Genius Brands International, Inc. (“Genius Brands” or the
“Company”) (NASDAQ:GNUS), the global brand management company that
creates and licenses multimedia entertainment content for children,
today filed its 10-Q for the quarterly period ended June 30, 2020.
The filing is available at:
https://ir.gnusbrands.com/all-sec-filings.
Genius Brands Chairman & CEO Andy
Heyward said:
“The Second Quarter of 2020 brought with it many
exciting and pivotal developments at Genius Brands.
We launched Kartoon Channel! and announced with
it the appointment of two of Hollywood’s most accomplished and
proven executives, Margaret Loesch as Executive Chairman and David
Neuman as Chief Content Officer. The channel launched June 15th
with notable shows like Angry Birds, Baby Einstein, Minecraft
gaming content, shorts for both Rainbow Rangers and Llama Llama,
and more. We achieved 100% broadcast sell-through of Rainbow
Rangers across the Western Hemisphere and announced that toys for
the property, by Mattel’s Fisher-Price, would debut at Walmart in
August. We shared that Governor Arnold Schwarzenegger, in addition
to being a key member of the production team for Stan Lee’s
Superhero Kindergarten, elected to take his advance against
royalties in the property as an investment in Genius
Brands.
Additionally, we shared that iconic film
director John Landis signed on to the production team for Superhero
Kindergarten, which now includes, among other talents, Fabien
Nicieza (the co-creator of Deadpool) and Steve Banks (the head
writer of SpongeBob SquarePants). We achieved all of this in just
three months, and all of it during a pandemic and associated global
recession, a time when many companies in the entertainment business
have been forced to shutter, lay off or furlough their
teams.
Finally, and importantly, we raised equity to
shore up our balance sheet and we retired our senior secured
convertible debt. The company is now free of corporate debt, and
with plenty of cash to execute its business plan for the
foreseeable future.”
Robert Denton, Chief Financial Officer,
added:
“Genius Brands’ financial position is stronger than
ever. We have cash on hand, no corporate debt, and we are
in a position to be opportunistic. It’s no secret that we are
determined to grow Genius Brands into the dominant force in
children’s entertainment, and we have both the human and creative
capital with which to do so.
Genius Brands has an impressive list of corporate initiatives,
some of which are noted here, others that have been announced over
the past few months, and more still that will made public in the
weeks and months ahead. This is particularly meaningful at a time
when the global pandemic has forced many companies into survival
mode and others still into bankruptcy.
Regarding the 10-Q we filed today, I would like
to clarify some potentially confusing elements related to the
reduction of the conversion price/exercise price of our 2020
Convertible Notes and the associated Warrants. To be clear, the
re-valuation of these options and warrants, which is partially a
result of fluctuations in our stock price, is a non-cash
event. The revaluation adjustments appear as expense
charges in our statements of operations for the three and six
months ended June 30, 2020. We must emphasize that these line
items, which show charges amounting to approximately $383 million
for the second quarter, do not reflect a cash
loss.
Allowing our investors to convert their notes
was important to improving our balance sheet. In fact, in doing
this we added approximately $4 million of new and additional cash
to our balance sheet. We now have over $52 million in
cash. We also eliminated all corporate
debt. The $13.75 million of our senior convertible
notes were converted into shares of common stock.”
Andy Heyward continued:
“As I have frequently communicated to our
shareholders, the steps we have taken over the past few months to
shore up our capital position are being done with one goal in mind:
providing Genius Brands with the continued financial
flexibility to take advantage of the many value-creating
opportunities in the sector.
We have already seen how the ability to take
advantage of opportunities when they present themselves is helping
us grow the company and position us for even greater success. For
example, last month we announced an agreement for Stan Lee Universe
to be distributed by Archie Comic Publications, the #1 most widely
distributed comic book company in the United States. Concurrently,
we announced that Oscar winning producer (Batman), long-time Stan
Lee friend and collaborator, Michael Uslan, has been appointed as
Creative Director of the Stan Lee Universe brand, for comic books,
motion pictures, and television. With Stan Lee Universe, we
are building the next MARVEL, based on the creations of the man who
built the original Marvel – Stan Lee.
In other exciting recent news, Kartoon
Channel!’s reach now extends to over 100M U.S. television
households and over 200M mobile devices, and we launched
our first iOS app to rave reviews and 5-star ratings, and we have
new apps launching on Android, Roku and Amazon Fire, streaming on
the web and more to follow, with the same high-quality user
experience as on iOS. The successful iOS user interface is being
rolled out across all our platforms and went live this week at
www.KartoonChannel.com.
Further expanding our foundation for value
creation is also the reason why we are asking our shareholders to
support proposals to amend our Articles of Incorporation to
increase the authorized number of shares of Genius Brands
International, Inc. common stock from 233 million to 400 million
shares, and to adopt our 2020 Incentive Plan. These proposals will
be voted on at a special meeting of stockholders that will be
held via live webcast at 10:00 a.m. Pacific Daylight Time, on
Thursday, August 27, 2020.
The point of these proposals is to allow the
company take advantage of unusual current opportunities to acquire
exciting assets in the entertainment space – assets that will be
accretive to the company. Meanwhile, the Incentive
Plan, will further allow us to attract, motivate, and retain
individuals who are the best in the business and who are driving
our growth strategy to create value.
I strongly believe in the future of Genius and,
as one of the largest shareholders in the company, my interests are
completely aligned with those of all holders of our common stock.
The team at Genius, led by myself, is fully dedicated to creating
value for our shareholders.”
About Genius Brands International Genius Brands
International, Inc. (Nasdaq: GNUS) is a leading global kids media
company developing, producing, marketing and licensing branded
children’s entertainment properties and consumer products for media
and retail distribution. The Company’s award-winning ‘content with
a purpose’ portfolio includes the upcoming Stan Lee’s
Superhero Kindergarten, starring Arnold Schwarzenegger and in
partnership with Alibaba; Rainbow Rangers for Nick
Jr.; Llama Llama, starring Jennifer Garner, for Netflix;
award-winning toddler brand Baby Genius; adventure comedy STEM
series Thomas Edison's Secret Lab; and entrepreneurship series
Warren Buffett's Secret Millionaires Club. Through licensing
agreements with leading partners, characters from Genius Brands’ IP
also appear on a wide range of consumer products for the worldwide
retail marketplace. The Company’s new Kartoon Channel! is available
in over 100 million U.S. television households via a broad range of
distribution platforms, including Comcast, Cox, DISH, Amazon Prime,
Sling TV, Apple TV, Roku, Amazon Fire and more. For additional
information, please visit www.gnusbrands.com.
Forward Looking Statements: Certain statements
in this press release constitute "forward-looking statements"
within the meaning of the federal securities laws. Words such as
"may," "might," "will," "should," "believe," "expect,"
"anticipate," "estimate," "continue," "predict," "forecast,"
"project," "plan," "intend" or similar expressions, or statements
regarding intent, belief, or current expectations, are
forward-looking statements. While the Company believes these
forward-looking statements are reasonable, undue reliance should
not be placed on any such forward-looking statements, which are
based on information available to us on the date of this release.
These forward looking statements are based upon current estimates
and assumptions and are subject to various risks and uncertainties,
including without limitation, our ability to generate revenue or
achieve profitability; our ability to obtain additional financing
on acceptable terms, if at all; our ability to repay our
outstanding debt; the potential issuance of a significant number of
shares to our convertible note holders which will dilute our equity
holders; fluctuations in the results of our operations from period
to period; general economic and financial conditions; our ability
to anticipate changes in popular culture, media and movies, fashion
and technology; competitive pressure from other distributors of
content and within the retail market; our reliance on and
relationships with third-party production and animation studios;
our ability to market and advertise our products; our reliance on
third-parties to promote our products; our ability to keep pace
with technological advances; our ability to protect our
intellectual property and those other risk factors set forth in the
“Risk Factors” section of the Company’s most recent Annual Report
on Form 10-K and in the Company's subsequent filings with the
Securities and Exchange Commission (the "SEC"). Thus, actual
results could be materially different. The Company expressly
disclaims any obligation to update or alter statements whether as a
result of new information, future events or otherwise, except as
required by law.
MEDIA CONTACT:pr@gnusbrands.com
INVESTOR RELATIONS
CONTACT:
ir@gnusbrands.com
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