A Promising Children’s Entertainment Company with Big Plans, Run By Industry Veterans

By Lisa Thompson


Contemporary off a December $5. million cash elevate and reverse split in December, Grom Social Enterprises (NASDAQ:GROM) is poised to capitalize on a range of promising initiatives around the next quite a few months. The corporation now has 3.2 million in fully diluted shares and trades at a market place capitalization of $5.5 million. It has about $4 million in funds soon after its December sale of equities and $590,000 in credit card debt generating its organization value only $2.1 million. It is employing its new funds to fund new tasks which include furthering the company’s wholly-owned primary holiday break eCommerce internet site, Santa.com a new preschool entertainment franchise entitled Hey Fuzzy Yellow! that has financing and distribution commitments from many worldwide programming expert services upconverting its animation manufacturing studio to supply equally pre- and write-up-output capabilities and a comprehensive overhaul of its COPPA-compliant children social media app to welcome youngsters under 13, whose social media alternatives will be minimal due to pending legislation. Grom is on the precipice of maximizing its significant assets in its 4 subsidiaries and is bolstered by a roster of proven executives in kids’ and family enjoyment.

Its companies all function in tandem to serve the entertainment and social media demands of youngsters and their family members. Grom’s educational company blocks inappropriate web sites on university campuses throughout the US and serves as a platform that introduces children to the company’s unique business, Grom Social, the social media app completely for kids underneath the age of 13, who are not permitted on most social media devoid of parental consent. Millions of youngsters protected accounts with no their parent’s expertise but pending legislation – with rare bipartisan assistance – aims to safeguard little ones on social media and penalize providers that have lax indicator-up with large fines and improved govt scrutiny.

Grom Social is ready, and market tailwinds are in the company’s favor as it operates very well within compliance with COPPA and expected legislation to go on to secure young children working with its application. With restricted social media choices, Grom aims to welcome youngsters with open up arms by way of its new interface and user working experience created to offer you children much more of what they like about applications meant for older buyers. Numerous huge media companies – Facebook/Meta and YouTube, to identify a couple – have been fined hundreds of tens of millions for not safeguarding youngsters on-line and promoting their facts. Grom Social never ever has and under no circumstances will share user info. Moreover, what sets Grom aside from rivals is that the app calls for parental indicator-up for every boy or girl, is fully secure to reduce exposure to damaging content material, has are living checking, and invitations moms and dads to enjoy an active purpose in holding young children risk-free on social media. The redesign, slated to be unveiled later on this calendar year, aims to quickly cultivate a new audience and give advertisers a platform to achieve a demo that is pure children.

About the previous two decades, Grom has expanded and gone through a sizeable transformation, which includes bringing on several seasoned field executives to lead its organizations. The management team is a vital differentiator for the business and really should deliver investors with far more self-assurance it can triumph in long run endeavors. Following acquiring produced revenue in the billions of bucks for organizations like Disney and Viacom, these executives are now established to make that money for Grom and themselves. The business has now experienced virtually two many years to lay the groundwork, is rising from Singapore lockdowns, and has the cash to capitalize on its plans. The acquisition of Curiosity Ink Media (CIM) was the key issue in its evolution.

Russell Hicks, turned Chief Material Officer and President of Prime Draw Animation, in April of 2021 and was one of Curiosity Ink Media’s founders. Prior to launching Curiosity Ink Media in 2018 with Brent Watts, he served as president of information and output at Nickelodeon from 2012 to 2017, and as CCO right before that from 1998 to 2012, playing a essential position on SpongeBob SquarePants, Henry Risk, and The Loud Property. Earlier in his profession, he labored at Warner Bros. as VP of marketing and advertising for Cartoon Network, and he also made written content for Disney.

80% Curiosity Ink Media was then acquired by Grom in August 2021 and the organization then introduced on Hicks’ lover Brent Watts as Grom’s Chief Imaginative Officer. CIM is a producer and developer of authentic kids’ and household material. This acquisition provided Curiosity’s IP catalog as revealed below.

Previously in his profession, Brent established and served as Government Imaginative Director for Struck, an award-profitable boutique structure and promoting company. His clientele included Pinterest, McDonald’s, Disney, Warner Bros. Paramount Photos, Sony Corp., Common Pics, and DreamWorks SKG. Watts was the innovative power behind Will.i.am’s Wizards and Robots and award-successful title styles for movies these kinds of as Lemony Snicket’s A Collection of Regrettable Events, and Universal’s Land of the Lost.

Then, in September 2021 the organization employed Jared Wolfson as the Main Govt Officer for Curiosity Ink Media and Govt VP for Major Draw Animation. He joined Grom from JAKKS Pacific, a leading designer, manufacturer, and marketer of toys and client merchandise offered during the world exactly where he was Senior VP of Media, Marketing, and Amusement. In advance of JAKKS, Wolfson held executive roles at Skyrocket Toys, Pacific Animation Associates, The Walt Disney Organization, and Zag Amusement.

Some of the assignments that CIM has introduced contain: a collaboration with worldwide toy corporation Cepia LLC to produce the strike on the web shorts Cats vs. Pickles into a television series…

…and an unique animated holiday break musical characteristic Santa.com, which will serve as a companion to a Santa.com digital holiday hub and eCommerce initiative.

On top of that, CIM has produced a foray into publishing with new companion Dynamite Amusement to build guides for youngsters rooted in Curiosity’s initial IP and other makes. Its first e book Baldwin’s Big Adventure released in November and is about a switcher practice and is qualified at 3-6-12 months-olds. It is at the moment remaining designed into an animated preschool sequence. It also programs to publish books dependent on PAW Patrol™.

In the first nine months of 2022, Grom generated $3.9 million in revenues and misplaced $9. million. The was a revenue decrease from 2021 due to COVID limitations in the Philippines wherever 85% of its earnings is generated and its animation studio is situated. $3.3 million of the decline was from interest payments which will now be lessened by the cash increase. It expects a very good fourth quarter. During 2022 revenues mostly arrived virtually solely from its animation operate.

In addition to its regular animation operate, and other initiatives currently outlined, 2023 should be a yr setting up on a few significant new chances that are evolving into projects.

1. The firm just declared that it has secured an fairness stake in Hey Fuzzy Yellow!, a new preschool franchise that will debut as a Television set series and, in accomplishment, extend into ancillary income prospects (shopper merchandise, merchandising, etcetera.) commonly connected with strike preschool franchises.

2. With its new funding, the firm hopes to increase its animation small business into a entire-vary animation studio finish with pre and submit-output abilities.

3. Also in the will work is a system for a function movie working with a person of its intellectual attributes. It is a comedy and will be element animated and aspect are living actors in the vein of Who Framed Roger Rabbit. Really should this progress, it will be with a planet-renowned director main the venture. This is expected to be a greater-spending budget film and will require partners to aid fund and distribute.

2023 will be a year of creating and investing even though 2024 could be huge for revenues and income as these tasks are produced. Close to-phrase, buyers should search for announcements as options company up. We be expecting the enterprise could return to its pre-COVID profits degree this year surpassing the previous file of $7.8 million. With the company’s company worth at $2.1 million, the stock justifies a second glance. Acquiring a strike with any of its new articles and jobs only provides to the opportunity upside.

SUBSCRIBE TO ZACKS Little CAP Research to receive our posts and studies emailed specifically to you each individual early morning. Make sure you take a look at our web site for added information and facts on Zacks SCR.

DISCLOSURE: Zacks SCR has been given payment from the issuer right, from an financial commitment manager, or from an investor relations consulting agency, engaged by the issuer, for supplying investigation protection for a period of time of no fewer than one 12 months. Analysis posts, as viewed here, are part of the company Zacks SCR provides and Zacks SCR gets quarterly payments totaling a highest charge of up to $40,000 yearly for these services provided to or concerning the issuer. Comprehensive Disclaimer In this article.