GROM SOCIAL ENTERPRISES, INC. Item 1.01 Entry Into Material Definitive Agreement.
As previously reported, on
The Purchase Agreement, as amended on
Closing of Second Tranche;
On
In connection with the Second Tranche Closing, the Company paid to EF Hutton a
fee of
Second Tranche Note Terms
The Second Tranche Note is convertible into common stock of the Company (the
"Common Stock") at a rate of
If the Company elects to repay the entire Second Tranche Note by issuance of shares, presuming recent stock prices, an aggregate of approximately 1,201,373 shares may be issued over 16 months plus interest.
Conditions to Repayment of Note with Common Stock
The Company's right to make monthly payments in stock in lieu of cash for the
Second Tranche Note is conditioned on certain conditions (the "Equity
Conditions"). The Equity Conditions required to be met each month in order to
redeem the Second Tranche Note with stock in lieu of a monthly cash payment,
among other conditions set forth therein, include without limitation, that a
registration statement be in effect with respect to the resale of the shares
issuable upon conversion or redemption of the Second Tranche Note (or, that an
exemption under Rule 144 is available), that no default be in effect, that the
average daily trading volume of the Company's common stock would have to be at
least
2 Other Note Terms
Other provisions of the Second Tranche Note, which is similar in terms to the
First Tranche Note, include that the Second Tranche Note Conversion Price is
subject to full anti-dilution price protections in the event of financings that
are below the Conversion Price with a floor of
In the event of an Event of Default as defined in the notes, if the stock price is below the Conversion Price at the time of default and only for so long as a default is continuing, the Notes would be convertible at a rate of 80% of the lowest VWAP in the ten prior trading days, provided, that if the default is cured the default conversion rate elevates back to the normal Conversion Price.
Warrant Terms
As part of the Second Tranche Closing, the Company issued Second Tranche
Warrants exercisable for five years from the date of issuance, at
The foregoing description of the Second Tranche Note and Second Tranche Warrant
are a summary only and does not purport to be complete and, is qualified in its
entirety by reference to the full text of such documents, the forms of which is
attached hereto as Exhibit 10.1 and 10.2 respectively, and incorporated herein
by reference. The Purchase Agreement and First Tranche Note and Warrants were
described and filed as exhibits to the
Lockup Agreements
The Purchase Agreement provides for the continuation of the existing lockup
agreements entered into between various executive officers, directors through
Registration Rights
The Company is required to file a registration statement with the
The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such document, the form of which is attached hereto as Exhibit 10.3 and incorporated herein by reference.
Security Agreement
The Second Tranche Note continues to be subject to (i) the repayment and . . .
Item 3.02 Unregistered Sales of
The information contained in Item 1.01 above is incorporated herein by reference.
The Notes and Warrants described in Item 1.01 above were 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.
Item 7.01 Regulation FD Disclosure.
On
The information in this Item 7.01, attached hereto, is being furnished as exhibit 99.1 hereto, 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 filing of ours 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 Form 8-K in such filing.
Cautionary 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
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Exhibit No. Description
10.1 10% Original Issue Discount Promissory Note datedJanuary 20, 2022 , betweenGrom Social Enterprises, Inc. , aFlorida corporation (the "Company"), andL1 Global Capital Master Fund ("L1 Global"). 10.2 Common Stock Purchase Warrant to purchase 303,682 shares of the Company's Common Stock issued to L1 Global, datedJanuary 20, 2022 . 10.3 Registration Rights Agreement, dated as ofJanuary 20, 2022 , between the Company and L1 Global. 104 Cover Page Interactive Data File formatted in inline XBRL. 4
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:
Darren Marks Chief Executive Officer 5
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