Grom Social Enterprises (GROM) 8-K/A Entry into a Material Definitive Agreement

Exhibit 99.4

GROM SOCIAL ENTERPRISES, INC AND CURIOSITY INK MEDIA LLC

Unaudited Pro Forma Consolidated Balance Sheets

June 30, 2021

	Grom Social			Curiosity
	Enterprises			Ink Media			Adjustment(s)				Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	8,161,908		$	47,007		$	–		(a)	$	8,208,915
Accounts receivable, net		705,321			149,206			–				854,527
Inventory, net		26,789			113,407			–				140,196
Prepaid expenses and other current assets		324,748			–			–				324,748
Total current assets		9,218,766			309,620			–				9,528,386
Operating lease right of use assets		453,920			–			–				453,920
Property and equipment, net		736,858			–			–				736,858
Goodwill		8,380,504			–			22,218,669		(a)(b)(d)		30,599,173
Intangible assets, net		5,372,882			1,133,014			–				6,505,896
Deferred tax assets, net -- noncurrent		531,557			–			–				531,557
Other assets		64,970			–			–				64,970
Total assets	$	24,759,457		$	1,442,634		$	22,218,669			$	48,420,760
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	498,672		$	3,000		$	–			$	501,672
Accrued liabilities		1,840,043			–			–				1,840,043
Advanced payments and deferred revenues		637,178			–			–				637,178
Convertible notes, net -- current		1,396,379			772,000			(494,000	)	(a)(c)		1,674,379
Loans payable -- current		190,438			678,000			(678,000	)	(a)		190,438
Related party payables		92,494			–			–				92,494
Lease liabilities -- current		303,554			–			–				303,554
Total current liabilities		4,958,758			1,453,000			(1,172,000	)			5,239,758
Convertible notes, net of loan discounts		251,674			–			–				251,674
Lease liabilities		177,380			–			–				177,380
Loans payable		53,832			–			–				53,832
Earnout liability		–			–			17,500,000		(b)		17,500,000
Other noncurrent liabilities		473,475			–			–		(a)		473,475
Total liabilities		5,915,119			1,453,000			16,328,000				23,696,119
Commitments and contingencies		–			–			–				–
Equity:
Grom Social Enterprises Inc. stockholders' equity:
Preferred stock		9,315			–			–				9,315
Common stock		9,560			–			1,772		(a)(c)		11,332
Additional paid-in capital		79,454,922			10,000			5,870,604		(a)(c)		85,335,526
Accumulated deficit		(60,611,994	)		(20,366	)		20,366		(c)		(60,611,994	)
Accumulated other comprehensive income		(17,465	)		–			–				(17,465	)
Total Grom Social Enterprises Inc. stockholders' equity		18,844,338			(10,366	)		5,892,742				24,726,714
Noncontrolling interests		–			–			(2,073	)	(a)		(2,073	)
Total equity		18,844,338			(10,366	)		5,890,669				24,724,641
Total liabilities and equity	$	24,759,457		$	1,442,634		$	22,218,669			$	48,420,760

_________________

(a) To record the purchase of 80% of Curiosity Ink Media LLC ("Curiosity").  As consideration, Grom Social Enterprises Inc. ("Company") agreed to (i) pay $400,000 in cash; (ii) issue 1,771,883 unregistered shares of the Company's common stock (at a per share price of a $2.89); (iii) issue an 8% convertible promissory notes for an aggregate of $278,000 in principal.

(b) To record a liability for the full effect of contingent additional purchase consideration, as defined in the Membership Interests Purchase Agreement dated July 29, 2021. The determination of the earnout liability is preliminary and subject to change upon completion of an independent valuation study.

(c) To adjust the pre-acquisition equity of Curiosity, including the conversion of $772,000 in convertible notes into membership equity.

(d) The determination of goodwill is preliminary and subject to change in accordance with FASB ASC Topic 850, Business Combinations upon completion of an independent valuation study. Separately identifiable intangible assets may be determined to exist that may require amortization expense to be recognized in future periods.

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GROM SOCIAL ENTERPRISES, INC AND CURIOSITY INK MEDIA LLC

Unaudited Pro Forma Consolidated Statements of Operations and Comprehensive Loss

For the Six Months Ended June 30, 2021

	Grom Social			Curiosity
	Enterprises (a)			Ink Media		Adjustment(s)				Consolidated
Revenue	$	3,263,835		$	251,013	$	–			$	3,514,848
Cost of revenue		1,634,115			9,000		–				1,643,115
Gross profit		1,629,720			242,013		–				1,871,733
Operating expenses:
Depreciation and amortization		424,498			–		–				424,498
Selling and marketing		78,911			–		–				78,911
General and administrative		2,791,154			1,885		–				2,793,039
Professional fees		513,031			20,813		–				533,844
Stock based compensation		–			–		–				–
Impairment of goodwill and other intangible assets		–			–		–				–
Total operating expenses		3,807,594			22,698		–				3,830,292
Income (loss) from operations		(2,177,874	)		219,315		–				(1,958,559	)
Other income (expense)
Interest income (expense), net		(1,743,762	)		–		(11,120	)	(a)		(1,754,882	)
Gain (loss) on settlement of debt		(947,179	)		–		–				(947,179	)
Unrealized gain (loss) on change in fair value of derivative liabilities		–			–		–				–
Other gains (losses)		48,735			–		–				48,735
Total other income (expense)		(2,642,206	)		–		(11,120	)			(2,653,326	)
Income (loss) before income taxes		(4,820,080	)		219,315		(11,120	)			(4,611,885	)
Provision for income taxes (benefit)		–			–		–				–
Net income (loss)		(4,820,080	)		219,315		(11,120	)			(4,611,885	)
Income (loss) attributable to noncontrolling interest		–			–		43,863		(b)		43,863
Net income (loss) attributable to Grom Social Enterprises Inc. stockholders	$	(4,820,080	)	$	219,315	$	(54,983	)		$	(4,655,748	)
Convertible preferred stock beneficial conversion feature and other discounts accreted as a deemed dividend		–									–
Net loss attributable to Grom Social Enterprises Inc. common stockholders	$	(4,820,080	)							$	(4,655,748	)
Basic and diluted earnings (loss) per common share attributable to Grom Social Enterprises Inc. stockholders:
Net loss attributable to Grom Social Enterprises Inc. stockholders	$	(0.79	)							$	(0.59	)
Weighted-average number of common shares outstanding:
Basic and diluted		6,125,941					1,771,883				7,897,824
Comprehensive loss:
Net income (loss)	$	(4,820,080	)	$	219,315	$	(11,120	)		$	(4,611,885	)
Foreign curreny translation adjustment		21,869			–		–				21,869
Comprehensive income (loss)		(4,798,211	)		219,315		(11,120	)			(4,590,016	)
Comprehensive income (loss) attributable to noncontrolling interests		–			–		43,863				43,863
Comprehensive income (loss) attributable to Grom Social Enterprises Inc. stockholders	$	(4,798,211	)	$	219,315	$	(54,983	)		$	(4,633,879	)

_______________

(a) To record interest expense related to the aggregate $278,000 in 8% convertible notes issued to Curiosity Ink Media.

(b) To record net income attributable to noncontrolling interests. 

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GROM SOCIAL ENTERPRISES, INC AND CURIOSITY INK MEDIA LLC

Unaudited Pro Forma Consolidated Statements of Operations and Comprehensive Income

For the Year Ended December 31, 2020

	Grom Social			Curiosity
	Enterprises (a)			Ink Media		Adjustment(s)				Consolidated
Revenue	$	6,159,531		$	130,132	$	–			$	6,289,663
Cost of revenue		3,352,640			–		–				3,352,640
Gross profit		2,806,891			130,132		–				2,937,023
Operating expenses:
Depreciation and amortization		449,379			–		–				449,379
Selling and marketing		118,844			–		–				118,844
General and administrative		4,462,095			2,799		–				4,464,894
Professional fees		623,014			85,277		–				708,291
Stock based compensation		62,600			–		–				62,600
Impairment of goodwill and other intangible assets		472,757			–		–				472,757
Total operating expenses		6,188,689			88,076		–				6,276,765
Income (loss) from operations		(3,381,798	)		42,056		–				(3,339,742	)
Other income (expense)
Interest income (expense), net		(1,398,731	)		–		(22,240	)	(a)		(1,420,971	)
Gain (loss) on settlement of debt		(1,312,983	)		–		–				(1,312,983	)
Unrealized gain (loss) on change in fair value of derivative liabilities		77,584			–		–				77,584
Other gains (losses)		48,468			–		–				48,468
Total other income (expense)		(2,585,662	)		–		(22,240	)			(2,607,902	)
Income (loss) before income taxes		(5,967,460	)		42,056		(22,240	)			(5,947,644	)
Provision for income taxes (benefit)		(224,027	)		–		–				(224,027	)
Net income (loss)		(5,743,433	)		42,056		(22,240	)			(5,723,617	)
Income (loss) attributable to noncontrolling interest		–			–		8,411		(b)		8,411
Net income (loss) attributable to Grom Social Enterprises Inc. stockholders	$	(5,743,433	)	$	42,056	$	(30,651	)		$	(5,732,028	)
Convertible preferred stock beneficial conversion feature and other discounts accreted as a deemed dividend		(277,500	)								(277,500	)
Net loss attributable to Grom Social Enterprises Inc. common stockholders	$	(6,020,933	)							$	(6,009,528	)
Basic earnings per common share attributable to Grom Social Enterprises Inc. stockholders:
Net loss attributable to Grom Social Enterprises Inc. stockholders	$	(1.07	)							$	(0.81	)
Weighted-average number of common shares outstanding:
Basic and diluted		5,630,699					1,771,883				7,402,582
Comprehensive income:
Net income (loss)	$	(5,743,433	)	$	42,056	$	(22,240	)		$	(5,723,617	)
Foreign curreny translation adjustment		58,226			–		–				58,226
Comprehensive income (loss)		(5,685,207	)		42,056		(22,240	)			(5,665,391	)
Comprehensive income (loss) attributable to Grom Social Enterprises Inc. stockholders	$	(5,685,207	)	$	42,056	$	(22,240	)		$	(5,665,391	)

_______________

(a) To record interest expense related to the aggregate $278,000 in 8% convertible notes issued to Curiosity Ink Media.

(b) To record net income attributable to noncontrolling interests.

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