Vinco Ventures (NASDAQ:BBIG) stock has been the center of attention this week in light of an attempted hostile takeover. Now, the company is postponing its stockholder meeting — which had been originally scheduled for July 26 — to Aug. 23. Vinco says the postponement will provide stockholders with more time to vote, but the delay may actually be due to its ongoing management issues.
Vinco’s attempted takeover was led by the Farnsworth Group, which includes former co-CEO Theodore Farnsworth and former CEO Lisa King. In a now-deleted press release, the company accuses the group of incorrectly appointing Farnsworth as co-CEO, blocking 8-K filings to the U.S. Securities and Exchange Commission (SEC) and sending misleading 8-Ks to the SEC. The press release is still accessible through various news sources, such as Yahoo Finance!
Making matters even worse, Vinco is also currently dealing with a Nasdaq noncompliance issue. Earlier this month, the company appointed John Colucci as interim CEO. However, Colucci also serves on the board. Nasdaq requires that a majority of the board be independent from the company, but Colucci’s appointment shifted the majority to affiliated directors. Vinco’s chairman recommended that Colucci step down from the board.
With that in mind, let’s get into the details of the stockholder meeting provisions.
Dear BBIG Stock Fans, Mark Your Calendars for Aug. 23
Before the meeting, shareholders will be able to vote on two major changes that the board is in favor of.
The first is increasing the number of authorized common shares outstanding from 250 million to 750 million. This provision will likely face shareholder backlash, as it would dilute existing investors. Still, Vinco says it needs the additional capital for operational purposes, “possible strategic acquisitions” and equity incentives. If approved, the company will likely issue shares in small tranches over time instead of all at once. As of May 27, Vinco has 233.14 million shares outstanding.
Next, Vinco would also like to increase its authorized shares of preferred stock from zero to 30 million. The company explains that preferred stock will provide for the “opportunity to raise funds for the Company and allow us to meet our capital needs.”
Vinco also says preferred stock could protect the company in the case of a hostile takeover. Essentially, the board could issue shares to holders opposed to the takeover. These new shares of BBIG stock would dilute the voting rights of the potential acquirer.
The details of these provisions were released on May 27. In an ironic foreshadowing, the company said that its board was “not aware of any attempt, or contemplated attempt, to acquire control of the Company.”
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On the date of publication, Eddie Pan did not hold (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.