What changed in this filing

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Item 1. Legal Proceedings

2021-11-15 compared with 2021-08-16 · 77 added, 48 removed, 22 unchanged (85% of the section changed)

LEGAL PROCEEDINGS.

As of June 30, 2021, there were no material pending

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

As of September 30, 2021, there were

no material pending legal proceedings to which the Company is a party or as to which any of its property is subject other than

described below.

On June 16, 2021, the Company was named as a defendant

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KIDOODLE.TV, KIDOODLE and KIDOODLETV by sponsoring Google Ads in which the plaintiff’s trademarks appeared.

The Company has denied

the plaintiff’s allegations and believes that in the event of a finding of liability any potential damages would be nominal.

case is in the early stages with an initial status conference scheduled for August 30, 2021, and it is likely that a close of discovery

will be set in early 2022 with a trial date scheduled for mid-to-late 2022.

As previously disclosed, the Company, its

Chief Executive Officer Andy Heyward and its Chief Financial Officer Robert Denton are named as defendants in a putative class

action lawsuit filed in the U.S.

District Court for the Central District of California and styled In re Genius Brands

International, Inc.

Securities Litigation, Master File No.

The parties have agreed

to entry of a stipulation that the alleged conduct did in fact constitute trademark infringement;

however, because the number of consumer

impressions was small, the Company contends that the plaintiff’s damages are nominal or zero.

The case is scheduled for trial on

the issue of damages in December 2021.

As previously disclosed, the Company, its Chief

Executive Officer Andy Heyward and its Chief Financial Officer Robert Denton are named as defendants in a putative class action lawsuit

filed in the U.S.

District Court for the Central District of California and styled In re Genius Brands International, Inc.

Litigation, Master File No.

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

In a consolidated amended complaint filed

February 1, 2021, the Lead Plaintiffs allege generally that defendants violated Sections 10(b) and 20(a) of the Securities Exchange

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

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

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

class period.

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

That motion is fully briefed, and

the Court took the motion under submission without oral argument in early July 2021.

We cannot predict the outcome of the motion or

the timing of a decision from the Court.

In a consolidated amended complaint filed February 1, 2021, the lead plaintiffs

alleged generally that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”)

by making materially false or misleading statements regarding the Company’s business and business prospects, artificially inflating

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

Plaintiffs sought unspecified

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

On March 17, 2021,

the defendants filed a motion to dismiss the amended complaint.

After full briefing, the Court took the motion under submission without

oral argument and, on August 30, 2021, issued a decision dismissing the amended complaint but granting the lead plaintiffs a further opportunity

to plead a claim if they filed a further amended complaint by September 27, 2021.

On September 27, 2021, the lead plaintiffs above

filed a second amended complaint, naming the same defendants.

The new complaint alleges that the Company made numerous false or misleading

statements over a class period running from March 11, 2020, through March 30, 2021.

The lead plaintiffs also allege a “scheme to

defraud” during 2020 that involved several private placements of Company stock with an allegedly “insider” group of

investors that purportedly then issued press releases that inflated the stock price, after which these investors purportedly sold their

shares at higher prices.

Other than Mr.

Heyward, who invested $1 million in a private offering at the beginning of the alleged class period

but who did not subsequently sell his shares, no member of the supposed investor group is identified or named as a defendant.

the lead plaintiffs again allege violations of Sections 10(b) and 20(a) of the Exchange Act and seek unspecified damages on behalf of

the alleged class—persons who invested in the Company’s common stock during the newly alleged class period.

Defendants intend

to file a motion to dismiss the second amended complaint, and under a Court-ordered briefing schedule, that motion is to be filed by November

The briefing schedule on the motion to dismiss extends into the first quarter of 2022.

The Company cannot predict the outcome

of the motion or the timing of a decision from the Court.

Pending resolution of the motion to dismiss, neither discovery nor other substantive

proceedings are occurring or expected.

Related to the securities class action, the

Company’s directors, Chief Executive Officer and Chief Financial Officer have been named as defendants in several putative

shareholder derivative lawsuits.

proceedings are occurring nor expected.

Related to the securities class action, the Company’s

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

As previously disclosed, these include a consolidated proceeding pending in the U.S.

District Court

for the Central District of California and styled In re Genius Brands Stockholder Derivative Litigation, Case No.

District Court for the Central District

of California and styled In re Genius Brands Stockholder Derivative Litigation, Case No.

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

an action filed in the Los Angeles County Superior Court captioned Ly, etc.

action filed in the Los Angeles County Superior Court captioned Ly, etc.

Heyward, et al.

and an additional case pending in the U.S.

and an additional

case pending in the U.S.

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

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

While the allegations and legal claims vary somewhat among the

derivative actions, they all generally allege that the defendants breached fiduciary duties owed to the Company by, among other

things, causing the Company to issue the supposedly false and misleading statements that underlie the securities lawsuit,

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

By these derivative lawsuits, the

plaintiffs seek no recovery from the Company.

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

and plaintiffs, all alleged stockholders of the Company, purport to sue on behalf and for the benefit of the Company.

Pursuant to agreements among the parties, the courts in all of the derivative lawsuits have stayed proceedings pending the outcome

of the motion to dismiss in the securities action.

On July 7, 2020, we received a letter from

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

been sold to another company, represented by that law firm.

The law firm alleged that the Company is, inter alia, interfering with their

contractual rights.

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

fiduciary duties owed to the Company by, among other things, causing the Company to issue the supposedly false and misleading statements

that underlie the securities lawsuit, purportedly exposing the Company to liability and damaging the Company in an unspecified amount.

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

Instead, as a shareholder derivative action, the Company

is named as a nominal defendant.

The plaintiffs, all alleged stockholders of the Company, purport to sue on behalf and for the benefit

of the Company.

Pursuant to agreements among the parties, the courts in all of the derivative lawsuits have stayed proceedings pending

the outcome of the motion to dismiss in the securities action.

On July 7, 2020, the Company received a letter

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

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

The law firm alleged that the Company is, inter alia,

interfering with Proxima’s contractual rights.

This matter was referred to our outside litigation counsel.

We have been informed that the matter is being adjudicated

in an arbitration and that the arbitrator issued a gag order preventing further communications from Plaintiff to 3 rd parties.

The Company has been

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

from Plaintiff to third parties.

On or about November 4, 2021, POW!

and Proxima entered a binding settlement agreement resolving

all the claims made by Proxima.

In all of the above-mentioned proceedings, the

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

UNREGISTERED SALES OF EQUITY SECURITIES

AND USE OF PROCEEDS.

DEFAULTS UPON SENIOR SECURITIES.

MINE SAFETY DISCLOSURES.

Not applicable.

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

What changed 10-Q

Item 1. Legal Proceedings