Note 16: Stockholders’ Equity

Common Stock

As of September 30, 2022, the total number of authorized shares of common stock was 400,000,000.

As of September 30, 2022, and December 31, 2021, there were 318,097,275 and 303,379,122 shares of common stock outstanding, respectively.

On February 18, 2022, the Company issued 350,000 shares of the Company’s common stock valued at $0.3 million to a nonemployee for productions services.

On February 24, 2022, the Company issued 36,196 shares of the Company’s common stock valued at $65,515 which were held in escrow as part of the ChizComm acquisition.

On April 7, 2022, the Company issued 10,365,823 shares of the Company’s common stock valued at $10.8 million related to the Wow Acquisition, as part of the purchase price. Also included as part of the Wow Acquisition, the Company has issued 691,262 shares, valued at $0.7 million, which will be exchanged at a future redemption date upon tender of ExchangeCo (as defined below) shares as specified in the agreement. See additional information on the ExchangeCo shares below under “Preferred Stock.”

During the nine months ended September 30, 2022, the Company issued 2,538,205 shares of the Company’s common stock valued at $1.6 million representing delivery of vested RSUs.

Preferred Stock

The Company has 10,000,001 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 the Company’s 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 the Company’s Board of Directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.

In connection with the Company’s acquisition of Wow, certain eligible Canadian shareholders, noteholders and optionholders of Wow elected to receive the Exchangeable Shares in the capital of the Wow Exchange Co. Inc. (“ExchangeCo”) instead of shares of the Company’s common stock to which they were otherwise entitled.

The shares of ExchangeCo are exchangeable into shares of the Company’s common stock in accordance with their terms. Holders of the ExchangeCo shares are entitled to defined voting rights (the “Voting Rights”) in the Company pursuant to a voting and exchange trust agreement (the “Voting Agreement”) dated April 6, 2022 between the Company, ExchangeCo, 1329258 B.C. Ltd. and Computershare Trust Company of Canada (the “Voting Trustee”). The Voting Trustee holds a single share of Series B Preferred Stock in the capital of the Company (the “Special Voting Share”), which grants the Voting Trustee that number of votes at the meetings of the Company’s shareholders as is equal to the number of shares of the Company’s common stock that at such time have not been delivered pursuant to the tender of ExchangeCo shares. The Voting Trustee is required to exercise each vote attached to the Special Voting Share only as directed by the relevant holder of the underlying Company shares of common stock and, in the absence of any instructions, will not exercise voting rights with respect to the applicable shares.

As of September 30, 2022 and December 31, 2021, there were 0 shares of Series A Convertible Preferred Stock outstanding. As of September 30, 2022 and December 31, 2021, there was 1 share of Series B Preferred Stock outstanding.

Treasury Stock

During the three months ended September 30, 2022, 6,993 shares of common stock were withheld to cover withholding taxes owed by certain employees, all of which were taken into treasury stock.

In addition, during the three months ended September 30, 2022, the Company agreed to settle the lawsuit, Harold Chizick and Jennifer Chizick v. Genius Brands International, Inc., ChizComm Ltd, pursuant to a settlement agreement (the “Settlement Agreement”) dated October 6, 2022 (the “Settlement Date”). Pursuant to the Settlement Agreement, the Company agreed to purchase the 419,336 non-escrow shares of common stock (the “Settlement Shares”) that the Chizicks held as of the Settlement Date. The Settlement Shares were purchased at the market price of $0.68 per share, plus a premium of $1.31 per share, for a total purchase price of $834,479. As of September 30, 2022, the Company recorded a liability within other current liabilities on the Company’s condensed consolidated balance sheet for the total purchase price, and the Company recorded the cost based on the market price on the Settlement Date of $285,148 to additional paid in capital for the share repurchase yet to be settled as of the balance sheet date. The Company recorded the amount in excess of cost of $549,330 as a legal expense within general and administrative expenses on the Company’s condensed consolidated statements of comprehensive income (loss).