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UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
Date of Report (Date of
earliest event reported): July
18, 2024
GROM SOCIAL
ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Florida |
001-40409 |
46-5542401 |
(State or other jurisdiction
of incorporation) |
(Commission
File Number) |
(IRS Employer
Identification No.) |
2060 NW Boca Raton Blvd., Suite #6
Boca Raton, Florida 33431
(Address
of principal executive offices)
Registrant’s telephone number, including area code: (561)
287-5776
Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Company under any of the following provisions:
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbols |
Name of each exchange on which registered |
Common Stock, par value $0.001 |
GROM |
The Nasdaq Capital Market |
Warrants
to purchase shares of Common Stock, par value $0.001 per share |
GROMW |
The Nasdaq Capital Market |
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1934 (§240.12b-2 of this chapter).
Emerging growth
company ☐
If an emerging growth
company, indicate by check mark 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 13(a) of the Exchange Act. ☐
Item 1.01 |
Entry Into Material Definitive Agreement. |
As previously reported, on November 9, 2023, Grom
Social Enterprises, Inc., a Florida corporation (the “Company”), entered into a Securities Purchase Agreement, as amended
on November 20, 2023 and March 11, 2024 (the “November 2023 SPA”) with Generating Alpha Ltd., a Saint Kitts and Nevis
Corporation (the “Generating Alpha”), pursuant to which the Company has agreed to sell two convertible promissory notes
of the Company (the “November 2023 Notes”), with each November 2023 Note having an initial principal amount of $4,000,000,
for a price of $3,640,000 per November 2023 Note. In connection with the purchase and sale of the November 2023 Notes, the Company has
agreed to issue to Generating Alpha warrants to acquire a total of 3,028,146 shares of the Company’s Common Stock, par value $0.001
per share (the “Common Stock”).
Also as previously reported, on April 1, 2024,
the Company entered into a Securities Purchase Agreement, as amended on April 24, 2024 (the “April 2024 SPA,” and together
with the November 2023 SPA, the “Purchase Agreements”) with Generating Alpha, pursuant to which the Company has agreed
to sell a convertible promissory note of the Company (the “April 2024 Note”), having an initial principal amount of
$650,000, for a price of $520,000. In connection with the purchase and sale of the April 2024 Note, the Company has agreed to issue to
Generating Alpha a common stock purchase warrant to acquire a total of 962,962 shares of the Common Stock.
On July 18, 2024, the Company entered into a consent
and waiver (the “Waiver”) to November 2023 SPA and April 2024 SPA with Generating Alpha, pursuant to which Generating
Alpha consented to a proposed financing that the Company intends to pursue (the “Financing”) and waived any and all
restrictions or prohibitions in the Purchase Agreements and all other transaction documents relating to the Financing. As consideration
for the Waiver, the Company agreed to the following: (i) 35% of net proceeds received from the Financing will be utilized to repay the
principal balances outstanding on the December 2023 Note and April 2024 Note, and the repayments are subject to the 130% optional redemption
right under Section 4.1 of the December 2023 Note and the April 2024 Note; (ii) the Company shall use its best efforts to obtain approval
of The Nasdaq Stock Market LLC (“Nasdaq”) to reset the conversion floor price of the November 2023 Notes to 20% of
Nasdaq Official Closing Price as of the date of the Waiver, (iii) a one-time issuance of a pre-funded warrant (the “Pre-Funded
Warrant”) to purchase $750,000 worth of shares of Common Stock at an exercise price of $0.0001 to Generating Alpha, in a form
substantially similar to the warrants issued pursuant to the April 2024 SPA, and (iv) waive the requirement to reinvest a percentage of
any realized net profit as defined under Section 6.09 of the November 2023 SPA.
Item 3.02 |
Unregistered Sales of Equity Securities. |
The information contained in Item 1.01 above is
incorporated herein by reference.
The Pre-Funded Warrant described in Item 1.01
above will be offered and sold in reliance upon an exemption from registration pursuant to Section 4(1) and Regulation D of
the Securities Act of 1933, as amended.
The foregoing description of the Waiver does not
purport to be complete and is qualified in its entirety by reference to the full text of such documents. The Waiver attached hereto as
Exhibit 10.1 and is incorporated herein by reference.
Item 9.01 |
Financial Statements and Exhibits. |
(d) Exhibits.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
GROM SOCIAL ENTERPRISES, INC. |
|
|
|
|
Date: July 22, 2024 |
By: |
/s/ Darren Marks |
|
|
Darren Marks
Chief Executive Officer |
Exhibit 10.1
![](https://www.sec.gov/Archives/edgar/data/1662574/000168316824004988/image_001.jpg)
July 18, 2024
Sent via Email
Generating Alpha Ltd.
Attention: Dave Martin
Re: Grom Social Enterprises, Inc., a Florida corporation
(“we” or the “Company”) Financing Waiver
Dear Dave,
Reference is made
to (i) that certain Securities Purchase Agreement by and between the Company and Generating Alpha Ltd., a Saint Kitts and Nevis corporation
(“Generating Alpha”) dated as of November 9, 2023 and amended on November 20, 2023 and March 11, 2024 (such Securities
Purchase Agreement, together with all amendments, modifications, substitutions, or replacements thereof, collectively referred to as the
“2023 SPA”) and (ii) that certain Securities Purchase Agreement by and between the Company and Generating Alpha dated
as of April 1, 2024, as amended on April 24, 2024 (the “2024 SPA,” together with the 2023 SPA and all amendments, modifications,
substitutions, or replacements thereof, collectively referred to as, the “Purchase Agreements”)
As you are aware,
the Company intends to pursue a financing pursuant to the terms set forth in the attached Term Sheet (the “Financing”).
Pursuant to this
letter agreement (this “Letter Agreement”), in respect of the Financing, the Company is requesting Generating Alpha’s
consent to the Financing and the waiver of any and all restrictions or prohibitions in the Purchase Agreements and all other transaction
documents relating to the Financing (the “Consent and Waiver”), which consent and waiver shall not be effective unless
and until the Financing is consummated (for the avoidance of doubt such consent and waivers shall be one time consent and waivers only
in respect of the Financing and shall not be applicable to any subsequent transaction unless separately agreed between the Company and
Generating Alpha in a writing subsequent to this Letter Agreement signed by the parties hereto). As consideration for the Consent and
Waiver, the Company agrees to (i) use 35% of the net proceeds received from the Financing to pay off the notes issued pursuant to the
Purchase Agreements, which will be subject to a 130% redemption premium (for example purposes, if the Company is paying off $100,000 of
debt, they will pay Generating Alpha $130,000 for that $100,000 debt amount). The investors for the Financing shall be deposit all funds
with EF Hutton. Upon receipt of the funds, EF Hutton shall apply 35% of all funds received and send a wire to the designated bank account
provided to them via email by Generating Alpha Ltd.. , (ii) the Company shall use their best efforts to obtain Nasdaq’s approval
to reset the conversion floor price of the notes issued to Generating Alpha in the 2023 SPA, to 20% of Nasdaq Official Closing Price as
of the date of this Letter Agreement, pursuant to an amendment in the form annexed hereto, (iii) the Company shall issue Generating Alpha
warrants to purchase $750,000 worth of the Company’s common stock, with cashless exercise, an exercise price of $0.0001 per share,
in a form substantially similar to the warrants issued pursuant to the 2024 SPA, and (iv) waive the requirement to reinvest a percentage
of any realized net profit as defined under Section 6.09 of the 2023 SPA.
By signing below, you hereby represent on behalf
of Generating Alpha that you agree to the above items.
This Letter Agreement
contains the entire understanding between and among the parties and supersedes any prior understandings and agreements among them respecting
the subject matter of this Letter Agreement. This Letter Agreement shall be governed by and construed in accordance with the provisions
of the Purchase Agreements. In case any provision of this Letter Agreement shall be held to be invalid, illegal or unenforceable, such
provision shall be severable from the rest of this Letter Agreement, and the validity legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
The parties hereby
consent and agree that if this Letter Agreement shall at any time be deemed by the parties for any reason insufficient, in whole or in
part, to carry out the true intent and spirit hereof or thereof, the parties will execute or cause to be executed such other and further
assurances and documents as in the reasonable opinion of the parties may be reasonably required in order more effectively to accomplish
the purposes of this Letter Agreement. By signing below, the parties hereto represent and agree that, prior to executing this Letter Agreement,
they have had the opportunity to consult with independent counsel concerning the terms of this Letter Agreement.
This Letter Agreement
may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one
and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including .pdf or any electronic signature complying
with the U.S. federal ESIGN Act of 2000, for example, www.docusign.com) or other transmission method and any counterpart so delivered
shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
Please indicate
confirmation of the terms provided herein by executing and returning this Letter Agreement in the space provided below.
[SIGNATURE PAGE FOLLOWS]
Very truly yours,
Grom Social Enterprises, Inc.
By: /s/ Jason Williams_____________
Name:
Jason Williams
Title:
Chief Financial Officer
Acknowledged and Agreed:
Generating Alpha Ltd.
By: /s/ Maria Cano_______________
Name: Maria
Cano
Title: Director
[Signature Page to Waiver]
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