Genius Brands International, Inc. Announces Second Quarter 2017 Financial Results and Business Update
Llama Llama Continues Post-Production with Q4 Delivery to Netflix Anticipated
Rainbow Rangers Begins Production and Expands Global Licensing Program
BEVERLY HILLS, Calif., Aug. 14, 2017 (GLOBE NEWSWIRE) -- Genius Brands International, Inc. (NASDAQ:GNUS) (“Genius”) announced today its financial results for the three and six months ended June 30, 2017:
Business Highlights:
- Deferred revenue continues to increase with a total balance of $5.0 million as of June 30, 2017, representing a 62% increase over the December 31, 2016 balance and over 400% increase over the December 31, 2015 balance.
- To date nearly $4.1 million has been invested in the development and production of animated content with four animated series currently in production and development to be delivered throughout 2017 and 2018.
- Working capital increased by nearly $2.9 million from December 31, 2016 to June 30, 2017 to nearly $2.5 million.
Management Commentary:
Andy Heyward, Chairman and CEO of Genius Brands International, Inc., commented, “Today, we released our financial results for the three and six-month periods ending on June 30, 2017. The second quarter of 2017 was another foundational period for the Company as we continued the development and monetization of our brands.
"Excitement around our Rainbow Rangers property continues to grow. Augmenting our previously announced partnerships with broadcaster Nick Jr. and Fisher Price which is owned by Mattel Inc, we partnered with three additional licensees during the quarter – The Bentex Group will be our master apparel partner; H.E.R Accessories will create a line of fashion accessories; and Jay Franco will create a line of bedding. All of these products will feature the Rainbow Rangers characters. While we cannot disclose the specific deal terms, these arrangements provide us minimum guarantees (and advances) against future royalties. Standard industries royalty rates are on average ten percent, providing the company with a share of the wholesale price of products. The minimum guarantees and advances are reflected in the growing deferred revenue balances. Subsequent to the end of the quarter, activity continues with additional licensees in more categories across the merchandising spectrum.
"Our Llama Llama production continues at a steady pace. By the end of the quarter, we have received a substantial portion of the animation for the episodes and are in the process of post-production for delivery to Netflix in the fourth quarter of the year. With the content licensed to Netflix and the previously announced partnership with NCircle for the distribution of DVDs, our merchandising program continues to grow as we added licensees in the puzzles and bedding categories. This activity is again reflected in our increasing deferred revenue balances.
"Additionally, during the quarter, we delivered the final webisodes of Season One of SpacePOP to YouTube and expanded the distribution of the content with various international licenses to broadcasters in Europe and Asia. As the content was delivered and continues to be delivered to our customers, we have and will continue to recognize top line revenues. In the second half of 2017, we plan to broaden the retail reach of SpacePOP with products available at Target, Best Buy, Barnes and Noble, Hudson News and Spirit Halloween, as well as launching a new direct-to-retail program with Calendar Club's Go! retail stores nationwide; an expanded Claire's program at additional locations; and continued support by Toys"R"Us.
"Finally, our STEM-based property Thomas Edison’s Secret Lab continues to expand its reach both domestically and internationally through a number of partnerships for both the animated content and the associated merchandise. Thomas Edison’s Secret Lab has been licensed in Latin America to National Geographic Kids with the merchandising program being handled by independent licensing agent Tycoon Enterprises across Latin America. The animated content has also been licensed to various territories in Asia with delivery anticipated for the third quarter of 2017.
"The second quarter’s results represent continued activity around each of our brands – one of the two pillars of revenue generation and value creation for the Company. As we have highlighted in the past, the value of the Company lies in two places – the brands we create, manage and monetize and the Kid Genius Cartoon Channel. The Kid Genius Cartoon Channel not only provides another avenue of distribution for our content but also has value in its own right as a distribution platform. As we look forward to the second half of the year, we anticipate seeing continue growth for Rainbow Rangers, Llama Llama, and the rest of our brands as well as increased in the reach of our Kid Genius Cartoon Channel.”
Conference Call:
Genius Brands International Chairman & CEO, Andy Heyward will host a conference call to discuss the Company's second quarter 2017 financial results and business update today, Monday, August 14, 2017 at 5:30pm ET/2:30pm PT
Conference Call Information:
When: Monday, August 14, 2017 at 5:30 PM ET/2:30 PM PT.
Dial-in: U.S.: 877-407-8291 and International: 201-689-8345
Please join the conference call at least 15 minutes early to register. A digital replay will be available by telephone approximately two hours after the completion of the call until November 30, 2017 and may be accessed by dialing 877-660-6853 from the U.S. or 201-612-7415 for international callers, and using the Conference ID# 13668963.
About Genius Brands International, Inc.
Headquartered in Beverly Hills, California, Genius Brands International, Inc. (NASDAQ:GNUS) is a leading global media company developing, producing, marketing and licensing branded children’s entertainment properties and consumer products for media distribution and retail channels. Led by award-winning creators and producers, Genius Brands distributes its content worldwide in all formats, as well as a broad range of consumer products based on its characters. In the children's media sector, its portfolio features "content with a purpose" for toddlers to tweens, which provides enrichment as well as entertainment, including new preschool property Rainbow Rangers; tween music-driven brand SpacePOP; preschool property debuting on Netflix Llama Llama; award-winning Baby Genius; adventure comedy Thomas Edison's Secret Lab®, available on public broadcast stations and Genius Brands' Kid Genius channel on Comcast's Xfinity on Demand and Roku; Warren Buffett's Secret Millionaires Club, created with and starring iconic investor Warren Buffett. The Company is also co-producing an all-new adult animated series, Stan Lee's Cosmic Crusaders, with Stan Lee's Pow! Entertainment and The Hollywood Reporter. Additionally, under Genius Brands' wholly owned subsidiary, A Squared Entertainment, the company represents the third-party property Celessence Technologies across a broad range of categories in territories around the world.
For additional information please visit www.gnusbrands.com.
FORWARD LOOKING STATEMENTS
This press release may contain forward-looking statements, including information about management’s view of Genius Brands’ future expectations, plans and prospects, within the safe harbor provisions under The Private Securities Litigation Reform Act of 1995 (the “Act”). In particular, when used in the preceding discussion, the words “believes,” “hopes,” “expects,” “intends,” “plans,” “anticipates,” or “may,” and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act, and are subject to the safe harbor created by the Act. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause the results of Genius Brands to be materially different than those expressed or implied in such statements. These risk factors and others are included from time to time in documents Genius Brands files with the Securities and Exchange Commission, including but not limited to, its Form 10-Ks, Form 10-Qs and Form 8-Ks. Other unknown or unpredictable factors also could have material adverse effects on Genius Brands’ future results. The forward-looking statements included in this press release are made only as of the date hereof. Genius Brands cannot guarantee future results, levels of activity, performance or achievements. Accordingly, readers should not place undue reliance on these forward-looking statements. Finally, Genius Brands undertakes no obligation to update these statements after the date of this release, except as required by law.
Tables to follow
The following tables should be read in conjunction with the footnotes accompanying the consolidated financial statements contained within the Form 10Q issued on August 14, 2017.
| Genius Brands International, Inc. | ||||||||
| Consolidated Balance Sheets | ||||||||
| As of June 30, 2017 and December 31, 2016 | ||||||||
| June 30, 2017 | December 31, 2016 | |||||||
| ASSETS | (unaudited) | |||||||
| Current Assets: | ||||||||
| Cash and Cash Equivalents | $ | 2,986,528 | $ | 1,887,921 | ||||
| Restricted Cash | 1,000,000 | 1,000,000 | ||||||
| Accounts Receivable, net | 302,031 | 122,910 | ||||||
| Inventory, net | 19,880 | 6,562 | ||||||
| Prepaid and Other Assets | 380,995 | 359,395 | ||||||
| Total Current Assets | 4,689,434 | 3,376,788 | ||||||
| Property and Equipment, net | 86,003 | 90,461 | ||||||
| Film and Television Costs, net | 3,806,578 | 2,260,964 | ||||||
| Intangible Assets, net | 1,814,638 | 1,845,650 | ||||||
| Goodwill | 10,365,805 | 10,365,805 | ||||||
| Total Assets | $ | 20,762,458 | $ | 17,939,668 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts Payable | $ | 302,737 | $ | 648,638 | ||||
| Accrued Expenses | 258,680 | 249,482 | ||||||
| Deferred Revenue | 554,739 | 410,662 | ||||||
| Accrued Salaries and Wages | 165,544 | 132,827 | ||||||
| Disputed Trade Payable | 925,000 | 925,000 | ||||||
| Service Advance | - | 1,489,583 | ||||||
| Total Current Liabilities | 2,206,700 | 3,856,192 | ||||||
| Long Term Liabilities: | ||||||||
| Deferred Revenue | 4,465,768 | 2,695,946 | ||||||
| Production Facility | 2,697,048 | 1,332,004 | ||||||
| Total Liabilities | 9,369,516 | 7,884,142 | ||||||
| Commitments and Contingencies (Note 13) | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred Stock, $0.001 par value, 10,000,000 shares authorized; 3,710 and 4,895 shares issued and outstanding, respectively | 4 | 5 | ||||||
| Common Stock, $0.001 par value, 233,333,334 shares authorized; 5,897,091 and 4,010,649 shares issued and outstanding, respectively | 5,898 | 4,011 | ||||||
| Common Stock to Be Issued | 24 | 24 | ||||||
| Additional Paid in Capital | 50,602,674 | 46,697,005 | ||||||
| Accumulated Deficit | (39,210,540 | ) | (36,642,761 | ) | ||||
| Accumulated Other Comprehensive Loss | (5,118 | ) | (2,758 | ) | ||||
| Total Stockholders’ Equity | 11,392,942 | 10,055,526 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 20,762,458 | $ | 17,939,668 | ||||
| The accompanying notes are an integral part of these financial statements. | ||||||||
| Genius Brands International, Inc. | ||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||
| Three and Six Months Ended June 30, 2017 and 2016 | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||
| Revenues: | ||||||||||||||||
| Licensing & Royalties | $ | 118,351 | $ | 113,456 | $ | 271,564 | $ | 261,468 | ||||||||
| Television & Home Entertainment | 64,766 | 46,726 | 108,138 | 250,607 | ||||||||||||
| Advertising Sales | 4,514 | - | 6,018 | - | ||||||||||||
| Product Sales | 8,501 | 16,150 | 8,501 | 16,150 | ||||||||||||
| Total Revenues | 196,132 | 176,332 | 394,221 | 528,225 | ||||||||||||
| Operating Expenses: | ||||||||||||||||
| Marketing and Sales | 185,542 | 204,318 | 275,046 | 465,950 | ||||||||||||
| Direct Operating Costs | 44,948 | 68,593 | 68,018 | 208,468 | ||||||||||||
| General and Administrative | 1,221,572 | 1,334,242 | 2,622,496 | 2,936,345 | ||||||||||||
| Total Operating Expenses | 1,452,062 | 1,607,153 | 2,965,560 | 3,610,763 | ||||||||||||
| Loss from Operations | (1,255,930 | ) | (1,430,821 | ) | (2,571,339 | ) | (3,082,538 | ) | ||||||||
| Other Income (Expense): | ||||||||||||||||
| Other Income | 5,567 | - | 5,593 | 60 | ||||||||||||
| Interest Expense | (1,180 | ) | (724 | ) | (2,033 | ) | (2,153 | ) | ||||||||
| Interest Expense - Related Parties | - | - | - | (6,141 | ) | |||||||||||
| Gain on Distribution Contracts | - | 248,593 | - | 258,103 | ||||||||||||
| Net Other Income (Expense) | 4,387 | 247,869 | 3,560 | 249,869 | ||||||||||||
| Loss before Income Tax Expense | (1,251,543 | ) | (1,182,952 | ) | (2,567,779 | ) | (2,832,669 | ) | ||||||||
| Income Tax Expense | - | - | - | - | ||||||||||||
| Net Loss Applicable to Common Shareholders | $ | (1,251,543 | ) | $ | (1,182,952 | ) | $ | (2,567,779 | ) | $ | (2,832,669 | ) | ||||
| Net Loss per Common Share (Basic and Diluted) | $ | (0.22 | ) | $ | (0.30 | ) | $ | (0.47 | ) | $ | (0.74 | ) | ||||
| Weighted Average Shares Outstanding (Basic and Diluted) | 5,820,553 | 3,905,554 | 5,422,564 | 3,838,802 | ||||||||||||
| The accompanying notes are an integral part of these financial statements. | ||||||||||||||||
| Genius Brands International, Inc. | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| Six Months Ended June 30, 2017 and 2016 | ||||||||
| (unaudited) | ||||||||
| June 30, 2017 | June 30, 2016 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net Loss | $ | (2,567,779 | ) | $ | (2,832,669 | ) | ||
| Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: | ||||||||
| Amortization of Film and Television Costs | 8,086 | 135,157 | ||||||
| Depreciation Expense | 33,865 | 33,063 | ||||||
| Amortization Expense | 31,012 | 38,315 | ||||||
| Imputed Interest Expense | - | 6,141 | ||||||
| Stock Issued for Services | 100,000 | 24,000 | ||||||
| Stock Compensation Expense | 405,633 | 877,962 | ||||||
| Gain on Distribution Contracts | - | (258,103 | ) | |||||
| Loss on Impairment of Assets | - | 1,850 | ||||||
| Decrease (Increase) in Operating Assets: | ||||||||
| Accounts Receivable | (181,481 | ) | 79,503 | |||||
| Inventory | (13,318 | ) | 518 | |||||
| Prepaid Expenses & Other Assets | (21,600 | ) | (145,634 | ) | ||||
| Film and Television Costs, Net | (1,473,384 | ) | (381,963 | ) | ||||
| Increase (Decrease) in Operating Liabilities: | ||||||||
| Accounts Payable | (345,900 | ) | 133,069 | |||||
| Accrued Salaries | 32,717 | 20,000 | ||||||
| Deferred Revenue and Advances | 424,313 | 2,140,369 | ||||||
| Other Accrued Expenses | 9,198 | (195,786 | ) | |||||
| Net Cash Used in Operating Activities | (3,558,638 | ) | (324,208 | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Investment in Intangible Assets | - | (5,650 | ) | |||||
| Investment in Fixed Assets | (29,407 | ) | (1,542 | ) | ||||
| Net Cash Used in Investing Activities | (29,407 | ) | (7,192 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from Warrant Exchange, Net of Offering Costs | 3,401,924 | - | ||||||
| Proceeds from Exercise of Warrants | - | 82,500 | ||||||
| Proceeds from Production Facility, Net | 1,284,728 | - | ||||||
| Net Cash Provided by Financing Activities | 4,686,652 | 82,500 | ||||||
| Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | 1,098,607 | (248,900 | ) | |||||
| Beginning Cash, Cash Equivalents, and Restricted Cash | 2,887,921 | 5,187,620 | ||||||
| Ending Cash, Cash Equivalents, and Restricted Cash | $ | 3,986,528 | $ | 4,938,720 | ||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| Cash Paid for Interest | $ | 2,033 | $ | 507 | ||||
| Schedule of Non-Cash Financing and Investing Activities | ||||||||
| Issuance of Common Stock in Relation to Sony Transaction | $ | 1,489,583 | $ | - | ||||
| Issuance of Common Stock in Satisfaction of Short Term Advances | $ | - | $ | 410,535 | ||||
| The accompanying notes are an integral part of these financial statements. | ||||||||
GENIUS BRANDS INTERNATIONAL, INC. INVESTOR RELATIONS: Michael Porter PLR Investor Relations 212.564.7000 mike@plrinvest.com
Released August 14, 2017