Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 16, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | VERTICAL COMPUTER SYSTEMS INC | |
Entity Central Index Key | 1,099,509 | |
Document Type | 10-Q | |
Trading Symbol | VCSY | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 1,081,601,656 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash | $ 256,461 | $ 117,866 |
Accounts receivable, net of allowance for bad debts of $154,841 and $97,419 | 141,883 | 560,879 |
Prepaid expenses and other current assets | 53,171 | 41,387 |
Total current assets | 451,515 | 720,132 |
Property and equipment, net of accumulated depreciation of $1,038,247 and $1,026,654 | 2,389 | 28,089 |
Intangible assets, net of accumulated amortization of $319,397 and $302,016 | 1,129,509 | 657,978 |
Deposits and other | 23,928 | 24,388 |
Total assets | 1,607,341 | 1,430,587 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 10,255,351 | 10,659,737 |
Accounts payable to related parties | 71,843 | 36,333 |
Bank overdraft | 1,980 | 7,699 |
Deferred revenue | $ 1,948,865 | 2,321,044 |
Derivative liabilities | 51,719 | |
Convertible debentures, net of unamortized discounts of $142,718 and $0 | $ 437,282 | 30,000 |
Current portion - notes payable | 3,853,948 | 4,545,239 |
Current portion - notes payable to related parties | 347,887 | 348,666 |
Total current liabilities | 16,917,156 | $ 18,000,437 |
Non-current portion - notes payable | 715,000 | |
Total liabilities | 17,632,156 | $ 18,000,437 |
Convertible Cumulative Preferred stock | 9,902,024 | 9,902,024 |
Stockholders' Deficit | ||
Common Stock; $.00001 par value; 2,000,000,000 shares authorized 1,100,101,656 issued and 1,070,101,656 outstanding as of September 30, 2015 and 999,735,151 issued and outstanding as of December 31, 2014 | 11,002 | $ 9,998 |
Treasury stock; 30,000,000 as of September 30, 2015 and no shares as of December 31, 2014 | (300) | |
Additional paid-in capital | 21,927,665 | $ 19,925,061 |
Accumulated deficit | (48,979,637) | (47,174,557) |
Accumulated other comprehensive income - foreign currency translation | 520,912 | 145,808 |
Total Vertical Computer Systems, Inc. stockholders' deficit | (26,520,358) | (27,093,690) |
Noncontrolling interest | 593,519 | 621,816 |
Total stockholders' deficit | (25,926,839) | (26,471,874) |
Total liabilities and stockholders' deficit | 1,607,341 | 1,430,587 |
Series A Preferred Stock [Member] | ||
Current liabilities: | ||
Convertible Cumulative Preferred stock | 9,700,000 | 9,700,000 |
Series B Preferred Stock [Member] | ||
Current liabilities: | ||
Convertible Cumulative Preferred stock | 246 | 246 |
Series C Preferred Stock [Member] | ||
Current liabilities: | ||
Convertible Cumulative Preferred stock | 200,926 | 200,926 |
Series D Preferred Stock [Member] | ||
Current liabilities: | ||
Convertible Cumulative Preferred stock | $ 852 | $ 852 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Allowance for bad debts | $ 154,841 | $ 97,419 |
Accumulated depreciation, property and equipment | 1,038,247 | 1,026,654 |
Accumulated amortization | 319,397 | 302,016 |
Unamortized discounts | $ 142,718 | $ 0 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 2,000,000,000 | 2,000,000,000 |
Common stock, shares issued | 1,100,101,656 | 999,735,151 |
Common stock, shares, outstanding | 1,070,101,656 | 999,735,151 |
Treasury stock, shares | 30,000,000 | 0 |
Series A Preferred Stock [Member] | ||
Preferred stock, dividend rate (as a percent) | 4.00% | 4.00% |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 250,000 | 250,000 |
Preferred stock, shares issued | 48,500 | 48,500 |
Preferred stock, shares outstanding | 48,500 | 48,500 |
Series B Preferred Stock [Member] | ||
Preferred stock, dividend rate (as a percent) | 10.00% | 10.00% |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 375,000 | 375,000 |
Preferred stock, shares issued | 7,200 | 7,200 |
Preferred stock, shares outstanding | 7,200 | 7,200 |
Series C Preferred Stock [Member] | ||
Preferred stock, dividend rate (as a percent) | 4.00% | 4.00% |
Preferred stock, par value (in dollars per share) | $ 100 | $ 100 |
Preferred stock, shares authorized | 200,000 | 200,000 |
Preferred stock, shares issued | 50,000 | 50,000 |
Preferred stock, shares outstanding | 50,000 | 50,000 |
Series D Preferred Stock [Member] | ||
Preferred stock, dividend rate (as a percent) | 15.00% | 15.00% |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 300,000 | 300,000 |
Preferred stock, shares issued | 25,000 | 25,000 |
Preferred stock, shares outstanding | 25,000 | 25,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues | ||||
Licensing and software | $ 22,500 | $ 180 | $ 22,500 | $ 2,600,360 |
Software maintenance | 850,287 | 873,723 | 2,742,035 | 2,871,790 |
Cloud-based offering | 86,417 | 92,437 | 248,444 | 299,047 |
Consulting services | 54,967 | 93,028 | 186,221 | 301,860 |
Other | 11,023 | 13,955 | 36,811 | 46,535 |
Total revenues | 1,025,194 | 1,073,323 | 3,236,011 | 6,119,592 |
Cost of revenues | (465,614) | (406,235) | (1,377,496) | (1,603,718) |
Gross profit | 559,580 | 667,088 | 1,858,515 | 4,515,874 |
Operating expenses: | ||||
Selling, general and administrative expenses | $ 563,406 | 1,095,077 | 2,124,196 | 4,423,627 |
Depreciation and amortization | $ 10,798 | 38,412 | $ 34,163 | |
Bad debt expense | $ 8,927 | $ 59,808 | ||
Impairment of software costs | $ 193,293 | $ 579,204 | ||
Total operating expenses | $ 572,333 | 1,299,168 | $ 2,222,416 | 5,036,994 |
Operating loss | (12,753) | (632,080) | (363,901) | (521,120) |
Other income (expense): | ||||
Interest income | $ 1 | 1 | 7 | 17 |
Gain (Loss) on derivative liabilities | $ 88,786 | (78,680) | $ 194,381 | |
Loss on debt extinguishment | $ (173,193) | (323,193) | ||
Forbearance fees | (699,900) | $ (94,568) | (948,900) | $ (256,170) |
Interest expense | (64,819) | (222,230) | (588,583) | (668,662) |
Net loss before noncontrolling interest and income tax benefit | (950,664) | $ (860,091) | (2,303,250) | $ (1,251,554) |
Income tax benefit | (675,895) | (562,373) | ||
Net loss before noncontrolling interest | (274,769) | $ (860,091) | (1,740,877) | $ (1,251,554) |
Net income (loss) attributable to noncontrolling interest | (36,588) | 21,620 | (64,203) | (30,439) |
Net loss attributable to Vertical Computer Systems, Inc. | (311,357) | (838,471) | (1,805,080) | (1,281,993) |
Dividends applicable to preferred stock | (147,000) | (147,000) | (441,000) | (441,000) |
Net loss available to common stockholders | $ (458,357) | $ (985,471) | $ (2,246,080) | $ (1,722,993) |
Basic and diluted net loss per share (in dollars per share) | $ 0 | $ 0 | $ 0 | $ 0 |
Basic and diluted weighted average of common shares outstanding (in shares) | 1,057,869,945 | 999,535,151 | 1,022,277,163 | 999,382,952 |
Comprehensive loss | ||||
Net loss | $ (274,769) | $ (860,091) | $ (1,740,877) | $ (1,251,554) |
Translation adjustments | 209,796 | 22,890 | 375,104 | 175,556 |
Comprehensive loss | (64,973) | (837,201) | (1,365,773) | (1,075,998) |
Comprehensive income (loss) attributable to noncontrolling interest | (36,588) | 21,620 | (64,203) | (30,439) |
Comprehensive loss attributable to Vertical Computer Systems, Inc. | $ (101,561) | $ (815,581) | $ (1,429,976) | $ (1,106,437) |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Deficit (Unaudited) - 9 months ended Sep. 30, 2015 - USD ($) | Common Stock [Member] | Treasure Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Other Comprehensive Interest [Member] | Noncontrolling Interest [Member] | Total |
Balances, in beginning at Dec. 31, 2014 | $ 9,998 | $ 19,925,061 | $ (47,174,557) | $ 145,808 | $ 621,816 | $ (26,471,874) | |
Balances, in beginning (in shares) at Dec. 31, 2014 | 999,735,151 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Shares issued for resolution of derivative liabilities | $ 33 | 130,366 | 130,399 | ||||
Shares issued for resolution of derivative liabilities (in shares) | 3,309,983 | ||||||
Shares issued for reimbursement of stock | $ 5 | 19,995 | 20,000 | ||||
Shares issued for reimbursement of stock (in shares) | 500,000 | ||||||
Shares issued for accrued interest and loan principal | $ 286 | 755,627 | 755,913 | ||||
Shares issued for accrued interest and loan principal (in shares) | 28,556,522 | ||||||
Shares issued for loan forbearance | $ 320 | $ 933,580 | $ 933,900 | ||||
Shares issued for loan forbearance (in share) | 32,000,000 | ||||||
Shares issued to subsidiaries and held in treasury | $ 300 | $ (300) | |||||
Shares issued to subsidiaries and held in treasury (in shares) | 30,000,000 | (30,000,000) | |||||
Shares and warrants issued with convertible debt | $ 60 | $ 153,228 | $ 153,288 | ||||
Shares and warrants issued with convertible debt (in shares) | 6,000,000 | ||||||
Amortization of restricted stock awards | $ 9,808 | 9,808 | |||||
Dividends paid to non-controlling interest | $ (92,500) | (92,500) | |||||
Other comprehensive income translation adjustment | $ 375,104 | 375,104 | |||||
Net loss | $ (1,805,080) | $ 64,203 | (1,740,877) | ||||
Balances, ending at Sep. 30, 2015 | $ 11,002 | $ (300) | $ 21,927,665 | $ (48,979,637) | $ 520,912 | $ 593,519 | $ (25,926,839) |
Balances, ending (in shares) at Sep. 30, 2015 | 1,100,101,656 | (30,000,000) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities | ||
Net loss | $ (1,740,877) | $ (1,251,554) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 38,412 | $ 34,163 |
Amortization of debt discounts | 10,570 | |
Common shares issued for stock compensation | 20,000 | $ 3,200 |
Write-off of property and equipment | 4,905 | |
Bad debt expense | 59,808 | |
Forbearance fees paid with common stock | $ 933,900 | |
Impairment of software development costs | $ 579,204 | |
Loss on extinguishment of debt and accrued interest | $ 323,193 | |
Loss/(gain) on derivatives | 78,680 | $ (194,381) |
Amortization of restricted stock awards | 9,808 | |
Settlement of accrued income taxes | (562,373) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 350,475 | $ 415,316 |
Prepaid expenses and other assets | (11,500) | (19,986) |
Accounts payable and accrued liabilities | 486,046 | $ 755,446 |
Accounts payable related parties | 35,510 | |
Deferred revenue | (185,121) | $ (346,110) |
Net cash used in operating activities | (148,564) | (24,702) |
Cash flow from investing activities: | ||
Software development | $ (489,148) | (298,523) |
Purchase of property and equipment | (6,804) | |
Net cash used in investing activities | $ (489,148) | (305,327) |
Cash flows from financing activities: | ||
Borrowings on notes payable | 335,333 | $ 331,282 |
Borrowings on convertible debentures | 550,000 | |
Payments of notes payable | $ (52,448) | $ (361,345) |
Borrowings on related party debt | 25,500 | |
Payments on related party debt | $ (780) | $ (20,992) |
Dividends paid | (92,500) | |
Bank overdraft | (5,719) | $ 33,478 |
Net cash provided by financing activities | 733,886 | 7,923 |
Effect of changes in exchange rates on cash | 42,421 | 175,316 |
Net change in cash and cash equivalents | 138,595 | (146,790) |
Cash and cash equivalents, beginning of period | 117,866 | 162,709 |
Cash and cash equivalents, end of period | 256,461 | 15,919 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | $ 98,857 | 205,463 |
Non-cash investing and financing activities: | ||
Common shares issued for accrued stock compensation | $ 10,226 | |
Common shares issued for conversion of debt and accrued interest | $ 432,720 | |
Common stock issued for settlement of derivative liabilities | 130,399 | |
Debt discount due to shares and warrants issued with debt | $ 153,288 |
Organization, Basis of Presenta
Organization, Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Basis of Presentation and Significant Accounting Policies | Note 1. Organization, Basis of Presentation and Significant Accounting Policies The accompanying unaudited interim consolidated financial statements of Vertical Computer Systems, Inc. (we, our, the Company, Vertical or VCSY) have been prepared in accordance with accounting principles generally accepted in the United States of America and rules of the Securities and Exchange Commission, and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in Verticals annual report on Form 10-K for the year ended December 31, 2014. The consolidated financial statements include the accounts of the Company and its subsidiaries (collectively, our, we, the Company or VCSY, as applicable). Verticals subsidiaries which currently maintain daily business operations are NOW Solutions, a 75% owned subsidiary, and SnAPPnet, Inc. (SnAPPnet), an 80% owned subsidiary of Vertical. Verticals subsidiaries which have minimal operations are Vertical do Brasil, Taladin, Inc. (Taladin"), and Vertical Healthcare Solutions, Inc. (VHS), each a wholly-owned subsidiary of Vertical, as well as Priority Time Systems, Inc. (Priority Time) a 70% owned subsidiary, Ploinks, Inc. (Ploinks) (formerly, OptVision Research, Inc.), a 93% owned subsidiary and Government Internet Systems, Inc. (GIS), an 84.5% owned subsidiary, Verticals subsidiaries which are inactive include EnFacet, Inc. (ENF), Globalfare.com, Inc. (GFI), Pointmail.com, Inc. and Vertical Internet Solutions, Inc. (VIS), each of which is a wholly-owned subsidiary of Vertical. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited financial statements as reported in the 2014 annual report on Form 10-K have been omitted. Earnings per share Basic earnings per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of shares of the Companys common stock outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if our share-based awards, stock warrants and convertible securities were exercised or converted into common stock. The dilutive effect of our share-based awards is computed using the treasury stock method, which assumes all share-based awards are exercised and the hypothetical proceeds from exercise are used to purchase common stock at the average market price during the period. The incremental shares (difference between shares assumed to be issued versus purchased), to the extent they would have been dilutive, are included in the denominator of the diluted EPS calculation. The dilutive effect of our convertible preferred stock and convertible debentures is computed using the if-converted method, which assumes conversion at the beginning of the year. For the nine months ended September 30, 2015 and 2014, common stock equivalents related to the convertible debentures, convertible debt and preferred stock and stock derivative liability were not included in the calculation of the diluted earnings per share as their effect would be anti-dilutive. Reclassifications Certain reclassifications have been made to the prior periods to conform to the current period presentation. Capitalized Software Costs Software costs incurred internally in creating computer software products are expensed until technological feasibility has been established upon completion of a detailed program design. Thereafter, all software development costs are capitalized until the point that the product is ready for sale, and are subsequently reported at the lower of unamortized cost or net realizable value. The Company considers annual amortization of capitalized software costs based on the ratio of current year revenues by product to the total estimated revenues by the product, subject to an annual minimum based on straight-line amortization over the products estimated economic useful life, not to exceed five years. The Company periodically reviews capitalized software costs for impairment where the fair value is less than the carrying value. During the nine months ended September 30, 2015, the Company capitalized an aggregate of $489,148 related to software development. During the nine months ended September 30, 2014, the Company capitalized an aggregate of $298,523 related to software development and the Company recorded impairment of $579,204 on previously capitalized software development costs. Recently Issued Accounting Pronouncements The Company does not expect the adoption of any recently issued accounting pronouncements to have a material impact on the Companys financial position, operations or cash flows. |
Going Concern
Going Concern | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | Note 2. Going Concern The accompanying unaudited consolidated financial statements for the nine months ended September 30, 2015 and 2014 have been prepared assuming that we will continue as a going concern, and accordingly realize our assets and satisfy our liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not purport to represent realizable or settlement values. As of September 30, 2015, we had negative working capital of approximately $15 million and defaulted on several of our debt obligations. These conditions raise substantial doubt about our ability to continue as a going concern. Our management is continuing its efforts to attempt to secure funds through equity and/or debt instruments for our operations, expansion and possible acquisitions, mergers, joint ventures, and/or other business combinations. The Company will require additional funds to pay down its liabilities, as well as finance its expansion plans consistent with anticipated changes in operations and infrastructure. However, there can be no assurance that the Company will be able to secure additional funds and that if such funds are available, whether the terms or conditions would be acceptable to the Company and whether the Company will be able to turn into a profitable position and generate positive operating cash flow. The consolidated financial statements contain no adjustment for the outcome of this uncertainty. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2015 | |
Notes Payable [Abstract] | |
Notes Payable | Note 3. Notes Payable The following table reflects our third party debt activity, including our convertible debt, for the nine months ended September 30, 2015: December 31, 2014 $ 4,575,239 Repayments of third party notes (52,448 ) Borrowings from third parties 885,333 Stock issued for debt payments (258,552 ) Debt discounts due to stock and warrants issued with debt (153,288 ) Amortization of debt discounts 10,570 Currency translation (624 ) September 30, 2015 $ 5,006,230 Lakeshore Financing On January 9, 2013, NOW Solutions completed a financing transaction in the aggregate amount of $1,759,150, which amount was utilized to pay off existing indebtedness of the Company and NOW Solutions to Tara Financial Services and Robert Farias, a former employee of the Company, and all security interests granted to Tara Financial Services and Mr. Farias were cancelled. In connection with this financing, the Company and several of its subsidiaries entered into a loan agreement (the Loan Agreement Lakeshore Lakeshore Note The Lakeshore Note is secured by the assets of the Companys subsidiaries, NOW Solutions, Priority Time, SnAPPnet, Inc. ( SnAPPnet As additional consideration for the loan, the Company granted a 5% interest in Net Claim Proceeds (less any attorneys fees and direct costs) from any litigation or settlement proceeds related to the SiteFlash technology to Lakeshore which was increased to 8% under an amendment to the Loan Agreement in 2013. In addition, until the Note is paid in full, NOW Solutions agreed to pay a Lakeshore royalty of 6% of its annual gross revenues in excess of $5 million dollars up to a maximum of $1,759,150. Management has estimated the fair value of the royalty to be nominal as of its issuance date and no royalty was owed as of September 30, 2015 or December 31, 2014. In December 2014, the Company and Lakeshore entered into an amendment of the Lakeshore Note and the Loan Agreement. Under the terms of the amendment, NOW Solutions agreed to make $2,500 weekly advance payments to Lakeshore to be applied to the 25% dividend of NOW Solutions net income after taxes in connection with Lakeshores 25% minority ownership interest in NOW Solutions. Within 10 business days after the Company files its periodic reports with the SEC, NOW Solutions will also make quarterly payment advances to Lakeshore based on 60% of Lakeshores 25% share of NOW Solutions estimated quarterly net income after taxes, less any weekly payment advances received by Lakeshore during the then-applicable quarter and the weekly $2,500 payments shall be increased or decreased based only upon any increases or decreases of maintenance and SaaS fees during the then-completed quarter (but will not decrease below a minimum of $2,500 per week). NOW Solutions shall pay Lakeshore the balance of Lakeshores 25% of NOWs yearly net income after taxes (less any advances) within 10 business days after the Company files it annual 10-K report with the SEC and any payments in excess of Lakeshores 25% of NOW yearly profit shall be credited towards future weekly advance payments. The Company also agreed to pay attorney fees of $40,000 and paid fees of $80,000 to a former consultant and employee of the Company who is a member of Lakeshore. In consideration of the extension to cure the default under the Lakeshore Note and the Loan Agreement, the Company transferred a 20% ownership interest in Priority Time Systems, Inc., a 90% owned subsidiary of VCSY, and in SnAPPnet, Inc., a 100% owned subsidiary of VCSY, to Lakeshore. This resulted in an additional noncontrolling interest recognized in the equity of the Company of $391,920 and $99,210 for Priority Time Systems, Inc. and SnAPPnet, Inc., respectively, during 2014. In July 2015, we entered into an agreement with Lakeshore to amend the terms of the Loan Agreement and the Lakeshore Note. Under the terms of the amendment, the Company issued 13,000,000 common shares with the Rule 144 restrictive legend, resulting in a forbearance loss of $455,000 and Ploinks, Inc. agreed to issue 3,000,000 common shares of its stock to Lakeshore. The fair value of the Ploinks shares was determined to be nominal. Also in July 2015, the Company further amended the Lakeshore Note and the Loan Agreement with Lakeshore. Pursuant to this Agreement, the Company issued 2,000,000 shares of its common stock with the Rule 144 restrictive legend resulting in a forbearance loss of $54,200 and paid $15,000 to Lakeshore as forbearance fees. In August 2015, we entered into an agreement with Lakeshore to amend the terms of the Loan Agreement and the Lakeshore Note. Under the terms of the amendment, the Company issued 7,000,000 shares of its common stock with the Rule 144 restrictive legend resulting in a forbearance loss of $175,700 and Ploinks, Inc. agreed to issue 2,000,000 common shares of its stock to Lakeshore. The fair value of the Ploinks shares was determined to be nominal. The Company also agreed to make a $500,000 payment for amounts due to Lakeshore under the Lakeshore Note and the Loan Agreement. In the event that the Company did not make the Lakeshore $500,000 payment on or before August 21, 2015, then Lakeshore in lieu of the $500,000 payment, would obtain a purchase option (the 2015 Purchase Option Furthermore, in the event that the Company did not make the $500,000 payment to Lakeshore on or before August 21, 2015, no further payment on the Note will be due until January1, 2016 at which time the Note plus all accrued interest will be recalculated and the Note will be re-amortized under the same interest rate and terms as the Note and the maturity date of the Note will be extended 10 years from January 1, 2016. In October 2015, Lakeshore provided notice to the Company of its intent to exercise the 2015 Purchase Option concerning the purchase of additional common shares of NOW Solutions, then Lakeshores option will be cancelled and the Company shall make a principal reduction payment in the amount of $250,000 on or before December 31, 2015. In the event that Lakeshore exercises the 2015 Purchase Option and purchases the additional common shares of NOW Solutions by December 31, 2015, then (a) after the second year, but before the end of the fourth year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option, the Company will have the option to purchase for cash, all of Lakeshore's 500 shares for a price equal to the greater of $4.0 Million, 60% of trailing twelve months revenue, or 2.75X EBITDA. If the Company does not exercise its purchase option prior to the end of the fourth year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option, then Lakeshore will have a purchase option to purchase for cash, all of the Companys 500 shares for the greater of $3.5 Million, 55% of trailing twelve months revenue, or 2.50 X EBITDA, which will expire at the end of the seventh year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option if exercised by Lakeshore. NOW Solutions will continue to make the $2,500 weekly payment which will be applied toward Lakeshores share of dividends until at least January 8, 2016. Any reconciliation payments due to Lakeshore will be deferred until January 15, 2016, at which time all reconciliation payments due through September 30, 2015 will be paid to Lakeshore. Lakeshore agreed it will not take any action to enforce its rights under the security agreements related to the Note, provided that the $2,500 weekly payments are made and the January 15, 2016 reconciliation payment is timely made. At September 30, 2015, the Note was in default. During the nine months ended September 30, 2015, the Company paid dividends to Lakeshore of $92,500. Additional Financing In March 2015, Taladin, Inc., a subsidiary of the Company, and a third party lender entered into a loan agreement under which the lender loaned Taladin $100,000. Pursuant to the loan agreement, Taladin, issued a promissory note in the principal amount of $100,000 bearing interest at 12% per annum and due on demand. In the second quarter ended June 30, 2015, the Company borrowed $60,000 from a third party lender. The note is due on demand and bears interest at 11% per annum. In June 2015, the Company and Victor Weber agreed to amend certain promissory notes (the Weber Notes Also in June 2015, Mr. Weber was issued 10,000,000 common shares as forbearance resulting in a forbearance loss of $249,000 and 10,000,000 common shares as repayment of $100,000 of accrued interest resulting in a loss on extinguishment of $150,000. In July 2015, Mr. Weber was issued 15,000,000 common shares (at a fair market value of $408,000) as repayment of accrued interest and principal $259,010 owed under a judgment, resulting in a loss on extinguishment of $148,985. These shares were issued to Mr. Weber in lieu of payments due under an agreement between the Company and Victor Weber to pay off a judgment held by Mr. Weber against the Company. In August 2015, the Company issued 556,522 shares of its common stock with the Rule 144 restrictive legend to a third party lender at a fair market value of $13,913 as repayment of debt and accrued interest of $11,130 resulting in a loss on extinguishment of $2,783. In August 2015, the Company granted stock awards to an employee consisting of 3,000,000 shares of its common stock with the Rule 144 restrictive legend (at a fair market value of $84,000), 60,000 shares of preferred stock of VHS and 200,000 shares of common stock of Ploinks, Inc. in connection with a loan modification agreement to pay off accrued interest in the amount of $62,575 related to certain loans made by the employee to the Company and its affiliates. This resulted in a loss on extinguishment of $21,425. The fair value of the VHS and Ploinks shares was determined to be nominal. In the third quarter ended September 30, 2015, the Company borrowed $150,000 from a third party lender. The note is due on demand. The company made payment of $50,000 on this loan during the third quarter ended September 30, 2015. During the third quarter ended September 30, 2015, the Company borrowed $25,333 from a third party lender. The notes are due on demand and bear interest at 11%. The Company made payments of $2,448 during the third quarter ended September 30, 2015. Convertible Debentures During the nine months ended September 30, 2015, the Company issued $550,000 of convertible debentures to various third party lenders for loans made to the Company in the aggregate amount of $550,000. The debt accrues interest at 10% per annum and is due one year from the date of issuance. Beginning six months after issuance of the respective debenture, the holder of the debenture may convert the debenture into shares of common stock at a price per share of either (a) 80% of the average per share price of the Companys common stock for the 5 trading days preceding the notice of conversion date using the 3 lowest closing prices or (b) 75% of the average per share closing bid price of the Companys common stock during the 10 trading days prior to the notice of conversion date using the lowest 5 closing bid prices per share (which shall not be lower than $0.03 per share). In connection with the loans, the Company also issued a total of 6,000,000 shares of common stock of the Company to the lenders and 3-5 year warrants under which each lender may purchase in aggregate a total of 5,500,000 shares of common stock of the Company at a purchase price of between $0.05-$0.10 per share (of which one warrant for 1,000,000 includes a cashless warrant exercise provision). In connection with the issuance of common stock and warrants, the Company recorded a discount of $153,288 against the face value of the loans based on the relative fair market value of the common stock and warrants. The discount is being amortized over twelve months and $10,570 of amortization expense was recognized for the nine months ended September 30, 2015. For additional transactions after September 30, 2015, please see Subsequent Events in Note 8. |
Derivative liability and fair v
Derivative liability and fair value measurements | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative liability and fair value measurements | Note 4. Derivative Liability and Fair Value Measurements Derivative liability In March 2015, pursuant to an indemnity and reimbursement agreement executed between Mr. Valdetaro and the Company, we issued 1,000,000 shares of our common stock to reimburse Mr. Valdetaro for 1,000,000 shares of common stock with the Rule 144 restrictive legend transferred to Lakeshore on the Companys behalf in connection with an extension granted by Lakeshore in August 2013. The issuance of these shares eliminated the derivative liability associated with the value of these shares. The fair market value of these shares on the date of issuance was $38,000 and resulted in the resolution of derivative liabilities. Mr. Valdetaro is the CTO of the Company. In March 2015, pursuant to two indemnity and reimbursement agreements executed between MRC and the Company, we issued a total of 2,809,983 shares of our common stock with the Rule 144 restrictive legend to reimburse MRC. Of these shares, the Company was obligated to reimburse MRC with 1,309,983 shares of common stock that had been pledged by MRC and sold by a third party lender in 2009, 500,000 shares of common stock that had been wrongfully converted by the same lender in 2014, and 1,000,000 shares of common stock that had been transferred to another third party lender in 2013 on the Companys behalf for a loan made by the lender. MRC assigned its claim against the third party lender for the lenders wrongful conversion of 500,000 common shares to the Company and we are pursuing the claim in the third party lenders bankruptcy proceeding. The issuance of these shares eliminated the derivative liability associated with the value of these shares. The fair market value of these shares on the date of issuance was $112,399 of which $92,399 resulted in the resolution of derivative liabilities and $20,000 was recognized as stock reimbursement expense during the three months ended March 31, 2015. In March 2015, 1,000,000 shares of common stock pledged by an officer of the company (through a company he controls) to secure payment of a $50,000 past due loan by a third party lender were eliminated as part of the derivative liability as the lender did not exercise their rights to obtain the stock. The derivative liability associated with this obligation of $12,000 was written-off to (gain) loss on derivative liability during the three months ended March 31, 2015. These contractual commitments to replace all of the shares associated with the derivative liability in 2014 was evaluated under FASB ASC 815-40, Derivatives and Hedging and was determined to have characteristics of a liability and therefore constituted a derivative liability under the above guidance. Each reporting period, this derivative liability is marked-to-market with the non-cash gain or loss recorded in the period as a gain or loss on derivatives. As of September 30, 2015, the derivative liability has been eliminated since the shares have been issued or the obligation to issue the shares has been resolved. As of December 31, 2014, the aggregate fair value of the derivative liabilities was $51,719. The aggregate change in the fair value of derivative liabilities resulted in a loss of $78,680 and a gain of $194,381 for the nine months ended September 30, 2015 and 2014, respectively. The valuation of our embedded derivatives is determined by using the VCSY stock price at each measurement date. As such, our derivative liabilities have been classified as Level 1. Fair value measurements FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. FASB ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 Level 2 Level 3 If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level of input that is significant to the fair value measurement of the instrument. The following table provides a summary of the fair value of our derivative liabilities as of September 30, 2015 and December 31, 2014: Fair value measurements on a recurring basis Level 1 Level 2 Level 3 As of September 30, 2015: Liabilities Stock derivative 0 shares $ - $ - $ - As of December 31, 2014: Liabilities Stock derivative 4,309,983 shares $ 51,719 $ - $ - The estimated fair value of short-term financial instruments, including cash, accounts receivable, accounts payable and accrued liabilities and deferred revenue approximates their carrying value due to their short-term nature. The estimated fair value of our long-term borrowings approximates carrying value since the related rates of interest approximate current market rates. |
Common and Preferred Stock Tran
Common and Preferred Stock Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Common and Preferred Stock Transactions | Note 5. Common and Preferred Stock Transactions In February 2015, after holding an annual stockholder meeting, the Company filed an amendment of its certificate of incorporation in the state of Delaware to increase the authorized number of shares of common stock to 2,000,000,000. In March 2015, in connection with a $100,000 loan to Taladin, Ploinks, Inc. agreed to issue 1,000,000 shares of its common stock to the third party lender. The fair value of these subsidiary shares was determined to be nominal. In March 2015, pursuant to an indemnity and reimbursement agreement executed between Mr. Valdetaro and the Company, we issued 1,000,000 shares of our common stock to reimburse Mr. Valdetaro for 1,000,000 shares of common stock with the Rule 144 restrictive legend transferred to Lakeshore on the Companys behalf in connection with an extension granted by Lakeshore in August 2013. The issuance of these shares eliminated the derivative liability associated with the value of these shares. The fair market value of these shares on the date of issuance was $38,000 and resulted in the resolution of derivative liabilities. In March 2015, pursuant to two indemnity and reimbursement agreements executed between Mountain Reservoir Corporation (MRC) and the Company, we issued a total of 2,809,983 shares of our common stock with the Rule 144 restrictive legend to reimburse MRC. Of these shares, the Company was obligated to reimburse MRC with 1,309,983 shares of common stock that had been pledged by MRC and sold by a third party lender in 2009, 500,000 shares of common stock that had been wrongfully converted by the same lender in 2014, and 1,000,000 shares of common stock that had been transferred to another third party lender in 2013 on the Companys behalf for a loan made by the lender. MRC has assigned its claim against the third party lender for the lenders wrongful conversion of 500,000 common shares to the Company and we are pursuing the claim in the third party lenders bankruptcy proceeding. The issuance of these shares eliminated the derivative liability associated with the value of these shares. The fair market value of these shares on the date of issuance was $112,399 of which $92,399 resulted in the resolution of derivative liabilities and $20,000 was recognized as stock reimbursement expense during the nine months ended September 30, 2015. In June 2015, pursuant to an agreement between the Company and Victor Weber to pay off a judgment held by Mr. Weber against the Company, we issued a total of 20,000,000 shares of our common stock with the Rule 144 restrictive legend to Mr. Weber at a fair market value of $499,000. Of these 20,000,000 common shares, 10,000,000 common shares were issued as forbearance resulting in a forbearance loss of $249,000 and 10,000,000 common shares as repayment of $100,000 payment due under the agreement resulting in a loss on extinguishment of $150,000. For additional details about the judgment and the agreement, please Legal Proceedings under Note 7. In June 2015, in connection with an amendment concerning certain promissory notes issued by the Company and NOW Solutions to Mr. Weber in the aggregate principal amount of $735,400, the Company issued 20,000,000 shares of its common stock with the Rule 144 restrictive legend to its subsidiary, Taladin, Inc., which pledged these shares to secure payment of the notes to Weber. The previous pledge agreements between MRC and Mr. Weber were cancelled. These shares are held in treasury. In June 2015, the Company issued 10,000,000 common shares with the Rule 144 restrictive legend to its consolidated subsidiary NOW Solutions. These shares are held in treasury. In July 2015, the Company issued 13,000,000 common shares with the Rule 144 restrictive legend resulting in a forbearance loss of $455,000 and Ploinks, Inc. agreed to issue 3,000,000 common shares of its stock to Lakeshore. The fair value of the Ploinks shares was determined to be nominal. In July 2015, the Company issued 15,000,000 shares of its common stock with the Rule 144 restrictive legend to Mr. Weber at a fair market value of $408,000 as repayment of a $265,000 payment due under the agreement pursuant to an agreement between the Company and Victor Weber to pay off a judgment held by Mr. Weber against the Company, This resulting in a loss on extinguishment of $148,985. For additional details about the judgment and the agreement, please Legal Proceedings under Note 7. In July 2015, the Company paid a $15,000 forbearance fee and issued 2,000,000 shares of its common stock with the Rule 144 restrictive legend resulting in a forbearance loss of $54,200 to Lakeshore in consideration of Lakeshores forbearance from taking any action concerning the existing defaults under the Lakeshore Note and the Loan Agreement. In August 2015, the Company issued 7,000,000 shares of its common stock with the Rule 144 restrictive legend resulting in a forbearance loss of $175,700 to Lakeshore. In connection with the amendment, and in lieu of a $500,000 payment the Company was obligated to make under the amendment, Lakeshore also obtained a purchase option (the 2015 Purchase Option) to purchase an additional 250 shares of NOW Solutions common stock (representing a 25% ownership interest in NOW Solutions) until December 31, 2015 as follows: (a) 84 shares of NOW Solutions common stock currently owned by VCSY for a purchase price of $450,000 and (b) 166 shares of NOW Solutions common stock for a purchase price of $500,000 payable to NOW Solutions. In the event that Lakeshore exercises the 2015 Purchase Option and purchases the additional common shares of NOW Solutions, then (a) after the second year, but before the end of the fourth year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option, the Company will have the option to purchase for cash, all of Lakeshore's 500 shares for a price equal to the greater of $4.0 Million, 60% of trailing twelve months revenue, or 2.75X EBITDA. If the Company does not exercise its purchase option prior to the end of the fourth year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option, then Lakeshore will have a purchase option to purchase for cash, all of the Companys 500 shares for the greater of $3.5 Million, 55% of trailing twelve months revenue, or 2.50 X EBITDA, which will expire at the end of the seventh year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option if exercised by Lakeshore. In August 2015, the Company issued 556,522 shares of its common stock with the Rule 144 restrictive legend to a third party lender at a fair market value of $13,913 as repayment of debt and accrued interest of $11,130 resulting in a loss on extinguishment of $2,783. In August 2015. the Company granted stock awards to an employee consisting of 3,000,000 shares of its common stock with the Rule 144 restrictive legend (at a fair market value of $84,000), 60,000 shares of preferred stock of VHS and 200,000 shares of common stock of Ploinks, Inc. in connection with a loan modification agreement to pay off accrued interest in the amount of $62,575 related to certain loans made by the employee to the Company and its affiliates. This resulted in a loss on extinguishment of $21,425. The fair value of the VHS and Ploinks shares was determined to be nominal. In September 2015, the Company issued 2,250,000 shares of its common stock with the Rule 144 restrictive legend to employees of the Company and its subsidiaries (at a fair market value of $54,750), pursuant to restricted stock agreements under which the shares vest in equal installments over a 24-30 month period. $9,808 was recognized as compensation expense related to these shares during the three months ended September 30, 2015. As of September 30, 2015, $44,942 remains to be amortized over the remaining vesting period. In September 2015, the Company issued 800,000 shares of common stock of Ploinks, Inc. to employees of the Company and its subsidiaries, pursuant to restricted stock agreements under which the shares vest in equal installments over a 24-30 month period. The fair value of the Ploinks shares was determined to be nominal. During the nine months ended September 30, 2015, the Company issued $550,000 of convertible debentures to various third party lenders for loans made to the Company in the aggregate amount of $550,000. The debt accrues interest at 10% per annum and is due one year from the date of issuance. Beginning six months after issuance of the respective debenture, the holder of the debenture may convert the debenture into shares of common stock at a price per share of either (a) 80% of the average per share price of the Companys common stock for the 5 trading days preceding the notice of conversion date using the 3 lowest closing prices or (b) 75% of the average per share closing bid price of the Companys common stock during the 10 trading days prior to the notice of conversion date using the lowest 5 closing bid prices per share (which shall not be lower than $0.03 per share). In connection with the loans, the Company also issued a total of 6,000,000 shares of common stock of the Company to the lenders and 3-5 year warrants under which each lender may purchase in aggregate a total of 5,500,000 shares of common stock of the Company at a purchase price of between $0.05-$0.10 per share (of which one warrant for 1,000,000 includes a cashless warrant exercise provision). In connection with the issuance of common stock and warrants, the Company recorded a discount of $153,288 against the face value of the loans based on the relative fair market value of the common stock and warrants. The discount is being amortized over twelve months and $10,570 of amortization expense was recognized for the nine months ended September 30, 2015. For additional common stock and preferred stock transactions after September 30, 2015, please see Subsequent Events in Note 8. We have evaluated our convertible cumulative preferred stock under the guidance set out in FASB ASC 470-20 and have accordingly classified these shares as temporary equity in the consolidated balance sheets. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 6. Related Party Transactions In March 2015, pursuant to an indemnity and reimbursement agreement executed between Mr. Valdetaro and the Company, we issued 1,000,000 shares of our common stock with the Rule 144 restrictive legend to reimburse Mr. Valdetaro for 1,000,000 shares of common stock transferred to Lakeshore on the Companys behalf in connection with an extension granted by Lakeshore in August 2013. The issuance of these shares eliminated the derivative liability associated with the value of these shares. The fair market value of these shares on the date of issuance was $38,000 and resulted in the resolution of derivative liabilities. In March 2015, pursuant to two indemnity and reimbursement agreements executed between Mountain Reservoir Corporation (MRC) and the Company, we issued a total of 2,809,983 shares of our common stock with the Rule 144 restrictive legend to reimburse MRC. Of these shares, the Company was obligated to reimburse MRC with 1,309,983 shares of common stock that had been pledged by MRC and sold by a third party lender in 2009, 500,000 shares of common stock that had been wrongfully converted by the same lender in 2014, and 1,000,000 shares of common stock that had been transferred to another third party lender in 2013 on the Companys behalf for a loan made by the lender. MRC assigned its claim against the third party lender for the lenders wrongful conversion of 500,000 common shares to the Company and we are pursuing the claim in the third party lenders bankruptcy proceeding. The issuance of these shares eliminated the derivative liability associated with the value of these shares. The fair market value of these shares on the date of issuance was $112,399 of which $92,399 resulted in the resolution of derivative liabilities and $20,000 was recognized as stock reimbursement expense during the nine months ended September 30, 2015. |
Legal Proceedings
Legal Proceedings | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | Note 7. Legal Proceedings We are involved in the following ongoing legal matters: On December 31, 2011, the Company and InfiniTek corporation (InfiniTek) entered into a settlement agreement to dismiss an action filed by the Company against InfiniTek in the Texas State District Court in Fort Worth, Texas, for breach of contract and other claims, a counter claim filed by InfiniTek against the Company for non-payment of amounts claimed the Company owed to InfiniTek, and an action filed by InfiniTek against the Company in California Superior Court in Riverside, California seeking damages for breach of contract and lost profit. Pursuant to the terms of the settlement agreement, Vertical agreed to pay InfiniTek $82,500 in three equal installments with the last payment due by or before August 5, 2012. Upon full payment, InfiniTek shall transfer and assign ownership of the NAVPath software developed by InfiniTek for use with NOW Solutions emPath® software application and Microsoft Dynamics NAV (formerly Navision) business solution platform. The amounts in dispute were included in our accounts payable and accrued liabilities and have been adjusted to the settlement amount of $82,500 at December 31, 2011. The Company has made $37,500 in payments due under the settlement agreement as of the date of this Report and each party is alleging the other party is in breach of the settlement agreement. We are currently seeking to resolve all disputes with InfiniTek. On February 4, 2014, Victor Weber filed a lawsuit against Vertical, MRC and Richard Wade in the District Court of Clark County, Nevada for failure to make payment of the outstanding balance due under a $275,000 promissory note issued by Vertical to Mr. Weber. On July 24 2014, the court granted plaintiffs motion for summary judgment against defendants. The judgment was filed on September 18, 2014. In June 2015, the Company and Mr. Weber entered into an agreement to pay off the $365,000 outstanding balance under the judgment, which included $275,000 in principal, accrued interest, attorneys fees and court costs. Under the terms of the agreement, the Company issued 10,000,000 shares of its common stock with the Rule 144 restrictive legend to Mr. Weber at a fair market value of $250,000 in consideration of Mr. Webers forbearance in not taking any action to enforce the judgment. The Company also agreed to make payments of $100,000 by June 15, 2015 and $265,000 by July 15, 2015, or in the alternative, the Company had the option to issue another 10,000,000 shares of the Companys common stock with the Rule 144 restrictive legend in lieu of making the $100,000 payment and issue an additional 15,000,000 shares of the Companys common stock with the Rule 144 restrictive legend in lieu of making the $265,000 payment. On June 15, 2015, the Company issued 10,000,000 shares with the Rule 144 restrictive legend at a fair market value of $250,000 to Mr. Weber as repayment of a $100,000 payment resulting in a loss on extinguishment of $150,000. On July 15, 2015, the Company issued 15,000,000 shares with the Rule 144 restrictive legend at a fair market value of $408,000 to Mr. Weber as repayment of the $265,000 payment. Pursuant to the agreement, Mr. Weber filed disposition documents that the judgment has been satisfied and this matter is resolved. On October 20, 2014, Michael T. Galvan and Michelle Bates ( Galvan & Bates |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 8. Subsequent Events In October 2015 the Company issued $50,000 of convertible debentures to a third party lender for a $50,000 loan made to the Company. The debt accrues interest at 10% per annum and is due one year from the date of issuance. Beginning six months after issuance of the respective debenture, the lender may convert the debenture into shares of common stock at a price per share of 80% of the average per share price of the Companys common stock for the 5 trading days preceding the notice of conversion date using the 3 lowest closing prices. In connection with the loan, the Company also issued a total of 500,000 shares of common stock of the Company to the lender and a 3 year warrant under which the lender may purchase a total of 500,000 shares of common stock of the Company at a purchase price of $0.10 per share. In October 2015, the Company and a third party lender entered into an agreement concerning loans made by the lender to the Company during 2015 for $65,833, which bear interest at 12% per annum and are due on demand. In connection with this agreement, the Company issued 1,500,000 shares of VCSY common stock with the Rule 144 restrictive legend at a fair market value of $29,250. In October 2015, the Company and a third party lender entered into an amendment of a forbearance agreement concerning a $100,000 and $50,000 note issued by the Company under which the Company issued 1,000,000 shares of VCSY common stock with the Rule 144 restrictive legend at a fair market value of $20,000 as a forbearance fee and 7,000,000 shares of VCSY common stock with the Rule 144 restrictive legend at a fair market value of $140,000 to cancel $63,907 of accrued interest due under both notes. In October 2015, the Company and a third party lender entered into a forbearance agreement concerning certain notes in the aggregate principal amount of $1,288,919 issued by the Company to the lender under which the Company issued 1,500,000 shares of VCSY common stock with the Rule 144 restrictive legend as a forbearance fee. |
Organization, Basis of Presen15
Organization, Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Earnings per share | Earnings per share Basic earnings per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of shares of the Companys common stock outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if our share-based awards, stock warrants and convertible securities were exercised or converted into common stock. The dilutive effect of our share-based awards is computed using the treasury stock method, which assumes all share-based awards are exercised and the hypothetical proceeds from exercise are used to purchase common stock at the average market price during the period. The incremental shares (difference between shares assumed to be issued versus purchased), to the extent they would have been dilutive, are included in the denominator of the diluted EPS calculation. The dilutive effect of our convertible preferred stock and convertible debentures is computed using the if-converted method, which assumes conversion at the beginning of the year. For the nine months ended September 30, 2015 and 2014, common stock equivalents related to the convertible debentures, convertible debt and preferred stock and stock derivative liability were not included in the calculation of the diluted earnings per share as their effect would be anti-dilutive. |
Reclassifications | Reclassifications Certain reclassifications have been made to the prior periods to conform to the current period presentation. |
Capitalized Software Costs | Capitalized Software Costs Software costs incurred internally in creating computer software products are expensed until technological feasibility has been established upon completion of a detailed program design. Thereafter, all software development costs are capitalized until the point that the product is ready for sale, and are subsequently reported at the lower of unamortized cost or net realizable value. The Company considers annual amortization of capitalized software costs based on the ratio of current year revenues by product to the total estimated revenues by the product, subject to an annual minimum based on straight-line amortization over the products estimated economic useful life, not to exceed five years. The Company periodically reviews capitalized software costs for impairment where the fair value is less than the carrying value. During the nine months ended September 30, 2015, the Company capitalized an aggregate of $489,148 related to software development. During the nine months ended September 30, 2014, the Company capitalized an aggregate of $298,523 related to software development and the Company recorded impairment of $579,204 on previously capitalized software development costs. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements The Company does not expect the adoption of any recently issued accounting pronouncements to have a material impact on the Companys financial position, operations or cash flows. |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Notes Payable [Abstract] | |
Schedule of third party debt activity | The following table reflects our third party debt activity, including our convertible debt, for the nine months ended September 30, 2015: December 31, 2014 $ 4,575,239 Repayments of third party notes (52,448 ) Borrowings from third parties 885,333 Stock issued for debt payments (258,552 ) Debt discounts due to stock and warrants issued with debt (153,288 ) Amortization of debt discounts 10,570 Currency translation (624 ) September 30, 2015 $ 5,006,230 |
Derivative liability and fair17
Derivative liability and fair value measurements (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of derivative liabilities at fair value | The following table provides a summary of the fair value of our derivative liabilities as of September 30, 2015 and December 31, 2014: Fair value measurements on a recurring basis Level 1 Level 2 Level 3 As of September 30, 2015: Liabilities Stock derivative 0 shares $ - $ - $ - As of December 31, 2014: Liabilities Stock derivative 4,309,983 shares $ 51,719 $ - $ - |
Organization, Basis of Presen18
Organization, Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Computer Software [Member] | ||
Aggregate capitalized cost | $ 489,148 | $ 298,523 |
Recorded impairments capitalized software development costs | $ 579,204 | |
Useful life | 5 years | |
NOW Solutions [Member] | ||
Percentage of ownership | 75.00% | |
SnAPPnet, Inc [Member] | ||
Percentage of ownership | 80.00% | |
Priority Time Systems, Inc. [Member] | ||
Percentage of ownership | 70.00% | |
Ploinks, Inc [Member] | ||
Percentage of ownership | 93.00% | |
SiteFlash [Member] | ||
Percentage of ownership | 100.00% | |
Government Internet Systems, Inc [Member] | ||
Percentage of ownership | 84.50% |
Going Concern (Details Narrativ
Going Concern (Details Narrative) | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Working capital | $ 15,000,000 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Jul. 31, 2015 | Jan. 09, 2013 | Sep. 30, 2015 | Aug. 31, 2015 | Jul. 31, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Repayment of debt | $ 62,575 | $ 52,448 | |||||||||||
Total shares of Now Solutions available for purchase option | 250 | ||||||||||||
Number of shars held in treasury | 30,000,000 | 30,000,000 | 30,000,000 | 0 | |||||||||
Extinguishment loss | $ 21,425 | $ (173,193) | $ (323,193) | ||||||||||
Number of shares granted during the period to employees | 2,250,000 | 3,000,000 | |||||||||||
Value of shares granted during the period to employees | $ 54,750 | $ 84,000 | |||||||||||
Debt discounts due to stock and warrants issued with debt | (153,288) | ||||||||||||
Amortization of debt discounts | $ 44,942 | 10,570 | |||||||||||
11% Secured Lakeshore Note Due 2022-01-31 [Member] | |||||||||||||
Debt frequency of periodic payments | Monthly | ||||||||||||
Debt periodic payment | $ 24,232 | ||||||||||||
Debt term | 10 years | ||||||||||||
Description of collateral | Secured by the assets of the Companys subsidiaries, NOW Solutions, Priority Time, SnAPPnet, Inc. (SnAPPnet) and the Companys SiteFlash technology and cross-collateralized. Upon the aggregate principal payment of $290,000 toward the Lakeshore Note, the Company has the option to have Lakeshore release either the Priority Time collateral or the SiteFlash collateral. Upon payment of the aggregate principal of $590,000 toward the Lakeshore Note, Lakeshore shall release either the Priority Time collateral or the SiteFlash collateral (whichever is remaining). Upon payment of the aggregate principal of $890,000 toward the Lakeshore Note, Lakeshore shall release the SnAPPnet collateral and upon full payment of the Lakeshore Note, Lakeshore shall release the NOW Solutions collateral. | ||||||||||||
Repayment of debt | 250,000 | ||||||||||||
Value of shares isssued during the period | $ 450,000 | ||||||||||||
Number of shares of Now Solutions available for purchase option | 84 | ||||||||||||
Aggregate forbearance fees | $ 15,000 | ||||||||||||
Dividends | 92,500 | ||||||||||||
Number of shares issued for forbearance | 2,000,000 | 7,000,000 | 13,000,000 | ||||||||||
Forbearance loss | $ 54,200 | $ 175,700 | $ 455,000 | ||||||||||
Description of purchase option agreement | The Company also agreed to make a $500,000 payment for amounts due to Lakeshore under the Lakeshore Note and the Loan Agreement. In the event that the Company did not make the Lakeshore $500,000 payment on or before August 21, 2015, then Lakeshore in lieu of the $500,000 payment, would obtain a purchase option (the 2015 Purchase Option In the event that Lakeshore exercises the 2015 Purchase Option and purchases the additional common shares of NOW Solutions by December 31, 2015, then (a) after the second year, but before the end of the fourth year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option, the Company will have the option to purchase for cash, all of Lakeshore's 500 shares for a price equal to the greater of $4.0 Million, 60% of trailing twelve months revenue, or 2.75X EBITDA. If the Company does not exercise its purchase option prior to the end of the fourth year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option, then Lakeshore will have a purchase option to purchase for cash, all of the Companys 500 shares for the greater of $3.5 Million, 55% of trailing twelve months revenue, or 2.50 X EBITDA, which will expire at the end of the seventh year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option if exercised by Lakeshore. | ||||||||||||
11% Secured Lakeshore Note Due 2022-01-31 [Member] | Stage First Collateral [Member] | |||||||||||||
Principal payment collatreral | $ 290,000 | ||||||||||||
11% Secured Lakeshore Note Due 2022-01-31 [Member] | Stage Second Collateral [Member] | |||||||||||||
Principal payment collatreral | 590,000 | ||||||||||||
11% Secured Lakeshore Note Due 2022-01-31 [Member] | Stage Third Collateral [Member] | |||||||||||||
Principal payment collatreral | 890,000 | ||||||||||||
Maximum [Member] | |||||||||||||
Debt term | 30 months | ||||||||||||
Minimum [Member] | |||||||||||||
Debt term | 24 months | ||||||||||||
Weber Notes [Member] | |||||||||||||
Debt face amount | $ 745,400 | ||||||||||||
Debt frequency of periodic payments | Monthly | ||||||||||||
Debt periodic payment | $ 20,000 | ||||||||||||
Repayment of debt | $ 259,010 | ||||||||||||
Number of shares isssued during the period | 15,000,000 | 20,000,000 | |||||||||||
Value of shares isssued during the period | $ 408,000 | ||||||||||||
Number of shars held in treasury | 20,000,000 | ||||||||||||
Number of shares issued for forbearance | 10,000,000 | ||||||||||||
Forbearance loss | $ 249,000 | ||||||||||||
Number of shares issued in lieu for payment | 10,000,000 | ||||||||||||
Accrued interest | $ 100,000 | ||||||||||||
Extinguishment loss | $ 148,985 | $ 150,000 | |||||||||||
Weber Notes [Member] | Maximum [Member] | |||||||||||||
Interest rate during period | 12.00% | ||||||||||||
Weber Notes [Member] | Minimum [Member] | |||||||||||||
Interest rate during period | 10.00% | ||||||||||||
Third Party [Member] | 12% Promissory Note [Member] | |||||||||||||
Debt face amount | $ 100,000 | ||||||||||||
Third Party [Member] | 12% Promissory Note [Member] | |||||||||||||
Repayment of debt | $ 13,913 | ||||||||||||
Number of shares isssued during the period | 556,522 | ||||||||||||
Accrued interest | $ 11,130 | ||||||||||||
Extinguishment loss | $ 2,783 | ||||||||||||
Third Party [Member] | Promissory Note [Member] | |||||||||||||
Notes payable | $ 150,000 | 150,000 | 150,000 | ||||||||||
Repayment of debt | 50,000 | ||||||||||||
Third Party [Member] | 11% Promissory Note [Member] | |||||||||||||
Notes payable | 25,333 | 25,333 | 25,333 | ||||||||||
Debt face amount | $ 60,000 | ||||||||||||
Repayment of debt | 2,448 | ||||||||||||
Third Party [Member] | 10% Convertible Debentures [Member] | |||||||||||||
Debt face amount | $ 550,000 | $ 550,000 | $ 550,000 | ||||||||||
Number of shares isssued during the period | 6,000,000 | ||||||||||||
Description of conversion terms | The holder of the debenture may convert the debenture into shares of common stock at a price per share of either (a) 80% of the average per share price of the Companys common stock for the 5 trading days preceding the notice of conversion date using the 3 lowest closing prices or (b) 75% of the average per share closing bid price of the Companys common stock during the 10 trading days prior to the notice of conversion date using the lowest 5 closing bid prices per share (which shall not be lower than $0.03 per share). | ||||||||||||
Debt discounts due to stock and warrants issued with debt | $ 153,288 | ||||||||||||
Amortization of debt discounts | $ 10,570 | ||||||||||||
Third Party [Member] | 10% Convertible Debentures [Member] | Warrant [Member] | |||||||||||||
Warrant oustanding | 5,500,000 | 5,500,000 | 5,500,000 | ||||||||||
Third Party [Member] | 10% Convertible Debentures [Member] | Warrant [Member] | Maximum [Member] | |||||||||||||
Warrant term | 5 years | ||||||||||||
Exercise price (in dollars per shares) | $ 0.10 | $ 0.10 | $ 0.10 | ||||||||||
Third Party [Member] | 10% Convertible Debentures [Member] | Warrant [Member] | Minimum [Member] | |||||||||||||
Warrant term | 3 years | ||||||||||||
Exercise price (in dollars per shares) | $ 0.05 | $ 0.05 | $ 0.05 | ||||||||||
Ploinks, Inc [Member] | |||||||||||||
Number of shares isssued during the period | 200,000 | ||||||||||||
Percentage of ownership | 93.00% | 93.00% | 93.00% | ||||||||||
Number of shares granted during the period to employees | 800,000 | ||||||||||||
Ploinks, Inc [Member] | 12% Promissory Note [Member] | |||||||||||||
Number of shares isssued during the period | 1,000,000 | ||||||||||||
Ploinks, Inc [Member] | 11% Secured Lakeshore Note Due 2022-01-31 [Member] | |||||||||||||
Repayment of debt | $ 500,000 | ||||||||||||
Number of shares issued for forbearance | 2,000,000 | 3,000,000 | |||||||||||
Number of shares issued in lieu for payment | 500,000 | ||||||||||||
Ploinks, Inc [Member] | Weber Notes [Member] | |||||||||||||
Number of shares isssued during the period | 1,000,000 | ||||||||||||
Vertical Healthcare Solutions, Inc [Member] | Preferred Stock [Member] | |||||||||||||
Number of shares isssued during the period | 60,000 | ||||||||||||
NOW Solutions [Member] | |||||||||||||
Notes payable | $ 1,759,150 | ||||||||||||
Number of shares isssued during the period | 10,000,000 | ||||||||||||
Percentage of ownership | 75.00% | 75.00% | 75.00% | ||||||||||
Number of shars held in treasury | 10,000,000 | 10,000,000 | 10,000,000 | ||||||||||
NOW Solutions [Member] | 11% Secured Lakeshore Note Due 2022-01-31 [Member] | |||||||||||||
Percentage of royalty on annual gross revenues | 6.00% | ||||||||||||
Threshold annual gross revenues | $ 5,000,000 | ||||||||||||
Percentage of ownership interest in principal payment | 25.00% | ||||||||||||
Value of shares isssued during the period | $ 500,000 | ||||||||||||
Number of shares of Now Solutions available for purchase option | 166 | ||||||||||||
Weekly advance periodic payment | $ 2,500 | ||||||||||||
Attorney fees | 40,000 | ||||||||||||
Payments to employees and former consultant | $ 80,000 | ||||||||||||
SiteFlash [Member] | 11% Secured Lakeshore Note Due 2022-01-31 [Member] | |||||||||||||
Percentage of net claim proceeds | 5.00% | 8.00% | |||||||||||
SiteFlash [Member] | 11% Secured Lakeshore Note Due 2022-01-31 [Member] | Lakeshore Investments Llc [Member] | |||||||||||||
Percentage of ownership | 90.00% | ||||||||||||
Priority Time Systems, Inc. [Member] | |||||||||||||
Percentage of ownership | 70.00% | 70.00% | 70.00% | ||||||||||
Priority Time Systems, Inc. [Member] | 11% Secured Lakeshore Note Due 2022-01-31 [Member] | Lakeshore Investments Llc [Member] | |||||||||||||
Income (loss) attributable to noncontrolling interest | $ 391,920 | ||||||||||||
Percentage of ownership | 20.00% | ||||||||||||
SnAPPnet, Inc [Member] | |||||||||||||
Percentage of ownership | 80.00% | 80.00% | 80.00% | ||||||||||
SnAPPnet, Inc [Member] | 11% Secured Lakeshore Note Due 2022-01-31 [Member] | Lakeshore Investments Llc [Member] | |||||||||||||
Income (loss) attributable to noncontrolling interest | $ 99,210 | ||||||||||||
Percentage of ownership | 90.00% |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 1 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Aug. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Notes Payable [Abstract] | ||||
Balance ,beginning | $ 4,575,239 | |||
Repayments of third party notes | $ (62,575) | (52,448) | ||
Borrowings from third parties | 885,333 | |||
Stock issued for debt payments | (258,552) | |||
Debt discounts due to stock and warrants issued with debt | (153,288) | |||
Amortization of debt discounts | $ 44,942 | 10,570 | ||
Currency translation | (624) | |||
Balance, end | $ 5,006,230 | $ 5,006,230 |
Derivative liability and fair22
Derivative liability and fair value measurements (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2015 | Sep. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Derivative liabilities | $ 51,719 | ||||||
Fair value of stock issued | $ 432,720 | ||||||
(Gain) loss on derivative liability | $ 88,786 | $ (78,680) | $ 194,381 | ||||
Stock Derivative [Member] | |||||||
Number of shares issued for derivative | 0 | 4,309,983 | |||||
Vertical Mountain Reservoir Corporation [Member] | |||||||
Number of shares issued during the period | 2,809,983 | ||||||
Derivative liabilities | $ 92,399 | $ 92,399 | $ 92,399 | $ 92,399 | |||
Number of shares issued for pledge | 1,309,983 | ||||||
Number of shares converted wrongfully | 500,000 | 500,000 | |||||
Number of shares transferred | 1,000,000 | ||||||
Fair value of stock issued | 112,399 | $ 112,399 | |||||
Stock reimbursement expense | 20,000 | $ 20,000 | |||||
Mr. Valdetaro [Member] | Lakeshore Investments Llc [Member] | |||||||
Number of shares issued during the period | 1,000,000 | ||||||
Number of shares transferred | 1,000,000 | ||||||
Fair value of stock issued | $ 38,000 | ||||||
Officer [Member] | |||||||
Number of shares issued for pledge | 1,000,000 | ||||||
Value of shares isssued during the period | $ 50,000 | ||||||
(Gain) loss on derivative liability | $ 12,000 |
Derivative liability and fair23
Derivative liability and fair value measurements (Details) - Stock Derivative [Member] - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Level 1 [Member] | ||
Liabilities | ||
Derivative | $ 51,719 | |
Level 2 [Member] | ||
Liabilities | ||
Derivative | ||
Level 3 [Member] | ||
Liabilities | ||
Derivative |
Common and Preferred Stock Tr24
Common and Preferred Stock Transactions (Details Narrative) - USD ($) | Jul. 31, 2015 | Jul. 15, 2015 | Jun. 15, 2015 | Jan. 09, 2013 | Sep. 30, 2015 | Aug. 31, 2015 | Jul. 31, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Feb. 28, 2015 | Sep. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Common stock authorized after amendment | 2,000,000,000 | |||||||||||||||
Total shares of Now Solutions available for purchase option | 250 | |||||||||||||||
Fair value stock issued | $ 432,720 | |||||||||||||||
Derivative liabilities | $ 51,719 | |||||||||||||||
Repayment of debt | $ 62,575 | 52,448 | ||||||||||||||
Extinguishment loss | $ 21,425 | $ (173,193) | $ (323,193) | |||||||||||||
Number of shars held in treasury | 30,000,000 | 30,000,000 | 30,000,000 | 0 | ||||||||||||
Number of shares granted during the period to employees | 2,250,000 | 3,000,000 | ||||||||||||||
Value of shares granted during the period to employees | $ 54,750 | $ 84,000 | ||||||||||||||
Debt discounts due to stock and warrants issued with debt | $ (153,288) | |||||||||||||||
Amortization of debt discounts | $ 44,942 | 10,570 | ||||||||||||||
Allocated Share-based Compensation Expense | $ 9,808 | |||||||||||||||
Maximum [Member] | ||||||||||||||||
Debt term | 30 months | |||||||||||||||
Minimum [Member] | ||||||||||||||||
Debt term | 24 months | |||||||||||||||
11% Secured Lakeshore Note Due 2022-01-31 [Member] | ||||||||||||||||
Number of shares of Now Solutions available for purchase option | 84 | |||||||||||||||
Number of shares issued for forbearance | 2,000,000 | 7,000,000 | 13,000,000 | |||||||||||||
Repayment of debt | $ 250,000 | |||||||||||||||
Forbearance loss | $ 54,200 | 175,700 | $ 455,000 | |||||||||||||
Value of shares isssued during the period | $ 450,000 | |||||||||||||||
Aggregate forbearance fees | $ 15,000 | |||||||||||||||
Description of purchase option | The Company also agreed to make a $500,000 payment for amounts due to Lakeshore under the Lakeshore Note and the Loan Agreement. In the event that the Company did not make the Lakeshore $500,000 payment on or before August 21, 2015, then Lakeshore in lieu of the $500,000 payment, would obtain a purchase option (the 2015 Purchase Option In the event that Lakeshore exercises the 2015 Purchase Option and purchases the additional common shares of NOW Solutions by December 31, 2015, then (a) after the second year, but before the end of the fourth year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option, the Company will have the option to purchase for cash, all of Lakeshore's 500 shares for a price equal to the greater of $4.0 Million, 60% of trailing twelve months revenue, or 2.75X EBITDA. If the Company does not exercise its purchase option prior to the end of the fourth year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option, then Lakeshore will have a purchase option to purchase for cash, all of the Companys 500 shares for the greater of $3.5 Million, 55% of trailing twelve months revenue, or 2.50 X EBITDA, which will expire at the end of the seventh year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option if exercised by Lakeshore. | |||||||||||||||
Debt term | 10 years | |||||||||||||||
Weber Notes [Member] | ||||||||||||||||
Number of shares isssued during the period | 15,000,000 | 20,000,000 | ||||||||||||||
Debt face amount | $ 745,400 | |||||||||||||||
Number of shares issued for forbearance | 10,000,000 | |||||||||||||||
Number of shares issued in lieu for payment | 10,000,000 | |||||||||||||||
Repayment of debt | $ 259,010 | |||||||||||||||
Extinguishment loss | 148,985 | $ 150,000 | ||||||||||||||
Number of shars held in treasury | 20,000,000 | |||||||||||||||
Forbearance loss | $ 249,000 | |||||||||||||||
Value of shares isssued during the period | $ 408,000 | |||||||||||||||
Litigation Case Against Vertical Mountain Reservoir Corporation [Member] | ||||||||||||||||
Number of shares isssued during the period | 15,000,000 | 20,000,000 | ||||||||||||||
Fair value stock issued | $ 408,000 | $ 499,000 | ||||||||||||||
Number of shares issued for forbearance | 10,000,000 | |||||||||||||||
Fair value of stock issued for forbearance | $ 249,000 | |||||||||||||||
Number of shares issued in lieu for payment | 10,000,000 | |||||||||||||||
Repayment of debt | $ 265,000 | $ 100,000 | ||||||||||||||
Extinguishment loss | $ 150,000 | |||||||||||||||
Vertical Mountain Reservoir Corporation [Member] | ||||||||||||||||
Number of shares isssued during the period | 2,809,983 | |||||||||||||||
Fair value stock issued | $ 112,399 | 112,399 | ||||||||||||||
Derivative liabilities | $ 92,399 | $ 92,399 | $ 92,399 | 92,399 | $ 92,399 | |||||||||||
Number of shares isssued for pledge | 1,309,983 | |||||||||||||||
Number of shares converted wrongfully | 500,000 | 500,000 | ||||||||||||||
Number of shares transferred | 1,000,000 | |||||||||||||||
Stock reimbursement expense | 20,000 | $ 20,000 | ||||||||||||||
NOW Solutions [Member] | ||||||||||||||||
Number of shares isssued during the period | 10,000,000 | |||||||||||||||
Number of shars held in treasury | 10,000,000 | 10,000,000 | 10,000,000 | |||||||||||||
NOW Solutions [Member] | 11% Secured Lakeshore Note Due 2022-01-31 [Member] | ||||||||||||||||
Number of shares of Now Solutions available for purchase option | 166 | |||||||||||||||
Value of shares isssued during the period | $ 500,000 | |||||||||||||||
Third Party [Member] | 12% Promissory Note [Member] | ||||||||||||||||
Debt face amount | $ 100,000 | $ 100,000 | ||||||||||||||
Third Party [Member] | 12% Promissory Note [Member] | ||||||||||||||||
Number of shares isssued during the period | 556,522 | |||||||||||||||
Repayment of debt | $ 13,913 | |||||||||||||||
Extinguishment loss | $ 2,783 | |||||||||||||||
Third Party [Member] | 10% Convertible Debentures [Member] | ||||||||||||||||
Number of shares isssued during the period | 6,000,000 | |||||||||||||||
Debt face amount | $ 550,000 | $ 550,000 | $ 550,000 | |||||||||||||
Description of conversion terms | The holder of the debenture may convert the debenture into shares of common stock at a price per share of either (a) 80% of the average per share price of the Companys common stock for the 5 trading days preceding the notice of conversion date using the 3 lowest closing prices or (b) 75% of the average per share closing bid price of the Companys common stock during the 10 trading days prior to the notice of conversion date using the lowest 5 closing bid prices per share (which shall not be lower than $0.03 per share). | |||||||||||||||
Debt discounts due to stock and warrants issued with debt | $ 153,288 | |||||||||||||||
Amortization of debt discounts | $ 10,570 | |||||||||||||||
Third Party [Member] | 10% Convertible Debentures [Member] | Warrant [Member] | ||||||||||||||||
Warrant oustanding | 5,500,000 | 5,500,000 | 5,500,000 | |||||||||||||
Third Party [Member] | 10% Convertible Debentures [Member] | Warrant [Member] | Maximum [Member] | ||||||||||||||||
Warrant term | 5 years | |||||||||||||||
Exercise price (in dollars per shares) | $ 0.10 | $ 0.10 | $ 0.10 | |||||||||||||
Third Party [Member] | 10% Convertible Debentures [Member] | Warrant [Member] | Minimum [Member] | ||||||||||||||||
Warrant term | 3 years | |||||||||||||||
Exercise price (in dollars per shares) | $ 0.05 | $ 0.05 | $ 0.05 | |||||||||||||
Third Party [Member] | 10% Convertible Debentures [Member] | Cashless Warrant [Member] | ||||||||||||||||
Number of cashless warrants | 1,000,000 | 1,000,000 | 1,000,000 | |||||||||||||
Ploinks, Inc [Member] | ||||||||||||||||
Number of shares isssued during the period | 200,000 | |||||||||||||||
Number of shares granted during the period to employees | 800,000 | |||||||||||||||
Ploinks, Inc [Member] | Maximum [Member] | ||||||||||||||||
Vesting period | 30 months | |||||||||||||||
Ploinks, Inc [Member] | Minimum [Member] | ||||||||||||||||
Vesting period | 24 months | |||||||||||||||
Ploinks, Inc [Member] | 12% Promissory Note [Member] | ||||||||||||||||
Number of shares isssued during the period | 1,000,000 | |||||||||||||||
Ploinks, Inc [Member] | 11% Secured Lakeshore Note Due 2022-01-31 [Member] | ||||||||||||||||
Number of shares issued for forbearance | 2,000,000 | 3,000,000 | ||||||||||||||
Number of shares issued in lieu for payment | 500,000 | |||||||||||||||
Repayment of debt | $ 500,000 | |||||||||||||||
Ploinks, Inc [Member] | Weber Notes [Member] | ||||||||||||||||
Number of shares isssued during the period | 1,000,000 | |||||||||||||||
Vertical Healthcare Solutions, Inc [Member] | Preferred Stock [Member] | ||||||||||||||||
Number of shares isssued during the period | 60,000 | |||||||||||||||
Mr. Valdetaro [Member] | Lakeshore Investments Llc [Member] | ||||||||||||||||
Number of shares isssued during the period | 1,000,000 | |||||||||||||||
Fair value stock issued | $ 38,000 | |||||||||||||||
Number of shares transferred | 1,000,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Related Party Transaction [Line Items] | |||||
Fair value of stock issued | $ 432,720 | ||||
Derivative liabilities | $ 51,719 | ||||
Accounts payable to related parties | 71,843 | $ 36,333 | |||
Vertical Mountain Reservoir Corporation [Member] | |||||
Related Party Transaction [Line Items] | |||||
Number of shares isssued during the period | 2,809,983 | ||||
Fair value of stock issued | $ 112,399 | 112,399 | |||
Derivative liabilities | $ 92,399 | 92,399 | $ 92,399 | ||
Number of shares isssued for pledge | 1,309,983 | ||||
Number of shares converted wrongfully | 500,000 | 500,000 | |||
Number of shares transferred | 1,000,000 | ||||
Stock reimbursement expense | $ 20,000 | $ 20,000 | |||
Lakeshore Investments Llc [Member] | Mr. Valdetaro [Member] | |||||
Related Party Transaction [Line Items] | |||||
Number of shares isssued during the period | 1,000,000 | ||||
Fair value of stock issued | $ 38,000 | ||||
Number of shares transferred | 1,000,000 |
Legal Proceedings (Details Narr
Legal Proceedings (Details Narrative) - USD ($) | Jul. 15, 2015 | Jun. 15, 2015 | Feb. 04, 2014 | Aug. 05, 2012 | Aug. 31, 2015 | Jun. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2011 |
Loss Contingencies [Line Items] | |||||||||||
Repayment of debt | $ 62,575 | $ 52,448 | |||||||||
Fair value of stock issued | 432,720 | ||||||||||
Extinguishment loss | $ 21,425 | $ (173,193) | $ (323,193) | ||||||||
Litigation Case Against InfiniTek Corporation [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Litigation settlement amount | $ 82,500 | $ 82,500 | |||||||||
Loss contingency accrual payments | $ 37,500 | ||||||||||
Litigation Case Against Vertical Mountain Reservoir Corporation [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Loss contingency damages sought value | $ 275,000 | ||||||||||
Number of shares issued during the period | 15,000,000 | 20,000,000 | |||||||||
Number of shares issued for forbearance | 10,000,000 | ||||||||||
Fair value of stock issued for forbearance | $ 249,000 | ||||||||||
Number of shares issued in lieu for payment | 10,000,000 | ||||||||||
Fair value of stock issued in lieu for payment | $ 250,000 | ||||||||||
Debt outstanding balance | 365,000 | ||||||||||
Repayment of debt | $ 265,000 | $ 100,000 | |||||||||
Fair value of stock issued | $ 408,000 | 499,000 | |||||||||
Extinguishment loss | $ 150,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Jul. 31, 2015 | Oct. 31, 2015 | Aug. 31, 2015 | Sep. 30, 2015 | Mar. 31, 2015 |
Subsequent Event [Line Items] | |||||
Repayment of debt | $ 62,575 | $ 52,448 | |||
11% Secured Lakeshore Note Due 2022-01-31 [Member] | |||||
Subsequent Event [Line Items] | |||||
Value of shares issued during the period | 450,000 | ||||
Aggregate forbearance fees | $ 15,000 | ||||
Repayment of debt | $ 250,000 | ||||
Description of purchase option | The Company also agreed to make a $500,000 payment for amounts due to Lakeshore under the Lakeshore Note and the Loan Agreement. In the event that the Company did not make the Lakeshore $500,000 payment on or before August 21, 2015, then Lakeshore in lieu of the $500,000 payment, would obtain a purchase option (the 2015 Purchase Option In the event that Lakeshore exercises the 2015 Purchase Option and purchases the additional common shares of NOW Solutions by December 31, 2015, then (a) after the second year, but before the end of the fourth year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option, the Company will have the option to purchase for cash, all of Lakeshore's 500 shares for a price equal to the greater of $4.0 Million, 60% of trailing twelve months revenue, or 2.75X EBITDA. If the Company does not exercise its purchase option prior to the end of the fourth year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option, then Lakeshore will have a purchase option to purchase for cash, all of the Companys 500 shares for the greater of $3.5 Million, 55% of trailing twelve months revenue, or 2.50 X EBITDA, which will expire at the end of the seventh year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option if exercised by Lakeshore. | ||||
Third Party [Member] | 12% Promissory Note [Member] | |||||
Subsequent Event [Line Items] | |||||
Debt face amount | $ 100,000 | ||||
Third Party [Member] | 12% Promissory Note [Member] | |||||
Subsequent Event [Line Items] | |||||
Number of shares issued during the period (in shares) | 556,522 | ||||
Accrued interest | $ 11,130 | ||||
Repayment of debt | $ 13,913 | ||||
Third Party [Member] | 10% Convertible Debentures [Member] | |||||
Subsequent Event [Line Items] | |||||
Debt face amount | $ 550,000 | ||||
Description of conversion terms | The holder of the debenture may convert the debenture into shares of common stock at a price per share of either (a) 80% of the average per share price of the Companys common stock for the 5 trading days preceding the notice of conversion date using the 3 lowest closing prices or (b) 75% of the average per share closing bid price of the Companys common stock during the 10 trading days prior to the notice of conversion date using the lowest 5 closing bid prices per share (which shall not be lower than $0.03 per share). | ||||
Number of shares issued during the period (in shares) | 6,000,000 | ||||
Third Party [Member] | 10% Convertible Debentures [Member] | Warrant [Member] | |||||
Subsequent Event [Line Items] | |||||
Warrant oustanding | 5,500,000 | ||||
Subsequent Event [Member] | 11% Secured Lakeshore Note Due 2022-01-31 [Member] | |||||
Subsequent Event [Line Items] | |||||
Repayment of debt | $ 250,000 | ||||
Description of purchase option | The Company also agreed to make a $500,000 payment for amounts due to Lakeshore under the Lakeshore Note and the Loan Agreement. In the event that the Company did not make the Lakeshore $500,000 payment on or before August 21, 2015, then Lakeshore in lieu of the $500,000 payment, would obtain a purchase option (the 2015 Purchase Option In the event that Lakeshore exercises the 2015 Purchase Option and purchases the additional common shares of NOW Solutions by December 31, 2015, then (a) after the second year, but before the end of the fourth year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option, the Company will have the option to purchase for cash, all of Lakeshore's 500 shares for a price equal to the greater of $4.0 Million, 60% of trailing twelve months revenue, or 2.75X EBITDA. If the Company does not exercise its purchase option prior to the end of the fourth year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option, then Lakeshore will have a purchase option to purchase for cash, all of the Companys 500 shares for the greater of $3.5 Million, 55% of trailing twelve months revenue, or 2.50 X EBITDA, which will expire at the end of the seventh year from the date Lakeshore purchases the additional shares of NOW Solutions under the 2015 Purchase Option if exercised by Lakeshore. | ||||
Subsequent Event [Member] | Third Party [Member] | 12% Promissory Note [Member] | |||||
Subsequent Event [Line Items] | |||||
Debt face amount | $ 65,833 | ||||
Number of shares issued during the period (in shares) | 1,500,000 | ||||
Value of shares issued during the period | $ 29,250 | ||||
Subsequent Event [Member] | Third Party [Member] | 12% Promissory Note [Member] | |||||
Subsequent Event [Line Items] | |||||
Debt face amount | 100,000 | ||||
Subsequent Event [Member] | Third Party [Member] | Second Promissory Note (Forbearance Agreement) [Member] | |||||
Subsequent Event [Line Items] | |||||
Debt face amount | $ 50,000 | ||||
Subsequent Event [Member] | Third Party [Member] | Total Promissory Note (Forbearance Agreement) [Member] | |||||
Subsequent Event [Line Items] | |||||
Number of shares issued during the period (in shares) | 1,000,000 | ||||
Aggregate forbearance fees | $ 20,000 | ||||
Accrued interest | $ 63,907 | ||||
Shares issued for forbearance | 7,000,000 | ||||
Value of shares cancelled during the period | $ 140,000 | ||||
Subsequent Event [Member] | Third Party [Member] | Promissory Note (Forbearance Agreement) [Member] | |||||
Subsequent Event [Line Items] | |||||
Debt face amount | $ 1,288,919 | ||||
Number of shares issued during the period (in shares) | 1,500,000 | ||||
Subsequent Event [Member] | Third Party [Member] | 10% Convertible Debentures [Member] | |||||
Subsequent Event [Line Items] | |||||
Debt face amount | $ 50,000 | ||||
Description of conversion terms | The lender may convert the debenture into shares of common stock at a price per share of 80% of the average per share price of the Companys common stock for the 5 trading days preceding the notice of conversion date using the 3 lowest closing prices. | ||||
Number of shares issued during the period (in shares) | 500,000 | ||||
Subsequent Event [Member] | Third Party [Member] | 10% Convertible Debentures [Member] | Warrant [Member] | |||||
Subsequent Event [Line Items] | |||||
Warrant term | 3 years | ||||
Warrant oustanding | 500,000 | ||||
Exercise price (in dollars per shares) | $ 0.10 |