Quarterly report pursuant to Section 13 or 15(d)

Variable Interest Entities

v3.22.1
Variable Interest Entities
3 Months Ended
Mar. 31, 2022
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 Variable Interest Entities (“VIEs”). The Company evaluates the consolidation of these entities as required pursuant to ASC Topic 810 relating to the consolidation of VIEs.

 

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 a portion of the economics of these VIEs. The Company is the primary beneficiary of the VIE entities. The assets of the VIEs can be used to settle obligations of the consolidated entities. Conversely, liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets.

 

 

The following table presents the carrying values of the assets and liabilities of entities that are VIEs and consolidated by the Company as of March 31, 2022 and December 31, 2021:

 

      March 31, 2022    

 

December 31, 2021

 
    March 31, 2022    

December 31, 2021

 
             
Assets                
Current assets:                
Cash and cash equivalents   $ 6,183,563     $ 1,856,017  
Prepaid expenses and other current assets     1,824,684       2,388,893  
Other Investments     109,765,000       -  
Due from Related Party     11,400,584       15,997,803  
Loan Interest Receivable     366,355       -  
Total current assets     129,540,186       20,242,713  
Loan Held-for-Investment     3,100,000       3,100,000  
Loan Held-for-Investment, related parties     18,000,000       11,500,000  
Property and Equipment, net     189,028       147,519  
Intangible assets, net     27,047,962       28,150,048  
Goodwill     116,188,021       116,188,021  
Cost Method Investments     1,500,000       1,000,000  
Total assets   $ 295,565,197     $ 180,328,301  
                 
Liabilities and stockholders’ equity                
Current liabilities:                
Accounts payable   $ 575,420     $ 686,674  
Accrued expenses and other current liabilities     1,597,397       1,672,492  
Total current liabilities     2,172,817       2,359,166  
Intercompany     44,681,303       -  
Notes Payable     4,563,879       2,650,000  
Total liabilities   $ 58,091,392     $ 5,324,832  

 

The following table presents the operations of entities that are VIEs and consolidated by the Company as of March 31, 2022 and 2021:

 

                 
   

For the Three Months

Ended March 31,

 
    2022     2021  
Revenues, net   $ -     $ 214,394  
Cost of revenues     -       84,155  
Gross profit     -       130,239  
                 
Operating expenses:                
Selling, general and administrative     10,971,969       100,421  
Operating (loss) income     (10,971,969 )     29,818  
                 
Other (expense) income:                
Interest expense     (2,212 )     26,250  
Other income     88,569          
Total other (expense) income     (86,357 )     56,068  
Loss before income taxes     (10,885,612 )     56,068  
Income tax expense     -       -  
Net loss   $ (10,885,612 )   $ 56,068  

 

 

As of March 31, 2022, the Company had no unconsolidated VIEs. The Company has consolidated both ZVV and Lomotif, for which the Company has determined it 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; and (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.

 

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