Note 1 — Basis of Presentation and Nature of Operations

Unaudited Interim Condensed Consolidated Financial Information

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries and consolidated variable interest entities. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2022 and the results of operations, changes in stockholders’ equity, and cash flows for the periods presented. The interim results are not necessarily indicative of the operating results to be expected for the fiscal year ending December 31, 2022 or for any other interim period or for any other future year.

The unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”). The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2021, and updated, as necessary, in this Quarterly Report.

Description of the Business

Vinco Ventures is focused on digital media, advertising and content technologies.

As of September 30, 2022, Vinco Ventures’ wholly-owned subsidiaries included: AdRizer, Vinco Ventures Shared Services LLC, Honey Badger, EVNT Platform LLC DBA Emmersive Entertainment (“EVNT”), Love is Blurred LLC and Edison Nation Holdings, LLC. Edison Nation Holdings, LLC is the single member of Edison Nation, LLC and Everyday Edisons, LLC. Edison Nation, LLC is the single member of Safe TV Shop, LLC. Vinco Ventures owns a 50% voting membership interest and a 25% economic interest after return of unreturned capital contributions in ZVV, which are consolidated as Variable Interest Entities (“VIE”) with noncontrolling interests. ZVV owns 80% of the outstanding equity interests in Lomotif and Lomotif owns 100% of Lomotif, Inc. Vinco Ventures also has an outstanding loan to Magnifi U which is consolidated as a VIE with a noncontrolling interest.

Going Concern and Liquidity

These condensed consolidated financial statements have been prepared assuming that we will continue as a going concern. This basis of accounting contemplates the recovery of our assets and the satisfaction of our liabilities in the normal course of business.

The Company has incurred and continues to incur losses from operations as well as negative cash flows from operations. For the nine months ended September 30, 2022, the Company had a net loss of $410,187,814, net cash used in operations of $98,770,185 and an accumulated deficit of $1,062,758,966. On June 30, 2022, the Company postponed its special stockholder meeting from July 1, 2022 to July 26, 2022 which was subsequently postponed again to August 23, 2022 and then postponed indefinitely. This meeting was to be held to approve various proposals including amending the Company’s Amended and Restated Articles of Incorporation to increase the number of its authorized shares of common stock from 250,000,000 to 750,000,000. The postponement of the meeting triggered an alternative exercise notice clause in the Company’s November and December 2021 warrants, as amended, which allows the holder to put the warrants back to the Company in exchange for cash payments of $0.65 and $0.36 per warrant for the November and December 2021 warrants, respectively (Note 12 – Warrant Liability). The Holder exercised this provision in July 2022 resulting in a cash payment of $33,886,612 and cancelation of 82,260,699 warrants. Additionally, per the terms of the amended July 2021 convertible note the Company made a cash payment of $33,000,000 against principal and cash interest payment of $115,500 on July 19, 2022. On August 18, 2022, the Company paid an additional $65,000,000 to the note holder, of which $55,000,000 was applied to the principal. These payments along with our cash flows from operations have reduced our cash balance from $20,750,707 at September 30, 2022 to approximately $16,000,000 in restricted cash and $1,700,000 in unrestricted cash at March 31, 2023. At September 30, 2022 we have approximately $12.4 million in accounts payable and accrued expenses, and during the first nine months of 2022, we utilized approximately $11,000,000 in cash per month, after adjusting cash used for debt repayments, cash satisfaction of warrant liabilities following the Alternate Exercise Notice, and acquired and divested cash in the AdRizer and Cryptyde transactions. Furthermore, due to the postponement of a special stockholder meeting, the Company’s ability to raise additional cash through issuance of common shares is limited. These conditions raise substantial doubt about the Company’s ability to continue as a going concern and meet its obligations for twelve months following the date the condensed consolidated financial statements are issued.

Management’s plans include evaluating different strategies to obtain required funding for future operations, developing and implementing cost reduction initiatives, and pursuing revenue generating programs with strategic partners. As these plans have not yet been implemented, management has concluded that substantial doubt about the Company’s ability to continue as a going concern has not been alleviated.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and reclassification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.