What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-03-31 compared with 2020-03-30 · 477 added, 678 removed, 259 unchanged (82% of the section changed)

41 unchanged sentences

by the Company’s stockholders on October 2, 2018.

The following table reflects, as of December

31, 2019, compensation plans pursuant to which we are authorized to issue options, warrants or other rights to purchase shares

of its common stock, including the number of shares issuable under outstanding options, warrants and rights issued under the plans

and the number of shares remaining available for issuance under the plans.

On August 4, 2020, the Board of Directors

voted to adopt the Genius Brands International, Inc 2020 Incentive Plan (the “2020 Plan”).

The shares available for

issuance under the 2020 Plan was approved by stockholders on August 27, 2020.

The 2020 Plan as approved by the stockholders increased

the maximum number of shares available for issuance up to an aggregate of 32,167,667 shares of Common Stock.

The following tables reflect, as of December

31, 2020, compensation plans pursuant to which we are authorized to issue options, warrants, RSUs, or other rights to purchase

shares of its Common Stock, including the number of shares issuable under outstanding options, warrants and rights issued under

the plans and the number of shares remaining available for issuance under the plans.

Plan category

8 unchanged sentences

Stock at a conversion price of $0.21 per share.

During the year ended December

31, 2019, the Company issued 3,804,766 shares of common stock pursuant to the conversion of 798 shares of Series A Convertible

Preferred Stock at a conversion price of $0.21 per share.

These securities were issued

solely to “accredited investors”

in reliance on the exemption from registration afforded by Section 4(a)(2) of the

Securities Act.

On October 18, 2019, the Company

issued 534,247 shares of Common Stock valued at $0.73 to a vendor for production services rendered.

These securities were issued solely to

“accredited investors”

in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities

On November 18, 2020, the Company issued

500,000 shares of Common Stock valued at $1.39 per share to a provider for production and marketing services.

The issuance of the

shares of Common Stock was exempt from registration pursuant to Section 4(a)(2) of the Securities Act.

On December 18, 2020, the Company issued

500,000 shares of Common Stock valued at $1.39 per share to a provider for production and marketing services.

The issuance of the

shares of Common Stock was exempt from registration pursuant to Section 4(a)(2) of the Securities Act.

Selected Financial Data

As a “smaller reporting company,”

as defined by

Item 10 of Regulation S-K, we are not required to provide information required by this Item.

Not required.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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“our,”

or the “Company”) is a global content and brand management company that creates

and licenses multimedia content.

Led by experienced industry personnel, we distribute our content in all formats as well as a broad

range of consumer products based on our characters.

In the children's media sector, our portfolio features “content with

a purpose”

or the “Company”) is a global content and brand management

company that creates and licenses multimedia content.

Led by experienced industry personnel, we distribute our content in all

formats as well as a broad range of consumer products based on our characters.

In the children's media sector, our portfolio

features “content with a purpose”

for toddlers to tweens, which provides enrichment as well as entertainment.

New intellectual property titles include

the preschool property Rainbow Rangers , which debuted in November 2018 on Nickelodeon and which was renewed for a second

season and preschool property Llama Llama , which debuted on Netflix in January 2018 and was renewed by Netflix for

a second season.

Our library titles include the award winning Baby Genius, adventure comedy Thomas Edison's

Secret Lab ®

and Warren Buffett's Secret Millionaires Club, created with and starring iconic investor

Warren Buffett which is distributed across our Genius Brands Network on Comcast’s Xfinity on Demand, AppleTV, Roku, Amazon

Fire, YouTube, Amazon Prime, Cox, Dish, Sling and Zumo as well as Connected TV.

We are also developing an all-new animated series,

Stan Lee's Superhero Kindergarten with Stan Lee's Pow!

Entertainment.

intellectual property titles include the preschool property Rainbow Rangers , which debuted in November 2018 on Nickelodeon

and which was renewed for a second season and preschool property Llama Llama, which debuted on Netflix in January 2018

and was renewed by Netflix for a second season.

Our library titles include the award-winning Baby Genius , adventure comedy

Thomas Edison's Secret Lab ®

and Warren Buffett's Secret Millionaires Club, created with and starring iconic

investor Warren Buffett, which is distributed across our Genius Brands Network on Comcast’s Xfinity on Demand, AppleTV, Roku,

Amazon Fire, YouTube, Amazon Prime, Cox, Dish, Sling and Zumo, as well as Connected TV.

We are also developing an all-new animated

series, Stan Lee’s Superhero Kindergarten with Stan Lee’s Pow!

Entertainment, Oak Productions and Alibaba.

Arnold Schwarzenegger lends his voice as the lead and is also an Executive Producer on the series.

The show will be broadcast in the

United States on Amazon Prime and the Company’s wholly owned distribution outlet, Kartoon Channel!.

In July 2020, the Company

entered into a binding term sheet with POW, Inc.

(“POW!”) in which we agreed to form an entity with POW!

certain rights in intellectual property created by Stan Lee, as well as the name and likeness of Stan Lee.

The entity is called

“Stan Lee Universe, LLC”

and the Company are finalizing the details of the venture.

Through this agreement we

are assuming the worldwide rights, in perpetuity, to the name, physical likeness, physical signature, live-action and animated

motion picture, television, online, digital, publishing, comic book, merchandising and licensing rights to Stan Lee and over 100

original Stan Lee creations, from which Genius Brands plans to develop and license approximately multiple properties each year.

In addition, we act as licensing agent

for Penguin Young Readers, a division of Penguin Random House LLC who owns or controls the underlying rights to Llama Llama ,

for Penguin Young Readers, a division of Penguin Random House LLC which owns or controls the underlying rights to Llama Llama ,

leveraging our existing licensing infrastructure to expand this brand into new product categories, new retailers, and new territories.

Recent Developments

On January 28, 2021, we entered into letter

agreements (the “Letter Agreements”) with certain existing institutional and accredited investors to exercise certain

outstanding warrants (the “Existing Warrants”) to purchase up to an aggregate of 39,740,500 shares of the Company’s

common stock at their original exercise price of $1.55 per share (the “Exercise”).

The Existing Warrants (the “Registered

Existing Warrants”) and the shares of common stock underlying the Registered Existing Warrants were previously registered

pursuant to a registration statement on Form S-3 (File No.

In consideration for the exercise of the Existing Warrants

for cash, the exercising holders will receive new unregistered warrants to purchase up to an aggregate of 39,740,500 shares of

common stock (the “New Warrants”) at an exercise price of $2.37 per share and with an exercise period of five years

from the initial issuance date.

The Special Equities Group, a division

of Bradley Woods & Co.

Ltd., acted as warrant solicitation agent and will receive a cash fee of approximately $4.3 million.

The gross proceeds to the Company from

the Exercise were approximately $61.6 million.

The Company intends to use the net proceeds from the Exercise for acquisitions of

children’s and family intellectual property, and/or companies in the children’s and family entertainment space.

On February 1, 2021, the Company through GBI Acquisition LLC,

a New Jersey limited liability company, and 2811210 Ontario Inc., a company organized under the laws of the Province of Ontario , two

wholly owned subsidiaries of the Company, closed its previously announced acquisition pursuant to a Purchase and Sale Agreement

(the “Purchase Agreement”) with (i) Harold Aaron Chizick, (ii) Jennifer Mara Chizick, (iii) Wishing Thumbelina Inc.

(“Wishing Thumbelina”), and (iv) Harold Aaron Chizick and Jennifer Mara Chizick, the trustees of The Chizsix (2019)

Family Trust for and on behalf of Harold Aaron Chizick, Jennifer Mara Chizick and Jay Mark Sonshine, trustees of The Chizsix (2019)

Family Trust, (the “Trustees”) (each a “Seller”

and, collectively, “Sellers”), pursuant to

which the Company acquired from the Sellers all of the issued and outstanding equity

interests of ChizComm Ltd., a corporation organized in Canada (“

ChizComm Canada ”),

and ChizComm USA Corp., a New Jersey corporation (“

ChizComm USA ”

together with ChizComm Canada, “

ChizComm ”) (the “

Acquisition ”).

Total consideration paid by the Company in the transaction at

closing consisted of $8.5 million in cash and 1,966,292 shares (the “Closing Shares”)

of the Company’s common stock, $0.001 par value per share (the “

Common Stock ”)

with a value of approximately $3.5 million, both as subject to certain purchase price adjustments.

Of the Closing Shares, 674,157

shares of Common Stock, with a value of approximately $1.2 million, were deposited into an escrow account to cover potential post-closing

indemnification obligations of Sellers under the Purchase Agreement.

Additionally, the Purchase Agreement also provides for the

issuance of additional shares of Common Stock with an aggregate value of up to $8.0 million that may be issued to the Sellers if

certain EBITDA and performance levels are achieved within a four-year period commencing on the date of the Purchase Agreement.

The parties to the Purchase

Agreement made certain representations, warranties and covenants, agreed to certain indemnification terms as set forth in the Purchase

Agreement, and agreed to enter into certain employment agreements in connection with the Acquisition.

Prior to the closing of the Acquisition, neither the Company

nor any of its affiliates, or any director or officer of the Company or any of its affiliates, or any associate of any such director

or officer, had any material relationship with the Sellers.

The terms of the Purchase Agreement, including the purchase price,

were determined by arm’s length negotiations between the Company and Sellers.

January 2020 Warrant Exercise Agreement

On January 22, 2020, the Company entered

into a private transaction (the “Private Transaction”) pursuant to a Warrant Exercise Agreement (the “Agreement”)

with the holder of the Company’s existing warrants (the “Original Warrants”).

The Original Warrants were originally

issued on October 3, 2017, to purchase an aggregate of 500,000 shares of Common Stock, at an exercise price of $3.90 per share

and were to expire in October 2022.

On January 22, 2020, we entered into a

private transaction pursuant to a Warrant Agreement (the “Agreement”) with the holder of the Company’s existing

warrants (the “Original Warrants”).

The Original Warrants were originally issued on October 3, 2017, to purchase an

aggregate of 500,000 shares of the Common Stock (as defined below) at an exercise price of $3.90 per share and were to expire in

October 2022.

Pursuant to the Agreement, the holder of

the Original Warrants and the Company agreed that such Original Warrant holder would exercise its Original Warrants in full and

the Company would amend the Original Warrants to reduce the exercise price thereof to $0.34 (the average closing price of the common

stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the Agreement) (the “Amended

Exercise Price”).

The Company received approximately $170,000 from the exercise of the Original Warrants.

March 2020 Private Placement

On March 11, 2020, the Company and certain

accredited investors (each an “Investor”

and collectively, the “Investors”) entered into a Securities Purchase

Agreement (the “SPA”) pursuant to which the Company agreed to sell and issue (1) Senior Secured Convertible Notes to

the Investors in the aggregate principal amount of $13,750,000 (each, a “Note”

and collectively, the “2020 Convertible

Notes”) and $11,000,000 funding amount (reflecting an original issue discount of $2,750,000) and (2) warrants to purchase

65,476,190 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), exercisable

for a period of five years at an initial exercise price of $0.26 per share (each a “Warrant”

and collectively, the

“Warrants”), for consideration consisting of (i) a cash payment of $7,000,000, and (ii) full recourse cash secured

promissory notes payable by the Investors to the Company (each, an “Investor Note”

and collectively, the “Investor

Notes”) in the principal amount of $4,000,000 (the “Investor Notes Principal”) (collectively, the “Financing”).

Andy Heyward, the Company’s Chairman and Chief Executive Officer, participated as an Investor and invested $1,000,000 in

connection with the Financing, all of which were paid at the closing and not pursuant to an Investor Note.

the Company would amend the Original Warrants to reduce the exercise price thereof to $0.34 (the average closing price (as reflected

on Nasdaq.com) of the Common Stock (as defined below) for the five trading days immediately preceding the signing of the Agreement).

We received approximately $170,000 from the exercise of the Original Warrants.

March 2020 Secured Convertible Note and Warrant Private Placement

On March 11, 2020, we entered into a Securities

Purchase Agreement (the “SPA”) with certain accredited investors (each an “Investor”

and collectively,

the “Investors”) pursuant to which we agreed to sell and issue (1) Senior Secured Convertible Notes to the Investors

in the aggregate principal amount of $13,750,000 (each, a “Note”

and collectively, the “2020 Convertible Notes”)

and $11,000,000 funding amount (reflecting an original issue discount of $2,750,000) and (2) warrants to purchase 65,476,190 shares

of our Common Stock, exercisable for a period of five years at an initial exercise price of $0.26 per share (each a “Warrant”

and collectively, the “Warrants”), for consideration consisting of (i) a cash payment of $7,000,000, and (ii) full

recourse cash secured promissory notes payable by the Investors to the Company (each, an “Investor Note”

and collectively,

the “Investor Notes”) in the principal amount of $4,000,000 (the “Investor Notes Principal”) (collectively,

the “Financing”).

Andy Heyward, our Chairman and Chief Executive Officer, participated as an Investor and invested

$1,000,000 in connection with the Financing, all of which was paid at the closing and not pursuant to an Investor Note.

Equities Group, LLC, a division of Bradley Woods & Co.

LTD, acted as placement agent and received warrants to purchase 6,547,619

shares at an exercise price of $0.26 per share (the “Placement Agent Warrants”).

The closing of the sale and issuance of

the 2020 Convertible Notes, the Warrants and the Placement Agent Warrants described below occurred on March 17, 2020 (the “Closing

Date”).

The maturity date of the 2020 Convertible Notes is September 30, 2021 and the maturity date of the Investor Notes

is March 11, 2060.

The SPA contains certain representations

and warranties, covenants and indemnities customary for similar transactions.

In addition, the Company agreed to the following

additional covenants including, but not limited to:

(i) the Company shall hold a stockholder meeting (the “Stockholder Meeting”),

by no later than May 15, 2020, to approve the issuance of shares of Common Stock issuable under the 2020 Convertible Notes and

pursuant to the terms of the SPA for the purposes of compliance with the stockholder approval rules of The Nasdaq Stock Market

(“Stockholder Approval”) and the Company will be obligated to continue to seek Stockholder Approval every 90 days until

such approval is obtained, (ii) until the date that the 2020 Convertible Notes are no longer outstanding, the Company will not

issue, offer, sell or grant any equity or equity-linked security, subject to certain limited exceptions described in the SPA, unless

(A) Stockholder Approval has been obtained prior thereto and (B) (i) at least 75% of the gross proceeds in excess of the first

$2,000,000 of gross proceeds of all subsequent Financings consummated prior to the six month anniversary of the Closing Date are

first applied to the redemption of the 2020 Convertible Notes (pro-rata based on an Investor’s Purchase Price which redemption

may be waiver by an Investor and it will not increase the pro-rata percentage of any other Investors) or (ii) at least 75% of the

gross proceeds of any such subsequent placement consummated after the six month anniversary of the Closing Date are first applied

to the redemption of the 2020 Convertible Notes (pro-rata), (iii) the Company shall use its best efforts to effectuate the transactions

contemplated by the Voting Agreements executed by the Company and the stockholders who hold in the aggregate approximately 40%

of the outstanding shares of Common Stock which require that such stockholders vote in favor of the proposals voted on at the Stockholder

Meeting, and (iv) promptly securing the listing of certain shares issuable pursuant to the transaction documents and maintaining

the listing of the shares of Common Stock on an eligible market.

the 2020 Convertible Notes, the Warrants and the Placement Agent Warrants occurred on March 17, 2020 (the “Closing Date”).

The maturity date of the 2020 Convertible Notes was September 30, 2021 and the maturity date of the Investor Notes was March 11,

The Company held a stockholder meeting

(the “Stockholder Meeting”) to approve the issuance of shares of Common Stock issuable under the 2020 Convertible Notes

and pursuant to the terms of the SPA for the purposes of compliance with the stockholder approval rules of The Nasdaq Stock Market

(“Stockholder Approval”).

In addition, pursuant to the terms of the

2 unchanged sentences

(1) the conversion price of the 2020 Convertible Notes shall be reduced to $0.21 per share and may be further

reduced to any amount and for any period of time deemed appropriate by the board of directors of the Company, (2) the exercise

price of the Warrants shall be immediately reduced to $0.21 per share and may be further reduced to any amount and for any period

of time deemed appropriate by the board of directors of the Company, (3) the 2020 Convertible Notes and Warrants shall each have

full ratchet anti-dilution protection for subsequent financings (subject to certain exceptions), (4) existing warrant holders that

are participating in the Financing (representing warrants to purchase an aggregate of 8,715,229 shares of Company Common Stock)

will have their existing warrants’

exercise prices reduced to $0.21 and (5) the investors shall have a most favored nations

right which provides that if the Company enters into a subsequent financing, then the Investors (together with their affiliates)

at their sole discretion shall have the ability to exchange their 2020 Convertible Notes on a $1 for $1 basis into securities issued

in the new transaction.

Additionally, in the event that any warrants or options (or any similar security or right) issued in a

subsequent financing include any terms more favorable to the holders thereof (less favorable to the Company) than the terms of

the Warrants, the Warrants shall be automatically amended to include such more favorable terms.

In addition, for as long as any 2020 Convertible

Notes or Warrants remain outstanding, the Company will not (i) issue or sell any rights, warrants or options to subscribe for or

purchase Common Stock or directly or indirectly convertible into or exchangeable or exercisable for Common Stock at a price which

varies or may vary with the market price of the Common Stock, including by way of one or more reset(s) to any fixed price, unless

the conversion, exchange or exercise price of any such security cannot be less than the then applicable Conversion Price with respect

to the Common Stock into which any 2020 Convertible Notes are convertible or redeemable or the then applicable Exercise Price (as

defined in the Warrants) with respect to the Common Stock into which any Warrant is exercisable or (ii) enter into, or effect any

transaction under, any agreement, including, but not limited to, an equity line of credit, an “at-the-market”

or similar agreement, whereby the Company may issue securities at a future determined price.

On March 16, 2020 the holders of the August

2018 Secured Convertible Notes were repaid in full including any outstanding interest.

Amortization of Principal

The 2020 Convertible Notes provide that

the Company will repay the principal amount of 2020 Convertible Notes in equal monthly installments of 1/12th of the principal

amount of the 2020 Convertible Notes beginning October 31, 2020 and the last business day of each calendar month anniversary thereafter

(each an “Installment Date”).

On each Installment Date, assuming the Equity Conditions described below are met and

Stockholder Approval has been obtained, all or some of the Installment Amount (as defined in the 2020 Convertible Notes) shall

be converted into shares of Common Stock, provided however that the Company may elect prior to any Installment Date to pay all

or a portion of the installment amount in cash, as described below.

The Company may elect to pay each monthly

Installment Amount in (i) cash (a “Company Redemption”

and such cash payment, the “Company Installment Redemption

Price”) equal to 100% of the portion of such Installment Amount which the Company elects or is required to redeem pursuant

to a Company Redemption (the “Company Redemption Amount”) or (ii) if (a) the Equity Conditions described below are

satisfied or waived and (b) the Company so elects and Stockholder Approval has been obtained, by conversion of all or some of an

Installment Amount into Common Stock (a “Company Conversion”).

To the extent that the Company elects to pay an Installment

Amount in shares of Common Stock, then (A) twenty-three (23) trading days prior to the applicable Installment Date (each such date

being a “Pre-Installment Date”), the Company shall deliver to the Investor(s) a number of shares of Common Stock (each

such quantity being a “Pre-Installment Share Amount”) equal to the Installment Amount being paid in shares of Common

Stock divided by the lower of (i) the then prevailing Conversion Price or (ii) the Market Price (as defined below) determined on

the applicable Pre-Installment Date, and (B) on the applicable Installment Date, the Company shall deliver to the Investor a number

of shares of Common Stock equal to (a) the amount of the applicable Installment Amount being paid in shares of Common Stock divided

by the lower of (i) the then prevailing Conversion Price or (ii) the Market Price determined on the applicable Installment Date,

less (b) any applicable Pre-Installment Share Amount delivered pursuant to the applicable Installment Amount.

“Market Price”

means 85% of the arithmetic average of the five (5) lowest daily Weighted Average Prices of the Common Stock during the twenty

(20) consecutive Trading Day period ending on the Trading Day immediately preceding the applicable date of determination, subject

to adjustments for any stock split, stock dividend, stock combination, reclassification or other similar transaction during such

measuring period.

With respect to any given date of determination,

the “Equity Conditions”

(i) on each day during the period

beginning thirty (30) Trading Days immediately prior to the applicable date of determination and ending on and including the applicable

date of determination (the “Equity Conditions Measuring Period”), the shares of Common Stock issuable pursuant to the

2020 Convertible Notes and upon exercise of the Warrants (the “Underlying Securities”) shall be registered for resale

pursuant to one or more registration statements filed with the SEC or eligible for sale pursuant to Rule 144 promulgated under

the Securities Act (or a successor rule thereto) (collectively, “Rule 144”);

(ii) on each day during the Equity

Conditions Measuring Period, the Common Stock is designated for quotation on the Nasdaq Capital Market (the “Principal Market”)

or any other eligible market and shall not have been suspended from trading on such exchange or market nor shall delisting or suspension

by such exchange or market been threatened (with delisting reasonably likely to occur after giving effect to all applicable notice,

appeal, cure, compliance and hearing periods), commenced or pending either (A) in writing by such exchange or market or (B) by

falling below the then effective minimum listing maintenance requirements of such exchange or market;

(iii) during the Equity Conditions

Measuring Period, the Company shall have delivered shares of Common Stock pursuant to the terms of the 2020 Convertible Notes and

shares of Common Stock upon exercise of the Warrants to the holders on a timely basis as set forth in the 2020 Convertible Notes

and the Warrants, respectively;

(iv) the shares of Common Stock

issuable upon conversion of the Conversion Amount that is subject to the applicable Company Conversion or Company Optional Redemption,

as applicable, requiring the satisfaction of the Equity Conditions may be issued in full without violating the 2020 Convertible

Notes and the rules or regulations of the Principal Market or any other applicable eligible market;

(v) during the Equity Conditions

Measuring Period, the Company shall not have failed to timely make any payments within five (5) business days of when such payment

is due pursuant to any transaction document;

(vi) during the Equity Conditions

Measuring Period, there shall not have occurred either (A) the public announcement of a pending, proposed or intended Fundamental

Transaction (as defined in the 2020 Convertible Notes) which has not been abandoned, terminated or consummated, (B) an Event of

Default or (C) an event that with the passage of time or giving of notice would constitute an Event of Default or Triggering Event

(as defined in the 2020 Convertible Notes);

(vii) the Company shall have

no knowledge of any fact that would cause (x) one or more registration statements not to be effective and available for the resale

of all remaining shares of Common Stock issuable pursuant to the terms of the 2020 Convertible Notes and upon exercise of the Warrants

(in each case, without giving effect to any limitation on conversion or exercise set forth herein and therein), including the shares

of Common Stock issuable upon conversion of the Conversion Amount that is subject to the applicable Company Conversion or Company

Optional Redemption, as applicable, requiring the satisfaction of the Equity Conditions, or (y) any shares of Common Stock issuable

pursuant to the terms of the 2020 Convertible Notes and upon exercise of the Warrants (in each case, without giving effect to any

limitation on conversion or exercise set forth herein and therein), including the shares of Common Stock issuable upon conversion

of the Conversion Amount that is subject to the applicable Company Conversion or Company Optional Redemption, as applicable, requiring

the satisfaction of the Equity Conditions, not to be eligible for sale without restriction pursuant to Rule 144 (other than with

respect to Rule 144(i)) (or any successor thereto) promulgated under the Securities Act, provided that no Public Information Failure

has occurred, and any applicable state securities laws;

(viii) during the Equity Conditions

Measuring Period, the Company otherwise shall have been in compliance with and shall not have breached any provision, covenant,

representation or warranty of any transaction document in any material respect (other than representations or warranties subject

to material adverse effect or materiality, which may not be breached in any respect);

(ix) during the Equity Conditions

Measuring Period, the Investor shall not have been in possession of any material, nonpublic information received from the Company,

any subsidiary or its respective agent or affiliates;

(x) the shares of Common Stock

issuable upon conversion of the Conversion Amount that is subject to the applicable Company Conversion or Company Optional Redemption,

as applicable, requiring the satisfaction of the Equity Conditions are duly authorized and listed and eligible for trading without

restriction on an eligible market;

(xi) the average daily dollar

trading volume of the Common Stock as reported by Bloomberg during the twenty (20) Trading Days immediately prior to the applicable

date of determination shall be at least $100,000;

(xii) on each Trading Day during

the Equity Conditions Measuring Period, the closing price of the Common Stock equals or exceeds $0.05 (as adjusted for any stock

dividend, stock split, stock combination, reclassification or similar transaction occurring after March 11, 2020).

Any holder of a Note may, by notice to

the Company, accelerate future installment payments to any applicable Installment Date, in which case the Company will deliver

shares of Common Stock for the conversion of such accelerated payments (the “Accelerated Amount”), regardless of whether

the Installment Amount scheduled to be paid on such applicable Installment Date shall be paid in cash, shares of Common Stock or

a combination thereof.

In the event that the Investor delivers one or more such notices of acceleration, the aggregated Accelerated

Amount shall not be greater than six (6) times such Investor’s pro rata amount.

If the Company fails to redeem the Company

Redemption Amount on the applicable Installment Date by payment of the Company Installment Redemption Price on such date, then

at the option of the Investor designated in writing to the Company (any such designation shall be deemed a “Conversion Notice”

pursuant to the 2020 Convertible Notes), (i) the Investor shall have the rights set forth in the 2020 Convertible Notes as if the

Company failed to pay the applicable Company Installment Redemption Price and all other rights as an Investor in the 2020 Convertible

Notes (including, without limitation, such failure constituting an Event of Default described in the 2020 Convertible Notes) and

(ii) the Investor may require the Company to convert all or any part of the Company Redemption Amount at the Company Conversion

Price as in effect on the applicable Installment Date.

Subject to certain beneficial ownership

limitations, until the Company Installment Redemption Price is paid in full, the Company Redemption Amount may be converted, in

whole or in part, by the Investor into Common Stock.

In the event the Investor elects to convert all or any portion of the Company

Redemption Amount prior to the applicable Installment Date as set forth in the immediately preceding sentence, the Company Redemption

Amount so converted shall be deducted in reverse order starting from the final Installment Amount to be paid on the final Installment

Date, unless the Investor otherwise indicates and allocates among any Installment Dates in the applicable Conversion Notice.

Optional Redemption at Company’s

At any time after the date of issuance

of the 2020 Convertible Notes, the Company will have the right to redeem a portion or all of the 2020 Convertible Notes in cash

at a price equal to (i) so long as there has been no Equity Conditions Failure during the period beginning on the date on which

the Company provided notice of such redemption through the trading day immediately before the date the Company makes the entire

redemption payment, 110% of the Conversion Amount to be redeemed and (ii) if an Equity Conditions Failure occurs (which is not

waived in writing by the holder) at any time during the period beginning on the date on which the Company provided notice of such

redemption through the trading day immediately before the date the Company makes the entire redemption payment, the greater of

(x) 125% of the Conversion Amount to be redeemed and (y) the product of (A) the Conversion Amount being redeemed and (B) the quotient

determined by dividing (I) the greatest closing price of the Common Stock on any trading day during the period commencing on the

date immediately preceding the date on which the Company provided notice of such redemption and ending on the trading day immediately

before the date the Company makes the entire redemption payment, by (II) the lowest Conversion Price in effect during such period.

Conversion of the 2020 Convertible Notes

Each Note is convertible, at the option

of the Note holder, into shares of Common Stock at an initial conversion price of $1.375, subject to adjustment as provided in

the 2020 Convertible Notes;

provided, however, upon receipt of Stockholder Approval, the conversion price shall be $0.21, subject

to adjustment as provided in the 2020 Convertible Notes.

On or after the date Stockholder Approval

is obtained, if the Company issues or sells, or the Company publicly announces the issuance or sale of, any shares of Common Stock,

or convertible securities or options issuable or exchangeable into Common Stock (a “New Issuance”), under which such

Common Stock is sold for a consideration per share less than the Conversion Price then in effect, the conversion price of the 2020

Convertible Notes will be adjusted to the New Issuance price in accordance with the formulas provided in the 2020 Convertible Notes.

Any such adjustment will not apply with respect to the issuance of Excluded Securities (as defined in the 2020 Convertible Notes).

Upon Stockholder Approval, the conversion price may be further reduced to any amount and for any period of time deemed appropriate

by the board of directors of the Company.

reduced to any amount and for any period of time deemed appropriate by the board of directors of the Company (the “Board

of Directors”), (2) the exercise price of the Warrants shall be immediately reduced to $0.21 per share and may be further

reduced to any amount and for any period of time deemed appropriate by the Board of Directors, (3) the 2020 Convertible Notes and

Warrants shall each have full ratchet anti-dilution protection for subsequent financings (subject to certain exceptions), (4) existing

warrant holders that are participating in the Financing (representing warrants to purchase an aggregate of 8,715,229 shares of

Company Common Stock) will have their existing warrants’

exercise prices reduced to $0.21 and (5) the investors shall have

a most favored nations right which provides that if the Company enters into a subsequent financing, then the Investors (together

with their affiliates) at their sole discretion shall have the ability to exchange their 2020 Convertible Notes on a $1 for $1

basis into securities issued in the new transaction.

Additionally, in the event that any warrants or options (or any similar security

or right) issued in a subsequent financing include any terms more favorable to the holders thereof (less favorable to the Company)

than the terms of the Warrants, the Warrants shall be automatically amended to include such more favorable terms.

On March 16, 2020, the holders of

the August 2018 Secured Convertible Notes were repaid in full including any outstanding interest.

On May 15, 2020, the Company received

the necessary Stockholder Approval in connection with the Nasdaq proposals described above.

As a result, the Conversion Price of

the 2020 Convertible Notes and the exercise price of the Warrants were each reduced to $0.21.

In addition, existing warrant holders

that participated in the Financing (representing warrants to purchase an aggregate of 9,172,463 shares of Common Stock) also had

their existing warrants’

exercise prices reduced to $0.21.

March 2020 Securities Purchase Agreement

On March 22, 2020, we entered into a Securities

Purchase Agreement (the “Purchase Agreement”) with certain long standing investors (the “Investors”), pursuant

to which we agreed to issue and sell, in a registered direct offering by the Company directly to the Investors (the “Registered

Offering”), an aggregate of 4,000,000 shares Common Stock at an offering price of $0.2568 per share for gross proceeds of

approximately $1.0 million before deducting offering expenses.

Series A Convertible Preferred Stock

On January 15, 2020, 666 shares

of the Company’s Series A Convertible Preferred Stock were converted into an aggregate of 3,171,428 shares of the Company’s

Common Stock.

January 2018 Private Placement

On January 8, 2018, we entered into a securities

purchase agreement with certain accredited investors pursuant to which we sold approximately $1,596,340 net, of common stock and

warrants to such investors (the “January 2018 Private Placement”).

We issued and sold warrants to purchase 592,000

shares of common stock at an exercise price of $3.00 per share.

In addition, we issued to Chardan Capital Markets, LLC, as placement

agent, warrants to purchase 93,000 shares of common stock at an exercise price of $3.00 per share.

August Securities Purchase Agreement

On August 17, 2018, we entered into a securities

purchase agreement (the “August 2018 Purchase Agreement”) with certain investors, pursuant to which we agreed to sell

(i) an aggregate principal amount of $4.50 million in secured convertible notes, convertible into shares of our common stock, at

an initial conversion price of $2.50 per share (the “Secured Convertible Notes”) and (ii) warrants to purchase 1,800,000

shares of our common stock at an exercise price of $3.00 per share.

We received $4,186,054 in net proceeds from the offering.

Production Loans

On September 28, 2018, Llama Productions

LLC, a California limited liability company (“Llama”) a wholly-owned subsidiary of the Company, entered into a Loan

and Security Agreement (the “Loan and Security Agreement”) with Bank Leumi USA (the “Lender”), pursuant

to which the Lender agreed to make a secured loan in an aggregate amount not to exceed $4,231,989 to Llama (the “Loan”).

The proceeds of the Loan were or will be used to pay the majority of the expenses of producing, completing and delivering two 22-minute

episodes and sixteen 11-minute episodes of the second season of the animated series Llama Llama to be initially

exhibited on Netflix.

In addition, on September 28, 2018, Llama

and Lender entered into Amendment No.

2 to Loan and Security Agreement, effective as of August 27, 2018, by and between Llama and

the Lender (the “Amendment”).

Pursuant to the Amendment, the original Loan and Security Agreement, dated as of August

5, 2016 and amended as of November 7, 2017 (the “Original Loan and Security Agreement”), was amended to (i) reduce

the loan commitment thereunder to $1,768,010, which is a reduction of $3,075,406 from the original loan commitment under the Original

Loan and Security Agreement and (ii) include the Llama Llama season two obligations under the Loan and Security Agreement as obligations

under the Original Loan and Security Agreement.

The Maturity Date of the Prime Rate Loan facility and LIBOR

Loan facility is March 31, 2021.

February 2019 Sale of Common Stock and Warrants

On February 19, 2019, we entered into a

securities purchase agreement with a certain accredited investor pursuant to which we sold 945,894 shares of common stock and warrants

to purchase up to 945,894 shares of our common stock, or the registered warrants, to such investor (the “February 2019 Offering”).

We received $1,757,552 of net proceeds from this offering.

Each share of common stock was accompanied by a registered warrant to

purchase one share of common stock at an exercise price of $2.12.

Each share of common stock and accompanying registered warrant

were sold at a combined purchase price of $2.12.

The shares of common stock and registered warrants were purchased together and

were issued separately and were immediately separable upon issuance.

In a concurrent private placement, we also sold to the purchaser

in the February 2019 Offering, unregistered warrants to purchase up to an additional 945,894 shares of our common stock.

February Amendment, Waiver and Consent

In connection with the February 2019 Offering

and concurrent private placement, we entered into an amendment, waiver and consent agreement, or the “Amendment, Waiver and

Consent Agreement,”

with certain holders of our 10% Secured Convertible Notes due August 20, 2019, which were issued pursuant

a securities purchase agreement, dated August 17, 2018, by and among the Company and the purchasers identified on the signature

pages thereto, or the notes purchase agreement.

Pursuant to the Amendment, Waiver and Consent Agreement, such holders agreed to

amend the notes purchase agreement, waive any applicable rights and remedies under the notes purchase agreement, and consent to

the February 2019 Offering and concurrent private placement.

In consideration for such Amendment, Waiver and Consent Agreement,

we agreed to issue all holders of our 10% Secured Convertible Notes due August 20, 2019 warrants to purchase up to an aggregate

amount 1,800,000 shares of our comment stock.

Such warrants have an exercise price of $2.55 per share, became exercisable commencing

six months and one day from the date of issuance and will expire five (5) years from the date of issuance.

July Amendment, Waiver and Consent

On July 22, 2019, in connection with a

proposed public offering of Common Stock (the “August 2019 Offering”), we entered into an amendment, waiver and consent

agreement (the “July Amendment, Waiver and Consent”) with certain holders constituting (i) a majority-in-interest of

the holders of our Secured Convertible Notes and (ii) 51% in interest of the shares of Common Stock issued pursuant to a securities

purchase agreement, dated as of January 8, 2018, by and among the Company and the purchasers identified on the signature pages

thereto (the “January 2018 Purchase Agreement”).

Pursuant to the July Amendment, Waiver and Consent, such holders agreed

to amend the August 2018 Purchase Agreement, the January 2018 Purchase Agreement and the Secured Convertible Notes, waive any applicable

rights and remedies under each of the August 2018 Purchase Agreement and the January 2018 Purchase Agreement, and consent to the

August 2019 Offering in consideration for (i) a reduction in the conversion price of the Secured Convertible Notes from $2.50 per

share to an amount equal to $1.515 and (ii) the issuance to the August 2018 Purchasers of new warrants to purchase the same number

of shares of Common Stock that were issued to each August 2018 Purchaser pursuant to the August 2018 Purchase Agreement (for an

aggregate of 1,800,000 shares of Common Stock to all August 2018 Purchasers) at an exercise price per share equal to $1.14 and

became exercisable commencing six (6) months and one day from the date of issuance and will expire five (5) years from the date

Series A Convertible Preferred Stock

Price Adjustments

In connection with the issuance of the

warrants described above, the conversion price of our outstanding Series A Convertible Preferred Stock was reduced from $2.12 to

On September 18, 2019, we entered into

a private transaction (the “Private Transaction”) pursuant to a Warrant Exercise Agreement (the “Agreement”)

with the holder of our existing warrants (the “Original Warrants”).

The Original Warrants were originally issued on

February 19, 2019, to purchase an aggregate of 945,894 shares of Common Stock, at an exercise price of $2.12 per share and were

to expire on February 19, 2020.

Pursuant to the Agreement, the holder of

the Original Warrants and the Company agreed that such Original Warrant holder would exercise its Original Warrants in full and

the Company would amend the Original Warrants to reduce the exercise price thereof to $0.76 (the “Amended Exercise Price”).

We received $718,879 from the exercise of the Original Warrants before paying the placement agent fee of $50,321.

The induced exercise

resulted in the Company recognizing and recording an “imputed dividend”

As a result, the conversion price

of the Series A Convertible Preferred Stock decreased to $0.76.

On November 20, 2019, we entered into a

settlement agreement and release (“Settlement Agreement”) with certain holders of Series A Convertible Preferred Stock

of the Company (each, a “Preferred Holder”

and collectively, the “Preferred Holders”) constituting 58%

of the outstanding Series A Preferred Stock in connection with a dispute that arose between the parties with respect to certain

rights under the Certificate of Designations, Preferences and Rights of the 0% Series A Convertible Preferred Stock of the Company

filed with the Nevada Secretary of State on May 14, 2014 (the “Certificate of Designations”).

Pursuant to the Settlement Agreement, we

agreed to adjust the conversion price of the Series A Convertible Preferred Stock to $0.21 and the parties agreed to terminate

and deem null and void that certain Securities Purchase Agreement, dated as of May 14, 2014, by and among the Preferred Holders

and the other parties signatories thereto, with respect to the Preferred Holders.

The Preferred Holders, constituting the holders

of at least a majority of the outstanding Preferred Shares (the “Required Holders”), agreed and consented to an amendment

and restatement of the Certificate of Designations.

The parties also agreed to customary releases and a covenant not to sue as

further contained in the Settlement Agreement.

Stock Purchase Agreement

October 2, 2019, the Company and Andy Heyward, our Chairman and Chief Executive Officer, entered into a stock purchase agreement

(the “Stock Purchase Agreement”) pursuant to which Mr.

Heyward agreed to purchase 1,000,000 shares of Common Stock,

in a private placement for an aggregate purchase price of $760,000, or $0.76 per share (the “Private Placement”).

Private Placement closed on October 3, 2019.

Stock Issued For Services

On October 18, 2019, in exchange for freelance

animation services, the Company issued a total of 534,247 shares of Common Stock to a vendor.

Purchase Agreement (the “Purchase Agreement”) with certain long standing investors (the “March 22 nd

Investors”), pursuant to which we agreed to issue and sell, in a registered direct offering by the Company directly to the

March 22 nd Investors, an aggregate of 4,000,000 shares of Common Stock, at an offering price of $0.2568 per share for

gross proceeds of approximately $1.0 million before deducting offering expenses.

May 2020 Securities Purchase Agreements

On May 7, 2020, the Company entered into

a Securities Purchase Agreement with certain long standing investors (the “May 7 th Investors”), pursuant

to which the Company agreed to issue and sell, in a registered direct offering by the Company directly to the May 7 th

Investors (the “Registered Offering”), an aggregate of 8,000,000 shares Common Stock at an offering price of $0.35

per share for gross proceeds of $2.8 million before deducting the placement agent fees and offering expenses.

The Registered Offering

closed on May 8, 2020.

On May 8, 2020, the Company entered into

a Securities Purchase Agreement with certain long standing investors (the “May 8 th Investors”), pursuant

to which the Company agreed to issue and sell, in a registered direct offering by the Company directly to the May 8 th

Investors (the “Registered Offering”), an aggregate of 12,000,000 shares Common Stock at an offering price of $0.454

per share for gross proceeds of $5.448 million before deducting the placement agent fees and offering expenses.

The Registered

Offering closed on May 12, 2020.

On May 18, 2020, we entered into a Securities

Purchase Agreement with certain long standing investors (the “May 18 th Investors”), pursuant to which

we agreed to issue and sell, in a registered direct offering by the Company directly to the May 18 th Investors,

an aggregate of 7,500,000 shares of our Common Stock, at an offering price of $1.20 per share for gross proceeds of approximately

$9.0 million before deducting offering expenses.

On May 28, 2020, we entered into a Securities

Purchase Agreement with certain long standing investors (the “May 28 th Investors”), pursuant to which

we agreed to issue and sell, in a registered direct offering by the Company directly to the May 28 th Investors,

an aggregate of 20,000,000 shares of our Common Stock, at an offering price of $1.50 per share for gross proceeds of approximately

$30.0 million before deducting offering expenses.

Warrant Exercises

On January 22, 2020, the Company entered

into a private transaction (the “Private Transaction”) pursuant to a Warrant Exercise Agreement (the “Agreement”)

with the holder of the Company’s existing warrants (the “Original Warrants”).

The Original Warrants were originally

issued on October 3, 2017, to purchase an aggregate of 500,000 shares of Common Stock (as defined below) at an exercise price of

$3.90 per share and were to expire in October 2022.Pursuant to the Agreement, the holder of the Original Warrants and the Company

agreed that such Original Warrant holder would exercise its Original Warrants in full and the Company would amend the Original

Warrants to reduce the exercise price thereof to $0.34 (the average closing price (as reflected on Nasdaq.com) of the Common Stock

(as defined below) for the five trading days immediately preceding the signing of the Agreement) (the “Amended Exercise Price”).

The Company received $170,000 from the exercise of the Original Warrants.

On May 15, 2020 stockholders of the Company

approved the reduction in warrants exercise price for the 2020 Convertible Notes holders to $0.21.

Between May 15 and June 19, 2020, the Company

received $5,649,319, net of expenses, from the exercise of 29,000,526 warrants at $0.21 per share.

Certain other warrant holders

exercised 41,508,189, warrants on a cashless basis, resulting in the issuance of 37,449,140 shares of Common Stock.

Between May 15 and June 19, 2020,

the Company received $5,649,319, net of expenses, from the exercise of 29,666,283 warrants at an exercise price of $0.21 per share.

On July 21,2020, the Company received $50,011,

net of expenses, from the exercise of 16,670 warrants at an exercise price of $3.30 per share.

On December 14, 2020 a warrant holder exercised

595,238 warrants on a cashless basis, resulting in the issuance of 532,424 shares of Common Stock.

October 2020 Securities Purchase Agreement

On October 28, 2020, the Company entered

into a Securities Purchase Agreement (the “Purchase Agreement”) with a certain investor named therein (the “Investor”),

pursuant to which the Company agreed to issue and sell, in a registered direct offering by the Company directly to the Investor

(the “Registered Offering”), an aggregate of 663,158 shares (the “Shares”) of Common Stock, at an offering

price of $0.76 per share for gross proceeds of approximately $504,000 before deducting the placement agent fee and related offering

The Shares were offered by the Company

pursuant to a registration statement on Form S-3 (File No.

333-214805), which was filed with the Securities and Exchange Commission

(the “Commission”) on November 25, 2016 and was declared effective by the Commission on December 19, 2016 (the “Registration

Statement”).

In a concurrent private placement (the

“Private Placement”

and together with the Registered Offering, the “Offerings”), the Company agreed to

issue to the Investor who participated in the Registered Offering warrants (the “Warrants”

and collectively with the

Shares, the “Securities”) exercisable for one share of Common Stock for an aggregate of 477,474 shares of Common Stock

at an exercise price of $0.76 per share.

Each Warrant will be immediately exercisable on the date of its issuance and will expire

five years from the date it becomes exercisable.

Subject to limited exceptions, a holder of a Warrant will not have the right to

exercise any portion of its warrants if the holder, together with its affiliates, would beneficially own in excess of 4.99% of

the number of shares of Common Stock outstanding immediately after giving effect to such exercise (the “Beneficial Ownership

Limitation”);

provided, however, that upon 61 days’

prior notice to the Company, the holder may increase or decrease

the Beneficial Ownership Limitation, provided further that in no event shall the Beneficial Ownership Limitation exceed 9.99%.

December Warrant Exercise Agreement

On December 16, 2019, the Company entered

into Warrant Exercise Agreements (the “Exercise Agreements”) with certain of the holders of Existing Warrants (defined

herein) to purchase an aggregate of 3,646,135 shares of Common Stock (the “Exercising Holders”).

Pursuant to the Exercise

Agreements, the Exercising Holders and the Company agreed that, subject to any applicable beneficial ownership limitations, the

Exercising Holders would exercise their Existing Warrants (the “Investor Warrants”) for shares of Common Stock underlying

such Existing Warrants (the “Exercised Shares”) at a reduced exercise price of $0.21 per share of Common Stock.

order to induce the Exercising Holders to cash exercise the Investor Warrants, the Exercise Agreements provided for the issuance

of new warrants to purchase up to an aggregate of approximately 3,646,135 shares of Common Stock (the “New Warrants”),

with such New Warrants issued in an amount equal to the number of the Exercised Shares underlying any Investor Warrants.

used a portion of these cash proceeds towards payment of certain Secured Convertible Notes.

into the Purchase Agreement with the Investors pursuant to which the Company agreed to issue and sell, in a registered director

offering by the Company directly to the certain Investors, an aggregate of 37,400,000 shares of our Common Stock and warrants to

purchase up to 37,400,000 shares of our Common Stock, at an offering price of $1.55 per fixed combination of one share of Common

Stock and a warrant to purchase one share of Common Stock for gross proceeds of approximately $57.9 million before deducting offering

Coronavirus (COVID-19)

With respect to the ongoing and evolving coronavirus

(“COVID-19”) outbreak, which was designated as a pandemic by the World Health Organization on March 11, 2020, COVID-19 has

caused substantial disruption in international and U.S.

economies and markets.

COVID-19 has had an adverse impact on the entertainment

industry and, if repercussions of COVID-19 are prolonged, could have a significant adverse impact on our business, which could be material.

The majority of the Company’s employees have been working remotely from home, with only a few individuals monitoring the office

We have not experienced any disruption in our supply chain, nor have we experienced any negative impact from our animation

production partners.

With regard to content distribution, we have observed demand increases for streaming entertainment services in 2020.

In terms of our consumer products business, we are starting to see some negative impact from COVID-19 as consumer activity decelerates

and across the world.

Global supply chain issues had a negative impact on the timing of certain toy releases.

If the COVID-19

outbreak is prolonged, we will see a negative impact on our revenues.

The Company’s management cannot at

this point estimate the impact of COVID-19 on its business and no provision for COVID-19 is reflected in the accompanying financial

We will continue to actively monitor the situation and may take further actions that alter our business operations

as may be required by federal, state, local or foreign authorities, or that we determine are in the best interests of our employees,

customers, partners and stockholders.

It is not clear what the potential effects any such alterations or modifications may have

on our business, including the effects on our customers, suppliers or vendors, or on our financial results.

Results of Operations

2 unchanged sentences

December 31, 2020 and 2019 are below.

Twelve Months Ended

December 31, 2020

December 31, 2019

Licensing & Royalties

3 unchanged sentences

Total Revenue

$ (3,425,772 )

Licensing and royalty revenue include items

for which we license the rights to our copyrights and trademarks of our brands and those of the brands for which we act as a licensing

During the year ended December 31, 2019 compared to December 31, 2018, this category increased $414,820, or 92%, primarily

due to increases revenues generated from Rainbow Rangers and Llama Llama properties in 2019.

During the year ended December 31, 2020 compared to December 31, 2019, this category decreased $102,373, or 12%, primarily

due to decreases revenues generated from Rainbow Rangers and Llama Llama properties in 2019.

Television & Home Entertainment revenue

4 unchanged sentences

of the content to the customer.

During the twelve months ended December 31, 2019 compared to the twelve months ended December 31,

2018, Television & Home Entertainment revenue increased $4,493,363 or 1,388%, primarily due to the revenue generated in 2019

During the year ended December 31, 2020 compared to the year ended December 31, 2019, Television

& Home Entertainment revenue decreased $3,352,437 or 70%.

This decrease was primarily due to the revenue generated in 2019

from the delivery of the Llama Llama Season 2 to Netflix and Rainbow Rangers Season 1 to Nickelodeon and Shanghai

Senyu Media in China.

The revenue generated in 2020 was due to the delivery of Rainbow Rangers Season 2 to Nickelodeon.

Advertising sales are generated on the

Kid Genius Cartoon Channel in the form of either flat rate promotions or advertising impressions served.

Advertising sales increased

by $5,660, or 3%, during the twelve months ended December 31, 2019 compared to the twelve months ended December 31, 2018 primarily

due to the addition of new distribution partners, increased advertising impressions served and additional ad campaigns in 2019.

This was a result of our efforts to continue to grow this area of the business through new distribution channels and with new partners.

Kartoon Channel in the form of either flat rate promotions or advertising impressions served.

Advertising sales increased by $29,476,

or 13%, during the year ended December 31, 2020 compared to the year ended December 31, 2019 primarily due to the addition of new

distribution partners, increased advertising impressions served and additional ad campaigns in 2020.

This was a result of our efforts

to continue to grow this area of the business through new distribution channels and with new partners.

Product sales represent physical products

1 unchanged sentence

sold by us directly.

During the twelve months ended December 31, 2019 compared to the twelve months ended December 31, 2018, product

sales associated with Warren Buffett’s Secret Millionaire Club increased by $604, or 26%, due to additional Warren Buffet

doll sales in 2019.

Twelve Months Ended

During the year ended December 31, 2020 compared to the year ended December 31, 2019, product sales associated

with Warren Buffett’s Secret Millionaire Club decreased by $438, or 15%.

December 31, 2020

December 31, 2019

Marketing and Sales

1 unchanged sentence

General and Administrative

Impairment Loss

Interest Expense

Total Expenses

Marketing and sales expenses decreased

$7,922, or 1%, for the twelve months ended December 31, 2019 compared to the twelve months ended December 31, 2018, primarily due

to a slight decrease in marketing and advertising expenses to promote the Rainbow Rangers and Llama Llama properties.

Marketing and sales expenses increased

$87,390, or 12%, for the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to a slight decrease

in marketing and advertising expenses to promote the Rainbow Rangers and Llama Llama properties.

Direct operating costs include costs of

3 unchanged sentences

Direct operating

costs for the twelve months ended December 31, 2019 increased $3,031,775, or 197%, compared to the twelve months ended December

During the twelve months ended December 31, 2019, we recorded film and television cost amortization expense of $2,230,024

and participation expense of $1,690,936, compared to the twelve months ended December 31, 2018, where we recorded expenses of $1,079,723

and $397,988, respectively.

The increases in direct operating costs in the year ended December 31, 2019 compared to the prior year

reflect increases in film amortization expense, participation expense and dubbing costs related to the delivery of Llama Llama

to Netflix and the delivery of Rainbow Rangers to Nickelodeon in 2019.

costs for the year ended December 31, 2020 decreased $2,444,539, or 54%, compared to the year ended December 31, 2019.

year ended December 31, 2020, we recorded film and television cost amortization expense of $979,598 and participation expense of

$1,043,214, compared to the year ended December 31, 2019, where we recorded expenses of $2,230,024 and $1,690,936, respectively.

The decreases in direct operating costs in the year ended December 31, 2020 compared to the prior year reflect decreases in film

amortization expense, participation expense and dubbing costs related to the delivery of Llama Llama to Netflix and the

delivery of Rainbow Rangers to Nickelodeon in 2019.

General and administrative expenses consist

1 unchanged sentence

amortization as well as other professional fees related to finance, accounting, legal and investor relations.

General and administrative

costs for twelve months ended December 31, 2019 increased $2,132,899, or 43%, compared to the same period in 2018.

This increase

is primarily due to an increase of $769,658 in professional fees, $598,788 in increased salaries and wages, $396,788 in increased

rent expense, and $200,847 in increase stock based compensation.

Fluctuations in other general and administrative expenses comprise

the balance of the variance.

In connection with the Merger in 2013,

the Company acquired $1,740,000 of Identifiable Artistic-Related Assets.

These assets, related to certain properties owned by A

Squared and assumed by the Company, were valued using an independent firm.

Based on certain legal, regulatory, contractual, and

economic factors, the Company has deemed these assets to be indefinite-lived.

Hence, pursuant to FASB ASC 350-30, these assets

are not subject to amortization and are tested annually for impairment.

As of December 31, 2018, the Company performed an analysis

and determined the Identifiable Artistic-Related Intangible Assets no longer have value and as a result has recognized $1,740,000

of impairment expense related to the Identifiable Artistic-Related Intangible Assets.

No additional impairment expense was recorded.

Interest expense for the twelve months

ended December 31, 2019 decreased $212,171, compared to the same period in 2018.

This decrease is due to the amortization of the

debt issue costs, the amortization of the debt discount related to the $4,500,000 of Senior Convertible, and interest expense in

General and administrative costs for year

ended December 31, 2020 increased $10,307,243, or 145%, compared to the same period in 2019.

This increase is primarily due to

an increase of $8,745,186 in stock based compensation, $648,493 in professional fees, and $680,779 in increased salaries and wages.

Fluctuations in other general and administrative expenses comprise the balance of the variance.

Interest expense for the year ended December

31, 2020 increased $372,652, compared to the same period in 2019.

The increase in interest expense was due to the costs associated

with the Senior Convertible Notes exceeding the face amount of the notes.

The excess was recorded as interest expense.

Liquidity and Capital Resources

1 unchanged sentence

As of December 31, 2020, we had current

assets of $4,646,249, including cash, cash equivalents, and restricted cash of $305,121, and current liabilities of $8,296,385,

resulting in negative working capital of $3,650,136, compared to a working capital of $971,663 as of December 31, 2018.

Increases in working capital were the result of three transactions:

January 2018 Private Placement

On January 8, 2018, the Company entered

into the January 2018 Private Placement.

We issued and sold warrants to purchase 592,000 shares of common stock at an exercise

price of $3.00 per share.

In addition, we issued to Chardan Capital Markets, LLC, as placement agent, warrants to purchase 93,000

shares of common stock at an exercise price of $3.00 per share.

The Company received $1,596,340 in net proceeds from this transaction.

Securities Purchase Agreement

On August 17, 2018, the Company entered

into the August 2018 Purchase Agreement with certain investors, pursuant to which the Company agreed to sell (i) the Secured Convertible

Notes and (ii) the Warrants.

We received $4,186,054 in net proceeds from the offering.

Production Loans

On September 28, 2018, Llama, a wholly-owned

subsidiary of the Company, entered into the Loan and Security Agreement with the Lender, pursuant to which the Lender agreed to

make the Loan, not to exceed $4,231,989, to Llama.

The proceeds of the Loan were or will be used to pay the majority of the expenses

of producing, completing and delivering two 22-minute episodes and sixteen 11-minute episodes of the second season of the animated

series Llama Llama to be initially exhibited on Netflix.

In addition, on September 28, 2018, Llama

and Lender entered into the Amendment to the Loan and Security Agreement.

Pursuant to the Amendment, the Original Loan and Security

Agreement was amended to (i) reduce the loan commitment thereunder to $1,768,010, which is a reduction of $3,075,406 from the original

loan commitment under the Original Loan and Security Agreement and (ii) include the Llama Llama season two obligations under the

Loan and Security Agreement as obligations under the Original Loan and Security Agreement.

The Maturity Date of the Prime Rate Loan facility and LIBOR

Loan facility is March 31, 2021.

Decreases in working capital were:

Production costs for Rainbow Rangers Season 2 of $2,686,904.

Repayment of the Secured Convertible Notes including interest

totaling $2,039,829.

An increase in General and Administrative expenses of $2,132,899

primarily resulting from an increase in salaries and wages, professional fees, rent expense and stock-based compensation expense.

assets of $108,566,089, including cash and cash equivalents of $100,456,324, and current liabilities of $7,178,906, resulting in

working capital of $101,387,183, compared to a negative working capital of $3,650,136 as of December 31, 2019.

Increases in working capital were primarily the result of the

increase in cash of $100,151,203 resulting from capital raises and warrant exercises and an increase in prepaid expenses of $6,608,554

resulting from the $500,000 cash payment, issuance of shares and warrants for prepayment of production and marketing services.

Decreases in working capital were primarily the result of the

repayment of the Secured Convertible Notes in the amount of $2,373,952, an increase in the warrant derivative liability of $1,197,068,

an increase in participations payable.

Comparison of Cash Flows for the Years

Ended December 31, 2020 and 2019

Our total cash, cash equivalents, and restricted

cash were $305,121 and $3,085,026 at December 31, 2019 and 2018, respectively.

Our total cash and cash equivalents were

$100,456,324 and $305,121 at December 31, 2020 and 2019, respectively.

Comparison of Cash Flows

Twelve Months Ended

December 31, 2020

3 unchanged sentences

$ (6,251,150 )

$ (1,593,565 )

Cash used in investing activities

Cash provided by financing activities

Decrease in cash

Increase (decrease) in cash

$ 100,151,203

$ (2,779,905 )

$ 102,931,108

During the year ended December 31, 2020,

our primary sources of cash from financing activities including the $2,517,552 in net sales of common stock, and $1,345,368 in

proceeds from warrant exchanges.

During the year ended December 31, 2018, our primary sources of cash were from the $1,596,340

raised from the January 2018 Private Placement, the issuance of $4,186,054 of senior secured notes (the “Senior Secured Notes”)

and the September Production Loans.

our primary sources of cash from financing activities included the $98,583,549 in net sales of common stock, $5,874,329 from warrant

exercises, $6,098,000 in net proceeds from Senior Secured Convertible Notes and $3,600,000 from the collection of the investor

During the year ended December 31, 2019, our primary sources of cash from financing activities included the $3,021,552 in

net sales of common stock, and $1,345,368 in proceeds from warrant exchanges.

Operating Activities

Cash used in operating activities for the

twelve months ended December 31, 2019 was $6,251,150 as compared to cash used in operating activities of $8,008,011 during the

prior period.

The decrease in cash used in operating activities is primarily due to a decrease in production costs, an increase

in accounts receivable and a loss on extinguishment of debt.

The decrease was partially offset by the increase in net loss for

2019 and by the impairment loss on intangible assets in 2018.

year ended December 31, 2020 was $7,844,715 as compared to cash used in operating activities of $6,251,150 during the prior period.

The increase in cash used in operating activities is primarily due to a decrease in accounts receivable and a loss on extinguishment

The decrease was partially offset by the increase in net loss for 2020 and by the impairment loss on intangible assets

The Company incurred a loss before income

taxes of $401,669,805 for the year ended December 31, 2020 compared to a loss before income taxes of $11,481,245 for the year ended

December 31, 2019.

The increase in the loss before income taxes is primarily the result of the $10,307,243 in general and administrative

expenses, the $210,713,281 increase in the warrant revaluation expense and the $171,835,729 in conversion option revaluation expense.

The Company plans to continue producing,

distributing, and marketing animated and live action programming for children.

This will require significant investments of capital.

The Company is looking to acquire accretive properties and other companies that could add additional broadcast outlets or content.

This too will require significant investments of capital.

Investing Activities

Cash used in investing activities for the

twelve months ended December 31, 2019 was $26,976 as compared to a use of $42,985 for the twelve months ended December 31, 2018.

Investing activities include the development of certain intangible assets and the purchase of furniture and equipment in 2019.

year ended December 31, 2020 was $1,403,190 as compared to a use of $26,976 for the year ended December 31, 2019.

Investing activities

include $1,000,000 investment in Stan Lee Universe LLC, $300,798 investment in Chizcomm and $102,392 for the development of certain

intangible assets and the purchase of furniture and equipment.

Investing activities in 2019 include the development of certain

intangible assets and the purchase of furniture and equipment.

Financing Activities

Cash generated from financing activities

for the twelve months ended December 31, 2019 was $3,498,221 as compared to $3,637,950 generated in the comparable period in 2018.

During the twelve months ended December 31, 2019, the sources of cash generated from financing activities were $2,517,552 in net

sales of common stock, and $1,345,368 in proceeds from warrant exchange, offset by $1,633,336 in repayment of the Senior Secured

During the twelve months ended December 31, 2018, the $1,596,341 in net proceeds from the warrant exchange and $4,186,054

in net proceeds from the issuance of the Senior Secured Notes.

The use of cash was the repayment of the production facility in

the amount of $2,144,445.

for the year ended December 31, 2020 was $109,399,108 as compared to $3,498,221 generated in the comparable period in 2019.

During the year ended December 31, 2020,

the sources of cash generated from financing activities were $98,583,549 in net sales of common stock, $1,345,368 from warrant

exercises and $913,541 of borrowings on the production loan, offset by repayments of $1,992,026 on the production loan.

During the year ended December 31, 2019,

the sources of cash generated from financing activities were $3,021,552 in net sales of common stock, $5,874,329 from warrant exercises,

$6,098,000 in proceeds from Senior Secured Convertible Notes, and $3,600,000 from the collection of the investor notes, offset

by $2,866,664 in repayment of the Senior Secured Notes and repayments of $1,992,020 on the production loan.

Capital Expenditures

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any material commitments for capital expenditures.

Critical Accounting Policies

Critical Accounting Policies and Estimates

Our accounting policies are described in

2 unchanged sentences

management believes involve significant judgments and estimates used in the preparation of its consolidated financial statements.

Principles of Consolidation

The accompanying consolidated financial

statements include the accounts of Genius Brands International, Inc., its wholly-owned subsidiaries A Squared and Llama Productions

as well as its interest in Stan Lee Comics, LLC (“Stan Lee Comics”).

All significant inter-company balances and transactions

have been eliminated in consolidation.

Goodwill and Intangible Assets

Goodwill represents the excess of purchase

price over the estimated fair value of net assets acquired in business combinations accounted for by the purchase method.

In accordance

with FASB ASC 350 Intangibles Goodwill and Other, goodwill and certain intangible assets are presumed to have indefinite useful

lives and are thus not amortized, but subject to an impairment test annually or more frequently if indicators of impairment arise.

We complete the annual goodwill and indefinite-lived intangible asset impairment tests at the end of each fiscal year.

for goodwill impairment, we are required to estimate the fair market value of each of our reporting units, of which we have one.

While we may use a variety of methods to estimate fair value for impairment testing, our primary method is discounted cash flows.

We estimate future cash flows and allocations of certain assets using estimates for future growth rates and our judgment regarding

the applicable discount rates.

Changes to our judgments and estimates could result in a significantly different estimate of the

fair market value of the reporting units, which could result in an impairment of goodwill or indefinite lived intangible assets

in future periods.

Goodwill represents the excess of purchase price over the estimated

fair value of net assets acquired in business combinations accounted for by the purchase method.

In accordance with FASB ASC 350

Intangibles Goodwill and Other, goodwill and certain intangible assets are presumed to have indefinite useful lives and are thus

not amortized, but subject to an impairment test annually or more frequently if indicators of impairment arise.

We complete the

annual goodwill and indefinite-lived intangible asset impairment tests at the end of each fiscal year.

In testing goodwill, we

initially use a qualitative approach and analyze relevant factors to determine if events and circumstances have affected the value

of the goodwill.

If the result of this qualitative analysis indicates that the value has been impaired, we then apply a quantitative

approach to calculate the difference between the goodwill’s recorded value and its fair value.

An impairment loss is recognized

to the extent that the recorded value exceeds its fair value.

Goodwill, in addition to being tested for impairment annually, is

tested for impairment at interim periods if an event occurs or circumstances change such that it is more likely than not that the

carrying amount of goodwill may be impaired.

For the year ended December 31, 2020, the Company performed a qualitative analysis

of the carrying value of goodwill.

Based on the results of our analysis, we concluded that there is no impairment to the goodwill

balance and no adjustment is necessary at this time.

Other intangible assets have been acquired,

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On January 1, 2018, the Company adopted

the new accounting standard ASC 606 (Topic 606), Revenue from Contracts with Customers and all the related amendments (“new

revenue standard”) using the modified retrospective method applied to those contracts which were not completed as of January

Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts

are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605, (Topic 605).

Accordingly, on January 1, 2018 the Company

recorded a cumulative effect adjustment to beginning accumulated deficit in the amount of $206,245.

The impact to our financial

statements for the year ended December 31, 2018, resulting from the adoption of Topic 606 as of January 1, 2018 was a reduction

of revenue in the amount of $188,734, and a corresponding reduction in costs in the amount of $57,269, from the amounts reported.

The amounts prior to adoption were not recognized pursuant to Topic 606 and would have been reported pursuant to Topic 605.

Changes to the opening balances in prepaid

and other assets, film and television costs, total assets, accrued expenses, deferred revenue and total liabilities resulting from

the adoption of the new guidance were as follows (thousands):

Prepaid and Other Assets

Film and Television Costs, net

Participations Payable

Deferred Revenue

Total liabilities

The Company performed its analysis of its

existing revenue contracts and has completed its new revenue accounting policy documentation under the new standard.

has identified the following six material and distinct performance obligations:

License rights to exploit Functional Intellectual Property (Functional Intellectual Property or “functional IP”

is defined as intellectual property that has significant standalone functionality, such as the ability be played or aired.

Functional intellectual property derives a substantial portion of its utility from its significant standalone functionality.)

License rights to exploit Symbolic Intellectual Property (Symbolic Intellectual Property or “symbolic IP”

is intellectual property that is not functional as it does not have significant standalone use and substantially all of the utility of symbolic IP is derived from its association with the entity’s past or ongoing activities, including its ordinary business activities, such as the Company’s licensing and merchandising programs associated with its animated content.)

Options to renew or extend a contract at fixed terms.

(While this performance obligation is not significant for the Company’s current contracts, it could become significant in the future.)

Options on future seasons of content at fixed terms.

(While this performance obligation is not significant for the Company’s current contracts, it could become significant in the future.)

Fixed fee advertising revenue generated from the Genius Brands Network.

Variable fee advertising revenue generated from the Genius Brands Network.

the new accounting standard ASC 606 (“Topic 606”), Revenue from Contracts with Customers and all the related amendments

(“new revenue standard”) using the modified retrospective method applied to those contracts which were not completed

as of January 1, 2018.

Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior

period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605 (“Topic

As a result of the change, beginning January

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of the license.

The Company sells advertising

on its Kid Genius channel in the form of either flat rate promotions or impressions served.

For flat rate promotions with a fixed

term, the Company recognizes revenue when all five revenue recognition criteria under FASB ASC 606 are met.

For impressions served,

the Company delivers a certain minimum number of impressions on the channel to the advertiser for which the advertiser pays a

contractual costs per thousand (CPM) per impression.

Impressions served are reported to the Company on a monthly basis, and revenue

is reported in the month the impressions are served.

The Company sells advertising on its App

and OTT based “Kartoon Channel!

in the form of either flat rate promotions or impressions served.

For flat rate promotions

with a fixed term, the Company recognizes revenue when all five revenue recognition criteria under FASB ASC 606 are met.

For impressions

served, the Company delivers a certain minimum number of impressions on the channel to the advertiser for which the advertiser

pays a contractual CPM per impression.

Impressions served are reported to the Company on a monthly basis, and revenue is reported

in the month the impressions are served.

The Company recognizes revenue related

to product sales when (i) the seller’s price is substantially fixed, (ii) shipment has occurred causing the buyer to be obligated

to pay for product, (iii) the buyer has economic substance apart from the seller, and (iv) there is no significant obligation for

future performance to directly bring about the resale of the product by the buyer.

Use of Estimates

The preparation of financial statements

in conformity with generally accepted accounting principles in the United States of America (“U.S.

GAAP”) requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent

assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting

to product sales when we complete our performance obligation, which is when the goods are transferred to the buyer.

Direct Operating Costs

Direct operating costs include costs of

our product sales, non-capitalizable film costs, film and television cost amortization expense, and participation expense related

to agreements with various animation studios, post-production studios, writers, directors, musicians or other creative talent with

which we are obligated to share net profits of the properties on which they have rendered services.

Share-Based Compensation

As required by FASB ASC 718 - Stock Compensation,

the Company recognizes an expense related to the fair value of our share-based compensation awards, including stock options, using

the Black-Scholes calculation as of the date of grant.

The Company has elected to use the graded attribution method for awards

which are in-substance, multiple awards based on the vesting schedule.

Earnings Per Share

Basic earnings (loss) per common share

(“EPS”) is calculated by dividing net income (loss) applicable to common shareholders by the weighted average number

of shares of common stock outstanding for the period.

Diluted EPS is calculated by dividing net income (loss) applicable to common

shareholders by the weighted average number of shares of common stock outstanding, plus the assumed exercise of all dilutive securities

using the treasury stock or “as converted”

method, as appropriate.

During periods of net loss, all common stock equivalents

are excluded from the diluted EPS calculation because they are antidilutive.

Deferred income tax assets and liabilities

are recognized based on differences between the financial statement and tax basis of assets and liabilities using presently enacted

At each balance sheet date, the Company evaluates the available evidence about future taxable income and other possible

sources of realization of deferred tax assets and records a valuation allowance that reduces the deferred tax assets to an amount

that represents management’s best estimate of the amount of such deferred tax assets that more likely than not will be realized.

Concentration of Risk.

The Company’s cash is maintained

at three financial institutions and from time to time the balances for this account exceed the Federal Deposit Insurance Corporation’s

(“FDIC”) insured amount.

Balances on interest bearing deposits at banks in the United States are insured by the FDIC

up to $250,000 per account.

As of December 30, 2020, the Company had four accounts with an uninsured balance of $99,260,006.

For the year ended December 30, 2020, the

Company had two customers whose total revenue exceeded 10% of the total consolidated revenue.

Those customers accounted for 44%

of the total revenue and 22% of accounts receivable.

For the year ended December 30, 2019, the Company had two customers whose

total revenue each exceeded 10% of the total consolidated revenue.

Those customers accounted for 65% and 57% of the total revenue

and accounts receivable respectively for the year ended December 31, 2019 respectively.

The major customers for the year ended

December 31, 2020 are the same as the major customers at December 31, 2019.

There is significant financial risk associated with

a dependence upon a small number of customers.

The Company periodically assesses the financial strength of these customers and

establishes allowances for any anticipated bad debt.

At December 31, 2020, the Company recorded an allowance for doubtful accounts

in the amount of $43,676.

In 2019, no allowance for bad debt had been established for the major customers as these amounts were

expected to be fully collectible.

Fair value of financial instruments

The carrying amounts of cash, receivables, accounts payable,

and accrued liabilities approximate fair value due to the short-term maturity of the instruments.

The carrying amount of the Facility

(as defined below) approximates fair value since the debt carries a variable interest rate that is tied to either the current Prime

or LIBOR rates plus an applicable spread.

The Company adopted FASB ASC 820 as of

January 1, 2008, for financial instruments measured at fair value on a recurring basis.

FASB ASC 820 defines fair value, establishes

a framework for measuring fair value in accordance with U.S.

GAAP and expands disclosures about fair value measurements.

Fair value is defined as the price that

would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the

measurement date.

FASB ASC Topic 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities

(level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements).

These tiers include:

Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Recent Accounting Pronouncements

In February 2016, the FASB issued Accounting

Standards Update (“ASU”) 2016-02, “Leases.”

The standard requires lessees to recognize the assets and liabilities

that arise from leases on the balance sheet.

A lessee should recognize in the statement of financial position a liability to make

lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease

The new guidance is effective for annual and interim reporting periods beginning after December 15, 2018.

In July 2018,

the FASB issued ASU 2018-11, Leases (Topic 842), Targeted Improvements, which allows for an additional optional transition

method where comparative periods presented in the financial statements in the period of adoption will not be restated and instead

those periods will be presented under existing guidance in accordance with ASC 840, Leases.

Management will use this optional

transition method.

As of January 1, 2019, management recorded lease liability of $2,071,903, right-of-use asset of $2,029,677,

a reversal of previously recorded deferred rent of $37,920 and the increase in accumulated deficit of $4,306.

In January 2017, the FASB issued Accounting Standards Update

(“ASU”) 2017-04, “Simplifying the Test for Goodwill Impairment”, which requires an entity to perform a

one-step quantitative impairment test, whereby a goodwill impairment loss will be measured as the excess of a reporting unit’s

carrying amount over its fair value (not to exceed the total goodwill allocated to that reporting unit).

It eliminates Step 2 of

the current two-step goodwill impairment test, under which a goodwill impairment loss is measured by comparing the implied fair

value of a reporting unit’s goodwill with the carrying amount of that goodwill.

The standard is effective January 1, 2020,

with early adoption as of January 1, 2017 permitted.

We adopted ASU 2017-04 in 2019.

The impact to our consolidated financial position,

results of operations and cash flows was minimal.

In July 2017, the FASB issued ASU No.

addressing, among other matters, accounting for certain financial instruments.

One of the amendments in this guidance intended

to reduce the complexity associated with the issuer’s accounting for certain financial instruments with characteristics of

liabilities and equity.

Specifically, the Board determined that a down round feature (as defined) would no longer cause a freestanding

equity-linked financial instrument (or an embedded conversion option) to be accounted for as a derivative liability at fair value

with changes in fair value recognized in current earnings.

ASU 2017-11 was effective for public business entities for fiscal year

beginning after December 15, 2018.

We adopted ASU 2017-11 in 2019.

The impact to our consolidated financial position, results of

operations and cash flows was minimal.

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework –

Changes to the Disclosure Requirements for Fair Value

Measurement (“ASU 2018-13”), which changes the fair value measurement disclosure requirements of ASC 820.

removes some disclosures, modifies others, and adds some new disclosure requirements.

The amendments in this ASU are effective

for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 with early

adoption permitted.

We adopted ASU 2018-13 in 2019.

The impact to our consolidated financial position, results of operations and

cash flows were not material.

In June 2018, the FASB issued ASU No.

2018-07, Compensation –

Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting (“ASU

2018-07”), which supersedes ASC 505-05 and expands the scope of ASC 718 to include all share-based payment arranges related

to the acquisition of goods and services from both nonemployees and employee.

As a result, most of the guidance in ASC 718 associated

with employee share-based payments, including most of its requirements related to classification and measurement, applies to nonemployee

share-based payment arrangements.

ASC 2018-07 is effective for all entities for fiscal year beginning after December 15, 2018,

and interim periods within that fiscal year.

We adopted ASU 2018-07 in 2019.

The impact to our consolidated financial position,

results of operations and cash flows were not material.

In March 2019, the FASB issued ASU

2019-02, Entertainment-Films-Other Assets-Film Costs (Subtopic 926-20) and Entertainment-Broadcasters Intangibles-Goodwill

and Other (Subtopic 920-350).

The update aligns the accounting for production costs of an episodic television series with the

accounting for production costs of films by removing the content distinction for capitalization.

The amendments also require that

an entity reassess estimates of the use of a film in a film group and account for any changes prospectively.

The amendments in

this update require that an entity test a film or license agreement for program material within the scope of Subtopic 920-350

for impairment at a film group level when the film or license agreement is predominantly monetized with other films and/or license

For public business entities, the amendments in this update are effective for fiscal years beginning after December

15, 2019, and interim periods within those fiscal years.

We adopted ASU 2019-02 in 2019.

The impact to our consolidated financial

position, results of operations and cash flows were not material.

Various other accounting pronouncements

have been recently issued, most of which represented technical corrections to the accounting literature or were applicable to specific

industries/transactions or special circumstances and are not expected to have a material effect on our financial position, results

of operations, or cash flows.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements.

2019-02, Subtopic 926-20 and Subtopic 920-350.

The update aligns the accounting for production costs of an episodic television

series with the accounting for production costs of films by removing the content distinction for capitalization.

The amendments

also require that an entity reassess estimates of the use of a film in a film group and account for any changes prospectively.

The amendments in this update require that an entity test a film or license agreement for program material within the scope of

Subtopic 920-350 for impairment at a film group level when the film or license agreement is predominantly monetized with other

films and/or license agreements.

For public business entities, the amendments in this update are effective for fiscal years beginning

after December 15, 2019, and interim periods within those fiscal years.

We have prospectively adopted ASU 2016-18.

The impact to

our consolidated financial position, results of operations and cash flows were not material.

2020, the FASB issued ASU No.

2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

update simplifies the accounting for convertible instruments by removing certain separation models in Subtopic 470-20, Debt—Debt

with Conversion and Other Options, for convertible instruments.

As part of the amendment, the embedded conversion features are

no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted

for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in

The FASB has eliminated the cash conversion and beneficial conversion feature models.

The FASB has also modified accounting

rules relating to application of the scope exception from derivative accounting.

The amendments revise the guidance in ASC 815-40-25-10,

to remove three out of seven conditions from the settlement guidance, referred to as additional equity classification requirements.

Following the above amendments, more convertible debt instruments will be accounted for as a single liability measured at its amortized

cost and more convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost,

as long as no features require bifurcation and recognition as derivatives.

The amendments are effective for public business entities,

excluding smaller reporting companies, for fiscal years beginning after December 15, 2021, including interim periods within those

fiscal years.

For all other entities, including smaller reporting companies the amendments are effective for fiscal years beginning

after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted, but no earlier than

fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

We have prospectively

adopted ASU No.

The impact to our consolidated financial position, results of operations and cash flows were not material.

Various other accounting

pronouncements have been recently issued, most of which represented technical corrections to the accounting literature or

were applicable to specific industries and are not expected to have a material effect on our financial position, results of

operations, or cash flows.

Quantitative and Qualitative Disclosures about Market Risk

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What changed 10-K

Item 5. Market for Registrant’s Common Equity