| Loans Held for Investment |
Note
7 — Loans Held for Investment
As
of September 30, 2022 and December 31, 2021, loans held-for-investment consisted of the following:
Summary
of Loans Held for Investment
| |
|
|
|
December
31, 2021 |
|
| Loans held-for-investment: |
|
|
|
|
|
|
|
|
| Carlin
Haynes, LLC (i) |
|
$ |
750,000 |
|
|
$ |
250,000 |
|
| Total loans held-for-investment |
|
$ |
750,000 |
|
|
$ |
250,000 |
|
| (i) |
On
August 5, 2021, the Company loaned $250,000 to Carlin Haynes, LLC, DBA TMX. On January 18, 2022, the Company loaned an additional
$500,000 to Carlin Haynes, LLC. The interest rate on the note is 6% per annum. The maturity date of the loan is August 5, 2023. The
purpose of the loan is to engage in the creation and distribution of digital media content. In the event that Carlin Haynes, LLC
issues and sells units of preferred equity securities to one or more investors in an arm’s length transaction or series of
related transactions with the principal purpose of raising capital that results in aggregate gross proceeds to Carlin Haynes, LLC
of at least $1,000,000, excluding the amount represented by the conversion of any simple agreement for future equity or outstanding
indebtedness, including all or a portion of the note issued to the Company (the “TMX Note”), in accordance with their
respective terms and the TMX Note has not been paid in full, then the outstanding principal balance of the TMX Note and all accrued
and unpaid interest thereon shall automatically convert in whole without any further action by the Company into the number of limited
liability company membership units/interests of Carlin Haynes LLC equal to the outstanding principal balance of the TMX Note and
all accrued and unpaid interest due on the TMX Note on the date of conversion, divided by 80% of the price per unit paid by the investors
to purchase the new securities in the qualified financing. |
As
of September 30, 2022, and December 31, 2021, loans held-for-investment – related parties consisted of the following:
Summary
of Related Parties Loans Held for Investment
| |
|
September
30, 2022 |
|
|
December 31, 2021 |
|
| Loans held-for-investment – related parties: |
|
|
|
|
|
|
|
|
| PZAJ
Holdings, LLC(ii) |
|
$ |
6,580,000 |
|
|
$ |
3,950,000 |
|
| ZASH Global
Media and Entertainment Corporation (iii) |
|
|
17,201,250 |
|
|
|
15,000,000 |
|
| Allowance for loan losses – PZAJ Holdings, LLC |
|
|
(840,000 |
) |
|
|
- |
|
| Allowance for loan losses – Zash Global Media and Entertainment Corporation |
|
|
(17,201,250 |
) |
|
|
- |
|
| Total Loans Held-For-Investment – Related Parties |
|
$ |
5,740,000 |
|
|
$ |
18,950,000 |
|
| (ii) |
PZAJ is an entertainment content development company engaged
in the acquisition, financing, development, production, and distribution of films and television projects. The loans each bear an interest
rate of 2% per annum, with a one-year maturity (see Note 3). |
| |
|
| (iii) |
ZASH
Global Media and Entertainment Corporation is a media and entertainment company involved in the development of consumer facing content. |
| |
|
| |
As of September 30, 2022,
the Company has loaned $19,500,000
to ZASH under multiple financings, $17,201,250
of which is outstanding. The
interest rates on the notes are 3% or 6% per annum. The
loans are due in 2023 and 2028 with $12,701,250
classified as current and $4,500,000
classified as non-current. The purpose of the loans is to engage in the acquisition, development and production of consumer
facing content and related activities. During the three months ended September 30, 2022, the Company recorded an allowance for loan losses of $17,201,250, the total value of
the outstanding loans. The Company recorded the allowance due to the deteriorating financial condition of the counterparty and assessed
the likelihood of ability and intent to repay as remote. |
| |
|
| |
In the event that ZASH issues and sells preferred equity securities
to one or more investors in an arm’s length transaction or series of related transactions with the principal purpose of raising
capital that results in aggregate gross proceeds to ZASH of at least $1,000,000, excluding the amount represented by the conversion of
any simple agreement for future equity or outstanding indebtedness, including all or a portion of the notes issued to the Company (the
“ZASH Notes”), in accordance with their respective terms and the ZASH Notes have not been paid in full, then the outstanding
principal balance of the ZASH Notes and all accrued and unpaid interest thereon shall automatically convert in whole without any further
action by the Company into the number of preferred equity securities of ZASH equal to the outstanding principal balance of the ZASH Notes
and all accrued and unpaid interest due on the ZASH Notes on the date of conversion, divided by 80% of the price per share paid by the
investors to purchase the new securities in the qualified financing. |
| |
|
| |
On December 30, 2021 the Vinco Ventures, Inc. Board of Directors
unanimously approved Vinco Ventures, Inc hiring of then-current employees of ZASH. The founding members of ZASH were not hired by Vinco. |
| |
|
| |
As
of September 30, 2022, the Company has loaned $6,580,000 to PZAJ under multiple financings, all of which is outstanding. The interest
rates on the notes are 2% per annum. As of September 30, 2022, $3,150,000 of the loans are past due. As of September 30, 2022, $5,740,000
are classified as current and $840,000 are classified as non-current. The purpose of the loans is the funding film or TV production
assets, all of which are still in production. As of September 30, 2022, the Company recorded an allowance for loan losses of $840,000
due to the deteriorating financial condition of the counterparty. The Company has reason to believe the non-reserved $5,740,000 of
loans outstanding will likely be converted into membership interest in PZAJ, however, the final $840,000 of loans outstanding were
not included in the discussion of conversion for membership interest and therefore have been reserved against. |
|