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10. Related Party Payables

9 Months Ended

Sep. 30, 2019

10.

RELATED PARTY PAYABLES

The Company has engaged the Chief Executive Officer, Darren Mark’s family to assist in the development of the Grom Social website and to create original content for the site. Since these individuals have been responsible for creating in excess of 500 episodes of original content. Mr. Marks wife Sarah; his sons Zach the founder of Grom, Luke, Jack, Dawson, and his daughters Caroline and Victoria all work for the Company either as employees or contractors.

The amount they were paid for the year ended December 31, 2018 are as follows: Sarah $33,600, Zach $90,000, Luke $33,800, Jack $5,400, Victoria $6,750 and Caroline $11,250. The total annual compensation payable to these six individuals for the period ended December 31, 2018, was $180,800.

For the nine-month period ended September 30, 2019, these individuals were paid a total of $70,800.

The Company believes the amounts paid to these individuals is below market rate for the value of the services performed. This expenditure for services provided by the Marks family is expected to continue for the foreseeable future. Members of the Marks family are actively involved on a daily basis in creating all of the current content for the website which includes numerous videos on social responsibility, anti-bullying, digital citizenship, unique blogs, and special events.

Liabilities Due to Executive and Other Officers

Messrs. Darren Marks and Melvin Leiner, both officers of the Company, have made numerous loans to Grom to help fund operations. These loans are non-interest bearing and callable on demand. No such loans have been made to the Company since the year ended December 31, 2017. The loan balances are classified as short-term obligations under Related Party Payables on the Company’s balance sheet.

During 2017 and 2018 Mr. Marks and Mr. Leiner on several occasions agreed to convert a portion of their loans into equity. These transactions are summarized as follows:

Name	Date		Amount of Loan Principal Converted to Equity		Conversion Price per Share		Closing Price of Common Stock on Conversion Date		Shares of Common Stock Issued

Darren Marks		12/29/2017		333,333	$	0.50		0.30		666,666
		10/15/2018		333,333	$	0.31		0.19		1,075,268

Melvin Leiner		12/29/2017		166,667	$	0.50		0.30		333,334
		10/15/2018		166,667	$	0.31		0.19		537,635

As of September 30, 2019 and December 31, 2018, the outstanding amounts due to Mr. Marks totaled $362,930 and $469,506, respectively, and the outstanding amounts due to Mr. Leiner totaled $336,629 and $451,944, respectively.

As of September 30, 2019 and December 31, 2018, the Company owed $50,000 to Dr. Thomas Rutherford, a director on its board, who extended a short-term loan to the Company. Additionally, as of September 30, 2019 and December 31, 2018, the Company owed $22,992 and $210,145, respectively, to Wayne and Stella Dearing, collectively, who extended loans to Top Draw Animation. These loans were made to the Company to finance working capital needs.

As of September 30, 2019 and December 31, 2018, the aggregate balance of related party payables was $772,551 and $1,181,645 respectively.