Vinco Ventures (BBIG) Risk Analysis

The Company entered into a May Exchange Agreement which requires the Company to hold a stockholder meeting no later than July 4, 2022 under Section 7(q). As previously reported in the Company's Current Report on Form 8-K filed with the SEC on June 30, 2022, the Company postponed the Special Meeting from July 1, 2022 until July 26, 2022, in order to provide additional time for the Company's stockholders to consider and vote on the proposals to be acted upon at the Special Meeting. On July 5, 2022, the Holder submitted Alternate Exercise Notices to the Company with respect to (i) 14,500,000 exercise shares under the November Warrants, and (ii) 67,760,699 exercise shares under the December Warrants, for an aggregate payment equal to $33,886,612 (the "Warrant Payment"). On July 6, 2022, the Company made the Warrant Payment, in cash, to the Holder pursuant to the Alternate Exercise Notices and, as a result, a total of 82,260,699 warrants held by the Holder were canceled.

The Company was engaged in litigation in the third quarter of 2022 due to a hostile takeover attempt by a newly appointed independent director. The disruption to the Company due to a drastic and immediate departure for the Company business plan, which resulted in SEC filings that were substantially inaccurate, along with the subsequent litigation, which ultimately resulted in the departure of the independent board members along with senior management, was a significant risk factor for the Company and will continue to be so moving forward. Further detail will be provided in our periodic report on Form 10-K for the year ended December 31, 2022.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on us. If no or too few securities or industry analysts commence coverage of us, the trading price for our stock would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” under the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. The Company has elected not to use the extended transition period for complying with new or revised financial accounting standards but does still have reduced reporting requirements. These provisions include: ? only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure; ? reduced disclosure about our executive compensation arrangements; ? no non-binding advisory votes on executive compensation or golden parachute arrangements; and ? exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting. We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.07 billion in annual revenues, we have more than $700 million in market value of our stock held by non-affiliates, or we issue more than $1 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of these reduced burdens. We may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests.

If our stockholders sell substantial amounts of our common stock in the public market upon the expiration of any statutory holding period under Rule 144, or shares issued upon the exercise of outstanding options or warrants or upon the conversion of convertible notes, it could create a circumstance commonly referred to as an “overhang” and, in anticipation of which, the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. In general, a non-affiliated person who has held restricted shares for a period of six months, under Rule 144, may sell into the market our common stock all of their shares, subject to the Company being current in its periodic reports filed with the SEC. Historically, we have raised capital through equity issuances, used our shares of common stock to satisfy our outstanding debt obligations, as equity compensation, and as consideration for acquisitions and we expect to continue to do so in the future. The number of new shares of our common stock issued in connection with raising capital, satisfying our outstanding debt obligations, or as consideration for acquisitions, could constitute a material portion of the then-outstanding shares of our common stock. As of April 14, 2022, there were 28,274,454 shares issuable upon conversion of a total outstanding principal of $112,990,000 under our senior secured convertible notes, 160,701,887 shares subject to outstanding warrants, up to 10,000,000 shares to be issued pursuant our unit purchase agreement to acquire AdRizer, 80,000 shares subject to outstanding options under the Company’s equity incentive plans, 4,000,000 issuable under contingent purchase agreement, and an additional 3,267,040 shares reserved for future issuance under the Company’s equity incentive plans, which will become, or have already become, eligible for sale in the public market to the extent permitted by any applicable vesting requirements, lock-up agreements, if any, Rule 144 under the Securities Act or in connection with their registration under the Securities Act. Sales or issuances of substantial amounts of our common stock in the public market, or the perception that these sales or issuances could occur, could adversely affect the price of our common stock and could impair our ability to raise capital through the sale of additional shares.

The closing market price for our common stock has varied between a high of $10.82 on September 9, 2021, and a low of $2.03 on April 19, 2021, in the twelve-month period ended April 4, 2022. During this time, the price per share of common stock has ranged from an intra-day low of $1.94 per share to an intra-day high of $12.49 per share. As a result of fluctuations in the price of our common stock, you may be unable to sell your shares at or above the price you paid for them. The market price of our common stock is likely to continue to be volatile and subject to significant price and volume fluctuations in response to market, industry and other factors, including the other risk factors described in this section. The market price of our common stock may also be dependent upon the valuations and recommendations of the analysts who cover our business. If the results of our business do not meet these analysts’ forecasts, the expectations of investors or the financial guidance we provide to investors in any period, the market price of our common stock could decline. In addition, the stock markets in general, and the markets for technology stocks in particular, have experienced significant volatility that has often been unrelated to the financial condition or results of operations of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock and, consequently, adversely affect the price at which you could sell the shares that you hold. In the past, following periods of volatility in the market or significant price declines, securities class-action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.

The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following: ? our actual or projected operating results, financial condition, cash flows, and liquidity, or changes in business strategy or prospects; ? equity issuances by us, or share resales by our stockholders, or the perception that such issuances or resales may occur; ? loss of a major funding source; ? actual or anticipated accounting problems; ? publication of research reports about us, or the industries in which we operate; ? changes in market valuations of similar companies; ? adverse market reaction to any indebtedness we incur in the future; ? the announcement of our entrance into a business combination or acquisition of a second company that has a material effect on us; ? speculation in the press or investment community; ? price and volume fluctuations in the overall stock market from time to time; ? general market and economic conditions, trends including inflationary concerns, and the current state of the credit and capital markets; ? significant volatility in the market price and trading volume of securities of companies in our sector, which are not necessarily related to the operating performance of these companies; ? changes in law, regulatory policies or tax guidelines, or interpretations thereof; ? any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts; ? operating performance of companies comparable to us; ? short-selling pressure with respect to shares of our common stock generally; ? uncertainty surrounding the strength of the United States economic recovery; and ? the persistence of COVID-19 and the preventative measures implemented to help limit the spread of the illness in the United States or internationally which may continue to impact our business. In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

Under our Articles of Incorporation, our Board may issue additional shares of common or preferred stock. Our Board has the ability to authorize “blank check” preferred stock without future stockholder approval. This makes it possible for our Board to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us by means of a merger, tender offer, proxy contest or otherwise, including a transaction in which our stockholders would receive a premium over the market price for their shares and/or any other transaction that might otherwise be deemed to be in their best interests, and thereby protects the continuity of our management and limits an investor’s opportunity to profit by their investment in the Company. Specifically, if in the due exercise of its fiduciary obligations, the Board were to determine that a takeover proposal was not in our best interest, shares could be issued by our Board without stockholder approval in one or more transactions that might prevent or render more difficult or costly the completion of the takeover by: ? diluting the voting or other rights of the proposed acquirer or insurgent stockholder group, ? putting a substantial voting bloc in institutional or other hands that might undertake to support the incumbent Board, or ? effecting an acquisition that might complicate or preclude the takeover.

Article XIII of our Articles of Incorporation provides that, to the fullest extent permitted by law, and unless we consent to the selection of an alternative forum, the courts of the State of Nevada shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Company, (b) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any director or officer of the Company to the Company or the Company’s stockholders, (c) any action or proceeding asserting a claim against the Company arising pursuant to claims under Title 7 of the Nevada Revised Statutes or our Articles of Incorporation or Bylaws, as amended or amended and restated as of the date of the Annual Report (the “Bylaws”), or (d) any action or proceeding asserting a claim against the Company governed by the internal affairs doctrine. We believe the choice-of-forum provision in our Articles of Incorporation provide will help provide for the orderly, efficient, and cost-effective resolution of Nevada-law issues affecting us by designating courts located in the State of Nevada (our state of incorporation) as the exclusive forum for cases involving such issues. However, this provision may limit a stockholder’s ability to bring a claim in a judicial forum that it believes to be favorable for disputes with us or our directors, officers, employees, or agents, which may discourage such actions against us and our directors, officers, employees, and agents. If a court were to find the choice-of-forum provision in our Articles of Incorporation was broader than permitted under Nevada law and thus inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition, or results of operations.

The proposals set forth in our proxy statement are subject to shareholder approval. If we do not obtain shareholder approval for the increase of our authorized shares of common stock to allow us to issue additional equity securities for financing purposes and equity incentives for employee retention, we will have limited financing alternatives available to us and may not have adequate shares available to incentivize our employees, and this will therefore increase the cost of capital and could adversely affect our ability to attract and retain talent, which could reduce shareholder returns.

We are generally not restricted from issuing additional shares of our common stock up to the authorized number of shares set forth in our charter. We may issue additional shares of our common stock or securities convertible into our common stock in the future pursuant to current or future employee stock incentive plans, employee stock grants, or in connection with future acquisitions or financings. We cannot predict the size of any such future issuances or the effect, if any, that any such future issuances will have on the trading price of our common stock. Any such future issuances of shares of our common stock or securities convertible into common stock may have a dilutive effect on the holders of our common stock and could have a material negative effect on the trading price of our common stock.

Sales of substantial amounts of shares or the perception that such sales could occur may adversely affect the prevailing market price for our shares. We may issue additional shares in subsequent public offerings or private placements to make new investments or for other purposes. We are not required to offer any such shares to existing shareholders on a preemptive basis. Therefore, it may not be possible for existing shareholders to participate in such future share issuances, which may dilute the existing shareholders’ interests in us.

The warrants we issued in November and December 2021 contain certain provisions which provide that we shall seek to obtain a stockholder approval to increase our authorized shares of common stock to at least 400,000,000 and to approve certain anti-dilution protection terms applicable to the warrants by June 4, 2022, or July 4, 2022 in the event that we receive comments from the SEC with respect to the preliminary proxy statement (the “Stockholder Vote Deadline”), and if we fail to receive such stockholder approval by the Stockholder Vote Deadline, we may be required to pay cash to the warrant holder pursuant to the alternate exercise mechanism under those warrants. If the alternate exercise mechanism is triggered, the warrant holder may deliver alternate exercise notices for us to pay cash amount equal to such number of warrant shares in such notice multiplied by $0.65 for the November warrants and $0.361 for the December warrants, subject to customary adjustments for stock dividends, stock splits, reclassifications and similar events related to the common stock.