Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 30, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Entity Registrant Name | Genius Brands International, Inc. | ||
Entity Central Index Key | 0001355848 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2020 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth | false | ||
Entity Shell Company | false | ||
Entity Incorporation, State or Country Code | NV | ||
File Number | 000-54389 | ||
Entity Interactive Data Current | Yes | ||
Entity Public Float | $ 460,858,761 | ||
Entity Common Stock, Shares Outstanding | 300,321,658 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 | ||
ICFR Auditor Attestation Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | |
Current Assets: | |||
Cash and Cash Equivalents | $ 100,456,324 | $ 305,121 | |
Accounts Receivable, net | 1,731,373 | 4,101,679 | |
Inventory, net | 0 | 9,277 | |
Prepaid Expenses | 6,378,392 | 230,172 | |
Total Current Assets | 108,566,089 | 4,646,249 | |
Property and Equipment, net | 95,828 | 64,876 | |
Right Of Use Assets, net | 1,972,364 | 4,009,837 | |
Film and Television Costs, net | 11,828,494 | 9,906,885 | |
Lease Deposits | 43,001 | 368,001 | |
Investment in Chizcomm Entities | 300,798 | 0 | |
Investment in Stan Lee Universe, LLC | 1,000,000 | 0 | |
Intangible Assets, net | 28,694 | 51,583 | |
Goodwill | 10,365,806 | 10,365,806 | |
Total Assets | 134,201,074 | 29,413,237 | |
Current Liabilities: | |||
Accounts Payable | 785,526 | 946,450 | |
Accrued Expenses | [1] | 408,459 | 124,940 |
Participations Payable | 3,160,016 | 2,271,613 | |
Deferred Revenue | 684,129 | 664,887 | |
Secured Convertible Notes, net | 0 | 2,373,952 | |
Payroll Protection Program | 366,267 | 0 | |
Warrant Derivative Liability | 1,197,068 | 0 | |
Lease Liability | 146,099 | 598,747 | |
Due To Related Party | 2,420 | 1,084,315 | |
Accrued Salaries and Wages | 428,922 | 231,481 | |
Total Current Liabilities | 7,178,906 | 8,296,385 | |
Long Term Liabilities: | |||
Deferred Revenue | 3,748,248 | 4,444,066 | |
Lease Liability | 2,052,530 | 3,569,345 | |
Production Facility, net | 1,099,713 | 3,091,739 | |
Disputed Trade Payable | 925,000 | 925,000 | |
Total Liabilities | 15,004,397 | 20,326,535 | |
Stockholders' Equity | |||
Preferred Stock, $0.001 par value, 10,000,000 shares authorized, 0 and 1,097 shares issued and outstanding as of December 30, 2020 and December 31, 2019, respectively | 0 | 1 | |
Common Stock, $0.001 par value, 400,000,000 shares authorized 258,438,514 and 21,877,724 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively | 258,439 | 21,878 | |
Additional Paid in Capital | 588,500,680 | 75,117,076 | |
Accumulated Deficit | (469,557,324) | (66,047,135) | |
Accumulated Other Comprehensive Loss | (5,118) | (5,118) | |
Total Stockholders' Equity | 119,196,677 | 9,086,702 | |
Total Liabilities and Stockholders' Equity | $ 134,201,074 | $ 29,413,237 | |
[1] | Other Accrued Expenses include the sub lease security deposit liability on the Rodeo Drive location as well as estimates of expenses incurred but not yet recorded. |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 10,000,000 | 10,000,000 |
Preferred stock shares issued | 0 | 1,097 |
Preferred stock shares outstanding | 0 | 1,097 |
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 400,000,000 | 400,000,000 |
Common Stock, shares issued | 258,438,514 | 21,877,724 |
Common Stock, shares outstanding | 258,438,514 | 21,877,724 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues: | ||
Total Revenues | $ 2,482,127 | $ 5,907,899 |
Operating Expenses: | ||
Marketing and Sales | 817,590 | 730,200 |
Direct Operating Costs | 2,123,958 | 4,568,497 |
General and Administrative | 17,422,921 | 7,115,678 |
Total Operating Expenses | 20,364,469 | 12,414,375 |
Loss from Operations | (17,882,342) | (6,506,476) |
Other Income (Expense): | ||
Interest Income | 144,898 | 15,045 |
Loss on Extinguished Debt | 0 | (4,432,819) |
Loss on Foreign Exchange | 405 | 0 |
Loss on Lease Termination | (338,586) | 0 |
Warrant Revaluation Expense | (210,895,356) | (182,075) |
Conversion Option Revaluation Expense | (171,835,729) | 0 |
Sub-Lease Income | 316,762 | 432,285 |
Interest Expense | (1,179,857) | (807,205) |
Net Other Income (Expense) | (383,787,463) | (4,974,769) |
Loss Before Income Tax Expense | (401,669,805) | (11,481,245) |
Income Tax Expense | 0 | 0 |
Net Loss | (401,669,805) | (11,481,245) |
Beneficial Conversion Feature on Preferred Stock | 0 | (3,380,289) |
Net Loss Applicable to Common Shareholders | $ (401,669,805) | $ (14,861,534) |
Net Loss per Common Share (Basic And Diluted) | $ (2.82) | $ (1.25) |
Weighted Average Shares Outstanding (Basic and Diluted) | 142,452,393 | 11,906,578 |
Licensing and Royalties [Member] | ||
Revenues: | ||
Total Revenues | $ 761,832 | $ 864,205 |
Television and Home Entertainment [Member] | ||
Revenues: | ||
Total Revenues | 1,464,635 | 4,817,072 |
Advertising Sales [Member] | ||
Revenues: | ||
Total Revenues | 253,135 | 223,659 |
Product Sales [Member] | ||
Revenues: | ||
Total Revenues | $ 2,525 | $ 2,963 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net Loss | $ (401,669,805) | $ (11,481,245) |
Beneficial Conversion Feature on Preferred Stock | 0 | (3,380,289) |
Comprehensive Net Loss to Common Shareholders | $ (401,669,805) | $ (14,861,534) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Common Stock [Member] | Preferred Stock | Additional Paid-In Capital | Accumulated Deficit | Other Comprehensive Loss | Total |
Beginning balance, shares at Dec. 31, 2018 | 9,457,859 | 2,120 | ||||
Beginning balance, value at Dec. 31, 2018 | $ 9,458 | $ 2 | $ 63,537,915 | $ (50,702,486) | $ (5,118) | $ 12,839,771 |
Proceeds from Securities Purchase Agreement, net, shares | 2,609,052 | |||||
Proceeds from Securities Purchase Agreement, net, value | $ 2,609 | 3,018,943 | 3,021,552 | |||
Proceeds From Warrant Exchange, Net, shares | 4,592,029 | |||||
Proceeds From Warrant Exchange, Net, value | $ 4,592 | 1,340,776 | 1,345,368 | |||
Cumulative effect of adoption of ASC | (4,306) | (4,306) | ||||
Issuance of Common Stock for Services, shares | 1,117,965 | |||||
Issuance of Common Stock for Services, value | $ 1,118 | 965,981 | 967,099 | |||
Share Based Compensation | 184,259 | 184,259 | ||||
Value Of Beneficial Conversion Feature resulting from debt extinguishment | (213,700) | (213,700) | ||||
Value of Beneficial Conversion Feature, value | 3,380,289 | (3,380,289) | ||||
Value of Preferred Stock Conversion, shares issued | 4,100,819 | |||||
Value of Preferred Stock Conversion, value issued | $ 4,101 | |||||
Value of Preferred Stock Conversion, shares converted | (1,023) | |||||
Value of Preferred Stock Conversion, shares converted value | $ (1) | (4,100) | ||||
Value of Warrant Inducement | 181,884 | (181,884) | ||||
Value of Warrant Modification | 479,000 | (296,925) | 182,075 | |||
Warrants Issued As Part Of Debt Extinguishment | 2,245,829 | 2,245,829 | ||||
Net Loss | (11,481,245) | (11,481,245) | ||||
Ending balance, shares at Dec. 31, 2019 | 21,877,724 | 1,097 | ||||
Ending balance, value at Dec. 31, 2019 | $ 21,878 | $ 1 | 75,117,076 | (66,047,135) | (5,118) | 9,086,702 |
Value of Preferred Stock Conversion, shares | 5,219,048 | (1,097) | ||||
Value of Preferred Stock Conversion, value | $ 5,219 | $ (1) | (5,218) | |||
Proceeds from Securities Purchase Agreement, net, shares | 88,900,000 | |||||
Proceeds from Securities Purchase Agreement, net, value | $ 88,900 | 98,494,649 | 98,583,549 | |||
Issuance of Common Stock for Services, shares | 1,249,747 | |||||
Issuance of Common Stock for Services, value | $ 1,250 | 1,739,251 | 1,740,501 | |||
Share Based Compensation | 8,929,445 | 8,929,445 | ||||
Derivative Liability Adjustment | 171,835,729 | 171,835,729 | ||||
Note Conversion, shares | 65,476,190 | |||||
Note Conversion, value | $ 65,476 | (120,663) | (55,187) | |||
Warrant Exercise, shares | 75,715,805 | |||||
Warrant Exercise, value | $ 75,716 | 9,032,519 | (1,840,384) | 7,267,851 | ||
Warrant Revaluation: Exercised | 219,034,621 | 219,034,621 | ||||
Warrants Issued | 4,443,271 | 4,443,271 | ||||
Net Loss | (401,669,805) | (401,669,805) | ||||
Ending balance, shares at Dec. 31, 2020 | 258,438,514 | |||||
Ending balance, value at Dec. 31, 2020 | $ 258,439 | $ 588,500,680 | $ (469,557,324) | $ (5,118) | $ 119,196,677 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash Flows from Operating Activities: | ||
Net Loss | $ (401,669,805) | $ (11,481,245) |
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: | ||
Amortization of Film and Television Costs | 979,598 | 2,230,024 |
Depreciation and Amortization Expense | 379,432 | 341,072 |
Accretion of Discount on Secured Convertible Notes | (7,288) | 274,751 |
Bad Debt Expense | 43,676 | 0 |
Stock Issued for Services | 338,501 | 163,799 |
Share Based Compensation Expense | 8,929,445 | 184,259 |
Warrant Revaluation Expense | 210,895,356 | 182,075 |
Loss On Lease Termination | 338,586 | 0 |
Loss On Extinguishment of Debt | 0 | 4,432,819 |
Conversion Option Revaluation Expense | 171,835,729 | 0 |
Debt Discount in Excess of the Principal | 1,031,852 | 0 |
Decrease (Increase) in Operating Assets: | ||
Accounts Receivable, net | 2,328,760 | (1,941,383) |
Other Receivable | 0 | 20,902 |
Inventory, net | 9,277 | 6,539 |
Prepaid Expenses | (357,369) | 67,370 |
Lease Deposits | 325,000 | (43,001) |
Film and Television Costs, net | (2,901,207) | (2,757,077) |
Increase (Decrease) in Operating Liabilities: | ||
Accounts Payable | (388,814) | 250,487 |
Accrued Salaries & Wages | 197,441 | 93,656 |
Deferred Revenue and Advances | (676,576) | 183,197 |
Participations Payable | 888,403 | 1,193,056 |
Due To Related Party | (581,895) | 237,556 |
Accrued Expenses | 217,183 | 109,994 |
Net Cash Used in Operating Activities | (7,844,715) | (6,251,150) |
Cash Flows from Investing Activities: | ||
Investment in Stan Lee Universe, LLC | (1,000,000) | 0 |
Investment in Chizcom Entities | (300,798) | 0 |
Investment in Intangible Assets, net | (26,499) | 0 |
Investment in Property & Equipment | (75,893) | (26,976) |
Net Cash Used in Investing Activities | (1,403,190) | (26,976) |
Cash Flows from Financing Activities: | ||
Payments On Lease Liability | (209,161) | (148,904) |
Proceeds from Sale of Securities Purchase Agreement, net | 98,583,549 | 3,021,552 |
Proceeds From Warrant Exchange | 5,874,329 | 1,345,368 |
Proceeds from Senior Secured Convertible Notes, net | 6,098,000 | 0 |
Proceeds from Payroll Protection Program | 366,267 | 0 |
Collection Of Investor Notes | 3,600,000 | 0 |
Repayment of Secured Convertible Notes | (2,866,664) | (1,633,336) |
Note Conversion Costs | (55,186) | 0 |
Repayment of Production Facility, net | (1,992,026) | 913,541 |
Net Cash Provided by Financing Activities | 109,399,108 | 3,498,221 |
Net Increase/(Decrease) in Cash and Cash Equivalents | 100,151,203 | (2,779,905) |
Beginning Cash and Cash Equivalents | 305,121 | 3,085,026 |
Ending Cash and Cash Equivalents | 100,456,324 | 305,121 |
Supplemental Disclosures of Cash Flow Information: | ||
Cash Paid for Interest | 470,129 | 516,963 |
Schedule of non-cash financing and investing activites: | ||
Issuance of Common Stock for production services | 0 | 803,300 |
Beneficial Conversion Feature | 0 | 2,008,907 |
Capitalization of Operating Lease Right to Use Asset | 0 | 2,245,093 |
Senior Convertible notes were converted into 65,476,190 shares of Common Stock 58,522,601 warrants were exercised on a cashless basis resulting in the issuance of 52,551,716 shares of Common Stock | $ 13,750,000 | $ 0 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) | 12 Months Ended |
Dec. 31, 2020shares | |
Senior Convertible Note Conversion [Member] | |
Debt conversion, shares issued | 65,476,190 |
Warrant exercised | 58,522,601 |
Issuance of common stock, shares | 52,551,716 |
1. Organization and Business
1. Organization and Business | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | Note 1: Organization and Business Organization and Nature of Business Genius Brands International, Inc. (“we,” “us,” “our,” or the “Company”) is a global content and brand management company that creates and licenses multimedia content. Led by experienced industry personnel, we distribute our content in all formats as well as a broad range of consumer products based on our characters. In the children's media sector, our portfolio features “content with a purpose” for toddlers to tweens, which provides enrichment as well as entertainment. New intellectual property titles include the preschool property Rainbow Rangers Llama Llama, Baby Genius ® Secret Millionaires Club, Stan Lee’s Superhero Kindergarten In addition, we act as licensing agent for Penguin Young Readers, a division of Penguin Random House LLC which owns or controls the underlying rights to Llama Llama The Company commenced operations in January 2006, assuming all the rights and obligations of its then Chief Executive Officer, under an Asset Purchase Agreement between the Company and Genius Products, Inc., in which the Company obtained all rights, copyrights, and trademarks to the brands “Baby Genius,” “Kid Genius,” “123 Favorite Music” and “Wee Worship,” and all then existing productions under those titles. In October 2011, the Company (i) changed its domicile to Nevada from California, and (ii) changed its name to Genius Brands International, Inc. from Pacific Entertainment Corporation (the “Reincorporation”). In connection with the Reincorporation, the Company changed its trading symbol from “PENT” to “GNUS”. Liquidity and Going Concern Recent Developments With respect to the ongoing and evolving coronavirus (COVID-19) outbreak, which was designated as a pandemic by the World Health Organization on March 11, 2020, the outbreak has caused substantial disruption in international and U.S. economies and markets. The outbreak has potential to have an adverse impact on the entertainment industry and, if repercussions of the outbreak are prolonged, could have a significant adverse impact on our business, which could be material. The Company’s management cannot at this point estimate the impact of the outbreak on its business and no provision for this outbreak are reflected in the accompanying financial statements Historically, the Company has incurred net losses. For the years ended December 31, 2020 and 2019, the Company reported net losses of $401,669,805 and $11,481,245, respectively. The Company reported net cash used in operating activities of $7,844,715 and $6,251,150 for the years ended December 31, 2020 and 2019, respectively. As of December 31, 2020, the Company had an accumulated deficit of $469,557,324 and total stockholders’ equity of $119,196,677. As of December 31, 2020, the Company had cash and cash equivalents of $100,456,324, which we believe is sufficient to fund the Company’s planned operations and production through one year after the date the consolidated financial statements are issued. During 2020, the Company completed various transactions that enhanced cash and working capital balances (See Notes 9 and 13). |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2: Summary of Significant Accounting Policies Basis of Presentation The accompanying 2020 and 2019 consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Genius Brands International, Inc., its wholly-owned subsidiaries A Squared LLC, Llama Productions LLC and Rainbow Rangers Productions LLC. All significant inter-company balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Financial Statement Reclassification Certain account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications. Cash and Cash Equivalents The Company considers all highly liquid debt instruments with initial maturities of three months or less to be cash equivalents. The Company had no restricted cash as of December 31, 2020 and 2019. Allowance for Doubtful Accounts Accounts receivable are presented on the balance sheets net of estimated uncollectible amounts. The Company assesses its accounts receivable balances on a quarterly basis to determine collectability and records an allowance for estimated uncollectible accounts in an amount approximating anticipated losses based on historical experience and future expectations. Individual uncollectible accounts are written off against the allowance when collection of the individual accounts appears doubtful. The Company had an allowance for doubtful accounts of $43,676 and $0 as of December 31, 2020 and 2019, respectively. Inventory Inventories are stated at the lower of average cost or net realizable value and consist of finished goods such as DVDs, CDs and other products. The Company concluded that the inventory was obsolete and has written off the balance of $9,277 as of December 31, 2020. Property and Equipment Property and equipment are recorded at cost. Depreciation on property and equipment is computed using the straight-line method over the estimated useful lives of the assets, which range from two to seven years. Maintenance, repairs, and renewals, which neither materially add to the value of the assets nor appreciably prolong their lives, are charged to expense as incurred. Gains and losses from any dispositions of property and equipment are reflected in the statement of operations. Goodwill and Intangible Assets Goodwill represents the excess of purchase price over the estimated fair value of net assets acquired in business combinations accounted for by the purchase method. In accordance with FASB ASC 350 Intangibles Goodwill and Other, goodwill and certain intangible assets are presumed to have indefinite useful lives and are thus not amortized, but subject to an impairment test annually or more frequently if indicators of impairment arise. We complete the annual goodwill and indefinite-lived intangible asset impairment tests at the end of each fiscal year. In testing goodwill, we initially use a qualitative approach and analyze relevant factors to determine if events and circumstances have affected the value of the goodwill. If the result of this qualitative analysis indicates that the value has been impaired, we then apply a quantitative approach to calculate the difference between the goodwill’s recorded value and its fair value. An impairment loss is recognized to the extent that the recorded value exceeds its fair value. Goodwill, in addition to being tested for impairment annually, is tested for impairment at interim periods if an event occurs or circumstances change such that it is more likely than not that the carrying amount of goodwill may be impaired. For the year ended December 31, 2020, the Company performed a qualitative analysis of the carrying value of goodwill. Based on the results of our analysis, we concluded that there is no impairment to the goodwill balance and no adjustment is necessary at this time. Other intangible assets have been acquired, either individually or with a group of other assets, and were initially recognized and measured based on fair value. Annual amortization of these intangible assets is computed based on the straight-line method over the remaining economic life of the asset. Film and Television Costs The Company capitalizes production costs for episodic series produced in accordance with FASB ASC 926-20 Entertainment-Films - Other Assets - Film Costs. Accordingly, production costs are capitalized at actual cost and then charged against revenue based on the initial market revenue evidenced by a firm commitment over the period of commitment. The Company expenses all capitalized costs that exceed the initial market firm commitment revenue in the period of delivery of the episodes. The Company capitalizes production costs for films produced in accordance with FASB ASC 926-20 Entertainment-Films - Other Assets - Film Costs. Accordingly, production costs are capitalized at actual cost and then charged against revenue quarterly as a cost of production based on the relative fair value of the film(s) delivered and recognized as revenue. The Company evaluates its capitalized production costs annually and limits recorded amounts by their ability to recover such costs through expected future sales. Additionally, for both episodic series and films, from time to time, the Company develops additional content, improved animation and bonus songs/features for its existing content. After the initial release of the film or episodic series, the costs of significant improvement to existing products are capitalized while routine and periodic alterations to existing products are expensed as incurred. Debt and Attached Equity-Linked Instruments The Company measures issued debt on an amortized cost basis, net of debt premium/discount and debt issuance costs amortized using the effective interest rate method or the straight-line method when the latter does not lead to materially different results. The Company accounts for the proceeds from the issuance of convertible notes payable in accordance with FASB ASC 470-20 Debt with Conversion and Other Options. Pursuant to FASB ASC 470-20, the intrinsic value of the embedded conversion feature (beneficial conversion interest), which is in the money on the commitment date is included in the discount to debt and amortized to interest expense over the term of the note agreement. When the conversion option is not separated, the Company accounts for the entire convertible instrument including debt and the conversion feature as a liability. The Company analyzes freestanding equity-linked instruments including warrants attached to debt to conclude whether the instrument meets the definition of the derivative and whether it is considered indexed to the Company’s own stock. If the instrument is not considered indexed to Company’s stock, it is classified as an asset or liability recorded at fair value. If the instrument considered indexed to Company’s stock, the Company analyzes additional equity classification requirements per ASC 815-40 Contract’s in Entity’s Own Equity. When the requirements are met the instrument is recorded as part of the Company’s equity, initially measured based on its relative fair value with no subsequent re-measurement. When the equity classification requirements are not met, the instrument is recorded as an asset or liability and is measured at fair value with subsequent changes in fair value recorded in earnings. When required, the Company also considers the bifurcation guidance for embedded derivatives per FASB ASC 815-15 Embedded Derivatives. Revenue Recognition The Company accounts for revenue according to standard ASC 606 (Topic 606). The Company has identified the following six material and distinct performance obligations: · License rights to exploit Functional Intellectual Property (Functional Intellectual Property or “functional IP” is defined as intellectual property that has significant standalone functionality, such as the ability be played or aired. Functional intellectual property derives a substantial portion of its utility from its significant standalone functionality.) · License rights to exploit Symbolic Intellectual Property (Symbolic Intellectual Property or “symbolic IP” is intellectual property that is not functional as it does not have significant standalone use and substantially all of the utility of symbolic IP is derived from its association with the entity’s past or ongoing activities, including its ordinary business activities, such as the Company’s licensing and merchandising programs associated with its animated content.) · Options to renew or extend a contract at fixed terms. (While this performance obligation is not significant for the Company’s current contracts, it could become significant in the future.) · Options on future seasons of content at fixed terms. (While this performance obligation is not significant for the Company’s current contracts, it could become significant in the future.) · Fixed fee advertising revenue generated from the Genius Brands Network · Variable fee advertising revenue generated from the Genius Brands Network As a result of the change, beginning January 1, 2018, the Company began recognizing revenue related to licensed rights to exploit functional IP in two ways. For minimum guarantees, the Company recognizes fixed revenue upon delivery of content and the start of the license period. For functional IP contracts with a variable component, the Company estimates revenue such that it is probable there will not be a material reversal of revenue in future periods. Revenue under these types of contracts was previously recognized when royalty statements were received. The Company began recognizing revenue related to licensed rights to exploit symbolic IP substantially similarly to functional IP. Although it has a different recognition pattern from functional IP, the valuation method is substantially the same, depending on the nature of the license. The Company sells advertising on its Kid Genius channel in the form of either flat rate promotions or impressions served. For flat rate promotions with a fixed term, the Company recognizes revenue when all five revenue recognition criteria under FASB ASC 606 are met. For impressions served, the Company delivers a certain minimum number of impressions on the channel to the advertiser for which the advertiser pays a contractual costs per thousand (CPM) per impression. Impressions served are reported to the Company on a monthly basis, and revenue is reported in the month the impressions are served. The Company recognizes revenue related to product sales when we complete our performance obligation, which is when the goods are transferred to the buyer. Direct Operating Costs Direct operating costs include costs of our product sales, non-capitalizable film costs, film and television cost amortization expense, and participation expense 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. Share-Based Compensation As required by FASB ASC 718 - Stock Compensation, the Company recognizes an expense related to the fair value of our share-based compensation awards, including stock options, using the Black-Scholes calculation as of the date of grant. The Company has elected to use the graded attribution method for awards which are in-substance, multiple awards based on the vesting schedule. The Company’s accounting policy elected for forfeitures is not to estimate the number of awards that are expected to vest. Instead, the Company accounts for forfeitures when they occur. The Company issues authorized shares available for the issuance under 2015 Plan upon employees’ exercise of their stock options. Earnings Per Share Basic earnings (loss) per common share (“EPS”) is calculated by dividing net income (loss) applicable to common shareholders by the weighted average number of shares of common stock outstanding for the period. Diluted EPS is calculated by dividing net income (loss) applicable to common shareholders by the weighted average number of shares of common stock outstanding, plus the assumed exercise of all dilutive securities using the treasury stock or “as converted” method, as appropriate. During periods of net loss, all common stock equivalents are excluded from the diluted EPS calculation because they are antidilutive. Income Taxes Deferred income tax assets and liabilities are recognized based on differences between the financial statement and tax basis of assets and liabilities using presently enacted tax rates. At each balance sheet date, the Company evaluates the available evidence about future taxable income and other possible sources of realization of deferred tax assets and records a valuation allowance that reduces the deferred tax assets to an amount that represents management’s best estimate of the amount of such deferred tax assets that more likely than not will be realized. Concentration of Risk The Company’s cash is maintained at two financial institutions and from time to time the balances for this account exceed the Federal Deposit Insurance Corporation’s (“FDIC”) insured amount. Balances on interest bearing deposits at banks in the United States are insured by the FDIC up to $250,000 per account. As of December 31, 2020, the Company had four accounts with a combined uninsured balance of $99,260,006. As of December 31, 2019, the Company had no accounts with a combined uninsured balance. For fiscal year 2020, the Company had two customers whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 44% of total revenue and represented 22% of accounts receivable. For fiscal year 2019, the Company had two customers whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 65% of total revenue and represented 95% of accounts receivable. The major customers for the year ended December 31, 2020 are the same as the major customers at December 31, 2019. There is significant financial risk associated with a dependence upon a small number of customers. The Company periodically assesses the financial strength of these customers and establishes allowances for any anticipated bad debt. At December 31, 2020 and 2019, the Company recorded an allowance for bad debt of $43,676 and $0, respectively. Fair value of financial instruments The carrying amounts of cash, receivables, accounts payable, and accrued liabilities approximate fair value due to the short-term maturity of the instruments. The carrying amount of long-term receivables approximate fair value due to the contractual nature of the obligation, payment schedule, and the current interest and inflation rate environments. The carrying amount of the Production Loan Facility approximates fair value since the debt carries a variable interest rate that is tied to either the current Prime or LIBOR rates plus an applicable spread. We previously adopted FASB ASC 820 for financial instruments measured at fair value on a recurring basis. FASB ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP and expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC Topic 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include: · Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; · Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and · Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Recent Accounting Pronouncements In March 2019, the FASB issued ASU No. 2019-02, Entertainment-Films-Other Assets-Film Costs (Subtopic 926-20) and Entertainment-Broadcasters Intangibles-Goodwill and Other (Subtopic 920-350). The update aligns the accounting for production costs of an episodic television series with the accounting for production costs of films by removing the content distinction for capitalization. The amendments also require that an entity reassess estimates of the use of a film in a film group and account for any changes prospectively. The amendments in this update require that an entity test a film or license agreement for program material within the scope of Subtopic 920-350 for impairment at a film group level when the film or license agreement is predominantly monetized with other films and/or license agreements. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company has prospectively adopted ASU 2016-18. The impact to our consolidated financial position, results of operations and cash flows was not material. In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The update simplifies the accounting for convertible instruments by removing certain separation models in Subtopic 470-20, Debt—Debt with Conversion and Other Options, for convertible instruments. As part of the amendment, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. The FASB has eliminated the cash conversion and beneficial conversion feature models. The FASB has also modified accounting rules relating to application of the scope exception from derivative accounting. The amendments revise the guidance in ASC 815-40-25-10, to remove three out of seven conditions from the settlement guidance, referred to as additional equity classification requirements. Following the above amendments, more convertible debt instruments will be accounted for as a single liability measured at its amortized cost and more convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no features require bifurcation and recognition as derivatives. The amendments are effective for public business entities, excluding smaller reporting companies, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, including smaller reporting companies the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is in the process of assessing the impact of the amendments to Company’s consolidated financial statements. Various other accounting pronouncements have been recently issued, most of which represented technical corrections to the accounting literature or were applicable to specific industries/transactions or special circumstances and are not expected to have a material effect on our financial position, results of operations, or cash flows. |
3. Property and Equipment, Net
3. Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Note 3: Property and Equipment, Net The Company has property and equipment as follows as of December 31, 2020 and 2019: Property and Equipment, Net December 31, 2020 December 31, 2019 Furniture and Equipment $ 19,419 $ 19,419 Computer Equipment 168,122 144,643 Leasehold Improvements 14,182 14,182 Software 68,152 15,737 Property and Equipment, Gross 269,875 193,981 Less Accumulated Depreciation (174,047 ) (129,105 ) Property and Equipment, Net $ 95,828 $ 64,876 During the years ended December 31, 2020 and December 31, 2019, the Company recorded depreciation expense of $44,942 and $37,734. |
4. Right of Use Leased Asset
4. Right of Use Leased Asset | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Right of Use Leased Asset | Note 4: Right Of Use Leased Asset In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842), Targeted Improvements, which allows for an additional optional transition method where comparative periods presented in the financial statements in the period of adoption will not be restated and instead those periods will be presented under existing guidance in accordance with ASC 840, Leases. Management used this optional transition method. As of January 1, 2019, the Company adopted ASU 2018-11. Right Of Use Leased Asset December 31, 2020 December 31, 2019 Office Lease Asset $ 2,245,093 $ 4,387,956 Printer Lease Asset 12,374 12,374 Right Of Use Asset, Gross 2,257,467 4,400,330 Office Lease Accumulated Amortization (274,980 ) (383,118 ) Printer Lease Accumulated Amortization (10,123 ) (7,375 ) Right Of Use Asset, Net $ 1,972,364 $ 4,009,837 During the year ended December 31, 2020 and 2019, the Company recorded amortization expense of $285,103 and 390,493. |
5. Film and Television Costs, N
5. Film and Television Costs, Net | 12 Months Ended |
Dec. 31, 2020 | |
Film, Capitalized Cost [Abstract] | |
Film and Television Costs, net | Note 5: Film and Television Costs, Net As of December 31, 2020, the Company had net Film and Television Costs of $11,828,494 compared to $9,906,885 at December 31, 2019. The increase relates primarily to the production and development of Rainbow Rangers Season 2 Stan Lee’s Superhero Kindergarten Season 1 Rainbow Rangers Season 1 and Season 2. During the years ended December 31, 2020 and December 31, 2019, the Company recorded Film and Television Cost amortization expense of $979,598 and $2,230,024, respectively. The following table highlights the activity in Film and Television Costs as of December 31, 2020 and 2019: Film and Television Costs, Net Total Film and Television Costs, Net as of December 31, 2018 $ 8,166,131 Additions to Film and Television Costs 3,920,013 Capitalized Interest 50,765 Film Amortization Expense (2,230,024 ) Film and Television Costs, Net as of December 31, 2019 9,906,885 Additions to Film and Television Costs 2,901,207 Capitalized Interest – Film Amortization Expense (979,598 ) Film and Television Costs, Net as of September 30, 2020 $ 11,828,494 |
6. Goodwill and Intangible Asse
6. Goodwill and Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, Net | Note 6: Goodwill and Intangible Assets, Net Goodwill In 2013, the Company recognized $10,365,805 in Goodwill, representing the excess of the fair value of the consideration over net identifiable assets acquired. Pursuant to FASB ASC 350-20, Goodwill is not subject to amortization but is subject to annual review to determine if certain events warrant impairment to the Goodwill asset. Through December 31, 2019, the Company has not recognized any impairment to Goodwill. Intangible Assets, Net The Company had the following intangible assets as of December 31, 2020 and 2019: Intangible Assets, Net December 31, 2020 December 31, 2019 Trademarks (a) $ 129,831 $ 129,831 Other Intangible Assets (a) 299,028 272,528 Intangible Assets, Gross 428,859 402,359 Less Accumulated Amortization (b) (400,165 ) (350,776 ) Intangible Assets, Net $ 28,694 $ 51,583 (a) Pursuant to FASB ASC 350-30-35, the Company reviews these intangible assets periodically to determine if the value should be retired or impaired due to recent events. At December 31, 2019, the Company determined that the Product Masters inventory had no further useful life and the asset value and accumulated amortization were written off. (b) During the years ended December 31, 2020 and December 31, 2019, the Company recognized, $49,388 and $38,405, respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets. Expected future intangible asset amortization as of December 31, 2020 is as follows: Fiscal Year: 2021 11,246 2022 10,528 2023 6,187 2024 733 Total $ 28,694 |
7. Deferred Revenue
7. Deferred Revenue | 12 Months Ended |
Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Deferred Revenue | Note 7: Deferred Revenue As of December 31, 2020, and 2019, the Company had total short term and long term deferred revenue of $4,432,377 and $5,108,953, respectively. Deferred revenue includes both (i) variable fee contracts with licensees and customers in which the Company had collected advances and minimum guarantees against future royalties and (ii) fixed fee contracts. The Company recognizes revenue related to these contracts when all revenue recognition criteria have been met. Included in the deferred revenue balance as of December 31, 2020 is $3,367,086 which is the remaining balance from the total $3,489,583 advance against future royalty that Sony paid to the Company for both the foreign and domestic distribution rights. |
8. Accrued Liabilities - Curren
8. Accrued Liabilities - Current | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities, Current | Note 8: Accrued Liabilities – Current As of December 31, 2020, and 2019, the Company had the following current accrued liabilities: December 31, 2020 December 31, 2019 Other Accrued Expenses (a) $ 408,459 $ 124,940 Accrued Salaries and Wages (b) 428,922 231,481 Total Accrued Liabilities – Current $ 837,381 $ 356,421 (a) Other Accrued Expenses include the sub lease security deposit liability on the Rodeo Drive location as well as estimates of expenses incurred but not yet recorded. (b) Accrued Salaries and Wages include accrued Salaries and vacation payable to employees |
9. Secured Convertible Notes
9. Secured Convertible Notes | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Secured Convertible Notes | Note 9: Secured Convertible Notes On August 17, 2018, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors (the “Investors”), pursuant to which the Company agreed to sell (i) an aggregate principal amount of $4.50 million in secured convertible notes, convertible into shares of our common stock, at a conversion price of $2.50 per share (the “Secured Convertible Notes”) and (ii) warrants to purchase 1,800,000 shares of our common stock at an exercise price of $3.00 per share (the “Warrants,” and, together with the Secured Convertible Notes, the “Securities”). We received approximately $4,500,000 in gross proceeds from the Offering. The Secured Convertible Notes were our senior secured obligations and are secured by certain tangible and intangible property of the Company as described in the Purchase Agreement. Unless earlier converted or redeemed, the Secured Convertible Notes will mature on August 20, 2019. The Secured Convertible Notes bear interest at a rate of 10% per annum and are convertible at any time until a Secured Convertible Note is no longer outstanding, in whole or in part, at the option of the holders into shares of common stock at a conversion price of $2.50 per share. The Secured Convertible Notes have a beneficial ownership limitation such that none of the Investors have the right to convert any portion of their Secured Convertible Notes if the Investor (together with its affiliates or any other persons acting together as a group with the Investor) would beneficially own in excess of 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the issuance of our common stock issuable upon conversion of such Secured Convertible Notes. In addition, the Secured Convertible Notes provide for a conversion cap such that we may not issue any shares of our common stock upon conversion of Secured Convertible Notes which would exceed the aggregate number of shares of our common stock we could issue upon conversion of the Secured Convertible Notes without breaching our obligations, if any, under Nasdaq Stock Market LLC rules and regulations. Interest under the Secured Convertible Notes were payable in arrears beginning on September 1, 2018 and thereafter on each of December 1, 2018, March 1, 2019, June 1, 2019 and at maturity when all amounts outstanding under the Secured Convertible Notes become due and payable. Subject to certain equity conditions, we may force a conversion of the debt into equity. We may redeem the Secured Convertible Notes at any time prior to maturity. If we do not meet such equity conditions at maturity, we are obligated to repay in cash one-sixth of the then outstanding principal amount of the Secured Convertible Notes each month for the six months following the date of maturity, with the first such payment due on the date of maturity, followed by payments each month thereafter. The Secured Convertible Notes contained certain negative covenants, including prohibitions on the incurrence of indebtedness or liens. The Secured Convertible Notes also contain standard and customary events of default including, but not limited to, failure to make payments when due, failure to observe or perform covenants or agreements contained in the Secured Convertible Notes or the bankruptcy or insolvency of the Company or any of our subsidiaries. The Company was in compliance with these covenants as of December 31, 2019. On the date of issuance, the Secured Convertible Notes were convertible into common stock at $2.50 per share, or at a conversion price below the closing market price of $2.55. This “discount” is considered a beneficial conversion feature for accounting purposes. The allocation of carrying basis between the Warrants issued and the Secured Convertible Notes was determined based on relative fair value. The discount of the initial conversion price from market related to the beneficial conversion feature of the debt was $1,561,111, and such amount was recorded as a reduction of debt and increase in additional paid-in capital. The discount will be amortized as additional interest over the term of the loan. The Warrants entitle the holders to purchase 1,800,000 shares of common stock. The Warrants were not exercisable until after six months from the date of issuance and expire five and half years from the date of issuance. The Warrants have an exercise price of $3.00 per share. In the event of a “Fundamental Transaction” (as defined in the Warrants), the Investors have the right to receive the value of the Warrants as determined in accordance with the Black Scholes option pricing model. The Warrants are considered indexes to the Company’s own stock pursuant to ASC 815-40. The Warrants also met the additional equity classification requirements and accordingly are accounted for as part of the Company’s equity. In conjunction with the February 2019 Offering and concurrent private placement, the Company entered into an amendment, waiver and consent agreement, or the “Amendment, Waiver and Consent Agreement,” with certain holders of its 10% Secured Convertible Notes due August 20, 2019, which were issued pursuant to a securities purchase agreement, dated August 17, 2018, by and among the Company and the purchasers identified on the signature pages thereto, or the notes purchase agreement. Pursuant to the Amendment, Waiver and Consent Agreement, such holders agreed to amend the notes purchase agreement, waive any applicable rights and remedies under the notes purchase agreement, and consent to the February 2019 Offering and concurrent private placement. In consideration for such Amendment, Waiver and Consent Agreement, the Company agreed to issue such holders warrants to purchase up to an aggregate amount of 1,800,000 shares of Common Stock. Such warrants have an exercise price of $2.55 per share, will become exercisable commencing six months and one day from the date of issuance and will expire five (5) years from the date of issuance. The issuance of the warrants resulted in a modification of debt in accordance with ASC 470 and is characterized as an extinguishment of debt in accordance with ASC-470-50-40. In accordance with ASC-470-50-40-2 the Company derecognized the existing debt as if it was extinguished and recorded the new debt, with the difference between the reacquisition price of the new debt and the net carrying amount of the extinguished debt, $2,109,818 being recorded as a loss on the extinguishment of debt. In addition, the warrants were accounted for as equity instruments in accordance with ASC 815-40 and valued using the Black Scholes option pricing model. The fair value of $1,287,962 was recorded as part of the loss on extinguishment of debt. On July 22, 2019, in connection with a proposed public offering of shares of Common Stock (the “August 2019 Offering”), the Company entered into an amendment, waiver and consent agreement (the “July Amendment, Waiver and Consent”) with certain holders constituting (i) a majority-in-interest of the holders of its Secured Convertible Notes and (ii) 51% in interest of the shares of Common Stock issued pursuant to a securities purchase agreement, dated as of January 8, 2018, by and among the Company and the purchasers identified on the signature pages thereto (the “January 2018 Purchase Agreement”). Pursuant to the July Amendment, Waiver and Consent, such holders agreed to amend the August 2018 Purchase Agreement, the January 2018 Purchase Agreement and the Secured Convertible Notes, waive any applicable rights and remedies under each of the August 2018 Purchase Agreement and the January 2018 Purchase Agreement, and consent to the August 2019 Offering in consideration for (i) a reduction in the conversion price of the Secured Convertible Notes from $2.50 per share to an amount equal to $1.515 and (ii) the issuance to the August 2018 Purchasers of new warrants to purchase the same number of shares of Common Stock that were issued to each August 2018 Purchaser pursuant to the August 2018 Purchase Agreement (for an aggregate of 1,800,000 shares of Common Stock to all August 2018 Purchasers) at an exercise price per share equal to $1.14 and will become exercisable commencing six (6) months and one day from the date of issuance and will expire five (5) years from the date of issuance. The issuance of the new warrants resulted in a modification of debt in accordance with ASC 470 and is characterized as an extinguishment of debt in accordance with ASC-470-50-40. In accordance with ASC-470-50-40-2, the Company derecognized the existing debt as if it was extinguished and recorded the new debt. The difference between the reacquisition price of the debt including the fair value of the warrants issued and the net carrying amount of the extinguished debt amounted to $957,867. This amount was recorded as a loss on debt extinguishment. In addition, the conversion option was accounted for as part of the debt’s carrying value in accordance with the bifurcation guidance per ASC 815 as it applies to the debt’s conversion feature. The conversion option was valued using the Black Scholes option pricing model. The fair value of $77,172 was recorded as part of the loss on extinguishment of debt. The conversion option will be amortized using the straight-line method over the remaining terms. On August 20, 2019, pursuant to the Secured Convertible Notes, the Company elected to make six equal monthly principal payments of $750,000. The first payment with interest was paid on August 23, 2019. On September 17, 2019, the Company’s CEO, Andy Heyward, purchased $500,000 of the Secured Convertible Notes from another holder. The Company did not receive any proceeds from this transaction. On September 20, 2019, the Company and the holders of $1,958,334 of the Secured Convertible Notes, extended the maturity date of those Secured Convertible Notes until January 31, 2020. The Company also agreed to pay the 10% interest to the holders monthly instead of quarterly. On September 20, 2019, the Company and the holders of $687,500 of the Secured Convertible Notes, extended the maturity date of those Secured Convertible Notes until August 20, 2021. The Company also agreed to pay the 10% interest to the holders monthly instead of quarterly. The remaining balance of $883,332 under the Secured Convertible Notes that were not extended were to be paid in four monthly installments of $220,883. The September through December payments, including interest, have been paid. On March 17, 2020, the Secured Convertible Notes were paid in full including interest. March 2020 Secured Convertible Note and Warrant Private Placement On March 11, 2020, we entered into a Securities Purchase Agreement (the “SPA”) with certain accredited investors (each an “Investor” and collectively, the “Investors”) pursuant to which we agreed to sell and issue (1) Senior Secured Convertible Notes to the Investors in the aggregate principal amount of $13,750,000 (each, a “Note” and collectively, the “2020 Convertible Notes”) and $11,000,000 funding amount (reflecting an original issue discount of $2,750,000) and (2) warrants to purchase 65,476,190 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), exercisable for a period of five years at an initial exercise price of $0.26 per share (each a “Warrant” and collectively, the “Warrants”), for consideration consisting of (i) a cash payment of $7,000,000, and (ii) full recourse cash secured promissory notes payable by the Investors to the Company (each, an “Investor Note” and collectively, the “Investor Notes”) in the principal amount of $4,000,000 (the “Investor Notes Principal”) (collectively, the “Financing”). Andy Heyward, our Chairman and Chief Executive Officer, participated as an Investor and invested $1,000,000 in connection with the Financing, all of which was paid at the closing and not pursuant to an Investor Note. The Special Equities Group, LLC, a division of Bradley Woods & Co. LTD, acted as placement agent and received warrants to purchase 6,547,619 shares at an exercise price of $0.26 per share (the “Placement Agent Warrants”). The closing of the sale and issuance of the 2020 Convertible Notes, the Warrants and the Placement Agent Warrants occurred on March 17, 2020 (the “Closing Date”). The maturity date of the 2020 Convertible Notes was September 30, 2021 and the maturity date of the Investor Notes was March 11, 2060. The Company held a stockholder meeting (the “Stockholder Meeting”) to approve the issuance of shares of Common Stock issuable under the 2020 Convertible Notes and pursuant to the terms of the SPA for the purposes of compliance with the stockholder approval rules of The Nasdaq Stock Market (“Stockholder Approval”). In addition, pursuant to the terms of the SPA, the 2020 Convertible Notes and the Warrants, the Company agreed that the following will apply or become effective only following Stockholder Approval: (1) the conversion price of the 2020 Convertible Notes shall be reduced to $0.21 per share and may be further reduced to any amount and for any period of time deemed appropriate by the board of directors of the Company (the “Board of Directors”), (2) the exercise price of the Warrants shall be immediately reduced to $0.21 per share and may be further reduced to any amount and for any period of time deemed appropriate by the Board of Directors, (3) the 2020 Convertible Notes and Warrants shall each have full ratchet anti-dilution protection for subsequent financings (subject to certain exceptions), (4) existing warrant holders that are participating in the Financing (representing warrants to purchase an aggregate of 8,715,229 shares of Company Common Stock) will have their existing warrants’ exercise prices reduced to $0.21 and (5) the investors shall have a most favored nations right which provides that if the Company enters into a subsequent financing, then the Investors (together with their affiliates) at their sole discretion shall have the ability to exchange their 2020 Convertible Notes on a $1 for $1 basis into securities issued in the new transaction. Additionally, in the event that any warrants or options (or any similar security or right) issued in a subsequent financing include any terms more favorable to the holders thereof (less favorable to the Company) than the terms of the Warrants, the Warrants shall be automatically amended to include such more favorable terms. On March 16, 2020, the holders of the August 2018 Secured Convertible Notes were repaid in full including any outstanding interest. On May 15, 2020, the Company received the necessary Stockholder Approval in connection with the Nasdaq proposals described above. As a result, the Conversion Price of the 2020 Convertible Notes and the exercise price of the Warrants were each reduced to $0.21. In addition, existing warrant holders that participated in the Financing (representing warrants to purchase an aggregate of 9,172,463 shares of Common Stock) also had their existing warrants’ exercise prices reduced to $0.21. As a result of the reduction in the Conversion Price of the 2020 Convertible Notes to $0.21, the conversion feature was revalued. This revaluation resulted in a conversion option revaluation expense of $171,835,729. |
10. Production Loan Facility
10. Production Loan Facility | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Production Loan Facility | Note 10: Production Loan Facility On August 8, 2016, Llama Productions, LLC closed a $5,275,000 multiple draw-down, secured, non-recourse, non-revolving credit facility (the “Facility”) with Bank Leumi USA to produce its animated series Llama Llama, (the “Series”) which is configured as fifteen half-hour episodes comprised of thirty 11-minute programs that were delivered to Netflix in fall 2017. The Facility is secured by the license fees the Company will receive from Netflix for the delivery of the Series as well as the Company’s copyright in the Series. The Facility has a term of 40 months and has an interest rate of either Prime plus 1% or one, three, or six-month LIBOR plus 3.25%. As a condition of the loan agreement with Bank Leumi, the Company deposited $1,000,000 into a cash account to be used solely to produce the Series. Additionally, the Facility contains certain standard affirmative and negative non-financial covenants such as maintaining certain levels of production insurance and providing standard financial reports. As of December 31, 2019, the Company was in compliance with these covenants. On September 28, 2018, Llama Productions LLC entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with Bank Leumi USA (the “Lender”), pursuant to which the Lender agreed to make a secured loan in an aggregate amount not to exceed $4,231,989 to Llama (the “Loan”). The proceeds of the Loan will be used to pay the majority of the expenses of producing, completing and delivering two 22-minute episodes and sixteen 11- minute episodes of the second season of the animated series Llama Llama To secure payment of the Loan, Llama has granted to the Lender a continuing security interest in and against, generally, all of its tangible and intangible assets, which includes all seasons of the Llama Llama Under the Loan and Security Agreement, Llama can request revolving loan advances under (a) the Prime Rate Loan facility and (b) the LIBOR Loan facility, each as further described in the Loan and Security Agreement attached as an exhibit hereto. Prime Rate Loan advances shall bear interest, on the outstanding balance thereof, at a fluctuating per annum rate equal to 1.0% plus the Prime Rate (as such term is defined in the Loan and Security Agreement), provided that in no event shall the interest rate applicable to Prime Rate Loans be less than 4.0% per annum. LIBOR Loan advances shall bear interest, on the outstanding balance thereof, for the period commencing on the funding date and ending on the date which is one (1), three (3) or six (6) months thereafter, at a per annum rate equal to 3.25% plus the LIBOR determined for the applicable Interest Period (as such terms are defined in the Loan and Security Agreement), provided that in no event shall the interest rate applicable to LIBOR Loans be less than 3.25% per annum. The Maturity Date of the Prime Rate Loan facility and LIBOR Loan facility is March 31, 2021. Interest rates on advances under the Loan and Security Agreement were between 5.53% and 6.14% as of December 31, 2019. In addition, on September 28, 2018, Llama and Lender entered into Amendment No. 2 to Loan and Security Agreement, effective as of August 27, 2018, by and between Llama and the Lender (the “Amendment”). Pursuant to the Amendment, the original Loan and Security Agreement, dated as of August 8, 2016 and amended as of November 7, 2017 (the “Original Loan and Security Agreement”), was amended to (i) reduce the loan commitment thereunder to $1,768,010, and (ii) include the Llama Llama season two obligations under the Loan and Security Agreement as obligations under the Original Loan and Security Agreement. As of December 31, 2020, the Company had outstanding borrowing under the facility of $1,099,713. As of December 31, 2019, the Company had outstanding borrowings under the facility of $3,091,739 |
11. Disputed Trade Payable
11. Disputed Trade Payable | 12 Months Ended |
Dec. 31, 2020 | |
Reload Warrants [Member] | |
Disputed Trade Payable | Note 11: Disputed Trade Payable As part of the merger in 2013, the Company assumed certain liabilities from a previous member of A Squared which has claimed certain liabilities totaling $925,000. The Company disputes the basis for this liability. As of December 31, 2020, the Company believes that the statute of limitations applicable to the assertion of any legal claim relating to the collection of these liabilities has expired and therefore believes this liability is not owed. |
12. Payroll Protection Program
12. Payroll Protection Program Loan | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Payroll Protection Program Loan | Note 12: Payroll Protection Program Loan On April 30, 2020, the Company received loan proceeds in the amount of $366,267 under the Paycheck Protection Program (“PPP”) which was established as part of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act and is administered through the Small Business Administration (“SBA”). The PPP provides loans to qualifying businesses in amounts up to 2.5 times their average monthly payroll expenses and was designed to provide a direct financial incentive for qualifying businesses to keep their workforce employed during the Coronavirus crisis. PPP loans are uncollateralized and guaranteed by the SBA and are forgivable after a “covered period” (eight or twenty-four weeks) as long as the borrower maintains its payroll levels and uses the loan proceeds for eligible expenses, including payroll, benefits, mortgage interest, rent, and utilities. The forgiveness amount will be reduced if the borrower terminates employees or reduces salaries and wages more than 25% during the covered period. Any unforgiven portion is payable over 2 years if issued before, or 5 years if issued after, June 5, 2020 at an interest rate of 1% with payments deferred until the SBA remits the borrower’s loan forgiveness amount to the lender, or, if the borrower does not apply for forgiveness, ten months after the end of the covered period. PPP loan terms provide for customary events of default, including payment defaults, breaches of representations and warranties, and insolvency events and may be accelerated upon the occurrence of one or more of these events of default. Additionally, PPP loan terms do not include prepayment penalties. The Company is in the process of repaying the loan. |
13. Stockholders' Equity
13. Stockholders' Equity | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Note 13: Stockholders’ Equity Common Stock As of December 31, 2020, the total number of authorized shares of common stock was 400,000,000. As of December 31, 2020, and 2019, there were 258,438,514 and 21,877,724 shares of common stock outstanding, respectively. Below are the changes to the Company’s common stock during the year ended December 31, 2020: Year Ended December 31, 2020 · On January 8, 2020, the Company issued 43,077 shares of Common Stock valued at $0.65 per share to a provider for investor relations services. · On January 15, 2020, the Company issued 3,171,428 shares of Common Stock in exchange for 667 shares of Preferred Stock at a conversion price of $0.21 per share. · On January 22, 2020, the Company entered into a private transaction (the “Private Transaction”) pursuant to a Warrant Exercise Agreement (the “Agreement”) with the holder of the Company’s existing warrants (the “Original Warrants”). The Original Warrants were originally issued on October 3, 2017, to purchase an aggregate of 500,000 shares of Common Stock (as defined below) at an exercise price of $3.90 per share and were to expire in October 2022.Pursuant to the Agreement, the holder of the Original Warrants and the Company agreed that such Original Warrant holder would exercise its Original Warrants in full and the Company would amend the Original Warrants to reduce the exercise price thereof to $0.34 (the average closing price (as reflected on Nasdaq.com) of the Common Stock (as defined below) for the five trading days immediately preceding the signing of the Agreement) (the “Amended Exercise Price”). The Company received $170,000 from the exercise of the Original Warrants. · On March 22, 2020, the Company entered into the Purchase Agreement with the Investors, pursuant to which the Company agreed to issue and sell, in the Registered Offering, an aggregate of 4,000,000 shares Common Stock at an offering price of $0.2568 per share for gross proceeds of approximately $1.0 million before deducting offering expenses. The Registered Offering closed on March 25, 2020. · On May 7, 2020, we entered into a Securities Purchase Agreement with the May 7 th th · On May 8, 2020, we entered into a Securities Purchase Agreement with the May 8 th th · On May 18, 2020, we entered into a Securities Purchase Agreement with the May 18 th th · On May 28, 2020, we entered into a Securities Purchase Agreement with the May 28 th th · Between May 15 and June 19, 2020 certain warrant holders exercised 50,014,895 warrants in cashless transactions resulting in the issuance of 45,000,428 shares of Common Stock. · Between May 15 and June 19, 2020, the Company received $5,649,319, net of expenses, from the exercise of 29,666,283 warrants at an exercise price of $0.21 per share · Between May 18 and June 24, 2020, the Company issued 1,571,430 shares of Common Stock in exchange for 330 shares of Preferred Stock at a conversion price of $0.21 per share. · On June 22, 2020, the Company issued 49,610 shares of Common Stock valued at $3.85 per share to a provider for investor relations services. · Between June 10 and June 23, 2020, the 2020 Convertible Notes were converted and repaid through the issuance of 65,476,190 shares of Common Stock. · On July 15, 2020, the Company issued 32,609 shares of Common Stock valued at $2.30 per share to a provider for marketing services. · On July 21, 2020, the Company received $55,011, net of expenses, from the exercise of 16,670 warrants at an exercise price of $0.454 per share. · On July 22, 2020, the Company issued 124,451 shares of Common Stock valued at $2.30 per share to a provider for marketing services. · On October 25, 2020, the Company entered into an Agreement that granted 1,000,000 shares of our Common Sock at an offering price of $1.39 per share in exchange for production serviceOn October 28, 2020, the Company entered into the Purchase Agreement with the Investors pursuant to which the Company agreed to issue and sell, in a registered director offering by the Company directly to the Investors, an aggregate of 37,400,000 shares of our Common Stock and warrants to purchase up to 37,400,000 shares of our Common Stock, at an offering price of $1.55 per fixed combination of one share of Common Stock and a warrant to purchase one share of Common Stock for gross proceeds of approximately $57.9 million before deducting offering expenses. · On November 17, 2020, the Company issued 476,190 shares of Common Stock in exchange for 100 shares of Series A Convertible Preferred Stock at a conversion price of $0.21 per share. · On December 14, 2020 a warrant holder exercised 595,238 warrants on a cashless basis, resulting in the issuance of 532,424 shares of Common Stock. Year Ended December 31, 2019 · On January 10, 2019, the Company issued 17,200 shares of the Company’s common stock valued at $2.44 per share for investor relations services. · On January 17, 2019, the Company issued 11,765 shares of the Company’s common stock valued at $2.55 per share for investor relations services. · On February 14, 2019, the Company sold, to a certain investor, pursuant to a Securities Purchase Agreement 945,894 shares of Common Stock at a purchase price of $2.12 per share. · On April 11, 2019, the Company issued 6,012 shares of common stock valued at $1.92 per share to a vendor for consulting services rendered. · On May 2, 2019, the Company issued 10,923 shares of common stock valued at $1.95 per share to a vendor for production services rendered. · On May 27, 2019, the Company issued 1,087 shares of common stock valued at $1.84 per share to a vendor for production services rendered. · On May 28, 2019, the Company issued 25,000 shares of common stock valued at $1.84 per share to a vendor for consulting services rendered. · On July 14, 2019, the Company issued 5,250 shares of Common Stock valued at $1.14 per share to a vendor for consulting services rendered. · On July 16, 2019, the Company issued 25,000 shares of Common Stock valued at $1.13 per share to a vendor for consulting services rendered. · On August 2, 2019, the Company issued 481,481 shares of Common Stock valued at $0.81 per share to a vendor for production services rendered. · On September 18, 2019, the Company issued 945,894 shares of Common Stock pursuant to a Warrant Exercise Agreement at $0.76 per share. · On October 2, 2019, Mr. Heyward purchased 1,000,000 shares of the Company’s common stock for an aggregate purchase price of $760,000, or $0.76 per share. · Between October 4 th nd · On October 18, 2019, the Company issued 534,247 shares of Common Stock valued at $0.73 per share to a vendor for production services rendered. · On October 28, 2019, the Company entered into a Securities Purchase Agreement with a certain investor pursuant to which the Company agreed to issue and sell, 663,158 shares of Common Stock, at an offering price of $0.76 per share. · Between November 21 st th · On December 17, 2019, the Company issued 3,646,135 shares of Common Stock pursuant to a Warrant Exercise Agreement at $0.21 per share. Preferred Stock The Company has 10,000,000 shares of preferred stock authorized with a par value of $0.001 per share. The Board of Directors is authorized, subject to any limitations prescribed by law, without further vote or action by our stockholders, to issue from time to time shares of preferred stock in one or more series. Each series of preferred stock will have such number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by our Board of Directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights. As of December 31, 2020, and 2019, there were 0 and 1,097 shares of Series A Convertible Preferred Stock outstanding, respectively. On May 12, 2014, the Board of Directors authorized the designation of a class of preferred stock as “Series A Convertible Preferred Stock”. On May 14, 2014, the Company filed the Certificate of Designation, Preferences and Rights of the 0% Series A Convertible Preferred Stock with the Secretary of State of the State of Nevada. Each share of the Series A Convertible Preferred Stock is convertible into shares of the Company’s common stock, par value $0.001 per share, based on a conversion calculation equal to the Base Amount divided by the conversion price. The Base Amount is defined as the sum of (i) the aggregate stated value of the Series A Convertible Preferred Stock to be converted and (ii) all unpaid dividends thereon. The stated value of each share of the Series A Convertible Preferred Stock is $1,000 and the initial conversion price is $6.00 per share, subject to adjustment in the event of stock splits, dividends and recapitalizations. Additionally, in the event the Company issues shares of its common stock or common stock equivalents at a per share price that is lower than the conversion price then in effect, the conversion price shall be adjusted to such lower price, subject to certain exceptions. The Company is prohibited from effecting a conversion of the Series A Convertible Preferred Stock to the extent that as a result of such conversion, the investor would beneficially own more than 9.99% in the aggregate of the issued and outstanding shares of the Company’s common stock, calculated immediately after giving effect to the issuance of shares of common stock upon conversion of the Series A Convertible Preferred Stock. The shares of Series A Convertible Preferred Stock possess no voting rights. Between October 4, 2019 and October 22, 2019, the Company issued 296,053 shares of Common Stock in exchange for 225 shares of Preferred Stock at a conversion price of $0.76 per share. Between November 21, 2019 and December 10, 2019, the Company issued 3,804,766 shares of the Common Stock in exchange for 798 shares of preferred Stock at a conversion price of $0.21 per share. On January 9, 2020, the Company issued 3,171,428 shares of the Common stock in exchange for 667 shares of Series A Convertible Preferred Stock at a conversion price of $0.21 per share. Between May 18 and June 24, 2020, the Company issued 1,571,428 shares of Common Stock in exchange for 330 shares of Series A Convertible Preferred Stock at a conversion price of $0.21 per share. On November 17, 2020, the Company issued 476,190 shares of Common Stock in exchange for 100 shares of Series A Convertible Preferred Stock at a conversion price of $0.21 per share. |
14. Stock Options
14. Stock Options | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock Options | Note 14: Stock Options On September 18, 2015, the Company adopted the Genius Brands International, Inc. 2015 Incentive Plan (the “2015 Plan”). The total number of shares that can be issued under the 2015 Plan is 2,167,667 shares. On September 1, 2020, the Company adopted the Genius Brands International, Inc. 2020 Incentive Plan (the “2020 Plan”). On August 4, 2020, the Board of Directors voted to adopt the 2020 Plan. The shares available for issuance under the 2020 Plan was approved by stockholders on August 27, 2020. The 2020 Plan as approved by the stockholders increased the maximum number of shares available for issuance up to an aggregate of 32,167,667 shares of Common Stock. During the year ended December 31, 2019, the Company granted options to purchase 81,000 shares of common stock to officers. These stock options generally vest between one and three years. The fair value of these options was determined to be $117,797 using the Black-Scholes option pricing model based on the following assumptions: Exercise Price $1.99 Dividend Yield 0% Volatility 125% Risk-free interest rate 2.44% Expected life of options 3.0 years During the year ended December 31, 2020, the Company granted options to purchase 8,880,000 shares of common stock to officers. These stock options generally vest between one and three years. The fair value of these options was determined to be $12,231,185 using the Black-Scholes option pricing model based on the following assumptions: Exercise Price $1.39 - $10.00 Dividend Yield 0% Volatility 121% - 122% Risk-free interest rate 0.31% -0.39% Expected life of options 5.0 years The following table summarizes the changes in the Company’s stock option plan during the year ended December 31, 2019 and December 31, 2020: Options Outstanding Number Of Shares Exercise Prices Per Share Weighted Average Remaining Contractual Life Weighted Average Exercise Price Per Share Balance at December 31, 2018 1,259,415 $ 2.09 - 12.00 2.50 years $ 7.39 Options Granted 81,000 $ 1.99 3 years $ 1.99 Options Exercised – $ – – $ – Options Cancelled 50,549 $ 1.99 - 2.70 4.51 years $ 6.34 Options Expired – $ – – $ – Balance at December 31, 2019 1,289,866 $ 1.99 - 12.00 6.49 years $ 7.18 Options Granted 8,880,000 $ 1.39 - 10.00 4.91 years $ 1.66 Options Exercised – $ – – $ – Options Cancelled 2,000 $ 1.99 3.18 years $ 1.99 Options Expired 1,051,690 $ 2.70 - 2.82 – $ 2.71 Balance at December 31, 2020 9,116,176 $ 1.39 - 10.00 4.84 years $ 1.69 Exercisable December 31, 2019 1,176,416 $ 1.99 - 9.00 6.25 years $ 7.67 Exercisable December 31, 2020 6,449,452 $ 1.39 - 3.17 4.87 years $ 1.44 During the years ended December 31, 2020 and 2019, the Company recognized $8,365,745 and $184,259 in share-based compensation expense, respectively. The unvested share-based compensation as of December 31, 2020 is $4,008,320 which will be recognized through the fourth quarter of 2023 assuming the underlying grants are not cancelled or forfeited. |
15. Restricted Stock Units
15. Restricted Stock Units | 12 Months Ended |
Dec. 31, 2020 | |
Restricted Stock Units | |
Restricted Stock Units | Note 15: Restricted Stock Units On December 7, 2020, the Company granted 9,075,000 shares of Restricted Stock Units (RSU’s) with a fair market value of $12,614,250 to certain employees and officers. The following table summarizes the Company’s restricted stock issuance during the year ended December 31, 2020: RSUs Outstanding Number Of Shares Exercise Prices Per Share Weighted Average Remaining Contractual Life Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Balance at December 31, 2019 – $ – – $ – – RSUs Granted 9,075,000 $ 1.39 4.94 years $ 1.39 – RSUs Exercised – $ – – $ – – RSUs Cancelled – $ – – $ – – RSUs Expired – $ – – $ – – Balance at December 31, 2020 9,075,000 $ 1.39 4.94 years $ 1.39 – Exercisable December 31, 2019 – $ – – $ – – Exercisable December 31, 2020 – $ – – $ – – During the year ended December 31, 2020, the Company recognized $563,700 in share-based compensation expense. The unvested share-based compensation as of December 31, 2020 is $12,050,550 which will be recognized through the fourth quarter of 2024 assuming the underlying grants are not cancelled or forfeited. |
16. Warrants
16. Warrants | 12 Months Ended |
Dec. 31, 2020 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrants | Note 16: Warrants The Company has warrants outstanding to purchase up to 45,511,965 shares and 11,124,405 shares at December 31, 2020 and 2019, respectively. On February 19, 2019, the Company entered into a securities purchase agreement with a certain accredited investor pursuant to which we sold 945,894 shares of Common Stock and warrants to purchase up to 945,894 shares of our Common Stock, or the registered warrants, to such investor (the “February 2019 Offering”). The Company received $1,757,552 in net proceeds from this offering. Each share of Common Stock was accompanied by a registered warrant to purchase one share of Common Stock at an exercise price of $2.12. Each share of Common Stock and accompanying registered warrant were sold at a combined purchase price of $2.12. The shares of Common Stock and registered warrants were purchased together and were issued separately and were immediately separable upon issuance. In a concurrent private placement, the Company also sold to the purchaser in the February 2019 Offering, warrants to purchase up to 945,894 shares of our Common Stock, or the private warrants. In connection with the February 2019 Offering and concurrent private placement, we entered into an amendment, waiver and consent agreement, or the “Amendment, Waiver and Consent Agreement,” with certain holders of our 10% Secured Convertible Notes, which were issued pursuant to a securities purchase agreement, dated August 17, 2018, by and among the Company and the purchasers identified on the signature pages thereto, or the notes purchase agreement. Pursuant to the Amendment, Waiver and Consent Agreement, such holders agreed to amend the notes purchase agreement, waive any applicable rights and remedies under the notes purchase agreement, and consent to the February 2019 Offering and concurrent private placement. In consideration for such Amendment, Waiver and Consent Agreement, we agreed to issue such holders warrants to purchase up to an aggregate amount of 1,800,000 shares of our Common Stock. Such warrants have an exercise price of $2.55 per share, will become exercisable commencing six months and one day from the date of issuance and will expire five (5) years from the date of issuance. The allocation of carrying basis between the Warrants issued and the Secured Convertible Notes was determined based on relative valuation. The carrying basis attributable to the Warrants to acquire Common Stock was $1,287,962 and was calculated using the Black-Scholes option pricing model. On July 22, 2019, the Company entered into an amendment, waiver and consent agreement (the “Amendment, Waiver and Consent”) with certain holders constituting (i) a majority-in-interest of the holders of our 10% Secured Convertible Notes due August 20, 2019 (the “Notes”), which were issued pursuant to a securities purchase agreement, dated as of August 17, 2018 and as amended on February 14, 2019, by and among the Company and the purchasers identified on the signature pages thereto (the “August 2018 Purchase Agreement”) and (ii) 51% in interest of the shares of Common Stock issued pursuant to a securities purchase agreement, dated as of January 8, 2018, by and among the Company and the purchasers identified on the signature pages thereto (the “January 2018 Purchase Agreement”). Pursuant to the Amendment, Waiver and Consent, such holders have agreed to (i) amend the definition of “Exempt Issuance” in each of the August 2018 Purchase Agreement and January 2018 Purchase Agreement to include an agreement to issue or announce the issuance or proposed issuance of Common Stock or Common Stock Equivalents (as that term is defined in each of the August 2018 Purchase Agreement and January 2018 Purchase Agreement) in a public offering for an effective per share purchase price of Common Stock of less than $2.50 (the “Offering”), (ii) waive any applicable rights and remedies under the August 2018 Purchase Agreement and January 2018 Purchase Agreement, and (iii) consent to the Offering. In consideration for the Amendment, Waiver and Consent, the Company agreed to reduce the conversion price of the Notes from $2.50 per share of Common Stock to $1.515 (the “Note Amendment”) and issue all of the purchasers under the August 2018 Purchase Agreement warrants to purchase up to an aggregate of 1,800,000 shares of our Common Stock (the “Waiver Warrants”). The Waiver Warrants will have an exercise price of $1.14 per share, will become exercisable commencing six months and one day from the date of issuance and will expire five (5) years from the date of issuance. On September 18, 2019, the Company entered into a private transaction (the “Private Transaction”) pursuant to a Warrant Exercise Agreement (the “Agreement”) with the holder of the Company’s existing warrants (the “Original Warrants”). The Original Warrants were originally issued on February 19, 2019, to purchase an aggregate of 945,894 shares of Common Stock at an exercise price of $2.12 per share and were to expire on February 19, 2020. Pursuant to the Agreement, the holder of the Original Warrants and the Company agreed that such Original Warrant holder would exercise its Original Warrants in full and the Company would amend the Original Warrants to reduce the exercise price thereof to $0.76. The Company received $718,879 from the exercise of the Original Warrants before paying the placement agent fee of $50,321. The induced exercise resulted in the Company recognizing and recording an “imputed dividend” of $181,884. On October 29, 2019, in a connection with a Private Placement, the Company issued to the Investor warrants exercisable for one share of Common Stock for an aggregate of 477,474 shares of Common Stock at an exercise price of $0.76 per share. Each Warrant became immediately exercisable on the date of its issuance and will expire five years from the date it becomes exercisable. Subject to limited exceptions, a holder of a Warrant will not have the right to exercise any portion of its warrants if the holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to such exercise. The Special Equities Group, LLC, a division of Bradley Woods & Co. LTD, acted as placement agent and will receive a cash fee of $35,280 and warrants to purchase 46,421 shares at an exercise price of $0.836 per share. On December 16, 2019, the Company entered into Warrant Exercise Agreements (the “Exercise Agreements”) with certain of the holders of the Existing Warrants to purchase an aggregate of 3,646,135 shares of Common Stock (the “Exercising Holders”). Pursuant to the Exercise Agreements, the Exercising Holders and the Company agreed that, subject to any applicable beneficial ownership limitations, the Exercising Holders exercised their Existing Warrants (the “Investor Warrants”) for shares of Common Stock underlying such Existing Warrants (the “Exercised Shares”) at a reduced exercise price of $0.21 per share of Common Stock. In order to induce the Exercising Holders to cash exercise the Investor Warrants, the Exercise Agreements provide for the issuance of new warrants to purchase up to an aggregate of approximately 3,646,135 shares of Common Stock (the “New Warrants”), with such New Warrants to be issued in an amount equal to the number of the Exercised Shares underlying any Investor Warrants. The New Warrants are exercisable six months and one day after issuance and terminate on the date that is five years following the initial exercise date. The New Warrants have an exercise price per share of $0.3004, which was the Nasdaq Official Closing Price on December 13, 2019. On January 22, 2020, the Company entered into the Private Transaction pursuant to the Agreement with the holder of the Company’s Original Warrants. The Original Warrants were originally issued on October 3, 2017, to purchase an aggregate of 500,000 shares of Common Stock, at an exercise price of $3.90 per share and were to expire in October 2022. Pursuant to the Agreement, the holder of the Original Warrants and the Company agreed that such Original Warrant holder would exercise its Original Warrants in full and the Company would amend the Original Warrants to reduce the exercise price thereof to $0.34 (the average closing price of the Common Stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the Agreement). The Company received approximately $170,000 from the exercise of the Original Warrants. The placement agent received warrants to purchase 50,000 shares at an exercise price of $0.34 per share. Pursuant to the SPA described in Note 9, the Company issued to the note holders warrants to purchase 65,476,191 shares of Common Stock, exercisable for a period of five years at an initial exercise price of $0.26 per share. The placement agent received warrants to purchase 6,547,619 shares at an exercise price of $0.26 per share. The warrants were accounted for as a derivative liability upon issuance. The warrants were revalued as of March 31, 2020. which resulted in a warrant revaluation expense in the amount of $3,467,961. On May 15, 2020 stockholders of the Company approved the reduction in warrants exercise price for the 2020 Convertible Notes holders to $0.21. As a result of the exercise price reduction, certain warrant holders exercised warrants for 29,000,526 shares of Common Stock at $0.21 per share in cash. Certain other warrant holders exercised 41,508,189, warrants on a cashless basis, resulting in the issuance of 37,449,140 shares of Common Stock. The warrants were revalued prior to their exercise. The estimated fair value of the exercised warrants immediately before the exercise was $219,034,621, This revaluation resulted in a warrant revaluation expense of $205,130,151 which was recorded prior to the warrant exercise. Upon exercise the $219,034,621 was reclassified form the warrant derivative liability to additional paid in capital. Certain other warrant holders did not exercise their warrants. Accordingly these warrants were revalued quarterly throughout the year, resulting in an additional warrant revaluation expense of $1,552,923. The fair values of derivative warrants attached to the 2020 Convertible Notes were determined based on Level 3 inputs, using the Black-Scholes-Merton model with standard valuation inputs. The valuation inputs used to value the warrants at March 31, 2020 included expected volatility of 89.91%, and annual interest rate of 0.37%. The valuation inputs for the warrants outstanding at December 31, 2020 included expected volatility of 169.99%, and annual risk-free interest rate of .33%. On May 15, 2020 stockholders of the Company approved the reduction of all previously issued warrants held by the 2020 Convertible Notes holders exercise price to $0.21. The repricing of the warrants resulted in a deemed dividend of $1,840,384, which was charged to additional paid in capital for warrants issued in connection with prior equity instruments and a warrant repricing loss of $744,321 recorded in Company’s consolidated statements of operations, if the warrants were issued in connection with prior debt transaction. All warrants were repriced using standard Black-Scholes-Merton valuation model. The valuation inputs for warrant repricing exercise included expected volatility varying between 98.56% and 203.81% and annual risk-free interest rate of approximately 0.2%. During the three months ended September 30, 2020, certain warrant holders exercised 16,670 warrants for shares of Common Stock at $3.30 per share in cash. On May 25, 2020, the Company issued to an individual and his management company 2,284,172 warrants to purchase shares of Common Stock at $1.39 per share for his involvement with the production and distribution of a television series being developed by the Company. The warrants have a 10-year term and are fully vested upon issuance. The warrants become immediately exercisable in whole upon the earlier of May 21, 2021 or the first date the series is exhibited on television or is otherwise available for viewing through a streaming service or otherwise on the internet. The Company anticipates the warrants will become exercisable by April 23, 2021. The warrants were valued at $3,174,806 using the Black-Scholes option pricing model. The warrants were issued as an advance payment against participation amounts that will become due to the individual upon the performance of the series. The warrants are being accounted as non-employee compensation expense which has been recorded as prepaid participation expense over the expected exercise period. During the year ended December 31, 2020, the Company recorded $1,327,646 and $1,847,160 as prepaid participation expense. The valuation inputs for the warrants included expected volatility of 253.01%, and annual risk-free interest rate of 0.7%. On October 15, 2020, the Company issued to an individual and his management company 1,000,000 warrants to purchase shares of Common Stock at $1.39 per share for his involvement with the production and distribution of a television series being developed by the Company. The shares become freely tradable, 50% upon the six-month anniversary of issuance and 50% upon one year of issuance. On October 28, 2020, the “Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors (the “Investors”), pursuant to which the Company agreed to issue and sell, in a registered direct offering by the Company directly to the Investors (the “Offering”), an aggregate of 37,400,000 shares (the “Shares”) of our Common Stock and warrants (“Investor Warrants”) to purchase up to 37,400,000 shares of our Common Stock (“Investor Warrant Shares”), available to the Company through an increase in authorized shares, as approved by the shareholders on August 27, 2020. The purchase price was $1.55 per fixed combination of one share of common stock and a warrant to purchase one share of common stock, for gross proceeds of approximately $57.9 million before deducting the placement agent fees and offering expenses. The Investor Warrants have an exercise price of $1.55 per share and are exercisable immediately on the date of issuance, and at any time thereafter up to five years from the initial issuance date. A holder will not have the right to exercise any portion of the Investor Warrant if the holder would beneficially own in excess of 4.99% (or, at the election of the holder, 9.99%) of the outstanding Common Stock immediately after exercise, except that upon notice from the holder to the Company, the holder may increase or decrease the beneficial ownership limitation up to 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Investor Warrants, provided that any increase in such beneficial ownership limitation shall not be effective until 61 days following notice from the holder to the Company. The Offering closed on October 30, 2020. The Special Equities Group, a division of Bradley Woods & Co. Ltd., acted as placement agent and received (i) a cash fee of approximately $4.1 million and (ii) warrants (“Placement Agent Warrants” and together with Investor Warrants, the “Warrants”) to purchase 2,618,000 shares of Common Stock (“Placement Agent Warrant Shares” and together with Investor Warrant Shares, the “Warrant Shares”). The Placement Agent Warrants have the same form and terms as the Investor Warrants. In addition, the Company will pay the placement agent a cash fee equal to 7% of the aggregate gross proceeds from the exercise of any Warrants. The Partnership has also agreed to reimburse the lead Investor for $25,000 of its legal fees and expenses incurred in connection with the Offering. The following table summarizes the changes in the Company’s outstanding warrants during the year ended December 31, 2019 and December 31, 2020: Warrants Outstanding Number Of Shares Exercise Prices Per Share Weighted Average Remaining Contractual Life Weighted Average Exercise Price Per Share Balance at December 31, 2018 5,899,389 $ 3.30 - 6.00 3.74 years $ 3.53 Warrants Granted 9,917,047 $ 2.55 - 2.12 5.39 years $ 0.35 Warrants Exercised 4,592,029 $ 2.12 - 3.90 2.77 years $ 2.77 Warrants Expired 100,002 $ 6.00 – $ 6.00 Balance at December 31, 2019 11,124,405 $ 0.21 - 5.30 4.37 years $ 0.84 Warrants Granted 115,375,982 $ 0.21 - 1.55 4.61 years $ 0.71 Warrants Exercised 80,820,087 $ 0.21 - 5.30 4.62 years $ 0.25 Warrants Expired 168,335 $ 3.30 - 3.60 – $ 3.50 Balance at June 30, 2020 45,511,965 $ 0.21 - 5.30 5.19 years $ 1.55 Exercisable December 31, 2019 7,176,620 $ 0.76 - 6.00 3.77 years $ 2.52 Exercisable December 31, 2020 42,227,793 $ 0.21 - 5.30 4.75 years $ 1.56 |
17. Income Taxes
17. Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 17: Income Taxes Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Net deferred tax liabilities consist of the following components as of December 31, 2020 and 2019: 2020 2019 Deferred tax assets: NOL Carryover $ 11,945,900 $ 10,068,800 Lease Liability 615,300 1,166,400 Stock Compensation 722,200 – Warrants 335,000 – Deferred Revenue 456,900 – Other 81,300 36,700 Subtotal 14,156,600 11,271,900 Valuation Allowance (13,603,100 ) (10,068,700 ) Deferred tax liabilities: Right of Use Assets (551,900 ) (1,122,100 ) Other (1,600 ) (81,100 ) Net Deferred Tax Asset $ – $ – The income tax provision differs from the amount of income tax determined by applying the U.S. federal tax rate to pretax income from continuing operations for the years ended December 31, 2020 and 2019 due to the following: 2020 2019 Income Tax Expense Computed at the Statutory Federal Rate $ (84,350,700 ) $ (2,411,100 ) State Income Taxes, Net of Federal Tax Effect (871,900 ) (613,300 ) Stock Compensation 1,333,300 38,700 Conversion Option Revaluation 36,085,500 – Secured Convertible Notes 216,700 483,100 Warrants 44,036,600 38,200 Other 16,200 15,000 Valuation Allowance 3,534,300 2,449,400 $ – $ – At December 31, 2020, the Company had Federal net operating loss carry forwards of approximately $43,112,000 and state net operating loss carry forwards of approximately $41,416,000 that may be offset against future taxable income will begin to expire in 2028, if not utilized. No tax benefit has been reported in the December 31, 2020 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years. The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes (“Topic 740”), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized. Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company’s financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operation in the provision for income taxes. As of December 31, 2020, the Company had no accrued interest or penalties related to uncertain tax positions. The Company files income tax returns in the U.S. federal jurisdiction and in the State of California. The Company is currently subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities since inception of the Company. |
18. Commitment and Contingencie
18. Commitment and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitment and Contingencies | Note 18: Commitments and Contingencies The Company has various contractual obligations, which are recorded as liabilities in our consolidated financial statements. Other items, such as certain purchase commitments and other executory contracts are not recognized as liabilities in our consolidated financial statements but are required to be disclosed in the footnotes to the financial statements. For example, the Company enters into various agreements associated with its individual properties. Some of these agreements call for the potential future payment of royalties or “profit” participations. In addition, the Company has contractual commitments for employment agreements of certain employees. Effective February 6, 2018, the Company entered into an operating lease for 6,969 square feet of general office space at 131 South Rodeo Drive, Suite 250, Beverly Hills, CA 90212 pursuant to a 91-month lease that commenced on May 25, 2018. We pay rent of $364,130 annually, subject to annual escalations of 3.5%. Effective December 28, 2018, the Company entered into a lease for 5,765 square feet of general office space at 8383 Wilshire Blvd., Suite 412, Beverly Hills, CA 90211 pursuant to a 6-month lease that commenced January 28, 2019. We paid rent of $24,501 monthly through August 31, 2019. Effective January 21, 2019, the Company entered into a sublease for the 6,969 square feet of general office space located at 131 South Rodeo Drive, Suite 250, Beverly Hills, CA 90212 pursuant to an 83-month sublease that commenced on February 4, 2019. The subtenant paid us rent of $422,321 annually, subject to annual escalations of 3.5%. On September 11, 2020, the Company entered into a Surrender Agreement with the landlord which terminated the 131 South Rodeo Dr lease agreement. As a result, the Company recorded decreases in the Right Of Use asset, accumulated amortization, and the lease liability of $2,142,863, $465,124 and $1,760,302 respectively. The termination of the lease resulted in a loss of $338,586. Simultaneously, as part of the Surrender Agreement the Sublease was terminated. Effective January 30, 2019, the Company entered into an operating lease for 5,838 square feet of general office space at 190 N. Canon Drive, 4th FL, Beverly Hills, CA 90210 pursuant to a 96-month lease that commenced on September 1, 2019. We pay rent of $392,316 annually, subject to annual escalations of 3.5%. In addition, the Company has contractual commitments for employment agreements of certain employees. Rental expenses incurred for operating leases during the twelve months ended December 31, 2020 and December 31, 2019 were $665,188 and $740,135, respectively. During the twelve months ended December 31, 2020 and December 31, 2019, the Company received sub-lease income of $316,762 and $432,285, respectively. The following is a schedule of future minimum contractual obligations as of December 31, 2020, under the Company’s operative leases and employment agreements: 2021 2022 2023 2024 2025 Thereafter Total Operating Leases $ 347,785 $ 429,984 $ 447,183 $ 465,071 $ 483,674 $ 847,192 $ 3,020,889 Employment Contracts 1,175,628 906,503 843,707 473,660 453,924 – 3,853,422 Consulting Contracts 300,000 187,500 – – – – 487,500 $ 1,823,413 $ 1,523,987 $ 1,290,890 $ 938,731 $ 937,598 $ 847,192 $ 7,361,811 In addition to employment agreements and operating leases, in the normal course of its business, the Company enters into various agreements associated with its individual properties. Some of these agreements call for the potential future payment of royalties or “profit” participations for either (i) the use of third party intellectual property, such as the case with Stan Lee and the Mighty 7 Llama Llama and Rainbow Rangers Additionally, other agreements contain options to acquire rights to intellectual property and would require payment to the rights holders contingent upon the Company securing minimum production, broadcast, or other financing commitments from third parties. Lastly, for its Cartoon Channel!, the Company licenses content for exhibition for which the Company is obligated to pay between 35% and 100% of revenues from the channel allocated to the aforementioned content after the deduction of certain direct operating expenses. |
19. Related Party Transactions
19. Related Party Transactions | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 19: Related Party Transactions On August 31, 2018, Llama entered into an animation production services agreement with Mr. Heyward for services as a producer for which he is to receive $124,000 through the course of production of the Company’s animated series Llama Llama Season 2. Pursuant to his employment agreements dated November 16, 2018 and November 16, 2020, Mr. Heyward is entitled to an Executive Producer fee of $12,400 per half hour episode for each episode he provides services as an executive producer. The first identified series under this employment agreement is Rainbow Rangers. Rainbow Rangers Season 2. On July 21, 2020, the Company entered into a merchandising and licensing agreement with Andy Heyward Animation Art (“AHAA”), whose principal is Andy Heyward, the Company’s Chief Executive Officer. The Company entered into a customary merchandise license agreement with AHAA for the use of characters and logos related to Warren Buffett’s Secret Millionaires Club Stan Lee’s Mighty 7 On September 17, 2019, Mr. Heyward purchased $500,000 of the Secured Convertible Notes from another holder. The Company did not receive any proceeds from this transaction. On October 2, 2019, Mr. Heyward purchased 1,000,000 shares of the Company’s common stock for an aggregate purchase price of $760,000, or $0.76 per share. On March 11, 2020, Mr. Heyward purchased $1,000,000 of the 2020 Convertible Notes with an original discount of $250,000. On June 19, 2020, Mr. Heyward received 5,658,474 shares of Common Stock upon the cashless exercise of 6,119,048 warrants. On June 23 , On December 7, 2020, Mr. Heyward’s was granted 7,500,000 Restricted Stock Units vest 1,875,000 on each of the next four anniversary dates. Mr. Heyward was also granted 7,500,000 Performance Based Restricted Stock Units that, if awarded, vest 1,875,000 on each of the next four anniversary dates. On December 7, 2020, Mr. Heyward’s was granted 5,000,000 options to purchase shares of the Company’s Common Stock at $1.39 per share. The options vest on the grant date. During the year ended December 31, 2020, Mr. Heyward was paid a bonus of $73,528, $11,370 in interest on the Senior Convertible Notes and $3,000 in board fees for his attendance at the unscheduled board meetings. During the year ended December 31, 2020, the Company paid $380,989 for security at Mr. Heyward’s residence. As of December 31, 2020, Andy Heyward is owed $2,420 for reimbursable expenses which are included in the “ Due To Related Parties |
20. Subsequent Events
20. Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 20: Subsequent Events On January 6, 2021, the Company issued 25,000 shares of the Company’s Common Stock for consulting services at $1.40 per share. The total amount of $35,000 was included in accrued expenses as of December 31, 2020. On January 25, 2021 the Company issued 136,986 shares of the Company’s Common Stock for marketing services at $1.46 per share. On January 27, 2021, the Company issued to certain employees 520,000 options to purchase shares of the Company’s Common Stock with an option price of $3.06 per share. The options vest on January 27, 2022 and have a five year term. On January 27, 2021, the Company issued to each of the members of the Board of Directors 20,000 options to purchase shares of the Company’s Common Stock with an option price of $3.06 per share. The options vest on December 31, 2022 and have a five year term. On January 28, 2021, the Company entered into letter agreements (the “Letter Agreements”) with certain existing institutional and accredited investors to exercise certain outstanding warrants (the “Existing Warrants”) to purchase up to an aggregate of 39,740,500 shares of the Company’s common stock at their original exercise price of $1.55 per share (the “Exercise”). The Company received approximately $61.6 million in gross proceeds. The Special Equities Group, a division of Bradley Woods & Co. Ltd., acted as warrant solicitation agent and received a cash fee of approximately $4.3 million. In consideration for the exercise of the Existing Warrants for cash, the exercising holders will receive new unregistered warrants to purchase up to an aggregate of 39,740,500 shares of common stock (the “New Warrants”) at an exercise price of $2.37 per share and with an exercise period of five years from the initial issuance date. Pursuant to the Letter Agreements, the New Warrants are substantially in the form of the Existing Warrants (except for customary legends and other language typical for an unregistered warrant, including the ability for the holder of the New Warrant to make a cashless exercise if no resale registration statement covering the common stock underlying the New Warrants is effective after six months), will be exercisable immediately, and will have a term of exercise of five years, and the Company will be required to register for resale the shares of common stock underlying the New Warrants. On February 1, 2021, the Company through GBI Acquisition LLC, a New Jersey limited liability company, and 2811210 Ontario Inc., a company organized under the laws of the Province of Ontario , Purchase Agreement Wishing Thumbelina Trustees Seller Sellers all of the issued and outstanding equity interests of ChizComm Ltd., a corporation organized in Canada (“ ChizComm Canada ”), and ChizComm USA Corp., a New Jersey corporation (“ ChizComm USA ” and, together with ChizComm Canada, “ ChizComm ”) (the “ Acquisition ”). Total consideration paid by the Company in the transaction at closing consisted of $8.5 million in cash and 1,977,658 shares (the “ Closing Shares Common Stock ”) with a value of approximately $3.5 million, both as subject to certain purchase price adjustments. Of the Closing Shares, 674,157 shares of Common Stock, with a value of approximately $1.2 million, were deposited into an escrow account to cover potential post-closing indemnification obligations of Sellers under the Purchase Agreement. Additionally, the Purchase Agreement also provides for the issuance of additional shares of Common Stock with an aggregate value of up to $8.0 million that may be issued to the Sellers if certain EBITDA and performance levels are achieved within a four-year period commencing on the date of the Purchase Agreement. On February 1, 2021, the Company issued 53,763 Restricted Stock Units to an employee. The Restricted Stock Units vest over three years with one third vesting each anniversary date. As a result of COVID 19, the majority of our employees started working remotely and we stopped paying rent in April of 2020. On November 30, 2020, the landlord filed a lawsuit demanding that the Company pay all past due rent. On February 18, 2021 we entered into a settlement agreement with the landlord whereby we agreed to pay $237,500 in full settlement of all claims and promised to resume paying the contractually agreed rent in full starting March 1, 2021. On September 21, 2020, the Company entered into an employment agreement with a senior executive. The agreement provided for a two-year term and an equity grant among other benefits. In or about January of 2021 the Company and the Executive mutually elected to terminate the agreement. As part of the separation agreement, the Company agreed to pay the executive $343,750 as well as $11,250 as reimbursement for health insurance premiums for 15 months. The executive was granted 750,000 fully vested options to purchase shares of the Company’s Common Stock., with a strike price of $3.06 and 1 year in which to exercise said options, to and including February 2, 2022. |
2. Summary of Significant Acc_2
2. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying 2020 and 2019 consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of Genius Brands International, Inc., its wholly-owned subsidiaries A Squared LLC, Llama Productions LLC and Rainbow Rangers Productions LLC. All significant inter-company balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. |
Financial Statement Reclassification | Financial Statement Reclassification Certain account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications. |
Cash, Cash Equivalents, and Restricted Cash | Cash and Cash Equivalents The Company considers all highly liquid debt instruments with initial maturities of three months or less to be cash equivalents. The Company had no restricted cash as of December 31, 2020 and 2019. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts Accounts receivable are presented on the balance sheets net of estimated uncollectible amounts. The Company assesses its accounts receivable balances on a quarterly basis to determine collectability and records an allowance for estimated uncollectible accounts in an amount approximating anticipated losses based on historical experience and future expectations. Individual uncollectible accounts are written off against the allowance when collection of the individual accounts appears doubtful. The Company had an allowance for doubtful accounts of $43,676 and $0 as of December 31, 2020 and 2019, respectively. |
Inventory | Inventory Inventories are stated at the lower of average cost or net realizable value and consist of finished goods such as DVDs, CDs and other products. The Company concluded that the inventory was obsolete and has written off the balance of $9,277 as of December 31, 2020. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost. Depreciation on property and equipment is computed using the straight-line method over the estimated useful lives of the assets, which range from two to seven years. Maintenance, repairs, and renewals, which neither materially add to the value of the assets nor appreciably prolong their lives, are charged to expense as incurred. Gains and losses from any dispositions of property and equipment are reflected in the statement of operations. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the excess of purchase price over the estimated fair value of net assets acquired in business combinations accounted for by the purchase method. In accordance with FASB ASC 350 Intangibles Goodwill and Other, goodwill and certain intangible assets are presumed to have indefinite useful lives and are thus not amortized, but subject to an impairment test annually or more frequently if indicators of impairment arise. We complete the annual goodwill and indefinite-lived intangible asset impairment tests at the end of each fiscal year. In testing goodwill, we initially use a qualitative approach and analyze relevant factors to determine if events and circumstances have affected the value of the goodwill. If the result of this qualitative analysis indicates that the value has been impaired, we then apply a quantitative approach to calculate the difference between the goodwill’s recorded value and its fair value. An impairment loss is recognized to the extent that the recorded value exceeds its fair value. Goodwill, in addition to being tested for impairment annually, is tested for impairment at interim periods if an event occurs or circumstances change such that it is more likely than not that the carrying amount of goodwill may be impaired. For the year ended December 31, 2020, the Company performed a qualitative analysis of the carrying value of goodwill. Based on the results of our analysis, we concluded that there is no impairment to the goodwill balance and no adjustment is necessary at this time. Other intangible assets have been acquired, either individually or with a group of other assets, and were initially recognized and measured based on fair value. Annual amortization of these intangible assets is computed based on the straight-line method over the remaining economic life of the asset. |
Film and Television Costs | Film and Television Costs The Company capitalizes production costs for episodic series produced in accordance with FASB ASC 926-20 Entertainment-Films - Other Assets - Film Costs. Accordingly, production costs are capitalized at actual cost and then charged against revenue based on the initial market revenue evidenced by a firm commitment over the period of commitment. The Company expenses all capitalized costs that exceed the initial market firm commitment revenue in the period of delivery of the episodes. The Company capitalizes production costs for films produced in accordance with FASB ASC 926-20 Entertainment-Films - Other Assets - Film Costs. Accordingly, production costs are capitalized at actual cost and then charged against revenue quarterly as a cost of production based on the relative fair value of the film(s) delivered and recognized as revenue. The Company evaluates its capitalized production costs annually and limits recorded amounts by their ability to recover such costs through expected future sales. Additionally, for both episodic series and films, from time to time, the Company develops additional content, improved animation and bonus songs/features for its existing content. After the initial release of the film or episodic series, the costs of significant improvement to existing products are capitalized while routine and periodic alterations to existing products are expensed as incurred. |
Debt and Attached Equity-Linked Instruments | Debt and Attached Equity-Linked Instruments The Company measures issued debt on an amortized cost basis, net of debt premium/discount and debt issuance costs amortized using the effective interest rate method or the straight-line method when the latter does not lead to materially different results. The Company accounts for the proceeds from the issuance of convertible notes payable in accordance with FASB ASC 470-20 Debt with Conversion and Other Options. Pursuant to FASB ASC 470-20, the intrinsic value of the embedded conversion feature (beneficial conversion interest), which is in the money on the commitment date is included in the discount to debt and amortized to interest expense over the term of the note agreement. When the conversion option is not separated, the Company accounts for the entire convertible instrument including debt and the conversion feature as a liability. The Company analyzes freestanding equity-linked instruments including warrants attached to debt to conclude whether the instrument meets the definition of the derivative and whether it is considered indexed to the Company’s own stock. If the instrument is not considered indexed to Company’s stock, it is classified as an asset or liability recorded at fair value. If the instrument considered indexed to Company’s stock, the Company analyzes additional equity classification requirements per ASC 815-40 Contract’s in Entity’s Own Equity. When the requirements are met the instrument is recorded as part of the Company’s equity, initially measured based on its relative fair value with no subsequent re-measurement. When the equity classification requirements are not met, the instrument is recorded as an asset or liability and is measured at fair value with subsequent changes in fair value recorded in earnings. When required, the Company also considers the bifurcation guidance for embedded derivatives per FASB ASC 815-15 Embedded Derivatives. |
Revenue Recognition | Revenue Recognition The Company accounts for revenue according to standard ASC 606 (Topic 606). The Company has identified the following six material and distinct performance obligations: · License rights to exploit Functional Intellectual Property (Functional Intellectual Property or “functional IP” is defined as intellectual property that has significant standalone functionality, such as the ability be played or aired. Functional intellectual property derives a substantial portion of its utility from its significant standalone functionality.) · License rights to exploit Symbolic Intellectual Property (Symbolic Intellectual Property or “symbolic IP” is intellectual property that is not functional as it does not have significant standalone use and substantially all of the utility of symbolic IP is derived from its association with the entity’s past or ongoing activities, including its ordinary business activities, such as the Company’s licensing and merchandising programs associated with its animated content.) · Options to renew or extend a contract at fixed terms. (While this performance obligation is not significant for the Company’s current contracts, it could become significant in the future.) · Options on future seasons of content at fixed terms. (While this performance obligation is not significant for the Company’s current contracts, it could become significant in the future.) · Fixed fee advertising revenue generated from the Genius Brands Network · Variable fee advertising revenue generated from the Genius Brands Network As a result of the change, beginning January 1, 2018, the Company began recognizing revenue related to licensed rights to exploit functional IP in two ways. For minimum guarantees, the Company recognizes fixed revenue upon delivery of content and the start of the license period. For functional IP contracts with a variable component, the Company estimates revenue such that it is probable there will not be a material reversal of revenue in future periods. Revenue under these types of contracts was previously recognized when royalty statements were received. The Company began recognizing revenue related to licensed rights to exploit symbolic IP substantially similarly to functional IP. Although it has a different recognition pattern from functional IP, the valuation method is substantially the same, depending on the nature of the license. The Company sells advertising on its Kid Genius channel in the form of either flat rate promotions or impressions served. For flat rate promotions with a fixed term, the Company recognizes revenue when all five revenue recognition criteria under FASB ASC 606 are met. For impressions served, the Company delivers a certain minimum number of impressions on the channel to the advertiser for which the advertiser pays a contractual costs per thousand (CPM) per impression. Impressions served are reported to the Company on a monthly basis, and revenue is reported in the month the impressions are served. The Company recognizes revenue related to product sales when we complete our performance obligation, which is when the goods are transferred to the buyer. |
Direct Operating Costs | Direct Operating Costs Direct operating costs include costs of our product sales, non-capitalizable film costs, film and television cost amortization expense, and participation expense 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. |
Share-Based Compensation | Share-Based Compensation As required by FASB ASC 718 - Stock Compensation, the Company recognizes an expense related to the fair value of our share-based compensation awards, including stock options, using the Black-Scholes calculation as of the date of grant. The Company has elected to use the graded attribution method for awards which are in-substance, multiple awards based on the vesting schedule. The Company’s accounting policy elected for forfeitures is not to estimate the number of awards that are expected to vest. Instead, the Company accounts for forfeitures when they occur. The Company issues authorized shares available for the issuance under 2015 Plan upon employees’ exercise of their stock options. |
Earnings Per Share | Earnings Per Share Basic earnings (loss) per common share (“EPS”) is calculated by dividing net income (loss) applicable to common shareholders by the weighted average number of shares of common stock outstanding for the period. Diluted EPS is calculated by dividing net income (loss) applicable to common shareholders by the weighted average number of shares of common stock outstanding, plus the assumed exercise of all dilutive securities using the treasury stock or “as converted” method, as appropriate. During periods of net loss, all common stock equivalents are excluded from the diluted EPS calculation because they are antidilutive. |
Income Taxes | Income Taxes Deferred income tax assets and liabilities are recognized based on differences between the financial statement and tax basis of assets and liabilities using presently enacted tax rates. At each balance sheet date, the Company evaluates the available evidence about future taxable income and other possible sources of realization of deferred tax assets and records a valuation allowance that reduces the deferred tax assets to an amount that represents management’s best estimate of the amount of such deferred tax assets that more likely than not will be realized. |
Concentration of Risk | Concentration of Risk The Company’s cash is maintained at two financial institutions and from time to time the balances for this account exceed the Federal Deposit Insurance Corporation’s (“FDIC”) insured amount. Balances on interest bearing deposits at banks in the United States are insured by the FDIC up to $250,000 per account. As of December 31, 2020, the Company had four accounts with a combined uninsured balance of $99,260,006. As of December 31, 2019, the Company had no accounts with a combined uninsured balance. For fiscal year 2020, the Company had two customers whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 44% of total revenue and represented 22% of accounts receivable. For fiscal year 2019, the Company had two customers whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 65% of total revenue and represented 95% of accounts receivable. The major customers for the year ended December 31, 2020 are the same as the major customers at December 31, 2019. There is significant financial risk associated with a dependence upon a small number of customers. The Company periodically assesses the financial strength of these customers and establishes allowances for any anticipated bad debt. At December 31, 2020 and 2019, the Company recorded an allowance for bad debt of $43,676 and $0, respectively. |
Fair value of financial instruments | Fair value of financial instruments The carrying amounts of cash, receivables, accounts payable, and accrued liabilities approximate fair value due to the short-term maturity of the instruments. The carrying amount of long-term receivables approximate fair value due to the contractual nature of the obligation, payment schedule, and the current interest and inflation rate environments. The carrying amount of the Production Loan Facility approximates fair value since the debt carries a variable interest rate that is tied to either the current Prime or LIBOR rates plus an applicable spread. We previously adopted FASB ASC 820 for financial instruments measured at fair value on a recurring basis. FASB ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP and expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC Topic 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include: · Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; · Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and · Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2019, the FASB issued ASU No. 2019-02, Entertainment-Films-Other Assets-Film Costs (Subtopic 926-20) and Entertainment-Broadcasters Intangibles-Goodwill and Other (Subtopic 920-350). The update aligns the accounting for production costs of an episodic television series with the accounting for production costs of films by removing the content distinction for capitalization. The amendments also require that an entity reassess estimates of the use of a film in a film group and account for any changes prospectively. The amendments in this update require that an entity test a film or license agreement for program material within the scope of Subtopic 920-350 for impairment at a film group level when the film or license agreement is predominantly monetized with other films and/or license agreements. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company has prospectively adopted ASU 2016-18. The impact to our consolidated financial position, results of operations and cash flows was not material. In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The update simplifies the accounting for convertible instruments by removing certain separation models in Subtopic 470-20, Debt—Debt with Conversion and Other Options, for convertible instruments. As part of the amendment, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. The FASB has eliminated the cash conversion and beneficial conversion feature models. The FASB has also modified accounting rules relating to application of the scope exception from derivative accounting. The amendments revise the guidance in ASC 815-40-25-10, to remove three out of seven conditions from the settlement guidance, referred to as additional equity classification requirements. Following the above amendments, more convertible debt instruments will be accounted for as a single liability measured at its amortized cost and more convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no features require bifurcation and recognition as derivatives. The amendments are effective for public business entities, excluding smaller reporting companies, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, including smaller reporting companies the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is in the process of assessing the impact of the amendments to Company’s consolidated financial statements. Various other accounting pronouncements have been recently issued, most of which represented technical corrections to the accounting literature or were applicable to specific industries/transactions or special circumstances and are not expected to have a material effect on our financial position, results of operations, or cash flows. |
3. Property and Equipment, Net
3. Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | Property and Equipment, Net December 31, 2020 December 31, 2019 Furniture and Equipment $ 19,419 $ 19,419 Computer Equipment 168,122 144,643 Leasehold Improvements 14,182 14,182 Software 68,152 15,737 Property and Equipment, Gross 269,875 193,981 Less Accumulated Depreciation (174,047 ) (129,105 ) Property and Equipment, Net $ 95,828 $ 64,876 |
4. Right of Use Leased Asset (T
4. Right of Use Leased Asset (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Schedule of right of use asset | Right Of Use Leased Asset December 31, 2020 December 31, 2019 Office Lease Asset $ 2,245,093 $ 4,387,956 Printer Lease Asset 12,374 12,374 Right Of Use Asset, Gross 2,257,467 4,400,330 Office Lease Accumulated Amortization (274,980 ) (383,118 ) Printer Lease Accumulated Amortization (10,123 ) (7,375 ) Right Of Use Asset, Net $ 1,972,364 $ 4,009,837 |
5. Film and Television Costs,_2
5. Film and Television Costs, Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Film, Capitalized Cost [Abstract] | |
Schedule of film and television costs activity | Film and Television Costs, Net Total Film and Television Costs, Net as of December 31, 2018 $ 8,166,131 Additions to Film and Television Costs 3,920,013 Capitalized Interest 50,765 Film Amortization Expense (2,230,024 ) Film and Television Costs, Net as of December 31, 2019 9,906,885 Additions to Film and Television Costs 2,901,207 Capitalized Interest – Film Amortization Expense (979,598 ) Film and Television Costs, Net as of September 30, 2020 $ 11,828,494 |
6. Goodwill and Intangible As_2
6. Goodwill and Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Asset | Intangible Assets, Net December 31, 2020 December 31, 2019 Trademarks (a) $ 129,831 $ 129,831 Other Intangible Assets (a) 299,028 272,528 Intangible Assets, Gross 428,859 402,359 Less Accumulated Amortization (b) (400,165 ) (350,776 ) Intangible Assets, Net $ 28,694 $ 51,583 (a) Pursuant to FASB ASC 350-30-35, the Company reviews these intangible assets periodically to determine if the value should be retired or impaired due to recent events. At December 31, 2019, the Company determined that the Product Masters inventory had no further useful life and the asset value and accumulated amortization were written off. (b) During the years ended December 31, 2020 and December 31, 2019, the Company recognized, $49,388 and $38,405, respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets. |
Schedule of expected future ingtangible asset amortization | Expected future intangible asset amortization as of December 31, 2020 is as follows: Fiscal Year: 2021 11,246 2022 10,528 2023 6,187 2024 733 Total $ 28,694 |
8. Accrued Liabilities - Curr_2
8. Accrued Liabilities - Current (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of other accrued liabilities | As of December 31, 2020, and 2019, the Company had the following current accrued liabilities: December 31, 2020 December 31, 2019 Other Accrued Expenses (a) $ 408,459 $ 124,940 Accrued Salaries and Wages (b) 428,922 231,481 Total Accrued Liabilities – Current $ 837,381 $ 356,421 (a) Other Accrued Expenses include the sub lease security deposit liability on the Rodeo Drive location as well as estimates of expenses incurred but not yet recorded. (b) Accrued Salaries and Wages include accrued Salaries and vacation payable to employees |
14. Stock Options (Tables)
14. Stock Options (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of assumptions used | During the year ended December 31, 2019, the Company granted options to purchase 81,000 shares of common stock to officers. These stock options generally vest between one and three years. The fair value of these options was determined to be $117,797 using the Black-Scholes option pricing model based on the following assumptions: Exercise Price $1.99 Dividend Yield 0% Volatility 125% Risk-free interest rate 2.44% Expected life of options 3.0 years During the year ended December 31, 2020, the Company granted options to purchase 8,880,000 shares of common stock to officers. These stock options generally vest between one and three years. The fair value of these options was determined to be $12,231,185 using the Black-Scholes option pricing model based on the following assumptions: Exercise Price $1.39 - $10.00 Dividend Yield 0% Volatility 121% - 122% Risk-free interest rate 0.31% -0.39% Expected life of options 5.0 years |
Schedule of stock option activity | The following table summarizes the changes in the Company’s stock option plan during the year ended December 31, 2019 and December 31, 2020: Options Outstanding Number Of Shares Exercise Prices Per Share Weighted Average Remaining Contractual Life Weighted Average Exercise Price Per Share Balance at December 31, 2018 1,259,415 $ 2.09 - 12.00 2.50 years $ 7.39 Options Granted 81,000 $ 1.99 3 years $ 1.99 Options Exercised – $ – – $ – Options Cancelled 50,549 $ 1.99 - 2.70 4.51 years $ 6.34 Options Expired – $ – – $ – Balance at December 31, 2019 1,289,866 $ 1.99 - 12.00 6.49 years $ 7.18 Options Granted 8,880,000 $ 1.39 - 10.00 4.91 years $ 1.66 Options Exercised – $ – – $ – Options Cancelled 2,000 $ 1.99 3.18 years $ 1.99 Options Expired 1,051,690 $ 2.70 - 2.82 – $ 2.71 Balance at December 31, 2020 9,116,176 $ 1.39 - 10.00 4.84 years $ 1.69 Exercisable December 31, 2019 1,176,416 $ 1.99 - 9.00 6.25 years $ 7.67 Exercisable December 31, 2020 6,449,452 $ 1.39 - 3.17 4.87 years $ 1.44 |
15. Restricted Stock Units (Tab
15. Restricted Stock Units (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Restricted Stock Units | |
Schedule of restricted stock units | The following table summarizes the Company’s restricted stock issuance during the year ended December 31, 2020: RSUs Outstanding Number Of Shares Exercise Prices Per Share Weighted Average Remaining Contractual Life Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Balance at December 31, 2019 – $ – – $ – – RSUs Granted 9,075,000 $ 1.39 4.94 years $ 1.39 – RSUs Exercised – $ – – $ – – RSUs Cancelled – $ – – $ – – RSUs Expired – $ – – $ – – Balance at December 31, 2020 9,075,000 $ 1.39 4.94 years $ 1.39 – Exercisable December 31, 2019 – $ – – $ – – Exercisable December 31, 2020 – $ – – $ – – |
16. Warrants (Tables)
16. Warrants (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Warrants and Rights Note Disclosure [Abstract] | |
Schedule of warrant activity | The following table summarizes the changes in the Company’s outstanding warrants during the year ended December 31, 2019 and December 31, 2020: Warrants Outstanding Number Of Shares Exercise Prices Per Share Weighted Average Remaining Contractual Life Weighted Average Exercise Price Per Share Balance at December 31, 2018 5,899,389 $ 3.30 - 6.00 3.74 years $ 3.53 Warrants Granted 9,917,047 $ 2.55 - 2.12 5.39 years $ 0.35 Warrants Exercised 4,592,029 $ 2.12 - 3.90 2.77 years $ 2.77 Warrants Expired 100,002 $ 6.00 – $ 6.00 Balance at December 31, 2019 11,124,405 $ 0.21 - 5.30 4.37 years $ 0.84 Warrants Granted 115,375,982 $ 0.21 - 1.55 4.61 years $ 0.71 Warrants Exercised 80,820,087 $ 0.21 - 5.30 4.62 years $ 0.25 Warrants Expired 168,335 $ 3.30 - 3.60 – $ 3.50 Balance at June 30, 2020 45,511,965 $ 0.21 - 5.30 5.19 years $ 1.55 Exercisable December 31, 2019 7,176,620 $ 0.76 - 6.00 3.77 years $ 2.52 Exercisable December 31, 2020 42,227,793 $ 0.21 - 5.30 4.75 years $ 1.56 |
17. Income Taxes (Tables)
17. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred tax assets and liabilities | Net deferred tax liabilities consist of the following components as of December 31, 2020 and 2019: 2020 2019 Deferred tax assets: NOL Carryover $ 11,945,900 $ 10,068,800 Lease Liability 615,300 1,166,400 Stock Compensation 722,200 – Warrants 335,000 – Deferred Revenue 456,900 – Other 81,300 36,700 Subtotal 14,156,600 11,271,900 Valuation Allowance (13,603,100 ) (10,068,700 ) Deferred tax liabilities: Right of Use Assets (551,900 ) (1,122,100 ) Other (1,600 ) (81,100 ) Net Deferred Tax Asset $ – $ – |
Schedule of effective income tax rate reconciliation | The income tax provision differs from the amount of income tax determined by applying the U.S. federal tax rate to pretax income from continuing operations for the years ended December 31, 2020 and 2019 due to the following: 2020 2019 Income Tax Expense Computed at the Statutory Federal Rate $ (84,350,700 ) $ (2,411,100 ) State Income Taxes, Net of Federal Tax Effect (871,900 ) (613,300 ) Stock Compensation 1,333,300 38,700 Conversion Option Revaluation 36,085,500 – Secured Convertible Notes 216,700 483,100 Warrants 44,036,600 38,200 Other 16,200 15,000 Valuation Allowance 3,534,300 2,449,400 $ – $ – |
18. Commitment and Contingenc_2
18. Commitment and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments | The following is a schedule of future minimum contractual obligations as of December 31, 2020, under the Company’s operative leases and employment agreements: 2021 2022 2023 2024 2025 Thereafter Total Operating Leases $ 347,785 $ 429,984 $ 447,183 $ 465,071 $ 483,674 $ 847,192 $ 3,020,889 Employment Contracts 1,175,628 906,503 843,707 473,660 453,924 – 3,853,422 Consulting Contracts 300,000 187,500 – – – – 487,500 $ 1,823,413 $ 1,523,987 $ 1,290,890 $ 938,731 $ 937,598 $ 847,192 $ 7,361,811 |
1. Organization and Business (D
1. Organization and Business (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Net loss | $ (401,669,805) | $ (11,481,245) | |
Net Cash Used in Operating Activities | (7,844,715) | (6,251,150) | |
Accumulated deficit | (469,557,324) | (66,047,135) | |
Stockholders equity | 119,196,677 | 9,086,702 | $ 12,839,771 |
Cash and cash equivalents | $ 100,456,324 | $ 305,121 | $ 3,085,026 |
2. Significant Accounting Polic
2. Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Restricted Cash | $ 0 | $ 0 |
Allowance for doubtful accounts | 43,676 | 0 |
Reserve for obsolete inventory | 9,277 | |
FDIC amount | 250,000 | |
Uninsured cash balances | $ 99,260,006 | $ 0 |
Sales Revenue, Net [Member] | Two Customer | ||
Concentration risk percentage | 44.00% | 65.00% |
Accounts Receivable [Member] | Two Customer | ||
Concentration risk percentage | 22.00% | 95.00% |
3. Property and Equipment, Ne_2
3. Property and Equipment, Net (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Property and equipment, gross | $ 269,875 | $ 193,981 |
Less Accumulated Depreciation | (174,047) | (129,105) |
Property and Equipment, Net | 95,828 | 64,876 |
Furniture and Fixtures [Member] | ||
Property and equipment, gross | 19,419 | 19,419 |
Computer Equipment [Member] | ||
Property and equipment, gross | 168,122 | 144,643 |
Leasehold Improvements [Member] | ||
Property and equipment, gross | 14,182 | 14,182 |
Software [Member] | ||
Property and equipment, gross | $ 68,152 | $ 15,737 |
3. Property and Equipment, Ne_3
3. Property and Equipment, Net (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 44,942 | $ 37,734 |
4. Right of Use Leased Asset (D
4. Right of Use Leased Asset (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Right of use asset, gross | $ 2,257,467 | $ 4,400,330 |
Right of use asset, net | 1,972,364 | 4,009,837 |
Office Lease [Member] | ||
Right of use asset, gross | 2,245,093 | 4,387,956 |
Total accumulated amortization | (274,980) | (383,118) |
Printer Lease [Member] | ||
Right of use asset, gross | 12,374 | 12,374 |
Total accumulated amortization | $ (10,123) | $ (7,375) |
4. Right of Use Leased Asset _2
4. Right of Use Leased Asset (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||
Amortization expense | $ 285,103 | $ 390,493 |
5. Film and Television Costs,_3
5. Film and Television Costs, Net (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Film And Television Costs Net | ||
Film and Television costs, beginning balance | $ 9,906,885 | $ 8,166,131 |
Additions to Film and Television Costs | 2,901,207 | 3,920,013 |
Capitalized interest | 0 | 50,765 |
Film Amortization Expense | (979,598) | (2,230,024) |
Film and Television Costs, ending balance | $ 11,828,494 | $ 9,906,885 |
5. Film and Television Costs,_4
5. Film and Television Costs, net (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Film And Television Costs Net | ||
Film amortization expense | $ 979,598 | $ 2,230,024 |
6. Goodwill and Intangible As_3
6. Goodwill and Intangible Assets, Net (Details - Intangibles) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | |
Intangible assets | $ 428,859 | $ 402,359 | |
Less Accumulated Amortization | [1] | (400,165) | (350,776) |
Net Intangible Assets | 28,694 | 51,583 | |
Trademarks [Member] | |||
Intangible assets | [2] | 129,831 | 129,831 |
Other Intangible Assets [Member] | |||
Intangible assets | [2] | $ 299,028 | $ 272,528 |
[1] | During the years ended December 31, 2020 and December 31, 2019, the Company recognized, $49,388 and $38,405, respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets. | ||
[2] | Pursuant to FASB ASC 350-30-35, the Company reviews these intangible assets periodically to determine if the value should be retired or impaired due to recent events. At December 31, 2019, the Company determined that the Product Masters inventory had no further useful life and the asset value and accumulated amortization were written off. |
6. Goodwill and Intangible As_4
6. Goodwill and Intangible Assets (Details - future amortization) | Dec. 31, 2020USD ($) |
Future intangible asset amortization | |
2021 | $ 11,246 |
2022 | 10,528 |
2023 | 6,187 |
2024 | 733 |
Total | $ 28,694 |
6. Goodwill and Intangible As_5
6. Goodwill and Intangible Assets, Net (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2013 | |
Goodwill | $ 10,365,806 | $ 10,365,806 | $ 10,365,805 |
Amortization expense | 979,598 | 2,230,024 | |
Trademarks, Product Masters, and Other Intangible Assets [Member] | |||
Amortization expense | $ 49,388 | $ 38,405 |
7. Deferred Revenue (Details Na
7. Deferred Revenue (Details Narrative) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred revenue, current | $ 4,432,377 | $ 4,432,377 |
Deferred revenue, noncurrent | 5,108,953 | $ 5,108,953 |
Royalty Advance [Member] | ||
Deferred revenue, current | $ 3,367,086 |
8. Accrued Liabilities - Curr_3
8. Accrued Liabilities - Current (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |||
Other accrued expenses | [1] | $ 408,459 | $ 124,940 |
Accrued Salaries and Wages | [2] | 428,922 | 231,481 |
Total accrued liabilities | $ 837,381 | $ 356,421 | |
[1] | Other Accrued Expenses include the sub lease security deposit liability on the Rodeo Drive location as well as estimates of expenses incurred but not yet recorded. | ||
[2] | Accrued Salaries and Wages include accrued Salaries and vacation payable to employees |
9. Secured Convertible Notes (D
9. Secured Convertible Notes (Details Narrative) - USD ($) | Mar. 11, 2020 | Jun. 19, 2020 | Jul. 22, 2019 | Feb. 19, 2019 | May 15, 2020 | Jul. 21, 2020 | Aug. 23, 2019 | Aug. 17, 2018 | Sep. 20, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Jan. 15, 2020 |
Proceeds from convertible debt | $ 6,098,000 | $ 0 | ||||||||||
Warrant exercise price | $ 0.21 | |||||||||||
Loss on extinguishment of debt | 0 | (4,432,819) | ||||||||||
Fair value of warrants | 210,895,356 | 182,075 | ||||||||||
Proceeds from warrant exercised | $ 5,649,319 | $ 55,011 | ||||||||||
Investment | 1,000,000 | $ 0 | ||||||||||
Secured Convertible Notes [Member] | ||||||||||||
Repayment of convertible notes | $ 750,000 | |||||||||||
Purchase Agreement [Member] | Amendment to February 2019 Offering [Member] | Warrants [Member] | ||||||||||||
Warrants issued, shares | 1,800,000 | |||||||||||
Warrant exercise price | $ 2.55 | |||||||||||
Loss on extinguishment of debt | $ (2,109,818) | |||||||||||
Fair value of warrants | $ 1,287,962 | |||||||||||
Purchase Agreement [Member] | August 2019 Offering [Member] | Warrants [Member] | ||||||||||||
Warrants issued, shares | 1,800,000 | |||||||||||
Warrant exercise price | $ 1.14 | |||||||||||
Loss on extinguishment of debt | $ (957,867) | |||||||||||
Fair value of warrants | $ 77,172 | |||||||||||
Purchase Agreement [Member] | Warrants [Member] | ||||||||||||
Warrants issued, shares | 1,800,000 | |||||||||||
Warrant exercise price | $ 3 | |||||||||||
Purchase Agreement [Member] | Secured Convertible Notes [Member] | ||||||||||||
Proceeds from convertible debt | $ 4,500,000 | |||||||||||
Debt maturity date | Aug. 20, 2019 | |||||||||||
Debt interest rate | 10.00% | |||||||||||
Conversion price per share | $ 2.50 | |||||||||||
Beneficial conversion feature | $ 1,561,111 | |||||||||||
Purchase Agreement [Member] | Secured Convertible Notes [Member] | ||||||||||||
Debt carrying amount | $ 1,958,334 | |||||||||||
Debt maturity date | Jan. 31, 2020 | |||||||||||
Purchase Agreement [Member] | Secured Convertible Notes [Member] | ||||||||||||
Debt carrying amount | $ 687,500 | |||||||||||
Debt maturity date | Aug. 20, 2021 | |||||||||||
Purchase Agreement [Member] | Secured Convertible Notes [Member] | ||||||||||||
Debt carrying amount | 883,332 | |||||||||||
Repayment of convertible notes | $ 662,649 | |||||||||||
Purchase Agreement [Member] | Investor Notes [Member] | ||||||||||||
Debt carrying amount | $ 4,000,000 | |||||||||||
Warrants issued, shares | 6,547,619 | |||||||||||
Warrant exercise price | $ 0.26 | |||||||||||
Investment | $ 1,000,000 | |||||||||||
Purchase Agreement [Member] | 2020 Convertible Notes [Member] | ||||||||||||
Warrants issued, shares | 8,715,229 | 9,172,463 | ||||||||||
Warrant exercise price | $ 0.21 | |||||||||||
Revaluation expense | $ 171,835,729 | |||||||||||
Purchase Agreement [Member] | Accredited Investors [Member] | ||||||||||||
Debt carrying amount | $ 13,750,000 | |||||||||||
Proceeds from convertible debt | $ 11,000,000 | |||||||||||
Warrants issued, shares | 65,476,190 | |||||||||||
Warrant exercise price | $ 0.26 | |||||||||||
Debt discount | $ 2,750,000 | |||||||||||
Proceeds from warrant exercised | $ 7,000,000 |
10. Production Loan Facility (D
10. Production Loan Facility (Details Narrative) - Llama Productions [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Credit line initiation date | Aug. 8, 2016 | |
Credit line term | 40 months | |
Credit line interest rate | Either Prime plus 1% or one, three, or six month LIBOR plus 3.25% | |
Credit line effective interest rates | 5.53% and 6.14% | |
Net borrowings under the facility | $ 1,099,713 | $ 3,091,739 |
11. Disputed Trade Payable (Det
11. Disputed Trade Payable (Details Narrative) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Reload Warrants [Member] | ||
Disputed Trade Payable | $ 925,000 | $ 925,000 |
12. Payroll Protection Progra_2
12. Payroll Protection Program Loan (Details Narrative) - Paycheck Protection Program [Member] | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Proceeds from loan | $ 366,267 |
Interest rate | 1.00% |
13. Stockholders' Equity (Detai
13. Stockholders' Equity (Details Narrative) - USD ($) | Jun. 23, 2020 | Jan. 15, 2020 | Jan. 09, 2020 | Jan. 08, 2020 | Jan. 10, 2019 | Jun. 24, 2020 | Jun. 19, 2020 | Jan. 22, 2020 | Dec. 10, 2019 | Oct. 22, 2019 | Jan. 17, 2019 | Feb. 14, 2019 | Mar. 22, 2020 | Apr. 11, 2019 | May 08, 2020 | May 07, 2020 | May 02, 2019 | May 28, 2020 | May 18, 2020 | May 28, 2019 | May 27, 2019 | Jul. 15, 2020 | Jun. 22, 2020 | Jul. 14, 2019 | Jul. 22, 2020 | Jul. 21, 2020 | Aug. 02, 2019 | Jul. 16, 2019 | Oct. 02, 2019 | Sep. 18, 2019 | Oct. 28, 2020 | Oct. 25, 2020 | Oct. 28, 2019 | Oct. 18, 2019 | Dec. 14, 2020 | Nov. 17, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 17, 2019 |
Shares authorized | 400,000,000 | 400,000,000 | |||||||||||||||||||||||||||||||||||||
Common shares outstanding | 258,438,514 | 21,877,724 | |||||||||||||||||||||||||||||||||||||
Preferred stock issued | 0 | 1,097 | |||||||||||||||||||||||||||||||||||||
Preferred stock outstanding | 0 | 1,097 | |||||||||||||||||||||||||||||||||||||
Warrant exercise price | $ 0.21 | ||||||||||||||||||||||||||||||||||||||
Gross proceeds from sale of stock | $ 98,583,549 | $ 3,021,552 | |||||||||||||||||||||||||||||||||||||
Proceeds from warrant exercised | $ 5,649,319 | $ 55,011 | |||||||||||||||||||||||||||||||||||||
Number of warrants exercised | 29,666,283 | 16,670 | |||||||||||||||||||||||||||||||||||||
Shares issued for debt conversion | 65,476,190 | ||||||||||||||||||||||||||||||||||||||
Securities Purchase Agreement [Member] | |||||||||||||||||||||||||||||||||||||||
Sale price, per share | $ 0.76 | ||||||||||||||||||||||||||||||||||||||
Stock issued new, shares | 663,158 | ||||||||||||||||||||||||||||||||||||||
Preferred Stock | |||||||||||||||||||||||||||||||||||||||
Stock converted, shares issued | 3,171,428 | 1,571,430 | |||||||||||||||||||||||||||||||||||||
Stock converted, shares converted | 667 | 330 | |||||||||||||||||||||||||||||||||||||
Conversion price | $ 0.21 | $ 0.21 | |||||||||||||||||||||||||||||||||||||
Series A Convertible Preferred Stock [Member] | |||||||||||||||||||||||||||||||||||||||
Stock converted, shares issued | 3,171,428 | 1,571,428 | 476,190 | ||||||||||||||||||||||||||||||||||||
Stock converted, shares converted | 667 | 330 | 100 | ||||||||||||||||||||||||||||||||||||
Conversion price | $ 0.21 | $ 0.21 | $ 0.21 | ||||||||||||||||||||||||||||||||||||
Andy Heyward [Member] | |||||||||||||||||||||||||||||||||||||||
Sale price, per share | $ 0.76 | ||||||||||||||||||||||||||||||||||||||
Stock issued new, shares | 1,000,000 | ||||||||||||||||||||||||||||||||||||||
Gross proceeds from sale of stock | $ 760,000 | ||||||||||||||||||||||||||||||||||||||
Warrant Exercise Agreements [Member] | |||||||||||||||||||||||||||||||||||||||
Shares issued, price per share | $ 0.76 | ||||||||||||||||||||||||||||||||||||||
Stock issued for exercise of warrants, shares | 945,894 | 3,646,135 | |||||||||||||||||||||||||||||||||||||
Warrant exercise price | $ 0.21 | ||||||||||||||||||||||||||||||||||||||
Investor Relations [Member] | Common Stock [Member] | |||||||||||||||||||||||||||||||||||||||
Shares issued, price per share | $ 2.44 | $ 2.55 | |||||||||||||||||||||||||||||||||||||
Stock issued for services, shares | 17,200 | 11,765 | |||||||||||||||||||||||||||||||||||||
Private Transaction [Member] | |||||||||||||||||||||||||||||||||||||||
Warrant exercise price | $ 0.34 | ||||||||||||||||||||||||||||||||||||||
Warrants issued | 500,000 | ||||||||||||||||||||||||||||||||||||||
Proceeds from warrant exercised | $ 170,000 | ||||||||||||||||||||||||||||||||||||||
Purchase Agreement [Member] | |||||||||||||||||||||||||||||||||||||||
Shares issued, price per share | $ 0.2568 | $ 0.454 | $ 0.35 | $ 1.50 | $ 1.20 | ||||||||||||||||||||||||||||||||||
Stock issued new, shares | 4,000,000 | 12,000,000 | 8,000,000 | 20,000,000 | 7,500,000 | ||||||||||||||||||||||||||||||||||
Gross proceeds from sale of stock | $ 1,000,000 | $ 5,448,000 | $ 2,800,000 | $ 30,000,000 | $ 9,000,000 | ||||||||||||||||||||||||||||||||||
Marketing services [Member] | |||||||||||||||||||||||||||||||||||||||
Shares issued, price per share | $ 2.30 | $ 2.30 | |||||||||||||||||||||||||||||||||||||
Stock issued for services, shares | 32,609 | 124,451 | |||||||||||||||||||||||||||||||||||||
Production service [Member] | |||||||||||||||||||||||||||||||||||||||
Shares issued, price per share | $ 1.39 | ||||||||||||||||||||||||||||||||||||||
Stock issued for services, shares | 37,400,000 | 1,000,000 | |||||||||||||||||||||||||||||||||||||
Warrants issued | 37,400,000 | ||||||||||||||||||||||||||||||||||||||
Proceeds from warrant exercised | $ 57,900,000 | ||||||||||||||||||||||||||||||||||||||
Vendor [Member] | |||||||||||||||||||||||||||||||||||||||
Shares issued, price per share | $ 1.14 | ||||||||||||||||||||||||||||||||||||||
Vendor [Member] | Consulting Services [Member] | |||||||||||||||||||||||||||||||||||||||
Shares issued, price per share | $ 1.92 | $ 1.84 | $ 1.13 | ||||||||||||||||||||||||||||||||||||
Stock issued for services, shares | 6,012 | 25,000 | 5,250 | 25,000 | |||||||||||||||||||||||||||||||||||
Vendor [Member] | Production Services [Member] | |||||||||||||||||||||||||||||||||||||||
Shares issued, price per share | $ 1.95 | $ 1.84 | $ 0.81 | $ 0.73 | |||||||||||||||||||||||||||||||||||
Stock issued for services, shares | 10,923 | 1,087 | 481,481 | 534,247 | |||||||||||||||||||||||||||||||||||
Investor [Member] | |||||||||||||||||||||||||||||||||||||||
Shares issued, price per share | $ 0.65 | $ 3.85 | |||||||||||||||||||||||||||||||||||||
Stock issued for services, shares | 43,077 | 49,610 | |||||||||||||||||||||||||||||||||||||
Investor [Member] | Securities Purchase Agreement [Member] | |||||||||||||||||||||||||||||||||||||||
Shares issued, price per share | $ 2.12 | ||||||||||||||||||||||||||||||||||||||
Stock issued new, shares | 945,894 | ||||||||||||||||||||||||||||||||||||||
Warrant holders [Member] | |||||||||||||||||||||||||||||||||||||||
Stock issued for exercise of warrants, shares | 45,000,428 | 532,424 | |||||||||||||||||||||||||||||||||||||
Warrant exercise price | $ 0.21 | ||||||||||||||||||||||||||||||||||||||
Number of warrants exercised | 50,014,895 | 595,238 | |||||||||||||||||||||||||||||||||||||
Common Stock [Member] | |||||||||||||||||||||||||||||||||||||||
Stock converted, shares issued | 3,804,766 | 296,053 | |||||||||||||||||||||||||||||||||||||
Series A Convertible Preferred Stock [Member] | |||||||||||||||||||||||||||||||||||||||
Stock converted, shares converted | 799 | 225 | |||||||||||||||||||||||||||||||||||||
Conversion price | $ 0.21 | $ 0.76 |
14. Stock Options (Details - As
14. Stock Options (Details - Assumptions) - Stock Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Exercise price | $ 1.99 | |
Dividend yield | 0.00% | 0.00% |
Volatility | 125.00% | |
Risk-free interest rate | 2.44% | |
Expected life | 5 years | 3 years |
Minimum [Member] | ||
Exercise price | $ 1.39 | |
Volatility | 121.00% | |
Risk-free interest rate | 0.31% | |
Maximum [Member] | ||
Exercise price | $ 10 | |
Volatility | 122.00% | |
Risk-free interest rate | 0.39% |
14. Stock Options (Details-Opti
14. Stock Options (Details-Option activity) - Stock Options [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Stock Options | |||
Number of Options outstanding beginning balance | 1,289,866 | 1,259,415 | |
Number of Options Granted | 8,880,000 | 81,000 | |
Number of Options Exercised | 0 | 0 | |
Number of Options Cancelled | 2,000 | 50,549 | |
Number of Options Expired | 1,051,690 | 0 | |
Number of Options outstanding ending balance | 9,116,176 | 1,289,866 | 1,259,415 |
Number of Options exercisable | 6,449,452 | 1,176,416 | |
Exercise Price Per Share | |||
Exercise price per share, range | 1.99 - 12.00 | 2.09 - 12.00 | |
Exercise price per share, options granted | 1.39 - 10.00 | 1.99 | |
Exercise price per share, options cancelled | 1.99 | 1.99 - 2.70 | |
Exercise price per share, Expired | 2.70 - 2.82 | ||
Exercise prices at period end | 1.39 - 10.00 | 1.99 - 12.00 | |
Exercise price per share, exercisable | 1.39 - 3.17 | 1.99 - 9.00 | |
Weighted Average Remaining Contractual Life | 4 years 10 months 3 days | 6 years 5 months 27 days | 2 years 6 months |
Weighted average remaining contractual life, options granted | 4 years 10 months 28 days | 3 years | |
Weighted average remaining contractual life, options cancelled | 3 years 2 months 5 days | 4 years 6 months 3 days | |
Weighted average remaining contractual life, exercisable | 4 years 10 months 14 days | 6 years 2 months 30 days | |
Weighted Average Exercise Price per Share beginning balance | $ 7.18 | $ 7.39 | |
Weighted Average Exercise Price Options Granted | 1.66 | 1.99 | |
Weighted Average Exercise Price Options Cancelled | 1.99 | 6.34 | |
Weighted Average Exercise Price Options Expired | 2.71 | ||
Weighted Average Exercise Price per Share ending balance | 1.69 | 7.18 | $ 7.39 |
Weighted Average Exercise Price per Share Exercisable | $ 1.44 | $ 7.67 |
14. Stock Options (Details Narr
14. Stock Options (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based compensation | $ 8,929,445 | $ 184,259 |
Unvested share based compensation | $ 4,008,320 | |
Stock Options [Member] | ||
Options granted | 8,880,000 | 81,000 |
Stock Options [Member] | Officers [Member] | ||
Options granted | 8,880,000 | 81,000 |
Share-based compensation | $ 12,231,185 | $ 117,797 |
2015 Plan [Member] | ||
Shares authorized under plan | 2,167,667 | |
Shares available for future issuance | 32,167,667 |
15. Restricted Stock Units (Det
15. Restricted Stock Units (Details) - Restricted Stock Units [Member] | 12 Months Ended |
Dec. 31, 2020USD ($)$ / sharesshares | |
RSUs Outstanding Number Of Shares | |
RSUs Outstanding shares, beginning | shares | 0 |
RSUs Granted | shares | 9,075,000 |
RSUs Exercised | shares | 0 |
RSUs Cancelled | shares | 0 |
RSUs Expired | shares | 0 |
RSUs Outstanding shares, ending | shares | 9,075,000 |
RSUs Outstanding shares, exercisable | shares | 0 |
Exercise Prices Per Share | |
Exercise Prices Per Share, beginning | |
RSUs Granted | 1.39 |
RSUs Exercised | |
RSUs Cancelled | |
RSUs Expired | |
Exercise Prices Per Share, ending | 1.39 |
Exercise Prices Per Share, exercisable | |
Weighted Average Remaining Contractual Life | 4 years 11 months 8 days |
RSUs Granted | 4 years 11 months 8 days |
Weighted Average Exercise Price Per Share, beginning | |
RSUs Granted | 1.39 |
RSUs Exercised | |
RSUs Cancelled | |
RSUs Expired | |
Weighted Average Exercise Price Per Share, ending | 1.39 |
Weighted Average Exercise Price Per Share, exercisable | |
Aggregate Intrinsic Value, beginning | $ | $ 0 |
Aggregate Intrinsic Value, ending | $ | $ 0 |
15. Restricted Stock Units (D_2
15. Restricted Stock Units (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based compensation | $ 8,929,445 | $ 184,259 |
Unvested share based compensation | $ 4,008,320 | |
Restricted Stock Units [Member] | ||
Restricted Stock Units granted | 9,075,000 | |
Fair value of restricted stock unit | $ 12,614,250 | |
Share-based compensation | 563,700 | |
Unvested share based compensation | $ 12,050,550 |
16. Warrants (Details)
16. Warrants (Details) - Warrants [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Warrant | |||
Number of Warrants outstanding beginning balance | 11,124,405 | 5,899,389 | |
Warrants Granted | 115,375,982 | 9,917,047 | |
Warrants Exercised | 80,820,087 | 4,592,029 | |
Warrants Expired | 168,335 | 100,002 | |
Number of Warrants outstanding ending balance | 45,511,965 | 11,124,405 | 5,899,389 |
Number of Warrants exercisable | 42,227,793 | 7,176,620 | |
Exercise Price Per Share | |||
Warrant exercise price per share, beginning balance | 0.21 - 5.30 | 3.30 - 6.00 | |
Warrant exericse price per share, granted | 0.21 - 1.55 | 2.55 - 2.12 | |
Warrant exercise price per share, exercised | 0.21 - 5.30 | 2.12 - 3.90 | |
Warrant exercise price per share, expired | 3.30 - 3.60 | 6 | |
Warrant exercise price per share, ending balance | 0.21 - 5.30 | 0.21 - 5.30 | |
Warrant exercise price per share, exercisable | 0.21 - 5.30 | 0.76 - 6.00 | |
Weighted Average Remaining Contractual Life | |||
Weighted average remaining contractual life, warrants outstanding | 5 years 2 months 8 days | 4 years 4 months 13 days | 3 years 8 months 26 days |
Weighted average remaining contractual life, warrants granted | 4 years 7 months 10 days | 5 years 4 months 20 days | |
Weighted average remaining contractual life, warrants exercised | 4 years 7 months 13 days | 2 years 9 months 7 days | |
Weighted average remaining contractual life, exercisable | 4 years 9 months | 3 years 9 months 7 days | |
Weighted Average Exercise Price per Share | |||
Weighted average exercise price per share, beginning balance | $ 0.84 | $ 3.53 | |
Weighted average exercise price per share, granted | 0.71 | 0.35 | |
Weighted average exercise price per share, exercised | 0.25 | 2.77 | |
Weighted average exercise price per share, expired | 3.50 | 6 | |
Weighted average exercise price per share, ending balance | 1.55 | 0.84 | $ 3.53 |
Weighted average exercise price per share, exercisable | $ 1.56 | $ 2.52 |
16. Warrants (Details Narrative
16. Warrants (Details Narrative) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 4 Months Ended | 5 Months Ended | 7 Months Ended | 8 Months Ended | 9 Months Ended | 10 Months Ended | 12 Months Ended | |||||||||
Jun. 19, 2020 | Jan. 22, 2020 | Feb. 19, 2019 | Sep. 30, 2020 | Mar. 31, 2020 | May 15, 2020 | May 25, 2020 | Jul. 21, 2020 | Aug. 17, 2018 | Oct. 15, 2020 | Sep. 18, 2019 | Oct. 30, 2020 | Oct. 29, 2020 | Oct. 28, 2020 | Oct. 29, 2019 | Dec. 31, 2020 | Dec. 16, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Proceeds from exercise of warrants | $ 5,649,319 | $ 55,011 | |||||||||||||||||
Warrant exercise price | $ 0.21 | ||||||||||||||||||
2020 Convertible Notes [Member] | |||||||||||||||||||
Shares issued for warrant exercised | 29,000,526 | ||||||||||||||||||
Warrant revaluation expense | $ 205,130,151 | ||||||||||||||||||
Derivative liability | $ 219,034,621 | ||||||||||||||||||
Certain Other Warrant Holders [Member] | 2020 Convertible Notes [Member] | |||||||||||||||||||
Warrants exercised, shares | 41,508,189 | ||||||||||||||||||
Shares issued for warrant exercised | 37,449,140 | ||||||||||||||||||
Warrant revaluation expense | $ 1,552,923 | ||||||||||||||||||
Certain Warrant Holders [Member] | |||||||||||||||||||
Warrants exercised, shares | 16,670 | ||||||||||||||||||
Private Transaction [Member] | Bradley Woods [Member] | |||||||||||||||||||
Warrant exercise price | $ 0.836 | ||||||||||||||||||
Private Placement [Member] | An Investor [Member] | |||||||||||||||||||
Warrants issued | 477,474 | ||||||||||||||||||
Warrant exercise price | $ 0.76 | ||||||||||||||||||
Warrant outstanding term | 5 years | ||||||||||||||||||
Private Placement [Member] | Bradley Woods [Member] | |||||||||||||||||||
Payment of placement agent fees | $ 35,280 | ||||||||||||||||||
Warrants issued | 46,421 | ||||||||||||||||||
Offering [Member] | Special Equities Group [Member] | |||||||||||||||||||
Payment of placement agent fees | $ 4,100,000 | ||||||||||||||||||
Warrant Exercise Agreement [Member] | Private Transaction [Member] | |||||||||||||||||||
Proceeds from exercise of warrants | $ 718,879 | ||||||||||||||||||
Payment of placement agent fees | 50,321 | ||||||||||||||||||
Imputed dividend | $ 181,884 | ||||||||||||||||||
Repricing of Warrants [Member] | 2020 Convertible Notes [Member] | |||||||||||||||||||
Deemed dividend | $ 1,840,384 | ||||||||||||||||||
Warrant repricing loss | $ 744,321 | ||||||||||||||||||
Involvement With Production [Member] | Individual[Member] | |||||||||||||||||||
Warrants issued | 2,284,172 | ||||||||||||||||||
Warrant exercise price | $ 1.39 | ||||||||||||||||||
Fair value of warrants issued | $ 3,174,806 | ||||||||||||||||||
Prepaid participation expense | $ 1,327,646 | ||||||||||||||||||
Involvement With Production [Member] | Individual[Member] | |||||||||||||||||||
Warrants issued | 1,000,000 | ||||||||||||||||||
Warrant exercise price | $ 1.39 | ||||||||||||||||||
Placement Agent Warrant Shares [Member] | Offering [Member] | Special Equities Group [Member] | |||||||||||||||||||
Warrants issued | 2,618,000 | ||||||||||||||||||
February 2019 Offering [Member] | Common Stock and Warrants[Member] | |||||||||||||||||||
Warrants issued | 945,894 | ||||||||||||||||||
Warrant exercise price | $ 2.12 | ||||||||||||||||||
Stock issued new, shares | 945,894 | ||||||||||||||||||
Proceeds from issuance of equity | $ 1,757,552 | ||||||||||||||||||
February 2019 Offering [Member] | Private Warrants [Member] | |||||||||||||||||||
Warrants issued | 945,894 | ||||||||||||||||||
February 2019 Offering [Member] | Warrants [Member] | Amendment, Waiver and Consent Agreement [Member] | |||||||||||||||||||
Warrants issued | 1,800,000 | ||||||||||||||||||
Warrant exercise price | $ 2.55 | ||||||||||||||||||
Warrant outstanding term | 5 years | ||||||||||||||||||
Fair value of warrants issued | $ 1,287,962 | ||||||||||||||||||
Warrant Exchange Agreements [Member] | Warrants [Member] | Existing Holders [Member] | |||||||||||||||||||
Warrants issued | 3,646,135 | ||||||||||||||||||
Warrant exercise price | $ 0.3004 | ||||||||||||||||||
Private Transaction [Member] | Holder of Original Warrants [Member] | |||||||||||||||||||
Proceeds from exercise of warrants | $ 170,000 | ||||||||||||||||||
Private Transaction For Original Warrants [Member] | Placement Agent [Member] | |||||||||||||||||||
Warrants issued | 50,000 | ||||||||||||||||||
Warrant exercise price | $ 0.34 | ||||||||||||||||||
Securities Purchase Agreement [Member] | Placement Agent [Member] | |||||||||||||||||||
Warrants issued | 6,547,619 | ||||||||||||||||||
Warrant exercise price | $ 0.26 | ||||||||||||||||||
Warrant revaluation expense | $ 3,467,961 | ||||||||||||||||||
Securities Purchase Agreement [Member] | Note Holders [Member] | |||||||||||||||||||
Warrants issued | 65,476,191 | ||||||||||||||||||
Warrant exercise price | $ 0.26 | ||||||||||||||||||
Warrant outstanding term | 5 years | ||||||||||||||||||
Securities Purchase Agreement [Member] | Investors [Member] | |||||||||||||||||||
Proceeds from exercise of warrants | $ 57,900,000 | ||||||||||||||||||
Warrants issued | 37,400,000 | ||||||||||||||||||
Warrant exercise price | $ 1.55 | ||||||||||||||||||
Stock issued new, shares | 37,400,000 | ||||||||||||||||||
Warrants [Member] | |||||||||||||||||||
Warrants outstanding | 45,511,965 | 11,124,405 | 5,899,389 | ||||||||||||||||
Warrant exercise price | $ 1.55 | $ 0.84 | $ 3.53 |
17. Income Taxes (Details-Defer
17. Income Taxes (Details-Deferred income taxes) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | ||
NOL Carryover | $ 11,945,900 | $ 10,068,800 |
Lease Liability | 615,300 | 1,166,400 |
Stock Compensation | 722,200 | 0 |
Warrants | 335,000 | 0 |
Deferred Revenue | 456,900 | 0 |
Other | 81,300 | 36,700 |
Deferred tax assets | 14,156,600 | 11,271,900 |
Valuation Allowance | (13,603,100) | (10,068,700) |
Deferred tax liabilities: | ||
Right of Use Assets | (551,900) | (1,122,100) |
Other | (1,600) | (81,100) |
Net deferred tax asset | $ 0 | $ 0 |
17. Income Taxes (Details-Incom
17. Income Taxes (Details-Income tax provision) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Income Tax Expense computed at the Statutory Federal Rate | $ (84,350,700) | $ (2,411,100) |
State Income Taxes, Net of Federal Tax Effect | (871,900) | (613,300) |
Stock Compensation | 1,333,300 | 38,700 |
Conversion Option Revaluation | 36,085,500 | 0 |
Secured Convertible Notes | 216,700 | 483,100 |
Warrants | 44,036,600 | 38,200 |
Other | 16,200 | 15,000 |
Valuation Allowance | 3,534,300 | 2,449,400 |
Income Tax Expense | $ 0 | $ 0 |
17. Income Taxes (Details Narra
17. Income Taxes (Details Narrative) | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Operating loss carryforward beginnng expiration date | Dec. 31, 2028 |
Federal [Member] | |
Net operating loss carry forwards | $ 43,112,000 |
State [Member] | |
Net operating loss carry forwards | $ 41,416,000 |
18. Commitment and Contingenc_3
18. Commitment and Contingencies (Details - Minimum lease commitments) | Dec. 31, 2020USD ($) |
Employment Contracts [Member] | |
Other commitment 2021 | $ 1,175,628 |
Other commitment 2022 | 906,503 |
Other commitment 2023 | 843,707 |
Other commitment 2024 | 473,660 |
Other commitment 2025 | 453,924 |
Other commitment Thereafter | 0 |
Total | 3,853,422 |
Consulting Contracts [Member] | |
Other commitment 2021 | 300,000 |
Other commitment 2022 | 187,500 |
Other commitment 2023 | 0 |
Other commitment 2024 | 0 |
Other commitment 2025 | 0 |
Other commitment Thereafter | 0 |
Total | 487,500 |
All Commitments [Member] | |
Other commitment 2021 | 1,823,413 |
Other commitment 2022 | 1,523,987 |
Other commitment 2023 | 1,290,890 |
Other commitment 2024 | 938,731 |
Other commitment 2025 | 937,598 |
Other commitment Thereafter | 847,192 |
Total | 7,361,811 |
Operating Leases [Member] | |
Operating lease 2021 | 347,785 |
Operating lease 2022 | 429,984 |
Operating lease 2023 | 447,183 |
Operating lease 2024 | 465,071 |
Operating lease 2025 | 483,674 |
Operating lease Thereafter | 847,192 |
Total | $ 3,020,889 |
18. Commitments and Contingenci
18. Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Operating lease expense | $ 665,188 | $ 740,135 |
Sublease income | 316,762 | 432,285 |
Loss from termination of lease | (338,586) | $ 0 |
131 S. Rodeo Drive [Member] | ||
Annual rent liability | 364,130 | |
Annual sublease receivable | 422,321 | |
Decrease in Right Of Use asset | (2,142,863) | |
Decreases in accumulated amortization | (465,124) | |
Decreases in lease liability | (1,760,302) | |
Loss from termination of lease | (338,586) | |
Wilshire Blvd [Member] | ||
Operating lease expense | $ 24,501 |
19. Related Party (Details Narr
19. Related Party (Details Narrative) - USD ($) | Jun. 23, 2020 | Jun. 23, 2020 | Jun. 19, 2020 | Oct. 02, 2019 | Dec. 07, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Mar. 11, 2020 | Sep. 17, 2019 |
Due to related party | $ 2,420 | $ 1,084,315 | |||||||
Proceeds from sale of stock | 98,583,549 | 3,021,552 | |||||||
Debt conversion, shares issued | 65,476,190 | ||||||||
Andy Heyward [Member] | |||||||||
Stock issued new, shares | 1,000,000 | ||||||||
Proceeds from sale of stock | $ 760,000 | ||||||||
Andy Heyward [Member] | Animation Production Services [Member] | Llama Llama Season 2 [Member] | |||||||||
Consulting fees paid | $ 124,000 | ||||||||
Andy Heyward [Member] | Animation Production Services [Member] | Rainbow Rangers [Member] | |||||||||
Consulting fees paid | 161,200 | ||||||||
Andy Heyward [Member] | Animation Production Services [Member] | Rainbow Rangers Season 2 [Member] | |||||||||
Consulting fees paid | 322,400 | ||||||||
Andy Heyward Animation Art [Member] | |||||||||
Royalty income | 0 | ||||||||
Andy Heyward [Member] | |||||||||
Stock issued from exercise of warrants, shares | 5,658,474 | ||||||||
Number of warrants exercised | 6,119,048 | ||||||||
Debt conversion, shares issued | 5,952,381 | ||||||||
Debt conversion, amount | $ 1,250,000 | ||||||||
Bonus paid | 73,528 | ||||||||
Interest paid | 11,370 | ||||||||
Board fees | 3,000 | ||||||||
Payment for security detail | 380,989 | ||||||||
Andy Heyward [Member] | Restricted Stock Units [Member] | |||||||||
Restricted stock granted | 7,500,000 | ||||||||
Andy Heyward [Member] | Performance Based Restricted Stock Units [Member] | |||||||||
Restricted stock granted | 7,500,000 | ||||||||
Andy Heyward [Member] | Options [Member] | |||||||||
Options granted | 5,000,000 | ||||||||
Options vested | 5,000,000 | ||||||||
Andy Heyward [Member] | Secured Convertible Notes [Member] | |||||||||
Debt face amount | $ 1,000,000 | ||||||||
Debt discount | $ 250,000 | ||||||||
Secured convertible note transferred | $ 500,000 | ||||||||
Andy Heyward [Member] | Common Stock [Member] | |||||||||
Stock issued new, shares | 1,000,000 | ||||||||
Proceeds from sale of stock | $ 760,000 | ||||||||
Andy Heyward [Member] | Reimbursable expenses [Member] | |||||||||
Due to related party | $ 2,420 |