Grom Social Enterprises Issues Shareholder Letter and Provides Corporate Update

BOCA RATON, Fla, Jan. 10, 2023 (GLOBE NEWSWIRE) — Grom Social Enterprises, Inc. (NASDAQ: GROM) (“Grom” or the “Company”), a media, technology and entertainment company dedicated to family-friendly programming, web filtering technology and safe social media for kids, today issued a letter to shareholders from Darren Marks, its Chairman and Chief Executive Officer.

Dear Fellow Shareholders,

On behalf of our entire organization, we hope that you enjoyed a magical holiday season and we wish you all health, happiness, and success in the New Year.

Fiscal 2022 was a foundational year for Grom as we fortified our core businesses to drive growth and future profitability. We remained steadfast to our values and primary objectives to provide safe, secure platforms and environments for kids to interact and explore; to deliver world class animation services; and to bring fun, novel, and authentic kids & family entertainment properties to life. The qualitative milestones that we achieved throughout the year established the base upon which we will build a successful enterprise, which is ultimately measured by the value that we create for our shareholders over the long term.

An Emerging Opportunity from Accelerating Changes in Industry Dynamics

We believe the social media landscape is undergoing a massive shift driven by consumer sentiment, and is now accelerating due to action taken by the Federal Trade Commission. Policy changes will soon create a lasting impact on our industry with an emerging opportunity for our Company. United States Senators Richard Blumenthal (D-CT) and Marsha Blackburn (R-TN) introduced the Kids Online Safety Act, which is comprehensive bipartisan legislation to enhance children’s safety online. While major technology companies continue to grapple with the growing concern around the safety and security of their platforms, especially when it comes to children, we remain focused on building a solution that families can trust.

Grom is well-positioned to reap the benefits of the growing trend of online child safety in the social media industry. We believe that Grom is the only fully Children’s Online Privacy Protection Act compliant social media application in the marketplace. This designation has always been of utmost importance to us; however, it will soon become invaluable.

Grom’s platform allows kids to interact with each other and share the content that they create, while viewing exclusive entertaining and educational content in a safe and secure digital environment. Our security features provide parents the ability to monitor and control their child’s access to content. Parental involvement required at all levels, ensuring maximum security. Furthermore, the proprietary security software that we utilize eliminates exposure to inappropriate content and ensures our users a kid-friendly experience.

Our Accomplishments in 2022

We are excited about the launch of our Santa.com ecommerce platform and are encouraged by its early results with an average of more than 11,000 daily visitors throughout this holiday season. It was a successful first step in our reimagination of the North Pole and holiday experience. The platform offers shoppers a boutique experience with whimsical products, curated gift lists, and specially-themed editorials and decorating tips for planning every aspect of the holiday season. The site also offers children a magical, immersive experience to explore the North Pole, play interactive games and activities, and get some one-on-one time with Santa Claus powered by an artificial intelligence-powered conversational video technology from StoryFile.

We released various diverse early childhood publications throughout the year. We believe debuting franchise properties as publications illustrates proof in concept and serves as a launch point for possible future publishing opportunities and brand extensions including consumer products, recurring animated series and feature films.

We expanded our relationship with Cepia LLC by entering into licensing agent agreement with the hit toy and entertainment franchise, Cats vs Pickles. The licensing partnership builds on our existing relationship to develop Cats vs Pickles into a widely distributed animated series and multiple publishing titles.

Top Draw Animation, our award-winning animation studio, secured millions of dollars in new production assignments during the year. Its success is driven by our leadership team’s collective experience and industry networks, a truly differentiating asset for Grom, and one which we are now leveraging to build a world-class family entertainment and media entity.

We broadened our educational product portfolio by partnering with tech management company, Radix Technologies, to offer Radix TeacherView, an award-winning, cloud-based management education solution, to schools and districts alongside our web filtering solution.

Initiatives for 2023 and Beyond

Our existing businesses and partnerships are primed for the next phase of growth in the markets in which we operate. As we look ahead to this year, we will continue to evaluate synergistic opportunities to augment our suite of offerings and advance our primary initiatives.

We are working to rebrand and relaunch the Grom mobile app, with a focus on improving the in-app user experience, and have identified unique features to develop and implement in 2023. We believe that these enhancements and additions will drive user traffic and pave the path to monetization first through traditional advertising and sponsorship models, and later through paid subscription.

Additionally, we will look to expand our Santa.com franchise through the broadening of our ecommerce platform and the development of original stories and content. We believe that Santa.com can become a one source destination for all holidays, celebrations, and special occasions. Our creators are dedicated to taking the guesswork out of planning, decorating, and gift giving.

Furthermore, we are actively engaged in advancing our Santa.com feature film project through continued production partnership and financing discussions. The flagship property will pave the path for many additional holiday themed animation and publication assets.

Moreover, we will continue to expand and develop our original content and franchise property portfolio. Our storytellers are actively involved in the design of a handful of feature films, among several other animated series and children’s publications. Original stories take time to unfold and we are incredibly excited about the progress that we have made. We have locked in several well-respected, Hollywood writers, directors, and producers to help shepherd our features, and maintain discussions with many more.

In the same light, we will continue to evaluate investment opportunities to participate in properties that are close to market. We believe that these opportunities will help to increase our prestige and reach globally.

What’s more, we plan to further capitalize on commercial, licensing, and partnership opportunities for revenue growth. These initiatives potentially offer us the ability to generate co-production fees and other intellectual property associated revenues in the nearer term.

Finally, we intend to vertically integrate pre- and post-production services into our animation operations by either acquisition or partnership. We believe by strategically repurposing our studio that we can penetrate new marketplaces, secure more meaningful contracts, and increase profit margins.

Our Commitment to Increased Transparency

We are expanding our commitment to the capital markets and our shareholders through enhanced investor relations initiatives to increase market awareness of our successes. We recently engaged investor relations specialists MZ Group to lead a comprehensive, strategic investor relations and financial communications program. As we continue to deploy our operational gameplan, we will also focus on raising our awareness to elevate our institutional profile throughout the investment community. We intend to expand our presence at key investment conferences and participate in non-deal roadshows with institutional investors. We believe that our increased interface with the capital markets will benefit all Grom stakeholders.

I am proud of our accomplishments and look forward to continued execution as we work to build a multi-generational legacy for kids & family entertainment and media.

On behalf of the entire Grom family, we thank you for your continued support.

Sincerely,

Darren Marks
Chairman & Chief Executive Officer

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