Grom Social Enterprises Form 10-K

 false 2023 FY 0001662574

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 2023-10-01

 UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 WASHINGTON, D.C. 20549

 FORM 10-K

 ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended December 31, 2023

 TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT

 For the transition period from ________ to
 _________

 Commission File Number: 001-40409

 (Exact name of registrant as specified in its charter)

 Florida

 46-5542401

 (State or other jurisdiction of incorporation or organization)

 (I.R.S. Employer Identification No.)

 2060 NW Boca Raton Blvd., Suite #6, Boca Raton, Florida

 33431

 (Address of principal executive offices)

 (Zip Code)

 Registrant's telephone number, including
area code: ( 561) 287-5776

 Securities registered pursuant
to Section 12(b) of the Act:

 Title of each class

 Trading Symbol(s)

 Name of each exchange

 on which registered

 Common Stock, par value $0.001

 GROM

 The Nasdaq Capital Market

 Warrants to purchase shares of Common Stock, par value $0.001 per share

 GROMW

 The Nasdaq Capital Market

 Securities registered pursuant
to Section 12(g) of the Act: Common Stock, par value $0.001 per share

 Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

 Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

(1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes No

has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
 No

is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.
See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company,"
or "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large accelerated filer

 Accelerated filer

 Non-accelerated filer

 Smaller reporting company

 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.

has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.

 If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.

 Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's
executive officers during the relevant recovery period pursuant to §240.10D-1(b).

is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 The aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and
asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter
was $ 2,793,525.

 As of April 11, 2024, there were 8,924,686 shares
of the registrant's common stock outstanding.

 DOCUMENTS INCORPORATED BY REFERENCE

 None

 Page

 Item 1.

 Business

 Item 1A.

 Risk Factors

 Item 1B.

 Unresolved Staff Comments

 Item 1C.

 Cybersecurity

 Item 2.

 Properties

 Item 3.

 Legal Proceedings

 Item 4.

 Mine Safety Disclosures

 Item 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6.

 [Reserved]

 Item 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 Item 8.

 Financial Statements and Supplementary Data

 Item 9.

 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item 9A.

 Controls and Procedures

 Item 9B.

 Other Information

 Item 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item 10.

 Directors, Executive Officers, and Corporate Governance

 Item 11.

 Executive Compensation

 Item 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item 14.

 Principal Accounting Fees and Services

 Item 15.

 Exhibits, Financial Statement Schedules

 Item 16.

 Form 10-K Summary

 Signatures

 i

 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 When used in this Annual Report, including
the documents that we have incorporated by reference, in future filings with the SEC or in press releases or other written or oral
communications, statements which are not historical in nature, including those containing words such as "believe,"
"expect," "anticipate," "estimate," "plan," "continue,"
"intend," "should," "may" or the negative of these words and phrases or similar words or phrases
which are predictions of or indicate future events or trends and which do not relate solely to historical matters, are intended to
identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (set
forth in Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Discussions containing forward-looking
statements may be found in the material set forth under "Business", "Management's Discussion and Analysis of Financial
Condition and Results of Operations", and in other sections of this Annual Report.

 Forward-looking statements are necessarily subjective,
are based upon our current plans, intentions, objectives, goals, strategies, beliefs, projections and expectations, and involve known
and unknown risks, uncertainties and other important factors.

 Forward-looking statements should not be read
as a guarantee of future performance or results and will not necessarily be accurate indications of whether, or the times by which, our
performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are
made and management's belief as of that time with respect to future events and are subject to risks and uncertainties that could
cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Any or
all of our forward-looking statements in this report may turn out to be inaccurate. Important factors that may cause actual results, our
performance or achievements, or industry results to differ materially from those contemplated by such forward-looking statements include,
without limitation, those discussed under the caption "Risk Factors" in this Annual Report. All forward-looking statements
in this report are made as of the date hereof, based on information available to us as of the date hereof, and we assume no obligation
to update any forward-looking statement.

 ii

 ITEM 1. BUSINESS

 Overview

 We were incorporated in the State of Florida on
April 14, 2014 under the name Illumination America, Inc.

 On August 17, 2017, we acquired Grom Holdings,
Inc., a Delaware corporation ("GHLD"), pursuant to a share exchange agreement (the "Share Exchange Agreement")
entered into on May 15, 2017 (the "Share Exchange"). In connection with the Share Exchange, the Company acquired 100% of the
outstanding shares of capital stock of GHLD from GHLD' stockholders in exchange for an aggregate of 5,774 shares of common stock,
par value $0.001 per share, of the Company. As a result of the Share Exchange, the stockholders of GHLD acquired approximately 92% of
the Company's then-issued and outstanding shares of common stock and GHLD became a wholly-owned subsidiary of the Company. In connection
with the Share Exchange, on August 17, 2017, we changed our name to Grom Social Enterprises, Inc. ("GROM", or the "Company").

 We are a media, technology and entertainment company
that focuses on (i) delivering content to children under the age of 13 years in a safe secure platform that is compliant with the Children's
Online Privacy Protection Act ("COPPA") and can be monitored by parents or guardians, (ii) creating, acquiring, and developing
the commercial potential of Kids & Family entertainment properties and associated business opportunities, (iii) providing world class
animation services, and (iv) offering protective web filtering solutions to block unwanted or inappropriate content. We conduct our business
through our following subsidiaries:

 Grom Social, Inc. ("GSOC"), incorporated in the State of Florida on March 5, 2012, operates our social media network designed for children under the age of 13 years.

 TD Holdings Limited ("TDH"), incorporated in Hong Kong on September 15, 2005, operates through its two wholly-owned subsidiaries: (i) Top Draw Animation Hong Kong Limited, a Hong Kong corporation ("TDAHK"), and (ii) Top Draw Animation, Inc., a Philippines corporation ("Top Draw"). The group's principal activities are the production of animated films and television series.

 Grom Educational Services, Inc. ("GEDU"), incorporated in the State of Florida on January 17, 2017, operates our web filtering services provided to schools and government agencies.

 Grom Nutritional Services, Inc. ("GNUT"), incorporated in the State of Florida on April 19, 2017, intends to market and distribute nutritional supplements to children. It has been nonoperational since its inception.

 Curiosity Ink Media, LLC ("CIM"), organized in the State of Delaware on January 5, 2017, develops, acquires, builds, grows and maximizes the short, mid and long-term commercial potential of kids and family entertainment properties and associated business opportunities.

 We own 100% of each of GSOC, TDH, GEDU and GNUT,
and 80% of CIM.

 We have three reportable business segments: Animation,
which includes TDH; Original Content, which includes CIM; and Social & Technology, which includes GSOC and GEDU.

 Grom
Social, Inc. (GSOC)

 Grom Social, Inc. is a media company that manages
a social mobile application ("app") platform designed for kids under the age of 13 – who are barred by law from using
social media apps without parental consent – and provides a fully secure social media environment that invites parents and caregivers
of users in to play an active role in keeping kids safe from common internet dangers while educating them about the importance of digital
safety.

 Derived from an Australian surfing term, the word
"Grom" is defined as a promising young individual who is eager to learn. The name is perfect for helping young consumers surf
digital media, many for the first time. The word also has a powerful meaning for GSOC's founders, the Marks family. Zach Marks,
who conceived a kids-only web destination in 2012 after his parents deleted his Facebook account, which he gained without his parents'
knowledge or permission; Darren Marks, GROM's CEO, who saw the need for safe social media from a parent's perspective; and
Caroline Marks, a US Olympian – and eldest daughter of the Marks family, who's early experiences of being bullied on social
media underscored the growing need to protect kids online.

 Fun and safety are the centerpieces of the Grom
Social experience. A fully functional user account can only be created by a parent or caregiver, who must be verified through a thorough
confirmation process. If a child enrolls without parental verification, that user will have very little access to the app's functionality
with no ability to engage with other users. GSOC defines a "user" as any child under the age of 13 who downloads the Grom Social
app from a mobile app store, any parent who registers for a Grom Social account, and any student or faculty who uses our NetSpective web
filtering platform.

 Monthly active users ("MAUs") is a
usage metric that reveals the total number of users who visit all of our platforms within 30 days. As of March 1, 2024, there were approximately
1,550 MAUs on the Grom Social platform. Based on statistics provided by our internal data metric system and an additional tool, Count.ly
(which is hosted and managed by our company's servers), the average online duration of users logged onto (time spent) on the Grom Social
platform was approximately 3.5 minutes.

 In May 2019, our Grom Social app for both Apple
Store and Google Play Store was approved within each platform's family designated section. The Apple Store markets iPhone operating
system ("IOS") applications for download solely on Apple devices. The Google Play Store markets applications for download
on Android devices.

 The Grom Social app is a platform where kids under
the age of 13 can:

 Record videos of themselves using custom 3D avatars that only Grom offers, and post, utilizing enhanced facial and apparel characteristics, and augmented reality ("AR") filters and masks while doing so.

 Upload videos compliant with the Children's Online Privacy Protection Act (COPPA).

 View exclusive, and curated, user-generated content to provide only safe and educational content for children.

 Communicate with users and parents regardless of where they may be navigating on the Grom Social app. This feature eliminates the need to leave the section of the app in which they are engaged.

 GSOC has established the following safeguards
and procedures which we believe will ensure our Grom Social platform is a safe place for children:

 Account Approval: We have account creation procedures to help ensure that only children under the age of 13 can create an account. If a child submits a request to open an account on the Grom Social app, we send an email notification to his or her parents that their child has applied to create a Grom Social account. If the child's parents approve, they may submit a video recording with consent consistent with approved COPPA guidelines, the account is opened. If a parent's approval is not expressed, the account will not be opened, and the child will have limited access to the Grom Social app.

 Parental Involvement: By requiring parental approval for a child to open an account and to interact with other users on the Grom Social platform, we hope to invite, promote, and encourage all caregivers to stay actively involved in their child's activity on the app. Further, we believe that parental involvement provides us with the ability to market products and services to parents if they elect to receive separate communications from GSOC.

 Digital Citizenship Educational Content: Children are presented with pop-up messages and suggestions throughout the app on good digital citizenship practices to promote positive online behavior and learn the basics of becoming a positive digital citizen. Users are rewarded with achievements for demonstrating exemplary online conduct, and the app features a comprehensive reward system to incentivize positive interactions. For example, when users exhibit kindness in their online engagements and while interacting with others' posts on the platform, they earn rewards. This system celebrates users for their positive digital footprint and fosters a community of respect and understanding on the platform.

 Limited Data Collection of Child and Parent: No digital profiles will be built for children or parents. The information we collect is for analytical data only and is limited to parent email, birthdate, gender, and country locations. GSOC will never use a child's personal information for profit.

 Content Monitoring: Our platform employs sophisticated software that utilizes standard "keyword" filter technology to meticulously monitor posts for inappropriate content. This ensures that any post containing offensive material is intercepted before it becomes visible on the platform, with the user receiving a warning about the unacceptable content. Additionally, every comment, video post, or public action on the Grom Social app undergoes a thorough review by our algorithms and dedicated GSOC staff monitors. Should any content fail to meet our community guidelines, it will not be approved, and the child's parent will be promptly notified through the Grom Social parent app, complete with a detailed explanation of the incident. This dual-layered approach of content monitoring and direct parental involvement not only promotes social responsibility and digital citizenship but also serves as an educational opportunity. We are committed to maintaining a safe and respectful community, resorting to user bans only if necessary to address persistent issues. Through these measures, we aim to foster a digital environment where positive interactions flourish.

 Anti-bullying: We have software that monitors the Grom Social app for bullying. In addition to monitoring the interaction between children on the app, we also post messages that strongly emphasize anti-bullying and actively promote social responsibility and digital citizenship. Additionally, our platform has received the "KidSafe Seal of Approval" from KidSafe, an independent safety certification service, and seal-of-approval program designed exclusively for children-friendly websites and technologies, including online game sites, educational services, virtual worlds, social networks, mobile apps, tablet devices, connected toys, and other similar online and interactive services.

 Use of "Gromatars": On the Grom Social platform, children express their creativity and identity through 3D animated videos known as "Gromatars." These vibrant avatars serve as a digital persona, allowing kids to engage with the community without revealing their real-life identity. Featured prominently on a user's home screen and visible in interactions such as comments and likes, Gromatars are the heart of a child's presence on the app. With over 200 customization options including head shape, eye and nose types, hairstyles, ear shapes, skin tones, and a plethora of accessories and backgrounds, children have the freedom to craft a Gromatar that truly reflects their personality and style. This innovative approach not only enhances the fun and interactivity of the platform but also fosters a safe and imaginative environment for kids to connect and share.

 These safeguards and procedures are a critical
component of our business model. We believe that children are increasingly accessing the internet at younger ages and therefore the need
for safe, age-appropriate platforms for younger children to browse and interact with other children is increasing. According to recent
statistics published in December 2023 on Stasista.com:

 68% of pre-teens were using social media applications.

 Overall, 42% of respondents aged 11 to 12 years were using TikTok, 31% were using Snapchat.

 According to recent statistics on GuardChild.com:

 88% of teens have seen someone be mean or cruel to another person on a social networking site.

 70% of children have accidentally encountered online pornography

 90% of children from 8 to 16 years old have seen online pornography

 65% of children from 8 to 14 years old have been involved in a cyber-bullying incident

 The Grom Social app is a dynamic platform tailored
for children, blending engaging features with stringent safety measures to create a digital space that mirrors the sophisticated social
networks used by adults, yet remains secure within a child-friendly ecosystem. The app boasts an array of functionalities, including:

 Video Recordings with AR Filters and Effects: Kids can unleash their creativity, making videos that sparkle with fun filters and effects, akin to the experiences on Snapchat and Instagram.

 Customizable Profiles: Users can personalize their space with custom colors and their unique 3D Gromatar avatars, adding a personal touch to their digital presence.

 Video Sharing with Music: Echoing TikTok's format, children can upload their videos set to a variety of music tracks, allowing for endless creative expression.

 Search and Discovery: With an intuitive search function, hashtags, and mentions, discovering new content and friends is easy and exciting.

 Engagement Features: Users can like, comment on, and share content, enhancing interaction and community spirit.

 Notifications: Keeps users informed about interactions and updates, ensuring they stay connected.

 Extensive AR Filters: A vast selection of AR filters enriches user videos, offering playful and imaginative ways to express themselves.

 Direct Messaging: Allows for private conversations, fostering friendships within a protected environment.

 Equipped with these features and robust safety
permissions, GSOC provides children with a comprehensive social platform. It's a safe, controlled environment where kids can explore,
create, and connect, enjoying the best aspects of social media adapted to suit their needs and protect their well-being.

 According to a survey released on March 9,
2022 by Common Sense Media, a nonprofit that tracks young people's tech habits reports, on average, 8- to 12-year-olds use about
five and a half hours of screen media per day. From 2019 to 2021, daily screen media consumption increased from 4 hours and 44 minutes
to 5 hours and 33 minutes for tweens, and from 7 hours and 22 minutes to 8 hours and 39 minutes for teenagers. This rise over two years
represents a significantly quicker pace than the growth observed over the prior four years. Thirty-eight percent of tweens are now using
social media, an increase from 31% in 2019, and almost one in five (18%) report using social media daily, a rise of 5 percentage points
since 2019.

 TD Holdings Limited and Subsidiaries (TDH)

 TDH is a holding company that operates through
its two wholly-owned subsidiaries (i) TDAHK and (ii) TDAM. Based in Manila, Philippines, the group's principal activities are the
production of animated television series and movies. TDAHK, which owns our animation studio in Manila, Philippines, contracts with third
parties for the production of animated television series and movies. Through an intercompany agreement, TDA then does the production work
at our studio in Manila, Philippines.

 TDA is a full-service production and pre-production
animation studio working with a diverse roster of global clients. It specializes in providing two-dimensional digital production services
for animated television series and movies on a contract basis or under co-production arrangements.

 TDA's pre-production services include planning
and creating storyboards, location design, model and props design, background color and color styling. Its production services focus on
library creation, digital asset management, animation layout, background, library development, background layout scene assembly, posing,
animation, composting and after-effects. TDA currently provides services to high-profile brands and properties, as well as all-new, original
intellectual properties. Its studio produces over 200 half-hour segments of animated content annually which we believe makes it one of
the top global producers of animation for television worldwide.

 The following table depicts some of TDA's
recent notable projects:

 Show

 Client

 Number of Series in Years

 Period

 My Little Pony

 DHX Media

 2010-2019

 My Little Pony - Equestria Girls

 DHX Media

 2012-2013, 2015-2019

 Tom and Jerry Seasons 2 - 5

 Slap Happy Cartoons

 2015-2019

 Penn Zero: Part-Time Hero

 Disney

 2016-2017

 Polly Pocket Seasons 1 - 4

 WildBrain (formerly DHX Media)

 2017-2021

 Glitch Techs

 Nickelodeon

 2018-2019

 Carmen Sandiego

 WildBrain (formerly DHX Media)

 2019-2020

 Rhyme Time Town

 DreamWorks

 2019-2020

 Viking Skool

 Samka Production

 2020

 Archibald's Next Big Thing Is Here

 DreamWorks

 2020-2021

 Polly Pocket Season 3

 DHX Media

 2021

 The Loud House Movie

 New Nickelodeon Animation

 2021

 Bionic Max

 Gaumont Animation

 2021

 Jamie's Got Tentacles Seasons 1 - 3

 Samka Production

 2013, 2016, and 2021

 The Guava Juice Show Seasons 1 - 2

 Main Frame Studios

 2021-2022

 Half Heros Season 2

 Cyber Group Studios

 2021-2022

 Strawberry Shortcake Seasons 1 - 2

 WildBrain

 2021-2022

 Star Trek: Lower Decks

 Titmouse

 2022

 Grom Educational Services, Inc. (GEDU)

 On January 2, 2017, we acquired certain assets
including internet content filtering software called NetSpective Webfilter from TeleMate.net and formed GEDU. Since inception, we have
sold hardware and/or subscriptions for web filtering software to thousands of schools with more than 4,000,000 children in attendance.
Clients pay for hardware within 30 days of delivery and in advance for filtering service ranging between one to five years. We offer a
proprietary digital citizenship program that assists K-12 schools in the United States to comply with The Children's Internet Protection
Act ("CIPA") requirements. CIPA requirements include the use internet content filters and implementation of other protective
measures to prevent children from exposure to harmful online content.

 On November 2, 2022, we expanded our educational
services product offering by teaming up with tech management company, Radix, to offer its cloud-based classroom management solution, TeacherView.
Radix's TeacherView is equipped with a built-in video conference system to enable remote (at home), local or hybrid learning. The
program gives educators an "over the shoulder" teaching experience to help oversee an enhanced learning experience.

 Grom Nutritional Services, Inc. (GNUT)

 GNUT was formed with the intention of developing,
marketing and distributing nutritional supplement beverages to children to support the healthy development of neurological structure and
intellectual development of cognitive skills. We initially intend to market and distribute nutritional based supplements to our user base
of children and their parents, then subsequently expand our marketing efforts to the wholesale/retail grocery, convenience, and big box
sectors. GNUT had no operations since its inception, but the Company is exploring partnerships.

 Curiosity Ink Media, LLC (CIM)

 On August 19, 2021, we acquired 80% of the outstanding
membership interest of CIM, a kids and family original content and media company that focuses on building and managing entertainment brands
and franchises. Specializing in revitalizing lapsed and underutilized properties, CIM reimagines beloved properties by strategically defining
their strengths to ensure their continued growth and legacy. CIM leverages its creative talent, established media distribution networks,
and industry connections to market proven media properties through strategic licensing agreements, partnerships, and original content
creation.

 Acquisition Strategy

 Our acquisition strategy is to acquire synergistic
companies, products or intellectual property that will help grow our Grom Social user base and operate profitably as both a stand-alone
enterprise as well as enhance Grom's overall monetization strategy.

 Acquisition of TD Holdings Limited and Subsidiaries

 On July 1, 2016, we entered into a share sale
agreement (the "TDH Share Sale Agreement") for the acquisition of 100% of the capital stock of TD Holdings for which we paid
$4,000,000 in cash, issued a 5% secured promissory note in the principal amount of $4,000,000 which originally matured on July 1, 2018
(the "TDH Note"), and 384 shares of our common stock valued at $4,240,000, or approximately $11,041.67 per share, to the selling
shareholders of TDH ("TDH Sellers"). The TDH Share Sale Agreement was subsequently amended and on August 18, 2021, the Company
paid the holders of the TDH Notes an aggregate of $834,760, representing all remaining amounts due and payable under the TDH Note.

 Acquisition of the NetSpective Webfilter
Assets

 On January 1, 2017, we acquired NetSpective webfilter
assets from TeleMate.net Software, LLC, a Georgia limited liability company, ("TeleMate") pursuant to an asset purchase agreement
(the "NetSpective APA"). Under the terms of the NetSpective APA, we issued a three-year 0.68% $1,000,000 redeemable,
convertible promissory note to TeleMate (the "TeleMate Note"). The TeleMate Note is convertible into our common stock at a
conversion rate of $0.78 per share. If not converted by TeleMate by November 1, 2019, the note may be converted by the Company into shares
of common stock at a conversion rate of $0.48 per share. In addition, we entered into a master services agreement ("MSA")
with TeleMate under which TeleMate provided engineering and sales support for twelve months and assumed all risks of NetSpective negative
cash flow for one year.

 In April 2019, TeleMate paid the TeleMate Note
in full. On December 4, 2019, the Company converted the outstanding principal and interest of $1,013,200 under the TeleMate Note into
2,113,428 shares of its common stock.

 Acquisition of Curiosity Ink Media LLC

 On August 19, 2021, we acquired 80% of the outstanding
membership interest of Curiosity Ink Media LLC, a Delaware limited liability company ("CIM") pursuant to a membership interest
purchase agreement (the "CIM MIPA"). Under the terms of the CIM MIPA, we issued an aggregate of 1,771,883 shares of the Company's
common stock to the Sellers, pro rata to their membership interests immediately prior to the closing of the Acquisition. The shares were
valued at $2.82 per share which represents the 20-day volume-weighted average price of the Company's common stock on August 19,
2021.

 Additionally, the Company also paid $400,000 and
issued an 8% eighteen-month convertible promissory note in the principal amount $278,000 (the "Note") to pay-down and refinance
certain outstanding loans and advances previously made to CIM by Russell Hicks and Brett Watts, members of CIM.

 Under the terms of the purchase agreement, the
Note is convertible into shares of common stock of the Company at a conversion price of $98.40 per share but may not be converted if,
after giving effect to such conversion, the noteholder and its affiliates would beneficially own in excess of 9.99% of the Company's
outstanding common stock. The Note may be prepaid at any time, in whole or in part. The Note is subordinated to the Company's senior
indebtedness.

 The Sellers also have the ability to earn up to
$17,500,000 (payable 50% in cash and 50% in stock) upon the achievement of certain performance milestones as of December 31, 2025.

 Business Strategy

 We hope to grow our business through a combination
of marketing initiatives and synergistic acquisitions in an effort to increase our Grom Social platform user base to a large enough size
to enable us to attract advertisers and paid users for our premium content. However, there can be no assurance that our strategy will
be successful or that our revenues will increase as a result of our business strategies.

 Our Growth Strategy

 Our current growth strategy is as follows:

 Increase Size of Grom Social's User Base. Comparable to other successful media companies, we believe the key strategy to our future success starts with growing our audience. Although the revenue from the Grom Social app is currently nominal, we believe that as we grow our audience, we can simultaneously build a revenue-generating opportunity for marketers and sponsors to connect with the important demographic of kids under the age of 13.

 Expand Core Products. We manage our brands through strategic product development initiatives, including introducing new products and modifying our existing intellectual property. Our marketing team and development teams strive to develop enhanced products to offer added technological, aesthetic and functional improvements to our portfolio of products.

 Pursue Strategic Acquisitions. We supplement our internal growth with strategic and synergistic acquisitions.

 Competition

 GSOC operates in a dynamic and competitive landscape
of innovation and rapidly evolving technologies. For kids under 13, there are limited opportunities for social media as most other apps,
including Facebook, YouTube, Twitter, Google, Snapchat, and TikTok, require parental consent to use. Each presents a wide array of internet
products, services, and content vying for our users' attention and spending. These tech giants, with their extensive resources and vast
user bases, represent a broad spectrum of competition, from social networking platforms to video sharing and content creation services.

 Despite the intense competition from these established
and well-funded entities, GSOC also navigates a competitive field with smaller internet companies. These companies, including Video Star,
Zigazoo, and Lego Life, offer niche products and services that directly compete with our target users. As we venture into new services
and products and as our existing offerings evolve, we anticipate facing additional competitors. This could include companies replicating
our range of capabilities, developing competing applications, especially in mobile and social communications, and entities focusing on
web and mobile-based entertainment designed to captivate our target audience.

 Nonetheless, GSOC distinguishes itself with unique
features that we believe not only set us apart from our competitors but also provide a competitive edge specifically tailored to our target
market:

 Safe and Controlled Environment for Children: Our platform offers a social media experience within a secure framework, ensuring a protective atmosphere for young users.

 Parental Involvement and Oversight: We emphasize and facilitate active parental engagement in monitoring and guiding their children's online activities.

 Content By and For Kids: Our platform prides itself on producing relatable and engaging content created with the direct input and participation of children, resonating deeply with our audience.

 Secure Registration Process: We have crafted a registration mechanism that ensures the safe onboarding of children, adhering to the highest standards of online safety.

 Live Monitoring and Content Filtering: Our platform is monitored in real-time by trained professionals, complemented by advanced filtering software to safeguard against inappropriate content, offering a layer of protection unmatched by other social networking sites accessible to children.

 COPPA-Compliant Features: We stand out as the only COPPA-compliant app offering an array of interactive features such as live commenting, hashtags, streaming video content, and the capability for users to record and share videos.

 GSOC embodies a pioneering social media platform
that integrates custom video editing, educational resources, social interaction, and exclusive content. We offer global connectivity and
group collaboration, encouraging the creation of new content and activities based on user behavior. This comprehensive approach positions
GSOC as a unique and innovative choice within the competitive digital landscape for young users.

 TD Holdings Limited and Subsidiaries

 We have extensive competition in our animation
business from production companies in Korea, Taiwan, Canada, India and, to a lesser degree, China, Malaysia, Singapore, and Thailand.
Businesses in these countries, such as Malaysia, may receive government subsidies which can increase competitive pressure.

 Our intention is for Top Draw to remain competitive
for the production of family-oriented, animated television series and movies and other family-oriented entertainment products produced
by major movie studios, including Disney, DreamWorks Animation, Warner Bros. Entertainment, Netflix, Nickelodeon, and numerous other independent
motion picture production companies.

 The primary competitors of Top Draw in the Philippines
are Toon City Animation, Snipple Animation Studio, and Synergy 88 Digital.

 Growth in the television industry is being driven
by larger streaming companies such as Netflix, Disney Plus, NBC, Amazon Prime, and Facebook. Competition is primarily based on the ability
to reach an audience directly and deliver products that meet consumer demand. The success of these streaming companies is primarily related
to the size and reach of their user or subscriber base.

 Grom Educational Services, Inc.

 We believe our primary competitors for web filtering
products and services are iBoss, Lightspeed, Linewize, Go Guardian and Securly. There are other large companies that offer web filtering
products including Forcepoint (Websense), Bluecoat, Symantec, Palo Alto Networks, Barracuda and Cisco. However, we believe these companies
are enterprise focused whereby they sell numerous products with web filtering representing a minimal component of their portfolio.

 Grom Nutritional Services, Inc.

 We believe that consumer awareness regarding the
benefits of dietary supplements and new product availability are the major drivers for the market worldwide. The global nutritional supplements
market size was valued at $273.9 billion in 2018 and is anticipated to expand at a compound annual growth rate of 6.4% over the forecast
period from 2019 to 2025, according to Grand View Research. The largest of our competitors are Axxess Pharma Inc., Celsius Holdings, Inc.,
GNC Holdings Inc., and Pfizer Inc.

 Curiosity Ink Media, LLC

 We have extensive competition in our publication
and animated series and movies are Disney, DreamWorks Animation, Warner Bros. Entertainment, Netflix and Nickelodeon. Growth in the publication
and animated series and movies are driven by the large streaming and production companies.

 Government Regulation

 We are subject to several U.S. federal and state
and foreign laws and regulations that affect companies conducting business on the internet. Many of these laws and regulations are still
evolving and being tested in courts and could be interpreted in ways that could harm our business. These may involve user privacy and
data protection, rights of publicity, content, intellectual property, advertising, marketing, distribution, data security, data retention
and deletion, personal information, electronic contracts and other communications, competition, protection of minors, consumer protection,
telecommunications, product liability, taxation, economic or other trade prohibitions or sanctions, securities law compliance, and online
payment services. In particular, we are subject to federal, state, and foreign laws regarding privacy and protection of data. Foreign
data protection, privacy, and other laws and regulations can be more restrictive than those in the United States. U.S. federal and state
and foreign laws and regulations, which in some cases can be enforced by private parties in addition to government entities, are constantly
evolving and can be subject to significant change. In addition, the application, interpretation, and enforcement of these laws and regulations
are often uncertain, particularly in the new and rapidly evolving industry in which we operate and may be interpreted and applied inconsistently
from country to country and inconsistently with our current policies and practices. There are also a number of legislative proposals pending
before federal, state, and foreign legislative and regulatory bodies. including data protection regulation.

 In addition, some countries are considering or
have passed legislation implementing data protection requirements or requiring local storage and processing of data or similar requirements
that could increase the cost and complexity of delivering our services.

 Our platforms follow the guidelines of the Children's
Online Privacy Protection Act of 1998, 15 U.S.C. 6501–6505. COPPA imposes certain requirements on operators of websites or online
services directed to children under 13 years of age, and on operators of other websites or online services that have actual knowledge
that they are collecting personal information online from a child under 13 years of age.

 Additionally, our K-12 NetSpective web filter
public school clients are subject to CIPA, which was enacted by Congress in 2000 to address concerns about children's access to obscene
or harmful content over the internet. CIPA imposes certain requirements on schools or libraries that receive discounts for internet access
or internal connections through the E-rate program – a program that makes certain communications services and products more affordable
for eligible schools and libraries. In early 2001, the FCC issued rules implementing CIPA and provided updates to those rules in 2011.

 The nutritional supplements that we intend to
market to children are governed by the US Food and Drug Administration ("FDA"). The FDA defines supplements as a product intended
to increase its levels in the diet. These may include vitamins, minerals, herbs, amino acids, or other plant-based substances. Over-the-counter
supplements do not undergo the same formal approval process as prescription and over-the-counter drugs. The FDA does not require supplement
manufacturers to submit their products to the FDA for review nor receive FDA approval, however, before marketing, companies must ensure
they are not making false claims on the product label to mislead consumers. Like other food substances, dietary supplements are not
subject to the safety and efficacy testing requirements imposed on drugs, and unlike drugs they do not require prior approval by the FDA;
however, they are subject to the FDA regulations regarding adulteration and misbranding.

 Intellectual Property

 To establish and protect our proprietary rights
we rely on a combination of trademarks, copyrights, trade secrets, including know-how, license agreements, confidentiality procedures,
non-disclosure agreements with third parties, employee non-disclosure and invention assignment agreements, and other contractual rights.
We do not believe that our proprietary website is dependent on any single copyright or groups of related patents or copyrights.

 Trademarks

 We currently own seven trademarks as follows:

 Country

 Mark

 Status

 Class

 Serial Number

 Filing Date

 Registration Number

 Registration Date

 Owner Name

 Expiration Date

 US

 GROM

 85808178

 12/20/2012

 4464931

 01/14/2014

 01/14/2034

 US

 GROM SKATE

 009, 041

 90530702

 2/16/2021

 6626893

 1/25/2022

 01/25/2028

 US

 GROM SOCIAL AND DESIGN

 042, 045

 88256892

 01/10/2019

 6217313

 12/08/2020

 Grom Social Enterprises Inc.

 12/08/2026

 US

 GROM NAME LOGO

 97884724

 04/12/2023

 N/A

 N/A

 N/A

 US

 MAKING HAPPY HAPPEN

 Pending

 035, 041

 97591379

 09/14/2022

 N/A

 N/A

 N/A

 US

 MAMABEAR

 85631796

 05/22/2012

 4351472

 06/11/2023

 Grom Holdings Inc.

 06/11/2033

 US

 TECHTOPIA

 86346608

 07/24/2014

 4820748

 09/29/2015

 09/29/2025

 Copyrights

 We currently own thirteen copyrights as follows:

 Title

 Claimant

 Filing Date

 Registration Number

 Registration Date

 CoCo

 VA 2-302-486

 Drone 2

 VA 2-302-307

 Drone 3

 VA 2-302-305

 Grom Social Characters

 07/20/2012

 VA 1-861-879

 07/20/2012

 Grom Social Characters – Fall 2015

 01/12/2016

 VA 2-000-079

 01/12/2016

 Hall

 02/24/2022

 VA 2-294-237

 04/06/2022

 Noswad

 04/09/2014

 VAu 1-171-758

 04/09/2014

 Ollie

 03/11/2014

 VAu 1-160-606

 03/11/2014

 Santa Claus

 02/24/2022

 VA 2-294-243

 04/06/2022

 Santa.com North Pole

 02/24/2022

 VA 2-293-035

 04/06/2022

 Santa.com Screenplay

 Curiosity Ink Media, LLC

 03/11/2024

 Pau 4-217-147

 03/22/2024

 YoYo

 VA 2-302-477

 Herbert Henry and Santa's Secret Society

 Curiosity Ink Media, LLC

 11/28/2018

 TX0008682635

 03/05/2019

 Employees

 As of April 11, 2024, the Company had 18 full-time
employees, 3 part-time employees and 2 independent contractors in the United States and 68 full-time employees and 37 part-time and 198
contracted employees in the Philippines.

 ITEM 1A. RISK FACTORS

 Investing in our securities involves a high
degree of risk. Before investing in our common stock, you should carefully consider the risks described below, as well as the other information
in this Annual Report, including our consolidated financial statements and the related notes. In addition, we may face additional risks
and uncertainties not currently known to us, or which as of the date of this Annual Report we might not consider significant, which may
adversely affect our business. If any of the following risks occur, our business, financial condition and results of operations could
be materially adversely affected. In such case the trading price of our common stock and warrants could decline due to any of these risks
or uncertainties, and you may lose part or all of your investment.

 Risks Related to Our Business

 Our independent auditors concurred with
our management's assessment that raises concern as to our ability to continue as a going concern.

 On a consolidated basis, we have incurred significant
operating losses since inception. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
As of December 31, 2023, we have an accumulated deficit of $96.7 million.

 Because we do not expect that existing operational
cash flow will be sufficient to fund presently anticipated operations, this raises substantial doubt about our ability to continue as
a going concern. Therefore, we will need to raise additional funds and are currently exploring alternative sources of financing. Historically,
we have raised capital through private placements of our equity securities and convertible notes and through officer loans as an interim
measure to finance working capital needs and may continue to raise additional capital through the sale of common stock or other securities
and by obtaining short-term loans. We will be required to continue to do so until our consolidated operations become profitable.

 These factors, among others, raise substantial
doubt about our ability to continue as a going concern. If we are unable to obtain sufficient funding, our business, prospects, financial
condition and results of operations will be materially and adversely affected, and we may be unable to continue as a going concern.

 Our future performance will depend on the
continued engagement of key members of our management team.

 Our future performance depends to a large extent
on the continued services of members of our current management and other key personnel. While we have employment agreements with certain
of our executive officers and key employees, the failure to secure the continued services of these or other key personnel for any reason,
could have a material adverse effect on our business, operations, and prospects. We currently do not carry "key man insurance"
on any of our executives.

 Failure to manage our growth effectively
could cause our business to suffer and have an adverse effect on our financial condition and operating results.

 Failure to manage our growth effectively could
cause our business to suffer and have an adverse effect on our financial condition and operating results. To manage our growth effectively,
we must continually evaluate and evolve our business and manage our employees, operations, finances, technology and development, and capital
investments efficiently. Our efficiency, productivity and the quality of our Grom Social platform, original content and intellectual properties,
animation business and web filtering user services and content may be adversely impacted if we fail to appropriately coordinate across
our business operations. Additionally, rapid growth may place a strain on our resources, infrastructure, and ability to maintain the quality
of our Grom Social platform. If and when our structure becomes more complex as we add additional staff, we will need to improve our operational,
financial and management controls as well as our reporting systems and procedures. Our failure to manage our growth could disrupt our
operations and ultimately prevent us from generating revenues.

 Future business acquisitions, strategic
investments or alliances, if any, as well as business acquisition transactions, could disrupt our business and may not succeed in generating
the intended benefits and may, therefore, adversely affect our business, revenue and results of operations.

 We completed the acquisition of TD Holdings in
2016, and acquired 80% of Curiosity Ink Media, LLC in 2021. In the future, we may explore potential acquisitions of companies or technologies,
strategic investments, or alliances to strengthen our business. Acquisitions involve numerous risks, any of which could harm our business,
including:

 our due diligence may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business, product or technology, including issues related to intellectual property, product quality or architecture, regulatory compliance practices, accounting practices or employee issues;

 failure to successfully integrate acquired businesses;

 diversion of management's attention from operating our business to addressing acquisition integration challenges;

 difficulties in coordinating geographically disparate organizations and corporate cultures and integrating management personnel with different business backgrounds;

 anticipated benefits may not materialize;

 retention of employees from the acquired company;

 integration of the acquired company's accounting, management information, human resources, and other administrative systems;

 coordination of product development and sales and marketing functions;

 liability for activities of the acquired company before the acquisition, including patent and trademark infringement, claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; and

 litigation or other claims in connection with the acquired company, including claims from terminated employees, users, former stockholders or other third parties.

 Failure to appropriately mitigate these risks
or other issues related to such strategic investments and acquisitions could result in reducing or completely eliminating any anticipated
benefits of transactions and harm our business generally. Future acquisitions could also result in dilutive issuances of our equity securities,
the incurrence of debt, contingent liabilities, amortization expenses or the impairment of goodwill, any of which could harm our business,
financial condition, and operating results.

 We face intense competition in all aspects
of our business including competition in the animation and web filtering businesses. If we do not provide features and content that will
engage and attract users, advertisers and developers we may not remain competitive, and our potential revenues and operating results could
be adversely affected.

 We face intense competition in almost every aspect
of our business, including from companies such as Facebook, YouTube, Twitter and Google, which offer a variety of internet products, services,
content, and online advertising offerings, as well as from mobile companies and smaller internet companies that offer products and services
that may compete directly with Grom Social for users, such as Yoursphere, Fanlala, Franktown Rocks and Sweety High. As we introduce new
services and products, as our existing services and products evolve, or as other companies introduce new products and services, we may
become subject to additional competition.

 Some of our current and potential competitors
have significantly greater resources and better competitive positions than we do. These factors may allow our competitors to respond more
effectively than us to new or emerging technologies and changes in market requirements. Our competitors may develop products, features,
or services that are similar to ours or that achieve greater market acceptance, may undertake more far-reaching and successful product
development efforts or marketing campaigns, or may adopt more aggressive pricing policies. In addition, our users, content providers or
application developers may use information shared by our users through Grom Social in order to develop products or features that compete
with us. Certain competitors, including Facebook, could use strong or dominant positions in one or more markets to gain a competitive
advantage against us in areas where we operate, including by creating a social networking experience similar to ours with similar content
and features. As a result, our competitors may acquire and engage users at the expense of the growth or engagement of our user base, which
may negatively affect our business and financial results.

 We believe that our ability to compete effectively
depends upon many factors, including:

 the age appropriateness, attractiveness, safety, ease of use, performance, and reliability of the Grom Social platform, our content and products compared to our competitors;

 the size and composition of our user base;

 the engagement of our users with our products;

 the timing and market acceptance of content, services, and products, including developments and enhancements to our or our competitors' content, services and products;

 our ability to monetize our products, including our ability to successfully monetize mobile usage;

 the frequency, size, and relative prominence of the ads and other commercial content displayed by us or our competitors;

 customer service and support efforts;

 marketing and selling efforts;

 responding to changes mandated by legislation or regulatory authorities, some of which may have a disproportionate effect on us;

 acquisitions or consolidation within our industry, which may result in more formidable competitors;

 our ability to attract, retain, and motivate talented employees, particularly programmers;

 our ability to cost-effectively manage and grow our operations; and

 our ability to cost-effectively manage and grow our operations; and

 If we are not able to effectively compete, our
user base and level of user engagement may decrease, which could make us less attractive to developers and advertisers and materially
and adversely affect our revenue and results of operations.

 We are a holding company organized in Florida,
with no operations of our own, and we depend on our subsidiaries, incorporated in Hong Kong, Manila and Florida for cash to fund our operations.

 Our operations are conducted entirely through
our subsidiaries and our ability to generate cash to fund operations or to meet debt service obligations is dependent on the earnings
and the receipt of funds from our subsidiaries. Deterioration in the financial condition, earnings or cash flow of TD Holdings and its
subsidiaries for any reason could limit or impair their ability to make payments to us. Additionally, to the extent that we need funds
and our subsidiaries are restricted from making such distributions under applicable law or regulation or are otherwise unable to provide
such funds, it could materially adversely affect our business, financial condition, results of operations or prospects.

 Our intellectual property rights are critical
to our success, and the loss of such rights or the ability to obtain, maintain and protect our intellectual property rights could materially
adversely affect our business.

 We regard our trademarks, copyrights, and other
intellectual property rights as critical to our success and attempt to obtain, maintain and protect such intellectual property with registered
and common law trademarks and copyrights, restrictions on disclosure and other actions to prevent infringement. Our success will depend
in part on our ability to obtain and maintain patent and other intellectual property protection in the United States and other countries
with respect to our property and technology. We rely on a combination of copyright, trade secret and trademark laws, to protect our proprietary
technology and prevent others from duplicating our products. However, there can be no assurance that other third parties will not infringe
or misappropriate our trademarks and similar proprietary rights. If we lose some or all of our intellectual property rights, our business
may be materially adversely affected.

 If our trademarks and tradenames are not
adequately protected, then we may not be able to build name recognition in our markets and our business may be adversely affected.

 Our trademarks or trade names may be challenged,
infringed, circumvented, declared generic or determined to be violating or infringing on other marks. We may not be able to protect our
rights to these trademarks and trade names or may be forced to stop using these trademarks or trade names, which we need to build name
recognition among potential partners and customers in our markets of interest. At times, competitors or other third parties may adopt
trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion.
In addition, there could be potential trade name or trademark infringement, or dilution claims brought by owners of other trademarks.
Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to
compete effectively, and our business may be adversely affected. Our efforts to enforce or protect our rights related to trademarks, trade
secrets, domain names or other intellectual property rights may be ineffective, could result in substantial costs and diversion of resources
and could adversely affect our business, financial condition and results of operations.

 We may be subject to claims alleging the
intellectual property subject to our licensing agreements is violating the intellectual property rights of others.

 We may face significant expense and liability
as a result of litigation or other proceedings relating to patents and intellectual property rights of others. We could be required to
participate in interference proceedings involving issued patents and pending applications of another entity. The cost to us of any such
proceeding could be substantial. An adverse outcome in an interference proceeding could require us to cease using the technology, to substantially
modify it or to license rights from prevailing third parties. There is no guarantee that any prevailing patent owner would offer us a
license so that we could continue to engage in activities claimed by the patent, or that such a license is made available to us or could
be acquired on commercially acceptable terms. In addition, third parties may, in the future, assert other intellectual property infringement
claims against us with respect to our services, technologies or other matters.

 Risks Related to Grom Social

 If we fail to retain existing users or add
new users, or if our users decrease their level of engagement, our revenue, financial results, and business may be significantly harmed.

 The size of our user base and our users'
level of engagement are critical to our success. We have over 28 million Grom Social users under the age of 13 and an almost equal number
of parents in our database as of October 2022. Our future financial performance will be significantly determined by our success in adding,
retaining, and engaging users. We define a "user" as any child under the age of 13 who joins Grom Social through the website
or downloads the Grom Social app from a mobile app store, and any parent who joins Grom Social and any student or faculty that uses our
NetSpective web filtering platform. If people do not perceive our site and the content that we offer to be enjoyable, engaging, reliable,
and trustworthy, we may not be able to attract or retain users or otherwise maintain or increase the frequency and duration of their interaction
on our website. A number of other social networking companies that achieved early popularity have since seen their active user bases or
levels of engagement decline, in some cases precipitously. There is no guarantee that we will not experience a similar erosion of our
user base or engagement levels. A decrease in user retention, growth, or engagement could render us less attractive to developers and
advertisers, which may have a material and adverse impact on our revenue, business, financial condition, and results of operations. Any
number of factors could potentially negatively affect our ability to attract and retain user and to increase their engagement on the website,
including, if:

 our users decide to spend their time on competing sites;

 we fail to introduce new and improved content or if we introduce new content or services that are not favorably received;

 we are unable to successfully balance our efforts to provide a compelling user experience with the decisions we make with respect to the frequency, prominence, and size of ads and other commercial content that we display;

 we are unable to continue to develop products for mobile devices that users find engaging, that work with a variety of mobile operating systems and networks, and that achieve a high level of market acceptance;

 there are changes in user sentiment about the quality or usefulness of our products or concerns related to privacy and sharing, safety, security, or other factors;

 we are unable to manage and prioritize information to ensure users are presented with content that is interesting, useful, and relevant to them;

 there are adverse changes in our products that are mandated by legislation or regulatory authorities;

 technical or other problems prevent us from delivering our products in a rapid and reliable manner or otherwise affect the user experience;

 we adopt policies or procedures related to areas such as sharing or user data that are perceived negatively by our users or the general public; or

 we fail to provide adequate customer service to users, developers, or advertisers;

 If we are unable to maintain and increase our
user base and user engagement, our revenue, financial results, and future growth potential may be adversely affected.

 Our strategy at Grom Social to create new
and original content, charge users for that content and attempt to secure advertisers to pay to advertise on our app, could fail to attract
or retain users or generate revenue.

 Our ability to retain, increase, and engage our
user base and to increase our revenue will depend heavily on our ability to create successful new content, both independently and in conjunction
with third parties. If new or enhanced content fails to engage users, developers, or advertisers, we may fail to attract or retain users
or to generate sufficient revenue, operating margin, or other value to justify our investments, and our business may be adversely affected.
In the future, we may invest in new products and initiatives to generate revenue, but there is no guarantee these approaches will be successful.
If we are not successful with new approaches to monetization, we may not be able to maintain or grow our revenue as anticipated or recover
any associated development costs, and our financial results could be adversely affected.

 If we are not able to maintain and enhance
our brand, or if events occur that damage our reputation and brand, our ability to expand our user base may be impaired, and our business
and financial results may be harmed.

 We believe that maintaining and enhancing the
Grom Social brand is central to expanding our base of users and advertisers. Many of our new users are referred by existing users, and
therefore we strive to ensure that our users remain favorably inclined towards our brand. Maintaining and enhancing our brand will depend
largely on our ability to continue to provide age-appropriate, enjoyable, reliable, trustworthy, and innovative content and services,
which we may not do successfully. We may introduce new content or terms of service that users do not like, which may negatively affect
our brand. Additionally, the actions of third-party developers may affect our brand if users do not have a positive experience using third-party
apps and websites integrated with our website. We also may fail to provide adequate customer service, which could erode confidence in
our brand. Our brand may also be negatively affected by the actions of users that are deemed to be hostile or inappropriate to other users,
or by users acting under false or inauthentic identities. Maintaining and enhancing our brand may require us to make substantial investments
and these investments may not be successful. If we fail to successfully promote and maintain the Grom Social brand or if we incur excessive
expenses in this effort, our business and financial results may be adversely affected.

 Our Grom Social platform may be misused
by users, despite the safeguards we have in place to protect against such behavior.

 Users may be able to circumvent the controls we
have in place to prevent abusive, illegal or dishonest activities and behavior on our website, and may engage in such activities and behavior
despite these controls. For example, our Grom Social platform could be used to exploit children and to facilitate individuals seeking
to engage in improper communications or contact with children. Such potential behavior of such users would injure our other users and
would jeopardize the reputation and integrity of our Grom Social platform. Fraudulent users could also post fraudulent profiles or create
false or unauthorized profiles on behalf of other, non-consenting parties. This behavior could expose us to liability or lead to negative
publicity that could injure the reputation of our Grom Social platform and materially adversely affect our brand.

 We could experience system failures or capacity
constraints that could negatively impact our Grom Social platform and business.

 Our ability to provide reliable service to our
users largely depends on the efficient and uninterrupted operation of our Grom Social platform, relying on people, processes, and technology
to function effectively. Any significant interruption to, failure of, or security breaches affecting, our Grom Social platform could result
in significant expense, a loss of users, and harm to our business and reputation. Interruptions, system failures or security breaches
could result from a wide variety of causes, including disruptions to the internet, malicious attacks or cyber incidents such as unauthorized
access, loss or destruction of data (including confidential and/or personal customer information), account takeovers, computer viruses
or other malicious code, and the loss or failure of systems over which we have no control. The failure of our Grom Social platform, or
the loss of data, could result in disruption to our operations, damage to our reputation and remediation costs, which could individually
or in the aggregate adversely affect our business and brand.

 Improper access to or disclosure of our
users' information, or violation of our terms of service or policies, could harm our reputation and adversely affect our business.

 Our efforts to protect the information that our
users have chosen to share using Grom Social may be unsuccessful due to the actions of third parties, software bugs or other technical
malfunctions, employee error or malfeasance, or other factors. In addition, third parties may attempt to fraudulently induce employees
or users to disclose information in order to gain access to our data or our users' data. If any of these events occur, our users'
information could be accessed or disclosed improperly. We have a privacy policy that governs the use of information that users have chosen
to share using the Grom Social website and how that information may be used by us and third parties. Some third-party developers may store
the information provided by our users through apps on the Grom Social platform or websites. If these third parties or developers fail
to adopt or adhere to adequate data security practices or fail to comply with our terms and policies, or in the event of a breach of their
networks, our users' data may be improperly accessed or disclosed.

 Any incidents involving unauthorized access to
or improper use of the information of our users or incidents involving violation of our terms of service or policies, including our privacy
policy, could damage our reputation and our brand and diminish our competitive position. In addition, the affected users or government
authorities could initiate legal or regulatory action against us in connection with such incidents, which could cause us to incur significant
expense and liability or result in orders or consent decrees forcing us to modify our business practices. Any of these events could have
a material and adverse effect on our business, reputation, or financial results.

 We collect, process, share, retain and use
personal information and other data, which subjects us to governmental regulations and other legal obligations related to privacy, and
our actual or perceived failure to comply with such obligations could harm our business.

 A variety of federal, state and foreign laws and
regulations govern privacy and the collection, use, retention, sharing and security of personal information. We collect, process, use,
share and retain personal information and other user data, including information about our users as they interact with our platform, and
we have a privacy policy concerning our use of data on our platform. We are subject to COPPA which regulates the collection, use, and
disclosure of personal information from children under 13 years of age and CIPA, which addresses concerns about children's access
to obscene or harmful content over the internet.

 Any failure or perceived failure by us to comply
with COPPA, CIPA, or other applicable privacy laws and regulations or with our privacy policy or any compromise of security that results
in the unauthorized release or transfer of sensitive information, which may include personally identifiable information or other user
data, may result in governmental enforcement actions or litigation, which could be costly to defend and may require us to pay significant
fines or damages. Such failures or perceived failures could also result in public statements against us by consumer advocacy groups, our
users or others, which could harm our brand and could cause our users, and parents to lose trust in us which in turn could have an adverse
effect on our business. Additionally, if third parties we work with, such as advertisers, vendors, content or platform providers, violate
applicable laws or our policies, such violations may also put the information of our users at risk and could, in turn, have an adverse
effect on our business.

 We also are or may become required to comply with
varying and complex privacy laws and regulations in multiple jurisdictions, and laws and regulations in foreign jurisdictions are sometimes
more restrictive than those in the United States. Complying with these laws as they evolve could cause us to incur substantial costs or
require us to change our business practices in a manner adverse to our business.

 As a result of our collection, retention, and
use of personal data, we are or may become subject to diverse laws and regulations in the United States and foreign jurisdictions mandating
notification to affected individuals in the event that personal data (as defined in the various governing laws) is accessed or acquired
by unauthorized persons. Complying with such numerous and complex regulations in the event of unauthorized access would be expensive and
difficult, and failure to comply with these regulations could subject us to regulatory scrutiny and additional liability.

 User trust regarding privacy and data security
is very important to our brand and the growth of our business, and privacy or data security concerns relating to our Grom Social platform
could damage our reputation and brand and deter current and potential users from using our platform, even if we are in compliance with
applicable privacy and data security laws and regulations.

 Users may curtail or stop their use of our
Grom Social platform if our security measures are compromised, if our platform is subject to attacks that degrade or deny the ability
of users to access our platform or if our member data is compromised.

 Our Grom Social platform collects, processes,
stores, shares, discloses and uses the information of our users and their communications. We are vulnerable to computer viruses, break-ins,
phishing attacks, and attempts to overload our servers with denial-of-service and other cyber-attacks and similar disruptions from unauthorized
use of our computer systems. Our security measures may also be breached due to employee error, malfeasance or otherwise. Several recent,
highly publicized data security breaches and denial of service attacks at other companies have heightened public awareness of this issue
and may embolden individuals or groups to target our systems. Any of the foregoing could lead to interruptions, delays or platform shutdowns,
causing loss of critical data or the unauthorized disclosure or use of personally identifiable or other confidential or sensitive information,
such as credit card information or information about our members. If our security is compromised, we could experience platform performance
or availability problems, the complete shutdown of our platform or the loss or unauthorized disclosure of confidential or sensitive information.
We could be subject to liability and litigation and reputational harm, and our users may be harmed, lose confidence in us and decrease
or terminate the use of our platform.

 We also rely on certain third parties to provide
critical services and to store sensitive customer information. For example, our platform is hosted using data centers operated by third
parties. However, we have little or no control over the security measures implemented by these parties, and if these measures are compromised,
we could be exposed to similar risks and liabilities to those described above.

 Unauthorized parties may also fraudulently induce
employees or members to disclose sensitive information in order to gain access to our information or the information of our members or
access this information through other means. They might also abuse our systems in other ways, such as by sending spam, which could diminish
or otherwise degrade the experience of our members or by compromising or gaining unauthorized access to member accounts. Because the techniques
used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and are becoming increasingly sophisticated,
they often are not recognized until launched against a target. Furthermore, such attacks may originate from less regulated and remote
areas around the world, and we may be unable to proactively address these techniques or to implement adequate preventative measures. Any
or all of these issues could negatively impact our ability to attract new members and increase engagement by existing members, cause existing
members to stop using our platform or subject us to lawsuits, regulatory fines or other action or liability, thereby harming our business
and operating results.

 Moreover, if a high-profile security breach occurs
with respect to another social media provider, our users and potential users may lose trust in the security of our platform generally,
which could adversely impact our ability to retain existing users or attract new ones.

 If any of our relationships with internet
search websites terminate, if such websites' methodologies are modified or if we are outbid by competitors, traffic to our websites
could decline.

 We depend in part on various internet search websites,
such as Google.com, Bing.com, Yahoo.com, and other websites to direct a significant amount of traffic to our websites. Search websites
typically provide two types of search results, algorithmic and purchased listings. Algorithmic listings generally are determined and displayed
as a result of a set of unpublished formulas designed by search engine companies in their discretion. Purchased listings generally are
displayed if particular word searches are performed on a search engine. We rely on both algorithmic and purchased search results, as well
as advertising on other internet websites, to direct a substantial share of visitors to our websites and to direct traffic to the advertiser
customers we serve. If these internet search websites modify or terminate their relationship with us or we are outbid by our competitors
for purchased listings, meaning that our competitors pay a higher price to be listed above us in a list of search results, traffic to
our websites could decline. Such a decline in traffic could affect our ability to generate advertising revenue and could reduce the desirability
of advertising on our websites.

 We may have difficulty scaling and adapting
our existing network infrastructure to accommodate increased traffic and technology advances or changing business requirements, which
could cause us to incur significant expenses and lead to the loss of users and advertisers.

 To be successful, our network infrastructure has
to perform well and be reliable. The greater the user traffic and the greater the complexity of our products and services, the more computer
power we will need. We could incur substantial costs if we need to modify our websites or our infrastructure to adapt to technological
changes. If we do not maintain our network infrastructure successfully, or if we experience inefficiencies and operational failures, the
quality of our products and services and our users' experience could decline. Maintaining an efficient and technologically advanced
network infrastructure is particularly critical to our business because of the pictorial nature of the products and services provided
on our websites. A decline in quality could damage our reputation and lead us to lose current and potential users and advertisers. Cost
increases, loss of traffic or failure to accommodate new technologies or changing business requirements could harm our operating results
and financial condition.

 Risks Related to Top Draw Animation

 Since Top Draw's business operations
are located in the Philippines, our results of operations or financial condition could be materially adversely affected by economic or
political developments in the Philippines.

 Top Draw's business operations are located
in the Philippines. As a result, we are subject to certain risks presented by the Philippine economy and regulatory environment. We believe
that the Philippine government exercises substantial control over virtually every sector of the Philippine economy through regulations
and, in some cases, state-ownership. Our ability to operate Top Draw's business in the Philippines may be harmed by changes in the
local laws and regulations, including those relating to employment, taxation, business regulation, intellectual property rights, property,
and other matters.

 In the event of adverse weather conditions,
calamity or epidemic that may occur in the Philippines, the lack of a fully developed infrastructure could have a material adverse impact
on Top Draw's business.

 The vast majority of Top Draw's employees
do not own an automobile and must commute to work using public transportation. Additionally, the power grid in the Philippines is considered
substandard compared to developed countries. Any negative event that impacts public transportation or power generation could result in
Top Draw's employees not being able to go to the office to perform their work thus potentially delaying projects.

 Operating Top Draw in the Philippines subjects
us to challenges and risks unique to operating a business in the Philippines and if we are unable to manage those challenges and risks,
the growth of our business could be limited, and our business could suffer.

 Operating Top Draw in the Philippines subjects
us to a number of risks and challenges that specifically relate to our Philippine operations. Our Philippine operations may not be successful
if we are unable to meet and overcome these challenges, which could limit the growth of our business and may have an adverse effect on
our revenue and operating results. These risks and challenges include:

 difficulties and costs of staffing and managing foreign operations, including any impairment to our relationship with employees caused by the change in ownership;

 restrictions imposed by local labor practices and laws on our business and operations;

 exposure to different business practices and legal standards;

 unexpected changes in regulatory requirements;

 the imposition of government controls and restrictions;

 political, social and economic instability and the risk of war, terrorist activities or other international incidents;

 the failure of telecommunications and connectivity infrastructure;

 natural disasters and public health emergencies;

 potentially adverse tax consequences; and

 lack of intellectual property protection.

 Although we report our results of operations
in U.S. dollars, approximately 84% of our revenue is currently denominated in foreign currencies. We do not hedge against currency fluctuations
and unfavorable fluctuations in foreign currency exchange rates. Such fluctuations could have a material adverse effect on our results
of operations.

 Because our consolidated financial statements
are presented in U.S. dollars, we must translate our Top Draw's revenues, expenses, and income, as well as assets and liabilities,
into U.S. dollars at exchange rates in effect during or at the end of each reporting period. Therefore, changes in the value of the U.S.
dollar against other currencies will affect our revenues, operating income and the value of balance-sheet items, including intercompany
payables and receivables, originally denominated in other currencies. These changes cause our growth in consolidated earnings stated in
U.S. dollars to be higher or lower than our growth in other currencies when compared against other periods.

 An increase in the value of other currencies,
against the U.S. dollar could increase costs for delivery of our digital animation services by increasing labor and other costs that are
denominated in other currencies. Conversely, a decrease in the value of other currencies, against the U.S. dollar could place us at a
competitive disadvantage compared to service providers that benefit to a greater degree from such a decrease and can, as a result, deliver
services at a lower cost.

 Historically, Top Draw's business
has been reliant and concentrated upon a limited number of key clients, the loss of any one of which could have a material adverse effect
on Top Draw's and our revenue and financial condition.

 During the year ended December 31, 2023, Top Draw
accounted for approximately 84% of our consolidated revenue. During the same period, three of Top Draw's clients accounted for approximately
77% of our consolidated revenue. Although the relative percentages by client may change from quarter to quarter, the reliance upon a limited
number of clients is not expected to change for the foreseeable future. As a result, a decrease in business or revenue from any one or
more of these key clients could materially negatively impact Top Draw's and our revenue, results of operation, and financial condition.

 In order for our digitally animated content
and related products to be successful, we must develop appealing creative content.

 The success of each digitally animated feature
developed and produced by Top Draw depends in large part upon our ability to develop and produce compelling stories and characters that
will appeal to our target audience. Traditionally, this process has been extremely difficult. While we believe Top Draw has enjoyed success
with its digitally animated features, there can be no assurance that similar levels of success will be achieved by Top Draw's subsequent
features and our other future projects.

 We expect to experience intense competition
with respect to Top Draw's digitally animated features and related content.

 We expect that Top Draw's digitally animated
features will compete with family-oriented, animated and live-action feature films and other family-oriented entertainment products produced
by major movie studios, including Disney, DreamWorks Animation SKG, Inc., Warner Bros. Entertainment, Sony Pictures Entertainment, Fox
Entertainment Group Inc., Paramount Pictures, Lucasfilm Ltd., Universal Studios, Inc., MGM/UA, and Studio Ghibli as well as numerous other
independent motion picture production companies.

 We believe competition from animated feature films
and family-oriented feature films will likely continue to intensify over the next several years. Some of the other movie studios with
which we compete have significantly greater financial, marketing and other resources than we do. In addition to the box office and home
video competition, other family-oriented features and films will compete with Top Draw Animation's digital features.

 If we are not able to produce digital features
and content that can compete successfully with offerings from our competitors, it could have a material adverse impact on our business,
revenue, and results of operations.

 Risks Related to Our Corporate Structure and
Ownership of Our Securities

 If we are unable to maintain compliance
with all applicable continued listing requirements and standards of Nasdaq, our common stock could be delisted from Nasdaq.

 Our common stock is listed on The Nasdaq Capital
Market under the symbol "GROM." In order to maintain that listing, we must satisfy minimum financial and other continued listing
requirements and standards, including those regarding director independence and independent committee requirements, minimum stockholders'
equity, minimum share price, and certain corporate governance requirements. There can be no assurances that we will be able to remain
in compliance with Nasdaq's listing standards or if we do later fail to comply and subsequently regain compliance with Nasdaq's
listing standards, that we will be able to continue to comply with the applicable listing standards. If we are unable to maintain compliance
with these Nasdaq requirements, our common stock will be delisted from Nasdaq.

 In the event that our common stock is delisted
from Nasdaq due to our failure to continue to comply with any requirement for continued listing on Nasdaq, and is not eligible for quotation
on another market or exchange, trading of our common stock could, again, be conducted in the over-the-counter market or on an electronic
bulletin board established for unlisted securities such as the OTC Pink or the OTCQB tiers of the OTC marketplace. In such event, it could
become more difficult to dispose of, or obtain accurate price quotations for, our common stock, and it would likely be more difficult
to obtain coverage by securities analysts and the news media, which could cause the price of our common stock to decline further. Also,
it may be difficult for us to raise additional capital if we are not listed on a national exchange. See " Management's Discussion and Analysis of Financial Condition and Results of Operations - Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard."

 Future capital raises may dilute our existing
stockholders' ownership and/or have other adverse effects on our operations.

 If we raise additional capital by issuing equity
securities, our existing stockholders' percentage ownership may decrease, and these stockholders may experience substantial dilution.
If we raise additional funds by issuing debt instruments, these debt instruments could impose significant restrictions on our operations,
including liens on our assets. If we raise additional funds through collaborations and licensing arrangements, we may be required to relinquish
some rights to our technologies or products, or to grant licenses on terms that are not favorable to us or could diminish the rights of
our stockholders.

 We do not anticipate paying any cash dividends
on our common stock in the foreseeable future; therefore, capital appreciation, if any, of our common stock, will be your sole source
of gain for the foreseeable future.

 We have never declared or paid cash dividends
on our common stock. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend
to retain all available funds and any future earnings to fund the development and growth of our business. In addition, future loan arrangements,
if any, may contain, terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock. As a result,
capital appreciation, if any, of our common stock, will be your sole source of gain for the foreseeable future.

 Our board of directors may authorize and
issue shares of new classes of stock that could be superior to or adversely affect you as a holder of our common stock.

 Our Board has the power to authorize and issue
shares of classes of stock, including preferred stock that have voting powers, designations, preferences, limitations and special rights,
including preferred distribution rights, conversion rights, redemption rights and liquidation rights without further shareholder approval
which could adversely affect the rights of the holders of our common stock. In addition, our board could authorize the issuance of a series
of preferred stock that has greater voting power than our common stock or that is convertible into our common stock, which could decrease
the relative voting power of our common stock or result in dilution to our existing shareholders.

 Any of these actions could significantly adversely
affect the investment made by holders of our common stock. Holders of our common stock could potentially not receive dividends that they
might otherwise have received. In addition, holders of our common stock could receive less proceeds in connection with any future sale
of the Company, whether in liquidation or on any other basis.

 The voting and conversion rights of our
issued and outstanding shares of Series C Stock will have the effect of diluting the voting power of existing common stockholders.

 Our authorized capital stock includes 25,000,000
shares of preferred stock, of which 2,000,000 shares are designated as Series A Stock, 10,000,000 shares are designated as Series B Stock,
and 10,000,000 shares are designated as Series C Stock. As of April 11, 2024, no shares of our Series A Stock or Series B Stock, and 9,234,309
shares of Series C Stock, are issued and outstanding. The holders of our outstanding shares of Series C Stock may at any time, after the
6-month anniversary of the issuance of their shares of Series C Stock, convert such shares into shares of our common stock at a conversion
price equal to $1,152.00. In addition, the Company may, at any time, require conversion of all or any of the Series C Stock then outstanding
at a conversion price equal to $1,152.00. The conversion of shares of our Series C Stock will dilute your interests. If all of the shares
of our Series C Stock were converted, we would have 8,023 additional shares of common stock issued and outstanding, which, based on the
8,924,686 shares outstanding as of April 11, 2024, would represent approximately 0.1% of our shares of common stock outstanding, if all
of the shares of our Series C Stock were converted.

 In addition, the holders of shares of our Series
C Stock vote together as a single class with the holders of shares of our common stock, with each share entitling the holder to 1.5625
votes per share. Therefore, as of April 11, 2024, the holders of our 9,234,309 shares of Series C Stock, have an aggregate of approximately
14,442,671 votes, representing approximately 61.8% of our voting power.

 The effects of the voting and conversion rights
tied to shares of our Series C Stock may affect the rights of our common stockholders by, among other things, restricting dividends on
our common stock, diluting the voting power of our common stockholders, reducing the market price of our common stock, or impairing the
liquidation rights of our common stock.

 Substantial future sales of shares of our
common stock could cause the market price of our common stock to decline.

 The market price of shares of our common stock
could decline as a result of substantial sales of our common stock, particularly sales by our directors, executive officers and significant
stockholders, or a large number of shares of our common stock becoming available for sale or the perception in the market that holders
of a large number of shares intend to sell their shares.

 The market price of our shares of common
stock is subject to fluctuation.

 The market prices of our shares may fluctuate
significantly in response to factors, some of which are beyond our control, including:

 The announcement of new products by our competitors;

 The release of new products by our competitors;

 Developments in our industry or target markets; and

 General market conditions including factors unrelated to our operating performance.

 Recently, the stock market, in general, has experienced
extreme price and volume fluctuations. Continued market fluctuations could result in extreme market volatility in the price of our shares
of common stock which could cause a decline in the value of our shares.

 In the event that our common stock is delisted
from Nasdaq, U.S. broker-dealers may be discouraged from effecting transactions in shares of our common stock because they may be considered
penny stocks and thus be subject to the penny stock rules.

 The SEC has adopted a number of rules to regulate
"penny stock" that restricts transactions involving stock which is deemed to be penny stock. These rules may have the effect
of reducing the liquidity of penny stocks. "Penny stocks" generally are equity securities with a price of less than $5.00
per share (other than securities registered on certain national securities exchanges or quoted on Nasdaq if current price and volume information
with respect to transactions in such securities is provided by the exchange or system). Our shares of common stock constitute a "penny
stock" within the meaning of the rules. The additional sales practice and disclosure requirements imposed upon U.S. broker-dealers
may discourage such broker-dealers from effecting transactions in shares of our common stock, which could severely limit the market liquidity
of such shares of common stock and impede their sale in the secondary market.

 Stockholders should be aware that, according to
the SEC, the market for "penny stocks" has suffered in recent years from patterns of fraud and abuse. Such patterns include
(i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation
of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, resulting in investor losses. Our management is aware of the abuses that have occurred
historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers
who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from
being established with respect to our securities.

 If securities or industry analysts do not
publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

 The trading market for our common stock will depend
in part on the research and reports that securities or industry analysts publish about us or our business. Several analysts may cover
our stock. If one or more of those analysts downgrade our stock or publish inaccurate or unfavorable research about our business, our
stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly,
demand for our stock could decrease, which might cause our stock price and trading volume to decline.

 The market price for our common stock is
particularly volatile given our status as a relatively unknown company with a small and thinly traded public float, and lack of profits,
which could lead to wide fluctuations in our share price.

 The market for our common stock is characterized
by significant price volatility when compared to the shares of larger, more established companies that have large public floats, and we
expect that our share price will continue to be more volatile than the shares of such larger, more established companies for the indefinite
future. The volatility in our share price is attributable to a number of factors. First, as noted above, our common stock is, compared
to the shares of such larger, more established companies, sporadically and thinly traded. The price for our common stock could, for example,
decline precipitously in the event that a large number of our common stock is sold on the market without commensurate demand. Secondly,
we are a speculative or "risky" investment due to our lack of profits to date. As a consequence of this enhanced risk, more
risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress,
be more inclined to sell their shares of common stock on the market more quickly and at greater discounts than would be the case with
the stock of a larger, more established company that has a large public float. Many of these factors are beyond our control and may decrease
the market price of our common stock regardless of our operating performance.

 If and when a larger trading market for
our common stock develops, the market price of our common stock is still likely to be highly volatile and subject to wide fluctuations.

 The market price of our common stock may be highly
volatile and could be subject to wide fluctuations in response to a number of factors that are beyond our control, including, but not
limited to:

 variations in our revenues and operating expenses;

 actual or anticipated changes in the estimates of our operating results or changes in stock market analyst recommendations regarding our common stock, other comparable companies or our industry generally;

 market conditions in our industry, the industries of our customers and the economy as a whole;

 actual or expected changes in our growth rates or our competitors' growth rates;

 developments in the financial markets and worldwide or regional economies;

 announcements of innovations or new products or services by us or our competitors;

 announcements by the government relating to regulations that govern our industry;

 sales of our common stock or other securities by us or in the open market;

 changes in the market valuations of other comparable companies; and

 other events or factors, many of which are beyond our control, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues including health epidemics or pandemics, such as the COVID-19 pandemic, and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather and climate conditions, whether occurring in the United States or elsewhere, could disrupt our operations, disrupt the operations of our suppliers or result in political or economic instability.

 In addition, if the market for technology stocks
or the stock market in general experiences loss of investor confidence, the trading price of our common stock could decline for reasons
unrelated to our business, financial condition or operating results. The trading price of our common stock might also decline in reaction
to events that affect other companies in our industry, even if these events do not directly affect us. Each of these factors, among others,
could harm the value of your investment in our common stock. In the past, following periods of volatility in the market, securities class-action
litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and
diversion of management's attention and resources, which could materially and adversely affect our business, operating results and
financial condition.

 We have identified a material weakness in
our internal control over financial reporting. This material weakness could continue to adversely affect our ability to report our results
of operations and financial condition accurately and in a timely manner.

 Our management is responsible for establishing
and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management is likewise
required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses
identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies,
in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or
interim financial statements will not be prevented or detected on a timely basis.

 As described elsewhere in this Annual Report,
we identified a material weakness in our internal control over financial reporting related to functional controls and segregation of duties.
As a result of this material weakness, our management concluded that our internal control over financial reporting was not effective as
of December 31, 2023.

 Any failure to maintain such internal control
could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis, which
could result in a material adverse effect on our business. If our financial statements are not accurate, investors may not have a complete
understanding of our operations. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions
or investigations by Nasdaq, the SEC or other regulatory authorities. In addition, we would likely incur additional accounting, legal
and other costs in connection with any remediation steps. Ineffective internal controls could also cause investors to lose confidence
in our reported financial information, which could have a negative effect on the trading price of our stock.

 To respond to this material weakness, we have
devoted, and plan to continue to devote, significant effort and resources to the remediation and improvement of our internal control over
financial reporting. While we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance
these processes to better evaluate our research and understanding of the nuances of the complex accounting standards that apply to our
financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents
and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications.
Additionally, we have hired, and plan to continue to hire, as resources permit, qualified accounting personnel to better manage our functional
controls and segregate responsibilities. The elements of our remediation plan can only be accomplished over time, and we can offer no
assurance that these initiatives will ultimately have the intended effects.

 We can give no assurance that the measures we
have taken and plan to take in the future will remediate the material weakness identified or that any additional material weaknesses or
restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over
financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures,
in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair
presentation of our financial statements.

 Failure to achieve and maintain effective
internal controls in accordance with Section 404 of the Sarbanes Oxley Act could prevent us from producing reliable financial reports
or identifying fraud. In addition, current and potential stockholders could lose confidence in our financial reporting, which could have
an adverse effect on our stock price.

 We are subject to Section 404 of the Sarbanes-Oxley
Act. Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud, and a lack
of effective controls could preclude us from accomplishing these critical functions. We are required to document and test our internal
control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, in connection with, PCAOB AS 2201 which
requires annual management assessments of the effectiveness of our internal controls over financial reporting. Our management assessed
the effectiveness of our internal control over financial reporting as of December 31, 2023, and concluded that our internal controls and
procedures were not effective.

 ITEM 1B. UNRESOLVED STAFF COMMENTS

 None.

 ITEM 1C. Cybersecurity

 We regularly review our cybersecurity
defenses to assess our vulnerability to cybersecurity attacks from viruses, malware and more sophisticated and targeted
cyber-related attacks such as hackers looking to demand ransomware or access our systems to obtain information and data, as well as
our vulnerability to cybersecurity failures resulting from human error and technological errors. We rely upon internal IT
personnel working in conjunction with specialized outside security consultants on a day-to-day basis to conduct reviews and upgrade
our systems when determined to be necessary.

 Our overall strategy
in combatting cybersecurity risks includes a variety of measures, including:

 the use of antivirus software, virtual private networks, email security, as well as other software and system-wide measures such as multi-factor authorization to prevent and detect data intrusions;

 deployment of updates and patches as they become available from our software suppliers and consultants and maintaining the current versions of major software to reduce the exposure to vulnerabilities;

 the use of third-party services to conduct mandatory online training for all employees regarding identifying and avoiding cyber-security risks;

 the review of the security procedures used by third parties that may host or otherwise have access to our systems;

 the deployment of third-party cyber-security experts to perform penetration testing on our internal and external networks and systems in an effort to identify potential vulnerabilities; and consideration of the cybersecurity risks posed by interacting with current and potential third-party service providers, suppliers and customers.

 We are not aware of any
existent weakness in our systems or malware embedded in our systems that would materially affect, or are reasonably likely to materially
affect, our operations.

 Board Oversight

 The Board, as a whole, has oversight responsibility for our strategic
and operational risks. The Audit Committee of our Board, which is composed of all non-employee directors, is responsible for oversight
of our efforts to eliminate cybersecurity risks. The Audit Committee meets regularly with our Chief Executive Officer and Chief
Financial Officer and, in turn, reports its finding to the Board.

 ITEM 2.
PROPERTIES

 We lease approximately 2,100 square feet of office
space as our principal executive offices in Boca Raton, Florida for approximately $4,000 per month on a month-to-month basis. Our most
recent two-year lease agreement expired on March 31, 2024.

 Our animation business leases an aggregate of
approximately 26,600 square feet in the West Tower of the Philippine Stock Exchange Centre in Pasig City, Manila for administration and
production purposes. We currently pay approximately $20,500 per month for such space (which increases by approximately 5% per year). These
leases expire in December 2027.

 Our web filtering business leases approximately
1,900 square feet in Peachtree Corners, Georgia, for approximately $2,450 per month pursuant to an amended and assigned five-year lease
which now expires in May 2025. The lease payments increase by approximately 3% annually.

 Our original content business leases approximately
153 square feet in Calabasas, California, for approximately $1,550 per month pursuant to a one-year lease which expires in November 2024.

 We believe our leased space for the present time
is adequate and additional space at comparable prices is available at all locations.

 ITEM 3. LEGAL PROCEEDINGS

 There are no pending legal proceedings to which
we are a party or in which any director, officer or affiliate of ours, any owner of record or beneficially of more than 5% of any class
of our voting securities, or security holder is a party adverse to us or has a material interest adverse to us.

 ITEM 4. MINE SAFETY DISCLOSURES

 None

 ITEM 5. MARKET FOR REGISTRANT'S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 Our shares of our common stock are quoted on the
Nasdaq Capital Market under the symbol "GROM." Such quotations reflect inter-dealer prices, without retail mark-up, mark-down,
or commission and do not necessarily represent actual transactions.

 The last reported sales price of our common stock
on the Nasdaq Capital Market on April 11, 2024, was $0.7198.

 Holders

 As of April 11, 2024, there were 439 shareholders
of record of our common stock.

 Dividends

 We have never declared or paid any cash dividends
on our common stock. We intend to retain future earnings, if any, to finance the expansion of our business. As a result, the Company does
not anticipate paying any cash dividends in the foreseeable future.

 Securities Authorized for Issuance Under Equity
Compensation Plan

 The following table provides information regarding
our equity compensation plans as of December 31, 2023:

 Equity Compensation Plan Information

 Plan category

 Number of securities to be issued upon exercise of outstanding options, warrants and rights

 Weighted-average exercise price of outstanding options, warrants and rights

 Number of securities remaining available for future issuance under equity compensation plans

 Equity compensation plans approved by security holders

 (1)

 $
 1,788.00

 10,000,000

 Equity compensation plans not approved by security holders

 –

 $
 –

 –

 ______________

 (1) Represents options to purchase
an aggregate of 347 shares of common stock issued to officers and employees for services provided to the Company at an exercise price
of $1,788.00.

 Unregistered Sales of Equity Securities

 There were no sales of equity securities during
the period covered by this Annual Report that were not registered under the Securities Act and were not previously reported in a Quarterly
Report on Form 10-Q or a Current Report on Form 8-K filed by the Company.

 ITEM 6. [Reserved]

 ITEM 7. MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 Forward-Looking Statements

 The following discussion and analysis should
be read in conjunction with our financial statements and the related notes thereto. The management's discussion and analysis contain forward-looking
statements, such as statements of our plans, objectives, expectations, and intentions. Any statements that are not statements of historical
fact are forward-looking statements. When used, the words "believe," "plan," "intend," "anticipate,"
"target," "estimate," "expect" and the like, and/or future tense or conditional constructions ("will,"
"may," "could," "should," etc.), or similar expressions, identify certain of these forward-looking statements.
These forward-looking statements are subject to risks and uncertainties, including those under "Risk Factors," which appear
in elsewhere in this Annual Report, that could cause actual results or events to differ materially from those expressed or implied by
the forward-looking statements. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking
statements as a result of several factors. We do not undertake any obligation to update forward-looking statements to reflect events or
circumstances occurring after the date of this Annual Report.

 The share and per share information in the following
discussion reflects a reverse stock split of our outstanding common stock at a 1-for-20 ratio, effective as of September 7, 2023.

 Overview

 We were incorporated in the State of Florida on
April 14, 2014 under the name Illumination America, Inc.

 On August 17, 2017, we acquired Grom Holdings,
Inc., a Delaware corporation ("GHLD"), pursuant to a share exchange agreement (the "Share Exchange Agreement")
entered into on May 15, 2017 (the "Share Exchange"). In connection with the Share Exchange, the Company acquired 100% of the
outstanding shares of capital stock of GHLD from GHLD' stockholders in exchange for an aggregate of 5,774 shares of common stock,
par value $0.001 per share, of the Company. As a result of the Share Exchange, the stockholders of GHLD acquired approximately 92% of
the Company's then-issued and outstanding shares of common stock and GHLD became a wholly-owned subsidiary of the Company. In connection
with the Share Exchange, on August 17, 2017, we changed our name to Grom Social Enterprises, Inc.

 We are a media, technology and entertainment company
that focuses on (i) delivering content to children under the age of 13 years in a safe secure platform that is compliant with the Children's
Online Privacy Protection Act ("COPPA") and can be monitored by parents or guardians, (ii) creating, acquiring, and developing
the commercial potential of Kids & Family entertainment properties and associated business opportunities, (iii) providing world class
animation services, and (iv) offering protective web filtering solutions to block unwanted or inappropriate content. We conduct our business
through our following subsidiaries:

 Grom Social, Inc. ("GSOC"), incorporated in the State of Florida on March 5, 2012, operates our social media network designed for children under the age of 13 years.

 TD Holdings Limited ("TDH"), incorporated in Hong Kong on September 15, 2005, operates through its two wholly-owned subsidiaries: (i) Top Draw Animation Hong Kong Limited, a Hong Kong corporation ("TDAHK"), and (ii) Top Draw Animation, Inc., a Philippines corporation ("TDAM"). The group's principal activities are the production of animated films and television series.

 Grom Educational Services, Inc. ("GEDU"), incorporated in the State of Florida on January 17, 2017, operates our web filtering services provided to schools and government agencies.

 Grom Nutritional Services, Inc. ("GNUT"), incorporated in the State of Florida on April 19, 2017, intends to market and distribute nutritional supplements to children. It has been nonoperational since its inception.

 Curiosity Ink Media, LLC ("CIM"), organized in the State of Delaware on January 5, 2017, develops, acquires, builds, grows and maximizes the short, mid and long-term commercial potential of kids and family entertainment properties and associated business opportunities.

 We own 100% of each of GSOC, TDH, GEDU and GNUT,
and 80% of CIM.

 We have three reportable business segments: Animation,
which includes TDH; Original Content, which includes CIM; and Social & Technology, which includes GSOC and GEDU.

 Recent Developments

 PIPE Offering and Related Waiver

 On January 25, 2023, we consummated a private
investment in public equity offering (the "PIPE Offering") pursuant to the terms of the Securities Purchase Agreement, dated
January 25, 2023, as amended (the "January 2023 SPA") that we entered into with institutional investors, in which we issued
(i) 5,000 shares of common stock; (ii) 66,372 purchase warrants (the "January 2023 Purchase Warrants") to purchase an aggregate
of 116,151 shares of common stock; and (iii) 61,372 pre-funded warrants (the "January 2023 Pre-Funded Warrants", together
with the January 2023 Purchase Warrants, the "January 2023 Warrants") to purchase an aggregate of 61,372 shares of common
stock. The purchase price of each share of common stock and associated January 2023 Purchase Warrant was $45.20. The purchase price of
each January 2023 Pre-Funded Warrant and associated January 2023 Purchase Warrant was $45.00. The aggregate gross proceeds of the PIPE
Offering was approximately $3.0 million, before deducting fees to the placement agent and other expenses payable by us. EF Hutton LLC
(then known as EF Hutton, division of Benchmark Investments, LLC), acted as the exclusive placement agent in connection with the PIPE
Offering.

 In connection with the PIPE Offering, we entered
into a waiver agreement (the "Waiver") with L1 Capital Global Opportunities Master Fund ("L1") waiving certain
provisions of the Securities Purchase Agreement, dated as of September 14, 2021 (the "2021 SPA"), by and between L1 and us.
Pursuant to the terms of the Waiver, L1 waived certain provisions of the 2021 SPA and in consideration thereof, we (i) issued 7,500 purchase
warrants substantially similar to the January 2023 Purchase Warrants issued in connection with the January 2023 SPA; and (ii) paid a cash
fee of $50,000 to L1.

 Pursuant to the January 2023 SPA, we were obligated
to hold a special stockholders' meeting no later than 60 days following the date of the January 2023 SPA to solicit the approval
of the issuance of the shares of common stock, January 2023 Warrants, and the shares of common stock underlying the January 2023 Warrants
in compliance with the rules of The Nasdaq Stock Market LLC (without regard to any limitations on exercise set forth in the January 2023
Purchase Warrants or the January 2023 Pre-Funded Warrants). On March 27, 2023, we held a virtual special meeting of stockholders, and
at the meeting, the issuance of the securities in compliance with the rules of The Nasdaq Stock Market has been approved.

 In connection with the PIPE Offering, we entered
into a Registration Rights Agreement with the investors, dated January 25, 2023 (the "PIPE Registration Rights Agreement").
The PIPE Registration Rights Agreement provided that we shall file a registration statement covering the resale of all of the Registrable
Securities (as defined in the PIPE Registration Rights Agreement) with the SEC. On February 2, 2023, we filed the registration statement,
and on February 9, 2023, the registration statement was declared effective by the SEC.

 September 2023 Offering

 On September 7, 2023, we sold an aggregate 946,000
units (the "Units") at a price of $3.00 per Unit and 54,000 pre-funded units (the "Pre-Funded Units") at a price
of $2.999 per Pre-Funded Unit, with (a) each Unit consisting of: (i) one share of common stock; (ii) one Series A Warrant (the "Series
A Warrant"); and (iii) one Series B Warrant (the "Series B Warrant", together with the Series A Warrant, the "September
2023 Offering Warrants"), each September 2023 Offering Warrant to purchase one share of common stock at $3.00 per share (100% of
the offering price per Unit); and (b) each Pre-Funded Unit consisting of: (i) one pre-funded warrant (the "September 2023 Pre-Funded
Warrant") exercisable for one share of common stock at $0.001 per share; (ii) one Series A Warrant; and (iii) one Series B Warrant,
identical to the September 2023 Offering Warrants in the Unit. The September 2023 Offering Warrants are immediately exercisable and will
expire on the fifth anniversary of the original issuance date. The September 2023 Pre-Funded Warrants are exercisable immediately and
may be exercised at any time until all of the Pre-Funded Warrants are exercised in full. We received approximately $3.0 million in gross
proceeds from the offering (the "September 2023 Offering"), prior to deducting the underwriting discount and commission and
other estimated offering expenses payable by us.

 Pursuant to the Underwriting Agreement, we granted
the underwriters a 45-day option to purchase up to 150,000 shares of common stock and/or September 2023 Pre-Funded Warrants to purchase
150,000 shares of common stock and/or September 2023 Offering Warrants to purchase 150,000 shares of common stock to cover over-allotments.

 The Underwriting Agreement contains customary
representations and warranties by us, conditions to closing, indemnification obligations of us and the underwriters, "lock-up"
agreements where we and each of our officers, directors and 5% shareholders have agreed with the underwriters not to offer for sale, issue,
sell, contract to sell, pledge or otherwise dispose of any of our common stock or securities convertible into common stock for a period
of 90 days from the commencement of sale under the final prospectus relating to the September 2023 Offering.

 Notice of Delisting or Failure to Satisfy
a Continued Listing Rule or Standard

 On April 10, 2023, we received a deficiency letter
(the "Notice") from the Listing Qualifications Department (the "Staff") of The Nasdaq Stock Market LLC ("Nasdaq")
notifying us that, based upon the closing bid price of our common stock for the last 30 consecutive business days, we were not in compliance
with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on Nasdaq, as set forth in Nasdaq Listing
Rule 5550(a)(2) (the "Minimum Bid Requirement"). The Notice had no immediate effect on the continued listing status of our
common stock on Nasdaq, and, therefore, our listing remained fully effective. We were provided a compliance period of 180 calendar days
from the date of the Notice, or until October 9, 2023, to regain compliance with Nasdaq Listing Rule 5550(a)(2).

 On September 21, 2023, we received a compliance
letter from the Staff notifying us that the closing bid price of our common stock had been at $1.00 per share or greater for the last
10 consecutive business days and thus we have regained compliance with Nasdaq Listing Rule 5550(a)(2) and the matter is now closed.

 On February 29, 2024, we received another deficiency
letter (the "Letter") from the Staff indicating that unless we request a hearing before the Nasdaq Hearings Panel (the "Panel")
by March 7, 2024, our securities will be delisted from the Nasdaq Capital Market based upon our non-compliance with the Minimum Bid Requirement
as set forth in Nasdaq Listing Rule 5550(a)(2). The Letter specified that we are not in compliance with the Minimum Bid Requirement for
continued listing on the Nasdaq Capital Market (Nasdaq Listing Rule 5550(a)(2)), as the bid price for our listed securities closed at
less than $1 per share for the previous 30 consecutive business days. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(iv), as we previously
implemented two reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one, we are not eligible
for any compliance period specified in Nasdaq Listing Rule 5810(c)(3)(A).

 On March 6, 2024, we requested a hearing before
the Panel to appeal the determination made by the Staff, and Nasdaq has scheduled the hearing for May 2, 2024. Accordingly, the suspension
of our securities has been stayed, pending the Panel's decision.

 On April 15, 2023 we received a letter from the
Panel that based on our written appeal, Nasdaq has granted an extension until August 27, 2024 provided that we effect a reverse stock
split no later than August 13, 2024 to regain compliance with the Minimum Bid Requirement.

 Reverse Stock Split

 On June 23, 2023, our Board and shareholders approved
the granting of authority to the Board to amend our articles of incorporation to effect a reverse stock split of the issued and outstanding
shares of our common stock, by a ratio of no less than 1-for-2 and no more than 1-for-20, with the exact ratio to be determined by the
Board in its sole discretion, and with such reverse stock split to be effective at such time and date, if at all, as determined by the
Board in its sole discretion. On September 7, 2023, our Board effected a 1-for-20 reverse stock split in connection with the continued
listing of our common stock on Nasdaq. The reverse stock split did not have any impact on the number of authorized shares of common stock,
which remains at 500,000,000 shares.

 November 2023 SPA with Generating Alpha

 On November 9, 2023, we entered into a Securities
Purchase Agreement (as amended on November 20, 2023 and March 11, 2024, the "November 2023 SPA") with Generating Alpha Ltd.
("Generating Alpha") pursuant to which we have agreed to sell two convertible promissory notes, with each note having an initial
principal amount of $4,000,000, for a price of $3,640,000 per note. In connection with the purchase and sale of the notes, we have agreed
to issue to Generating Alpha warrants to acquire a total of 3,028,146 shares of our common stock.

 On December 21, 2023, we consummated a private
placement offering (the "December 2023 Offering") pursuant to the November 2023 SPA, as amended on November 20, 2023, with
Generating Alpha for the purchase of (1) a convertible promissory note, dated December 21, 2023 and amended on March 11, 2024 (the "December
2023 Note"), having an initial principal amount of $4,000,000, (2) a common stock purchase warrant to purchase up to an aggregate
of 757,036 shares of common stock at an exercise price of $1.78 per share of common stock (the "Warrant A"), and (3) a common
stock purchase warrant to purchase up to an aggregate of 757,036 shares of common stock at an exercise price of $0.001 per share of common
stock (the "Warrant B", together with the Warrant A, the "December 2023 Offering Warrants"). The purchase price
of the December 2023 Note was $3,640,000. The aggregate gross proceeds of the December 2023 Offering were approximately $3.6 million,
before deducting fees to the placement agent and other expenses payable by us.

 In connection with the November 2023 SPA, we entered
into a Registration Rights Agreement, dated December 21, 2023 (the "December 2023 Registration Rights Agreement"), with Generating
Alpha. The December 2023 Registration Rights Agreement provided that we shall file a registration statement covering the resale of all
of the Registrable Securities (as defined in the December 2023 Registration Rights Agreement) with the SEC.

 On March 11, 2024, we entered into a second amendment
agreement (the "Second Amendment") to the November 2023 SPA with Generating Alpha, pursuant to which (1) the exercise price
of each of the Warrant A and the Warrant C (as described in the November 2023 SPA) has been amended from $1.78 per share of common stock
to $0.001 per share, and (2) we shall promptly effect a reverse stock split in the event that the closing price of our common stock falls
below $0.25 per share for a period of five consecutive trading days.

 In connection with the Second Amendment, we entered
into an amendment to the December 2023 Note with Generating Alpha, pursuant to which in no event shall the conversion price be less than
$0.25.

 EF Hutton LLC is acting as placement agent for
the financing.

 Non-Binding Letter of Intent with Arctic7

 On March 5, 2024, we signed a non-binding letter
of intent to acquire Arctic7, Inc. ("Arctic7"), an emerging gaming industry service provider, through issuance of shares of
our common stock. Arctic7 is currently engaged in the business of providing full game development, co-development, transmedia and virtual
production services to its customers and partners.

 March 2024 SPA with Generating Alpha

 On March 11, 2024, we entered into a Securities
Purchase Agreement (the "March 2024 SPA") with Generating Alpha pursuant to which we have agreed to issue and sell to Generating
Alpha from time to time up to $25 million of common stock.

 Pursuant to the March 2024 SPA, we may require
Generating Alpha to purchase shares of common stock by delivering put notices to Generating Alpha, subject to certain conditions set forth
therein, at a purchase price of 85% of the lowest traded price of our common stock during the 10 trading days immediately preceding the
date 10 business days after the date the put shares have been accepted and cleared by Generating Alpha's brokerage firm. We have
agreed to issue to Generating Alpha as a commitment fee a Common Stock Purchase Warrant (the "Warrant") for 2,314,814 shares
of common stock with an exercise price of $0.001 per share.

 In connection with the March 2024 SPA, we entered
into a Registration Rights Agreement (the "March 2024 Registration Rights Agreement") with Generating Alpha, pursuant to which
we have agreed to use our commercially reasonable efforts to file a registration statement (the "Registration Statement")
with the SEC on a date no later than sixty (60) days following the date thereof and to have the Registration Statement declared effective
by the SEC within thirty (30) calendar days, but no more than ninety (90) calendar days, after we have filed the Registration Statement.

 April 2024 SPA with Generating Alpha

 On April 1, 2024, we entered into a Securities
Purchase Agreement (the "April 2024 SPA") with Generating Alpha pursuant to which we have agreed to sell a convertible promissory
note (the "April 2024 Note"), having an initial principal amount of $650,000, for a price of $520,000. In connection with
the purchase and sale of the April 2024 Note, we have agreed to issue to Generating Alpha a common stock purchase warrant to acquire a
total of 962,962 shares of our common stock. The transactions closed on April 4, 2024.

 In connection with the April 2024 SPA, we entered
into a Registration Rights Agreement, dated April 1, 2024 (the "April 2024 Registration Rights Agreement"), with Generating
Alpha. The April 2024 Registration Rights Agreement provided that we shall file a registration statement covering the resale of all of
the Registrable Securities (as defined in the April 2024 Registration Rights Agreement) with the SEC.

 EF Hutton LLC is acting as placement agent for
the financing.

 Results of Operations

 For the years ended December 31, 2023 and December 31, 2022

 The following table sets forth our results of
operations for the specified periods, as well as changes between periods and as a percentage of revenue for those same periods:

 Year
 Ended December 31,

 2023

 2022

 Year over
 Year Comparison

 Amount

 % Revenue

 Amount

 % Revenue

 Amount

 % Change

 Sales

 $

 100.0%

 $

 100.0%

 $
 (1,385,481
)

 -25.5%

 Cost of goods sold

 2,674,440

 66.2%

 3,664,766

 67.5%

 (990,326
)

 -27.0%

 Gross profit

 1,366,580

 33.8%

 1,761,735

 32.5%

 (395,155
)

 -22.4%

 Operating expenses:

 590,611

 14.6%

 311,574

 5.7%

 279,037

 89.6%

 Selling, general and administrative

 7,659,004

 189.5%

 7,313,145

 134.8%

 325,859

 4.7%

 Professional fees

 1,559,490

 38.6%

 1,467,323

 27.0%

 92,167

 6.3%

 Impairment of goodwill

 4,876,106

 120.7%

 11,340,115

 209.0%

 (6,464,009
)

 -57.0%

 Total operating expenses

 14,685,211

 363.4%

 20,432,157

 376.5%

 (5,746,946
)

 -28.1%

 Loss from operations

 (13,318,631
)

 -329.6%

 (18,670,422
)

 -344.1%

 5,351,791

 -28.7%

 Other income (expense)

 Interest expense, net

 (554,686
)

 -13.7%

 (3,348,867
)

 -61.7%

 2,794,181

 -83.4%

 Loss on settlement of derivative liabilities

 –

 0.0%

 (143,598
)

 -2.6%

 143,598

 -100.0%

 Unrealized gain on change in fair
 value of contingent purchase consideration

 –

 0.0%

 102.9%

 (5,586,493
)

 -100.0%

 Unrealized gain on change in fair
 value of derivative liabilities

 –

 0.0%

 49,047

 0.9%

 (49,047
)

 -100.0%

 Other gains (losses)

 (24,368
)

 -0.6%

 206,787

 3.8%

 (231,155
)

 -111.8%

 Total other income (expense)

 (579,054
)

 -14.3%

 2,349,862

 43.3%

 (2,928,916
)

 -124.6%

 Loss before income taxes

 (13,897,685
)

 -343.9%

 (16,320,560
)

 -300.8%

 2,422,875

 -14.8%

 Provision for income taxes (benefit)

 (18,528
)

 -0.5%

 8.2%

 (464,706
)

 -104.2%

 (13,879,157
)

 -343.5%

 (16,766,738
)

 -309.0%

 2,887,581

 -17.2%

 Loss attributable to noncontrolling interests

 (1,351,728
)

 -33.5%

 (434,102
)

 -8.0%

 (917,626
)

 211.4%

 Net loss attributable to Grom Social
 Enterprises, Inc. stockholders

 (12,527,429
)

 -310.0%

 (16,332,636
)

 -301.0%

 3,805,207

 -23.3%

 Dividends to Series C preferred stockholders

 742,546

 18.4%

 735,586

 13.6%

 6,960

 0.9%

 Net loss attributable to Grom Social
 Enterprises, Inc. common stockholders

 (13,269,975
)

 -328.4%

 (17,068,222
)

 -314.5%

 3,798,247

 -22.3%

 Revenue

 Revenue for the year ended December 31, 2023 was
$4,041,020, compared to revenue of $5,426,501 during the year ended December 31, 2022, representing a decrease of $1,385,481 or 25.5%.

 Year Ended December 31,

 Year over Year Comparison

 2023

 2022

 Amount

 % Change

 Animation

 $
 3,375,751

 $
 4,796,775

 $
 (1,421,024
)

 -29.6%

 Original content

 237,579

 146,070

 91,509

 62.6%

 Social and technology

 427,690

 483,656

 (55,966
)

 -11.6%

 Total revenue

 $

 $

 $
 (1,385,481
)

 -25.5%

 Animation revenue for the year ended December
31, 2023 was $3,375,751, compared to animation revenue of $4,796,775 during the year ended December 31, 2022, representing a decrease
of $1,421,024 or 29.6%. The decrease in animation revenue is primarily attributable to a smaller number of animation projects currently
in production as compared to the prior year.

 Original content revenue for the year ended December
31, 2023 was $237,539, compared to original content revenue of $146,070 during the year ended December 31, 2022. The increase in original
content revenue is attributable to an increase in publishing sales and commercial projects.

 Social and technology revenue for the year ended
December 31, 2023 was $427,690, compared to social and technology revenue of $483,656 during the year ended December 31, 2022, representing
a decrease of $55,966 or 11.6%. The decrease is primarily due to a decline in sales and the timing or loss of multi-year contract renewals
from our web filtering solutions.

 Gross Profit

 Our gross profits vary significantly by subsidiary.
In recent years, our animation segment has realized gross profits between 25% and 35%, while our social & technology segment has realized
gross profits between 90% and 95%. Our gross profits may vary from period to period due to the nature of the business of each segment,
and the timing and volume of customer contracts and projects. Current gross margins percentages may not be indicative of future gross
margin performance.

 Gross profit for the years ended December 31,
2023 and 2022 were $1,366,580, or 33.8%, and $1,761,735, or 32.5%, respectively. The decrease in the amount of our gross profit is primarily
attributable to lower animation revenue levels, while the nominal increase in our gross profit percentage is attributable improved profit
margins in our original content segment.

 Operating Expenses

 Operating expenses for the year ended December
31, 2023 were $14,685,211, compared to operating expenses of $20,432,157 during the year ended December 31, 2022, representing a decrease
of $5,746,946 or 28.1%. The decrease is primarily attributable to impairment charges against the goodwill of our animation and original
content businesses, offset by higher selling, general and administrative costs, specifically in production and development, and employee
headcount, compensation and benefits.

 Selling, general and administrative ("SG&A")
expenses are comprised of selling, marketing and promotional expenses, compensation and benefits, insurance, rent and related facility
costs, research and development, and other general expenses. SG&A expenses were $7,659,004 for the year ended December 31, 2023, compared
to $7,313,145 for the year ended December 31, 2022, representing an increase of $345,859 or 4.7%.

 Professional fees are comprised of accounting
and compliance services, legal services, investor relations and other advisory fees. Professional fees were $1,559,490 for the year ended
December 2023, compared to $1,467,323 for the year ended December 31, 2022, representing a decrease of $92,167 or 6.3%.

 At December 31, 2023, we performed our annual
impairment tests as prescribed by ASC 350 on the carrying value of our goodwill and recorded an aggregate impairment charge of $4,876,106;
of which $954,655 was attributed to the carrying value of goodwill related to our animation segment, and $3,921,451 was attributed to
the carrying value of goodwill related to our original content segment. The determination was made as the result of our qualitative assessment
of each business unit, including the decline in our animation revenues and delay in monetization of our original content properties. Comparatively,
at December 31, 2022, we performed our annual impairment tests as prescribed by ASC 350 on the carrying value of our goodwill and recorded
an aggregate impairment charge of $11,340,115; of which $6,202,888 was attributed to the carrying value of goodwill related to our animation
segment, and $5,137,227 was attributed to the carrying value of goodwill related to our original content segment. The determinations were
made as the result of our qualitative assessment of each business unit, including the decline in our animation revenues and delay in monetization
of our original content properties.

 Other Income (Expense)

 Net other expense for the year ended December
31, 2023 was $579,054, compared to a net other income of $2,349,862 for the year ended December 31, 2022, representing an increase of
$2,928,916 or 124.6%.

 Interest expense is comprised of interest accrued
and paid on our convertible notes and recorded from the amortization of note discounts. Interest expense was $554,686 for the year ended
December 31, 2023, compared to $3,348,867 during the year ended December 31, 2022, representing a decrease of $2,794,181 or 83.4%. The
decrease is attributable to lower debt levels, and less amortization expense recorded against debt discounts and charges associated with
derivative liabilities.

 During the year ended December 31, 2022, we recorded
a gain of 5,586,493 recorded for the change in fair value of our contingent purchase consideration, offset in part by increased interest
expense of $1,052,350 related to the recognition of a derivative liability and a loss of $143,598 on the settlement of a substantial portion
of the derivative liability recognized.

 Net Loss Attributable to Common Stockholders

 We realized a net loss attributable to common
stockholders of $13,269,975, or $15.54 per share, for the year ended December 31, 2023, compared to a net loss attributable to common
stockholders of $17,068,222, or $463.48 per share, during the year ended December 31, 2022 representing a decrease in net loss attributable
to common stockholders of $3,798,247 or 22.3%.

 Liquidity and Capital Resources

 At December 31, 2023, we had cash and cash equivalents of $2,505,449.

 Net cash used in operating activities for the
year ended December 31, 2023 was $8,873,024, compared to net cash used in operating activities of $6,976,120 during the year ended December
31, 2022 representing an increase in cash used of $1,896,904, primarily due to the decrease in our consolidated revenues and change in
our working capital assets and liabilities.

 Net cash used in investing activities for the
year ended December 31, 2023 was $28,668, compared to net cash used in investing activities of $91,297 during the year ended December
31, 2022 representing a decrease in cash used of $62,629. This decrease is directly attributable to a decrease in the amount of fixed
assets purchased during the year ended December 31, 2023.

 Net cash provided by financing activities for
the year ended December 31, 2023 was $7,507,427, compared to net cash provided by financing activities of $4,471,967 for the year ended
December 31, 2022 representing an increase in cash provided of $3,035,460. The primary reason for the increase is attributable to the
amount of proceeds received from the sale of our common stock and convertible notes as compared to amount of proceeds received from similar
offerings completed in 2022. Additionally, we settled a derivative liability related to a convertible note for $1,146,901 during the year
ended December 31, 2022.

 Our primary sources of cash from financing activities
during the year ended December 31, 2023 were attributable to $4,948,497 in proceeds from the sale of our common stock and $3,042,400 in
proceeds from the sale of senior secured convertible notes, as compared to $4,360,330 in proceeds from the sale of our common stock and
$1,444,000 in proceeds from the sale of senior secured convertible notes during the year ended December 31, 2022. These sources of cash
were offset, in part, by the repayment of convertible notes and loans payable of $495,793 during the year ended December 31, 2023, as
compared to repayments of convertible notes and loans for $185,741 and cash settlement of a derivative liability of $1,146,901 in accordance
with note conversions during the year ended December 31, 2022.

 Going Concern

 We have incurred significant operating losses
since our inception. We have funded our operations primarily through sales of our common stock in public markets, proceeds from the exercise
of warrants to purchase common stock, and the sale of convertible notes. Future capital requirements will depend on many factors, including
the (i) rate of revenue growth, (ii) expansion of sales and marketing activities, (iii) timing and extent of spending on content development
efforts, and (iv) market acceptance of our content, products and services.

 Our management intends to raise additional funds
through the issuance of equity securities or debt to enable us to meet our obligations for the twelve-month period. However, there can
be no assurance that, in the event we require additional financing, such financing will be available at terms acceptable to us, if at
all. Failure to generate sufficient cash flows from operations and/or raise additional capital could have a material adverse effect on
our ability to achieve our intended business objectives. These factors raise substantial doubt about our ability to continue as a going
concern for the twelve months from the date of this report.

 Off-Balance Sheet Arrangements

 We have no off-balance sheet arrangements.

 CRITICAL ACCOUNTING POLICIES
AND ESTIMATES

 Use of Estimates

 The preparation of consolidated financial statements
in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. The most significant estimates relate to revenue recognition, valuation of accounts receivable and inventories,
purchase price allocation of acquired businesses, impairment of long-lived assets and goodwill, valuation of financial instruments, income
taxes, and contingencies. We base our estimates on historical experience, known or expected trends and various other assumptions that
are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of
these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent
from other sources. Actual results could differ from these estimates.

 Segment and Related
Information

 Financial Accounting
Standards Board ("FASB") Accounting Standards Codification 280 ("ASC 280"), Segment Reporting, establishes standards
for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding
how to allocate resources and in assessing performance.

 The Company's chief
operating decision maker is the Chief Executive Officer, who reviews the financial performance and the results of operations of the segments
prepared in accordance with U.S. GAAP when making decisions about allocating resources and assessing performance of the Company.

 The Company has three reportable business segments:
(i) Animation, which includes the operations of TDH and its subsidiaries; (ii) Original Content, which includes the operations of CIM;
and (iii) Social & Technology, which includes the business of both GSOC and GEDU.

 Revenue Recognition

 The Financial Accounting Standards Board ("FASB")
Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) outlines a single
comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The guidance provided in Accounting
Standards Codification ("ASC") Topic 606 ("ASC 606") requires entities to use a five-step model to recognize revenue
by allocating the consideration from contracts to performance obligations on a relative standalone selling price basis. Revenue is recognized
when a customer obtains control of promised goods or services in an amount that reflects the consideration that the entity expects to
receive in exchange for those goods or services. The standard also requires new disclosures regarding the nature, amount, timing, and
uncertainty of revenue and cash flows arising from contracts with customers. ASC 606 also includes Subtopic 340-40, Other Assets
and Deferred Costs – Contracts with Customers, which requires the deferral of incremental costs of obtaining a contract with
a customer.

 Animation Revenue

 Animation revenue is primarily generated from
contracts with customers for preproduction and production services related to the development of animated movies and television series.
Preproduction activities include producing storyboards, location design, model and props design, background color and color styling. Production
focuses on library creation, digital asset management, background layout scene assembly, posing, animation and after effects. We provide
services under fixed-price contracts. Under fixed-price contracts, we agree to perform the specified work for a pre-determined price.
To the extent actual costs vary from estimated costs, our profit may increase, decrease, or result in a loss.

 We identify a contract under ASC 606 once (i)
it is approved by all parties, (ii) the rights of the parties are identified, (iii) the payment terms are identified, (iv) the contract
has commercial substance, and (v) collectability of consideration is probable.

 We evaluate the services promised in each contract
at inception to determine whether the contract should be accounted for as having one or more performance obligations. The services in
our contracts are distinct from one another as the referring parties typically can direct all, limited, or single portions of the various
preproduction and production activities required to create and design and entire episode to us and we therefore have a history of developing
standalone selling prices for all of these distinct components. Accordingly, our contracts are typically accounted for as containing multiple
performance obligations.

 We determine the transaction price for each contract
based on the consideration we expect to receive for the distinct services being provided under the contract.

 We recognize revenue as performance obligations
are satisfied and the customer obtains control of the services. In determining when performance obligations are satisfied, we consider
factors such as contract terms, payment terms and whether there is an alternative future use of the product or service. Substantially
all of our revenue is recognized over time as we perform under the contract due to the contractual terms present in each contract which
irrevocably transfer control of the work product to the customer as the services are performed.

 For performance obligations recognized over time,
revenue is recognized based on the extent of progress made towards completion of the performance obligation. We use the input method because
it best depicts the transfer of control to the customer as we incur costs against its contracts. Under the input method, the extent of
progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs to complete the performance
obligation. The input method requires management to make estimates and assumptions that affect the reported amounts of contract assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
The most significant estimates relate to the total estimated amount of costs that will be incurred for a project or job.

 Ecommerce Revenue

 Ecommerce revenue includes sales of merchandise
and delivery revenue related to merchandise sold. Revenue is recognized when control of product passes to customers, which is when the
merchandise is expected to be received by the customer. The Company recognizes revenue in the amount expected to be received when control
of the Company's products transfers to customers, and is presented net of various fixed percentage price allocations.

 The Company excludes from revenue, taxes assessed
by governmental authorities, including sales-related taxes, that are imposed on and concurrent with revenue-producing activities.

 Produced and Licensed Content Revenue

 Produced and licensed content revenues are generated
from the licensing of internally-produced films and television programs.

 Licensed internally-produced films and television
programming, each individual film or episode delivered represents a separate performance obligation and revenues are recognized when the
episode is made available to the licensee for exhibition. For license agreements containing multiple deliverables, revenues are allocated
based on the relative standalone selling price of each film or episode of a television series, which is based on licenses for comparable
films or series within the marketplace. Agreements to license programming are often long term, with collection terms ranging from one to five years.

 The advanced billing component for licensed content
is initially recorded as deferred revenue and subsequently recognized as revenue upon completion of the performance obligation in accordance
with the terms of licensing agreement.

 Publishing Revenue

 Publishing revenues are recognized when merchandise
is shipped or electronically delivered to the consumer. Consumer print books are generally sold with a right of return. The Company records
a returns reserve and corresponding decrease in revenue at the time of sale based upon historical trends. For publishing revenues, payments
are due shortly after shipment or electronic delivery.

 Web Filtering Revenue

 Web filtering revenue from subscription sales
is recognized on a pro-rata basis over the subscription period. Typically, a subscriber purchases computer hardware and a software and
support service license for a period of use between one year to five years. The subscriber is billed in full at the time of the sale.
We immediately recognize revenue attributable to the computer hardware as it is non-refundable and control passes to the customer. The
advanced billing component for software and service is initially recorded as deferred revenue and subsequently recognized as revenue on
a straight-line basis over the subscription period.

 Fair Value Measurements

 The Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") 820 "Fair Value Measurements and Disclosures" ("ASC 820")
defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal
or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use
of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

 Level 1 - Quoted prices in active
markets for identical assets or liabilities.

 Level 2 - Inputs other than quoted
prices included within Level 1 that are either directly or indirectly observable.

 Level 3 - Unobservable inputs that
are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that
market participants would use in pricing.

 Fair value estimates discussed herein are based
upon certain market assumptions and pertinent information available to management as of December 31, 2023 and December 31, 2022. We use
the market approach to measure fair value for its Level 1 financial assets and liabilities. The market approach uses prices and other
relevant information generated by market transactions involving identical or comparable assets or liabilities. The respective carrying
value of certain balance sheet financial instruments approximates its fair value. These financial instruments include cash, trade receivables,
related party payables, accounts payable, accrued liabilities and short-term borrowings. Fair values were estimated to approximate carrying
values for these financial instruments since they are short term in nature, and they are receivable or payable on demand.

 The estimated fair value of assets and liabilities
acquired in business combinations and reporting units and long-lived assets used in the related asset impairment tests utilize inputs
classified as Level 3 in the fair value hierarchy.

 We determine the fair value of contingent consideration
based on a probability-weighted discounted cash flow analysis. The fair value remeasurement is based on significant inputs not observable
in the market and thus represents a Level 3 measurement as defined in the fair value hierarchy. In each period, we reassess our current
estimates of performance relative to the stated targets and adjusts the liability to fair value. Any such adjustments are included as
a component of Other Income (Expense) in the Consolidated Statements of Operations and Comprehensive Loss.

 Capitalized Prepublication Costs

 Prepublication costs include costs incurred to
create and develop the art, prepress, editorial, digital conversion and other content required for the creation of the master copy of
a book or other media. Prepublication costs are amortized on a straight-line basis over a two- to five-year period based on expected future
revenue. The Company regularly reviews the recoverability of the capitalized costs based on expected future revenues.

 Capitalized Produced and Licensed Content
Costs

 Produced and licensed content costs include capitalizable
direct costs, production overhead, interest and development costs and are stated at the lower of cost, less accumulated amortization,
or fair value. Marketing, distribution and general and administrative costs are expensed as incurred.

 Film, television and direct to consumers through
streaming services production and residual costs are expensed over the product life cycle based upon the ratio of the current period's
revenues to estimated remaining total revenues (Ultimate Revenues) for each production. For film productions and direct to consumer services,
Ultimate Revenues include revenues from all sources that will be earned within ten years from the date of the initial release. For television
series, Ultimate Revenues include revenues that will be earned within ten years from delivery of the first episode, or if still in production,
five years from delivery of the most recent episode, if later. Costs of film, television and direct to consumer productions are subject
to regular recoverability assessments, which compare the estimated fair values with the unamortized costs. The Company bases these fair
value measurements on the Company's assumptions about how market participants would price the assets at the balance sheet date,
which may be different than the amounts ultimately realized in future periods. The amount by which the unamortized costs of film and television
productions exceed their estimated fair values is written off. Costs for projects that have been abandoned are written off. Projects that
have not been set for production within three years are also written off unless management has committed to a plan to proceed with the
project and is actively working on and funding the project.

 Capitalized Website Development Costs

 The Company capitalizes certain costs associated
with the development of its Santa.com website after the preliminary project stage is complete and until the website is ready for its intended
use. Planning and operating costs are expensed as incurred. Capitalization begins when the preliminary project stage is complete, project
plan is defined, functionalities are determined and internal and external resources are identified. Qualified costs incurred during the
operating stage of our software applications relating to upgrades and enhancements are capitalized to the extent it is probable that they
will result in added functionality, while costs that cannot be separated between maintenance of, and minor upgrades and enhancements to
the websites are expensed as incurred.

 Capitalized website costs are amortized on a straight-line
basis over their estimated useful life of three years beginning with the time when it is ready for intended use. Amounts amortized
are presented through cost of sales. Management evaluates the useful lives of these assets on an annual basis and tests for impairment
whenever events or changes in circumstances occur that could impact the recoverability of these assets.

 Goodwill and Intangible Assets

 Goodwill represents the future economic benefit
arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the
Company's acquisitions is attributable to the value of the potential expanded market opportunity with new customers.

 Intangible assets have either an identifiable
or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic
or legal life, whichever is shorter. The Company's amortizable intangible assets consist of customer relationships and non-compete
agreements. Their useful lives range from 1.5 to 10 years. The Company's indefinite-lived intangible assets consist of trade names.

 Goodwill and indefinite-lived assets are not amortized
but are subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs an annual impairment
assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate
that the fair value of the asset may be less than the carrying amount. The evaluation begins with a qualitative assessment to determine
whether a quantitative impairment test is necessary. If, after assessing qualitative factors, the Company determines it is more likely
than not that the fair value of the reporting unit is less than the carrying amount, then the quantitative goodwill impairment test is
performed.

 The quantitative goodwill impairment test used
to identify potential impairment compares the fair value of a reporting unit with its carrying amount, including goodwill. The fair value
of the reporting unit represents the price a market participant would be willing to pay in a potential sale of the reporting unit and
is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and
market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines
fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors
that consider the timing and risk of cash flows. For the discount rate, the Company relies on the capital asset pricing model approach,
which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, the Company's risk
relative to the overall market, the Company's size and industry and other Company-specific risks. Other significant assumptions
used in the income approach include the terminal value, growth rates, future capital expenditures and changes in future working capital
requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market.

 If the fair value of the reporting unit is greater
than its carrying amount, there is no impairment. If the reporting unit's carrying amount exceeds its fair value, an impairment
loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Any impairment
identified is included within "goodwill impairment" in the consolidated statements of operations.

 Determining the fair value of a reporting unit
is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans,
and future market conditions, among others. There can be no assurance that the Company's estimates and assumptions made for purposes
of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause
the Company to perform an impairment test prior to scheduled annual impairment tests.

 We performed our annual fair value assessment
at December 31, 2023 on our subsidiaries with material goodwill and intangible asset amounts on their respective balance sheets and determined
that an impairment charge of $4,876,106 was necessary.

 Impairment of Long-Lived Assets

 We evaluate the recoverability of our long-lived
assets whenever events or changes in circumstances have indicated that an asset may not be recoverable. The long-lived asset is grouped
with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets
and liabilities. If the sum of the projected undiscounted cash flows is less than the carrying value of the assets, the assets are written
down to the estimated fair value.

 We evaluated the recoverability of our long-lived
assets at December 31, 2023, respectively on its subsidiaries with material amounts on their respective balance sheets and determined
that no impairment exists.

 RECENT ACCOUNTING PRONOUNCEMENTS

 Not Yet Adopted

 In November 2023, the FASB issued ASU No. 2023-07, Segment
Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. ASU 2023-07 requires disclosure of incremental segment information
on an annual and interim basis, including significant segment expenses that are regularly provided to the Chief Operating Decision Maker
("CODM") and included within each reported measure of segment profit or loss. Additionally, the ASU requires disclosure of
the title and position of our CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing
segment performance and deciding how to allocate resources. The ASU does not change how a public entity identifies its operating segments,
aggregates them, or applies the quantitative thresholds to determine its reportable segments. This guidance is effective for the Company
beginning with its 2024 Form 10-K for annual disclosures and the Q1-2025 Form 10-Q for interim disclosures, with early adoption permitted.
The guidance should be applied retrospectively to all periods presented in the financial statements. The guidance, once adopted, will
result in increased reportable segment disclosures.

 In December 2023, the FASB issued ASU No. 2023-09, Income
Taxes (Topic 740) - Improvements to Income Tax Disclosures. ASU 2023-09 expands the existing disclosure requirements for the annual
rate reconciliation between the effective tax rate and the statutory federal tax rate by requiring reconciliation items to be disaggregated
by defined categories and disclosed as both percentages and amounts. The ASU also requires the disaggregation of income taxes paid by
jurisdiction for each annual period presented. This guidance is effective for the Company beginning with its 2025 Form 10-K annual disclosures,
with early adoption permitted. The guidance should be applied on a prospective basis, but retrospective application is permitted. The
guidance, once adopted, will result in increased income tax disclosures.

 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 As a smaller reporting company, we are not required to provide this
information.

 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 INDEX TO FINANCIAL STATEMENTS

 Page

 Report of Independent Registered
 Public Accounting Firm (PCAOB ID: 89)

 Consolidated Balance Sheets as of December 31, 2023 and 2022

 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2022

 Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2023 and 2022

 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

 Notes to the Consolidated Financial Statements

 F- 1

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

 To the Board of Directors and

 Stockholders of Grom Social Enterprises, Inc.

 Opinion on the Financial Statements

 We have audited the accompanying consolidated
balance sheets of Grom Social Enterprises, Inc. (the "Company") as of December 31, 2023 and 2022, and the related consolidated
statements of operations and comprehensive loss, shareholders' equity, and cash flows for each of the years in the two-year period
ended December 31, 2023, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its
operations and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with accounting principles
generally accepted in the United States of America.

 Substantial Doubt about the Company's
Ability to Continue as a Going Concern

 The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company's
significant operating losses, working capital deficit and negative cash flows from operations raise substantial doubt about its ability
to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 Basis for Opinion

 These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 Critical Audit Matters

 The critical audit matters communicated below
are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to
the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions
on the critical audit matters or on the accounts or disclosures to which they relate.

 F- 2

 Goodwill Impairment Evaluation

 As discussed in Notes 2 and 8 to the financial
statements, management conducts a goodwill impairment assessment annually at December 31, and when events or changes in circumstances
indicate that the carrying value of a reporting unit exceeds its fair value. The fair value of a reporting unit is determined through
the use of the income approach using estimates of future cash flows attributable to the respective reporting units. As a result of the
annual impairment assessment, the Company recognized $4.9 million of goodwill impairment related to the reporting unit.

 We identified the impairment of goodwill as a
critical audit matter because of significant judgments required by management to estimate the fair value of its reporting unit, including
forecasted cash flows, revenue growth rates and discount rate. This required a high degree of auditor judgment and an increased extent
of effort when performing audit procedures to evaluate the reasonableness of management's assumptions used in the model.

 How the Critical Audit Matter Was Addressed
in the Audit

 Our audit procedures related to the forecasts
of management's estimates of future cash flows, the selection of cash flow multiples for the Company's reporting unit, and
the evaluation of the discount rate included the following, among others:

 –
 Tested the mathematical accuracy of the calculations and evaluated significant
assumptions and the underlying data used by the Company by performing procedures to test the projected revenues, projected direct costs,
projected operating expenses, and projected capital expenditures by comparing them with the historical forecasted results of the respective
reporting unit and assessing the impacts of internal and/or external economic factors.

 –
 We assessed management's ability to forecast by comparing historical
projections to actual results and comparing current forecasted projections to historical trends, industry data, and underlying business
strategies.

 –
 The work of managements specialists was used in performing the procedures
to evaluate the reasonableness of the fair value of the reporting unit as well as the assumptions used in the model. As a basis for using
this work, management specialist's qualifications were understood and the business relationship with management specialists was
assessed. The procedures performed also included evaluation of the methods and assumptions used by management's specialists, tests
of the data used by management's specialists, and an evaluation of their findings.

 We have served as the Company's auditor
since 2022.

 /s/ Rosenberg Rich Baker Berman, P.A.

 Somerset, New Jersey

 F- 3

 Consolidated Balance Sheets

 2023

 2022

 ASSETS

 Current assets:

 Cash and cash equivalents

 $
 2,505,449

 $
 3,871,176

 Accounts receivable, net

 826,073

 1,162,230

 Inventory, net

 43,205

 92,303

 Prepaid expenses and other current assets

 527,539

 605,497

 Total current assets

 3,902,266

 5,731,206

 Operating lease right of use assets

 796,600

 1,069,222

 Property and equipment, net

 114,814

 285,676

 Goodwill, net

 5,691,378

 10,567,484

 Intangible assets, net

 5,194,209

 5,364,231

 Other assets

 2,433,415

 1,627,078

 Total assets

 $
 18,132,682

 $
 24,644,897

 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:

 Accounts payable

 $
 865,266

 $
 839,679

 Accrued liabilities

 293,279

 378,954

 Dividends payable

 1,114,344

 371,799

 Advanced payments and deferred revenues

 376,613

 576,338

 Convertible notes payable, net – current

 254,146

 503,465

 Derivative liabilities

 –

 Related party payables

 –

 50,000

 Lease liabilities – current

 205,575

 269,681

 Total current liabilities

 4,419,617

 2,989,916

 Convertible notes payable, net of loan discounts

 540,443

 68,199

 Lease liabilities

 614,443

 803,958

 Other noncurrent liabilities

 240,763

 Total liabilities

 5,815,266

 4,297,049

 Commitments and contingencies (Note 18)

 –

 –

 Stockholders' Equity:

 Series A preferred stock, $ 0.001
 par value. 2,000,000
 shares authorized; 0 zero shares issued and outstanding as of December 31, 2023 and 2022, respectively

 –

 –

 Series B preferred stock, $ 0.001
 par value. 10,000,000
 shares authorized; 0 zero shares issued and outstanding as of December 31, 2023 and 2022, respectively

 –

 –

 Series C preferred stock, $ 0.001 par value. 10,000,000 shares authorized; 9,243,309 and 9,281,809
 shares issued and outstanding as of December 31, 2023 and 2022, respectively

 9,243

 9,282

 Common stock, $ 0.001 par value. 500,000,000 shares authorized; 1,970,404 and 163,596 shares issued and
 outstanding as of December 31, 2023 and 2022, respectively

 1,970

 Additional paid-in capital

 108,311,684

 101,728,706

 Accumulated deficit

 ( 96,742,387
)

 ( 83,472,412
)

 Accumulated other comprehensive loss

 ( 159,603
)

 ( 166,129
)

 Total Grom Social Enterprises, Inc. stockholders' equity

 11,420,907

 18,099,611

 Noncontrolling interests

 896,509

 2,248,237

 Total stockholders' equity

 12,317,416

 20,347,848

 Total liabilities and equity

 $
 18,132,682

 $
 24,644,897

 The accompanying notes are an integral part of
the consolidated financial statements.

 F- 4

 Consolidated Statements of Operations and Comprehensive
Loss

 For the Years Ended December 31, 2023 and 2022

 Year Ended

 Year Ended

 2023

 2022

 Sales

 $

 $

 Cost of goods sold

 2,674,440

 3,664,766

 Gross profit

 1,366,580

 1,761,735

 Operating expenses:

 590,611

 311,574

 Selling, general and administrative

 7,659,004

 7,313,145

 Professional fees

 1,559,490

 1,467,323

 Impairment of goodwill

 4,876,106

 11,340,115

 Total operating expenses

 14,685,211

 20,432,157

 Loss from operations

 ( 13,318,631
)

 ( 18,670,422
)

 Other income (expense)

 Interest expense, net

 ( 554,686
)

 ( 3,348,867
)

 Loss on settlement of derivative liabilities

 –

 ( 143,598
)

 Unrealized gain on change in fair value of contingent purchase consideration

 –

 Unrealized gain on change in fair value of derivative liabilities

 –

 49,047

 Other gains (losses)

 ( 24,368
)

 206,787

 Total other income (expense)

 ( 579,054
)

 2,349,862

 Loss before income taxes

 ( 13,897,685
)

 ( 16,320,560
)

 Provision for income taxes (benefit)

)

)

)

 Loss attributable to noncontrolling interests

 ( 1,351,728
)

 ( 434,102
)

 Net loss attributable to Grom Social Enterprises, Inc. stockholders

 ( 12,527,429
)

 ( 16,332,636
)

 Dividends to Series C preferred stockholders

 742,546

 735,586

 Net loss attributable to Grom Social Enterprises, Inc. common stockholders

 $
 ( 13,269,975
)

 $
 ( 17,068,222
)

 Basic and diluted loss per common share attributable to Gron Social Enterprises, Inc. common stockholders

 $
 ( 15.54
)

 $
 ( 463.48
)

 Weighted-average number of common shares outstanding:

 Basic and diluted

 854,189

 36,826

 Comprehensive loss:

 $
)

 $
)

 Foreign currency translation adjustment

 6,526

 ( 135,374
)

 Comprehensive loss

 ( 13,872,631
)

 ( 16,902,112
)

 Comprehensive loss attributable to noncontrolling interests

 ( 1,351,728
)

 ( 434,102
)

 Comprehensive loss attributable to Grom Social Enterprises, Inc. common stockholders

 $
 ( 12,520,903
)

 $
 ( 16,468,010
)

 The accompanying notes are an integral part of
the consolidated financial statements.

 F- 5

 Consolidated Statement of Changes in Shareholders'
Equity

 For the Years Ended December 31, 2023 and 2022

 Series
 A Preferred Stock

 Series
 B Preferred Stock

 Series
 C Preferred Stock

 Shares

 Value

 Shares

 Value

 Shares

 Value

 Balance, January 1, 2022

 –

 $
 –

 –

 $
 –

 9,400,309

 $
 9,400

 –

 –

 –

 –

 –

 –

 Change in foreign currency translation

 –

 –

 –

 –

 –

 –

 Conversion of Series C preferred
 stock into common stock

 –

 –

 –

 –

 ( 118,500
)

 ( 118
)

 Dividends declared for Series C preferred
 stock

 –

 –

 –

 –

 –

 –

 Issuance of common stock as payment
 for Series C preferred stock dividends payable

 –

 –

 –

 –

 –

 –

 with sales made under public offerings

 –

 –

 –

 –

 –

 –

 with sales made under private offerings

 –

 –

 –

 –

 –

 –

 with the exercise of common stock purchase warrants

 –

 –

 –

 –

 –

 –

 Issuance of common stock in exchange
 for consulting, professional and other services

 –

 –

 –

 –

 –

 –

 Conversion of note principal and
 accrued interest into common stock

 –

 –

 –

 –

 –

 –

 Recognition of beneficial conversion
 features related to notes payable

 –

 –

 –

 –

 –

 –

 Stock based compensation expense
 related to stock options

 –

 –

 –

 –

 –

 –

 Balance, December 31, 2022

 –

 $
 –

 –

 $
 –

 9,281,809

 $
 9,282

 –

 –

 –

 –

 –

 –

 Change in foreign currency translation

 –

 –

 –

 –

 –

 –

 Dividends declared for Series C preferred
 stock

 –

 –

 –

 –

 –

 –

 Repurchase and retirement of Series
 C preferred stock

 ( 38,500
)

 ( 39
)

 with sales made under public offerings

 –

 –

 –

 –

 –

 –

 with sales made under private offerings

 –

 –

 –

 –

 –

 –

 with the exercise of common stock purchase warrants

 –

 –

 –

 –

 –

 –

 Issuance of common stock in exchange
 for consulting, professional and other services

 –

 –

 –

 –

 –

 –

 Issuance of common stock purchase
 warrants as consideration for waiver of a financing covenant

 –

 –

 –

 –

 –

 –

 Fair value of common stock purchase
 warrants issued with notes payable

 –

 –

 –

 –

 –

 –

 Stock based compensation expense
 related to stock options

 –

 –

 –

 –

 –

 –

 Balance, December 31, 2023

 –

 $
 –

 –

 $
 –

 9,243,309

 $
 9,243

 (continued)

 F- 6

 Additional

 Other

 Total

 Stock

 Paid-in

 Comprehensive

 Noncontrolling

 Stockholders'

 Shares

 Value

 Capital

 Deficit

 Loss

 Interests

 Equity

 Balance, January 1, 2022

 59,534

 $

 $
 89,863,947

 $
 ( 66,404,190
)

 $
 ( 30,755
)

 $
 2,682,339

 $
 26,120,801

 –

 –

 –

 ( 16,332,636
)

 –

 ( 434,102
)

)

 Change in foreign currency translation

 –

 –

 –

 –

 ( 135,374
)

 –

 ( 135,374
)

 Conversion of Series C preferred stock into common stock

 –

 –

 –

 –

 –

 Dividends declared for Series C preferred stock

 –

 –

 –

 ( 735,586
)

 –

 –

 ( 735,586
)

 Issuance of common stock as payment for Series C preferred stock dividends
 payable

 1,352

 833,738

 –

 –

 –

 833,739

 Issuance of common stock in connection with sales made under public
 offerings

 70,784

 4,085,259

 –

 –

 –

 4,085,330

 Issuance of common stock in connection with sales made under private
 offerings

 2,575

 274,997

 –

 –

 –

 275,000

 Issuance of common stock in connection with the exercise of common stock
 purchase warrants

 13,953

 –

 –

 –

 Issuance of common stock in exchange for consulting, professional and
 other services

 –

 116,736

 –

 –

 –

 116,736

 Conversion of note principal and accrued interest into common
 stock

 14,997

 5,874,985

 –

 –

 –

 5,875,000

 Recognition of beneficial conversion features related to notes
 payable

 –

 –

 363,329

 –

 –

 –

 363,329

 Stock based compensation expense related to stock
 options

 –

 –

 315,332

 –

 –

 –

 315,332

 Balance, December 31, 2022

 163,596

 $

 $
 101,728,706

 $
 ( 83,472,412
)

 $
 ( 166,129
)

 $
 2,248,237

 $
 20,347,848

 –

 –

 –

 ( 12,527,429
)

 –

 ( 1,351,728
)

)

 Change in foreign currency translation

 –

 –

 –

 –

 6,526

 –

 6,526

 Dividends declared for Series C preferred stock

 –

 –

 –

 ( 742,546
)

 –

 –

 ( 742,546
)

 Repurchase and retirement of Series C preferred stock

 –

 –

 ( 1
)

 –

 –

 –

 ( 40
)

 Issuance of common stock in connection with sales made under public
 offerings

 946,000

 2,459,692

 –

 –

 –

 2,460,638

 Issuance of common stock in connection with sales made under private
 offerings

 5,000

 2,487,854

 –

 –

 –

 2,487,859

 Issuance of common stock in connection with the exercise of common stock
 purchase warrants

 854,641

 11,509

 –

 –

 –

 12,363

 Issuance of common stock in exchange for consulting, professional and
 other services

 1,167

 31,967

 –

 –

 –

 31,968

 Issuance of common stock purchase warrants as consideration for waiver of
 a financing covenant

 –

 –

 350,038

 –

 –

 –

 350,038

 Fair value of common stock purchase warrants issued with notes
 payable

 –

 –

 1,102,852

 –

 –

 –

 1,102,852

 Stock based compensation expense related to stock
 options

 –

 –

 139,067

 –

 –

 –

 139,067

 Balance, December 31, 2023

 1,970,404

 $
 1,970

 $
 108,311,684

 $
 ( 96,742,387
)

 $
 ( 159,603
)

 $
 896,509

 $
 12,317,416

 The accompanying notes are an integral part of
the consolidated financial statements.

 F- 7

 Consolidated Statements of Cash Flows

 For the Years Ended December 31, 2023 and 2022

 Year
 Ended

 December
 31,

 Year
 Ended

 December
 31,

 2023

 2022

 Cash flows from operating activities:

 $
)

 $
)

 Adjustments to reconcile net loss to cash used in operating
 activities:

 700,608

 593,438

 Amortization of debt discount

 39,565

 2,194,302

 Amortization of right-of-use assets

 288,967

 365,636

 Provision for doubtful accounts

 5,789

 –

 Provision for excess or obsolete inventory

 –

 5,321

 Common stock issued for financing costs

 350,038

 –

 Common stock issued in exchange for fees and services

 31,968

 116,737

 Deferred taxes

 ( 19,660
)

 466,089

 Derivative expense

 –

 1,052,350

 Goodwill impairment

 4,876,106

 11,340,115

 Retirement benefit cost

 39,278

 –

 Stock based compensation

 139,067

 315,332

 Loss on disposal of property and equipment

 2,237

 Loss on settlement of derivative liability

 –

 143,598

 Unrealized gain on change in fair value of contingent
 consideration

 –

 ( 5,586,493
)

 Unrealized gain on change in fair value of derivative
 liabilities

 –

 ( 49,047
)

 Unrealized loss on foreign exchange

 202,226

 –

 Changes in operating assets and liabilities:

 Accounts receivable

 600,013

 ( 192,730
)

 Inventory

 768,764

 ( 6,253
)

 Prepaid expenses and other current assets

 36,967

 ( 147,545
)

 Other assets

 ( 1,160,794
)

 ( 974,380
)

 Accounts payable

 ( 167,652
)

 342,182

 Accrued liabilities

 ( 385,713
)

 ( 21,375
)

 Advanced payments and deferred revenues

 ( 875,313
)

 170,937

 Income taxes payable and other noncurrent liabilities

 ( 194,582
)

 44,055

 Operating lease liabilities

 ( 270,059
)

 ( 383,888
)

 Net cash used in operating activities

 ( 8,873,024
)

 ( 6,976,120
)

 Cash flows from investing activities:

 Purchase of property and equipment

 ( 33,248
)

 ( 104,715
)

 Proceeds from the sale of property
 and equipment

 4,580

 13,418

 Net cash used in investing activities

 ( 28,668
)

 ( 91,297
)

 Cash flows from financing activities:

 Proceeds from issuance of common stock, net of issuance
 costs

 4,948,497

 4,360,330

 Proceeds from exercise of common stock purchase warrants,
 net of issuance costs

 12,363

 Proceeds from issuance of convertible notes

 3,042,400

 1,444,000

 Repayments of convertible notes

 ( 445,793
)

 ( 148,907
)

 Repayments of loans payable

 –

 ( 36,834
)

 Repayments of related party payables

 ( 50,000
)

 –

 Repurchase of preferred stock

 ( 40
)

 –

 Settlement of derivative liabilities

 –

 ( 1,146,901
)

 Net cash provided by financing activities

 7,507,427

 4,471,967

 Effect of exchange rates on cash and cash equivalents

 28,538

 ( 63,535
)

 Net decrease in cash and cash equivalents

 ( 1,365,727
)

 ( 2,658,985
)

 Cash and cash equivalents at beginning of period

 3,871,176

 6,530,161

 Cash and cash equivalents at end of period

 $
 2,505,449

 $
 3,871,176

 Supplemental disclosure of cash flow information:

 Cash paid for interest

 $
 61,549

 $
 41,763

 Cash paid for income taxes

 $
 –

 $
 –

 Supplemental disclosure of non-cash investing and financing activities:

 Common stock issued to reduce dividends payable to
 Series C preferred stockholders

 $
 –

 $
 833,739

 Common stock warrants issued in connection with convertible
 promissory notes

 $
 1,102,852

 $
 363,329

 Conversion of note principal and accrued interest into
 common stock

 $
 –

 $
 5,875,000

 Derivative liability related to conversion feature
 on notes payable

 $

 $
 –

 Dividends payable to Series C preferred stockholders

 $
 742,545

 $
 371,799

 Operating lease right-of-use assets obtained in exchange
 for lease liabilities

 $
 11,152

 $
 80,478

 The accompanying notes are an integral part of
the consolidated financial statements.

 F- 8

 Notes to Consolidated Financial Statements

 December 31, 2023 and 2022

 1.

 NATURE OF OPERATIONS

 Grom Social Enterprises, Inc. (the "Company",
"Grom" "we", "us" or "our"), a Florida corporation f/k/a Illumination America, Inc. ("Illumination"),
is a media, technology and entertainment company that focuses on (i) delivering content to children under the age of 13 years in a safe
secure platform that is compliant with the Children's Online Privacy Protection Act ("COPPA") and can be monitored by
parents or guardians, (ii) creating, acquiring, and developing the commercial potential of Kids & Family entertainment properties
and associated business opportunities, (iii) providing world class animation services, and (iv) offering protective web filtering solutions
to block unwanted or inappropriate content. We conduct our business through our following subsidiaries:

 Grom Social, Inc. ("GSOC"), incorporated in the State of Florida on March 5, 2012, operates our social media network designed for children under the age of 13 years.

 TD Holdings Limited ("TDH"), incorporated in Hong Kong on September 15, 2005, operates through its two wholly-owned subsidiaries: (i) Top Draw Animation Hong Kong Limited, a Hong Kong corporation ("TDAHK"), and (ii) Top Draw Animation, Inc., a Philippines corporation ("TDAM"). The group's principal activities are the production of animated films and television series.

 Grom Educational Services, Inc. ("GEDU"), incorporated in the State of Florida on January 17, 2017, operates our web filtering services provided to schools and government agencies.

 Grom Nutritional Services, Inc. ("GNUT"), incorporated in the State of Florida on April 19, 2017, intends to market and distribute nutritional supplements to children. It has been nonoperational since its inception.

 Curiosity Ink Media, LLC ("CIM"), organized in the State of Delaware on January 5, 2017, develops, acquires, builds, grows and maximizes the short, mid and long-term commercial potential of kids and family entertainment properties and associated business opportunities.

 The Company owns 100% of each of GSOC, TDH, GEDU
and GNUT, and 80% of CIM.

 2.

 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Going Concern

 The consolidated financial statements
of the Company have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities
in the normal course of business. Based on current operating levels, the Company will need to raise additional funds by selling additional
equity or incurring debt.

 On a consolidated basis, the Company has
incurred significant operating losses since its inception. As of December 31, 2023, the Company has an accumulated deficit of $ 96.7
million and a working capital deficit of $ 517,351. During the year ended December 31, 2023, it used approximately $ 8.9
million, respectively, in cash for operating activities.

 F- 9

 The Company has funded its operations primarily
through sales of its common stock in public markets, proceeds from the exercise of warrants to purchase common stock, and the sale of
convertible notes. Future capital requirements will depend on many factors, including the (i) rate of revenue growth, (ii) expansion of
sales and marketing activities, (iii) timing and extent of spending on content development efforts, and (iv) market acceptance of the
Company's content, products and services.

 The Company's management intends to raise
additional funds through the issuance of equity securities or debt to enable the Company to meet its obligations for the twelve-month
period. However, there can be no assurance that, in the event the Company requires additional financing, such financing will be available
at terms acceptable to the Company, if at all. Failure to generate sufficient cash flows from operations and/or raise additional capital
could have a material adverse effect on the Company's ability to achieve its intended business objectives. These factors raise substantial
doubt about the Company's ability to continue as a going concern.

 The accompanying consolidated financial
statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 Basis of Presentation

 The consolidated financial statements of the Company
have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP")
and are expressed in United States dollars. For the years ended December 31, 2023 and 2022, the consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries Grom Social, TDH, GEDU, and GNUT. The Company recognizes noncontrolling
interest related to its 80% owned subsidiary, CIM, as equity in the consolidated financial statements separate from the parent entity's
equity. The net income (loss) attributable to noncontrolling interest is included in net income (loss) in the consolidated statements
of operations and comprehensive loss. All intercompany accounts and transactions are eliminated in consolidation.

 Use of Estimates

 The preparation of consolidated financial statements
in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. The most significant estimates relate to revenue recognition, valuation of accounts receivable, impairment
of long-lived assets and goodwill, valuation of financial instruments, valuation of derivative liabilities, pension plan obligations related
to the Company's defined benefit pension plan, stock-based compensation, income taxes, and contingencies. The Company bases its estimates
on historical experience, known or expected trends and various other assumptions that are believed to be reasonable given the quality
of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates
about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from
these estimates.

 Segment and Related
Information

 Financial Accounting
Standards Board ("FASB") Accounting Standards Codification 280 ("ASC 280"), Segment Reporting, establishes standards
for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding
how to allocate resources and in assessing performance.

 The Company's chief
operating decision maker is the Chief Executive Officer, who reviews the financial performance and the results of operations of the segments
prepared in accordance with U.S. GAAP when making decisions about allocating resources and assessing performance of the Company.

 The Company has three
reportable business segments: (i) Animation, which includes the operations of TDH and its subsidiaries; (ii) Original Content, which includes
the operations of CIM; and (iii) Social & Technology, which includes the business of both GSOC and GEDU.

 F- 10

 Revenue Recognition

 The guidance provided in Accounting Standards
Codification ("ASC") Topic 606 ("ASC 606") requires entities to use a five-step model to recognize revenue by
allocating the consideration from contracts to performance obligations on a relative standalone selling price basis. Revenue is recognized
when a customer obtains control of promised goods or services in an amount that reflects the consideration that the entity expects to
receive in exchange for those goods or services. The standard also requires disclosures regarding the nature, amount, timing, and uncertainty
of revenue and cash flows arising from contracts with customers.

 Animation Revenue

 Animation revenue is primarily generated from
contracts with customers for preproduction and production services related to the development of animated movies and television series.
Preproduction activities include producing storyboards, location design, model and props design, background color and color styling. Production
focuses on library creation, digital asset management, background layout scene assembly, posing, animation and after effects. The Company
provides services under fixed-price contracts. Under fixed-price contracts, the Company agrees to perform the specified work for a pre-determined
price. To the extent actual costs vary from estimated costs, the Company's profit may increase, decrease, or result in a loss.

 The Company identifies a contract under ASC 606
once (i) it is approved by all parties, (ii) the rights of the parties are identified, (iii) the payment terms are identified, (iv) the
contract has commercial substance, and (v) collectability of consideration is probable.

 The Company evaluates the services promised in
each contract at inception to determine whether the contract should be accounted for as having one or more performance obligations. The
services in the Company's contracts are distinct from one another as the referring parties typically can direct all, limited, or
single portions of the various preproduction and production activities required to create and design and entire episode to us and we therefore
have a history of developing standalone selling prices for all of these distinct components. Accordingly, our contracts are typically
accounted for as containing multiple performance obligations.

 The Company determines the transaction price for
each contract based on the consideration it expects to receive for the distinct services being provided under the contract.

 The Company recognizes revenue as
performance obligations are satisfied and the customer obtains control of the services. In determining when performance obligations
are satisfied, the Company considers factors such as contract terms, payment terms and whether there is an alternative future use of
the product or service. Substantially all of the Company's animation revenue is recognized over time as it performs under the
contract due to the contractual terms present in each contract which irrevocably transfer control of the work product to the
customer as the services are performed.

 For performance obligations recognized over time,
revenue is recognized based on the extent of progress made towards completion of the performance obligation. The Company uses the input
method to measure of progress because it best depicts the transfer of control to the customer as the Company incurs costs against its
contracts. Under the input method, the extent of progress towards completion is measured
based on the ratio of costs incurred to date to the total estimated costs to complete the performance obligation. The input method requires
management to make estimates and assumptions that affect the reported amounts of contract assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to the
total estimated amount of costs that will be incurred for a project or job.

 F- 11

 Ecommerce Revenue

 Ecommerce revenue includes sales of merchandise related to merchandise sold. Revenue is recognized when control of product passes to customers, which is when the
merchandise is received by the customer. The Company recognizes revenue in the amount expected to be received when control
of the Company's products transfers to customers, and is presented net of various fixed percentage price allocations.

 The Company excludes from revenue, taxes assessed
by governmental authorities, including sales-related taxes, that are imposed on and concurrent with revenue-producing activities.

 Produced and Licensed Content Revenue

 Produced and licensed content revenues are generated
from the licensing of internally-produced films and television programs.

 Licensed internally-produced films and television
programming, each individual film or episode delivered represents a separate performance obligation and revenues are recognized when the
episode is made available to the licensee for exhibition. For license agreements containing multiple deliverables, revenues are allocated
based on the relative standalone selling price of each film or episode of a television series, which is based on licenses for comparable
films or series within the marketplace. Agreements to license programming are often long term, with collection terms ranging from one to five years.

 The advanced billing component for licensed content
is initially recorded as deferred revenue and subsequently recognized as revenue upon completion of the performance obligation in accordance
with the terms of licensing agreement.

 Publishing Revenue

 Publishing revenues are recognized when merchandise
is shipped or electronically delivered to the consumer. Consumer print books are generally sold with a right of return. The Company records
a returns reserve and corresponding decrease in revenue at the time of sale based upon historical trends. For publishing revenues, payments
are due shortly after shipment or electronic delivery.

 Web Filtering Revenue

 Web filtering revenue from subscription sales
is recognized on a pro-rata basis over the subscription period. Typically, a subscriber purchases a computer appliance and a software
and support service license for a period of use between one year to five years. The subscriber is billed in full at the time of the sale.
The Company immediately recognizes revenue attributable to the computer appliance as it is non-refundable and control passes to the customer.
The advanced billing component for software and service is initially recorded as deferred revenue and subsequently recognized as revenue
on a straight-line basis over the subscription period.

 Contract Assets and Liabilities

 Animation revenue contracts vary with movie contracts
typically allowing for progress billings over the contract term while other episodic development activities are typically billable upon
delivery of the performance obligation for an episode. These episodic activities typically create unbilled contract assets between episode
delivery dates while movies can create contract assets or liabilities based on the progress of activities versus the arranged billing
schedule. Revenues from web filtering contracts are all billed in advance and therefore represent contract liabilities until fully recognized
on a ratable basis over the contract life.

 F- 12

 Fair Value Measurements

 FASB ASC 820, Fair Value Measurements and Disclosures
("ASC 820") defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an
exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs
and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used
to measure fair value:

 Level 1: Quoted prices in active markets for identical assets or liabilities.

 Level 2: Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable.

 Level 3: Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.

 Fair value estimates discussed herein are based
upon certain market assumptions and pertinent information available to management as of December 31, 2023 and 2022. The Company uses the
market approach to measure fair value for its Level 1 financial assets and liabilities. The market approach uses prices and other relevant
information generated by market transactions involving identical or comparable assets or liabilities. The respective carrying value of
certain balance sheet financial instruments approximates its fair value. These financial instruments include cash, trade receivables,
related party payables, accounts payable, accrued liabilities and short-term borrowings. Fair values were estimated to approximate carrying
values for these financial instruments since they are short term in nature, and they are receivable or payable on demand.

 The estimated fair value of assets and liabilities
acquired in business combinations, reporting units and long-lived assets used in the related asset impairment tests, contingent consideration,
and derivatives utilize inputs classified as Level 3 in the fair value hierarchy.

 The Company determines the fair value of contingent
consideration based on a probability-weighted discounted cash flow analysis. The fair value remeasurement is based on significant inputs
not observable in the market and thus represents a Level 3 measurement as defined in the fair value hierarchy. In each period, the Company
reassesses its current estimates of performance relative to the stated targets and adjusts the liability to fair value. Any such adjustments
are included as a component of Other Income (Expense) in the Consolidated Statements of Operations and Comprehensive Loss.

 Derivative Financial Instruments

 The Company does not use derivative instruments
to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible and other promissory notes are reviewed to determine
whether they contain embedded derivative instruments that are required to be accounted for separately from the host contract and recorded
on the balance sheet at fair value. The fair value of derivative liabilities is required to be revalued at each reporting date, with corresponding
changes in fair value recorded in current period operating results.

 Beneficial Conversion Features

 In accordance with FASB ASC 470-20, Debt with
Conversion and Other Options the Company records a beneficial conversion feature ("BCF") related to the issuance of convertible
debt or preferred stock instruments that have conversion features at fixed rates that are in-the-money when issued. The BCF for the convertible
instruments is recognized and measured by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional
paid-in capital. The intrinsic value is generally calculated at the commitment date as the difference between the conversion price and
the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into
which the security is convertible. If certain other securities are issued with the convertible security, the proceeds are allocated among
the different components. The portion of the proceeds allocated to the convertible security is divided by the contractual number of the
conversion shares to determine the effective conversion price, which is used to measure the BCF. The effective conversion price is used
to compute the intrinsic value. The value of the BCF is limited to the basis that is initially allocated to the convertible security.

 F- 13

 Stock Purchase Warrants

 The Company accounts for warrants issued to purchase
shares of its common stock as equity in accordance with FASB ASC 480, Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Company's Own Stock, Distinguishing Liabilities from Equity.

 Cash and Cash Equivalents

 The Company's cash and cash equivalents
are exposed to concentration of credit risk. The Company maintains cash at various regulated financial institutions which, at times, may
be in excess of the federal depository insurance limit. The Company's management regularly monitors these institutions and believes
that the potential for future loss is remote. The Company considers liquid investments with original or acquired maturities of three months
or less to be cash equivalents. At December 31, 2023 and 2022, the Company did no t have any cash equivalents.

 Accounts Receivable

 Accounts receivable are customer obligations due
under normal trade terms which are recorded at net realizable value. The Company establishes an allowance for credit losses based on management's
assessment of the collectability of trade receivables. A considerable amount of judgment is required in assessing the amount of the allowance.
The Company makes judgments about the creditworthiness of each customer based on ongoing credit evaluations and monitors current economic
trends that might impact the level of credit losses in the future. If the financial condition of the customers were to deteriorate, resulting
in their inability to make payments, a specific allowance will be required.

 Recovery of credit loss amounts previously written
off is recorded as a reduction of credit loss expense in the period the payment is collected. If the Company's actual collection
experience changes, revisions to its allowance may be required. After all attempts to collect a receivable have failed, the receivable
is written off against the allowance.

 Accounts receivable includes unbilled accounts
receivable. Unbilled accounts receivable is a contract asset related to amounts that are unbilled due to agreed-upon contractual terms
in which billing occurs subsequent to revenue recognition. This situation typically occurs when the Company recognizes revenue for episodic
development activities performed but not yet billed. Episodic development activities are typically billable upon delivery.

 Inventory

 Inventory consists of costs incurred to produce
animated content for third party customers. Costs incurred to produce the animated content to customers, which include direct production
costs, production overhead and supplies are recognized as work-in-progress inventory. As animated content is completed in accordance with
the terms stated by the customer, inventory is classified as finished products and subsequently recognized as cost of services as animated
content is accepted by and available to the customer. Carrying amounts of animated content are recorded at the lower of cost or net realizable
value. Cost is determined using a weighted average cost method for direct production costs, productions overhead and supplies used for
completing animation projects.

 At December 31, 2023 and 2022, the Company's
inventory totaled $ 43,205 and $ 92,303, respectively, and was comprised of work-in-progress of $ 40,722 and $ 85,324, respectively, and finished
goods of $ 2,483 and $ 6,979, respectively.

 F- 14

 Capitalized Prepublication Costs

 Prepublication costs include costs incurred to
create and develop the art, prepress, editorial, digital conversion and other content required for the creation of the master copy of
a book or other media. Prepublication costs are amortized on a straight-line basis over a two- to five-year period based on expected future
revenue. The Company regularly reviews the recoverability of the capitalized costs based on expected future revenues.

 Capitalized Produced and Licensed Content
Costs

 Produced and licensed content costs include capitalizable
direct costs, production overhead, interest and development costs and are stated at the lower of cost, less accumulated amortization,
or fair value. Marketing, distribution and general and administrative costs are expensed as incurred.

 Film, television and direct to consumers through
streaming services production and residual costs are expensed over the product life cycle based upon the ratio of the current period's
revenues to estimated remaining total revenues (Ultimate Revenues) for each production. For film productions and direct to consumer services,
Ultimate Revenues include revenues from all sources that will be earned within ten years from the date of the initial release. For television
series, Ultimate Revenues include revenues that will be earned within ten years from delivery of the first episode, or if still in production,
five years from delivery of the most recent episode, if later. Costs of film, television and direct to consumer productions are subject
to regular recoverability assessments, which compare the estimated fair values with the unamortized costs. The Company bases these fair
value measurements on the Company's assumptions about how market participants would price the assets at the balance sheet date,
which may be different than the amounts ultimately realized in future periods. The amount by which the unamortized costs of film and television
productions exceed their estimated fair values is written off. Costs for projects that have been abandoned are written off. Projects that
have not been set for production within three years are also written off unless management has committed to a plan to proceed with the
project and is actively working on and funding the project.

 Capitalized Website Development Costs

 The Company capitalizes certain costs associated
with the development of its Santa.com website after the preliminary project stage is complete and until the website is ready for its intended
use. Planning and operating costs are expensed as incurred. Capitalization begins when the preliminary project stage is complete, project
plan is defined, functionalities are determined and internal and external resources are identified. Qualified costs incurred during the
operating stage of our software applications relating to upgrades and enhancements are capitalized to the extent it is probable that they
will result in added functionality, while costs that cannot be separated between maintenance of, and minor upgrades and enhancements to
the websites are expensed as incurred.

 Capitalized website costs are amortized on a straight-line
basis over their estimated useful life of three years beginning with the time when it is ready for intended use. Amounts amortized are
presented through cost of sales. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever
events or changes in circumstances occur that could impact the recoverability of these assets.

 F- 15

 Property and Equipment

 Property and equipment are stated at cost or fair
value if acquired as part of a business combination. Depreciation is computed by the straight-line method and is charged to operations
over the estimated useful lives of the assets. Maintenance and repairs are charged to expense as incurred. The carrying amount and accumulated
depreciation of assets sold or retired are removed from the accounts in the year of disposal and any resulting gain or loss is included
in results of operations. The estimated useful lives of property and equipment are as follows:

 Schedule of estimated useful lives of property and equipment

 Computers, software, and office equipment

 1 – 5 years

 Capitalized website development cost

 3 years

 Machinery and equipment

 3 – 5 years

 Vehicles

 5 years

 Furniture and fixtures

 5 – 10 years

 Leasehold improvements

 Lesser of the lease term or estimated useful life

 Construction in process is not depreciated until
the construction is completed and the asset is placed into service.

 Goodwill and Intangible Assets

 Goodwill represents the future economic benefit
arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the
Company's acquisitions is attributable to the value of the potential expanded market opportunity with new customers.

 Intangible assets have either an identifiable
or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic
or legal life, whichever is shorter. The Company's amortizable intangible assets consist of customer relationships and non-compete
agreements. Their useful lives range from 1.5 to 10 years. The Company's indefinite-lived intangible assets consist of trade names
and goodwill.

 Goodwill and indefinite-lived assets are not amortized
but are subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs an annual impairment
assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate
that the fair value of the asset may be less than the carrying amount. The evaluation begins with a qualitative assessment to determine
whether a quantitative impairment test is necessary. If, after assessing qualitative factors, the Company determines it is more likely
than not that the fair value of the reporting unit is less than the carrying amount, then the quantitative goodwill impairment test is
performed.

 The quantitative goodwill impairment test used
to identify potential impairment compares the fair value of a reporting unit with its carrying amount, including goodwill. The fair value
of the reporting unit represents the price a market participant would be willing to pay in a potential sale of the reporting unit and
is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and
market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines
fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors
that consider the timing and risk of cash flows. For the discount rate, the Company relies on the capital asset pricing model approach,
which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, the Company's risk
relative to the overall market, the Company's size and industry and other Company-specific risks. Other significant assumptions
used in the income approach include the terminal value, growth rates, future capital expenditures and changes in future working capital
requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market.

 F- 16

 If the fair value of the reporting unit is greater
than its carrying amount, there is no impairment. If the reporting unit's carrying amount exceeds its fair value, an impairment
loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Any impairment
identified is included within "goodwill impairment" in the consolidated statements of operations.

 Determining the fair value of a reporting unit
is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans,
and future market conditions, among others. There can be no assurance that the Company's estimates and assumptions made for purposes
of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause
the Company to perform an impairment test prior to scheduled annual impairment tests.

 The Company performed its annual fair value assessment
at December 31, 2023 on its subsidiaries with material goodwill and intangible asset amounts on their respective balance sheets and determined
that an impairment charge of $ 4,876,106 was necessary. See Note 8 – Goodwill and Intangible Assets for more information.

 Impairment of Long-Lived Assets

 The Company evaluates the recoverability of its
long-lived assets whenever events or changes in circumstances have indicated that an asset may not be recoverable. The long-lived asset
is grouped with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other
groups of assets and liabilities. If the sum of the projected undiscounted cash flows is less than the carrying value of the assets, the
assets are written down to the estimated fair value.

 The Company evaluated the recoverability of its
long-lived assets on December 31, 2023, respectively on its subsidiaries with material amounts on their respective balance sheets and
determined that no impairment exists.

 Income Taxes

 The Company accounts for income taxes under
FASB ASC 740, Accounting for Income Taxes ("ASC 740"). Under ASC 740, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under
ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date. ASC 740-10-05, Accounting for Uncertainty in Income Taxes prescribes a recognition threshold and
a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a
tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by
taxing authorities.

 The amount recognized is measured as the largest
amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company assesses the validity
of its conclusions regarding uncertain tax positions on a quarterly basis to determine if facts or circumstances have arisen that might
cause it to change its judgment regarding the likelihood of a tax position's sustainability under audit.

 F- 17

 Right of Use Assets and Lease Liabilities

 FASB ASU No. 2016-02, "Leases" (ASC
842) requires lessees to recognize almost all leases on the balance sheet as a right of use ("ROU") asset and a lease liability
and requires leases to be classified as either an operating or a finance type lease. The standard excludes leases of intangible assets
or inventory, and permits the exclusion of leases with an original lease term of less than one year.

 Under ASC 842, the Company determines if an arrangement
is a lease at inception. ROU assets and liabilities are recognized at commencement date based on the present value of remaining lease
payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement.
As most of the Company's leases do not provide an implicit rate, the Company estimated the incremental borrowing rate in determining the
present value of lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any
lease incentives received. The Company lease terms may include options to extend or terminate the lease when it is reasonably certain
that the Company will exercise such options.

 Operating leases are included in operating lease
right-of-use assets, operating lease liabilities, current and operating lease liabilities, non-current on the Company's consolidated balance
sheets.

 Foreign Currency Translation

 The functional and reporting currency of TD Holdings
and TDAHK is the Hong Kong Dollar. The functional and reporting currency of Top Draw is the Philippine Peso. Management applies the guidance
within FASB ASC 830, Foreign Currency Matters for transactions that occur in foreign currencies. Monetary assets denominated in
foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Average monthly rates are used to translate
revenues and expenses.

 Transactions denominated in currencies other than
the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction.
Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective
periods.

 Assets and liabilities of the Company's
operations are translated into the reporting currency, United States dollars, at the exchange rate in effect at the balance sheet dates.
Revenue and expenses are translated at average rates in effect during the reporting periods. Equity transactions are recorded at the historical
rate when the transaction occurred. The resulting translation adjustment is reflected as accumulated other comprehensive income, a separate
component of stockholders' equity in the statement of stockholders' equity.

 Differences may arise in the amount of bad debt
expense, depreciation expense and amortization expense reported in the Company's operating results as compared to the corresponding change
in the allowance for doubtful accounts, accumulated depreciation, and accumulated amortization, respectively, due to foreign currency
translation. These translation adjustments are reflected in accumulated other comprehensive income, a separate component of the Company's
stockholders' equity.

 Comprehensive Gain or Loss

 FASB ASC 220, Comprehensive Income establishes
standards for the reporting and display of comprehensive income and its components in the financial statements. At December 31, 2023 and
2022, the Company determined that it had items that represented components of comprehensive income (loss), which include accumulated foreign
currency translation adjustments, and, therefore, has included a statement of comprehensive income (loss) in the financial statements.

 F- 18

 Advertising Expenses

 Advertising costs are expensed as incurred and
included in selling, general and administrative expenses.

 Interest

 Cost associated with the refinancing or issuance
of debt, as well as debt discounts or premiums, are recorded as interest over the term of the related debt using the effective interest
method.

 Shipping and Handling Costs

 Shipping and handling costs related to the acquisition
of goods from vendors are included in the cost of sales.

 Stock-Based Compensation

 The Company calculates share-based compensation
expense for option awards ("Share-based Award(s)") based on the estimated grant/issue date fair value using the Black-Scholes-Merton
option pricing model ("Black-Scholes Model") and recognizes the expense on a straight-line basis over the vesting period.
It accounts for forfeitures as they occur. The Black-Scholes Model requires the use of a number of assumptions including volatility of
the stock price, the weighted average risk-free interest rate, and the vesting period in determining the fair value of Share-based Awards.
The expected term is based on the "simplified method", due to the Company's limited option exercise history. Under this
method, the term is estimated using the weighted average of the service vesting period and contractual term of the option award. As the
Company does not yet have sufficient history of its own volatility, the Company has identified several public entities of similar size,
complexities and industry and calculates historical volatility based on the volatilities of these companies. Although the Company believes
its assumptions used to calculate share-based compensation expense are reasonable, these assumptions can involve complex judgments about
future events, which are open to interpretation and inherent uncertainty. In addition, significant changes to its assumptions could significantly
impact the amount of expense recorded in a given period.

 The Company recognizes restricted stock unit expense
over the period of vesting or period that services will be provided. Compensation associated with shares of common stock issued or to
be issued to consultants and other non-employees is recognized over the expected service period beginning on the measurement date, which
is generally the time the Company and the service provider enter into a commitment whereby the Company agrees to grant shares in exchange
for the services to be provided.

 Basic and Diluted Net Income (Loss) Per
Share

 The Company computes net income (loss) per share
in accordance with FASB ASC 260, Earnings per Share which requires presentation of both basic and diluted earnings per share ("EPS")
on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common stockholders (numerator)
by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential
shares of common stock outstanding during the period using the treasury stock method, and convertible preferred stock and convertible
debt using the if-converted method. These potentially dilutive shares include 5,775,215 shares from convertible notes, 8,024 shares from
convertible preferred stock, 232 shares from vested stock options and 2,862,056 shares from stock purchase warrants. In computing diluted
EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock
options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

 In accordance with FASB ASC Topic 260-10-45, The
Company includes pre-funded warrants in the weighted average common shares outstanding number for the purpose of calculating EPS. At December
31, 2023, all pre-funded warrants were fully exercised.

 F- 19

 Recent Accounting Pronouncements

 Not Yet Adopted

 In November 2023, the FASB issued ASU No.
2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. ASU 2023-07 requires disclosure of
incremental segment information on an annual and interim basis, including significant segment expenses that are regularly provided
to the Chief Operating Decision Maker ("CODM") and included within each reported measure of segment profit or loss.
Additionally, the ASU requires disclosure of the title and position of our CODM and an explanation of how the CODM uses the reported
measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. The ASU does not change
how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its
reportable segments. This guidance is effective for the Company beginning with its 2024 Form 10-K for annual disclosures and the
Q1-2025 Form 10-Q for interim disclosures, with early adoption permitted. The guidance should be applied retrospectively to all
periods presented in the financial statements. The guidance, once adopted, will result in increased reportable segment
disclosures.

 In December 2023, the FASB issued ASU No.
2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. ASU 2023-09 expands the existing disclosure
requirements for the annual rate reconciliation between the effective tax rate and the statutory federal tax rate by requiring
reconciliation items to be disaggregated by defined categories and disclosed as both percentages and amounts. The ASU also requires
the disaggregation of income taxes paid by jurisdiction for each annual period presented. This guidance is effective for the Company
beginning with its 2025 Form 10-K annual disclosures, with early adoption permitted. The guidance should be applied on a prospective
basis, but retrospective application is permitted. The guidance, once adopted, will result in increased income tax disclosures.

 3.

 ACCOUNTS RECEIVABLE, NET

of the Company's accounts receivable at December 31, 2023 and 2022:

 Schedule of accounts receivable

 2023

 2022

 Billed accounts receivable

 $
 495,991

 $
 607,524

 Unbilled accounts receivable

 374,206

 592,932

 Allowance for doubtful accounts

 ( 44,124
)

 ( 38,226
)

 Total accounts receivable, net

 $
 826,073

 $
 1,162,230

 During the year ended December 31, 2023, the Company
had three customers that accounted for 76.5 % of revenues and two customers that accounted for 80.5 % of accounts receivable. During the
year ended December 31, 2022, the Company had three customers that accounted for 84.5 % of revenues and two customers that accounted for
 73.6 % of accounts receivable.

 F- 20

 4.

 PREPAID EXPENSES AND OTHER CURRENT ASSETS

 Prepaid expenses and other current assets represent
advances or prepayments made in the normal course and in which the economic benefit is expected to be realized within twelve months.

of the Company's prepaid expenses and other current assets at December 31, 2023 and 2022:

 Schedule of prepaid expenses and other current assets

 2023

 2022

 Employee advance and other payroll related items

 $
 70,224

 $
 66,428

 Prepaid insurance

 99,792

 103,026

 Prepaid rent and deposits

 25,217

 14,850

 Prepaid service agreements

 177,177

 410,373

 Vendor advances

 7,916

 5,365

 Other prepaid expenses and current assets

 147,213

 5,455

 Total prepaid expenses and other current assets

 $
 527,539

 $
 605,497

 5.

 PROPERTY AND EQUIPMENT

 The following table sets forth the components of the Company's
property and equipment at December 31, 2023 and 2022:

 Schedule of property and equipment

 Cost

 Depreciation

 Net Book
 Value

 Cost

 Depreciation

 Net Book
 Value

 Capital assets subject to depreciation:

 Computers, software and office equipment

 $
 2,516,090

 $
 ( 2,471,833
)

 $
 44,257

 $
 2,774,308

 $
 ( 2,651,872
)

 $
 122,436

 Machinery and equipment

 180,317

 ( 174,844
)

 5,473

 189,641

 ( 182,180
)

 7,461

 Vehicles

 11,729

 ( 11,729
)

 –

 41,112

 ( 35,504
)

 5,608

 Furniture and fixtures

 375,429

 ( 367,286
)

 8,143

 409,996

 ( 391,783
)

 18,213

 Leasehold improvements

 1,077,852

 ( 1,020,911
)

 56,941

 1,172,501

 ( 1,065,148
)

 107,353

 Total fixed assets

 4,161,417

 ( 4,046,603
)

 114,814

 4,587,558

 ( 4,326,487
)

 261,071

 Capital assets not subject to depreciation:

 Construction in progress

 –

 –

 –

 24,605

 –

 24,605

 Total

 $
 4,161,417

 $
 ( 4,046,603
)

 $
 114,814

 $
 4,612,163

 $
 ( 4,326,487
)

 $
 285,676

 For the years ended December 31, 2023 and 2022,
the Company recorded depreciation expense of $ 152,417
 and $ 347,727, respectively, of which $ 109,997
and $ 281,864 is presented under Cost of Goods Sold on the Company's Consolidated Results of Operations and Comprehensive Loss.

 F- 21

 6.

 OTHER ASSETS

of the Company's other assets at December 31, 2023 and 2022:

 Schedule of other assets

 2023

 2022

 Capitalized prepublication costs

 $
 682,722

 $
 1,057,312

 Capitalized produced and licensed content costs

 173,949

 164,042

 Capitalized website development costs

 1,503,036

 325,966

 Deposits

 73,708

 72,027

 Other noncurrent assets

 –

 7,731

 Total other assets

 $
 2,433,415

 $
 1,627,078

 The following tables set forth the components
of the Company's capitalized costs at December 31, 2023 and 2022:

 Schedule of capitalized costs

 Gross Carrying Value

 Amortization

 Net Book
 Value

 Gross Carrying Value

 Depreciation

 Net Book
 Value

 Capitalized website development costs

 $
 1,123,772

 $
 ( 441,050
)

 $
 682,722

 $
 1,123,772

 $
 ( 66,460
)

 $
 1,057,312

 Prepublication costs

 178,648

 ( 4,699
)

 173,949

 165,524

 ( 1,482
)

 164,042

 Produced and licensed content costs

 1,503,036

 –

 1,503,036

 325,966

 –

 325,966

 Total

 $
 2,805,456

 $
 ( 445,749
)

 $
 2,359,707

 $
 1,615,262

 $
 ( 67,942
)

 $
 1,547,320

 For the years ended December 31, 2023 and 2022,
the Company recorded amortization expense of $ 377,807 and $ 67,942, respectively.

 7.

 LEASES

 The Company has entered into operating leases
primarily for office space. These leases have initial terms which range from two years to six years, and often include one or more options
to renew or in the case of equipment rental, to purchase the equipment. During the year ended December 31, 2023, $ 11,152 of right of use
assets and leases liabilities were added related to new operating leases.

 The Company leases approximately 2,100 square
feet of office space in Boca Raton, Florida at the rate of $4,000 per month pursuant to a three-year lease which was renewed for six months
and expired in March 2022. The Florida office space is the location of the Company's corporate headquarters and administrative staff.
In January 2022, the Company signed a new lease agreement to extend the term until March 2024. The total legally binding minimum lease
payments for this lease are approximately $94,898.

 In August and September 2022, the Company signed
new lease agreements to extend its use of approximately 25,300 square feet of office space in Manila. The lease agreements expire in December
2027. The total legally binding minimum lease payments for these leases are approximately $ 1,044,644.

 F- 22

 On March 10, 2023, the Company entered into an
assignment and first amendment to its lease dated November 3, 2017 for approximately 1,900 square feet of office space in Peachtree Corners,
GA. Under the terms of the amended agreement, the Company agreed to extend the lease term until May 31, 2024. The Company has the option
to renew the lease term for an additional 12 months. The renewal option is not included in the future minimum lease payments used in determining
the ROU liability as management is not reasonably certain to execute the option. The total legally binding minimum lease payments for
this lease is approximately $ 12,267.

 On September 27, 2023, the Company signed a new
lease agreement for approximately 150 square feet of office space in Calabasas, CA at a rate of approximately $1,550 per month. The term
of the lease is 12 months from the commencement date, November 15, 2023. The Company has elected not to account for the lease under the
standard due to its short term.

 The future minimum payment obligations at December
31, 2023 for operating leases are as follows:

 Schedule of future minimum payment obligations

 2024

 $
 287,577

 2025

 276,622

 2026

 224,702

 2027

 235,939

 Thereafter

 –

 Total

 $
 1,024,840

 These operating leases are listed as separate
line items on the Company's Consolidated Balance Sheets and represent the Company's right to use the underlying asset for the lease
term. The Company's obligation to make lease payments are also listed as separate line items on the Company's Consolidated Balance
Sheets.

 Because the rate implicit in each lease is not
readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments.

 Information related to the Company's operating right-of-use assets
and related lease liabilities were as follows:

 Schedule of operating right of use assets
and related lease liabilities

 Year Ended

 Cash paid for operating lease liabilities

 $
 377,652

 Weighted-average remaining lease term (in years)

 2.9

 Weighted-average discount rate

 10 %

 Total rent expense related to lease obligations, reflected in general
and administrative costs line items on the consolidated income statements, for the years ended December 31, 2023 and 2022, were $ 396,560
and $ 398,754, respectively.

 The following table presents the amortization of the Company's
lease liabilities under ASC 842 at December 31, 2023:

 Schedule of amortization of lease liabilities

 2024

 $
 205,575

 2025

 $
 215,177

 2026

 $
 184,776

 2027

 $
 214,490

 Thereafter

 $
 820,018

 F- 23

 8.

 GOODWILL AND INTANGIBLE ASSETS

 Goodwill represents the future economic benefit
arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the
Company's acquisitions is attributable to the value of the potential expanded market opportunity with new customers.

 The following table sets forth the changes in
the carrying amount of goodwill by reportable segment for the years ended December 31, 2023 and 2022:

 Schedule of goodwill

 Animation

 Original Content

 Consolidated

 Balance, January 1, 2022

 $
 8,104,056

 $
 14,271,969

 $
 22,376,025

 Measurement period adjustment

 –

 ( 468,426
)

 ( 468,426
)

 Impairment charge

 ( 6,202,888
)

 ( 5,137,227
)

 ( 11,340,115
)

 Balance, December 31, 2022

 1,901,168

 8,666,316

 10,567,484

 Impairment charge

 ( 954,655
)

 ( 3,921,451
)

 ( 4,876,106
)

 Balance, December 31, 2023

 $
 946,513

 $
 4,744,865

 $
 5,691,378

finalized the purchase price allocation, during the permissible measurement period, and obtained new fair value information for certain
identifiable intangible assets related to its acquisition of CIM. The revised purchase price allocation decreased goodwill by $ 468,426
and increased intangible assets by $ 468,426. Additionally, the Company recorded amortization expense of $ 24,641 related to intangible
assets subject to amortization during the year ended December 31, 2022 (of which $ 7,247 corresponded to the year ended December 31, 2021).
These adjustments did not have a significant impact on the Company's operations for the year ended December 31, 2022. The following
table summarizes the individually identifiable intangible assets recognized:

 Schedule of identifiable intangible assets

 Licensing agreements

 $
 341,728

 Books and stories content

 Total new fair value information for certain identifiable intangible assets

 $
 468,426

 At December 31, 2023, the Company performed its
annual impairment tests as prescribed by ASC 350 on the carrying value of its goodwill and recorded aggregate impairment charges of $ 4,876,106;
of which $ 954,655 was attributed to its TD Holdings Ltd animation business acquired in 2016, and $ 3,921,451 was attributed to its CIM
original content business acquired in 2021. The determination was made as the result of the Company's qualitative assessment of
each business unit, including the decline in animation revenues and delay in monetization of original content properties.

 At December 31, 2022, the Company performed its
annual impairment tests as prescribed by ASC 350 on the carrying value of its goodwill and recorded aggregate impairment charges of $ 11,340,115;
of which $ 6,202,888 was attributed to its TD Holdings Ltd animation business acquired in 2016, and $ 5,137,227 was attributed to its CIM
original content business acquired in 2021. The determination was made as the result of the Company's qualitative assessment of
each business unit, including the decline in animation revenues and delay in monetization of original content properties.

 F- 24

 At December 31, 2023 and 2022, the carrying amount
of the Company's goodwill was $ 5,691,378 and $ 10,567,484, respectively.

of the Company's intangible assets at December 31, 2023 and 2022:

 Schedule of intangible assets

 Amortization Period (Years)

 Gross Carrying Amount

 Accumulated Amortization

 Net Book Value

 Gross Carrying Amount

 Accumulated Amortization

 Net Book Value

 Intangible assets subject to amortization:

 Customer relationships

 10.00

 $
 1,526,282

 $
 ( 1,144,711
)

 $
 381,571

 $
 1,526,282

 $
 ( 992,083
)

 $
 534,199

 Licensing agreement

 19.60

 341,728

 ( 42,035
)

 299,693

 341,728

 ( 24,641
)

 317,087

 Subtotal

 1,868,010

 ( 1,186,746
)

 681,264

 1,868,010

 ( 1,016,724
)

 851,286

 Intangible assets not subject to amortization:

 Books and stories content

 –

 –

 Trade names

 4,386,247

 –

 4,386,247

 4,386,247

 –

 4,386,247

 Total intangible assets

 $
 6,380,955

 $
 ( 1,186,746
)

 $
 5,194,209

 $
 6,380,955

 $
 ( 1,016,724
)

 $
 5,364,231

 For the years ended December 31, 2023 and 2022,
the Company recorded amortization expense for intangible assets subject to amortization of $ 170,022, respectively.

 The following table provides information regarding
estimated amortization expense for intangible assets subject to amortization for each of the following years ending December 31:

 Schedule of estimated amortization expense for intangible assets

 2024

 $
 170,022

 2025

 170,022

 2026

 93,708

 2027

 17,394

 2028

 17,393

 Thereafter

 212,724

 Total

 $
 681,264

 9.

 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

 Accounts, or trade, payables are recognized initially
at the transaction price and subsequently measured at the undiscounted amount of cash or other consideration expected to be paid. At December
31, 2023 and 2022, the aggregate accounts payable were $ 865,266 and $ 839,679, respectively.

 Accrued expenses are recognized based on the expected
amount required to settle the obligation or liability.

 F- 25

of the Company's accrued liabilities at December 31, 2023 and 2022:

 Schedule of accrued liabilities

 2023

 2022

 Executive and employee compensation

 $
 53,582

 $
 102,151

 Interest on convertible promissory notes

 61,216

 84,292

 Other accrued expenses and liabilities

 178,481

 192,511

 Total
 accrued liabilities

 $
 293,279

 $
 378,954

 10.

 RELATED PARTY PAYABLES AND TRANSACTIONS

 At December 31, 2023 and 2022, the aggregate related
party payables were $ 0 and $ 50,000, respectively.

 Darren Marks's Family

 The Company has engaged the family of Darren Marks,
its Chief Executive Officer, to assist in the development of the Grom Social mobile application. These individuals create and produce
original short form content focusing on social responsibility, anti-bullying, digital citizenship, unique blogs, and special events. Sarah
Marks, the wife of Mr. Marks, and Zach Marks, Luke Marks, Caroline Marks, Jack Marks, Dawson Marks and Victoria Marks, each Mr. Marks's
children, are, or have been, by the Company employed or independently contracted.

 During the year ended December 31, 2023, Zach
Marks was employed by Grom Social as its Founder and Content Creator and receives an annual salary of $ 103,000. Effective August 4, 2023,
Luke Marks resigned from his position of Content Coordinator from which he received an annual salary of $ 30,000.

 During the years ended December 31, 2023 and 2022,
the Marks family was paid a total of $ 122,542 and $ 112,500, respectively.

 Compensation for services provided by the Marks
family is expected to continue for the foreseeable future.

 Liabilities Due to Officers and/or Directors

 On July 13, 2018, our director, Thomas Rutherford,
loaned the Company $ 50,000. The loan bears interest at a rate of 10 % per annum and matured on August 11, 2018. On April 21, 2023, the
Company repaid the $ 50,000 principal balance of the note. During the years ended December 31, 2023 and 2022, the Company accrued interest
expense of $ 1,521 and $ 5,000, respectively, on the note.

 At December 31, 2023 and 2022, the aggregate related
party payables was $ 23,904 and $ 72,383, respectively, of which $ 23,904 and $ 22,383, respectively, were reported under accrued liabilities
on the Company's Consolidated Balance Sheets.

 F- 26

 11.

 EMPLOYEE BENEFIT PLAN

 The Company's subsidiary, TDAM, has an unfunded,
non-contributory defined benefit plan covering its permanent employees.

 Under the existing regulatory framework, the Company
is required to pay eligible employees at least the minimum regulatory benefit upon retirement, which provides a retirement benefit equal
to 22.5 days' pay for every year of credited service, subject to age and service requirements. The regulatory benefit is paid in
a lump sum upon retirement. The existing regulatory framework does not require minimum funding of the plan.

 Retirement benefit expenses and liabilities are
determined in accordance with an actuarial study made for the plan utilizing the net interest approach which disaggregates the defined
benefit cost into the following components: service costs (cost of services received); net interest (financing effect of paying for benefits
in advance or in arrears); and remeasurements (period-to-period fluctuations in the amounts of defined benefit obligations and plan assets).

 Under the net interest approach, service cost
and net interest on the defined benefit liability (asset) are both recognized in the statement of operations, while remeasurements of
the defined benefit liability (asset) are recognized in other comprehensive income. Remeasurements recognized in other comprehensive income
shall not be reclassified to profit or loss in a subsequent period.

 The amount of the defined benefit liability reported
under other noncurrent liabilities in the consolidated balance sheet is determined as follows:

 Schedule of defined benefit liability

 2023

 2022

 Benefit obligation

 $
 240,763

 $

 Plan assets

 –

 –

 Total

 $
 240,763

 $

 The components of the accumulated benefit cost
to be recognized under selling, general and administrative expense in consolidated statement of operations are the service cost (current
service cost, past service cost or credit and settlement gains or losses) and net interest expense on the net defined benefit liability:

 Schedule of accumulated benefit cost

 2023

 2022

 Current service cost

 $
 18,030

 $
 86,357

 Net interest expense

 21,248

 12,785

 Total

 $
 39,278

 $
 99,142

 F- 27

 The change in the accumulated benefit cost in
the consolidated balance sheet are as follows:

 Schedule of change in the accumulated benefit cost

 2023

 2022

 Balance, beginning of year

 $

 $
 390,833

 Foreign currency translation

 ( 20,938
)

 ( 29,639
)

 Expense recognized in other comprehensive income

 39,278

 99,142

 Remeasurement on actuarial gain (loss) recognized

 ( 67,167
)

 24,552

 Contributions paid

 ( 145,386
)

 ( 49,912
)

 Balance, end of year

 $
 240,763

 $

 The cumulative amount of actuarial gains recognized
in other comprehensive income is as follows:

 Schedule of actuarial gains recognized
in other comprehensive income

 2023

 2022

 Balance, beginning of year

 $
 35,163

 $
 60,518

 Foreign currency translation

 1,518

 ( 803
)

 Actuarial gain (loss)

 88,241

 ( 24,552
)

 Balance, end of year

 124,922

 35,163

 Tax effect

 ( 31,230
)

 ( 8,802
)

 Cumulative actuarial gain (loss), net of tax

 $
 93,692

 $
 26,361

 The assumptions used to determine retirement benefits
for the years ended December 31 are as follows:

 Schedule of assumptions used to determine retirement benefits

 2023

 2022

 Discount rate

 6.05 %

 7.17 %

 Salary increase rate

 2.00 %

 2.00 %

 The average duration of the accrued retirement
benefit cost as at December 31, 2023 and 2022 is 7.7 years and 7.3 years, respectively.

 F- 28

 12.

 DEBT

 Convertible Notes Payable

 The following table set forth the components of
the Company's convertible notes payable at December 31, 2023 and 2022:

 Schedule of convertible notes payable

 2023

 2022

 8% Unsecured Convertible Notes (CIM)

 $
 –

 $
 278,000

 9% Secured Convertible Note with Original Issuance Discounts (Generating Alpha)

 4,000,000

 –

 10% Secured Convertible Notes with Original Issuance Discounts (OID Notes)

 75,000

 75,000

 12% Senior Secured Convertible Notes (TDH Secured Notes)

 63,905

 204,907

 12% Senior Secured Convertible Notes (Additional Secured Notes)

 12,142

 38,923

 Loan discounts

 ( 3,356,458
)

 ( 25,164
)

 Total convertible notes, net

 794,589

 571,664

 Less: current portion of convertible notes, net

 ( 254,146
)

 ( 503,465
)

 Convertible notes, net

 $
 540,443

 $
 68,199

 8% Unsecured Convertible Notes (CIM)

 On July 29, 2021, the Company entered into a membership
interest purchase agreement with CIM and the holders of all of CIM's outstanding membership interests, for the purchase of 80% of
CIM's outstanding membership interests from the sellers. Pursuant to the purchase agreement, the Company issued 8% eighteen-month
convertible promissory notes in the aggregate principal amount $ 278,000 to pay-down and refinance certain outstanding loans and advances
previously made by certain of its principals. The notes are convertible into shares of common stock of the Company at a conversion price
of $ 1,968.00 per share but may not be converted if, after giving effect to such conversion, the noteholder and its affiliates would beneficially
own in excess of 9.99% of the Company's outstanding common stock. The notes may be prepaid at any time, in whole or in part, and
are subordinate to the Company's senior indebtedness.

 On September 21, 2023, the Company repaid $ 278,000
of outstanding principal and $ 46,430 of accrued interest to the noteholders.

 At December 31, 2023 and 2022, the principal balance
of the CIM notes was $ 0 and $ 278,000, respectively.

 9% Secured Convertible Note with Original
Issuance Discounts (First Alpha Note)

 On November 9, 2023, the Company entered into
a Securities Purchase Agreement (the "Alpha SPA") with Generating Alpha Ltd. ("Alpha") pursuant to which the Company
agreed to sell two convertible promissory notes of the Company, with each note having an initial principal amount of $ 4,000,000, for a
price of $ 3,640,000 per note.

 The note in the aggregate principal amount of
$ 4,000,000 has five-year maturity with an interest at 9 % per calendar year and carries a 9 % original issue discount (the "First
Alpha Note"). The Company has agreed to make amortization payments each month in the amount of $ 83,033 in cash or in kind.

 F- 29

 The First Alpha Note is convertible at the discretion
of Alpha into shares of the Company's common stock at a price of $ 1.50. Alpha may choose the alternate conversion price equal to
85% of the average of the three lowest trading prices during the previous ten trading day period ending on the latest complete trading
day prior to notice of conversion.

 In connection with the purchase and sale of the
notes, the Company agreed to issue to Alpha warrants to acquire a total of 3,028,146 shares of the Company's common stock. The warrant
to be issued at the first closing shall be a warrant for 1,514,073 shares of the Company's common stock at an exercise price of
$ 1.78 per share. The warrant to be issued at the second closing shall be a warrant for 1,514,073 shares of the Company's common
Stock at an exercise price of $0.001 per share.

 On November 20, 2023, the Company entered into
a first amendment agreement (the "Amendment") to the Alpha SPA. Pursuant to the Amendment, the Alpha SPA was amended by replacing
the first closing warrant for 1,514,073 shares of common stock with an exercise price of $ 1.78 per share with (i) a warrant for 757,036
shares of common stock with an exercise price of $1.78 per share and (ii) a warrant for 757,036 shares of common stock with an exercise
price of $.001 per share. Additionally, the Amendment replaced the second closing warrant for 1,514,073 shares of common stock with an
exercise price of $0.001 per share with (i) a warrant for 757,036 shares of common stock with an exercise price of $1.78 per share and
(ii) a warrant for 757,036 shares of common stock with an exercise price of $.001 per share.

 On December 21, 2023, the Company received approximately
$ 3.6 million in gross proceeds from the first closing, prior to deducting the underwriting discount and commission and other estimated
offering expenses payable by the Company.

 At December 31, 2023, the principal balance
of these notes was $ 4,000,000 and the remaining balance on the associated loan discounts was $ 3,352,119.

 10% Senior Secured Convertible Note with
Original Issuance Discount (First L1 Tranche)

 On September 14, 2021, the Company entered into
a securities purchase agreement (the "L1 Purchase Agreement") with L1 Capital Global Master Fund ("L1") pursuant
to which it issued (i) a 10% original issue discount senior secured convertible note in the principal amount of $ 4,400,000 to L1 (the
"L1 Note") and (ii) a five-year warrant to purchase 1,355 shares of the Company's common stock at an exercise price
of $2,520.00 per share in exchange for $ 3,960,000 (the "First L1 Tranche"). The L1 Purchase Agreement also provided, subject
to shareholder approval, for the issuance, subject to certain conditions, of an additional $1,500,000 of notes and warrants to purchase
463 shares of common stock (the "Second L1 Tranche") on the same terms.

 The L1 Note is convertible by L1 into common stock
of the Company at a price of $ 2,520.00 per share, or approximately 1,746 shares. It is repayable in equal monthly installments of
$ 275,000 with certain deferments or an acceleration of up to three months' payments. The Company may repay the L1 Note in cash or shares
of common stock at a price equal to the lesser of the then conversion price or 95% of the lowest daily VWAP during the ten consecutive
trading days immediately preceding the monthly payment date, but in no event less than $1,152.00. In the event that VWAP drops below $1,152.00,
the Company will have the right to pay at such VWAP with any shortfall paid in cash.

 On October 20, 2021, the Company and L1 entered
into an amended and restated purchase agreement which increased the amount of the Second L1 Tranche from $1,500,000 to $ 6,000,000 and
provides (i) for an amended and restated 10% original issue discount senior secured convertible note to be issued in exchange for the
L1 Note pursuant to the L1 Purchase Agreement and (ii) for the issuance of a five-year warrant to purchase 1,735 shares of the Company's
common stock at an exercise price of $2,520.00 per share.

issued an aggregate 9,596 shares of common stock to L1 upon the conversion of $ 4,125,000 of outstanding principal on the First L1 Tranche.

 As of December 31, 2023 and 2022, the principal
balance of this note was $ 0, respectively, and all associated loan discounts were fully amortized.

 F- 30

 10% Senior Secured Convertible Note with
Original Issuance Discount (Second L1 Tranche)

 On January 20, 2022 (the "Second Tranche
Closing"), the Company and L1 closed on the Second L1 Tranche of the offering, resulting in the issuance of (i) a $ 1,750,000 10 %
Original Issue Discount Senior Secured Convertible Note, due July 20, 2023, (the "Second L1 Note"); and (ii) a five year warrant
to purchase 506 shares of Common Stock of the Company at an exercise price of $ 2,520.00 per share (the "Second Tranche Warrants"),
in exchange for consideration of $ 1,575,000 (i.e. the face amount less the 10% Original Issue Discount of $ 175,000).

 The Second L1 Note is convertible into common
stock of the Company at a rate of $ 2,520.00 per share into 694 shares of common stock and, is repayable in equal monthly installments
of $111,563 commencing on the date that the SEC declares a registration statement with respect to the resale of such shares effective,
with all remaining amounts due on July 20, 2023. The Second L1 Note is repayable by payment of cash, or by issuance of shares of the common
stock at a price of 95% of the lowest daily VWAP during the ten-trading day period prior to the respective monthly redemption dates (with
a floor of $1,152.00) multiplied by 102% of the amount due on such date. In the event that the ten-trading day VWAP drops below $1,152.00
the Company will have the right to pay in stock at such ten-trading day VWAP with any shortfall paid in cash. The conversion price may
be adjusted in the event of dilutive issuances but in no event to less than $324.00.

issued an aggregate 5,401 shares of common stock and repaid $1,146,901 in cash to L1 upon the conversion of $1,750,000 of outstanding
principal on the Second L1 Note.

 As of December 31, 2023, the principal balance
of this note was $ 0 and all associated loan discounts were fully amortized.

 10% Secured Convertible Notes with Original
Issuance Discounts (OID Notes)

 During the year ended December 31, 2017, the Company
issued a series of secured, convertible notes with original issuance discounts to accredited investors. The notes were issued with original
issuance discounts of 10.0%, bear interest at a rate of 10% per annum (payable semiannually in cash), and carry a two-year term with a
fixed conversion price of $14,976.00. As of December 31, 2023, the remaining principal balance of these notes was $ 25,000.

 During the year ended December 31, 2018, the Company
issued a series of secured, convertible notes with original issuance discounts to accredited investors. The notes were issued with original
issuance discounts of 20.0%, bear interest at a rate of 10% per annum (payable semiannually in cash), and carry a two-year term with a
fixed conversion price of $9,600.00. As of December 31, 2023, the remaining principal balance of these notes was $ 50,000.

 At December 31, 2023 and 2022, the aggregate
principal balance of these notes was $ 75,000 and all associated loan discounts were fully amortized. No notices of default or demands
for payment have been received by the Company.

 12% Senior Secured Convertible Notes ("TDH
Secured Notes")

 On March 16, 2020, the Company sold an aggregate
$ 3,000,000 of its 12% senior secured convertible notes (the "TDH Secured Notes"), to eleven accredited investors (the "TDH
Secured Note Lenders"), pursuant to a subscription agreement with the TDH Secured Note Lenders. Interest on the TDH Secured Notes
accrues on the outstanding principal amount at the rate of 12% per annum. Principal and interest on the TDH Secured Notes are payable
monthly, on an amortized basis over 48 months, with the last payment due on March 16, 2024. The TDH Secured Notes are convertible at the
option of the holders at 75% of the average sales price of the Company's common stock over the 60 trading days immediately preceding
conversion provided that the conversion price shall not be less than $1,920.00 per share.

 F- 31

 The Company's obligations under the TDH
Secured Notes, are secured by Grom Holdings' shares of stock of TDH, and of its wholly owned subsidiary, TDAHK.

 At December 31, 2023 and 2022, the
principal balance of these notes was $ 63,905
and $ 204,907,
respectively, and the remaining balance on the associated loan discounts was $ 3,646
and $ 21,246,
respectively.

 12% Senior Secured Convertible Notes (Additional
Secured Notes)

 On March 16, 2020, the Company issued to seven
accredited investors (the "Additional Secured Note Lenders") an aggregate of $ 1,060,000 of its 12 % senior secured convertible
notes (the "Additional Secured Notes") in a private offering pursuant to a subscription agreement with substantially the same
terms as the TDH Secured Notes except that the Additional Secured Notes are secured by all of the assets of the Company other than the
shares and other assets of TDH and TDAHK, pursuant to a security agreement by and among the Company and the Additional Secured Note Lenders.

 Interest on the Additional Secured Notes accrues
on the outstanding principal amount at the rate of 12% per annum. Principal and interest on the Additional Secured Notes are payable monthly,
on an amortized basis over 48 months, with the last payment due on March 16, 2024.

 The Additional Secured Notes are convertible at
the option of the holders at 75% of the average sales price of the Company's common stock over the 60 trading days immediately preceding
conversion provided that the conversion price shall not be less than $96.00 per share.

 In connection with the issuance of the Additional
Secured Notes, the Company issued to each Additional Secured Note Lender shares of common stock equal to 20% of the principal amount of
such holder's Additional Secured Note, divided by $1,920.00.

 At December 31, 2023 and 2022, the principal balance
of these notes was $ 12,142, and $ 38,932, respectively, and the remaining balance on the associated loan discounts was $ 693 and $ 4,018,
respectively.

 Future Minimum Principal Payments

 The principal repayments based upon the maturity
dates of the Company's borrowings for each of the next five years are as follows:

 Schedule of principal repayments

 2024

 $
 814,367

 2025

 $
 725,544

 2026

 $
 793,605

 2027

 $
 868,051

 2028

 $
 949,480

 Thereafter

 $
 –

 F- 32

 13.

 DERIVATIVE LIABILITIES

 On December 21, 2023, the Company sold a note
to Generating Alpha Ltd. in the aggregate principal amount of $ 4,000,000 with a five-year maturity, interest at 9 % per calendar year,
and carries a 9 % original issue discount (the "First Alpha Note"). The First Alpha Note is convertible at the discretion of
Alpha into shares of the Company's common stock at a price of $ 1.50. Alpha may choose the alternate conversion price equal to 85%
of the average of the three lowest trading prices during the previous ten trading day period ending on the latest complete trading day
prior to notice of conversion.

 The Company assessed the alternate conversion
price and determined that it represented a derivative liability with a fair value of $ 1,310,394. The fair value of derivative liability
was calculated using the Monte Carlo simulation with the following factors, assumptions and methodologies:

 Schedule of assumptions

 2023

 Stock price

 $
 1.13

 Strike price

 1.50

 Risk-free rate

 3.77%

 Annualized volatility

 100%

 Forecast horizon in years

 5.0

 Alternative Conversion Price

 85.0%

 Implied Discount Rate

 27.3%

 On January 20, 2022, the Company sold a second
tranche note to L1, as described within Note 12 – Debt. The terms of the transaction included a provision that in the event the
stock price is below $324.00 (the "Floor Price") at the time for so long as stock price continues below the Floor Price, the
Second L1 Note would be convertible at a rate of 80% of the lowest VWAP in the ten prior trading days, provided, that if the stock prices
elevate back to the normal Floor Price. On May 9, 2022, stock price fell below $324.00 and the default provision was triggered.

 As a result of the default, the Company recorded
a derivative liability for $ 1,052,350 which represented the fair value transferred to the note holder from the down round feature being
triggered. The fair value of derivative liability was calculated using the Monte Carlo simulation with the following factors, assumptions
and methodologies:

 Schedule of monte carlo simulation assumption

 May 9,

 2022

 Stock price

 $
 17.10

 Strike price

 16.20

 Risk-free rate

 2.12%

 Annualized volatility

 150%

 Forecast horizon in years

 1.20

 Alternative Conversion Discount

 20.0%

 Maximum Shares to be Delivered

 108,025

 F- 33

 During the year ended December 31, 2022, L1 converted
$ 1,750,000 of the Second L1 Note for 5,401 shares and a cash settlement of $ 1,146,901, resulting in a $ 143,598 loss on settlement of derivative.
As of December 31, 2023 and 2022, the fair value of this derivative liability was $ 0.

 Changes in the unobservable input values would
likely cause material changes in the fair value of the Company's Level 3 financial instruments. The significant unobservable
input (probability of a down round event) used in the fair value measurement is the estimation of the likelihood of the occurrence of
a change in the contractual terms of the financial instruments. A significant increase (decrease) in this likelihood or in the volatility
assumptions would result in a higher (lower) fair value measurement.

 14.

 FAIR VALUE MEASUREMENTS

 Fair value is the price that would be received
upon the sale of an asset or paid upon the transfer of a liability in an orderly transaction between market participants at the measurement
date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions
that market participants would use in pricing the asset or liability, non on assumptions specific to the entity. In addition, the fair
value of liabilities should include consideration of non-performance risk, include the Company's own credit risk.

 The Company applied FASB Accounting Standards
Codification ("ASC") 820 – Fair Value Measurement, which provides guidance for using fair value to measure
assets and liabilities by defining fair value and establishing the framework for measuring fair value. ASC 820 applies to financial and
nonfinancial instruments that are measured and reported on a fair value basis. The three-level hierarchy of fair value measurements is
based on whether the inputs to those measurements are observable or unobservable. Observable inputs reflect market data obtained from
independent sources, while unobservable inputs reflect the Company's market assumptions. The fair value hierarchy requires the use
of observable market data when available and consists of the following levels:

 Level 1 – Unadjusted inputs based on quoted markets for identical assets or liabilities.

 Level 2 – Observable inputs, either direct or indirect, not including Level 1 measurements, corroborated by market data or based upon quoted prices in non-active markets

 Level 3 – Unobservable inputs that reflect management's best assumptions of what market participants would use in valuing the asset or liability.

 Contingent Consideration

 The fair value of the Company's contingent
consideration payable was based on the Company's evaluation as to the probability and amount of any earn-out that could have ultimately
been payable. The Company utilizes a third-party valuation firm to assist in the calculation of the contingent consideration at the acquisition
date. The Company evaluates the forecast of the acquired entity and the probability of earn-out provisions being achieved when it evaluates
the contingent consideration recorded at initial acquisition date and at each subsequent reporting period. The fair value of contingent
consideration is measured at each reporting period and adjusted as necessary. The Company evaluates the terms in contingent consideration
arrangements provided to former owners of acquired companies who become employees of the Company to determine if such amounts are part
of the purchase price of the acquired entity or compensation. Because the fair value measurements relating to the contingent consideration
liabilities are subject to management judgment, measurement uncertainty is inherent in the valuation of the contingent consideration liabilities
as of the reporting date.

 F- 34

 The fair value of the derivative liabilities is
classified as Level 3 within the Company's fair value hierarchy. Please refer to Note 14 ("Derivative Liability"), for
a further discussion of the measurement of fair value of the derivatives and their underlying assumptions.

 The fair value of the Company's financial
instruments carried at fair value at December 31, 2023 and 2022 are as follows:

 Schedule of financial
instruments

 Total

 Level 1

 Level 2

 Level 3

 Liabilities:

 Contingent Purchase Consideration

 $
 –

 $
 –

 $
 –

 $
 –

 –

 –

 Total Liabilities

 $

 $
 –

 $
 –

 $

 Total

 Level 1

 Level 2

 Level 3

 Liabilities:

 Contingent Purchase Consideration

 $
 –

 $
 –

 $
 –

 $
 –

 –

 –

 –

 –

 Total Liabilities

 $
 –

 $
 –

 $
 –

 $
 –

 The following table sets forth a summary of changes
in the fair value of the Company's Level 3 financial liabilities during the years ended December 31, 2023 and 2022:

 Schedule of changes in the fair value financial liabilities

 Level 3 Financial Liabilities for the Year Ended December 31, 2023

 Balance

 January 1, 2023

 Realized (Gains) Losses

 Additions

 Settlements

 Unrealized (Gains) Losses

 Balance December 31, 2023

 Liabilities:

 Contingent Purchase Consideration

 $
 –

 $
 –

 $
 –

 $
 –

 $
 –

 $
 –

 –

 –

 –

 –

 Total Liabilities

 $
 –

 $
 –

 $

 $
 –

 $
 –

 $

 Level 3 Financial Liabilities for the Year Ended December 31, 2022

 Balance

 January 1, 2022

 Realized (Gains) Losses

 Additions

 Settlements

 Unrealized (Gains) Losses

 Balance December 31, 2022

 Liabilities:

 Contingent Purchase Consideration

 $

 $
 –

 $
 –

 $
 –

 $
 ( 5,586,493
)

 $
 –

 –

 143,598

 1,052,350

 ( 1,146,901
)

 ( 49,047
)

 –

 Total Liabilities

 $

 $
 143,598

 $
 1,052,350

 $
 ( 1,146,901
)

 $
 ( 5,635,540
)

 $
 –

 F- 35

 15.

 INCOME TAXES

of income tax expense (benefit) for the years ended December 31, 2023 and 2022:

 Schedule of income tax expense (benefit)

 2023

 2022

 Current:

 Federal

 $

 –

 $

 –

 State and local

 –

 –

 Foreign

)

 –

 Total current

)

 –

 Deferred:

 Federal

 –

 –

 State and local

 –

 –

 Foreign

 –

 Total deferred

 –

 Total

 $
)

 $

 The following table sets forth a reconciliation
of income tax expense (benefit) at the federal statutory rate to recorded income tax expense (benefit) for the years ended December 31,
2023 and 2022:

 Schedule of reconciliation
of income tax expense (benefit) at the federal statutory rate

 2023

 2022

 Computed tax at the expected statutory rate

 21.00 %

 21.00 %

 State and local income taxes, net of federal benefit

 0.69 %

 0.67 %

 Permanent differences

 - 5.81 %

 - 14.58 %

 Foreign deferred tax adjustment

 - 3.94 %

 - 1.36 %

 Noncontrolling interest

 - 2.05 %

 - 0.56 %

 Foreign tax differential

 0.47 %

 0.10 %

 Change in valuation allowance

 - 15.70 %

 - 5.27 %

 Other

 - 0.16 %

 0.00 %

 Total

 5.51 %

 0.00 %

 The following tables set forth the components of income taxes payable
at December 31, 2023 and 2022:

 Schedule of income taxes payable

 2023

 2022

 Federal

 $
 –

 $
 –

 State and local

 –

 –

 Foreign

 –

 –

 Total

 $
 –

 $
 –

 F- 36

 The following tables set forth the components of deferred income taxes
at December 31, 2023 and 2022:

 Schedule of deferred income taxes

 2023

 2022

 Non-current deferred tax assets:

 Retirement benefits

 $
 60,191

 $
 73,756

 Write down of investment(s)

 49,741

 49,636

 Deferred revenue net

 41,278

 84,126

 Stock options

 3,387,305

 –

 Intangible amortization

 1,409,730

 –

 Other

 ( 95,338
)

 14,947

 Net operating loss carryforwards

 13,728,996

 11,351,901

 Less: valuation allowance

 ( 18,581,903
)

 ( 11,574,366
)

 Total non-current deferred tax asset

 –

 –

 Total deferred tax asset

 $
 –

 $
 –

 Certain prior year deferred income tax balances
have been reclassified to conform with the current year presentation. The changes do not have any financial impact on the Company's
consolidated financial statements.

 As of December 31, 2023, the Company had federal,
state and foreign net operating loss carryforwards of approximately $ 60.3 million, $ 8.5 million, and $ 2.9 million, respectively. Approximately
$20.7 million of these NOL's begin to expire in 2032 and $39.6 million currently do not expire. The $8.5 million of state NOL's do not
expire and the foreign NOL's begin to expire in 2023. The federal and state NOL's may be subject to limitation under IRS Sec. 382, the
analysis of which is not yet complete. The Company has established a full valuation allowance against the US federal, state and foreign
NOL carryforwards as well as its other US and foreign deferred tax assets based on an assessment that it is more likely than not that
the deferred tax assets will not be realized in future years.

 The Company remains subject to examination in
federal, state and foreign jurisdictions in which the Company conducts its operations and files tax returns. These tax years range from
2017 through 2023. The Company believes that the results of current or any prospective audits will not have a material effect on its financial
position or results of operations.

 The Company has made its assessment of the level
of tax authority for each tax position, including the potential application of interest and penalties, based on the technical merits
and determined that no unrecognized tax benefits associated with the tax positions exist.

 F- 37

 16.

 STOCKHOLDERS' EQUITY

 Preferred Stock

 The Company is authorized to issue 25,000,000
shares of preferred stock, par value of $ 0.001 per share.

 Series A Preferred Stock

 On February 22, 2019, the Company designated 2,000,000
shares of its preferred stock as 10% Series A convertible preferred stock, par value $ 0.001 per share ("Series A Stock").

 At December 31, 2023 and December 31, 2022, the
Company had no shares of Series A Stock issued and outstanding.

 Series B Preferred Stock

 On August 4, 2020, the Company filed with the
Secretary of State of the State of Florida a Certificate of Designation of Preferences, Rights and Limitations of Series B Stock designating
10,000,000 shares as Series B Preferred Stock (the "Series B Stock").

 At December 31, 2023 and 2022, the Company had
 no shares of Series B Stock issued and outstanding, respectively.

 Series C Preferred Stock

 On May 20, 2021, the Company filed with the Secretary
of State of the State of Florida a Certificate of Designation of Preferences, Rights and Limitations of Series C Stock designating 10,000,000
shares as Series C Preferred Stock (the "Series C Stock"). The Series C Stock ranks senior and prior to all other classes
or series of the Company's preferred stock and common stock.

 The holder may, at any time after the 6-month
anniversary of the issuance of the shares of Series C Preferred Stock, convert such shares into common stock at a conversion rate of $1,152.00
per share. In addition, the Company may, at any time after the issuance of the shares, convert any or all of the outstanding shares of
Series C Preferred Stock at a conversion rate of $1,152.00 per share.

 Each share of Series C Stock entitles the holder
to 1.5625 votes for each share of Series C Stock. The consent of the holders of at least two-thirds of the shares of Series C Stock is
required for the amendment to any of the terms of the Series C Stock, to create any additional class of stock unless the stock ranks junior
to the Series C Stock, to make any distribution or dividend on any securities ranking junior to the Series C Stock, to merge or sell all
or substantially all of the assets of the Company or acquire another business or effectuate any liquidation of the Company.

 Cumulative dividends accrue on each share of Series
C Stock at the rate of 8% per annum of the stated value of $1.00 per share and are payable in arrears quarterly commencing 90 days from
issuance. The dividend shall be payable in shares of common stock (a "PIK Dividend") and are be due and payable on the date
on which such PIK Dividend was declared.

 Upon a liquidation, dissolution or winding up
of the Company, the holders of the Series C Stock are entitled to $1.00 per share plus all accrued and unpaid dividends. No distribution
may be made to holders of shares of capital stock ranking junior to the Series C Stock upon a liquidation until Series C stockholders
receive their liquidation preference. The holders of 66 2/3% of the then outstanding shares of Series C Stock, may elect to deem a merger,
reorganization or consolidation of the Company into or with another corporation, not affiliated with said majority, or other similar transaction
or series of related transactions in which more than 50% of the voting power of the Company is disposed of in exchange for property, rights
or securities distributed to holders thereof by the acquiring person, firm or other entity, or the sale of all or substantially all of
the assets of the Company.

 F- 38

 On January 24, 2022, the Company issued 34 shares
of common stock to a stockholder upon the conversion of 39,500 shares of Series C Stock.

 On July 29, 2022, the Company issued 69 shares
of common stock to a stockholder upon the conversion of 79,000 shares of Series C Stock.

 On December 28, 2023, the Company repurchased
 38,500 shares of Series C Stock from a stockholder for $ 40.

 As of December 31, 2023 and 2022, the Company
had 9,243,309 shares and 9,281,809 shares of Series C Stock issued and outstanding, respectively.

 For the years ended December 31, 2023 and 2022,
the Company declared cumulative dividends totaling $ 742,546 and $ 735,586, respectively, for amounts accrued on its Series C Stock.

 Common Stock

 The Company is authorized to issue 500,000,000
shares of common stock, par value of $ 0.001 per share and had 1,970,404 and 163,596 shares of common stock issued and outstanding as of
December 31, 2023 and 2022, respectively.

 Reverse Stock Splits

 On October 4, 2022, the Board and shareholders
approved the granting of authority to the Board to amend the Company's articles of incorporation to effect a reverse stock split
of the issued and outstanding shares of its common stock, by a ratio of no less than 1-for-2 and no more than 1-for-30, with the exact
ratio to be determined by the Board in its sole discretion, and with such reverse stock split to be effective at such time and date, if
at all, as determined by the Board in its sole discretion. On December 9, 2022, the Board effected a 1-for-30 reverse stock split in connection
with our continued listing of the Company's common stock on Nasdaq.

 On June 23, 2023, the Board and shareholders approved
the granting of authority to the Board to amend the Company's articles of incorporation to effect a reverse stock split of the issued
and outstanding shares of its common stock, by a ratio of no less than 1-for-2 and no more than 1-for-20, with the exact ratio to be determined
by the Board in its sole discretion, and with such reverse stock split to be effective at such time and date, if at all, as determined
by the Board in its sole discretion. On September 7, 2023, the Board effected a 1-for-20 reverse stock split in connection with the Company's
continued listing of its common stock on Nasdaq.

 The reverse stock splits did not have any impact
on the number of authorized shares of common stock, which remains at 500,000,000 shares.

 Registered Offerings

 On December 8, 2022, the Company sold an aggregate
of 1,415,682 units (the "Units") and 314,422 pre-funded units (the "Pre-Funded Units"), with (a) each Unit consisting
of: (i) one share of common stock, par value $ 0.001 per share (the "Common Stock"); and (ii) two warrants (the "Warrants"),
each Warrant to purchase one share of Common Stock at $ 2.89 per share (100% of the offering price per Unit); and (b) each Pre-Funded Unit
consisting of: (i) one pre-funded warrant (the "Pre-Funded Warrant") exercisable for one share of Common Stock at $ 0.001;
and (ii) two Warrants. The Warrants will be immediately exercisable and will expire on the fifth anniversary of the original issuance
date. The Pre-Funded Warrants will be exercisable immediately and may be exercised at any time until all of the Pre-Funded Warrants are
exercised in full. The Warrants and Pre-Funded Warrant will be issued pursuant to a warrant agent agreement (the "Warrant Agent
Agreement") entered into by and between the Company and Equiniti Trust Company, as warrant agent. Pursuant to the Underwriting Agreement,
the Company granted the Underwriter a 45-day option to purchase up to an additional 259,515 Units and/or Pre-Funded Units to cover over-allotments.
On December 12, 2022 the Underwriter exercised in part, the over-allotment to purchase 495,602 Warrants.

 F- 39

 The Company received gross proceeds of approximately
$ 5,000,000 in the Offering, before deducting underwriting discounts and commissions and other offering expenses.

 On September 7, 2023, the Company sold an aggregate
 946,000 units (the "Units") at a price of $ 3.00 per Unit and 54,000 pre-funded units (the "Pre-Funded Units")
at a price of $ 2.999 per Pre-Funded Unit, with (a) each Unit consisting of: (i) one share of common stock, par value $ 0.001 per share
(the "Common Stock"); (ii) one Series A Warrant (the "Series A Warrant"); and (iii) one Series B Warrant. ("Series
B Warrant," together with Series A Warrant, the "Warrants"), each Warrant to purchase one share of Common Stock at $ 3.00
per share (100% of the offering price per Unit); and (b) each Pre-Funded Unit consisting of: (i) one pre-funded warrant (the "Pre-Funded
Warrant") exercisable for one share of Common Stock at $ 0.001; (ii) one Series A Warrant; and (iii) one Series B Warrant, identical
to the Warrants in the Unit. The Warrants are immediately exercisable and will expire on the fifth anniversary of the original issuance
date. The Pre-Funded Warrants are exercisable immediately and may be exercised at any time until all of the Pre-Funded Warrants are exercised
in full. The Company received approximately $ 3.0 million in gross proceeds from the Offering, prior to deducting the underwriting discount
and commission and other estimated offering expenses payable by the Company.

 Pursuant to the Underwriting Agreement, the Company
granted the Underwriter a 45-day option to purchase up to 150,000 shares of Common Stock and/or Pre-Funded Warrants to purchase 150,000
shares of Common Stock and/or Warrants to purchase 150,000 shares of Common Stock to cover over-allotments.

 The Underwriting Agreement contains customary
representations and warranties by the Company, conditions to closing, indemnification obligations of the Company and the underwriters,
"lock-up" agreements where the Company and each officers, directors and 5% shareholders of the Company have agreed with the
Underwriter not to offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any of the Company's Common Stock
or securities convertible into Common Stock for a period of 90 days from the commencement of sale under the final prospectus relating
to the Offering.

 Private Offerings to Accredited Investors

sold 2,575 shares of common stock for gross proceeds of $ 275,000 to accredited investors in a private offering.

 PIPE Offering and Related Waiver to Institutions

 On January 25, 2023, the Company consummated a
private placement (the "PIPE Offering") pursuant to the terms of the Securities Purchase Agreement dated as of January 25,
2023 (the "2023 SPA") that it entered into with institutional investors, in which the Company issued (i) 5,000 shares of common
stock; (ii) 66,372 purchase warrants (the "Purchase Warrants") to purchase an aggregate of 116,151 shares of common stock;
and (iii) 61,372 pre-funded warrants (the "Pre-Funded Warrants") to purchase an aggregate of 61,372 shares of common stock.
The purchase price of each share of common stock and associated Purchase Warrant was $ 45.20. The purchase price of each Pre-Funded Warrant
was $45.00. The aggregate gross proceeds of the PIPE Offering was approximately $3.0 million, before deducting fees to the placement agent
and other expenses payable by the Company. EF Hutton, division of Benchmark Investments, LLC, acted as the exclusive placement agent in
connection with the PIPE Offering.

 In connection with the PIPE Offering, the Company
entered into a Waiver (the "Waiver") with L1 Capital Global Opportunities Master Fund ("L1") waiving certain provisions
of the Securities Purchase Agreement, dated as of September 14, 2021 (the "2021 SPA"), by and between it and L1. Pursuant
to the terms of the Waiver, L1 waived certain provisions of the 2021 SPA and in consideration thereof, the Company (i) issued 7,500 purchase
warrants substantially similar to the Purchase Warrants issued in connection with the 2023 SPA; and (ii) paid a cash fee of $ 50,000 to
L1.

 F- 40

 Pursuant to the 2023 SPA, the Company is obligated
to hold a special stockholders' meeting no later than 60 days following the date of the Purchase Agreement to solicit the approval
of the issuance of the shares, Warrants and the shares of common stock underlying the Warrants in compliance with the rules of The Nasdaq
Stock Market LLC (without regard to any limitations on exercise set forth in the Warrants or the Pre-Funded Warrants. On March 27, 2023,
the Company held a special meeting of stockholders and the stockholders approved the PIPE Offering.

 In connection with the PIPE Offering, the Company
entered into a Registration Rights Agreement with the Purchasers, dated January 25, 2023 (the "Registration Rights Agreement").
The Registration Rights Agreement provides that the Company shall file a registration statement covering the resale of all of the Registrable
Securities (as defined in the Registration Rights Agreement) with the SEC. The Registration Statement was filed and declared effective
by the SEC on February 9, 2023.

 Common Stock Issued in Exchange for Consulting,
Professional and Other Services

 During the year ended December 31, 2023, the Company
issued 1,167 shares of common stock with a fair market value of $ 31,968 to contractors for services rendered.

issued 298 shares of common stock with a fair market value of $ 116,736 to contractors for services rendered.

 Common Stock Issued in Connection with the
Conversion of Convertible Note Principal and Accrued Interest

issued 14,997 shares of common stock upon the conversion of $ 5,875,000 in convertible note principal and accrued interest.

 Stock Purchase Warrants

 Stock purchase warrants are accounted for as equity
in accordance with ASC 480, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's
Own Stock, Distinguishing Liabilities from Equity.

 The following table reflects all outstanding and
exercisable warrants at December 31, 2023 and 2022.

 Schedule of stock purchase warrants

 Number of Warrants Outstanding

 Weighted Avg.

 Exercise Price

 Weighted Avg. Contractual Life (Yrs.)

 Balance January 1, 2022

 7,079

 $
 2,640.00

 1.75

 Warrants issued

 214,018

 $
 64.00

 Warrants exercised

 ( 13,953
)

 $
 –

 Warrants forfeited

 ( 284
)

 $
 –

 206,860

 $
 145.80

 4.89

 Warrants issued

 4,058,719

 $
 2.07

 Warrants exercised

 ( 1,403,461
)

 $
 –

 Warrants forfeited

 ( 62
)

 $
 –

 Balance December 31, 2023

 2,862,056

 $
 7.93

 4.84

 F- 41

 All stock warrants are exercisable for a period
ranging from three to five years from the date of issuance.

 On January 31, 2023, in connection with the PIPE
Offering described above (Note 16 – Stockholders' Equity), the Company issued 66,372 Purchase Warrants to purchase an aggregate
of 116,151 shares of common stock. The Purchase Warrants are immediately exercisable for $ 45.20 per share of common stock. The Purchase
Warrant holders may also effect an alternative cashless exercise on or after the later of (i) the 30 day anniversary of the initial exercise
date and (ii) the stockholder approval date (as defined in the 2023 SPA). In such event, the aggregate number of shares of common stock
issuable in such alternative cashless exercise shall equal the product of the aggregate number of shares of common stock that would be
issuable upon exercise of the Purchase Warrants and 0.85.

 The Purchase Warrants were valued using the Black-Scholes
option pricing model with the following average assumptions: the Company's stock price on the date of the issuance ($ 43.00), an
expected dividend yield of 0 %, a historical volatility of 176.6 %, a risk-free interest rate of 3.6 %, and an expected term of one year.
The Purchase Warrants were allocated a relative fair value of $ 1,387,429.

 On January 31, 2023, the Company also issued 7,500
purchase warrants, substantially similar to the Purchase Warrants issued in connection with the PIPE Offering, to purchase an aggregate
of 13,125 shares of common stock. The Purchase Warrants were valued using the Black-Scholes option pricing model with the following average
assumptions: the Company's stock price on the date of the issuance ($ 43.00), an expected dividend yield of 0 %, a historical volatility
of 176.6 %, a risk-free interest rate of 3.6 %, and an expected term of 1 year. The fair value of the purchase warrants was $ 350,039.

 On September 7, 2023, in connection with the Registered
Offering described above (Note 16 – Stockholders' Equity), the Company issued 1,150,000 Series A Warrants and 1,150,000 Series
B Warrants to purchase an aggregate 2,300,000 shares of common stock at $3.00 per share. The Warrants are immediately exercisable and
will expire on the fifth anniversary of the original issuance date. The Series A Warrant holders may also effect an alternative cashless
on or after the earlier of (i) thirty (30) days from the effective date of the registration statement filed with the SEC until the termination
date and (ii) the date on which the aggregate composite trading volume of the Company's common stock as reported by Bloomberg beginning
on the date of the initial exercise date exceeds 15 million shares. In such event, the aggregate number of shares of common stock issuable
in such alternative cashless exercise shall equal the product of the aggregate number of shares of common stock that would be issuable
upon exercise of the Purchase Warrants and 0.50.

 The Purchase Warrants were valued using the Black-Scholes
option pricing model with the following average assumptions: the Company's stock price on the date of the issuance ($ 2.22), an expected
dividend yield of 0 %, a historical volatility of 184.4 %, a risk-free interest rate of 4.41 %, and an expected term of one year. The Purchase
Warrants were allocated a relative fair value of $ 1,375,248.

 On December 21, 2023, in connection with the
Alpha SPA described above (Note 12 – Debt), the Company issued a warrant for 757,036
shares of common stock with an exercise price of $ 1.78
per share and a warrant for 757,036
shares of common stock with an exercise price of $.001
per share. The warrants are immediately exercisable and will expire on the fifth anniversary of the original issuance date.

 The Purchase Warrants were valued using the Black-Scholes
option pricing model with the following average assumptions: the Company's stock price on the date of the issuance ($ 1.31), an expected
dividend yield of 0 %, a historical volatility of 143.70 %, a risk-free interest rate of 3.87 %, and an expected term of one year. The Purchase
Warrants were allocated a relative fair value of $ 1,102,852.

 F- 42

issued 13,953 shares of common stock upon the exercise of 13,953 Pre-Funded Warrants for gross proceeds of $ 279.

 During the year ended December 31, 2023, the Company
issued 117,139 shares of common stock upon the exercise of 117,139 Pre-Funded Warrants for gross proceeds of $ 12,363.

 During the year ended December 31, 2023, the Company
also issued 737,502 shares of common stock upon the cashless exercise of 1,286,322 purchase warrants.

 As of December 31, 2023, the outstanding stock
purchase warrants had an aggregate intrinsic value of $ 854,694.

 Stock Options

 The following table represents all outstanding
and exercisable stock options at December 31, 2023.

 Schedule of stock options

 Year Issued

 Options
 Issued

 Options
 Forfeited

 Options
 Outstanding

 Vested
 Options

 Strike
 Price

 Weighted
 Average
 Remaining
 Life (Yrs.)

 2013

 ( 566
)

 –

 –

 $
 –

 –

 2018

 ( 3
)

 –

 –

 –

 –

 2021

 –

 $
 1,788.00

 2.58

 Total

 ( 569
)

 $
 1,788.00

 2.58

 During the years ended December 31, 2023 and 2022,
the Company recorded $ 139,067 and $ 315,332, respectively, in stock-based compensation expense related to stock options. Stock-based compensation
expense is reported in selling, general and administrative on the Company's Consolidated Statement of Operations and Comprehensive
Loss.

 As of December 31, 2023, the total unrecognized
cost of stock-based compensation related to stock options was $ 47,884. This cost is expected to be recognized over a weighted average
period of 0.59 years.

 As of December 31, 2023, the outstanding stock
options had an aggregate intrinsic value of $ 0.

 17.

 SEGMENT INFORMATION

 At December 31, 2023,
the Company assessed its requirement for segment reporting. The Company utilized several criteria, including (i) its organizational structure,
(ii) the manner in which its operations are managed, (iii) the criteria used by its Chief Executive Officer, the Chief Operating Decision
Maker ("CODM"), to evaluate segment performance and (iv) the availability of separate financial information, as a basis to
identify its operating segments.

 The Company determined
that it has three reportable business segments: Animation, Original Content, and Social & Technology. Animation includes the business
of TDH and its subsidiaries, a company primarily based in the Philippines which provides production services for animated films and television
series to a diverse base of global content providers and publishers. Original Content includes the business of CIM, a company operating
in Los Angeles, California and Salt Lake City, Utah which develops, acquires, builds, grows and maximizes the short, mid and long-term
commercial potential of kids and family entertainment properties and associated business opportunities. Social & Technology includes
the businesses of GSOC and GEDU, companies based in Boca Raton, Florida and Peachtree Corners, GA, respectively, which deliver content
to children under the age of 13 years in a safe, secure platform that is COPPA compliant that can be monitored by parents or guardians,
and provides protective web filtering solutions to block unwanted or inappropriate content, respectively.

 The operating results of these business segments are regularly reviewed
by the Company's CODM who evaluates the performance of its business segments based primarily on revenue and operating profit or
loss.

 The Company's determination, as described above, represents a
change from previous years and, as such, the prior year's segment information has been recast and disclosed herein to conform to
the current year's presentation.

 F- 43

 The accounting policies
of the reportable segments are the same as those described in Note 2 – Summary of Significant Accounting Policies to the consolidated
financial statements. The Company's CODM reviews financial information presented on a consolidated basis, accompanied by disaggregated
information by segment for purpose of evaluating financial performance.

 Segment Results

 The table below presents the results of operations by reportable segment
for the years ended December 31, 2023:

 Schedule of segment results

 Animation

 Original

 Content

 Social & Technology

 Corporate

 Consolidated

 Sales

 $
 3,375,751

 $
 237,579

 $
 427,690

 $
 –

 $

 Cost of goods sold

 2,477,040

 154,585

 42,815

 –

 2,674,440

 Gross profit

 898,711

 82,994

 384,875

 –

 1,366,580

 Operating expenses:

 186,338

 400,515

 3,758

 –

 590,611

 Selling, general and administrative

 1,491,335

 1,971,982

 2,280,424

 1,915,263

 7,659,004

 Professional fees

 117,841

 575,227

 1,690

 864,732

 1,559,490

 Impairment of goodwill

 954,655

 3,921,451

 –

 –

 4,876,106

 Total operating expenses

 2,750,169

 6,869,175

 2,285,872

 2,779,995

 14,685,211

 Loss from operations

 ( 1,851,458
)

 ( 6,786,181
)

 ( 1,900,997
)

 ( 2,779,995
)

 ( 13,318,631
)

 Other income (expense)

 Interest expense, net

 2,279

 –

 ( 606
)

 ( 556,359
)

 ( 554,686
)

 Loss on settlement of derivative liabilities

 –

 –

 –

 –

 –

 Unrealized gain on change in fair value of contingent purchase consideration

 –

 –

 –

 –

 –

 Unrealized gain on change in fair value of derivative liabilities

 –

 –

 –

 –

 –

 Other gains (losses)

 ( 32,497
)

 –

 8,102

 ( 24,368
)

 Total other income (expense)

 ( 30,218
)

 –

 7,496

 ( 556,332
)

 ( 579,054
)

 Loss before income taxes

 ( 1,881,676
)

 ( 6,786,181
)

 ( 1,893,501
)

 ( 3,336,327
)

 ( 13,897,685
)

 Provision for income taxes (benefit)

)

 –

 –

 –

)

 $
 ( 1,863,148
)

 $
 ( 6,786,181
)

 $
 ( 1,893,501
)

 $
 ( 3,336,327
)

 $
)

 F- 44

 The table below presents the results of operations by reportable segment
for the years ended December 31, 2022:

 Animation

 Original

 Content

 Social & Technology

 Corporate

 Consolidated

 Sales

 $
 4,796,775

 $
 146,070

 $
 483,656

 $
 –

 $

 Cost of goods sold

 3,448,382

 206,511

 9,873

 –

 3,664,766

 Gross profit

 1,348,393

 ( 60,441
)

 473,783

 –

 1,761,735

 Operating expenses:

 210,220

 97,677

 3,677

 –

 311,574

 Selling, general and administrative

 1,621,092

 1,579,149

 2,257,189

 1,855,715

 7,313,145

 Professional fees

 125,174

 660,924

 18,863

 662,362

 1,467,323

 Impairment of goodwill

 6,202,888

 5,137,227

 –

 –

 11,340,115

 Total operating expenses

 8,159,374

 7,474,977

 2,279,729

 2,518,077

 20,432,157

 Loss from operations

 ( 6,810,981
)

 ( 7,535,418
)

 ( 1,805,946
)

 ( 2,518,077
)

 ( 18,670,422
)

 Other income (expense)

 Interest expense, net

 ( 3,598
)

 ( 794
)

 ( 136
)

 ( 3,344,339
)

 ( 3,348,867
)

 Loss on settlement of derivative liabilities

 –

 –

 –

 ( 143,598
)

 ( 143,598
)

 Unrealized gain on change in fair value of contingent purchase consideration

 –

 –

 –

 Unrealized gain on change in fair value of derivative liabilities

 –

 –

 –

 49,047

 49,047

 Other gains (losses)

 ( 18,126
)

 23,700

 55,787

 145,426

 206,787

 Total other income (expense)

 ( 21,724
)

 22,906

 55,651

 2,293,029

 2,349,862

 Loss before income taxes

 ( 6,832,705
)

 ( 7,512,512
)

 ( 1,750,295
)

 ( 225,048
)

 ( 16,320,560
)

 Provision for income taxes (benefit)

 –

 –

 –

 $
 ( 7,278,883
)

 $
 ( 7,512,512
)

 $
 ( 1,750,295
)

 $
 ( 225,048
)

 $
)

 Corporate functions including (i) the compensation of the Company's
executive management, (ii) services provided to the segments in areas such as accounting, information technology, legal and human resources,
and (iii) financing and other transactional activities are not allocated to the segments and are included in "Corporate" in
the table above. Operating segments do
not sell products to each other, and accordingly, there is no inter-segment revenue to be reported.

 Management does not use
total assets by segment to evaluate segment performance or allocate resources. As such, total assets by segment are not disclosed.

 F- 45

 Geographic Information

 The tables below present revenue by country for
the years ended December 31, 2023 and 2022. Revenue amounts are based upon the location of the business segment servicing the cus tomer.

 Schedule of revenue by country

 Year Ended December 31, 2023

 Year Ended December 31, 2022

 United States

 $
 3,375,751

 $
 4,796,775

 Philippines

 665,269

 629,726

 Total sales

 $

 $

 The table below presents property and equipment,
net by country, based on the physical location of the assets, as of December 31, 2023 and 2022:

 Schedule of property and equipment, net by country

 United States

 $
 28,614

 $
 25,099

 Philippines

 86,200

 260,577

 Total property and equipment, net

 $
 114,814

 $
 285,676

 18.

 COMMITMENTS AND CONTINGENCIES

 In the ordinary course of business, we and our
subsidiaries are subject to various pending and potential legal actions, arbitration proceedings, claims, investigations, examinations,
regulatory proceedings, information gathering requests, subpoenas, inquiries and matters relating to compliance with laws and regulations
(collectively, legal proceedings).

 Based on our current knowledge, and taking into
consideration our legal expenses, we do not believe we are a party to, nor are any of our subsidiaries the subject of, any legal proceeding
that would have a material adverse effect on our consolidated financial condition or liquidity.

 See also Note 7 ("Leases").

 See also Note 15 ("Income Taxes").

 F- 46

 19.

 SUBSEQUENT EVENTS

 In accordance with FASB ASC 855-10, Subsequent
Events, the Company has analyzed its operations subsequent to December 31, 2023 to the date these consolidated financial statements
were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements,
except as follows:

 Common Stock Issued in Connection with Note
Conversions

 From January 8 to March 28, 2024, Generating Alpha
Ltd. converted $3,939,678 of note principal for 6,861,666 shares of common stock.

 Non-Binding Letter of Intent with Arctic7

 On March 5, 2024, the Company signed a non-binding
letter of intent to acquire Arctic7, Inc. ("Arctic7"), an emerging gaming industry service provider, through issuance of shares
of its common stock. Arctic7 is currently engaged in the business of providing full game development, co-development, transmedia and virtual
production services to its customers and partners.

 Second Amending Agreement to the November
2023 SPA with Generating Alpha

 On March 11, 2024, the Company entered into a
second amendment agreement (the "Second Amendment") to the November 2023 SPA with Generating Alpha, pursuant to which (1)
the exercise price of each of the Warrant A and the Warrant C (as described in the November 2023 SPA) has been amended from $1.78 per
share of common stock to $0.001 per share, and (2) the Company shall promptly effect a reverse stock split in the event that the closing
price of its common stock falls below $0.25 per share for a period of five consecutive trading days.

 In connection with the Second Amendment, the Company entered into an
amendment to the December 2023 Note with Generating Alpha, pursuant to which in no event shall the conversion price be less than $0.25.

 March 2024 SPA with Generating Alpha

 On March 11, 2024, the Company entered into a
securities purchase agreement (the "March 2024 SPA") with Generating Alpha Ltd. pursuant to which it has agreed to issue and
sell to the investor from time to time up to $25 million of common stock.

 Pursuant to the March 2024 SPA, the Company may
require Generating Alpha to purchase shares of common stock by delivering put notices to the investor, subject to certain conditions set
forth therein, at a purchase price of 85% of the lowest traded price of its common stock during the 10 trading days immediately preceding
the date 10 business days after the date the put shares have been accepted and cleared by investor's brokerage firm. The Company
has agreed to issue to Generating Alpha as a commitment fee a common stock purchase warrant for 2,314,814 shares of common stock with
an exercise price of $0.001 per share.

 April 2024 SPA with Generating Alpha

 On April 1, 2024, the Company entered into a Securities
Purchase Agreement (the "April 2024 SPA") with Generating Alpha Ltd. pursuant to which it has agreed to sell a convertible
promissory note (the "April 2024 Note"), having an initial principal amount of $650,000, for a price of $520,000. In connection
with the purchase and sale of the April 2024 Note, the Company has agreed to issue to Generating Alpha a common stock purchase warrant
to acquire a total of 962,962 shares of our common stock. The transactions closed on April 4, 2024.

 F- 47

 ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 None.

 ITEM 9A. CONTROLS AND PROCEDURES

 Evaluation of Disclosure Controls and Procedures

 Our management, with the participation of our
principal executive officer and principal financial officer has evaluated the effectiveness of our disclosure controls and procedures
(as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of December 31, 2023, the end of the period covered
by this Annual Report.

 These controls are designed to ensure that information
required to be disclosed in the reports we file or submit pursuant to the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated
and communicated to our management, including our principal executive officer and principal financial, as appropriate officer to allow
timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and the principal financial
officer have concluded that our disclosure controls and procedures were not effective as of December 31, 2023.

 The Company's assessment identified certain
material weaknesses which are set forth below:

 Functional Controls and Segregation of Duties

 Because of the Company's limited resources,
there are limited controls over information processing. Additionally, there is inadequate segregation of duties consistent with control
objectives. Our Company's management is composed of a small number of individuals resulting in a situation where limitations on
segregation of duties exist. In order to remedy this situation, we will need to hire additional staff to provide greater segregation of
duties.

 Accordingly, as the result of identifying the
above material weakness we have concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement
of the annual or interim financial statements may not be prevented or detected on a timely basis by the Company's internal controls.

 Management believes that the material weaknesses
set forth above were the result of the scale of our operations and are intrinsic to our small size. Management continues to take actions
to remedy these weaknesses, including the process of hiring additional staff to create the necessary segregation of duties to improve
controls over information processing. Additionally, management has initiated the process of building a risk management framework with
plans to embed the principles of this framework across all aspects of the business.

 Despite the existence of the material weakness,
we have concluded that the consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material
respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP. Additionally,
the material weakness did not result in any restatements of our consolidated financial statements or disclosures for any prior period.

 Management Report on Internal Control Over
Financial Reporting

 Our management is responsible for establishing
and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange
Act. Those rules define internal control over financial reporting as a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles and include those policies and procedures that:

 Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

 Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and the receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

 Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of the company's assets that could have a material effect on the financial statements.

 Because of its inherent limitations, internal
controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

 Management assessed the effectiveness of our internal
control over financial reporting as of December 31, 2023. In making this assessment, our management used the criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in May 2013.

 Based on its assessment, management has concluded
that as of December 31, 2023, our disclosure controls and procedures and internal control over financial reporting were not effective.

 This Annual Report does not include an attestation
report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not
subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission
that permit us to provide only management's report in this Annual Report.

 Remediation Plan

 Management has implemented remediation steps to
address the material weakness and to improve our internal control over financial reporting. Specifically, we (i) expanded and improved
our review process for complex transactions and related accounting standards, including the identification of third-party professionals
with whom to consult regarding the application of complex accounting matters, (ii) hired qualified personnel to improve the oversight
of our accounting operations, and (iii) established new processes and policies. While we believe that these remediation actions will improve
the effectiveness of our internal control over financial reporting, the material weakness identified will not be considered remediated
until the controls operate for a sufficient period of time, and we cannot assure you that the measures we have taken to date, or any measures
we may take in the future will be sufficient to remediate the material weakness we have identified or avoid potential future material
weaknesses.

 Changes in Internal Control over Financial
Reporting

 There were no changes in our internal control
over financial reporting during our fourth fiscal quarter, that have materially affected or are reasonably likely to materially affect,
our internal control over financial reporting.

 Item 9b. Other Information

 During the quarter
ended December 31, 2023, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement"
or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

 Item 9C. DISCLOSURE REGARDING
FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 Not applicable.

 Item 10. Directors,
Executive Officers and Corporate Governance

 The following table sets forth information regarding our current directors
and executive officers:

 Name

 Age

 Position

 Darren M. Marks

 Chief Executive Officer, President and Director

 Jason A. Williams

 Chief Financial Officer, Treasurer and Secretary

 Norman Rosenthal

 Robert Stevens

 Thomas J. Rutherford

 Our directors hold office until the next annual
meeting of shareholders of the Company and until their successors have been elected and qualified. Our officers are elected by the Board
and serve at the discretion of the Board.

 Biographies

 Darren M. Marks, Chief Executive
Officer and President

 Darren Marks has served as our Chief Executive
Officer and director since June 2012 and as our President since the Share Exchange on August 17, 2017. From July 6, 2015 until the Share
Exchange, Mr. Marks was chairman, chief executive officer, president and a director of Grom Holdings, Inc. From January 2011 to February
2016, Mr. Marks was the President of DNA Brands, Inc., a beverage distributor and formerly a public company quoted on the OTCBB ("DNA
Brands"). Mr. Marks has more than 20 years of executive management experience. In 1991, Mr. Marks co-founded and served as
Vice-President of Sims Communications, Inc. a telecommunications company that formerly traded on the Nasdaq ("Sims"), where
he was responsible for the creation, design, and funding of a national telecommunications program for clients such as Alamo Rental Car
and the American Automobile Association. Mr. Marks attended the University of Florida/Santa Fe Community College from 1986 to 1988.

 Mr. Marks' management and public company
experience and his role as Chief Executive Officer and President of the Company, led to the conclusion that he should serve as a director.

 Jason A. Williams, Chief Financial
Officer, Treasurer and Secretary

 Jason Williams has served as our Chief Financial
Officer, Secretary and Treasurer since July 26, 2021. Mr. Williams has more than 20 years of leadership experience in accounting,
finance, and operations. Before joining the Company, Mr. Williams served as President of WM Consulting, LLC, offering executive-level,
strategic and financial consulting services since 2016. Prior to this, Mr. Williams served as Chief Financial Officer for two publicly
traded companies and in varying financial leadership roles with several other entities. Mr. Williams earned his Bachelor of Science in
Accounting from Florida Atlantic University in 1995 and is a Certified Public Accountant (inactive).

 Thomas J. Rutherford, Director

 Thomas J. Rutherford has served as a director
of the Company since August 2017 and as a director of Grom Holdings Inc. since July 2015. Dr. Rutherford is an oncologist and a national
expert in cancer, with more than 30 years of highly specialized surgical and clinical expertise in gynecologic cancer care. Dr. Rutherford
has been the Director of Oncology for South Florida University in Tampa, Florida since January 2017. Prior thereto, from January 2015
through December 2016, Dr. Rutherford was the Director of Oncology for Connecticut Oncology, a Division of Women's Health of Connecticut
and Director of Cancer Services for Western Connecticut Health Network leading more than 100 physician subspecialists including surgeons,
medical oncologists and radiation oncologists. Dr. Rutherford served as Chair of Gynecological Oncology at Yale University Medical School
until January 2015. Dr. Rutherford has served on the Strategic Advisory Board at Mira Dx, Inc., a Delaware corporation. Dr. Rutherford
practiced at Yale Oncology and served as Professor of Oncology and Director of Oncology Fellowship at Yale University School of Medicine
from July 1993 through December 2014. Dr. Rutherford received a Bachelor of Science degree in 1976 from Roanoke College, a Master of Science
degree from John Carroll University in 1979 and a Ph. D. from the Medical College of Ohio in 1989.

 Mr. Rutherford's operational experience
led to the conclusion that he should serve as a director.

 Robert Stevens, Director

 Robert Stevens has served as a director since
June 2018. Mr. Stevens founded Somerset Capital Ltd., a private capital firm that employs industry-specific skillsets to make strategic
investments in distressed and turnaround situations as well as merger and direct investments in private and pre-public companies and has
served as its president and managing director since 2001. Mr. Stevens also serves as a court-appointed receiver. Mr. Stevens also served
as Managing Director of Technology Partners, a private equity and M&A firm, from 2010 to 2013.

 Mr. Stevens financial experience led to the conclusion
that he should serve as a director.

 Norman Rosenthal, Director

 Norman Rosenthal has served as a director since
June 2018. Mr. Rosenthal founded Tempest Systems Inc., a technology consultancy firm which offers business development, relationship management
and competitive intelligence services. and has served as its chief executive officer since 1986. Mr. Rosenthal has also served in senior
management/advisory positions at Micro Focus International plc and Computer Associates International, Inc.

 Mr. Rosenthal's financial experience led
to the conclusion that he should serve as a director.

 Board Committees

 On June 1, 2018, concurrently with the appointment
of two independent directors, Mr. Stevens and Mr. Rosenthal, we formed an Audit Committee, a Compensation Committee, and a Nominating
and Governance Committee.

 Mr. Stevens was appointed to the Nominating and
Governance Committee, Audit Committee and Compensation Committee. Mr. Stevens was appointed chair of the Audit Committee and "audit
committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K.

 Mr. Rosenthal was appointed to the Nominating
and Governance Committee, Audit Committee and Compensation Committee. Mr. Rosenthal was appointed the chair of the Nominating and Governance
Committee.

 Dr. Rutherford was appointed to the Nominating
and Governance Committee, Audit Committee and Compensation Committee. Dr. Rutherford was appointed the chair of the Compensation Committee.

 Audit Committee

 The Audit Committee is composed of three independent
directors: Robert Stevens (Chair), Thomas Rutherford and Norman Rosenthal. Mr. Stevens is also an "audit committee financial expert"
as defined in Item 407(d)(5)(ii) of Regulation S-K. Each member of the Audit Committee is an independent director as defined by the rules
of the SEC and Nasdaq. The Audit Committee has the sole authority and responsibility to select, evaluate and engage independent auditors
for the Company.

 The Audit Committee's primary responsibilities are to:

 review our accounting policies and issues which may arise in the course of the audit of our financial statements; and

 select and retain our independent registered public accounting firm.

 The Audit Committee meets at least on a quarterly
basis to discuss with management the annual audited financial statements and quarterly financial statements and meets from time to time
to discuss general corporate matters.

 Compensation Committee

 The Compensation Committee is composed of three
independent directors: Thomas Rutherford (Chair), Robert Stevens and Norman Rosenthal.

 The general responsibilities of our Compensation Committee include:

 approving the compensation of our President and Chief Executive Officer and all other executive officers; and

 approving all equity grants.

 The Compensation Committee meets in executive
session to determine the compensation of the Chief Executive Officer of the Company. In determining the amount, form, and terms of such
compensation, the Committee considers the annual performance evaluation of the Chief Executive Officer conducted by the Board in light
of company goals and objectives relevant to Chief Executive Officer compensation, competitive market data pertaining to Chief Executive
Officer compensation at comparable companies, and such other factors as it deems relevant, and is guided by, and seeks to promote, the
best interests of the Company and its shareholders.

 In addition, subject to existing agreements, the
Compensation Committee determines the salaries, bonuses, and other matters relating to compensation of the executive officers of the Company
using similar parameters. It sets performance targets for determining periodic bonuses payable to executive officers. It also reviews
and makes recommendations to the Board regarding executive and employee compensation and benefit plans and programs generally, including
employee bonus and retirement plans and programs (except to the extent specifically delegated to a Board appointed committee with authority
to administer a particular plan). In addition, the Compensation Committee approves the compensation of non-employee directors and reports
it to the full Board.

 Nominating and Corporate Governance Committee

 The Nominating and Corporate Governance Committee
consists of Norman Rosenthal (Chair), Thomas Rutherford and Robert Stevens. All members must satisfy the independence requirements of
the Exchange Act, the rules adopted by the SEC thereunder and the corporate governance and other listing standards of the Nasdaq as in
effect from time to time.

 The duties and responsibilities of the Nominating
and Corporate Governance Committee include the following:

 develop and recommend to the Board a set of corporate governance guidelines and from time to time, review and reassess the adequacy of such guidelines;

 identify, review and recommend to the Board individuals qualified to become members of the Board; and

 recommend to the Board nominating policies and procedures.

 The Nominating and Corporate Governance Committee
identifies individuals qualified to become members of the Board, consistent with criteria approved by the Board,; recommends to the Board
the director nominees for the next annual meeting of stockholders or special meeting of shareholders at which directors are to be elected;
recommends to the Board candidates to fill any vacancies on the Board; develops, recommends to the Board, and reviews the corporate governance
guidelines applicable to the Company; and oversees the evaluation of the Board and management.

 In recommending director nominees for the next
annual meeting of shareholders, the Nominating and Governance Committee ensures the Company complies with its contractual obligations,
if any, governing the nomination of directors. It considers and recruits candidates to fill positions on the Board, including as a result
of the removal, resignation or retirement of any director, an increase in the size of the Board or otherwise. The Committee conducts,
subject to applicable law, any and all inquiries into the background and qualifications of any candidate for the Board and such candidate's
compliance with the independence and other qualification requirements established by the Committee. The Committee also recommends candidates
to fill positions on committees of the Board.

 In selecting and recommending candidates for election
to the Board or appointment to any committee of the Board, the Nominating and Governance Committee does not believe that it is appropriate
to select nominees through mechanical application of specified criteria. Rather, the Nominating and Governance Committee shall consider
such factors at it deems appropriate, including, without limitation, the following: personal and professional integrity, ethics and values;
experience in corporate management, such as serving as an officer or former officer of a publicly-held company; experience in the Company's
industry; experience as a board member of another publicly-held company; diversity of expertise and experience in substantive matters
pertaining to the Company's business relative to other directors of the Company; practical and mature business judgment; and composition
of the Board (including its size and structure).

 The Nominating and Governance Committee develops
and recommends to the Board a policy regarding the consideration of director candidates recommended by the Company's shareholders
and procedures for submission by stockholders of director nominee recommendations.

 In appropriate circumstances, Nominating and Corporate
Committee, in its discretion, will consider and may recommend the removal of a director, in accordance with the applicable provisions
of the Company's articles of incorporation, as amended, and amended bylaws. If the Company is subject to a binding obligation that
requires director removal structure inconsistent with the foregoing, then the removal of a director shall be governed by such instrument.

 The Nominating and Governance Committee oversees
the evaluation of the Board and management. It also develops and recommends to the Board a set of corporate governance guidelines applicable
to the Company, which the Nominating and Governance Committee shall periodically review and revise as appropriate. In discharging its
oversight role, the Nominating and Governance Committee is empowered to investigate any matter brought to its attention.

 Board Diversity

 The table below provides information relating
to certain voluntary self-identified characteristics of our directors. Each of the categories listed in the table below has the meaning
as set forth in Nasdaq Listing Rule 5605(f).

 Board Diversity Matrix (As of December 31, 2023)

 Total Number of Directors

 Female

 Male

 Non-Binary

 Did Not Disclose Gender

 Part I: Gender Identity

 Directors

 Part II: Demographic Background

 African American or Black

 Alaskan Native or Native American

 Asian

 Hispanic or Latinx

 Native Hawaiian or Pacific Islander

 White

 Two or More Races or Ethnicities

 LGBTQ

 Did Not Disclose Demographic Background

 Our Board seeks members from diverse professional
backgrounds who combine a solid professional reputation and knowledge of our business and industry with a reputation for integrity. Our
Board does not have a formal policy concerning diversity and inclusion but is in the process of establishing a policy on diversity. Diversity
of experience, expertise, and viewpoints is one of many factors the Nominating and Corporate Governance Committee considers when recommending
director nominees to our Board. Further, our Board is committed to actively seeking highly qualified women and individuals from minority
groups and the LGBTQ+ community to include in the pool from which new candidates are selected. Our Board also seeks members that have
experience in positions with a high degree of responsibility or are, or have been, leaders in the companies or institutions with which
they are, or were, affiliated, but may seek other members with different backgrounds, based upon the contributions they can make to our
Company. While our Board has continued its efforts to identify candidates that have such experience, it has currently been unable to identify
any such candidates which fulfill the diversity requirement with the requisite professional experience.

 Family Relationships

 There are no family relationships among any of
our officers or directors.

 Code of Ethics

 We have adopted a Code of Business Conduct and
Ethics that applies to our principal executive, financial and accounting officers (or persons performing similar functions) and have filed
a copy of such Code as Exhibit 14.1 to this Annual Report.

 Insider Trading Policies and Procedures

 We have adopted insider trading policies and procedures
governing the purchase, sale, and/or other dispositions of our securities by directors, officers and employees, or us, that are reasonably
designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable to us.

 Board Leadership Structure and Role in Risk
Oversight

 Although we have not adopted a formal policy on
whether the Chairman and Chief Executive Officer positions should be separate or combined, we have traditionally determined that it is
in the best interests of the Company and its shareholders to combine these roles. Due to the small size and early stage of the Company,
we believe it is currently most effective to have the Chairman and Chief Executive Officer positions combined. In addition, having one
person serve as both Chairman and Chief Executive Officer eliminates the potential for confusion and provides clear leadership for the
Company, with a single person setting the tone and managing our operations.

 Involvement in Certain Legal Proceedings

 To our knowledge, our directors and executive officers have not been
involved in any of the following events during the past ten years:

 1.

 any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

 2.

 any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

 3.

 being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities;

 4.

 being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

 5.

 being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

 6.

 being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 Delinquent Section 16(a) Reports

 Section 16(a) of the Securities Exchange Act of
1934 requires our executive officers and directors and persons beneficially owning more than ten percent of our equity securities ("Reporting
Persons"), to file initial reports of ownership and changes in ownership with the Securities and Exchange Commission. Based solely
upon a review of the copies of these reports and representations from the Reporting Persons that no other reports were required, we believe
that, during our fiscal year ended December 31, 2023, the Reporting Persons timely filed all such reports.

 Changes in Nominating Process

 There are no material changes to the procedures
by which security holders may recommend nominees to our Board.

 ITEM 11. EXECUTIVE COMPENSATION

 The following table sets forth information concerning
all cash and non-cash compensation awarded to, earned by or paid to our Chief Executive Officer and the other executive officers with
compensation exceeding $100,000 during 2023 (each a "Named Executive Officer").

 SUMMARY COMPENSATION TABLE

 Name and Principal Position

 Year

 Salary
 ($)

 Bonus
 ($)

 Stock Awards
 ($)

 Option Awards ($)

 Non-equity Incentive Plan Compensation ($)

 Change in Pension Value and Nonqualified Deferred Compensation Earnings
 ($)

 All Other
 Compensation ($)

 Total
 ($)

 Darren Marks

 2023

 $
 300,000

 $
 –

 $
 –

 $
 –

 $
 –

 $
 –

 $
 –

 $
 300,000

 Chief Executive Officer and President

 2022

 $
 300,000

 $
 –

 $
 –

 $
 –

 $
 –

 $
 –

 $
 –

 $
 300,000

 Jason Williams

 2023

 $
 228,000

 $
 –

 $
 –

 $
 –

 $
 –

 $
 –

 $
 –

 $
 228,000

 Chief Financial Officer, Treasurer and Secretary

 2022

 $
 228,000

 $
 –

 $
 –

 $
 –

 $
 –

 $
 –

 $
 –

 $
 228,000

 Employment Agreements

 On June 1, 2016, the Company entered into an employment
agreement with Darren Marks pursuant to which Mr. Marks serves as the Company's Chief Executive Officer. The employment agreement
is for an initial term of three years, which term shall be automatically extended for successive and additional two-year periods unless
either party shall provide written notice of termination at least 90 days prior to the end of the then-current term. Under the agreement,
Mr. Marks is entitled to an annual base salary of $245,000 (subject to a minimum 5% annual increase each year commencing on January 1,
2017) and an annual incentive bonus of up to an 80% of his base salary. The employment agreement may be terminated by the Company for
"cause" (as such term is defined in the agreement), in which case Mr. Marks shall be entitled to his base salary up to the
date of termination, without "cause" by the Company or for "good reason"( as such term is defined in the agreement),
by Mr. Marks upon 90 days' prior written notice, in which case Mr. Marks shall be entitled to base salary and health benefits for
18 months from the expiration of the agreement and shall have 10 years to exercise any outstanding stock options. The agreement provides
that Mr. Marks has the obligation to mitigate any such severance with any income he may subsequently receive. The agreement also provides
that Mr. Marks shall not compete with the Company and shall keep all Company information confidential for one year after the term of the
agreement.

 Director Compensation

 2023 Director Compensation Table

 Name

 Fees
 Earned
 or Paid
 in Cash

 Stock
 Awards

 Option
 Awards

 Non-Equity
 Incentive Plan
 Compensation

 Change in Pension Value and Nonqualified
 Deferred
 Compensation Earnings

 All Other
 Compensation

 Total

 Thomas Rutherford

 $
 6,000

 $
 –

 –

 –

 –

 –

 $
 6,000

 Robert Stevens

 $
 6,000

 $
 –

 –

 –

 –

 –

 $
 6,000

 Norman Rosenthal

 $
 6,000

 $
 –

 –

 –

 –

 –

 $
 6,000

 All directors are reimbursed for out-of-pocket
expenses related to their Board duties. Our employee director, Mr. Marks, does not receive any compensation for serving as a director.
Our three independent directors receive $1,500 per quarter for their services.

 Employee Benefit Plans

 The Company currently has no employee benefit
plans.

 Amended and Restated 2020 Equity Incentive
Plan

 On September 14, 2020, the Board and, on September
16, 2020, the shareholders approved the Company's 2020 Equity Incentive Plan (the "2020 Plan"). The 2020 Plan provides
for the grant of nonqualified stock options, incentive stock options, restricted stock awards, restricted RSUs, performance units and
performance shares (which may be designed to comply with Section 162(m) of the Internal Revenue Code) and stock appreciation rights to
officers, directors, key employees, consultants and directors who provide services to the Company.

 On June 23, 2023, the Board and, on August 8,
2023, the shareholders approved the Amended and Restated 2020 Equity Incentive Plan (the "A&R 2020 Plan"), which replaced
the 2020 Plan. The A&R 2020 Plan provides for the grant of nonqualified stock options, incentive stock options, stock appreciation
rights, restricted stock, restricted stock units, performance shares and performance units. The Company has reserved 10,000,000 shares
for issuance under the A&R 2020 Plan.

 As of April 11, 2024, an aggregate 5,265 shares
of common stock and 6,950 options to purchase shares of common stock were issued under the 2020 Plan and no issuances have been made under
the A&R 2020 Plan.

 Outstanding Equity Awards

 The Company's Named Executive Officers had
no outstanding equity awards on December 31, 2023.

 ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

 The following table lists, as of April 11, 2024,
the number of shares of common stock beneficially owned by (i) each person, entity or group (as that term is used in Section 13(d)(3)
of the Securities Exchange Act of 1934) known to the Company to be the beneficial owner of more than 5% of the outstanding common stock;
(ii) each of our directors (iii) each of our Named Executive Officers and (iv) all executive officers and directors as a group. Information
relating to beneficial ownership of common stock by our principal stockholders and management is based upon information furnished by each
person using "beneficial ownership" concepts under the rules of the SEC. Under these rules, a person is deemed to be a beneficial
owner of a security if that person directly or indirectly has or shares voting power, which includes the power to vote or direct the voting
of the security, or investment power, which includes the power to dispose or direct the disposition of the security. The person is also
deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under
the SEC rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a
beneficial owner of securities as to which he or she may not have any pecuniary interest. Except as noted below, each person has sole
voting and investment power with respect to the shares beneficially owned and each stockholder's address is c/o Grom Social Enterprises,
Inc., 2060 NW Boca Raton Blvd., Suite #6, Boca Raton, Florida, 33431.

 The percentages below are calculated based on
8,924,696 shares of common stock and 9,243,309 shares of Series C Stock issued and outstanding as of April 11, 2024.

 Name of Beneficial Owner

 Stock

 Percentage
 of
 Stock

 Series C
 Preferred
 Stock

 Percentage
 of
 Series C
 Stock

 Combined
 Voting
 Power

 Executive Officers and Directors:

 Darren Marks

 1,187

 (1)

 *

 –

 –

 54.5%

 (9)

 Jason Williams

 *

 –

 –

 *

 Robert Stevens

 (3)

 *

 –

 –

 *

 Norman Rosenthal

 (4)

 *

 –

 –

 *

 Thomas J. Rutherford

 *

 –

 –

 *

 All officers and directors as a group (5 persons)

 1,363

 (5)

 *

 –

 –

 54.5%

 (10)

 5% or Greater Holders:

 Denis J. Kerasotes
 31 Fairview Lane
 Springfield, Illinois 62711

 *

 (6)

 *

 3,816,105
 (11)

 41.3%

 –

 Condor Equities, LLC (6)
 2535 Webb Girth Road
 Gainesville, Georgia 30507

 *

 (8)(13)

 *

 3,131,300
 (11)

 33.3%

 –

 Section 3 Developments (7)
 2415 Alta Monte Drive
 Cedar Park, Texas 78613

 *

 *

 520,000
 (11)

 5.6%

 –

 Eileen F. Kerasotes Family Trust (8)
 4747 County Road 501
 Bayfield, CO 81122

 *

 *

 472,420
 (11)

 5.1%

 –

 __________

 *Less than 1%

 (1) Represents 1,187 shares of common stock held
by Family Tys, LLC ("Family Tys"), of which Mr. Marks is the managing member and over which Mr. Marks has voting and dispositive
power. Does not include an aggregate of (i) 9,243,309 shares of Series C Stock (with 1.5625 votes per share, or 14,442,671 votes in the
aggregate) and (ii) 2,353 shares, for which Mr. Marks has a voting proxy until May 20, 2023.

 (3) Represents shares held by Thistle Investments,
LLC, of which Mr. Stevens is managing member and over which Mr. Stevens has sole voting and dispositive power.

 (4) Represents shares held by Tempest Systems,
Inc., of which Mr. Rosenthal is chief executive officer and over which Mr. Rosenthal has sole voting and dispositive power.

 (5) Does not include an aggregate of (i) 9,243,309
shares of Series C Stock (with 1.5625 votes per share, or 14,442,671 votes in the aggregate), and (ii) 2,353 shares of common stock, for
which Mr. Marks has a voting proxy until May 20, 2023.

 (6) Dale Nabb, manager of Condor Equities, LLC
("Condor"), has sole voting and dispositive power of the shares held by Condor.

 (7) Michael Tapajna, chief executive officer of
Section 3 Developments, Inc. ("Section 3"), has sole voting and dispositive power of the shares held by Section 3.

 (8) John G. Kerasotes, as trustee of the Eileen
F. Kerasotes Trust, has sole voting and dispositive power over the shares held by such Trust.

 (9) Based upon (i) 23,721 shares of common stock
held by Family Tys of which Mr. Marks is the managing member and over which Mr. Marks has voting and dispositive power and (ii) the voting
rights to an aggregate of (A) 2,353 shares of common stock held by certain holders of our Series C Stock, and (B) 9,243,309 shares of
Series C Stock, having the right to 1.5625 votes for each share of Series C Stock for which Mr. Marks has a voting proxy until May 20,
2023.

 (10) Includes 9,243,309 shares of Series C Stock
(with 1.5625 votes per share, or 14,442,671 votes in the aggregate).

 (11) Darren Marks, the Company's Chief Executive
Officer, President, and a director, has the voting rights to such shares of Series C Stock and common stock until May 20, 2023, pursuant
to voting proxies from such shareholders.

 Series C Stock

 Darren Marks, the Company's Chief Executive
Officer, President, and a director, has a majority of the voting rights of the Series C Stock until May 20, 2025, pursuant to a proxy
from certain Series C shareholders.

 ITEM 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 Darren Marks's Family

 The Company has engaged the family of Darren Marks,
its Chief Executive Officer, to assist in the development of the Grom Social mobile application. These individuals create and produce
original short form content focusing on social responsibility, anti-bullying, digital citizenship, unique blogs, and special events. Sarah
Marks, the wife of Mr. Marks, and Zach Marks, Luke Marks, Caroline Marks, Jack Marks, Dawson Marks and Victoria Marks, each Mr. Marks's
children, are, or have been, by the Company employed or independently contracted.

 During the year ended December 31, 2023, Zach
Marks was employed by Grom Social as its Founder and Content Creator and receives an annual salary of $103,000. Effective August 4, 2023,
Luke Marks resigned from his position of Content Coordinator from which he received an annual salary of $30,000.

 During the years ended December 31, 2023 and 2022,
the Marks family was paid a total of $122,542 and $112,500, respectively.

 Compensation for services provided by the Marks family is expected
to continue for the foreseeable future.

 Liabilities Due to Executive Officers and/or
Directors

 On July 13, 2018, our director, Thomas Rutherford,
loaned the Company $50,000. The loan bears interest at a rate of 10% per annum and matured on August 11, 2018. On April 21, 2023, the
Company repaid the $50,000 principal balance of the note. During the years ended December 31, 2023 and 2022, the Company accrued interest
expense of $1,521 and $5,000, respectively, on the note.

 At December 31, 2023 and 2022, the aggregate related
party payables was $23,904 and $72,383, respectively, of which $23,904 and $22,383, respectively, were reported under accrued liabilities
on the Company's Consolidated Balance Sheets.

 Voting Proxies

 On May 20, 2023, certain Series C Stock holders
extended proxies with Darren Marks, an officer and director of the Company, granting him the power to vote all of their shares of Series
C Stock, and all other securities that they hold of the Company, for a period of two years. As a result, Mr. Marks currently has 54.5%
of the Company's combined voting power.

 Director Independence

 Our Board has reviewed the independence of our
directors based on the listing standards of the Nasdaq Stock Market ("Nasdaq"). Based on this review, the Board of Directors
determined that Messrs. Rosenthal, Rutherford and Stevens are independent, as defined in Rule 5605(a)(2) of the Nasdaq rules. In making
this determination, our Board considered the relationships that each of these non-employee directors has with us and all other facts and
circumstances our Board deemed relevant in determining their independence.

 ITEM 14.
 PRINCIPAL ACCOUNTING FEES AND SERVICES

 Upon recommendation of the Audit Committee of
the Board of Directors, the Board appointed Rosenberg Rich Baker Berman, P.A. as our independent registered public accounting firm for
the year ending December 31, 2023.

 The following table reflects the aggregate fees
billed for professional services rendered by Rosenberg Rich Baker Berman, P.A. in the years ended December 31, 2023 and 2022:

 Services

 2023

 2022

 Audit Fees

 $
 216,000

 $
 190,000

 Audit-Related Fees

 85,000

 12,500

 Tax Fees

 –

 –

 All Other Fees

 –

 –

 Total Fees

 $
 301,000

 $
 202,500

 Audit Fees. Consists of fees for professional
services rendered for the audit of our annual financial statements included in our Annual Reports on Forms 10-K for our fiscal years ended
December 31, 2023 and 2022 and reviews of our interim financial statements included in our Quarterly Reports on Form 10-Q.

 Audit-Related Fees. Consists of fees for
assurance and related services that are reasonably related to the audit. This category includes fees related to consents and comfort letters
on registration statements.

 Tax Fees. Consists of amounts
billed for professional services rendered for tax return preparation.

 All Other Fees. Consists of
amounts billed for services other than those noted above.

 Audit Committee's Pre-Approval Practice

 The Audit Committee of the Board of
Directors has established its pre-approval policies and procedures, pursuant to which the Audit Committee approved the foregoing audit
and audit-related services provided by our independent registered public accounting firm in 2023 and 2022, consistent with the Audit Committee's
responsibility for engaging our independent registered public accounting firm. The Audit Committee also considered whether the non-audit
services rendered by our independent registered public accounting firm are compatible with an auditor maintaining independence. The Audit
Committee has determined that the rendering of such services is compatible with our independent registered public accounting firm maintaining
its independence. The percentage of hours expended on our independent registered public accounting firm 's engagement to audit our
financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's
full-time, permanent employees was 0%.

 PART
IV

 ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES.

 The following exhibits are included with this Annual Report:

 Exhibit

 Number

 Description

 3.1

 Articles
 of Incorporation (Incorporated by reference to Exhibit 3.1 of the Company's Registration Statement on Form S-1, filed with
 the Securities and Exchange Commission on January 13, 2016)

 3.2

 Bylaws
 (Incorporated by reference to Exhibit 3.2 of the Company's Registration Statement on Form S-1, filed with the Securities and
 Exchange Commission on January 13, 2016)

 3.3

 Amendment
 to Articles of Incorporation (Incorporated by reference to Exhibit 3.3 of the Company's Current Report on Form 8-K, filed
 with the Securities and Exchange Commission on August 22, 2017)

 3.4

 Articles
 of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 of the Company's Current Report on
 Form 8-K, filed with the Securities and Exchange Commission on June 18, 2019)

 3.5

 of Amendment to the Articles of Incorporation of the Company, filed May 7, 2021, effective as of May 13, 2021 (incorporated by
 reference to Exhibit 3.1 of the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on
 May 17, 2021)

 3.6

 of Designation of Preferences, Rights and Limitations of Series C 8% Convertible Preferred Stock (incorporated by reference
 to Exhibit 3.1 of the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 24, 2021)

 3.7

 of Amendment to the Articles of Incorporation of the Company, filed on December 6, 2022 (incorporated by reference to Exhibit
 3.1 of the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 8, 2022)

 4.1

 Specimen
 Stock Certificate (Incorporated by reference to Exhibit 3.4 of the Company's Registration Statement on Form S-1, filed
 with the Securities and Exchange Commission on January 13, 2016)

 4.2

 of Designation of Series A Convertible Preferred Stock, dated February 22, 2019 (incorporated by reference to Exhibit 10.16 to
 the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 16, 2019)

 4.3

 Articles
 of Amendment to Articles of Incorporation, dated May 31, 2019 (incorporated by reference to Exhibit 3.1 to the Company's
 Current Report on Form 8-K filed with the SEC on June 18, 2019)

 4.5

 of Designation of Series B 8% Convertible Preferred Stock (incorporated by reference to Exhibit 4.5 to the Company's Quarterly
 Report on Form 10-Q filed with the SEC on August 6, 2020)

 4.5

 Stock Purchase Warrant, dated February 9, 2021, issued to Auctus Fund, LLC (incorporated by reference to Exhibit 4.2 to the Company's
 Current Report on Form 8-K filed with the SEC on February 12, 2021)

 4.6

 8%
 Convertible Promissory Note, dated August 19, 2021, issued by Grom Social Enterprises, Inc. to Curiosity Ink Media LLC (incorporated
 by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the SEC on August 24, 2021)

 4.7

 Form
 of $4,400,000 Principal Amount, 10% Original Issue discount Senior Secured Convertible Note issued to L1 Capital, due March 14, 2023
 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on September
 20, 2021)

 4.8

 Form
 of Common Stock Purchase Warrant issued to L1 Capital, exercisable at $4.20 for 813,278 shares of the Company's Common Stock
 (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the SEC on September 20,
 2021)

 4.9

 Amended
 and Restated $4,400,000 Principal Amount, 10% Original Issue Discount Senior Secured Convertible Note issued to L1 Capital on October
 20, 2021 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC
 on October 20, 2021)

 4.10

 Form
 of Common Stock Purchase Warrant (Incorporated by reference to Exhibit 4.15 of the Company's Registration Statement
 on Form S-1, filed with the Securities and Exchange Commission on December 6, 2022)

 4.11

 Form
 of Pre-Funded Common Stock Purchase Warrant (Incorporated by reference to Exhibit 4.16 of the Company's Registration
 Statement on Form S-1, filed with the Securities and Exchange Commission on December 6, 2022)

 4.12

 Form
 of Warrant Agreement (Incorporated by reference to Exhibit 4.2 of the Company's Form 8-K, filed with the Securities
 and Exchange Commission on January 31, 2023)

 4.13

 Form
 of Prefunded Warrant Agreement (Incorporated by reference to Exhibit 4.1 of the Company's Form 8-K, filed with the
 Securities and Exchange Commission on January 31, 2023)

 4.14

 Form
 of Series A Warrant relating to the September 2023 Offering (Incorporated by reference to Exhibit 4.1 of the Company's Form 8-K,
 filed with the Securities and Exchange Commission on September 11, 2023)

 4.15

 Form
 of Series B Warrant relating to the September 2023 Offering (Incorporated by reference to Exhibit 4.2 of the Company's Form 8-K,
 filed with the Securities and Exchange Commission on September 11, 2023)

 4.16

 Form
 of Pre-Funded Warrant relating to the September 2023 Offering (Incorporated by reference to Exhibit 4.3 of the Company's Form 8-K,
 filed with the Securities and Exchange Commission on September 11, 2023)

 4.17

 Form
 of $4,000,000 Principal Amount, 9% Original Issue Discount Note issued to Generating Alpha Ltd. (Incorporated by reference to
 Exhibit 10.2 of the Company's Form 8-K, filed with the Securities and Exchange Commission on November 15, 2023)

 4.18

 Form
 of Common Stock Purchase Warrant issued to Generating Alpha Ltd. (Incorporated by reference to Exhibit 10.3 of the Company's
 Form 8-K, filed with the Securities and Exchange Commission on November 15, 2023)

 4.19

 First
 Amendment, dated March 11, 2024, to Convertible Promissory Note, dated November 9, 2023, by and between Grom Social Enterprises,
 Inc. and Generating Alpha Ltd. (Incorporated by reference to Exhibit 10.2 of the Company's Form 8-K, filed with the Securities
 and Exchange Commission on March 15, 2024)

 4.20

 Stock Purchase Warrant, dated March 11, 2024, issued to Generating Alpha Ltd. (Incorporated by reference to Exhibit 10.4 of the
 Company's Form 8-K, filed with the Securities and Exchange Commission on March 15, 2024)

 4.21

 Form
 of $650,000 Principal Amount, 20% Original Issue Discount Note issued to Generating Alpha Ltd. (Incorporated by reference to Exhibit
 10.2 of the Company's Form 8-K, filed with the Securities and Exchange Commission on April 5, 2024)

 4.22

 Form
 of Common Stock Purchase Warrant issued to Generating Alpha Ltd. (Incorporated by reference to Exhibit 10.3 of the Company's
 Form 8-K, filed with the Securities and Exchange Commission on April 5, 2024)

 9.1

 Form
 of Voting Agreement by and between Grom Social Enterprises, Inc., certain shareholders of Grom Social Enterprises, Inc., and Generating
 Alpha Ltd. (Incorporated by reference to Exhibit 9.1 of the Company's Form 8-K, filed with the Securities and Exchange
 Commission on November 15, 2023)

 9.2

 Form
 of Voting Agreement by and between Grom Social Enterprises, Inc., certain shareholders of Grom Social Enterprises, Inc., and Generating
 Alpha Ltd. (Incorporated by reference to Exhibit 9.1 of the Company's Form 8-K, filed with the Securities and Exchange
 Commission on April 5, 2024)

 10.1

 Form
 of Sales Rep Agreement (Incorporated by reference to Exhibit 10.1 of the Company's Registration Statement on Form S-1,
 filed with the Securities and Exchange Commission on January 13, 2016)

 10.2

 Consulting
 Agreement and Addendum (Incorporated by reference to Exhibit 10.2 of the Company's Registration Statement on Form S-1,
 filed with the Securities and Exchange Commission on January 13, 2016)

 10.3

 Sublease
 Agreement with Grom Social, Inc. (Incorporated by reference to Exhibit 10.3 of the Company's Registration Statement on
 Form S-1/A, filed with the Securities and Exchange Commission on March 3, 2016)

 10.4

 Purchase
 and Sale Agreement with Forcefield (Incorporated by reference to Exhibit 10.4 of the Company's Current Report on Form 8-K,
 filed with the Securities and Exchange Commission on May 6, 2016)

 10.5

 Copy
 of Letter of Intent with Grom Holdings, Inc. (Incorporated by reference to Exhibit 10.4 of the Company's Current Report
 on Form 8-K, filed with the Securities and Exchange Commission on January 17, 2017)

 10.6

 Share
 Exchange Agreement with Grom Holdings, Inc. (Incorporated by reference to Exhibit 10.5 of the Company's Current Report
 on Form 8-K, filed with the Securities and Exchange Commission on May 17, 2017)

 10.7*

 Employment
 Agreement, dated June 1, 2016, between the Company and Darren Marks (Incorporated by reference to Exhibit 10.5 of the Company's
 Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 22, 2017)

 10.8

 Acquisition
 Agreement of TD Holdings (Incorporated by reference to Exhibit 10.6 of the Company's Current Report on Form 8-K, filed
 with the Securities and Exchange Commission on August 22, 2017)

 10.9

 Memorandum
 of Understanding with Fyoosion LLC (Incorporated by reference to Exhibit 10.5 of the Company's Current Report on Form 8-K,
 filed with the Securities and Exchange Commission on December 6, 2017)

 10.10

 Asset
 Purchase Agreement with Fyoosion LLC (Incorporated by reference to Exhibit 10.6 of the Company's Current Report on Form
 8-K, filed with the Securities and Exchange Commission on January 3, 2018)

 10.11

 Amending
 Agreement to the Share Sale Agreement for the Entire Issued Share Capital of TD Holdings Limited and the Secured Promissory Note
 (Incorporated by reference to Exhibit 10.7 of the Company's Current Report on Form 8-K, filed with the Securities and Exchange
 Commission on January 5, 2018)

 10.12

 $1.0
 Million Convertible Promissory Note with TeleMate.net (incorporated by reference to Exhibit 10.17 to the Company's Annual
 Report on Form 10-K filed with the Securities and Exchange Commission on April 16, 2019).

 10.13

 Investment
 Banking Agreement with Newbridge Securities Corporation (incorporated by reference to Exhibit 10.18 to the Company's Annual
 Report on Form 10-K filed with the Securities and Exchange Commission on April 16, 2019).

 10.14

 Form
 of Pledge and Security Agreement (incorporated by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K
 filed with the Securities and Exchange Commission on April 16, 2019).

 10.15

 Subscription
 Agreement for Series A Stock (incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K filed
 with the Securities and Exchange Commission on April 16, 2019).

 10.16

 Purchase
 and Sale Agreement with TeleMate. Net (incorporated by reference to Exhibit 10.21 to the Company's Annual Report on Form
 10-K filed with the Securities and Exchange Commission on April 16, 2019).

 10.17

 Grom
 Educational Services Peachtree Pointe Lease (incorporated by reference to Exhibit 10.22 to the Company's Annual Report
 on Form 10-K filed with the Securities and Exchange Commission on April 16, 2019).

 10.18

 Form
 of Subscription Agreement (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed
 with the Securities and Exchange Commission on November 19, 2019)

 10.19

 Form
 of Debt Exchange Agreement (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed
 with the Securities and Exchange Commission on November 15, 2019

 10.20

 Form
 of 12% Senior Secured Convertible Promissory Note (incorporated by reference to Exhibit 4.1 to the Company's Current Report
 on Form 8-K filed with the SEC on March 20, 2020)

 10.21

 Form
 of 12% Senior Secured Convertible Promissory Note (incorporated by reference to Exhibit 4.2 to the Company's Current Report
 on Form 8-K filed with the SEC on March 20, 2020)

 10.22

 Form
 of Subscription Agreement for 12% Senior Secured Convertible Promissory Note (incorporated by reference to Exhibit 10.2 to the
 Company's Current Report on Form 8-K filed with the SEC on March 20, 2020)

 10.23

 Intercreditor
 Deed (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on March
 20, 2020)

 10.24

 Security
 Agent Agreement, dated March 16, 2020 (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form
 8-K filed with the SEC on March 20, 2020)

 10.25

 Third
 Amendment to the TDH Share Sell Agreement, dated March 16, 2020 (incorporated by reference to Exhibit 10.4 to the Company's
 Current Report on Form 8-K filed with the SEC on March 20, 2020)

 10.26

 Security
 Agreement, dated March 16, 2020 (incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K
 filed with the SEC on March 20, 2020)

 10.27

 Form
 of Subscription Agreement (incorporated by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K filed
 with the SEC on March 20, 2020)

 10.28

 Form
 of Debt Exchange Agreement (incorporated by reference to Exhibit 10.33 to the Company's Quarterly Report on Form 10-Q filed
 with the SEC on August 6, 2020)

 10.29

 Form
 of Exchange Agreement for Series A 10% Convertible Preferred Stock (incorporated by reference to Exhibit 10.34 to the Company's
 Quarterly Report on Form 10-Q filed with the SEC on August 6, 2020)

 10.30

 Form
 of Subscription Agreement for Series B Convertible Stock (incorporated by reference to Exhibit 10.35 to the Company's Quarterly
 Report on Form 10-Q filed with the SEC on August 6, 2020)

 10.31

 2020
 Equity Incentive Plan (incorporated by reference to Exhibit 10.36 to the Company's Current Report on Form 8-K filed with
 the SEC on September 21, 2020)

 10.32

 Form
 of Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.37 to the Company's Current Report on Form
 8-K filed with the SEC on September 21, 2020)

 10.33

 Form
 of NonQualified Stock Option Agreement (incorporated by reference to Exhibit 10.38 to the Company's Current Report on Form
 8-K filed with the SEC on September 21, 2020)

 10.34

 Form
 of Restricted Stock Agreement (incorporated by reference to Exhibit 10.39 to the Company's Current Report on Form 8-K filed
 with the SEC on September 21, 2020)

 10.35

 Form
 of Grant of Stock Appreciation Rights (incorporated by reference to Exhibit 10.40 to the Company's Current Report on Form
 8-K filed with the SEC on September 21, 2020)

 10.36

 Purchase Agreement, dated February 9, 2021, between the Company and Auctus Fund, LLC incorporated by reference to Exhibit 10.3
 to the Company's Current Report on Form 8-K filed with the SEC on February 12, 2021)

 10.37

 Note
 Cancellation and General Release, dated March 17, 2021 from Newbridge Securities Corporation (incorporated by reference to Exhibit
 10.47 to the Company's Annual Report on Form 10-K filed with the SEC on April 13, 2021)

 10.38

 Stock Purchase Warrant, dated March 11, 2021, issued to FirstFire Fund, LLC (incorporated by reference to Exhibit 4.2 to the
 Company's Current Report on Form 8-K filed with the SEC on April 5, 2021)

 10.39

 Purchase Agreement, dated March 11, 2021, between the Company and FirstFire Fund, LLC (incorporated by reference to Exhibit 10.2
 to the Company's Current Report on Form 8-K filed with the SEC on April 5, 2021)

 10.40

 Form
 of Exchange Agreement for exchange of Series B Stock for Series C Stock (incorporated by reference to Exhibit10.1 to the Company's
 Current Report on Form 8-K filed with the SEC on May 24, 2021)

 10.41

 Membership
 Interest Purchase Agreement, dated July 29, 2021, by and among the Company, Curiosity and the Sellers (incorporated by reference
 to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on August 4, 2021)

 10.42

 Amended
 and Restated Limited Liability Company Agreement dated as of August 19, 2021 by and among CIM, Grom and Sellers (incorporated
 by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on August 24, 2021)

 10.43

 Employment
 Agreement dated as of August 19, 2021 between the Company and Russell Hicks (incorporated by reference to Exhibit 10.3 to the
 Company's Current Report on Form 8-K filed with the SEC on August 24, 2021)

 10.44

 Non-Qualified
 Stock Option Agreement dated August 19, 2021 between the Company and Russell Hicks (incorporated by reference to Exhibit 10.4
 to the Company's Current Report on Form 8-K filed with the SEC on August 24, 2021)

 10.45

 Employment
 Agreement dated as of August 19, 2021 between the Company and Brent Watts (incorporated by reference to Exhibit 10.5 to the Company's
 Current Report on Form 8-K filed with the SEC on August 24, 2021)

 10.46

 Non-Qualified
 Stock Option Agreement dated August 19, 2021 between the Company and Brent Watts (incorporated by reference to Exhibit 10.6 to
 the Company's Current Report on Form 8-K filed with the SEC on August 24, 2021)

 10.47

 Purchase Agreement, Dated as of September 14, 2021 ("Closing Date"), between Grom Social Enterprises, Inc., a Florida
 corporation (the "Company"), and L1 Capital Global Master Fund ("L1 Capital") (incorporated by reference
 to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on September 20, 2021)

 10.48

 Form
 of Subsidiary Guaranty executed by Company subsidiaries, in favor of L1 Capital (incorporated by reference to Exhibit 10.4 to
 the Company's Current Report on Form 8-K filed with the SEC on September 20, 2021)

 10.49

 Form
 of Registration Rights Agreement, dated September 14, 2021, between the Company and L1 Capital (incorporated by reference to
 Exhibit 10.5 to the Company's Current Report on Form 8-K filed with the SEC on September 20, 2021)

 10.50

 Form
 of Security Agreement, dated as of September 14, 2021, between the Company and L1 Capital (incorporated by reference to Exhibit
 10.6 to the Company's Current Report on Form 8-K filed with the SEC on September 20, 2021)

 10.51

 Form
 of Intercreditor Agreement, dated as of September 14, 2021, between the Company, L1 Capital and certain pre-existing creditors of
 the Company (incorporated by reference to Exhibit 10.7 to the Company's Current Report on Form 8-K filed with the SEC on
 September 20, 2021)

 10.52

 Amended
 and Restated Securities Purchase Agreement, dated October 20, 2021, between the Company and L1 Capital (incorporated by reference
 to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on October 20, 2021)

 10.53

 10%
 Original Issue Discount Promissory Note dated January 20, 2022, between the Company", and L1 Global Capital Master Fund
 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on January 26, 2022).

 10.54

 Stock Purchase Warrant to purchase 303,682 shares of the Company's common stock issued to L1 Global Capital Master Fund, dated
 January 20, 2022 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the
 SEC on January 26, 2022).

 10.55

 Form
 of Registration Rights Agreement, dated January 20, 2022, between the Company and L1 Capital Master Fund (incorporated
 by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the SEC on January 26, 2022).

 10.56

 Form
 of Warrant Agent Agreement (Incorporated by reference to Exhibit 10.1 of the Company's Current Report filed on December
 13, 2022, filed with the Securities and Exchange Commission on December 6, 2022)

 10.57

 Form
 of Lockup Agreement (Incorporated by reference to Exhibit 10.71 of the Company's Registration Statement on Form S-1,
 filed with the Securities and Exchange Commission on December 6, 2022)

 10.58

 Purchase Agreement, dated January 25, 2023, between the Company and Hudson Bay Master Fund Ltd. (incorporated by reference to
 Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on January 31, 2023)

 10.59

 Amendment
 No. 1 to Securities Purchase Agreement, dated January 30, 2023, between the Company and Hudson Bay Master Fund Ltd. (incorporated
 by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on January 31, 2023)

 10.60

 Amendment
 No. 2 to Securities Purchase Agreement, dated January 30, 2023, between the Company and Hudson Bay Master Fund Ltd. (incorporated
 by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the SEC on January 31, 2023)

 10.61

 Waiver
 Agreement, dated January 30, 2023, between the Company and L1 Capital Global Opportunities Master Fund (incorporated by reference
 to Exhibit 10.4 to the Company's Current Report on Form 8-K filed with the SEC on January 31, 2023)

 10.62

 Registration
 Rights Agreement by and between Grom Social Enterprises, Inc. and the Hudson Bay Master Fund Ltd. dated January 25, 2023 (incorporated
 by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed with the SEC on January 31, 2023)

 10.63

 Purchase Agreement, dated November 9, 2023, by and between Grom Social Enterprises, Inc. and Generating Alpha Ltd. (Incorporated
 by reference to Exhibit 10.1 of the Company's Form 8-K, filed with the Securities and Exchange Commission on November 15, 2023)

 10.64

 F orm
 of Registration Rights Agreement by and between Grom Social Enterprises, Inc. and Generating Alpha Ltd. (Incorporated by reference
 to Exhibit 10.4 of the Company's Form 8-K, filed with the Securities and Exchange Commission on November 15, 2023)

 10.65

 First
 Amendment, dated November 20, 2023, to Securities Purchase Agreement, dated November 9, 2023, by and between Grom Social Enterprises,
 Inc. and Generating Alpha Ltd. (Incorporated by reference to Exhibit 10.1 of the Company's Form 8-K, filed with the Securities
 and Exchange Commission on November 21, 2023)

 10.66

 Second
 Amendment, dated March 11, 2024, to Securities Purchase Agreement, originally dated November 9, 2023, by and between Grom Social
 Enterprises, Inc. and Generating Alpha Ltd. (Incorporated by reference to Exhibit 10.1 of the Company's Form 8-K, filed
 with the Securities and Exchange Commission on March 15, 2024)

 10.67

 Purchase Agreement, dated March 11, 2024, by and between Grom Social Enterprises, Inc. and Generating Alpha Ltd. (Incorporated
 by reference to Exhibit 10.3 of the Company's Form 8-K, filed with the Securities and Exchange Commission on March 15, 2024)

 10.68

 Registration
 Rights Agreement, dated March 11, 2024, by and between Grom Social Enterprises, Inc. and Generating Alpha Ltd. (Incorporated
 by reference to Exhibit 10.5 of the Company's Form 8-K, filed with the Securities and Exchange Commission on March 15, 2024)

 10.69

 Purchase Agreement, dated April 1, 2024, by and between Grom Social Enterprises, Inc. and Generating Alpha Ltd. (Incorporated
 by reference to Exhibit 10.1 of the Company's Form 8-K, filed with the Securities and Exchange Commission on April 5, 2024)

 10.70

 Form
 of Registration Rights Agreement by and between Grom Social Enterprises, Inc. and Generating Alpha Ltd. (Incorporated by reference
 to Exhibit 10.4 of the Company's Form 8-K, filed with the Securities and Exchange Commission on April 5, 2024)

 14.1

 Code
 of Conduct (Incorporated by reference to Exhibit 14.1 of the Company's Annual Report on Form 10-K, filed with the Securities
 and Exchange Commission on April 17, 2018)

 21.1

 Subsidiaries
 of the Registrant (Incorporated by reference to Exhibit 21.1 of the Company's Annual Report on Form 10-K, filed with the
 Securities and Exchange Commission on April 17, 2018)

 31.1**

 Certification of Chief Executive Officer required by Rule 13a-14(a) under the Exchange Act (filed herewith)

 31.2**

 Certification of Chief Financial Officer required by Rule 13a-14(a) under the Exchange Act (filed herewith)

 32**

 Certification of Principal Executive Officer and Principal Financial and Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (filed herewith)

 101.INS**

 101.SCH**

 101.CAL**

 Linkbase Document

 101.LAB**

 Document

 101.PRE**

 Linkbase Document

 101.DEF**

 Linkbase Document

 Cover Page Interactive Data File (formatted as inline

 * Management compensation agreement

 ** Filed herewith

 ITEM 16. FORM 10–K SUMMARY

 None

 SIGNATURES

 Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunder duly authorized.

 Dated: April 16, 2024

 By:

 / s/ Darren Marks

 Darren Marks

 Chief Executive Officer, President and Chairman

 (Principal Executive Officer)

 Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

 Name

 Title

 Date

 /s/ Darren Marks

 Chief Executive Officer, President and Chairman

 Darren Marks

 (Principal Executive Officer)

 /s/ Jason Williams

 Chief Financial Officer, Treasurer and Secretary

 Jason Williams

 (Principal Financial and Accounting Officer)

 /s/ Thomas Rutherford

 Thomas Rutherford

 /s/ Robert Stevens

 Robert Stevens

 /s/ Norman Rosenthal

 Norman Rosenthal