What changed in this filing

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Item 1. Financial Statements

2022-05-16 compared with 2021-11-15 · 1155 added, 1343 removed, 286 unchanged (90% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

As of September 30, 2021, and December 31,

September 30,

(in thousands, except share and per share data)

March 31, 2022

December 31, 2021

Current Assets:

Cash and Cash Equivalents

$ 100,456,324

Investment in Marketable Securities (amortized cost of $125,692,272)

Restricted Cash

Investments in Marketable Securities (amortized cost of $105,977)

Accounts Receivable, net

Note & Accounts Receivable from Related Party

Other Receivable

5 unchanged sentences

Lease Deposits

Investment in ChizComm

Investment in Stan Lee Universe, LLC

Investment in Your Family Entertainment AG

Intangible Assets, net

$ 193,325,583

$ 134,201,074

LIABILITIES AND STOCKHOLDERS’ EQUITY

1 unchanged sentence

Accounts Payable

Accrued Production Costs

Accrued Expenses

2 unchanged sentences

Notes Payable

Payroll Protection Program

Warrant Derivative Liability

Warrant Liability

Lease Liability

5 unchanged sentences

Lease Liability

Production Facility, net

Contingent Earn Out

2 unchanged sentences

Total Liabilities

Commitments and contingent liabilities (Note 21)

Stockholders’ Equity

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

Preferred Stock, $ 0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

Common Stock, $ 0.001 par value, 400,000,000 shares authorized 304,368,966 and 303,379,122 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

Additional Paid in Capital

Accumulated Deficit

( 562,464,295 )

( 469,557,324 )

Accumulated Other Comprehensive Loss

Total Genius Brands International, Inc.

Stockholders' Equity

Non-Controlling Interests in Consolidated Subsidiaries

Total Stockholders' Equity

Total Liabilities and Stockholders’ Equity

$ 193,325,583

$ 134,201,074

The accompanying notes are an integral part of

2 unchanged sentences

Condensed Consolidated Statements of Operations

Three and Nine Months Ended September 30, 2021

and September 30, 2020

(in thousands, except share and per share data)

Three Months Ended

Nine Months Ended

September 30,

Licensing & Royalties

March 31, 2022

March 31, 2021

Media Advisory & Advertising Services

Television & Home Entertainment

Advertising Sales

Product Sales

Content Distribution

Licensing & Royalties

Total Revenues

5 unchanged sentences

Loss from Operations

( 9,834,460 )

( 3,352,506 )

( 24,137,169 )

( 7,497,281 )

Other Income (Expense):

Interest Income

Loss on Lease Termination

Realized Loss on Marketable Securities

Gain (Loss) on Foreign Exchange

Warrant Incentive Expense

( 69,138,527 )

Warrant Revaluation Gain (Loss)

( 210,672,085 )

Conversion Option Revaluation Expense

( 171,835,729 )

Sub-Lease Income

Interest Expense

( 1,168,801 )

Net Other Income (Expense)

( 68,769,802 )

( 383,603,874 )

Loss Before Income Tax Expense

( 9,253,380 )

( 2,007,209 )

( 92,906,971 )

( 391,101,155 )

Income Tax Expense

Net Loss Applicable to Common Shareholders

$ ( 9,253,380 )

$ ( 2,007,209 )

$ ( 92,906,971 )

$ ( 391,101,155 )

Net Loss per Common Share (Basic and Diluted)

Weighted Average Shares Outstanding (Basic and Diluted)

Other Income (Expense), Net

Gain (Loss) Before Income Tax Expense

Provision for Tax Expense

Net Loss Attributable to Non-Controlling Interests

Net Loss Attributable to Genius Brands International, Inc.

Net Loss per Share (Basic)

Net Loss per Share (Diluted)

Weighted Average Shares Outstanding (Basic)

Weighted Average Shares Outstanding (Diluted)

The accompanying notes are an integral part of

2 unchanged sentences

Condensed Consolidated Statements of Comprehensive

Three and Nine Months Ended September 30, 2021

and September 30, 2020

(in thousands)

Three Months Ended

Nine Months Ended

September 30,

$ ( 9,253,380 )

$ ( 2,007,209 )

$ ( 92,906,971 )

$ ( 391,101,155 )

Net Unrealized Loss on Marketable Securities (1)

Net Realized Loss on Marketable Securities Included in Earnings

Foreign Currency Translation Adjustment

Comprehensive Net Loss

$ ( 9,539,042 )

$ ( 2,007,209 )

$ ( 93,239,105 )

$ ( 391,101,155 )

Prior quarter amounts have been revised to correct an error in previously issued financial statements.

See Note 2 of the Notes

to unaudited Condensed Consolidated Financial Statements for further information.

March 31, 2022

March 31, 2021

Other Comprehensive Income (Loss):

Change in Unrealized Losses on Marketable Securities

Realized Losses on Marketable Securities Reclassified from AOCI into Earnings

Foreign Translation Adjustment

Total Other Comprehensive Loss

Total Comprehensive Net Loss

Comprehensive Loss Attributable to Non-Controlling Interests

Total Comprehensive Net Loss Attributable to Genius Brands International, Inc.

The accompanying notes are an integral part of

1 unchanged sentence

Genius Brands International, Inc.

Condensed Consolidated Statements of

Stockholders' Equity

Three and Nine Months Ended September 30, 2021

and September 30, 2020

Other Comprehensive

Condensed Consolidated Statements of Stockholders'

(in thousands, except share data)

Preferred Stock

Additional Paid-In

Accumulated Other Comprehensive

Balance, December 31, 2020

$ ( 469,557 )

$ ( 469,557,324 )

$ 119,196,677

Shares Issued for ChizComm Acquisition

1 unchanged sentence

Issuance of Common Stock for Services

Warrants Incentive

Share Based Compensation

Warrant Incentive

Foreign Currency Translation Adjustment

( 76,258,943 )

Other Comprehensive Loss

Balance, March 31, 2021

$ ( 545,816 )

$ ( 545,816,267 )

$ 175,681,817

Issuance of Common Stock for Services

Share Based Compensation

Unrealized Loss on Marketable Securities (1)

Foreign Currency Translation Adjustment

( 7,394,648 )

Balance, June 30, 2021

$ 724,924,857

$ ( 553,210,915 )

$ 171,963,144

Share Based Compensation

Unrealized Loss on Marketable Securities

Foreign Currency Translation Adjustment

( 9,253,380 )

Balance, September 30, 2021

$ 730,477,723

$ ( 562,464,295 )

$ ( 337,252 )

$ 167,976,968

Other Comprehensive

Balance, December 31, 2021

$ ( 595,848 )

Value of Preferred Stock Conversion

Proceeds from Securities Purchase Agreement, Net

Proceeds From Warrant Exchange, net

Issuance of Common Stock for Services

Issuance of Common Stock for Vested Restricted Stock Units

Share Based Compensation

( 5,835,944 )

Other Comprehensive Loss

Balance, March 31, 2022

$ ( 600,379 )

Proceeds from Securities Purchase Agreement, Net

Issuance of Common Stock for Services

Share Based Compensation

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, June 30, 2020

$ 519,985,782

$ ( 456,981,465 )

Issuance of Common Stock for Services

Share Based Compensation

Warrant Exercise

Warrants Issued for Services

( 2,007,209 )

Balance, September 30, 2020

$ ( 458,988,674 )

(1) Prior quarter amounts have been revised to correct

an error in previously issued financial statements.

See Note 2 of the Notes to unaudited Condensed Consolidated Financial Statements

for further information.

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

Nine Months Ended September 30, 2021 and September

September 30, 2021

September 30, 2020

(in thousands)

March 31, 2022

March 31, 2021

Cash Flows from Operating Activities:

$ ( 92,906,971 )

$ ( 391,101,155 )

Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:

Amortization of Film and Television Costs

Depreciation and Amortization Expense

Right of Use Asset Amortization

Amortization of Premium on Marketable Securities

Accretion of Discount on Secured Convertible Notes

Stock Issued for Services

Depreciation and Amortization of Property, Equipment & Intangible Assets

Amortization of Right of Use Asset

Share Based Compensation Expense

Warrant Revaluation (Gain) Loss

Loss on Lease Termination

Conversion Option Revaluation Expense

Debt Discount in Excess of the Principal

Warrant Incentive Expense

Amortization of Premium on Marketable Securities

Gain on Revaluation of Equity Investment in Your Family Entertainment (“YFE”)

(Gain) Loss on Warrant Revaluation

Realized Loss on Marketable Securities

Warrant Incentive Expense

Stock Issued for Services

Decrease (Increase) in Operating Assets:

Accounts Receivable, net

Other Receivable

Inventory, net

Prepaid Expenses & Other Assets

Lease Deposits

Other Receivables

Film and Television Costs, net

( 4,809,700 )

( 1,789,000 )

Lease Deposits

Prepaid Expenses & Other Assets

Increase (Decrease) in Operating Liabilities:

Accounts Payable

( 2,886,249 )

Accrued Production Costs

Accrued Salaries & Wages

Deferred Revenue

Participations Payable

Deferred Revenue

Lease Liability

2 unchanged sentences

Net Cash Used in Operating Activities

( 15,965,351 )

( 5,475,826 )

Cash Flows from Investing Activities:

Investment in Stan Lee Universe, LLC

( 1,000,000 )

Cash Payment for Equity Investment in YFE

Cash Payment for Ameba, net of Cash Acquired

Cash Payment for ChizComm, net of cash acquired

( 7,788,877 )

Investment in Marketable Securities

( 305,387,221 )

Investment in Stan Lee Universe, LLC

Proceeds from Principal Collections on Marketable Securities

Proceeds from Sales of Marketable Securities

Investment in Intangible Assets, net

Investment in Property & Equipment

Purchase of Property & Equipment

Net Cash Used in Investing Activities

( 135,521,695 )

Cash Flows from Financing Activities:

Proceeds from Sale of Securities Purchase Agreement, 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 )

Proceeds from Notes Payable

Note Conversion Costs

Proceeds from Margin Loan

Repayments of Margin Loan

Note & Accounts Receivable from Related Party

Repayment of Note Payable

Consolidation of VIE (VIE Asset/Liability)

Proceeds from Warrant Exchange, net

Repayment of Production Facility, net

( 1,099,713 )

( 1,585,220 )

Net Cash Provided by Financing Activities

Net (Decrease)/Increase in Cash and Cash Equivalents

( 95,572,175 )

Beginning Cash and Cash Equivalents

Ending Cash and Cash Equivalents

Supplemental Disclosures of Cash Flow Information:

Cash Paid for Interest

Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash

Net Increase/(Decrease) in Cash, Cash Equivalents and Restricted Cash

Beginning Cash, Cash Equivalents and Restricted Cash

Ending Cash, Cash Equivalents and Restricted Cash

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

The accompanying notes are an integral part of

1 unchanged sentence

Genius Brands International, Inc.

Notes to Condensed Consolidated Financial

September 30, 2021 (unaudited)

Notes to Condensed Consolidated Financial Statements

March 31, 2022

Organization and Business

Organization and Nature of Business

Genius Brands International, Inc.

“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.

New intellectual property titles include Stan Lee’s Superhero

Kindergarten produced with Stan Lee’s Pow!

Genius Brands International,

(“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, the Company distributes its content primarily on

television and streaming platforms and licenses its properties for a broad range of consumer products based on the Company’s characters.

In the children’s media sector, the Company’s 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!

Entertainment and Oak Productions.

Arnold Schwarzenegger lends his voice as

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

Another new offering is KC Pop Quiz , a live action game show featuring

kids as contestants.

The show is hosted by Casey Simpson, a prominent influencer and former Nickelodeon star.

Both KC Pop Quiz

and Superhero Kindergarten are 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.

In 2011, the Company

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

Arnold Schwarzenegger lends his voice as the lead and is also an Executive

Producer on the series.

Another new offering is KC!

Pop Quiz , a live action game show featuring kids as contestants.

hosted by Casey Simpson, a prominent social media influencer and former Nickelodeon star.

Pop Quiz and Superhero Kindergarten are

being broadcast in the United States on the Company’s wholly-owned advertisement supported video on demand (“AVOD”)

and subscription video on demand (“SVOD”) distribution outlet, the Kartoon Channel!.

Other newer series include, the

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

The Company is in production on a new animated series starring Shaquille O’Neal called Shaq’s

Garage, which the Company expects to debut during the fourth quarter of 2022.

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.

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”).

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

As more fully discussed in Note 3, 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, purchased the outstanding

equity interests of ChizComm Ltd., a corporation organized in Canada, and ChizComm USA Corp., a New Jersey corporation.

During the nine months ended September 30, 2021,

the Company’s cash and cash equivalents and marketable security positions increased by $ 29,768,161 .

Cash in excess of immediate

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

Accordingly, available-for-sale securities, consisting principally of corporate and government debt securities, and money market funds

classified as cash equivalents are also available as a source of liquidity.

During the nine months ended September 30, 2021, the Company

purchased marketable securities of $ 128,277,575 , net of redemptions during the period.

Historically, the Company has incurred net losses.

For the three months ended September 30, 2021 and September 30, 2020, the Company reported net losses of $ 9,253,380 and $ 2,007,209 , respectively.

For the nine months ended September 30, 2021 and September 30, 2020, the Company reported net losses of $ 92,906,971 and $ 391,101,155 ,

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”).

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

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, purchased the outstanding equity

interests of ChizComm Ltd., a corporation organized in Canada, and ChizComm USA Corp., a New Jersey corporation (collectively “ChizComm”).

During the fourth quarter of 2021, the Company rebranded and renamed ChizComm Ltd.

Communications and ChizComm USA Corp.

to Beacon Media (collectively, the “Beacon Media

On January 13, 2022, the Company

completed its acquisition of the issued and outstanding shares of Ameba Inc., a corporation incorporated under the laws of the Province

of Manitoba and gained access to its kid-safe subscription-based video on demand platform technology and 13,000 episodes of content.

to Note 3 for additional details.

Acquisition Completed Subsequent to Quarter

On April 6, 2022, the

Company completed its previously disclosed acquisition of Wow Unlimited Media Inc.

(“WOW”), a corporation existing under

the laws of the Province of British Columbia.

On October 26, 2021, the Company’s wholly-owned subsidiary, 1326919 B.C.

corporation existing under the laws of the Province of British Columbia and WOW, entered into an Arrangement Agreement to effect a

transaction among the parties by way of a plan of arrangement under the arrangement provisions of Part 9, Division 5 of the Business

Corporations Act .

The Company purchased 100% of WOW’s issued and outstanding shares for approximately $ 38.3

million in cash and 11,057,000

shares of the Company’s common stock.

The Company has not completed its initial

accounting for the business combination which will be accounted for using the acquisition method of accounting.

The fair value of

the assets and liabilities are still to be determined.

Following the initial

equity investment in Your Family Entertainment AG (“YFE”) during the fourth quarter of 2021, the Company participated in

a mandatory tender offer for the remaining publicly traded shares held by YFE shareholders.

Upon the expiration of the offer on

February 14, 2022, the Company purchased an additional 2,637,717 shares

of YFE, at 2.00 EUROS per share or $ 5.7 million

in the aggregate.

On March 9, 2022, bonds held by YFE shareholders, were converted into 2,574,000 shares

of YFE common stock, 304,631 of

which were purchased by the Company, at 2.00 EUROS per share or $ 0.6 million,

increasing the number of YFE’s outstanding shares and increasing the Company’s ownership in YFE to 45.6 %

as of March 31, 2022.

During the three months

ended March 31, 2022, the Company’s cash and cash equivalents (excluding restricted cash) increased by $ 47.8

Of this amount, $ 43.3

million, including transactional costs, was borrowed and transferred from the Company’s investment margin account to

subsequently finance the WOW acquisition, as noted above.

As of March 31, 2022,

the Company held marketable securities with a fair value of $ 101.3

million as available-for-sale, a decrease of $ 11.2

million during the three months ended March 31, 2022.

Cash in excess of immediate requirements is invested in accordance with the

Company’s investment policy, primarily with a view for liquidity and capital preservation.

Accordingly, the available-for-sale

securities, consisting principally of corporate and government debt securities, are also available as a source

of liquidity.

During the three months

ended March 31, 2022, the Company borrowed an additional $ 59.6 million

from its investment margin account and repaid $ 8.2 million

with cash received from sales and/or redemptions of its marketable securities.

The borrowed amounts were used to finance the

Company’s additional investments in YFE and the closing of its acquisition of WOW, in each case pledging certain of its

marketable securities as collateral.

The interest rate for these investment margin account borrowings fluctuates based on the

Federal Funds Rate plus 0.65 %

with interest only payable monthly.

The weighted average interest rate was 0.72 %

and the average balance of the borrowings was $ 13.6 million

as of March 31, 2022.

The Company incurred interest expense of $ 21,846 during

the three months ended March 31, 2022.

The investment margin account borrowings do not mature but are payable on demand as the

custodian can issue a margin call at any time, therefore the margin loan is recorded as a current liability on the Company’s

condensed consolidated balance sheets.

The Company has the ability to borrow up to 66 %

of the balance held in marketable securities, with the option to increase its borrowing capacity, if needed.

As of March 31, 2022,

the outstanding balance of the margin loan was $ 57.8

million, or 57% of the balance held in marketable securities.

Historically, the

Company has incurred net losses.

For the three months ended March 31, 2022 and March 31, 2021, the Company reported net losses of

$4.5 million 4,531

and $76.3 million, 76,259

respectively.

The Company reported net cash used in operating activities of $ 15,965,351 and $ 5,475,826 for the nine months ended September

30, 2021 and September 30, 2020, respectively.

As of September 30, 2021, the Company had an accumulated deficit of $ 562,464,295 and total

stockholders’ equity of $ 167,976,968 .

As of September 30, 2021, the Company had current assets of $ 143,046,171 , including cash and

cash equivalents of $ 4,884,149 and marketable securities of $ 125,340,336 , and current liabilities of $ 11,607,299 .

The Company had working

capital of $ 131,438,872 as of September 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.

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

Ltd., acted as warrant solicitation agent

and received a cash fee of approximately $ 4,286,844 .

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, exercisable immediately, 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).

was required to register the resale of the shares of common stock issuable upon exercise of the New Warrants.

The Company reported net cash used in operating activities of $5.3 million 5,332 and

$5.6 million 5,640 for

the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, the Company had an accumulated deficit of $600.3

million 600,379

and total stockholders’ equity of $141.6 million.

of March 31, 2022, the Company had current assets of $164.3 million, 164,291 including

cash and cash equivalents of $45.6 million 49,811 and

current liabilities of $68.9 million.

Company had working capital of $ 95.4 million as

of March 31, 2022, compared to working capital of $ 115.1 million

as of December 31, 2021.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated

balance sheet as of December 31, 2020 has been derived from audited statements.

The accompanying condensed

consolidated balance sheet as of December 31, 2021 has been derived from audited statements.

The accompanying unaudited condensed consolidated

financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.

Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles

(“US GAAP”) for complete financial statements and should be read in conjunction with the audited financial statements

and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with

the Securities and Exchange Commission on March 31, 2021.

The accompanying condensed consolidated financial

statements include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary

to state fairly the Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Loss, Statements of Stockholders'

Equity, and Statements of Cash Flows for all periods presented.

Certain prior period amounts have been reclassified

for consistency with the current period presentation.

These relcassifications had no effect on the reported results of operations.

Correction of Error

During the third quarter of fiscal 2021, the Company

discovered an error in the unaudited Condensed Consolidated Statements of Comprehensive Loss and Condensed Consolidated Statement of Stockholder’s

Equity for the three months ended June 30, 2021.

The reported line item for Net Unrealized Loss on Marketable Securities improperly included

the amount of purchased and accrued interest.

As a result of this error, Other Comprehensive Loss was overstated by $352,098 for

the three and six months ended June 30, 2021.

Net Unrealized Loss on Marketable Securities was previously reported as $(509,625)

for the three months and six months ended June 30, 2021.

The error did not have a material impact on prior period Condensed Consolidated

Statement of Operations.

Corrected amounts are included in the comparative periods presented in this Form 10-Q.

The Company determined its operating segments

on the same basis that it assesses performance and makes operating decisions.

The Company principally operates in two distinct business

the Content Production & Distribution Segment which produces and distributes children’s content, and the Media &

Advertising Services Segment which provides media and advertising services.

These segments are reflective of how the Company’s Chief

Operating Decision Maker (“CODM”) reviews operating results for the purposes of allocating resources and assessing performance.

they do not include all of the information and footnotes required by generally accepted accounting principles (“US GAAP”)

for complete financial statements and should be read in conjunction with the audited financial statements and related footnotes included

in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission

on April 6, 2022.

The accompanying condensed

consolidated financial statements include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and

reclassifications) necessary to state fairly the Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive

Loss, Statements of Stockholders' Equity, and Statements of Cash Flows for all periods presented.

Certain prior period amounts

have been reclassified for consistency with the current period presentation.

These reclassifications had no effect on the reported results

of operations.

The Company determined its

operating segments on the same basis that it assesses performance and makes operating decisions.

The Company principally operates

in two distinct business segments:

the Content Production & Distribution Segment which produces and distributes children’s content,

and the Media Advisory & Advertising Services Segment which provides media and advertising services.

These segments are reflective

of how the Company’s Chief Operating Decision Maker (“CODM”) reviews operating results for the purposes of allocating

resources and assessing performance.

The Company has identified its Chief Executive Officer as the CODM.

The segments are organized around the products and services

provided to customers and represent the Company’s reportable segments.

The segments are organized around

the products and services provided to customers and represent the Company’s reportable segments.

Prior to the acquisition of

ChizComm Ltd., the Company’s operations were comprised of a single segment.

The accounting policies for each segment are the

same as for the Company as a whole.

the Beacon Media Group (formerly “ChizComm”), the Company’s operations were comprised of a single segment.

The accounting policies for

each segment are the same as for the Company as a whole.

Refer to Note 22 for additional information.

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, ChizComm Ltd., Stan Lee Universe

LLC, Shaq’s Garage Productions LLC and KCPQ Productions LLC.

All significant inter-company balances and transactions have been eliminated

in consolidation.

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 .

Principles of Consolidation and Basis of Presentation

The Company’s condensed

consolidated financial statements include the accounts of Genius Brands International, Inc.

and its wholly-owned subsidiaries.

consolidates all majority-owned subsidiaries, investments in entities in which it has controlling influence and variable interest entities

where the Company has been determined to be the primary beneficiary.

Minority interests are recorded as noncontrolling interests.

Non-consolidated

investments are accounted for using the equity method or the fair value option when the Company has the ability to significantly influence

the operating decisions of the investee.

When the Company does not have the ability to significantly influence the operating decisions

of an investee, these equity securities are classified as either marketable investment securities or other investments and recorded at

fair value with changes recognized within other Income (expense) on the consolidated statements of operations and comprehensive income

All significant intercompany accounts and transactions have been eliminated in consolidation.

Business Combinations

Company accounts for transactions that are classified as business combinations in accordance with the Financial Accounting Standards

Boards’ (“FASB”) Accounting Standards Codification (“ASC”) 805, Business

Combinations (“ASC 805”) .

Once a business is acquired, the Company allocates the fair value of the purchase

consideration 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.

required, preliminary fair values are determined upon acquisition, with the final determination of the fair values being completed within

the one-year measurement period from the date of acquisition.

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

Acquisition-related expenses and any related restructuring costs are recognized separately from the business combination and

are expensed as incurred.

Variable Interest Entities

The Company holds an

interest in Stan Lee University (“SLU”), an entity that is considered a variable interest entity (“VIE”).

The variable interest relates to 50% ownership in the entity that is comprised of the Stan Lee Assets (as defined below) and that

requires additional financial support from the Company to continue operations.

The Company’s total cash investment in SLU is

$ 2.0 million.

The Company is considered the primary beneficiary and is required to consolidate the VIE.

In evaluating whether the

Company has the power to direct the activities of a VIE that most significantly impact its economic performance, the Company considers

the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and the Company’s decision-making

role, if any, in those activities that significantly determine the entity’s economic performance as compared to other economic interest

This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the entity’s

future performance and the exercise of professional judgment in deciding which decision-making rights are most important.

In determining whether the

Company has the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, the Company

evaluates all of its economic interests in the entity, regardless of form (debt, equity, management and servicing fees, and other contractual

arrangements).

This evaluation considers all relevant factors of the entity’s design, including:

the entity’s capital structure,

contractual rights to earnings (losses), subordination of our interests relative to those of other investors, contingent payments, as

well as other contractual arrangements that have the potential to be economically significant.

The evaluation of each of these factors

in reaching a conclusion about the potential significance of our economic interests is a matter that requires the exercise of professional

The Company continuously assesses whether it is the primary beneficiary of a variable interest entity as changes to existing

relationships or future transactions may result in the Company consolidating its collaborators or partners.

Use of Estimates

The preparation of financial statements in conformity

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.

The preparation of financial

statements in conformity with 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.

Foreign Currency

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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

functional currency for its Canada based operations.

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

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.

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

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

Foreign exchange transaction

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Cash and Cash Equivalents

The Company considers all highly liquid debt instruments

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

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

cash and cash equivalents of $ 4,884,149 and $ 100,456,324 , respectively.

During the three months ended September 30, 2021, the Company

transferred $ 2,600,000 of cash deposits from its investment account to money market funds, classified as cash equivalents on the consolidated

balance sheets.

The Company considers all

highly liquid debt instruments with initial maturities of three months or less to be cash equivalents.

As of March 31, 2022, and December

31, 2021, the Company had cash and cash equivalents of $ 49.8 million and $ 2.1 million, respectively.

Restricted Cash

The Company holds restricted

cash of $ 3.0 million in an escrow account for the future commitment of financing related to our investment in YFE, which was used to purchase

additional shares of YFE, subsequent to March 31, 2022.

Marketable Debt Securities

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will be received.

Approximately $ 514,099 in interest income was receivable as of September 30, 2021, classified within Other Receivables

on the condensed consolidated balance sheets.

Approximately $ 0.6 million in interest income was receivable as of March 31, 2022 and classified within Other Receivables

on the consolidated balance sheets.

Interest earned on investment

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for by the level yield method with no pre-payment anticipated.

Equity-Method Investments

When the Company does not

have a controlling financial interest in an entity but can exert significant influence over the entity’s operating and financial

policies, the investment is accounted for either (i) under the equity method of accounting or (ii) at fair value by electing

the fair value option available under U.S.

Significant influence generally exists when the firm owns 20% to 50% of the

entity’s common stock or in-substance common stock.

In general, the Company accounts

for investments acquired at fair value.

See Note 5 for further information about the Company’s investment in YFE’s equity

securities accounted for under the fair value option.

Allowance for Doubtful Accounts

Accounts receivable are presented on the balance

sheets net of estimated uncollectible amounts.

The Company assesses its accounts receivable balances on a quarterly basis to determine

collectability and records an allowance for estimated uncollectible accounts in an amount approximating anticipated losses based on historical

experience and future expectations.

Individual uncollectible accounts are written off against the allowance when collection of the individual

accounts appears doubtful.

The Company had an allowance for doubtful accounts of $ 119,754 as of September 30, 2021 and $ 43,676 as of December

Accounts receivable are presented

on the balance sheets net of estimated uncollectible amounts.

The Company assesses its accounts receivable balances on a quarterly basis

to determine collectability and records an allowance for estimated uncollectible accounts in an amount approximating anticipated losses

based on historical experience and future expectations.

Individual uncollectible accounts are written off against the allowance when collection

of the individual accounts appears doubtful.

Property and Equipment

Property and equipment are recorded at cost.

on property and equipment is computed using the straight-line method over the estimated useful lives of the assets, which range from two

to seven years.

Maintenance, repairs, and renewals, which neither materially add to the value of the assets nor appreciably prolong their

lives, are charged to expense as incurred.

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

statement of operations.

Property and equipment are

recorded at cost.

Depreciation on property and equipment is computed using the straight-line method over the estimated useful lives of

the assets, which range from two to seven years.

Maintenance, repairs, and renewals, which neither materially add to the value of the

assets nor appreciably prolong their lives, are charged to expense as incurred.

Gains and losses from any dispositions of property and

equipment are reflected in the consolidated statement of operations.

Right of Use Leased Assets

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 or finance.

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.

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 or finance under FASB ASC 842, Leases (“ASC 842”) .

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

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 date.

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.

Film and Television Costs

The Company capitalizes

production costs for episodic series produced in accordance with FASB ASC 926-20, Entertainment-Films - Other Assets - Film

Accordingly, production costs are capitalized at actual cost and amortized using the individual-film-forecast method,

whereby these costs are amortized, and participations costs are accrued based on the ratio of the current period’s revenues to

management’s estimate of ultimate revenue expected to be recognized from each production.

Due to the inherent uncertainties

involved in making such estimates of ultimate revenues and expenses, these estimates have differed in the past from actual results and

are likely to differ to some extent in the future from actual results.

In addition, in the normal course of the Company’s business,

some titles are more successful or less successful than anticipated.

Management reviews its ultimate revenue and cost estimates on a title-by-title

basis, when an event or change in circumstances indicates that the fair value of the production may be less than its unamortized cost.

This may result in a change in the rate of amortization of film costs and participations and/or a write-down of all or a portion of the

unamortized costs of the film or television production to its estimated fair value.

An impairment charge is recorded in the amount by

which the unamortized costs exceed the estimated fair value.

These write-downs are included in amortization expense within Direct Operating

Expenses on the Company’s condensed consolidated statements of operations.

There were no events or changes in circumstances that

would indicate a change in fair value of productions and therefore the Company has not recorded any impairment charges during the three

months ended March 31, 2022.

The Company expenses all capitalized

costs that exceed the initial market firm commitment revenue in the period of delivery of the episodes.

Additionally, for episodic series,

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

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

periodic alterations to existing products are expensed as incurred.

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 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.

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 its reporting units, of which the Company has two.

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

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

Annual amortization of these

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

Goodwill represents the excess

of purchase price 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.

for goodwill impairment, the Company may elect to perform a qualitative assessment to determine whether it is more likely than not that

the fair value of a reporting unit, of which the Company has two, is less than its carrying value.

If impairment is indicated in the qualitative

assessment, or, if management elects to initially perform a quantitative assessment of goodwill, the impairment test uses a one-step approach.

The fair value of a reporting unit is compared with its carrying amount, including goodwill.

If the fair value of the reporting unit exceeds

its carrying amount, goodwill of the reporting unit is not impaired.

If the carrying amount of a reporting unit exceeds its fair value,

an impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed

the total amount of goodwill allocated to that reporting unit.

Changes in future results,

assumptions, and estimates after the measurement date may lead to an outcome where additional impairment charges would be required in

future periods.

Specifically, actual results may vary from the Company’s forecasts and such variations may be material and unfavorable,

thereby triggering the need for future impairment tests where the conclusions may differ in reflection of prevailing market conditions.

Further, continued adverse market conditions could result in the recognition of additional impairment if the Company determines that the

fair values of its reporting units have fallen below their carrying values.

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.

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

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 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 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

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

Film and Television Costs

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.

Additionally, for episodic series, from time to

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

After the initial

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

to existing products are expensed as incurred

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 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 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 FASB ASC 815-40, Contract’s in Entity’s Own

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.

When required, the Company

also considers the bifurcation guidance for embedded derivatives per ASC 815-15, Embedded Derivatives .

Revenue Recognition

The Company accounts for revenue according to

standard FASB ASC 606, Revenue from Contracts with Customers .

The Company has identified the following seven material and distinct

performance obligations:

The Company accounts for revenue

according to standard FASB ASC 606, Revenue from Contracts with Customers (“ASC 606”) .

The Company has identified the

following 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).

Provide media and advertising services to clients.

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).

media and advertising services to clients.

Fixed and variable fee advertising and subscription-based revenue generated from the Genius Brands Kartoon Channel!

Options to renew or extend a contract at fixed terms.

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(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 Kartoon Channel!

Variable fee advertising revenue generated from the Genius Brands Kartoon Channel!

The Company recognizes 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 and 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.

The Company recognizes revenue related to licensed rights

to exploit symbolic IP substantially similarly to functional IP.

Although 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

The Company provides media and advertising services

The Company recognizes 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 and 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.

The Company recognizes revenue related to

licensed rights to exploit symbolic IP substantially similarly to functional IP.

Although 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

and subscriptions on its App and OTT based “Kartoon Channel!” in the form of either flat rate promotions or impressions

For flat rate promotions with a fixed term, the Company recognizes revenue when all five revenue recognition criteria under ASC

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.

For subscription-based revenue, the Company recognizes revenue when customer downloads

the mobile device application and their credit card is charged.

The Company provides media

and advertising services to clients.

Revenue is recognized when the services are performed.

When the Company purchases advertising for clients on linear and across

digital and streaming platforms and receives a commission, the commissions are recognized as revenue in the month the advertising is displayed.

The Company recognizes revenue related to product

sales when the Company completes its performance obligation, which is when the goods are transferred to the buyer.

When the Company purchases advertising for

clients on linear and across digital and streaming platforms and receives a commission, the commissions are recognized as revenue in the

month the advertising is displayed.

The Company recognizes revenue

related to product 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 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

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”).

Direct operating costs include

costs of the Company’s product sales, non-capitalizable film costs, film and television cost amortization expense, impairment expenses

related to film and television costs, 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

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 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-Merton (“BSM”) 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.

(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;

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

treasury zero-coupon

issues with an equivalent expected term;

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

The Company issues authorized shares

available for issuance under the Company’s 2015 Incentive Plan and the Company’s 2020 Incentive Plan 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

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 tax rates.

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.

Basic earnings (loss) per

share of common stock (“EPS”) is calculated by dividing net income (loss) applicable to common stockholders 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 stockholders 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 tax rates.

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 maintains its cash in bank deposit

accounts which, at times, may exceed the Federal Deposit Insurance Corporation’s (“FDIC”) insured amount.

interest bearing deposits at banks in the United States are insured by the FDIC up to $ 250,000 per account.

As of September 30, 2021,

the Company had three accounts with an uninsured balance in bank deposit accounts of $ 1,907,973 .

The Company has a managed account and a brokerage

account with a financial institution.

The managed account maintains our investments in marketable securities of $ 125,340,336 and bank

deposits held in a sweep program of $ 1,328,895 as of September 30, 2021.

The brokerage account holds $ 2,600,000 as of September 30, 2021.

Assets in the managed account and brokerage account are protected by the Securities Investor Protection Corporation (“SIPC”)

up to $500,000 (with a limit of $ 250,000 for cash).

In addition, the financial institution provides additional “excess of SIPC”

coverage which insures up to $1 billion.

As of September 30, 2021, the Company has not had account balances held at this financial institution

that exceed the insured balances.

The Company’s investment portfolio consists

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

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 September 30, 2021,

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

That customer accounted for 13 % of the

total revenue and 6 % of accounts receivable.

For the nine months ended September 30, 2021, the Company had one customer whose total revenue

exceeded 10% of the total consolidated revenue.

That customer accounted for 22 % of the total revenue and 0 % of accounts receivable.

of September 30, 2021, the Company had three customers whose accounts receivable exceeded 10% of total consolidated accounts receivable.

Those customers accounted for 59 % of accounts receivable.

For the three months ended September 30, 2020,

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

Those customers accounted for 24 % of

the total revenue and 16 % of accounts receivable.

One other customer accounted for 70 % of accounts receivable.

For the nine months ended

September 30, 2020, the Company had one customer whose total revenue exceeded 10% of the total consolidated revenue.

That customer accounted

for 23 % of the total revenue and 0 % of accounts receivable.

One other customer accounted for 70 % of accounts receivable.

The Company maintains its

cash in bank deposit accounts which, at times, may exceed the Federal Deposit Insurance Corporation’s (“FDIC”) or the

Canadian Deposit Insurance Corporation’s (“CDIC”) insured amounts.

Balances on interest bearing deposits at banks in

the United States are insured by the FDIC up to $250,000 per account and deposits in banks in Canada are insured by the CDIC up to $100,000

As of March 31, 2022, the Company had three accounts with an uninsured balance in bank deposit accounts of $ 1.1 million.

The Company has a managed

account and a brokerage account with a financial institution.

The managed account maintains the Company’s investments in marketable

securities of $ 101.3 million as of March 31, 2022.

The brokerage account held $ 4.7 million in cash as of March 31, 2022, that was subsequently

invested in additional shares of YFE.

Assets in the managed and brokerage account are protected by the Securities Investor Protection

Corporation (“SIPC”) up to $500,000 (with a limit of $ 250,000 for cash).

In addition, the financial institution provides additional

“excess of SIPC” coverage which insures up to $1 billion.

As of March 31, 2022 the Company has not had account balances held

at this financial institution that exceed the insured balances.

The Company’s investment

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

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

March 31, 2022, the Company had one customer, whose total revenue exceeded 10% of total consolidated revenue.

This customer accounted

for 13.3 % of total revenue.

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

These customers accounted for 57 % of the total accounts receivable as of March 31, 2022.

For the three months ended

March 31, 2021, the Company had one customer whose total revenue exceeded 10% of the total consolidated revenue.

This customer accounted

for 11 % of total revenue.

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

Those customers

accounted for 69 % of accounts receivable.

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.

As of March 31, 2022 and December 31, 2021, the Company recorded an

allowance for bad debt of $ 34,097 and $ 22,080 , respectively.

Fair value of Financial Instruments

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

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

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).

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 820, Fair Value Measurement (“ASC 820”) establishes a three-tier fair value hierarchy

which prioritizes the inputs used in measuring fair value.

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:

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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 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 September 30, 2021:

The carrying amounts of cash,

restricted cash, receivables, payables, accrued liabilities and the margin loan approximate fair value due to the short-term maturity

of the instruments.

The fair values of the Company’s liability-classified derivative warrants are determined using the BSM model

(Level 2) with standard valuation inputs.

Refer to Note 19 for additional details.

The investment in YFE is valued based on the trading

price of YFE (Level 1).

Refer to Note 5 for additional details.

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 1 or Level 2 inputs for the determination of fair value to facilitate fair value measurements and

Level 2 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 March 31, 2022 (in thousands):

Schedule of marketable security measured at fair value

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Corporate Bonds

Mortgage-Backed

agency and government sponsored securities

states and municipalities

Commercial paper

$ 125,340,336

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 19 for additional details.

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

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 FASB ASC 320, Investments – Debt and Equity Securities .

There were no impairment charges recorded

for the marketable securities.

Refer to Note 6 for additional details.

The Company did not have any financial assets

and liabilities measured at fair value on a non-recurring basis as of September 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.

Financial and nonfinancial

assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs and

include the Company’s contingent earn-out liability, goodwill and film and television costs as of March 31, 2022.

There were no

significant events that occurred or circumstances that resulted in an adjustment to the fair value of those assets and liabilities measured

on a non-recurring basis during the three months ended March 31, 2022.

Recent Accounting Pronouncements

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 issued ASU No.

2019-10, Financial Instruments-Credit Losses, Effective Dates approving 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 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.

The Company has early adopted ASU No.

2020-06 starting January 1, 2021 on a modified retrospective basis.

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 convertible

instruments outstanding as of the beginning of the fiscal year.

In May 2021, the FASB issued ASU No.

Modification of Equity-Classified Written Call Options .

The update requires the issuer to treat a modification of an equity-classified

warrant that does not cause the warrant to become liability-classified as an exchange of the original warrant for a new warrant.

guidance applies whether the modification is structured as an amendment to the terms and conditions of the warrant or as termination of

the original warrant and issuance of a new warrant.

Under the amendments, an issuer should measure the effect of a modification as the

difference between the fair value of the modified warrant and the fair value of that warrant immediately before modification.

The recognition

of the modification depends on the nature of the transaction in which a warrant is modified, i.e., in connection with equity issuance,

debt origination, debt modification, or other.

For example, if a warrant is modified in connection with an equity issuance, the issuer

should recognize the increase (and disregard any decrease) in the warrant’s fair value as an equity issuance cost, which should

be charged against the gross proceeds of the offering.

The amendments are effective for public business entities for fiscal years beginning

after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted, including interim periods within

those fiscal years.

The amendment would be applied prospectively to modifications that occur after the date of initial application.

Company will apply the amendment during the interim periods of fiscal year 2022 to any prospective modifications.

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 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

“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 “ChizComm

Acquisition”).

The following

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

The Company reviewed all recently

issued accounting pronouncements and concluded that they were not applicable or not expected to have a significant impact on the Company’s

condensed consolidated financial statements.

Acquisition of Ameba

On January 13, 2022, the Company

closed its previously announced acquisition of Ameba Inc., a corporation incorporated under the laws of the province of Manitoba (“Ameba”),

pursuant to a Stock Purchase Agreement (the “SPA”) by and between the Company and Tony Havelka, a resident of the Province

of Manitoba (the “Seller”), in which the Company acquired from the Seller all of the issued

and outstanding equity interests of Ameba.

In addition to the SPA, pursuant to an Asset Purchase Agreement (the “APA”) by

and between the Company, the Seller and Tek Gear Inc., a corporation owned by the Seller, the Company acquired from the Seller, a proprietary

software platform (the “Technology”) that powers the Ameba subscription video on demand (“SVOD”) deliveries.

SPA, together with the APA, are referred to as the “Ameba Acquisition.”

Consideration paid by the Company in the transaction

at closing consisted of $ 3.5 million in cash pursuant to the SPA and $ 0.3 million in cash pursuant

to the APA, for total consideration of $ 3.8 million, or $ 3.6 million net of cash acquired, excluding transaction costs and subject to

a net working capital adjustment (the “NWC Adjustment”) as described in more detail below.

costs incurred relating to the Ameba Acquisition, including legal and accounting, totaled $ 0.1 million, which is included in general and

administrative expenses on the statement of operations.

The agreement provides for an adjustment to the purchase price based on an adjusted

net working capital (“NWC”) as defined in the agreement.

The Company recorded an estimated liability of $ 0.3 million

related to the NWC Adjustment, which is reflected within Accrued Expenses in the condensed consolidated balance sheet.

Ameba acquisition facilitates the Company’s expansion into SVOD with its technology and content essential to the launch of the ad-free

subscription-based Kartoon Channel!

Kidaverse platform.

The acquisition provides immediate benefit recognized through the content

available on the SVOD Ameba channel app, available for download on Amazon Fire TV, Roku, Xbox 360, Xumo, LG Smart TV, TiVo, VEWD, CINEMOOD

and iOS and Android devices.

Company has determined that the Ameba Acquisition constitutes a business acquisition as defined by ASC 805.

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

preliminary purchase price allocation was based on an evaluation of the available data to determine the appropriate fair values based

on the requirements of ASC 820 and represents managements best estimates.

following table summarizes the consideration paid, including the preliminary Net Working Capital Adjustment (in thousands):

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 “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).

Acquisition was approved by the board of directors of each company.

Transaction costs incurred relating to this acquisition including

legal and accounting totaled $539,806, which is included in general and administrative expenses on the statement of operations.

Acquisition expands the Company’s revenue streams into media and advertising services.

has determined that the ChizComm Acquisition constitutes a business acquisition as defined by ASC 805, Business Combinations .

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 .

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 September 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

SPA cash consideration at closing

APA cash consideration at closing

Net working capital adjustment

As of March 31, 2022, the

accounting for the acquisition is preliminary, as the Company is finalizing its valuation and determination of the intangible assets.

The Company has engaged a third-party valuation firm to assist with the purchase price allocation, which will be completed in subsequent

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 on January 11,

2022 as follows (in thousands):

Assets acquired and liabilities assumed

Accounts Receivable

Prepaid Expenses

Lease Deposits

Customer Relationships

Non-Compete Agreements

Prepaids Expenses

Digital Network

Accounts Payable and Accrued Expenses

( 7,006,350 )

Payroll Tax Liability

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 economical life, $ 6,140,000 for ChizComm’s

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

The identifiable intangible

assets acquired of $ 3.1 million is comprised of $2.8 million for the Digital Network, Ameba TV, with a remaining economic life of 18 years,

$24,000 for Ameba’s trade name with a useful life of 3 years and $0.3 million for the SVOD technology with a remaining useful life

of approximately 3 years.

The goodwill arising from the acquisition consists largely of the synergies expected from the combined businesses,

including the Company’s build-out of its technology for the expansion of the Kartoon Channel!

The goodwill was

recorded to the Content Production & Distribution reporting unit and is not deductible for tax

The allocation of the preliminary

purchase price shown in the above table was based upon a preliminary valuation and estimates and assumptions that are subject to change

within the purchase price allocation period, generally one year from the acquisition date.

Valuation Methodology

Customer relationships

for ChizComm were valued by performing a discounted cash flow analysis using the multiperiod excess earnings method.

This method includes

discounting the projected cash flows associated with existing customers based primarily upon customer turnover data over its expected

life and considers the operating expenses and contributory asset charges associated with servicing such existing customers.

cash flows attributable to the customer relationships were discounted to their present value at a rate commensurate with the perceived

The useful lives of customer relationships are estimated based primarily upon the present value of cash flows attributable to the

customer relationships.

Trademarks and trade

names for ChizComm were valued using the relief-from-royalty method.

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.

Royalty payments are estimated by applying a royalty rate to the prospective revenue attributable to the intangible asset.

The resulting annual royalty payments are tax-affected and then discounted to present value.

Non-compete agreements

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.

The after-tax differential PFI attributable to the intangible asset is then discounted to its present value.

Assumptions used in forecasting

cash flows for each of the identified intangible assets included consideration of the following:

digital network was valued by performing a discounted cash flow analysis.

This method includes discounting the projected cash flows associated

with the current digital network content, based primarily upon historical revenue and projections over its expected life and considers

the operating expenses and contributory asset charges associated with servicing such network.

Projected cash flows attributable to the

digital network was discounted to the present value at a rate commensurate with the perceived risk.

The useful life of the digital network

is estimated based primarily upon the present value of cash flows attributable to the digital network.

The Ameba trade name was

valued using the relief-from-royalty method.

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.

payments are estimated by applying a royalty rate to the prospective revenue attributable to the intangible asset.

The resulting annual

royalty payments are tax-affected and then discounted to present value.

The useful life of the trade name is based on the estimated time

it will take for the Company to rebrand the Ameba trade name and logo with the Company branded Kartoon Channel!

Kidaverse trade

The technology was valued

The assumptions used in

forecasting cash flows for each of the identified intangible assets included consideration of the following:

Historical performance including sales and profitability.

Business prospects and industry expectations.

Expense estimates.

Contributory asset charges.

Estimated economic life of asset.

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Attrition of existing customers.

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

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.

Supplemental pro forma information as follows:

Supplemental Pro Forma Information

The following unaudited supplemental

pro forma information summarizes the Company’s results of operations as if the acquisition was completed in the beginning of the

periods presented (in thousands, except for share and per share data):

Supplemental pro forma information

Three Months Ended

Nine Months Ended

September 30,

March 31, 2022

March 31, 2021

Total Revenues

( 9,253,380 )

( 2,164,427 )

( 93,533,387 )

( 391,625,312 )

Net Loss per Common Share (Basic and Diluted)

Net Loss Applicable to Common Stockholders

Net Loss per Common Stock (Basic and Diluted)

Weighted Average Shares Outstanding (Basic and Diluted)

Variable Interest Entity

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.” POW!

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

of the acquisition was to enable 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 (the “Stan Lee Assets”), from which Genius Brands plans to develop and license

multiple properties each year.

The Company contributed $ 2.0

million to obtain 50% of SLU’s voting equity and POW, for the remaining 50%, contributed the specified intangible assets associated

with the Stan Lee Assets.

POW will retain certain rights in the transferred intangible assets, namely existing the rights/obligations

arising from current licensing agreements.

Under ASC 805, the Company determined that the value of SLU was wholly attributable to the

Stan Lee Assets and would be accounted for as an asset acquisition.

The acquisition cost of $ 2.0 million was equivalent to the value of

the Stan Lee Assets contributed by POW.

Therefore, the fair value of the consideration paid by the entity of $2.0 million and the fair

value of the 50% noncontrolling interest approximated a total of $4.0 million.

Pursuant to the guidance under

ASC 810, the Company concluded that SLU qualifies as a variable interest entity (“VIE”).

The Company consolidates the results

of SLU as it was determined that the Company is the primary beneficiary due to having the power through the collaboration to direct the

activities that most significantly impact the entity’s economic performance and the Company is required to fund over half of the

economic support of the entity.

Accordingly, the Company recorded the total fair value of the Stan Lee Assets in SLU of $ 4.0 million,

as an intangible asset to be amortized over the duration of 70 years, the life of the publicity rights related to Stan Lee’s name,

likeness, voice, physical characteristics, etc.

There were no changes in facts and circumstances

that occurred during the three months ended March 31, 2022 that would result in a re-evaluation of the VIE assessment.

Investment in Equity Interest

On December 1, 2021, the Company

completed a $ 6.8 million investment in YFE.

In exchange for $ 3.4 million in cash and 2,281,269

shares of the Company’s common stock (valued at approximately $3.4 million), the Company received 3,000,000 shares of YFE’s

common stock.

Following the initial

equity investment in YFE during the fourth quarter of 2021, the Company participated in a mandatory tender offer for the remaining

publicly traded shares held by YFE shareholders.

Upon the expiration of the offer on February 14, 2022, the Company purchased an

additional 2,637,717 shares

of YFE at 2.00 EUROS per share or $5.7 million in the aggregate.

On March 9, 2022, bonds held by YFE shareholders, were converted

into 2,574,000 shares

of YFE common stock, 304,631 of

which were purchased by the Company at 2.00 EUROS per share or $0.6 million, increasing the number of YFE’s outstanding shares

and the Company’s ownership in YFE to 45.6 %

as of March 31, 2022.

The Company has elected to

apply the fair value option for its investment in YFE (Level 1) as it is believed that investors value this investment based on the trading

price of YFE.

The Company recognizes changes in the fair value of its investment in YFE as unrealized gains (losses), net in the accompanying

consolidated statements of operations with other income (loss), net.

The Company revalued the investment

in YFE’s securities as of March 31, 2022 and recorded a gain of $ 5.2 million within other income (loss) on the Company’s condensed

consolidated statement of operations, net of a $ 0.2 million loss due to the change in the foreign currency translation rate.

On April 5, 2022, the Company

exercised its subscription rights to purchase an additional 914,284 shares of YFE’s common stock at 3.00 EUROS per share, increasing

the number of shares held by the Company to 6,857,132 shares and its ownership in YFE to 48.2 %.

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 $125,692,272 and a market value of $125,340,336 as of September 30, 2021.

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 $106.0 million and a market value of $101.3 million as of March 31, 2022.

The balances consisted

of the following securities (in thousands) :

Summary of Investment in marketable security

2 unchanged sentences

Corporate Bonds

$ ( 140,716 )

Mortgage-Backed

agency and government sponsored securities

states and municipalities

Commercial paper

$ 125,692,272

$ ( 351,936 )

$ 125,340,336

The Company reported the net unrealized losses

in accumulated other comprehensive (loss) income, a component of stockholders' equity.

The decline in fair value is largely due to changes

in interest rates and other market conditions and is expected to recover as the securities approach maturity.

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

The Company reported the net

unrealized losses in accumulated other comprehensive (loss) income, a component of stockholders' equity.

The decline in fair value is

largely due to changes in interest rates and other market conditions and is expected to recover as the securities approach maturity.

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 Company has not yet held marketable securities in an unrealized loss position for greater than twelve months.

A net realized

loss of $24,779 related to the prepayment of principals for certain mortgage-backed securities was recorded in earnings during the three

months ended September 30, 2021.

The contractual maturities of the Company’s marketable investments

as of September 30, 2021 were as follows:

A net realized loss of $79,051 related to the prepayment of principals for certain mortgage-backed securities was recorded in earnings

during the three months ended March 31, 2022.

The contractual maturities of the Company’s

marketable investments as of March 31, 2022 were as follows (in thousands) :

Summary of contractual maturity

Due within 1 year

Due after 1 year through 5 years

$ 104,873,382

Due after 5 years through 10 years

Due after 10 years (a)

$ 125,340,336

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 nine months

ended September 30, 2021, that resulted in material gains or losses.

Due after 10 years

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 months ended March 31, 2022, that resulted in material gains or losses.

Property and Equipment, Net

The Company has property and equipment as follows

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

The Company has property

and equipment as follows (in thousands) :

Schedule of property and equipment, net

September 30,

March 31, 2022

December 31, 2021

Furniture and Equipment

5 unchanged sentences

Property and Equipment, Net

During the three months ended September 30, 2021

and 2020, the Company recorded depreciation expense of $ 23,665 and $ 10,206 , respectively.

During the nine months ended September 30, 2021

and 2020, the Company recorded depreciation expense of $ 53,494 and $ 37,281 , respectively.

Right of Use Leased Asset

Right of use asset consisted of the following

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

During the three months ended

March 31, 2022 and 2021, the Company recorded depreciation expense of $ 37,051 and $ 14,562 , respectively.

Right of Use Leased Assets

Right of use assets consisted

of the following (in thousands) :

Schedule of right of use asset

September 30,

March 31, 2022

December 31, 2021

Office Lease Asset

Printer Lease Asset

Right Of Use Asset, Gross

Right of Use Assets, Gross

Accumulated Amortization

Right Of Use Asset, Net

ROU asset amortization during the three months

ended September 30, 2021 and September 30, 2020, was $ 82,323 and $ 89,412 , respectively.

ROU asset amortization during the nine months

ended September 30, 2021 and September 30, 2020, was $ 202,020 and $ 307,115 , respectively.

Right of Use Assets, Net

During the three months ended

March 31, 2022 and 2021, the Company recorded ROU asset amortization expense of $ 97,037 and $ 46,237 , respectively.

Film and Television Costs, Net

As of September 30, 2021, the Company had net

Film and Television Costs of $16,293,040, compared to $11,828,494 as of December 31, 2020.

The increase primarily relates to the production

costs related to Stan Lee’s Superhero Kindergarten and KC Pop Quiz , offset by amortization of Rainbow Rangers Season

1&2 and Llama Llama Seasons 1 & 2 .

During the three months ended September 30, 2021

and 2020, the Company recorded Film and Television Cost amortization expense of $ 249,141 and $ 101,716 , respectively.

During the nine months

ended September 30, 2021 and 2020, the Company recorded Film and Television Cost amortization expense of $ 907,511 and $3 95,073 , respectively.

The following table highlights the activity in

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

As of March 31, 2022, the

Company had net Film and Television Costs of $4.0 million, compared to $2.9 million as of December 31, 2021.

The increase primarily relates

to the production of Shaq’s Garage and other development costs, partially offset by amortization of Rainbow Rangers, Superhero

Kindergarten and KC!

During the three months ended

March 31, 2022 and 2021, the Company recorded Film and Television Cost amortization expense of $ 0.2 million and $ 0.1 million, respectively.

The following table highlights

the activity in Film and Television Costs as of March 31, 2022, and December 31, 2021 (in thousands):

Schedule of film and television costs activity

5 unchanged sentences

Film Amortization Expense

( 1,073,154 )

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

Film and Television Costs, Net as of March 31, 2022

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 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

exceeded the fair value of the assets acquired by $9,607,027.

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

Through September 30, 2021, the Company has not

recognized any impairment on goodwill.

The Company will perform its annual review of goodwill during the fourth quarter.

The following table summarizes the changes in

the carrying amount of goodwill by reportable segment:

In 2013, the Company recognized

$10.4 million in goodwill, as a result of the merger with A Squared.

During the first quarter of 2021, the Company recognized $ 9.6 million

in goodwill, as a result of the acquisition of The Beacon Media Group (formerly ChizComm).

As of December 31, 2021, the goodwill allocated

to the Media Advisory and Advertising Services reportable segment was determined to be impaired and the Company recorded an impairment

charge of $ 4.8 million, accordingly.

As a result of the Ameba Acquisition

during the first quarter of 2022, the Company recorded goodwill of $ 0.7 million as determined to be the amount in excess of the fair value

of the assets acquired and liabilities assumed in the acquisition.

The goodwill recorded for the Ameba Acquisition was allocated to the

Content Production and Distribution reportable segment.

As Beacon Communications and

Ameba are incorporated as Canadian companies with CAD being their functional currency, goodwill will change each period due to currency

exchange differences.

The Company will perform its

annual review of goodwill during the fourth quarter.

There were no events or changes in circumstances that would indicate an impairment

in goodwill during the three months ended March 31, 2022.

The following table summarizes

the changes in the carrying amount of goodwill by reportable segment (in thousands) :

Schedule of Goodwill

Content Production & Distribution

Media & Advertising Services

Media Advisory & Advertising Services

Goodwill as of December 31, 2021

Acquisition of ChizComm Entities

Acquisition of Ameba

Foreign Currency Translation Adjustment

Goodwill as of September 30, 2021

Goodwill as of March 31, 2022

Intangible Assets, Net

The Company had the following intangible assets

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

The Company had the following

intangible assets (in thousands) with their weighted average remaining amortization period (in years) :

Intangible Assets, Net

Schedule of Intangible Asset

September 30,

Trademarks (a)

Trade Name (b)

Customer Relations (c)

Non-Compete (d)

Weighted Average Remaining Amortization Period

Customer Relationships

Digital Networks

Other Intangible Assets (a)

3 unchanged sentences

Intangible Assets, Net

Pursuant to ASC 350-30, General Intangibles Other than Goodwill , 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 September 30, 2021 and September 30, 2020, the Company recognized, $2,757 and $13,013, respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets.

During the nine months ended September 30, 2021 and September 30, 2020, the Company recognized, $13,888 and $34,651, 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 nine months ended September 30, 2021 was $128,083 and $341,553, 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 nine months ended September 30, 2021 was $5,006 and $13,350, respectively.

Expected future intangible asset amortization as of September 30,

2021 is as follows:

__________________

Represents the remaining unamortized logo and website intangible assets related to the merger with A Squared.

During the three months ended

March 31, 2022 and 2021, the Company recorded amortization expense of $ 225,093 and $ 91,521 , respectively.

Pursuant to ASC 350-30, General

Intangibles Other than Goodwill , the Company reviews these intangible assets periodically to determine if the value should be retired

or impaired due to recent events.

There were no changes in events or circumstances during the three months ended March 31, 2022 that would

indicate an impairment of the intangible assets.

Expected future intangible asset amortization

Remaining 2021

as of March 31, 2022 is as follows (in thousands):

Expected future intangible asset amortization

Deferred Revenue

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

the Company had total short term and long term deferred revenue of $ 3,938,839 and $ 4,432,377 , respectively.

Deferred revenue includes

both (i) variable fee contracts with licensees and customers in which the Company had collected advances and minimum guarantees against

future royalties and (ii) fixed fee contracts.

The Company recognizes revenue related to these contracts when all revenue recognition

criteria have been met.

Included in the deferred revenue balance as of September 30, 2021 and December 31, 2020 is the $ 3,369,695 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 rights.

Accrued Expenses, Salaries and Wages

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

the Company has the following current accrued liabilities:

As of March 31, 2022, and

December 31, 2021, the Company had total short term and long term deferred revenue of $ 3.85 million and $ 3.9 million, respectively.

revenue includes both (i) variable fee contracts with licensees and customers in which the Company had collected advances and minimum

guarantees against future royalties and (ii) fixed fee contracts.

The Company recognizes revenue related to these contracts when all revenue

recognition criteria have been met.

Included in the deferred revenue balance as of March 31, 2022 and December 31, 2021 is the $ 3.4 million

which is the remaining balance from the total $ 3.5 million advance against future royalty that Sony paid to the Company for both the foreign

and domestic distribution rights.

Supplemental Financial Statement

Accrued Expenses

The Company had the following

current accrued liabilities as of March 31, 2022 and December 31, 2021 (in thousands) :

Schedule of other accrued liabilities

September 30,

Other Accrued Expenses (a)

Accrued Salaries and Wages (b)

Accrued Production Costs (a)

Other Accrued Expenses (b)

Accrued Salaries and Wages (c)

Accrued NWC Adjustment (d)

Total Accrued Liabilities – Current

Primarily represents accrued interest and legal fees.

Represents accrued salaries and wages and accrued vacation payable to employees as of September 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 $ 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 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”).

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

(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 .

On June 23, 2020, the Company received $ 3,600,000 ,

net of expenses, from the payment of the Investor Notes Principal.

Between June 19 and June 23, 2020, the Convertible

Notes were converted and repaid through the issuance of 65,476,190 shares of common stock.

Production Loan Facility

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.

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.

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 were used to

pay the majority of the expenses of producing, completing and delivering two 22-minute episodes and nineteen 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 series.

Under the Loan and Security Agreement, Llama could

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.

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

In addition, on September 28, 2018, Llama and

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 December 31, 2020, the Company had gross

outstanding borrowings under the facility of $ 1,099,713 .

The outstanding balance of $ 274,365 was repaid on July 14, 2021.

__________________

Represents production costs accrued for Rainbow Rangers Season 3 and KC!

Primarily represents Ameba royalty fees for revenue share and external consulting services, legal fees and taxes.

Represents accrued salaries and wages and accrued vacation payable to employees.

Represents estimated amount owed as part of the Ameba Acquisition for the NWC Adjustment.

Other Income (Expense), Net

Components of other income (expense), net, are

summarized as follows (in thousands) :

Schedule of Other Operating Cost and Expense, by Component

Three Months Ended March 31,

Gain (Loss) on Warrant Revaluation

Loss on Foreign Exchange

Loss on Marketable Securities Investments

Gain on Revaluation of Equity Investment in YFE

Interest Income

Warrant Incentive Expense

Net Other Income (Expense)

The gain (loss) on warrant

revaluation is related to the change in fair value of outstanding warrants that were determined to be derivative liabilities attached

to previously issued and converted convertible notes.

The foreign exchange

gains and losses are due to foreign currency denominated transactions, including the foreign exchange loss on the investment in YFE’s

equity securities accounted for under the fair value option.

The Company started investing

in marketable securities during the year ended December 31, 2021.

The net realized loss on marketable securities recognized during the

three months ended March 31, 2022, reflects the loss in the investments in available-for-sale securities that will not be recovered due

to prepayments of principals on certain mortgage-backed securities.

The gain on revaluation of

the equity investment in YFE, is the change in fair value recognized on the Company’s investments in YFE accounted for using the

fair value option.

The gain is a result of the difference in the original cost of the YFE investments and the updated fair value based

on YFE’s stock price at the end of the current reporting period.

Interest Income during the

three months ended March 31, 2022, primarily consists of cash interest received of $ 0.5 million on the investments in marketable securities,

net of $ 0.3 million for amortization of premiums.

The Warrant Incentive Expense

is related to the fair value of new warrants that were issued in 2021 to certain existing warrant holders in exchange for previously issued

outstanding warrants.

Disputed Trade Payable

As part of the merger in 2013, the Company assumed

certain liabilities from a previous member of A Squared which has claimed certain liabilities totaling $ 925,000 .

The Company disputes

the basis for this liability.

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.

Payroll Protection Program Loan

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 Company repaid the outstanding balance, including interest of $3,452 on April 28, 2021.

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

the Company assumed a $ 200,000 business loan that was entered into on October 15, 2019 .

The loan matures on September 15, 2026 , with payments

of $ 2,999 , plus interest at a rate of Prime plus 2.85 % per annum, due monthly.

As of September 30, 2021, the Company has an outstanding

balance of $ 116,195 , classified as a note payable within current and noncurrent liabilities on its consolidated balance sheets.

As part of the merger in 2013,

the Company assumed certain liabilities from a previous member of A Squared which has claimed certain liabilities totaling $ 925,000 .

Company disputes the basis for this liability.

As of December 31, 2017, the Company believes 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

On February 1, 2021, as part

of the ChizComm Acquisition, the Company assumed a $ 200,000 business loan that was entered into on October 15, 2019 .

The loan matures

on September 15, 2026 , with payments of $ 2,999 , plus interest at a rate of Prime plus 2.85 % per annum, due monthly.

As of March 31, 2022,

the Company has an outstanding balance of $ 107,000 , classified as a note payable within current and noncurrent liabilities on its consolidated

balance sheets.

During the three months ended

March 31, 2022, the Company borrowed an additional $ 59.6 million from its investment margin account and repaid $ 8.2 million with cash

received from sales and/or redemptions of its marketable securities.

The borrowed amounts were used to finance the Company’s additional

investments in YFE and the closing of its acquisition of WOW, in each case pledging certain of its marketable securities as collateral.

The interest rate for these investment margin account borrowings fluctuates based on the Federal Funds Rate plus 0.65 % with interest

only payable monthly.

The weighted average interest rate was 0.72 % and the average balance of the borrowings was $ 13.6 million as of March

The Company incurred interest expense of $ 21,846 during the three months ended March 31, 2022.

The investment margin account

borrowings do not mature but are payable on demand as the custodian can issue a margin call at any time, therefore the

margin loan is recorded as a current liability on the Company’s condensed consolidated balance sheets.

The Company has the ability

to borrow up to 66 % of the balance held in marketable securities, with the option to increase its borrowing capacity, if needed.

March 31, 2022, the outstanding balance of the margin loan was $ 57.8 million, or 57% of the balance held in marketable securities.

Stockholders’ Equity

As of September 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 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 September 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.

As of March 31, 2022, the

total number of authorized shares of common stock was 400,000,000 .

of March 31, 2022, and December 31, 2021, there were 304,368,966 and 303,379,122 shares of common stock outstanding, respectively.

On February 24, 2022, the

Company issued 36,196 shares of the Company’s common stock valued at $ 65,515 which were held in escrow as part of the ChizComm acquisition.

On March 2, 2022, the Company issued 350,000 shares

of the Company’s common stock valued at $ 0.3 million to a consultant for advisory services.

During the three months ended March 31, 2022, the

Company issued 603,648 shares of the Company’s common stock valued at $ 0.6 million which represented delivery of vested RSUs.

Preferred Stock

The Company has 10,000,000 shares of preferred

stock authorized with a par value of $ 0.001 per share.

The Board of Directors is authorized, subject to any limitations prescribed by

law, without further vote or action by our stockholders, to issue from time-to-time shares of preferred stock in one or more series.

series of preferred stock will have such number of shares, designations, preferences, voting powers, qualifications and special or relative

rights or privileges as shall be determined by our Board of Directors, which may include, among others, dividend rights, voting rights,

liquidation preferences, conversion rights and preemptive rights.

There were no shares of preferred stock outstanding

as of September 30, 2021 and December 31, 2020.

The Company has 10,000,000

shares of preferred stock authorized with a par value of $ 0.001 per share.

The Board of Directors is authorized, subject to any limitations

prescribed by law, without further vote or action by our stockholders, to issue from time to time shares of preferred stock in one or

Each series of preferred stock will have such number of shares, designations, preferences, voting powers, qualifications

and special or relative rights or privileges as shall be determined by our Board of Directors, which may include, among others, dividend

rights, voting rights, liquidation preferences, conversion rights and preemptive rights.

As of March 31, 2022, and

December 31, 2021, there were 0 shares of Series A Convertible Preferred Stock outstanding.

Stock Options

On September 18, 2015, the Company adopted the

Genius Brands International, Inc.

On September 18, 2015, the

Company adopted the Genius Brands International, Inc.

2015 Incentive Plan (the “2015 Plan”).

The total number of shares that can be issued under

the 2015 Plan is 2,167,667 shares.

On September 1, 2020, the Company adopted the

Genius Brands International, Inc.

The total number of shares that

can be issued under the 2015 Plan is 2,167,667 shares.

On September 1, 2020, the

Company adopted the Genius Brands International, Inc.

2020 Incentive Plan (the “2020 Plan”).

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

adopt the 2020 Plan.

On August 4, 2020, the Board

of Directors voted to adopt the 2020 Plan.

The shares available for issuance under the 2020 Plan was approved by stockholders on August

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.

During the three months ended March 31, 2021,

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.

The options vest

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

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

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 per share.

The Company did not grant any options during the

three months ended September 30, 2021.

The table below outlines the weighted average

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

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.

During the three months ended

March 31, 2022, the Company granted options to purchase 875,000 shares of common stock to employees with a fair market value of $ 603,750 .

The options were granted on March 17, 2022, with a three-year vesting period and a five-year term.

The fair value of the options

granted during the three months ended March 31, 2022 was calculated using the BSM option pricing model based on the following assumptions:

Schedule of assumptions used

March 31, 2021

June 30, 2021

Exercise Price

2 unchanged sentences

Expected life of options

The following table summarizes the stock option

activity during the nine months ended September 30, 2021:

The following table summarizes

the stock option activity during the three months ended March 31, 2022:

Schedule of stock option activity

3 unchanged sentences

Outstanding at December 31, 2021

Outstanding at September 30, 2021

Unvested at September 30, 2021

Vested and exercisable September 30, 2021

During the three and nine months ended September

30, 2021, the Company recognized $ 915,374 and $ 2,836,339 , respectively in share-based compensation expense related to stock options.

the three and nine months ended September 30, 2020, the Company recognized $ 411,825 and $ 764,136 , respectively in share-based compensation

The unrecognized share-based compensation expense as of September 30, 2021 was $ 2,183,277 and will be recognized over a weighted

average remaining contractual life of 7.40 years.

The outstanding shares as of September 30, 2021 have an aggregated intrinsic value of

The weighted average fair values per option granted for the nine months ended September 30, 2021 was determined to be $ 2.36 .

Forfeited/Cancelled

Outstanding at March 31, 2022

Unvested at March 31, 2022

Vested and exercisable at March 31, 2022

the three months ended March 31, 2022 and March 31, 2021, the Company recognized $ 0.4 million and $ 0.98 million, respectively, in share-based

compensation expense related to stock options.

The unrecognized share-based compensation expense related to stock options at March 31,

2022 of $ 1.7 million, will be recognized through the first quarter of 2025 based on the remaining vesting periods, assuming the options

are not cancelled or forfeited.

The outstanding shares as of March 31, 2022 have an aggregated intrinsic value of $ 0 .

The weighted average

fair value per option granted during the three months ended March 31, 2022 was $ 0.69 .

Restricted Stock Units

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

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

Of such RSUs, 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 RSUs 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

RSUs 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 RSUs shall be modified to vest based on performance or market conditions.

The previously issued 7,500,000

performance-based awards, along with the 3,750,000 modified service-based awards, shall vest as follows:

(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.

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

of RSUs with a fair market value of $ 422,999 .

The following table summarizes the Company’s

RSU activity during the nine months ended September 30, 2021:

During the three months ended

March 31, 2022, the Company granted 300,000 shares of RSUs to a nonemployee with a fair market value of

The shares were granted on March 17, 2022, with a three-year vesting period and a five-year term.

The following table summarizes

the Company’s RSU activity during the three months ended March 31, 2022:

Schedule of restricted stock units

Restricted Stock Units

Grant Date Fair Value

Average Remaining Contractual Life

Average Grant Date Fair Value per Share

Unvested at December 31, 2021

Unvested at September 30, 2021

During the three and nine months ended September

30, 2021, the Company recognized $ 4,637,492 and $ 8,283,848 , respectively, in share-based compensation expense related to RSU awards.

The unvested share-based compensation as of September 30, 2021 is $ 14,697,027 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 September 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”).

The Original Warrants were originally issued

on October 3, 2017, to purchase an aggregate of 500,000 shares of common stock, at an exercise price of $3.90 per share and were to expire

in October 2022.

Pursuant to the Agreement, the holder of the Original

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

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

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

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

The placement agent received warrants to purchase

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 5 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 the 2020 Convertible Notes

and Notes conversion option were determined using the Black-Scholes-Merton option pricing 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 September 30, 2021, warrants to purchase 892,857 shares

were outstanding and re-valued at $1,094,023, resulting in a net decrease in liability of $103,046, as compared to December 31, 2020.

The change in value is recorded in the Warrant Revaluation Gain (Loss) line item within Net Other Income (Expense) on the consolidated

statement of operations.

The valuation inputs as of September 30, 2021 included expected volatility of 107%, and annual interest rate

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 $4,286,844.

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, exercisable immediately, 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).

The Company registered the

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

The fair value of these warrants was determined to be

$69,138,527 using the Black-Scholes option pricing model and was recorded as Warrant Incentive Expense within Net Other Income (Expense)

on the condensed consolidated statement of operations, based on the following assumptions:

Schedule of assumptions for warrant activity

Exercise Price

Dividend Yield

Risk-free interest rate

Expected life of options

The following table summarizes the changes in

the Company’s outstanding warrants during the nine months ended September 30, 2021:

Schedule of warrant activity

Warrants Outstanding Number of Shares

Exercise Prices

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price Per Share

Balance at December 31, 2020

Warrants Granted

Warrants Exercised

Warrants Expired

Balance at September 30, 2021

Exercisable December 31, 2020

Exercisable September 30, 2021

The Company accounts for income taxes in accordance

with ASC 740, Income Taxes (“ASC 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 financial statements or tax returns.

A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized.

ASC 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 it is

more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position.

If the more-likely-than-not

threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

The Company includes interest and penalties arising

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

As of September 30, 2021, and

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

The Company files income tax returns in the U.S.

federal jurisdiction and in the state of California and Massachusetts, and New Jersey.

The Company is currently subject to U.S.

state and local, or non-U.S.

Forfeited/Cancelled

Unvested at March 31, 2022

During the three months ended

March 31, 2022, the Company recognized $ 4.1 million in share-based compensation expense related to RSUs.

The unrecognized share-based

compensation expense related to RSUs at March 31, 2022 of $ 6.4 million, will be recognized through the first quarter of 2025 based on

the remaining vesting periods, assuming the underlying grants are not cancelled or forfeited.

The Company has warrants outstanding

to purchase up to 45,511,965 shares of the Company’s common stock as of March 31, 2022 and December 31, 2021.

As of March 31, 2022, 892,857

liability classified derivative warrants to purchase shares of the Company’s common stock remain outstanding and were re-valued

at $ 0.8 million, resulting in a decrease in liability, as compared to December 31, 2021.

The change in value is recorded within Net Other

Income (Expense) on the condensed consolidated statement of operations.

The valuation inputs as of March 31, 2022 included an expected

volatility of 124 % and an annual interest rate of 2.44 %.

The Company did not have any

warrant activity during the three months ended March 31, 2022.

The Company accounts for income

taxes in accordance with ASC 740, Income Taxes (“ASC 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 financial

statements or tax returns.

A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than

not to be realized.

ASC 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 it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of

the position.

If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize

in the financial statements.

The Company includes

interest and penalties arising from the underpayment of income taxes in the statements of operation in the provision for income taxes.

As of March 31, 2022 and December 31, 2021, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company files income tax

returns in the U.S.

federal jurisdiction and in the states of California, Massachusetts and New Jersey.

The Company is currently subject

federal, state and local, or non-U.S.

income tax examinations by tax authorities since inception of the Company.

Genius Brands International, Inc.

is subject to

US income taxes on a stand-alone basis.

Genius Brands International,

is subject to US income taxes on a stand-alone basis.

Genius Brands International, Inc.

and ChizComm Canada file separate stand-alone tax returns in

each jurisdiction in which they operate.

ChizComm Canada is a corporation operating in Canada and is subject to Canadian income taxes

on its stand-alone taxable income.

and the Beacon Media Group (formerly ChizComm)

file separate stand-alone tax returns in each jurisdiction in which they operate.

Beacon Communications and Ameba are corporations operating

in Canada and are subject to Canadian income taxes on its stand-alone taxable income.

Commitment and Contingencies

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 adoption, management recorded a right-of-use asset of $ 2,153,747 , accumulated amortization of $ 124,070 , a lease liability of $ 2,071,903 ,

a reversal of previously recorded deferred rent of $ 37,920 and the increase in accumulated deficit of $ 4,306 for the operating lease entered

into on February 6, 2018, for 6,969 square feet of general office space at 131 South Rodeo Drive, Suite 250, Beverly Hills, CA 90212 pursuant

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

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

Effective January 21, 2019, the Company entered

into an 83-month sublease for the 6,969 square feet of general office space, that commenced on February 4, 2019.

The subtenant paid the

Company rent of $422,321 annually, subject to annual escalations of 3.5%.

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 ChizComm 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 an 84-month lease which commenced on October 1, 2019.

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

Also, as part of the ChizComm Acquisition, the Company

assumed an operating lease that was 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 ended on May 1, 2021.

The Company paid 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 an 89-month lease which commenced on October 1, 2021.

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

As of September 30, 2021, the weighted-average

lease term for operating leases equals to 69 months.

Weighted-average discount rate equals to 8.32 %.

In addition, the Company has contractual commitments

for employment agreements of certain employees.

Rental expenses incurred for operating leases

during the three months ended September 30, 2021 and September 30, 2020 were $ 124,189 and $ 141,962 , respectively.

Rental expenses incurred

for operating leases during the nine months ended September 30, 2021 and September 30, 2020 were $ 367,935 and $ 557,640 , respectively.

During the nine months ended September 30, 2021, the Company did not receive sub-lease income.

During the nine months ended September

30, 2020, the Company received sub-lease income of $ 316,762 .

The following is a schedule of future minimum contractual obligations

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

The following is a schedule of future minimum

contractual obligations as of March 31, 2022 (in thousands) :

Schedule of future minimum lease payments

2 unchanged sentences

Consulting Contracts

The Company has not included

any amounts that may be required related to its pending acquisition of WOW.

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 $0.4 million annually, subject to annual escalations

On February 1, 2021, as part

of the ChizComm 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 an 84-month lease which commenced

on October 1, 2019.

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

Also, as part of the ChizComm Acquisition,

the Company assumed an operating lease that was 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 ended on May 1, 2021.

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 an 89-month lease which commenced on October 1, 2021.

The Company pays rent of $0.1 million annually subject to annual

escalations of 2.5%.

As of March 31, 2022, the

weighted-average lease term for operating leases was 67 months.

The weighted-average discount rate on the leases was 24.9 %.

Rental expenses incurred for

operating leases during the three months ended March 31, 2022 and 2021 were $ 0.2 million and $ 0.1 million, respectively.

Other Funding Commitments

The Company enters into various

agreements associated with its individual properties.

Some of these agreements call for the potential future payment of royalties or “profit”

participations for either (i) the use of third party intellectual property, in which the Company is obligated to share net profits with

the underlying rights holders on a certain basis as defined in the respective agreements or (ii) services rendered by animation studios,

post-production studios, writers, directors, musicians or other creative talent for which the Company is obligated to share with these

service providers a portion of the net profits of the properties on which they have rendered services, as defined in each respective agreement.

On April 6, 2022, the Company

completed its acquisition of WOW.

The Company purchased 100% of WOW’s issued and outstanding

shares for approximately $38.3 million in cash and 11,057,000 shares of the Company’s common stock.

Related Party Transactions

Pursuant to his employment agreements dated November

16, 2018 and November 16, 2020, Mr.

Heyward is entitled to an Executive Producer fee of $12,500 per half hour episode for each episode

he provides services as an executive producer.

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

Superhero Kindergarten.

Accordingly, Mr.

Heyward is owed $ 175,000 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 and nine months ended

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

As of September 30, 2021, Mr.

awarded $55,000 as a quarterly bonus and is owed $ 931

for reimbursable expenses which are included in Due to Related Party on the condensed consolidated balance sheet.

Pursuant to his employment

agreements dated December 7, 2020, Andy Heyward, the Company’s CEO, is entitled to an Executive Producer fee of $12,500 per one-half

hour episode for each episode he provides services as an executive producer .

During the three months ended March 31, 2022, Mr.

Heyward earned $ 0.6 million in producer fees and is owed $ 12,155 as of March 31, 2022, which is included in Due to Related Party on the

Company’s condensed consolidated balance sheets.

Heyward was also paid $ 55,000 as part of his quarterly discretionary bonus

during the first quarter of 2022.

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 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.

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, 2022, the Company earned $ 0 in royalties from

this agreement.

On September 30, 2021, the

Company entered into a Loan Agreement and Promissory Note with POW!

in the amount of $ 1,250,000 , accruing simple interest at the annualized

The entire principal sum was required to be remitted to POW!’s client trust account of POW!’s legal counsel within

5 days of the effective date.

The principal, plus interest must be repaid by no later than November 1, 2022.

Within the Loan Agreement,

it is stated that the proceeds of $1,000,000 are required to be used by POW!

to settle the arbitration against Stan Lee Studios (aka Proxima

Studios) and $250,000 shall be used to solely pay for the payment of legal costs and fees.

The principal amount was transferred to POW!

on October 12, 2021 and on or about November 4, 2021, POW and Proxima entered into a binding settlement agreement resolving all the claims

made by Proxima.

The loan has accrued interest of $ 26,221 as of March 31, 2022 and is recorded with the principal balance within Note

Receivable from Related Party on the Company’s condensed consolidated balance sheet.

In addition, pursuant to its joint venture

and formation of the entity Stan Lee Universe, LLC, the Company included within Note Receivable from Related Party, the amount

owed to the Company equal to 50% of expenses incurred by the Company related to the 50% of the Company’s non-controlling interest

held by POW!.

Segment Reporting

The Company’s CODM uses revenue and

net earnings to evaluate the profitability and performance of each operating segment.

All other financial information is reviewed by the

CODM on a consolidated basis.

The CODM does not evaluate the operating segments using asset information and it is therefore not disclosed.

expenses directly attributable to each reportable segment is included in operating results for each segment.

However, the CODM does not

evaluate the expenses by operating segment and, therefore, it is not separately presented.

The following table presents the revenue and net

earnings within our two operating segments:

Segment information

by revenues and net earnings

Three Months Ended

Nine Months Ended

September 30,

The Company’s CODM uses

revenue and net earnings to evaluate the profitability and performance of each operating segment.

All other financial information is reviewed

by the CODM on a consolidated basis.

The CODM does not evaluate the operating segments using asset information and it is therefore

not disclosed.

All expenses directly attributable to each reportable segment is included in operating results for each segment.

the CODM does not evaluate the expenses by operating segment and, therefore, it is not separately presented.

The following table presents

the revenue and net earnings within the two operating segments for the three months ended March 31, 2022 and 2021 (in

Segment information by revenues and net earnings

Three Months Ended March 31,

Total Revenues:

Content Production & Distribution

Media & Advertising Services

Media Advisory & Advertising Services

Total Revenue

Content Production & Distribution

( 8,872,348 )

( 2,007,209 )

( 91,702,308 )

$ ( 391,101,155 )

Media & Advertising Services

( 1,204,663 )

Media Advisory & Advertising Services

Total Operating Loss

( 9,253,380 )

( 2,007,209 )

$ ( 92,906,971 )

$ ( 391,101,155 )

Geographic Information

The following table provides information about disaggregated revenue

by geographic area:

The following table provides

information about disaggregated revenue by geographic area for the three months ended March 31, 2022 and 2021 (in

Schedule of segments by geographic area

Three Months Ended

Nine Months Ended

September 30,

Three Months Ended March 31,

Total Revenues:

United States

1 unchanged sentence

Subsequent Events

On September 30, 2021, the Company entered into

a loan agreement and promissory with POW!

in which the Company loaned POW!

The loan bears interest at 9% and is due November

The loan was funded on October 12, 2021.

On October 5, 2021, Mr.

Heyward was paid $55,000

in bonuses, this amount was included in Due to Related Party on the Company’s condensed consolidated Balance Sheet as of September

On October 8, 2021 Mr.

Heyward was paid $175,000

for producer fees, this amount was included in Due to Related Party on the Company’s condensed consolidated Balance Sheet as of

September 30, 2021.

On October 22, 2021 Mr.

Heyward was paid $75,000

for producer fees.

On October 26, 2021, 1326919 B.C.

LTD., a corporation

existing under the laws of the Province of British Columbia and a wholly-owned subsidiary of the Company and Wow Unlimited Media Inc.

(“WOW”), a corporation existing under the laws of the Province of British Columbia, entered into an Arrangement Agreement

to effect a transaction among the parties by way of a plan of arrangement under the arrangement provisions of Part 9, Division 5 of the

Business Corporations Act , whereby the Company will purchase 100% of WOW’s issued and outstanding shares for $38.4 million

in cash and 11,000,000 shares of the Company’s common shares.

The acquisition will allow

the Company to expand its audience demographic into the lucrative teens and young adult marketplaces, provide additional content on Kartoon

and provide additional brands to be put through the consumer products and global distribution sales networks.

Since the acquisition

occurred after the reporting date but before the filing of this form 10-Q, the

Company has not completed its initial accounting for the business combination which will be accounted for using the acquisition method

of accounting.

The fair value of the assets and liabilities are still to be determined, which precludes the Company from reporting substantially

all the required disclosure including the supplemental pro forma information at this time.

On October 27, 2021, the Company issued 176,101

shares of the Company’s common stock valued at $1.59 per share for production services to an unrelated third party.

On April 6, 2022, the Company

completed its acquisition of WOW whereby on October 26, 2021, the Company’s wholly-owned

subsidiary, 1326919 B.C.

LTD., a corporation existing under the laws of the Province of British Columbia and WOW, a corporation existing

under the laws of the Province of British Columbia, entered into an Arrangement Agreement to effect a transaction among the parties by

way of a plan of arrangement under the arrangement provisions of Part 9, Division 5 of the Business Corporations Act .

purchased 100% of WOW’s issued and outstanding shares for approximately $38.3 million in cash and 11,057,000 shares of the Company’s

common stock.

The Company has not completed its initial accounting for the business combination

which will be accounted for using the acquisition method of accounting.

The fair value of the assets and liabilities are still to be determined.

On April 5, 2022, the Company

exercised its subscription rights to purchase an additional 914,284 shares of YFE’s common stock at 3.00 EUROS per share, increasing

the number of shares held by the Company to 6,857,132 shares and its ownership in YFE to 48.2%.

On April 7, 2022, the Company

issued 703,125 shares of the Company’s common stock valued at $0.6 million, which represented delivery of 25% of the CEO’s

RSUs that vested related to the satisfaction of performance-based criteria.

During April, 2022, pursuant

to his employment agreements, Andy Heyward, the Company’s CEO, was paid $87,500 in Executive Producer fees and $55,000 as part of

his quarterly discretionary bonus.

During the second quarter

of 2022, the Company borrowed an additional $2.2 million from its investment margin account.

On April 25,2022, in the matter

of Harold Chizick and Jennifer Chizick v.

Genius Brands International, Inc., ChizComm Ltd., Index No.

650278/2022, the Company filed a

Motion for Partial Dismissal of the Plaintiffs’ Amended Complaint seeking (1) dismissal of Plaintiffs’ claims for Indemnification

and Defamation and (2) a stay of Plaintiffs’ claim for Breach of Escrow Agreement pending the required arbitration of this claim.

This Motion has not yet been ruled on and the case remains at the pleading stage with no trial date set.

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