| 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 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).
Name of consolidated State or other Date of incorporation Attributable
KTC Corp. The State of Nevada, U.S.A. September 20, 2010 100 %
Kicking the Can L.L.C. The State of Delaware, U.S.A. April 17, 2009 100 %
Wizard World Digital, Inc. The State of Nevada, U.S.A. March 18, 2011 100 %
Wiz Wizard, LLC The State of Delaware, U.S.A. December 29, 2014 100 %
ButtaFyngas, LLC The State of Delaware, U.S.A. April 10, 2015 50 %
Wizard World China, LLC The State of Delaware, U.S.A. August 31, 2017 100 %
Jevo Holdings, LLC (formerly Wizard Immersive, LLC) The State of California, U.S.A. June 18, 2018 100 %
Wizard Special Events, LLC The State of California, U.S.A. June 5, 2018 100 %
Wizard World, LLC The State of California, U.S.A. October 30, 2018 100 % 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 December 31, 2020 and 2019, the aggregate non-controlling
interest in ButtaFyngas was ($12,498). The non-controlling interest is separately disclosed on the 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
December 31, 2020 and 2019, 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:
December 31, December 31,
Finished goods $ 220,641 $ -
Finished goods inventory includes finished components
to the Jevo units. 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
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 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. As reflected in Note 1, the amount attributed to the intellectual property from the purchase was $132,000. 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. The Company has determined
that a ten-year useful life of the intellectual property is reasonable and will begin amortization in Q2 2021. 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. 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”. Investments - Cost Method, Equity Method and
Joint Venture In accordance with sub-topic 323-10 of the Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“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 year ended December 31, 2020 and 2019, the
Company recognized $0 losses from this venture, respectively. As of December 31, 2020 and 2019, the investment in
CONtv was $0. As of December 31, 2020 and 2019, the amount due to
CONtv was $224,241. Fair Value of Measurements The Company follows ASC 820-10 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 under 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. 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 year ended December 31, 2020 and 2019
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. Refer to Note 9. Operating Leases for additional disclosures
required by ASC 842. Revenue Recognition and Cost of Revenues The Company recognizes revenue according to ASC 606,
Revenue from Contracts with Customers
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 December
31, 2020 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.
For the Years Ended
December 31, December 31,
Conventions $ 2,610,123 $ 10,578,316
Virtual 412,325 -
Vault 1,466,714 -
Jevo 29,001 -
Total revenue $ 4,518,163 $ 10,578,316 Shipping and Handling Costs The Company accounts for shipping and handling fees
in accordance with paragraph ASC 605-45-45-19. 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 $5,954 and $0 for
the years ended December 31, 2020 and 2019, respectively. Equity–based compensation The Company recognizes compensation expense for all
equity–based payments in accordance with ASC 718 “ Compensation – Stock Compensation 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 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 December 31, 2020 and 2019. 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 December 31,
2020 and 2019. 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 2017. In response to the COVID-19 pandemic, the Coronavirus
Aid, Relief and Economic Security Act (“ CARES Act 2017 Tax Act “NOLs In addition, the CARES Act raises the corporate charitable
deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100%
bonus depreciation. The enactment of the CARES Act did not result in any material adjustments to the income tax provision. 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
For the Year For the Year
Convertible note 833,333 833,333
Common stock options 792,750 226,000
Common stock warrants 10,300,000 1,133,333
Total contingent shares issuance arrangement, stock options or warrants 11,926,083 2,192,666 Related Parties The Company follows subtopic ASC 850-10 for the identification
of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20, the related parties
include: (a) affiliates of the Company (“Affiliate” means, with respect to any specified person, any other person that, directly
or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person, as such terms
are used in and construed under Rule 405 under the Securities Act); (b) entities for which investments in their equity securities would
be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted
for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that
are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties
with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other
to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties
that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in
one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might
be prevented from fully pursuing its own separate interests. Reclassification Certain prior period amounts have been reclassified
to conform to current period presentation. Recently Adopted Accounting Guidance In October 2016, the FASB issued ASU 2016-16, “Income
Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory”, In August 2018, the FASB issued Accounting Standards
Update (ASU) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for
Fair Value Measurement”, In February 2016, the FASB issued ASU 2016-02 “ Leases” 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 In December 2019, the FASB issued ASU 2019-12, Income
Taxes(Topic 740): “Simplifying the Accounting for Income Taxes” 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” 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. Subsequent Events The Company evaluates subsequent events and transactions
that occur after the balance sheet date for potential recognition or disclosure. Any material events that occur between the balance sheet
date and the date that the consolidated financial statements were issued are disclosed as subsequent events, while the consolidated financial
statements are adjusted to reflect any conditions that existed at the balance sheet date. |
