Kartoon Studios Inc. (TOON) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Genius Brands International 2020 Annual Shareholder Meeting. I will now turn the meeting over to Mr. Andy Heyward. Andy, the floor is yours.

Thank you. Good morning. Welcome to the 2020 Annual Meeting of Shareholders of Genius Brands International. I'm Andy Heyward, Chairman of the Board of Directors, and it's my pleasure to welcome all of you. The directors, along with myself are Michael Klein, Joseph Gray Davis, Lynne Segall, P. Clark Hallren, Anthony Thomopoulos and Margaret Loesch. Information about myself, Mr. Klein, Mr. Davis, Ms. Segall, Mr. Hallren, Mr. Thomopoulos and Ms. Loesch and complete biographies as well as the information and biographies of all of our directors and executive officers are contained in the company's proxy statement. It is 10 a.m. Pacific Daylight Time on May 15, 2020. And in accordance with the notice of the meeting, I call to order the 2020 Annual Meeting of Stockholders of Genius Brands International. For each of you attending the meeting via webcast this morning, you should be able to access the agenda for this meeting through the virtual platform. It's our intention to conduct the meeting in accordance with that agenda. We are joined today by the company's management team, including Robert L. Denton, the company's Chief Financial Officer; and Michael Jaffa, the company's Corporate Secretary and General Counsel. Also joining us is Alan Langer of Mintz, Levin, the company's counsel; and Leah Santos of VStock Transfer, our transfer agent, who will act as the inspector of election for the meeting. Statements regarding mailing of notice is present for the quorum. This meeting is held pursuant to a notice mailed on or about April 14, 2020, to each stockholder of record as of March 28, 2020, who is entitled to vote. The count of the shares present immediately prior to commencement of the meeting indicated that 21,368,568 of the company's outstanding common shares -- common stock were present at this meeting or by proxy. This is 72.7% of the outstanding common stock of the company. Declaration of quorum. I hereby declare a quorum of the stockholder is present at the meeting. On behalf of the Board of Directors, I would like to express my appreciation to all stockholders who returned their proxies. I would also like to point out that most of you who returned proxies authorized the persons named in the proxy to vote for the election of management's nominees for director. Those of you who requested ballot so that you could vote individually were provided with them prior to the meeting. Additional ballots are available upon request. Item 4, election of directors. The first matter to be acted upon by our stockholders is the election of 7 directors to serve until the annual meeting to be held in 2021. I would just introduce the nominees. Myself, Andy Heyward; Michael Klein; Joseph Gray Davis; Lynne Segall; P. Clark Hallren; Anthony Thomopoulos; and Margaret Loesch. And additional information about each of them is in the proxy statement. I hereby declare Mr. Heyward, Mr. Klein, Mr. Davis, Ms. Segall, Mr. Hallren, Mr. Thomopoulos and Ms. Loesch duly nominated. Company has not received timely notice of any other nominations as required under the bylaws. Therefore, I declare the nominations closed. Item 5, approval of the issuance of shares of common stock upon conversion, exercise, exchange or otherwise in financing transaction. The second matter being submitted to stockholders for action is the approval for the purposes of complying with NASDAQ Listing Rule 5635(d) of the issuance of shares of our common stock upon conversion, exercise, exchange or otherwise pursuant to the terms of that certain securities purchase agreement dated March 11, 2020, by and among the company and the investors listed on the schedule of buyers thereto and the related convertible notes and warrants to purchase common stock issued to the investors pursuant thereto and the warrants to purchase common stock issued to the placement agent. This proposal is described in more detail in the proxy statement. I suggest those stockholders voting at this meeting now mark their ballots and retain them. Item 6, approval of issuance of shares of common stock upon conversion, exercise, exchange or otherwise to Andy Heyward in financing transaction. The next matter being submitted to the stockholders for action is the approval for the purposes of complying with NASDAQ Listing Rule 5635(c) of the issuance of shares of our common stock upon conversion, exercise, exchange or otherwise to myself, Andy Heyward, pursuant to the terms of certain securities purchase agreement described in the previous proposal and the related convertible notes and warrants to purchase common stock issued pursuant thereto. This proposal is described in more detail in the proxy statement. I suggest those stockholders voting at this meeting now mark their ballots and retain them. Item 7, approval of amendment to articles of incorporation. The next matter being submitted to stockholders for action is the approval of an amendment to our charter to increase the authorized number of shares of our common stock from 233,333,334 to 650,000,000, and to increase the authorized number of shares of our capital stock to 660,000,000. This proposal is described in more detail in the proxy statement. I suggest that those stockholders voting at this meeting now mark their ballots and retain them. Item 8, ratification of appointment of auditors. The next matter being submitted to our stockholders for action is the ratification of the appointment by the Board of Directors of Squar Milner, LLP, as the independent registered public accounting firm of Genius Brands International, Inc. for the fiscal year ending December 31, 2020. The Audit Committee was assigned the responsibility of recommending auditors to be appointed by the Board of Directors. This committee consists entirely of directors who are independent of corporate management. The Audit Committee has had direct access to both the outside auditors and the internal auditors. In its deliberations, the Audit Committee has worked closely and regularly with Squar Milner, LLP, has had substantial opportunity to evaluate their work and has founded to be consistently high quality. Audit Committee recommends the ratification of the appointment of Squar Milner, LLP, to audit the financial statements of the company and its subsidiaries for the fiscal year ending December 31, 2020. I suggest those stockholders voting at this meeting now mark their ballots and retain them. Item 9, advisory vote on approval of executive compensation. The last matter being submitted to the stockholders for action is an advisory vote on the compensation of our named executive officers as disclosed in the executive officer and director compensation section and the related disclosure in our proxy statement. This vote is commonly known as the say-on-pay vote. You should note that because your vote is only advisory, it is not binding on our Compensation Committee or our Board of Directors. Our Compensation Committee and Board of Directors will review the votes however and consider them when making future decisions on executive compensation. I suggest those stockholders voting at this meeting now mark their ballots and retain them. And results of balloting. Will the inspector of election please report the results of the balloting? Ms. Santos?

We have completed a final count of the stockholder ballots and a plurality of votes have been cast voted for the election of Andy Heyward, Michael Klein, Joseph Gray Davis, Lynne Segall, P. Clark Hallren, Anthony Thomopoulos and Margaret Loesch for terms expiring on the date of the annual meeting in 2021. The ballots in connection with the issuance of common stock to investors pursuant to the securities purchase agreement have been counted. And 12,163,949 shares, being more than the majority of the votes cast at the meeting, have been voted in favor of; 486,714 shares have been voted against; and 101,379 shares have abstained from the vote on such proposal. The ballots in connection with the issuance of common stock to Andy Heyward pursuant to the securities purchase agreement have been counted. And 12,192,310 shares, being more than the majority of the votes cast at the meeting, have been voted in favor of; 400 -- I'm sorry, 458,485 shares have been voted against; and 101,247 shares have been abstained from a vote on such proposal. The ballots in connection with the amendment of the company's charter to increase the company's authorized common stock and capital stock have been counted. And 12,101,111 shares, being less than a majority of the company, have been voted in favor of; 585,281 shares have been voted against; and 65,650 shares have abstained from a vote on such proposal. The ballots in connection with the ratification of our independent registered public accounting firm have been counted. And 20,252,938 shares, being more than the majority of the votes cast at the meeting, have been voted in favor of; 990,389 shares have been voted against; and 125,259 shares have abstained from ratification of the appointment of Squar Milner, LLP, to audit the financial statements of the company for the year ending December 31, 2021. The ballots in connection with the advisory vote on compensation of named executive officers have been counted. And 12,93,989 shares, being more than the majority of votes presented or represented by proxy and entitled to vote on this proposal, have been voted in favor of; 595,559 shares have been voted against; and 62,494 shares have abstained from a vote on such proposal.

Thank you. I hereby declare that the nominees for directors on behalf of the stockholders have been duly elected; that the stockholders have approved the common stock issuance to the investors and myself, Andy Heyward, pursuant to that certain securities purchase agreement; that the stockholders have not approved the amendment to our charter of increase the company's authorized common stock and capital stock; that the appointment of Squar Milner, LLP, to audit the financial statements of the company has been duly ratified; and that the stockholders have approved the compensation of the named executive officers on an advisory basis. So the final tabulation has been completed. It shall be placed with the minutes of this meeting. If there is no other business, this concludes the formal portion of our annual meeting. I would again like to express my sincere appreciation to all of the stockholders who attended the meeting and voted as well as those who submitted their proxies who are not able to be present at this meeting. Item 11, questions and discussion by stockholders. We have elected not to take any questions during this meeting because of the nature of webcasting today. Any questions you may have should be addressed to Michael Jaffa, the company's General Counsel and will be answered properly. The meeting is now formally adjourned.