GROM Grom Social Enterprises Inc

Grom Social Enterprises, Inc. (NASDAQ: GROM), a provider of safe social media for kids, animation production services, original intellectual properties, and web filtering solutions used in schools, today issued a Letter to Shareholders. The letter was issued by Darren Marks, Grom’s Chairman and Chief Executive Officer. Investor relations information on Grom Social Enterprises, Inc. is available at https://investors.gromsocial.com.

To Our Esteemed Shareholders:On behalf of everyone at Grom Social Enterprises, Inc., let me begin by expressing our gratitude for your continued advocacy and support of Grom, and we hope that you and your loved ones are all safe, happy and healthy. Today, I’d like to take a few moments to offer you insights into Grom’s overall performance and share some exciting developments we’re currently pursuing that we believe will lay the groundwork for improved near- and long-term shareholder value.

Let’s start with the current valuation of Grom, which, in our estimation, is a poor reflection of our revenue potential, asset portfolio and market opportunities. Like other companies, our stock price is at the mercy of environmental factors that challenge our valuation including major indexes recording big losses, high inflation and rising interest rates – to name a few – all of which have a way of placing increased pressure on small cap stocks, Grom Social Enterprises included. Our position is straight-forward: We have a smart strategy, a deep bench of talented leaders and a roster of potentially lucrative intellectual properties (IP) in development that we anticipate could unlock new revenue streams. Collectively, we view these favorable conditions as the bedrock foundation of our organization that will allow us to cultivate significant growth potential. Now is the perfect time to express our vision and bring further clarity to our mission that challenges the current narrative and underscores how undervalued GROM is at an $8.1MM market cap.

In a nutshell, these are exciting times at Grom. Our uplisting to NASDAQ last June was followed weeks later by the acquisition of Curiosity Ink Media, immediately making us an emerging player in kids and family entertainment. The creative energy pulsing through Curiosity, combined with our mission to provide top-shelf, kid-first content, aligns perfectly with our legacy assets: Grom Social, Top Draw Animation, and Grom Educational Services.

Three takeaways that are driving the new Grom Social Enterprises:

Curiosity Ink Media Can Play a Vital Role in Reversing Fortunes of Programmers

As new subscribers are a top priority for most subscription video on demand (SVOD) providers (like Netflix, Amazon, Hulu, etc.), many are waking up to the opportunity that original content for preschoolers and animation represents. Today’s millennial parents are finally giving up their parents’ passwords and opting for their own subscriptions. These consumers are more likely to incur the expense of a subscription if they feel that the programming offered by the service includes content for their kids. In the Curiosity model, our aim is to make true partners in the development of our programming by sharing the investment costs of bringing shows to life through partners who can provide the right backing (marketing, PR and positioning) and platforming each show for success. An animated or preschool hit can lay the groundwork for other revenue streams (consumer products, international distribution, licensing, live tours, etc.) and bring SVODs new ancillary revenue that helps offset losses from subscriber erosion. Curiosity’s Russell Hicks’s proven biography in cultivating hits like SpongeBob SquarePants, Dora the Explorer and Paw Patrol make him the perfect team captain to lead our crew with the creative energy and business acumen to position Grom and Curiosity’s new original IP for success.

Top Draw Is Now a Hollywood Player

Grom’s acquisition of Top Draw Animation (TDA) in 2016 proved to be a stellar move as the studio has served as a consistent and reliable revenue source for Grom. TDA’s studio in the Philippines boasts nearly 400 animation pros, who for the last 20 years, have delivered premium animation to programmers around the world. TDA now has a meaningful presence in Hollywood and managing it alongside Curiosity allows us to offer its services to key decision makers – many of whom now occupy C-Suite roles and are longtime colleagues and friends of Russell Hicks – in a streamlined approach. Previously, TDA’s studio in Manila gave it limited access to animation producers and obscured its considerable strengths. Having TDA in the center of the entertainment universe, we believe, heightens the opportunity for even more lucrative assignments.

Protecting Kids on Social Has Never Been So Vital; Grom is Ready

The world has finally woken up to the importance of protecting kids in the digital universe. Every day, Grom is keeping our kids safe, both online and in school. Lawmakers nationwide and globally are taking major steps to hold the most popular social media companies accountable for their lax oversight in protecting kids from harmful content. Although most apps bar kids under 13 without parental consent, unfortunately, the age rule is easy to circumvent as millions of kids still find a way onto these apps without their parents’ knowledge. Grom, aimed solely at users who are under the age of 13, has been quiet lately…here’s why. For the past several months, we have been hard at work behind-the-scenes to refresh the Grom app and make it even more appealing to kids. We aim to serve them with many of the things they love about social media, but – and this is what sets Grom apart – is just for kids, offers an environment that filters inappropriate content (such as bullying and harsh language), has live monitoring and invites parents to play an active role in keeping kids safe. In Q4, Grom Social will begin to roll out the new look, great new features and fun content that you’ll hear more about in the coming weeks. Let’s face it, today is one of the most challenging times in memory to grow up and today’s kids have paid a heavy toll during the global pandemic. Distance learning, loss of play dates, canceled sports and stay-at-home orders have taken their toll. Kids have earned a social media opportunity all their own and we aim to offer it to them through the fun, escapist and tech savvy updated Grom app we’re excited to share soon.

Our commitment to protecting kids doesn’t stop on social programs, however. Through our Grom Educational Services division, we bring schools and learning environments nationwide our NetSpective Web filtering solutions, which helps safeguard students K-12 from harmful content and inappropriate sites when on campus or when using school-issued devices or Wi-Fi. Taking it further, Grom helps ensure that kids learn about the importance of safety through our newly updated Digital Citizen Licensing (DCL) course that schools rely on to stay within compliance of the 2000 congressional Children’s Internet Privacy Act (CIPA), which ties e-rate funding to schools and districts that demonstrate their students have been taught – and have a rich understanding – of the importance of digital safety.

As you can see, the capital raised last year with the help of our banker, EF Hutton, is being put to very good use as we support these top priorities and execute against the initial phase of our business plan. As we have expressed at every turn, we are smartly investing in original IP and other initiatives and have embarked on setting all of Grom Social Enterprises up for even greater success.

Here is a quick snapshot of some of the key initiatives currently underway across Grom’s subsidiaries:

• Santa.com - This virtual North Pole is back this year, this time with a robust e-commerce shop that will engage kids and grown-ups alike and allow us to tap into revenue as a storefront host where consumers can shop for all their holiday needs. Concurrently, we are also hard at work on the Santa.com animated holiday musical special – slated for Christmas 2024 – in which Santa’s efforts to automate his gift-giving is thrown into peril and forces him to save Christmas the old-fashioned way. Try to stay off his naughty list as we believe this special musical, and the site will be two holiday traditions everyone will love.

• Thunderous - In April, our first IP to come out of Curiosity – Thunderous – hit bookstores everywhere and we are incredibly pleased with its robust sales. By late summer, we will share more about what comes next for this franchise about an Indigenous American teenager who suddenly learns that her survival lies in the lessons gleaned from her family’s rich heritage.

• Cats vs. Pickles - Some of you may already be familiar with Cats vs. Pickles, the animated, short-form YouTube sensation that has attracted millions of fans. In May, Cepia LLC, the parent company of Cats vs. Pickles, named Curiosity as the property’s licensing agent of record, marking a new era for Grom. Curiosity is chomping at the bit to help grow Cats vs. Pickles globally and cultivate yet another new revenue stream for Grom.

• Top Draw Animation – Continues to secure several lucrative assignments that have kept the state-of-the-art studio’s army of animation pros busy and productive. A strong Hollywood connection is proving beneficial.

• The Pirate Princess -- Last year, we told you about our feature film in development, The Pirate Princess, an animated musical feature about a deposed princess whose fate delivers her to a remote island populated with a band of pirates who raise her and teach her everything they know about survival. Both The Pirate Princess and Thunderous are currently being pre-pitched to studios and distributors as we speak.

• The Legion of Forgettable Supervillains is a fun take on the classic superhero books and debuts in comic stores nationwide today and will be followed by distribution in early August wherever books are sold. The plot line centers on a band of failed superheroes who decide to pivot and try their luck as villains.

• MR. ZIP - An icon of the Baby Boomer era, MR. ZIP was first introduced by the US Postal Service to encourage wider use of the ZIP code in 1963. Well, he is back, and Curiosity has been tasked with mounting his awaited return starting with a book that promotes the fun of STEM and STEAM learning for kids. MR. ZIP will be on shelf at booksellers nationwide beginning in Q4 and may serve as a launchpad for future franchise expansion.

• Baldwin’s Big Adventure -- This animated series in development for the preschool market follows a young switcher train who joins his friend for adventure on the rails to reunite with his father. This premium and graphically rich animated series is perfect for programmers ready to cultivate a potentially lucrative preschool hit and is the brainchild of Russell Hicks, who proven successes at Nickelodeon provide a valuable roadmap to Baldwin and all Curiosity originals.

To fortify our vision, we have enlisted the aid of talented leaders from the worlds of advertising, finance, toys, e-commerce and entertainment, two of whom helped lead Nickelodeon and Nick at Nite into prized assets that, for decades, helped define the Paramount (formerly ViacomCBS) portfolio. Capitalizing on their collective experience, we aim to leverage their considerable learnings as we champion the type of family programming global entertainment providers need to win.

Let’s meet the team helping to lead Grom Social Enterprises, Inc.:

• As CEO, my 30+ years of leading 4 publicly traded companies will guide Grom’s success as we strive to enhance shareholder value.
• Russell Hicks brings 40 years of experience – from Disney to Cartoon Network, to Nickelodeon and now, Curiosity Ink Media and TDA – to place rich storytelling and premium content front and center and win with consumers everywhere.
• Paul Ward’s 23 years at Viacom helped upconvert Nick at Nite from a rerun channel into a family-first programming powerhouse. He has the blueprints for success and brings them to Grom every day as we pursue success with the kids and family audience.
• Jared Wolfson’s 20+ years of deal making, studio experience and marketing expertise make him the perfect strategic leader to grow TDA and solidify Curiosity’s imprint on the entertainment industry.
• Former ad agency exec, Brent Watts - who helped build SpongeBob, Shrek, KungFu Panda and Spiderman into global franchises - brings his consumer marketing expertise to all our key assets as we attain further brand recognition.
• Jon Rosenberg’s 25+ years in publishing serve to benefit all of Grom, as books remain a strong pipeline to consumers and establish vital emotional connections to grow successful IP franchises.
• Jason Williams’s 25 years in finance, strategic planning, corporate governance, and M&A track record will guide Grom as we pursue new revenue opportunities.
• As VP of Operations, Ralph Sabella brings over 25 years of operational and entrepreneurial experience to his role as head of Human Resources, a position he gained in 2016.
• Christian Morales-Reyes brings 13 years of public accounting experience, to oversee Grom’s overall accounting financial reporting and compliance. His background, which includes training and advising large complex audit engagements on matters related to compliance with SEC rules, makes him an indispensable part of the Grom team.

In closing, I hope this overview has provided you with even more insight into how we’re dedicated, qualified, and energized by the prospect of entertaining kids and families all over the world. Our shared vision is to bring Grom Social Enterprises, Inc., and all of our subsidiaries to new heights that we hope achieves the type of shareholder value you richly deserve. We are so lucky and grateful to have you as part of the Grom family as we work hard to make you proud.

Warmly,

Darren Marks

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 the Securities and Exchange Commission which are available at www.sec.gov as well as the Company’s website 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.

Media Contact:Marianne RomanoGrom Social Enterprises, Inc.media.contact@gromsocial.com  (818) 681-0849

Investor Contact:Colette EymonttTraDigital IRcolette@tradigitalir.com+823-331-2399

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/0db82080-0312-46d6-962a-22f301f236c1