What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2022-04-06 compared with 2021-03-31 · 24 added, 733 removed, 3 unchanged (100% of the section changed)

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our Common Stock began trading on the Nasdaq

Capital Market under the symbol “GNUS”

on November 21, 2016.

Prior to that, our Common Stock traded on the OTCQB of

the OTC Markets Group Inc.

Our common stock began trading

on the Nasdaq Capital Market under the symbol “GNUS” on November 21, 2016.

Prior to that, our common stock traded on the OTCQB

of the OTC Markets Group Inc.

under the same symbol.

The last reported closing price for our

common stock on the Nasdaq Capital Market on March 30, 2021 was $2.07 per share.

As of March 30, 2021, the number of shares

of Common Stock outstanding was 300,321,658.

As of March 30, 2021, there were approximately 170 active record holders of our shares

of issued and outstanding Common Stock.

This number does not include persons or entities that hold their stock in nominee or “street”

name through various brokerage firms.

We have never declared or paid dividends

on our Common Stock.

Moreover, we currently intend to retain any future earnings for use in our business and, therefore, do not

anticipate paying any dividends on our Common Stock in the foreseeable future.

As of April 4,

2022, there were approximately 309 stockholders of record of our common stock, although there is a significantly larger number of

beneficial owners of our common stock.

We have never declared or

paid any cash dividends on our capital stock, and we do not currently anticipate paying any cash dividends in the foreseeable future.

Equity Compensation Plan Information

On September 18, 2015, the Company adopted

the Genius Brands International, Inc.

2015 Incentive Plan (the “2015 Plan”).

The 2015 Plan was approved by our stockholders

in September 2015.

The 2015 Plan as approved by the stockholders authorized the issuance up to an aggregate of 150,000 shares of

Common Stock.

On December 14, 2015, the Board of Directors voted to amend the 2015 Plan to increase the total number of shares

that can be issued under the 2015 Plan by 1,293,334 from 150,000 shares to 1,443,334 shares.

The increase in shares available for

issuance under the 2015 Plan was approved by stockholders on February 3, 2016.

On May 18, 2017, the Board of Directors voted to

amend the 2015 Plan to increase the total number of shares that can be issued under the 2015 Plan by 223,333 shares from 1,443,334

shares to an aggregate of 1,667,667 shares.

The increase in shares available for issuance under the 2015 Plan was approved by the

stockholders on July 25, 2017.

On September 6, 2018, the Board of Directors

voted to amend the 2015 Plan to increase the total number of shares that can be issued under the 2015 Plan by 500,000 shares from

1,667,667 shares to an aggregate of 2,167,667 shares.

The increase in shares available for issuance under the 2015 Plan was approved

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

On August 4, 2020, the Board of Directors

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

The shares available for

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

The 2020 Plan as approved by the stockholders increased

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

The following tables reflect, as of December

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

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

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

Plan category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

Equity compensation plans approved by shareholders

Equity compensation plans not approved by shareholders

Issuances of Unregistered Sales of Securities

During the year ended December 31, 2020,

the Company issued 5,219,048 shares of Common Stock pursuant to the conversion of 1.097 shares of Series A Convertible Preferred

Stock at a conversion price of $0.21 per share.

These securities were issued solely to

“accredited investors”

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

On November 18, 2020, the Company issued

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

The issuance of the

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

On December 18, 2020, the Company issued

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

The issuance of the

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

Selected Financial Data

Not required.

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

The following discussion and analysis

of our results of operations, financial condition and liquidity and capital resources should be read in conjunction with our audited

financial statements and related notes for the years ended December 31, 2020 and 2019.

Certain statements made or incorporated

by reference in this report and our other filings with the Securities and Exchange Commission, in our press releases and in statements

made by or with the approval of authorized personnel constitute forward looking statements within the meaning of Section 27A of

the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act,

and are subject to the safe harbor created thereby.

Forward looking statements reflect intent, belief, current expectations, estimates

or projections about, among other things, our industry, management’s beliefs, and future events and financial trends affecting

Words such as “anticipates,”

“expects,”

“intends,”

“plans,”

“believes,”

“seeks,”

“estimates,”

“may,”

“will”

and variations of these words or similar expressions

are intended to identify forward looking statements.

In addition, any statements that refer to expectations, projections or other

characterizations of future events or circumstances, including any underlying assumptions, are forward looking statements.

we believe the expectations reflected in any forward-looking statements are reasonable, such statements are not guarantees of future

performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict.

Therefore, our actual

results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors.

These differences can arise as a result of the risks described above in the section entitled “Item 1A.

Risk Factors”

and elsewhere in this report, as well as other factors that may affect our business, results of operations, or financial condition.

Forward looking statements in this report speak only as of the date hereof, and forward-looking statements in documents incorporated

by reference speak only as of the date of those documents.

Unless otherwise required by law, we undertake no obligation to publicly

update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

of these risks and uncertainties, we cannot assure you that the forward-looking statements contained in this report will, in fact,

The management’s discussion and analysis

is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the

United States of America.

The preparation of these financial statements requires us to make certain estimates and judgments that

affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities.

bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances,

the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily

apparent from other sources.

Actual results may differ from these estimates under different assumptions and conditions.

Genius Brands International, Inc.

(“we,”

“us,”

“our,”

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

company that creates and licenses multimedia content.

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

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

In the children's media sector, our portfolio

features “content with a purpose”

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

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

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

and was renewed by Netflix for a second season.

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

Thomas Edison's Secret Lab ®

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

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

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

We are also developing an all-new animated

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

Entertainment, Oak Productions and Alibaba.

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

The show will be broadcast in the

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

In July 2020, the Company

entered into a binding term sheet with POW, Inc.

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

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

The entity is called

“Stan Lee Universe, LLC”

and the Company are finalizing the details of the venture.

Through this agreement we

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

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

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

In addition, we act as licensing agent

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

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

Recent Developments

On January 28, 2021, we entered into letter

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

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

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

The Existing Warrants (the “Registered

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

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

In consideration for the exercise of the Existing Warrants

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

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

from the initial issuance date.

The Special Equities Group, a division

of Bradley Woods & Co.

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

The gross proceeds to the Company from

the Exercise were approximately $61.6 million.

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

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

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

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

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

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

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

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

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

and, collectively, “Sellers”), pursuant to

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

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

ChizComm Canada ”),

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

ChizComm USA ”

together with ChizComm Canada, “

ChizComm ”) (the “

Acquisition ”).

Total consideration paid by the Company in the transaction at

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

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

Common Stock ”)

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

Of the Closing Shares, 674,157

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

indemnification obligations of Sellers under the Purchase Agreement.

Additionally, the Purchase Agreement also provides for the

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

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

The parties to the Purchase

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

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

Prior to the closing of the Acquisition, neither the Company

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

or officer, had any material relationship with the Sellers.

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

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

January 2020 Warrant Exercise Agreement

On January 22, 2020, we entered into a

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

warrants (the “Original Warrants”).

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

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

October 2022.

Pursuant to the Agreement, the holder of

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

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

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

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

March 2020 Secured Convertible Note and Warrant Private Placement

On March 11, 2020, we entered into a Securities

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

and collectively,

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

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

and collectively, the “2020 Convertible Notes”)

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

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

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

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

and collectively,

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

the “Financing”).

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

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

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

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

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

The closing of the sale and issuance of

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

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

The Company held a stockholder meeting

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

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

(“Stockholder Approval”).

In addition, pursuant to the terms of the

SPA, the 2020 Convertible Notes and the Warrants, the Company agreed that the following will apply or become effective only following

Stockholder Approval:

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

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

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

Company Common Stock) will have their existing warrants’

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

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

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

basis into securities issued in the new transaction.

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

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

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

On March 16, 2020, the holders of

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

On May 15, 2020, the Company received

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

As a result, the Conversion Price of

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

In addition, existing warrant holders

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

their existing warrants’

exercise prices reduced to $0.21.

March 2020 Securities Purchase Agreement

On March 22, 2020, we entered into a Securities

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

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

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

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

May 2020 Securities Purchase Agreements

On May 7, 2020, the Company entered into

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

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

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

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

The Registered Offering

closed on May 8, 2020.

On May 8, 2020, the Company entered into

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

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

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

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

The Registered

Offering closed on May 12, 2020.

On May 18, 2020, we entered into a Securities

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

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

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

$9.0 million before deducting offering expenses.

On May 28, 2020, we entered into a Securities

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

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

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

$30.0 million before deducting offering expenses.

Warrant Exercises

On January 22, 2020, the Company entered

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

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

The Original Warrants were originally

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

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

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

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

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

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

On May 15, 2020 stockholders of the Company

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

Between May 15 and June 19, 2020, the Company

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

Certain other warrant holders

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

Between May 15 and June 19, 2020,

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

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

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

On December 14, 2020 a warrant holder exercised

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

October 2020 Securities Purchase Agreement

On October 28, 2020, the Company entered

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

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

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

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

Coronavirus (COVID-19)

With respect to the ongoing and evolving coronavirus

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

caused substantial disruption in international and U.S.

economies and markets.

COVID-19 has had an adverse impact on the entertainment

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

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

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

production partners.

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

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

and across the world.

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

If the COVID-19

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

The Company’s management cannot at

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

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

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

customers, partners and stockholders.

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

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

Results of Operations

Years Ended December 31, 2020 and 2019

Our summary results for the years ended

December 31, 2020 and 2019 are below.

December 31, 2020

December 31, 2019

Licensing & Royalties

Television & Home Entertainment

Advertising Sales

Product Sales

Total Revenue

$ (3,425,772 )

Licensing and royalty revenue include items

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

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

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

Television & Home Entertainment revenue

is generated from distribution of our properties for broadcast on television, VOD, or SVOD in domestic and international markets

and the sale of DVDs for home entertainment through our partners.

Fluctuations in Television & Home Entertainment revenue occur

period over period based on the achievement of revenue recognition criteria such as the start of a license period and the delivery

of the content to the customer.

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

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

This decrease was primarily due to the revenue generated in 2019

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

Senyu Media in China.

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

Advertising sales are generated on the

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

Advertising sales increased by $29,476,

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

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

This was a result of our efforts

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

Product sales represent physical products

in which we hold intellectual property rights such as trademarks and copyrights to the characters and which are manufactured and

sold by us directly.

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

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

December 31, 2020

December 31, 2019

Marketing and Sales

Direct Operating Costs

General and Administrative

Interest Expense

Marketing and sales expenses increased

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

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

Direct operating costs include costs of

our product sales, unamortizable post-production 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 for the year ended December 31, 2020 decreased $2,444,539, or 54%, compared to the year ended December 31, 2019.

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

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

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

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

delivery of Rainbow Rangers to Nickelodeon in 2019.

General and administrative expenses consist

primarily of salaries, employee benefits, share-based compensation related to stock options, insurances, rent, depreciation, and

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

General and administrative costs for year

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

This increase is primarily due to

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

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

Interest expense for the year ended December

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

The increase in interest expense was due to the costs associated

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

The excess was recorded as interest expense.

Liquidity and Capital Resources

Working Capital

As of December 31, 2020, we had current

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

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

Increases in working capital were primarily the result of the

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

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

Decreases in working capital were primarily the result of the

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

an increase in participations payable.

Comparison of Cash Flows for the Years

Ended December 31, 2020 and 2019

Our total cash and cash equivalents were

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

Comparison of Cash Flows

December 31, 2020

December 31, 2019

Cash used in operations

$ (7,844,715 )

$ (6,251,150 )

$ (1,593,565 )

Cash used in investing activities

Cash provided by financing activities

Increase (decrease) in cash

$ 100,151,203

$ (2,779,905 )

$ 102,931,108

During the year ended December 31, 2020,

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

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

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

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

Operating Activities

Cash used in operating activities for the

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

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

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

The Company incurred a loss before income

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

December 31, 2019.

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

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

The Company plans to continue producing,

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

This will require significant investments of capital.

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

This too will require significant investments of capital.

Investing Activities

Cash used in investing activities for the

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

Investing activities

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

intangible assets and the purchase of furniture and equipment.

Investing activities in 2019 include the development of certain

intangible assets and the purchase of furniture and equipment.

Financing Activities

Cash generated from financing activities

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

During the year ended December 31, 2020,

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

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

During the year ended December 31, 2019,

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

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

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

Capital Expenditures

As of December 31, 2020, we do not have

any material commitments for capital expenditures.

Critical Accounting Policies and Estimates

Our accounting policies are described in

the notes to the consolidated financial statements.

Below is a summary of the critical accounting policies, among others, that

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

Goodwill and Intangible Assets

Goodwill represents the excess of purchase price over the estimated

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

In accordance with FASB ASC 350

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

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

We complete the

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

In testing goodwill, we

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

of the goodwill.

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

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

An impairment loss is recognized

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

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

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

carrying amount of goodwill may be impaired.

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

of the carrying value of goodwill.

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

balance and no adjustment is necessary at this time.

Other intangible assets have been acquired,

either individually or with a group of other assets, and were initially recognized and measured based on fair value.

In accordance

with FASB ASC 350 Intangible Assets, the costs of new product development and significant improvement to existing products are

capitalized while routine and periodic alterations to existing products are expensed as incurred.

Annual amortization of these

intangible assets is computed based on the straight-line method over the remaining economic life of the asset.

Film and Television Costs

We capitalize production costs for episodic

series produced in accordance with FASB ASC 926-20 Entertainment-Films –

Other Assets –

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.

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 –

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 our capitalized production costs annually and limit recorded

amounts by our 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 our 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.

Debt and Attached Equity Linked Instruments

The Company measures issued debt on an

amortized cost basis, net of debt premium/discount and debt issuance costs amortized using the effective interest rate method or

the straight-line 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.

Pursuant to 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.

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

When required, the Company also considers

the bifurcation guidance for embedded derivatives per FASB ASC 815-15 Embedded Derivatives.

Revenue Recognition

On January 1, 2018, the Company adopted

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

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

as of January 1, 2018.

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

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

As a result of the change, beginning January

1, 2018, the Company began recognizing revenue related to licensed rights to exploit functional IP in two ways.

For minimum guarantees,

the Company recognizes fixed revenue upon delivery of content and the start of the license period.

For functional IP contracts

with a variable component, the Company estimates revenue such that it is probable there will not be a material reversal of revenue

in future periods.

Revenue under these types of contracts was previously recognized when royalty statements were received.

Company began recognizing revenue related to licensed rights to exploit symbolic IP substantially similarly to functional IP.

it has a different recognition pattern from functional IP, the valuation method is substantially the same, depending on the nature

of the license.

The Company sells advertising on its App

and OTT based “Kartoon Channel!

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

For flat rate promotions

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

For impressions

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

pays a contractual CPM per impression.

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

in the month the impressions are served.

The Company recognizes revenue related

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

Direct Operating Costs

Direct operating costs include costs of

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

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

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

Share-Based Compensation

As required by FASB ASC 718 - Stock Compensation,

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

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

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

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

Earnings Per Share

Basic earnings (loss) per common share

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

of shares of common stock outstanding for the period.

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

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

using the treasury stock or “as converted”

method, as appropriate.

During periods of net loss, all common stock equivalents

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

Deferred income tax assets and liabilities

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

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

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

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

Concentration of Risk.

The Company’s cash is maintained

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

(“FDIC”) insured amount.

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

up to $250,000 per account.

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

For the year ended December 30, 2020, the

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

Those customers accounted for 44%

of the total revenue and 22% of accounts receivable.

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

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

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

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

The major customers for the year ended

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

There is significant financial risk associated with

a dependence upon a small number of customers.

The Company periodically assesses the financial strength of these customers and

establishes allowances for any anticipated bad debt.

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

in the amount of $43,676.

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

expected to be fully collectible.

Fair value of financial instruments

The carrying amounts of cash, receivables, accounts payable,

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

The carrying amount of the Facility

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

or LIBOR rates plus an applicable spread.

The Company adopted FASB ASC 820 as of

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

FASB ASC 820 defines fair value, establishes

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

GAAP and expands disclosures about fair value measurements.

Fair value is defined as the price that

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

measurement date.

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

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

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

These tiers include:

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

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

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

Recent Accounting Pronouncements

In March 2019, the FASB issued ASU

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

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

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

The amendments

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

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

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

films and/or license agreements.

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

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

We have prospectively adopted ASU 2016-18.

The impact to

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

2020, the FASB issued ASU No.

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

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

with Conversion and Other Options, for convertible instruments.

As part of the amendment, the embedded conversion features are

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

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

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

The FASB has also modified accounting

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

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

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

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

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

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

The amendments are effective for public business entities,

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

fiscal years.

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

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

Early adoption is permitted, but no earlier than

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

We have prospectively

adopted ASU No.

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

Various other accounting

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

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

operations, or cash flows.

Quantitative and Qualitative Disclosures about Market Risk

As a “smaller reporting company,”

as defined by

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

Financial Statements and Supplementary Data

The financial

statements are included herein commencing on page F-1.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Information about our equity

compensation plans is incorporated herein by reference to Part III, Item 12 of this Annual Report.

Recent Sales of Unregistered Securities

On October 27, 2021, we issued

176,101 shares of common stock valued at $1.59 per share for production services.

The issuance of the shares of common stock was exempt

from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

On December 1, 2021, we issued

2,281,269 shares of common stock valued at $1.49 as partial consideration for 3,000,000 shares in YFE.

The issuance of the shares of common

stock was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

Company Purchases of Equity Securities

There were no purchases of

our own equity securities during the year ended December 31, 2021.

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-K

Item 5. Market for Registrant’s Common Equity