What changed in this filing

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Item 1. Financial Statements

2021-08-16 compared with 2021-05-18 · 883 added, 807 removed, 557 unchanged (75% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

As of March 31, 2021, and December 31, 2020

March 31, 2021

As of June 30, 2021, and December 31, 2020

June 30, 2021

December 31, 2020

2 unchanged sentences

$ 100,456,324

Investment in Marketable Securities (amortized cost of $80,902,119)

Accounts Receivable, net

10 unchanged sentences

$ 134,201,074

LIABILITIES AND STOCKHOLDERS’

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

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Total Liabilities

Stockholders’

Preferred Stock, $0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

Common Stock, $0.001 par value, 400,000,000 shares authorized 300,321,658 and 258,438,514 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

Stockholders’ Equity

Preferred Stock, $ 0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2021 and December 31, 2020

Common Stock, $ 0.001 par value, 400,000,000 shares authorized 300,791,335 and 258,438,514 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Additional Paid in Capital

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Total Stockholders' Equity

Total Liabilities and Stockholders’

Total Liabilities and Stockholders’ Equity

$ 201,219,754

4 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended March 31, 2021 and March

Three and Six Months Ended June 30, 2021 and

June 30, 2020

Three Months Ended

March 31, 2021

March 31, 2020

Six Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Licensing & Royalties

10 unchanged sentences

Loss from Operations

( 7,574,129 )

( 2,376,726 )

( 14,293,988 )

( 4,144,775 )

Other Income (Expense):

2 unchanged sentences

Warrant Revaluation Expense

( 208,760,698 )

( 212,228,659 )

Warrant Incentive Expense

( 69,138,527 )

Conversion Option Revaluation Expense

( 171,835,729 )

Sub-Lease Income

Interest Expense

( 1,151,609 )

Net Other Income (Expense)

( 380,881,276 )

( 69,348,933 )

( 384,949,171 )

Loss Before Income Tax Expense

( 7,383,978 )

( 383,258,002 )

( 83,642,921 )

( 389,093,946 )

Income Tax Expense

Net Loss Before Foreign Translation Adjustment

Net Loss Applicable to Common Shareholders

$ ( 7,383,978 )

Foreign Translation Adjustment

$ ( 383,258,002 )

$ ( 83,642,921 )

$ ( 389,093,946 )

Net Loss per Common Share (Basic and Diluted)

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Condensed Consolidated Statements of Comprehensive

Three months ended March 31, 2021 and March

Three and Six Months Ended June 30, 2021 and

June 30, 2020

Three Months Ended

March 31, 2021

March 31, 2020

Six Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

$ ( 7,383,978 )

$ ( 383,258,002 )

Foreign Translation Adjustment

Comprehensive Net Loss to Common Shareholders

$ ( 83,642,921 )

$ ( 389,093,946 )

Unrealized Loss on Marketable Securities

Foreign Currency Translation Adjustment

Comprehensive Net Loss

$ ( 7,782,273 )

$ ( 383,258,002 )

$ ( 84,041,491 )

$ ( 389,093,946 )

The accompanying notes are an integral part of

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Genius Brands International, Inc.

Condensed Consolidated Statements of Stockholders'

Three Months Ended March 31, 2021 and Three

Months Ended March 31, 2020

Paid-In Capital

Comprehensive Loss

Consolidated Statements of Stockholders' Equity

Three and Six Months Ended June 30, 2021 and

June 30, 2020

Other Comprehensive

Balance, December 31, 2020

( 469,557,324

Issued for ChizComm acquisition

From Warrant Exchange, net

of Common Stock for Services

Warrant Incentive

Currency Translation Adjustment

Balance, March 31, 2021

( 545,816,267

of Common Stock for Services

Share Based Compensation

Loss on Marketable Securities

Currency Translation Adjustment

Balance, June 30, 2021

( 553,200,246

Balance, December 31, 2019

$ ( 66,047,135 )

Value of Preferred Stock Conversion

3 unchanged sentences

Share Based Compensation

Balance, March 31, 2020

( 5,835,944 )

Balance, December 31, 2020

( 5,835,944 )

$ (469,557,324 )

Balance, March 31, 2020

$ ( 71,883,079 )

Shares Issued for ChizComm acquisition

Proceeds from Warrant Exchange, net

Proceeds from Securities Purchase Agreement, Net

Issuance of Common Stock for Services

Share Based Compensation

Warrant Incentive

Foreign Translation Adjustment

Value of Preferred Stock Conversion

Derivative Liability Adjustment

Note Conversion

Warrant Exercise

( 1,840,384 )

Warrant Revaluation

Warrants Issued for Services

( 383,258,002 )

Balance, March 31, 2021

( 383,258,002 )

Balance, June 30, 2020

$ 519,985,782

$ ( 456,981,465 )

The accompanying notes are an integral part of

these financial statements.

The accompanying notes are an integral part

of these financial statements.

Genius Brands International, Inc.

Condensed Consolidated Statements of Cash Flows

Three months ended March 31, 2021 and March

March 31, 2021

March 31, 2020

Six Months Ended June 30, 2021 and June 30,

June 30, 2021

June 30, 2020

Cash Flows from Operating Activities:

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Lease Modification

Conversion Option Revaluation Expense

Debt Discount in Excess of the Principal

Warrant Incentive Expense

Warrant Inducement Expense

Decrease (Increase) in Operating Assets:

Accounts Receivable, net

Inventory, net

Prepaid Expenses & Other Assets

( 1,134,977 )

Lease Deposits

Film and Television Costs, net

( 3,175,941 )

Increase (Decrease) in Operating Liabilities:

6 unchanged sentences

Net Cash Used in Operating Activities

( 8,972,775 )

( 2,331,260 )

Cash Flows from Investing Activities:

1 unchanged sentence

Cash Payment for ChizComm, net of cash acquired

( 7,788,877 )

Investment in Marketable Securities

( 80,902,119 )

Investment in Intangible Assets, net

Investment in Property & Equipment

Net Cash Used in Investing Activities

( 89,316,206 )

Cash Flows from Financing Activities:

Increase in Lease Liability, net of Payments

Payments On Lease Liability

Proceeds from Sale of Securities Purchase Agreement, net

Proceeds from Warrant Exchange, net

Proceeds From Warrant Exchange

Proceeds from Senior Secured Convertible Notes, net

(Repayment)/Proceeds from Payroll Protection Program

Collection Of Investor Notes

Repayment of Secured Convertible Notes

( 2,866,664 )

Note Conversion Costs

Repayment of Production Facility, net

( 1,202,313 )

Net Cash Provided by Financing Activities

Net Increase in Cash and Cash Equivalents

Net (Decrease)/Increase in Cash and Cash Equivalents

( 42,083,989 )

Beginning Cash and Cash Equivalents

Ending Cash and Cash Equivalents

$ 143,612,749

Supplemental Disclosures of Cash Flow Information:

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Schedule of Non-Cash Financing and Investing Activities

Issuance of common stock for services

Shares issued for ChizComm acquisition

Liability for Acquisition Earnout Shares

Senior Convertible notes were converted into 65,476,190

shares of Common Stock, 58,522,601 warrants were exercised on a cashless basis resulting in the issuance of 52,551,716 shares of Common Stock

Warrant Derivative Liability

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Genius Brands International, Inc.

Notes to Condensed Consolidated Financial Statements

March 31, 2021 (unaudited)

Notes to Condensed Financial Statements

June 30, 2021 (unaudited)

Organization and Business

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Genius Brands International, Inc.

(“we,”

“us,”

“our,”

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

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

multimedia content.

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products based on our characters.

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

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 Stan Lee’s Superhero

Kindergarten produced with Stan Lee’s Pow!

New intellectual property titles include Stan Lee’s Superhero

Kindergarten produced with Stan Lee’s Pow!

Entertainment, and Oak Productions.

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the lead and is also an Executive Producer on the series.

The show is being broadcast in the United States on the Company’s wholly

owned distribution outlet, Kartoon Channel!.

Other newer series 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.

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!

to exploit 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.

This agreement will enable us to assume 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 multiple properties each year.

The Company is also developing a new animated series starring the voice of Shaquille

O’Neil called Shaq’s Garage .

In addition, we act as licensing agent 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.

The show is being broadcast in the United States on the Company’s wholly-owned

distribution outlet, Kartoon Channel!.

Other newer series 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.

The Company’s 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 the Company’s 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.

In July 2020, the Company entered

into a binding term sheet with POW, Inc.

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

to exploit 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 executed an Operating Agreement for the joint venture, effective as of June 1, 2021.

This agreement

enables the Company to assume 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 multiple properties each year.

The Company is in

production on a new animated series starring Shaquille O’Neal called Shaq’s Garage .

In addition, the Company acts as licensing agent

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

the Company’s existing licensing infrastructure to expand this brand into new product categories, new retailers, and new territories.

The Company commenced operations in 2006, assuming

all the rights and obligations of its then Chief Executive Officer, under an Asset Purchase Agreement between the Company and Genius Products,

Inc., in which the Company obtained all rights, copyrights, and trademarks to the brands “Baby Genius,”

“Kid Genius,”

“123 Favorite Music”

and “Wee Worship,”

and all then existing productions under those titles.

Inc., in which the Company obtained all rights, copyrights, and trademarks to the brands “Baby Genius,” “Kid Genius,”

“123 Favorite Music” and “Wee Worship,” and all then existing productions under those titles.

In 2011, the Company

reincorporated in Nevada and changed its name to Genius Brands International, Inc.

(the “Reincorporation”).

In connection

with the Reincorporation, the Company changed its trading symbol to “GNUS.”

In 2013, the Company entered into an Agreement

and Plan of Reorganization (the “Merger Agreement”) with A Squared Entertainment LLC, a Delaware limited liability company

(“A Squared”), A Squared Holdings LLC, a California limited liability company and sole member of A Squared (the “Parent

Member”), and A2E Acquisition LLC, its newly formed, wholly-owned Delaware subsidiary (“Acquisition Sub”).

and Plan of Reorganization (the “Merger Agreement”) with A Squared Entertainment LLC, a Delaware limited liability company

(“A Squared”), A Squared Holdings LLC, a California limited liability company and sole member of A Squared (the “Parent

Member”), and A2E Acquisition LLC, its newly formed, wholly-owned Delaware subsidiary (“Acquisition Sub”).

of the transactions, A Squared, as the surviving entity, became a wholly-owned subsidiary of the Company.

During the six months ended June 30, 2021, the

Company’s cash and cash equivalents and marketable security positions increased by $ 38,308,505 , net.

Cash and cash equivalents were

used to purchase marketable securities of $ 80,902,119 during the six months ended June 30, 2021.

Cash in excess of immediate requirements

is invested in accordance with the Company’s investment policy, primarily with a view to liquidity and capital preservation.

available for sale securities, consisting principally of corporate and government debt securities stated at fair value, are also available

as a source of liquidity.

Historically, the Company has incurred net losses.

For the three months ended March 31, 2021 and March 31, 2020, the Company reported net losses of $76,258,943 and $5,835,944, respectively.

The Company reported net cash used in operating activities of $5,855,273 and $995,517 for the three months ended March 31, 2021 and March

For the three months ended June 30, 2021 and June 30, 2020, the Company reported net losses of $ 7,383,978 and $ 383,258,002 , respectively.

For the six months ended June 30, 2021 and June 30, 2020, the Company reported net losses of $ 83,642,921 and $ 389,093,946 , respectively.

The Company reported net cash used in operating activities of $ 8,972,775 and $ 2,331,260 for the six months ended June 30, 2021 and June

30, 2020, respectively.

As of March 31, 2021, the Company had an accumulated deficit of $545,816,267 and total stockholders’

As of June 30, 2021, the Company had an accumulated deficit of $ 553,200,246 and total stockholders’ equity

of $ 171,621,715 .

At March 31, 2021, the Company had current assets of $159,186,104, including cash and cash equivalents of $143,612,749

As of June 30, 2021, the Company had current assets of $ 152,521,636 , including cash and cash equivalents of $ 58,372,335 ,

and current liabilities of $ 15,507,100 .

The Company had working capital of $143,844,784 as of March 31, 2021, compared to working capital

The Company had working capital of $ 137,014,536 as of June 30, 2021, compared to working capital

of $ 101,387,183 as of December 31, 2020.

On January 28, 2021,

the Company 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 Company received

approximately $61.6 million in gross proceeds.

On January 28, 2021, the Company 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 Company received approximately $ 61.6

million in gross proceeds.

The Special Equities Group, a division of Bradley Woods & Co.

Ltd., acted as warrant

solicitation agent and received a cash fee of approximately $4.3 million.

In consideration for the exercise of the Existing Warrants for

cash, the exercising holders received 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

Pursuant to the Letter Agreements, the New Warrants are substantially in the form of the Existing Warrants (except for customary

legends and other language typical for an unregistered warrant, including the ability for the holder of the New Warrant to make a cashless

exercise if no resale registration statement covering the common stock underlying the New Warrants is effective after six months), were

exercisable immediately, and have a term of exercise of five years, and the Company was required to register for resale the shares of

common stock underlying the New Warrants.

Ltd., acted as warrant solicitation agent

and received a cash fee of approximately $ 4.3 million.

In consideration for the exercise of the Existing Warrants for cash, the exercising

holders received 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.

Pursuant to the Letter

Agreements, the New Warrants are substantially in the form of the Existing Warrants (except for customary legends and other language typical

for an unregistered warrant, including the ability for the holder of the New Warrant to make a cashless exercise if no resale registration

statement covering the common stock underlying the New Warrants is effective after six months), were exercisable immediately, and the

Company was required to register the shares of common stock underlying the New Warrants for resale.

As more fully discussed in Note 3 on February

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Basis of Presentation

The accompanying 2021 and 2020 condensed consolidated

financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

The accompanying unaudited condensed consolidated

financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

Principles of Consolidation

The accompanying condensed consolidated

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

Entertainment LLC, Llama Productions LLC, Rainbow Rangers Productions LLC, Superhero Kindergarten LLC, ChizComm Beacon Media LLC and

ChizComm Ltd.

The accompanying condensed consolidated financial

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

Productions LLC, Rainbow Rangers Productions LLC, Superhero Kindergarten LLC, ChizComm Beacon Media LLC, ChizComm Ltd., Stan Lee Universe

LLC and Shaq’s Garage Productions LLC.

All significant inter-company balances and transactions have been eliminated in consolidation.

The financial statements have been prepared using

the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards

Codification (“ASC”) 805 Business Combinations.

The condensed consolidated financial statements

have been prepared using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”)

Accounting Standards Codification (“ASC”) 805 Business Combinations and ASC 810 Consolidation .

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 periods.

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 periods.

Foreign Currency

The Company considers the

dollar to be its functional currency for its United States based operations.

The Company considers the Canadian dollar to be its

functional currency for its Canada based operation.

Accordingly, the financial information is translated from the Canadian dollar to the

dollar for inclusion in the Company’s consolidated financial statements.

Revenue and expenses are translated at average exchange

rates prevailing during the period, and assets and liabilities are translated at exchange rates in effect at the balance sheet date.

translation adjustments are included as a component of accumulated other comprehensive income (loss), net in stockholders’ equity.

Foreign exchange transaction

gains and losses are included in other income (expense), net in the consolidated statements of operations.

Cash and Cash Equivalents

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with initial maturities of three months or less to be cash equivalents.

As of March 31, 2021, and December 31, 2020, the Company had Cash

As of June 30, 2021, and December 31, 2020, the Company had cash

and cash equivalents of $ 58,372,335 and $ 100,456,324 , respectively.

Marketable Debt Securities

The Company purchases high

quality, investment grade securities from diverse issuers with a weighted average credit rating of AA/Aa2.

Management determines

the appropriate classification of securities at the time of purchase and reevaluates such designation as of each balance sheet date.

the Company classifies its investments in marketable securities as “available-for-sale” and records these investments at fair

The securities are available to support current operations and, accordingly, the Company classifies the investments as current

assets without regard to their contractual maturity.

Unrealized gains or losses

on available-for-sale securities for which the Company expects to fully recover the amortized cost basis are recognized in accumulated

other comprehensive (loss) income, a component of stockholders’ equity.

If the Company intends to sell a debt security, or it is

more likely than not that it would be required to sell a debt security before the recovery of its amortized cost basis, the entire difference

between the security's amortized cost basis and its fair value at the balance sheet date would be recognized as a loss in the consolidated

statements of operations.

Allowance for Doubtful Accounts

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accounts appears doubtful.

The Company had an allowance for doubtful accounts of $117,087 for March 31, 2021 and $43,676 as of December

The Company had an allowance for doubtful accounts of $ 54,840 as of June 30, 2021 and $ 43,676 as of December

Property and Equipment

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lives, are charged to expense as incurred.

Gains and losses from any dispositions of property and equipment are reflected in the statement

of operations.

Gains and losses from any dispositions of property and equipment are reflected in the condensed

consolidated statement of operations.

Right of Use Leased Assets

In February 2016, the FASB issued Accounting Standards

Update 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 term.

The new guidance is effective for annual

and interim reporting periods beginning after December 15, 2018.

The amendments should be applied at the beginning of the earliest period

presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting

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 used this optional transition method.

As of February 1, 2021,

as a result of the ChizComm acquisition, management recorded lease liability of $380,050, right-of-use asset of $380,050.

Effective January 1, 2019, the Company adopted

ASC 842, Leases , using the modified retrospective transition method applied at the effective date of the standard.

The Company determines at contract inception whether the arrangement

is a lease based on its ability to control a physically distinct asset and determines the classification of the lease as either operating

For all leases, the Company combines all components of the lease including related nonlease components as a single component.

Operating leases are reflected as operating right-of-use (“ROU”) assets and operating lease liabilities in the consolidated

balance sheets.

The Company does not have any finance leases.

Operating lease ROU assets and liabilities are

recognized at commencement date based on the present value of lease payments over the lease term.

As the Company’s leases do not

provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining

the present value of lease payments.

The Company estimates the incremental borrowing rate to reflect the profile of collateralized borrowing

over the expected term of the leases based on the information available at the later of the initial date of adoption, or the lease commencement

The operating lease ROU asset also includes any

lease payments made prior to lease commencement date and excludes lease incentives.

Lease terms may include options to extend or terminate

the lease when the Company is reasonably certain that it will exercise the option.

Lease expense is recognized on a straight-line basis

over the lease term in the consolidated statement of operations.

Lease incentives are recognized as a reduction to the lease expense on

a straight-line basis over the underlying lease term.

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.

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

The Company completes

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

To test 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.

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.

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.

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

To test for goodwill

impairment, the Company is required to estimate the fair market value of each of our reporting units, of which the Company has one.

the Company may use a variety of methods to estimate fair value for impairment testing, its primary method is discounted cash flows.

Company estimates future cash flows and allocations of certain assets using estimates for future growth rates and judgment regarding the

applicable discount rates.

Changes to 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.

Other intangible assets have been acquired, either

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method when the latter does not lead to materially different results.

The Company accounts for the proceeds from the

issuance of convertible notes payable in accordance with FASB ASC 470-20 Debt with Conversion and Other Options.

FASB ASC 470-20, the intrinsic value of the embedded conversion feature (beneficial conversion interest), which is in the money

on the commitment date is included in the discount to debt and amortized to interest expense over the term of the note agreement.

the conversion option is not separated, the Company accounts for the entire convertible instrument including debt and the conversion feature

as a liability.

The Company analyzes freestanding equity-linked

instruments including warrants attached to debt to conclude whether the instrument meets the definition of the derivative and whether

it is considered indexed to the Company’s own stock.

If the instrument is not considered indexed to Company’s stock, it is

classified as an asset or liability recorded at fair value.

If the instrument considered indexed to Company’s stock, the Company

analyzes additional equity classification requirements per ASC 815-40 Contract’s in Entity’s Own Equity.

When the requirements

are met, the instrument is recorded as part of the Company’s equity, initially measured based on its relative fair value with no

subsequent re-measurement.

When the equity classification requirements are not met, the instrument is recorded as an asset or liability

and is measured at fair value with subsequent changes in fair value recorded in earnings.

it is considered indexed to the Company’s own stock.

If the instrument is not considered indexed to the Company’s stock, it

is classified as an asset or liability recorded at fair value.

If the instrument is considered indexed to the Company’s stock, the

Company analyzes additional equity classification requirements per ASC 815-40, Contract’s in Entity’s Own Equity .

the requirements are met, the instrument is recorded as part of the Company’s equity, initially measured based on its relative fair

value with no subsequent re-measurement.

When the equity classification requirements are not met, the instrument is recorded as an asset

or liability and is measured at fair value with subsequent changes in fair value recorded in earnings.

When required, the Company also considers the

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Film and Television Costs

We capitalize production costs for episodic series

The Company capitalizes production costs for episodic

series produced in accordance with FASB ASC 926-20, Entertainment-Films - Other Assets - Film Costs .

Accordingly, production costs

are capitalized at actual cost and then charged against revenue based on the initial market revenue evidenced by a firm commitment over

the period of commitment.

The Company expenses all capitalized costs that exceed the initial market firm commitment revenue in the period

of delivery of the episodes.

The Company capitalizes production costs for films

produced in accordance with FASB ASC 926-20, Entertainment - Films - Other Assets - Film Costs .

Accordingly, production costs are capitalized

at actual cost and then charged against revenue based on the initial market revenue evidenced by a firm commitment over the period of

We expense all capitalized costs that exceed the initial market firm commitment revenue in the period of delivery of the episodes.

We capitalize production costs for films produced

in accordance with FASB ASC 926-20 Entertainment - Films - Other Assets - Film Costs.

Accordingly, production costs are capitalized at

actual cost and then charged against revenue quarterly as a cost of production based on the relative fair value of the film(s) delivered

and recognized as revenue.

We evaluate its capitalized production costs annually and limits recorded amounts by their ability to recover

such costs through expected future sales.

Accordingly, production costs are

capitalized at actual cost and then charged against revenue quarterly as a cost of production based on the relative fair value of the

film(s) delivered and recognized as revenue.

The Company evaluates its capitalized production costs annually and limits recorded amounts

by their ability to recover such costs through expected future sales.

Additionally, for both episodic series and films,

from time to time, we develop additional content, improved animation and bonus songs/features for its existing content.

After the initial

release of the film or episodic series, the costs of significant improvement to existing products are capitalized while routine and periodic

alterations to existing products are expensed as incurred.

from time to time, the Company develops additional content, improved animation and bonus songs/features for its existing content.

the initial release of the film or episodic series, the costs of significant improvement to existing products are capitalized while routine

and periodic alterations to existing products are expensed as incurred

Revenue Recognition

The Company accounts

for revenue according to standard ASC 606 (Topic 606).

The Company has identified the following six material and distinct performance

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.

The Company accounts for revenue according to

standard FASB ASC 606, Revenue from Contracts with Customers .

The Company 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.)

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

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The Company sells advertising on its App and OTT

based “Kartoon Channel!

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

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The Company recognizes revenue related to product

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

sales when the Company completes its 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.

Direct operating costs include costs of the Company’s

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 the Company

is 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.

The Company’s accounting policy elected for forfeitures is not to estimate the number

of awards that are expected to vest.

Instead, the Company accounts for forfeitures when they occur.

The Company issues stock-based awards to employees

and non-employees that are generally in the form of stock options or restricted stock units (“RSUs”).

Share-based compensation

cost is recorded for all options and awards of non-vested stock based on the grant-date fair value of the award.

The fair value of stock options is estimated at

the date of grant using the Black-Scholes option pricing model, which requires management to make assumptions with respect to the fair

value on the grant date.

The assumptions are as follows:

(i) the expected term assumption of the award is based on the Company’s

historical exercise and post-vesting behavior (ii) the expected volatility assumption is based on historical and implied volatilities

of the Company’s common stock calculated based on a period of time generally commensurate with the expected term of the award;

the risk-free interest rates are based on the implied yield available on U.S.

treasury zero-coupon issues with an equivalent expected

(iv) and the expected dividend yields of the Company’s stock are based on history and expectations of future dividends payable.

In the case of RSUs the fair value is calculated based on the Company’s underlying common stock on the date of grant.

The Company recognizes compensation expense

over the requisite service period ratably, using the graded attribution method, which is in-substance, recognizing multiple awards

based on the vesting schedule.

The Company has elected to account for forfeitures when they occur.

The Company issues authorized

shares available for the issuance under the 2015 and 2020 Plans upon employees’

exercise of their stock options.

shares available for issuance under the 2015 and 2020 Plans upon employees’ exercise of their stock options.

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

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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.

“as converted” method, as appropriate.

During periods of net loss, all common stock equivalents are excluded from the diluted

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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 two

financial institutions and from time to time the balances for this account exceed the Federal Deposit Insurance Corporation’s (“FDIC”)

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 March 31, 2020, the Company had six accounts with an uninsured balance of $142,111,746.

For the three months ended March 31, 2021, the

Company had one customer whose total revenue each exceeded 10% of the total consolidated revenue.

That customer was responsible for 11%

to total revenue.

The Company had four customers whose accounts receivable exceeded 10% of total accounts receivable.

Those customers

accounted for 69% of accounts receivable.

For the three months ended March 31, 2020, the Company had two customers whose total revenue

exceeded 10% of the total consolidated revenue.

These customers accounted for 22% of total revenue and two other customers represented

92% of accounts receivable.

As of June 30, 2021, the Company had three accounts with an uninsured balance of $ 56,601,018 .

The Company’s investment portfolio consists

of investment-grade securities diversified among security types, industries and issuers.

The investments are held and managed by a financial

institution that follows the Company’s investment policy.

The Company’s policy limits the amount of credit exposure to any

one security issue or issuer and the Company believes no significant concentration of credit risk exists with respect to these investments.

For the three months ended June 30, 2021, the

Company had one customer whose total revenue exceeded 10% of the total consolidated revenue.

That customer accounted for 11 % of the total

As of June 30, 2021, the Company had two customers whose accounts receivable exceeded 10% of total consolidated accounts receivable.

Those customers accounted for 62 % of accounts receivable.

For the six months ended June 30, 2021, the Company had one customer whose total

revenue exceeded 10% of the total consolidated revenue.

That customer accounted for 34 % of the total revenue.

For the three months ended June 30, 2020, the

Company had one customer whose total revenue exceeded 10% of the total consolidated revenue.

That customer accounted for 46 % of the total

revenue and 13 % of accounts receivable.

One other customer accounted for 56 % of accounts receivable.

For the six months ended June 30,

2020, the Company had one customer whose total revenue exceeded 10% of the total consolidated revenue.

That customer accounted for 29 %

of the total revenue and 13% of accounts receivable.

One other customer accounted for 56 % of accounts receivable.

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

Production Loan Facility 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.

We previously adopted FASB ASC 820 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

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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.

· Level 1 - Observable inputs such as quoted prices for identical instruments

in active markets;

· Level 2 - 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 - 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.

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

Production Loan Facility 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 fair values of the available-for-sale securities

are generally based on quoted market prices, where available.

These fair values are obtained primarily from third-party pricing services,

which generally use Level I or Level II inputs for the determination of fair value to facilitate fair value measurements and disclosures.

Level II securities primarily include corporate securities, securities from states, municipalities and political subdivisions, mortgage-backed

securities, United States Government securities, foreign government securities, and certain other asset-backed securities.

For securities

not actively traded, the pricing services may use quoted market prices of comparable instruments or a variety of valuation techniques,

incorporating inputs that are currently observable in the markets for similar securities.

The following table summarizes the marketable

securities measured at fair value by level within the fair value hierarchy as of June 30, 2021:

Schedule of marketable security measured at fair value

Total Fair Value

Marketable investments:

Corporate Bonds

agency and government sponsored securities

states and municipalities

Fair values were determined for each individual

security in the investment portfolio.

The Company’s marketable securities are considered to be available-for-sale investments as

defined under ASC 320, Investments – Debt and Equity Securities .

There were no impairment charges recorded for the marketable

Refer to Note 4 for additional details.

The fair values of the derivative warrants attached to the 2020 Convertible Notes

were determined using the Black-Scholes-Merton model (Level 2) with standard valuation inputs.

Refer to Note 18 for additional details.

The fair value of the contingent earn-out liability was valued using Level 3 inputs.

Refer to Note 3 for additional details.

The Company did not have any financial assets

and liabilities measured at fair value on a non-recurring basis as of June 30, 2021 or December 31, 2020.

Business Combinations

The Company allocates

the fair value of the purchase consideration of a business acquisition to the tangible assets, liabilities, and intangible assets acquired

based on their estimated fair values.

The excess of the fair value of purchase consideration over the fair values of these identifiable

assets and liabilities is recorded as goodwill.

The valuation of acquired assets and assumed liabilities requires significant judgment

and estimates, especially with respect to intangible assets.

The valuation of intangible assets requires that the Company use valuation

techniques such as the income approach.

The income approach includes the use of a discounted cash flow model, which includes discounted

cash flow scenarios and requires significant estimates such as future expected revenue, expenses, capital expenditures and other costs,

and discount rates.

The Company estimates the fair value based upon assumptions management believes to be reasonable, but which are inherently

uncertain and unpredictable and, as a result, actual results may differ from estimates.

Estimates associated with the accounting for acquisitions

may change as additional information becomes available regarding the assets acquired and liabilities assumed.

Acquisition-related expenses

and any related restructuring costs are recognized separately from the business combination and are expensed as incurred.

Recent Accounting Pronouncements

In March 2019, the FASB issued ASU No.

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

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.

In June 2016, the FASB issued Accounting Standards

Update ("ASU") No.

2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326) .

ASU 2016-13 replaces the

“incurred loss” credit losses framework with a new accounting standard that requires management's measurement of the allowance

for credit losses to be based on a broader range of reasonable and supportable information for lifetime credit loss estimates.

model, referred to as the current expected credit loss (“CECL”) model, will apply to:

(1) financial assets subject to credit

losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures.

This includes, but is not limited to, loans,

leases, held-to-maturity securities, loan commitments, and financial guarantees.

The CECL model does not apply to available-for-sale (“AFS”)

debt securities.

For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they

do today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities.

ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans.

2016-13 also expands the disclosure

requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses.

16, 2019, the FASB approved a proposal to change the effective date of ASU No.

2016-13 for smaller reporting companies, such as the Company,

delaying the effective date to fiscal years beginning after December 31, 2022, including interim periods within those fiscal periods.

Early adoption is permitted for interim and annual reporting periods.

The Company is currently evaluating the effect that the ASU will

have on its consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU No.

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

The 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

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 capital.

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

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,

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .

The 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 capital.

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.

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.

The Company has adopted ASU No.

2020-06 starting January 1, 2021.

The impact to the Company’s consolidated financial position, results

of operations and cash flows was not material as the Company does not have any outstanding convertible instruments.

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 consolidated financial position, results of operations, or cash flows.

Business Combinations

We allocate the fair

value of the purchase consideration of a business acquisition to the tangible assets, liabilities, and intangible assets acquired based

on their estimated fair values.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets

and liabilities is recorded as goodwill.

The valuation of acquired assets and assumed liabilities requires significant judgment and estimates,

especially with respect to intangible assets.

The valuation of intangible assets requires that we use valuation techniques such as the

income approach.

The income approach includes the use of a discounted cash flow model, which includes discounted cash flow scenarios and

requires significant estimates such as future expected revenue, expenses, capital expenditures and other costs, and discount rates.

estimate the fair value based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable and,

as a result, actual results may differ from estimates.

Estimates associated with the accounting for acquisitions may change as additional

information becomes available regarding the assets acquired and liabilities assumed.

Acquisition-related expenses and any related restructuring

costs are recognized separately from the business combination and are expensed as incurred.

Foreign Currency Translation

The Company considers the

dollar to be its functional currency for its United States based operations.

The Company considers the Canadian dollar to be its

functional currency for its Canada based operation.

Accordingly, monetary assets and liabilities denominated in foreign currencies are

translated into U.S.

dollars at the exchange rate in effect at the balance sheet date and non-monetary assets and liabilities are translated

at the exchange rates in effect at the time of acquisition or issue.

Revenues and expenses are translated at rates approximating the exchange

rates in effect at the time of the transactions.

All exchange gains and losses are included in operations.

and are not expected to have a material effect on the Company’s financial position, results of operations, or cash flows.

Acquisition of ChizComm Entities

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 “

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 ”

and, together with ChizComm Canada,

ChizComm ”) (the “

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.

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” and, together with ChizComm Canada, “ChizComm”) (the “Acquisition”).

The following

table summarizes the fair value of the purchase price consideration paid to acquire ChizComm:

Total purchase price consideration paid

Cash consideration at closing

Equity consideration at closing

Fair value of Earn-Out shares

Total consideration paid by the Company in the

transaction at closing consisted of $8.5 million in cash and 1,980,658 shares (the “

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 (Earn-Out).

transaction at closing consisted of $ 8.5 million in cash and 1,980,658 shares (the “Closing Shares”) of the Company’s

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 (Earn-Out).

The Acquisition

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The acquisition expands the

Company’s revenue streams into media and advertising services.

has determined that the Acquisition constitutes a business acquisition as defined by Accounting Standards Codification (“ASC”)

Company’s revenue streams into media and advertising services.

has determined that the Acquisition constitutes a business acquisition as defined by Accounting Standards Codification (“ASC”)

805, Business Combinations .

Accordingly, the assets acquired and the liabilities assumed in the transaction were recorded at their estimated

acquisition fair values, while transaction costs associated with the acquisition were expensed as incurred pursuant to the purchase method

of accounting in accordance with ASC 805.

The Company’s purchase price allocation was based on an evaluation of the appropriate

Accordingly, the assets acquired and the liabilities assumed in the transaction were recorded at their

estimated acquisition fair values, while transaction costs associated with the acquisition were expensed as incurred pursuant to the purchase

method of accounting in accordance with ASC 805.

The Company’s purchase price allocation was based on an evaluation of the appropriate

fair values and represent managements best estimate based on available data.

Fair values are determined based on the requirements of ASC

820, Fair Measurements and Disclosures (“ASC 820”).

arrangement meets the liability classification criteria outlined in ASC 480, “Distinguishing Liabilities from Equity”, as

it is not indexed to the Company’s own shares and is classified as a liability in the accompanying balance sheet.

Liability classified

contingent consideration is measured initially at the fair value on the acquisition date and is remeasured at each reporting period.

differences between the estimated fair value of the Earn-Out recorded at the acquisition date and the remeasurement date will be reflected

as a charge or credit, as applicable, in the statement of operations.

The following

table summarizes the fair value of the purchase price consideration paid to acquire ChizComm:

Cash consideration at closing

Equity consideration at closing

Fair value of Earn-Out shares

The preliminary purchase price allocation was

based upon an estimate of the fair value of the assets acquired and the liabilities assumed by the Company in connection with the acquisition

The accounting for the acquisition at March 31, 2021 is preliminary as the Company is finalizing its valuation and determination

of it’s intangible assets and contingent consideration and expects to be finalized in subsequent quarters.

The Company has engaged

a third party valuation firm to assist with the purchase price allocation which will be completed in subsequent quarters.

820, Fair Measurements and Disclosures (“ASC 820”).

arrangement meets the liability classification criteria outlined in ASC 480, Distinguishing Liabilities from Equity , as it is not

indexed to the Company’s own shares and is classified as a liability in the accompanying balance sheet.

Liability classified contingent

consideration is measured initially at the fair value on the acquisition date and is remeasured at each reporting period.

Subsequent differences

between the estimated fair value of the Earn-Out recorded at the acquisition date and the remeasurement date will be reflected as a charge

or credit, as applicable, in the statement of operations.

As of June 30, 2021, there were no material changes to the assumptions used

on the acquisition date to value the contingent consideration, therefore no change in value was recorded.

completed and finalized the purchase price allocation during the three months ended June 30, 2021.

The Company recorded assets acquired

and liabilities assumed at their respective fair values.

The following table summarizes the final fair value of assets acquired and liabilities

Assets acquired and liabilities assumed

Accounts Receivable

Prepaid Expenses

Lease Deposits

Customer Relationships

Non-Compete Agreements

Accounts Payable and Accrued Expenses

( 7,006,350 )

Payroll Tax Liability

Total Consideration

The identifiable intangible assets acquired of

$9,630,000 was composed of $3,430,000 for ChizComm’s trade name with an indefinite remaining economical life, $6,140,000 for ChizComm’s

customer base with a remaining useful life of approximately 12 years, and $60,000 for ChizComm’s non-compete agreements with a remaining

$ 9,630,000 was composed of $ 3,430,000 for ChizComm’s trade name with an indefinite remaining economical life, $ 6,140,000 for ChizComm’s

customer base with a remaining useful life of approximately 12 years, and $ 60,000 for ChizComm’s non-compete agreements with a remaining

economic life of 3 years.

Management is responsible for determining the

fair value of the identifiable assets acquired as of the effective Date.

Management considered a number of factors, including reference

to an analysis under ASC 805 solely for the purpose of allocating the purchase price to the assets acquired.

Valuation Methodology

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This method is an income approach that estimates the portion of a

company’s earnings attributable to an asset based on the royalty rate the company would have paid for the use of the asset if it

did not own it.

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were valued using a with and without method.

Under this method, estimated prospective financial information (“PFI”) is calculated

with the existence and ownership of an intangible asset and compared to the PFI in the absence of the ownership of the intangible asset.

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Attrition of existing customers.

The acquisition was treated for tax purposed as

a nontaxable transaction and as such, the historical tax bases of the acquired tax bases of the acquired assets, net operating loose,

and other tax attributes of ChizComm will carryover.

As a result, no new goodwill for tax purposes was created on connection with the

acquisition as there is no step-up to the fair value of the underlying tax bases of the acquired net assets.

The preliminary purchase price allocation was

based upon an estimate of the fair value of the assets acquired and the liabilities assumed by the Company in connection with the acquisition

of ChizComm, as follows:

Accounts Receivable

Prepaids Expenses

Lease Deposits

Customer Relationships

Non-Compete Agreements

Accounts Payable and Accrued Expenses

Payroll Tax Liability

Total Consideration

Supplemental Pro Forma Information (Unaudited)

The acquisition was treated for tax purposes as

a nontaxable transaction and as such, the historical tax basis of the acquired assets, net operating loss, and other tax attributes

of ChizComm will carryover.

As a result, no new goodwill for tax purposes was created in connection with the acquisition as there is no

step-up to the fair value of the underlying tax bases of the acquired net assets.

The following supplemental pro forma information

summarizes our results of operations for the periods presented, as if we completed the acquisition of ChizComm on the beginning of the

period presented.

Supplemental proforma information as follows:

summarize the Company’s results of operations for the current reporting period, as if the Company completed the acquisition as of

the beginning of the annual reporting period.

pro forma information as follows:

Three Months Ended

March 31, 2021

March 31, 2020

Six Months Ended

Total Revenues

Net Loss Applicable to Common Shareholders

( 7,383,978 )

( 383,624,941 )

( 84,269,062 )

( 391,305,960 )

Net Loss per Common Share (Basic and Diluted)

Weighted Average Shares Outstanding (Basic and Diluted)

Marketable Securities

The Company classifies and accounts for its marketable

debt securities as available-for-sale and the securities are stated at fair value.

The investments in marketable securities had an adjusted cost basis

of $80,902,119 and a market value of $80,392,494 as of June 30, 2021.

Summary of Investment in marketable security

Adjusted Cost

Unrealized Loss

Corporate Bonds

$ ( 371,032 )

agency and government sponsored securities

states and municipalities

$ ( 509,625 )

The Company reported the unrealized losses, net

of taxes, as a component of stockholders' equity.

The decline in fair value is largely due to changes in interest rates and other market

The Company has evaluated these securities and determined that no allowance is necessary based on the credit quality and the

low risk of loss due to the security type.

The fair value is expected to recover as the securities approach maturity.

The contractual maturities of the Company’s marketable investments

as of June 30, 2021 were as follows:

Summary of contractual maturity

Due after 1 year through five years

Due after 5 years through 10 years

Due after 10 years (a)

(a) Included within this category are municipal bonds with a fair value of $2,300,000 that the Company plans to sell within the next twelve months.

The Company may sell certain of its marketable debt securities prior

to their stated maturities for reasons including, but not limited to, managing liquidity, credit risk, duration and asset allocation.

The Company did not sell any securities during the three or six months

ended June 30, 2021, that resulted in gains or losses.

Property and Equipment, Net

The Company has property and equipment as follows

as of March 31, 2021 and December 31, 2020:

March 31, 2021

December 31, 2020

as of June 30, 2021 and December 31, 2020:

Schedule of property and equipment, net

Furniture and Equipment

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Leasehold Improvements

Production Equipment

Property and Equipment, Gross

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Property and Equipment, Net

During the three months ended March 31, 2021 and

During the three months ended June 30, 2021 and

2020, the Company recorded depreciation expense of $ 15,265 and $ 13,537 , respectively.

During the six months ended June 30, 2021 and 2020,

the Company recorded depreciation expense of $ 29,829 and $ 27,075 , respectively.

Right of Use Leased Asset

As of February 1, 2021, as a result of the Acquisition,

management recorded lease liability and right-of-use asset of $380,050.

Right of use asset consisted of the following

as of March 31, 2021 and December 31, 2020:

March 31, 2021

December 31, 2020

as of June 30, 2021 and December 31, 2020:

Schedule of right of use asset

Office Lease Asset

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Right Of Use Asset, Net

During the three months ended March 31, 2021

and 2020, the Company recorded amortization expense of $46,237 and $108,245 respectively.

During the three months ended June 30, 2021 and

June 30, 2020, the Company recorded amortization expense of $ 82,668 and $ 109,458 , respectively.

During the six months ended June 30, 2021

and June 30, 2020, the Company recorded amortization expense of $ 128,905 and $ 217,704 , respectively.

Film and Television Costs, Net

As of March 31, 2021, the Company had net Film

and Television Costs of $13,106,729, compared to $11,828,494 at December 31, 2020.

The increases primarily relates to the development

costs related to Stan Lee’s Superhero Kindergarten offset by amortization of Rainbow Rangers Season 1 and Llama

Llama Seasons 1 & 2 .

During the three months ended March 31, 2021 and

As of June 30, 2021, the Company had net

Film and Television Costs of $14,972,446, compared to $11,828,494 as of December 31, 2020.

The increase primarily relates to the

development costs related to Stan Lee’s Superhero Kindergarten offset by amortization of Rainbow Rangers Season

1 and Llama Llama Seasons 1 & 2 .

During the three months ended June 30, 2021 and

2020, the Company recorded Film and Television Cost amortization expense of $ 553,562 and $ 185,748 , respectively.

During the six months

ended June 30, 2021 and 2020, the Company recorded Film and Television Cost amortization expense of $ 658,369 and $ 292,363 , respectively.

The following table highlights the activity in

Film and Television Costs of March 31, 2021, and December 31, 2020:

Film and Television Costs as of June 30, 2021, and December 31, 2020:

Schedule of film and television costs activity

Film and Television Costs, Net as of December 31, 2019

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Film Amortization Expense

Film and Television Costs, Net as of March 31, 2021

Film and Television Costs, Net as of June 30, 2021

Goodwill and Intangible Assets, Net

In 2013, the Company recognized $10,365,806 in

Goodwill, representing the excess of the fair value of the consideration for the Merger over net identifiable assets acquired.

to FASB ASC 350-20, Goodwill is not subject to amortization but is subject to annual review to determine if certain events warrant impairment

to the Goodwill asset.

In 2013, the Company recognized $10,365,806

in goodwill, representing the excess of the fair value of the consideration for the merger with A Squared over net identifiable

assets acquired.

Pursuant to FASB ASC 350-20, Goodwill is not subject to amortization but is subject to annual review to

determine if certain events warrant impairment to the goodwill asset.

As a result of the ChizComm acquisition, the consideration

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Accordingly, this amount was recorded as goodwill at the time of the acquisition.

Through March 31, 2021, the Company has not recognized any impairment to Goodwill.

Through June 30, 2021, the Company has not recognized any impairment on goodwill.

The following table represents details of our

goodwill balance:

Schedule of Goodwill

Goodwill as of December 31, 2020

Acquisition of ChizComm Entities

Goodwill as of March 31, 2021

Foreign Currency Translation Adjustment

Goodwill as of June 30, 2021

Intangible Assets, Net

The Company had the following intangible assets

as of March 31, 2021, and December 31, 2020:

March 31, 2021

December 31, 2020

as of June 30, 2021 and December 31, 2020:

Schedule of Intangible Asset

Trademarks (a)

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Intangible Assets, Gross

Less Accumulated Amortization (e)

Foreign Currency Translation Adjustment

Less Accumulated Amortization

Intangible Assets, Net

(a) Pursuant to FASB ASC 350-30-35, the Company reviews these intangible assets periodically to determine

if the value should be retired or impaired due to recent events.

(b) Amount represents fair value of the ChizComm and ChizComm Beacon Media trade names which have determined

to have an indefinite useful life.

life of 12 years.

Amortization expense for the three months ended March 31, 2021 was $85,333.

(d) Amount represents fair value of the Non-compete agreements as part of the ChizComm acquisition.

The non-compete

agreements have a useful life of 3 years.

Amortization expense for the three months ended March 31, 2021 was $3,333.

(e) During the three months ended March 31, 2021 and March 31, 2020, the Company recognized, $2,855 and $10,791,

to FASB ASC 350-30-35, the Company reviews these intangible assets periodically to determine if the value should be retired or

impaired due to recent events.

During the three months ended June 30, 2021 and June 30, 2020, the Company recognized, $ 8,276

and $ 10,847 ,

respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets.

Expected future intangible asset amortization as of March 31, 2021

During the six months

ended June 30, 2021 and June 30, 2020, the Company recognized, $ 11,131

and $ 21,638 ,

respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets.

Amount represents fair value of the ChizComm and ChizComm Beacon Media Trade Names which have been determined to have an indefinite useful life.

Amount represents fair value of the ChizComm and ChizComm Beacon Media Customer Relationships with a useful life of 12 years.

Amortization expense for the three and six months ended June 30, 2021 was $ 129,277 and $ 214,610 , respectively.

Amount represents fair value of the Non-Compete agreements as part of the ChizComm acquisition.

The Non-Compete agreements have a useful life of 3 years.

Amortization expense for the three and six months ended June 30, 2021 was $5,053 and $8,386, respectively.

Expected future intangible asset amortization as of June

30, 2021 is as follows:

Expected future intangible asset amortization

Remaining 2021

Deferred Revenue

As of March 31, 2021, and December 31, 2020, the

As of June 30, 2021 and December 31, 2020, the

Company had total short term and long term deferred revenue of $ 3,957,937 and $ 4,432,377 , respectively.

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have been met.

Included in the deferred revenue balance as of March 31, 2021 and December 31, 2020 is the $3,370,284 which is the remaining

Included in the deferred revenue balance as of June 30, 2021 and December 31, 2020 is the $ 3,394,967 which is the remaining

balance from the total $ 3,489,583 advance against future royalty that Sony paid to the Company for both the foreign and domestic distribution

Accrued Expenses, Salaries and

Wages –

As of March 31, 2021, and December 31, 2020, the

Accrued Expenses, Salaries and Wages

As of June 30, 2021 and December 31, 2020, the

Company has the following current accrued liabilities:

March 31, 2021

December 31, 2020

Schedule of other accrued liabilities

Other Accrued Expenses (a)

Accrued Salaries and Wages (b)

Total Accrued Liabilities –

Represents accrued interest and legal fees.

Represents accrued salaries and wages and accrued vacation payable to employees as of March 31, 2021 and the year ended December 31, 2020

Secured Convertible Notes

On August 17, 2018, the Company entered into a

Securities Purchase Agreement (the “August 2018 Purchase Agreement”) with certain investors (the “Investors”),

pursuant to which the Company agreed to sell (i) an aggregate principal amount of $4.50 million in secured convertible notes, convertible

into shares of our common stock, at a conversion price of $2.50 per share (the “August 2018 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 (the “Warrants,”

together with the August 2018 Secured Convertible Notes, the “Securities”).

We received approximately $4,500,000 in gross

proceeds from the Offering.

The August 2018 Secured Convertible Notes were

our senior secured obligations and were secured by certain tangible and intangible property of the Company as described in the August

2018 Purchase Agreement.

On March 16, 2020, the holders of the August 2018 Secured Convertible Notes were repaid in full including interest.

Senior Secured Convertible Notes 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 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

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.

The Special 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”).

Total Accrued Liabilities – Current

Primarily represents accrued interest and legal fees.

Represents accrued salaries and wages and accrued vacation payable to employees as of June 30, 2021 and the year ended December 31, 2020.

Senior Secured Convertible Notes

On March 11, 2020, the Company entered into a

Securities Purchase Agreement (the “SPA”) with certain accredited investors (each an “Investor” and collectively,

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

in the aggregate principal amount of $1 3,750,000 (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 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 was paid at the closing and not pursuant

to an Investor Note.

The Special 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 occurred on March 17, 2020 (the “Closing Date”).

date of the 2020 Convertible Notes was September 30, 2021 and the maturity date of the Investor Notes was March 11, 2060.

The Company held a 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”).

The Company held a 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 SPA,

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(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 (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

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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

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

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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.

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Production Loan Facility

On August 8, 2016, Llama Productions, LLC closed

a $5,275,000 multiple draw-down, secured, non-recourse, non-revolving credit facility (the “Facility”) with Bank Leumi USA

to produce its animated series Llama Llama , (the “Series”) which is configured as fifteen half-hour episodes comprised

of thirty 11-minute programs that were delivered to Netflix in fall 2017.

The Facility is secured by the license fees the Company will

receive from Netflix for the delivery of the Series as well as the Company’s copyright in the Series.

The Facility has a term of

40 months and has an interest rate of either Prime plus 1% or one, three, or six-month LIBOR plus 3.25%.

As a condition of the loan agreement

with Bank Leumi, the Company deposited $1,000,000 into a cash account to be used solely to produce the Series.

Additionally, the Facility

contains certain standard affirmative and negative non-financial covenants such as maintaining certain levels of production insurance

and providing standard financial reports.

As of March 31, 2020, the Company was in compliance with these covenants.

On September 28, 2018, Llama Productions LLC 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”).

proceeds of the Loan 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.

payment of the Loan, Llama has granted to the Lender a continuing security interest in and against, generally, all of its tangible and

intangible assets, which includes all seasons of the Llama Llama animated series.

Under the Loan and Security Agreement, Llama can

request revolving loan advances under (a) the Prime Rate Loan facility and (b) the LIBOR Loan facility, each as further described in the

Loan and Security Agreement attached as an exhibit hereto.

Prime Rate Loan advances shall bear interest, on the outstanding balance thereof,

at a fluctuating per annum rate equal to 1.0% plus the Prime Rate (as such term is defined in the Loan and Security Agreement), provided

that in no event shall the interest rate applicable to Prime Rate Loans be less than 4.0% per annum.

LIBOR Loan advances shall bear interest,

on the outstanding balance thereof, for the period commencing on the funding date and ending on the date which is one (1), three (3) or

six (6) months thereafter, at a per annum rate equal to 3.25% plus the LIBOR determined for the applicable Interest Period (as such terms

are defined in the Loan and Security Agreement), provided that in no event shall the interest rate applicable to LIBOR Loans be less than

3.25% per annum.

The Maturity Date of the Prime Rate Loan facility and LIBOR Loan facility is July 31, 2021.

Interest rates on advances

under the Loan and Security Agreement were 4.25% as of March 31, 2021.

On August 8, 2016 , Llama Productions LLC (“Llama”)

closed a $5,275,000 multiple draw-down, secured, non-recourse, non-revolving credit facility (the “Facility”) with Bank Leumi

USA (the “Lender”) to produce its animated series Llama Llama , (the “Series”) which is configured as fifteen

half-hour episodes comprised of thirty 11-minute programs that were delivered to Netflix in fall 2017.

The Facility is secured by the

license fees the Company will receive from Netflix for the delivery of the Series as well as the Company’s copyright in the Series.

The Facility has a term of 40 months and has an interest rate of either Prime plus 1% or one, three, or six-month LIBOR plus 3.25%.

a condition of the loan agreement with Bank Leumi, the Company deposited $1,000,000 into a cash account to be used solely to produce the

Additionally, the Facility contains certain standard affirmative and negative non-financial covenants such as maintaining certain

levels of production insurance and providing standard financial reports.

As of June 30, 2020, the Company was in compliance with these

On September 28, 2018, Llama entered into a Loan and Security Agreement

(the “Loan and Security Agreement”) with 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 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.

To secure payment of the Loan, Llama has granted to the Lender a continuing security

interest in and against, generally, all of its tangible and intangible assets, which includes all seasons of the Llama Llama animated

Under the Loan and Security Agreement, Llama can request revolving loan advances under (a) the Prime Rate Loan facility and (b) the LIBOR Loan facility, each as further described in the Loan and Security Agreement attached as an exhibit hereto.

Prime Rate Loan advances shall bear interest, on the outstanding balance thereof, at a fluctuating per annum rate equal to 1.0% plus the Prime Rate (as such term is defined in the Loan and Security Agreement), provided that in no event shall the interest rate applicable to Prime Rate Loans be less than 4.0% per annum.

LIBOR Loan advances shall bear interest, on the outstanding balance thereof, for the period commencing on the funding date and ending on the date which is one (1), three (3) or six (6) months thereafter, at a per annum rate equal to 3.25% plus the LIBOR determined for the applicable Interest Period (as such terms are defined in the Loan and Security Agreement), provided that in no event shall the interest rate applicable to LIBOR Loans be less than 3.25% per annum.

The Maturity Date of the Prime Rate Loan facility and LIBOR Loan facility was June 30, 2021.

Interest rates on advances under the Loan and Security Agreement averaged 4.

25% as of June 30, 2020.

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

the Original Loan and Security Agreement.

As of March 31, 2021, the Company had gross outstanding

borrowing under the facility of $688,011.

the Lender entered into Amendment No.

2 to the 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 8, 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, and (ii) include the Llama Llama season two obligations under the Loan and Security Agreement as obligations

under the Original Loan and Security Agreement.

As of June 30, 2021, the Company had gross

outstanding borrowing under the facility of $ 274,365 .

As of December 31, 2020, the Company had gross outstanding borrowing under the facility of $ 1,099,713 .

The outstanding balance was repaid on July 14, 2021.

Disputed Trade Payable

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the basis for this liability.

As of December 31, 2017, the Company believes that the statute of limitations applicable to the assertion

As of December 31, 2017, the Company believed that the statute of limitations applicable to the assertion

of any legal claim relating to the collection of these liabilities has expired and therefore believes this liability is not owed.

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On April 30, 2020, the Company received loan proceeds

in the amount of $366,267 under the Paycheck Protection Program (“PPP”) which was established as part of the Coronavirus Aid,

Relief and Economic Security (“CARES”) Act and is administered through the Small Business Administration (“SBA”).

The PPP provides loans to qualifying businesses in amounts up to 2.5 times their average monthly payroll expenses and was designed to

provide a direct financial incentive for qualifying businesses to keep their workforce employed during the Coronavirus crisis.

are uncollateralized and guaranteed by the SBA and are forgivable after a “covered period”

(eight or twenty-four weeks) as

long as the borrower maintains its payroll levels and uses the loan proceeds for eligible expenses, including payroll, benefits, mortgage

interest, rent, and utilities.

The forgiveness amount will be reduced if the borrower terminates employees or reduces salaries and wages

more than 25% during the covered period.

Any unforgiven portion is payable over 2 years if issued before, or 5 years if issued after,

June 5, 2020 at an interest rate of 1% with payments deferred until the SBA remits the borrower’s loan forgiveness amount to the

lender, or, if the borrower does not apply for forgiveness, ten months after the end of the covered period.

PPP loan terms provide for

customary events of default, including payment defaults, breaches of representations and warranties, and insolvency events and may be

accelerated upon the occurrence of one or more of these events of default.

Additionally, PPP loan terms do not include prepayment penalties.

in the amount of $ 366,267 under the Paycheck Protection Program (“PPP”) which was established as part of the Coronavirus Aid,

Relief and Economic Security (“CARES”) Act and is administered through the Small Business Administration (“SBA”).

The Company repaid the loan, including interest of $3,452 on April 28, 2021.

Stockholders’

As of March 31, 2021, the total number of authorized

Stockholders’ Equity

As of June 30, 2021, the total number of authorized

shares of Common Stock was 400,000,000 .

On March 22, 2020, the Company entered into a

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

pursuant to which the Company 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.

On March 22, 2020, the Company entered into

a Securities Purchase Agreement (the “Purchase Agreement”) with certain long-standing investors (the

“Investors”), pursuant to which the Company 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 of common stock at an offering price of $0.2568 per share for gross proceeds of approximately $ 1.0

million before deducting offering expenses.

The Registered Offering closed on March 25, 2020.

As of March 31, 2021, and December 31, 2020, there

As of June 30, 2021 and December 31, 2020, there

were 300,791,335 and 258,438,514 shares of common stock outstanding, respectively.

On January 6, 2021, the Company issued 25,000

shares of the Company’s common stock valued at $ 1.40 per share for marketing services.

On January 21, 2021, the Company issued 136,986

shares of the Company’s common stock valued at $ 1.46 per share for marketing services.

On February 1, 2021, the Company issued 1,932,163

shares of the Company’s common stock valued at $ 1.78 per share as partial consideration for the ChizComm acquisition.

On February 4, 2021, the Company issued 48,495

shares of the Company’s common stock valued at $ 1.81 per share as partial consideration for the ChizComm acquisition.

On May 14, 2021, the Company issued 469,677 shares

of the Company’s common stock valued at $ 1.55 per share for production services.

Preferred Stock

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liquidation preferences, conversion rights and preemptive rights.

As of March 31, 2021, and December 31, 2020, there

were 0 and 0 shares of Series A Convertible Preferred Stock outstanding respectively.

On May 12, 2014, the Board of Directors authorized

the designation of a class of preferred stock as “Series A Convertible Preferred Stock.”

On May 14, 2014, the Company filed

the Certificate of Designation, Preferences and Rights of the 0% Series A Convertible Preferred Stock (the “Certificate of Designations”)

with the Secretary of State of the State of Nevada.

Each share of the Series A Convertible Preferred

Stock is convertible into shares of Common Stock, based on a conversion calculation equal to the Base Amount divided by the conversion

The Base Amount is defined as the sum of (i) the aggregate stated value of the Series A Convertible Preferred Stock to be converted

and (ii) all unpaid dividends thereon.

The stated value of each share of the Series A Convertible Preferred Stock is $1,000 and the initial

conversion price is $6.00 per share, subject to adjustment in the event of stock splits, dividends and recapitalizations.

Additionally,

in the event the Company issues shares of its common stock or common stock equivalents at a per share price that is lower than the conversion

price then in effect, the conversion price shall be adjusted to such lower price, subject to certain exceptions.

The Company is prohibited

from effecting a conversion of the Series A Convertible Preferred Stock to the extent that as a result of such conversion, the investor

would beneficially own more than 9.99% in the aggregate of the issued and outstanding shares of the Company’s common stock, calculated

immediately after giving effect to the issuance of shares of common stock upon conversion of the Series A Convertible Preferred Stock.

The shares of Series A Convertible Preferred Stock possess no voting rights.

On November 20, 2019, we entered into a settlement

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

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.

Accordingly, on November 21, 2019, we filed an Amended and Restated Certificate of Designation (the “Amended

and Restated Certificate”) for our Series A Convertible Preferred Stock.

The amendments, among other things, had the effect of setting

the conversion price of the Series A Convertible Preferred Stock at $0.21.

Between November 21, 2019 and December 10, 2019,

the Company issued 3,804,766 shares of the Common Stock in exchange for 798 shares of preferred Stock at a conversion price of $0.21 per

On January 9, 2020, the Company issued 3,171,428

shares of the Common Stock in exchange for 666 shares of preferred Stock at a conversion price of $0.21 per share.

Between May 18 and June 24, 2020, the Company

issued 1,571,428 shares of Common Stock in exchange for 330 shares of Series A Convertible Preferred Stock at a conversion price of $0.21

On November 17, 2020, the Company issued 476,190

shares of Common Stock in exchange for 100 shares of Series A Convertible Preferred Stock at a conversion price of $0.21 per share.

On January 6, 2021, the Company issued 25,000

shares of the Company’s common stock valued at $1.40 per share for marketing services.

On January 21, 2021,

the Company issued 136,986 shares of the Company’s common stock valued at $1.46 per share for marketing services.

On February 1, 2021,

the Company issued 1,932,163 shares of the Company’s common stock valued at $1.78 per share as partial consideration for the ChizComm

On February 4, 2021,

the Company issued 48,495 shares of the Company’s common stock valued at $1.81 per share as partial consideration for the ChizComm

There were no shares of preferred

stock outstanding as of June 30, 2021 and December 31, 2020.

Stock Options

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Genius Brands International, Inc.

2015 Incentive Plan (the “2015 Plan”).

The total number of shares that can be issued under

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Genius Brands International, Inc.

2020 Incentive Plan (the “2020 Plan”).

On August 4, 2020, the Board of Directors voted to

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the Company granted options to purchase 520,000 shares of common stock to employees and granted to each of the members of the Board of

Directors 20,000 options to purchase shares of the Company’s Common Stock with an option price of $3.06 per share.

Directors 20,000 options to purchase shares of the Company’s common stock with an option price of $ 3.06 per share.

The options vest

on January 27, 2022 and have a five-year term.

The fair value of these options was determined to be $1,801,800 using the Black-Scholes

option pricing model based on the following assumptions:

During the three months ended June 30, 2021,

the Company granted options to purchase 253,636

shares of common stock to employees that fully

vest on January 24, 2024 and have a five-year term .

The Company also granted 20,000

options to purchase shares of common stock to a new member of the Board of Directors that vest

on June 24, 2022 and have a five-year term.

The shares have an option price of $ 1.98

The table below outlines the weighted average

assumptions for options granted during the three months ended March 31, 2021 and June 30, 2021:

Schedule of assumptions used

March 31, 2021

June 30, 2021

Exercise Price

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The following table summarizes the changes in

the Company’s stock option plan during the three months ended March 31, 2021:

Exercise Price Per Share

Balance at December 31, 2020

$ 1.39 - 10.00

Options Granted

Options Exercised

Options Cancelled

Options Expired

Balance at March 31, 2021

$ 1.39 - 10.00

Exercisable December 31, 2020

$ 1.39 - 9.00

Exercisable March 31, 2021

$ 1.39 - 3.17

During the three months ended March 31, 2021,

and March 31, 2020, the Company recognized $1,158,624 and $23,814, respectively in share-based compensation expense.

The unvested share-based

compensation as of March 31, 2021 was $4,510,315, which will be recognized through the fourth quarter of 2023 assuming the underlying

grants are not cancelled or forfeited.

the Company’s stock option plan during the six months ended June 30, 2021:

Schedule of stock option activity

Number of Shares

Weighted- Average Remaining Contractual Life

Weighted- Average Exercise Price

Outstanding at December 31, 2020

Outstanding at June 30, 2021

Unvested at June 30, 2021

Vested and exercisable June 30, 2021

During the three and six months ended June 30,

2021, the Company recognized $ 762,341 and $ 1,920,965 , respectively in share-based compensation expense related to stock options.

the three and six months ended June 30, 2020, the Company recognized $ 328,497 and $ 352,311 , respectively in share-based compensation expense.

The unrecognized share-based compensation as of June 30, 2021 was $ 3,098,651 and will be recognized over a weighted average remaining

contractual life of 7.62 years.

The outstanding shares as of June 30, 2021 have an aggregated intrinsic value of $ 0 .

The weighted average

fair values per option granted for the six months ended June 30, 2021 was determined to be $ 2.36 .

Restricted Stock Units

On December 7, 2020, the Company granted 9,075,000

shares of Restricted Stock Units (RSU’s) with a fair market value of $12,614,250 to certain employees and officers.

shares of Restricted Stock Units (RSU’s) with a fair market value of $ 12,614,250 to certain employees and officers.

Of such RSU’s,

7,500,000 were issued to Andy Heyward, the Company’s Chief Executive Officer (“CEO”) and were to vest in four equal

installments on the first, second, third and fourth anniversaries of December 7, 2020, subject to his continued employment (the “service-based

The CEO also received an additional 7,500,000 RSU’s that vested in four equal installments on the first, second,

third and fourth anniversaries of December 7, 2020, based on achievement of certain performance goals (the “performance-based awards”),

which have not been established at the time the CEO and the Company entered into the arrangement, and subject to his continued employment.

the performance conditions have not been established for the performance-based awards, a grant date was not yet established.

On February 1, 2021, the Company issued 53,763

shares of Restricted Stock Units (RSU’s) with a fair market value of $82,594.

The following table summarizes the Company’s

restricted stock issuance during the three months ended December 31, 2020:

Outstanding Number Of

Contractual Life

Balance at December 31, 2020

RSUs Exercised

RSUs Cancelled

Balance at March 31, 2021

$ 1.38 - 1.39

Exercisable December 31, 2019

Exercisable March 31, 2021

During the quarter ended March 31, 2021, the Company

recognized $1,414,524 in share-based compensation expense.

The unvested share-based compensation as of March 31, 2021 is $8,734,200 which

will be recognized through the fourth quarter of 2024 assuming the underlying grants are not cancelled or forfeited.

The Company has warrants outstanding to purchase

up to 45,511,965 and 45,511,965 shares as of March 31, 2021 and December 31, 2020, respectively.

shares of RSU’s with a fair market value of $ 74,193 .

On June 23, 2021, the Compensation Committee

of the Board of Directors amended the service-based awards granted to the CEO, such that 3,750,000 of such RSUs shall continue to

vest in four equal installments on the first, second, third and fourth anniversaries of December 7, 2020, subject to his continued

employment and the remaining 3,750,000 RSU’s shall be modified to vest based on performance or market conditions.

previously issued 7,500,000 performance-based awards, along with the 3,750,000 modified service-based awards, shall vest as

(i) 3,750,000 RSUs vest when the Company’s common stock closing sale price equals or exceeds $3.00 per share or

the Company’s market capitalization equals or exceeds $903,000,000 for 20 consecutive trading days;

(ii) 3,750,000 RSUs vest

when the Company’s common stock closing sale price equals or exceeds $3.50 per share or the Company’s market

capitalization equals or exceeds $1,053,500,000 for 20 consecutive trading days, and (iii) 3,750,000 RSUs vest when the

Company’s common stock closing sale price equals or exceeds $3.75 per share or the Company’s market capitalization

equals or exceeds $1,128,750,000 for 20 consecutive trading days (the “market conditions”).

In addition to the stock

price and market capitalization vesting conditions set forth above, such 11,250,000 RSUs may also vest in four equal installments on

the first, second, third and fourth anniversaries of December 7, 2020, based on achievement of certain operating performance-based

vesting conditions established by the Compensation Committee on June 23, 2021 and subject to his continued employment, adjusted

pro-ratably for vesting pursuant to the market conditions.

As a result of these modifications, the RSUs subject to the market

conditions were valued at $ 15,649,700 with a derived service period of 12 months, using a Monte-Carlo simulation model.

resulted in a $ 221,665 increase in stock-based compensation for the three months ended June 30, 2021.

On June 24, 2021, the Company issued 213,636

shares of RSU’s with a fair market value of $ 422,999 .

The following table summarizes the Company’s

restricted stock issuance during the six months ended December 31, 2020:

Schedule of restricted stock units

Restricted Stock Units

Grant Date Fair Value

Unvested at December 31, 2020

Unvested at June 30, 2021

During the three and six months ended June 30,

2021, the Company recognized $ 2,231,833 and $ 3,646,356 , respectively in share-based compensation expense related to RSU awards.

share-based compensation as of June 30, 2021 is $ 19,334,519 which will be recognized through the fourth quarter of 2024 assuming the underlying

grants are not cancelled or forfeited.

The Company has warrants outstanding to

purchase up to 45,511,965

shares as of June 30, 2021 and December 31, 2020.

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”).

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

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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”).

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

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50,000 shares at an exercise price of $0.34 per share.

Pursuant to the SPA described in Note 11, the

Company issued to the note holders warrants to purchase 65,476,191 shares of Common Stock, exercisable for a period of five years at an

initial exercise price of $0.26 per share.

The placement agent received warrants to purchase 6,547,619 shares

at an exercise price of $0.26 per share.

The fair values of derivative warrants attached to 2020 Convertible Notes and Notes conversion

option were determined based on Level 3 inputs, using the Black-Scholes-Merton model with standard valuation inputs.

Pursuant to the SPA described in Note 11,

the Company issued to the note holders warrants to purchase 65,476,191

shares of common stock, exercisable for a period of 5 five years at an initial exercise price of $ 0.26

The placement agent received warrants to purchase

6,547,619 shares at an exercise price of $ 0.26 per share.

The fair values of derivative warrants attached to 2020 Convertible Notes and

Notes conversion option were determined using the Black-Scholes-Merton model with standard valuation inputs.

The valuation inputs as of March 17, 2020 included expected volatility of 89%, and annual interest rate of 0.66%.

The warrants were determined to be liability classified and adjusted

to fair value as of each reporting period.

As of June 30, 2021, warrants to purchase 892,857 shares were outstanding and re-valued at

$1,513,883, resulting in a net increase in liability of $316,814, as compared to December 31, 2020.

The change in value is recorded in

the Warrant Revaluation Expense line item within Net Other Income (Expense) on the consolidated statement of operations.

The valuation

inputs at March 17, 2020 included expected volatility of 88.98%, and annual interest rate of 0.66%.

On January 28, 2021, the Company 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 Company received approximately $61.6

million in gross proceeds.

inputs as of June 30, 2021 included expected volatility of 103%, and annual interest rate of 0.61%.

On January 28, 2021, the Company 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 Company received approximately $ 61.6 million

in gross proceeds.

The Special Equities Group, a division of Bradley Woods & Co.

Ltd., acted as warrant solicitation agent

and received a cash fee of approximately $4.3 million.

Ltd., acted as warrant solicitation agent and

received a cash fee of $4,286,844 million.

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.

Pursuant to the Letter

Agreements, the New Warrants are substantially in the form of the Existing Warrants (except for customary legends and other language typical

for an unregistered warrant, including the ability for the holder of the New Warrant to make a cashless exercise if no resale registration

statement covering the common stock underlying the New Warrants is effective after six months), will be exercisable immediately, and will

have a term of exercise of five years, The Company registered the New Warrants.

The valuation inputs at January 28, 2021 included expected

volatility of 143.85%, and annual interest rate of 0.42%.

The fair value of these warrants was determined to be $69,138,527 using the

Black-Scholes option pricing model, which was recorded as a warrant incentive expense and included in the calculation of the Net Loss

per Common Share, based on the following assumptions:

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.

Pursuant to the Letter Agreements, the New Warrants are substantially in the form of the Existing

Warrants (except for customary legends and other language typical for an unregistered warrant, including the ability for the holder

of the New Warrant to make a cashless exercise if no resale registration statement covering the common stock underlying the New

Warrants is effective after six months), will be exercisable immediately, and will have a term of exercise of five years, The

Company registered the resale of the shares of common stock issuable upon exercise of the New Warrants.

The valuation inputs at

January 28, 2021 included expected volatility of 144%, and annual interest rate of 0.42%.

The fair value of these warrants was

determined to be $69,138,527 using the Black-Scholes option pricing model, which was recorded as a warrant incentive expense and

included in the calculation of the Net Loss per Common Share, based on the following assumptions:

Schedule of assumptions for warrant

Exercise Price

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The following table summarizes the changes in

the Company’s outstanding warrants during the three months ended March 31, 2021:

the Company’s outstanding warrants during the six months ended June 30, 2021:

Schedule of warrant activity

Warrants Outstanding Number of Shares

Exercise Prices

Contractual Life

Exercise Price

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price Per Share

Balance at December 31, 2020

$ 0.21 - 5.30

Warrants Granted

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Warrants Expired

Balance at March 31, 2021

Balance at June 30, 2021

$ 0.21 - 5.30

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$ 0.76 - 6.00

Exercisable December 31, 2020

Exercisable June 30, 2021

$ 0.21 - 5.30

The Company accounts for income taxes in accordance

with Accounting Standards Codification Topic 740 Income Taxes (“Topic 740”), which requires the recognition of deferred tax

liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the

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Topic 740 provides guidance on the accounting

for uncertainty in income taxes recognized in a company’s financial statements.

ASC 740 requires a company to determine whether

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from the underpayment of income taxes in the statements of operation in the provision for income taxes.

As of March 31, 2021, and December

As of June 30, 2021, and December

31, 2020, the Company had no accrued interest or penalties related to uncertain tax positions.

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Commitment and Contingencies

In February 2016, the FASB issued Accounting Standards

Update 2016-02, “Leases.”

The standard requires lessees to recognize the assets and liabilities that arise from leases on

the balance sheet.

For practically all leases, 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 term.

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 $2,153,747, accumulated amortization of $124,070, a reversal of previously recorded

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

As of March 31, 2021, weighted-average lease term

Effective January 1, 2019, the Company adopted

ASC 842, Leases , using the modified retrospective transition method applied at the effective date of the standard.

As of January 1, 2019, management recorded lease

liability of $ 2,071,903 , right-of-use asset of $ 2,153,747 , accumulated amortization of $ 124,070 , a reversal of previously recorded deferred

rent of $ 37,920 and the increase in accumulated deficit of $ 4,306 .

As of June 30, 2021, weighted-average lease term

for operating leases equals to 72.72 months.

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to a 91-month lease that commenced on May 25, 2018.

We pay rent of $364,130 annually, subject to annual escalations of 3.5%.

Effective January 21, 2019, the Company entered

into a sublease for the 6,969 square feet of general office space located at 131 South Rodeo Drive, Suite 250, Beverly Hills, CA 90212

pursuant to an 83-month sublease that commenced on February 4, 2019.

The subtenant will pay us rent of $422,321 annually, subject to annual

escalations of 3.5%.

On January 30, 2019, we entered into an operating

lease for 5,838 square feet of general office space at 190 N.

Canon Drive, Suite 400, Beverly Hills, CA 90210 pursuant to a 96-month lease

that commenced on August 1, 2019.

We will pay rent of $392,316 annually, subject to annual escalations of 3.5%.

On February 1, 2021,

as part of the Acquisition, the Company assumed an operating lease that entered into on May 19, 2019 for 6845 square feet of general office

space located at 245 Fairview Mall Drive, Suites 202 and 301, Toronto, Ontario M2J 4T1 pursuant to a 84 month lease which commenced on

October 1, 2019.

We pay rent of $95,830 annually, subject to annual escalations 5% to 7%.

The Company pays rent of $364,130 annually, subject to annual escalations of 3.5%.

Effective January 21, 2019, the Company entered into a sublease for

the 6,969 square feet of general office space located at 131 South Rodeo Drive, Suite 250, Beverly Hills, CA 90212 pursuant to an 83-month

sublease that commenced on February 4, 2019.

The subtenant paid the Company rent of $422,321 annually, subject to annual escalations of

On September 11, 2020, the Company entered into a Surrender Agreement with the landlord which terminated

the 131 South Rodeo Dr.

lease agreement.

As a result, the Company recorded a decrease in the Right of Use asset, accumulated amortization,

and the lease liability of $ 2,142,863 , $ 465,124 and $ 1,760,302 respectively.

The termination of the lease resulted in a loss of $338,586.

Simultaneously, as part of the Surrender Agreement the Sublease was terminated.

On January 30, 2019, the Company entered into

an operating lease for 5,838 square feet of general office space at 190 N.

Canon Drive, Suite 400, Beverly Hills, CA 90210 pursuant to

a 96-month lease that commenced on August 1, 2019.

The Company pays rent of $392,316 annually, subject to annual escalations of 3.5%.

On February 1, 2021, as part of the Acquisition,

the Company assumed an operating lease that was entered into on May 19, 2019 for 6,845 square feet of general office space located at

245 Fairview Mall Drive, Suites 202 and 301, Toronto, Ontario M2J 4T1 pursuant to a 84 month lease which commenced on October 1, 2019.

The Company pays rent of $95,830 annually, subject to annual escalations 5% to 7%.

On February 1, 2021, as part of the Acquisition,

the Company assumed an operating lease that entered into on April 30, 2019 for 3,379 square feet of general office space located at One

International Boulevard, 11 th Floor, Mahawh, New Jersey pursuant to a 24-month lease which commenced on May 1, 2019.

rent of $74,338 annually.

Company pays rent of $74,338 annually.

On March 2, 2021, the Company entered into an

operating lease for 4,765 square feet of general office space located at 1050 Wall Street West, Suite 665, Lyndhurst NJ, 07071 pursuant

to a 89 month lease which is expected to commence on August 1, 2021.

We will pay $114,360 annually subject to annual escalations of 2.5%.

to an 89-month lease which is expected to commence on August 1, 2021.

The Company will pay $114,360 annually subject to annual escalations

In addition, the Company has contractual commitments

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Rental expenses incurred for operating leases

during the three months ended March 31, 2021 and March 31, 2020 were $112,343 and $207,839, respectively.

During the three months ended

March 31, 2021 and March 31, 2020, we received sub-lease income of $0 and $121,070, respectively.

during the three months ended June 30, 2021 and June 30, 2020 were $ 131,403 and $ 207,839 , respectively.

Rental expenses incurred for operating

leases during the six months ended June 30, 2021 and June 30, 2020 were $ 243,746 and $ 415,678 , respectively.

During the six months ended

June 30, 2021, the Company did not receive sub-lease income.

During the six months ended June 30, 2020, the Company received sub-lease

income of $ 238,484 .

The following is a schedule of future minimum contractual obligations

as of March 31, 2021, under the Company’s operating leases and employment agreements:

as of June 30, 2021, under the Company’s operating leases and employment agreements:

Schedule of future minimum lease payments

Operating Leases

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he provides services as an executive producer.

The first identified series under this employment agreement is Rainbow Rangers.

the year ended December 31, 2020, 13 half hours had been delivered and accordingly Mr.

Heyward was paid $161,200.

The second identified

series under this employment agreement is Rainbow Rangers Season 2.

During the year ended December 31, 2020, 26 half hours had

been delivered and accordingly Mr.

Heyward was paid $322,400.

The third identified series under this employment agreement is Stan Lee’s

Superhero Kindergarten.

During the six months ended June 30, 2021, 11 half hours were delivered.

Accordingly, Mr.

Heyward is owed

$ 137,500 which is included in Due to Related Party on the Company’s condensed consolidated Balance Sheet.

On July 21, 2020, the Company entered into a merchandising

and licensing agreement with Andy Heyward Animation Art (“AHAA”), whose principal is Andy Heyward, the Company’s Chief

Executive Officer.

The Company entered into a customary merchandise license agreement with AHAA for the use of characters and logos related

to Warren Buffett’s Secret Millionaires Club and Stan Lee’s Mighty 7 in connection with certain products to

be sold by AHAA.

The terms and conditions of such license are customary within the industry, and the Company earns an arm-length industry

standard royalty on all sales made by AHAA utilizing the licensed content.

During the three months ended March 31, 2021, the Company earned

$0 in royalties from this agreement.

On March 11, 2020, Mr.

Heyward purchased $1,000,000

of the 2020 Convertible Notes with an original discount of $250,000.

On June 19, 2020, Mr.

Heyward received 5,658,474

shares of Common Stock upon the cashless exercise of 6,119,048 warrants.

On June 23 , 2020, Mr.

Heyward received

5,952,381 shares of Common Stock upon conversion of $1,250,000 of 2020 Convertible Notes.

On December 7, 2020, Mr.

Heyward’s was granted

7,500,000 Restricted Stock Units vest 1,875,000 on each of the next four anniversary dates.

Heyward was also granted 7,500,000 Performance

Based Restricted Stock Units that, if awarded, vest 1,875,000 on each of the next four anniversary dates.

On December 7, 2020, Mr.

Heyward’s was granted

5,000,000 options to purchase shares of the Company’s Common Stock at $1.39 per share.

The options vest on the grant date.

During the year ended December 31, 2020, Mr.

was paid a bonus of $73,528, $11,370 in interest on the Senior Convertible Notes and $3,000 in board fees for his attendance at the unscheduled

board meetings.

During the year ended December 31, 2020, the Company

paid $380,989 for security at Mr.

Heyward’s residence.

As of March 31, 2021, Mr.

to Warren Buffett’s Secret Millionaires Club and Stan Lee’s Mighty 7 in connection with

certain products to be sold by AHAA.

The terms and conditions of such license are customary within the industry, and the Company earns

an arm-length industry standard royalty on all sales made by AHAA utilizing the licensed content.

During the three and six months ended

June 30, 2021, the Company earned $ 0 in royalties from this agreement.

As of June 30, 2021, Mr.

Heyward is owed

for reimbursable expenses which are included in the Due To Related Parties line item on our condensed consolidated balance sheet.

$ 1,506 for reimbursable expenses which are included in Due to Related Party on the condensed consolidated Balance Sheet.

Segment Reporting

The Company has determined that it operates in

two operating segments, the production and distribution of children’s content and provides media and advertising services.

two operating segments, the production and distribution of children’s content and to provide media and advertising services.

The following table presents sales and earnings

within our two operating segments.

Schedule of Segment Reporting

Content Production & Distribution

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Subsequent Events

Pursuant to FASB ASC 855, management has evaluated

all events and transactions that occurred from March 31, 2021 through the date of issuance of these financial statements.

period, we did not have any significant subsequent events, except as disclosed below:

On April 7, 2021, the Company finalized a Mutual Termination Agreement

with Mattel, Inc., with regard to its Rainbow Rangers property.

The agreement allows the Company to contract with other companies for

the design, manufacturing of Rainbow Rangers toys.

April 14, 2021, Mr.

On July 20, 2021, Mr.

Heyward was paid a bonus

On April 28, 2021, the Company repaid the Payroll

Protection Program loan, including interest which totaled $369,779.

On May 14, 2021, the Company issued 469,677 shares

of the Company’s common stock valued at $1.55 per share for production services.

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

A return-to-work plan for the Company is under development and is expected to be implemented, on a phased in basis, commencing

in June of 2021.

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.

If there is a resurgence and the COVID-19 outbreak is prolonged, we may 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 statements.

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.

To date, we believe that COVID-19 has not caused a material negative impact on our business, including the effects on

our customers, suppliers or vendors, or on our financial results.

On July 20, 2021, the Company issued 176,101 shares

of the Company’s common stock valued at $1.55 per share to a production company for services.

On August 5, 2021, Mr.

Heyward was paid $137,500

for accrued producer fees.

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. Financial Statements