What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-17 · 193 added, 199 removed, 277 unchanged (59% of the section changed)

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

and related notes for the three and six months ended June 30, 2022 and 2021.

Certain statements made or incorporated by reference in this

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

approval of authorized personnel constitute forward looking statements within the meaning of Section 27A of the Securities Act of 1933,

as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and are subject to the safe harbor

created thereby.

Forward-looking statements reflect intent, belief, current expectations, estimates or projections about, among other

things, our industry, management’s beliefs, and future events and financial trends affecting us.

and related notes for the three and nine months ended September 30, 2022 and 2021.

Certain statements made or incorporated by reference

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

the approval of authorized personnel constitute forward looking statements within the meaning of Section 27A of the Securities Act of

1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and are subject to the safe

harbor created thereby.

Forward-looking statements reflect intent, belief, current expectations, estimates or projections about, among

other things, our industry, management’s beliefs, and future events and financial trends affecting us.

Words such as “anticipates,”

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

The combination of ourselves, our investment in YFE, our acquired companies

Wow, Ameba and Beacon Media provides us 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.

The combination of ourselves,

our investment in YFE, our acquired companies Wow, Ameba and Beacon Media provides us 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.

Environmental, Social and Governance Strategy

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Human Capital Management

As of June 30, 2022, we employed

817 full-time employees and 90 independent contractors.

As of September 30, 2022,

we employed 798 full-time employees and 454 independent contractors.

We aim to build a culture

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

increasing the number of YFE’s outstanding shares to 6,857,132.

As of September 30, 2022, our ownership in YFE was 48.0%.

Coronavirus (COVID-19)

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Our summary results for the

three months ended June 30, 2022 and June 30, 2021 are below.

three months ended September 30, 2022 and September 30, 2021 are below.

Three Months Ended

June 30, 2022

June 30, 2021

September 30,

(in thousands, except percentages)

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Production Services revenue

is generated specifically by Wow providing animation production services for the three months ended June 30, 2022, since the acquisition

of the Company at the start of the quarter.

Content Distribution revenue is generated from the distribution of

our properties for broadcast on television, video-on-demand (“VOD”) or SVOD in domestic and international markets and the

sale of DVDs for home entertainment through our partners.

Content Distribution also includes our advertising sales generated on our digital

networks, the Kartoon Channel!

in the form of either flat rate promotions or advertising impressions served, SVOD revenues generated

by Ameba and revenue generated by Frederator on its multi-channel network.

Fluctuations in Content

Distribution revenue are based on the achievement of revenue recognition criteria such as the start of a license period and the

delivery of the content or advertisement to the customer.

Revenue related to our AVOD and SVOD, including advertising sales during

the three months ended June 30, 2022, increased 6,218% as compared to the three months ended June 30, 2021, primarily due to the

acquisition of Ameba, Wow and Frederator, increasing revenue by $7.7 million.

is generated specifically by Wow providing animation production services for the three months ended September 30, 2022, since the acquisition

of Wow at the start of the second quarter.

Content Distribution revenue

is generated from the distribution of our properties for broadcast on television, video-on-demand (“VOD”) or SVOD in domestic

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

Content Distribution also includes our advertising

sales generated on our digital networks, the Kartoon Channel!

in the form of either flat rate promotions or advertising impressions

served, SVOD revenues generated by Ameba and revenue generated by Frederator on its multi-channel network.

Fluctuations in Content Distribution

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

or advertisement to the customer.

Revenue related to our AVOD and SVOD, including advertising sales during the three months ended September

30, 2022, increased 1,420% as compared to the three months ended September 30, 2021, primarily due to the acquisition of Ameba, Wow and

Frederator, increasing revenue by $8.8 million, offset by a $0.3 million decrease.

Licensing & Royalties

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for which we act as a licensing agent.

Revenue related to our licensing and royalties for the three months ended June 30, 2022 increased

102% as compared to the three months ended June 30, 2021, due to entering an agreement for the licensing of certain Stan Lee Assets.

Media Advisory & Advertising

Services revenue is a combination of client retainer fee-based services and media commissions generated by our wholly-owned subsidiary,

Beacon Media Group, which we acquired on February 1, 2021.

The increase of 11% during the three months ended June 30, 2022 as compared

to the three months ended June 30, 2021 represents new customers acquired, net of churn, during the period.

Revenue related to our licensing and royalties for the three months ended September 30, 2022 increased

208% as compared to the three months ended September 30, 2021, due to entering in an agreement for the licensing of certain Stan Lee Assets.

Three Months Ended

June 30, 2022

June 30, 2021

September 30, 2022

September 30, 2021

(in thousands, except percentages)

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support marketing activities.

The decrease in marketing and sales expenses for the three months ended June 30, 2022 as compared to the

three months ended June 30, 2021 was primarily due to a decrease in marketing and advertising expenses incurred to promote Kartoon

Amortization, including any

impairments of film and television costs, makes up the majority of our Direct Operating Costs.

Expenses directly associated with the acquisition,

salaries and related expenses to the production services employees Mainframe and Frederator, licensing and production of content, such

as participation expenses related to agreements with various animation studios, post-production studios, writers, directors, musicians

or other creative talent with which we are obligated to share net profits of the properties on which they have rendered services and costs

of our product sales make up the remainder of Direct Operating Costs.

The increase in direct operating costs for the three months ended

June 30, 2022 as compared to the three months ended June 30, 2021 was primarily due to the consolidation of service salaries and channel

expenses related to the Wow Acquisition.

General and Administrative expenses primarily consist of payroll and

related expenses, share-based compensation related to our equity compensation plan, rent, depreciation of our property and equipment and

amortization of our intangible assets, as well as professional fees and other general corporate expenses.

The $8.0 million increase in

general and administrative expenses for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 primarily

consisted of a $4.5 million increase in costs associated with the acquisition of Wow and Frederator and an increase share-based compensation

expense and the consolidation of Wow’s general and administrative expenses for the three months ended June 30, 2022.

Our summary results for the six months ended June

30, 2022 and June 30, 2021 are below.

Six Months Ended

June 30, 2022

June 30, 2021

The decrease in marketing and sales expenses for the three months ended September 30, 2022 as compared to

the three months ended September 30, 2021 was primarily due to a decrease in marketing and advertising expenses incurred to promote Kartoon

Salaries and related expenses

of the animation production services employees of Mainframe and Frederator make up the majority of our Direct Operating Costs.

expenses, licensing and production of content costs, such as participation expenses related to profit sharing obligations with various

animation studios, post-production studios, writers, directors, musicians or other creative talent that have rendered services and amortization,

including any impairments of film and television costs, make up the remainder of Direct Operating Costs.

The increase in direct operating

costs for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 was primarily due to the

consolidation of Wow and Frederator’s animation production service salaries and channel expenses into our direct operating costs.

General and Administrative

expenses primarily consist of payroll and related expenses, share-based compensation related to our equity compensation plan, rent, depreciation

of our property and equipment and amortization of our intangible assets, as well as professional fees and other general corporate expenses.

The $0.5 million increase in general and administrative expenses for the three months ended September 30, 2022 as compared to the three

months ended September 30, 2021 primarily consisted of a $3.0 million increase in costs associated with the acquisition of Wow and Frederator

and a decrease in share-based compensation expense for the three months ended September 30, 2022.

Our summary results for the nine months ended September

30, 2022 and September 30, 2021 are below.

Nine months Ended

September 30,

(in thousands, except percentages)

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Production Services Revenue

is generated specifically by Wow providing animation production services for the six months ended June 30, 2022.

Content Distribution revenue is generated from the distribution of

our properties for broadcast on television, video-on-demand (“VOD”) or subscription video-on-demand (“SVOD”) in

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

Content Distribution also includes

our advertising sales generated on our digital network, the Kartoon Channel!

in the form of either flat rate promotions or advertising

impressions served, SVOD revenues generated by Ameba and revenue generated by Frederator on its multi-channel network.

Fluctuations in Content Distribution revenue are based on the achievement

of revenue recognition criteria such as the start of a license period and the delivery of the content or advertisement to the customer.

Revenue related to our AVOD and SVOD, including advertising sales for the six months ended June 30, 2022, increased 3,152% as compared

to the six months ended June 30, 2021 primarily due to the acquisition of Ameba, Wow and Frederator, increasing revenue by $7.7 million.

is generated specifically by Wow providing animation production services for the nine months ended September 30, 2022.

Content Distribution revenue

is generated from the distribution of our properties for broadcast on television, video-on-demand (“VOD”) or subscription

video-on-demand (“SVOD”) in domestic and international markets and the sale of DVDs for home entertainment through our partners.

Content Distribution also includes our advertising sales generated on our digital network, the Kartoon Channel!

in the form of

either flat rate promotions or advertising impressions served, SVOD revenues generated by Ameba and revenue generated by Frederator on

its multi-channel network.

Fluctuations in Content Distribution

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

or advertisement to the customer.

Revenue related to our AVOD and SVOD, including advertising sales for the nine months ended September

30, 2022, increased 1,965% as compared to the nine months ended September 30, 2021 primarily due to the acquisition of Ameba, Wow and

Frederator, increasing revenue by $17.3 million, offset by a $0.1 million decrease.

Licensing & Royalties

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for which we act as a licensing agent.

Revenue related to our licensing and royalties for the six months ended June 30, 2022 increased

80% as compared to the six months ended June 30, 2021 primarily due to entering an agreement for the licensing of certain Stan Lee Assets.

Media Advisory & Advertising Services revenue is a combination

of client retainer fee-based services and media commissions generated by our wholly-owned subsidiary, Beacon Media Group, which we acquired

on February 1, 2021.

The increase of 20% represents an additional month of revenue recognized during the six months ended June 30, 2022

as compared the six months ended June 30, 2021 and new customers acquired, net of churn during the period.

Six Months Ended

June 30, 2022

June 30, 2021

Revenue related to our licensing and royalties for the nine months ended September 30, 2022 increased

88% as compared to the nine months ended September 30, 2021 primarily due to entering an agreement for the licensing of certain Stan Lee

Media Advisory & Advertising

Services revenue is a combination of client retainer fee-based services and media commissions generated by our wholly-owned subsidiary,

Beacon Media Group, which we acquired on February 1, 2021.

The increase of 12% represents an additional month of revenue recognized during

the nine months ended September 30, 2022 as compared the nine months ended September 30, 2021 and new customers acquired, net of churn

during the period.

Nine months Ended

September 30,

(in thousands, except percentages)

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support marketing activities.

The decrease in marketing and sales expenses for the six months ended June 30, 2022 as compared to the six

months ended June 30, 2021 was primarily due to a decrease in marketing and advertising expenses incurred to promote the Kartoon Channel.

Amortization, including any

impairments of film and television costs makes up the majority of our Direct Operating Costs.

Expenses directly associated with the acquisition,

salaries and related expenses to the production services of Mainframe and Frederator, licensing and production of content, such as participation

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

talent with which we are obligated to share net profits of the properties on which they have rendered services and costs of our product

sales make up the remainder of Direct Operating Costs.

The increase in direct operating costs for the six months ended June 30, 2022

as compared to the six months ended June 30, 2021 was primarily due to the consolidation of service salaries and channel expenses into

our financial statements related to the Wow Acquisition.

General and Administrative expenses primarily consist of payroll and

related expenses, share-based compensation related to our equity compensation plan, rent, depreciation of our property and equipment and

amortization of our intangible assets, as well as professional fees and other general corporate expenses.

The $11.9 million increase in

general and administrative expenses for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 primarily

consisted of a $4.5 million increase in costs associated with the acquisition of Wow and Frederator, a $4.2 million increase in share-based

compensation expense, a $2.2 million increase related to an increase in salaries and wages, directors’ and officers’ insurance

and the consolidation of Wow’s general and administration expenses for the three months ended June 30, 2022.

The decrease in marketing and sales expenses for the nine months ended September 30, 2022 as compared to

the nine months ended September 30, 2021 was primarily due to a decrease in marketing and advertising expenses incurred to promote the

Kartoon Channel!

Salaries and related expenses

of the animation production services employees of Mainframe and Frederator make up the majority of our Direct Operating Costs.

expenses, licensing and production of content costs, such as participation expenses related to profit sharing obligations with various

animation studios, post-production studios, writers, directors, musicians or other creative talent that have rendered services and amortization,

including any impairments of film and television costs, make up the remainder of Direct Operating Costs.

The increase in direct operating

costs for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 was primarily due to the

consolidation of Wow and Frederator’s animation production service salaries and channel expenses into our direct operating costs.

General and Administrative

expenses primarily consist of payroll and related expenses, share-based compensation related to our equity compensation plan, rent, depreciation

of our property and equipment and amortization of our intangible assets, as well as professional fees and other general corporate expenses.

The $12.4 million increase in general and administrative expenses for the nine months ended September 30, 2022 as compared to the nine

months ended September 30, 2021 primarily consisted of a $6.1 million increase in costs associated with the acquisition of Wow and Frederator,

a $2.5 million increase in professional fees related to costs to acquire Wow and Frederator and a $1.1 million increase related to an

increase in salaries and wages, directors’ and officers’ insurance and the consolidation of Wow’s general and administration

expenses for the three months ended September 30, 2022.

Other Income (Expense), Net

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Three Months Ended

Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Nine months Ended

September 30,

Gain (Loss) on Warrant Revaluation (a)

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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.

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.

We 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.

We 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 our 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 of amortization of premiums.

The gain 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 nine months ended September 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 nine months ended September 30, 2021, loss on foreign exchange related to foreign currency denominated monetary transactions.

We started investing in marketable securities during the three months ended September 30, 2021.

The net realized loss on marketable securities recognized during the three and nine months ended September 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.

We did not incur any realized losses on marketable securities during the three and nine months ended September 30, 2021.

The loss on revaluation of the equity investment in YFE is the change in fair value recognized on our investments in YFE accounted for using the fair value option.

The 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 nine months ended September 30, 2022 and 2021, primarily consists of cash interest received on the investments in marketable securities, net of 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 our margin loan collateralized by our marketable security investments and $0.3 million of interest incurred on our production facilities loan and bank indebtedness assumed as part of the Wow Acquisition.

Interest expense during the three and nine months ended September 30, 2022 primarily consists of $0.4 million and $0.6 million, respectively, of interest incurred on our margin loan collateralized by its marketable security investments and $0.3 million and $0.6 million, respectively, of interest incurred on the production facilities loan and bank indebtedness assumed as part of the Wow Acquisition.

Liquidity and Capital Resources

During the six months ended

June 30, 2022, our cash, cash equivalents and restricted cash decreased by $2.2 million.

The decrease was primarily due to cash used in

investment activities, inclusive of the Wow and Ameba acquisitions and the YFE investments, of $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

As of June 30, 2022, we held

marketable securities with a fair value of $97.4 million as available-for-sale, a decrease of $15.1 million as compared to December 31,

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

a source of liquidity.

As our recent focus has been on expanding its business, excess cash and liquid investments have been utilized to

pay our margin loan down.

During the nine months ended

September 30, 2022, we had cash, cash equivalents and restricted cash of $7.1 million, which decreased by $3.0 million from December 31,

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

of $35.9 million, $24.2 million used for operational activities, offset by $57.4 million of financing from the margin loan and production

facilities and bank indebtedness assumed in the Wow Acquisition.

As of September 30, 2022,

we held marketable securities with a fair value of $89.9 million as available-for-sale, a decrease of $22.7 million as compared to December

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

as a source of liquidity.

We borrowed an additional

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

$63.2 million from our investment margin account during the nine months ended September 30, 2022 and repaid $7.8 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 our additional investments in YFE and the closing of the acquisitions of Ameba and WOW, in each case pledging certain of our

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.

the borrowed amounts were used to finance our additional investments in YFE

and the closing of the acquisitions of Ameba and Wow, in each case pledging certain of our marketable securities as collateral.

the three months ended September 30, 2022, the additional borrowings of $4.2 million related to quarterly operational costs.

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

The weighted average interest rate was 2.65% on an average margin loan balance of $61.2 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.

We 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 our condensed consolidated balance sheets.

September 30, 2022.

The weighted average interest rate was 1.54% on an average margin loan balance of $43.4 million during the nine months

ended September 30, 2022.

We incurred interest expense of $0.6 million during the nine months ended September 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 our condensed consolidated balance sheets.

Upon the acquisition of Wow,

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facilities for specific production titles.

The Facilities are

guaranteed by us and the security reflects substantially all of our and our subsidiary guarantors tangible and intangible assets

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 conditions.

The Facilities are guaranteed

by us and the security reflects substantially all of our and our subsidiary guarantors tangible and intangible assets 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 conditions.

Working Capital

As of June 30, 2022, we had current assets of $150.3 million, including

cash and cash equivalents of $7.8 million and marketable securities of $97.4 million and our current liabilities were $112.7 million.

We had working capital of $37.6 million as of June 30, 2022 as compared to working capital of $115.1 million as of December 31, 2021.

The decrease of $77.5 million in working capital as compared to December 31, 2021 was primarily due to the $54.7 million increase in our

margin loan balance and a $21.8 million increase due to the assumption of Wow’s current debt for interim production facilities and

bank loans upon the acquisition.

During the six months ended

June 30, 2022 we met our immediate cash requirements through existing cash balances.

Additionally, we used equity and equity-linked instruments

to pay for services and compensation.

We have the ability to borrow against license contracts, production service contracts, or refundable

tax credits receivable, entering into leases, the issuance of debentures, or the issuance of shares.

The Company manages liquidity risk

by continuously monitoring actual and forecasted cash flows, using lease financing and by maintaining revolving credit facilities.

believe that our current cash and cash equivalents balances and our investments in available for sale marketable securities are sufficient

As of September 30, 2022,

we had current assets of $143.6 million, including cash and cash equivalents of $7.1 million and marketable securities of $89.9 million

and our current liabilities were $111.2 million.

We had working capital of $32.4 million as of September 30, 2022 as compared to working

capital of $115.1 million as of December 31, 2021.

The decrease of $82.7 million in working capital as compared to December 31, 2021 was

primarily due to the $56.0 million increase in our margin loan balance, a $21.4 million increase due to the assumption of Wow’s

current debt for interim production facilities and bank loans upon the acquisition and the increase of deferred revenue of $10.4 million.

During the nine months ended

September 30, 2022 we met our immediate cash requirements through existing cash balances.

Additionally, we used equity and equity-linked

instruments to pay for services and compensation.

We have the ability to borrow against license contracts, production service contracts,

or refundable tax credits receivable, entering into leases, the issuance of debentures, or the issuance of shares.

We manage liquidity

risk by continuously monitoring actual and forecasted cash flows, using lease financing and by maintaining our revolving credit facilities.

We believe that our current cash and cash equivalents balances and our investments in available for sale marketable securities are sufficient

to support our operations for at least the next twelve months.

Comparison of Cash Flows for the Six Months

Ended June 30, 2022 and June 30, 2021

Comparison of Cash Flows for the Nine months

Ended September 30, 2022 and September 30, 2021

Our total cash, cash equivalents

and restricted cash as of June 30, 2022 and 2021 was $7.5 million and $58.4 million, respectively.

and restricted cash as of September 30, 2022 and 2021 was $7.1 million and $4.9 million, respectively.

Comparison of Cash Flows

Six Months Ended

June 30, 2022

June 30, 2021

Nine months Ended

September 30,

(in thousands, except percentages)

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Effect of Exchange Rate Changes on Cash

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

Decrease in Cash, Cash Equivalents and Restricted Cash

Operating Activities

Cash used in operating activities

for the six months ended June 30, 2022 increased $8.8 million as compared to cash used during the six months ended June 30, 2021.

change in cash used in operating activities is primarily due to the increase in cash of $9.5 million used to pay down operating liabilities

as compared to the prior period, primarily due to the increase in liabilities from the acquisition of Wow.

for the nine months ended September 30, 2022 increased $6.9 million as compared to cash used during the nine months ended September 30,

2021 due to an increase in cash used of $10.5 million for operating liabilities as compared to the prior period, offset by an increase

in cash used of $3.2 million, primarily due to the increase in liabilities assumed as part of the acquisition of Wow.

Investing Activities

Cash used in investing activities

for the six months ended June 30, 2022 decreased $48.1 million as compared to cash used during the six months ended June 30, 2021.

decrease in cash used for investing was primarily due to our investments in marketable securities of $80.9 million and the cash payment

to acquire ChizComm of $7.8 million during the six months ended June 30, 2021 compared to the cash used to acquire Wow and Ameba of $41.2

million, cash paid for our equity investment in YFE of $9.5 million, offset by proceeds from marketable securities of $10.0 million during

the six months ended June 30, 2022.

for the nine months ended September 30, 2022 decreased $98.2 million as compared to cash used during the nine months ended September 30,

The decrease in cash used for investing was primarily due to a decrease of investment activity in our marketable securities of $141.8

million during the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021.

The decrease is partially

offset by the increase of $41.2 million in our investment activity related to the acquisitions of Wow and Ameba and investments in YFE,

as compared to the acquisition of Beacon in the prior year period.

Financing Activities

Cash provided by financing

activities for the six months ended June 30, 2022 increased by $0.5 million as compared to cash provided during the six months ended June

The primary source of cash during the six months ended June 30, 2022 was the net proceeds borrowed from our margin loan of $54.5

million and $2.5 million from production loans, compared to the primary source of cash during the six months ended June 30, 2021 of $57.3

million from the warrant exercise during January 2021.

activities for the nine months ended September 30, 2022 increased by $1.5 million as compared to cash provided during the nine months

ended September 30, 2021.

The primary source of cash during the nine months ended September 30, 2022 was the net proceeds borrowed from

our margin loan of $55.4 million and $3.5 million from production loans, compared to the primary source of cash during the nine months

ended September 30, 2021 of $57.3 million from the warrant exercise during January 2021.

Material Cash Requirements

We have entered into arrangements that contractually obligate us to

make payments that will affect our liquidity and cash flows in future periods.

Our material cash requirements from known contractual and

other obligations primarily relate to our debt and lease obligations and our employment and consulting contracts.

The aggregate amount

of future minimum purchase obligations under these agreements over the period of next five years is approximately $108.5 million as of

June 30, 2022, of which about $80.0 million, if the margin loan and interim production facilities are called, could be owed within one

For additional information on our contractual commitments and timing of future payments see Note 21 to the condensed consolidated

financial statements included in this Report on Form 10-Q.

We have entered into arrangements

that contractually obligate us to make payments that will affect our liquidity and cash flows in future periods.

Our material cash requirements

from known contractual and other obligations primarily relate to our debt and lease obligations and our employment and consulting contracts.

The aggregate amount of future minimum purchase obligations under these agreements over the period of next five years is approximately

$101.6 million as of September 30, 2022, of which about $64.5 million, could be owed within one year, if the margin loan and interim production

facilities are called.

For additional information on our contractual commitments and timing of future payments see Note 21 to the condensed

consolidated financial statements included in this Report on Form 10-Q.

We plan to utilize our liquidity

(as described above) to fund our material cash requirements.

As of June 30, 2022, we have

$5.8 million in commitments for capital expenditures, related to equipment leases.

As of September 30, 2022,

we have $3.1 million in commitments for capital expenditures, related to equipment leases.

Critical Accounting Policies

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What changed 10-Q

Item 2. Management’s Discussion and Analysis