Viva Entertainment Group Inc (OTCMKTS:OTTV) Is Today's Small Cap Tech Focus

Viva Entertainment Group, Inc. (OTCMKTS:OTTV), the developer of innovative OTT systems, through which television services and contents are delivered via the Internet mobile and web based platforms, seems to be exciting traders recently by putting out deals with new partners in the industry. Other small cap analysts, such as this one, or this other one, already assessed the company in 2017. But, we wanted to be sure about the company before releasing information. Now, in our opinion, time has come to make a deep assessment of the company. Also, the news put out by the company, and the latest volume increase warrants coverage.SourceBusiness historyThe company was founded in 2009 and it started its current business on April 5, 2016 after the acquisition of Viva Entertainment Group, Inc. through a stock purchase agreement with EMS Find, Inc. We found the most important terms of this contract in this document:

"Pursuant to the stock purchase agreement, the Company and EMS agreed to transfer control of Viva Entertainment to the Company through the purchase of all outstanding shares of stock of Viva Entertainment by the Company in exchange for the issuance to EMS of a 10% promissory note in the principal amount of $100,000, due six months from the Closing (the “EMS Note”), and the issuance of 22,000,000 shares of common stock" Source

For those who are not familiar with this type of transactions, this merger was the usual reverse merger that helps OTTV enter the sector, nothing else. The buyer paid in a combination of shares and debt. As we will see later, it is not only a good opportunity in terms of strategy, but also a great move, as the company has a large amount of accumulated losses. Hence, the company will be able to pay little taxes in the future.What does OTTV sell?OTTV sells a system under which television transmissions are transmitted through Internet. The following formats are used:

• Live television
• Catch-up TV, which are replays of TV shows
• Video on Demand

How is the company able to do it? A "Content Delivery Network" (CDN) is used. This is a system of distributed servers that delivers web content to users depending on their geographic locations. Users are grouped by location, thus they are able to receive the same stream of information speeding up the downloading process. Consumers linked to the system will be able to use wide range of devices: "PCs, laptops, tablets, smart phones, set-top boxes, Smart TVs and gaming consoles".SourceRecent DevelopmentsThe technology is not new. Thus, what is the new information that made traders bid up the stock? The key is that the company is using this technology to sign deals with powerful partners that will help commercialize web content. The following are some examples:

• On April 26, 2017, the company agreed to partner with Triad Wireless. The partnership could bring over $140,000,000 (140 million dollars) revenue stream from subscription fees, advertising fees, and movie rentals. Why? Mainly because Triad has a large network of homes connected:"Triad Wireless and its affiliates have a nationwide distribution network that delivers an Internet connectivity services to over 3 million homes and now will have access to all Viva Live OTT services including movie rentals, radio and an international pay per view programs such as concerts and sports events." Source
• On April 18, 2017, the company noted a marketing collaboration agreement with the Non-Profit Montessori Model UN Program (MMUN):"MMUN's communications reach more than 5,000 domestic schools and 7,000 schools globally, and within the UN NGO community there are approximately 3,500 organizations that can benefit from Viva's Reciprocal Revenue program. The total reach is estimated to be more than three million domestic households of supporters to the NGO and school communities. " Source
• On January 31, 2017, the company noted that it was negotiating a deal with hotels groups to enter, what it said to be a multi-billion dollar market.

Our takeThe most important reason to explain the trader's reaction is that the company is able to sign deals with other distribution networks. The key in this business is to develop a network to sell products. Once this network is established, the content is not so important. Increasing the network is the race that this operator and others competitors, such as Netflix, are running.Hence, we expect that the company will invest quite a large amount of money on creating a well-known network, and will benefit from it in the future. In the beginning, subscriptions will be very low, so that everybody becomes customer. The company will only try to cover costs in this first phase. But later, once content producers will need to sell their products through the network, OTTV will increase its subscription little by little.FinancingThe company was able to obtain financing selling not only common stock, but also convertible notes. The company was able to raise $1,248,689.NOLsAnother interesting point that we noted earlier is that the balance sheet shows an accumulated deficit of $4,753,478. Why is this interesting? The company acquired a business that had losses in the past. These losses are tax deductible. They are called net operating losses. The following text is from Investopedia:

"When more expenses than revenues are incurred during the period, the net operating loss for the company can generally be used to recover past tax payments. The reasoning behind this is that corporations deserve some form of tax relief when they lose money, so they may apply the net operating loss to future income tax payments, reducing the need to make payments in future periods. " Source

ConclusionOTTV was able to capture the interest of traders last week, as the company is successfully signing deals with distribution networks. This is the key for its business and investors noted it by increasing the amount of shares exchanged. To sum up, there is a lot to like in this company, so try to stay alert. We will be updating our subscribers as soon as we know more. For the latest updates on OTTV, sign up below!Disclosure: We have no position in OTTV and have not been compensated for this article.