BOCA RATON, FL, Jan. 09, 2018 (GLOBE NEWSWIRE) -- Grom Social Enterprises (OTCQB: GRMM) ("Grom” or the "Company"), a social media company providing a safe networking environment for children ages five to 16, today announced that it has improved its balance sheet and liquidity position through a series of transactions.
First, Grom Social’s Chairman and CEO, Darren Marks, and Executive Vice President and CFO, Melvin Leiner, converted $500,000 of their loans to equity at a price of $0.50 per share at a time when the Company’s common stock was trading at $0.30; and deferred another approximately $1.5 million of their demand loans for 18 months until July 1, 2019. As a result of these transactions, the current portion of Mr. Marks’ and Mr. Leiner’s demand loan balances decreased from approximately $2.6 million to $600,000.
Additionally, as previously disclosed, in 2016 Grom acquired 100% of the Common Stock of TD Holdings Limited (“TDH”), and its primary subsidiary, Top Draw Animation. To do so, Grom entered into a Stock Purchase Agreement, as well as a two-year $4 million, 5% secured promissory note (“Note”) payable to the TDH Sellers on July 1, 2018. On January 3, 2018, the Company and the TDH Sellers entered into an agreement whereby the TDH Sellers agreed to extend the maturity date of the Note for one year until July 1, 2019. In consideration for the extension; the TDH Sellers received 800,000 shares of the Company’s common stock, a 5% increase in interest on the Loan balance for the period July 2, 2018 through July 1, 2019. Additionally, the TDH Sellers were granted an additional year until December 31, 2019 to achieve their potential Earnout milestones under the Stock Purchase Agreement.
“The commitment by Darren and I, as well as the TDH Sellers, materially improves our balance sheet, current ratio and liquidity by extending the maturity date of approximately $5.5 million in debt, and converting an additional $500,000 of debt into equity” said Mel Leiner, Grom’s Executive Vice President and CFO. “The one-year extension granted to us by the TDH Sellers, provides us flexibility and demonstrates their strong show of support of Grom and its management. Further, we believe this structure provides a stronger representation to the capital markets that the Company is positioned for high long-term growth achieved through strategic and effective financing that we believe will ultimately result in increased shareholder value.”
“These transactions firmly establish the Company’s course as it enters a pivotal moment in its journey,” said Darren Marks, Chairman and CEO. “Grom is now well-positioned with the runway to accelerate our revenue initiates and investor awareness without having to be concerned about doing a near term, potentially dilutive capital raise to pay down debt, especially at a time when we believe Grom is significantly undervalued. We are confident in our ability to leverage our stronger financial position to take advantage of the tremendous market opportunity before us.”
About Grom Social Enterprises, Inc.
Grom Social Enterprises, Inc. operates five subsidiaries, including Grom Social, a safe social media platform for kids between the ages of five and 16. Since its beginnings in 2012, Grom Social has attracted kids and parents with the promise of a safe and secure environment where their kids can be entertained and can interact with their peers while learning good digital citizenship.
The Company also owns and operates Top Draw Animation, Inc., an award-winning animation company which produces animated content for Grom Social and other high-profile media properties such as Tom and Jerry, My Little Pony and Disney Animation's Penn Zero: Part-Time Hero. In addition, Grom Educational Services provides web filter services to up to an additional two million children across 3,700 schools and libraries, and Grom Nutritional Services is in the process of creating a line of healthy nutritional supplements for children.
For more information please visit Grom's website at www.gromsocial.com.
Safe Harbor Statement
This press release may contain forward looking statements which are based on current expectations, forecasts, and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially from those anticipated or expected, including statements related to the amount and timing of expected revenues and any payment of dividends on our common stock, statements related to our financial performance, expected income, distributions, and future growth for upcoming quarterly and annual periods. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors. Among other matters, the Company may not be able to sustain growth or achieve profitability based upon many factors including, but not limited to general stock market conditions. We have incurred and will continue to incur significant expenses in our expansion of our existing and new service lines, noting there is no assurance that we will generate enough revenues to offset those costs in both the near and long term. Additional service offerings may expose us to additional legal and regulatory costs and unknown exposure(s) based upon the various geopolitical locations where we will be providing services, the impact of which cannot be predicted at this time. All forward-looking statements speak only as of the date of this press release. We undertake no obligation to update any forward-looking statements or other information contained herein. Stockholders and potential investors should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements in this report are reasonable, we cannot assure stockholders and potential investors that these plans, intentions or expectations will be achieved. Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.