What changed in this filing

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Item 1. Legal Proceedings

2021-05-18 compared with 2020-11-16 · 71 added, 30 removed, 6 unchanged (94% of the section changed)

LEGAL PROCEEDINGS.

As of September 30, 2020, there were no material

pending legal proceedings to which we are a party or as to which any of its property is subject other than described below.

As previously disclosed, the Company and its Chief Executive

Officer Andy Heyward are named as defendants in a putative securities class action lawsuit filed in August 2020 in the U.S.

As of March 31, 2021, there were no material pending

legal proceedings to which we are a party or as to which any of its property is subject other than described below.

As previously disclosed, on August 18, 2020, the

Company and its Chief Executive Officer Andy Heyward were named as defendants in a putative class action lawsuit filed in the U.S.

Court for the Central District of California and styled Salvador Verdin v.

1 unchanged sentence

and Andy Heyward ,

2:20-cv-07457-DSF (RAO).

Plaintiff alleges generally that defendants made false or misleading statements regarding

the Company’s business and business prospects during an alleged class period that runs from March 17 through July 5, 2020.

Subsequently, a second putative class action asserting substantially similar claims against the same defendants was filed in the

On October 19, 2020, applications were filed with the court by multiple persons and law firms seeking appointment as

lead plaintiff and lead plaintiff’s counsel in the matter, as contemplated by procedures specified in the Private Securities

Litigation Reform Act.

The applicants also sought formal consolidation of the two suits.

The court has advised the parties that

it expects to resolve the motions and appoint a lead plaintiff and lead plaintiff’s counsel without oral argument.

that appointment, the Company anticipates little if any substantive activity in the litigation.

2:20-cv-07457 DSF (RAOx).

We were later served with a similar lawsuit Sumit Garg v.

Genius Brands International, Inc.

Andy Heyward , Case No.

2:20-cv-07764.

Both suits allege generally that defendants violated Sections 10(b) and 20(a) of the Securities

Exchange Act of 1934 by making materially false or misleading statement regarding the Company’s business and business prospects,

artificially inflating the Company’s stock price during an alleged class period running from March 11 through July 5, 2020.

seek unspecified damages on behalf of the alleged class of persons who invested in our common stock during the alleged class period.

securities suits have been consolidated into a single proceeding before Judge Dale Fischer in the U.S.

District Court for the Central

District of California.

The proceeding will now be known as, styled In re Genius Brands International, Inc.

Securities Litigation,

Master File No.

2:20-cv-07457 DSF (RAOx).

The Lead Plaintiffs filed an amended complaint in the consolidated actions on February 1,

While asserting the same legal claims and class period, the amended complaint added a new defendant, Chief Financial Officer Robert

On March 17, 2021, the defendants filed a motion to dismiss the amended complaint.

Briefing of that motion is, by court-ordered

schedule, expected to extend into June 2021, with a hearing currently scheduled for July 5, 2021.

Pending resolution of the motion to

dismiss, neither discovery nor other substantive proceedings are expected.

Related to the securities class action, the Company’s

directors have been named as defendants in a putative shareholder derivative lawsuit filed in September 2020 in the U.S.

Court for the Central District of California and styled Eduardo Correa, etc., v.

Andy Heyward, et.

directors, Chief Executive Officer and Chief Financial Officer have been named as defendants in a putative shareholder derivative lawsuit

filed in September 2020 in the U.S.

District Court for the Central District of California and styled Correa, etc., v.

al., Case No.

2:20-cv-08277-DSF

The suit alleges generally that the defendants breached fiduciary duties owed to the Company by, among other things, causing

the Company to issue the supposedly false and misleading statements that underlie the Verdin securities litigation and thereby

purportedly exposing the Company to liability and damaging the Company in an unspecified amount.

No recovery is sought from the

Instead, as a shareholder derivative action, the Company is named as Nominal Defendant;

and plaintiff, an alleged stockholder

of the Company, purports to sue on behalf and for the benefit of the Company.

Pursuant to an agreement among the parties, the court

has stayed proceedings in the derivative litigation pending the outcome of anticipated motions to dismiss in the securities class

In both proceedings, defendants have denied and continue to

deny any wrongdoing and intend to defend the claims vigorously.

2:20-cv-08277-DSF (RAOx).

On November 20, 2020 a second case, Ly, etc.

Heyward, et al.

was filed in the Los Angeles County Superior Court.

More recently, two additional putative shareholder derivative lawsuits have been filed,

one in the U.S.

District Court for the Central District of California captioned Contorno, etc.

Heyward et al., Case No.

2:21-cv-02331

DSF (RAOx), and another in the U.S.

District Court for the District of Nevada styled Miceli, etc.

Heyward, et al., Case No.

3:21-cv-00132-MMD-WGC.

While the allegations and legal claims vary somewhat among the derivative actions, they all generally allege that

the defendants breached fiduciary duties owed to the Company by, among other things, causing the Company to issue the supposedly false

and misleading statements that underlie the securities lawsuit, purportedly exposing the Company to liability and damaging the Company

in an unspecified amount.

By these derivative lawsuits, the plaintiffs seek no recovery from the Company.

Instead, as a shareholder derivative

action, the Company is named as Nominal Defendant;

and plaintiffs, all alleged stockholders of the Company, purports to sue on behalf

and for the benefit of the Company.

Pursuant to agreements among the parties, the courts have stayed proceedings in the derivative litigations

pending the outcome of anticipated motions to dismiss in the securities class action.

Additionally, the parties

to the Correa and Contorno actions have agreed to consolidate those two lawsuits and expect shortly to submit to the

Court an agreement formally to do so.

In all of the above-mentioned proceedings, defendants

have denied and continue to deny any wrongdoing and intend to defend the claims vigorously.

On July 7, 2020, we

received a letter from a law firm alleging that rights Genius Brands had licensed from POW!, LLC, through its the Stan Lee Universe, LLC

joint venture, had already been sold to another company, represented by that law firm.

The law firm alleged that the Company is, inter

alia, interfering with their contractual rights.

This matter was referred to our outside litigation counsel.

We have been informed that

the matter is being adjudicated in an arbitration and that the arbitrator issued a gag order preventing further communications from Plaintiff

to 3 rd parties.

RISK FACTORS.

There have been no material changes to the Risk

Factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Legal Proceedings