Grom Social Enterprises, Inc. Reports Financial Results For 2021 First Quarter Period

BOCA RATON, Fla., May 18, 2021 /PRNewswire/ -- Grom Social Enterprises, Inc. (OTCQB: GRMM) ("Grom" or the Company"), today reported operating and financial results for the first quarter period ending March 31, 2021. Investors are encouraged to read the Company's quarterly report on Form 10-Q when it is filed with the Securities and Exchange Commission, (the "SEC"), which will contain additional details, and will be posted at www.gromsocial.com

FIRST QUARTER FINANCIAL PERFORMANCE

• Revenues for the first quarter were $1.87 million compared to $1.29 million in the 2020 first quarter period, a 45% increase.
• Gross profit for the first quarter was $1.07 million, compared to $0.68 million in the prior year period, a 58% increase.
• Loss from operations narrowed to $710,849 compared to a loss of $1.06 million in the prior year period, a 33% improvement.
• Net loss for the first quarter was $2.31 million compared to $1.34 million in the prior year period.  The losses in the first quarter of 2021 were driven largely by non-cash charges related to the settlement of debt and amortization charges categorized as interest expense.
• On March 31, 2021, total stockholders' equity was $10.73 million, compared to $8.59 million on December 31, 2020, a 24.8% increase.

"We're showing substantial improvement in a number of important areas and continue to grow the enterprise."

Commenting on the results, Darren Marks, Chairman and Chief Executive Officer of Grom said, "We're very pleased with our performance in the first quarter.  As we exit the Covid-19 pandemic, we're showing substantial improvement in a number of important areas and continue to grow the enterprise.  The 45% increase in sales is a dramatic rebound and brings us almost entirely back to where revenues were just prior to the March 2020 shutdowns related to Covid-19.  In addition to the increase in revenues, we saw a 17.7% increase in new users and more than an 11% increase in online duration of visits and these KPIs continue to show recent improvement. Our net loss included a non-cash charge of nearly $950,000 related to the conversion of note holders, a move that enhanced our capital position despite the contribution to net loss.  In addition, a large portion of the increased interest expense in the first quarter was also non-cash and was related to the amortization of certain debt discounts.  Absent these non-cash charges, our net loss for the first quarter would have reflected a considerably smaller loss than that of the prior year period and highlights our improving financial performance."

Marks continued, "We have added key personnel and now boast an enhanced, industry savvy management team.  We recently announced our intention to acquire Curiosity Ink Media.  While the acquisition has not closed just yet, the company has already begun to generate positive momentum with the anticipated debut of Santa.com., an online hub where kids and adults can experience classic holiday joy in a one-stop, modern digital holiday venue.  Our improved financial results, the optimism arising from opening economies and other initiatives to improve our visibility with the investment community are all a result of management's focus on executing our business plan and building shareholder value."

About Grom Social Enterprises, Inc.

Grom Social Enterprises, Inc. is a growing social media platform and original content provider of entertainment for children under 13 years of age, which provides safe and secure digital environments for kids that can be monitored by their parents or guardians. The Company has several operating subsidiaries, including Grom Social, which delivers its content through mobile and desktop environments (web portal and apps) that entertain children, let them interact with friends, access relevant news, and play proprietary games while teaching them about being good digital citizens. The Company owns and operates Top Draw Animation,, which produces award-winning animation content for some of the largest international media companies in the world. Grom also includes Grom Educational Services, which has provided web filtering services for K-12 schools, government and private businesses. For more information, please visit.gromsocial.com.

Forward-Looking Statements

This press release contains statements, which may constitute "forward-looking statements.". Those statements include statements regarding the intent, belief, or current expectations of Grom and members of its management team as well as the assumptions on which such statements are based. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that may cause actual results to differ from those anticipated are discussed throughout the Company's reports filed with Securities and Exchange Commission which are available at www.sec.gov as well as the Company's web site at www.gromsocial.com. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.

GROM SOCIAL ENTERPRISES INC.
Consolidated Balance Sheets
	March 31,				December 31,
	2021				2020
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	581,950			$	120,300
Accounts receivable, net		725,649				587,932
Inventory, net		27,339				48,198
Prepaid expenses and other current assets		343,254				386,165
Total current assets		1,678,192				1,142,595
Operating lease right of use assets		528,348				602,775
Property and equipment, net		846,714				965,109
Goodwill		8,380,504				8,380,504
Intangible assets, net		5,469,610				5,566,339
Deferred tax assets, net -- noncurrent		531,557				531,557
Other assets		76,175				76,175
Total assets	$	17,511,100			$	17,265,054
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	778,111			$	1,126,114
Accrued liabilities		1,964,509				1,794,232
Advanced payments and deferred revenues		694,737				967,053
Convertible notes, net -- current		1,612,259				2,349,677
Loans payable -- current		192,739				189,963
Related party payables		142,516				143,741
Income taxes payable		102,559				102,870
Lease liabilities -- current		303,940				304,326
Total current liabilities		5,791,370				6,977,976
Convertible notes, net of loan discounts		292,083				897,349
Lease liabilities		253,076				328,772
Loans payable		67,235				95,931
Other noncurrent liabilities		369,597				367,544
Total liabilities		6,773,361				8,667,572
Commitments and contingencies		–				–
Stockholders' Equity:
Series A preferred stock, $0.001 par value. 10,000,000 shares authorized; zero shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		–				–
Series B preferred stock, $0.001 par value. 10,000,000 shares authorized; 9,215,884 and 5,625,884 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		9,215				5,626
Common stock, $0.001 par value. 500,000,000 shares authorized; 189,316,295 and 188,354,282 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		189,317				188,355
Additional paid-in capital		68,667,661				64,234,749
Accumulated earnings (deficit)		(58,107,489)				(55,791,914)
Accumulated other comprehensive income		(20,965)				(39,334)
Total stockholders' equity		10,737,739				8,597,482
Total liabilities and equity	$	17,511,100			$	17,265,054

GROM SOCIAL ENTERPRISES INC.
Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
	Three Months Ended March 31,				Three Months Ended March 31,
	2021				2020
Sales	$	1,875,284			$	1,292,239
Cost of goods sold		800,434				612,093
Gross profit		1,074,850				680,146
Operating expenses:
Depreciation and amortization		217,515				195,965
Selling and marketing		30,276				34,317
General and administrative		1,350,799				1,449,348
Professional fees		187,109				52,718
Stock based compensation		–				16,200
Total operating expenses		1,785,699				1,748,548
Loss from operations		(710,849)				(1,068,402)
Other income (expense)
Interest expense, net		(648,846)				(277,763)
Loss on settlement of debt		(947,179)				–
Unrealized loss on change in fair value of derivative liabilities		–				(767)
Other gains (losses)		(8,701)				98
Total other income (expense)		(1,604,726)				(278,432)
Loss before income taxes		(2,315,575)				(1,346,834)
Provision for income taxes (benefit)		–				–
Net loss		(2,315,575)				(1,346,834)
Convertible preferred stock beneficial conversion feature and other discounts accreted as a deemed dividend		–				–
Net loss attributable to common stockholders	$	(2,315,575)			$	(1,346,834)
Basic and diluted loss per common share	$	(0.01)			$	(0.01)
Weighted-average number of common shares outstanding:
Basic and diluted		189,827,352				168,649,145
Comprehensive loss:
Net loss	$	(2,315,575)			$	(1,346,834)
Foreign currency translation adjustment		18,369				33,454
Comprehensive loss	$	(2,297,206)			$	(1,313,380)

 

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SOURCE Grom Social Enterprises, Inc.