Genius Brands International, Inc. “Genius Brands” (NASDAQ: GNUS),
the global brand management company that creates and licenses
multimedia entertainment content for children, released a letter to
shareholders from Chairman & CEO Andy Heyward. The complete
letter follows and to view in browser, please visit Genius Brands
International.Dear Genius Brands’ Shareholders:
At a time when we are all rightfully focused on
the health of our families and our communities, I am happy to share
with you that the health of Genius Brands International
(GNUS:NASDAQ) is strong. Tuesday morning we announced an
$11 million financing of Senior Secured Convertible Notes. I
was pleased to participate and help lead in this financing based on
the strong and growing numbers of our two tentpole
series, RAINBOW
RANGERS and LLAMA LLAMA, in both global
broadcast and retail. Additionally, our upcoming
series, STAN LEE’S SUPERHERO KINDERGARTEN,
which we are co-producing with the largest company in China,
Alibaba (NYSE:BABA), continues to gather steam, and we plan to
announce our U.S. broadcast partner next week on one of the most
dynamic and important platforms in the world. Meanwhile
our programming service, Genius
Brands Network, a 24-hour on-demand kid’s
animation platform carried by Comcast, Cox, Dish, Roku,
Amazon and a dozen major OTT platforms across over 100 million U.S.
TV households, is now growing rapidly, both in
gaining viewership, and exceeding internal revenue
forecasts.
I want to talk today, about why our Company is
on such a strong footing, in these very uncertain times.
- First, we have the money
that is necessary to operate our business and we
significantly enhanced our balance sheet by paying down
debt.
- Second,
our two tentpole brands (Rainbow Rangers and Llama
Llama) are now proven hits. They are
working, and that means that consumer products coming into the
marketplace and shelves this year should have tremendous
recognition and appeal to our audience of kids and moms.
- Third,
our business model is
stronger than ever. It is the same model as the Walt
Disney Company. We make animated entertainment which we
distribute worldwide for fees, and we license toys and hundreds of
consumer products based on characters from our animated programs
worldwide. Which brings me to the question I've
been increasingly asked in recent days…
“In light of the COVID-19 coronavirus,
will Genius Brands be affected like other businesses?”The
answer is simple. No. The business of animated cartoons has proven
over and over again, that its appeal is timeless. Like the Walt
Disney Company, and as Bob Iger said at the Disney shareholder
meeting last Wednesday, “What we create has never been more
important or necessary.” Animated entertainment has shown to
be extremely insulated to factors that other asset
classes can fall prey to: the price of oil, the price of
gold, Brexit, impeachment, wars, elections, recessions,
and today, even the COVID-19 coronavirus. We are a tiny
company, but our model is similar to the Walt Disney
Company. However, unlike some entertainment
conglomerates, we don’t have cruise lines or theme parks, or
live Broadway shows to be shut down. We make cartoons, and we
sell licensed products from those cartoons. Kids watch
cartoons through all weather and events. If baseball practice or
soccer games or Girl Scout meetings are canceled, and even if
school is closed down, kids will still watch cartoons, maybe
even more cartoons. Our stories are uplifting, they
all have positive messages and enriched content, from which kids
learn, thus making our cartoons parent friendly as well.In fact, we
have witnessed an increase in viewership, which equates to
more revenue, to more recognition and appeal of the
characters. That ultimately equates to product sales at
retail, and that is how our business makes money.Cartoons endure.
We announced Tuesday that Rainbow Rangers is now up to 26
broadcasts a week on Nick Jr.!!! We intend to share
a significant number of releases regarding Rainbow
Rangers in the coming days, but let me say in brief, that it
is now being broadcast, in the entire western hemisphere, on the
best broadcasters there are. Not just Nick Jr. in the U.S. and
Nickelodeon Latin America, but also in Mexico on top kid’s
broadcaster Televisa, and on top kids broadcaster, Treehouse, in
Canada. From, Italy, where we are on the top kid’s
broadcaster, Cartoonito, to NOGA, the top kid’s
broadcaster in Israel, we see the same story. Rainbow Rangers is
gaining traction. We are closing a broadcast deal with
Australia and expect to announce next week a major deal with the
largest and most important broadcaster in China, where Rainbow
Rangers will become available to be seen by an audience of 1.2
billion. Rainbow Rangers continues to grow, and we have
increasing confidence that it will meet our high expectations, as
we have spoken to right from the start.Over the coming days, we
plan to roll out more and more news about what has been going on
with both Rainbow Rangers and Llama Llama, as well
as what is happening with our upcoming new tentpole series, Stan
Lee’s Superhero Kindergarten. We have a MAJOR retail event
with Llama Llama, that we plan to announce next week and
will only bring more awareness to that brand which is now strong
and growing.While the major studios, who churn out production for
the networks and broadcasters worldwide, have called all live
action production to a halt, our business continues to
thrive and grow steadily. More content. more viewers. more
consumer product licensees. We don’t have actors who have to
go home because they can’t be on a set full of people. We don’t
have a film crew, which is gathered together. Our
artists work at their
computers. And while the rest
of Hollywood is grinding to a stop, we are busy creating new
products for the insatiable audience that has grown out of the new
technologies and streaming services…all hungry for new content.To
that point, just in the last six months we have witnessed not just
the success of Netflix and Hulu, but new services popping up it
seems almost daily.
- HBO Max
- Disney+
- Peacock
- CBS All Access
The rush of new streaming broadcasters
we are seeing here in the U.S., is being mimicked all around
the world now.What they share in common is that they all
need product, and children’s animated content is a staple
of virtually every broadcaster. What
we do at Genius Brands is supply them that content, and
our global sales team is busy signing deals. We now
have built a rich and growing catalogue of first
class animated cartoons, and we also have a robust pipeline with
powerful brands yet unannounced, but which we are confident will be
very much in demand.We have had a long road to get here. We have
had a lot of bumps and challenges.
But we are finally at the ‘door,’ and with
this week’s announcement of financing, the road has become a
lot clearer. Our earliest products now are in
Target, Walmart and Amazon, and we have just barely begun to arrive
at U.S. retail, with international to
follow. Other than retailers such as Target,
Walmart, and Amazon, our commercial partners include Mattel Toys,
Nickelodeon, Netflix, Amazon Prime. They also include
powerful international partners like Alibaba, Televisa,
Treehouse, and China’s CCTV. As I have often stated,
these companies ‘play to win.’ We are selling our shows literally
around the world to the most important and established
broadcasters, and we expect international retail to follow and
mimic the U.S.
I want to now say a word
about Walmart
(NYSE:WMT). Maintaining a relationship
with Walmart is fundamental to maximizing revenue and
profitability. Because the cartoons we broadcast, have
products which we license for retail, and with half of all
retail in America occurring at Walmart, we cannot state how
important this relationship is. Some of our first
products are now in Walmart, however, we expect to have a robust
assortment of products and categories of Rainbow Rangers
products at retail in the coming 4th quarter. As
we become authorized to discuss, we will share this
further with our shareholders.Having said the above, I am very
privileged to have been asked
to EMCEE the upcoming HELEN R. WALTON
CHILDREN’S ENRICHMENT CENTER
GALA. It is an annual event held in
Bentonville, and one very near and dear to the entire Walmart
family. The event originally planned for the first week of
April, has for obvious reasons now been postponed, and has
been rescheduled to take place the first week of October. I
am proud to be a part of this and of Genius Brands’ connection to
Walmart.I share this to underscore, that Genius Brands has been
busy working on nourishing the entire food chain from which our
company will flourish.I hesitate to leave you on a cliff hanger,
but we have a number of particularly important news items
converging throughout the next week, and they will speak on their
own behalf. I am extremely excited as we will share them with you.I
had the privilege to speak with Warren Buffett yesterday morning,
who some of you may recall plays himself, in our series,
Warren Buffett’s Secret Millionaires Club, which
teaches kids lessons about money and investing. I was
reminded of one of Warren’s important quotes. He said that
“successful investing takes time, discipline, and patience. No
matter, how great the talent, or effort, some things just take
time.” In that spirit, I want to thank all of our shareholder
and investors for their continued support and patience, some of
whom have been with us since we began the company at the beginning
of 2014. We look forward to driving significant shareholder
value in the months and years ahead. Most importantly, I wish
everyone to stay safe and remain healthy.
Sincerely,
Andy Heyward Chairman & CEO Genius Brands
International, Inc.
Forward Looking Statements: Certain statements
in this notice 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 those set forth in the Company's filings with the
Securities and Exchange Commission (the "SEC"), not limited to Risk
Factors relating to its patent business contained therein. 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.
Investor Relations Contact:
PORTER LEVAY & ROSE7 Pennsylvania Plaza,
Suite 810New York, NY
10001T: 212-564-4700ir@gnusbrands.com
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/a209deb6-9244-4222-a3eb-70bb6eb9b34f
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