Virtual Piggy, Inc. (OTCBB:VPIG) Tries To Get Back To Its Former Heights

Not many penny stock ventures have the privilege of having an article dedicated to them at a magazine or a website like Forbes, but Virtual Piggy, Inc. (OTCBB:VPIG) is one of the few who do. The report came out on January 17 and while it didn’t have the immediate effect that we’re usually used to seeing from small cap ventures, the overall stock performance has been quite good. Investors seem excited and news about new additions to the team, contracts and milestones have kept the fire burning for quite a while now. Is there anything to worry about, though?

Well, first of all, we should point out while the word “innovative” is overly abused throughout business descriptions of small cap ventures, it doesn’t seem out of place when we talk about VPIG. They have developed an online payment system through which parents can let their teenage kids shop online and manage savings and allowances. Generally speaking, children and computers don’t always make for a great combination, but reality is, online shopping is getting more and more widespread. Plus, VPIG tell us that their system is 100% safe and it’s compliant with all the rules and regulations.

Reading through the latest press releases, we can see that the business is expanding. New people with some impressive CV’s are taking up positions at VPIG and during the first quarter of 2013, shortly after the Virtual Piggy system went live in Europe, they opened a new office in the United Kingdom.

All in all, at first glance at least, it would appear that the skies are blue for VPIG. It’s a shame that their financial statements fail to reflect the growth. The latest quarterly report covers the first three months of 2013, it was published on May 10 and we have summarized the most important figures below:

• cash: $5.3 million
• current assets: $5.4 million
• current liabilities: $852 thousand
• revenue: $88
• quarterly net loss: $2.6 million

We can understand that they are still not ready with a steady revenue stream, but the fact remains that the sales figure in the report for the same period of 2012 hovers around $1,200 which is still not great, but it is a lot better than the $88. Unfortunately, VPIG are not willing to discuss the cause of the drop in the revenues but they do say that if they manage to stick to their business plan, they should have a more significant flow of proceeds by the end of 2013. The only thing shareholders can do is hope that this will happen and keep their fingers crossed that the ticker’s performance will reflect the progress.

This hasn’t always been the case. Take the end of May and the beginning of June, for example. Just like right now, there was a steady stream of exciting press releases and in one of them we read that a partnership with ClickAndBuy has been agreed upon. This means that VPIG have the opportunity to attract as much as 14 million new users and yet, just four trading sessions after the announcement came out, the shares were around 20% cheaper.

That’s quite a lot of movement in a very short period of time and as we wrote in one of our previous articles, it might be caused by people who got quite a lot of discounted stock through old warrants and in private placements. You will probably know by now that if these shares hit the open market, they will depress the price, not to mention the dilution that they cause considering the fact that profitability is still nowhere in sight.

In conclusion we should point out that unlike the stock of companies like Dephasium Corp (OTCMKTS:DPHS) and American Graphite Technologies Inc (OTCBB:AGIN) who tend to move up only when there’s a paid pump for them, VPIG‘s progress during the last couple of months is driven solely by the investors’ trust in the potential of the company. Still, a penny stock is a penny stock and its volatility should never be underestimated.