The demise of Wizard Magazine has certainly been the talk of the industry, as has the plan to launch an online magazine called Wizard World in the coming weeks. From my vantage point, as a public equity investor, the most notable component wasn’t the end of the print magazine, or the unceremonious way in which some of the staff were dismissed, but instead the fact Wizard is now a publicly traded company.
Gareb Shamus, recently appointed President and CEO of public company Wizard World, Inc. (“Wizard World”) (OTC: GOEE.PK), today announced that the Comic Con Tour, which consists of pop culture conference events that provide high visibility marketing opportunities to pop culture brands and companies in multiple venues throughout the year, is now being produced by public company Wizard World.
Upon reading this, my first instinct was to pull up the stock quotation and see what I could find out about the company. I’m sure many of you did the same thing…yet when you typed in the symbol: GOEE.PK, you didn’t find a company named Wizard World. You found a company named GoEnergy, Incorporated. By its description, GoEnergy is:
An exploration stage Company which plans to ultimately engage in the exploration of mineral properties and to exploit mineral reserves it discovers, if any, that demonstrate economic feasibility, if any.
So what gives, you ask? Did the press release get the stock symbol wrong? No, you found the right company, you just didn’t realize it. As it turns out, Gareb has orchestrated what is known as a reverse merger. Essentially, the way a reverse merger works is pretty simple:
1) Identify a shell company that is already a publicly-listed security
2) Acquire the majority of the shell company’s assets (in this case, shares)
3) Merge the private assets of your company with the shell company
4) Voila, you are now “publicly traded”
This entire process is documented, by law, in GOEE’s SEC documents. Every time a “material change” occurs with a company, even one on the OTC Bulletin Board, it must file what’s called an 8K statement. By taking the time to read through GOEE's recent 8K filings, we get a clear picture of just how Gareb Shamus and Wizard went from a privately held company into a publicly-traded one through a reverse merger.
September 21, 2010
- KTC Corp was incorporated in Nevada
September 29, 2010
- KTC Corp issues 16 million shares to KTC, LLC in exchange for the rights to produce the Atlanta Comic Con, Big Apple Comic Con, Cincinnati Comic Con, Connecticut Comic Con, Nashville Comic Con, New England Comic Con, North Coast Comic Con and Toronto Comic Con.
- GoEnergy agrees to acquire the entirety of the stock of KTC (“Kick the Can”) Corp and its subsidiaries, and in exchange, GoEnergy issues 33.43 million new shares of GOEE to the KTC owners.
- As a result, Gareb Shamus (the owner of KTC Corp) and his KTC partners becomes the effective owner of 95.51% of GOEE.
- Strato Malamas, the former majority owner of GoEnergy, agrees to surrender his 2.75 million shares of GOEE, removing him from the equation.
- Bridge notes were issues to four creditors in the aggregate amount of $200,000 – with various provisions for when the notes could and would be paid back, and in the interim the notes pay 8% annual interest
- The merger agreement is completed
- GOEE becomes the owner of KTC Corp, described in the documentation as: “a producer of pop culture and multimedia conventions across the United States that markets movies, TV shows, video games, technology, toys, social networking/gaming platforms, comic books and graphic novels.”
- As previously disclosed, GOEE assigns 33.43 million shares of its stock to the shareholders of KTC Corp (of which Gareb Shamus is the majority shareholder and sole director)
- Terry Fields, who had been the operating executive of GOEE while it was an energy company, effectively resigns from all officer positions, except for the CFO (Chief Financial Officer) role
- Gareb Shamus is appointed President and Chief Executive Officer of GOEE
- GOEE enters into agreement with a number of accredited investors for the issuance and sale of $1.5 million in convertible preferred stock
- Terry Fields resigns as CFO citing that it was not the result of any disagreements with the company or related to any component of the company’s operations
- Vadim Mats was named a director of GOEE
- The board of directors and stockholders approved the name change from GoEnergy, Inc. to Wizard World, Inc.
So what now?
Based on the company’s initial filings, Wizard is primarily focused on running its current slate of conventions, as well as acquiring and developing more convention assets. Why did Shamus feel the need to become publicly-traded? That is up for him to answer, and we’ve reached out to his team and they’ve told us to expect a response. As soon as they’ve responded, we will update this article with their comments.
As it stands, I would expect Wizard World, Inc. to also consider changing its stock symbol from GOEE to something more indicative of its new corporate brand. Normally company’s seek to be publicly listed in order to create liquidity (i.e., generate cash flow necessary to run operations and grow the business), create scale and to diversify the ownership base. I presume Gareb has those goals in mind.
Let's be crystal clear. I am not going to offer any advice or opinion on the merits of GOEE. It's up to every individual to do their own due diligence and to make sure they fully understand the risks inherent in any investment, and whether said investment is suitable for them. But I did want to share some resources with you that discuss OTC (over-the-counter) stocks and reverse merger companies. Any investment carries with it risk, but OTB Bulletin board companies (of which GOEE is one) are, by their nature, riskier investments than their listed counterparts you would find on the Nasdaq or the New York Stock Exchange.
- SEC Guide to Microcap Stocks
- SEC Guide to OTC Pink Sheets
- Fred Wilson's thoughts on reverse (or backdoor) IPOs
- Motley Fool Straight Talk on Penny Stocks
Jason is a mutant with the ability to squeeze 36 hours into every 24-hour day, which is why he was able to convince his wife he had time to join the iFanboy team on top of running his business, raising his three sons, and most importantly, co-hosting the 11 O'Clock Comics podcast with his buddies Vince B, Chris Neseman and David Price. If you are one of the twelve people on Earth who want to read about comics, the stock market and football in rapid fire succession, you can follow him on Twitter.