$0.25 — $1.00
VirZOOM creates engaging VR experiences powered by you. Pedal your VirZOOM Controller to propel yourself through endlessly exciting VR games. Power a horse in a race, a tank in battle, a fire-breathing dragon through mountains. Patent pending software controls keep you feeling good. A workout without the work.
In early 2014, VirZOOM co-founders Eric Janszen and Eric Malafeew set out to get the sedentary consumer moving with a new concept: virtual reality exercise games. They committed themselves to creating a fun way to exercise using virtual reality to get millions of under-exercised consumers on the road to health and fitness. The result is an entirely new kind of game and exercise called virtual sports (vSports).
vSports is real physical competition in virtual worlds based on VirZOOM's inexpensive and versatile patent pending virtual reality exercise game platform. With partners Fitbit, Life Fitness, HTC, and AMD only VirZOOM can bring exciting physical and immersive online virtual game competition to millions of consumers all over the world. Players of all ages engage in thrilling competitive virtual challenges to consumers including cycling, F1 racing, and tank battles all powered by the player. Players can engage in real time online challenges or engage at a later time for high score. VirZOOM statistics show customers do not get bored with vSports the way they do with other indoor equipment-based exercise. They play VirZOOM vSports for longer periods more frequently over time.
VirZOOM employs an exciting new technology, virtual reality, to solve an old and very large customer problem: motivating sedentary people of all ages to exercise.
Product & Service
VirZOOM vSports Content
VirZOOM Arcade is an ever-expanding collection of free multiplayer online VR sport games, available on Steam and the PlayStation Network store with updates delivered automatically to you. You can also use the VirZOOM Gamepad Emulator to turn your bike into a virtual joystick, keyboard, and mouse to play popular games on PC.
The my.virzoom web service allows players to track performance, set goals, and challenge friends to competitions, and integrates with Fitbit and Strava. VirZOOM's own exercise bike based VR game controllers are sold online directly and through online retailers Amazon.com, BestBuy.com, Target.com, and GameStop.com, and in 2017 through a growing number of regional vSports Centers across the U.S. and China. The exercise bike portion of VirZOOM's own VR game controller is sub-assembled in a factory in China with IP-sensitive electronics manufacturing and final assembly done in a Sony factory in Mexico. VirZOOM Arcade games are distributed on Steam for PC and PlayStation Network for PS4.
VirZOOM vSports Controller
Uniquely VirZOOM virtual reality games are played by pedaling and leaning while seated on a modified exercise bike, with control buttons and triggers for game play. The faster you pedal in the real world the faster you move in the virtual world. VirZOOM's sensor technology turns a stationary exercise bike into a specialized VR game controller. VirZOOM's ever-evolving and growing library of virtual reality exercise games, compatible with all major VR systems including HTC Vive and Sony Playstation VR, are designed from the ground up by a unique AAA game development team with feedback from hundreds of alpha sites, betas sites, and customers since July 2015.
Since the early 1980s avid cyclist, start-up investor and CEO of venture-backed companies Eric Janszen nursed the idea of using virtual reality to make indoor cycling fun instead of a drag. Not until the appearance of Oculus Rift in 2013 did the potential for a commercially viable VR exercise game product finally arrive. Egged on by members of his investment group in late 2013 to pursue the idea, in early 2014 he approached his friend Eric Malafeew, Chief Architect for highly successful titles Guitar Hero, Rock Band, and Dance Central titles, games that combined unique game controllers with unique games.
After building a prototype with a bicycle and laptop in Eric Malafeew's basement in early 2014 the two entrepreneurs decided the concept had legs -- literally. Over the next year Malafeew evolved the prototype and patent while Janszen developed the business model and business plan. By February 2015 they formed VirZOOM. In March Janszen raised the initial $1.8M in seed funding, mostly from the investor group that egged him on in early 2014, and by April 1 the core team was in place in Harvard Square offices in Cambridge, MA.
Malafeew brings Virginia Tech undergraduate and MIT graduate engineering training and 20 plus years of robotics, simulation, and video game and game controller design and engineering expertise to the project. He recruited the entire AAA game development and hardware engineering teams from colleagues. He also contributes a wealth of game industry contacts. Janszen brings decades of product management, sales, operations, finance, and business design and planning expertise as well as board experience to the project. He also brings accredited investors from among friends and colleagues he has known for over 20 years who have supplied 90% of the company's funding to date. He is personally the largest single investor in the company.
Eric Janszen is an avid bike rider, who co-founded VirZOOM with over 25 years experience in the tech and investment space. Eric spent over a decade as a product manager for start-ups, before joining bluesocket as President and CEO. He has run a seed-stage investment firm, acted as an economic analyst, and has founded his own online economics and financial services company. For the last decade, he has served on the Board of Directors for TruTouch Technologies. Eric graduated from U. Mass. Amherst with a B.S. in Resource Economics.
Before co-founding VirZOOM, Eric worked for over 25 years on videogames and military simulations. First, on flight simulators and robotics for the government, then in the private sector, creating the game engine for Harmonix Music Systems, and acting as Chief Architect on blockbuster titles like Guitar Hero, Rock Band, and Dance Central. He brings his experience building games with unique game controllers to VirZOOM, with its exercise-bike-based VR game controller, and specialized VR games. He received a B.S. in Mechanical Engineering from Virginia Tech, and an M.S. in Mechanical Engineering from MIT.
Key Team Members
Notable Advisors & Investors
VirZOOM is not targeted at spin class consumers as is Peloton Cycle, nor at hard core bike enthusiasts as is Zwift. The consumers of these products have a form of exercise they enjoy and stick with. VirZOOM customers do not.
The total available market for spin class consumers and for hard core bike enthusiasts is relatively small compared to the size of the market of all of the consumers who do not have a form of exercise they enjoy.
VirZOOM is not targeted at consumers who have a form of exercise they enjoy but rather at everyone else, at the vast majority of consumers of all ages who are looking for a new form of exercise that they do enjoy.
Through thousands of play tests with over ten thousand subjects VirZOOM has since early 2015 refined its combination of exercise games and controller to create an exercise experience that we call vSports that they do enjoy.
Customer reviews and telemetry data confirm that VirZOOM has achieved this goal. The next task is to expand the business.
One gating factor for VirZOOM product adoption is VR system cost. As mobile VR options such as Google Daydream make VR more affordable the VirZOOM platform will become affordable and accessible to more and more consumers.
The VirZOOM product roadmap has content for Google Daydream and GearVR by April 2017 and for Microsoft VR around the same time. When mobile VR ships in the millions of units with android devices the total available market for VirZOOM will expand significantly.
Another gating factor for VirZOOM product adoption is experience. VirZOOM is so new that consumers cannot imagine what it's like to use the product. They have to try it. But how can VirZOOM make the VirZOOM experience available to consumers without spending millions on specialty stores the way Peloton did?
That's where VirZOOM vSports Centers come in. Already the company has 18 in operation. By the end of 2017 at least 100 will be up and running across the U.S.
Use of Proceeds
If the offering's maximum amount of $999,999 is raised:
|Use||Value||% of Proceeds|
|vSports Operations Management||$190,200||19.0%|
This is an offering of Common stock, under registration exemption 4(a)(6), in VirZOOM, Inc.. This offering must raise at least $500,000 by June 1, 2017 at 4:00pm ET. If this offering doesn’t reach its target, then your money will be refunded. VirZOOM may issue additional securities to raise up to $999,999, the offering’s maximum.
The company’s post-money valuation could be calculated as 7,883,829 shares outstanding × $0.94 per share = $7,410,799 if all shares are sold in this offering. Be sure to understand the methodology provided by the company:
In December 2016, the Company secured a term sheet for a preferred stock financing with a pre-financing valuation of $16,000,000. At that point in time, the convertible note plus interest was equal to approximately $4,500,000 with an $8,000,000 cap. Assuming a 2x conversion of the notes, the value of the Company was approximately $7,000,000.
For the purposes of pursuing a mutually exclusive sales contract, VirZOOM did not complete the above listed preferred stock financing. In the approximate four months following the December term sheet, VirZOOM has launched its first successful vSports event. Additionally, since December, VirZOOM has engaged in partnership talks with an international fitness equipment brand, is negotiating an international distribution contract with prepayment terms, has received numerous press accolades and has continued sales through direct and secondary channels. We place this increase in value, company exposure and potential at approximately $250,000 per month, or an additional $1,000,000.
This brings the value of the company to approximately $8,000,000. VirZOOM currently has 6,820,000 shares of common stock outstanding and 1,666,720 common stock options issued but not exercised nor fully vested. A share price of $0.94 is the quotient of the $8,000,000 valuation divided by 8,486,720 shares.
The VirZOOM VR Exercise Game Platform requires consumers to have a VR system comprised of a VR headset and a PC or VR headset and a game console. In 2016 VR systems cost from $700 for a Sony PSVR headset and PS4 console to $2,000 for a HTC Vive headset and gaming PC. These cost of PC-based VR is expected to decline to under $1000 in 2017 with the introduction of Microsoft VR. Google Daydream will expand the market for mobile VR by bringing VR capabilities to millions of mobile computing devices. VirZOOM supports all of these major VR platforms.
In Q4 2016 VirZOOM Controllers shipped in volume to consumers through its distributor COKeM International to online retailers Amazon.com, BestBuy.com, GameStop.com, and Target.com. VirZOOM Arcade Games distributed via Valve's Steam store and Sony's Playstation Network (PSN), the largest game stores in the world.
The goal of Q3 and Q4 2016 shipments was to establish an initial customer base for collection of product feedback, telemetry data, and refinement of supply chain and manufacturing processes. In 2017 the company will shift gears to focus on increasing unit sales volumes and average sales price while lowering COGs and cost-of-sales via vSports business execution.
Total COGs including shipping was $320 and $205 respectively for the first two batches units built and sold in 2016, including NRE costs to set up manufacturing processes in China and Mexico. With manufacturing processes established COGs is expected to decline to $105 by Q4 2017. By the end of 2017 the company expects to license VirZOOM sensor and security technology to 3rd party VirZOOM Controller makers and phase out specialized exercise bike manufacturing by the end of 2018.
The VirZOOM Controller sells for $399.95 directly from its web site and also through major online retailers via its distributor COKeM International. Gross margins on shipments of the 2nd batch of VZ Controllers through distribution was close to zero while gross margins on direct sales averaged 40%.
Shipments of tethered VR system sales by suppliers Oculus, HTC, and Sony were delayed from Q1 to Q2 2016 and 2016 unit volumes were below analyst forecasts reportedly due to Sony PSVR supply constraints. Nonetheless VirZOOM realized Q4 2016 revenue of $325,000 versus the company's $250,000 revenue forecast.
The company's flagship VirZOOM Controller, made in China and Mexico, embodies unique sensor and security technology that make viable commercial agreements possible in the Chinese market where prevention of pirating of hardware and software is a critical product requirement. This sensor and security technology enabled the company to close a $1M distribution deal with a major Chinese state-owned entity Daily E-Sports Datang Network Company Ltd.
The company's sensor and security technology is designed to be licensed via OEM agreements to fitness equipment makers who will supply VirZOOM Controllers with embedded circuits and firmware for VirZOOM Arcade game use. Initially this sensor and security technology is embodied in an add-on aftermarket product to cause certain existing exercise bikes to be used to play VirZOOM Arcade games, that is, to make them "VirZOOM-Ready." In January 2017 Life Fitness became the first fitness equipment maker to engage in a VirZOOM-Ready pilot program.
Starting in Q1 2017 VirZOOM will begin to execute on its next phase of development as a virtual sports or vSports platform company. The company has as of the end of December 2016 contracted 18 vSports Centers across the U.S. to demonstrate VirZOOM and sell vSports Systems comprised of the VirZOOM Controller, VirZOOM Arcade games, a VR headset and PC or console. The company plans to have 100 vSports Centers across the U.S. by the end of 2017. If each vSports Center sells on average 12 units per month by Q4 2017, VirZOOM can operate on a cash-flow break-even basis without recurring revenue from subscriptions. Recurring revenue from my.virzoom subscriptions are planned to begin in Q2 2017.
From company founding in April 2015 VirZOOM's one-of-a-kind technology and business team brought an entirely new game hardware and content product to market in 14 months, and by Q4 2016 was shipping product in volume across the U.S. and Canada, on $4.4M in seed financing.
Use of $5M Series A funds is to build out the vSports sales channel, instituting the recurring revenue model, achieving reductions in COGs and increasing sales volumes at higher ASP to achieve cash flow breakeven by Q4 2017.
These financial statements have been reviewed by an independent Certified Public Accountant.
The Offering Statement is a formal description of the company and this transaction. It’s filed with the SEC to comply with the requirements of exemption 4(a)(6) of the Securities Act of 1933.
We’re also required to share links to each of the SEC filings related to this offering with investors.
- Jun 13, 2017VirZOOM to launch new mobile products with Samsung at E3In partnership with Samsung, VirZOOM will unveil new products at E3 June 13-15 that enables more consumers than ever before to take part in the VirZOOM fitness experience. If you’ll be at E3, add VirZOOM to your schedule.
- Jun 1, 2017Primary offering closed, sellingsharesSold $0.94 for a total of $548,967.52shares at
- May 17, 2017Samsung GearVR and VirZOOM team up at IoTWe have promising news coming out of the IoT show happening right now in Santa Clara, California. VirZOOM and Samsung are showing off their techs in tandem. What does that mean for you? When two companies like Samsung and VirZOOM get together, it’s often the precursor to bigger things and this glimpse into a potential alliance between the two definitely fits that description. Learn more about partnership here.
- May 8, 2017VirZOOM announces strategic partnership with AMDAMD small form factor PCs and HTC Vive VR headsets are instrumental in creating a high-end commercial VirZOOM experience that motivates users to move like never before. Read more on Yahoo! Finance
- May 4, 2017Feature on CNBCVirtual reality is most commonly used for entertainment, like playing games or immersing yourself in a cartoon world. But as one game developer has discovered, it can also be used to improve your health. Read the full article on CNBC.
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Be sure to understand the risks of this type of investment. No regulatory body (not the SEC, not any state regulator) has passed upon the merits of or given its approval to the securities, the terms of the offering, or the accuracy or completeness of any offering materials or information posted herein. That’s typical for Regulation CF offerings like this one.
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The information contained herein includes forward-looking statements. These statements relate to future events or to future financial performance, and involve known and unknown risks, uncertainties, and other factors, that may cause actual results to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties, and other factors, which are, in some cases, beyond the company’s control and which could, and likely will, materially affect actual results, levels of activity, performance, or achievements. Any forward-looking statement reflects the current views with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to operations, results of operations, growth strategy, and liquidity. No obligation exists to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.