Item 1.01 Entry into a Material Definitive Agreement.
On June 21, 2021 (the "Closing Date"), Grom Social Enterprises, Inc., a Florida
corporation (the "Company"), sold an aggregate of 2,409,639 units (the "Units"),
at a price to the public of $4.15 per Unit (the "Offering"), each Unit
consisting of one share (the "Shares") of the Company's common stock, par value
$0.001 per share (the "Common Stock"), and a warrant to purchase one share of
Common Stock at an exercise price of $4.565 per share (the "Warrants"), pursuant
to an underwriting agreement, dated as of June 16, 2021 (the "Underwriting
Agreement"), between the Company and EF Hutton, division of Benchmark
Investments, LLC, as representative (the "Representative") of the several
underwriters named in the Underwriting Agreement. In addition, pursuant to the
Underwriting Agreement, the Company granted the Representative a 45-day option
to purchase up to 361,445 additional Units of Common Stock and Warrants, to
cover over-allotments in connection with the Offering, which the Representative
exercised with respect to Warrants exercisable for up to an additional 361,445
shares of Common Stock on the Closing Date.
The Shares and the Warrants were offered and sold to the public pursuant to the
Company's registration statement on Form S-1, as amended (File No. 333-253154),
filed by the Company with the Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "Securities Act"), which
became effective on June 16, 2021.
On the Closing Date, the Company received gross proceeds of approximately
$10,000,000, before deducting underwriting discounts and commissions of 8% of
the gross proceeds and estimated Offering expenses. The Company intends to use
the net proceeds from the Offering primarily for sales and marketing activities,
product development, acquisition of, or investment in, technologies, solutions,
or businesses that complement the Company's business, and for working capital
and general corporate purposes.
The Underwriting Agreement contains customary representations, warranties, and
covenants by the Company. It also provides for customary indemnification by each
of the Company and the underwriters for losses or damages arising out of or in
connection with the Offering, including for liabilities under the Securities
Act, other obligations of the parties and termination provisions.
Pursuant to the Underwriting Agreement, the Company also agreed to issue to the
Representative warrants (the "Representative's Warrants") to purchase up to a
total of 144,578 shares of Common Stock (6% of the shares of Common Stock sold
in the Offering), which Representative Warrants were issued to the
Representative on the Closing Date. The Representative's Warrants are
exercisable at $4.15 per share and have a term of five years. The
Representative's Warrants are subject to a lock-up for 180 days from the
commencement of sales in the Offering, including a mandatory lock-up period in
accordance with FINRA Rule 5110(e).
The total expenses of the Offering are estimated to be approximately $1,162,738,
which included the underwriting discounts and commissions and the
Representative's reimbursable expenses relating to the Offering.
On June 21, 2021, the Company also entered into a Warrant Agency Agreement with
Equiniti Trust Company ("Warrant Agency Agreement"), pursuant to which Equiniti
Trust Company agreed to act as warrant agent with respect to the Warrants.
The final prospectus relating to the Offering has been filed with the SEC and is
available on the SEC's website at http://www.sec.gov. Copies of the final
prospectus relating to the Offering may be obtained from the SEC's website or
from EF Hutton, division of Benchmark Investments, LLC, 590 Madison Avenue, 39th
Floor, New York, NY 10022, Attention: Syndicate Department, or via email at
syndicategroup@efhuttongroup.com or telephone at (212) 404-7002.
The foregoing summary of the terms of the Underwriting Agreement,
Representative's Warrants and Warrant Agency Agreement (including the Warrants)
do not purport to be complete and are qualified in their entirety by reference
to the full text of such documents, copies of which are attached hereto as
Exhibits 1.1, 4.1 and 10.1, respectively, to this Report, and are incorporated
herein by reference.
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Item 7.01. Regulation FD Disclosure.
On June 16, 2021, the Company issued a press release with respect to the
Company's entering into the Underwriting Agreement, the uplisting of its Common
Stock to Nasdaq and pricing of the Offering. A copy of this press release is
filed as Exhibit 99.1 to this Report and incorporated herein by reference. On
June 21, 2021, the Company issued a press release with respect to the closing of
the Offering. A copy of this press release is filed as Exhibit 99.2 to this
Report and incorporated herein by reference. The information in this Item 7.01,
including Exhibits 99.1 and 99.2 attached hereto, is being furnished and shall
not be deemed "filed" for the purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), nor shall it be deemed
incorporated by reference in any of the Company's filings under the Securities
Act, or the Exchange Act, whether made before or after the date hereof, except
as shall be expressly set forth by specific reference to this Report in such
filing.
Forward Looking Statements
This filing includes "forward-looking statements." All statements other than
statements of historical facts included or incorporated herein may constitute
forward-looking statements. Actual results could vary significantly from those
expressed or implied in such statements and are subject to a number of risks and
uncertainties. Although the Company believes that the expectations reflected in
the forward-looking statements are reasonable, the Company can give no assurance
that such expectations will prove to be correct. The forward-looking statements
involve risks and uncertainties that affect the Company's operations, financial
performance, and other factors as discussed in the Company's filings with the
SEC. Among the factors that could cause results to differ materially are those
risks discussed in the periodic reports the Company files with the SEC,
including the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2021, filed with the SEC on April 13, 2021. You are urged to
carefully review and consider the cautionary statements and other disclosures
made in those filings, specifically those under the heading "Risk Factors." The
Company does not undertake any duty to update any forward-looking statement
except as required by law.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
1.1 Underwriting Agreement, dated June 16, 2021, between the Company and
EF Hutton, division of Benchmark Investments, LLC, as representative of
the underwriters named therein
4.1 Representative's Warrant, dated June 21, 2021, issued to EF Hutton,
division of Benchmark Investments, LLC
10.1 Warrant Agency Agreement dated as of June 21, 2021, between the
Company and Equiniti Trust Company
99.1 Press release, dated June 16, 2021
99.2 Press release, dated June 21, 2021
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: June 22, 2021 By: /s/ Darren Marks
Darren Marks
Chief Executive Officer
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