Genius Brands International, Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Genius Brands International Second Quarter 2022 Business Update Call. At this time, all participants are on a listen-only mode. I would now like to turn the call over to David Waldman, Investor Relations. David, please go ahead.

Thank you. Good afternoon, everyone, and welcome to Genius Brands Second Quarter 2022 Financial Results and Investor Update Conference Call. On the call with us this afternoon is Andy Hayward, Chairman and CEO of Bob Denton, Chief Financial Officer, and Michael Hirsch, CEO of WOW. The company issued a press release this morning. If you have not received a copy, you can view it on the company's website at gnusbrands.com. Before I turn the call over to Genius Brands CEO Andy Hayward, I would like to remind you that this call, certain statements constitute forward-looking statements within the meaning of the federal securities laws. Words such as may, might, will, should, believe, expect, anticipate, estimate, continue, predict, forecast, project, plan, intent or similar expressions or statements regarding intent, belief, or current expectations or forward-looking statements. While the company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to us on the date of this call. These forward-looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including risk factors set forth in the risk factors section of the company's most recent annual report on Form 10-K, in the company's subsequent filings with the Securities and Exchange Commission. Thus, actual results could differ materially from those reported. The company expressly disclaims any obligations to update or alter statements, whether as a result of new information, future events, or otherwise, except as required by law. Following their prepared remarks, the company will field a number of questions that investors have submitted in anticipation of the call. I'd now like to turn the call over to Genius Brand CEO, Andy Hayward. Please go ahead, Andy. Thank you.

Thank you, David, and good morning, everyone. The second quarter was very strong for Genius Brands. We experienced significant top-line growth with record revenues of $21 million, which we now expect to continue and accelerate. The assets currently now in-house and those being acquired and developed, we believe, will lead to recurring positive cash flow, more growth, and sustained profitability. During this last quarter, we've gone from a company with 100 employees to a company of over 900 employees with offices in Los Angeles, New York, New Jersey, Toronto, Vancouver, Munich, and London. We've grown our own or controlled catalog of animated children's programs from 450 episodes to over 3,800 episodes and now have over 22,000 animated children's episodes under license to the Cartoon Channel system. We have grown our cartoon channel distribution footprint from just the U S to now being seen in over 60 territories worldwide via satellite cable and terrestrial, as well as streaming in Europe, the middle East, Africa, Latin America, and Asia. We've gone from a company producing 26 episodes of content at this time last year to producing over 200 half hour episodes with over $135 million of production. and a robust pipeline with significant committed contracts going forward for the next three years and beyond. Our programs are seen not only on our growing cartoon channel, but are additionally licensed to Netflix, Amazon, YouTube, Peacock, Paramount+, HBO Max, and terrestrial and satellite broadcasters worldwide. We completed the transformational acquisition of WOW Unlimited Media, signed a 20-year deal with Marvel Studios and the Walt Disney Company, to license Stan Lee for use in feature films, television productions, and Disney theme parks and experiences. And we are in additional and material conversations with the Walt Disney Company on separate opportunities. Also during this quarter, we partnered with world-renowned chef restaurateur and philanthropist Wolfgang Puck to create an animated children's series and healthy food products licensed from and based on the series entitled Wolfgang Puck Secret Chef Academy. Wolfgang Puck worldwide now generates approximately $650 million in worldwide revenues, and we see an opportunity from the show to partner on similar kitchen and healthy food products now designed for children. In addition, we are pleased to report the highest revenues in the history of the company. Our Q2 revenues of $22.1 million, which is nearly a tenfold increase over the same quarter last year. We believe the continued and accelerating revenue growth is a precursor to earnings, which we are confident will be forthcoming. Our key units and businesses are growing, increasing market share and margin. Meanwhile, the company continues to maintain high levels of cash. The non-exclusive deal we signed to license the name and likeness of Stan Lee to Marvel Studios for movies and television and the exclusive license to the Walt Disney theme parks and attractions to create Stanley merchandise and consumer products to be sold in the Walt Disney theme parks, cruise ships, and other entertainment venues for the next 20 years, all of which Genius Brands will enjoy royalty income from. While the company received a $2.5 million license fee, the bulk of the revenues Genius will see as a result of this agreement we expect to come from royalties that will be generated from Disney's creation and sale of Stan Lee merchandise in the Walt Disney theme parks and theme park experiences for the duration of the 20-year agreement. We also anticipate additional benefits from the ongoing and enriched exposure of the Stan Lee brand, driving retail sales of our own upcoming Stan Lee content and merchandise programs separately. We consider the rights we own and control in the Stan Lee universe to be extremely valuable and we will be announcing significant news prior to Stan Lee's 100th birthday on December 28th this year. As a close friend of Stan's for many years, I can share that this was his personal desire, and we believe it's a privilege to act as a responsible steward of the Stan Lee brand on his behalf. During the past quarter, we continued to make great strides in many segments of our business, which will have a significant impact on the future of the company as well as our financial growth. Also during the quarter, Cartoon Channel, our flagship streaming platform for children, continues to experience monthly growth in downloads, viewership, advertisers, distribution, and most importantly, revenues. We are investing aggressively in Cartoon Channel to secure the best content, the best features, the most robust distribution, and the overall most attractive user experience. We believe Cartoon Channel will be a key driver and tentpole of Genius Brand's revenues and earnings for years to come. Cartoon Channel is now being carried on virtually every major platform in the United States, including Apple iOS, Apple TV, Android TV, Android Mobile, Amazon Prime, Amazon Fire, Roku, Tubi, Comcast, Cox, Samsung Smart TVs, LG Smart TVs, Pluto TV, and the increasingly important YouTube platform. In fact, if you happen to be flying on JetBlue, you'll now see Cartoon Channel carried there as well. Cartoon Channel is now firmly established as a premier viewing destination for kids and families with viewer rankings regularly placing us ahead of our major competitors in both the Apple and the Google app stores. Advertising revenues have continued their solid growth trajectory as we continue to sign up new advertisers and have invested to build out a premium ad sales team led by a proven industry leader, Cindy Kelly, who joined Genius Brands during the quarter and now oversees all advertiser sales. Concurrent with Cartoon Channel as a free product supported by advertising, we launched in the second quarter our commercial-free streaming subscription product at $3.99 a month, the Cartoon Channel Kitiverse. We expect subscription growth to become a critical component of our future revenue streams as it is for all content providers such as Netflix, Disney Plus, and HBO Max. However, whereas several of our competitors have seen declines, Genius subscriber statistics are growing. We're building both on the subscription distribution we have now on Amazon Prime, as well as the subscription network we acquired with the Amoeba channel acquisition in January, and their technology and superb management group. As we continue to roll out the subscription-based cartoon channel, Kitiverse, and its metaversal features, we believe Kidiverse will be a breakthrough, first-of-its-kind offering for kids, including avatars, emojis, games, Kidiverse VR goggles, immersive content, NFTs for kids, collectible digital cards based on many of the channel's popular characters, including Stanley Universe, a digital currency for kids, which we refer to as Kidabucks, child-safe messaging, which we refer to as Messy's, podcasts, music, and more. The combination now of Cartoon Channel as a free ad-supported service and Cartoon Channel Kidiverse, our enriched commercial-free service, enables us to capture those parents who want their kids to have a premium channel for free, as well as those who prefer to have a children's channel without commercials containing enriched features and are prepared to pay a monthly subscription fee. Having an ad-free and a subscription product Grounded always in safe, positive programming for children is the essence of our channel strategy to grow and capture market share worldwide. Okay, let's talk worldwide for a moment. The company made a strategic investment in Your Family Entertainment, the premier German children's entertainment company trading on the Frankfurt Exchange. YFB not only has a 3,000 title catalog of animation, but also an existing global distribution platform now in over 60 markets across Europe, Asia, the Middle East, Africa, and Latin America. Under the leadership of Paul Robinson, who previously was managing director of Disney Channels Worldwide, this channel system is now being rebranded as Cartoon Channel Worldwide and rolling out in virtually every major territory. We are now in more than 60 countries around the world and in various stages of discussion in additional markets with a group of important carriage deals currently pending. We've also witnessed growth in viewership of Cartoon Channel on platforms such as Amazon Prime. We believe this trend will continue as we continuously add attractive new content, markets, and distribution partners to our portfolio. In addition to our owned and produced shows, like Rainbow Rangers and Stanley's Superhero Kindergarten, we continue to acquire timeless, top-performing content from around the world, including Peppa Pig, Paw Patrol shorts, Scooby-Doo, Yu-Gi-Oh!, as well as Roblox and Minecraft-based gaming content. Strong, proven content with positive values that children will want to see will always be a component of our program strategy to increase market share, revenues, and profits. Separate from the rollout of Cartoon Channel and Cartoon Channel Kidiverse, the company acquired the Frederator Channel as part of the acquisition of WoW. The importance of the Frederator Channel As part of Genius' overall distribution business, can't be overstated. The Frederator channel is distributed exclusively on YouTube. It is a platform of over 3,000 producers, which makes up the largest animation platform on YouTube and currently generates an astonishing 1 billion views per month. In itself, Frederator channel is already a profitable service. However, we expect to grow and harness it dramatically more so. as we migrate top-performing YouTube programs from there to Cartoon Channel and Cartoon Channel Kidiverse, unlocking new value for the company and Frederator's producers. It's kind of like the biggest farm league of animation, which we are now bringing up regularly to the big leagues. The combination of Genius Brand's WOW! Frederated channel, Amoeba, and Your Family Entertainment now provides Genius with one of the largest and most desirable children's content catalogs in the world. as well as a fully integrated distribution system and consumer product infrastructure to maximize value. I can't emphasize this point enough as each of the catalogs has tremendous intrinsic value. Most importantly, animation is not only timeless, but an asset that grows in value over time. One needs only to look at the Flintstones, Tom and Jerry, and others that live on forever. Decades later, you still see branded consumer products on store shelves around the world. The more the animation is consumed, the more the value of the portfolio grows over time. Now I want to turn the call over to Michael Hirsch, CEO of WOW, to discuss possibly the most important event in the history of the company, the acquisition and integration of WOW into Genius Brands. Michael, you're up.