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Item 5.07
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Submission of Matters to a Vote of Security Holders.
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On November 5, 2021, Grom Social Enterprises,
Inc., a Florida corporation (the “Company”), filed with the SEC, and distributed to all of the Company’s shareholders
of record as of October 7, 2021, a Notice and Consent Solicitation on Schedule 14A (the “Consent Solicitation”). The Consent
Solicitation, which was approved by the Company’s board of directors, sought shareholder approval for the closing of the second
tranche of a financing (the “Financing”) with L1 Capital Global Opportunities Master Fund (the “Investor”). The
consents were required because Nasdaq Rule 5635 requires that a company obtain approval from its shareholders prior to the issuance of
shares of common stock, or any securities convertible into or exercisable for common stock, that in the aggregate equals or
exceeds 20% of the number of shares of common stock outstanding, or total voting power, prior
to such issuance.
The Consent Solicitation requested consent of
the shareholders to approve the issuance of up to (i) a 10% Original Issue Discount Senior Secured Convertible Note in the principal amount
of $6,000,000, convertible into shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) at
$4.20 per share, due 18 months from issuance (the “Second Tranche Note”), (ii) a five-year common stock purchase warrant to
purchase 1,041,194 shares of Common Stock at $4.20 per share (the “Second Tranche Warrant”), and (iii) shares of Common Stock
upon conversion or redemption of the Second Tranche Note, and upon exercise of the Second Tranche Warrant in accordance
with their respective terms, as the second tranche of a private placement offering totaling up to $10,400,000 (the “Proposal”).
Effective as of November 26, 2021, the Company
obtained the necessary consents for the approval of the Proposal from shareholders holding 16,509,297 votes, or approximately 60.90% of
the Company’s voting power, comprised of (i) 1,988,501 shares of Common Stock and (ii) 9,325,309 shares of Series C 8% Convertible
Preferred Stock, par value $0.001 per share (the “Series C Stock”), which vote on a 1.5625-to-1 basis with the Common Stock,
or the equivalent of 14,570,796 shares of Common Stock. 49,378 shares of Common Stock voted against the proposal and 1,410 shares abstained.
As a result of the approval of the Proposal,
the Company may now conduct a closing of the second tranche of the Financing, for the Second Tranche Note in the principal amount of
up to $6,000,000 and 1,041,194 Second Tranche Warrants. As previously reported, the closing of the second tranche of the Financing
is conditioned upon, among other conditions, (i) the registration for resale of the shares issuable upon conversion of the
convertible promissory note and common stock purchase warrants issued to the Investor in the first tranche of the Financing
(which condition has been satisfied), and (ii) a limitation on the principal amount of notes that may be issued in the Financing to
up to an aggregate amount that is no more than 25% of the Company’s market capitalization as reported by Bloomberg L.P., which
requirement may be waived by the Investor. If the foregoing 25% amount is exceeded, the parties may agree to issue such lesser
amount in the second tranche of the Financing that does not exceed such threshold.
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 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. 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.
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.
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GROM SOCIAL ENTERPRISES, INC.
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Date: November 30,
2021
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By:
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/s/ Darren Marks
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Darren Marks
Chief Executive Officer
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