What changed in this filing

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Item 1. Financial Statements

2022-08-17 compared with 2022-05-16 · 1100 added, 643 removed, 798 unchanged (69% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

March 31, 2022

June 30, 2022

December 31, 2021

4 unchanged sentences

Accounts Receivable, net

Tax Credits Receivable

Note & Accounts Receivable from Related Party

2 unchanged sentences

Total Current Assets

Noncurrent Assets:

Property and Equipment, net

1 unchanged sentence

Film and Television Costs, net

Lease Deposits

Investment in Your Family Entertainment AG

3 unchanged sentences

Accounts Payable

Accrued Production Costs

Accrued Expenses

Participations Payable

Accrued Expenses

Accrued Salaries and Wages

Deferred Revenue

Notes Payable

Warrant Liability

Production Facilities, net

Bank Indebtedness

Lease Liability

Warrant Liability

Due to Related Party

Accrued Salaries and Wages

Other Current Liabilities

Total Current Liabilities

Long Term Liabilities:

Noncurrent Liabilities:

Deferred Revenue

1 unchanged sentence

Contingent Earn Out

Notes Payable

Disputed Trade Payable

Other Noncurrent Liabilities

Total Liabilities

1 unchanged sentence

Stockholders’ Equity

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

Preferred Stock Series A, $ 0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

Preferred Stock Series B, $ 0.001

share authorized, 0

shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

Common Stock, $ 0.001 par value, 400,000,000 shares authorized 317,235,116 and 303,379,122 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

Additional Paid in Capital

12 unchanged sentences

Three Months Ended

March 31, 2022

March 31, 2021

Media Advisory & Advertising Services

Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Production Services

Content Distribution

Licensing & Royalties

Media Advisory & Advertising Services

Total Revenues

8 unchanged sentences

Other Income (Expense), Net

Gain (Loss) Before Income Tax Expense

Net Other Income (Expense)

Loss Before Income Tax Expense

Provision for Tax Expense

Net Loss Attributable to Non-Controlling Interests

Net Income Attributable to Non-Controlling Interests

Net Loss Attributable to Genius Brands International, Inc.

9 unchanged sentences

Three Months Ended

March 31, 2022

March 31, 2021

Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Other Comprehensive Income (Loss):

4 unchanged sentences

Total Comprehensive Net Loss

Comprehensive Loss Attributable to Non-Controlling Interests

Comprehensive Income Attributable to Non-Controlling Interests

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

4 unchanged sentences

(in thousands, except share data)

Preferred Stock

Additional Paid-In

Accumulated Other Comprehensive

Other Comprehensive

Balance, December

$ ( 595,848 )

Shares Issued for ChizComm Acquisition

Proceeds from Warrant Exchange, net

Issuance of Common Stock for Services

Warrants Incentive

Issuance of Common Stock for

Vested Restricted Stock Units

Share Based Compensation

2 unchanged sentences

$ ( 600,379 )

Shares Issued for Wow Acquisition

Fair Value of Replacement

Options Related to Wow Acquisition

Issuance of Common Stock for

Vested Restricted Stock Units

Share Based Compensation

Other Comprehensive Loss

Distributions to Non-Controlling

June 30, 2022

$ ( 613,720 )

Balance, December 31, 2020

$ ( 469,557 )

Issuance of Common Stock for Services

Issuance of Common Stock for Vested Restricted Stock Units

Shares Issued for ChizComm

Proceeds From Warrant Exchange,

Issuance of Common Stock for

Share Based Compensation

Other Comprehensive Loss

Warrant Incentive

Balance, March 31, 2021

$ ( 545,816 )

Issuance of Common Stock for

Share Based Compensation

Other Comprehensive Loss

June 30, 2021

$ ( 553,211 )

The accompanying notes are an integral part of

3 unchanged sentences

(in thousands)

March 31, 2022

March 31, 2021

June 30, 2022

June 30, 2021

Cash Flows from Operating Activities:

5 unchanged sentences

Amortization of Premium on Marketable Securities

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

(Gain) on Revaluation of Equity Investment in Your Family Entertainment AG

(Gain) Loss on Foreign Currency Transactions

(Gain) Loss on Warrant Revaluation

Interest Incurred on Debt

Realized Loss on Marketable Securities

4 unchanged sentences

Other Receivables

Tax Credits Earned (less capitalized)

Tax Credits Received

Film and Television Costs, net

Lease Deposits

Note Receivable from Related Party

Prepaid Expenses & Other Assets

1 unchanged sentence

Accounts Payable

Accrued Production Costs

Accrued Salaries & Wages

Accrued Expenses

Accrued Production Costs

Participations Payable

2 unchanged sentences

Due to Related Party

Accrued Expenses

Other Noncurrent Liabilities

Net Cash Used in Operating Activities

Cash Flows from Investing Activities:

Cash Payment for Wow, net of Cash Acquired

Cash Payment for Equity Investment in YFE

2 unchanged sentences

Investment in Stan Lee Universe, LLC

Investment in Marketable Securities

Proceeds from Principal Collections on Marketable Securities

1 unchanged sentence

Purchase of Property & Equipment

Investment in Intangible Assets

Net Cash Used in Investing Activities

2 unchanged sentences

Repayments of Margin Loan

Note & Accounts Receivable from Related Party

Proceeds from Production Facilities

Repayments of Production Facilities

Proceeds from Bank Loan

Capital Lease Payments

Debt Issuance Costs

Repayment of Note Payable

Consolidation of VIE (VIE Asset/Liability)

Distributions to Non-Controlling Interest

Repayment of Payroll Protection Program

Proceeds from Warrant Exchange, net

Repayment of Production Facility, net

Net Cash Provided by Financing Activities

4 unchanged sentences

Schedule of Non-Cash Financing and Investing Activities

Shares issued for Wow Acquisition

FV of Replacement Options Granted Related to Wow Acquisition

Shares issued for ChizComm acquisition

Liability for Acquisition Earnout Shares

Issuance of Common Stock for Services

The accompanying notes are an integral part of

2 unchanged sentences

Notes to Condensed Consolidated Financial Statements

March 31, 2022

June 30, 2022

Organization and Business

1 unchanged sentence

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.

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.

(“we,” “us,” “our,” or the “Company”) is a publicly traded (NASDAQ:GNUS) global content

and brand management company that creates, produces, licenses, and broadcasts timeless and educational, multimedia animated content for

Led by experienced industry personnel, the Company distributes its content primarily on streaming platforms and television and

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

The Company is a leading “work

for hire” producer for many of the streaming outlets and IP holders.

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

features “content with a purpose” for toddlers to tweens, providing enrichment as well as entertainment.

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”).

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

programs, along with those programs it acquires and/or licenses, are being broadcast in the United States on the Company’s wholly-owned

advertisement supported video on demand (“AVOD”) service, Kartoon Channel!

, and its subscription video on demand (“SVOD”)

distribution outlets, Kartoon Channel!

Kidaverse , and Ameba TV .

These streaming services are available on Apple TV, Apple

iOS, Android TV, Android mobile, Amazon Prime, Amazon Fire, Tubi, Roku, Comcast, Cox, Dish/Sling, Zumo, Pluto, Samsung Smart TVs, LG Smart

TVs, as well as YouTube, among other popular platforms.

The Company’s in-house owned and produced shows include Stan Lee’s

Superhero Kindergarten starring Arnold Schwarzenegger, Llama Llama starring Jennifer Garner, Rainbow Rangers, KC Pop Quiz ,

and the upcoming Shaq’s Garage starring Shaquille O’Neal, scheduled to debut in the fourth quarter of 2022.

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.

The Company also licenses

its programs to other services worldwide, in addition to the operation of its own channels, including but not limited to Netflix, HBO

Max, Paramount+, Nickelodeon, and satellite, cable and terrestrial broadcasters around the world.

Through the Company’s

recent investment in Germany’s Your Family Entertainment (“YFE”) , a publicly traded company on the Frankfurt

Exchange (RTV-Frankfurt), it has gained access to one of the largest animation catalogues in Europe with over 3,000 titles, and a global

distribution network, which currently covers over 60 territories worldwide and, which the Company is currently in process of rebranding

as Kartoon Channel!

The Company also recently

acquired WOW Unlimited Media Inc.

(“Wow”), and through that acquisition, established an affiliate relationship with Mainframe

Studios, which is one of the largest animation producers in the world.

In addition, Wow owns Frederator Networks Inc.

(“Frederator”)

and its Channel Frederator Network , the largest animation focused multi-channel network on YouTube , with over 2,500 content

creators and currently averages over 1 billion views per month.

The Company owns a select

amount of valuable IP, including among them a controlling interest in Stan Lee Universe (“SLU”), through which it controls

the name, likeness, signature, and all consumer product and IP rights to Stan Lee (the “Stan Lee Assets”).

The Company plans

to launch a Stan Lee Centennial program of merchandise set to coincide with Stan Lee’s 100 th birthday on December 28,

The Company also owns Beacon

Media, the largest media buying service for children in North America.

Beacon represents over 30 major toy companies, including Playmobile,

Bandai Toys, Bazooka, Moose Toys, and JAKKS Pacific.

In addition, the Company recently

acquired the Canadian company Ameba TV (“Ameba”), which distributes a profitable SVOD channel for kids and is now expected

to become the backbone of the newly launched SVOD channel of Kartoon Channel!, Kartoon Channel!

The combination of the Company,

its investment in YFE, its acquired companies Wow, Ameba and Beacon Media provide the Company with world class animation production studios,

a catalogue representing thousands of hours of premium global content for children, a broadcast system for delivering that content and

an in-house Consumer Products Licensing infrastructure to fully exploit the content.

On February 1, 2021, the Company,

1 unchanged sentence

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

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

During the fourth

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

to Beacon Communications

and ChizComm USA Corp.

to Beacon Media (collectively, the “Beacon Media Group”) .

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.

completed its acquisition of the issued and outstanding shares of Ameba and gained access to its kid-safe SVOD platform technology and

13,000 episodes of content.

Refer to Note 3 for additional details.

On April 6, 2022, the Company

completed its acquisition of Wow.

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

LTD., a corporation existing

under the laws of the Province of British Columbia and Wow, entered into an Arrangement Agreement to effect 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.

Refer to Note

3 for additional details.

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.

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, or $ 2.7 million, increasing the number of YFE’s outstanding shares to 6,857,132 and the Company’s ownership

in YFE to 49.2 % as of June 30, 2022.

During the six months ended

June 30, 2022, the Company’s cash, cash equivalents and restricted cash decreased by $ 2.2

The decrease was primarily due to cash used in investment activities, inclusive of the Wow and Ameba acquisitions and

the YFE investments, totaling $41.2 million, $17.7

million used for operational activities, offset by $56.6

million of financing from the margin loan, and production facilities

and bank indebtedness assumed in the Wow Acquisition.

As of June 30, 2022, the

Company held marketable securities with a fair value of $ 97.4

million as available-for-sale, a decrease of $ 15.1

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 $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

million as compared to December 31, 2021 primarily due to the Company selling $5.5 million

of its held securities during the period, a decrease in fair value of $4.5 million recorded as an unrealized loss, additional prepayments

of $4.4 million on principals for certain mortgage-backed securities and $0.5 million for continued amortization of premiums during the

The available-for-sale securities, consist principally of corporate and government debt securities and are also available

as a source of liquidity.

As the Company’s recent focus has been on expanding its business, excess cash and liquid investments

have been utilized to pay the Company’s margin loan down.

The Company borrowed an additional

$ 59.0 million from its investment margin account during the six months ended June 30, 2022 and repaid $ 4.5 million with cash received

from sales and/or redemptions of its marketable securities.

During the six months ended June 30, 2022, the borrowed amounts were used

to finance the Company’s additional investments in YFE and the closing of the acquisitions of Ameba and Wow, in each case pledging

certain of its marketable securities as collateral.

During the three months ended June 30, 2022, the additional borrowings of $ 3.2 million

related to the Company’s final obligated purchase of YFE shares and additional transactional costs in the acquisition of Wow.

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 1.23 % on an average margin loan balance of $ 55.7 million during the three

months ended June 30, 2022.

The weighted average interest rate was 0.98 % on an average margin loan balance of $ 34.6 million during the

six months ended June 30, 2022.

The Company incurred interest expense of $ 201,160 during the six months ended June 30, 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.

Upon the acquisition of

Wow, the Company assumed certain credit facilities (the “Facilities”) with a Canadian bank.

The Facilities are comprised

(i) a $ 5.0 million CAD

($ 3.9 million USD)

revolving demand facility, (ii) an $ 8.0 million

CAD ($ 6.2 million USD)

equipment lease line, (iii) a treasury risk management facility of up to $ 0.5 million

CAD ($ 0.4 million USD) for

foreign exchange forward contracts, and (iv) interim financing facilities for specific production titles.

The Facilities are

guaranteed by the Company and the security reflects substantially all of the tangible and intangible assets of the Company and its

subsidiary guarantors subject to permitted encumbrances, including a combination of federal and provincial tax credits, other

government incentives, production service agreements, and license agreements.

The Facilities are generally repayable on demand and

are subject to customary affirmative and negative covenants, default provisions, representations and warranties and other terms and

Refer to Note 14 for additional details.

Historically, the Company has incurred net losses.

For the three months

ended June 30, 2022 and 2021, the Company reported net losses of $13.3 million and $7.4 million, respectively.

For the six months ended

June 30, 2022 and 2021, the Company reported net losses of $17.9 million and $83.7 million, respectively.

The Company reported net cash

used in operating activities of $17.7 million and $8.8 million for the six months ended June 30, 2022 and 2021, respectively.

30, 2022, the Company had an accumulated deficit of $613.7 million and total stockholders’ equity of $141.2 million.

30, 2022, the Company had current assets of $150.3 million, including cash and cash equivalents of $7.8 million and current liabilities

of $112.7 million.

The Company had working capital of $37.6 million as of June 30, 2022, compared to working capital of $115.1 million

as of December 31, 2021.

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

Prior to the acquisition of

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

Prior to the acquisition of the

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

The accounting policies for

2 unchanged sentences

Principles of Consolidation and Basis of Presentation

The Company’s condensed

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

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.

The Company 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 non-controlling 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 (loss).

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 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

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.

As 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.

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.

Variable Interest Entities

3 unchanged sentences

requires additional financial support from the Company to continue operations.

The Company’s total cash investment in SLU is

$ 2.0 million.

The Company’s total net cash investment in SLU

as of June 30, 2022, is $ 0.8 million.

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

38 unchanged sentences

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

As of March 31, 2022, and December

As of June 30, 2022 and December

31, 2021, the Company had cash and cash equivalents of $ 7.8 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.

Tax Credits Receivable

The Federal and certain Provincial

governments in Canada provide programs that are designed to assist film and television production in the form of refundable tax credits

or other incentives.

Estimated amounts

receivable in respect of refundable tax credits are recorded as an offset to the related production operating cost, or to investment

in film and television programming when the conditions for eligibility of production assistance based on the government’s

criteria are met, the qualifying expenditures are made and there is reasonable assurance of realization.

Determination of when and

if the conditions of eligibility have been met is based on management’s judgement, and the amount recognized is based on

management’s estimates of qualifying expenditures.

The ultimate collection of previously recorded estimates is subject to

ordinary course audits from the Canada Revenue Agency (“CRA”) and Provincial agencies.

Changes in administrative policies by the

CRA or subsequent review of eligibility documentation may impact the collectability of these estimates.

The Company continuously

reviews the results of these audits to determine if any circumstances arise that in management’s judgement would result in a

previously recognized amount to be considered no longer collectible.

The Company classifies the tax credits receivable as current based

on their normal operating cycle.

Government assistance, in the form of refundable tax credits, is relied upon as a key component of production

These amounts are claimed from the CRA through the submission of income tax returns and can take up to 18 to 24 months from

the date of the first tax credit dollar being earned to being received.

As this financing is fundamental to the Company’s ability

to produce animated productions and generate revenue in the normal course of business, the normal operating cycle for such assets is considered

to be a 12-to-24-month period, or the time it takes for the CRA to assess and refund the tax credits earned.

As of June 30, 2022, the Company had $ 25.9

million in current Tax Credit Receivables on its condensed consolidated balance sheet.

does not have an allowance on tax credits receivable as of June 30, 2022, based on historical experience and future expectations.

Marketable Debt Securities

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to support current operations and, accordingly, the Company classifies the investments as current assets without regard to their contractual

Unrealized gains or losses

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

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

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

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

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

statements of operations.

Unrealized gains or losses on available-for-sale securities for which

the Company expects to fully recover the amortized cost basis are recognized in accumulated other comprehensive (loss) income, a component

of stockholders’ equity.

If the Company intends to sell a debt security, or it is more likely than not that it would be required

to sell a debt security before the recovery of its amortized cost basis, the entire difference between the security's amortized cost basis

and its fair value at the balance sheet date would be recognized as a loss in the condensed consolidated statements of operations.

The Company reports accrued

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will be received.

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

on the consolidated balance sheets.

Approximately $ 0.4 million in interest income was receivable as of June 30, 2022 and classified within Other Receivables

on the condensed consolidated balance sheets.

Interest earned on investment

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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.

Accounts receivable are presented on the balance sheets net of estimated

uncollectible amounts.

The carrying amounts of trade accounts receivable and unbilled accounts receivable represents the maximum credit

risk exposure of these assets.

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

based on an assessment of past events, current economic conditions, and forecasts of future events.

The Company records an allowance for

estimated uncollectible accounts in an amount approximating anticipated losses.

Individual uncollectible accounts are written off against

the allowance when collection of the individual accounts appears doubtful.

The Company limits its exposure to this credit risk through a credit

approval process and credit monitoring procedures.

In addition, Wow’s contracts with customers usually require upfront and milestone

payments throughout the production process.

The Company’s customer base is mainly comprised of major Canadian, American, and worldwide

studios, distributors, broadcasters, toy companies and AVOD and SVOD platforms that have been customers for several years.

Property and Equipment

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of use (“ROU”) assets and operating lease liabilities in the consolidated balance sheets.

The Company does not have any finance

Operating lease ROU assets

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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.

The Company capitalizes production

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

production costs are capitalized at actual cost and amortized using the individual-film-forecast-computation 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

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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.

Management reviews its ultimate revenue for productions in development

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.

These write-downs are included

in amortization expense within Direct Operating Expenses on the Company’s condensed consolidated statements of operations.

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 or six months ended June 30, 2022.

The Company expenses all capitalized

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

Borrowing Costs

Borrowing costs related to

the issuance of interim production financing are recorded as a reduction to the carrying amount of interim production financing and measured

at amortized cost using the effective interest method.

Borrowing costs are recognized as part of interest expense in the condensed consolidated

statements operations or loss in the period in which they are incurred.

Borrowing costs directly attributable to the acquisition or production

of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale,

are added to the cost of those assets, until such time the assets are substantially ready for their intended use or sale.

recorded $ 0.3 million related to production financing during the three months ended June 30, 2022.

Revenue Recognition

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

The Company has identified the

following material and distinct performance obligations:

Revenue is measured based

on the consideration specified in a contract with a customer.

Revenue is recognized when a customer obtains control of the products or

services in a contract.

Judgement is required in determining the timing of whether the transfer of control occurs at a point in time or

over time and is discussed below.

The Company evaluates each contract to identify separate performance obligations as a contract with

a customer may have one or more performance obligations.

Consideration in a contract with multiple performance obligations is allocated

to the separate performance obligations based on their stand-alone selling prices.

If a stand-alone selling price is not determinable,

the Company estimates the stand-alone selling price using an adjusted market assessment approach.

The Company’s main sources of

revenue are derived from animation production services provided to third parties, the sale of licenses for the distribution of films and

television programs, advertising revenues, and merchandising and licensing sales.

Gross versus Net Revenue Presentation

The Company evaluates individual arrangements with third parties to

determine whether the Company acts as principal or agent under the terms.

To the extent that the Company acts as the principal in an arrangement,

revenues are reported on a gross basis, resulting in revenues and expenses being classified in their respective financial statement line

To the extent that the Company acts as the agent in an arrangement, revenues are reported on a net basis, resulting in revenues

being presented net of any expenses incurred in providing agency services.

Determining whether the Company acts as principal or agent

is based on an evaluation of which party has substantial risks and rewards of ownership under the terms of an arrangement.

The most significant

factors that the Company considers include identification of the primary obligor, as well as which party has credit risk, general and

inventory risk and the latitude or ability in establishing prices.

The Company has identified

the following material and distinct performance obligations.

Provide animation production services.

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).

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.

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.

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

and the Frederator owned and operated YouTube channels.

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).

Production Services

Animation Production Services

For revenue from animation

production services, the customer controls the output throughout the production process.

Each production is made to an individual customer’s

specifications and if the contract is terminated by the customer, the Company is entitled to be reimbursed for any costs incurred to date,

and for any prepaid commitments made, plus the agreed contractual mark-up.

Revenue and the associated costs of such contracts are recognized

over time on a percentage of completion basis - i.e.

as the project is being produced, prior to it being delivered to the customer.

percentage-of-completion is calculated based upon the proportion of costs incurred cumulatively to total expected costs.

Changes in revenue

recognized as a result of adjustments to total expected costs are recognized in profit or loss on a prospective basis.

Invoices related

to these projects are issued based on the achievement of milestones during the project or other contractual terms.

The difference between

contractual payments received and revenue recognized is recorded as deferred revenue when receipts exceed revenue.

When revenue exceeds

milestone billings, the Company recognizes this difference as unbilled accounts receivable.

Unbilled accounts receivable is transferred

to accounts receivable when the Company has an unconditional right to consideration.

When the outcome of an arrangement

cannot be estimated reliably, revenue is recognized only to the extent of the expenses incurred that are recoverable.

Content Distribution

Film and Television Licensing

The Company recognizes revenue

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functional IP, the valuation method is substantially the same, depending on the nature of the license.

Invoices related to these

projects are issued based on the achievement of milestones during the project or other contractual terms.

The difference between contractual

payments received and revenue recognized is recorded as deferred revenue when receipts exceed revenue.

When revenue exceeds milestone

billings, the Company recognizes this difference as unbilled accounts receivable.

Unbilled accounts receivables are transferred to accounts

receivable when the Company has an unconditional right to consideration.

Advertising revenues

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.

and subscriptions on its wholly-owned AVOD service, Kartoon Channel!

, and its SVOD distribution outlets, Kartoon Channel!

and Ameba TV .

Advertising sales are generated in the form of either flat rate promotions or advertising impressions served.

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

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

pays a contractual CPM per impression.

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

month the impressions are served.

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

application and their credit card is charged.

Upon the acquisition of Wow, the Company generates advertising revenue

from Frederator’s owned and operated YouTube channels as well as revenues generated from the operation of its multi-channel

network on YouTube .

Revenue is recognized when services are provided in accordance with the Company’s agreement with YouTube,

the price is fixed or determinable, and collection of the related receivable is probable.

Receivables are usually collectable within 30

Licensing & Royalties

Merchandising and licensing

The Company enters into merchandising

and licensing agreements that allow customers to produce merchandise utilizing certain of the Company’s intellectual property.

minimum guaranteed amounts that make up a contract, revenue is recognized over time, over the term of the license period commencing on

the date at which the customer can use and benefit from the licensed content.

Variable consideration in excess of non-refundable guaranteed

amounts, such as royalties and other contractual payments are recognized as revenue when the amounts are known and become due provided

collectability is reasonably assured.

Invoices are issued based on the contractual terms of an agreement and are usually payable within

Product Sales

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.

Media Advisory & Advertising

Media and Advertising Services

The Company provides media

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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.

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.

Direct Operating Costs

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on which they have rendered services.

Upon the acquisition of Wow, the Company also includes salaries and related service production employee

costs as part of its direct operating costs.

Share-Based Compensation

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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.

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

The fair value of stock options

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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.

As of June 30, 2022, the Company had six accounts with an uninsured balance in bank deposit accounts of $ 1.8 million.

The Company has a managed

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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.

securities of $ 97.4 million as of June 30, 2022.

The brokerage account did not hold any of the Company’s cash as of June 30, 2022.

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 June 30, 2022 the Company has not had account balances held at this financial institution

that exceed the insured balances.

The Company’s investment

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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 the three months

ended June 30, 2022, the Company had five customers, whose total revenue exceeded 10 % of total consolidated revenue.

These customers accounted

for 81.25 % 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 six months ended June

30, 2022, the Company had five customers whose total revenue exceeded 10 % of total consolidated revenue.

These customers accounted for

76.3 % of total revenue.

As of June 30, 2022, the Company had four customers whose total accounts receivable exceeded 10 % of total accounts

These customers accounted for 65.04 % of the total accounts receivable as of June 30, 2022.

For the three months ended

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

June 30, 2021, the Company had one customer whose total revenue exceeded 10 % of the total consolidated revenue.

This customer accounted

for 47 % 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.

For the six months ended June

30, 2021, the Company had one customer, whose total revenue exceeded 10 % of total consolidated revenue.

This customer accounted for 34 %

of total revenue.

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

Those customers accounted for 62 % of accounts receivable.

There is significant financial

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customers and establishes allowances for any anticipated bad debt.

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

As of June 30, 2022 and December 31, 2021, the Company recorded an

allowance for bad debt of $ 67,897 and $ 22,080 , respectively.

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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.

Financial instruments that

are not measured at fair value on the condensed consolidated statement of operations are represented by cash, receivables, payables, accrued

liabilities, bank indebtedness, the Company’s margin loan and interim production financing.

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.

restricted cash, receivables, payables, accrued liabilities, bank indebtedness and the Company’s margin loan approximate fair value

due to the short-term nature of the instruments.

The fair values of the Company’s liability-classified derivative warrants are revalued

at the end of each reporting period determined using the BSM model (Level 2) with standard valuation inputs.

Refer to Note 19 for additional

The investment in YFE is also revalued at the end of each reporting period based on the trading price of YFE (Level 1).

to Note 5 for additional details.

Upon acquisition of Wow, the Company assumed foreign currency forward contracts that are not traded

in active markets.

These are fair valued using observable forward exchange rates at the measurement dates and interest rates corresponding

to the maturity of the contracts.

The fair values of the available-for-sale

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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):

the marketable securities measured at fair value by level within the fair value hierarchy as of June 30, 2022 (in thousands):

Schedule of marketable security measured at fair value

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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.

include the Company’s contingent earn-out liability, goodwill and film and television costs as of June 30, 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 June 30, 2022.

Recent Accounting Pronouncements

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condensed consolidated financial statements.

Acquisition of Ameba

Wow Unlimited Media

On April 6, 2022, the Company

completed the acquisition of Wow.

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, entered into an Arrangement Agreement to effect a plan of arrangement under

the arrangement provisions of Part 9, Division 5 of the Business Corporations Act .

The Company purchased 100% of issued and outstanding

shares of Wow for $ 38.3 million in cash and 11,057,085 shares of the Company’s common stock, including Wow’s subsidiary Frederator.

The plan of arrangement and final agreement, together with the acquisition of Wow’s Mainframe

Studios and its subsidiary Frederator, are referred to as the “Wow Acquisition.”

Final consideration paid

by the Company in the transaction at closing consisted of $ 38.3

million in cash and 11,057,085 shares of the Company’s common stock, including 691,262 Exchangeable Shares, with a fair value

million, 2,409,515

options granted to employees of Wow with a fair value of previously vested options of $ 1.2

million, included in the purchase price, and $ 0.3

million for future services and $ 1.6

million in severance and bonuses to executives, for total consideration of $ 52.7

million, or $ 50.1

million net of cash acquired, excluding transaction costs as described in more detail below.

costs incurred relating to the Wow Acquisition, including banks, legal and accounting, totaled $ 3.1 million, which is included in general

and administrative expenses on the statement of operations in the three months ended June 30, 2022.

The Company will also expense the

unvested replacement options, with a fair value of $ 0.3 million, as stock-based compensation expense over the remaining requisite service

period specified in the agreements.

Wow Acquisition facilitates the Company’s expansion as a global animation and children’s digital media company.

content, ongoing production projects and the addition of two studios that can also be leveraged for in-house production of the Company’s

properties, will drive cost synergies, facilitate further expansion into the global children’s entertainment market and strengthen

financial growth.

Frederator, with its owned and operated channels on YouTube , will provide a distribution platform

to facilitate the global growth of Kartoon Channel !.

Company has determined that the Wow 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:

Schedule of Total purchase price consideration paid

Genius Common Stock Issued

Shares Issued Exchangeable for Genius Common Stock

Stock Option Value of Replacement Options- Pre-Combination Vested Options

Severance Payments

As of June 30, 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 is based upon the estimate of the fair value of the assets acquired and the liabilities assumed by the Company on

April 6, 2022 as follows (in thousands):

Schedule of fair value of the assets acquired and the liabilities

Cash and cash equivalents

Accounts Receivable

Prepaid Expenses and Other

Property and Equipment

IP (In-Process)

IP (Proprietary Productions)

Customer Relationships

Networks and Platforms

Accounts Payable

Participations Payable

Accrued Liabilities

Interim Production Facilities

Deferred Revenue

Lease Liabilities

Other Liabilities

Total Consideration

The identifiable intangible

assets acquired of $ 34.8 million is comprised of $16.1 million for Customer Relationships, with remaining economic lives of 8 years, $10.3

million for IP Content including completed productions and productions in progress, that is included as part of Film and Television costs

on the condensed consolidated balance sheet and will be amortized as such, Tradenames for $ 7.6 million, with an indefinite life and Networks

and Platforms of $ 0.8 million, with a remaining economic life of 16 years.

The goodwill of $ 21.4 million arising from the acquisition

consists largely of the synergies expected from the combined businesses, including the Company’s ability to produce its content

in-house utilizing the acquired studios and expansion of the Kartoon Channel!

The goodwill was recorded to the Content

Production & Distribution reporting unit and is not deductible for tax purposes.

The valuation and allocation

of the preliminary purchase price shown in the above table was based upon a preliminary valuation and estimates and assumptions, especially

with respect to intangible assets, that are subject to change within the purchase price allocation period generally one year from the

acquisition date, including our evaluation of certain income tax positions, with corresponding adjustments to goodwill.

Valuation Methodology

Networks and Platforms were valued by performing a discounted cash flow analysis, specifically the multi-period excess earnings method.

This method involves quantifying the amount of residual (or excess) cash flows generated by 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 networks are discounted to present value at a

rate commensurate with the perceived risk.

The significant assumptions used in this model included the customer attrition rate, acquisition

rate of new customers, weighted average cost of capital, and expense estimates.

The useful life of the networks is estimated based primarily

upon the present value of cash flows attributable to the digital network.

The significant assumptions used in this method included the

royalty rate and weighted average cost of capital.

Tradenames were valued using the relief-from-royalty method.

The relief-from-royalty method is one of the methods under the income approach

wherein estimates of a company’s earnings attributable to the intangible asset are 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.

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

completed the acquisition of 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.

Concurrently, pursuant to an Asset Purchase Agreement (the “APA”) by and among

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 SVOD deliveries.

The transactions contemplated by the SPA and the APA are

referred to as the “Ameba Acquisition.”

Consideration paid by

the Company in the transaction at closing consisted of $ 3.8

million in cash, inclusive of $ 0.3

million for a net working capital adjustment (the “NWC Adjustment”) pursuant to the SPA and $0.3 million in cash

pursuant to the APA, for total consideration of $ 4.1

million, or $ 3.9

million net of cash acquired, excluding transaction costs and subject to 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 provided for an adjustment to the purchase price based on an

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

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

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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):

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

Total purchase price consideration paid

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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):

The net working capital

calculation was finalized as $ 268,657

during the three months ended June 30, 2022, as determined by the Company and agreed upon by the acquiree.

The amount was paid to the

acquiree on June 30, 2022.

As of June 30, 2022, the accounting

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

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

The preliminary purchase

price allocation is 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

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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.

The $0.7 million in 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 purposes.

The valuation and allocation

of the preliminary purchase price shown in the above table was based upon a preliminary valuation and estimates and assumptions, especially

with respect to intangible assets, that are subject to change within the purchase price allocation period generally one year from the

acquisition date, including our evaluation of certain income tax positions, with corresponding adjustments to goodwill.

Valuation Methodology

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!

The 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.

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.

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.

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

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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

pro forma information summarizes the Company’s results of operations as if the acquisitions were completed at the beginning of the

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

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Three Months Ended

March 31, 2022

March 31, 2021

Genius Brands Consolidated (including Wow and Ameba results)

June 30, 2022

June 30, 2021

June 30, 2021 (1)

June 30, 2021

Total Revenues

Net Loss Applicable to Common Stockholders

Net Loss per Common Stock (Basic and Diluted)

Net Income (Loss)

Net Loss per Common Share (Basic and Diluted)

Weighted Average Shares Outstanding (Basic and Diluted)

Six Months Ended

Genius Brands Consolidated

(including Wow and Ameba results)

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Total Revenues

Net Income (Loss)

Net Loss per Common Share (Basic and Diluted)

Weighted Average Shares Outstanding (Basic and Diluted)

(1) The unaudited historical financial statements of Wow are not adjusted for conversion

GAAP from International Financial Reporting Standards, as the adjustments are immaterial to the periods presented.

Variable Interest Entity

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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.

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

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

The entity is called “Stan

Lee Universe, LLC” (“SLU”).

and the Company executed an Operating Agreement for the joint venture, effective as

of June 1, 2021.

The purpose 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

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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.

value of the 50% non-controlling interest approximated a total of $4.0 million.

Pursuant to the guidance under

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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.

During the three months ended

June 30, 2022, SLU generated $ 2.4

million in net income, upon entering into a license agreement to license certain of the Stan Lee Assets.

The Company distributed

million to POW as their share of the non-controlling interest in SLU.

The Company’s investment in SLU, net of the cash received

from a distribution of $ 1.2

million, is $ 0.8

million as of June 30, 2022.

There were no changes in facts and circumstances that occurred during the three or six months ended

June 30, 2022 that would result in a re-evaluation of the VIE assessment.

Investment in Equity Interest

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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.

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.

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.

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, or $ 2.7 million, increasing the number of YFE’s outstanding shares to 6,857,132 and the Company’s ownership

in YFE to 49.2 % as of June 30, 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 %.

apply the fair value option for its investment in YFE (Level 1) as YFE is a publicly traded company on the Frankfurt Exchange, therefore

its trading price is readily available and relied upon by investors.

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 revalues the investment

in YFE securities as of the end of each reporting period.

During the three months and six months ended June 30, 2022, the Company recorded

a loss of $ 2.5 million and a gain of $ 2.9 million, respectively, within other income (loss) on the Company’s condensed consolidated

statement of operations, net of a $ 1.1 million loss and a $ 1.3 million loss, respectively, due to the change in the foreign currency translation

rate during the three and six months ended June 30, 2022, respectively.

Wow has a 63% membership interest

in Ratchet Productions, LLC ("RPLLC"), a privately-owned company registered in Colorado.

Wow accounts for its interest using

the equity method of accounting.

Prior to the Wow Acquisition, in 2016, Wow determined that its investment in RPLLC was impaired and reduced

its investment to $ 0 .

As the investment has been $ 0 , and remains as such, there has been no impact on the Company’s financial statements

for the membership interest in RPLLC.

Marketable Securities

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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) :

The investments in marketable securities

had an adjusted cost basis of $103.2 million and a market value of $97.4 million as of June 30, 2022.

The balances consisted of the following

securities (in thousands) :

Summary of Investment in marketable security

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states and municipalities

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 $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 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 type.

holds sixty-three available-for-sale securities, all of which are in an unrealized loss position as of June 30, 2022.

The unrealized losses

and fair values of available-for-sale securities that have been in an unrealized loss position for a period greater than 12 months as

of June 30, 2022 are as follows:

Schedule of Unrealized losses and fair values of available for sale securities

Gross Unrealized Loss

Corporate Bonds

Mortgage-Backed

agency and government sponsored securities

states and municipalities

A net realized loss of $44,241

and $123,291 related to the prepayment of principals for certain mortgage-backed securities was recorded in earnings during the three

and six months ended June 30, 2022, respectively.

The contractual maturities of the Company’s

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

marketable investments as of June 30, 2022 were as follows (in thousands) :

Summary of contractual maturity

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The Company did not sell any securities during

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

the three or six months ended June 30, 2022 that resulted in material gains or losses.

Property and Equipment, Net

The Company has property

and equipment as follows (in thousands) :

The Company has property and

equipment as follows (in thousands) :

Schedule of property and equipment, net

March 31, 2022

June 30, 2022

December 31, 2021

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During the three months ended

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

June 30, 2022 and 2021, the Company recorded depreciation expense of $ 0.2 million and $ 82,688 , respectively.

During the six months ended

June 30, 2022 and 2021, the Company recorded depreciation expense of $ 0.2 million and $ 0.1 million, respectively.

Right of Use Leased Assets

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Schedule of right of use asset

March 31, 2022

June 30, 2022

December 31, 2021

Office Lease Asset

Printer Lease Asset

Office Lease Assets

Equipment Lease Assets

Right of Use Assets, Gross

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During the three months ended

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

June 30, 2022 and 2021, the Company recorded ROU asset amortization expense of $ 0.7 million and $ 0.1 million, respectively.

six months ended June 30, 2022 and 2021, the Company recorded ROU asset amortization expense of $ 0.6 million and $ 0.2 million, respectively.

Film and Television Costs, Net

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 six months ended

June 30, 2022, Film and Television Costs increased by $ 14.0 million, net of amortization expense, as compared to December 31, 2021.

the $9.5 million acquired from the Wow Acquisition, Film and Television Costs increased $ 4.5 million during the six months ended June

30, 2022, primarily due to the production of Shaq’s Garage .

The increase is partially offset by amortization of Rainbow

Rangers and Superhero Kindergarten .

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.

June 30, 2022 and 2021, the Company recorded Film and Television Cost amortization expense of $ 2.2 million, $ 1.9 million of which amortized

by Wow, and $0.2 million, respectively.

During the six months ended June 30, 2022 and 2021, the Company recorded Film and Television Cost

amortization expense of $ 2.4 million, $ 1.9 million of which amortized by Wow, and $0.7 million, respectively.

The following table highlights

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

the activity in Film and Television Costs as of June 30, 2022 and December 31, 2021 (in thousands):

Schedule of film and television costs activity

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Film Amortization Expense

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

Goodwill and Intangible Assets, Net

Film and Television Costs, Net as of June 30, 2022

Intangible Assets, Net and Goodwill

Intangible Assets, Net

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

Weighted Average Remaining Amortization Period

Customer Relationships

Digital Networks

Other Intangible Assets (a)

Intangible Assets, Gross

Foreign Currency Translation Adjustment

Less Accumulated Amortization

Intangible Assets, Net

__________________

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

During the three months ended

June 30, 2022 and 2021, the Company recorded amortization expense of $ 0.9 million and $ 0.1 million, respectively.

During the three months

ended June 30, 2022 and 2021, the Company recorded amortization expense of $ 0.7 million and $ 0.2 million, 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 or six months ended June

30, 2022 that would indicate an impairment of the intangible assets.

Expected future intangible asset amortization as

of June 30, 2022 is as follows (in thousands):

Expected future intangible asset amortization

In 2013, the Company recognized

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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.

in goodwill, as a result of the acquisition of the Beacon Media Group (formerly ChizComm), which was subsequently determined to be impaired

as of December 31, 2021, resulting in an impairment charge of $ 4.8 million and a goodwill balance of $ 4.9 million.

As a result of the Ameba Acquisition

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Content Production and Distribution reportable segment.

As a result of the Wow Acquisition

during the second quarter of 2022, the Company recorded goodwill of $ 21.4 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 Wow 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

Wow 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.

annual review of goodwill during the fourth quarter of 2022.

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

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

in goodwill during the six months ended June 30, 2022.

The following table summarizes

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Acquisition of Ameba

Foreign Currency Translation Adjustment

Goodwill as of March 31, 2022

Intangible Assets, Net

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

Weighted Average Remaining Amortization Period

Customer Relationships

Digital Networks

Other Intangible Assets (a)

Intangible Assets, Gross

Acquisition of Wow

Foreign Currency Translation Adjustment

Less Accumulated Amortization

Intangible Assets, Net

__________________

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

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

Expected future intangible asset amortization

Goodwill as of June 30, 2022

Deferred Revenue

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

As of June 30, 2022 and December

31, 2021, the Company had total short term and long term deferred revenue of $ 18.0 million and $ 3.9 million, respectively.

the deferred revenue balance as of June 30, 2022 is $ 13.1 million the Company assumed in the Wow Acquisition.

The deferred revenue balance

assumed represents cash received from customers for productions in progress.

Revenue is fully recognized upon production completion.

revenue also 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.

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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

Accrued Production Costs (a)

Other Accrued Expenses (b)

Accrued Salaries and Wages (c)

Accrued NWC Adjustment (d)

Total Accrued Liabilities – Current

__________________

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) :

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

Three Months Ended

Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Gain (Loss) on Warrant Revaluation (a)

Loss on Foreign Exchange (b)

Loss on Marketable Securities Investments (c)

Gain (Loss) on Revaluation of Equity Investment in YFE(d)

Interest Income (e)

Warrant Incentive Expense (f)

Interest Expense (g)

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 .

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 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.

For the three and six months ended June 30, 2022 loss on foreign exchange primarily relates to the foreign exchange loss on the investment in YFE’s equity securities accounted for under the fair value option.

For the three and six months ended June 30, 2021 loss on foreign exchange related to foreign currency denominated monetary transactions.

The Company started investing in marketable securities during the three months ended June 30, 2021.

The net realized loss on marketable securities recognized during the three and six months ended June 30, 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 Company did not incur any realized losses on marketable securities during the three and six months ended June 30, 2021.

The gain (loss) 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 (loss) is a result of the change in YFE’s stock price at the end of the current reporting period.

Interest Income received during the three and six months ended June 30, 2022 and 2021 primarily consists of cash interest received on the investments in marketable securities, net 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.

Interest expense during the three and six months ended June 30, 2022 primarily consists of $0.2 million of interest incurred on the Company’s margin loan collateralized by its marketable security investments and $0.3 million of interest incurred on its production facilities loan and bank indebtedness assumed as part of the Wow Acquisition.

Bank Indebtedness and Production Facilities

Revolving Demand Facility

Draws under the $5.0 million

CAD revolving demand facility can be made in Canadian or US dollars at the option of the Company by way of bank prime rate loans, Canadian

Bankers’ Acceptances, USD LIBOR, or letters of credit and can be repaid at any time without penalty and without notice and

are generally repayable on demand .

Canadian or US dollar bank prime borrowings bear interest at

a rate equal to bank prime plus 2.00% per annum.

For other draws under the revolving facility, the respective loans bear interest at a

rate equal to Canadian Bankers’ Acceptances or USD LIBOR plus 3.75% per annum.

As of June 30, 2022, the Company had an outstanding

balance of $2.7 million USD on the revolving demand facility, included as Bank Indebtedness within current liabilities on the Company’s

condensed consolidated balance sheet.

of June 30, 2022, the Company was in compliance with all covenants under the revolving demand facility.

Each transaction under the $8.0

million CAD equipment lease line has specific financing terms in respect of the leased equipment such as term, finance amount, rate, and

payment terms.

The finance rates for these equipment leases range from 4%- 4.5% with remaining lease terms of 17-31 months as of the Wow

Acquisition date.

The Company has recorded right of use assets and lease liabilities for the leased equipment acquired in respect of these

The Company has drawn down a total of $7.9 million CAD ($6.1 million USD), with an outstanding balance as of June 30, 2022 of $2.6

million CAD ($2.0 million USD), net of repayments, included within current and noncurrent Lease Liabilities on the Company’s condensed

consolidated balance sheet.

Treasury Risk Management Facility

Advances under the treasury

risk management facility are subject to market rates as determined by the lender’s treasury department or derivatives group at the

time of the drawdown request.

The maximum term for foreign exchange forward contracts and interest rate swaps is one year.

of June 30, 2022, there were no outstanding amounts drawn under the treasury risk management facility.

Financing Facilities

The Company’s interim financing facilities for specific productions

bear interest at rates ranging from bank prime plus 1.25% - 1.75% per annum.

The interim production financing facilities are generally

repayable on demand and are generally secured by a combination of federal and provincial tax credits, other government incentives, production

service agreements and license agreements.

As of June 30, 2022, the Company had an outstanding balance of $19.2 million USD recorded as

Production Facilities, net within current liabilities on the Company’s condensed consolidated balance sheet.

As of June 30, 2022, the

Company had an outstanding balance in its margin loan account of $ 61.1

million, an increase of $ 54.7

million as compared to December 31, 2021.

The Company borrowed an additional $ 59.0

million from its investment margin account during the six months ended June 30, 2022 and repaid $ 4.5

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

During the three months ended March 31,

2022, the borrowed amounts were used to finance the Company’s additional investments in YFE and the closing of the acquisitions

of Ameba and WOW, in each case pledging certain of its marketable securities as collateral.

During the three months ended the additional

borrowings of $3.2 million related to the Companies final obligated purchase of YFE shares and transaction costs related to the Wow Acquisition.

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.

The weighted average interest rate was 1.23% on an average margin loan balance of $55.7 million during the three

months ended June 30, 2022.

The weighted average interest rate was 0.98% on an average margin loan of $34.6 million balance during the

six months ended June 30, 2022.

The Company incurred interest expense of $ 201,160

during the six months ended June 30, 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.

Stockholders’ Equity

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.

As of June 30, 2022, the total

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

As of June 30, 2022, and December

31, 2021, there were 317,235,116 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.

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.

On April 7, 2022, the Company

issued 10,365,823 shares of the Company’s common stock valued at $ 10.8 million related to the Wow Acquisition, as part of the purchase

Also included as part of the Wow Acquisition, the Company has issued 691,262 shares, valued at $ 0.7 million, which will be exchanged

at a future redemption date upon tender of ExchangeCo (as defined below) shares as specified in the agreement.

See additional information

on the ExchangeCo shares below under “Preferred Stock.”

On May 31, 2022, the Company

issued 736,667 shares of the Company’s common stock valued at $ 0.4 million to a nonemployee for productions services.

During the six months ended

June 30, 2022, the Company issued 1,676,046 shares of the Company’s common stock valued at $ 1.4 million representing delivery of

Preferred Stock

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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.

In connection with the Company’s

acquisition of Wow, certain eligible Canadian shareholders, noteholders and optionholders of Wow elected to receive the Exchangeable Shares

in the capital of the Wow Exchange Co.

(“ExchangeCo”) instead of shares of the Company’s common stock to which

they were otherwise entitled.

The shares of ExchangeCo are

exchangeable into shares of the Company’s common stock in accordance with their terms.

Holders of the ExchangeCo shares are entitled

to defined voting rights (the “Voting Rights”) in the Company pursuant to a voting and exchange trust agreement (the “Voting

Agreement”) dated April 6, 2022 between the Company, ExchangeCo, 1329258 B.C.

and Computershare Trust Company of Canada (the

“Voting Trustee”).

The Voting Trustee holds a single share of Series B Preferred Stock in the capital of the Company (the

“Special Voting Share”), which grants the Voting Trustee that number of votes at the meetings of the Company’s shareholders

as is equal to the number of shares of the Company’s common stock that at such time have not been delivered pursuant to the tender

of ExchangeCo shares.

The Voting Trustee is required to exercise each vote attached to the Special Voting Share only as directed by the

relevant holder of the underlying Genuis Shares and, in the absence of any instructions, will not exercise voting rights with respect

to the applicable shares.

As of June 30, 2022 and December

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

As of June 30, 2022 there was 1 share of Series B Preferred

Stock outstanding.

Stock Options

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

As part of the Wow Acquisition,

the Company granted replacement options to purchase 1,733,100 shares of the Company’s common stock to Wow employees who would continue

to provide services to the Company.

676,415 options to purchase common stock were also granted to certain departing Wow shareholders to

replace their previously vested Wow options.

These options were cancelled after 30 days of the grant date if not exercised.

The fair market

value of $ 1.5 million was determined utilizing assumptions as of the replacement date of April 6, 2022 and were valued using the BSM option

pricing model.

The number of shares granted was determined by using an exchange ratio calculated by a third party based on the intrinsic

value of the Wow common stock purchased as part of the acquisition and the value of the Company’s common stock as of the agreement

The vesting terms of the replacement options remained the same as the Wow options for which they were exchanged.

All shares that

replaced previously vested Wow shares were included as part of the purchase price based on the calculated fair value on the acquisition

date of $ 1.2 million for 1,967,528 shares.

The remaining options to vest with a fair value of $ 0.3 million will be expensed over the remaining

requisite period.

The options expire within 3 years from the replacement option grant date or the original Wow option, whichever is greater.

During the three months ended

June 30, 2022, the Company also granted 500,000 options to purchase shares of common stock to a former employee of Wow, as a new employee

of the Company after the acquisition date.

The options vest evenly over three years and expire 10 years from the grant date of June 23,

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:

granted during the three months ended June 30, 2022 was calculated using the BSM option pricing model based on the following assumptions:

Schedule of assumptions used

3/17/2022 Options

4/6/22 Replacement Options

6/23/22 Options

Exercise Price

$ 0.51 -$ 1.66

Dividend Yield

Risk-free interest rate

2.67 %- 2.70 %

Expected life of options

3.0 - 4.3 years

The following table summarizes

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

the stock option activity during the six months ended June 30, 2022:

Schedule of stock option activity

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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 .

( 1,026,915 )

Outstanding at June 30, 2022

Unvested at June 30, 2022

Vested and exercisable at June 30, 2022

During the three months ended

June 30, 2022 and 2021, the Company recognized $ 0.4 million and $ 0.8 million, respectively, in share-based compensation expense related

to stock options.

During the six months ended June 30, 2022 and 2021, the Company recognized $ 0.8 million and $ 1.9 million, respectively,

in share-based compensation expense related to stock options.

The unrecognized share-based compensation expense related to stock options

at June 30, 2022 of $ 1.8 million will be recognized through the second quarter of 2025 based on the remaining vesting periods, assuming

the options are not cancelled or forfeited.

As of June 30, 2022 there was $ 159,311 of aggregate intrinsic value related to outstanding

unvested options.

The weighted average fair value per option granted during the three months ended June 30, 2022 was $ 0.64 .

Restricted Stock Units

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:

March 31, 2022, the Company granted 300,000 RSUs to a nonemployee with a fair market value of $ 268,500 .

The RSUs were granted on March

17, 2022, with a three-year vesting period and a five-year term.

During the three months ended

June 30, 2022, the Company granted 469,677 fully vested RSUs to a nonemployee for production services with a fair market value of $ 286,806 .

The RSUs were granted on May 10, 2022 with a five-year term and recorded as part of capitalized production costs.

During the three months ended

June 30, 2022, the Company also granted 500,000 RSUs to a former employee of Wow, as a new employee of the Company after the acquisition

date, with a fair market value of $ 390,000 .

The RSUs were granted on June 23, 2022, with a three-year vesting period and a five-year term.

following table summarizes the Company’s RSU activity during the six months ended June 30, 2022:

Schedule of restricted stock units

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Unvested at December 31, 2021

( 3,371,311 )

Forfeited/Cancelled

Unvested at March 31, 2022

Unvested at June 30, 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.

June 30, 2022 and 2021, the Company recognized $ 3.8 million and $ 0.8 million, respectively, in share-based compensation expense related

During the six months ended June 30, 2022 and 2021, the Company recognized $ 7.9 million and $ 1.9 million, respectively, in share-based

compensation expense related to RSUs.

The unrecognized share-based compensation expense related to RSUs at June 30, 2022 of $ 2.9 million,

will be recognized through the second 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 %.

to purchase up to 45,511,965 shares of the Company’s common stock as of June 30, 2022, and December 31, 2021, with a total value

of $ 74.2 million, an average exercise price of $ 1.86 and average term of 5.5 years.

As of June 30, 2022, 892,857

liability classified derivative warrants to purchase shares of the Company’s common stock remained outstanding and are revalued

each reporting period.

As of June 30, 2022, the warrants were revalued at $0.6 million, resulting in a decrease of $ 0.3 million 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 June 30, 2022 included an expected volatility of 128 % and an annual interest rate of 2.97 %.

The Company did not have any

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

warrant activity during the three or six months ended June 30, 2022.

The Company accounts for income

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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 includes interest

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

30, 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 jurisdiction and in the states of California, Massachusetts and New Jersey and will start filing in New York.

The Company is currently subject to U.S.

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

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

Genius Brands International,

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

Genius Brands International, Inc.

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.

income tax examinations by tax authorities since inception

of the Company.

The Company is subject to

US income taxes on a stand-alone basis.

The Company, the Beacon Media Group (formerly ChizComm) and Wow file separate stand-alone tax

returns in each jurisdiction in which they operate.

Beacon Communications, Wow and Ameba are corporations operating in Canada and are

subject to Canadian income taxes on its stand-alone taxable income.

Commitment and Contingencies

The following is a schedule of future minimum

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

The following is a schedule of future minimum contractual

obligations as of June 30, 2022 (in thousands) :

Schedule of future minimum lease payments

Operating Leases

Operating/Capital Leases

Employment Contracts

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

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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 %.

On April 6, 2022, as

part of the Wow Acquisition, the Company assumed an operating lease for 45,119 square feet of general office space located at 2025

West Broadway, Suite 200, Vancouver, B.C., V6J 1Z6.

The right of use asset and lease liability were revalued on the acquisition date

based on the remaining lease term of 117 months with payments of $81,769 per month, subject to escalations of 7% each of the third

and fifth years.

The lease liability and right of use asset were determined to be $6.6 million, utilizing a discount rate of 11.5 %.

As part of the assumed office lease, the Company also assumed a parking lease for 80 parking spaces.

The parking lease was also

revalued utilizing the 11.5% discount rate.

With a remaining lease term of 117 months, paying $6,091 per month, the ROU asset and

lease liability were determined to be $ 0.5 million

as of the acquisition date.

Also, as part of the Wow Acquisition, the Company assumed various capital

equipment leases, the majority of which are under Master Line of Credit Agreements with certain banking institutions.

As the rates were

implicit in the leases, the Company determined that the carrying value of the leases as of the acquisition date equaled the fair value.

As determined by utilizing the implicit rate in the leases that ranged from 3.7%- 14.5% with remaining

lease terms of 10-33 months and monthly payments of $1,346-$57,362 as of the Wow Acquisition date .

The remaining capital lease

obligations of $ 3.5 million

as of the acquisition date was included as part of the Company’s

existing current and noncurrent lease liabilities on the Company’s condensed consolidated balance sheet upon consolidation.

As of June 30, 2022, the weighted-average

lease term for all of the

Company’s operating and capital leases was 82 months and the weighted-average discount rate on the leases was

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.

operating and capital leases during the three months ended June 30, 2022 and 2021 were $ 0.4 million and $ 0.1 million, respectively.

expenses incurred for operating and capital leases during the six months ended June 30, 2022 and 2021 were $ 0.6 million and $ 0.2 million,

respectively.

Other Funding Commitments

6 unchanged sentences

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

2 unchanged sentences

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.

During the six months ended June 30, 2022, Mr.

earned $ 0.6 million in producer fees.

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

first and second quarters of 2022.

Pursuant to his employment agreement dated April 7, 2022, whereas Michael

Hirsh was appointed as the CEO of Wow and its Frederator and Mainframe Studio subsidiaries, a member of the Company’s Executive

Committee and a member of the Company’s Board of Directors, is entitled to an Executive Producer fee of $12,400 per one-half hour

for each episode of any audio-visual production produced by Wow and any of its subsidiaries during the term of his employment, up to 52

episodes per year .

During the six months ended June 30, 2022, Mr.

Hirsh did not yet earn any producer fees under the employment

On July 21, 2020, the Company

4 unchanged sentences

sales made by AHAA utilizing the licensed content.

During the three months ended March 31, 2022, the Company earned $ 0 in royalties from

During the three months ended June 30, 2022, the Company earned $ 0 in royalties from

this agreement.

12 unchanged sentences

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!.

The loan has accrued interest of $ 52,442 as of June 30, 2022 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 with POW!

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

Company related to the 50% non-controlling interest held by POW!.

Segment Reporting

8 unchanged sentences

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

the revenue and net earnings within the Company’s two operating segments for the three and six months ended June 30, 2022 and 2021

(in thousands) :

Segment information by revenues and net earnings

Three Months Ended March 31,

Three Months Ended

Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Total Revenues:

4 unchanged sentences

Media Advisory & Advertising Services

Total Operating Loss

Total Net Operating Loss

Geographic Information

The following table provides

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

information about disaggregated revenue by geographic area for the three months ended June 30, 2022 and 2021 (in

Schedule of segments by geographic area

Three Months Ended March 31,

Three Months Ended

Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Total Revenues:

United States

United Kingdom

Total Revenue

Subsequent Events

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.

On July 7, 2022, the Company

entered into an Equipment Master Lease Agreement with the Royal Bank of Canada, pursuant to which it opened a line of credit, in an amount

not to exceed $1.35 million CAD, to purchase leases for equipment for general use in operations.

The purchased leases will be accounted

for as capital leases with a term of 36 months and a base index rate of 4.47%.

On July 15, 2022, Andy Heyward

was paid $55,000 for his second quarter discretionary bonus.

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