What are Stock Warrants and what they mean for BBIG Shareholders (from a CPA)
Seeing a lot of questions regarding the recent stock warrant issuance so I thought I would share a little background based on my knowledge in the Capital Markets with Deloitte.
**Background:** A stock warrant represents the right to purchase a company's stock at a specific price and at a specific date (similar to an option w/ no obligation and typically expiration dates). A stock warrant is issued directly by a company to an investor. There are times when warrants have vesting periods. A warrant is typically provided as a part of a deal as a "kicker" to sweeten the deal by granting participants the right, but not the obligation, to acquire stock in the company at a set price, by a given date.
See below for an exceprt from the recent proxy filed on 9/1/21 (NOT REVERSE MERGER RELATED).
"*(i) the Investor shall exercise warrants that were issued on May 24, 2021 and are currently held by the Investor for 6,900,000 shares of the Company?s common stock, par value $0.001 per share (the ?Common Stock?), at the exercise price set on May 24, 2021; (ii) the Company shall issue and deliver to the Investor warrants to purchase an aggregate of 20,000,000 shares of Common Stock at an exercise price of $9.00 per share, subject to adjustments provided therein (the ?September Series A Warrants?); and (iii) the Company shall issue and deliver to the Investor warrants to purchase an aggregate of 2,000,000 shares of Common Stock at an exercise price of $9.00 per share*"
**Proxy Explanations:**
(i) Represents the Investor EXERCISING their Warrants in return for 6.9M shares @ X Price (SHARE DILUTION)
(ii) BBIG is issuing additional warrants to the Investor for 22M shares with an exercise price of $9.00 (This would be BEARISH at the time the warrants are exercised as it would further DILUTE SHARES). BBIG did not just buy 22M shares at $9. If this were the case we would've seen a massive cahs inflow for the stock.
Hopefully this helps and clears up some of the air regarding this recent proxy filing and a portion of the reasoning as to why we just saw a massive dip from today's highs (share dilution + shorting).
**SUMMARY** \- SHARES ON DISCOUNT FOR NOW, BUY AND HODL FOR MORE BANANAS. NOT FINANCIAL ADVICE
