☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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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
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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265 Sunrise Boulevard, Palm Beach, Florida
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33480
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☐ (Do not check if a smaller reporting company)
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Smaller reporting company
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☒
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19
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24
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24
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PART II - OTHER INFORMATION
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25
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25
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25
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25
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25
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25
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25
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26
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PAGE
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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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10-17
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June 30, 2016
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December 31, 2015
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|||||||
(Unaudited)
|
(Audited)
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS
|
||||||||
Cash and cash equivalents
|
$
|
3,735
|
$
|
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
|
-
|
72,918
|
||||||
TOTAL CURRENT ASSETS
|
3,735
|
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
|
(22,220
|
)
|
(57,823
|
)
|
||||
13,868
|
31,544
|
|||||||
OTHER ASSETS
|
||||||||
Deposit
|
-
|
31,800
|
||||||
Patents and trademarks, net of accumulated
|
||||||||
amortization of $114,706 and $96,282
|
570,997
|
589,420
|
||||||
570,997
|
621,220
|
|||||||
TOTAL ASSETS
|
$
|
588,600
|
$
|
776,759
|
||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||
CURRENT LIABILITIES
|
||||||||
Accounts payable and accrued expenses
|
$
|
1,889,100
|
$
|
1,702,527
|
||||
Accounts payable and accrued expenses - related parties
|
198,568
|
-
|
||||||
Loans payable
|
9,000
|
-
|
||||||
Preferred stock dividend liability
|
2,340,863
|
1,804,302
|
||||||
Convertible notes payable - stockholders
|
3,040,000
|
2,940,000
|
||||||
Notes payable, net of discount of $10,959 and $37,482
|
1,674,041
|
988,918
|
||||||
TOTAL CURRENT LIABILITIES
|
9,151,572
|
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 June 30, 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 June 30, 2016 and December 31, 2015
|
3
|
3
|
||||||
Common stock, $ .0001 par value; 230,000,000 shares authorized;
|
||||||||
118,017,626 and 117,517,626 shares issued and outstanding at June 30, 2016 and
|
||||||||
December 31, 2015
|
11,802
|
11,752
|
||||||
Additional paid in capital
|
55,652,622
|
54,203,451
|
||||||
Deferred compensation
|
(22,917
|
)
|
(72,188
|
)
|
||||
Accumulated deficit
|
(64,204,493
|
)
|
(60,802,017
|
)
|
||||
STOCKHOLDERS' DEFICIT
|
(8,562,972
|
)
|
(6,658,988
|
)
|
||||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
|
$
|
588,600
|
$
|
776,759
|
For the Three Months Ended
|
For the Six Months
|
|||||||||||||||
Ended June 30,
|
Ended June 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
SALES
|
$
|
12
|
$
|
5,277
|
$
|
1,037
|
$
|
9,386
|
||||||||
OPERATING EXPENSES
|
||||||||||||||||
Sales and marketing
|
(1,068
|
)
|
509,039
|
34,035
|
1,398,276
|
|||||||||||
Product development
|
168,566
|
505,924
|
416,139
|
1,096,793
|
||||||||||||
Integration and customer support
|
36,337
|
58,872
|
70,575
|
120,710
|
||||||||||||
General and administrative
|
359,885
|
798,833
|
2,078,113
|
2,291,085
|
||||||||||||
Strategic consulting
|
-
|
203,500
|
-
|
338,500
|
||||||||||||
Total operating expenses
|
563,720
|
2,076,168
|
2,598,862
|
5,245,364
|
||||||||||||
NET OPERATING LOSS
|
(563,708
|
)
|
(2,070,891
|
)
|
(2,597,825
|
)
|
(5,235,978
|
)
|
||||||||
OTHER INCOME (EXPENSE)
|
||||||||||||||||
Interest income
|
-
|
150
|
-
|
299
|
||||||||||||
Interest expense
|
(134,347
|
)
|
(62,998
|
)
|
(276,578
|
)
|
(77,245
|
)
|
||||||||
Other income
|
1,085
|
-
|
1,085
|
-
|
||||||||||||
Gain on disposition of fixed assets
|
-
|
-
|
7,403
|
-
|
||||||||||||
(133,262
|
)
|
(62,848
|
)
|
(268,090
|
)
|
(76,946
|
)
|
|||||||||
NET LOSS
|
(696,970
|
)
|
$
|
(2,133,739
|
)
|
(2,865,915
|
)
|
(5,312,924
|
)
|
|||||||
Less: Accrued preferred dividends
|
(268,281
|
)
|
(267,545
|
)
|
(536,561
|
)
|
(532,150
|
)
|
||||||||
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$
|
(965,251
|
)
|
$
|
(2,401,284
|
)
|
$
|
(3,402,476
|
)
|
$
|
(5,845,074
|
)
|
||||
BASIC AND DILUTED NET LOSS PER
|
||||||||||||||||
COMMON SHARE
|
$
|
(0.01
|
)
|
$
|
(0.02
|
)
|
$
|
(0.03
|
)
|
$
|
(0.05
|
)
|
||||
BASIC AND DILUTED WEIGHTED AVERAGE
|
||||||||||||||||
COMMON SHARES OUTSTANDING
|
117,684,293
|
119,167,626
|
117,600,959
|
119,142,626
|
For the Three Months
|
For the Six Months
|
|||||||||||||||
Ended June 30,
|
Ended June 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
NET LOSS
|
$
|
(696,970
|
)
|
$
|
(2,133,739
|
)
|
$
|
(2,865,915
|
)
|
$
|
(5,312,924
|
)
|
||||
OTHER COMPREHENSIVE LOSS
|
||||||||||||||||
Foreign currency translation adjustments, net of tax
|
-
|
(154,840
|
)
|
-
|
(40,365
|
)
|
||||||||||
TOTAL OTHER COMPREHENSIVE LOSS, net of tax
|
-
|
(154,840
|
)
|
-
|
(40,365
|
)
|
||||||||||
COMPREHENSIVE LOSS
|
$
|
(696,970
|
)
|
$
|
(2,288,579
|
)
|
$
|
(2,865,915
|
)
|
$
|
(5,353,289
|
)
|
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 restricted common stock for services
|
-
|
-
|
-
|
-
|
500,000
|
50
|
54,950
|
(55,000
|
)
|
-
|
-
|
|||||||||||||||||||||||||||||
Issuance of warrants with notes payable
|
-
|
-
|
-
|
-
|
-
|
-
|
8,537
|
-
|
-
|
8,537
|
||||||||||||||||||||||||||||||
Revaluation of warrants
|
-
|
-
|
-
|
-
|
-
|
-
|
1,305,411
|
-
|
-
|
1,305,411
|
||||||||||||||||||||||||||||||
Fair value of options for services
|
-
|
-
|
-
|
-
|
-
|
-
|
162,773
|
-
|
162,773
|
|||||||||||||||||||||||||||||||
Amortization of deferred compensation
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
32,083
|
-
|
32,083
|
||||||||||||||||||||||||||||||
Forfeited restricted common stock
|
-
|
-
|
-
|
-
|
-
|
-
|
(82,500
|
)
|
72,188
|
-
|
(10,312
|
)
|
||||||||||||||||||||||||||||
Accrued preferred dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(536,561
|
)
|
(536,561
|
)
|
||||||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(2,865,915
|
)
|
(2,865,915
|
)
|
||||||||||||||||||||||||||||
Balance, June 30, 2016 (Unaudited)
|
108,600
|
$
|
11
|
28,378
|
$
|
3
|
118,017,626
|
$
|
11,802
|
$
|
55,652,622
|
$
|
(22,917
|
)
|
$
|
(64,204,493
|
)
|
$
|
(8,562,972
|
)
|
Six Months Ended June 30,
|
||||||||
2016
|
2015
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net loss
|
$
|
(2,865,915
|
)
|
$
|
(5,312,924
|
)
|
||
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
|
162,773
|
279,976
|
||||||
Fair value of common stock issued in exchange for services
|
-
|
279,915
|
||||||
Revaluation of options and warrants
|
1,305,411
|
195,463
|
||||||
Reversal of expense from forfeiture of restricted common stock
|
(10,312
|
)
|
-
|
|||||
Amortization of deferred compensation
|
32,083
|
|||||||
Accretion of discount on notes payable
|
57,568
|
-
|
||||||
Depreciation and amortization
|
22,573
|
59,250
|
||||||
(Gain) Loss on abandonment of patents and disposal of fixed assets
|
(7,403
|
)
|
895
|
|||||
Decrease in assets
|
||||||||
Accounts receivable
|
-
|
1,063
|
||||||
Prepaid expenses
|
72,918
|
179,609
|
||||||
Deposits
|
31,800
|
7,253
|
||||||
Increase in liabilities
|
||||||||
Accounts payable and accrued expenses
|
417,633
|
195,244
|
||||||
Deferred revenue
|
-
|
7,676
|
||||||
Net cash used in operating activities
|
(780,511
|
)
|
(4,106,580
|
)
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Purchase of equipment
|
-
|
(7,693
|
)
|
|||||
Patent and trademark costs
|
-
|
(28,042
|
)
|
|||||
Net cash used in investing activities
|
-
|
(35,735
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Proceeds from loans payable
|
9,000
|
-
|
||||||
Proceeds from convertible notes payable - stockholders
|
100,000
|
2,940,000
|
||||||
Proceeds from notes payable - stockholders
|
658,600
|
-
|
||||||
Net cash provided by financing activities
|
767,600
|
2,940,000
|
||||||
EFFECT OF EXCHANGE RATE ON CASH
|
-
|
(40,365
|
)
|
|||||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(12,911
|
)
|
(1,242,680
|
)
|
||||
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
|
16,646
|
1,652,392
|
||||||
CASH AND CASH EQUIVALENTS - END OF PERIOD
|
$
|
3,735
|
$
|
409,712
|
||||
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
|
$
|
536,561
|
$
|
532,150
|
||||
Fair value of warrants issued as discount for note payable
|
$
|
8,537
|
$
|
-
|
||||
Accrued interest as discount on notes payable
|
$
|
22,508
|
$
|
-
|
||||
Issuance of restricted common stock
|
$
|
55,000
|
$
|
-
|
||||
Forfeited restricted stock |
$
|
82,500 |
$
|
- |
|
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
|
||||||||||||
Granted
|
4,225,000
|
$
|
0.80
|
|||||||||||||
|
||||||||||||||||
Cancelled/forfeited/expired
|
(1,737,500
|
)
|
$
|
(0.83
|
)
|
|||||||||||
|
||||||||||||||||
Balance June 30, 2016
|
11,310,000
|
$
|
0.76
|
2.7
|
$
|
-
|
||||||||||
|
||||||||||||||||
Exercisable at June 30, 2016
|
6,532,496
|
$
|
0.81
|
1.6
|
$
|
-
|
||||||||||
|
||||||||||||||||
Exercisable at June 30, 2016 and expected to
|
||||||||||||||||
vest thereafter
|
11,310,000
|
$
|
0.76
|
2.7
|
$
|
-
|
(1)
|
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $0.12 for the Company’s common stock on June 30, 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
|
(1,242,858
|
)
|
(0.10
|
)
|
-
|
|||||||||||
Granted
|
131,700
|
$
|
0.90
|
-
|
||||||||||||
|
||||||||||||||||
Balance June 30, 2016
|
25,254,738
|
$
|
1.07
|
0.8
|
$
|
8
|
||||||||||
|
||||||||||||||||
Exercisable at June 30, 2016
|
25,254,738
|
$
|
1.07
|
0.8
|
$
|
8
|
(1)
|
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.12 for the Company’s common stock on June 30, 2016.
|
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.
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32.1
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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.
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32.2
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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.
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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VIRTUAL PIGGY, INC.
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By:
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/s/ Scott McPherson
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Scott McPherson
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Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
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Date: August 12, 2016
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Date: August 12, 2016
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By:
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/s/ John Coyne
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John Coyne
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Chief Executive Officer
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Date: August 12, 2016
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By:
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/s/ Scott McPherson
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Scott McPherson
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Chief Financial Officer
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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: August 12, 2016
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By:
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/s/ John Coyne
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John Coyne
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Chief Executive Officer
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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: August 12, 2016
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By:
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/s/ Scott McPherson
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Scott McPherson
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Chief Financial Officer
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Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Aug. 12, 2016 |
|
Document And Entity Information | ||
Entity Registrant Name | VIRTUAL PIGGY, INC. | |
Entity Central Index Key | 0001437283 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 118,017,626 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2016 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Accounts receivable, allowance | $ 6,293 | |
Assets held for sale, accumulated depreciation | 23,174 | |
Patents and trademarks, accumulated amortization | 114,706 | 96,282 |
Notes payable, discount | $ 10,959 | $ 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 | 118,017,626 | 117,517,626 |
Common stock, shares outstanding | 118,017,626 | 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 | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Income Statement [Abstract] | ||||
SALES | $ 12 | $ 5,277 | $ 1,037 | $ 9,386 |
OPERATING EXPENSES | ||||
Sales and marketing | (1,068) | 509,039 | 34,035 | 1,398,276 |
Product development | 168,566 | 505,924 | 416,139 | 1,096,793 |
Integration and customer support | 36,337 | 58,872 | 70,575 | 120,710 |
General and administrative | 359,885 | 798,833 | 2,078,113 | 2,291,085 |
Strategic consulting | 203,500 | 338,500 | ||
Total operating expenses | 563,720 | 2,076,168 | 2,598,862 | 5,245,364 |
NET OPERATING LOSS | (563,708) | (2,070,891) | (2,597,825) | (5,235,978) |
OTHER INCOME (EXPENSE) | ||||
Interest income | 150 | 299 | ||
Interest expense | (134,347) | (62,998) | (276,578) | (77,245) |
Other income | 1,085 | 1,085 | ||
Gain on disposition of fixed assets | 7,403 | |||
Total other income (expense) | (133,262) | (62,848) | (268,090) | (76,946) |
NET LOSS | (696,970) | (2,133,739) | (2,865,915) | (5,312,924) |
Less: Accrued preferred dividends | (268,281) | (267,545) | (536,561) | (532,150) |
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (965,251) | $ (2,401,284) | $ (3,402,476) | $ (5,845,074) |
BASIC AND DILUTED NET LOSS PER COMMON SHARE | $ (0.01) | $ (0.02) | $ (0.03) | $ (0.05) |
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 117,684,293 | 119,167,626 | 117,600,959 | 119,142,626 |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Statement of Comprehensive Income [Abstract] | ||||
NET LOSS | $ (696,970) | $ (2,133,739) | $ (2,865,915) | $ (5,312,924) |
OTHER COMPREHENSIVE LOSS | ||||
Foreign currency translation adjustments, net of tax | (154,840) | (40,365) | ||
TOTAL OTHER COMPREHENSIVE LOSS, net of tax | (154,840) | (40,365) | ||
COMPREHENSIVE LOSS | $ (696,970) | $ (2,288,579) | $ (2,865,915) | $ (5,353,289) |
Condensed Consolidated Statement of Changes in Stockholders' Deficit - 6 months ended Jun. 30, 2016 - USD ($) |
Preferred Stock [Member]
Series A [Member]
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Preferred Stock [Member]
Series B [Member]
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Common Stock [Member] |
Additional Paid-In Capital [Member] |
Deferred Compensation [Member] |
Accumulated Deficit [Member] |
Total |
---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2015 | $ 11 | $ 3 | $ 11,752 | $ 54,203,451 | $ (72,188) | $ (60,802,017) | $ (6,658,988) |
Balance, shares at Dec. 31, 2015 | 108,600 | 28,378 | 117,517,626 | ||||
Issuance of restricted common stock for services | $ 50 | 54,950 | (55,000) | ||||
Issuance of restricted common stock for services, shares | 500,000 | ||||||
Issuance of warrants with notes payable | 8,537 | 8,537 | |||||
Revaluation of warrants | 1,305,411 | 1,305,411 | |||||
Fair value of options for services | 162,773 | 162,773 | |||||
Amortization of deferred compensation | 32,083 | 32,083 | |||||
Forfeited restricted common stock | (82,500) | 72,188 | (10,312) | ||||
Accrued preferred dividends | (536,561) | (536,561) | |||||
Net loss | (2,865,915) | (2,865,915) | |||||
Balance at Jun. 30, 2016 | $ 11 | $ 3 | $ 11,802 | $ 55,652,622 | $ (22,917) | $ (64,204,493) | $ (8,562,972) |
Balance, shares at Jun. 30, 2016 | 108,600 | 28,378 | 118,017,626 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
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 seek to incorporate licensing fees and customization services. This would 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 the Children’s Online Privacy Protection Act (“COPPA”) or other regulatory requirements.
The Company’s 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. 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 approach should greatly reduce the expense associated with direct marketing efforts.
The Company’s principal office is located in Palm Beach, Florida.
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. Finitii, Inc. has had no operations since it was formed.
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 and six months ended June 30, 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.
The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional financing to operationalize the Company’s current technology before another company develops similar technology to compete with the Company.
Recently Adopted Accounting Pronouncements
As of June 30, 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 June 30, 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. |
MANAGEMENT PLANS |
6 Months Ended |
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Jun. 30, 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 its platform to merchants to enable them to provide COPPA compliant services for themselves and their customers.
As of August 12, 2016, the Company has a cash position of approximately $40,000. 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 August 2016. |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES - RELATED PARTIES |
6 Months Ended |
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Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES - RELATED PARTIES | NOTE 3 ACCOUNTS PAYABLE AND ACCRUED EXPENSES RELATED PARTIES
As of June 30, 2016, the former Chairman of the Board had paid expenses on behalf of the Company in the amount of $114,126.
The Company owes the Chief Executive Officer unpaid salary of $26,154.
The Company also owes the Chief Financial Officer a total of $32,721 as of June 30, 2016, including unpaid salary of $11,538, health insurance of $14,670 and unpaid accounting services, to the Chief Financial Officers 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 $20,567 and the son of this beneficial owner $5,000 as of June 30, 2016. |
CONVERTIBLE NOTES PAYABLE |
6 Months Ended |
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Jun. 30, 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.
On May 5, 2016, the Company issued an additional $100,000 of Notes to stockholders.
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 June 30, 2016. Interest accrued on the notes was $374,542 and $225,452 as of June 30, 2016 and December 31, 2015. Interest expense related to these notes payable was $75,792 and $149,091 for the three and six months ended June 30, 2016 and $62,998 and $77,245 for the three and six months ended June 30, 2015. |
NOTES PAYABLE - STOCKHOLDERS |
6 Months Ended |
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Jun. 30, 2016 | |
Debt Disclosure [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.
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 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 20, 2016, the Company issued $5,000 in aggregate principal amount of unsecured Promissory Notes to an accredited investor pursuant to Promissory Note Agreements. The Investors also received two-year Warrants to purchase an aggregate of 1,000 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 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 June 1, 2016, the Company issued a $50,000 principal amount unsecured Promissory Note to an accredited investor pursuant to a Promissory Note Agreement. 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 June 9, 2016, the Company issued a $50,000 principal amount unsecured Promissory Note to an accredited investor pursuant to a Promissory Note Agreement. 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.
As of June 30, 2016, $551,100 in aggregate principal of the Promissory Notes are in default.
The 7.5% commitment fees, amounting to $76,913 and $54,405 as of June 30, 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 fair value of the warrants issued in conjunction with the Promissory Notes are recorded 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 notes payable for financial statement purposes. The warrants were valued at $2,178 and $8,537 fair value for the three and six months ended June 30, 2016, using the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 135.4% to 183.1%, risk free interest rate of 0.71% to 0.98% and expected option life of 2 years.
The notes payable are recorded as a current liability as of June 30, 2016. Interest accrued including the 7.5% commitment fee on the notes as of June 30, 2016 and December 31, 2015 was $174,257 and $81,831. Interest expense, including accretion of discounts, related to these notes payable was $58,555 and $127,487 for the three and six months ended June 30, 2016 and $0 for the three and six months ended June 30, 2015. |
LOANS PAYABLE |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Loans Payable | |
LOANS PAYABLE | NOTE 6 LOANS PAYABLE
During the three months ended June 30, 2016, the Company received loans in the aggregate amount of $9,000. These loans have no formal repayment terms and are not accruing interest. |
INCOME TAXES |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 7 INCOME TAXES
Income tax expense was $0 for the three and six months ended June 30, 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 2016 related to unrecognized tax benefits. There has been no change in unrecognized tax benefits during the six months ended June 30, 2016, and there was no accrual for uncertain tax positions as of June 30, 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 and six months ended June 30, 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 |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | |
CONVERTIBLE PREFERRED STOCK | NOTE 8 CONVERTIBLE PREFERRED STOCK
As of June 30, 2016, the value of the cumulative 8% dividends for all preferred stock was $2,340,863. Such dividends will be paid when and if declared payable by the Companys 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 |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 9 – 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. The increase in fair value of this term extension was $219,051 which was expensed during the period. 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 95.1%, risk free interest rate of 0.22%, and expected warrant life of 1.28 years.
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.
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 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 500,000 shares of restricted stock, 250,000 of which vest immediately and the remainder vest on the one year anniversary of his employment. The options were valued at $196,505 fair value using the Black-Scholes option pricing model to calculate the fair value, with the following assumptions for the extended warrants: no dividend yield, expected volatility of 121.7%, risk free interest rate of 1.24%, and expected warrant life of 5 years.
A restricted stock award (“RSA”) is an award of common shares that is subject to certain restrictions during a specified period. Restricted stock awards are independent of option grants and are generally subject to forfeiture if employment terminates prior to the release of the restrictions. The grantee cannot transfer the shares before the restricted shares vest. Shares of nonvested restricted stock have the same voting rights as common stock, are entitled to receive dividends and other distributions thereon and are considered to be currently issued and outstanding. The Company’s restricted stock awards vest over a period of one year. The Company expenses the cost of the restricted stock awards, which is determined to be the fair market value of the shares at the date of grant, straight-line over the period during which the restrictions lapse. For these purposes, the fair market value of the restricted stock is determined based on the closing price of the Company’s common stock on the grant date. The RSAs were valued at $55,000 based on the market price of the shares on the issuance date, which was $0.11. The value of the 250,000 RSAs that vested immediately, or $27,500, was expensed immediately and the remainder was recorded as deferred compensation and is being amortized. For the three and six months ended June 30, 2016 $0 and $32,083 was expensed and for the three and six months ended June 30, 2015 $0 was expensed.
The remaining value of the previous CEO’s RSAs included in deferred compensation in the amount of $48,125 was reclassified to additional paid in capital upon her resignation and the Company reversed expense of $10,312 relative to her departure. |
STOCK OPTIONS AND WARRANTS |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK OPTIONS AND WARRANTS | NOTE 10 – 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 June 30, 2016, options to purchase 9,590,000 shares of common stock have been issued and are unexercised, and 5,560,000 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 June 30, 2016, under the 2013 Plan grants of restricted stock and options to purchase 1,390,000 shares of common stock have been issued and are unvested or unexercised, and 3,110,000 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.
The following table summarizes the activities for the Company’s stock options for the six months ended June 30, 2016:
For the three and six months ended June 30, 2016, the Company expensed $93,366 and $162,773 with respect to the options. For the three and six months ended June 30, 2015, the Company expensed $89,612 and $279,976 with respect to the options.
As of June 30, 2016 there was $494,841 of unrecognized compensation cost related to outstanding stock options. This amount is expected to be recognized over a weighted-average period of 2.1 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 June 30, 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 the Company warrants for the six months ended June 30, 2016:
All warrants were vested on the date of grant. |
OPERATING LEASES |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Leases [Abstract] | |
OPERATING LEASES | NOTE 11 OPERATING LEASES
For the three and six months ended June 30, 2016, total rent expense under leases amounted to $3,417 and $11,415. For the three and six months ended June 30, 2015, total rent expense under leases amounted to $72,594 and $172,028. As of June 30, 2016, the Company was not obligated under any non-cancelable operating lease arrangements. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
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 seek to incorporate licensing fees and customization services. This would 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 the Children’s Online Privacy Protection Act (“COPPA”) or other regulatory requirements.
The Company’s 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. 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 approach should greatly reduce the expense associated with direct marketing efforts.
The Company’s principal office is located in Palm Beach, Florida.
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. Finitii, Inc. has had no operations since it was formed. |
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 Companys Annual Report on form 10-K for the year ended December 31, 2015 as filed with the SEC. Operating results for the three and six months ended June 30, 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.
The Companys activities are subject to significant risks and uncertainties, including failing to secure additional financing to operationalize the Companys current technology before another company develops similar technology to compete with the Company. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements
As of June 30, 2016 and for the period then ended, there were no recently adopted accounting pronouncements that had a material effect on the Companys financial statements. |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted
As of June 30, 2016, there are no recently issued accounting standards not yet adopted which would have a material effect on the Companys financial statements through 2017. |
STOCK OPTIONS AND WARRANTS (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Option Activity | The following table summarizes the activities for the Company’s stock options for the six months ended June 30, 2016:
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Schedule of Warrant Activity | The following table summarizes the activities for the Company warrants for the six months ended June 30, 2016:
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
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 ($) |
Aug. 12, 2016 |
Jun. 30, 2016 |
Dec. 31, 2015 |
Jun. 30, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|---|
Going Concern [Line Items] | |||||
Cash positions | $ 3,735 | $ 16,646 | $ 409,712 | $ 1,652,392 | |
Subsequent Event [Member] | |||||
Going Concern [Line Items] | |||||
Cash positions | $ 40,000 |
LOANS PAYABLE (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Loans Payable | ||
Aggregate loan amount received | $ 9,000 |
INCOME TAXES (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense | ||||
Change in unrecognized tax benefits | ||||
Accrual for uncertain tax positions |
CONVERTIBLE PREFERRED STOCK (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Class of Stock [Line Items] | ||||
Dividends declared | $ 268,281 | $ 267,545 | $ 536,561 | $ 532,150 |
Preferred Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Dividend rate | 8.00% | |||
Dividends declared | $ 2,340,863 |
STOCK OPTIONS AND WARRANTS (Schedule of Warrant Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
Apr. 14, 2016 |
||||
Number of Shares: | ||||||
Balance December 31, 2015 | 26,365,896 | |||||
Expired | (1,242,858) | |||||
Granted | 131,700 | |||||
Balance June 30, 2016 | 25,254,738 | 26,365,896 | ||||
Exercisable at June 30, 2016 | 25,254,738 | |||||
Weighted Average Exercise Price: | ||||||
Balance December 31, 2015 | $ 1.02 | |||||
Expired | (0.10) | |||||
Granted | 0.90 | |||||
Balance June 30, 2016 | 1.07 | $ 1.02 | ||||
Exercisable at June 30, 2016 | $ 1.07 | |||||
Weighted- Average Remaining Contractual Term: | ||||||
Balance December 31, 2015 | 9 months 18 days | 4 months 24 days | ||||
Exercisable at June 30, 2016 | 9 months 18 days | |||||
Aggregate Intrinsic Value: | ||||||
Balance June 30, 2016 | [1] | $ 8 | ||||
Exercisable at June 30, 2016 | [1] | $ 8 | ||||
Closing stock price | $ 0.12 | $ 0.11 | ||||
|
OPERATING LEASES (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Leases [Abstract] | ||||
Total rent expense under leases | $ 3,417 | $ 72,594 | $ 11,415 | $ 172,028 |
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