Related Party Transaction
|9 Months Ended|
Sep. 30, 2022
|Related Party Transactions [Abstract]|
|Related Party Transaction||
Note 13 — Related Party Transaction
Schedule of Related Party Transaction
As of September 30, 2022, the Company has provided ZASH with cash advances of $15,451,062 for the purpose of funding ZASH Global Media to support the operations of Lomotif, in which the Company has a significant investment. During the three and nine months ended September 30, 2022 and 2021, the Company examined the financial condition of the counterparty and determined, due to deteriorating financial liquidity, the likelihood of repayment was remote. The Company established an allowance for losses on existing related party balances for $15,451,062 and $0, respectively.
ZASH Global Media and Entertainment Corporation
As of September 30, 2022, Lomotif owed ZASH $2,500,000 in original principal amount under two promissory notes. In addition, ZASH owed the Company $17,201,250 in outstanding principal amount under five promissory notes. Our Executive Chairman, Roderick Vanderbilt, co-founded ZASH on December 14, 2020, and previously served as the President of ZASH. He resigned from ZASH on January 5, 2021. He has a pre-existing personal and business relationship with the current controlling shareholder of ZASH and ZVV manager, Theodore Farnsworth. On October 1, 2021, ZASH, ZVV, and AdRizer entered into a letter of intent (as amended, the “LOI”), which contemplated the acquisition by ZASH or ZVV of all of the outstanding equity interests of AdRizer. On February 11, 2022, the Company, ZASH and ZVV entered into an Assignment and Assumption Agreement whereby ZASH and ZVV assigned to the Company, and the Company assumed, all of the rights and obligations of ZASH and ZVV under the LOI, in consideration of a cash payment by the Company to ZASH of $6.75 million upon the closing of the acquisition, which occurred on February 11, 2022 (See Note 3- Acquisitions and Divestitures).
On June 29, 2022, the Company and ZVV entered into a Secured Promissory Note (the “Note”) in the original principal amount of $56,955,167 (eliminated in consolidation as a VIE), loaned by the Company to ZVV to support Lomotif and other ZVV business ventures and projects. Pursuant to the Note, ZVV can borrow up to an aggregate principal amount of $70,000,000 and will use the proceeds from loans drawn under the Note to support the business of Lomotif and other ZVV business ventures and projects. The Note becomes due and payable in full by ZVV on June 30, 2024, and carries interest at a rate per annum equal to five percent (5%).
In connection with the Note, on the Issue Date, the Company and ZVV entered into a Security and Pledge Agreement (the “Security Agreement”). Pursuant to the Security Agreement and to provide security for ZVV’s repayment of all loans under the Note, ZVV granted, among other things, a second priority security interest and lien upon all of ZVV’s property to the Company.
Magnifi U, Inc.
On October 12, 2021, ZVV entered into a promissory note (the “Magnifi U Note”) with Magnifi U, pursuant to which ZVV loaned Magnifi U $1,500,000 and is eliminated in consolidation as a VIE. The Magnifi U Note bears interest at 3% annually and Magnifi U is obligated to pay the full amount of principal and interest in one balloon payment on October 12, 2023. Our director, Vinco employee, and member of the board of managers of ZVV, Lisa King, is the founder of Magnifi U and serves as its chief executive officer. ZASH has an 8% ownership interest in Magnifi U resulting from its equity investment of $2,411,140 in Magnifi U, with an obligation to fund a total of $5,000,000 for a total of 15% equity.
As of September 30, 2022, Lisa King had one member of her extended family working at Magnifi U with an annual salary in excess of $100,000, and Ted Farnsworth had one member of his extended family working at Vinco Ventures and/or ZASH with an annual salary in excess of $100,000.
On June 1, 2020, AdRizer LLC entered into an operating agreement by and among Mind Tank Media LLC and Mind Tank, LLC. The company evaluated accounting for Mind Tank, LLC in accordance with Topic 810 – Consolidations and concluded while Mind Tank LLC is a variable interest entity in accordance with ASC 810-10, it was not the primary beneficiary and has used accounting under the equity method prescribed in ASC 323.
For the three months ended September 30, 2022, AdRizer LLC recorded operating revenue on sales to Mind Tank, LLC totaling $2,653,672 and has outstanding accounts receivable with Mind Tank, LLC of $1,700,139.
PZAJ Holdings LLC
As of September 30, 2022, Ted Farnsworth held the position of Initial Chairman of the Board of Managers at PZAJ Holdings, LLC.
Prior to appointment as a member of Board of Directors of the Company, Mr. Hart previously provided consulting services to the Company earlier in 2022 pursuant to which he received $90,000 in compensation pursuant to which he has been paid in full before September 27, 2022. Mr. Hart is no longer providing consulting services to the Company as of that date.
No definition available.
The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef