Variable Interest Entities
|12 Months Ended|
Dec. 31, 2021
|Organization, Consolidation and Presentation of Financial Statements [Abstract]|
|Variable Interest Entities||
Note 4 — Variable Interest Entities
The Company is involved in the formation of various entities considered to be VIEs. The Company evaluates the consolidation of these entities as required pursuant to ASC Topic 810 relating to the consolidation of VIEs. These VIEs are primarily partnerships formed to supply consumer goods to through various distribution and retail channels.
The Company’s determination of whether it is the primary beneficiary of VIE is based in part on an assessment of whether or not the Company and its related parties are exposed to the majority of the risks and rewards of the entity. Typically, the Company is entitled to substantially all or portion of the economics of these VIEs. The Company is the primary beneficiary of the VIE entities.
The following table presents the carrying values of the assets and liabilities of entities that are VIEs and consolidated by the Company at December 31, 2021 and 2020:
Schedule of Variable Interest Entities
The following table presents the operations of entities that are VIEs and consolidated by the Company for the years ending December 31, 2021 and 2020:
At December 31, 2021 and December 31, 2020, there were no unconsolidated VIEs for which the Company holds a variable interest.
ZVV Media Partners, LLC and Lomotif Private Limited
On January 19, 2021, Vinco Ventures, ZASH and ZVV entered into a Contribution Agreement pursuant to which each of Vinco Ventures and Zash contributed to ZVV certain media and entertainment assets in order for ZVV to engage in the development and production of consumer facing content and related activities.
On or around February 23, 2021, ZASH entered into a Securities Purchase Agreement (the “Lomotif SPA”) with Lomotif and certain shareholders of Lomotif (the “Lomotif Selling Shareholders”) to acquire a controlling interest in Lomotif.
On July 19, 2021, ZASH, Lomotif, the Lomotif Selling Shareholders and ZVV entered into a Deed of Variation and Supplement whereby, among other things, ZASH novated all of its rights and obligations under the Lomotif SPA to ZVV and ZVV assumed all of ZASH’s rights and obligations under the Lomotif SPA.
On July 22, 2021, ZASH and Vinco Ventures entered into a Second Amended and Restated Limited Liability Company Agreement of ZVV, pursuant to which (i) ZASH and Vinco Ventures each acquired a 50% voting membership interest in ZVV; (ii) ZASH acquired a 75% economic interest in ZVV after return of unreturned capital contributions and Vinco Ventures acquired a 25% economic interest in ZVV after return of unreturned capital contributions. (See Note 3 – Acquisitions and Divestitures).
On July 25, 2021, ZVV completed the acquisition of an 80% equity ownership interest in Lomotif for a total purchase price of $109,765,000.
Global Clean Solutions, LLC
. The Company issued shares of its restricted common stock, $par value per share (the “Common Stock”) to PPE, and shares of Common Stock to Graphene, in consideration for the Purchase Units. Global Clean Solutions, LLC is a VIE. The fair value of the shares of $was treated as a distribution to the noncontrolling interest members.
Pursuant to the terms of the Share Exchange Agreement, the sellers may earn additional shares of Common Stock upon Global realizing the following revenue targets: (i) in the event that Global’s total orders equal or exceed $, Graphene shall receive shares of Common Stock; (ii) in the event that Global’s total orders equal or exceed $, PPE shall receive shares of restricted Common Stock; and (iii) in the event that Global’s total orders equal or exceed $, Graphene shall receive shares of restricted Common Stock. Additionally, the Company shall be entitled to appoint two managers to the Board of Managers of Global. The fair value of the shares is expensed over the estimated vesting period and is adjusted based on the number of shares that vest. There currently are no outstanding awards remaining to be vested.
Amended Limited Liability Company Agreement
On May 20, 2020, the Company entered into an Amended Limited Liability Company Agreement of Global (the “Amended LLC Agreement”). The Amended LLC Agreement amends the original Limited Liability Company Agreement of Global, dated May 13, 2020. The Amended LLC defines the operating rules of Global and the ownership percentage of each member: Vinco Ventures, Inc. 50%, PPE 25% and Graphene 25%. In September 2021, the company entered into a settlement agreement whereby they acquired the 25% owned by PPE thereby resulting in Vinco Ventures, Inc. owning 75%.
Secured Line of Credit Agreement
On May 20, 2020, the Company as the guarantor, entered into a Secured Line of Credit Agreement (the “Credit Agreement”) with Global and PPE. Under the terms of the Credit Agreement, PPE is to make available to Global a revolving credit loan in a principal aggregate amount at any one time not to exceed $2,500,000. Upon each drawdown of funds against the credit line, Global shall issue a Promissory Note (the “PPE Note”) to PPE. The PPE Note shall accrue interest at 3% per annum and have a maturity date of six (6) months. In the event of a default, any and all amounts due to PPE by Global, including principal and accrued but unpaid interest, shall increase by forty (40%) percent and the interest shall increase to five (5%) percent. The Company paid the balance in full.
On May 20, 2020, the Company (as the guarantor entered into a Security Agreement (the “Security Agreement”) with Global as the borrower, and PPE as the secured party, whereby the Company placed shares of Common Stock (the “Reserve Shares”) in reserve with its transfer agent in the event of default under the Credit Agreement. In the event of a default that is not cured by the defined cure period, the PPE may liquidate the Reserve Shares until Global’s principal, interest and associated expenses are recovered. The number of Reserve Shares may be increased through the issuance of True-Up shares in the event the original number of Reserve Shares is insufficient.
The entire disclosure for a variable interest entity (VIE), including but not limited to, judgments and assumptions in determining whether to consolidate and in identifying the primary beneficiary, gain (loss) recognized on the initial consolidation of the VIE, terms of arrangements, amounts and classification of the VIE's assets and liabilities, and the entity's maximum exposure to loss.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef