EARLY BIRD: Investors in the first $250k will receive a $16M valuation cap and 20% discount.
|1||Facebook bet on us to expand their VRfitness offering for their millions of Oculus users.|
|2||Dev team behind success of Guitar Hero ($1B rev), Rock Band ($2B rev), and Dance Central ($50M rev).|
|3||In partnership with Oculus, VZFit offers a full-body VR experience with no third-party hardware.|
|4||Upcoming move to Facebook storefront increases TAM size by 200X and discoverability by 10X.|
|5||Projected December 2024 Annual Recurring Revenue is $30M at 90% gross margin.|
|6||Named one of the World's Most Innovative Companies by FastCompany|
|7||Fitness effectiveness scientifically proven by Brunel University London & University of Exeter.|
I first invested VirZOOM in 2015 because the early product changed my life. We all know we need to get more exercise and it can seem so hard to make it happen. VirZOOM lets me tuck in a sweat-drenching workout, at home, on a cold rainy night or in the middle of a busy remote work day, with just two minutes of prep. I have so much fun I don't even realize I’m working hard until I notice my T-shirt is dripping. During the pandemic, being able to get out of the apartment and into a virtual world somewhere else has been a lifesaver.
I’ve continued to invest since 2015 because-
1. The market was huge before COVID-19 and it's even bigger now. Scientific research proves that we really do work out harder when it feels like fun and VR is the best way to get immersed in fun. This is the future.
2. The team is awesome. Co-Founder & CTO Eric Malafeew led the monster hits Guitar Hero and Dance Central, and has a crack group of developers working with him. The other Co-Founder, CEO Eric Janszen, I’ve known for 25 years. He’s well connected, perseverant, creative, and really smart, which are all essential for a successful startup. He’s also raised $50 million from VCs in past businesses, so it’s not his first time sitting in the big chair.
3. Favorable market trends. You want to invest in businesses that sit on a rising tide in the world. VirZOOM sits on more than one:
- VR is getting better, cheaper, and more popular, every year. The Oculus Quest has sold millions of units. This can no longer be called a niche.
- Home fitness, which was already growing, has gotten a big boost from the pandemic. Many people will never go back to a gym.
5. The business model. Software as a service (SaaS) is the best way to make a business that can really scale profitably, and VirZOOM’s SaaS business performance is about as good as it gets.
6. VirZOOM leads the market, far ahead of other VR fitness offerings. They have mature technology and products, and a large and fast-growing customer base.
7. The leadership position is defensible. Other VR fitness products have you standing still and reacting to objects flying at you (like Beat Sabre) or moving only on a predetermined path (like Holodia). These are really limiting. VirZOOM offers 6 degrees of freedom and games that make use of it. These unique things VirZOOM does in VR are patent protected and use numerous trade secrets developed five years of responding to real customer feedback.
I’m very optimistic about this company.
Say “goodbye” to your boring workout! VZfit enables you to move freely through VR worlds in a fun and exciting immersive exercise experience. Pull on your headset and hop on your stationary bike to cycle around the globe, or go bike-free and workout virtually with your friends—using 10 million miles of Google Street View to travel to some of the most breathtaking places on Earth.
In partnership with Facebook, we’re launching a new standing mode for VZFit. This new technology requires NO third-party hardware, and puts us front and center in the Oculus store—increasing our Total Available Market size by 200X and our discoverability by 10X. Consumers can now experience our tried and true bike mode, or explore the world on foot!
In 2018, we launched VirZOOM on WeFunder.
Since then, over 6,000 customers have created VZfit.com accounts, we’ve received countless rave reviews on Amazon, and our patented VR tech and fun fitness forward approach to design has caught the attention of Facebook.
Today, we’re back for another round...We’ve proven the market, secured a game-changing Oculus Quest partnership, and we want you along for the ride!
There’s a surging need for home fitness solutions right now, as consumers are eager to avoid highly trafficked gym environments. However, working out at home presents unique challenges—in particular, it can be difficult to self-motivate and stay interested.
VZfit changes that by combining the addictive fun of VR game play with an immersive, full-body workout experience. The result? People workout for longer, more days per week.
VZFit harnesses the power of enjoyment-motivated exercise to keep users engaged, and it’s backed by proven science.
VZFit is the next evolution of both fitness and virtual reality. We have created the future, and consumers love it.
Our patented VZfit technology answers an untapped market need, and our partnership with Facebook gives us a significant competitive advantage. Here’s how we compare:
We’ve created a robust business model and proven that it works. Here’s a breakdown of our revenue channels:
Interactive fitness is in high demand, VR even more so, and our recent move to the Facebook storefront has increased our Total Available Market (TAM) size by 200X. Here’s where we fit into the market:
Our recent Facebook partnership puts us on track for exponential future growth by giving us direct access to a massive consumer audience (anyone with an Oculus Quest!). This boils down to a 200x larger user base.
*Please note these are projections only and are not guaranteed.
With the funds we raise through this campaign, we plan to continue to scale our B2C focus while growing towards cash flow neutral optionality and providing a runway for our Series A round.
We’ll also be finalizing the development of the VZfit Freestyle. This will work in several exercise modes with an Oculus headset and controller but without an in-home bike set-up or any other 3rd party hardware.
Will you take the ride with us?
VirZOOM has financial statements ending January 31 2019. Our cash in hand is $139,736, as of July 2020. Over the three months prior, revenues averaged $29,000/month, cost of goods sold has averaged $5,500/month, and operational expenses have averaged $140,000/month.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
We're turning stationary bikes into something gym goers actually use. VZfit, our third-gen product, turns any bike into VR fitness fun in 5 minutes. Over the last 3 years, we proved VR-equipped bikes motivate riders to come back to the gym, increasing gym retention rates and profit margins. Now, we're selling our tech directly to gyms through Life Fitness, the world's largest commercial fitness equipment manufacturer, which has resulted in 50 VZfits sold worldwide – all before official launch.
We employ VR to solve a very old and very large customer problem: motivating the masses to get the cardio they need. And, the VZfit is a win all around: we help Acer sell VR headsets, Intel sell NUCs, Life Fitness sell bikes, and gyms retain members. Users don't have to buy or set up expensive VR systems. All the pieces are in place for us to scale VZfit into every fitness center health club, higher education, real estate, and corporate customers around the world.
VirZOOM, Inc. was incorporated in the State of Delaware in February 2015.
Since then, we have:
Historical Results of Operations
Related Party Transaction
Refer to Question 26 of this Form C for disclosure of all related party transactions.
Liquidity & Capital Resources
To-date, the company has been financed with $305,000 in debt, $1,477,758 in equity, and $8,692,940 in convertibles.
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 6 months before we need to raise further capital.
We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.
We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. We plan to raise capital in 2 months. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.
Runway & Short/Mid Term Expenses
VirZOOM, Inc. cash in hand is $139,736, as of July 2020. Over the last three months, revenues have averaged $29,000/month, cost of goods sold has averaged $5,500/month, and operational expenses have averaged $140,000/month, for an average burn rate of $116,500 per month. Our intent is to be profitable in 18 months.
The Company has evaluated subsequent events through July 7, 2020, the date these financial statements were available to be issued. Subsequent to December 31, 2019, the Company raised an additional $345k for the 2019 NPA.
Also subsequent to December 31, 2019, holders of both sets of Short Term Notes agreed to amend their notes, adjusting $205,000 of principal, $201,690 in accrued interest into the 2019 NPA Convertible Note. Subsequent to the aforementioned amendment, $100,000 in principal remains short-term debt, accruing interest at the federal minimum rate adjusted monthly at year end starting January 1st 2020.
Also subsequent to December 31, 2019, the Company has enabled compatibility with existing 3rd party hardware on the market and will cease production and sales of VZ Sensor after existing inventory levels are sold through. Revenues will be only recurring subscription access to the VirZOOM game platform on a monthly or annual basis. Cost of Goods will reduce as sales will no longer include hardware.
Last 3 month revenue and expense data listed above is reported on a cash basis.
We expect in-month revenues to average $10,000/month and MRR $20,000 until our new VZ Fit for Oculus Quest product ships Q4 2020. One our new product ships, we expect in-month revenues to increase to $90,000/month and MRR to be approximately $40,000/mo in the first month and increase to $180,000/mo over a 12-month period based on comparable products on the Oculus Quest VR platform.
VirZOOM continues to attract capital on an on-going basis from accredited investors. Since May 2020 these have been largely directed to the WeFunder plaform; $130,000 is now committed at launch. Commitments from accredited investors ranging from $25,000 to $100,000 for investment on or off the WeFunder platform are in process. In addition, we have been in a due diligence process with Fitness Ventures since May 2020 for a $250k investment; August 15 is indicated as the target closing date.
VirZOOM is highly dependent on the success and commercialization of Virtual Reality (VR).
While we believe we have proven the attractiveness of our VZfit product, our growth rate does rely on the consumer acceptance of VR as a whole.
Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
The Company may never receive a future equity financing or elect to convert the Securities upon such future financing. In addition, the Company may never undergo a liquidity event such as a sale of the Company or an IPO. If neither the conversion of the Securities nor a liquidity event occurs, the Purchasers could be left holding the Securities in perpetuity. The Securities have numerous transfer restrictions and will likely be highly illiquid, with no secondary market on which to sell them. The Securities are not equity interests, have no ownership rights, have no rights to the Company’s assets or profits and have no voting rights or ability to direct the Company or its actions.
VirZOOM’s current liquidity is limited and we expect additional financing will be required in order to continue to fund the Company.
If we fail to accurately forecast seasonal demand for VZfit systems, consistent with in-home fitness products and services generally, our results of
VZfit Explorer uses Google Streetview data that is currently publicly available. Google may in the future choose to discontinue its public availability policy, or decide to impose data use charges that are not economically viable for sales of VZfit Explorer, or make changes to the API that impact product performance and require significant time and development effort to correct. For these and other reasons, the product may be discontinued, and its contribution to revenues eliminated.
Sonny Tahiliani is a part-time officer. As such, it is likely that the company will not make the same progress as it would if that were not the case.
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