Current Report Filing (8-k)
December 06 2017 - 5:06AM
Edgar (US Regulatory)
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form
8-K
Current Report Pursuant to Section 13 or 15(d)
of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 3, 2017
GROM SOCIAL ENTERPRISES, INC.
(Exact name of small business issuer as specified
in its charter)
Florida
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000-
55585
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46-5542401
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(IRS Employer ID No.)
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2060 NW Boca Raton Blvd., #6
Boca Raton, FL 33431
(Address of principal executive offices)
561-997-7270
(Issuer’s Telephone Number)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2
of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by
check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive
Agreement
On December 3, 2017, we executed a Memorandum
of Understanding (“MOU”) with Fyoosion LLC, a Delaware limited liability company (“Fyoosion”), to acquire
all of its assets, including the following:
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all
of Fyoosion’s worldwide right, title and interest in all “Fyoosion LLC” trademarks (registered or common law),
service marks, trade names, service names, brand names, all trade dress rights, logos, Internet domain names and corporate names
and general intangibles of a like nature, together with the goodwill associated with any of the foregoing, and all pending applications,
registrations and renewals thereof, owned or used by Fyoosion, and all variations of the “Fyoosian LLC” trademarks
and trade names (collectively, the “Marks”);
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all
technology (“Technology”), including all designs, methods, techniques, ideas, know-how, research and development,
technical data, programs, materials, specifications, processes, inventions (patentable or unpatentable), patents, creations, improvements,
works of authorship and other similar materials, and all recordings, drawings, reports, analyses, and other writings, and other
tangible embodiment of the foregoing, in any form whether or not specifically listed herein, and all related technology, that
are used in, incorporated in, embodied in, displayed by or relate to, or are used or useful in the design, development, reproduction,
maintenance or modification of, any of the products developed, manufactured, marketed or sold by Fyoosion using the Marks,
whether work in process, pending application or in final form;
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all
copyrights and registrations and applications therefor and works of authorship, and mask work rights relating to goods sold bearing
the Marks;
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patterns, molds, tasks, computer aided designs (CADs), samples and designs owned or used by
Fyoosion with respect to the Marks;
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all
books, records or files related to the Marks,
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all
artwork, photography and archival material (including but not limited to advertising materials, copy, commercials, catalogues,
images, and artwork, as well as brand books, samples, and other material showing the heritage of Fyoosion) owned by
Fyoosion related to the Marks;
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all
visitor tracking codes and analysis, including but
not limited to hits, page(s) viewed and unique visitors to the
Fyoosion
website (the
“Website”) on a daily, weekly and monthly basis, and all related charts, graphs and tools, records relating to
third parties Fyoosion pays to advertise the Website, and records relating to third parties who place advertising on the
Website, whether paid or gratis;
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email
lists and addresses related to the business of Fyoosion utilizing the Marks; and
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records
and documents, whether in hard copy or electronic, including all material files maintained by Fyoosion’s attorney(s),
to the extent relating to any of the foregoing.
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The effectiveness of the MOU is dependent upon
our ability to negotiate acceptable terms of repayment with the Fyoosion creditors, of which there is no assurance, and the completion
of our due diligence. These liabilities aggregate approximately $300,000 and are owed to 12 separate creditors. We intend to settle
these liabilities by issuing shares of our common stock. If we are unable to reach an agreement with all of these creditors we
have the right to terminate the MOU.
If we are able to reach an agreement with these
creditors we have agreed to issue an aggregate of 300,000 shares of our Common Stock in consideration for the Assets. These shares
will be subject to a leakout agreement limiting the number of shares that can be sold, limiting the number of shares that can be
sold during the one year period following effectiveness of the agreement to 25% of the daily average trading volume during the
period prior to such sale.
The MOU also provides that up to an additional
200,000 shares of our “restricted” Common Shares can be earned and will become payable to Fyoosion only if the proposed
business utilizing the Assets attains $125,000 in pre-tax earnings before interest, taxes, depreciation and amortization (“EBITDA”)
calculated using generally accepted accounting principles (“GAAP”) for the one-year period post-closing. This calculation
shall be based upon Fyoosion stand-alone performance excluding any of our intercompany revenue and expense, and will not include
any corporate fees or charges.
We have also agreed to retain two of the members
of Fyoosion as employees if the MOU becomes effective.
We intend to use Fyoosion’s proprietary
marketing software across all of our subsidiary businesses including our social media platform to help increase awareness as well
as in our animation, webfiltering, and nutritional product business being developed.
We intend to file another report on Form 8-K
to advise whether we were successful in reaching an agreement with the creditors, or failed to do so, prior to the December 31,
2017 deadline.
A copy of the applicable MOU is attached as
Exhibit 10.5 hereto. The value of the acquired assets does not require that we file any audited financial statements relating to
these assets as part of this report.
Item 7.01 Regulation FD Disclosure
Our Press Release relating to the filing of
our initial listing application for the NASDAQ Capital Markets is attached as Exhibit 99.3 and is hereby incorporated.
Item 8.01 Other Events
On December 5, 2017, we filed our initial listing
application to trade our Common Stock on the NASDAQ Capital Markets. There are no assurances that our application will be successful.
Item 9.01 Financial Statements and Exhibits
(b) Exhibits. The following exhibits are included
in this report:
SIGNATURES
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.
Dated: December 5, 2017
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GROM SOCIAL ENTERPRISES, INC.
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(Registrant)
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By:
/s/ Darren Marks
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Darren Marks, Chief Executive Officer
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