Beleaguered online payment platform Virtual Piggy Inc. has named former PayPal mid-level executive Käthe Anchel as its chief executive.
Anchel previously worked within PayPal’s consumer product division and will replace Jo Webber, who stepped down Friday as chief executive and has resigned from the board, the company said in a recent filing with the Securities and Exchange Commission. Additionally, Chairwoman of the Board of Advisors Martha McGeary Snider will become chairwoman of the board of directors.
Virtual Piggy’s payment app is designed to help children learn how to manage their money by giving them some parent-monitored autonomy over their spending. The startup earns a 1.5 percent to 3 percent cut of each transaction and also offers a pre-paid debit card, which costs $10 for activation.
Virtual Piggy of Hermosa Beach has been running on fumes since April, when it said it only had enough money to sustain operations through the end of the month. The startup said then it was exploring “strategic alternatives,” a phrase interpreted as the company was seeking a sale.
Alas, a sale hasn’t come and Virtual Piggy has survived the summer on installments of cash raised by issuing a web of new shares, warrants and convertible notes, often on the over-the-counter market.
Since its founding in 2008, Virtual Piggy has run up a cumulative net deficit of $58.9 million while only bringing in $27,545 in revenue. Losses have almost all been paid by over-the-counter investors, including John Paul Dejoria, the billionaire behind Beverly Hills’ Paul Mitchell hair products and Patron Tequila. Dejoria owns a 12.2 percent stake in the company’s common stock and 9.2 percent of a Series A class stock, according to Virtual Piggy’s most recent proxy statement.
Virtual Piggy had $225,000 in cash and cash equivalents, and total liabilities of $6.3 million for the quarter ended Sept. 30, according to the most recent financial filing. Because that’s only enough money to maintain operations through Dec. 31, Virtual Piggy said it may seek additional financing. Virtual Piggy has also agreed to place Anchel’s entire $250,000 base annual salary in escrow within 60 days.
In addition to substantially increasing Virtual Piggy’s revenue, newly minted Chief Executive Anchel will need to stem an out flow of executives. Former Chief Financial Officer Joseph Dwyer resigned in June. Chief Technology Officer Pradeep Ittycheria and board member Darr Aley resigned in July.
Virtual Piggy’s stock fell almost 3 percent to close at 32 cents a share today.
