Grom Social Enterprises signs $8M convertible notes financing agreement

Grom Social Enterprises entered into a securities purchase agreement with a single institutional investor pursuant to which the Company has agreed to sell two convertible promissory notes of the Company. with each Note having an initial principal amount of $4,000,000, for a price of $3,640,000 per Note. In connection with the purchase and sale of the Notes, the Company has agreed to issue to the Investor warrants to acquire a total of 3,028,146 shares of the Company’s Common Stock, par value $0.001 per share. The Transactions are subject to shareholder approval. The Company has agreed to secure Shareholder Approval for the SPA and the Transactions at a special meeting or via a written consent in lieu of a meeting. Pursuant to the SPA, the issuance of the Notes and the Warrants shall occur at two closings. The Warrant to be issued at the First Closing shall be a Warrant for 1,514,073 shares of Common Stock and shall have an exercise price of $1.78 per share of Common Stock. The Warrant to be issued at the Second Closing shall be a Warrant for 1,514,073 shares of Common Stock and shall have an exercise price of $0.001 per share of Common Stock. Subject to the terms and conditions set forth in the SPA, the First Closing shall occur on the first business day following the receipt of the Shareholder Approval, and the Second Closing shall occur thirty-five business days following the date that the Registration Statement has been declared effective by the Securities and Exchange Commission/ The shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants described above have not been registered under the Securities Act of 1933, as amended. They may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from such registration requirements. The securities were offered only to accredited investors. Pursuant to the Registration Rights Agreement, the Company is required to file a registration statement with the SEC covering shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants. The Company intends to use the net proceeds from the private placement for general working capital and administrative purposes.