UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______ to _______
Commission
file number:
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction | (I.R.S. Employer | |
| of Incorporation or Organization) | Identification No.) | |
| 14450 | ||
| (Address of Principal Executive Offices) | (Zip Code) |
(Registrant’s Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☐
Yes ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☐Yes
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
Reporting Company | |
| Emerging
Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐
Yes ☒
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
As of April 7, 2023, there were shares of the registrant’s common stock outstanding.
VINCO VENTURES, INC.
TABLE OF CONTENTS
| 2 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q for the period ended September 30, 2022 (the “Quarterly Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to future events including, without limitation, our ability to raise capital, our operational and strategic initiatives or our future financial performance. We have attempted to identify forward-looking statements by using terminology such as “anticipates,” “believes,” “expects,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predict,” “should,” or “will” or the negative of these terms or other comparable terminology. These statements are only predictions; uncertainties and other factors may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels or activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Our expectations are as of the date this Quarterly Report is filed, and we do not intend to update any of the forward-looking statements after the date this Quarterly Report is filed to confirm these statements to actual results, unless required by law.
You should not place undue reliance on forward looking statements. The cautionary statements set forth in this Quarterly Report identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:
| ● | Our ability to effectively execute our business plans including transitioning from being focused on end-to-end consumer product innovation, development, and commercialization to being focused on digital media, advertising and content technologies innovation, development, and commercialization; | |
| ● | Our ability to manage our expansion, growth and operating expenses; | |
| ● | Our ability to protect our brands, reputation and intellectual property rights; | |
| ● | Our ability to obtain adequate financing to support our development plans; | |
| ● | Our ability to repay our debts; | |
| ● | Our ability to rely on third-party suppliers, content contributors, developers, and other business partners; | |
| ● | Our ability to evaluate and measure our business, prospects and performance metrics; | |
| ● | Our ability to compete and succeed in a highly competitive and evolving industry; | |
| ● | Our ability to respond and adapt to changes in technology and consumer behavior; | |
| ● | Our dependence on information technology, and being subject to potential cyberattacks, security problems, network disruptions, and other incidents; | |
| ● | Our ability to comply with complex and evolving laws and regulations including those relating to privacy, data use and data protection, content, competition, safety and consumer protection, e-commerce, digital assets and other matters, many of which are subject to change and uncertain interpretation; | |
| ● | Our ability to enhance disclosure and financial reporting controls and procedures and remedy the existing weakness; | |
| ● | Risks in connection with completed or potential acquisitions, dispositions and other strategic growth opportunities and initiatives; | |
| ● | Risks related to the integration of completed acquisitions and the achievement of our expected benefits from our acquisitions and investments, including, but not limited to, our investment in Lomotif Private Limited (“Lomotif”) through ZVV Media Partners, LLC (“ZVV”), our investment in Magnifi U Inc. (“Magnifi U”), our joint venture with ZASH Global Media and Entertainment Corporation (“ZASH”), and our acquisitions of AdRizer, LLC (“AdRizer”) and Honey Badger Media, LLC (“Honey Badger”); | |
| ● | Other risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2021. |
Specifically, our investment in Lomotif and related growth initiatives may fail to deliver our expected benefits, for reasons relating to including, but not limited to, our and Lomotif’s capital requirements and whether we will be able to raise capital as needed; our ability to successfully develop the business and revenue models for Lomotif’s social media platform; whether Lomotif can retain its existing users and attract new users to its platform; whether our cross-platform user engagement strategy will enhance our ability to monetize the Lomotif platform; whether Lomotif can attract and maintain relationships with influencers, artists, and other content creators or publishers who will provide compelling content to the platform; our ability to integrate the operations of Lomotif within the Vinco Ventures conglomerate and create synergies between Lomotif and other businesses and assets we have acquired or plan to acquire, including AdRizer; the ability of Lomotif’s platform and associated promotional activities to compete effectively for user engagement; Lomotif’s ability to retain reliable developers, vendors and suppliers to support its operations; failure of third parties to promote Lomotif’s platform and associated products and services effectively or at all; breaches of network and data security measures; a disruption or failure of networks and information systems; Lomotif’s ability to protect its patents and other intellectual property and operate its businesses without infringing upon the intellectual property rights of others; changes in local, state, federal and international laws and regulations that may adversely affect Lomotif’s business or prospects; risk of attempts at unauthorized or improper use of the platform and resulting damages to Lomotif’s reputation; the inability to maintain or increase the value of the Lomotif brands; the inability to successfully respond to rapid changes in technologies and user tastes and preferences and remain competitive; the impact of any legal proceedings or governmental action against Lomotif; and whether Lomotif will continue to receive the services of key management and retain qualified personnel.
In addition, AdRizer’s advertising business and our efforts to integrate AdRizer with our other businesses or investments such as Lomotif and Honey Badger are subject to risks including, but not limited to, AdRizer is faced with intensive competition in the digital advertising industry; high customer concentration, long sales cycles and payment-related risks may subject AdRizer to significant fluctuations or declines in revenues; the reliability of operational and performance issues with AdRizer’s platform, whether real or perceived, including a failure to respond to technological changes or to upgrade its technology systems, may adversely affect AdRizer’s business and operational results; AdRizer’s technology solutions are dependent on third parties including data hosting service, data providers and various technology, software, products and services from third parties or available as open source; AdRizer’s business practices are subject to governmental regulation, legal requirements or industry standards relating to consumer privacy, data protection and consumer protection, and unfavorable changes or failure by AdRizer to comply with these laws and regulations could substantially harm its business; and to the extent the use of “third-party cookies” or other technology to uniquely identify devices is rejected by Internet users, restricted by government regulations, blocked or limited by technical changes on end users’ devices and web browsers, AdRizer’s performance may decline and AdRizer may lose advertisers.
These and other factors discussed above could cause results to differ materially from those expressed in the estimates made by any independent parties and by us.
| 3 |
USE OF MARKET AND INDUSTRY DATA
This Quarterly Report includes market and industry data that we have obtained from third-party sources, including industry publications, as well as industry data prepared by our management on the basis of its knowledge of and experience in the industries in which we operate (including our management’s estimates and assumptions relating to such industries based on that knowledge). Management has developed its knowledge of such industries through its experience and participation in these industries. While our management believes the third-party sources referred to in this Quarterly Report are reliable, neither we nor our management have independently verified any of the data from such sources referred to in this Quarterly Report or ascertained the underlying economic assumptions relied upon by such sources. Furthermore, internally prepared and third-party market prospective information, in particular, are estimates only and there will usually be differences between the prospective and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. Also, references in this Quarterly Report to any publications, reports, surveys or articles prepared by third parties should not be construed as depicting the complete findings of the entire publication, report, survey or article. The information in any such publication, report, survey or article is not incorporated by reference in this Quarterly Report.
TRADEMARKS, SERVICE MARKS AND TRADE NAMES
Solely for convenience, we refer to trademarks in this Quarterly Report without the ® or the ™ or symbols, but such references are not intended to indicate that we will not assert, to the fullest extent under applicable law, our rights to our own trademarks. Other service marks, trademarks and trade names referred to in this Quarterly Report, if any, are the property of their respective owners, although for presentational convenience we may not use the ® or the ™ symbols to identify such trademarks.
OTHER PERTINENT INFORMATION
Unless the context otherwise indicates, when used in this Quarterly Report, the terms “Vinco Ventures”, “Vinco”, “we,” “us,” “our,” the “Company” and similar terms refer to Vinco Ventures, Inc., a Nevada corporation formerly known as Edison Nation, Inc., Xspand Products Lab, Inc. and Idea Lab Products, Inc., and all of our consolidated subsidiaries and variable interest entities. The Company was formerly known as Edison Nation Inc., Xspand Products Lab, Inc. and Idea Lab Products, Inc. prior to its name change to “Vinco Ventures, Inc.” on November 10, 2020.
| 4 |
PART ONE – FINANCIAL INFORMATION
Vinco Ventures, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| Assets* | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash - short term | ||||||||
| Short-term investments | ||||||||
| Accounts receivable, net | ||||||||
| Inventory, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Loan held-for-investment | ||||||||
| Loans held-for-investment - related parties - current portion, net of allowance for loan losses of $ | ||||||||
| Current assets of discontinued operations | ||||||||
| Total current assets | ||||||||
| Restricted cash long-term | ||||||||
| Property and equipment, net | ||||||||
| Right of use assets, net | ||||||||
| Loan held-for-investment | ||||||||
| Loan held-for-investment - related parties, net of allowance for loan losses of $ | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Investment in Mind Tank, LLC | ||||||||
| Investments | ||||||||
| Film and television productions | ||||||||
| Other assets | ||||||||
| Due from related party, net of allowance for losses of $ | ||||||||
| Due from Cryptyde net of allowance for losses of $ | ||||||||
| Non-current assets of discontinued operations | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Current portion of convertible notes payable, net of debt issuance costs of $ | ||||||||
| Current portion of notes payable | ||||||||
| Current portion of notes payable – related parties | ||||||||
| Current liabilities of discontinued operations | ||||||||
| Total current liabilities | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Convertible notes payable – related parties, net of current portion | ||||||||
| Notes payable -related parties, net of current portion | ||||||||
| Derivative liability | ||||||||
| Deferred tax liability | ||||||||
| Deferred acquisition purchase price | ||||||||
| Non-current liabilities of discontinued operations | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 14) | ||||||||
| Stockholders’ Equity | ||||||||
| Common stock, $ par value, shares authorized; and shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity attributable to Vinco Ventures, Inc. | ||||||||
| Noncontrolling interest | ( | ) | ||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
| * | The assets of the variable interest entities (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 (Note 4). |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 5 |
Vinco
Ventures, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues | ||||||||||||||||
| Total revenue, net | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Total costs of revenue | ||||||||||||||||
| Gross profit (deficit) | ( | ) | ( | ) | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Impairment expense | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on issuance of warrants | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss on inventory write down | ( | ) | ||||||||||||||
| Loss on investments | ( | ) | ||||||||||||||
| Change in fair value of warrant liability | ( | ) | ( | ) | ||||||||||||
| Change in fair value of contingent purchase price related to Adrizer, LLC acquisition | ||||||||||||||||
| Loan loss expense | ( | ) | ( | ) | ||||||||||||
| Loss on debt extinguishment | ( | ) | ( | ) | ||||||||||||
| Other income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to noncontrolling interests | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to Vinco Ventures, Inc. from continuing operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss from discontinued operations | ( | ) | ( | ) | ||||||||||||
| Net loss attributable to Vinco Ventures, Inc. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share - Basic and Diluted | ||||||||||||||||
| Net loss per share- Continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share- Noncontrolling interests | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss per share – Vinco Ventures, Inc. | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss per share- Discontinued operations | ( | ) | ( | ) | ||||||||||||
| Net loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted Average Number of Common Shares Outstanding – Basic and Diluted | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 6 |
Vinco Ventures, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
For the Nine Months ended September 30, 2022 and 2021:
| Preferred Stock | Common Stock | Additional Paid in | Retained Earnings (Accumulated | Non-controlling | Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Share | Amount | Capital | Deficit) | Interest | Equity | |||||||||||||||||||||||||
| Balance, January 1, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Sale of common stock – investors | - | |||||||||||||||||||||||||||||||
| Issuance of common stock - noteholders | - | |||||||||||||||||||||||||||||||
| Issuance of common stock - consultants | - | |||||||||||||||||||||||||||||||
| Issuance of common stock - employees | - | |||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of warrants | - | |||||||||||||||||||||||||||||||
| Offering costs -exercise of warrants | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Issuance of common stock for acquisition | - | |||||||||||||||||||||||||||||||
| Share-based compensation | - | - | ||||||||||||||||||||||||||||||
| Conversion under notes payable | - | |||||||||||||||||||||||||||||||
| Exercise of warrant liabilities | - | - | ||||||||||||||||||||||||||||||
| Shares reserved for future issuance of common stock as consideration for the Emmersive asset acquisition | - | - | ||||||||||||||||||||||||||||||
| Conversion of preferred stock to common | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Noncontrolling interest | - | - | ||||||||||||||||||||||||||||||
| Net (loss) income | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance, September 30, 2021 | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||
| Balance, January 1, 2022 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Issuance of common stock – noteholders, net of offering costs | - | |||||||||||||||||||||||||||||||
| Issuance of common stock - consultants | - | |||||||||||||||||||||||||||||||
| Warrants exercised, net of offering costs | - | |||||||||||||||||||||||||||||||
| Share-based compensation | - | - | ||||||||||||||||||||||||||||||
| Exercise of warrant liabilities | - | - | ||||||||||||||||||||||||||||||
| Write off of investments | - | - | ||||||||||||||||||||||||||||||
| Investment in Magnifi U | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Common stock issued by Cryptyde, Inc. | - | - | ||||||||||||||||||||||||||||||
| Spin-off of Cryptyde, Inc. | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 7 |
For the three months ended September 30, 2022 and 2021:
| Preferred Stock | Common Stock | Additional Paid in | Retained Earnings (Accumulated | Non-controlling | Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Share | Amount | Capital | Deficit) | Interest | Equity | |||||||||||||||||||||||||
| Balance, July 1, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Sale of common stock – investors | - | |||||||||||||||||||||||||||||||
| Issuance of common stock - noteholders | - | |||||||||||||||||||||||||||||||
| Issuance of common stock - consultants | - | |||||||||||||||||||||||||||||||
| Issuance of common stock - employees | - | ( | ) | |||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of warrants | - | |||||||||||||||||||||||||||||||
| Offering costs -exercise of warrants | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Issuance of common stock for acquisition | - | |||||||||||||||||||||||||||||||
| Share-based compensation | - | - | ||||||||||||||||||||||||||||||
| Conversion under notes payable | - | |||||||||||||||||||||||||||||||
| Exercise of warrant liabilities | - | - | ||||||||||||||||||||||||||||||
| Noncontrolling interest | - | - | ||||||||||||||||||||||||||||||
| Net (loss) income | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance, September 30, 2021 | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||
| Balance, July 1, 2022 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Issuance of common stock – noteholders, net of offering costs | - | |||||||||||||||||||||||||||||||
| Share-based compensation | - | - | ||||||||||||||||||||||||||||||
| Investment in Magnifi U | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| 8 |
Vinco Ventures, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Nine Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash Flow from Operating Activities | ||||||||
| Net loss attributable to Vinco Ventures, Inc. | $ | ( | ) | $ | ( | ) | ||
| Net loss attributable to noncontrolling interest | ( | ) | ( | ) | ||||
| Net loss | ( | ) | ( | |||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Discontinued operations | ( | ) | ( | ) | ||||
| Amortization of financing costs | ||||||||
| Share-based compensation | ||||||||
| Depreciation and amortization | ||||||||
| Loss on disposal of assets | ||||||||
| Loss on disposal of joint venture | ||||||||
| Amortization of right of use asset | ||||||||
| Change in fair value of short-term investment | ||||||||
| Write off of investments | ||||||||
| Impairment of AdRizer goodwill | ||||||||
| Impairment of Lomotif goodwill | ||||||||
| Impairment of Uber Mom and Pirasta | ||||||||
| Impairment of Edison Nation goodwill | ||||||||
| Impairment of AdRizer intangible assets | ||||||||
| Impairment of Lomotif intangible assets | ||||||||
| Impairment of Edison Nation intangible assets | ||||||||
| Impairment of E-NFT intangible assets | ||||||||
| (Gain) loss on debt extinguishment | ( | ) | ||||||
| Change in allowance for loan losses | ||||||||
| Loss on issuance of warrants | ||||||||
| Change in fair value of warrant liability | ( | ) | ||||||
| Inventory write-off | ( | ) | ||||||
| Exit of investment | ||||||||
| Change in fair value of deferred acquisition | ( | ) | ||||||
| Equity method investment - Income share of Mind Tank LLC | ( | ) | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Related party, net | ( | ( | ) | |||||
| Accrued expenses and other liabilities | ( | ) | ( | ) | ||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Issuance of loans held-for-investment-related parties | ( | ) | ||||||
| Repayments of loans held-for-investment-related parties | ||||||||
| Issuance of loans held-for-investment | ( | ) | ||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Cash received from sale of assets of CBAV 1, LLC | ||||||||
| Funding of loan receivable | ( | ) | ||||||
| Consolidation of Magnifi U (VIE) | ||||||||
| Acquisition of business, net of cash acquired | ( | ) | ( | ) | ||||
| Net Cash (Used in) Provided by Investing Activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Net (repayments) under line of credit | ( | ) | ||||||
| Net (repayments) borrowings under convertible notes payable | ||||||||
| Net (repayments) borrowings under notes payable | ( | ) | ( | ) | ||||
| Net (repayments) borrowings under notes payable - related parties | ( | ) | ( | ) | ||||
| Warrants settled for cash | ( | ) | ||||||
| Payments under convertible notes | ( | ) | ||||||
| Fees paid for financing costs | ( | ) | ||||||
| Net proceeds from exercise of warrants | ||||||||
| Net proceeds from issuance of common stock | ||||||||
| Common stock issued by Cryptyde, Inc. | ||||||||
| Cash paid with Cryptyde, Inc. spinoff | ( | ) | ||||||
| Net Cash (Used in) Provided by Financing Activities | ( | ) | ||||||
| Net (Decrease) Increase in Cash and Cash Equivalents and Restricted Cash | ( | ) | ||||||
| Cash and Cash Equivalents and Restricted Cash - Beginning of Period | ||||||||
| Cash and Cash Equivalents and Restricted Cash - End of Period | $ | $ | ||||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| Cash paid during the year for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Noncash investing and financing activity: | ||||||||
| Issuance of warrants to note holders | $ | $ | ||||||
| Deferred acquisition purchase price | $ | $ | ||||||
| Share issued to holders of line of credit | $ | $ | ||||||
| Shares issued to note holders | $ | $ | ||||||
| Shares issued for the acquisition of Lomotif Private Limited | $ | $ | ||||||
| Conversions under notes payable | $ | ( | ) | $ | ||||
| Shares reserved for EVNT, LLC | $ | $ | ||||||
| Asset acquisition of Love is Blurred, LLC – Repayment of held-for-investment-related parties | $ | $ | ||||||
| Consolidation of Magnifi U (VIE), net of cash | $ | ( | ) | $ | ||||
| Acquisition of business, net of cash acquired | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 9 |
Vinco Ventures, Inc. and Subsidiaries
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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
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 $
| 10 |
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.
Note 2 — Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Vinco Ventures, Inc. and its wholly-owned subsidiaries, majority owned subsidiaries and consolidated variable interest entities. All intercompany balances and transactions have been eliminated.
Use of Estimates
Preparation of financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements.
The Company’s significant estimates used in these financial statements include, but are not limited to, accounts receivable reserves, the valuation allowance related to the Company’s deferred tax assets, impairment valuation estimates, the recoverability and useful lives of long-lived assets, debt conversion features, fair value of warrant liabilities, stock-based compensation, certain assumptions related to the valuation of the reserved shares and the assets acquired and liabilities assumed related to the Company’s acquisitions. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates.
Significant Accounting Policies
Significant accounting policies are disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. There have been no changes in such policies or the application of such policies during the nine months ended September 30, 2022. As a result of the acquisition of Adrizer, the Company added a new revenue stream, Digital Media Advertising and Licensing, to its Revenue Recognition policy. Additionally, as a result of the Company’s interest in Love is Blurred, the Company has recorded Film and Television Production assets in accordance with Topic 926. As a result of these changes in the first nine months of 2022, new investments have been recognized. The details for each of these topics are as follows:
Revenue Recognition
The Company considers all revenues as arising from contracts with customers. Revenue is recognized based on the five-step process outlined in the Accounting Standards Codification (“ASC”) 606 as disclosed in the Company’s Annual Report on Form 10-K. Additional clarification on the Company’s Digital Media Advertising and Licensing revenue recognition policy is provided below.
| 11 |
Digital Media Advertising and Licensing
The Company’s digital media advertising revenues are generated primarily from the posting of original digital content through third-party online platforms which are then delivered to users of the online platform across the customer’s digital advertising platform and becomes monetizable to the Company, which the Company concludes is its performance obligation. The Company purchases traffic (spots on a web page) from third party providers. The Company generates revenue by charging their clients for traffic that they purchase from third-parties. The Company also charges a client traffic management fee that is based on a percentage of the amount of traffic purchased by AdRizer for the client. AdRizer built a proprietary software which provides real-time analytics. Utilizing the Company’s software, the Company’s media buyers create, deploy and manage ad campaigns to generate profit. Revenue from the digital media platform is primarily recognized based on impressions delivered to customers. An “impression” is delivered when an advertisement appears on pages viewed by users. For impressions-based digital advertising, revenues are recognized as impressions are delivered over the term of the arrangement, while revenue from non-impressions-based digital advertising is recognized over the period that the advertisements are displayed. Such amounts are recognized net of agency commissions and provisions for estimated sales incentives, including rebates, rate adjustments or discounts.
Licensing
revenues are derived from the sale of a licensee’s products that incorporates the Company’s intellectual property. Royalty
revenues are recognized during the quarter in which the Company receives a report from the licensee detailing the shipment of products
that incorporate the Company’s intellectual property, which receipt is in the quarter following the licensee’s sale of such
products to its customers. Royalties are calculated as a percentage of the revenues received by the Company’s licensees on sales
of products incorporating the Company’s intellectual property. Total licensing revenues for the nine months ended September 30, 2022 are $
Identification of a Customer and Gross Versus Net Revenue Recognition
In the normal course of business, the Company acts as or uses an intermediary or agent in executing transactions with third parties. When the intermediary or agent is determined to be the Company’s customer, the Company records revenue based on the amount it expects to receive from the agent or intermediary based on contractual terms with the customer.
In other circumstances, the determination of whether revenue should be reported on a gross or net basis is based on an assessment of whether the Company is acting as the principal or an agent in the transaction. If the Company is acting as a principal in a transaction, the Company reports revenue on a gross basis. If the Company is acting as an agent in a transaction, the Company reports revenue on a net basis. The determination of whether the Company is acting as a principal or an agent in a transaction involves judgment and is based on an evaluation of the terms of the arrangement. The Company serves as the principal in transactions in which it controls the goods or services prior to being transferred to the ultimate customer.
For AdRizer, FASB ASC 606 requires an entity to determine whether it is a principal (recognizes revenue at the gross amount) or an agent (recognizes revenue at the net amount) for each promised good or service. Based on the FASB guidance, the Company has determined that AdRizer is the principal for each promised good or service, thus, revenue is recognized at the gross amount of the transactions. Revenue from traffic sales and traffic management services are generally recognized at the end of each month when the performance obligation is satisfied.
Film and Television Productions
The Company accounts for the film and television productions in accordance with Topic 926, Entertainment – Films. Production costs qualifying for capitalization, are recorded as film and television productions on the consolidated balance sheet and amortized using forecast methods that match amortization to estimated revenue. Currently all productions are actively under development and, as such, amortization has not commenced.
Investments
Investments in equity securities (excluding equity method investments) with readily determinable fair values are accounted for at fair value. For investments in equity securities without readily determinable fair values, the Company elects the measurement alternative permitted under GAAP to measure these investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer.
| 12 |
Investments
in which the Company has the ability to exercise significant influence but does not control and is not the primary beneficiary are equity
method investments. Significant influence typically exists if the Company has a
Note 3 — Acquisitions and Divestitures
Acquisitions AdRizer, LLC
On
February 11, 2022, the Company acquired all of the outstanding equity interests of AdRizer and cancelled all outstanding performance
units under AdRizer’s phantom equity plan (“Performance Units”) pursuant to that certain Unit Purchase Agreement among
the Company, AdRizer, the members of AdRizer and the holders of Performance Units of AdRizer (collectively, the “Seller Members”),
and Innovative Assets LLC, in its capacity as the sellers’ representative (the “Unit Purchase Agreement”), resulting
in AdRizer becoming a wholly-owned subsidiary of the Company. The purchase price paid and payable consists of (i) $
If
a Company change of control transaction occurs on or prior to January 1, 2024, the issuance of the Purchase Price Equity may be accelerated
to allow each Seller Member to participate in such transaction on the same terms as other common stockholders of the Company (the “Acceleration”),
provided that, to the extent that the consideration to be paid to the common stockholders of the Company in such transaction does not
consist entirely of cash or free-trading securities listed on a national stock exchange, (i) each Seller Member may elect the Acceleration
except with respect to Purchase Price Equity issuable in respect of the Performance Units, and (b) if any Seller Member has not elected
the Acceleration, to the extent permitted and with respect to the Performance Units, the Company shall (i) pay each such applicable Seller
Member a cash amount equal to
Upon the closing of the acquisition, AdRizer entered into a new employment agreement with its chief executive officer, Kenneth Bond. Certain Seller Members including those who are employees, officers, directors or managers of AdRizer and their affiliates also agreed to be bound by three-year post-closing non-competition and non-solicitation restrictive covenants pursuant to the Unit Purchase Agreement.
| 13 |
The Company has accounted for the AdRizer acquisition as a business combination under the acquisition method of accounting. The Company has classified the Purchase Price Equity as a deferred acquisition liability.
The
purchase price allocation presented below is preliminary given the recent closing of the AdRizer acquisition. We are in the process of
evaluating additional information necessary to finalize the valuation of assets acquired and liabilities assumed as of the acquisition
date including, but not limited to, post-closing adjustments to the working capital acquired and identification and valuation of developed
technology and intangible assets acquired which include customer relationships and trade name, and the fair value of AdRizer’s
investment in Mind Tank, LLC, of which we own
The fair value in AdRizer, and AdRizer’s investment in Mind Tank, used several methodologies to arrive at the current estimate. To value assets, fixed assets were reported at NBV which approximates fair value. The fair value of the intangible assets employed the following methodologies: customer relationships (Distributor method); developed technology (Multi- period Excess Earnings Method); trade name (Relief-from-Royalty); and the existing workforce was also valued (Replacement Cost method) but is included in Goodwill for reporting purposes. The estimated useful life of the various intangibles was based on the cash flow estimated for the particular asset. Qualitative factors regarding the valuation included expected synergies between businesses and integration of the technology.
The following purchase price allocation is preliminary and details management’s estimate and allocation of the purchase price and fair value of the asset acquired and liabilities assumed at the time of closing.
| AdRizer | ||||
| Cash paid | $ | |||
| Fair value of deferred acquisition price | ||||
| Purchase consideration | $ | |||
| AdRizer | ||||
| Cash and cash equivalents | $ | |||
| Accounts receivable | ||||
| Other current assets | ||||
| Property and equipment | ||||
| Investment in Mind Tank, LLC | ||||
| Customer relationships | ||||
| Developed technology | ||||
| Trade Name | ||||
| Goodwill | ||||
| Total assets acquired | ||||
| Accounts payable and accrued expenses | ||||
| Total liabilities assumed | ||||
| $ | ||||
Statement of Cash Flow reconciliation:
| Purchase consideration | $ | |||
| Fair value of deferred acquisition price | ( | ) | ||
| Cash and cash equivalents, acquired | ( | ) | ||
| Net cash paid | $ |
During
the nine months ended September 30, 2022, the Company made a provisional estimate and adjustment for amortization of the preliminary
intangible assets including customer list, developed technology, and trade name. The Company has estimated a -year useful life and
recorded amortization expense of approximately $
The
Company recognized $
| 14 |
The activity of AdRizer is included in the Company’s consolidated financial statements from the acquisition date to September 30, 2022. The amounts of revenue and earnings of AdRizer from the acquisition date of February 11, 2022 to September 30, 2022 are as follows:
| Revenue | $ | |||
| Net income | $ | ( | ) |
The following represents the pro forma consolidated statement of operations as if AdRizer had been included in the consolidated results of operations of the Company for the nine-month period ended September 30, 2022 and 2021. The pro forma financial information is for illustrative purposes only, does not include the pro forma adjustments that would be required under Regulation S-X for pro forma financial information, is not necessarily indicative of the financial position or results of operations that would have been realized if the acquisition had been completed on the dates indicated, does not reflect synergies that might have been achieved, nor is it indicative of future operating results or financial position. The pro forma information is based upon currently available information and does not reflect any additional depreciation or amortization that would have been charged assuming fair value adjustments to developed technology and other intangible assets, together with the consequential tax effects, which have not yet been finalized.
| For the Nine Months Ended September 30, | ||||||||
| 2022 (Unaudited) | 2021 (Unaudited) | |||||||
| Revenues, net | $ | $ | ||||||
| Net loss attributable to Vinco Ventures, Inc. | $ | ( | ) | $ | ( | ) | ||
PZAJ Holdings, LLC
On
May 12, 2022, the Company entered into an agreement with PZAJ Holdings, LLC (“PZAJ”) to Convert Promissory Note to Capital
Contributions (“5/12/2022 Conversion Agreement”). Under the 5/12/2022 Conversion Agreement, the Company was to be admitted
as a PZAJ Member with
Because condition(s) precedent to the Company’s admission to PZAJ as a member and to the May 12, 2022 Agreement to Convert Promissory Note to Capital Contributions failed to occur, the Company did not record a membership interest in PZAJ. The notes receivable due from PZAJ will continue to be reported by the Company. Because the intent is to be admitted as a member in exchange for the cancellation of the notes receivable, the Company will not establish a reserve against the loans that are included in the conversion agreement as the fair value of the membership interest approximates the fair value of the loans receivable.
During
the nine months ended September 30, 2022, the Company held eight loans for investment with PZAJ, a related party, totaling $
The
notes are principally funding film or TV production assets, all of which are still in production. As of September 30, 2022, $
| 15 |
Asset Acquisitions
Love is Blurred, LLC
On
June 21, 2022, ZASH and the Company entered into a Love is Blurred LLC Membership Interest Assignment Agreement (“LIB Membership
Interest Agreement”). Pursuant to the LIB Membership Interest Agreement, ZASH sold
The LIB LLC assets consist principally of a single film production asset. Because LIB LLC is not a business, the acquisition has been accounted for as an asset.
Emmersive Entertainment Asset Contribution
On
April 17, 2021, Vinco and EVNT entered into (and closed on) a certain Asset Contribution Agreement (“Asset Contribution Agreement”)
with Emmersive Entertainment, Inc. (“Emmersive”), pursuant to which Emmersive contributed/transferred to the Company the
assets used for Emmersive’s business, which include digital assets, software and certain physical assets (the “Contributed
Assets”) in consideration for, among other things, the Company assuming certain obligations of Emmersive, hiring certain employees,
and issuing
On
April 17, 2021, the transactions under both the Asset Contribution Agreement and Amended Operating Agreement closed. The Preferred Units
and Conditional Preferred Units were valued at $
The following table summarizes the aggregate purchase price consideration paid for the acquisition of the asset:
| April 17, 2021 | ||||
| Fair value of shares reserved for future issuance and earn out shares | $ | |||
| Fair value of assumed notes payable | ||||
| Total | $ | |||
On February 25, 2022, Emmersive, certain former shareholders of Emmersive (collectively, the “Emmersive Parties”), the Company and EVNT entered into a Termination and Release Agreement, terminating certain transaction documents dated April 17, 2021, in connection with which the Emmersive Parties and our subsidiary Cryptyde, Inc (“Cryptyde”) also entered into a Milestone Agreement for the earnout shares to be earned and any remaining consideration to be paid by Cryptyde with an effective date of both the agreements upon the spin- off of Cryptyde being declared effective by the SEC (the “Effective Date”). Upon the Effective Date, the agreements released the Company of the obligation to deliver the additional earn-out shares provided under the Asset Contribution Agreement. The Cryptyde spin-off occurred on June 29, 2022, and therefore the Company is no longer liable for any contingent consideration to Emmersive.
In
addition, with the sale of Cryptyde, there was a change in how the Company planned to utilize the EVNT platform from its acquisition.
Management made the determination that it was no longer interested in continuing to operate and profit from E-NFT. The developed technology
intangible asset for the EVNT platform of $
| 16 |
Divestitures
Spin-Off of Cryptyde, Inc.
On
November 8, 2021, Cryptyde initially filed, and on January 25, 2022, March 18, 2022 and May 13, 2022 amended, a Form 10 registration
statement with the SEC (the “Form 10”) in connection with our planned spin-off of
On May 16, 2022, the Form 10 was declared effective. The Record Date for the spin-off was May 18, 2022. Effective June 29, 2022, Cryptyde separated from the Company and the distribution of its common stock was completed. Upon completion of the spin-off, Cryptyde became an independent, publicly traded company (NasdaqCM: TYDE). The distribution was made in the amount of one share of Cryptyde common stock for every ten shares of our common stock owned by our stockholders at the close of business on the Record Date.
Also, in connection with the spinoff, we entered into definitive agreements with Cryptyde that, among other things, set forth the terms and conditions of the separation and distribution. The agreements set forth the principles and actions taken or to be taken in connection with the separation and the distribution and provide a framework for our relationship with Cryptyde from and after the separation and the distribution. The agreements include a Separation and Distribution Agreement and a Tax Matters Agreement.
On
January 26, 2022,
On June 29, 2022, . On the Distribution Date, each holder of Vinco common stock received one share of Cryptyde common stock for every ten shares of Vinco common stock held at the close of business on the Record Date.
The results of our Cryptyde businesses have been reflected as discontinued operations in the current year period through the date of the spinoff and in the prior year period.
| 17 |
Details of assets and liabilities related to the spin-off of Cryptyde are as follows:
June 29, 2022 | December 31, 2021 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Loan receivable, related party | ||||||||
| Loan Interest Receivable, related party | ||||||||
| Fixed assets, net | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Current liabilities | $ | $ | ||||||
| Total Current Liabilities | ||||||||
| Other liabilities: | ||||||||
| Due company (former parent), net | $ | $ | ||||||
| Other liabilities | ||||||||
| Net assets of spin-off / discontinued operations: | ||||||||
| Net assets of spin-off / discontinued operations | $ | $ | ||||||
The following cash flow supplementary information summarizes the distribution:
| June 29, 2022 | ||||
| Cash distributed | $ | |||
| Other assets distributed | ||||
| Liabilities distributed | ( | ) | ||
| Net assets distributed | $ | |||
Details of earnings (loss) from discontinued operations included in our condensed consolidated statements of operations are as follows:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues, net | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Operating Income | ( | ) | ||||||||||||||
| Other (expense) Income | ||||||||||||||||
| Interest income (expense) | ( | ) | ( | ) | ||||||||||||
| Other income (loss) | ||||||||||||||||
| Total other (expense) income | ||||||||||||||||
| (Loss) Income Before Income Taxes | ( | ) | ||||||||||||||
| Income tax expense | ||||||||||||||||
| Net (Loss) Income | $ | $ | $ | ( | ) | $ | ||||||||||
During
the time Cryptyde was under management of the Company, cash advances were made to Cryptyde for management fees, working capital, and
financing needs, as well as other operating expenses that were paid for on behalf of Cryptyde. As of September 30, 2022, amounts due
from Cryptyde, net of allowance for losses of $
Write-off of Best Party Concepts, LLC and Global Clean Solutions, LLC
The
Company wrote-off its investment in Best Party Concepts, LLC and Global Clean Solutions, LLC as of June 30, 2022 due to insignificant
activity and a decision to not pursue business in the foreseeable future. The write-off attributed to Best Party Concepts equaled $
| 18 |
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.
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 September 30, 2022 and December 31, 2021:
| September 30, 2022 | December 31, 2021 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Due from related party, current | ||||||||
| Loan held-for-investment, related parties, current, net of allowance for loan losses of $ | ||||||||
| Total current assets | ||||||||
| Due from related party, non-current, net of allowance for losses of $ | ||||||||
| Loan interest receivable, non-current, net of allowance for loan losses of $ | ||||||||
| Loan held-for-investment | ||||||||
| Loan held-for-investment, related parties | ||||||||
| Investment in subsidiary | ||||||||
| Total other assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Cost method Investments | ||||||||
| Right of use assets, net | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Operating lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Intercompany | ||||||||
| Notes payable | ||||||||
| Due to related party | ||||||||
| Total liabilities | $ | $ | ||||||
The following table presents the operations of entities that are VIEs and consolidated by the Company as of September 30, 2022 and 2021:
| For the Three Months | For the Nine Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues, net | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Operating (Loss) income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (Expense) Income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||||||
| Loan loss expense | ( | ) | ( | ) | ||||||||||||
| Total Other Expense | ||||||||||||||||
| Loss Before Income Taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ||||||||||||||||
| Net (Loss) Income | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 19 |
As
of September 30, 2022, the Company had no unconsolidated VIEs. The Company has consolidated Magnifi U, ZVV, and Lomotif for which the
Company has determined it holds a variable interest. ZVV currently owns an
Magnifi U Inc.
On
May 19, 2021, the Audit Committee approved the Company entering into a secured loan to Magnifi U for up to $
On
October 12, 2021, ZVV Media loaned $
On December 30, 2021 the Vinco Ventures, Inc. Board of Directors unanimously approved Vinco Ventures, Inc. to hire all then-current employees of Magnifi U, as part of the strategic investment in the platform.
As a result of the Board of Directors approval to hire all then-current employees of Magnifi U, and subsequent onboarding of Magnifi U employees in January 2022, the Company reconsidered the relationship as prescribed in ASC 810-10-35-4. The Company concluded consolidation was appropriate.
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,
On
July 25, 2021, ZVV completed the acquisition of an
Note 5 — Short-Term Investments
Investments in equity securities with readily determinable fair values are carried at fair value, and changes in unrealized gains or losses are reported in current period earnings. As of September 30, 2022 and December 31, 2021, short-term investments consisted of the following:
September 30, 2022 | December 31, 2021 | |||||||
| Jupiter Wellness, Inc. (JUPW) | $ | $ | ||||||
| Unrealized losses | ( | ) | ( | ) | ||||
| Total short-term investments | $ | $ | ||||||
| 20 |
Note 6 — Property and Equipment, net
As of September 30, 2022 and December 31, 2021, property and equipment consisted of the following:
September 30, 2022 | December 31, 2021 | |||||||
| Software | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Computers | ||||||||
| Leasehold improvements | ||||||||
| Equipment | ||||||||
| Construction in progress | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
Depreciation
expense for the three months ended September 30, 2022 and 2021 was $
Note 7 — Loans Held for Investment
As of September 30, 2022 and December 31, 2021, loans held-for-investment consisted of the following:
September 30, 2022 | December 31, 2021 | |||||||
| Loans held-for-investment: | ||||||||
| Carlin Haynes, LLC (i) | $ | $ | ||||||
| Total loans held-for-investment | $ | $ | ||||||
| (i) |