0001683168-17-002119.txt : 20170814 0001683168-17-002119.hdr.sgml : 20170814 20170814165440 ACCESSION NUMBER: 0001683168-17-002119 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 67 CONFORMED PERIOD OF REPORT: 20170630 FILED AS OF DATE: 20170814 DATE AS OF CHANGE: 20170814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Genius Brands International, Inc. CENTRAL INDEX KEY: 0001355848 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 204118216 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-37950 FILM NUMBER: 171031210 BUSINESS ADDRESS: STREET 1: 301 N. CANON DRIVE STREET 2: SUITE 305 CITY: BEVERLY HILLS STATE: CA ZIP: 90210 BUSINESS PHONE: 310-273-4222 MAIL ADDRESS: STREET 1: 301 N. CANON DRIVE STREET 2: SUITE 305 CITY: BEVERLY HILLS STATE: CA ZIP: 90210 FORMER COMPANY: FORMER CONFORMED NAME: PACIFIC ENTERTAINMENT CORP DATE OF NAME CHANGE: 20060310 10-Q 1 genius_10q-063017.htm QUARTERLY REPORT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number: 000-54389

GENIUS BRANDS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Nevada		20-4118216
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

301 North Canon Drive, Suite 305
Beverly Hills, California		90210
(Address of principal executive offices)		(Zip Code)

310-273-4222

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer (Do not check if a smaller reporting company)	o	Smaller reporting company	x

Emerging growth company o

If an emerging growth company, indicate by check if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 5,938,103 shares of common stock, par value $0.001, were outstanding as of August 11, 2017.

GENIUS BRANDS INTERNATIONAL, INC.

FORM 10-Q

For the Quarterly Period Ended June 30, 2017

Table of Contents

*PART I - FINANCIAL INFORMATION*	3

Item 1. Financial Statements.	3

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.	20

Item 3. Quantitative and Qualitative Disclosures about Market Risk.	26

Item 4. Controls and Procedures.	26

*PART II - OTHER INFORMATION*	27

Item 1. Legal Proceedings.	27

Item 1A. Risk Factors.	27

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	27

Item 3. Defaults upon Senior Securities.	27

Item 4. Mine Safety Disclosures.	27

Item 5. Other Information.	27

Item 6. Exhibits.	27

SIGNATURES	28

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Genius Brands International, Inc.

Consolidated Balance Sheets

As of June 30, 2017 and December 31, 2016

	June 30, 2017			December 31, 2016
	(unaudited)
ASSETS
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 Comprehensive Income

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
Net Loss Applicable to Common Shareholders	$	(1,251,543	)	$	(1,182,952	)	$	(2,567,779	)	$	(2,832,669	)

Other Comprehensive Loss, Net of Tax:
Unrealized Loss on Foreign Currency Translation		(2,360	)		–			(2,360	)		–
Other Comprehensive Loss, Net of Tax:		(2,360	)		–			(2,360	)		–
Comprehensive Loss	$	(1,253,903	)	$	(1,182,952	)	$	(2,570,139	)	$	(2,832,669	)

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.

Notes to Financial Statements

June 30, 2017 (unaudited)

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 industry veterans, the Company distributes its content in all formats as well as a broad range of consumer products based on its characters. In the children's media sector, the Company’s portfolio features “content with a purpose” for toddlers to tweens, which provides enrichment as well as entertainment including the award-winning Baby Genius; new preschool property Rainbow Rangers; preschool property debuting on Netflix Llama Llama; tween music-driven brand SpacePop; adventure comedy Thomas Edison's Secret Lab® available on public broadcast stations and the Company’s Kid Genius Carton 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-themed animated series, Stan Lee's Cosmic Crusaders, with Stan Lee's Pow! Entertainment and The Hollywood Reporter.

In addition, the Company acts as licensing agent for certain brands, leveraging its existing licensing infrastructure to expand these brands into new product categories, new retailers, and new territories. These include Llama Llama and Celessence Technologies.

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”.

On November 15, 2013, the Company entered into an Agreement and Plan of Reorganization (the “Merger Agreement”) with A Squared Entertainment LLC, a Delaware limited liability company (“A Squared”), A Squared Holdings LLC, a California limited liability company and sole member of A Squared (the “Parent Member”) and A2E Acquisition LLC, its newly formed, wholly-owned Delaware subsidiary (“Acquisition Sub”). Upon closing of the transactions contemplated under the Merger Agreement (the “Merger”), which occurred concurrently with entering into the Merger Agreement, the Acquisition Sub merged with and into A Squared, and A Squared, as the surviving entity, became a wholly-owned subsidiary of the Company. As a result of the Merger, the Company acquired the business and operations of A Squared.

On November 4, 2016, the Company filed a certificate to change its Articles of Incorporation to effect a reverse split on a one-for-three basis (the “2016 Reverse Split”). The 2016 Reverse Split became effective on November 9, 2016. All common stock (“Common Stock”) share and per share information in this Quarterly Report on Form 10-Q (“Form 10-Q”), including the accompanying consolidated financial statements and notes thereto, have been adjusted to reflect retrospective application of the 2016 Reverse Split, unless otherwise indicated.

Liquidity

Historically, the Company has incurred net losses. For the three months ended June 30, 2017 and 2016, the Company reported net losses of $1,251,543 and $1,182,952, respectively. For the six months ended June 30, 2017 and 2016, the Company reported net losses of $2,567,779 and $2,832,669, respectively. The Company reported net cash used in operating activities of $3,558,638 and $324,208 for the six months ended June 30, 2017 and 2016, respectively. As of June 30, 2017, the Company had an accumulated deficit of $39,210,540 and total stockholders’ equity of $11,392,942. At June 30, 2017, the Company had current assets of $4,689,434, including cash, cash equivalents, and restricted cash of $3,986,528 and current liabilities of $2,206,700, including certain trade payables of $925,000 to which the Company disputes the claim. The Company had working capital of $2,482,734 as of June 30, 2017, compared to a working capital deficit of $479,404 as of December 31, 2016.

During the first quarter of 2017, the Company completed two key transactions that enhanced cash and working capital balances:

	·	On January 10, 2017, the Company entered into an amendment of its home entertainment distribution agreement with Sony Pictures Home Entertainment Inc. (“SPHE”) pursuant to which, among other things, SPHE paid $1,489,583 which was owed and payable by the Company to SPHE’s sister company Sony DADC US Inc. (“DADC”) for certain disk manufacturing and replication services. In connection with such transaction, the Company issued SPHE 301,231 shares of its Common Stock at $4.945 per share, SPHE’s exclusive territory for exercising its home entertainment distribution rights under the Distribution Agreement was extended from the United States and Canada to worldwide, and the amount of advances subject to recoupment by SPHE out of royalty payments that would otherwise be due to the Company under the Distribution Agreement was increased by the amount of the payment to DADC. In connection with the above issuance of our shares, the Company entered into a subscription agreement with SPHE, effective as of January 17, 2017. Collectively, these transactions are referred to as the “January 2017 Sony Transactions.”
	·	On February 9, 2017, the Company entered into a private transaction (the “Private Transaction”) pursuant to a Warrant Exercise Agreement (the “Agreement”) with certain holders of the Company’s existing warrants (the “Original Warrants”) for which it received gross proceeds of $3,866,573 from the exercise of the Original Warrants and issued additional warrants to these holders (see Notes 9 and 11 for additional information about the Private Transaction).

While the Company believes that its anticipated cash balances and working capital combined with its production facility and deal pipeline will be sufficient to fund operations for the next twelve months, there can be no assurance that cash flows from operations will continue to improve in the near future. If the Company is unable to attain profitable operations and attain positive operating cash flows, it may need to (i) seek additional funding, (ii) scale back its development or production plans, or (iii) reduce certain operations.

Note 2: Summary of Significant Accounting Policies

Basis of Presentation

The accompanying 2017 and 2016 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 and Llama Productions as well as its interest in Stan Lee Comics, LLC (“Stan Lee Comics”). All significant inter-company balances and transactions have been eliminated in consolidation.

Business Combination

On November 15, 2013, the Company entered into a Merger Agreement with A Squared, the Parent Member, and the Acquisition Sub. Upon closing of the Merger, which occurred concurrently with entering into the Merger Agreement, our Acquisition Sub merged with and into A Squared, and A Squared, as the surviving entity, became a wholly-owned subsidiary of the Company. As a result of the Merger, the Company acquired the business and operations of A Squared.

The financial statements have been prepared using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 Business Combinations.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid debt instruments with initial maturities of three months or less to be cash equivalents. Restricted Cash includes $1,000,000 that the Company deposited into a cash account to be used solely to produce its series Llama Llama as a condition of its loan agreement with Bank Leumi USA.

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 $110,658 at both June 30, 2017 and December 31, 2016.

Inventories

Inventories are stated at the lower of average cost or market and consist of finished goods such as DVDs, CDs and other products. A reserve for slow-moving and obsolete inventory is established for all inventory deemed potentially non-saleable by management in the period in which it is determined to be potentially non-saleable. The current inventory is considered properly valued and saleable. The Company concluded that there was an appropriate reserve for slow moving and obsolete inventory of $26,097 at both June 30, 2017 and December 31, 2016.

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. The Company completes the annual goodwill and indefinite-lived intangible asset impairment tests at the end of each fiscal year. To test for goodwill impairment, we are required to estimate the fair market value of each of our reporting units, of which we have one. While we may use a variety of methods to estimate fair value for impairment testing, our primary method is discounted cash flows. We estimate future cash flows and allocations of certain assets using estimates for future growth rates and our judgment regarding the applicable discount rates. Changes to our judgments and estimates could result in a significantly different estimate of the fair market value of the reporting units, which could result in an impairment of goodwill or indefinite lived intangible assets in future periods.

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. In accordance with FASB ASC 350 Intangible Assets, the costs of new product development and significant improvement to existing products are capitalized while routine and periodic alterations to existing products are expensed as incurred. 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.

Revenue Recognition

The Company recognizes revenue in accordance with FASB ASC 926-605 Entertainment-Films - Revenue Recognition. Accordingly, the Company recognizes revenue when (i) persuasive evidence of a sale with a customer exists, (ii) the film is complete and has been delivered or is available for delivery, (iii) the license period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale, (iv) the arrangement fee is fixed or determinable, and (v) collection of the arrangement fee is reasonably assured.

The Company’s licensing and royalty revenue represents revenue generated from license agreements that are held in conjunction with third parties that are responsible for collecting fees due and remitting to the Company its share after expenses. Revenue from licensed products is recognized when realized or realizable based on royalty reporting received from licensees. Licensing income the Company recognizes as an agent is in accordance with FASB ASC 605-45 Revenue Recognition - Principal Agent. Accordingly, the Company’s revenue is its gross billings to its customers less the amounts it pays to suppliers for their products and services.

The Company sells advertising on its Kid Genius Cartoon 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 605 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 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 (i) the seller’s price is substantially fixed, (ii) shipment has occurred causing the buyer to be obligated to pay for product, (iii) the buyer has economic substance apart from the seller, and (iv) there is no significant obligation for future performance to directly bring about the resale of the product by the buyer as required by FASB ASC 605 Revenue Recognition.

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.

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.

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 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 adopted FASB ASC 820 as of January 1, 2008 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 May 2014, the FASB issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets unless those contracts are within the scope of other standards (e.g. insurance contracts). This ASU will supersede all revenue recognition requirements in Topic 605, Revenue Recognition, and industry-specific guidance throughout the industry topics of the codification. The guidance's core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue principles, an entity will identify the contract(s) with a customer, identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue when the performance obligation is satisfied (either over time or at a point in time). The ASU further states that an entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”, which approved a one-year deferral of the effective date of the ASU from the original effective date of annual reporting periods beginning after December 15, 2016, to annual reporting periods (including interim reporting periods) beginning after December 15, 2017, with an option for early adoption of the standard on the original effective date. Additionally, in March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”, which clarified the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”, that amended the revenue guidance on identifying performance obligations and accounting for licenses of intellectual property. In May 2016, the FASB issued ASU 2016-11 “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 805): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016, EITF Meeting”, which rescinded from the FASB Accounting Standards Codification certain SEC paragraphs as a result of two SEC Staff Announcements. The FASB also issued ASU 2016-12 “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”, which clarified guidance on assessment of collectability, presentation of sale taxes, measurement of noncash consideration, and certain transition matters. The Company has formed a project team and is engaging an external consultant to evaluate the impact that the provisions of ASU 2014-09 and related subsequent updates will have on the Company's consolidated financial position, results of operations, cash flows, and disclosures. We anticipate adopting this accounting standard on January 1, 2018 using the modified retrospective method; however, we may opt for the full retrospective method depending on the final outcome of our evaluation.

In February 2016, the FASB issued Accounting Standards Update 2016-02, “Leases”. The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2018. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

In November 2016, the FASB issued Accounting Standards Update 2016-18, “Statement of Cash Flows - Restricted Cash a consensus of the FASB Emerging Issues Task Force.” This standard requires restricted cash and cash equivalents to be included with cash and cash equivalents on the statement of cash flows under a retrospective transition approach. The guidance will become effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We have prospectively adopted ASU 2016-18. The impact to our consolidated financial position, results of operations and cash flows is minimal.

In January 2017, the FASB issued Accounting Standards Update 2017-04, “Simplifying the Test for Goodwill Impairment”, which requires an entity to perform a one-step quantitative impairment test, whereby a goodwill impairment loss will be measured as the excess of a reporting unit’s carrying amount over its fair value (not to exceed the total goodwill allocated to that reporting unit). It eliminates Step 2 of the current two-step goodwill impairment test, under which a goodwill impairment loss is measured by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The standard is effective January 1, 2020, with early adoption as of January 1, 2017 permitted. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

In May 2017, the FASB issued Accounting Standard Update 2017-09, “Compensation—Stock Compensation: Scope of Modification Accounting”, which clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the new guidance, modification accounting is required if the fair value, vesting conditions or classification (equity or liability) of the new award are different from the original award immediately before the original award is modified. The standard is effective beginning January 1, 2018, with early adoption permitted. We are currently evaluating the potential impact of adopting this guidance on our 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, and are not expected to have a material effect on our financial position, results of operations, or cash flows.

Note 3: Property and Equipment, Net

The Company has property and equipment as follows as of June 30, 2017 and December 31, 2016:

	June 30, 2017			December 31, 2016
Furniture and Equipment	$	12,385		$	12,385
Computer Equipment		72,062			42,654
Leasehold Improvements		176,903			176,903
Software		15,737			15,737
Property and Equipment, Gross		277,087			247,679
Less Accumulated Depreciation		(191,084	)		(157,218	)
Property and Equipment, Net	$	86,003		$	90,461

During the three months ended June 30, 2017 and 2016, the Company recorded depreciation expense of $16,933 and $16,428, respectively. During the six months ended June 30, 2017 and 2016, the Company recorded depreciation expense of $33,865 and $33,063, respectively.

Note 4: Film and Television Costs, Net

As of June 30, 2017, the Company had net Film and Television Costs of $3,806,578 compared to $2,260,964 at December 31, 2016. The increase relates primarily to the production and development of SpacePop, Llama Llama, and Rainbow Rangers offset by the amortization of film costs associated with the revenue recognized for Thomas Edison’s Secret Lab and SpacePop.

During the three months ended June 30, 2017 and 2016, the Company recorded Film and Television Cost amortization expense of $3,482 and $17,644, respectively. During the six months ended June 30, 2017, and 2016, the Company recorded Film and Television Cost amortization expense of $8,086 and $135,157, respectively.

The following table highlights the activity in Film and Television Costs as of June 30, 2017 and December 31, 2016:

	Total
Film and Television Costs, Net as of December 31, 2015	$	1,003,546
Additions to Film and Television Costs		1,390,450
Capitalized Interest		34,756
Film Amortization Expense		(167,788	)
Film and Television Costs, Net as of December 31, 2016		2,260,964
Additions to Film and Television Costs		1,473,384
Capitalized Interest		80,316
Film Amortization Expense		(8,086	)
Film and Television Costs, Net as of June 30, 2017	$	3,806,578

Note 5: Goodwill and Intangible Assets, Net

Goodwill

In connection with the Merger in 2013, the Company recognized $10,365,805 in Goodwill, representing the excess of the fair value of the consideration for the Merger 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 June 30, 2017, the Company has not recognized any impairment to Goodwill.

Intangible Assets, Net

The Company had the following intangible assets as of June 30, 2017 and December 31, 2016:

	June 30, 2017			December 31, 2016
Identifiable Artistic-Related Assets (a)	$	1,740,000		$	1,740,000
Trademarks (b)		129,831			129,831
Product Masters (b)		64,676			64,676
Other Intangible Assets (b)		185,020			185,020
Intangible Assets, Gross		2,119,527			2,119,527
Less Accumulated Amortization (c)		(304,889	)		(273,877	)
Intangible Assets, Net	$	1,814,638		$	1,845,650

	(a)	In connection with the Merger in 2013, the Company acquired $1,740,000 of Identifiable Artistic-Related Assets. These assets, related to certain properties owned by A Squared and assumed by the Company, were valued using an independent firm. Based on certain legal, regulatory, contractual, and economic factors, the Company has deemed these assets to be indefinite-lived. Hence, pursuant to FASB ASC 350-30, these assets are not subject to amortization and are tested annually for impairment. Through June 30, 2017, the Company has not recognized any impairment expense related to these assets.
	(b)	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. Through June 30, 2017, the Company has not recognized any impairment expense related to these assets.
	(c)	During the three months ended June 30, 2017 and 2016, the Company recognized $13,315 and $19,184, respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets. During the six months ended June 30, 2017 and 2016, the Company recognized $31,012 and $38,315, respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets.

Expected future intangible asset amortization as of June 30, 2017 is as follows:

Fiscal Year:
2017	$	24,508
2018		26,119
2019		9,236
2020		8,655
2021		2,059
Remaining		4,061
Total	$	74,638

Note 6: Deferred Revenue

As of June 30, 2017 and December 31, 2016, the Company had total short term and long term deferred revenue of $5,020,507 and $3,106,608, 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, 2016 is the $2,000,000 advance against future royalty that Sony paid to the Company in the first quarter of 2016. Included in the deferred revenue balance as of June 30, 2017 is the $2,000,000 advance against future royalties that Sony paid to the Company in the first quarter of 2016 as well as $1,489,583 attributable to the expansion of distribution rights acquired by Sony through the January 2017 Sony Transactions.

Note 7: Accrued Liabilities - Current

As of June 30, 2017 and December 31, 2016, the Company had the following current accrued liabilities:

	June 30, 2017		December 31, 2016
Accrued Salaries and Wages (a)	$	165,544	$	132,827
Disputed Trade Payables (b)		925,000		925,000
Services Advance - Current Portion (c)		–		1,489,583
Other Accrued Expenses		258,680		249,482
Total Accrued Liabilities - Current	$	1,349,224	$	2,796,892

	(a)	Accrued Salaries and Wages represent accrued vacation payable to employees.
	(b)	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 June 30, 2017, 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 uncollectible. The Company is working with the counterparty to extinguish this liability.

(c)

During the first quarter of 2014, the Company entered into an exclusive three-year agreement with DADC to provide all CD, DVD and Blu-ray replication, packaging and distribution to the Company’s direct customers. Under the terms of the long-term, exclusive supply chain services agreement, the Company will order a minimum level of disk replication, packaging and distribution services for its content across all physical media, including DVD, CD, and Blu-ray from DADC. As consideration for these minimum order levels, the Company received a total of $1,500,000, $750,000 during the first quarter of 2014 and $750,000 during the first quarter of 2015. At the end of the term, the Company is obligated to repay a pro-rata portion of the advance if it has not ordered a minimum number of DVD/CD units during the term.

On January 10, 2017, the Company entered into an amendment of our home entertainment Distribution Agreement with Sony pursuant to which, among other things, Sony paid DADC $1,489,583, which was the total sum owed and payable by us to DADC for the disk replication, packaging and distribution services.

In connection with such transaction, we issued Sony 301,231 shares of our Common Stock at $4.945 per share, Sony’s exclusive territory for exercising its home entertainment distribution rights under the Distribution Agreement was extended from the United States and Canada to worldwide, and the amount of advances subject to recoupment by Sony out of royalty payments that would otherwise be due to us under the Distribution Agreement was increased by the amount of the payment to DADC.

Note 8: Production Loan Facility

On August 8, 2016, Llama Productions 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 to be 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 June 30, 2017, the Company was in compliance with these covenants.

As of June 30, 2017, the Company had gross outstanding borrowing under the facility of $2,840,642 against which financing costs of $143,594 were applied resulting in net borrowings of $2,697,048. As of December 31, 2016, the Company had gross outstanding borrowing under the facility of $1,505,307 against which financing costs of $173,303 were applied resulting in net borrowings of $1,332,004.

Note 9: Stockholders’ Equity

Common Stock

As of June 30, 2017, the total number of authorized shares of Common Stock was 233,333,334.

On October 29, 2015, the Company entered into securities purchase agreements with certain accredited investors pursuant to which the Company sold an aggregate of 1,443,362 shares of its Common Stock, par value $0.001 per share, and warrants to purchase up to an aggregate of 1,443,362 shares of Common Stock (the “Original Warrants”) for a purchase price of $3.00 per share and the associated warrants for gross proceeds to the Company of $4,330,000 (“2015 Private Placement”). The closing of the 2015 Private Placement occurred on November 3, 2015. Stock offering costs were $502,218. (See Note 11 for additional information about these warrants.)

On October 6, 2016, the Board of Directors of the Company authorized a reverse stock split in preparation for the Company’s anticipated uplisting on the NASDAQ Capital Market.

On November 4, 2016, the Company filed a certificate of change to the Company’s Articles of Incorporation with the Secretary of State of the State of Nevada to effect a one-for-three reverse stock split of the Company’s issued and outstanding Common Stock. As a result of the 2016 Reverse Split, every three shares of the Company’s issued and outstanding Common Stock were automatically combined and reclassified into one share of the Company’s Common Stock. The 2016 Reverse Split affected all issued and outstanding shares of Common Stock, as well as Common Stock underlying stock options and warrants outstanding. No fractional shares were issued in connection with the 2016 Reverse Split. Stockholders who would otherwise have held a fractional share of Common Stock received an increase to their Common Stock as the Common Stock was rounded up to a full share. The total number of authorized shares of Common Stock was reduced from 700,000,000 to 233,333,334 in conjunction with the 2016 Reverse Split. The 2016 Reverse Split became effective on November 9, 2016. All disclosures of shares and per share data in these consolidated financial statements and related notes have been retroactively adjusted to reflect the reverse stock split for all periods presented.

On February 9, 2017, the Company entered into the Private Transaction pursuant to the Agreement with certain holders of the Original Warrants. Pursuant to the Agreement, the holders of the Original Warrants and the Company agreed that such Original Warrant holders would exercise their Original Warrants in full, and the Company would issue to each such holder new warrants. (See Note 11 for additional information about these warrants.) In association with the Private Transaction, the Company issued 1,171,689 shares of Common Stock upon exercise of a portion of the Original Warrants for which it received gross proceeds of $3,866,573 and recording offering costs of $464,649 for net proceeds of $3,401,924.

As of June 30, 2017, and December 31, 2016, there were 5,897,091 and 4,010,649 shares of Common Stock outstanding, respectively. Below are the changes to the Company’s Common Stock during the six months ended June 30, 2017:

	·	In connection with the January 2017 Sony Transactions, we issued Sony 301,231 shares of our Common Stock at $4.945 per share.
	·	On January 17, 2017, we issued to a consultant 10,112 shares of our Common Stock at $4.945 per share in connection with the January 2017 Sony Transactions.
	·	On February 9, 2017, the Company issued 1,171,689 shares of Common Stock in connection with the Private Transaction.
	·	On March 14, 2017, the Company issued 8,410 shares of Common Stock valued at $5.95 per share to a consultant for services rendered.
	·	On various dates during the six months ended June 30, 2017, the Company issued 395,000 shares of the Company’s Common Stock pursuant to the conversion of 1,185 shares of Series A Convertible Preferred Stock at a conversion price of $3.00.

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 June 30, 2017 and December 31, 2016, there were 3,710 and 4,895 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.

On May 14, 2014, we entered into securities purchase agreements with certain accredited investors pursuant to which we sold an aggregate of 6,000 shares of our then newly designated Series A Convertible Preferred Stock at a price of $1,000 per share for gross proceeds to us of $6,000,000. Related to the sale, we incurred offering costs of $620,085 resulting in net proceeds of $5,379,915. The transaction closed on May 15, 2014.

As the conversion price of the Series A Convertible Preferred Stock on a converted basis was below the market price of the Common Stock on the closing date, this resulted in a beneficial conversion feature recorded as an “imputed” dividend of $2,010,000. In addition, during the fourth quarter of 2015, in connection with the 2015 Private Placement in which the Company’s Common Stock was sold at $3.00 per share, the conversion price of the Series A Convertible Preferred Stock decreased to $3.00. This decrease resulted in an additional beneficial conversion feature of $3,383,850 recognized as of the time of the 2015 Private Placement.

Note 10: Stock Options

On December 29, 2008, the Company adopted the 2008 Stock Option Plan (the “Plan”), which provides for the issuance of qualified and non-qualified stock options to officers, directors, employees and other qualified persons. The Plan is administered by the Board of Directors of the Company or a committee appointed by the Board of Directors. The number of shares of the Company’s Common Stock initially reserved for issuance under the Plan was 36,667. On September 2, 2011, the stockholders holding a majority of the Company’s outstanding Common Stock adopted an amendment to the Company’s 2008 Stock Option Plan to increase the number of shares of Common Stock issuable under the plan to 166,667.

On September 18, 2015, the Company adopted the Genius Brands International, Inc. 2015 Incentive Plan (the “2015 Plan”). The 2015 Plan was approved by our stockholders in September 2015. The 2015 Plan as approved by the stockholders authorized the issuance up to an aggregate of 150,000 shares of Common Stock. On December 14, 2015, the Board of Directors voted to amend the 2015 Plan to increase the total number of shares that can be issued under the 2015 Plan by 1,293,334 from 150,000 shares to 1,443,334 shares. The increase in shares available for issuance under the 2015 Plan was approved by stockholders on February 3, 2016. On May 18, 2017, the Board of Directors voted to amend the 2015 Plan to increase the total number of shares that can be issued under the 2015 Plan by 223,333 shares from 1,443,334 shares to an aggregate of 1,666,667 shares. The increase in shares available for issuance under the 2015 Plan was approved by stockholders on July 25, 2017.

The following table summarizes the changes in the Company’s stock option plan during the six months ended June 30, 2017:

	Options Outstanding Number of Shares		Exercise Price per Share		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value		Weighted Average Exercise Price per Share
Balance at December 31, 2016		1,373,554	$	2.82 - 12.00		3.99 years	$	280,642	$	8.14
Options Granted		–
Options Exercised		–
Options Cancelled		16,087
Options Expired		–
Balance at June 30, 2017		1,357,467	$	2.82 - 12.00		3.49 years	$	63,013	$	8.14

Exercisable December 31, 2016		452,535	$	2.82 - 6.00		3.95 years	$	263,375	$	5.29
Exercisable June 30, 2017		467,534	$	2.82 - 6.00		3.48 years	$	59,012	$	5.33

During the year ended December 31, 2015, the Company granted options to purchase 1,407,775 shares of Common Stock to officers, directors, employees, and consultants. These stock options generally vest between one and three years, while a portion vested upon grant. The fair value of these options was determined to be $2,402,460 using the Black-Scholes option pricing model based on the following assumptions:

Exercise Price	$2.82 - $12.00
Dividend Yield	0%
Volatility	100% - 137%
Risk-free interest rate	0.89% - 1.25%
Expected life of options	2.5 - 3.5 years

During the three and six months ended June 30, 2016, the Company recognized share-based compensation expense of $312,977 and $877,962, respectively. During the first quarter of 2016, the Company recognized $220,564 of true-up expenses from prior periods which reflected certain revisions meant to (i) align with the graded vesting of the majority of the options granted in 2015, (ii) make adjustments in certain accounting estimates utilized in the Black-Scholes model, and (iii) reflect the accurate number of options granted in 2015. The Company has assessed these adjustments individually and in aggregate and considers them immaterial to the current and prior periods.

During the three and six months ended June 30, 2017, the Company recognized $183,641 and $405,633, respectively, in share-based compensation expense. The unvested share-based compensation as of June 30, 2017 was $480,673 which will be recognized through the second quarter of 2019 assuming the underlying grants are not cancelled or forfeited.

Note 11: Warrants

The Company has warrants outstanding to purchase up to 1,766,698 and 1,651,698 at June 30, 2017 and December 31, 2016, respectively.

In connection with the sale of the Company’s Series A Convertible Preferred Stock in May 2014, Chardan Capital Markets LLC (“Chardan”) acted as sole placement agent in consideration for which it received a cash fee of $535,000 and a warrant to purchase up to 100,002 shares of the Company’s Common Stock. These warrants are exercisable immediately, have an exercise price of $6.00 per share, and have a five-year term.

In connection with the 2015 Private Placement, the Company issued to accredited investors the Original Warrants to purchase up to an aggregate of 1,443,362 shares of Common Stock for a purchase price of $3.00 per share. The Original Warrants are exercisable into shares of Common Stock for a period of five (5) years from issuance at an initial exercise price of $3.30 per share, subject to adjustment in the event of stock splits, dividends and recapitalizations. The Original Warrants are exercisable immediately. The Company is prohibited from effecting an exercise of the warrants to the extent that as a result of such exercise, the holder would beneficially own more than 4.99% (subject to increase up to 9.99% upon 61 days’ notice) in the aggregate of the issued and outstanding shares of Common Stock, calculated immediately after giving effect to the issuance of shares of Common Stock upon exercise of the warrant.

In connection with the 2015 Private Placement, Chardan acted as sole placement agent in consideration for which it received a cash fee of $300,000 and a warrant to purchase up to 141,668 shares of the Company’s Common Stock. These warrants are exercisable immediately, have an exercise price of $3.60 per share, and have a five-year term.

On February 9, 2017, the Company entered into the Private Transaction pursuant to the Agreement with certain holders of the Original Warrants. Pursuant to the Agreement, the holders of the Original Warrants and the Company agreed that such Original Warrant holders would exercise their Original Warrants in full, and the Company would issue to each such holder new warrants, with the new warrants being identical to the Original Warrants except that the termination date of such new warrants is February 10, 2022 (the “Reload Warrants”). In addition, depending on the number of Original Warrants exercised by all holders of the Original Warrants, the Company also agreed to issue to the holders another new warrant, identical to the Original Warrant except that the exercise price of such warrant is $5.30 and such warrant is not exercisable until August 10, 2017 (the “Market Price Warrants” and together with the Reload Warrants, the “New Warrants”).

The Company received gross proceeds of $3,866,573 from the exercise of the Original Warrants and issued Reload Warrants to purchase an aggregate of 799,991 shares of the Company’s Common Stock and Market Price Warrants to purchase an aggregate of 371,699 shares of the Company’s Common Stock. In association with the Private Transaction, the Company recorded $1,402,174, representing the difference in the fair market value of the Original Warrants and the New Warrants, as an adjustment to additional paid-in capital.

Chardan acted as financial advisor on the Private Transaction in consideration for which Chardan received $363,617 and was issued New Warrants for 115,000 shares of the Company’s Common Stock.

The following table summarizes the changes in the Company’s outstanding warrants during the six months ended June 30, 2017:

	Warrants Outstanding Number of Shares		Exercise Price per Share		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price per Share		Aggregate Intrinsic Value
Balance at December 31, 2016		1,651,698	$	3.30 - 6.00		3.75 years	$	3.49	$	3,301,913
Warrants Granted		1,286,690		3.30 - 5.30		–		–		ؘ–
Warrants Exercised		1,171,690		3.30		–		–		–
Warrants Expired		–
Balance at June 30, 2017		1,766,698	$	3.30 - 6.00		4.19 years	$	4.03	$	124,599

Exercisable December 31, 2016		1,651,698	$	3.30 - 6.00		3.75 years	$	3.49	$	3,301,913
Exercisable June 30, 2017		1,279,999	$	3.30 - 6.00		4.03 years	$	3.54	$	124,599

Note 12: Income Taxes

The Company accounts for income taxes in accordance with ASC 740 Income Taxes, 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.

ASC 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company’s financial statements. ASC 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.

At the adoption date of January 1, 2008, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized.

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 June 30, 2017 and December 31, 2016, 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 and Massachusetts. 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.

Note 13: Commitment 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 is contractually committed to make certain minimum lease payments for the use of property under its operating lease. In addition, the Company has contractual commitments for employment agreements of certain employees.

During the first quarter of 2015, the Company entered into an agreement for new office space to which it relocated its operations upon the expiration of its prior lease. Effective May 1, 2015, the Company began leasing approximately 3,251 square feet of general office space at 301 North Canon Drive, Suite 305, Beverly Hills, California 90210 pursuant to a 35-month sub-lease that commenced on May 1, 2015. The Company will pay $136,542 annually subject to annual escalations of 3%.

Rental expenses incurred for operating leases during the three months ended June 30, 2017 and 2016 were $35,862 and $34,818, respectively. Rental expenses incurred for operating leases during the six months ended June 30, 2017 and 2016 were $71,022 and $69,825, respectively.

The following is a schedule of future minimum contractual obligations under the Company’s operating leases and employment agreements:

	2017		2018		2019		2020		2021		Remaining		Total
Operating Leases	$	72,429	$	36,214	$	–	$	–	$	–	$	–	$	108,643
Employment Agreements		222,252		248,044		–		–		–		–		470,296
Total	$	294,681	$	284,258	$	–	$	–	$	–	$	–	$	578,939

In addition to employment agreements and operating leases, in the normal course of its business, the Company enters into various agreements which call for the potential future payment of royalties or “profit” participations associated with its individual properties. These future payments can be for either (i) the use of third party intellectual property, such as the case with Stan Lee and the Mighty 7 and Llama Llama among others, in which the Company is obligated to share net profits with the underlying rights holders on a certain basis as defined in the respective agreements or (ii) services rendered by animation studios, post-production studios, writers, directors, musicians or other creative talent for which the Company is obligated to share with these service providers a portion of the net profits of the properties on which they have rendered services, as defined in each respective agreement.

Note 14: Related Party Transactions

On April 21, 2016, 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 and Stan Lee’s Mighty 7 in connection with certain products to be sold by AHAA. The terms and conditions of such license are customary within the industry, and the Company earns an arm-length industry standard royalty on all sales made by AHAA utilizing the licensed content. During the three months ended June 30, 2017 and 2016, the Company earned $96 and $247 in royalties from this agreement, respectively. During the six months ended June 30, 2017 and 2016, the Company earned $96 and $247 in royalties from this agreement, respectively.

On July 25, 2016, the Company entered into a consulting agreement with Foothill Entertainment, Inc. (“Foothill”), an entity whose Chairman is Gregory Payne, our corporate secretary. The Company has engaged Foothill Entertainment, Inc. for a term of six months to assist in the distribution and commercial exploitation of its audiovisual content as well as for the preparation and attendance on behalf of the Company at the MIPJR and MIPCOM markets in Cannes. The agreement continues on a month-to-month basis following the initial term. Foothill receives $12,500 per month for these services.

On October 1, 2016, Llama Productions LLC entered into an animation production services agreement with Mr. Heyward for services as a producer for which he is to receive $186,000 through the course of production of the Company’s animated series Llama Llama. From October 1, 2016 through June 30, 2017, Mr. Heyward has been paid $96,000.

Note 15: Subsequent Events

Pursuant to FASB ASC 855, Management has evaluated all events and transactions that occurred from June 30, 2017 through the date of issuance of these financial statements. During this period, we did not have any significant subsequent events, except as disclosed below:

Effective July 13, 2017, the Company entered into an employment agreement with Gregory B. Payne for the position of Chief Operating Officer. Mr. Payne will be entitled to be paid a salary at the annual rate of $225,000 per year. The term of the agreement is one year with a mutual option for an additional one-year period.

On August 7, 2017, the Company issued to a consultant 6,012 shares of our common stock for services rendered.

On various dates subsequent to June 30, 2017, an investor converted 105 shares of Series A Convertible Preferred Stock into 35,000 shares of the Company’s common stock at a conversion price of $3.00.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our results of operations, financial condition and liquidity and capital resources should be read in conjunction with our financial statements and related notes for the three and six months ended June 30, 2017 and 2016. Certain statements made or incorporated by reference in this report and our other filings with the Securities and Exchange Commission, in our press releases and in statements made by or with the approval of authorized personnel constitute forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and are subject to the safe harbor created thereby. Forward-looking statements reflect intent, belief, current expectations, estimates or projections about, among other things, our industry, management’s beliefs, and future events and financial trends affecting us. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will” and variations of these words or similar expressions are intended to identify forward looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward looking statements. Although we believe the expectations reflected in any forward-looking statements are reasonable, such statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. These differences can arise as a result of the risks described in the section entitled “Item 1A. Risk Factors” in our Annual Report on Form 10-K filed on March 31, 2017, and elsewhere in this report, as well as other factors that may affect our business, results of operations, or financial condition. Forward-looking statements in this report speak only as of the date hereof, and forward-looking statements in documents incorporated by reference speak only as of the date of those documents. Unless otherwise required by law, we undertake no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, we cannot assure you that the forward-looking statements contained in this report will, in fact, transpire.

Overview

The management’s discussion and analysis is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make certain estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

Our Business

Genius Brands International, Inc. is a global content and brand management company that creates and licenses multimedia content. Led by industry veterans, we distribute our content in all formats as well as a broad range of consumer products based on its 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 including the award-winning Baby Genius; new preschool property Rainbow Rangers; preschool property debuting on Netflix Llama Llama; tween music-driven brand SpacePop; adventure comedy Thomas Edison's Secret Lab®, available on public broadcast stations and our Kid Genius Cartoon Channel on Comcast's Xfinity on Demand and Roku; Warren Buffett's Secret Millionaires Club, created with and starring iconic investor Warren Buffett. We are also co-producing an all-new adult-themed animated series, Stan Lee's Cosmic Crusaders, with Stan Lee's Pow! Entertainment and The Hollywood Reporter.

In addition, we act as licensing agent for certain brands, leveraging our existing licensing infrastructure to expand these brands into new product categories, new retailers, and new territories. These include Llama Llama and Celessence Technologies.

Results of Operations

Three Months Ended June 30, 2017 and 2016

Our summary results for the three months ended June 30, 2017 and 2016 are below.

Revenues

	Three months ended
	June 30, 2017		June 30, 2016		Change			% Change
Licensing & Royalties	$	118,351	$	113,456	$	4,895			4%
Television & Home Entertainment		64,766		46,726		18,040			39%
Advertising Sales		4,514		–		4,514			N/A
Product Sales		8,501		16,150		(7,649	)		-47%
Total Revenue	$	196,132	$	176,332	$	19,800			11%

Licensing and royalty revenue includes items for which we license the rights to our copyrights and trademarks of our brands and those of the brands for which we act as a licensing agent. During the three months ended June 30, 2017 compared to June 30, 2016, this category increased $4,895 or 4% primarily due to increases in revenues from our SpacePop property offset by decreases in one brand for which we act as a licensing agent.

Television & Home Entertainment revenue is generated from distribution of our properties for broadcast on television, VOD, or SVOD in domestic and international markets and the sale of DVDs for home entertainment through our partners. Fluctuations in Television & Home Entertainment revenue occur period over period based on the achievement of revenue recognition criteria such as the start of a license period and the delivery of the content to the customer. During the three months ended June 30, 2017 compared to June 30, 2016, Television & Home Entertainment revenue increased $18,040 or 39%. During the three months ended June 30, 2016, we recognized revenue from numerous licenses of our Thomas Edison’s Secret Lab Property. In the current period, there were fewer licenses of Thomas Edison’s Secret Lab offset by increased licensing activity related to our SpacePop property.

Advertising sales are generated on the Kid Genius Cartoon Channel in the form of either flat rate promotions or advertising impressions served. Advertising sales increased by $4,514 during the three months ended June 30, 2017 due to advertising impressions served compared to no revenue in the prior period as we had not yet begun to monetize our growing base of homes served.

Product sales represent physical products in which we hold intellectual property rights such as trademarks and copyrights to the characters and which are manufactured and sold by us directly. During the three months ended June 30, 2017, product sales associated with Warren Buffett’s Secret Millionaire Club decreased by $7,649 (47%) compared to the three months ended June 30, 2016 due to a different product offering and price point as compared to that period in the prior year.

Expenses

	Three months ended
	June 30, 2017		June 30, 2016		Change			% Change
Marketing and Sales	$	185,542	$	204,318	$	(18,776	)		-9%
Direct Operating Costs		44,948		68,593		(23,645	)		-34%
General and Administrative		1,221,572		1,334,242		(112,670	)		-8%
Total Operating Expenses	$	1,452,062	$	1,607,153	$	(155,091	)		-10%

Marketing and sales expenses decreased $18,776 for the three months ended June 30, 2017 compared to the prior year period primarily due to modest decreases in spending related to sponsorships and promotions during the quarter pursuant to our SpacePop marketing plan.

Direct operating costs include costs of our product sales, unamortizable post-production 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. During the three months ended June 30, 2017, we recorded film and television cost amortization expense of $3,482 and participation expense of $13,148 compared to prior period expenses of $17,644 and $0, respectively. These decreases are related to decreased Television & Home Entertainment revenue related to Thomas Edison’s Secret Lab in the current period compared to the prior period. Additionally, direct operating costs included certain post production costs, property development costs, and content delivery expenses.

General and administrative expenses consist primarily of salaries, employee benefits, share-based compensation related to stock options, insurance, rent, depreciation and amortization as well as other professional fees related to finance, accounting, legal and investor relations. General and administrative costs for three months ended June 30, 2017 decreased $112,670 compared to the same period in 2016. This change resulted from decreases in share-based compensation expense of $129,336 and in salaries and wages of $27,620 offset by increases in professional fees of $58,403 and in bad debt expense of $16,730. Fluctuations in other general and administrative expenses make up the balance of the variance.

Six Months Ended June 30, 2017 and 2016

Our summary results for the six months ended June 30, 2017 and 2016 are below.

Revenues

	Six months ended
	June 30, 2017		June 30, 2016		Change			% Change
Licensing & Royalties	$	271,564	$	261,468	$	10,096			4%
Television & Home Entertainment		108,138		250,607		(142,469	)		-57%
Advertising Sales		6,018		–		6,018			N/A
Product Sales		8,501		16,150		(7,649	)		-47%
Total Revenue	$	394,221	$	528,225	$	(134,004	)		-25%

Licensing and royalty revenue includes items for which we license the rights to our copyrights and trademarks of our brands and those of the brands for which we act as a licensing agent. During the six months ended June 30, 2017 compared to June 30, 2016, this category increased $10,096 or 4% primarily due to increases in revenues from our SpacePop property offset by decreases in one brand for which we act as a licensing agent.

Television & Home Entertainment revenue is generated from distribution of our properties for broadcast on television, VOD, or SVOD in domestic and international markets and the sale of DVDs for home entertainment through our partners. Fluctuations in Television & Home Entertainment revenue occur period over period based on the achievement of revenue recognition criteria such as the start of a license period and the delivery of the content to the customer. During the six months ended June 30, 2017 compared to June 30, 2016, Television & Home Entertainment revenue decreased $142,469 or 57%. During the six months ended June 30, 2016, we recognized revenue from numerous licenses of our Thomas Edison’s Secret Lab Property. In the current period, there were fewer licenses of Thomas Edison’s Secret Lab offset by increased licensing activity related to our SpacePop property.

Advertising sales are generated on the Kid Genius Cartoon Channel in the form of either flat rate promotions or advertising impressions served. Advertising sales increased by $6,018 during the six months ended June 30, 2017 due to advertising impressions served compared to no revenue in the prior period as we had not yet begun to monetize our growing base of homes served.

Product sales represent physical products in which we hold intellectual property rights such as trademarks and copyrights to the characters and which are manufactured and sold by us directly. During the six months ended June 30, 2017, product sales associated with Warren Buffett’s Secret Millionaire Club decreased by $7,649 (47%) compared to the six months ended June 30, 2016 due to a different product offering and price point as compared to that period in the prior year.

Expenses

	Six months ended
	June 30, 2017		June 30, 2016		Change			% Change
Marketing and Sales	$	275,046	$	465,950	$	(190,904	)		-41%
Direct Operating Costs		68,018		208,468		(140,450	)		-67%
General and Administrative		2,622,496		2,936,345		(313,849	)		-11%
Total Operating Expenses	$	2,965,560	$	3,610,763	$	(645,203	)		-18%

Marketing and sales expenses decreased $190,904 for the six months ended June 30, 2017 compared to the prior year period primarily due to modest decreases in spending related to sponsorships and promotions during the quarter pursuant to our SpacePop marketing plan as well as fees paid to a consultant for execution of a distribution contract in the prior period without similar activity in the current period.

Direct operating costs include costs of our product sales, unamortizable post-production 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. During the six months ended June 30, 2017, we recorded film and television cost amortization expense of $8,086 and participation expense and music royalties of $25,826 compared to prior period expenses of $135,157 and $0, respectively. These decreases are related to decreased Television & Home Entertainment revenue in the current period compared to the prior period. Additionally, direct operating costs included certain post production costs, property development costs, and content delivery expenses.

General and administrative expenses consist primarily of salaries, employee benefits, share-based compensation related to stock options, insurances, rent, depreciation and amortization as well as other professional fees related to finance, accounting, legal and investor relations. General and administrative costs for six months ended June 30, 2017, decreased $313,849 compared to the same period in 2016. This change resulted from decreases in share-based compensation expense of $472,329 offset by increases in professional fees of $127,912 and in bad debt expense of $16,730. Fluctuations in other general and administrative expenses make up the balance of the variance.

Liquidity and Capital Resources

Working Capital

As of June 30, 2017, we had current assets of $4,689,434, including cash, cash equivalents, and restricted cash of $3,986,528, and current liabilities of $2,206,700, including certain trade payables of $925,000 of which we dispute the claim, resulting in working capital of $2,482,734, compared to a working capital deficit of $479,404 as of December 31, 2016.

Increases in working capital were the result of two transactions:

On January 10, 2017, we entered into an amendment of our home entertainment distribution agreement with Sony pursuant to which, among other things, Sony paid DADC $1,489,583 which was the total sum owed and payable by us to DADC.

On February 9, 2017, we entered into the Private Transaction for which we received gross proceeds of $3,866,573 from the exercise of the Original Warrants.

Credit Facility

On August 8, 2016, Llama Productions LLC, our wholly-owned subsidiary, closed a $5,275,000 multiple draw-down, secured, non-recourse, non-revolving credit facility (the “Facility”) with Bank Leumi USA to produce our animated series Llama Llama (the “Series”). The Series is configured as fifteen half-hour episodes comprised of thirty 11-minute programs to be delivered to Netflix in Fall 2017. The Facility is secured by the license fees we will receive from Netflix for the delivery of the Series as well as our 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, we deposited $1,000,000 into a cash account to be used solely for the production of the series.

Comparison of Cash Flows for the Six Months Ended June 30, 2017 and 2016

Our total cash, cash equivalents, and restricted cash was $3,986,528 and $4,938,720 at June 30, 2017 and 2016, respectively.

	Six months ended
	June 30, 2017			June 30, 2016			Change
Cash used in operations	$	(3,558,638	)	$	(324,208	)	$	(3,234,430	)
Cash used in investing activities		(29,407	)		(7,192	)		(22,215	)
Cash provided by financing activities		4,686,652			82,500			4,604,152
Increase in cash	$	1,098,607		$	248,900		$	1,347,507

During the six months ended June 30, 2017, our primary sources of cash were the $3,866,573 in gross proceeds from the Private Transaction coupled with the $1,284,728 in proceeds from the Llama Llama production facility. During the comparable period in 2016, our primary source of cash was the $2,000,000 advance from the Sony Distribution Agreement. During both periods, these funds were primarily used to fund operations including the continued investment in our film and television assets as well as marketing support for our brands.

Operating Activities

Cash used in operating activities for the six months ended June 30, 2017 was $3,558,638 as compared to cash used in operating activities of $324,208 during the prior period. The use of cash in the current period is based on the operating results discussed above as well as increases in film and television costs of $1,437,384 related to the development and production of SpacePop, Llama Llama, and Rainbow Rangers. The cash used in operating activities in the prior period resulted primarily from the $2,000,000 advance from the Sony Distribution Agreement offset by our operating results and increases in film and television costs of $381,963 related to the production of SpacePop and Llama Llama.

Investing Activities

Cash used in investing activities for the six months ended June 30, 2017 was $29,407 for the enhancement of our IT infrastructure as compared to a use of $7,192 during the comparable period for the development of certain intangible assets.

Financing Activities

Cash generated from financing activities for the six months ended June 30, 2017 was $4,686,652 as compared to $82,500 generated in the comparable period in 2016. During the six months ended June 30, 2017, the sources of cash generated from financing activities were the $3,866,573 in gross proceeds from the Private Transaction coupled with the $1,284,728 in proceeds from the Llama Llama production facility. During the six months ended June 30, 2016, cash generated from financing activities included the exercise of certain warrants outstanding.

Capital Expenditures

As of June 30, 2017, we do not have any material commitments for capital expenditures.

Critical Accounting Policies

Our accounting policies are described in the notes to the financial statements. Below is a summary of the critical accounting policies, among others, that management believes involve significant judgments and estimates used in the preparation of its financial statements.

Principles of Consolidation

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. To test for goodwill impairment, we are required to estimate the fair market value of each of our reporting units, of which we have one. While we may use a variety of methods to estimate fair value for impairment testing, our primary method is discounted cash flows. We estimate future cash flows and allocations of certain assets using estimates for future growth rates and our judgment regarding the applicable discount rates. Changes to our judgments and estimates could result in a significantly different estimate of the fair market value of the reporting units, which could result in an impairment of goodwill or indefinite lived intangible assets in future periods.

Film and Television Costs

We capitalize 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. We expense all capitalized costs that exceed the initial market firm commitment revenue in the period of delivery of the episodes.

We capitalize 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. We evaluate our capitalized production costs annually and limit recorded amounts by our ability to recover such costs through expected future sales.

Additionally, for both episodic series and films, from time to time, we develop additional content, improved animation and bonus songs/features for our 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.

Revenue Recognition

We recognize revenue in accordance with FASB ASC 926-605 Entertainment-Films - Revenue Recognition. Accordingly, we recognize revenue when (i) persuasive evidence of a sale with a customer exists, (ii) the film is complete and has been delivered or is available for delivery, (iii) the license period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale, (iv) the arrangement fee is fixed or determinable, and (v) collection of the arrangement fee is reasonably assured.

Our licensing and royalty revenue represents revenue generated from license agreements that are held in conjunction with third parties that are responsible for collecting fees due and remitting to us our share after expenses. Revenue from licensed products is recognized when realized or realizable based on royalty reporting received from licensees. Licensing income that we recognize as an agent is in accordance with FASB ASC 605-45 Revenue Recognition - Principal Agent. Accordingly, our revenue is our gross billings to our customers less the amounts we pay to suppliers for their products and services.

We sell advertising on our Kid Genius channel in the form of either flat rate promotions or impressions served. For flat rate promotions with a fixed term, we recognize revenue when all five revenue recognition criteria under FASB ASC 605 are met. For impressions served, we deliver a certain minimum number of impressions on the channel to the advertiser for which the advertiser pays a contractual CPM per impression. Impressions served are reported to us on a monthly basis, and revenue is reported in the month the impressions are served.

We recognize revenue related to product sales when (i) the seller’s price is substantially fixed, (ii) shipment has occurred causing the buyer to be obligated to pay for product, (iii) the buyer has economic substance apart from the seller, and (iv) there is no significant obligation for future performance to directly bring about the resale of the product by the buyer as required by FASB ASC 605 Revenue Recognition.

Use of Estimates

Recent Accounting Pronouncements

In January 2017, the FASB issued Accounting Standards Update 2017-04, “Simplifying the Test for Goodwill Impairment”, which requires an entity to perform a one-step quantitative impairment test, whereby a goodwill impairment loss will be measured as the excess of a reporting unit’s carrying amount over its fair value (not to exceed the total goodwill allocated to that reporting unit). It eliminates Step 2 of the current two-step goodwill impairment test, under which a goodwill impairment loss is measured by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The standard is effective January 1, 2020, with early adoption as of January 1, 2017, permitted. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’). Disclosure controls and procedures include, without limitation, controls and procedures that are designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective for the period ended June 30, 2017 in ensuring that information that we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations over Internal Controls

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations, including the possibility of human error and circumvention by collusion or overriding of controls. Accordingly, even an effective internal control system may not prevent or detect material misstatements on a timely basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

As of June 30, 2017, there were no material pending legal proceedings to which we are a party or as to which any of its property is subject, and no such proceedings are known to us to be threatened or contemplated against us.

ITEM 1A. RISK FACTORS.

There have been no changes to the Risk Factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On various dates during the three months ended June 30, 2017, the Company issued 245,000 shares of the Company’s Common Stock pursuant to the conversion of 735 shares of Series A Convertible Preferred Stock at a conversion price of $3.00.

The securities referenced above were issued solely to “accredited investors” in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act, as amended.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

There were no reportable events under this Item 3 during the three months ended June 30, 2017.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

The exhibits filed as a part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index, which is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GENIUS BRANDS INTERNATIONAL, INC.

Date: August 14, 2017	By:	/s/ Andy Heyward
		Andy Heyward, Chief Executive Officer (Principal Executive Officer)


Date: August 14, 2017	By:	/s/ Rebecca D. Hershinger
		Rebecca D. Hershinger, Chief Financial Officer
		(Principal Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit No.	Description

3.1	Articles of Incorporation (Incorporated by reference from Registration Statement on Form 10 filed with the SEC on May 4, 2011)

3.2	Bylaws (Incorporated by reference from Registration Statement on Form 10 filed with the SEC on May 4, 2011)

10.1	Subscription Agreement dated January 17, 2017, between Genius Brands International, Inc. and Sony DADC USA, Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 20, 2017)

10.2	Form of Warrant Exercise Agreement dated February 9, 2017, (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on February 13, 2017)

31.1 *	Section 302 Certification of Chief Executive Officer.

31.2 *	Section 302 Certification of Chief Financial Officer.

32.1 **	Section 906 Certification of Chief Executive Officer.

32.2 **	Section 906 Certification of Chief Financial Officer.

101.INS *	XBRL Instance Document
101.SCH *	XBRL Schema Document
101.CAL *	XBRL Calculation Linkbase Document
101.DEF *	XBRL Definition Linkbase Document
101.LAB *	XBRL Label Linkbase Document
101.PRE *	XBRL Presentation Linkbase Document

* Filed herewith

** Furnished herewith

EX-31.1 2 genius_10q-ex3101.htm CERTIFICATION

EXHIBIT 31.1

CERTIFICATION

I, Andy Heyward, certify that:

I have reviewed this 10-Q of Genius Brands International, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d- 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 14, 2017

/s/ Andy Heyward

Andy Heyward, Chief Executive Officer

(Principal Executive Officer)

EX-31.2 3 genius_10q-ex3102.htm CERTIFICATION

EXHIBIT 31.2

CERTIFICATION

I, Rebecca D. Hershinger, certify that:

I have reviewed this 10-Q of Genius Brands International, Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 14, 2017

	/s/ Rebecca D. Hershinger
	Rebecca D. Hershinger, Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32.1 4 genius_10q-ex3201.htm CERTIFICATION

EXHIBIT 32.1

CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT

OF 2002 (18 U.S.C. 1350)

I, Andy Heyward, Chief Executive Officer of Genius Brands International, Inc., (the “Company”), do hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

the Quarterly Report on Form 10-Q, of the Company for the fiscal quarter ended June 30, 2017, (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 14, 2017

	/s/ Andy Heyward
	Andy Heyward, Chief Executive Officer
	(Principal Executive Officer)

EX-32.2 5 genius_10q-ex3202.htm CERTIFICATION

EXHIBIT 32.2

CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT

OF 2002 (18 U.S.C. 1350)

I, Rebecca D. Hershinger, Chief Financial Officer of Genius Brands International, Inc., (the “Company”), do hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 14, 2017

	/s/ Rebecca D. Hershinger
	Rebecca D. Hershinger, Chief Financial Officer
	(Principal Financial and Accounting Officer)

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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 industry veterans, the Company distributes its content in all formats as well as a broad range of consumer products based on its characters. In the children's media sector, the Company’s portfolio features “content with a purpose” for toddlers to tweens, which provides enrichment as well as entertainment including the award-winning Baby Genius; new preschool property Rainbow Rangers; preschool property debuting on Netflix Llama Llama; tween music-driven brand SpacePop; adventure comedy Thomas Edison's Secret Lab® available on public broadcast stations and the Company’s Kid Genius Carton 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-themed animated series, Stan Lee's Cosmic Crusaders, with Stan Lee's Pow! Entertainment and The Hollywood Reporter.    In addition, the Company acts as licensing agent for certain brands, leveraging its existing licensing infrastructure to expand these brands into new product categories, new retailers, and new territories. These include Llama Llama and Celessence Technologies.   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”.   On November 15, 2013, the Company entered into an Agreement and Plan of Reorganization (the “Merger Agreement”) with A Squared Entertainment LLC, a Delaware limited liability company (“A Squared”), A Squared Holdings LLC, a California limited liability company and sole member of A Squared (the “Parent Member”) and A2E Acquisition LLC, its newly formed, wholly-owned Delaware subsidiary (“Acquisition Sub”). Upon closing of the transactions contemplated under the Merger Agreement (the “Merger”), which occurred concurrently with entering into the Merger Agreement, the Acquisition Sub merged with and into A Squared, and A Squared, as the surviving entity, became a wholly-owned subsidiary of the Company. As a result of the Merger, the Company acquired the business and operations of A Squared.   On November 4, 2016, the Company filed a certificate to change its Articles of Incorporation to effect a reverse split on a one-for-three basis (the “2016 Reverse Split”). The 2016 Reverse Split became effective on November 9, 2016. All common stock (“Common Stock”) share and per share information in this Quarterly Report on Form 10-Q (“Form 10-Q”), including the accompanying consolidated financial statements and notes thereto, have been adjusted to reflect retrospective application of the 2016 Reverse Split, unless otherwise indicated.   Liquidity   Historically, the Company has incurred net losses. For the three months ended June 30, 2017 and 2016, the Company reported net losses of $1,251,543 and $1,182,952, respectively. For the six months ended June 30, 2017 and 2016, the Company reported net losses of $2,567,779 and $2,832,669, respectively. The Company reported net cash used in operating activities of $3,558,638 and $324,208 for the six months ended June 30, 2017 and 2016, respectively. As of June 30, 2017, the Company had an accumulated deficit of $39,210,540 and total stockholders’ equity of $11,392,942. At June 30, 2017, the Company had current assets of $4,689,434, including cash, cash equivalents, and restricted cash of $3,986,528 and current liabilities of $2,206,700, including certain trade payables of $925,000 to which the Company disputes the claim. The Company had working capital of $2,482,734 as of June 30, 2017, compared to a working capital deficit of $479,404 as of December 31, 2016.   During the first quarter of 2017, the Company completed two key transactions that enhanced cash and working capital balances:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px">·</td> <td style="padding-left: 9pt; text-align: justify">On January 10, 2017, the Company entered into an amendment of its home entertainment distribution agreement with Sony Pictures Home Entertainment Inc. (“SPHE”) pursuant to which, among other things, SPHE paid $1,489,583 which was owed and payable by the Company to SPHE’s sister company Sony DADC US Inc. (“DADC”) for certain disk manufacturing and replication services. In connection with such transaction, the Company issued SPHE 301,231 shares of its Common Stock at $4.945 per share, SPHE’s exclusive territory for exercising its home entertainment distribution rights under the Distribution Agreement was extended from the United States and Canada to worldwide, and the amount of advances subject to recoupment by SPHE out of royalty payments that would otherwise be due to the Company under the Distribution Agreement was increased by the amount of the payment to DADC. In connection with the above issuance of our shares, the Company entered into a subscription agreement with SPHE, effective as of January 17, 2017. Collectively, these transactions are referred to as the “January 2017 Sony Transactions.”</td></tr> <tr style="vertical-align: top"> <td> </td> <td>·</td> <td style="padding-left: 9pt; text-align: justify">On February 9, 2017, the Company entered into a private transaction (the “Private Transaction”) pursuant to a Warrant Exercise Agreement (the “Agreement”) with certain holders of the Company’s existing warrants (the “Original Warrants”) for which it received gross proceeds of $3,866,573 from the exercise of the Original Warrants and issued additional warrants to these holders (see Notes 9 and 11 for additional information about the Private Transaction).</td></tr> </table>   While the Company believes that its anticipated cash balances and working capital combined with its production facility and deal pipeline will be sufficient to fund operations for the next twelve months, there can be no assurance that cash flows from operations will continue to improve in the near future. If the Company is unable to attain profitable operations and attain positive operating cash flows, it may need to (i) seek additional funding, (ii) scale back its development or production plans, or (iii) reduce certain operations.

Basis of Presentation   The accompanying 2017 and 2016 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 and Llama Productions as well as its interest in Stan Lee Comics, LLC (“Stan Lee Comics”). All significant inter-company balances and transactions have been eliminated in consolidation.   Business Combination   On November 15, 2013, the Company entered into a Merger Agreement with A Squared, the Parent Member, and the Acquisition Sub. Upon closing of the Merger, which occurred concurrently with entering into the Merger Agreement, our Acquisition Sub merged with and into A Squared, and A Squared, as the surviving entity, became a wholly-owned subsidiary of the Company. As a result of the Merger, the Company acquired the business and operations of A Squared.   The financial statements have been prepared using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 Business Combinations.   Use of Estimates   The preparation of financial statements in conformity with generally accepted accounting principles 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, Cash Equivalents, and Restricted Cash   The Company considers all highly liquid debt instruments with initial maturities of three months or less to be cash equivalents. Restricted Cash includes $1,000,000 that the Company deposited into a cash account to be used solely to produce its series Llama Llama as a condition of its loan agreement with Bank Leumi USA.   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 $110,658 at both June 30, 2017 and December 31, 2016.   Inventories   Inventories are stated at the lower of average cost or market and consist of finished goods such as DVDs, CDs and other products. A reserve for slow-moving and obsolete inventory is established for all inventory deemed potentially non-saleable by management in the period in which it is determined to be potentially non-saleable. The current inventory is considered properly valued and saleable. The Company concluded that there was an appropriate reserve for slow moving and obsolete inventory of $26,097 at both June 30, 2017 and December 31, 2016.   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. The Company completes the annual goodwill and indefinite-lived intangible asset impairment tests at the end of each fiscal year. To test for goodwill impairment, we are required to estimate the fair market value of each of our reporting units, of which we have one. While we may use a variety of methods to estimate fair value for impairment testing, our primary method is discounted cash flows. We estimate future cash flows and allocations of certain assets using estimates for future growth rates and our judgment regarding the applicable discount rates. Changes to our judgments and estimates could result in a significantly different estimate of the fair market value of the reporting units, which could result in an impairment of goodwill or indefinite lived intangible assets in future periods.   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. In accordance with FASB ASC 350 Intangible Assets, the costs of new product development and significant improvement to existing products are capitalized while routine and periodic alterations to existing products are expensed as incurred. 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.   Revenue Recognition   The Company recognizes revenue in accordance with FASB ASC 926-605 Entertainment-Films - Revenue Recognition. Accordingly, the Company recognizes revenue when (i) persuasive evidence of a sale with a customer exists, (ii) the film is complete and has been delivered or is available for delivery, (iii) the license period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale, (iv) the arrangement fee is fixed or determinable, and (v) collection of the arrangement fee is reasonably assured.   The Company’s licensing and royalty revenue represents revenue generated from license agreements that are held in conjunction with third parties that are responsible for collecting fees due and remitting to the Company its share after expenses. Revenue from licensed products is recognized when realized or realizable based on royalty reporting received from licensees. Licensing income the Company recognizes as an agent is in accordance with FASB ASC 605-45 Revenue Recognition - Principal Agent. Accordingly, the Company’s revenue is its gross billings to its customers less the amounts it pays to suppliers for their products and services.   The Company sells advertising on its Kid Genius Cartoon 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 605 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 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 (i) the seller’s price is substantially fixed, (ii) shipment has occurred causing the buyer to be obligated to pay for product, (iii) the buyer has economic substance apart from the seller, and (iv) there is no significant obligation for future performance to directly bring about the resale of the product by the buyer as required by FASB ASC 605 Revenue Recognition.   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.   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.   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 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 adopted FASB ASC 820 as of January 1, 2008 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:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px">·</td> <td style="padding-left: 9pt; text-align: justify">Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;</td></tr> <tr style="vertical-align: top"> <td> </td> <td>·</td> <td style="padding-left: 9pt; text-align: justify">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</td></tr> <tr style="vertical-align: top"> <td> </td> <td>·</td> <td style="padding-left: 9pt; text-align: justify">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.</td></tr> </table>     Recent Accounting Pronouncements   In May 2014, the FASB issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets unless those contracts are within the scope of other standards (e.g. insurance contracts). This ASU will supersede all revenue recognition requirements in Topic 605, Revenue Recognition, and industry-specific guidance throughout the industry topics of the codification. The guidance's core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue principles, an entity will identify the contract(s) with a customer, identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue when the performance obligation is satisfied (either over time or at a point in time). The ASU further states that an entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”, which approved a one-year deferral of the effective date of the ASU from the original effective date of annual reporting periods beginning after December 15, 2016, to annual reporting periods (including interim reporting periods) beginning after December 15, 2017, with an option for early adoption of the standard on the original effective date. Additionally, in March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”, which clarified the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”, that amended the revenue guidance on identifying performance obligations and accounting for licenses of intellectual property. In May 2016, the FASB issued ASU 2016-11 “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 805): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016, EITF Meeting”, which rescinded from the FASB Accounting Standards Codification certain SEC paragraphs as a result of two SEC Staff Announcements. The FASB also issued ASU 2016-12 “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”, which clarified guidance on assessment of collectability, presentation of sale taxes, measurement of noncash consideration, and certain transition matters. The Company has formed a project team and is engaging an external consultant to evaluate the impact that the provisions of ASU 2014-09 and related subsequent updates will have on the Company's consolidated financial position, results of operations, cash flows, and disclosures. We anticipate adopting this accounting standard on January 1, 2018 using the modified retrospective method; however, we may opt for the full retrospective method depending on the final outcome of our evaluation.   In February 2016, the FASB issued Accounting Standards Update 2016-02, “Leases”. The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2018. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.   In November 2016, the FASB issued Accounting Standards Update 2016-18, “Statement of Cash Flows - Restricted Cash a consensus of the FASB Emerging Issues Task Force.” This standard requires restricted cash and cash equivalents to be included with cash and cash equivalents on the statement of cash flows under a retrospective transition approach. The guidance will become effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We have prospectively adopted ASU 2016-18. The impact to our consolidated financial position, results of operations and cash flows is minimal.   In January 2017, the FASB issued Accounting Standards Update 2017-04, “Simplifying the Test for Goodwill Impairment”, which requires an entity to perform a one-step quantitative impairment test, whereby a goodwill impairment loss will be measured as the excess of a reporting unit’s carrying amount over its fair value (not to exceed the total goodwill allocated to that reporting unit). It eliminates Step 2 of the current two-step goodwill impairment test, under which a goodwill impairment loss is measured by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The standard is effective January 1, 2020, with early adoption as of January 1, 2017 permitted. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.   In May 2017, the FASB issued Accounting Standard Update 2017-09, “Compensation—Stock Compensation: Scope of Modification Accounting”, which clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the new guidance, modification accounting is required if the fair value, vesting conditions or classification (equity or liability) of the new award are different from the original award immediately before the original award is modified. The standard is effective beginning January 1, 2018, with early adoption permitted. We are currently evaluating the potential impact of adopting this guidance on our 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, and are not expected to have a material effect on our financial position, results of operations, or cash flows.

The Company has property and equipment as follows as of June 30, 2017 and December 31, 2016:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">June 30, 2017</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">December 31, 2016</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 68%">Furniture and Equipment</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 13%; text-align: right">12,385</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 13%; text-align: right">12,385</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Computer Equipment</td> <td> </td> <td> </td> <td style="text-align: right">72,062</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">42,654</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Leasehold Improvements</td> <td> </td> <td> </td> <td style="text-align: right">176,903</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">176,903</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt">Software</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">15,737</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">15,737</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Property and Equipment, Gross</td> <td> </td> <td> </td> <td style="text-align: right">277,087</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">247,679</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt">Less Accumulated Depreciation</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">(191,084</td> <td style="padding-bottom: 1pt">)</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">(157,218</td> <td style="padding-bottom: 1pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-bottom: 2.5pt">Property and Equipment, Net</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">86,003</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">90,461</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>   During the three months ended June 30, 2017 and 2016, the Company recorded depreciation expense of $16,933 and $16,428, respectively. During the six months ended June 30, 2017 and 2016, the Company recorded depreciation expense of $33,865 and $33,063, respectively.

As of June 30, 2017, the Company had net Film and Television Costs of $3,806,578 compared to $2,260,964 at December 31, 2016. The increase relates primarily to the production and development of SpacePop, Llama Llama, and Rainbow Rangers offset by the amortization of film costs associated with the revenue recognized for Thomas Edison’s Secret Lab and SpacePop.   During the three months ended June 30, 2017 and 2016, the Company recorded Film and Television Cost amortization expense of $3,482 and $17,644, respectively. During the six months ended June 30, 2017, and 2016, the Company recorded Film and Television Cost amortization expense of $8,086 and $135,157, respectively.   The following table highlights the activity in Film and Television Costs as of June 30, 2017 and December 31, 2016:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Total</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 84%">Film and Television Costs, Net as of December 31, 2015</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 13%; text-align: right">1,003,546</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 9pt">Additions to Film and Television Costs</td> <td> </td> <td> </td> <td style="text-align: right">1,390,450</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-left: 9pt">Capitalized Interest</td> <td> </td> <td> </td> <td style="text-align: right">34,756</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; padding-left: 9pt">Film Amortization Expense</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">(167,788</td> <td style="padding-bottom: 1pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Film and Television Costs, Net as of December 31, 2016</td> <td> </td> <td> </td> <td style="text-align: right">2,260,964</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 9pt">Additions to Film and Television Costs</td> <td> </td> <td> </td> <td style="text-align: right">1,473,384</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-left: 9pt">Capitalized Interest</td> <td> </td> <td> </td> <td style="text-align: right">80,316</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; padding-left: 9pt">Film Amortization Expense</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">(8,086</td> <td style="padding-bottom: 1pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-bottom: 2.5pt">Film and Television Costs, Net as of June 30, 2017</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">3,806,578</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

Goodwill   In connection with the Merger in 2013, the Company recognized $10,365,805 in Goodwill, representing the excess of the fair value of the consideration for the Merger over net identifiable assets acquired. Pursuant to FASB ASC 350-20, Goodwill is not subject to amortization but is subject to annual review to determine if certain events warrant impairment to the Goodwill asset. Through June 30, 2017, the Company has not recognized any impairment to Goodwill.   Intangible Assets, Net   The Company had the following intangible assets as of June 30, 2017 and December 31, 2016:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">June 30, 2017</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">December 31, 2016</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 68%">Identifiable Artistic-Related Assets (a)</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 13%; text-align: right">1,740,000</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 13%; text-align: right">1,740,000</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Trademarks (b)</td> <td> </td> <td> </td> <td style="text-align: right">129,831</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">129,831</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Product Masters (b)</td> <td> </td> <td> </td> <td style="text-align: right">64,676</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">64,676</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt">Other Intangible Assets (b)</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">185,020</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">185,020</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Intangible Assets, Gross</td> <td> </td> <td> </td> <td style="text-align: right">2,119,527</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">2,119,527</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt">Less Accumulated Amortization (c)</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">(304,889</td> <td style="padding-bottom: 1pt">)</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">(273,877</td> <td style="padding-bottom: 1pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-bottom: 2.5pt">Intangible Assets, Net</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">1,814,638</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">1,845,650</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>     <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 29px">(a)</td> <td style="text-align: justify">In connection with the Merger in 2013, the Company acquired $1,740,000 of Identifiable Artistic-Related Assets. These assets, related to certain properties owned by A Squared and assumed by the Company, were valued using an independent firm. Based on certain legal, regulatory, contractual, and economic factors, the Company has deemed these assets to be indefinite-lived. Hence, pursuant to FASB ASC 350-30, these assets are not subject to amortization and are tested annually for impairment. Through June 30, 2017, the Company has not recognized any impairment expense related to these assets.</td></tr> <tr style="vertical-align: top"> <td> </td> <td>(b)</td> <td style="text-align: justify">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. Through June 30, 2017, the Company has not recognized any impairment expense related to these assets.</td></tr> <tr style="vertical-align: top"> <td> </td> <td>(c)</td> <td style="text-align: justify">During the three months ended June 30, 2017 and 2016, the Company recognized $13,315 and $19,184, respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets. During the six months ended June 30, 2017 and 2016, the Company recognized $31,012 and $38,315, respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets.</td></tr> </table>   Expected future intangible asset amortization as of June 30, 2017 is as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td>Fiscal Year:</td> <td> </td> <td colspan="2" style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 69%">2017</td> <td style="width: 3%"> </td> <td style="width: 1%">$</td> <td style="width: 26%; text-align: right">24,508</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>2018</td> <td> </td> <td> </td> <td style="text-align: right">26,119</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>2019</td> <td> </td> <td> </td> <td style="text-align: right">9,236</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>2020</td> <td> </td> <td> </td> <td style="text-align: right">8,655</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>2021</td> <td> </td> <td> </td> <td style="text-align: right">2,059</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Remaining</td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">4,061</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Total</td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">74,638</td> <td> </td></tr> </table>

As of June 30, 2017 and December 31, 2016, the Company had total short term and long term deferred revenue of $5,020,507 and $3,106,608, 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, 2016 is the $2,000,000 advance against future royalty that Sony paid to the Company in the first quarter of 2016. Included in the deferred revenue balance as of June 30, 2017 is the $2,000,000 advance against future royalties that Sony paid to the Company in the first quarter of 2016 as well as $1,489,583 attributable to the expansion of distribution rights acquired by Sony through the January 2017 Sony Transactions.

As of June 30, 2017 and December 31, 2016, the Company had the following current accrued liabilities:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">June 30, 2017</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">December 31, 2016</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 68%">Accrued Salaries and Wages (a)</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 13%; text-align: right">165,544</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 13%; text-align: right">132,827</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Disputed Trade Payables (b)</td> <td> </td> <td> </td> <td style="text-align: right">925,000</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">925,000</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Services Advance - Current Portion (c)</td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">1,489,583</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt">Other Accrued Expenses</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">258,680</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">249,482</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-bottom: 2.5pt">Total Accrued Liabilities - Current</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">1,349,224</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">2,796,892</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 29px">(a)</td> <td style="text-align: justify">Accrued Salaries and Wages represent accrued vacation payable to employees.</td></tr> <tr style="vertical-align: top"> <td> </td> <td>(b)</td> <td style="text-align: justify">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 June 30, 2017, 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 uncollectible. The Company is working with the counterparty to extinguish this liability.</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 29px">(c)</td> <td> During the first quarter of 2014, the Company entered into an exclusive three-year agreement with DADC to provide all CD, DVD and Blu-ray replication, packaging and distribution to the Company’s direct customers. Under the terms of the long-term, exclusive supply chain services agreement, the Company will order a minimum level of disk replication, packaging and distribution services for its content across all physical media, including DVD, CD, and Blu-ray from DADC. As consideration for these minimum order levels, the Company received a total of $1,500,000, $750,000 during the first quarter of 2014 and $750,000 during the first quarter of 2015. At the end of the term, the Company is obligated to repay a pro-rata portion of the advance if it has not ordered a minimum number of DVD/CD units during the term.   On January 10, 2017, the Company entered into an amendment of our home entertainment Distribution Agreement with Sony pursuant to which, among other things, Sony paid DADC $1,489,583, which was the total sum owed and payable by us to DADC for the disk replication, packaging and distribution services.   In connection with such transaction, we issued Sony 301,231 shares of our Common Stock at $4.945 per share, Sony’s exclusive territory for exercising its home entertainment distribution rights under the Distribution Agreement was extended from the United States and Canada to worldwide, and the amount of advances subject to recoupment by Sony out of royalty payments that would otherwise be due to us under the Distribution Agreement was increased by the amount of the payment to DADC.</td></tr> </table>

On August 8, 2016, Llama Productions 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 to be 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 June 30, 2017, the Company was in compliance with these covenants.   As of June 30, 2017, the Company had gross outstanding borrowing under the facility of $2,840,642 against which financing costs of $143,594 were applied resulting in net borrowings of $2,697,048. As of December 31, 2016, the Company had gross outstanding borrowing under the facility of $1,505,307 against which financing costs of $173,303 were applied resulting in net borrowings of $1,332,004.

Common Stock   As of June 30, 2017, the total number of authorized shares of Common Stock was 233,333,334.   On October 29, 2015, the Company entered into securities purchase agreements with certain accredited investors pursuant to which the Company sold an aggregate of 1,443,362 shares of its Common Stock, par value $0.001 per share, and warrants to purchase up to an aggregate of 1,443,362 shares of Common Stock (the “Original Warrants”) for a purchase price of $3.00 per share and the associated warrants for gross proceeds to the Company of $4,330,000 (“2015 Private Placement”). The closing of the 2015 Private Placement occurred on November 3, 2015. Stock offering costs were $502,218. (See Note 11 for additional information about these warrants.)    On October 6, 2016, the Board of Directors of the Company authorized a reverse stock split in preparation for the Company’s anticipated uplisting on the NASDAQ Capital Market.   On November 4, 2016, the Company filed a certificate of change to the Company’s Articles of Incorporation with the Secretary of State of the State of Nevada to effect a one-for-three reverse stock split of the Company’s issued and outstanding Common Stock. As a result of the 2016 Reverse Split, every three shares of the Company’s issued and outstanding Common Stock were automatically combined and reclassified into one share of the Company’s Common Stock. The 2016 Reverse Split affected all issued and outstanding shares of Common Stock, as well as Common Stock underlying stock options and warrants outstanding. No fractional shares were issued in connection with the 2016 Reverse Split. Stockholders who would otherwise have held a fractional share of Common Stock received an increase to their Common Stock as the Common Stock was rounded up to a full share. The total number of authorized shares of Common Stock was reduced from 700,000,000 to 233,333,334 in conjunction with the 2016 Reverse Split. The 2016 Reverse Split became effective on November 9, 2016. All disclosures of shares and per share data in these consolidated financial statements and related notes have been retroactively adjusted to reflect the reverse stock split for all periods presented.   On February 9, 2017, the Company entered into the Private Transaction pursuant to the Agreement with certain holders of the Original Warrants. Pursuant to the Agreement, the holders of the Original Warrants and the Company agreed that such Original Warrant holders would exercise their Original Warrants in full, and the Company would issue to each such holder new warrants. (See Note 11 for additional information about these warrants.) In association with the Private Transaction, the Company issued 1,171,689 shares of Common Stock upon exercise of a portion of the Original Warrants for which it received gross proceeds of $3,866,573 and recording offering costs of $464,649 for net proceeds of $3,401,924.   As of June 30, 2017, and December 31, 2016, there were 5,897,091 and 4,010,649 shares of Common Stock outstanding, respectively. Below are the changes to the Company’s Common Stock during the six months ended June 30, 2017:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px">·</td> <td style="padding-left: 8.75pt; text-align: justify">In connection with the January 2017 Sony Transactions, we issued Sony 301,231 shares of our Common Stock at $4.945 per share.</td></tr> <tr style="vertical-align: top"> <td> </td> <td>·</td> <td style="padding-left: 8.75pt; text-align: justify">On January 17, 2017, we issued to a consultant 10,112 shares of our Common Stock at $4.945 per share in connection with the January 2017 Sony Transactions.</td></tr> <tr style="vertical-align: top"> <td> </td> <td>·</td> <td style="padding-left: 8.75pt; text-align: justify">On February 9, 2017, the Company issued 1,171,689 shares of Common Stock in connection with the Private Transaction.</td></tr> <tr style="vertical-align: top"> <td> </td> <td>·</td> <td style="padding-left: 8.75pt; text-align: justify">On March 14, 2017, the Company issued 8,410 shares of Common Stock valued at $5.95 per share to a consultant for services rendered.</td></tr> <tr style="vertical-align: top"> <td> </td> <td>·</td> <td style="padding-left: 8.75pt; text-align: justify">On various dates during the six months ended June 30, 2017, the Company issued 395,000 shares of the Company’s Common Stock pursuant to the conversion of 1,185 shares of Series A Convertible Preferred Stock at a conversion price of $3.00.</td></tr> </table>   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 June 30, 2017 and December 31, 2016, there were 3,710 and 4,895 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.   On May 14, 2014, we entered into securities purchase agreements with certain accredited investors pursuant to which we sold an aggregate of 6,000 shares of our then newly designated Series A Convertible Preferred Stock at a price of $1,000 per share for gross proceeds to us of $6,000,000. Related to the sale, we incurred offering costs of $620,085 resulting in net proceeds of $5,379,915. The transaction closed on May 15, 2014.   As the conversion price of the Series A Convertible Preferred Stock on a converted basis was below the market price of the Common Stock on the closing date, this resulted in a beneficial conversion feature recorded as an “imputed” dividend of $2,010,000. In addition, during the fourth quarter of 2015, in connection with the 2015 Private Placement in which the Company’s Common Stock was sold at $3.00 per share, the conversion price of the Series A Convertible Preferred Stock decreased to $3.00. This decrease resulted in an additional beneficial conversion feature of $3,383,850 recognized as of the time of the 2015 Private Placement.

On December 29, 2008, the Company adopted the 2008 Stock Option Plan (the “Plan”), which provides for the issuance of qualified and non-qualified stock options to officers, directors, employees and other qualified persons. The Plan is administered by the Board of Directors of the Company or a committee appointed by the Board of Directors. The number of shares of the Company’s Common Stock initially reserved for issuance under the Plan was 36,667. On September 2, 2011, the stockholders holding a majority of the Company’s outstanding Common Stock adopted an amendment to the Company’s 2008 Stock Option Plan to increase the number of shares of Common Stock issuable under the plan to 166,667.   On September 18, 2015, the Company adopted the Genius Brands International, Inc. 2015 Incentive Plan (the “2015 Plan”). The 2015 Plan was approved by our stockholders in September 2015. The 2015 Plan as approved by the stockholders authorized the issuance up to an aggregate of 150,000 shares of Common Stock. On December 14, 2015, the Board of Directors voted to amend the 2015 Plan to increase the total number of shares that can be issued under the 2015 Plan by 1,293,334 from 150,000 shares to 1,443,334 shares. The increase in shares available for issuance under the 2015 Plan was approved by stockholders on February 3, 2016. On May 18, 2017, the Board of Directors voted to amend the 2015 Plan to increase the total number of shares that can be issued under the 2015 Plan by 223,333 shares from 1,443,334 shares to an aggregate of 1,666,667 shares. The increase in shares available for issuance under the 2015 Plan was approved by stockholders on July 25, 2017.    The following table summarizes the changes in the Company’s stock option plan during the six months ended June 30, 2017:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Options Outstanding Number of Shares</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Exercise Price per Share</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Weighted Average Remaining Contractual Life</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Aggregate Intrinsic Value</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Weighted Average Exercise Price per Share</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 35%">Balance at December 31, 2016</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">1,373,554</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">2.82 - 12.00 </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">3.99 years</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">280,642</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">    8.14</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Options Granted</td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Options Exercised</td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Options Cancelled</td> <td> </td> <td> </td> <td style="text-align: right">16,087</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Options Expired</td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Balance at June 30, 2017</td> <td> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">1,357,467</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">2.82 - 12.00 </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">3.49 years</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">63,013</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">8.14</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Exercisable December 31, 2016</td> <td> </td> <td> </td> <td style="text-align: right">452,535</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">2.82 - 6.00 </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">3.95 years</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">263,375</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">5.29</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Exercisable June 30, 2017</td> <td> </td> <td> </td> <td style="text-align: right">467,534</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">2.82 - 6.00 </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">3.48 years</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">59,012</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">5.33</td> <td> </td></tr> </table>   During the year ended December 31, 2015, the Company granted options to purchase 1,407,775 shares of Common Stock to officers, directors, employees, and consultants. These stock options generally vest between one and three years, while a portion vested upon grant. The fair value of these options was determined to be $2,402,460 using the Black-Scholes option pricing model based on the following assumptions:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 60%">Exercise Price</td> <td style="width: 40%; text-align: center">$2.82 - $12.00</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Dividend Yield</td> <td style="text-align: center">0%</td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Volatility</td> <td style="text-align: center">100% - 137%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Risk-free interest rate</td> <td style="text-align: center">0.89% - 1.25%</td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Expected life of options</td> <td style="text-align: center">2.5 - 3.5 years</td></tr> </table>   During the three and six months ended June 30, 2016, the Company recognized share-based compensation expense of $312,977 and $877,962, respectively. During the first quarter of 2016, the Company recognized $220,564 of true-up expenses from prior periods which reflected certain revisions meant to (i) align with the graded vesting of the majority of the options granted in 2015, (ii) make adjustments in certain accounting estimates utilized in the Black-Scholes model, and (iii) reflect the accurate number of options granted in 2015. The Company has assessed these adjustments individually and in aggregate and considers them immaterial to the current and prior periods.   During the three and six months ended June 30, 2017, the Company recognized $183,641 and $405,633, respectively, in share-based compensation expense. The unvested share-based compensation as of June 30, 2017 was $480,673 which will be recognized through the second quarter of 2019 assuming the underlying grants are not cancelled or forfeited.

The Company has warrants outstanding to purchase up to 1,766,698 and 1,651,698 at June 30, 2017 and December 31, 2016, respectively.   In connection with the sale of the Company’s Series A Convertible Preferred Stock in May 2014, Chardan Capital Markets LLC (“Chardan”) acted as sole placement agent in consideration for which it received a cash fee of $535,000 and a warrant to purchase up to 100,002 shares of the Company’s Common Stock. These warrants are exercisable immediately, have an exercise price of $6.00 per share, and have a five-year term.   In connection with the 2015 Private Placement, the Company issued to accredited investors the Original Warrants to purchase up to an aggregate of 1,443,362 shares of Common Stock for a purchase price of $3.00 per share. The Original Warrants are exercisable into shares of Common Stock for a period of five (5) years from issuance at an initial exercise price of $3.30 per share, subject to adjustment in the event of stock splits, dividends and recapitalizations. The Original Warrants are exercisable immediately. The Company is prohibited from effecting an exercise of the warrants to the extent that as a result of such exercise, the holder would beneficially own more than 4.99% (subject to increase up to 9.99% upon 61 days’ notice) in the aggregate of the issued and outstanding shares of Common Stock, calculated immediately after giving effect to the issuance of shares of Common Stock upon exercise of the warrant.   In connection with the 2015 Private Placement, Chardan acted as sole placement agent in consideration for which it received a cash fee of $300,000 and a warrant to purchase up to 141,668 shares of the Company’s Common Stock. These warrants are exercisable immediately, have an exercise price of $3.60 per share, and have a five-year term.   On February 9, 2017, the Company entered into the Private Transaction pursuant to the Agreement with certain holders of the Original Warrants. Pursuant to the Agreement, the holders of the Original Warrants and the Company agreed that such Original Warrant holders would exercise their Original Warrants in full, and the Company would issue to each such holder new warrants, with the new warrants being identical to the Original Warrants except that the termination date of such new warrants is February 10, 2022 (the “Reload Warrants”). In addition, depending on the number of Original Warrants exercised by all holders of the Original Warrants, the Company also agreed to issue to the holders another new warrant, identical to the Original Warrant except that the exercise price of such warrant is $5.30 and such warrant is not exercisable until August 10, 2017 (the “Market Price Warrants” and together with the Reload Warrants, the “New Warrants”).   The Company received gross proceeds of $3,866,573 from the exercise of the Original Warrants and issued Reload Warrants to purchase an aggregate of 799,991 shares of the Company’s Common Stock and Market Price Warrants to purchase an aggregate of 371,699 shares of the Company’s Common Stock. In association with the Private Transaction, the Company recorded $1,402,174, representing the difference in the fair market value of the Original Warrants and the New Warrants, as an adjustment to additional paid-in capital.   Chardan acted as financial advisor on the Private Transaction in consideration for which Chardan received $363,617 and was issued New Warrants for 115,000 shares of the Company’s Common Stock.   The following table summarizes the changes in the Company’s outstanding warrants during the six months ended June 30, 2017:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Warrants Outstanding Number of Shares</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Exercise Price per Share</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Weighted Average Remaining Contractual Life</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Weighted Average Exercise Price per Share</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Aggregate Intrinsic Value</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 35%">Balance at December 31, 2016</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">1,651,698</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">3.30 - 6.00</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">3.75 years</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">   3.49</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">3,301,913</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Warrants Granted</td> <td> </td> <td> </td> <td style="text-align: right">1,286,690</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">3.30 - 5.30</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">ؘ–</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Warrants Exercised</td> <td> </td> <td> </td> <td style="text-align: right">1,171,690</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">3.30</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Warrants Expired</td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Balance at June 30, 2017</td> <td> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">1,766,698</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">3.30 - 6.00</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">4.19 years</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">4.03</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">124,599</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Exercisable December 31, 2016</td> <td> </td> <td> </td> <td style="text-align: right">1,651,698</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">3.30 - 6.00</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">3.75 years</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">3.49</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">3,301,913</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Exercisable June 30, 2017</td> <td> </td> <td> </td> <td style="text-align: right">1,279,999</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">3.30 - 6.00</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">4.03 years</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">3.54</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">124,599</td> <td> </td></tr> </table>

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 is contractually committed to make certain minimum lease payments for the use of property under its operating lease. In addition, the Company has contractual commitments for employment agreements of certain employees.   During the first quarter of 2015, the Company entered into an agreement for new office space to which it relocated its operations upon the expiration of its prior lease. Effective May 1, 2015, the Company began leasing approximately 3,251 square feet of general office space at 301 North Canon Drive, Suite 305, Beverly Hills, California 90210 pursuant to a 35-month sub-lease that commenced on May 1, 2015. The Company will pay $136,542 annually subject to annual escalations of 3%.   Rental expenses incurred for operating leases during the three months ended June 30, 2017 and 2016 were $35,862 and $34,818, respectively. Rental expenses incurred for operating leases during the six months ended June 30, 2017 and 2016 were $71,022 and $69,825, respectively.   The following is a schedule of future minimum contractual obligations under the Company’s operating leases and employment agreements:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2017</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2018</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2019</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2020</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2021</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Remaining</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Total</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 23%">Operating Leases</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">72,429</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">36,214</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">–</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">–</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right"> –</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">–</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">108,643</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt">Employment Agreements</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">222,252</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">248,044</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">–</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">–</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">–</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">–</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">470,296</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-bottom: 2.5pt">Total</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">294,681</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">284,258</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">–</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">–</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">–</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">–</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">578,939</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>   In addition to employment agreements and operating leases, in the normal course of its business, the Company enters into various agreements which call for the potential future payment of royalties or “profit” participations associated with its individual properties. These future payments can be for either (i) the use of third party intellectual property, such as the case with Stan Lee and the Mighty 7 and Llama Llama among others, in which the Company is obligated to share net profits with the underlying rights holders on a certain basis as defined in the respective agreements or (ii) services rendered by animation studios, post-production studios, writers, directors, musicians or other creative talent for which the Company is obligated to share with these service providers a portion of the net profits of the properties on which they have rendered services, as defined in each respective agreement.

On April 21, 2016, 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 and Stan Lee’s Mighty 7 in connection with certain products to be sold by AHAA. The terms and conditions of such license are customary within the industry, and the Company earns an arm-length industry standard royalty on all sales made by AHAA utilizing the licensed content. During the three months ended June 30, 2017 and 2016, the Company earned $96 and $247 in royalties from this agreement, respectively. During the six months ended June 30, 2017 and 2016, the Company earned $96 and $247 in royalties from this agreement, respectively.    On July 25, 2016, the Company entered into a consulting agreement with Foothill Entertainment, Inc. (“Foothill”), an entity whose Chairman is Gregory Payne, our corporate secretary. The Company has engaged Foothill Entertainment, Inc. for a term of six months to assist in the distribution and commercial exploitation of its audiovisual content as well as for the preparation and attendance on behalf of the Company at the MIPJR and MIPCOM markets in Cannes. The agreement continues on a month-to-month basis following the initial term. Foothill receives $12,500 per month for these services.   On October 1, 2016, Llama Productions LLC entered into an animation production services agreement with Mr. Heyward for services as a producer for which he is to receive $186,000 through the course of production of the Company’s animated series Llama Llama. From October 1, 2016 through June 30, 2017, Mr. Heyward has been paid $96,000.

Pursuant to FASB ASC 855, Management has evaluated all events and transactions that occurred from June 30, 2017 through the date of issuance of these financial statements. During this period, we did not have any significant subsequent events, except as disclosed below:   <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px; font: 12pt Times New Roman, Times, Serif">·</td> <td style="font: 12pt Times New Roman, Times, Serif; text-align: justify">Effective July 13, 2017, the Company entered into an employment agreement with Gregory B. Payne for the position of Chief Operating Officer. Mr. Payne will be entitled to be paid a salary at the annual rate of $225,000 per year. The term of the agreement is one year with a mutual option for an additional one-year period. </td></tr> </table>   <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px; font: 12pt Times New Roman, Times, Serif">·</td> <td style="font: 12pt Times New Roman, Times, Serif; text-align: justify">On August 7, 2017, the Company issued to a consultant 6,012 shares of our common stock for services rendered.</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px; font: 12pt Times New Roman, Times, Serif">·</td> <td style="font: 12pt Times New Roman, Times, Serif; text-align: justify">On various dates subsequent to June 30, 2017, an investor converted 105 shares of Series A Convertible Preferred Stock into 35,000 shares of the Company’s common stock at a conversion price of $3.00.</td></tr> </table>

Principles of Consolidation   The accompanying consolidated financial statements include the accounts of Genius Brands International, Inc., its wholly-owned subsidiaries A Squared and Llama Productions as well as its interest in Stan Lee Comics, LLC (“Stan Lee Comics”). All significant inter-company balances and transactions have been eliminated in consolidation.

Business Combination   On November 15, 2013, the Company entered into a Merger Agreement with A Squared, the Parent Member, and the Acquisition Sub. Upon closing of the Merger, which occurred concurrently with entering into the Merger Agreement, our Acquisition Sub merged with and into A Squared, and A Squared, as the surviving entity, became a wholly-owned subsidiary of the Company. As a result of the Merger, the Company acquired the business and operations of A Squared.   The financial statements have been prepared using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 Business Combinations.

Use of Estimates   The preparation of financial statements in conformity with generally accepted accounting principles 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, Cash Equivalents, and Restricted Cash   The Company considers all highly liquid debt instruments with initial maturities of three months or less to be cash equivalents. Restricted Cash includes $1,000,000 that the Company deposited into a cash account to be used solely to produce its series Llama Llama as a condition of its loan agreement with Bank Leumi USA.

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 $110,658 at both June 30, 2017 and December 31, 2016.

Inventories   Inventories are stated at the lower of average cost or market and consist of finished goods such as DVDs, CDs and other products. A reserve for slow-moving and obsolete inventory is established for all inventory deemed potentially non-saleable by management in the period in which it is determined to be potentially non-saleable. The current inventory is considered properly valued and saleable. The Company concluded that there was an appropriate reserve for slow moving and obsolete inventory of $26,097 at both June 30, 2017 and December 31, 2016.

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. The Company completes the annual goodwill and indefinite-lived intangible asset impairment tests at the end of each fiscal year. To test for goodwill impairment, we are required to estimate the fair market value of each of our reporting units, of which we have one. While we may use a variety of methods to estimate fair value for impairment testing, our primary method is discounted cash flows. We estimate future cash flows and allocations of certain assets using estimates for future growth rates and our judgment regarding the applicable discount rates. Changes to our judgments and estimates could result in a significantly different estimate of the fair market value of the reporting units, which could result in an impairment of goodwill or indefinite lived intangible assets in future periods.   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. In accordance with FASB ASC 350 Intangible Assets, the costs of new product development and significant improvement to existing products are capitalized while routine and periodic alterations to existing products are expensed as incurred. 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.

Revenue Recognition   The Company recognizes revenue in accordance with FASB ASC 926-605 Entertainment-Films - Revenue Recognition. Accordingly, the Company recognizes revenue when (i) persuasive evidence of a sale with a customer exists, (ii) the film is complete and has been delivered or is available for delivery, (iii) the license period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale, (iv) the arrangement fee is fixed or determinable, and (v) collection of the arrangement fee is reasonably assured.   The Company’s licensing and royalty revenue represents revenue generated from license agreements that are held in conjunction with third parties that are responsible for collecting fees due and remitting to the Company its share after expenses. Revenue from licensed products is recognized when realized or realizable based on royalty reporting received from licensees. Licensing income the Company recognizes as an agent is in accordance with FASB ASC 605-45 Revenue Recognition - Principal Agent. Accordingly, the Company’s revenue is its gross billings to its customers less the amounts it pays to suppliers for their products and services.   The Company sells advertising on its Kid Genius Cartoon 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 605 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 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 (i) the seller’s price is substantially fixed, (ii) shipment has occurred causing the buyer to be obligated to pay for product, (iii) the buyer has economic substance apart from the seller, and (iv) there is no significant obligation for future performance to directly bring about the resale of the product by the buyer as required by FASB ASC 605 Revenue Recognition.

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.

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.

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 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 adopted FASB ASC 820 as of January 1, 2008 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:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px">·</td> <td style="padding-left: 9pt; text-align: justify">Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;</td></tr> <tr style="vertical-align: top"> <td> </td> <td>·</td> <td style="padding-left: 9pt; text-align: justify">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</td></tr> <tr style="vertical-align: top"> <td> </td> <td>·</td> <td style="padding-left: 9pt; text-align: justify">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.</td></tr> </table>

Recent Accounting Pronouncements   In May 2014, the FASB issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets unless those contracts are within the scope of other standards (e.g. insurance contracts). This ASU will supersede all revenue recognition requirements in Topic 605, Revenue Recognition, and industry-specific guidance throughout the industry topics of the codification. The guidance's core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue principles, an entity will identify the contract(s) with a customer, identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue when the performance obligation is satisfied (either over time or at a point in time). The ASU further states that an entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”, which approved a one-year deferral of the effective date of the ASU from the original effective date of annual reporting periods beginning after December 15, 2016, to annual reporting periods (including interim reporting periods) beginning after December 15, 2017, with an option for early adoption of the standard on the original effective date. Additionally, in March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”, which clarified the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”, that amended the revenue guidance on identifying performance obligations and accounting for licenses of intellectual property. In May 2016, the FASB issued ASU 2016-11 “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 805): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016, EITF Meeting”, which rescinded from the FASB Accounting Standards Codification certain SEC paragraphs as a result of two SEC Staff Announcements. The FASB also issued ASU 2016-12 “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”, which clarified guidance on assessment of collectability, presentation of sale taxes, measurement of noncash consideration, and certain transition matters. The Company has formed a project team and is engaging an external consultant to evaluate the impact that the provisions of ASU 2014-09 and related subsequent updates will have on the Company's consolidated financial position, results of operations, cash flows, and disclosures. We anticipate adopting this accounting standard on January 1, 2018 using the modified retrospective method; however, we may opt for the full retrospective method depending on the final outcome of our evaluation.   In February 2016, the FASB issued Accounting Standards Update 2016-02, “Leases”. The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2018. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.   In November 2016, the FASB issued Accounting Standards Update 2016-18, “Statement of Cash Flows - Restricted Cash a consensus of the FASB Emerging Issues Task Force.” This standard requires restricted cash and cash equivalents to be included with cash and cash equivalents on the statement of cash flows under a retrospective transition approach. The guidance will become effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We have prospectively adopted ASU 2016-18. The impact to our consolidated financial position, results of operations and cash flows is minimal.   In January 2017, the FASB issued Accounting Standards Update 2017-04, “Simplifying the Test for Goodwill Impairment”, which requires an entity to perform a one-step quantitative impairment test, whereby a goodwill impairment loss will be measured as the excess of a reporting unit’s carrying amount over its fair value (not to exceed the total goodwill allocated to that reporting unit). It eliminates Step 2 of the current two-step goodwill impairment test, under which a goodwill impairment loss is measured by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The standard is effective January 1, 2020, with early adoption as of January 1, 2017 permitted. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.   In May 2017, the FASB issued Accounting Standard Update 2017-09, “Compensation—Stock Compensation: Scope of Modification Accounting”, which clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the new guidance, modification accounting is required if the fair value, vesting conditions or classification (equity or liability) of the new award are different from the original award immediately before the original award is modified. The standard is effective beginning January 1, 2018, with early adoption permitted. We are currently evaluating the potential impact of adopting this guidance on our 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, and are not expected to have a material effect on our financial position, results of operations, or cash flows.

<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">June 30, 2017</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">December 31, 2016</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 68%">Furniture and Equipment</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 13%; text-align: right">12,385</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 13%; text-align: right">12,385</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Computer Equipment</td> <td> </td> <td> </td> <td style="text-align: right">72,062</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">42,654</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Leasehold Improvements</td> <td> </td> <td> </td> <td style="text-align: right">176,903</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">176,903</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt">Software</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">15,737</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">15,737</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Property and Equipment, Gross</td> <td> </td> <td> </td> <td style="text-align: right">277,087</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">247,679</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt">Less Accumulated Depreciation</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">(191,084</td> <td style="padding-bottom: 1pt">)</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">(157,218</td> <td style="padding-bottom: 1pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-bottom: 2.5pt">Property and Equipment, Net</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">86,003</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">90,461</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Total</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 84%">Film and Television Costs, Net as of December 31, 2015</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 13%; text-align: right">1,003,546</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 9pt">Additions to Film and Television Costs</td> <td> </td> <td> </td> <td style="text-align: right">1,390,450</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-left: 9pt">Capitalized Interest</td> <td> </td> <td> </td> <td style="text-align: right">34,756</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; padding-left: 9pt">Film Amortization Expense</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">(167,788</td> <td style="padding-bottom: 1pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Film and Television Costs, Net as of December 31, 2016</td> <td> </td> <td> </td> <td style="text-align: right">2,260,964</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 9pt">Additions to Film and Television Costs</td> <td> </td> <td> </td> <td style="text-align: right">1,473,384</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-left: 9pt">Capitalized Interest</td> <td> </td> <td> </td> <td style="text-align: right">80,316</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; padding-left: 9pt">Film Amortization Expense</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">(8,086</td> <td style="padding-bottom: 1pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-bottom: 2.5pt">Film and Television Costs, Net as of June 30, 2017</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">3,806,578</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">June 30, 2017</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">December 31, 2016</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 68%">Identifiable Artistic-Related Assets (a)</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 13%; text-align: right">1,740,000</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 13%; text-align: right">1,740,000</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Trademarks (b)</td> <td> </td> <td> </td> <td style="text-align: right">129,831</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">129,831</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Product Masters (b)</td> <td> </td> <td> </td> <td style="text-align: right">64,676</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">64,676</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt">Other Intangible Assets (b)</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">185,020</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">185,020</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Intangible Assets, Gross</td> <td> </td> <td> </td> <td style="text-align: right">2,119,527</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">2,119,527</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt">Less Accumulated Amortization (c)</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">(304,889</td> <td style="padding-bottom: 1pt">)</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">(273,877</td> <td style="padding-bottom: 1pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-bottom: 2.5pt">Intangible Assets, Net</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">1,814,638</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">1,845,650</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>     <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 29px">(a)</td> <td style="text-align: justify">In connection with the Merger in 2013, the Company acquired $1,740,000 of Identifiable Artistic-Related Assets. These assets, related to certain properties owned by A Squared and assumed by the Company, were valued using an independent firm. Based on certain legal, regulatory, contractual, and economic factors, the Company has deemed these assets to be indefinite-lived. Hence, pursuant to FASB ASC 350-30, these assets are not subject to amortization and are tested annually for impairment. Through June 30, 2017, the Company has not recognized any impairment expense related to these assets.</td></tr> <tr style="vertical-align: top"> <td> </td> <td>(b)</td> <td style="text-align: justify">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. Through June 30, 2017, the Company has not recognized any impairment expense related to these assets.</td></tr> <tr style="vertical-align: top"> <td> </td> <td>(c)</td> <td style="text-align: justify">During the three months ended June 30, 2017 and 2016, the Company recognized $13,315 and $19,184, respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets. During the six months ended June 30, 2017 and 2016, the Company recognized $31,012 and $38,315, respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets.</td></tr> </table>

<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td>Fiscal Year:</td> <td> </td> <td colspan="2" style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 69%">2017</td> <td style="width: 3%"> </td> <td style="width: 1%">$</td> <td style="width: 26%; text-align: right">24,508</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>2018</td> <td> </td> <td> </td> <td style="text-align: right">26,119</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>2019</td> <td> </td> <td> </td> <td style="text-align: right">9,236</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>2020</td> <td> </td> <td> </td> <td style="text-align: right">8,655</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>2021</td> <td> </td> <td> </td> <td style="text-align: right">2,059</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Remaining</td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">4,061</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Total</td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">74,638</td> <td> </td></tr> </table>

<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">June 30, 2017</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">December 31, 2016</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 68%">Accrued Salaries and Wages (a)</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 13%; text-align: right">165,544</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 13%; text-align: right">132,827</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Disputed Trade Payables (b)</td> <td> </td> <td> </td> <td style="text-align: right">925,000</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">925,000</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Services Advance - Current Portion (c)</td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">1,489,583</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt">Other Accrued Expenses</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">258,680</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">249,482</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-bottom: 2.5pt">Total Accrued Liabilities - Current</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">1,349,224</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">2,796,892</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 29px">(a)</td> <td style="text-align: justify">Accrued Salaries and Wages represent accrued vacation payable to employees.</td></tr> <tr style="vertical-align: top"> <td> </td> <td>(b)</td> <td style="text-align: justify">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 June 30, 2017, 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 uncollectible. The Company is working with the counterparty to extinguish this liability.</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 29px">(c)</td> <td> During the first quarter of 2014, the Company entered into an exclusive three-year agreement with DADC to provide all CD, DVD and Blu-ray replication, packaging and distribution to the Company’s direct customers. Under the terms of the long-term, exclusive supply chain services agreement, the Company will order a minimum level of disk replication, packaging and distribution services for its content across all physical media, including DVD, CD, and Blu-ray from DADC. As consideration for these minimum order levels, the Company received a total of $1,500,000, $750,000 during the first quarter of 2014 and $750,000 during the first quarter of 2015. At the end of the term, the Company is obligated to repay a pro-rata portion of the advance if it has not ordered a minimum number of DVD/CD units during the term.   On January 10, 2017, the Company entered into an amendment of our home entertainment Distribution Agreement with Sony pursuant to which, among other things, Sony paid DADC $1,489,583, which was the total sum owed and payable by us to DADC for the disk replication, packaging and distribution services.   In connection with such transaction, we issued Sony 301,231 shares of our Common Stock at $4.945 per share, Sony’s exclusive territory for exercising its home entertainment distribution rights under the Distribution Agreement was extended from the United States and Canada to worldwide, and the amount of advances subject to recoupment by Sony out of royalty payments that would otherwise be due to us under the Distribution Agreement was increased by the amount of the payment to DADC.</td></tr> </table>

<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Options Outstanding Number of Shares</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Exercise Price per Share</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Weighted Average Remaining Contractual Life</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Aggregate Intrinsic Value</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Weighted Average Exercise Price per Share</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 35%">Balance at December 31, 2016</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">1,373,554</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">2.82 - 12.00 </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">3.99 years</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">280,642</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">    8.14</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Options Granted</td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Options Exercised</td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Options Cancelled</td> <td> </td> <td> </td> <td style="text-align: right">16,087</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Options Expired</td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Balance at June 30, 2017</td> <td> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">1,357,467</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">2.82 - 12.00 </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">3.49 years</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">63,013</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">8.14</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Exercisable December 31, 2016</td> <td> </td> <td> </td> <td style="text-align: right">452,535</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">2.82 - 6.00 </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">3.95 years</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">263,375</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">5.29</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Exercisable June 30, 2017</td> <td> </td> <td> </td> <td style="text-align: right">467,534</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">2.82 - 6.00 </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">3.48 years</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">59,012</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">5.33</td> <td> </td></tr> </table>

<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 60%">Exercise Price</td> <td style="width: 40%; text-align: center">$2.82 - $12.00</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Dividend Yield</td> <td style="text-align: center">0%</td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Volatility</td> <td style="text-align: center">100% - 137%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Risk-free interest rate</td> <td style="text-align: center">0.89% - 1.25%</td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Expected life of options</td> <td style="text-align: center">2.5 - 3.5 years</td></tr> </table>

<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Warrants Outstanding Number of Shares</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Exercise Price per Share</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Weighted Average Remaining Contractual Life</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Weighted Average Exercise Price per Share</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> Aggregate Intrinsic Value</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 35%">Balance at December 31, 2016</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">1,651,698</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">3.30 - 6.00</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">3.75 years</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">   3.49</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">3,301,913</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Warrants Granted</td> <td> </td> <td> </td> <td style="text-align: right">1,286,690</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">3.30 - 5.30</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">ؘ–</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Warrants Exercised</td> <td> </td> <td> </td> <td style="text-align: right">1,171,690</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">3.30</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Warrants Expired</td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Balance at June 30, 2017</td> <td> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">1,766,698</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">3.30 - 6.00</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">4.19 years</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">4.03</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">124,599</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td>Exercisable December 31, 2016</td> <td> </td> <td> </td> <td style="text-align: right">1,651,698</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">3.30 - 6.00</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">3.75 years</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">3.49</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">3,301,913</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Exercisable June 30, 2017</td> <td> </td> <td> </td> <td style="text-align: right">1,279,999</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">3.30 - 6.00</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">4.03 years</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">3.54</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">124,599</td> <td> </td></tr> </table>

<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2017</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2018</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2019</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2020</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2021</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Remaining</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Total</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 23%">Operating Leases</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">72,429</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">36,214</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">–</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">–</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right"> –</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">–</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">108,643</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt">Employment Agreements</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">222,252</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">248,044</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">–</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">–</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">–</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">–</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">470,296</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-bottom: 2.5pt">Total</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">294,681</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">284,258</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">–</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">–</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">–</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">–</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">578,939</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

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The Company accounts for income taxes in accordance with ASC 740 Income Taxes, 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.   ASC 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company’s financial statements. ASC 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.   At the adoption date of January 1, 2008, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized.   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 June 30, 2017 and December 31, 2016, 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 and Massachusetts. 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.

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220564 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 June 30, 2017, 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 uncollectible. The Company is working with the counterparty to extinguish this liability. 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. Through June 30, 2017, the Company has not recognized any impairment expense related to these assets. In connection with the Merger in 2013, the Company acquired $1,740,000 of Identifiable Artistic-Related Assets. These assets, related to certain properties owned by A Squared and assumed by the Company, were valued using an independent firm. Based on certain legal, regulatory, contractual, and economic factors, the Company has deemed these assets to be indefinite-lived. Hence, pursuant to FASB ASC 350-30, these assets are not subject to amortization and are tested annually for impairment. Through June 30, 2017, the Company has not recognized any impairment expense related to these assets. During the three months ended June 30, 2017 and 2016, the Company recognized $13,315 and $19,184, respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets. During the six months ended June 30, 2017 and 2016, the Company recognized $31,012 and $38,315, respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets. Accrued Salaries and Wages represent accrued vacation payable to employees. During the first quarter of 2014, the Company entered into an exclusive three-year agreement with DADC to provide all CD, DVD and Blu-ray replication, packaging and distribution to the Company's direct customers. Under the terms of the long-term, exclusive supply chain services agreement, the Company will order a minimum level of disk replication, packaging and distribution services for its content across all physical media, including DVD, CD, and Blu-ray from DADC. As consideration for these minimum order levels, the Company received a total of $1,500,000, $750,000 during the first quarter of 2014 and $750,000 during the first quarter of 2015. At the end of the term, the Company is obligated to repay a pro-rata portion of the advance if it has not ordered a minimum number of DVD/CD units during the term. On January 10, 2017, the Company entered into an amendment of our home entertainment Distribution Agreement with Sony pursuant to which, among other things, Sony paid DADC $1,489,583, which was the total sum owed and payable by us to DADC for the disk replication, packaging and distribution services. In connection with such transaction, we issued Sony 301,231 shares of our Common Stock at $4.945 per share, Sony's exclusive territory for exercising its home entertainment distribution rights under the Distribution Agreement was extended from the United States and Canada to worldwide, and the amount of advances subject to recoupment by Sony out of royalty payments that would otherwise be due to us under the Distribution Agreement was increased by the amount of the payment to DADC. 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Related Party (Details Narrative) link:presentationLink link:calculationLink link:definitionLink EX-101.CAL 9 gnus-20170630_cal.xml XBRL CALCULATION FILE EX-101.DEF 10 gnus-20170630_def.xml XBRL DEFINITION FILE EX-101.LAB 11 gnus-20170630_lab.xml XBRL LABEL FILE Indefinite-lived Intangible Assets [Axis] Trademarks [Member] Product Masters [Member] Other Intangible Assets [Member] Identifiable artistic-related assets [Member] Award Type [Axis] Stock Options [Member] Property, Plant and Equipment, Type [Axis] Furniture and Fixtures [Member] Computer Equipment [Member] Leasehold Improvements [Member] Software [Member] Warrant [Member] Plan Name [Axis] 2015 Plan [Member] Deferred Revenue Arrangement Type [Axis] Future Royalty [Member] Distribution Rights [Member] Finite-Lived Intangible Assets by Major Class [Axis] Trademarks, Product Masters and Other Intangible Assets [Member] Credit Facility [Axis] Llama Productions [Member] Counterparty Name [Axis] Sony Pictures Home Entertainment [Member] Consultant [Member] Consultant 2 [Member] Transaction Type [Axis] Private Transaction [Member] Shareholders' Equity Class [Axis] Common Stock [Member] Series A Preferred Stock [Member] Reload Warrants [Member] Market Price Warrants [Member] Chardan [Member] Related Party [Axis] Andy Heyward [Member] Other Commitments [Axis] Operating Leases Employment Agreements Document And Entity Information Entity Registrant Name Entity Central Index Key Document Type Document Period End Date Amendment Flag Current Fiscal Year End Date Is Entity a Well-known Seasoned Issuer? Is Entity a Voluntary Filer? Is Entity's Reporting Status Current? Entity Filer Category Entity Public Float Entity Common Stock, Shares Outstanding Document Fiscal Period Focus Document Fiscal Year Focus Statement of Financial Position [Abstract] ASSETS Current Assets: Cash and Cash Equivalents Restricted Cash Accounts Receivable, net Inventory, net Prepaid and Other Assets Total Current Assets Property and Equipment, net Film and Television Costs, net Intangible Assets, net Goodwill Total Assets LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts Payable Accrued Expenses Deferred Revenue Accrued Salaries and Wages Disputed Trade Payable Service Advance Total Current Liabilities Long Term Liabilities: Deferred Revenue Production Facility Total Liabilities Stockholders' Equity: Preferred Stock, $0.001 par value, 10,000,000 shares authorized; 3,710 and 4,895 shares issued and outstanding, respectively Common Stock, $0.001 par value, 233,333,334 shares authorized; 5,897,091 and 4,010,649 shares issued and outstanding, respectively Common Stock to Be Issued Additional Paid in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity Total Liabilities & Stockholders' Equity Common Stock, par value Common Stock, shares authorized Common Stock, shares issued Common Stock, shares outstanding Preferred stock par value Preferred stock shares authorized Preferred stock shares issued Preferred stock shares outstanding Income Statement [Abstract] Revenues: Licensing & Royalties Television & Home Entertainment Advertising Sales Product Sales Total Revenues Operating Expenses: Marketing and Sales Direct Operating Costs General and Administrative Total Operating Expenses Loss from Operations Other Income (Expense): Other Income Interest Expense Interest Expense - Related Parties Gain on Distribution Contracts Net Other Income (Expense) Loss before Income Tax expense Income Tax expense Net Loss Applicable to Common Shareholders Net Loss per Common Share (Basic and Diluted) Weighted Average Shares Outstanding (Basic and Diluted) Statement of Other Comprehensive Income [Abstract] Net Loss Applicable to Common Shareholders Other Comprehensive Loss, Net of Tax: Unrealized Loss on Foreign Currency Translation Other Comprehensive Loss, Net of Tax: Comprehensive Loss Statement of Cash Flows [Abstract] Cash Flows from Operating Activities: Net Loss Adjustments to reconcile net loss to net cash used in operating activities: Amortization of Film and Television Costs Depreciation Expense Amortization Expense Imputed Interest Expense Stock Issued for Services Stock Compensation Expense Gain on Distribution Contracts Loss on Impairment of Assets Decrease (Increase) in Operating Assets Accounts Receivable Inventory Prepaid Expenses & Other Assets Film and Television Costs, net Increase (Decrease) in Operating Liabilities Accounts Payable Accrued Salaries Deferred Revenue and Advances Other Accrued Expenses Net Cash Used in Operating Activities Cash Flows from Investing Activities: Investment in Intangible Assets Investment in Fixed Assets Net Cash Used in Investing Activities Cash Flows from Financing Activities: Proceeds from Warrant Exchange, Net of Offering Costs Proceeds from Exercise of Warrants Proceeds from Production Facility, Net Net cash provided by financing activities Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash Beginning Cash, Cash Equivalents, and Restricted Cash Ending Cash, Cash Equivalents, and Restricted Cash Supplemental Disclosures of Cash Flow Information: Cash paid for interest Schedule of non-cash financing and investing activites: Issuance of Common Stock in Relation to Sony Transaction Issuance of Common Stock in Satisfaction of Short Term Advances Accounting Policies [Abstract] Organization and Business Summary of Significant Accounting Policies Property, Plant and Equipment [Abstract] Property and Equipment, Net Film And Television Costs Net Film and Television Costs, net Goodwill and Intangible Assets Disclosure [Abstract] Goodwill and Intangible Assets, Net Deferred Revenue Disclosure [Abstract] Deferred Revenue Payables and Accruals [Abstract] Accrued Liabilities Debt Disclosure [Abstract] Production Loan Facility Equity [Abstract] Stockholders' Equity Disclosure of Compensation Related Costs, Share-based Payments [Abstract] Stock Options Warrants and Rights Note Disclosure [Abstract] Warrants Income Tax Disclosure [Abstract] Income Taxes Commitments and Contingencies Disclosure [Abstract] EX-101.PRE 12 gnus-20170630_pre.xml XBRL PRESENTATION FILE XML 13 R1.htm IDEA: XBRL DOCUMENT

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2017	Aug. 11, 2017
Document And Entity Information
Entity Registrant Name	Genius Brands International, Inc.
Entity Central Index Key	0001355848
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		5,938,103
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2017

XML 14 R2.htm IDEA: XBRL DOCUMENT

Consolidated Balance Sheets (Unaudited) - USD ($)

Jun. 30, 2017

Dec. 31, 2016

Current Assets:

Cash and Cash Equivalents

$ 2,986,528

$ 1,887,921

Restricted Cash

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

Total Assets

20,762,458

17,939,668

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

^[1]

925,000

Service Advance

^[2],[3],[4]

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

Stockholders' Equity:

Preferred Stock, $0.001 par value, 10,000,000 shares authorized; 3,710 and 4,895 shares issued and outstanding, respectively

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

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 & Stockholders' Equity

$ 20,762,458

$ 17,939,668

[1]	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 June 30, 2017, 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 uncollectible. The Company is working with the counterparty to extinguish this liability.
[2]	During the first quarter of 2014, the Company entered into an exclusive three-year agreement with DADC to provide all CD, DVD and Blu-ray replication, packaging and distribution to the Company's direct customers. Under the terms of the long-term, exclusive supply chain services agreement, the Company will order a minimum level of disk replication, packaging and distribution services for its content across all physical media, including DVD, CD, and Blu-ray from DADC. As consideration for these minimum order levels, the Company received a total of $1,500,000, $750,000 during the first quarter of 2014 and $750,000 during the first quarter of 2015. At the end of the term, the Company is obligated to repay a pro-rata portion of the advance if it has not ordered a minimum number of DVD/CD units during the term.
[3]	In connection with such transaction, we issued Sony 301,231 shares of our Common Stock at $4.945 per share, Sony's exclusive territory for exercising its home entertainment distribution rights under the Distribution Agreement was extended from the United States and Canada to worldwide, and the amount of advances subject to recoupment by Sony out of royalty payments that would otherwise be due to us under the Distribution Agreement was increased by the amount of the payment to DADC.
[4]	On January 10, 2017, the Company entered into an amendment of our home entertainment Distribution Agreement with Sony pursuant to which, among other things, Sony paid DADC $1,489,583, which was the total sum owed and payable by us to DADC for the disk replication, packaging and distribution services.

XML 15 R3.htm IDEA: XBRL DOCUMENT

Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Common Stock, par value	$ 0.001	$ 0.001
Common Stock, shares authorized	233,333,334	233,333,334
Common Stock, shares issued	5,897,091	4,010,649
Common Stock, shares outstanding	5,897,091	4,010,649
Preferred stock par value	$ 0.001	$ 0.001
Preferred stock shares authorized	10,000,000	10,000,000
Preferred stock shares issued	3,710	4,895
Preferred stock shares outstanding	3,710	4,895

XML 16 R4.htm IDEA: XBRL DOCUMENT

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 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	0	6,018	0
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	0	5,593	60
Interest Expense	(1,180)	(724)	(2,033)	(2,153)
Interest Expense - Related Parties	0	0	0	(6,141)
Gain on Distribution Contracts	0	248,593	0	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	0	0	0	0
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

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Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Statement of Other Comprehensive Income [Abstract]
Net Loss Applicable to Common Shareholders	$ (1,251,543)	$ (1,182,952)	$ (2,567,779)	$ (2,832,669)
Other Comprehensive Loss, Net of Tax:
Unrealized Loss on Foreign Currency Translation	(2,360)	0	(2,360)	0
Other Comprehensive Loss, Net of Tax:	(2,360)	0	(2,360)	0
Comprehensive Loss	$ (1,253,903)	$ (1,182,952)	$ (2,570,139)	$ (2,832,669)

XML 18 R6.htm IDEA: XBRL DOCUMENT

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 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	0	6,141
Stock Issued for Services	100,000	24,000
Stock Compensation Expense	405,633	877,962
Gain on Distribution Contracts	0	(258,103)
Loss on Impairment of Assets	0	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	0	(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	0
Proceeds from Exercise of Warrants	0	82,500
Proceeds from Production Facility, Net	1,284,728	0
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 activites:
Issuance of Common Stock in Relation to Sony Transaction	1,489,583	0
Issuance of Common Stock in Satisfaction of Short Term Advances	$ 0	$ 410,535

XML 19 R7.htm IDEA: XBRL DOCUMENT

1. Organization and Business

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Organization and Business

Organization and Nature of Business

Liquidity

During the first quarter of 2017, the Company completed two key transactions that enhanced cash and working capital balances:

	·	On January 10, 2017, the Company entered into an amendment of its home entertainment distribution agreement with Sony Pictures Home Entertainment Inc. (“SPHE”) pursuant to which, among other things, SPHE paid $1,489,583 which was owed and payable by the Company to SPHE’s sister company Sony DADC US Inc. (“DADC”) for certain disk manufacturing and replication services. In connection with such transaction, the Company issued SPHE 301,231 shares of its Common Stock at $4.945 per share, SPHE’s exclusive territory for exercising its home entertainment distribution rights under the Distribution Agreement was extended from the United States and Canada to worldwide, and the amount of advances subject to recoupment by SPHE out of royalty payments that would otherwise be due to the Company under the Distribution Agreement was increased by the amount of the payment to DADC. In connection with the above issuance of our shares, the Company entered into a subscription agreement with SPHE, effective as of January 17, 2017. Collectively, these transactions are referred to as the “January 2017 Sony Transactions.”
	·	On February 9, 2017, the Company entered into a private transaction (the “Private Transaction”) pursuant to a Warrant Exercise Agreement (the “Agreement”) with certain holders of the Company’s existing warrants (the “Original Warrants”) for which it received gross proceeds of $3,866,573 from the exercise of the Original Warrants and issued additional warrants to these holders (see Notes 9 and 11 for additional information about the Private Transaction).

XML 20 R8.htm IDEA: XBRL DOCUMENT

2. Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying 2017 and 2016 consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

Principles of Consolidation

Business Combination

Use of Estimates

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

Allowance for Doubtful Accounts

Inventories

Property and Equipment

Goodwill and Intangible Assets

Film and Television Costs

Revenue Recognition

Share-Based Compensation

Earnings Per Share

Income Taxes

Fair value of financial instruments

	·	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

XML 21 R9.htm IDEA: XBRL DOCUMENT

3. Property and Equipment, Net

6 Months Ended

Jun. 30, 2017

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

The Company has property and equipment as follows as of June 30, 2017 and December 31, 2016:

	June 30, 2017			December 31, 2016
Furniture and Equipment	$	12,385		$	12,385
Computer Equipment		72,062			42,654
Leasehold Improvements		176,903			176,903
Software		15,737			15,737
Property and Equipment, Gross		277,087			247,679
Less Accumulated Depreciation		(191,084	)		(157,218	)
Property and Equipment, Net	$	86,003		$	90,461

XML 22 R10.htm IDEA: XBRL DOCUMENT

4. Film and Television Costs, net

6 Months Ended

Jun. 30, 2017

Film And Television Costs Net

Film and Television Costs, net

The following table highlights the activity in Film and Television Costs as of June 30, 2017 and December 31, 2016:

	Total
Film and Television Costs, Net as of December 31, 2015	$	1,003,546
Additions to Film and Television Costs		1,390,450
Capitalized Interest		34,756
Film Amortization Expense		(167,788	)
Film and Television Costs, Net as of December 31, 2016		2,260,964
Additions to Film and Television Costs		1,473,384
Capitalized Interest		80,316
Film Amortization Expense		(8,086	)
Film and Television Costs, Net as of June 30, 2017	$	3,806,578

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5. Goodwill and Intangible Assets, Net

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets, Net

Goodwill

Intangible Assets, Net

The Company had the following intangible assets as of June 30, 2017 and December 31, 2016:

	June 30, 2017			December 31, 2016
Identifiable Artistic-Related Assets (a)	$	1,740,000		$	1,740,000
Trademarks (b)		129,831			129,831
Product Masters (b)		64,676			64,676
Other Intangible Assets (b)		185,020			185,020
Intangible Assets, Gross		2,119,527			2,119,527
Less Accumulated Amortization (c)		(304,889	)		(273,877	)
Intangible Assets, Net	$	1,814,638		$	1,845,650

	(a)	In connection with the Merger in 2013, the Company acquired $1,740,000 of Identifiable Artistic-Related Assets. These assets, related to certain properties owned by A Squared and assumed by the Company, were valued using an independent firm. Based on certain legal, regulatory, contractual, and economic factors, the Company has deemed these assets to be indefinite-lived. Hence, pursuant to FASB ASC 350-30, these assets are not subject to amortization and are tested annually for impairment. Through June 30, 2017, the Company has not recognized any impairment expense related to these assets.
	(b)	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. Through June 30, 2017, the Company has not recognized any impairment expense related to these assets.
	(c)	During the three months ended June 30, 2017 and 2016, the Company recognized $13,315 and $19,184, respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets. During the six months ended June 30, 2017 and 2016, the Company recognized $31,012 and $38,315, respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets.

Expected future intangible asset amortization as of June 30, 2017 is as follows:

Fiscal Year:
2017	$	24,508
2018		26,119
2019		9,236
2020		8,655
2021		2,059
Remaining		4,061
Total	$	74,638

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

XML 24 R12.htm IDEA: XBRL DOCUMENT

6. Deferred Revenue	6 Months Ended
6. Deferred Revenue	Jun. 30, 2017
Deferred Revenue Disclosure [Abstract]
Deferred Revenue	As of June 30, 2017 and December 31, 2016, the Company had total short term and long term deferred revenue of $5,020,507 and $3,106,608, 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, 2016 is the $2,000,000 advance against future royalty that Sony paid to the Company in the first quarter of 2016. Included in the deferred revenue balance as of June 30, 2017 is the $2,000,000 advance against future royalties that Sony paid to the Company in the first quarter of 2016 as well as $1,489,583 attributable to the expansion of distribution rights acquired by Sony through the January 2017 Sony Transactions.

XML 25 R13.htm IDEA: XBRL DOCUMENT

7. Accrued Liabilities

6 Months Ended

Jun. 30, 2017

Payables and Accruals [Abstract]

Accrued Liabilities

As of June 30, 2017 and December 31, 2016, the Company had the following current accrued liabilities:

	June 30, 2017		December 31, 2016
Accrued Salaries and Wages (a)	$	165,544	$	132,827
Disputed Trade Payables (b)		925,000		925,000
Services Advance - Current Portion (c)		–		1,489,583
Other Accrued Expenses		258,680		249,482
Total Accrued Liabilities - Current	$	1,349,224	$	2,796,892

	(a)	Accrued Salaries and Wages represent accrued vacation payable to employees.
	(b)	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 June 30, 2017, 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 uncollectible. The Company is working with the counterparty to extinguish this liability.

(c)

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8. Production Loan Facility

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Production Loan Facility

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9. Stockholders' Equity

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

Stockholders' Equity

Common Stock

As of June 30, 2017, the total number of authorized shares of Common Stock was 233,333,334.

On October 6, 2016, the Board of Directors of the Company authorized a reverse stock split in preparation for the Company’s anticipated uplisting on the NASDAQ Capital Market.

	·	In connection with the January 2017 Sony Transactions, we issued Sony 301,231 shares of our Common Stock at $4.945 per share.
	·	On January 17, 2017, we issued to a consultant 10,112 shares of our Common Stock at $4.945 per share in connection with the January 2017 Sony Transactions.
	·	On February 9, 2017, the Company issued 1,171,689 shares of Common Stock in connection with the Private Transaction.
	·	On March 14, 2017, the Company issued 8,410 shares of Common Stock valued at $5.95 per share to a consultant for services rendered.
	·	On various dates during the six months ended June 30, 2017, the Company issued 395,000 shares of the Company’s Common Stock pursuant to the conversion of 1,185 shares of Series A Convertible Preferred Stock at a conversion price of $3.00.

Preferred Stock

As of June 30, 2017 and December 31, 2016, there were 3,710 and 4,895 shares of Series A Convertible Preferred Stock outstanding, respectively.

XML 28 R16.htm IDEA: XBRL DOCUMENT

10. Stock Options

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Options

The following table summarizes the changes in the Company’s stock option plan during the six months ended June 30, 2017:

	Options Outstanding Number of Shares		Exercise Price per Share		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value		Weighted Average Exercise Price per Share
Balance at December 31, 2016		1,373,554	$	2.82 - 12.00		3.99 years	$	280,642	$	8.14
Options Granted		–
Options Exercised		–
Options Cancelled		16,087
Options Expired		–
Balance at June 30, 2017		1,357,467	$	2.82 - 12.00		3.49 years	$	63,013	$	8.14

Exercisable December 31, 2016		452,535	$	2.82 - 6.00		3.95 years	$	263,375	$	5.29
Exercisable June 30, 2017		467,534	$	2.82 - 6.00		3.48 years	$	59,012	$	5.33

Exercise Price	$2.82 - $12.00
Dividend Yield	0%
Volatility	100% - 137%
Risk-free interest rate	0.89% - 1.25%
Expected life of options	2.5 - 3.5 years

XML 29 R17.htm IDEA: XBRL DOCUMENT

11. Warrants

6 Months Ended

Jun. 30, 2017

Warrants and Rights Note Disclosure [Abstract]

Warrants

The Company has warrants outstanding to purchase up to 1,766,698 and 1,651,698 at June 30, 2017 and December 31, 2016, respectively.

On February 9, 2017, the Company entered into the Private Transaction pursuant to the Agreement with certain holders of the Original Warrants. Pursuant to the Agreement, the holders of the Original Warrants and the Company agreed that such Original Warrant holders would exercise their Original Warrants in full, and the Company would issue to each such holder new warrants, with the new warrants being identical to the Original Warrants except that the termination date of such new warrants is February 10, 2022 (the “Reload Warrants”). In addition, depending on the number of Original Warrants exercised by all holders of the Original Warrants, the Company also agreed to issue to the holders another new warrant, identical to the Original Warrant except that the exercise price of such warrant is $5.30 and such warrant is not exercisable until August 10, 2017 (the “Market Price Warrants” and together with the Reload Warrants, the “New Warrants”).

Chardan acted as financial advisor on the Private Transaction in consideration for which Chardan received $363,617 and was issued New Warrants for 115,000 shares of the Company’s Common Stock.

The following table summarizes the changes in the Company’s outstanding warrants during the six months ended June 30, 2017:

	Warrants Outstanding Number of Shares		Exercise Price per Share		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price per Share		Aggregate Intrinsic Value
Balance at December 31, 2016		1,651,698	$	3.30 - 6.00		3.75 years	$	3.49	$	3,301,913
Warrants Granted		1,286,690		3.30 - 5.30		–		–		ؘ–
Warrants Exercised		1,171,690		3.30		–		–		–
Warrants Expired		–
Balance at June 30, 2017		1,766,698	$	3.30 - 6.00		4.19 years	$	4.03	$	124,599

Exercisable December 31, 2016		1,651,698	$	3.30 - 6.00		3.75 years	$	3.49	$	3,301,913
Exercisable June 30, 2017		1,279,999	$	3.30 - 6.00		4.03 years	$	3.54	$	124,599

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12. Income Taxes

6 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

At the adoption date of January 1, 2008, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized.

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13. Commitment and Contingencies

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitment and Contingencies

The following is a schedule of future minimum contractual obligations under the Company’s operating leases and employment agreements:

	2017		2018		2019		2020		2021		Remaining		Total
Operating Leases	$	72,429	$	36,214	$	–	$	–	$	–	$	–	$	108,643
Employment Agreements		222,252		248,044		–		–		–		–		470,296
Total	$	294,681	$	284,258	$	–	$	–	$	–	$	–	$	578,939

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14. Related Party Transactions

6 Months Ended

Jun. 30, 2017

Related Party Transactions

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15. Subsequent Events

6 Months Ended

Jun. 30, 2017

Subsequent Events [Abstract]

Subsequent Events

On August 7, 2017, the Company issued to a consultant 6,012 shares of our common stock for services rendered.

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2. Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying 2017 and 2016 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

Business Combination

Business Combination

Use of Estimates

Use of Estimates

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, Cash Equivalents, and Restricted Cash

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

Inventories

Inventories

Property and Equipment

Property and Equipment

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Films and Television Costs

Film and Television Costs

Revenue Recognition

Revenue Recognition

Share-Based Compensation

Share-Based Compensation

Earnings Per Share

Earnings Per Share

Income Taxes

Income Taxes

Fair value of financial instruments

Fair value of financial instruments

	·	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

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3. Property and Equipment, Net (Tables)

6 Months Ended

Jun. 30, 2017

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

	June 30, 2017			December 31, 2016
Furniture and Equipment	$	12,385		$	12,385
Computer Equipment		72,062			42,654
Leasehold Improvements		176,903			176,903
Software		15,737			15,737
Property and Equipment, Gross		277,087			247,679
Less Accumulated Depreciation		(191,084	)		(157,218	)
Property and Equipment, Net	$	86,003		$	90,461

XML 36 R24.htm IDEA: XBRL DOCUMENT

4. Film and Television Costs, net (Tables)

6 Months Ended

Jun. 30, 2017

Film And Television Costs Net

Film and Television activity table

	Total
Film and Television Costs, Net as of December 31, 2015	$	1,003,546
Additions to Film and Television Costs		1,390,450
Capitalized Interest		34,756
Film Amortization Expense		(167,788	)
Film and Television Costs, Net as of December 31, 2016		2,260,964
Additions to Film and Television Costs		1,473,384
Capitalized Interest		80,316
Film Amortization Expense		(8,086	)
Film and Television Costs, Net as of June 30, 2017	$	3,806,578

XML 37 R25.htm IDEA: XBRL DOCUMENT

5. Goodwill and Intangible Assets, Net (Tables)

6 Months Ended

Jun. 30, 2017

Goodwill And Intangible Assets Net Tables

Schedule of Intangible Assets

	June 30, 2017			December 31, 2016
Identifiable Artistic-Related Assets (a)	$	1,740,000		$	1,740,000
Trademarks (b)		129,831			129,831
Product Masters (b)		64,676			64,676
Other Intangible Assets (b)		185,020			185,020
Intangible Assets, Gross		2,119,527			2,119,527
Less Accumulated Amortization (c)		(304,889	)		(273,877	)
Intangible Assets, Net	$	1,814,638		$	1,845,650

	(a)	In connection with the Merger in 2013, the Company acquired $1,740,000 of Identifiable Artistic-Related Assets. These assets, related to certain properties owned by A Squared and assumed by the Company, were valued using an independent firm. Based on certain legal, regulatory, contractual, and economic factors, the Company has deemed these assets to be indefinite-lived. Hence, pursuant to FASB ASC 350-30, these assets are not subject to amortization and are tested annually for impairment. Through June 30, 2017, the Company has not recognized any impairment expense related to these assets.
	(b)	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. Through June 30, 2017, the Company has not recognized any impairment expense related to these assets.
	(c)	During the three months ended June 30, 2017 and 2016, the Company recognized $13,315 and $19,184, respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets. During the six months ended June 30, 2017 and 2016, the Company recognized $31,012 and $38,315, respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets.

Expected Future Ingtangible Asset Amortization

Fiscal Year:
2017	$	24,508
2018		26,119
2019		9,236
2020		8,655
2021		2,059
Remaining		4,061
Total	$	74,638

XML 38 R26.htm IDEA: XBRL DOCUMENT

7. Accrued Liabilities (Tables)

6 Months Ended

Jun. 30, 2017

Payables and Accruals [Abstract]

Other accrued liabilities

	June 30, 2017		December 31, 2016
Accrued Salaries and Wages (a)	$	165,544	$	132,827
Disputed Trade Payables (b)		925,000		925,000
Services Advance - Current Portion (c)		–		1,489,583
Other Accrued Expenses		258,680		249,482
Total Accrued Liabilities - Current	$	1,349,224	$	2,796,892

	(a)	Accrued Salaries and Wages represent accrued vacation payable to employees.
	(b)	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 June 30, 2017, 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 uncollectible. The Company is working with the counterparty to extinguish this liability.

(c)

XML 39 R27.htm IDEA: XBRL DOCUMENT

10. Stock Options (Tables)

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of stock option activity

	Options Outstanding Number of Shares		Exercise Price per Share		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value		Weighted Average Exercise Price per Share
Balance at December 31, 2016		1,373,554	$	2.82 - 12.00		3.99 years	$	280,642	$	8.14
Options Granted		–
Options Exercised		–
Options Cancelled		16,087
Options Expired		–
Balance at June 30, 2017		1,357,467	$	2.82 - 12.00		3.49 years	$	63,013	$	8.14

Exercisable December 31, 2016		452,535	$	2.82 - 6.00		3.95 years	$	263,375	$	5.29
Exercisable June 30, 2017		467,534	$	2.82 - 6.00		3.48 years	$	59,012	$	5.33

Assumptions used

Exercise Price	$2.82 - $12.00
Dividend Yield	0%
Volatility	100% - 137%
Risk-free interest rate	0.89% - 1.25%
Expected life of options	2.5 - 3.5 years

XML 40 R28.htm IDEA: XBRL DOCUMENT

11. Warrants (Tables)

6 Months Ended

Jun. 30, 2017

Warrants and Rights Note Disclosure [Abstract]

Schedule of warrant activity

	Warrants Outstanding Number of Shares		Exercise Price per Share		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price per Share		Aggregate Intrinsic Value
Balance at December 31, 2016		1,651,698	$	3.30 - 6.00		3.75 years	$	3.49	$	3,301,913
Warrants Granted		1,286,690		3.30 - 5.30		–		–		ؘ–
Warrants Exercised		1,171,690		3.30		–		–		–
Warrants Expired		–
Balance at June 30, 2017		1,766,698	$	3.30 - 6.00		4.19 years	$	4.03	$	124,599

Exercisable December 31, 2016		1,651,698	$	3.30 - 6.00		3.75 years	$	3.49	$	3,301,913
Exercisable June 30, 2017		1,279,999	$	3.30 - 6.00		4.03 years	$	3.54	$	124,599

- Definition

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

+ References + Details

XML 41 R29.htm IDEA: XBRL DOCUMENT

13. Commitment and Contingencies (Tables)

6 Months Ended

Jun. 30, 2017

Lease Commitments Tables

Future minimum lease payments

	2017		2018		2019		2020		2021		Remaining		Total
Operating Leases	$	72,429	$	36,214	$	–	$	–	$	–	$	–	$	108,643
Employment Agreements		222,252		248,044		–		–		–		–		470,296
Total	$	294,681	$	284,258	$	–	$	–	$	–	$	–	$	578,939

XML 42 R30.htm IDEA: XBRL DOCUMENT

1. Organization and Business (Details Narrative) - USD ($)

3 Months Ended

6 Months Ended

Jun. 30, 2017

Jun. 30, 2016

Jun. 30, 2017

Jun. 30, 2016

Dec. 31, 2016

Dec. 31, 2015

Net loss

$ (1,251,543)

$ (1,182,952)

$ (2,567,779)

$ (2,832,669)

Net cash used in operating activities

(3,558,638)

(324,208)

Accumulated deficit

(39,210,540)

$ (36,642,761)

Stockholders equity

11,392,942

10,055,526

Current assets

4,689,434

3,376,788

Cash, Cash Equivalents, and Restricted Cash

3,986,528

$ 4,938,720

3,986,528

$ 4,938,720

2,887,921

$ 5,187,620

Current liabilities

2,206,700

3,856,192

Trade payables

^[1]

925,000

Working capital

$ 2,482,734

2,482,734

$ (479,404)

Proceeds from Warrant Exchange

3,866,573

Sony Pictures Home Entertainment [Member]

Proceeds from license agreement

$ 1,489,583

Stock issued for licensing rights, shares

301,231

[1]

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 June 30, 2017, 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 uncollectible. The Company is working with the counterparty to extinguish this liability.

XML 43 R31.htm IDEA: XBRL DOCUMENT

2. Significant Accounting Policies (Details Narrative) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Restricted Cash	$ 1,000,000	$ 1,000,000
Allowance for doubtful accounts	110,658	110,658
Reserve for obsolete inventory	$ 26,097	$ 26,097

XML 44 R32.htm IDEA: XBRL DOCUMENT

3. Property and Equipment, Net (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Property and equipment, gross	$ 277,087	$ 247,679
Less Accumulated Depreciation	(191,084)	(157,218)
Property and Equipment, Net	86,003	90,461
Furniture and Fixtures [Member]
Property and equipment, gross	12,385	12,385
Computer Equipment [Member]
Property and equipment, gross	72,062	42,654
Leasehold Improvements [Member]
Property and equipment, gross	176,903	176,903
Software [Member]
Property and equipment, gross	$ 15,737	$ 15,737

XML 45 R33.htm IDEA: XBRL DOCUMENT

3. Property and Equipment, Net (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 16,933	$ 16,428	$ 33,865	$ 33,063

XML 46 R34.htm IDEA: XBRL DOCUMENT

4. Film and Television Costs and Capitalized Product Development in Process (Details) - USD ($)	3 Months Ended		6 Months Ended	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Dec. 31, 2016
Film And Television Costs Net
Film and Television costs, beginning balance			$ 2,260,964	$ 1,003,546
Additions to Film and Television Costs			1,473,384	1,390,450
Capitalized interest			80,316	34,756
Film amortization expense			(8,086)	(167,788)
Film and Television costs, ending balance	$ 3,806,578		3,806,578	2,260,964
Film amortization expense	$ 3,482	$ 17,644	$ 8,086	$ 135,157

XML 47 R35.htm IDEA: XBRL DOCUMENT

5. Goodwill and Intangible Assets, Net (Details - Intangibles) - USD ($)

Jun. 30, 2017

Dec. 31, 2016

Intangible assets

$ 2,119,526

$ 2,119,527

Less Accumulated Amortization

^[1]

(304,889)

(273,877)

Net Intangible Assets

1,814,638

1,845,650

Product Masters [Member]

Intangible assets

^[2]

64,676

Identifiable artistic-related assets [Member]

Intangible assets

^[3]

1,740,000

Trademarks [Member]

Intangible assets

^[2]

129,831

Other Intangible Assets [Member]

Intangible assets

^[2]

$ 185,020

[1]	During the three months ended June 30, 2017 and 2016, the Company recognized $13,315 and $19,184, respectively, in amortization expense related to the Trademarks, Product Masters, and Other Intangible Assets. During the six months ended June 30, 2017 and 2016, the Company recognized $31,012 and $38,315, 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. Through June 30, 2017, the Company has not recognized any impairment expense related to these assets.
[3]	In connection with the Merger in 2013, the Company acquired $1,740,000 of Identifiable Artistic-Related Assets. These assets, related to certain properties owned by A Squared and assumed by the Company, were valued using an independent firm. Based on certain legal, regulatory, contractual, and economic factors, the Company has deemed these assets to be indefinite-lived. Hence, pursuant to FASB ASC 350-30, these assets are not subject to amortization and are tested annually for impairment. Through June 30, 2017, the Company has not recognized any impairment expense related to these assets.

XML 48 R36.htm IDEA: XBRL DOCUMENT

5. Goodwill and Intangible Assets, Net (Details - Amortization expense) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Amortization expense			$ 31,012	$ 38,315
Trademarks, Product Masters and Other Intangible Assets [Member]
Amortization expense	$ 13,315	$ 19,184	$ 31,012	$ 38,315

XML 49 R37.htm IDEA: XBRL DOCUMENT

5. Goodwill and Intangible Assets (Details - future amortization)	Jun. 30, 2017 USD ($)
Future intangible asset amortization
2017	$ 24,508
2018	26,119
2019	9,236
2020	8,655
2021	2,059
Remaining	4,061
Total	$ 74,638

XML 50 R38.htm IDEA: XBRL DOCUMENT

6. Deferred Revenue (Details Narrative) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Deferred revenue	$ 5,020,507	$ 3,106,608
Distribution Rights [Member]
Deferred revenue	1,489,583
Future Royalty [Member]
Deferred revenue	$ 2,000,000	$ 2,000,000

XML 51 R39.htm IDEA: XBRL DOCUMENT

7. Accrued Liabilities (Details) - USD ($)

Jun. 30, 2017

Dec. 31, 2016

Payables and Accruals [Abstract]

Accrued Salaries and Wages

^[1]

$ 165,544

$ 132,827

Disputed trade payables

^[2]

925,000

Services Advance - Current Portion

^[3],[4],[5]

1,489,583

Other Accrued Expenses

258,680

249,482

Total accrued liabilities

$ 1,349,224

$ 2,796,892

[1]	Accrued Salaries and Wages represent accrued vacation payable to employees.
[2]	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 June 30, 2017, 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 uncollectible. The Company is working with the counterparty to extinguish this liability.
[3]	During the first quarter of 2014, the Company entered into an exclusive three-year agreement with DADC to provide all CD, DVD and Blu-ray replication, packaging and distribution to the Company's direct customers. Under the terms of the long-term, exclusive supply chain services agreement, the Company will order a minimum level of disk replication, packaging and distribution services for its content across all physical media, including DVD, CD, and Blu-ray from DADC. As consideration for these minimum order levels, the Company received a total of $1,500,000, $750,000 during the first quarter of 2014 and $750,000 during the first quarter of 2015. At the end of the term, the Company is obligated to repay a pro-rata portion of the advance if it has not ordered a minimum number of DVD/CD units during the term.
[4]	In connection with such transaction, we issued Sony 301,231 shares of our Common Stock at $4.945 per share, Sony's exclusive territory for exercising its home entertainment distribution rights under the Distribution Agreement was extended from the United States and Canada to worldwide, and the amount of advances subject to recoupment by Sony out of royalty payments that would otherwise be due to us under the Distribution Agreement was increased by the amount of the payment to DADC.
[5]	On January 10, 2017, the Company entered into an amendment of our home entertainment Distribution Agreement with Sony pursuant to which, among other things, Sony paid DADC $1,489,583, which was the total sum owed and payable by us to DADC for the disk replication, packaging and distribution services.

XML 52 R40.htm IDEA: XBRL DOCUMENT

8. Production Loan Facility (Details Narrative) - Llama Productions [Member] - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Credit line initiation date	Aug. 08, 2016
Credit line maximum	$ 5,275,000
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 borrowings during period	$ 2,840,642	$ 1,505,307
Payment of financing costs	143,594	173,303
Credit line net borrowings	$ 2,697,048	$ 1,332,004

- Definition

The carrying value as of the balance sheet date of the current and noncurrent portions of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

+ References + Details

XML 53 R41.htm IDEA: XBRL DOCUMENT

9. Stockholders' Equity (Details Narrative) - USD ($)	6 Months Ended
9. Stockholders' Equity (Details Narrative) - USD ($)	Jun. 30, 2017	Jun. 30, 2016
Proceeds from Warrant Exchange	$ 3,866,573
Proceeds from Warrant Exchange, Net of Offering Costs	$ 3,401,924	$ 0
Common Stock [Member]
Conversion of preferred stock, common shares issued	395,000
Series A Preferred Stock [Member]
Conversion of stock, shares converted	1,185
Sony Pictures Home Entertainment [Member]
Stock issued for licensing rights, shares	301,231
Consultant [Member]
Stock issued for services, shares	10,112
Consultant 2 [Member]
Stock issued for services, shares	8,410
Private Transaction [Member]
Stock issued upon conversion of warrants, shares	1,171,689
Proceeds from Warrant Exchange	$ 3,866,573
Payment of offering costs	464,649
Proceeds from Warrant Exchange, Net of Offering Costs	$ 3,401,924

XML 54 R42.htm IDEA: XBRL DOCUMENT

10. Stock Options (Details-Option activity) - Stock Options [Member] - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Stock Options
Number of Options outstanding beginning balance	1,373,554
Number of Options Granted	0
Number of Options Exercised	0
Number of Options Cancelled	16,087
Number of Options Expired	0
Number of Options outstanding ending balance	1,357,467	1,373,554
Number of Options exercisable	467,534	452,535
Exercise Price Per Share
Exercise price per share, range	$2.82-$12-00	$2.82-$12-00
Exercise price per share, exercisable	$2.82-$6.00
Exercise prices at period end	$2.82-$6.00
Weighted Average Remaining Contractual Life	3 years 5 months 27 days	3 years 11 months 26 days
Weighted average remaining contractual life, exercisable	3 years 5 months 23 days	3 years 11 months 12 days
Aggregate Intrinsic Value
Aggregate intrinsic value, options outstanding	$ 63,013	$ 280,642
Aggregate intrinsic value, exercisable	$ 59,012	$ 263,375
Weighted Average Exercise Price per Share beginning balance	$ 8.14
Weighted Average Exercise Price per Share ending balance	8.14	$ 8.14
Weighted Average Exercise Price per Share Exercisable	$ 5.33	$ 5.29

XML 55 R43.htm IDEA: XBRL DOCUMENT

10. Stock Options (Details-Assumptions) - Stock Options [Member]	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Exercise Price	$2.82-$12-00	$2.82-$12-00
Dividend Yield	0.00%
Volatility rate, minimum	100.00%
Volatity rate, maximum	137.00%
Risk-free interest rate, minimum	0.89%
Risk-free interest rate, maximum	1.25%
Expected life of options	2.5 - 3.5 years

XML 56 R44.htm IDEA: XBRL DOCUMENT

10. Stock Options (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
10. Stock Options (Details Narrative) - USD ($)	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Share-based compensation expense	$ 183,641	$ 312,977	$ 405,633	$ 877,962
Additional Share-based compensation expenses, true-up		$ 220,564
2015 Plan [Member]
Shares authorized under plan	1,666,667		1,666,667
Stock Options [Member]
Share-based compensation expense			$ 221,992
Unvested share-based compensation	$ 480,673		$ 480,673

XML 57 R45.htm IDEA: XBRL DOCUMENT

11. Warrants (Details) - Warrant [Member] - USD ($)	6 Months Ended	12 Months Ended
11. Warrants (Details) - Warrant [Member] - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Warrant
Number of Warrants outstanding beginning balance	1,651,698
Warrants Granted	1,286,690
Warrants Exercised	1,171,690
Warrants Expired	0
Number of Warrants outstanding ending balance	1,766,698	1,651,698
Number of Warrants exercisable	1,279,999	1,651,698
Exercise Price Per Share
Warrant exercise price per share, beginning balance	$3.30-$6.00
Warrant exericse price per share, granted	$3.30-$5.30
Warrant exercise price per share, exercised	3.30
Warrant exercise price per share, ending balance	$3.30-$6.00	$3.30-$6.00
Warrant exercise price per share, exercisable	$3.60-$6.00	$3.60-$6.00
Weighted Average Remaining Contractual Life
Weighted average remaining contractual life, warrants outstanding	4 years 2 months 8 days	3 years 9 months
Weighted average remaining contractual life, exercisable	4 years 11 days	3 years 9 months
Weighted Average Exercise Price per Share
Warrant weighted average exercise price per share, beginning balance	$ 3.49
Warrant weighted average exercise price per share, ending balance	4.03	$ 3.49
Warrant weighted average exercise price per share, exercisable	$ 3.54	$ 3.49
Aggregate Intrinsic Value
Aggregate intrinsic value, outstanding	$ 124,599	$ 3,301,913
Aggregate instrinsic value, exercisable	$ 124,599	$ 3,301,913

XML 58 R46.htm IDEA: XBRL DOCUMENT

11. Warrants (Details Narrative)	6 Months Ended
11. Warrants (Details Narrative)	Jun. 30, 2017 USD ($) shares
Proceeds from Warrant Exchange	$ 3,866,573
Warrant [Member]
Proceeds from Warrant Exchange	3,866,573
Fair value of warrants issued	$ 1,402,174
Reload Warrants [Member]
Warrants issued \| shares	799,991
Reload Warrants [Member] \| Chardan [Member]
Warrants issued \| shares	115,000
Payment of stock issuance costs	$ 363,617
Market Price Warrants [Member]
Warrants issued \| shares	371,699

XML 59 R47.htm IDEA: XBRL DOCUMENT

12. Income Taxes (Details Narrative)	Jun. 30, 2017 USD ($)
Income Tax Disclosure [Abstract]
Uncertain tax positions	$ 0

XML 60 R48.htm IDEA: XBRL DOCUMENT

13. Commitment and Contingencies (Details)	Jun. 30, 2017 USD ($)
2017	$ 294,681
2018	284,258
2019	0
2020	0
2021	0
Remaining	0
Operating Leases, Future Minimum Payments Due	578,939
Operating Leases
2017	72,429
2018	36,214
2019	0
2020	0
2021	0
Remaining	0
Operating Leases, Future Minimum Payments Due	108,643
Employment Agreements
2017	222,252
2018	248,044
2019	0
2020	0
2021	0
Remaining	0
Operating Leases, Future Minimum Payments Due	$ 470,296

XML 61 R49.htm IDEA: XBRL DOCUMENT

13. Commitment and Contingencies (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Leases [Abstract]
Rental expenses	$ 35,862	$ 34,818	$ 71,022	$ 69,825

XML 62 R50.htm IDEA: XBRL DOCUMENT

14. Related Party (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
14. Related Party (Details Narrative) - USD ($)	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Royalty payments received	$ 96	$ 247	$ 96	$ 247
Andy Heyward [Member]
Consulting fees			$ 96,000