of shares in another entity 50.00%    
Due to CONtv joint venture   224,241
Shipping and handling costs 0 $ 0  
Unrecognized tax benefits  
Accrued penalties and interest  
Operating Agreement [Member]      
Recognized losses from the venture $ 0   0
Con Tv LLC [Member]      
Percentage of shares in another entity 10.00%    
Investment $ 0   $ 0
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.21.1
Significant and Critical Accounting Policies and Practices - Schedule of Inventories (Details) - USD ($)
Mar. 31, 2021
Dec. 31, 2020
Accounting Policies [Abstract]    
Finished goods $ 305,475 $ 220,641
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.21.1
Significant and Critical Accounting Policies and Practices - Schedule of Estimated Useful Lives of Property (Details)
3 Months Ended
Mar. 31, 2021
Computer Equipment [Member]  
Estimated useful life of property and equipment 3 years
Equipment [Member] | Minimum [Member]  
Estimated useful life of property and equipment 2 years
Equipment [Member] | Maximum [Member]  
Estimated useful life of property and equipment 5 years
Furniture and Fixture [Member]  
Estimated useful life of property and equipment 7 years
Leasehold Improvements [Member]  
Estimated useful life of property and equipment 0 years [1]
[1] Amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever period is shorter.
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.21.1
Significant and Critical Accounting Policies and Practices - Schedule of Disaggregation of Revenue from Contracts with Customers (Details) - USD ($)
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Total revenue $ 379,174 $ 2,602,419
Conventions [Member]    
Total revenue 2,583,404
Virtual [Member]    
Total revenue 191,962 19,015
Vault [Member]    
Total revenue 172,698
Jevo [Member]    
Total revenue $ 14,514
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.21.1
Significant and Critical Accounting Policies and Practices - Schedule of Contingent Share Issuance Arrangements, Stock Options and Warrants (Details) - shares
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Total contingent shares issuance arrangement, stock options or warrants 12,622,583 2,192,666
Convertible Note [Member]    
Total contingent shares issuance arrangement, stock options or warrants 833,333 833,333
Common Stock Options [Member]    
Total contingent shares issuance arrangement, stock options or warrants 789,250 226,000
Common Stock Warrants [Member]    
Total contingent shares issuance arrangement, stock options or warrants 11,000,000 1,133,333
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.21.1
Property and Equipment (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Property, Plant and Equipment [Abstract]    
Depreciation expense $ 6,722 $ 7,940
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.21.1
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($)
Mar. 31, 2021
Dec. 31, 2020
Property, Plant and Equipment [Abstract]    
Computer Equipment $ 36,525 $ 36,525
Equipment 474,069 474,069
Furniture and Fixtures 65,465 65,465
Vehicles 15,000 15,000
Leasehold Improvements 27,094 27,095
Property and equipment, gross 618,154 618,153
Less: Accumulated depreciation (566,604) (559,652)
Property and equipment, net $ 51,550 $ 58,501
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.21.1
Related Party Transactions (Details Narrative)
3 Months Ended 12 Months Ended
Mar. 29, 2021
USD ($)
Aug. 03, 2020
USD ($)
shares
Jul. 31, 2020
shares
Dec. 19, 2019
USD ($)
Nov. 22, 2018
USD ($)
shares
Dec. 29, 2016
USD ($)
shares
Dec. 02, 2016
USD ($)
shares
Jul. 02, 2016
USD ($)
Mar. 31, 2021
USD ($)
Integer
$ / shares
shares
Mar. 31, 2020
USD ($)
Dec. 31, 2020
USD ($)
Dec. 31, 2019
USD ($)
Stock options granted to purchase of common stock | shares                      
Consulting expense                 $ 1,740,008 $ 117,807    
Shares issued during period, value $ 5,000,000               1,725,000      
Operating sublease, monthly payment                    
Fair value for warrant and debt discount                 $ 1,448,293      
Percentage of shares in another entity                 50.00%      
Due to Contv joint venture                   $ 224,241  
Con Tv LLC [Member]                        
Debt discount                 $ 0      
Percentage of shares in another entity                 10.00%      
Investment                 $ 0   0  
Common Stock [Member]                        
Shares issued during period, shares | shares                      
Shares issued during period, value                      
Series A Warrants [Member]                        
Warrant to purchase shares of common stock | shares                 833,333      
Warrant exercise price per share | $ / shares                 $ 3.00      
Warrant expiring date                 Dec. 01, 2021      
Warrant exercise price decrease | $ / shares                 $ 0.25      
Series B Warrants [Member]                        
Debt discount                 $ 0   0  
Warrant to purchase shares of common stock | shares                 833,333      
Warrant exercise price per share | $ / shares                 $ 0.0001      
Warrant expiring date                 Dec. 01, 2021      
Gross proceeds from exercise of warrants                 $ 1,667      
Debenture [Member]                        
Debt principal amount                 $ 2,500,000      
Debt instruments maturity date                 Dec. 30, 2018      
Debt instrument interest rate per annum                 12.00%      
Debt conversion price per share | $ / shares                 $ 0.25      
Average trading price percentage                 50.00%      
Trading days | Integer                 20      
Debenture [Member] | Common Stock [Member]                        
Debt conversion price per share | $ / shares                 $ 3.00      
Bristol Capital Advisors, LLC [Member]                        
Operating sublease, term               5 years 3 months        
Operating sublease, monthly payment               $ 8,118        
Operating sublease, rent expense                 $ 13,034 23,812    
CEO [Member]                        
Loan from officer                       $ 100,000
Total loan amount                 $ 0   0  
John D. Maatta [Member] | Series A Preferred Stock [Member]                        
Convertible debt owed shares | shares     35,074                  
Deferred compensation outstanding | shares   85,868                    
Board of Directors [Member] | Series A Preferred Stock [Member]                        
Shares issued during period, shares | shares                 22,500      
Board of Directors [Member] | Series A Preferred Stock [Member] | 2018 Bristol Shares [Member]                        
Stock options granted to purchase of common stock | shares                 22,500      
Convertible debt owed shares | shares   88,125                    
Board of Directors [Member] | Bristol Capital, LLC [Member]                        
Convertible debt owed   $ 384,375                    
Board of Directors [Member] | Bristol Capital, LLC [Member] | Series A Preferred Stock [Member]                        
Convertible debt owed shares | shares     38,438                  
Board And Employee Options [Member] | Debenture [Member]                        
Debt conversion price per share | $ / shares                 $ 0.25      
Consulting Services Agreement [Member] | Bristol Capital, LLC [Member]                        
Debt monthly fee           $ 18,750            
Stock options granted to purchase of common stock | shares           30,000            
Consulting expense                 $ 225,000 $ 56,000    
Accrued consulting expense                 0   0  
Consulting Services Agreement [Member] | Bristol Capital, LLC [Member] | Board of Directors [Member]                        
Shares issued during period, shares | shares         210,982              
Shares issued during period, value         $ 496,875              
Securities Purchase Agreement [Member]                        
Debt discount                 465,604   510,384  
Securities Purchase Agreement [Member] | Board of Directors [Member] | Bristol Investment Fund Ltd [Member]                        
Shares issued during period, shares | shares             25,000          
Shares issued during period, value             $ 85,000          
Cash purchase price of securities       $ 2,500,000     2,500,000          
Repayments of debt             25,000          
Debt discount       $ 25,400     $ 25,791          
Operating Agreement [Member]                        
Recognized losses from the venture                 $ 0   $ 0  
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.21.1
Notes Payable (Details Narrative) - USD ($)
Jun. 09, 2020
Mar. 27, 2020
Mar. 31, 2021
Feb. 25, 2021
Dec. 31, 2020
Apr. 30, 2020
Loans bear interest   1.00%        
Debt instrument description   The loans bear interest at an annual rate of one percent (1%), are due two (2) years from the date of issuance, and all payments are deferred for the first six (6) months of the loan. Any unforgiven balance of loan principal and accrued interest at the end of the six (6) month loan deferral period is amortized in equal monthly installments over the remaining 18-months of the loan term.        
Loans payable     $ 197,600      
Paycheck Protection Program [Member]            
Loans payable     197,662 $ 197,662   $ 197,600
Loan Agreement SBA [Member]            
Loans payable     $ 149,900   $ 149,900  
Proceeds from loan $ 149,000          
Accrue interest percentage 3.75%          
Debt maturity date description Mature in June 2050.          
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.21.1
Convertible Debenture (Details Narrative) - USD ($)
3 Months Ended
Dec. 19, 2019
Dec. 02, 2016
Mar. 31, 2021
Dec. 31, 2020
Fair value for warrant and debt discount     $ 1,448,293  
Series B Warrants [Member]        
Warrant to purchase shares of common stock     300,000  
Warrant exercise price per share     $ 2.50  
Warrant expiring date     Dec. 01, 2024  
Warrant exercise price decrease     $ 0.25  
Fair value for warrant and debt discount     $ 545,336  
Convertible Debenture [Member]        
Debt principal amount     $ 2,500,000  
Debt instruments maturity date     Dec. 30, 2021  
Debt instrument interest rate per annum     12.00%  
Debt conversion price per share     $ 2.50  
Average trading price percentage     50.00%  
Employee Options [Member] | Convertible Debenture [Member]        
Debt conversion price per share     $ 0.25  
Securities Purchase Agreement [Member]        
Debt discount     $ 465,604 $ 510,384
Bristol Investment Fund Ltd [Member] | Securities Purchase Agreement [Member] | Board of Directors [Member]        
Cash purchase price of securities $ 2,500,000 $ 2,500,000    
Purchaser's legal fees 25,400      
Debt discount $ 25,400 $ 25,791    
XML 46 R35.htm IDEA: XBRL DOCUMENT v3.21.1
Commitments and Contingencies (Details Narrative) - USD ($)
3 Months Ended
Mar. 29, 2021
Mar. 24, 2021
Mar. 02, 2021
Feb. 20, 2021
Aug. 03, 2020
Jul. 31, 2020
Nov. 22, 2018
Dec. 29, 2016
Mar. 31, 2021
Number of options granted                
Shares issued during period, value $ 5,000,000               $ 1,725,000
Consulting Services Agreement [Member] | Bristol Capital, LLC [Member]                  
Monthly fee               $ 18,750  
Number of options granted               30,000  
Financial Advisory Agreement [Member]                  
Warrants issued   300,000              
Warrants exercise price   $ 1.00              
Term of warrant   3 years              
Consulting expenses   $ 1,592,517              
Mr.Maatta [Member]                  
Monthly fee       $ 10,000          
Mr.Maatta [Member] | Series A Preferred Stock [Member]                  
Number of options granted       8,500          
Board of Directors [Member] | Consulting Services Agreement [Member] | Bristol Capital, LLC [Member]                  
Shares issued during period, shares             210,982    
Shares issued during period, value             $ 496,875    
Board of Directors [Member] | Consulting Services Agreement [Member] | Bristol Capital, LLC [Member]                  
Shares issued during period, shares             201,982    
Shares issued during period, value             $ 496,875    
Board of Directors [Member] | Bristol Capital, LLC [Member]                  
Convertible debt owed         $ 384,375        
Board of Directors [Member] | Series A Preferred Stock [Member]                  
Shares issued during period, shares                 22,500
Board of Directors [Member] | Series A Preferred Stock [Member] | 2018 Bristol Shares [Member]                  
Number of options granted                 22,500
Convertible debt owed shares         88,125        
Board of Directors [Member] | Series A Preferred Stock [Member] | Bristol Capital, LLC [Member]                  
Convertible debt owed shares           38,438      
Mr. Kaufman [Member]                  
Annual base salary     $ 250,000            
Ms. Bowman [Member]                  
Annual base salary     $ 120,000            
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.21.1
Operating Leases (Details Narrative) - USD ($)
3 Months Ended
Apr. 28, 2020
Jul. 02, 2016
Mar. 31, 2021
Mar. 31, 2020
Operating sublease, monthly payment    
Lease Agreement [Member] | Third Party [Member]        
Operating sublease, term 5 years      
Operating sublease, monthly payment $ 3,900      
Operating sublease, rent expense     3,060 0
Operating lease, escalation clause 2.00%      
Bristol Capital Advisors, LLC [Member]        
Operating sublease, term   5 years 3 months    
Operating sublease, monthly payment   $ 8,118    
Operating sublease, rent expense     $ 13,034 $ 23,812
Operating lease, option to extend     Our lease term includes options to extend the lease when it is reasonably certain that we will exercise that option.  
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.21.1
Operating Leases - Schedule of Lease Expenses (Details) - USD ($)
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Leases [Abstract]    
Operating lease $ 16,594 $ 26,812
Sublease income (9,000)
Total net lease cost $ 16,594 $ 17,812
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.21.1
Operating Leases - Schedule of Supplemental Cash Flow and Other Information Related Leases (Details) - USD ($)
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Leases [Abstract]    
Operating cash flows from operating leases
ROU assets obtained in exchange for lease liabilities: Operating leases
Weighted average remaining lease term (in years): operating leases 3 years 1 month 24 days 1 year 5 months 1 day
Weighted average discount rate: operating leases 12.00% 12.00%
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.21.1
Operating Leases - Schedule of Maturities of Operating Lease Liabilities (Details)
Mar. 31, 2021
USD ($)
Leases [Abstract]  
2022 $ 103,224
2023 48,532
2024 49,502
2025 50,492
2026 8,444
Future minimum lease payments 260,194
Less: Imputed interest (46,101)
Present value $ 214,093
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.21.1
Stockholders' Equity (Deficit) (Details Narrative) - USD ($)
3 Months Ended
Mar. 29, 2021
Mar. 29, 2021
Mar. 24, 2021
Mar. 31, 2021
Mar. 31, 2020
Dec. 31, 2020
Mar. 29, 2020
Reverse stock split description       one-for-twenty (1:20) reverse stock split (the "Reverse Stock Split") of for all classes of its stock, par value $0.0001 per share, without any change to its par value.      
Common stock par value       $ 0.0001   $ 0.0001  
Authorized capital stock       105,000,000   105,000,000  
Preferred stock par value       $ 0.0001   $ 0.0001  
Preferred stock, shares issued       5,000   288,448  
Preferred stock, shares outstanding       5,000   288,448  
Common stock issued       3,506,752   3,506,752  
Common stock outstanding       3,506,752   3,506,752  
Intrinsic value of option outstanding       $ 2,581,488      
Intrinsic value of option exercisable       1,811,220      
Unrecognized stock based compensation       203,500      
Total intrinsic value of warrants outstanding       17,450,000      
Total intrinsic value of warrants exercisable       14,935,000      
Shares issued during period, value $ 5,000,000     $ 1,725,000      
Proceeds from issuance of offering 1,700,000            
Commission $ 170,000            
Preferred stock, shares authorized       4,500,000   4,500,000  
Financial Advisory Agreement [Member]              
Warrants issued     300,000        
Warrants exercise price     $ 1.00        
Term of warrant     3 years        
Consulting expenses     $ 1,592,517        
Common Stock Options [Member]              
Stock based compensation expense       $ 97,429 $ 21,171    
Series A Cumulative Convertible Preferred Stock [Member]              
Authorized capital stock       500,000      
Preferred stock, shares issued       217,293   173,974  
Preferred stock, shares outstanding       217,293   173,974  
Series B Preferred Stock [Member]              
Preferred stock par value             $ 1,080
Designated shares             20,000
Preferred stock, shares authorized             5,000,000
Accrued dividends             $ 993
Series B Preferred Stock [Member] | Securities Purchase Agreement II [Member] | Leviston Resources LLC [Member]              
Common stock par value $ 0.0001 $ 0.0001          
Preferred stock par value $ 0.0001 $ 0.0001          
Shares issued during period, value $ 5,400,000            
Issuance of preferred shares 5,000            
Common Stock [Member]              
Common stock par value       $ 0.0001      
Authorized capital stock       100,000,000      
Shares issued during period, value            
Issuance of preferred shares            
Preferred Stock [Member]              
Authorized capital stock       5,000,000      
Preferred stock par value       $ 0.0001      
Shares issued during period, value       $ 1      
Issuance of preferred shares       5,000      
Warrant [Member] | Series B Preferred Stock [Member] | Securities Purchase Agreement II [Member] | Leviston Resources LLC [Member]              
Warrant to purchase shares of common stock 5,000 5,000          
Warrant expiring date   Mar. 26, 2023          
Aggregate purchase price   $ 5,000,000          
Warrant [Member] | Series B Preferred Stock [Member] | Securities Purchase Agreement II [Member] | Leviston Resources LLC [Member] | Closing Date [Member]              
Aggregate purchase price   2,000,000          
Purchase price issuable upon exercise of warrants   500,000          
Purchase price payables   $ 2,500,000          
Series 1 Warrants [Member] | Series B Preferred Stock [Member] | Securities Purchase Agreement II [Member] | Leviston Resources LLC [Member]              
Warrant to purchase shares of common stock 5,000 5,000          
Warrant expiring date   Mar. 26, 2024          
Number of common stock acquired shares   $ 1,000          
Series 2 Warrants [Member] | Series B Preferred Stock [Member] | Securities Purchase Agreement II [Member] | Leviston Resources LLC [Member]              
Number of common stock acquired shares   $ 1,000          
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.21.1
Stockholders' Equity (Deficit) - Summary of Stock Option Activity (Details)
3 Months Ended
Mar. 31, 2021
$ / shares
shares
Equity [Abstract]  
Number of options, Outstanding at the beginning of the period | shares 789,250
Number of options, Exercisable at beginning of the period | shares 451,448
Number of options, Granted | shares
Number of options, Exercised | shares
Number of options, Forfeited/Cancelled | shares
Number of options, Outstanding at the end of the period | shares 789,250
Number of options, Exercisable at end of the period | shares 589,781
Weighted Average Exercise Price, Outstanding at the beginning of the period | $ / shares $ 1.75
Weighted Average Exercise Price, Exercisable at beginning of the period | $ / shares 2.69
Weighted Average Exercise Price, Granted | $ / shares
Weighted Average Exercise Price, Exercised | $ / shares
Weighted Average Exercise Price, Forfeited/Cancelled | $ / shares
Weighted Average Exercise Price, Outstanding at the end of the period | $ / shares 1.75
Weighted Average Exercise Price, Exercisable at end of the period | $ / shares $ 2.15
XML 53 R42.htm IDEA: XBRL DOCUMENT v3.21.1
Stockholders' Equity (Deficit) - Schedule of Information Regarding Stock Options Outstanding (Details)
3 Months Ended
Mar. 31, 2021
$ / shares
shares
Equity [Abstract]  
Range of Exercise Price Lower Limit $ 0.25
Range of Exercise Price Upper limit $ 18.80
Number of Shares Outstanding | shares 789,250
Weighted Average Remaining Contractual Life (years) 3 years 8 months 19 days
Weighted Average Exercise Price $ 1.75
Number of Shares Exercisable | shares 589,781
Weighted Average Exercise Price $ 2.15
XML 54 R43.htm IDEA: XBRL DOCUMENT v3.21.1
Stockholders' Equity (Deficit) - Summary of Stock Warrants Activity (Details) - Warrant [Member]
3 Months Ended
Mar. 31, 2021
$ / shares
shares
Number of warrants, Outstanding at the beginning of the period | shares 10,300,000
Number of warrants, Exercisable at beginning | shares 10,300,000
Number of warrants, Granted | shares 700,000
Number of warrants, Exercised | shares
Number of warrants, Forfeited/Cancelled | shares
Number of warrants, Outstanding at the end of the period | shares 11,000,000
Number of warrants, Exercisable at end of the period | shares 10,600,000
Weighted Average Exercise Price, Outstanding at the beginning of the period | $ / shares $ 3.00
Weighted Average Exercise Price, Exercisable at the beginning of the period | $ / shares 3.00
Weighted Average Exercise Price, Granted | $ / shares 0.86
Weighted Average Exercise Price, Exercised | $ / shares
Weighted Average Exercise Price, Forfeited/Cancelled | $ / shares
Weighted Average Exercise Price, Outstanding at the end of the period | $ / shares 2.86
Weighted Average Exercise Price, Exercisable at end of the period | $ / shares $ 2.94
XML 55 R44.htm IDEA: XBRL DOCUMENT v3.21.1
Stockholders' Equity (Deficit) - Schedule of Information Regarding Stock Warrants Outstanding (Details) - Warrant [Member] - $ / shares
3 Months Ended
Mar. 31, 2021
Dec. 31, 2020
Warrants Outstanding 11,000,000 10,300,000
Warrants Outstanding, Weighted Average Remaining Contractual Life (years) 1 year 9 months 14 days  
Warrants Outstanding, Weighted Average Exercise Price $ 2.86 $ 3.00
Warrants Exercisable 10,600,000 10,300,000
Warrants Exercisable, Weighted Average Exercise Price $ 2.94 $ 3.00
Minimum [Member]    
Warrants, Range of Exercise Price 0.50  
Maximum [Member]    
Warrants, Range of Exercise Price $ 3.00  
XML 56 R45.htm IDEA: XBRL DOCUMENT v3.21.1
Subsequent Events (Details Narrative) - Subsequent Event [Member]
Apr. 26, 2021
USD ($)
shares
Conversion of stock, shares issuable 10,800,000
March 2021 Private Placement [Member]  
Conversion of stock, shares issuable 5,400,000
Proceeds from private placement | $ $ 460,000
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