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Genius Brands CEO Says Short Reports Full Of 'Misleading Statements'

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Genius Brands International Inc (NASDAQ: GNUS), a children's media company, said Monday that recent short reports are full of "misleading statements, omissions of key facts, and red herrings."

The stock trades around $5.42 per share, after rising from 73 cents on May 12 to as high as $7.93 on June 3.

What Happened: Genius' response was penned by CEO and Chairman Andy Heyward. He wrote that as one of the largest investors in the company, his "interests are fully aligned with those of my fellow shareholders -- and will remain so." Over the past two years, the CEO said he has been increasing his personal stake in the company and has "not sold a single share."

Having said that, Heyward's statement is meant to "clarify certain facts as it relates to the short seller information that has been put into the marketplace."

Creating Value Genius is "well-positioned" to create value for investors, he wrote. The Kartoon Channel! is scheduled to launch on June 15 and will be available to more than 100 million U.S. TV households nad 200 million mobile devices. This would position the company as "one of the preeminent" ad-supported kids' digital networks.

Balance Sheet Update: The company has enough cash on its balance sheet to meet its existing obligations and operate on its business for at least 60 months, including funding new production and content acquisitions.

Pointing Out 'Industry Ignorance': The short-seller report's criticism of Genius' programs "highlight their own industry ignorance." As an example, the short seller report pointed out "Rainbow Rangers" being scaled back on Nick Jr.

However, Heyward said this is "standard industry practice" and will ramp again in August with new material along with a planned launch of toys from Mattel (NASDAQ: MAT).

Related Link: PreMarket Prep Stock Of The Day: Genius Brands

Management Team Strength: The management team is composed of industry veterans responsible for "many of the biggest and most profitable hits in children's television history."

"Collectively, we have more than 150 years of experience in children's media, and have helped generate literally tens of billions of dollars of content and consumer products sales," the CEO wrote in the release.

Long-Term Story: Finally, Genius Brands represents a long-term growth story with more than 450 licensed products contracted with advances and guarantees that will enter the market in "the coming months." The company will also introduce 350 other licensed consumer product SKUs across other categories, like apparel, publishing, touring shows, among others.

"After working with Warren Buffett for 25 years and producing the children's animated series with Warren to teach financial literacy ('Warren Buffett's Secret Millionaires Club'), I've learned to focus on the importance of the basics: asset creation and value-building for our shareholders," Heyward wrote.

Photo snippet courtesy of Nick Jr./Rainbow Rangers.

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