x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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35-2327649
|
|
(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
|
|
100 S. Murphy Avenue, Suite 200 Sunnyvale, CA
|
94086
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
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Large accelerated filer
|
¨
|
|
Accelerated filer
|
¨
|
||
Non-accelerated filer
|
¨ (Do not check if a smaller reporting company)
|
|
Smaller reporting company
|
x
|
|
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3
|
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4
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5
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6
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7
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8
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9
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10 | |||
18
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22
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22
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PART II - OTHER INFORMATION
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|||
23
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23
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23
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23
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23
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23
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23
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24
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FINANCIAL STATEMENTS
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PAGE
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||
5
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||
6
|
||
7
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||
8
|
||
9
|
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10-17
|
|
March 31, 2016
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December 31, 2015
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS
|
||||||||
Cash and cash equivalents
|
$ | 50,808 | $ | 16,646 | ||||
Accounts receivable, net of allowance of $0 and $6,293
|
- | 360 | ||||||
Assets held for sale, net of accumulated depreciation of $0 and $23,174
|
- | 34,071 | ||||||
Prepaid expenses
|
17,417 | 72,918 | ||||||
TOTAL CURRENT ASSETS
|
68,225 | 123,995 | ||||||
PROPERTY AND EQUIPMENT
|
||||||||
Computer equipment
|
20,366 | 73,645 | ||||||
Furniture and fixtures
|
15,722 | 15,722 | ||||||
36,088 | 89,367 | |||||||
Less: accumulated depreciation
|
(20,329 | ) | (57,823 | ) | ||||
15,759 | 31,544 | |||||||
OTHER ASSETS
|
||||||||
Deposit
|
- | 31,800 | ||||||
Patents and trademarks, net of accumulated
|
||||||||
amortization of $105,490 and $96,282
|
580,212 | 589,420 | ||||||
580,212 | 621,220 | |||||||
TOTAL ASSETS
|
$ | 664,196 | $ | 776,759 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||
CURRENT LIABILITIES
|
||||||||
Accounts payable and accrued expenses
|
$ | 1,753,811 | $ | 1,702,527 | ||||
Accounts payable - related parties
|
109,993 | - | ||||||
Preferred stock dividend liability
|
2,072,582 | 1,804,302 | ||||||
Convertible notes payable - stockholders
|
2,940,000 | 2,940,000 | ||||||
Notes payable, net of discount of $27,679 and $37,482
|
1,482,221 | 988,918 | ||||||
TOTAL CURRENT LIABILITIES
|
8,358,607 | 7,435,747 | ||||||
CONTINGENCIES
|
||||||||
STOCKHOLDERS' DEFICIT
|
||||||||
Preferred stock, $.0001 par value; 2,000,000 preferred shares
|
||||||||
authorized; 195,000 preferred shares Series A authorized; 108,600 shares
|
||||||||
issued and outstanding at March 31, 2016 and December 31, 2015
|
11 | 11 | ||||||
Preferred stock, $.0001 par value; 2,000,000 preferred shares
|
||||||||
authorized; 222,222 preferred shares Series B authorized; 28,378 shares
|
||||||||
issued and outstanding at March 31, 2016 and December 31, 2015
|
3 | 3 | ||||||
Common stock, $ .0001 par value; 230,000,000 shares authorized;
|
||||||||
117,517,626 shares issued and outstanding at March 31, 2016 and
|
||||||||
December 31, 2015
|
11,752 | 11,752 | ||||||
|
||||||||
Additional paid in capital
|
55,584,628 | 54,203,451 | ||||||
Deferred compensation
|
(51,563 | ) | (72,188 | ) | ||||
Accumulated deficit
|
(63,239,242 | ) | (60,802,017 | ) | ||||
Cumulative translation adjustment
|
- | - | ||||||
STOCKHOLDERS'DEFICIT
|
(7,694,411 | ) | (6,658,988 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
|
$ | 664,196 | $ | 776,759 |
For theThree Months Ended
|
||||||||
Ended March 31,
|
||||||||
2016
|
2015
|
|||||||
SALES
|
$ | 1,025 | $ | 4,109 | ||||
OPERATING EXPENSES
|
||||||||
Sales and marketing
|
35,103 | 889,237 | ||||||
Product development
|
247,573 | 590,870 | ||||||
Integration and customer support
|
34,238 | 61,838 | ||||||
General and administrative
|
1,718,228 | 1,492,252 | ||||||
Strategic consulting
|
- | 135,000 | ||||||
Total operating expenses
|
2,035,142 | 3,169,197 | ||||||
NET OPERATING LOSS
|
(2,034,117 | ) | (3,165,088 | ) | ||||
OTHER INCOME (EXPENSE)
|
||||||||
Interest income
|
- | 149 | ||||||
Interest expense
|
(142,231 | ) | (14,247 | ) | ||||
Gain on disposition of fixed assets
|
7,403 | - | ||||||
(134,828 | ) | (14,098 | ) | |||||
NET LOSS
|
(2,168,945 | ) | (3,179,186 | ) | ||||
Less: Accrued preferred dividends
|
(268,280 | ) | (264,605 | ) | ||||
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$ | (2,437,225 | ) | $ | (3,443,791 | ) | ||
BASIC AND DILUTED NET LOSS PER
|
||||||||
COMMON SHARE
|
$ | (0.02 | ) | $ | (0.03 | ) | ||
BASIC AND DILUTED WEIGHTED AVERAGE
|
||||||||
COMMON SHARES OUTSTANDING
|
117,517,626 | 119,117,626 |
For the Three Months
|
||||||||
Ended March 31,
|
||||||||
2016
|
2015
|
|||||||
NET LOSS
|
$ | (2,168,945 | ) | $ | (3,179,186 | ) | ||
OTHER COMPREHENSIVE INCOME
|
||||||||
Foreign currency translation adjustments, net of tax
|
- | 114,475 | ||||||
TOTAL OTHER COMPREHENSIVE INCOME, net of tax
|
- | 114,475 | ||||||
COMPREHENSIVE LOSS
|
$ | (2,168,945 | ) | $ | (3,064,711 | ) |
Preferred
|
Preferred
|
Common
|
||||||||||||||||||||||||||||||||||||||
Stock Series A
|
Stock Series B
|
Stock
|
Additional
|
|||||||||||||||||||||||||||||||||||||
Number of
|
Number of
|
Number of
|
Paid-In
|
Deferred
|
Accumulated
|
|||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Compensation
|
Deficit
|
Total
|
|||||||||||||||||||||||||||||||
Balance, December 31, 2015 (Audited)
|
108,600 | $ | 11 | 28,378 | $ | 3 | 117,517,626 | $ | 11,752 | $ | 54,203,451 | $ | (72,188 | ) | $ | (60,802,017 | ) | $ | (6,658,988 | ) | ||||||||||||||||||||
Issuance of warrants with notes payable
|
- | - | - | - | - | - | 6,359 | - | - | 6,359 | ||||||||||||||||||||||||||||||
Revaluation of warrants
|
- | - | - | - | - | - | 1,305,411 | - | - | 1,305,411 | ||||||||||||||||||||||||||||||
Fair value of options for services
|
- | - | - | - | - | - | 69,407 | - | - | 69,407 | ||||||||||||||||||||||||||||||
Amortization of deferred compensation
|
- | - | - | - | - | - | - | 20,625 | - | 20,625 | ||||||||||||||||||||||||||||||
Accrued preferred dividends
|
- | - | - | - | - | - | - | - | (268,280 | ) | (268,280 | ) | ||||||||||||||||||||||||||||
Net loss
|
- | - | - | - | - | - | - | - | (2,168,945 | ) | (2,168,945 | ) | ||||||||||||||||||||||||||||
Balance, March 31, 2016 (Unaudited)
|
108,600 | $ | 11 | 28,378 | $ | 3 | 117,517,626 | $ | 11,752 | $ | 55,584,628 | $ | (51,563 | ) | $ | (63,239,242 | ) | $ | (7,694,411 | ) |
Three Months Ended March 31,
|
||||||||
2016
|
2015
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net loss
|
$ | (2,168,945 | ) | $ | (3,179,186 | ) | ||
Adjustments to reconcile net loss to net cash
|
||||||||
used in operating activities
|
||||||||
Provision for bad debts
|
360 | - | ||||||
Fair value of options issued in exchange for services
|
69,407 | 190,364 | ||||||
Fair value of stock issued in exchange for services
|
- | 115,068 | ||||||
Revaluation of options and warrants
|
1,305,411 | 228,743 | ||||||
Deferred compensation
|
20,625 | - | ||||||
Accretion of discount on notes payable
|
38,670 | - | ||||||
Depreciation and amortization
|
11,467 | 28,719 | ||||||
(Gain) Loss on abandonment of patents and disposal of fixed assets
|
(7,403 | ) | 895 | |||||
(Increase) decrease in assets
|
||||||||
Accounts receivable
|
- | 57 | ||||||
Prepaid expenses
|
55,500 | 265,390 | ||||||
Deposits
|
31,800 | 7,253 | ||||||
Increase (decrease) in liabilities
|
||||||||
Accounts payable, accrued expenses and litigation settlement
|
193,770 | 59,617 | ||||||
Deferred revenue
|
- | 5,207 | ||||||
Net cash used in operating activities
|
(449,338 | ) | (2,277,873 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Purchase of equipment
|
- | (5,129 | ) | |||||
Patent and trademark costs
|
- | (28,041 | ) | |||||
Net cash used in investing activities
|
- | (33,170 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Proceeds from convertible notes payable - stockholders
|
- | 2,000,000 | ||||||
Proceeds from notes payable - stockholders
|
483,500 | - | ||||||
Net cash provided by financing activities
|
483,500 | 2,000,000 | ||||||
EFFECT OF EXCHANGE RATE ON CASH
|
- | 114,475 | ||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
34,162 | (196,568 | ) | |||||
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
|
16,646 | 1,652,392 | ||||||
CASH AND CASH EQUIVALENTS - END OF PERIOD
|
$ | 50,808 | $ | 1,455,824 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash paid during year for:
|
||||||||
Interest
|
$ | - | $ | - | ||||
Income taxes
|
$ | - | $ | - | ||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
|
||||||||
Disposal of equipment in satisfaction of accounts payable
|
$ | 55,000 | $ | - | ||||
- | ||||||||
Accrued preferred dividend
|
$ | 268,280 | $ | 264,605 | ||||
Fair value of warrants issued as discount for note payable
|
$ | 6,359 | $ | - | ||||
Accrued interest as discount on notes payable
|
$ | 22,508 | $ | - |
Options Outstanding
|
||||||||||||||||
Weighted -
|
||||||||||||||||
Average
|
||||||||||||||||
Remaining
|
Aggregate
|
|||||||||||||||
Weighted-
|
Contractual
|
Intrinsic
|
||||||||||||||
Number of
|
Average
|
Term
|
Value
|
|||||||||||||
Shares
|
Exercise Price
|
in years)
|
(in 000's) (1)
|
|||||||||||||
Balance December 31, 2015
|
8,822,500 | $ | 0.76 | 2.6 | ||||||||||||
Cancelled/forfeited
|
(535,837 | ) | $ | (0.57 | ) | |||||||||||
Balance March 31, 2016
|
8,286,663 | $ | 0.77 | 2.2 | $ | - | ||||||||||
Exercisable at March 31, 2016
|
5,345,824 | $ | 0.86 | 1.3 | $ | - | ||||||||||
Exercisable at March 31, 2016 and expected to
|
||||||||||||||||
vest thereafter
|
8,286,663 | $ | 0.77 | 2.2 | $ | - |
(1)
|
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $0.11 for our common stock on March 31, 2016.
|
Remaining
|
Aggregate
|
|||||||||||||||
Weighted-
|
Contractual
|
Intrinsic
|
||||||||||||||
Number of
|
Average
|
Term
|
Value
|
|||||||||||||
Shares
|
Exercise Price
|
in years)
|
(in 000's) (1)
|
|||||||||||||
Balance December 31, 2015
|
26,365,896 | $ | 1.02 | 0.4 | ||||||||||||
Expired
|
(1,142,858 | ) | (0.04 | ) | - | |||||||||||
Granted
|
96,700 | $ | 0.90 | 2.0 | ||||||||||||
Balance March 31, 2016
|
25,319,738 | $ | 1.07 | 1.1 | $ | - | ||||||||||
Exercisable at March 31, 2016
|
25,319,738 | $ | 1.07 | 1.1 | $ | - | ||||||||||
Exercisable at March 31, 2016 and expected to
|
||||||||||||||||
vest thereafter
|
25,319,738 | $ | 1.07 | 1.1 | $ | - |
(1)
|
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.11 for our common stock on March 31, 2016.
|
10.1
|
Coyne Employment Agreement
|
10.2
|
ICM Consulting Agreement
|
31.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
VIRTUAL PIGGY, INC.
|
|||
By:
|
/s/ Scott McPherson
|
||
Scott McPherson
|
|||
Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
|
|||
Date: May 13, 2016
|
Section 1.
|
Employment
|
Section 2.
|
Duties
|
Section 3.
|
Term
|
Section 4.
|
Salary
|
Section 5.
|
Bonus
|
Section 6.
|
Equity Compensation
|
Section 7.
|
Employee Benefits
|
Section 8.
|
Business Expenses
|
Section 9.
|
Vacations and Sick Leave
|
Section 10.
|
Confidential Information
|
Section 11.
|
Successors and Assigns
|
Section 12.
|
Governing Law
|
Section 13.
|
Entire Agreement
|
Section 14.
|
Waiver of Breach
|
Section 15.
|
Notices
|
Section 16.
|
Severability
|
Section 17.
|
Counterparts
|
Section 18.
|
Internal Revenue Code Section 409A Compliance.
|
|
(i)
|
“Separation from Service” means, generally, a termination of employment with the Company (or any successor or related employer treated as the service recipient for purposes of Internal Revenue Code Section 409A), and shall have the same meaning as such term has for purposes of Internal Revenue Code Section 409A (including Treasury Regulation Section 1.409A-1(h)).
|
|
(ii)
|
“Involuntary Separation from Service” means a Separation from Service due to the independent exercise of the unilateral authority of the Company (or any successor or related employer treated as the service recipient for purposes of Internal Revenue Code Section 409A) to terminate the Employee’s employment, other than due to the Employee’s implicit or explicit request, where the Employee was willing and able to continue employment with the Company. Notwithstanding the foregoing, a termination for Good Reason may constitute an Involuntary Separation from Service. Involuntary Separation from Service shall have the same meaning as such term has for purposes of Internal Revenue Code Section 409A (including Treasury Regulation Section 1.409A-1(n)).
|
The Company:
|
VIRTUAL PIGGY, INC.
By: ____________________________________
Name: Ernie Cimadamore
Title: Secretary
|
Employee:
|
_______________________________________
|
John Coyne
|
VIRTUAL PIGGY, INC.
|
|||
By:
|
|||
Name: Ernest Cimadamore
Title: Secretary
|
|||
CONSULTANT
International Corporate Management, LLC
|
|||
Officer: Peter S. Pelullo
|
Date: May 13, 2016
|
By:
|
/s/ Ernest Cimadamore
|
||||
Ernest Cimadamore
|
||||||
Interim Chief Executive Officer
|
Date: May 13, 2016
|
By:
|
/s/ Scott McPherson
|
||||
Scott McPherson
|
||||||
Chief Financial Officer
|
1)
|
This Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2)
|
The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
Date: May 13, 2016
|
By:
|
/s/ Ernest Cimadamore
|
||||
Ernest Cimadamore
|
||||||
Interim Chief Executive Officer
|
1)
|
This Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2)
|
The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
Date: May 13, 2016
|
By:
|
/s/ Scott McPherson
|
||||
Scott McPherson
|
||||||
Chief Financial Officer
|
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
May. 13, 2016 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Entity Registrant Name | VIRTUAL PIGGY, INC. | |
Entity Central Index Key | 0001437283 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2016 | |
Document Period End Date | Mar. 31, 2016 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Common Stock, Shares Outstanding | 117,517,626 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Accounts receivable, allowance | $ 0 | $ 6,293 |
Assets held for sale, accumulated depreciation | 0 | 23,174 |
Patents and trademarks, accumulated amortization | 105,490 | 96,282 |
Notes payable, discount | $ 27,679 | $ 37,482 |
Preferred stock, par value per share | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Common stock, par value per share | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 230,000,000 | 230,000,000 |
Common stock, shares issued | 117,517,626 | 117,517,626 |
Common stock, shares outstanding | 117,517,626 | 117,517,626 |
Series A [Member] | ||
Preferred stock, shares authorized | 195,000 | 195,000 |
Preferred stock, shares issued | 108,600 | 108,600 |
Preferred stock, shares outstanding | 108,600 | 108,600 |
Series B [Member] | ||
Preferred stock, shares authorized | 222,222 | 222,222 |
Preferred stock, shares issued | 28,378 | 28,378 |
Preferred stock, shares outstanding | 28,378 | 28,378 |
Condensed Consolidated Statements of Operations - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Condensed Consolidated Statements of Operations [Abstract] | ||
SALES | $ 1,025 | $ 4,109 |
OPERATING EXPENSES | ||
Sales and marketing | 35,103 | 889,237 |
Product development | 247,573 | 590,870 |
Integration and customer support | 34,238 | 61,838 |
General and administrative | $ 1,718,228 | 1,492,252 |
Strategic consulting | 135,000 | |
Total operating expenses | $ 2,035,142 | 3,169,197 |
NET OPERATING LOSS | $ (2,034,117) | (3,165,088) |
OTHER INCOME (EXPENSE) | ||
Interest income | 149 | |
Interest expense | $ (142,231) | $ (14,247) |
Gain on disposition of fixed assets | 7,403 | |
Total other income (expense) | (134,828) | $ (14,098) |
NET LOSS | (2,168,945) | (3,179,186) |
Less: Accrued preferred dividends | (268,280) | (264,605) |
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (2,437,225) | $ (3,443,791) |
BASIC AND DILUTED NET LOSS PER COMMON SHARE | $ (0.02) | $ (0.03) |
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 117,517,626 | 119,117,626 |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Condensed Consolidated Statements of Comprehensive Loss [Abstract] | ||
NET LOSS | $ (2,168,945) | $ (3,179,186) |
OTHER COMPREHENSIVE INCOME | ||
Foreign currency translation adjustments, net of tax | 114,475 | |
TOTAL OTHER COMPREHENSIVE INCOME, net of tax | 114,475 | |
COMPREHENSIVE LOSS | $ (2,168,945) | $ (3,064,711) |
Condensed Consolidated Statement of Changes in Stockholders' Deficit - 3 months ended Mar. 31, 2016 - USD ($) |
Total |
Preferred Stock [Member]
Series A [Member]
|
Preferred Stock [Member]
Series B [Member]
|
Common Stock [Member] |
Additional Paid-In Capital [Member] |
Deferred Compensation [Member] |
Accumulated Deficit [Member] |
---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2015 | $ (6,658,988) | $ 11 | $ 3 | $ 11,752 | $ 54,203,451 | $ (72,188) | $ (60,802,017) |
Balance, shares at Dec. 31, 2015 | 108,600 | 28,378 | 117,517,626 | ||||
Issuance of warrants with notes payable | 6,359 | 6,359 | |||||
Revaluation of warrants | 1,305,411 | 1,305,411 | |||||
Fair value of options for services | 69,407 | $ 69,407 | |||||
Amortization of deferred compensation | 20,625 | $ 20,625 | |||||
Accrued preferred dividends | (268,280) | $ (268,280) | |||||
Net loss | (2,168,945) | (2,168,945) | |||||
Balance at Mar. 31, 2016 | $ (7,694,411) | $ 11 | $ 3 | $ 11,752 | $ 55,584,628 | $ (51,563) | $ (63,239,242) |
Balance, shares at Mar. 31, 2016 | 108,600 | 28,378 | 117,517,626 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended |
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Mar. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of the Business
Virtual Piggy, Inc. (the Company) was incorporated in the state of Delaware on February 11, 2008.
The Company is a technology company that seeks to deliver an online ecommerce solution for the family. The Company's system allows parents and their children to manage, allocate funds and track their expenditures, savings and charitable giving online. The system is designed to allow a minor to transact online without a credit card by gaining the parents' permission ahead of time and allowing the parent to set up the rules of use.
The Company believes that a future alternative for Virtual Piggy, Inc. will revolve around the FinTech industry with a partner-first go to market model in which established payments market leaders and vertical market participants can incorporate and integrate the Company's platform into co-branded payments solutions targeting youth and family. The Company also believes this approach will enable the Company to reduce expenses while broadening its reach.
Within this affinity partner model, the Company will be incorporating licensing fees and customization services. This should enable the company to begin creating shareholder value above and beyond consumer transaction fees.
The Company is also analyzing specific components of our technology for individual monetization as well as exploring opportunities in the Business to Business (B2B) realm.
In addition, the Company is currently adding enhancements to the platform, to enable the platform to update itself with any new regulations that are passed, in order to reduce costs associated with manually updating the platform. This will also enable the Company to market the platform to other companies in need of a solution to comply with COPPA or other regulatory requirements.
Our primary strategic objective over the next 12 -18 months is to increase the value of the underlying technical assets of the company by incorporating new essential functionality that will act as a key differentiator in the financial services market. These new technology advances will also augment our current portfolio of patents that give the company its competitive advantage. In addition, the company is redirecting its marketing efforts to increase its user base by entering into affinity marketing agreements with companies targeting specific user communities. This will increase our potential user community while bringing in substantial development and licensing revenue for those sectors. This approach will greatly reduce the expense associated with direct marketing efforts.
The Company's principal office is located in Sunnyvale, California and in 2013 the Company opened an office in London, England to support the sales and marketing efforts in Europe and the development of its mobile applications, which was closed in September 2015.
On December 3, 2015, Finity, Inc. was incorporated as a wholly owned subsidiary of the Company. On December 11, 2015, Finity, Inc. changed its name to Finitii, Inc. Finitii, Inc. was established as a not for profit entity for the purpose of teaching children financial literacy.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and with the instructions for Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited financial statements should be read in conjunction with the financial statements and notes included in the Company's Annual Report on form 10-K for the year ended December 31, 2015 as filed with the SEC. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.
The accompanying condensed consolidated financial statements of Virtual Piggy, Inc. and its wholly owned subsidiary, Finitii, Inc. (collectively the Company), have been prepared in accordance with accounting principles generally accepted in the United States of America. All intercompany transactions have been eliminated in consolidation. Recently Adopted Accounting Pronouncements
As of March 31, 2016 and for the period then ended, there were no recently adopted accounting pronouncements that had a material effect on the Company's financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
As of March 31, 2016, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company's financial statements through 2017.
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MANAGEMENT PLANS |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
MANAGEMENT PLANS [Abstract] | |
MANAGEMENT PLANS | NOTE 2 MANAGEMENT PLANS
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred significant losses and experienced negative cash flow from operations since inception. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Since inception, the Company has focused on developing and implementing its business plan. The Company believes that its existing cash resources will not be sufficient to sustain operations during the next twelve months. The Company currently needs to generate revenue in order to sustain its operations. In the event that the Company cannot generate sufficient revenue to sustain its operations, the Company will need to reduce expenses or obtain financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing shareholders. If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company would likely be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have a material, adverse effect on the business, financial condition and results of operations.
The Company's current monetization model is to license our platform to merchants to enable them to provide COPPA compliant services for themselves and their customers.
As of May 13, 2016, the Company has a cash position of approximately $44,000. Based upon the current cash position and the Company's planned expense run rate, management believes the Company has funds currently to finance its operations through May 2016.
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ACCOUNTS PAYABLE - RELATED PARTIES |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
ACCOUNTS PAYABLE - RELATED PARTIES [Abstract] | |
ACCOUNTS PAYABLE - RELATED PARTIES | NOTE 3 ACCOUNTS PAYABLE RELATED PARTIES
As of March 31, 2016, the former Chairman of the Board had paid expenses on behalf of the Company in the amount of $88,658. The Company also owes the Chief Financial Officer a total of $13,848 as of March 31, 2016, including unpaid health insurance of $7,335 and unpaid accounting services, to the Chief Financial Officer's accounting firm for services provided prior to his becoming the Chief Financial Officer of the Company, in the amount of $6,513. Additionally, the Company owes a company owned by a beneficial owner of more than 5% of the Company $7,487.
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CONVERTIBLE NOTES PAYABLE |
3 Months Ended |
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Mar. 31, 2016 | |
CONVERTIBLE NOTES PAYABLE [Abstract] | |
CONVERTIBLE NOTES PAYABLE | NOTE 4 CONVERTIBLE NOTES PAYABLE
On March 6, 2015, the Company, pursuant to a Securities Purchase Agreement (the Purchase Agreement), issued $2,000,000 aggregate principal amount of its 10% Secured Convertible Promissory Notes due March 5, 2016 (the Notes) to certain stockholders. On May 11, 2015, the Company issued an additional $940,000 of Notes to stockholders. The maturity dates of the notes were extended to March 5, 2017 with the consent of the note holders.
The Notes are convertible by the holders, at any time, into shares of the Company's Series B Preferred Stock at a conversion price of $90.00 per share, subject to adjustment for stock splits, stock dividends and similar transactions with respect to the Series B Preferred Stock only. Each share of Series B Preferred Stock is currently convertible into 100 shares of the Company's common stock at a current conversion price of $0.90 per share, subject to anti-dilution adjustment as described in the Certificate of Designation of the Series B Preferred Stock. In addition, pursuant to the terms of a Security Agreement entered into on May 11, 2015 by and among the Company, the Investors and a collateral agent acting on behalf of the Investors (the Security Agreement), the Notes are secured by a lien against substantially all of the Company's business assets. Pursuant to the Purchase Agreement, the Company also granted piggyback registration rights to the holders of the Series B Preferred Stock upon a conversion of the Notes.
The Notes are recorded as a current liability as of March 31, 2016. Interest accrued on the notes was $298,751 and $225,452 as of March 31, 2016 and December 31, 2015. Interest expense related to these notes payable was $73,299 and $14,247 for the three months ended March 31, 2016 and 2015.
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NOTES PAYABLE - STOCKHOLDERS |
3 Months Ended |
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Mar. 31, 2016 | |
NOTES PAYABLE - STOCKHOLDERS [Abstract] | |
NOTES PAYABLE - STOCKHOLDERS | NOTE 5 NOTES PAYABLE - STOCKHOLDERS
On January 15 and 19, 2016, the Company entered into agreements with two stockholders that includes notes payable in the aggregate amount of $62,500, and two-year warrants to purchase 12,500 shares of the Company's common stock at $0.90. The notes bear interest at 10% per annum, and mature on the six month anniversary of the issuance date, or on such earlier date that (i) the Company completes the closing of a specified joint venture agreement or (ii) the Company completes the sale of at least an additional $1 million of the 10% Secured Convertible Promissory Notes.
On January 29 and February 3, 2016, the Company entered into agreements with two stockholders that includes notes payable in the aggregate amount of $90,000, and two-year warrants to purchase 18,000 shares of the Company's common stock at $0.90. The notes bear interest at 10% per annum, and mature on the six month anniversary of the issuance date, or on such earlier date that (i) the Company completes the closing of a specified joint venture agreement or (ii) the Company completes the sale of at least an additional $1 million of the 10% Secured Convertible Promissory Notes.
On February 23, 2016, the Company entered into agreements with three stockholders that includes notes payable in the aggregate amount of $26,000, and two-year warrants to purchase 5,200 shares of the Company's common stock at $0.90 per share. The notes bear interest at 10% per annum, and mature on the six month anniversary of the issuance date, or on such earlier date that (i) the Company completes the closing of a specified joint venture agreement or (ii) the Company completes the sale of at least an additional $1 million of the 10% Secured Convertible Promissory Notes.
On February 23, 2016, the Company entered into Amendments to Promissory Note Agreements (the Amendments) with five holders of the Company's outstanding unsecured Promissory Notes in the aggregate principal amount of $475,300 (the Outstanding Notes), pursuant to which the maturity date of such Outstanding Notes was extended to the twelve (12) month anniversary of the original issuance date (formerly the six (6) month anniversary of the original issuance date) or such earlier date that (i) the Company completes the closing of specified joint venture agreement or (ii) the Company completes the sale of at least an additional $1 million of 10% Secured Convertible Promissory Notes. The Outstanding Notes were previously to mature between January 20, 2016 and March 18, 2016 and will now mature not later than dates between July 20, 2016 and September 18, 2016. The Amendments took effect retroactive to the prior applicable maturity date.
On March 2, 2016, the Company entered into an agreement with a stockholder that includes a note payable in the amount of $5,000, and two-year warrants to purchase 1,000 shares of the Company's common stock at $0.90. The note bears interest at 10% per annum, and matures on the six month anniversary of the issuance date, or on such earlier date that (i) the Company completes the closing of a specified joint venture agreement or (ii) the Company completes the sale of at least an additional $1 million of the 10% Secured Convertible Promissory Notes.
On March 4, 2016, the Company entered into an agreement with a stockholder that includes a note payable in the amount of $100,100, and two-year warrants to purchase 20,020 shares of the Company's common stock at $0.90. The note bears interest at 10% per annum, and matures on the six month anniversary of the issuance date, or on such earlier date that (i) the Company completes the closing of a specified joint venture agreement or (ii) the Company completes the sale of at least an additional $1 million of the 10% Secured Convertible Promissory Notes. This note contains a 7.5% commitment fee, which is payable upon maturity of the note.
On March 15, 2016, the Company entered into an agreement with a stockholder that includes notes payable in the amount of $200,000, and two-year warrants to purchase 40,000 shares of the Company's common stock at $0.90 per share. The note bears interest at 10% per annum, and matures on the six month anniversary of the issuance date, or on such earlier date that (i) the Company completes the closing of a specified joint venture agreement or (ii) the Company completes the sale of at least an additional $1 million of the 10% Secured Convertible Promissory Notes. This note contains a 7.5% commitment fee, which is payable upon maturity of the note.
The 7.5% commitment fees, amounting to $76,913 and $54,405 as of March 31, 2016 and December 31, 2015, on the Notes Payable were treated as a discount to the value of the notes payable in accordance with FASB ASC 835-30-25, Recognition and are being accreted over the term of the note payable for financial statement purposes. The same amount is included in accrued interest until the liability is paid.
The notes payable are recorded as a current liability as of March 31, 2016. Interest accrued including the 7.5% commitment fee on the notes as of March 31, 2016 and December 31, 2015 was $134,601 and $81,831. Interest expense, including accretion of discounts, related to these notes payable was $68,932 and $0 for the three months ended March 31, 2016 and 2015.
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INCOME TAXES |
3 Months Ended |
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Mar. 31, 2016 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | NOTE 6 INCOME TAXES Income tax expense was $0 for the three months ended March 31, 2016 and 2015. As of January 1, 2016, the Company had no unrecognized tax benefits, and accordingly, the Company did not recognize interest or penalties during 2015 related to unrecognized tax benefits. There has been no change in unrecognized tax benefits during the three months ended March 31, 2016, and there was no accrual for uncertain tax positions as of March 31, 2016. Tax years from 2012 through 2015 remain subject to examination by major tax jurisdictions. There is no income tax benefit for the losses for the three months ended March 31, 2016 and 2015, since management has determined that the realization of the net tax deferred asset is not assured and has created a valuation allowance for the entire amount of such benefits. |
CONVERTIBLE PREFERRED STOCK |
3 Months Ended |
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Mar. 31, 2016 | |
CONVERTIBLE PREFERRED STOCK [Abstract] | |
CONVERTIBLE PREFERRED STOCK | NOTE 7 CONVERTIBLE PREFERRED STOCK As of March 31, 2016, the value of the cumulative 8% dividends for all preferred stock was $2,072,582. Such dividends will be paid when and if declared payable by the Company's board of directors or upon the occurrence of certain liquidation events. In accordance with FASB ASC 260-10-45-11, the Company has recorded these accrued dividends as a current liability. |
STOCKHOLDERS' EQUITY |
3 Months Ended |
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Mar. 31, 2016 | |
STOCKHOLDERS' EQUITY [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 8 STOCKHOLDERS' EQUITY In February 2015, the Board of Directors of the Company approved amendments extending the term of outstanding warrants to purchase in the aggregate 3,877,970 shares of common stock of the Company at exercise prices ranging from $0.01 per share to $1.00 per share. These warrants were scheduled to expire at various dates during 2015 and were each extended for an additional one year period from the applicable current expiration date, with the new expiration dates ranging from February 23, 2016 to December 28, 2016. The increase in fair value of this term extension was $219,051, which was expensed in 2015. In February 2015, the Company extended options previously granted to two of its executive officers, which included 3,500,000 options exercisable at $0.04 per share. The increase in fair value of this term extension was $9,692 which was expensed during the period. The Company used the Black-Scholes option pricing model to calculate the increase in fair value after the extension, with the following assumptions: no dividend yield, expected volatility of 96.4%, risk free interest rate of 0.64%, and expected option life of 2 years. On January 25, 2016, the Board of Directors approved amendments extending the term of outstanding warrants to purchase in the aggregate 24,372,838 shares of common stock of the Company at exercise prices ranging from $0.01 per share to $3.00 per share (the Warrants). These Warrants were scheduled to expire at various dates during 2016 and were each extended for an additional one year period from the applicable current expiration date, with the new expiration dates ranging from January 26, 2017 to December 28, 2017. The increase in fair value of this term extension was $1,305,411 which was expensed during the three months ended March 31, 2016. The Company used the Black-Scholes option pricing model to calculate the increase in fair value, with the following assumptions for the extended warrants: no dividend yield, expected volatility of 161.3%, risk free interest rate of 0.47%, and expected warrant life of 1.27 years. |
STOCK OPTIONS AND WARRANTS |
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STOCK OPTIONS AND WARRANTS | NOTE 9 STOCK OPTIONS AND WARRANTS
During 2008, the Board of Directors (Board) of the Company adopted the 2008 Equity Incentive Plan (2008 Plan) that was approved by the shareholders. Under the Plan, the Company is authorized to grant options to purchase up to 25,000,000 shares of common stock to any officer, other employee or director of, or any consultant or other independent contractor who provides services to the Company. The Plan is intended to permit stock options granted to employees under the 2008 Plan to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (Incentive Stock Options). All options granted under the 2008 Plan, which are not intended to qualify as Incentive Stock Options are deemed to be non-qualified options (Non-Statutory Stock Options). As of March 31, 2016, options to purchase 6,101,664 shares of common stock have been issued and are unexercised, and 9,048,336 shares are available for grants under the 2008 Plan.
During 2013, the Board adopted the 2013 Equity Incentive Plan (2013 Plan), which was approved by stockholders at the 2013 annual meeting of stockholders. Under the 2013 Plan, the Company is authorized to grant awards of stock options, restricted stock, restricted stock units and other stock-based awards of up to an aggregate of 5,000,000 shares of common stock to any officer, employee, director or consultant. The 2013 Plan is intended to permit stock options granted to employees under the 2013 Plan to qualify as Incentive Stock Options. All options granted under the 2013 Plan, which are not intended to qualify as Incentive Stock Options are deemed to be Non-Statutory Stock Options. As of March 31, 2016, under the 2013 Plan grants of restricted stock and options to purchase 2,105,000 shares of common stock have been issued and are unvested or unexercised, and 2,895,000 shares of common stock remain available for grants under the 2013 Plan.
The 2008 Plan and 2013 Plan are administered by the Board or its compensation committee, which determines the persons to whom awards will be granted, the number of awards to be granted, and the specific terms of each grant, including the vesting thereof, subject to the terms of the applicable Plan.
In connection with Incentive Stock Options, the exercise price of each option may not be less than 100% of the fair market value of the common stock on the date of the grant (or 110% of the fair market value in the case of a grantee holding more than 10% of the outstanding stock of the Company).
Prior to January 1, 2014, volatility in all instances presented is the Company's estimate of volatility that is based on the volatility of other public companies that are in closely related industries to the Company. Beginning January 1, 2014, volatility in all instances presented is the Company's estimate of volatility that is based on the historical volatility of the Company's stock history.
The following table summarizes the activities for our stock options for the three months ended March 31, 2016:
For the three months ended March 31, 2016 and 2015, the Company expensed $69,407 and $305,432 with respect to the options.
As of March 31, 2016 there was $499,572 of unrecognized compensation cost related to outstanding stock options. This amount is expected to be recognized over a weighted-average period of 2.4 years. To the extent the actual forfeiture rate is different from what the Company has estimated, stock-based compensation related to these awards will be different from the Company's expectations. The difference between the stock options exercisable at March 31, 2016 and the stock options exercisable and expected to vest relates to management's estimate of options expected to vest in the future.
The following table summarizes the activities for our warrants for the three months ended March 31, 2016:
All warrants were vested on the date of grant.
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OPERATING LEASES |
3 Months Ended |
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Mar. 31, 2016 | |
OPERATING LEASES [Abstract] | |
OPERATING LEASES | NOTE 10 OPERATING LEASES For the three months ended March 31, 2016 and 2015, total rent expense under leases amounted to $7,998 and $156,677. As of March 31, 2016, the Company was not obligated under any non-cancelable operating lease arrangements. |
SUBSEQUENT EVENTS |
3 Months Ended |
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Mar. 31, 2016 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11 SUBSEQUENT EVENTS
On April 14, 2016, the Company appointed a new Chief Executive Officer and Chairman of the Board, with such appointments taking effect on April 18, 2016. In this connection with his appointment, the Company also simultaneously entered into an Employment Agreement with the Chief Executive Officer and Chairman of the Board, pursuant to which he will be employed on an at will basis at an annual salary of $240,000 during the first year of employment. He also received options to purchase 3,000,000 shares of the Company's common stock at an exercise price of $0.90 per share, vesting over three years and 250,000 restricted stock units.
On April 18, 2016, the Company issued $20,000 in aggregate principal amount of unsecured Promissory Notes to two accredited investors pursuant to Promissory Note Agreements (the Notes). The Investors also received two-year Warrants to purchase an aggregate of 4,000 shares of Company common stock at an exercise price of $0.90 per share. The Notes bear interest at a rate of ten percent (10%) per annum and mature on the six (6) month anniversary of the issuance date, or on such earlier date that (i) the Company completes the closing of a specified joint venture agreement or (ii) the Company completes the sale of at least an additional $1 million of 10% Secured Convertible Promissory Notes.
On April 25, 2016, the Company issued a $50,000 principal amount unsecured Promissory Note to an accredited investor pursuant to a Promissory Note Agreement (the Note). The Investor also received two-year Warrants to purchase an aggregate of 10,000 shares of Company common stock at an exercise price of $0.90 per share. The Note bears interest at a rate of ten percent (10%) per annum and matures on the six (6) month anniversary of the issuance date, or on such earlier date that (i) the Company completes the closing of a specified joint venture agreement or (ii) the Company completes the sale of at least an additional $1 million of 10% Secured Convertible Promissory Notes. On May 5, 2016, the Company issued $100,000 aggregate principal amount of its 10% Secured Convertible Promissory Notes due March 6, 2017 (the New Notes) to an accredited investor. The New Notes are in addition to currently outstanding promissory notes of the same series, in the principal amount of $2,940,000 (the Prior Notes), which were originally due March 5, 2016 and the maturity date thereof was subsequently extended to March 6, 2017 with the consent of the Note holders.
On May 11, 2016, the Company entered into a consulting agreement with a company owned by a beneficial owner of more than 5% of the Company. The agreement requires the payment of $12,500 per month and continues on a monthly basis until terminated.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
3 Months Ended |
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Mar. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Nature of the Business | Nature of the Business
Virtual Piggy, Inc. (the Company) was incorporated in the state of Delaware on February 11, 2008.
The Company is a technology company that seeks to deliver an online ecommerce solution for the family. The Company's system allows parents and their children to manage, allocate funds and track their expenditures, savings and charitable giving online. The system is designed to allow a minor to transact online without a credit card by gaining the parents' permission ahead of time and allowing the parent to set up the rules of use.
The Company believes that a future alternative for Virtual Piggy, Inc. will revolve around the FinTech industry with a partner-first go to market model in which established payments market leaders and vertical market participants can incorporate and integrate the Company's platform into co-branded payments solutions targeting youth and family. The Company also believes this approach will enable the Company to reduce expenses while broadening its reach.
Within this affinity partner model, the Company will be incorporating licensing fees and customization services. This should enable the company to begin creating shareholder value above and beyond consumer transaction fees.
The Company is also analyzing specific components of our technology for individual monetization as well as exploring opportunities in the Business to Business (B2B) realm.
In addition, the Company is currently adding enhancements to the platform, to enable the platform to update itself with any new regulations that are passed, in order to reduce costs associated with manually updating the platform. This will also enable the Company to market the platform to other companies in need of a solution to comply with COPPA or other regulatory requirements.
Our primary strategic objective over the next 12 -18 months is to increase the value of the underlying technical assets of the company by incorporating new essential functionality that will act as a key differentiator in the financial services market. These new technology advances will also augment our current portfolio of patents that give the company its competitive advantage. In addition, the company is redirecting its marketing efforts to increase its user base by entering into affinity marketing agreements with companies targeting specific user communities. This will increase our potential user community while bringing in substantial development and licensing revenue for those sectors. This approach will greatly reduce the expense associated with direct marketing efforts.
The Company's principal office is located in Sunnyvale, California and in 2013 the Company opened an office in London, England to support the sales and marketing efforts in Europe and the development of its mobile applications, which was closed in September 2015.
On December 3, 2015, Finity, Inc. was incorporated as a wholly owned subsidiary of the Company. On December 11, 2015, Finity, Inc. changed its name to Finitii, Inc. Finitii, Inc. was established as a not for profit entity for the purpose of teaching children financial literacy.
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Basis of Presentation | Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and with the instructions for Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited financial statements should be read in conjunction with the financial statements and notes included in the Company's Annual Report on form 10-K for the year ended December 31, 2015 as filed with the SEC. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.
The accompanying condensed consolidated financial statements of Virtual Piggy, Inc. and its wholly owned subsidiary, Finitii, Inc. (collectively the Company), have been prepared in accordance with accounting principles generally accepted in the United States of America. All intercompany transactions have been eliminated in consolidation. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements
As of March 31, 2016 and for the period then ended, there were no recently adopted accounting pronouncements that had a material effect on the Company's financial statements.
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Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted
As of March 31, 2016, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company's financial statements through 2017.
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STOCK OPTIONS AND WARRANTS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK OPTIONS AND WARRANTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Option Activity |
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Schedule of Warrant Activity |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Minimum period for increase to value of underlying technical assets | 12 months |
Maximum period for increase to value of underlying technical assets | 18 months |
MANAGEMENT PLANS (Details) - USD ($) |
May. 13, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|---|
Going concern [Line Items] | |||||
Cash position | $ 50,808 | $ 16,646 | $ 1,455,824 | $ 1,652,392 | |
Subsequent event [Member] | |||||
Going concern [Line Items] | |||||
Cash position | $ 44,000 |
CONVERTIBLE NOTES PAYABLE (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
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Convertible Promissory Notes due March 5, 2016 [Member] | |||
Debt Instrument [Line Items] | |||
Interest accrued | $ 298,751 | $ 225,452 | |
Convertible Promissory Notes due March 5, 2016, Issued on March 6, 2015 [Member] | |||
Debt Instrument [Line Items] | |||
Note payable included per unit | $ 2,000,000 | ||
Interest rate | 10.00% | ||
Interest expense, notes payable | $ 73,299 | $ 14,247 | |
Convertible Promissory Notes due March 5, 2016, Issued on May 11, 2015 [Member] | |||
Debt Instrument [Line Items] | |||
Note payable included per unit | $ 940,000 | ||
Preferred Class B [Member] | Convertible Promissory Notes due March 5, 2016 [Member] | |||
Debt Instrument [Line Items] | |||
Conversion price (in dollars per share) | $ 90.00 | ||
Number of convertible shares in specific lot size | 100 | ||
Conversion price at which preferred stock is convertible into common stock (in dollars per share) | $ 0.90 |
INCOME TAXES (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Jan. 01, 2016 |
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INCOME TAXES [Abstract] | |||
Income tax expense | $ 0 | $ 0 | |
Unrecognized tax benefits | |||
Change in unrecognized tax benefits | |||
Accrual for uncertain tax positions |
CONVERTIBLE PREFERRED STOCK (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
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Class of Stock [Line Items] | ||
Dividends declared | $ 268,280 | $ 264,605 |
Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Dividend rate | 8.00% | |
Dividends declared | $ 2,072,582 |
STOCK OPTIONS AND WARRANTS (Schedule of Warrant Activity) (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
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Number of Shares: | |||||
Balance December 31, 2015 | 26,365,896 | ||||
Expired | (1,142,858) | ||||
Granted | 96,700 | ||||
Balance March 31, 2016 | 25,319,738 | 26,365,896 | |||
Exercisable at March 31, 2016 | 25,319,738 | ||||
Exercisable at March 31, 2016 and expected to vest thereafter | 25,319,738 | ||||
Weighted Average Exercise Price: | |||||
Balance December 31, 2015 | $ 1.02 | ||||
Granted | 0.90 | ||||
Expired | 0.04 | ||||
Balance March 31, 2016 | 1.07 | $ 1.02 | |||
Exercisable at March 31, 2016 | 1.07 | ||||
Exercisable at March 31, 2016 and expected to vest thereafter | $ 1.07 | ||||
Weighted- Average Remaining Contractual Term: | |||||
Balance March 31, 2016 | 1 year 1 month 6 days | 4 months 24 days | |||
Expired | |||||
Granted | 2 years | ||||
Exercisable at March 31, 2016 | 1 year 1 month 6 days | ||||
Exercisable at March 31, 2016 and expected to vest thereafter | 1 year 1 month 6 days | ||||
Aggregate Intrinsic Value: | |||||
Balance March 31, 2016 | [1] | ||||
Exercisable at March 31, 2016 | [1] | ||||
Exercisable as of March 31, 2016 and expected to vest thereafter | [1] | ||||
Closing stock price | $ 0.11 | ||||
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OPERATING LEASES (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
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OPERATING LEASES [Abstract] | ||
Total rent expense under leases | $ 7,998 | $ 156,677 |
SUBSEQUENT EVENTS (Details) - USD ($) |
1 Months Ended | ||||
---|---|---|---|---|---|
May. 11, 2016 |
Apr. 14, 2016 |
Apr. 30, 2016 |
May. 31, 2016 |
Mar. 31, 2016 |
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Beneficial owner [Member] | |||||
Subsequent Event [Line Items] | |||||
Ownership percentage | 5.00% | ||||
Subsequent event [Member] | Chief Executive Officer and Chairman of the Board [Member] | Employment Agreement [Member] | |||||
Subsequent Event [Line Items] | |||||
Officers' Compensation | $ 240,000 | ||||
Options to purchase company's common stock | 3,000,000 | ||||
Exercise price (in dollars per share) | $ 0.90 | ||||
Vesting period | 3 years | ||||
Options to purchase restricted stock unit | 250,000 | ||||
Subsequent event [Member] | Beneficial owner [Member] | |||||
Subsequent Event [Line Items] | |||||
Ownership percentage | 5.00% | ||||
Monthly payment for consulting services | $ 12,500 | ||||
Subsequent event [Member] | April 18, 2016 Agreement [Member] | |||||
Subsequent Event [Line Items] | |||||
Principal amount | $ 20,000 | ||||
Warrant Term | 2 years | ||||
Warrant to purchase a number of shares of common stock | 4,000 | ||||
Exercise price of warrants | $ 0.90 | ||||
Interest rate | 10.00% | ||||
Subsequent event [Member] | April 25, 2016 Agreement [Member] | |||||
Subsequent Event [Line Items] | |||||
Principal amount | $ 50,000 | ||||
Warrant Term | 2 years | ||||
Warrant to purchase a number of shares of common stock | 10,000 | ||||
Exercise price of warrants | $ 0.90 | ||||
Interest rate | 10.00% | ||||
Subsequent event [Member] | May 05, 2016 Agreement [Member] | |||||
Subsequent Event [Line Items] | |||||
Principal amount | $ 100,000 | ||||
Interest rate | 10.00% | ||||
Outstanding debt amount | $ 2,940,000 |
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