Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Apr. 14, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | VERTICAL COMPUTER SYSTEMS INC | ||
Entity Central Index Key | 1,099,509 | ||
Document Type | 10-K | ||
Trading Symbol | VCSY | ||
Document Period End Date | Dec. 31, 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 Public Float | $ 37,896,769 | ||
Entity Common Stock, Shares Outstanding | 1,129,367,529 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash | $ 37,141 | $ 117,866 |
Accounts receivable, net of allowance for bad debts of $97,973 and $97,419 | 382,463 | 560,879 |
Prepaid expenses and other current assets | 57,488 | 41,387 |
Total current assets | 477,092 | 720,132 |
Property and equipment, net of accumulated depreciation of $1,038,609 and $1,026,654 | 2,375 | 28,089 |
Intangible assets, net of accumulated amortization of $319,413 and $302,016 | 1,181,661 | 657,978 |
Deposits and other assets | 7,909 | 24,388 |
Total assets | 1,669,037 | 1,430,587 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 10,536,974 | 10,659,737 |
Accounts payable to related parties | 108,379 | 36,333 |
Bank overdraft | 52 | 7,699 |
Deferred revenue | $ 1,658,158 | 2,321,044 |
Derivative liabilities | 51,719 | |
Convertible debentures, net of unamortized discounts of $110,121 and $0 | $ 499,879 | 30,000 |
Notes payable | 4,897,141 | 4,545,239 |
Notes payable and convertible debt to related parties, net of unamortized discounts of $20,798 and $0 | 417,445 | 348,666 |
Total current liabilities | 18,118,028 | 18,000,437 |
Total liabilities | 18,118,028 | 18,000,437 |
Convertible Cumulative Preferred stock | 9,902,024 | 9,902,024 |
Stockholders' Deficit | ||
Common stock: $0.00001 par value, 2,000,000,000 shares authorized, 1,114,601,656 issued and 1,084,601,656 outstanding as of December 31, 2015 and 1,000,000,000 shares authorized, 999,735,151 shares issued and outstanding as of December 31, 2014 | 11,147 | $ 9,998 |
Treasury stock: 30,000,000 shares as of December 31, 2015 and no shares as of December 31, 2014 | (300) | |
Additional paid-in capital | 22,252,823 | $ 19,925,061 |
Accumulated deficit | (49,739,924) | (47,174,557) |
Accumulated other comprehensive income - foreign currency translation | 558,668 | 145,808 |
Total Vertical Computer Systems, Inc. stockholders' deficit | (26,917,586) | (27,093,690) |
Non-controlling interest | 566,571 | 621,816 |
Total stockholders' deficit | (26,351,015) | (26,471,874) |
Total liabilities and stockholders' deficit | 1,669,037 | 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 (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Allowance for bad debts | $ 97,973 | $ 97,419 |
Accumulated depreciation, property and equipment | 1,038,609 | 1,026,654 |
Accumulated amortization | 319,413 | 302,016 |
Unamortized discounts | 110,121 | 0 |
Unamortized discounts to related parties | $ 20,798 | $ 0 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, authorized | 2,000,000,000 | 1,000,000,000 |
Common stock, issued | 1,114,601,656 | 999,735,151 |
Common stock, outstanding | 1,084,601,656 | 999,735,151 |
Treasury stock | 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, authorized | 250,000 | 250,000 |
Preferred stock, issued | 48,500 | 48,500 |
Preferred stock, 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, authorized | 375,000 | 375,000 |
Preferred stock, issued | 7,200 | 7,200 |
Preferred stock, 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, authorized | 200,000 | 200,000 |
Preferred stock, issued | 50,000 | 50,000 |
Preferred stock, 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, authorized | 300,000 | 300,000 |
Preferred stock, issued | 25,000 | 25,000 |
Preferred stock, outstanding | 25,000 | 25,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues: | ||
Licensing and software | $ 22,500 | $ 2,600,360 |
Software maintenance | 3,573,622 | 3,971,097 |
Consulting services | 292,129 | 425,932 |
Cloud-based offering | 321,619 | 373,335 |
Other | 53,765 | 64,778 |
Total Revenues | 4,263,635 | 7,435,502 |
Cost of Revenues | (1,767,155) | (2,159,870) |
Gross Profit | 2,496,480 | 5,275,632 |
Operating Expenses: | ||
Selling, general and administrative expenses | 3,088,568 | 5,035,088 |
Depreciation and amortization | 38,412 | 44,878 |
Bad debt expense | $ 3,300 | 42,492 |
Impairment of software costs | 771,251 | |
Total operating expenses | $ 3,130,280 | 5,893,709 |
Operating loss | (633,800) | (618,077) |
Other Income (Expense): | ||
Gain (loss) on derivative liabilities | (78,680) | 211,621 |
Forbearance fees | (1,065,900) | $ (197,156) |
Loss on extinguishment of debt | (393,301) | |
Interest income | 9 | $ 19 |
Interest expense | (895,920) | (933,529) |
Net loss before non-controlling interest and income tax benefit | (3,067,592) | (1,537,122) |
Income tax benefit | (571,980) | (86,300) |
Net loss before non-controlling interest | (2,495,612) | (1,450,822) |
Net loss attributable to non-controlling interest | (69,755) | (32,014) |
Net loss attributable to Vertical Computer Systems, Inc. | (2,565,367) | (1,482,836) |
Dividends applicable to preferred stock | (588,000) | (588,000) |
Net loss available to common stockholders | $ (3,153,367) | $ (2,070,836) |
Basic and diluted loss per share (in dollars per share) | $ 0 | $ 0 |
Basic and diluted weighted average common shares outstanding (in shares) | 1,036,597,308 | 999,471,727 |
Comprehensive loss: | ||
Net loss | $ (2,495,612) | $ (1,450,822) |
Translation adjustments | 412,860 | 264,356 |
Comprehensive loss | (2,082,752) | (1,186,466) |
Comprehensive loss attributable to non-controlling interest | (69,755) | (32,014) |
Comprehensive loss attributable to Vertical Computer Systems, Inc. | $ (2,152,507) | $ (1,218,480) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($) | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Other Comprehensive Interest [Member] | Non-controlling Interest [Member] | Total |
Balances, in beginning at Dec. 31, 2013 | $ 9,990 | $ 19,420,513 | $ (45,691,721) | $ (118,548) | $ 1,080,882 | $ (25,298,884) | |
Balances, in beginning (in shares) at Dec. 31, 2013 | 998,985,151 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Shares issued for stock compensation that was previously accrued | $ 6 | 10,220 | 10,226 | ||||
Shares issued for stock compensation that was previously accrued (in shares) | 550,000 | ||||||
Shares issued for stock compensation | $ 2 | 3,198 | 3,200 | ||||
Shares issued for stock compensation (in shares) | 200,000 | ||||||
Issuance of subsidiary stock | 491,130 | (491,130) | 491,130 | ||||
Other comprehensive income translation adjustment | 264,356 | 50 | 264,406 | ||||
Net loss | (1,482,836) | 32,014 | (1,450,822) | ||||
Balances, ending at Dec. 31, 2014 | $ 9,998 | 19,925,061 | (47,174,557) | 145,808 | 621,816 | (26,471,874) | |
Balances, ending (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 | $ 356 | 895,557 | 895,913 | ||||
Shares issued for accrued interest and loan principal (in shares) | 35,556,522 | ||||||
Shares issued for loan forbearance | $ 365 | 1,050,535 | 1,050,900 | ||||
Shares issued for loan forbearance (in share) | 36,500,000 | ||||||
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 | $ 75 | 182,458 | 182,533 | ||||
Shares and warrants issued with convertible debt (in shares) | 7,500,000 | ||||||
Shares issued for loan discounts | $ 15 | 29,235 | 29,250 | ||||
Shares issued for loan discounts (in shares) | 1,500,000 | ||||||
Amortization of restricted stock awards | 19,616 | 19,616 | |||||
Dividends paid by subsidiary to non-controlling interest | (125,000) | $ (125,000) | |||||
Issuance of subsidiary stock | |||||||
Other comprehensive income translation adjustment | 412,860 | $ 412,860 | |||||
Net loss | (2,565,367) | 69,755 | (2,495,612) | ||||
Balances, ending at Dec. 31, 2015 | $ 11,147 | $ (300) | $ 22,252,823 | $ (49,739,924) | $ 558,668 | $ 566,571 | $ (26,351,015) |
Balances, ending (in shares) at Dec. 31, 2015 | 1,114,601,656 | (30,000,000) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (2,495,612) | $ (1,450,822) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Loss on extinguishment of debt and accrued interest | 393,301 | |
Depreciation and amortization | 38,412 | $ 44,878 |
Amortization of restricted stock awards | 19,616 | |
Amortization of debt discounts | 80,864 | |
Loss (gain) on derivatives | 78,680 | $ (211,621) |
Common shares issued for stock compensation | $ 20,000 | 3,200 |
Impairment of software development costs | $ 771,251 | |
Forbearance fees paid with common stock | $ 1,050,900 | |
Bad debt expense | 3,300 | $ 42,492 |
Write off of property and equipment | 4,919 | |
Settlement of accrued income taxes | (581,622) | $ (267,842) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 158,158 | (43,763) |
Prepaid expense and other assets | 164 | 56,898 |
Accounts payable and accrued liabilities | 1,083,971 | 1,173,885 |
Accounts payable to related parties | 72,046 | 12,739 |
Deferred revenue | (453,109) | 3,055 |
Net cash provided by (used in) operating activities | (526,012) | 134,350 |
Cash flows from investing activities: | ||
Software development | $ (541,300) | (478,876) |
Purchase of equipment | (8,091) | |
Net cash used in investing activities | $ (541,300) | (486,967) |
Cash flows from financing activities: | ||
Payments of notes payable | (132,848) | (418,294) |
Borrowings on notes payable | 555,333 | 451,282 |
Payments on related party debt | (10,425) | (20,992) |
Borrowings on related party debt and convertible debt | 100,000 | $ 25,500 |
Borrowings on convertible debentures | 580,000 | |
Dividends paid by subsidiary to non-controlling interest | (125,000) | |
Bank overdraft | (7,647) | $ 5,771 |
Net cash provided by financing activities | 959,413 | 43,267 |
Effect of changes in exchange rates on cash | 27,174 | 264,507 |
Net decrease in cash | (80,725) | (44,843) |
Cash, beginning of period | 117,866 | 162,709 |
Cash, end of period | 37,141 | 117,866 |
Supplemental Disclosure of Cash Flows Information: | ||
Cash paid for interest | $ 128,712 | 316,353 |
Non-cash Investing and Financing Activities: | ||
Common shares issued for accrued stock compensation | 10,226 | |
Issuance of subsidiary stock | $ 491,130 | |
Common shares issued for conversion of debt and accrued interest | $ 895,913 | |
Common stock issued for settlement of derivative liabilities | 130,399 | |
Debt discount due to shares and warrants issued with debt | 211,783 | |
Accrued interest capitalized into debt principal | $ 188,552 |
Organization, Basis of Presenta
Organization, Basis of Presentation and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 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 Nature of Business Vertical Computer Systems, Inc. was incorporated in Delaware in March 1992. We are a multinational provider of application software, software services, Internet core technologies, and derivative software application products through our distribution network. Our business model combines complementary, integrated software products, internet core technologies, and a multinational distribution system of partners, in order to create a distribution matrix that is capable of penetrating multiple sectors through cross selling our products and services. We operate one business segment. Basis of Presentation 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 of which 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. To date, we have generated revenues primarily from software licenses, software as a service, consulting fees and maintenance agreements from NOW Solutions and SnAPPnet and patent licenses from Vertical Computer Systems, the parent company. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. Equity investments in which we exercise significant influence, but do not control and are not the primary beneficiary, are accounted for using the equity method of accounting. Investments in which we do not exercise significant influence over the investee are accounted for using the cost method of accounting. All intercompany accounts and transactions have been eliminated. We currently have no investments accounted for using the equity or cost methods of accounting. Cash and Cash Equivalents Cash equivalents are highly liquid investments with an original maturity of three months or less. Revenue Recognition Our revenue recognition policies are in accordance with standards on software revenue recognition, which includes guidance on revenue arrangements with multiple deliverables and arrangements that include the right to use of software stored on another entitys hardware. In the case of non-software arrangements, we apply the guidance on revenue arrangements with multiple deliverables and wherein multiple elements are allocated to each element based on the elements relative fair value. Revenue allocated to separate elements is recognized for each element in accordance with our accounting policies described below. If we cannot account for items included in a multiple-element arrangement as separate units of accounting, they are combined and accounted for as a single unit of accounting and generally recognized as the undelivered items or services are provided to the customer. Consulting. Software License. Software licenses are generally sold as part of a multiple element arrangement that may include maintenance and, under a separate agreement, consulting services. The consulting services are generally performed by the Company, but the customer may use a third-party to perform those. We consider these separate agreements as being negotiated as a package. The Company determines whether there is vendor specific objective evidence of fair value (VSOEFV) for each element identified in the arrangement to determine whether the total arrangement fees can be allocated to each element. If VSOEFV exists for each element, the total arrangement fee is allocated based on the relative fair value of each element. In cases where there is not VSOEFV for each element, or if it is determined that services are essential to the functionality of the software being delivered, we initially defer revenue recognition of the software license fees until VSOEFV is established or the services are performed. However, if VSOEFV is determinable for all of the undelivered elements, and assuming the undelivered elements are not essential to the delivered elements, we will defer recognition of the full fair value related to the undelivered elements and recognize the remaining portion of the arrangement value through application of the residual method. Where VSOEFV has not been established for certain undelivered elements, revenue for all elements is deferred until those elements have been delivered or their fair values have been determined. Evidence of VSOEFV is determined for software products based on actual sales prices for the product sold to a similar class of customer and based on pricing strategies set forth in the Companys standard pricing list. Evidence of VSOEFV for consulting services is based upon standard billing rates and the estimated level of effort for individuals expected to perform the related services. The Company establishes VSOEFV for maintenance agreements using the percentage method such that VSOEFV for maintenance is a percentage of the license fee charged annually for a specific software product, which in most instances is 18% of the portion of arrangement fees allocated to the software license element. Maintenance Revenue. While most of our customers pay for their annual maintenance at the beginning of the maintenance period, a few customers have payment terms that allow them to pay for their annual maintenance on a quarterly or monthly basis. If the annual maintenance fee is not paid at the beginning of the maintenance period (or at the beginning of the quarter or month for those few maintenance customers), we will ratably recognize the maintenance revenue if management believes the collection of the maintenance fee is imminent. Otherwise, we will defer revenue recognition until the time that the maintenance fee is paid by the customer. We normally continue to provide maintenance service while awaiting payment from customers. When the payment is received, revenue is recognized for the period that revenue was previously deferred. This may result in volatility in software maintenance revenue from period to period. Cloud-based offering. We will provide consulting services to customers in conjunction with our cloud-based offering. The rate for such service is based on standard hourly or daily billing rates. The consulting revenue is recognized as services are performed. Customers, utilizing their own computer to access our cloud-based offering, are charged a fee equal to the number of employees paid each month multiplied by an agreed-upon monthly rate per employee. The revenue is recognized as the cloud-based offering services are rendered each month. Concentration of Credit Risk We maintain our cash in bank deposit accounts, which, at times, may exceed federally insured limits. We have not experienced any such losses in these accounts. Substantially all of our revenue was derived from recurring maintenance fees related to our payroll processing software. The companys revenue consists of 57% in Canada and 43% in the US. Receivables arising from sales of the Companys products are not collateralized. As of December 31, 2015, four customers represented approximately 81.4% (31.7%, 25.2%, 12.7 and 11.8%) of accounts receivable. As of December 31, 2014, three customers represented approximately 58.4% (21.2%, 20.1%, and 17.1%) of accounts receivable. 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. For the year ended December 31, 2015 and 2014, the company capitalized $541,300 and $478,877, respectively of software development costs related to its Ploinks subsidiary. For the year ended December 31, 2014, the Company wrote off $771,251 of previously capitalized software development costs related to its 70% owned subsidiary, Priority Time Systems. Property and Equipment Property and equipment are stated at cost. Depreciation is computed primarily utilizing the straight-line method over the estimated economic life of three to five years. Maintenance, repairs and minor renewals are charged directly to expenses as incurred. Additions and betterment to property and equipment are capitalized. When assets are disposed of, the related cost and accumulated depreciation thereon are removed from the accounts and any resulting gain or loss is included in the statement of operations. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. During 2015 and 2014, there was no impairment of long-lived assets. Stock-based Compensation We account for share-based compensation in accordance with the provisions of share-based payments, which requires measurement of compensation cost for all stock-based awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. The fair value of restricted stock and restricted stock units is determined based on the number of shares granted and the quoted price of our common stock. Equity instruments issued to other than employees are valued at the earlier of a commitment date or upon completion of the services, based on the fair value of the equity instruments, and are recognized as expense over the service period. Allowance for Doubtful Accounts We establish an allowance for bad debts through a review of several factors including historical collection experience, current aging status of the customer accounts, and financial condition of our customers. We do not generally require collateral for our accounts receivable. Our allowance for doubtful accounts was $97,973 and $97,419 as of December 31, 2015 and 2014, respectively. Income Taxes We provide for income taxes in accordance with the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. A valuation allowance is provided when management cannot determine whether it is more likely than not the deferred tax asset will be realized. The effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Since January 1, 2007, we account for uncertain tax positions in accordance with the authoritative guidance issued by the Financial Accounting Standards Board (FASB) on income taxes which addresses how we should recognize, measure and present in our financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. Pursuant to this guidance, we can recognize a tax benefit only if it is more likely than not that a particular tax position will be sustained upon examination or audit. To the extent the more likely than not standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that is greater than 50% likely of being realized upon settlement. No liability for unrecognized tax benefits was recorded as of December 31, 2015 and 2014. 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 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. The following represents a reconciliation of the numerators and denominators of the basic and diluted earnings per share computation: Year Ended December 31, 2015 Year Ended December 31, 2014 Net Loss Shares Per Share Net Loss Shares Per Basic EPS $ (3,153,367 ) 1,036,597,308 $ (0.00 ) $ (2,070,836 ) 999,471,727 $ (0.00 ) Effect of dilutive securities: Warrants & Restricted Stock - - 0.00 - - 0.00 Diluted EPS $ (3,153,367 ) 1,036,597,308 $ (0.00 ) $ (2,070,836 ) 999,471,727 $ (0.00 ) As of December 31, 2015 and 2014, common stock equivalents related to the convertible debt, preferred stock and stock derivative liabilities totaling 33,681,957 were not included in the denominators of the diluted earnings per share as their effect would be anti-dilutive. Fair Value of Financial Instruments For certain of our financial instruments, including cash, accounts receivable, short term debt and accrued expenses, the carrying amounts approximate fair value due to the short maturity of these instruments. The carrying value of our long-term debt approximates its fair value based on the quoted market prices for the same or similar issues or the current rates offered to us for debt of the same remaining maturities. For additional information, please see Note 4 Derivative Liabilities and Fair Value Measurements. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Among the more significant estimates included in these financial statements are the estimated allowance for doubtful accounts receivable, valuation allowance for deferred tax assets, impairment of long-lived assets and intangible and the valuation of warrants and restricted stock grants. Actual results could materially differ from those estimates. Cash Reimbursements We record reimbursement by our customers for out-of-pocket expense as part of consulting services revenue in accordance with the guidance related to income statement characterization of reimbursements received for out of pocket expense incurred. Reclassifications Certain reclassifications have been made to the prior periods to conform to the current period presentation. 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 Uncertainty
Going Concern Uncertainty | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern Uncertainty | Note 2. Going Concern Uncertainty The accompanying consolidated financial statements for 2015 and 2014 have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of 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 December 31, 2015, the Company had negative working capital of approximately $17.6 million and defaulted on several of its debt obligations. The company also incurred net losses in 2015 and 2014. These conditions raise substantial doubt about the Companys ability to continue as a going concern. 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. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 3. Related Party Transactions In August 2014, in connection with a $50,000 note payable issued to a third party lender by the Company, MRC amended a stock pledge agreement previously entered into with the lender under which MRC had pledged 16,976,296 common shares to secure payment of this note and another note issued to the lender. 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 and a loss on derivative liabilities of $26,000. 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 a loss on derivative liabilities of $64,680 and $20,000 was recognized as stock reimbursement expense during the twelve months ended December 31, 2015. As of December 31, 2015 and 2014, the Company had accounts payable to related parties in an aggregate amount of $108,379 and $36,333, respectively. Related Party Notes Payable December 31, 2015 2014 Notes payable bearing interest at 10% to 15% per annum. Of these notes payable $338,243 and $348,666 were in default at December 31, 2015 and 2014, respectively. $ 338,243 $ 348,666 Convertible debenture bearing interest at 10% per annum, due one year from date of issuance. Net of unamortized discount of $20,798. $ 79,202 $ 348,666 Total notes payable to related parties 417,445 348,666 Current maturities (417,445 ) (348,666 ) Long-term portion of notes payable to related parties $ - $ - The following table reflects our related party debt activity for the years ended December 31, 2015 and 2014: December 31, 2013 $ 344,158 Borrowings from related parties 25,500 Payments to related parties (20,992 ) December 31, 2014 348,666 Borrowings from related parties 100,000 Payments to related parties (10,423 ) Debt discounts due to stock and warrants issued with debt (20,798 ) December 31, 2015 $ 417,445 During the year ended December 31, 2015, the Company issued a convertible debenture in the principal amount of $100,000 to Parker Mills, LLP (Parker Mills). 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 debenture, the holder of the debenture 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 1,000,000 shares of common stock of the Company to the lender and 3-year warrants under which the lender may purchase in aggregate a total of 1,000,000 unregistered shares of common stock of the Company at a purchase price of $0.10 per share. In connection with the issuance of common stock and warrants, the Company recorded a discount of $20,798 against the face value of the loans based on the relative fair market value of the common stock and warrants. William Mills is a partner of Parker Mills and the Secretary and a Director of the Company. During the year ended December 31, 2014, the Company borrowed $25,500 from an employee of the Company. The note is unsecured, bears interest at 11% per annum and is due on demand. |
Derivative Liabilities and Fair
Derivative Liabilities and Fair Value Measurements | 12 Months Ended |
Dec. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liabilities and Fair Value Measurements | Note 4. Derivative Liabilities and Fair Value Measurements Derivative liabilities 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 and a loss on derivative liabilities of $26,000. 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 a loss on derivative liabilities of $64,680 and $20,000 was recognized as stock reimbursement expense during the year ended December 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 on derivative liability during the year ended December 31, 2015. These contractual commitments to replace all of the pledged shares 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. At December 31, 2015 and 2014, the aggregate fair value of the derivative liabilities was $0 and $51,719, respectively. The aggregate change in the fair value of derivative liabilities was a loss of $78,680 for the year ended December 31, 2015. For the year ended December 31, 2014, the aggregate change in the fair value of derivative liabilities was a gain of $211,621 The valuation of our embedded derivatives is determined by using the VCSY stock price at December 31, 2015 and 2014. 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 December 31, 2015 and December 31, 2014: Fair value measurements on a recurring Level 1 Level 2 Level 3 As of December 31, 2015: Liabilities Stock derivatives 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. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 5. Property and Equipment Property and equipment consist of the following as of December 31, 2015 and 2014: 2015 2014 Equipment (3-5 year life) $ 908,086 $ 921,152 Leasehold improvements (5 year life) 87,714 87,713 Furniture and fixtures (3-5 year life) 45,184 45,878 Total 1,040,984 1,054,743 Accumulated depreciation (1,038,609 ) (1,026,654 ) $ 2,375 $ 28,089 Depreciation expense for 2015 and 2014 was $20,795 and $2,598, respectively. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 6. Intangible Assets Intangible assets consisted of the following as of December 31, 2015 and 2014: 2015 2014 Capitalized software development $ 1,174,972 $ 633,672 Acquired software (5 year life) 303,902 304,122 Customer list (5 year life) 2,200 2,200 Trademark 5,000 5,000 Website (5 year life) 15,000 15,000 Total 1,501,074 959,994 Accumulated amortization (319,413 ) (302,016 ) $ 1,181,661 $ 657,978 Amortization expense for 2015 and 2014 was $17,617 and $42,280, respectively. During 2015, the Company capitalized $541,300 of software development costs related to its Ploinks software application. During 2014, the Company wrote off $771,251 of previously capitalized software costs related to its 70% owned subsidiary, Priority Time Systems, and capitalized $478,876 of software development costs related to its Ploinks software application. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | Note 7. Accounts Payable and Accrued Expenses Accounts payable and accrued liabilities consist of the following: 2015 2014 Accounts payable $ 3,975,873 $ 3,611,685 Accrued payroll 2,703,165 2,344,177 Accrued payroll tax and penalties 662,330 671,149 Accrued interest 2,424,178 2,074,934 Accrued taxes 499,102 1,618,956 Accrued liabilities - other 272,326 338,836 $ 10,536,974 $ 10,659,737 Accrued payroll primarily consists of deferred compensation for several executives who agreed to defer a portion of their salaries due to cash flow constraints. Accrued payroll tax and penalties relate to unpaid payroll taxes, interest and penalties for prior years for non-functioning subsidiaries and employer payroll taxes on accrued payroll. Accrued taxes primarily consist of unpaid sales and use taxes, Canadian GST, Canadian income tax and other accrued taxes. Accrued liabilities other primarily consists of accrued rent, board of director fees, unbilled professional and consulting fees, and other accrued expenses. During the year ended December 31, 2015 the Internal Revenue Service has made a claim for payroll taxes owed of approximately $1.2 million. The company currently has this accrued in accounts payable |
Notes Payable and Convertible D
Notes Payable and Convertible Debts | 12 Months Ended |
Dec. 31, 2015 | |
Notes Payable [Abstract] | |
Notes Payable and Convertible Debts | Note 8. Notes Payable and Convertible Debts The following table reflects our third party debt activity, including our convertible debt, for the years ended December 31, 2015 and 2014: December 31, 2013 $ 4,542,512 Repayments of third party notes (418,555 ) Borrowings from third parties 451,282 December 31, 2014 4,575,239 Repayments of third party notes (132,848 ) Borrowings from third parties 1,135,333 Stock issued for debt payments (258,552 ) Debt discounts due to stock and warrants issued with debt (190,985 ) Amortization of debt discounts 80,864 Conversion of accrued interest to debt principal 188,552 Currency translation (583 ) December 31, 2015 $ 5,397,020 During the year ended December 31, 2015, the Company and its subsidiaries borrowed an aggregate of $555,333 from various third party lenders and issued several unsecured notes payable in the same amounts to the lenders, which bear interest at 10%-12% per annum. Of these notes, $132,848 was repaid at December 31, 2015. During the year ended December 31, 2015, the Company issued convertible promissory notes and debentures in the aggregate principal amount of $580,000 to various third party lenders for loans made to the Company in the same amount. The debts accrue interest at 10% per annum and are 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 6,500,000 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 5,800,000 unregistered shares of common stock of the Company at a purchase price of between $0.05-$0.10 per share (of which one warrant for 800,000 shares included a cashless warrant exercise provision). These warrants were issued to the lenders in connection with these loans made to the Company. In connection with the issuance of common stock and warrants, the Company recorded a discount of $161,735 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 $51,614 of amortization expense was recognized for the year ended December 31, 2015. During the year ended December 31, 2014, the Company borrowed an aggregate of $451,282 from various third party lenders and issued several notes payable in the same amounts to lender. Two notes were issued in the aggregate amount of $231,282, had interest rates of 12% per annum, included commitment fees of $22,000 and other payments of 133,000 owed to the lender under previous contractual obligations with the lender, and all amounts outstanding were paid in 2014. One note, issued in the amount of $50,000, bearing interest at the rate of 18% per annum, included a commitment fee of $2,000, was due in November 2014 and is secured by stock pledged by MRC. The remaining notes were issued in the aggregate amount of $170,000, were unsecured, bear interest at 11% per annum, and were due on demand or past due and in default. In connection with the $170,000 in notes issued during the year, the Company agreed to issue 1,000,000 shares of common stock of its subsidiary, Ploinks to the lender. 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 cloud-based offering 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 non-controlling 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. The Company had an option to buy back Lakeshores ownership interest in NOW Solutions, Priority Time and SnAPPnet, Inc. (which expired on January 31, 2015). 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 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 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) 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. 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. Lakeshore did not make the payment due by December 31, 2015 to purchase an additional ownership interest in NOW Solutions and as a consequence the 2015 Purchase Option expired. The Lakeshore note is currently in default and the Company is currently in discussions with Lakeshore to resolve all outstanding issues to ensure that Lakeshore does take any action to enforce its rights under the security agreements related to the Note. 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. All of the foregoing $2,500 weekly payments were made through December 31, 2015. During the year ended December 31, 2015, the Company, through its subsidiary, paid dividends to Lakeshore of $125,000. December 31 December 31 2015 2014 Third Party Notes Payable Unsecured notes payable issued to third party lenders bearing interest at rates between 10% and 15% per annum and are past due their original maturity dates. Of these notes, $1,560,103 and $1,353,743 were in default or non-performing as of December 31, 2015 and 2014, respectively. $ 1,770,103 $ 1,353,743 Secured notes payable issued to third party lenders, bearing interest at 10% to 18% per annum and are past due their original maturity dates or mature based on payment schedules between 2022 and 2024. These notes are secured by stock pledges by MRC totaling 33,976,296 common shares. Of these notes $310,449 and $1,278,460 were in default or non-performing at December 31, 2015 and 2014, respectively. 1,025,449 1,278,460 Secured notes payable issued to third party lenders, bearing interest at 11% to 18% per annum and mature between 2012 and 2022. These notes are secured by certain technology owned by the Company, supporting its Emily product. Of these notes $470,860 were in default or non-performing at December 31, 2015 and 2014. 470,860 470,860 Secured note payable issued to Lakeshore, bearing interest at 11% per annum and maturing December 31, 2022. The note is secured by all of the assets of NOW Solutions, Priority Time, and SnAPPnet, Inc. as well as the SiteFlash technology. 1,630,729 1,442,176 Total notes payable to third parties 4,897,141 4,545,239 Current maturities 4,897,141 (4,545,239 ) Long-term portion of notes payable to third parties $ - $ - Certain notes payable also contain provisions requiring additional principal reductions in the event sales by NOW Solutions exceed certain financial thresholds or the Company receives proceeds from infringement claims regarding U.S. Patent #6,826,744, U.S. Patent #7,716,629 and U.S. Patent #8,949,780. Third Party Convertible Promissory Notes and Debentures Third party convertible promissory notes and debentures consist of the following: December 31, December 31, In December 2003, we issued a debenture in the amount of $30,000 to a third party. The debt accrues interest at 13% per annum and was due December 2005. The holder may convert the debenture into shares of common stock at 100% of the closing price. $ 30,000 $ 30,000 During the year ended December 31, 2015, the Company issued $580,000 of convertible debentures to various third party lenders for loans made to the Company in the aggregate amount of $580,000, net of unamortized discounts of $110,121. 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). 469,879 - Total convertible debentures 499,879 30,000 Current maturities (499,879 ) (30,000 ) Long-term portion of convertible debentures $ - $ - Future minimum payments for third party, related party, and convertible debentures for the next five years are as follows: Year Amount 2016 $ 5,945,384 2017 - 2018 - 2019 - 2020+ - Total notes payable 5,945,384 Unamortized discounts (130,919 ) Notes payable, net of discounts $ 5,814,465 For additional transactions involving notes payable after December 31, 2015, please see Subsequent Events in Note 12. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 9. Income Taxes We account for income taxes using the asset and liability method of accounting for income taxes. Deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rate applicable to future years to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities and result primarily form differences in methods used to amortize intangible assets. A valuation allowance is provided when management cannot determine whether it is more likely than not that the deferred tax asset will be realized. The effect on deferred income taxes of the change in tax rates is recognized in income in the period that includes the enactment date. The difference between the statutory tax rate and the effective tax rate is the valuation allowance. The provision of income taxes consists of the following for the years ended December 31, 2015 and 2014: Years Ended December 31, 2015 2014 Current Federal - 166,675 State - - Foreign (571,980 ) (252,975 ) (571,980 ) (86,300 ) During 2014, the Company recorded an income tax provision of $166,675 related to income taxes for NOW Solutions, a 75% owned subsidiary of the Company. Income taxes in previous years were not accrued as VCSY was able to utilize tax loss carry-forwards to offset NOW Solutions taxable income. As the company owns less than 80% of NOW Solutions, the Company is not allowed to file a consolidated income tax return and NOW Solutions cannot utilize VCSYs tax loss carry-forwards. Temporary difference between the financial statement carrying amount and tax bases of assets and liabilities that give rise to deferred tax assets relate to the following: December 31, December 31, Net operating loss carry-forward $ 8,331,000 $ 7,465,000 Reserves 537,000 497,000 Accrued vacation 37,000 40,000 Deferred compensation 882,000 757,000 9,787,000 8,759,000 Valuation allowance (9,787,000 ) (8,759,000 ) $ - $ - At December 31, 2015 and December 31, 2014, VCSY had available net operating loss carry-forwards of approximately $24.0 million and $22.0 million, respectively. At December 31, 2015 NOW Solutions had available net operating loss carry-forwards of approximately $281,000. These net operating loss carry-forwards expire in varying amounts through 2033. The benefit for income taxes differs from the amount computed by applying the U.S. federal income tax rate of 34% to loss before income taxes as follows for the years ended December 31, 2015 and 2014: 2015 2014 U.S. federal income tax expense at statutory rates (1,113,702 ) (522,621 ) Permanent differences 553,709 (65,441 ) Settlement of foreign income tax (581,622 ) (267,842 ) Foreign income tax expense 9,642 14,867 Change in valuation allowance 559,993 754,737 (571,980 ) (86,300 ) During 2013, the company recorded an arbitrary income tax assessment received from Canada Revenue Agency. During 2014 and 2015, the Company had the income taxes reassessed and, as a result, recognized a gain on settlement of foreign income taxes of $581,622 and $267,842 for the years ended December 31, 2015 and 2014, respectively. During 2015, Canada Revenue Agency began garnishing NOW Solutions Canada customer receivables in order to pay down debts owed to them for income tax and goods and services tax (GST). The customer accounts receivable payments were applied directly to the taxes owed. |
Common and Preferred Stock
Common and Preferred Stock | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Common and Preferred Stock | Note 10. Common and Preferred Stock Terms of Common and Preferred Stock Common Stock Series A Cumulative Convertible Preferred Stock Series B 10% Cumulative Convertible Preferred Stock Series C 4% Cumulative Convertible Preferred Stock Series D 15% Cumulative Convertible Preferred Stock 2015 Common Stock In February 2015, the Company increased the number of its authorized 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 and a loss on derivative liabilities of $26,000. 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 a loss on derivative liabilities of $64,680 and $20,000 was recognized as stock reimbursement expense during the twelve months ended December 31, 2015. 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 certain notes payable issued 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. During the year ended December 31, 2015, the Company granted 2,250,000 unregistered shares of its common stock to employees of the Company and its subsidiaries pursuant to restricted stock agreements with the Company. These shares vest over 2 years in equal installments and the fair value of the awards is being expensed over this vesting period. The aggregate fair market value of the awards was determined to be $54,750. Stock compensation expense of $19,616_has been recorded for the year ended December 31, 2015 as additional paid-in capital. During the year ended December 31, 2015, the Company issued 36,500,000 unregistered shares of its common stock as forbearance fees and late fees to lenders in connection with loans made to the Company and its subsidiaries. The aggregate fair value of these shares was determined to be $1,050,900. During the year ended December 31, 2015, the Company issued 35,556,522 unregistered shares of its common stock to lenders to pay off accrued principal and interest debt in the aggregate amount of $482,612 related to loan principal and interest made by these lenders to the Company and its subsidiaries and $20,000 related to attorney fees. The aggregate fair value of these shares was determined to be $895,913. Accordingly, the Company recorded a loss on debt extinguishment of $393,301. As of December 31, 2015, there were 2,250,000 unvested stock compensation awards During the year ended December 31, 2015, the Company issued 9,000,000 unregistered shares of its common stock and 3-5 year warrants to purchase 6,800,000 shares of common stock at a purchase price between $0.05-$0.10 per share (of which one warrant for 800,000 shares included a cashless warrant exercise provision). These shares and warrants were granted to lenders in connection with loans made by these lenders to the Company and its subsidiaries in the aggregate principal amount of $745,333. The aggregate relative fair value of these shares was determined to be $211,783 (which includes $82,904 under the Black-Scholes formula), and was accounted for as a discount on the loans. Amortization expense is $80,864 during the year ended December 31, 2015 and unamortized discounts are $130,919. Option and warrant activities 2015 is summarized as follows: Incentive Stock Non-Statutory Warrants Weighted Outstanding at 12/31/14 - - - - Options/Warrants granted - - 6,800,000 $ .091 Options/Warrants exercised - - - - Options/Warrants expired/cancelled - - - - Outstanding at 12/31/15 - - 6,800,000 $ .091 The weighted average remaining life of the outstanding warrants as of December 31, 2015 was 2.73. The intrinsic value of the exercisable warrants as of December 31, 2015 was $.0220. Preferred Stock For the year ended December 31, 2015, total dividends applicable to Series A and Series C Preferred Stock was $588,000. The Company did not declare or pay any dividends in 2015. Although no dividends have been declared, the cumulative total of preferred stock dividends due to these stockholders upon declaration was $8,895,712 as of December 31, 2015. 2014 Common Stock During the year ended December 31, 2014, 550,000 common shares granted to employees of the Company and a consultant of the Company vested. Stock compensation that was previously accrued totaling $10,226 was reclassified from accrued liabilities to stockholders equity associated with these shares vested. During the year ended December 31, 2014, the Company granted 200,000 common shares to an employee of the Company. The shares vested immediately upon grant and the fair value of the shares was determined to be $3,200. The fair value was expensed in full during the year ended December 31, 2014. As of December 31, 2014, there were no outstanding, unvested stock compensation awards. Preferred Stock For the year ended December 31, 2014, total dividends applicable to Series A and Series C Preferred Stock was $588,000. The Company did not declare or pay any dividends in 2014. Although no dividends have been declared, the cumulative total of preferred stock dividends due to these stockholders upon declaration was $8,217,712 as of December 31, 2014. 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. For additional transactions involving Common and Preferred Stock after December 31, 2015, please see Subsequent Events in Note 12. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 11. Commitments and Contingencies Commitments We lease various office spaces which leases run from July 2014 through September 2018. We have future minimum rental payments as follows: Years ending December 31, Amount 2016 76,380 2017 74,204 2018 56,804 2019 - 2020 - Total $ 207,388 Rental expense for the years ended December 31, 2015 and 2014 was $97,917 and $156,437, respectively. Royalties When we acquire rights to patents, licenses, or other intellectual property, we generally agree to pay royalties on any net sales of any products utilizing these rights. There were no sales of products requiring royalties in 2015 and 2014. We also have royalty agreements associated with certain notes payable that provide a royalty when revenues exceed certain thresholds in addition to royalty agreements on subsidiary revenues pursuant to the terms of an acquisition agreement. For the years ended December 31, 2015 and 2014, we paid royalties of $9,659 and $16,105, respectively, on revenues from subsidiaries. Litigation 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 intend 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 | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12. Subsequent Events In January 2016, the Company re-amortized the Lakeshore Note at 11% interest per annum pursuant to the amendment of the Loan Agreement and Note executed on August 6, 2015. The Company is currently in discussions with Lakeshore to resolve a dispute concerning the reconciliation payment due on January 15, 2016. The Company has made all monthly installment payments towards the Note and the $2,500 weekly payments which will be applied toward Lakeshores share of dividends through the date of this Report. In January 2016, the Company granted 2,000,000 unregistered shares of its common stock and 200,000 shares of Ploinks common stock to a consultant of the Company and its subsidiaries pursuant to a consulting agreement with the Company. The aggregate fair market value of the 2,000,000 share award was determined to be $44,000. In addition, the Company agreed to issue up to 15,000,000 common shares of the Company and 1,500,000 shares of Ploinks common stock pursuant to restricted performance stock agreements with the consultant. These shares may vest over a term of 3 years and are based upon the Consultant achieving certain performance criteria. In March 2016, the In March 2016, the Company cancelled 1,000,000 unregistered shares of its common stock issued to a third party lender under an agreement to amend certain promissory notes issued by the Company and NOW Solutions in the aggregate principal amount of $715,000. Under the amendment, the Company agreed to make $22,000 monthly payments and an additional $10,000 penalty if such monthly payment is not timely made. In March 2016, the Company issued 10,000,000 common shares with the Rule 144 restrictive legend to its consolidated subsidiary Ploinks. These shares are held in treasury. In exchange, Ploinks issued 5,000,000 of its common shares to the Company. In March 2016, the Company issued a convertible promissory note in the aggregate principal amount of $100,000 to a third party lender for a loan made to the Company in the same amount. 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 debenture and provided that the lowest Closing Price of the Common Stock for each of the 5 trading days immediately preceding the Conversion Date has been $0.03 or higher, the holder of the debenture 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 to the lender a total of 1,000,000 shares of common stock of the Company and 3-year warrants under which the lender may purchase in aggregate a total of 1,000,000 unregistered shares of common stock of the Company at a purchase price of $0.10 per share. From January 1, 2016 to April 14, 2016, $6,500 of principal and interest under a convertible note issued in the principal amount of $80,000 was converted into 515,873 common shares. From January 1, 2016 to April 14, 2016, 400,000 VCSY common shares issued under restricted stock agreements to consultants and employees of the Company vested. |
Organization, Basis of Presen19
Organization, Basis of Presentation and Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | Nature of Business Vertical Computer Systems, Inc. was incorporated in Delaware in March 1992. We are a multinational provider of application software, software services, Internet core technologies, and derivative software application products through our distribution network. Our business model combines complementary, integrated software products, internet core technologies, and a multinational distribution system of partners, in order to create a distribution matrix that is capable of penetrating multiple sectors through cross selling our products and services. We operate one business segment. |
Basis of Presentation | Basis of Presentation 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 of which 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. To date, we have generated revenues primarily from software licenses, software as a service, consulting fees and maintenance agreements from NOW Solutions and SnAPPnet and patent licenses from Vertical Computer Systems, the parent company. |
Principles of Consolidation | P rinciples of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. Equity investments in which we exercise significant influence, but do not control and are not the primary beneficiary, are accounted for using the equity method of accounting. Investments in which we do not exercise significant influence over the investee are accounted for using the cost method of accounting. All intercompany accounts and transactions have been eliminated. We currently have no investments accounted for using the equity or cost methods of accounting. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents are highly liquid investments with an original maturity of three months or less. |
Revenue Recognition | Revenue Recognition Our revenue recognition policies are in accordance with standards on software revenue recognition, which includes guidance on revenue arrangements with multiple deliverables and arrangements that include the right to use of software stored on another entitys hardware. In the case of non-software arrangements, we apply the guidance on revenue arrangements with multiple deliverables and wherein multiple elements are allocated to each element based on the elements relative fair value. Revenue allocated to separate elements is recognized for each element in accordance with our accounting policies described below. If we cannot account for items included in a multiple-element arrangement as separate units of accounting, they are combined and accounted for as a single unit of accounting and generally recognized as the undelivered items or services are provided to the customer. Consulting. Software License. Software licenses are generally sold as part of a multiple element arrangement that may include maintenance and, under a separate agreement, consulting services. The consulting services are generally performed by the Company, but the customer may use a third-party to perform those. We consider these separate agreements as being negotiated as a package. The Company determines whether there is vendor specific objective evidence of fair value (VSOEFV) for each element identified in the arrangement to determine whether the total arrangement fees can be allocated to each element. If VSOEFV exists for each element, the total arrangement fee is allocated based on the relative fair value of each element. In cases where there is not VSOEFV for each element, or if it is determined that services are essential to the functionality of the software being delivered, we initially defer revenue recognition of the software license fees until VSOEFV is established or the services are performed. However, if VSOEFV is determinable for all of the undelivered elements, and assuming the undelivered elements are not essential to the delivered elements, we will defer recognition of the full fair value related to the undelivered elements and recognize the remaining portion of the arrangement value through application of the residual method. Where VSOEFV has not been established for certain undelivered elements, revenue for all elements is deferred until those elements have been delivered or their fair values have been determined. Evidence of VSOEFV is determined for software products based on actual sales prices for the product sold to a similar class of customer and based on pricing strategies set forth in the Companys standard pricing list. Evidence of VSOEFV for consulting services is based upon standard billing rates and the estimated level of effort for individuals expected to perform the related services. The Company establishes VSOEFV for maintenance agreements using the percentage method such that VSOEFV for maintenance is a percentage of the license fee charged annually for a specific software product, which in most instances is 18% of the portion of arrangement fees allocated to the software license element. Maintenance Revenue. While most of our customers pay for their annual maintenance at the beginning of the maintenance period, a few customers have payment terms that allow them to pay for their annual maintenance on a quarterly or monthly basis. If the annual maintenance fee is not paid at the beginning of the maintenance period (or at the beginning of the quarter or month for those few maintenance customers), we will ratably recognize the maintenance revenue if management believes the collection of the maintenance fee is imminent. Otherwise, we will defer revenue recognition until the time that the maintenance fee is paid by the customer. We normally continue to provide maintenance service while awaiting payment from customers. When the payment is received, revenue is recognized for the period that revenue was previously deferred. This may result in volatility in software maintenance revenue from period to period. Cloud-based offering. We will provide consulting services to customers in conjunction with our cloud-based offering. The rate for such service is based on standard hourly or daily billing rates. The consulting revenue is recognized as services are performed. Customers, utilizing their own computer to access our cloud-based offering, are charged a fee equal to the number of employees paid each month multiplied by an agreed-upon monthly rate per employee. The revenue is recognized as the cloud-based offering services are rendered each month. |
Concentration of Credit Risk | Concentration of Credit Risk We maintain our cash in bank deposit accounts, which, at times, may exceed federally insured limits. We have not experienced any such losses in these accounts. Substantially all of our revenue was derived from recurring maintenance fees related to our payroll processing software. The companys revenue consists of 57% in Canada and 43% in the US. Receivables arising from sales of the Companys products are not collateralized. As of December 31, 2015, four customers represented approximately 81.4% (31.7%, 25.2%, 12.7 and 11.8%) of accounts receivable. As of December 31, 2014, three customers represented approximately 58.4% (21.2%, 20.1%, and 17.1%) of accounts receivable. |
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. For the year ended December 31, 2015 and 2014, the company capitalized $541,300 and $478,877, respectively of software development costs related to its Ploinks subsidiary. For the year ended December 31, 2014, the Company wrote off $771,251 of previously capitalized software development costs related to its 70% owned subsidiary, Priority Time Systems. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation is computed primarily utilizing the straight-line method over the estimated economic life of three to five years. Maintenance, repairs and minor renewals are charged directly to expenses as incurred. Additions and betterment to property and equipment are capitalized. When assets are disposed of, the related cost and accumulated depreciation thereon are removed from the accounts and any resulting gain or loss is included in the statement of operations. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. During 2015 and 2014, there was no impairment of long-lived assets. |
Stock-based Compensation | Stock-based Compensation We account for share-based compensation in accordance with the provisions of share-based payments, which requires measurement of compensation cost for all stock-based awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. The fair value of restricted stock and restricted stock units is determined based on the number of shares granted and the quoted price of our common stock. Equity instruments issued to other than employees are valued at the earlier of a commitment date or upon completion of the services, based on the fair value of the equity instruments, and are recognized as expense over the service period. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts We establish an allowance for bad debts through a review of several factors including historical collection experience, current aging status of the customer accounts, and financial condition of our customers. We do not generally require collateral for our accounts receivable. Our allowance for doubtful accounts was $97,973 and $97,419 as of December 31, 2015 and 2014, respectively. |
Income Taxes | Income Taxes We provide for income taxes in accordance with the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. A valuation allowance is provided when management cannot determine whether it is more likely than not the deferred tax asset will be realized. The effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Since January 1, 2007, we account for uncertain tax positions in accordance with the authoritative guidance issued by the Financial Accounting Standards Board (FASB) on income taxes which addresses how we should recognize, measure and present in our financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. Pursuant to this guidance, we can recognize a tax benefit only if it is more likely than not that a particular tax position will be sustained upon examination or audit. To the extent the more likely than not standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that is greater than 50% likely of being realized upon settlement. No liability for unrecognized tax benefits was recorded as of December 31, 2015 and 2014. |
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 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. The following represents a reconciliation of the numerators and denominators of the basic and diluted earnings per share computation: Year Ended December 31, 2015 Year Ended December 31, 2014 Net Loss Shares Per Share Net Loss Shares Per Share Basic EPS $ (3,153,367) 1,036,597,308 $ (0.00 ) $ (2,070,836 ) 999,471,727 $ (0.00 ) Effect of dilutive securities: Warrants & Restricted Stock - - 0.00 - - 0.00 Diluted EPS $ (3,153,367 ) 1,036,597,308 $ (0.00 ) $ (2,070,836 ) 999,471,727 $ (0.00 ) As of December 31, 2015 and 2014, common stock equivalents related to the convertible debt, preferred stock and stock derivative liabilities totaling 33,681,957 were not included in the denominators of the diluted earnings per share as their effect would be anti-dilutive. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments For certain of our financial instruments, including cash, accounts receivable, short term debt and accrued expenses, the carrying amounts approximate fair value due to the short maturity of these instruments. The carrying value of our long-term debt approximates its fair value based on the quoted market prices for the same or similar issues or the current rates offered to us for debt of the same remaining maturities. For additional information, please see Note 4 Derivative Liabilities and Fair Value Measurements. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Among the more significant estimates included in these financial statements are the estimated allowance for doubtful accounts receivable, valuation allowance for deferred tax assets, impairment of long-lived assets and intangible and the valuation of warrants and restricted stock grants. Actual results could materially differ from those estimates. |
Cash Reimbursements | Cash Reimbursements We record reimbursement by our customers for out-of-pocket expense as part of consulting services revenue in accordance with the guidance related to income statement characterization of reimbursements received for out of pocket expense incurred. |
Reclassifications | Reclassifications Certain reclassifications have been made to the prior periods to conform to the current period presentation. |
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. |
Organization, Basis of Presen20
Organization, Basis of Presentation and Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of earnings per share, basic and diluted | The following represents a reconciliation of the numerators and denominators of the basic and diluted earnings per share computation: Year Ended December 31, 2015 Year Ended December 31, 2014 Net Loss Shares Per Share Net Loss Shares Per Share Basic EPS $ (3,153,367 ) 1,036,597,308 $ (0.00 ) $ (2,070,836 ) 999,471,727 $ (0.00 ) Effect of dilutive securities: Warrants & Restricted Stock - - 0.00 - - 0.00 Diluted EPS $ (3,153,367 ) 1,036,597,308 $ (0.00 ) $ (2,070,836 ) 999,471,727 $ (0.00 ) |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Schedule of related party notes payable | Related Party Notes Payable December 31, 2015 2014 Notes payable bearing interest at 10% to 15% per annum. Of these notes payable $338,243 and $348,666 were in default at December 31, 2015 and 2014, respectively. $ 338,243 $ 348,666 Convertible debenture bearing interest at 10% per annum, due one year from date of issuance. Net of unamortized discount of $20,798. $ 79,202 $ 348,666 Total notes payable to related parties 417,445 348,666 Current maturities (417,445 ) (348,666 ) Long-term portion of notes payable to related parties $ - $ - |
Schedule of related party transactions | The following table reflects our related party debt activity for the years ended December 31, 2015 and 2014: December 31, 2013 $ 344,158 Borrowings from related parties 25,500 Payments to related parties (20,992 ) December 31, 2014 348,666 Borrowings from related parties 100,000 Payments to related parties (10,423 ) Debt discounts due to stock and warrants issued with debt (20,798 ) December 31, 2015 $ 417,445 |
Derivative liability and fair v
Derivative liability and fair value measurements (Tables) | 12 Months Ended |
Dec. 31, 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 December 31, 2015 and December 31, 2014: Fair value measurements on a recurring Level 1 Level 2 Level 3 As of December 31, 2015: Liabilities Stock derivatives 0 shares $ - $ - $ - As of December 31, 2014: Liabilities Stock derivative 4,309,983 shares $ 51,719 $ - $ - |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | Property and equipment consist of the following as of December 31, 2015 and 2014: 2015 2014 Equipment (3-5 year life) $ 908,086 $ 921,152 Leasehold improvements (5 year life) 87,714 87,713 Furniture and fixtures (3-5 year life) 45,184 45,878 Total 1,040,984 1,054,743 Accumulated depreciation (1,038,609 ) (1,026,654 ) $ 2,375 $ 28,089 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of finite-lived intangible assets | Intangible assets consisted of the following as of December 31, 2015 and 2014: 2015 2014 Capitalized software development $ 1,174,972 $ 633,672 Acquired software (5 year life) 303,902 304,122 Customer list (5 year life) 2,200 2,200 Trademark 5,000 5,000 Website (5 year life) 15,000 15,000 Total 1,501,074 959,994 Accumulated amortization (319,413 ) (302,016 ) $ 1,181,661 $ 657,978 |
Accounts Payable and Accrued 25
Accounts Payable and Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Schedule of accounts payable and accrued liabilities | Accounts payable and accrued liabilities consist of the following: 2015 2014 Accounts payable $ 3,975,873 $ 3,611,685 Accrued payroll 2,703,165 2,344,177 Accrued payroll tax and penalties 662,330 671,149 Accrued interest 2,424,178 2,074,934 Accrued taxes 499,102 1,618,956 Accrued liabilities - other 272,326 338,836 $ 10,536,974 $ 10,659,737 |
Notes Payable and Convertible26
Notes Payable and Convertible Debts (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Notes Payable [Abstract] | |
Schedule of third party debt activity and convertible debt | The following table reflects our third party debt activity, including our convertible debt, for the years ended December 31, 2015 and 2014: December 31, 2013 $ 4,542,512 Repayments of third party notes (418,555 ) Borrowings from third parties 451,282 December 31, 2014 4,575,239 Repayments of third party notes (132,848 ) Borrowings from third parties 1,135,333 Stock issued for debt payments (258,552 ) Debt discounts due to stock and warrants issued with debt (190,985 ) Amortization of debt discounts 80,864 Conversion of accrued interest to debt principal 188,552 Currency translation (583 ) December 31, 2015 $ 5,397,020 |
Schedule of debt | December 31 December 31 2015 2014 Third Party Notes Payable Unsecured notes payable issued to third party lenders bearing interest at rates between 10% and 15% per annum and are past due their original maturity dates. Of these notes, $1,560,103 and $1,353,743 were in default or non-performing as of December 31, 2015 and 2014, respectively. $ 1,770,103 $ 1,353,743 Secured notes payable issued to third party lenders, bearing interest at 10% to 18% per annum and are past due their original maturity dates or mature based on payment schedules between 2022 and 2024. These notes are secured by stock pledges by MRC totaling 33,976,296 common shares. Of these notes $310,449 and $1,278,460 were in default or non-performing at December 31, 2015 and 2014, respectively. 1,025,449 1,278,460 Secured notes payable issued to third party lenders, bearing interest at 11% to 18% per annum and mature between 2012 and 2022. These notes are secured by certain technology owned by the Company, supporting its Emily product. Of these notes $470,860 were in default or non-performing at December 31, 2015 and 2014. 470,860 470,860 Secured note payable issued to Lakeshore, bearing interest at 11% per annum and maturing December 31, 2022. The note is secured by all of the assets of NOW Solutions, Priority Time, and SnAPPnet, Inc. as well as the SiteFlash technology. 1,630,729 1,442,176 Total notes payable to third parties 4,897,141 4,545,239 Current maturities 4,897,141 (4,545,239 ) Long-term portion of notes payable to third parties $ - $ - |
Schedule of debt conversions | Third party convertible promissory notes and debentures consist of the following: December 31, December 31, In December 2003, we issued a debenture in the amount of $30,000 to a third party. The debt accrues interest at 13% per annum and was due December 2005. The holder may convert the debenture into shares of common stock at 100% of the closing price. $ 30,000 $ 30,000 During the year ended December 31, 2015, the Company issued $580,000 of convertible debentures to various third party lenders for loans made to the Company in the aggregate amount of $580,000, net of unamortized discounts of $110,121. 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). 469,879 - Total convertible debentures 499,879 30,000 Current maturities (499,879 ) (30,000 ) Long-term portion of convertible debentures $ - $ - |
Schedule of future minimum payments for the next five years | Future minimum payments for third party, related party, and convertible debentures for the next five years are as follows: Year Amount 2016 $ 5,945,384 2017 - 2018 - 2019 - 2020+ - Total notes payable 5,945,384 Unamortized discounts (130,919 ) Notes payable, net of discounts $ 5,814,465 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of effective income tax rate reconciliation | The provision of income taxes consists of the following for the years ended December 31, 2015 and 2014: Years Ended December 31, 2015 2014 Current Federal - 166,675 State - - Foreign (571,980 ) (252,975 ) (571,980 ) (86,300 ) |
Schedule of deferred tax assets and liabilities | Temporary difference between the financial statement carrying amount and tax bases of assets and liabilities that give rise to deferred tax assets relate to the following: December 31, December 31, Net operating loss carry-forward $ 8,331,000 $ 7,465,000 Reserves 537,000 497,000 Accrued vacation 37,000 40,000 Deferred compensation 882,000 757,000 9,787,000 8,759,000 Valuation allowance (9,787,000 ) (8,759,000 ) $ - $ - |
Schedule of components of income tax expense (benefit) | The benefit for income taxes differs from the amount computed by applying the U.S. federal income tax rate of 34% to loss before income taxes as follows for the years ended December 31, 2015 and 2014: 2015 2014 U.S. federal income tax expense at statutory rates (1,113,702 ) (522,621 ) Permanent differences 553,709 (65,441 ) Settlement of foreign income tax (581,622 ) (267,842 ) Foreign income tax expense 9,642 14,867 Change in valuation allowance 559,993 754,737 (571,980 ) (86,300 ) |
Common and Preferred Stock (Tab
Common and Preferred Stock (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Schedule of option and warrant activities | Option and warrant activities 2015 is summarized as follows: Incentive Stock Non-Statutory Warrants Weighted Outstanding at 12/31/14 - - - - Options/Warrants granted - - 6,800,000 $ .091 Options/Warrants exercised - - - - Options/Warrants expired/cancelled - - - - Outstanding at 12/31/15 - - 6,800,000 $ .091 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum rental payments | We have future minimum rental payments as follows: Years ending December 31, Amount 2016 76,380 2017 74,204 2018 56,804 2019 - 2020 - Total $ 207,388 |
Organization, Basis of Presen30
Organization, Basis of Presentation and Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Effect of basic securities: | ||
Net Loss Applicable to Common Stockholders, Basic EPS | $ (3,153,367) | $ (2,070,836) |
Basic (in shares) | 1,036,597,308 | 999,471,727 |
Basic Per Share (in dollars per share) | $ 0 | $ 0 |
Effect of dilutive securities: | ||
Net Loss Applicable to Common Stockholders, Diluted EPS | $ (3,153,367) | $ (2,070,836) |
Diluted (in shares) | 1,036,597,308 | 999,471,727 |
Diluted Per Share (in dollars per share) | $ 0 | $ 0 |
Warrants & Restricted Stock (in dollars per share) | $ 0 | $ 0 |
Organization, Basis of Presen31
Organization, Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Allowance for doubtful accounts | $ 97,973 | $ 97,419 |
Number of antidilutive securities excluded from computation of earnings per share, amount | 33,681,957 | 33,681,957 |
Percentage of concentration risk of accounts receivable | 81.40% | 58.40% |
One Customer[Member] | ||
Percentage of concentration risk of accounts receivable | 31.70% | 21.20% |
Two Customer[Member] | ||
Percentage of concentration risk of accounts receivable | 25.20% | 20.10% |
Three Customer[Member] | ||
Percentage of concentration risk of accounts receivable | 12.70% | 17.10% |
Four Customer[Member] | ||
Percentage of concentration risk of accounts receivable | 11.80% | |
Revenue [Member] | CANADA [Member] | ||
Percentage of concentration risk | 57.00% | |
Revenue [Member] | UNITED STATES [Member] | ||
Percentage of concentration risk | 43.00% | |
Computer Software [Member] | ||
Aggregate capitalized cost | $ 541,300 | $ 478,877 |
Capitalized software development costs | $ 771,251 | |
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% | |
Priority Time Systems, Inc. [Member] | Computer Software [Member] | ||
Percentage of ownership | 70.00% | |
Ploinks, Inc [Member] | ||
Percentage of ownership | 93.00% | |
Government Internet Systems, Inc [Member] | ||
Percentage of ownership | 84.50% | |
SiteFlash [Member] | ||
Percentage of ownership | 100.00% |
Going Concern Uncertainty (Deta
Going Concern Uncertainty (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Negative working capital | $ 17,600,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Related Party Transaction [Line Items] | |||
Total notes payable to related parties | $ 417,445 | $ 348,666 | $ 344,158 |
Current maturities | $ (417,445) | $ (348,666) | |
Long-term portion of notes payable to related parties | |||
Unamortized discount | $ 110,121 | $ 0 | |
10% to 15% Notes Payable Issued To Related Parties [Member] | |||
Related Party Transaction [Line Items] | |||
Total notes payable to related parties | 338,243 | 348,666 | |
Notes payable default | 338,243 | 348,666 | |
10% Convertible Debentures [Member] | |||
Related Party Transaction [Line Items] | |||
Total notes payable to related parties | 79,202 | $ 348,666 | |
Unamortized discount | $ 20,798 |
Related Party Transactions (D34
Related Party Transactions (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Related Party Transactions [Abstract] | ||
Balance beginning | $ 348,666 | $ 344,158 |
Borrowings from related parties | 100,000 | 25,500 |
Payments to related parties | (10,425) | $ (20,992) |
Debt discounts due to stock and warrants issued with debt | 211,783 | |
Balance ending | $ 417,445 | $ 348,666 |
Related Party Transactions (D35
Related Party Transactions (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Dec. 31, 2015 | Mar. 31, 2015 | Aug. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Apr. 14, 2016 | |
Related Party Transaction [Line Items] | ||||||
Debt face amount | $ 80,000 | |||||
Fair value of stock issued | ||||||
Derivative liabilities | $ 0 | $ 0 | $ 51,719 | |||
Accounts payable to related parties | 108,379 | 108,379 | 36,333 | |||
Debt discounts due to stock and warrants issued with debt | 20,798 | 20,798 | 0 | |||
Loss on derivative liabilities | (78,680) | $ 211,621 | ||||
Warrant [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Debt face amount | 680,000 | $ 680,000 | ||||
Number of common shares purchased | 6,800,000 | |||||
Fair value of stock issued | $ 211,873 | |||||
10% Convertible Debentures [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Debt face amount | 100,000 | $ 100,000 | ||||
Percentage conversion of debentures into common shares | 80.00% | |||||
Debt discounts due to stock and warrants issued with debt | 20,798 | $ 20,798 | ||||
Vertical Mountain Reservoir Corporation [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Debt face amount | $ 50,000 | |||||
Number of pledged common shares to secure payment of note | 16,976,296 | |||||
Number of shares isssued during the period | 2,809,983 | |||||
Fair value of stock issued | 112,399 | |||||
Derivative liabilities | 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 | |||||
Loss on derivative liabilities | (64,680) | |||||
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 | |||||
Loss on derivative liabilities | $ (26,000) | |||||
Parker Mills, LLP [Member] | 10% Convertible Debentures [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Debt face amount | $ 100,000 | $ 100,000 | ||||
Accrued interest rate | 10.00% | |||||
Description of convertible debt | Beginning six months after issuance of the debenture, the holder of the debenture 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. | |||||
Third Party Lender [Member] | 10% Convertible Debentures [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Number of shares isssued during the period | 1,000,000 | |||||
Debt discounts | $ 20,798 | $ 20,798 | ||||
Third Party Lender [Member] | 10% Convertible Debentures [Member] | Warrant [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Number of common shares purchased | 1,000,000 | |||||
Purchase price (in dollars per share) | $ 0.10 | $ 0.10 | ||||
Warrant term | 3 years |
Derivative Liabilities and Fa36
Derivative Liabilities and Fair Value Measurements (Details) - Stock Derivative [Member] - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Level 1 [Member] | ||
Liabilities | ||
Derivative | $ 51,719 | |
Level 2 [Member] | ||
Liabilities | ||
Derivative | ||
Level 3 [Member] | ||
Liabilities | ||
Derivative |
Derivative Liabilities and Fa37
Derivative Liabilities and Fair Value Measurements (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Mar. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Apr. 14, 2016 | Aug. 31, 2014 | |
Derivative liabilities | $ 0 | $ 51,719 | |||
Fair value of stock issued | |||||
Face value of a debt instrument | $ 80,000 | ||||
Gain (loss) on derivative liability | $ (78,680) | $ 211,621 | |||
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 | ||||
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 | ||||
Stock reimbursement expense | 20,000 | ||||
Face value of a debt instrument | $ 50,000 | ||||
Gain (loss) on derivative liability | (64,680) | ||||
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 | ||||
Gain (loss) on derivative liability | $ (26,000) | ||||
Officer [Member] | |||||
Number of shares issued for pledge | 1,000,000 | ||||
Face value of a debt instrument | $ 50,000 | ||||
Gain (loss) on derivative liability | $ 12,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Total property and equipment gross | $ 1,040,984 | $ 1,054,743 |
Accumulated depreciation | (1,038,609) | (1,026,654) |
Total property and equipment net | 2,375 | 28,089 |
Equipment [Member] | ||
Total property and equipment gross | $ 908,086 | 921,152 |
Equipment [Member] | Maximum [Member] | ||
Useful life | 5 years | |
Equipment [Member] | Minimum [Member] | ||
Useful life | 3 years | |
Leasehold Improvements [Member] | ||
Total property and equipment gross | $ 87,714 | 87,713 |
Useful life | 5 years | |
Furniture and Fixtures [Member] | ||
Total property and equipment gross | $ 45,184 | $ 45,878 |
Furniture and Fixtures [Member] | Maximum [Member] | ||
Useful life | 5 years | |
Furniture and Fixtures [Member] | Minimum [Member] | ||
Useful life | 3 years |
Property and Equipment (Detai39
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 20,795 | $ 2,598 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | ||
Total | $ 1,501,074 | $ 959,994 |
Accumulated amortization | (319,413) | (302,016) |
Net | 1,181,661 | 657,978 |
Capitalized Software Development [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total | 1,174,972 | 633,672 |
Acquired Software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total | $ 303,902 | 304,122 |
Useful life | 5 years | |
Customer List [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total | $ 2,200 | 2,200 |
Useful life | 5 years | |
Trademark [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total | $ 5,000 | 5,000 |
Website [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total | $ 15,000 | $ 15,000 |
Useful life | 5 years |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | $ 17,617 | $ 42,280 |
Ploinks, Inc [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Capitalized software development costs | $ 541,300 | 478,876 |
Priority Time Systems, Inc. [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Capitalized software costs wrote off | $ 771,251 |
Accounts Payable and Accrued 42
Accounts Payable and Accrued Expenses (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 3,975,873 | $ 3,611,685 |
Accrued payroll | 2,703,165 | 2,344,177 |
Accrued payroll tax and penalties | 662,330 | 671,149 |
Accrued interest | 2,424,178 | 2,074,934 |
Accrued taxes | 499,102 | 1,618,956 |
Accrued liabilities - other | 272,326 | 338,836 |
Accounts payable and accrued liabilities | $ 10,536,974 | $ 10,659,737 |
Accounts Payable and Accrued 43
Accounts Payable and Accrued Expenses (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Claim for payroll taxes | $ 662,330 | $ 671,149 |
Internal Revenue Service (IRS) [Member] | ||
Claim for payroll taxes | $ 1,200,000 |
Notes Payable and Convertible44
Notes Payable and Convertible Debts (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Notes Payable [Abstract] | ||
Balance, beginning | $ 4,575,239 | $ 4,542,512 |
Repayments of third party notes | (132,848) | (418,555) |
Borrowings from third parties | 1,135,333 | $ 451,282 |
Stock issued for debt payments | (258,552) | |
Debt discounts due to stock and warrants issued with debt | (190,985) | |
Amortization of debt discounts | 80,864 | |
Conversion of accrued interest to debt principal | 188,552 | |
Currency translation | (583) | |
Balance, end | $ 5,814,465 | $ 4,575,239 |
Notes Payable and Convertible45
Notes Payable and Convertible Debts (Details 1) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Notes Payable and Convertible Debts [Line Items] | ||
Total notes payable to third parties | $ 4,897,141 | $ 4,545,239 |
Current maturities | $ 4,897,141 | $ 4,545,239 |
Long-term portion of notes payable to third parties | ||
11% Secured Lakeshore Note Due 2022-12-31 [Member] | Notes Payable 1 [Member] | ||
Notes Payable and Convertible Debts [Line Items] | ||
Total notes payable to third parties | $ 1,770,103 | $ 1,353,743 |
11% Secured Lakeshore Note Due 2022-12-31 [Member] | Notes Payable 2 [Member] | ||
Notes Payable and Convertible Debts [Line Items] | ||
Total notes payable to third parties | 1,025,449 | 1,278,460 |
11% Secured Lakeshore Note Due 2022-12-31 [Member] | Notes Payable 3 [Member] | ||
Notes Payable and Convertible Debts [Line Items] | ||
Total notes payable to third parties | 470,860 | 470,860 |
11% Secured Lakeshore Note Due 2022-12-31 [Member] | Notes Payable 4 [Member] | ||
Notes Payable and Convertible Debts [Line Items] | ||
Total notes payable to third parties | $ 1,630,729 | $ 1,442,176 |
Notes Payable and Convertible46
Notes Payable and Convertible Debts (Details 2) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Notes Payable and Convertible Debts [Line Items] | ||
Total convertible debentures | $ 499,879 | $ 30,000 |
Current maturities | $ (499,879) | $ (30,000) |
Long-term portion of convertible debentures | ||
13% Convertible Debt [Member] | ||
Notes Payable and Convertible Debts [Line Items] | ||
Total convertible debentures | $ 30,000 | $ 30,000 |
10% Convertible Promissory Notes And Debentures [Member] | ||
Notes Payable and Convertible Debts [Line Items] | ||
Total convertible debentures | $ 469,879 |
Notes Payable and Convertible47
Notes Payable and Convertible Debts (Details 3) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Notes Payable [Abstract] | |||
2,016 | $ 5,945,384 | ||
2,017 | |||
2,018 | |||
2,019 | |||
2020+ | |||
Total notes payable | $ 5,945,384 | ||
Unamortized discounts | (130,919) | ||
Notes payable, net of discounts | $ 5,814,465 | $ 4,575,239 | $ 4,542,512 |
Notes Payable and Convertible48
Notes Payable and Convertible Debts (Details Narrative) - USD ($) | Jul. 31, 2015 | Jan. 09, 2013 | Aug. 31, 2015 | Jul. 31, 2015 | Mar. 31, 2015 | Apr. 14, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Debt face amount | $ 80,000 | |||||||
Debt discount amortized | $ 80,864 | |||||||
Notes payable | 4,897,141 | $ 4,545,239 | ||||||
Debt periodic payment | $ 6,500 | |||||||
Repayment of debt | 132,848 | 418,555 | ||||||
Attorney fees | $ 20,000 | |||||||
Number of shares issued for forbearance | 36,500,000 | |||||||
Common Stock And Warrants [Member] | ||||||||
Debt discount amortized | $ 161,735 | |||||||
Warrant [Member] | ||||||||
Debt face amount | $ 680,000 | |||||||
Number of cashless warrant | 6,800,000 | |||||||
Maximum [Member] | Warrant [Member] | ||||||||
Warrant term | 5 years | |||||||
Minimum [Member] | Warrant [Member] | ||||||||
Warrant term | 3 years | |||||||
11% Secured Lakeshore Note Due 2022-12-31 [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. | |||||||
Percentage of net claim proceeds | 60.00% | |||||||
Aggregate forbearance fees | $ 15,000 | |||||||
Dividends | $ 125,000 | |||||||
Number of shares issued for forbearance | 2,000,000 | 7,000,000 | 13,000,000 | |||||
Forbearance loss | $ 54,200 | $ 175,700 | $ 455,000 | |||||
11% Secured Lakeshore Note Due 2022-12-31 [Member] | Notes Payable 1 [Member] | ||||||||
Notes payable | $ 1,770,103 | $ 1,353,743 | ||||||
Percentage of bearing interest | 10.00% | 15.00% | ||||||
Notes payable default | $ 1,560,103 | $ 1,353,743 | ||||||
11% Secured Lakeshore Note Due 2022-12-31 [Member] | Notes Payable 2 [Member] | ||||||||
Notes payable | $ 1,025,449 | $ 1,278,460 | ||||||
Description of collateral | These notes are secured by stock pledges by MRC totaling 53,976,296 common shares. | |||||||
Percentage of bearing interest | 10.00% | 18.00% | ||||||
Notes payable default | $ 310,449 | $ 1,278,460 | ||||||
11% Secured Lakeshore Note Due 2022-12-31 [Member] | Notes Payable 3 [Member] | ||||||||
Notes payable | $ 470,860 | $ 470,860 | ||||||
Description of collateral | These notes are secured by certain technology owned by the Company, supporting its Emily product. | |||||||
Percentage of bearing interest | 11.00% | 18.00% | ||||||
Notes payable default | $ 470,860 | $ 470,860 | ||||||
11% Secured Lakeshore Note Due 2022-12-31 [Member] | Notes Payable 4 [Member] | ||||||||
Notes payable | $ 1,630,729 | $ 1,442,176 | ||||||
Description of collateral | The note is secured by all of the assets of NOW Solutions, Priority Time, and SnAPPnet, Inc. as well as the SiteFlash technology. | |||||||
11% Secured Lakeshore Note Due 2022-12-31 [Member] | Stage First Collateral [Member] | ||||||||
Principal payment collateral | $ 290,000 | |||||||
11% Secured Lakeshore Note Due 2022-12-31 [Member] | Stage Second Collateral [Member] | ||||||||
Principal payment collateral | 590,000 | |||||||
11% Secured Lakeshore Note Due 2022-12-31 [Member] | Stage Third Collateral [Member] | ||||||||
Principal payment collateral | 890,000 | |||||||
NOW Solutions [Member] | ||||||||
Notes payable | $ 1,759,150 | |||||||
Percentage of ownership | 75.00% | |||||||
NOW Solutions [Member] | 11% Secured Lakeshore Note Due 2022-12-31 [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% | |||||||
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 2022-12-31 [Member] | ||||||||
Percentage of net claim proceeds | 5.00% | |||||||
SiteFlash [Member] | 11% Secured Lakeshore Note Due 2022-12-31 [Member] | Lakeshore Investments Llc [Member] | ||||||||
Percentage of ownership | 90.00% | |||||||
Priority Time Systems, Inc. [Member] | ||||||||
Percentage of ownership | 70.00% | |||||||
Priority Time Systems, Inc. [Member] | 11% Secured Lakeshore Note Due 2022-12-31 [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% | |||||||
SnAPPnet, Inc [Member] | 11% Secured Lakeshore Note Due 2022-12-31 [Member] | Lakeshore Investments Llc [Member] | ||||||||
Income (loss) attributable to noncontrolling interest | $ 99,210 | |||||||
Percentage of ownership | 90.00% | |||||||
Ploinks, Inc [Member] | ||||||||
Debt face amount | $ 100,000 | |||||||
Number of shares issued during the period | 1,000,000 | |||||||
Percentage of ownership | 93.00% | |||||||
Ploinks, Inc [Member] | 11% Secured Lakeshore Note Due 2022-12-31 [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] | 11% Notes Payable [Member] | Common Stock [Member] | ||||||||
Number of shares issued during the period | 1,000,000 | |||||||
Third Party Lender 2 [Member] | 10%-12% Unsecured Notes Payable [Member] | ||||||||
Debt face amount | $ 555,333 | |||||||
Repayment of debt | 132,848 | |||||||
Third Party Lender 2 [Member] | 10% Convertible Promissory Notes And Debentures [Member] | ||||||||
Debt face amount | $ 580,000 | |||||||
Description of convertible debt | 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). | |||||||
Third Party Lender 3 [Member] | ||||||||
Number of shares issued during the period | 6,500,000 | |||||||
Third Party Lender 3 [Member] | Maximum [Member] | ||||||||
Warrant term | 5 years | |||||||
Purchase price (in dollars per share) | $ 0.10 | |||||||
Third Party Lender 3 [Member] | Minimum [Member] | ||||||||
Warrant term | 3 years | |||||||
Purchase price (in dollars per share) | $ 0.05 | |||||||
Third Party Lender [Member] | ||||||||
Debt face amount | $ 451,282 | |||||||
Third Party Lender [Member] | 12% Notes Payable [Member] | ||||||||
Debt face amount | 231,282 | |||||||
Third Party Lender [Member] | 18% Notes Payable [Member] | ||||||||
Debt face amount | 50,000 | |||||||
Commitment fees | 22,000 | |||||||
Other payment | 133,000 | |||||||
Third Party Lender [Member] | 11% Notes Payable [Member] | ||||||||
Debt face amount | 170,000 | |||||||
Commitment fees | $ 2,000 | |||||||
Maturity date | 2014-11 |
Notes Payable and Convertible49
Notes Payable and Convertible Debts (Details Narrative 1) - USD ($) | 1 Months Ended | 12 Months Ended | |
Aug. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Repayment of debt | $ 132,848 | $ 418,555 | |
Number of shares issued for forbearance | 36,500,000 | ||
11% Secured Lakeshore Note Due 2022-12-31 [Member] | |||
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 | ||
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) 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. 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. Lakeshore did not make the payment due by December 31, 2015 to purchase an additional ownership interest in NOW Solutions and as a consequence the 2015 Purchase Option expired. | ||
Ploinks, Inc [Member] | 11% Secured Lakeshore Note Due 2022-12-31 [Member] | |||
Repayment of debt | $ 500,000 | ||
Number of shares issued for forbearance | 2,000,000 | ||
Number of shares issued in lieu for payment | 500,000 | ||
NOW Solutions [Member] | 11% Secured Lakeshore Note Due 2022-12-31 [Member] | |||
Value of shares isssued during the period | $ 500,000 | ||
Number of shares of Now Solutions available for purchase option | 166 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Current | ||
Federal | $ 166,675 | |
State | ||
Foreign | $ (571,980) | $ (252,975) |
Current Foreign Tax Expense (Benefit) | $ (571,980) | $ (86,300) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carry-forward | $ 8,331,000 | $ 7,465,000 |
Reserves | 537,000 | 497,000 |
Accrued vacation | 37,000 | 40,000 |
Deferred compensation | 882,000 | 757,000 |
Deferred Tax Assets, Gross | 9,787,000 | 8,759,000 |
Valuation allowance | $ (9,787,000) | $ (8,759,000) |
Deferred Tax Assets, Net |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
U.S. federal income tax expense at statutory rates | $ (1,113,702) | $ (522,621) |
Permanent differences | 553,709 | (65,441) |
Settlement of foreign income tax | (581,622) | (267,842) |
Foreign income tax expense | 9,642 | 14,867 |
Change in valuation allowance | 559,993 | 754,737 |
Income tax expense (benefit) | $ (571,980) | $ (86,300) |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Operating loss carryforwards | $ 24,000,000 | $ 22,000,000 |
Net operating loss expiration year | 2,033 | |
NOW Solutions [Member] | ||
Operating loss carryforwards | $ 281,000 | |
Income tax provision | $ 166,675 |
Common and Preferred Stock (Det
Common and Preferred Stock (Details) | 12 Months Ended |
Dec. 31, 2015$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options And Warrants, Outstanding, Weighted Average Exercise Price [Abstract] | |
Outstanding at beginning | $ / shares | |
Options/Warrants granted | $ / shares | $ 0.091 |
Options/Warrants exercised | $ / shares | |
Options/Warrants expired/cancelled | $ / shares | |
Outstanding at ending | $ / shares | $ 0.091 |
Warrant [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options And Warrants, Outstanding [Roll Forward] | |
Outstanding at beginning | |
Options/Warrants granted | 6,800,000 |
Options/Warrants exercised | |
Options/Warrants expired/cancelled | |
Outstanding at ending | 6,800,000 |
Incentive Stock Options [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options And Warrants, Outstanding [Roll Forward] | |
Outstanding at beginning | |
Options/Warrants granted | |
Options/Warrants exercised | |
Options/Warrants expired/cancelled | |
Outstanding at ending | |
Non-Statutory Stock Options [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options And Warrants, Outstanding [Roll Forward] | |
Outstanding at beginning | |
Options/Warrants granted | |
Options/Warrants exercised | |
Options/Warrants expired/cancelled | |
Outstanding at ending |
Common and Preferred Stock (D55
Common and Preferred Stock (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||||
Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Apr. 14, 2016 | Feb. 28, 2015 | Aug. 31, 2014 | |
Common stock, authorized | 2,000,000,000 | 1,000,000,000 | 2,000,000,000 | ||||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | |||||
Common stock, issued | 1,114,601,656 | 999,735,151 | |||||
Common stock, outstanding | 1,084,601,656 | 999,735,151 | |||||
Common stock voting rights | O ne vote on each matter submitted to a vote. | ||||||
Debt face amount | $ 80,000 | ||||||
Number of shares held in treasury | 30,000,000 | 0 | |||||
Number of shares granted during the period to employees | 2,250,000 | ||||||
Value of shares granted during the period to employees | $ 54,750 | ||||||
Allocated Share-based Compensation Expense | $ 19,616 | ||||||
Vesting period | 2 years | ||||||
Number of shares issued for forbearance | 36,500,000 | ||||||
Fair value of stock issued for forbearance | $ 1,050,900 | ||||||
Loss on debt extinguishment | (393,301) | ||||||
Accrued principal and interest | $ 482,612 | ||||||
Number of shares non vested | 2,250,000 | ||||||
Dividends applicable | $ 8,895,712 | $ 8,217,712 | |||||
Fair value stock issued | |||||||
Derivative liabilities | 0 | $ 51,719 | |||||
Loss on derivative liabilities | (78,680) | $ 211,621 | |||||
Attorney fees | 20,000 | ||||||
Amortization of debt discounts | 80,864 | ||||||
Unamortized discounts | $ (130,919) | ||||||
Weighted average remaining life of warrants | 2 years 8 months 23 days | ||||||
Intrinsic value of the exercisable warrants | $ 0.0220 | ||||||
Officer [Member] | |||||||
Number of shares granted | 200,000 | ||||||
Fair value of shares granted | $ 3,200 | ||||||
Employees And Consultant [Member] | |||||||
Number of shares granted | 550,000 | ||||||
Fair value of shares granted | $ 10,226 | ||||||
Warrant [Member] | |||||||
Debt face amount | $ 680,000 | ||||||
Number of cashless warrants | 800,000 | ||||||
Number of common shares purchased | 6,800,000 | ||||||
Fair value of warrant | $ 82,904 | ||||||
Fair value stock issued | $ 211,873 | ||||||
Warrant [Member] | Minimum [Member] | |||||||
Warrant term | 3 years | ||||||
Intrinsic value of the exercisable warrants | $ 0.05 | ||||||
Warrant [Member] | Maximum [Member] | |||||||
Warrant term | 5 years | ||||||
Intrinsic value of the exercisable warrants | $ 0.10 | ||||||
Ploinks, Inc [Member] | |||||||
Debt face amount | $ 100,000 | ||||||
Number of shares isssued during the period | 1,000,000 | ||||||
Lakeshore Investments Llc [Member] | Mr. Valdetaro [Member] | |||||||
Number of shares isssued during the period | 1,000,000 | ||||||
Fair value stock issued | $ 38,000 | ||||||
Number of shares transferred | 1,000,000 | ||||||
Vertical Mountain Reservoir Corporation [Member] | |||||||
Debt face amount | $ 50,000 | ||||||
Number of shares isssued during the period | 2,809,983 | ||||||
Fair value stock issued | $ 112,399 | ||||||
Number of shares transferred | 1,000,000 | ||||||
Number of shares isssued for pledge | 1,309,983 | ||||||
Number of shares converted wrongfully | 500,000 | 500,000 | |||||
Derivative liabilities | $ 92,399 | ||||||
Loss on derivative liabilities | (64,680) | ||||||
Stock reimbursement expense | 20,000 | ||||||
Third Party Lender One [Member] | |||||||
Debt face amount | $ 745,333 | ||||||
Number of shares issued for accrued interest and loan principal | 9,000,000 | ||||||
Fair value of shares issued for accrued interest and loan principal | $ 220,600 | ||||||
Third Party Lender [Member] | |||||||
Number of shares issued for accrued interest and loan principal | 35,556,522 | ||||||
Fair value of shares issued for accrued interest and loan principal | $ 895,913 | ||||||
Weber Notes [Member] | |||||||
Debt face amount | $ 735,400 | ||||||
Number of shares held in treasury | 20,000,000 | ||||||
Number of shares isssued during the period | 10,000,000 | ||||||
Series A Preferred Stock [Member] | |||||||
Preferred stock, dividend rate (as a percent) | 4.00% | 4.00% | |||||
Preferred stock, authorized | 250,000 | 250,000 | |||||
Preferred stock, outstanding | 48,500 | 48,500 | |||||
Preferred stock voting rights | Entitled to vote on an as-converted basis with the holders of common stock and entitled to 500 votes per share. | ||||||
Number of common shares issued on conversion | 500 | ||||||
Preferred stock liquidation preference (in dollars per share) | $ 200 | ||||||
Dividends applicable | $ 588,000 | $ 588,000 | |||||
Series B Preferred Stock [Member] | |||||||
Preferred stock, dividend rate (as a percent) | 10.00% | 10.00% | |||||
Preferred stock, authorized | 375,000 | 375,000 | |||||
Preferred stock, outstanding | 7,200 | 7,200 | |||||
Preferred stock voting rights | N ot entitled to vote. | ||||||
Number of common shares issued on conversion | 3.788 | ||||||
Redemption amount (in dollars per share) | $ 6.25 | ||||||
Amount of redemption | $ 45,000 | ||||||
Series C Preferred Stock [Member] | |||||||
Preferred stock, dividend rate (as a percent) | 4.00% | 4.00% | |||||
Preferred stock, authorized | 200,000 | 200,000 | |||||
Preferred stock, outstanding | 50,000 | 50,000 | |||||
Preferred stock voting rights | N ot entitled to vote. | ||||||
Number of common shares issued on conversion | 400 | ||||||
Preferred stock liquidation preference (in dollars per share) | $ 100 | ||||||
Description of conversion | H older of 37,500 shares waived the conversion rights associated with these shares pursuant to an agreement in 2010. | ||||||
Dividends applicable | $ 588,000 | $ 588,000 | |||||
Series D Preferred Stock [Member] | |||||||
Preferred stock, dividend rate (as a percent) | 15.00% | 15.00% | |||||
Preferred stock, authorized | 300,000 | 300,000 | |||||
Preferred stock, outstanding | 25,000 | 25,000 | |||||
Preferred stock voting rights | N ot entitled to vote. | ||||||
Number of common shares issued on conversion | 3.788 | ||||||
Redemption amount (in dollars per share) | $ 6.25 | ||||||
Amount of redemption | $ 156,250 |
Commitments and Contingencies56
Commitments and Contingencies (Details) | Dec. 31, 2015USD ($) |
Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2,016 | $ 76,380 |
2,017 | 74,204 |
2,018 | $ 56,804 |
2,019 | |
2,020 | |
Total | $ 207,388 |
Commitments and Contingencies57
Commitments and Contingencies (Details Narrative) - USD ($) | Jul. 15, 2015 | Jun. 15, 2015 | Feb. 04, 2014 | Aug. 05, 2012 | Jun. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2011 |
Loss Contingencies [Line Items] | ||||||||
Number of shares issued for forbearance | 36,500,000 | |||||||
Fair value of stock issued for forbearance | $ 1,050,900 | |||||||
Repayment of debt | 132,848 | $ 418,555 | ||||||
Fair value of stock issued | ||||||||
Extinguishment loss | (393,301) | |||||||
Rent expenses | 97,917 | $ 156,437 | ||||||
Royalties paid | $ 9,659 | $ 16,105 | ||||||
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 ($) | Jan. 09, 2013 | Mar. 31, 2016 | Jan. 31, 2016 | Mar. 31, 2015 | Apr. 14, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Subsequent Event [Line Items] | |||||||
Debt face amount | $ 80,000 | ||||||
Exercise price (in dollars per shares) | $ 0.0220 | ||||||
Debt periodic payment | $ 6,500 | ||||||
Number of shares converted into common shares | 515,873 | ||||||
Number of treasury shares issued | 30,000,000 | 0 | |||||
Warrant [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Debt face amount | $ 680,000 | ||||||
11% Secured Lakeshore Note Due 2022-12-31 [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Debt frequency of periodic payments | Monthly | ||||||
Debt periodic payment | $ 24,232 | ||||||
Ploinks, Inc [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Debt face amount | $ 100,000 | ||||||
Number of shares issued during period | 1,000,000 | ||||||
Subsequent Event [Member] | 11% Secured Lakeshore Note Due 2022-12-31 [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Weekly payments | $ 2,500 | ||||||
Subsequent Event [Member] | Restricted Stock [Member] | Employees And Consultant [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Number of shares vested | 400,000 | ||||||
Subsequent Event [Member] | Consultant [Member] | Restricted Stock [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Performance based shares issuance | 15,000,000 | ||||||
Number of shares issued during period | 2,000,000 | ||||||
Vesting term | 3 years | ||||||
Subsequent Event [Member] | Third Party Lender [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Additional penalty | $ 80,000 | ||||||
Debt interest payment | $ 6,500 | ||||||
Number of shares converted into common shares | 515,873 | ||||||
Subsequent Event [Member] | Third Party Lender [Member] | 10% Convertible Debentures [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Debt face amount | $ 100,000 | ||||||
Number of shares issued during period | 1,000,000 | ||||||
Description of conversion terms | The holder of the debenture may convert the debenture into shares of common stock at a price per share of 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. | ||||||
Subsequent Event [Member] | Third Party Lender [Member] | 10% Convertible Debentures [Member] | Warrant [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Warrant term | 3 years | ||||||
Warrant oustanding | 1,000,000 | ||||||
Exercise price (in dollars per shares) | $ 0.10 | ||||||
Subsequent Event [Member] | Third Party Lender [Member] | Restricted Stock [Member] | Employees And Consultant [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Debt face amount | $ 715,000 | ||||||
Number of cancelled shares | 1,000,000 | ||||||
Debt frequency of periodic payments | Monthly | ||||||
Debt periodic payment | $ 22,000 | ||||||
Additional penalty | $ 10,000 | ||||||
Subsequent Event [Member] | Ploinks, Inc [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Number of treasury shares issued | 10,000,000 | ||||||
Number of repuchased share | 5,000,000 | ||||||
Subsequent Event [Member] | Restricted Performance Stock Agreements [Member] | Consultant [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Performance based shares issuance | 1,500,000 | ||||||
Vesting term | 3 years | ||||||
Subsequent Event [Member] | Consulting Agreement [Member] | Consultant [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Aggregate fair market value | $ 44,000 | ||||||
Number of shares issued during period | 100,000 | 200,000 | |||||
Vesting term | 1 year | ||||||
Subsequent Event [Member] | Restricted Stock Agreement [Member] | Consultant [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Number of shares issued during period | 2,000,000 |