Vinco Ventures (NASDAQ:BBIG) is a product research and development, manufacturing, sales and fulfillment company that runs large losses. Back in January, it announced a reverse merger with a private media company called Zash Global Media. Now, BBIG stock also seems to be dependent on the closing of this merger. In effect, Zash will become the controlling company, although it will retain the Vinco Ventures name and the BBIG stock symbol.
Altogether, this deal will allow the company to cover its losses and expand its business. So far, the agreement hasn’t yet closed, but hopes are that it will be approved sometime in July. That could help boost BBIG stock — especially if it leads to a new cash raise.
Here’s what you should know about Vinco Ventures and its stock moving forward.
BBIG Stock: What the Deal Is About
Zash Global Media is the brainchild of the “media disrupter and financier” Ted Farnsworth. He was the founder of MoviePass, a subscription service for weekly movie-going that eventually failed. Zash also includes two other media figures, including an early investor in TikTok and Triller — Jaeson Ma — and “social monetization expert” Vincent Butta.
However, the problem here is that there’s been very little information provided about the benefits of the upcoming merger with Zash Global Media. In addition, the combined company plans on acquiring another company called Lomotif through a joint venture that Vinco and Zash have formed pre-merger. This company is seen as a possible rival to TikTok.
According to Media Play News, the merger is designed to make a new “virtual Hollywood.” The company will utilize data, metadata and the Internet of Things (IoT) to “meet the ever-changing engagement and content demands of content developers, consumers and creators.” So far, it’s not clear what their plans and product are.
Back in February, Farnsworth and Ma took a controlling stake in Lomotif. For one, this joint venture with Vinco Ventures prior to the reverse merger allows shareholders in BBIG stock to participate in its growth. Lomotif, a video and social platform similar to TikTok, “lets users share short music videos.” It has become increasingly popular in Asia, Europe and South America, apparently growing by over 350 million videos per month.
Once the reverse merger closes, for all intents and purposes, Vinco Ventures will be the public parent company of Lomotif. That may allow the company to raise additional capital and help fund its growth.
Where This Leaves BBIG Stock
On May 25, Vinco Ventures released its first-quarter earnings report. The company emphasized that it planned on closing the merger with Zash Global Media. Additionally, as of Mar. 31, it has just $5.5 million in cash and $1.68 million in receivables and is also running steep cash flow losses.
For example, in Q1 Vinco’s cash flow from operations was a loss of $4.14 million, according to Page 8 of its latest 10-Q filing. Recently, on May 24, the company also raised an additional $5.74 million from an accredited investor through the exercise of existing warrants in BBIG stock.
Then, on Jun. 4, the joint venture that Vinco formed with Zash Global Media invested $2 million into Lomotif. This was after the joint venture received the $2 million investment. Moreover, Farnsworth and his partner Ma control Lomotif. So, they appear to have milked $2 million out of Vinco Ventures in advance of the merger.
In addition, on Jun. 24, Vinco Ventures said it would spin out Emmersive Entertainment to its shareholders as a standalone public company. That entity creates and markets NFTs (non-fungible tokens). The deal will close in Q3 of this year, but the record date is not yet set.
All told, you can look to see BBIG stock move higher as the merger and spinoff close.
On the date of publication, Mark Hake did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.
