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Genius Brands Update from CEO and CFO

January 6, 2022

Genius Brands Update
from CEO and CFO

“Someone is sitting in the shade today, because someone planted a tree
a long time ago.”
-Warren Buffett,
Genius Brands animated series,
“Secret Millionaires Club”

 
Dear Shareholders:
 
GENIUS BRANDS TODAY IS ON A SOLID TRAJECTORY OF VALUE CREATION.  THAT FACT CANNOT BE STATED STRONGLY ENOUGH.
 
As we start off the new year, I want to share with you some specific data points illustrating the value creation of this last year and, with Genius Brands’ newly appointed Chief Financial Officer, Zrinka Dekic, take a look into how those achievements will impact your company in the coming year and beyond.
 

 
WOW! UNLIMITED MEDIA INC.
(TSXV:WOW)
(October 27, 2021)
One of the most important events of this last year was GENIUS BRANDS’ announcement of the acquisition of Canada’s WOW! UNLIMITED MEDIA INC. (WOW!), a company listed on the TSX Venture Exchange (TSXV:WOW), and its associated companies, MAINFRAME ANIMATION and FREDERATOR CHANNEL. Last Thursday, the shareholders and noteholders of WOW! overwhelmingly approved the acquisition by Genius Brands, and we are now moving toward closure.
 
WOW! is one of the largest subcontract producers of animation in the world, working for Netflix, Hulu, Universal, Sony, Mattel, and Spin Master, among many others.  Frederator Channel has over 2,500 content providers and is one of the largest animation focused, Multi-Channel Networks (MCNs) in the world, with over 1 billion views on YouTube per month.  WOW’s end of year numbers have not been released yet, however, the already announced 3rd quarter numbers gave us a peek into a banner year, with over CDN $20 million of revenue and CDN $2.4 million of EBITDA for the third quarter of 2021 alone. 
 
WOW! had its biggest year ever in 2021 and already contracted bookings for 2022 are expected to exceed that, as well as significant bookings already in place for 2023. This single acquisition alone, grows Genius Brands’ pro forma last 12 months revenues by over 1,100%.
 
Equally significant, alongside the revenues, are the cost savings, the synergies, the incremental consumer product licensing from the WOW! brands, and the acceleration to Kartoon Channel! growth both domestically and worldwide.
 

 
YFE / YOUR FAMILY ENTERTAINMENT (FRA:RTV)
(December 2, 2021)
 
No less important than the WOW! acquisition is the announcement of taking a significant stake in Your Family Entertainment (YFE), a company listed on the Frankfurt Stock Exchange (FRA:RTV), which will be followed by a mandatory tender offer to acquire the remaining YFE shares.  YFE has over 3,500 animated episodes in its catalogue, one of the largest in the world, with strategic evergreen titles and brilliant visionary management.  YFE also runs a global network of cable, satellite, and digital streaming children’s channels across Europe, Asia, Latin America, the Middle East and Africa.  Genius Brands will take over these channels, which will now be branded Kartoon Channel! Worldwide in their local territories, as Kartoon Channel! becomes a worldwide distribution platform.
Across key metrics of value creation, Genius Brands is showing growth and momentum:
 
  • Revenues
  • Kartoon Channel Viewership
  • Kartoon Channel Distribution
  • Animation Episodes in catalogue
  • Key Animations Brands
  • Key Partnerships
  • Key Manpower
 
Our animation brands are being delivered and positioned to be on the air and into the marketplace as consumer products.
 
At the same time, the company finished the year with a significant cash position and virtually zero debt.  Our balance sheet remains strong, and we are positioned for opportunity.
 
As Genius Brands International grows to soon having over 650 employees in North America, we will continue to focus on PROVEN MANPOWER and recruit key executives, who have demonstrated records of value creation and success, joining us from companies such as Disney, Marvel, DreamWorks and Hasbro.  The caliber of the management team is the means by which the company will create value for our shareholders.
 

 
ZRINKA DEKIC
Chief Financial Officer
(December 13, 2021)
Zrinka Dekic joined Genius Brands as CFO at the end of 2021.  We expect her leadership in the C-suite as Chief Financial Officer will be nothing less than transformational.  Zrinka’s pedigree with nearly 20 years of experience in finance, media and entertainment (Wharton MBA, Vice President at Goldman Sachs and positions at the Walt Disney Company in strategic planning and business development) has her prepared to lead the financial growth of our company as we now accelerate. 
 
 

PAUL ROBINSON
Managing Director Kartoon Channel! Worldwide
(December 2, 2021)
In 2021, concurrent with the announcement of YFE, Genius Brands added Paul Robinson as Managing Director of Kartoon Channel! Worldwide, with the responsibility to build out Kartoon Channel! internationally, outside the U.S. flagship service. Paul previously worked at the Walt Disney Company as Managing Director of Walt Disney Television U.K. and Senior Vice President Disney Channel Worldwide, where he was responsible for global programming and production strategy. He also founded the Toon Disney and Playhouse Disney Channels internationally.  Paul is a proven executive whose impact on the growth of Genius Brands and Kartoon Channel! Worldwide is expected to be profound.

 
 
KERRY PHELAN
Executive Vice President & General Manager of Global Franchise Management
(July 6, 2021)
With Kerry Phelan joining Genius Brands in 2021 as Executive Vice President & General Manager of Global Franchise Management, we have one of the smartest and most accomplished leaders in the field. The creation of wealth in children’s media comes from taking the characters and stories and translating them into consumer products that sell and earn royalty income. These products can include toys, video games, publishing, apparel, sleepwear, room décor, food products, school supplies, party goods, and the hundreds and hundreds of licensed products for kids.
 
Kerry is a proven value creator.  She did it for LEGO where she ran the STAR WARS business for them. She did it for Lucasfilm where she ran the entire Star Wars licensing program. She did it for PIXAR where she ran the licensing business, reporting directly to Steve Jobs, and she did it at DreamWorks Animation where she ran their licensing program.  I can say confidently that Kerry is one of the most accomplished individuals in the entire consumer products licensing industry having repeatedly launched billion-dollar licensing programs based on globally renowned character brands.
 
Zrinka, Paul and Kerry join our management team ‘programmed to win.’ They are proven leaders who have created value for their shareholders again and again and again. They join MARGARET LOESCH (Kartoon Channel! Executive Chairman), DAVID NEUMAN (Chief Content Officer) and MIKE JAFFA (Chief Operating Officer), all coming from senior roles at Marvel Entertainment, The Jim Henson Company, The Walt Disney Company, DreamWorks TV Animation, and Hasbro Productions.
 

 
KARTOON CHANNEL
(Launched June 15, 2020)
Since its launch, our flagship distribution platform, Kartoon Channel!, has continued to grow, now being carried on virtually every platform, including Apple iOS, Apple TV, Android TV, Android Mobile, Amazon Prime, Amazon Fire, Roku, Tubi, YouTube, Comcast, Cox, Samsung Smart TV, LG Smart TV, and more.
 
Month in and month out, Kartoon Channel! user rankings have placed us among the top ranked kids’ content apps in both the Apple and Google Play app stores, often appearing #1 ahead of Disney+, Netflix, YouTube Kids, Nickelodeon, and Cartoon Network.
Source: iTunes App Store November 2021
Source: Google Play App Store November 2021
Recent milestones have included:
 
KC! EN ESPANOL (Oct 7, 2021) - Kartoon Channel! launched a Spanish- language programming service.
KARTOON CHANNEL! ON PLUTO TV (Oct 5, 2021) - Kartoon Channel! became available on Pluto.
KARTOON CHANNEL! ON JETBLUE (Dec 21, 2021) - Kartoon Channel! launched on JetBlue as part of the airline’s inflight entertainment package.
Kartoon Channel! now carries some of the biggest hits in kids TV, including Peppa Pig, PJ Masks, My Little Pony, Pac-Man, Angry Birds, Roblox and Minecraft-based programs, Llama Llama, Scooby-Doo movies, and our first live-action kids game series KC! Pop Quiz, starring teen icon Casey Simpson (launched October 12, 2021).
*KEEP YOUR EYES OPEN FOR WHAT’S COMING NEXT TO KARTOON CHANNEL!
 

 
STAN LEE UNIVERSE
I believe there is no more valuable rights package than what we acquired of Stan Lee, and our subsequent creation of the upcoming Stan Lee Universe.  The man who created Spider-Man, Iron Man, Fantastic Four, Black Panther, Guardians of the Galaxy, X-Men, Incredible Hulk, Captain America, and many others, including 14 of the top 50 box office movies of all time, as well as the #1 superhero movie of all time, Avengers Endgame, left a treasure chest of over 100 properties behind, from which we are building the next iteration of Stan Lee superheroes.

Genius Brands now controls the rights to the name, the likeness, the signature, and the consumer product licensing of Stan Lee personally, and a package of up to 7 properties a year from his post Marvel catalogue. 
 
Genius Brands brought on Stan’s close friend and collaborator, MICHAEL USLAN, the Executive Producer of the Batman film franchise to build out this universe for us.  To do this, we have engaged some of the most talented artists and writers in comic book history, including the greatest fantasy, science fiction, and super-hero painter in the industry, the legendary GREG HILDEBRANDT of “The Brothers Hildebrandt” fame noted for the iconic Star Wars poster, the iconic Lord of the Rings poster, and the renowned Marvel Masterpieces card series.
 
Stan Lee Universe is expected to rollout in 2022 concurrent with the celebration of his 100th birthday on Dec. 28.
 
STAN LEE’S SUPERHERO KINDERGARTEN STARRING ARNOLD SCHWARZENEGGER
(launched April 19, 2021)
Stan Lee’s Superhero Kindergarten, starring Arnold Schwarzenegger, premiered to over 2 million views its first weekend, over 4 million views on its 1st two episodes, and is already up to over 75 million views.  Arnold is a partner in the series, and in Genius Brands. The series is now being prepared to launch in key territories through YFE across the distribution of the upcoming Kartoon Channel! Worldwide, and in China next month through our deal with the Alibaba Group.



SHAQ’S GARAGE
(in production for delivery in 2022)
Shaq’s Garage, starring the voices of Shaquille O’Neal AND Rob Gronkowski leading a team of extraordinary comedic and heartfelt adventures, has been greenlit and is in production to premiere in Q3 2022.  Standby for exciting news!  This is going to be one of the most innovative children’s series ever produced, and the show is well along in production. 
 

 
RAINBOW RANGERS
(Season 3 in production)
Season 3 of Rainbow Rangers has been greenlit and is also well along in production, with a new toy partner, NEVER WRONG TOYS. The successful series has been sought by broadcasters worldwide and is running now not only on Kartoon Channel!, but also on Netflix, HBO Max, Paramount+, NICK LatAm, and broadcasters around the world.
 
This last year has been a busy one.  Seeds continue to be planted to make Genius Brands a leading provider of quality children’s entertainment in the world.  But more than that, we plan to do so in a responsible way with program content and channels that parents will always know is safe and with stories, language and images that are always child appropriate. That is the core of our mission.
 
We at Genius Brands intend to stick to our model and will remain focused on creating content, which is superb, safe children’s entertainment, and on building out cutting-edge distribution systems, which we believe will flourish for years to come.  We have exciting initiatives coming forth!
 
What does all this mean to our patient investors and shareholders?
 
Perhaps that is best answered by our new CFO, Zrinka Dekic, in her own words:
 

Genius Brands has accomplished a lot in the past year: announcing two significant M&A deals, building out a rich production slate and strengthening our IP and distribution capabilities. We ended the year with a solid cash position and are poised for growth both organically and inorganically. We believe that the stock price is undervalued at these levels and we anticipate that share repurchases will be integrated into our capital allocation strategy going forward. We are committed to driving efficiencies and increasing shareholder value. Moreover, we are intent on building out the strongest management and creative team in the animation and kids’ content space. We have many exciting initiatives in the works and we thank you for your continued support in 2022 and beyond.
 

Sincerely,

Andy Heyward
Chairman and CEO
Genius Brands International

Zrinka Dekic
Chief Financial Officer
Genius Brands International
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; the potential issuance of a significant number of shares, 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.
Copyright © 2022 Genius Brands, All rights reserved.

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