Genius Brands International, Inc. Announces Third Quarter 2017 Financial Results and Business Update

Kid Genius Cartoons Plus! Channel Now Available to 80 MM Amazon Prime Subscribers;

Pre-Production Continues on Rainbow Rangers; Post-Production Continues on Netflix Original Llama Llama

BEVERLY HILLS, Calif., Nov. 15, 2017 (GLOBE NEWSWIRE) — Genius Brands International, Inc. (NASDAQ:GNUS) (“Genius” or the “Company”) announced today its financial results for the three and nine months ended September 30, 2017:

Business Highlights:

  • Deferred revenue continues to grow quarter over quarter and totaled $5.1 million as of September 30, 2017, representing a 63% increase over the period ended December 31, 2016.
  • For the three months ended September 30, 2017, revenues increased 113% over the prior period, while remaining constant for the nine months ended September 30, 2017 compared to the prior period.
  • For the three months ended September 30, 2017, operating expenses decreased by 14% over the prior period.  For the nine months ended September 30, 2017, operating expenses decreased by 17% over the prior period.

Management Commentary:

Andy Heyward, Chairman and CEO of Genius Brands International, Inc. commented, “Today, we released our financial results for the three and nine-month periods ended September 30, 2017. The third quarter of 2017 was a positive quarter for the Company from both an operational and financial perspective.

As we have discussed in previous quarters, the Company has two pillars of value creation – the brands we create, manage and monetize, and the Kid Genius Cartoon Channel. On September 28, 2017, we launched the Kid Genius Cartoons Plus! channel on Amazon Prime. This subscription streaming service is available to Amazon’s 80 million Prime members for a monthly subscription fee of $3.99 that we share with Amazon. Kid Genius Cartoons Plus! features the Company’s brands, as well as content we have licensed from third parties, such as Inspector Gadget, Liberty’s Kids, Dino Squad, Eddie is a Yeti, Carl Squared, La Golda and Heads Up. In addition, the channel will also feature third-party preschool series, such as The Day Henry Met, So Smart!, Baby Prodigy, and Happy Kids. We believe that the Kid Genius Cartoons Plus! channel will enable us to grow awareness of our brands to consumers, as well as expand our revenue streams to include a subscription-based model.

On the brand side, we’ve had a positive quarter for many of our already-released brands as well as those currently in production. Thomas Edison’s Secret Lab and SpacePOP are both continuing to progress, as reflected in the revenue increases in both Television & Home Entertainment and Licensing & Royalties in the third quarter of 2017 compared to the prior period.

Investment in Llama Llama increased during the quarter as we continued post-production during the quarter, while investment in Rainbow Rangers also increased, as pre-production activities, such as character design and scripting, began during the quarter. Both series have been licensed, with Llama Llama premiering on Netflix and Rainbow Rangers premiering on Nick Jr. While both series are still in production, we have been generating sales activities around both brands in advance of their completion. We continue to sign new agreements with consumer products licensees. During the quarter, we secured consumer products licensees in categories that include animatronic plush, cosmetics, backpacks and luggage, clothing, and motorized toys. As we have previously mentioned, while we cannot disclose the specific deal terms, these arrangements provide us minimum guaranteed royalties (and many times advances against that guaranteed minimum royalties) against future royalties. Average industry royalty rates are ten percent, providing the company with a share of either the retail or wholesale price of the products. The collection of these minimum guarantees and advances are reflected in the growing deferred revenue balances.

In addition to these activities within the third quarter, there were a few additional events which occurred subsequent to the end of the quarter that are noteworthy.  Our sales teams were in Europe at three different markets including Brand Licensing Europe, the consumer products market in London, and MIPJunior and MIPCOM, the two content distribution/acquisition markets in Cannes. Feedback from potential licensees and broadcasters has been strong across all our brands, in particular for Rainbow Rangers, as well as for our Kid Genius Cartoon Channel. We expect to announce deals coming out of those markets in the next several weeks and months.

Lastly, on October 3, 2017, the Company sold, in a registered direct offering, an aggregate of 1,647,691 shares of Common Stock at an offering price of $3.90 per share and, in a concurrent private placement, warrants to purchase an aggregate of 1,647,691 shares of Common Stock for gross proceeds of approximately $6,425,995 before deducting the placement agent fee and related offering expenses which we intend to use for general corporate purposes and working capital.”

Conference Call:

Genius Brands International Chairman & CEO Andy Heyward will host a conference call to discuss the Company’s third quarter 2017 financial results and business update on Wednesday, November 15, 2017 at 4:00 PM ET / 1:00 PM PT.

Conference Call Information:
When: Wednesday, November 15 at 4:00 PM ET/1:00 PM PT.
Dial-in: U.S.: 877-407-8291 and International: 201-689-8345

Please join the conference call at least 15 minutes early to register. A digital replay will be available by telephone approximately two hours after the completion of the call until December 30, 2017 and may be accessed by dialing 877-660-6853 from the U.S. or 201-612-7415 for international callers, and using the Conference ID# 13673522.

About Genius Brands International, Inc.

Headquartered in Beverly Hills, California, Genius Brands International, Inc. (GNUS) is a leading global media company developing, producing, marketing and licensing branded children’s entertainment properties and consumer products for media distribution and retail channels. Led by award-winning creators and producers, Genius Brands distributes its content worldwide in all formats, as well as a broad range of consumer products based on its characters. In the children’s media sector, its portfolio of “content with a purpose” includes new preschool properties Rainbow Rangers for Nick Jr. and Llama Llama for Netflix; tween music-driven, YouTube brand SpacePOP; award-winning toddler brand Baby Genius; adventure comedy series Thomas Edison’s Secret Lab, and Warren Buffett’s Secret Millionaires Club, created with and starring iconic investor Warren Buffett. The Company is also co-producing an all-new adult animated series, Stan Lee’s Cosmic Crusaders, with Stan Lee’s Pow! Entertainment and The Hollywood Reporter. Genius Brands’ Kid Genius Cartoon Channel is currently available in approximately 60 million households via Comcast and OTT platforms and Kid Genius Cartoons Plus!, which is now available to Amazon Prime subscribers. For additional information please visit www.gnusbrands.com.

GENIUS BRANDS INTERNATIONAL, INC. INVESTOR RELATIONS:

Michael Porter       
PLR Investor Relations
212.564.7000
mike@plrinvest.com

FORWARD LOOKING STATEMENTS
This press release may contain forward-looking statements, including information about management’s view of Genius Brands’ future expectations, plans and prospects, within the safe harbor provisions under The Private Securities Litigation Reform Act of 1995 (the “Act”). In particular, when used in the preceding discussion, the words “believes,” “hopes,” “expects,” “intends,” “plans,” “anticipates,” or “may,” and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act, and are subject to the safe harbor created by the Act. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause the results of Genius Brands to be materially different than those expressed or implied in such statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are described in the sections titled “Risk Factors” in the Company’s filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, as well as reports on Form 8-K, including, but not limited to the following: the loss of key personnel; lawsuits against the Company in the ordinary course of business that may divert management’s attentions from the operations of the Company and the Company’s ability to raise additional capital to fund its operations and business on favorable terms. Other unknown or unpredictable factors also could have material adverse effects on Genius Brands’ future results. The forward-looking statements included in this press release are made only as of the date hereof. Genius Brands cannot guarantee future results, levels of activity, performance or achievements. Accordingly, readers should not place undue reliance on these forward-looking statements. Finally, Genius Brands undertakes no obligation to update these statements after the date of this release, except as required by law.

Tables to follow
The following tables should be read in conjunction with the footnotes accompanying the consolidated financial statements contained within the Form 10Q for the quarterly period ended September 30, 2017.

 
Genius Brands International, Inc.
 Consolidated Balance Sheets
 As of September 30, 2017 and December 31, 2016
             
ASSETS   September 30, 2017   December 31, 2016
    (Unaudited)    
Current Assets:            
Cash and Cash Equivalents   $ 2,247,402     $ 1,887,921  
Restricted Cash     1,000,000       1,000,000  
Accounts Receivable, net     130,179       122,910  
Other Receivables     160,545       –   
Inventory, net     18,502       6,562  
Prepaid and Other Assets     433,272       359,395  
Total Current Assets     3,989,900       3,376,788  
             
Property and Equipment, net     86,295       90,461  
Other Receivables     96,327       –   
Film and Television Costs, net     4,232,632       2,260,964  
Intangible Assets, net     1,801,878       1,845,650  
Goodwill     10,365,805       10,365,805  
Total Assets   $ 20,572,837     $ 17,939,668  
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
Current Liabilities:            
Accounts Payable   $ 336,122     $ 648,638  
Accrued Expenses     225,178       249,482  
Deferred Revenue     489,394       410,662  
Accrued Salaries and Wages     151,150       132,827  
Disputed Trade Payable     925,000       925,000  
Service Advance       –        1,489,583  
Total Current Liabilities     2,126,844       3,856,192  
             
Long Term Liabilities:            
Deferred Revenue     4,583,455       2,695,946  
Production Facility     3,495,524       1,332,004  
Total Liabilities     10,205,823       7,884,142  
             
Commitments & Contingencies (Note 13)            
             
Stockholders’ Equity            
Preferred Stock, $0.001 par value, 10,000,000 shares authorized; 3,605 and 4,895 shares issued and outstanding, respectively     4       5  
Common Stock, $0.001 par value, 233,333,334 shares authorized; 5,938,103 and 4,010,649 shares issued and outstanding, respectively     5,939       4,011  
Common Stock to Be Issued     24       24  
Additional Paid in Capital     50,741,109       46,697,005  
Accumulated Deficit     (40,374,944 )     (36,642,761 )
Accumulated Other Comprehensive Loss     (5,118 )     (2,758 )
Total Stockholders’ Equity     10,367,014       10,055,526  
             
Total Liabilities and Stockholders’ Equity   $ 20,572,837     $ 17,939,668  
             
 The notes included in the Form 10Q are an integral part of these financial statements.
 

 
Genius Brands International, Inc.
 Consolidated Statements of Operations
 Three and Nine Months Ended September 30, 2017 and 2016
(Unaudited)
                       
   Three Months Ended    Nine Months Ended
  September 30,
2017
  September 30,
2016
  September 30,
2017
  September 30,
2016
Revenues:                      
Licensing & Royalties $ 94,430     $ 85,660     $ 365,993     $ 347,128  
Television & Home Entertainment   155,003       34,826       263,142       285,433  
Advertising Sales   7,008        –        13,027        –   
Product Sales   60       –        8,561       16,150  
Total Revenues   256,501       120,486       650,723       648,711  
                       
Operating Expenses:                      
Marketing and Sales   86,715        220,627       361,761       686,577  
Direct Operating Costs   186,226       44,220       254,243       252,688  
General and Administrative   1,150,147       1,389,360       3,772,643       4,325,703  
Total Operating Expenses   1,423,088       1,654,207       4,388,647       5,264,968  
                       
Loss from Operations   (1,166,587 )     (1,533,721 )     (3,737,924 )     (4,616,257 )
                       
Other Income (Expense):                      
Other Income   2,975       3,238        8,568        3,298  
Interest Expense   (794 )     (417 )     (2,827 )      (2,570 )
Interest Expense – Related Parties    –          –         –         (6,141 )
Gain on Distribution Contracts    –         –         –         258,103  
Net Other Income (Expense)   2,181       2,821       5,741        252,690  
                       
Loss before Income Tax Expense   (1,164,406 )     (1,530,900 )     (3,732,183 )     (4,363,567 )
                       
Income Tax Expense    –          –          –          –   
                       
Net Loss Applicable to Common Shareholders $ (1,164,406 )   $ (1,530,900 )   $ (3,732,183 )   $ (4,363,567 )
                       
Net Loss per Common Share (Basic And Diluted) $ (0.20 )   $  (0.38 )   $  (0.67 )   $ (1.12 )
                       
Weighted Average Shares Outstanding (Basic and Diluted)   5,923,838       3,988,626       5,591,492       3,889,108  
                       
                       
The notes included in the Form 10Q are an integral part of these financial statements.
 
 
Genius Brands International, Inc.
 Consolidated Statements of Cash Flows
 Nine Months Ended September 30, 2017 and 2016
(Unaudited)
             
    September 30, 2017   September 30, 2016
Cash Flows from Operating Activities:        
Net Loss   $ (3,732,183 )   $ (4,363,567 )
             
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:            
Amortization of Film and Television Costs       37,935         158,168  
Depreciation Expense       51,527         49,637  
Amortization Expense       43,771         57,763  
Imputed Interest Expense       –          6,141  
Stock Issued for Services       130,000         39,000  
Stock Compensation Expense       514,108         1,236,880  
Gain on Distribution Contracts       –          (258,103 )
Loss on Impairment of Assets       –          1,850  
             
Decrease (Increase) in Operating Assets:            
Accounts Receivable       (9,626 )       220,285  
Other Receivables     (256,872 )      
Inventory     (11,940 )       518  
Prepaid Expenses & Other Assets     (73,877 )     (253,678 )
Film and Television Costs, Net     (1,880,811 )     (754,770 )
             
Increase (Decrease) in Operating Liabilities:            
Accounts Payable     (312,516 )       66,247  
Accrued Expenses     (24,304 )     (274,042 )
Deferred Revenue       476,655         2,159,120  
Accrued Salaries and Wages       18,323         23,223  
Net Cash Used in Operating Activities     (5,029,810 )     (1,885,328 )
             
Cash Flows from Investing Activities:            
Investment in Intangible Assets       –        (5,650 )
Purchase of Fixed Assets     (47,361 )     (1,542 )
Net Cash Used in Investing Activities     (47,361 )     (7,192 )
             
Cash Flows from Financing Activities:            
Proceeds from Warrant Exchange, Net       3,401,924         –   
Proceeds from Exercise of Warrants       –          110,000  
Proceeds from Production Facility, Net       2,034,728         237,567  
Net Cash Provided by Financing Activities       5,436,652         347,567  
             
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash       359,481       (1,544,953 )
Beginning Cash, Cash Equivalents, and Restricted Cash       2,887,921         5,187,620  
Ending Cash, Cash Equivalents, and Restricted Cash   $   3,247,402     $   3,642,667  
             
Supplemental Disclosures of Cash Flow Information:            
Cash Paid for Interest   $   2,827     $   1,450  
             
Schedule of Non-Cash Financing and Investing Activities            
Issuance of Common Stock in Relation to Sony Transaction   $   1,489,583     $   –   
Issuance of Common Stock in Satisfaction of Short Term Advances   $   –      $   410,535  
             
The notes included in the Form 10Q are an integral part of these financial statements.