Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 16, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | VERTICAL COMPUTER SYSTEMS INC | |
Entity Central Index Key | 1,099,509 | |
Document Type | 10-Q | |
Trading Symbol | VCSY | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 1,142,865,748 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash | $ 7,586 | $ 37,141 |
Accounts receivable, net of allowance for bad debts of $104,925 and $97,973 | 123,686 | 382,463 |
Prepaid expenses and other current assets | 57,353 | 57,488 |
Total current assets | 188,625 | 477,092 |
Property and equipment, net of accumulated depreciation of $1,040,776 and $1,038,609 | 6,119 | 2,375 |
Intangible assets, net of accumulated amortization of $319,461 and $319,413 | 1,325,588 | 1,181,661 |
Deposits and other assets | 8,043 | 7,909 |
Total assets | 1,528,375 | 1,669,037 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 10,906,032 | 10,536,974 |
Accounts payable to related parties | 123,371 | 108,379 |
Bank overdraft | 52 | 52 |
Deferred revenue | 1,800,541 | $ 1,658,158 |
Derivative liabilities | 326,223 | |
Convertible debentures, net of unamortized discounts of $326,852 and $110,121 | 283,148 | $ 499,879 |
Notes payable | 4,835,076 | 4,897,141 |
Notes payable and convertible debt to related parties, net of unamortized discounts of $15,627 and $20,798 | 422,616 | 417,445 |
Total current liabilities | 18,697,059 | 18,118,028 |
Total liabilities | 18,697,059 | 18,118,028 |
Convertible Cumulative Preferred stock | 9,902,024 | 9,902,024 |
Stockholders' Deficit | ||
Common Stock; $.00001 par value; 2,000,000,000 shares authorized; 1,126,051,656 issued and 1,086,051,656 outstanding as of March 31, 2016 and 1,114,601,656 issued and 1,084,601,656 outstanding as of December 31, 2015 | 11,262 | 11,147 |
Treasury stock: 40,000,000 shares and 30,000,000 shares as of March 31, 2016 and December 31, 2015 | (400) | (300) |
Additional paid-in capital | 22,227,276 | 22,252,823 |
Accumulated deficit | (50,293,252) | (49,739,924) |
Accumulated other comprehensive income - foreign currency translation | 441,187 | 558,668 |
Total Vertical Computer Systems, Inc. stockholders' deficit | (27,613,927) | (26,917,586) |
Non-controlling interest | 543,219 | 566,571 |
Total stockholders' deficit | (27,070,708) | (26,351,015) |
Total liabilities and stockholders' deficit | 1,528,375 | 1,669,037 |
Series A Preferred Stock [Member] | ||
Current liabilities: | ||
Convertible Cumulative Preferred stock | 9,700,000 | 9,700,000 |
Series B Preferred Stock [Member] | ||
Current liabilities: | ||
Convertible Cumulative Preferred stock | 246 | 246 |
Series C Preferred Stock [Member] | ||
Current liabilities: | ||
Convertible Cumulative Preferred stock | 200,926 | 200,926 |
Series D Preferred Stock [Member] | ||
Current liabilities: | ||
Convertible Cumulative Preferred stock | $ 852 | $ 852 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Allowance for bad debts | $ 104,925 | $ 97,973 |
Accumulated depreciation, property and equipment | 1,040,776 | 1,038,609 |
Accumulated amortization | 319,461 | 319,413 |
Unamortized discounts | 326,852 | 110,121 |
Unamortized discounts to related parties | $ 15,627 | $ 20,798 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, authorized | 2,000,000,000 | 2,000,000,000 |
Common stock, issued | 1,126,051,656 | 1,114,601,656 |
Common stock, outstanding | 1,086,051,656 | 1,084,601,656 |
Treasury stock | 40,000,000 | 30,000,000 |
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 Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues | ||
Licensing and software | $ 12,000 | |
Software maintenance | 807,795 | $ 890,729 |
Cloud-based offering | 43,283 | 85,247 |
Consulting services | 82,054 | 63,859 |
Other | 7,811 | 15,000 |
Total revenues | 952,943 | 1,054,835 |
Cost of revenues | 388,156 | 425,862 |
Gross profit | 564,787 | 628,973 |
Operating expenses: | ||
Selling, general and administrative expenses | 667,816 | 873,893 |
Depreciation and amortization | 108 | 31,365 |
Bad debt expense | 6,138 | 36,190 |
Total operating expenses | 674,062 | 941,448 |
Operating loss | (109,275) | (312,475) |
Other Income (Expense): | ||
Gain (Loss) on derivative liabilities | 28,712 | $ (78,680) |
Forbearance fees | (11,100) | |
Interest income | 10 | $ 4 |
Interest expense | (376,967) | (255,496) |
Net loss before non-controlling interest and income tax expense | (468,620) | (646,647) |
Income tax expense | 75,560 | 25,506 |
Net loss before non-controlling interest | (544,180) | (672,153) |
Net loss attributable to non-controlling interest | (9,148) | (7,506) |
Net loss attributable to Vertical Computer Systems, Inc. | (553,328) | (679,659) |
Dividend applicable to preferred stock | (147,000) | (147,000) |
Net loss applicable to common stockholders | $ (700,328) | $ (826,659) |
Basic and diluted loss per share (in dollars per share) | $ 0 | $ 0 |
Basic and diluted weighted average of common shares outstanding (in shares) | 1,085,680,776 | 1,000,055,816 |
Comprehensive loss | ||
Net loss | $ (544,180) | $ (672,153) |
Translation adjustments | (117,481) | 234,778 |
Comprehensive loss | (661,661) | (437,375) |
Comprehensive loss attributable to non-controlling interest | (9,148) | (7,506) |
Comprehensive loss attributable to Vertical Computer Systems, Inc. | $ (670,809) | $ (444,881) |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Deficit (Unaudited) - 3 months ended Mar. 31, 2016 - 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, 2015 | $ 11,147 | $ (300) | $ 22,252,823 | $ (49,739,924) | $ 558,668 | $ 566,571 | $ (26,351,015) |
Balances, in beginning (in shares) at Dec. 31, 2015 | 1,114,601,656 | (30,000,000) | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Amortization of restricted stock awards | 12,295 | 12,295 | |||||
Forfeited restricted stock awards | $ (1,145) | $ (1,145) | |||||
Shares issued to subsidiary and held in treasury | $ 100 | $ (100) | |||||
Shares issued to subsidiary and held in treasury (in shares) | 10,000,000 | (10,000,000) | |||||
Shares issued for vested restricted stock awards | $ 5 | $ (5) | |||||
Shares issued for vested restricted stock awards (in shares) | 450,000 | ||||||
Cancellation of shares issued for loan forbearance | $ (10) | (28,890) | $ (28,900) | ||||
Cancellation of shares issued for loan forbearance (in shares) | (1,000,000) | ||||||
Shares issued for consulting fees | $ 20 | 43,980 | 44,000 | ||||
Shares issued for consulting fees (in shares) | 2,000,000 | ||||||
Reclassification of warrants as derivative liabilities | $ (52,462) | (52,462) | |||||
Dividends paid by subsidiary to non-controlling interest | $ (32,500) | (32,500) | |||||
Other comprehensive income translation adjustment | $ (117,481) | (117,481) | |||||
Net loss | $ (553,328) | $ 9,148 | (544,180) | ||||
Balances, ending at Mar. 31, 2016 | $ 11,262 | $ (400) | $ 22,227,276 | $ (50,293,252) | $ 441,187 | $ 543,219 | $ (27,070,708) |
Balances, ending (in shares) at Mar. 31, 2016 | 1,126,051,656 | (40,000,000) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities | ||
Net loss | $ (544,180) | $ (672,153) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 108 | 31,365 |
Bad debt expense | 6,138 | $ 36,190 |
Amortization of debt discounts | 90,913 | |
(Gain) loss on derivative liabilities | $ (28,712) | $ 78,680 |
Stock reimbursement expense | 20,000 | |
Write-off of property and equipment | $ 5,015 | |
Common stock issued for consulting fees | $ 44,000 | |
Cancellation of common shares issued for loan forbearance | (28,900) | |
Forfeited restricted stock award compensation | (1,145) | |
Amortization of restricted stock awards | 12,975 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 258,520 | $ 390,856 |
Prepaid expenses and other assets | 754 | 6,183 |
Accounts payable to related parties | 14,992 | 1,869 |
Accounts payable and accrued liabilities | 338,114 | 184,159 |
Deferred revenue | 72,749 | (267,728) |
Net cash provided by (used in) operating activities | 236,326 | (185,564) |
Cash flow from investing activities: | ||
Software development | (143,927) | $ (142,253) |
Purchase of equipment | (3,853) | |
Net cash used in investing activities | $ (147,780) | $ (142,253) |
Cash flows from financing activities: | ||
Borrowings on notes payable | $ 100,000 | |
Payments of notes payable | $ (62,190) | |
Dividends paid by subsidiary to non-controlling interest | $ (32,500) | $ (30,000) |
Bank overdraft | 24,558 | |
Net cash provided by (used in) financing activities | $ (94,690) | 94,558 |
Effect of changes in exchange rates on cash | (23,411) | 234,464 |
Net change in cash | (29,555) | 1,205 |
Cash, beginning of period | 37,141 | 117,866 |
Cash, end of period | 7,586 | 119,071 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | $ 107,200 | $ 68,960 |
Cash paid for income taxes | ||
Non-cash investing and financing activities: | ||
Common shares issued for vested restricted stock awards | $ 5 | |
Reclassification of warrants as derivative liabilities | (52,462) | |
Debt discounts due to derivative liabilities | $ 302,473 |
Organization, Basis of Presenta
Organization, Basis of Presentation and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Basis of Presentation and Significant Accounting Policies | Note 1. Organization, Basis of Presentation and Significant Accounting Policies The accompanying unaudited interim consolidated financial statements of Vertical Computer Systems, Inc. (we, our, the Company or Vertical) have been prepared in accordance with accounting principles generally accepted in the United States of America and rules of the Securities and Exchange Commission, and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in Verticals annual report on Form 10-K for the year ended December 31, 2015. 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. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited financial statements as reported in the 2015 annual report on Form 10-K have been omitted. Earnings per share Basic earnings per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of shares of the Companys common stock outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if our share-based awards and convertible securities were exercised or converted into common stock. The dilutive effect of our share-based awards is computed using the treasury stock method, which assumes all share-based awards are exercised and the hypothetical proceeds from exercise are used to purchase common stock at the average market price during the period. The incremental shares (difference between shares assumed to be issued versus purchased), to the extent they would have been dilutive, are included in the denominator of the diluted EPS calculation. The dilutive effect of our convertible preferred stock and convertible debentures is computed using the if-converted method, which assumes conversion at the beginning of the year. For the three months ended March 31, 2016 and 2015, common stock equivalents related to the convertible debentures, convertible debt and preferred stock and stock derivative liability were not included in the calculation of the diluted earnings per share as their effect would be anti-dilutive. Reclassifications Certain reclassifications have been made to the prior periods to conform to the current period presentation. Capitalized Software Costs Software costs incurred internally in creating computer software products are expensed until technological feasibility has been established upon completion of a detailed program design. Thereafter, all software development costs are capitalized until the point that the product is ready for sale, and are subsequently reported at the lower of unamortized cost or net realizable value. The Company considers annual amortization of capitalized software costs based on the ratio of current year revenues by product to the total estimated revenues by the product, subject to an annual minimum based on straight-line amortization over the products estimated economic useful life, not to exceed five years. The Company periodically reviews capitalized software costs for impairment where the fair value is less than the carrying value. During the three months ended March 31, 2016 and 2015, the Company capitalized an aggregate of $143,927 and $142,253 respectively, related to software development. Recently Issued Accounting Pronouncements The Company does not expect the adoption of any recently issued accounting pronouncements to have a material impact on the Companys financial position, operations or cash flows. |
Going Concern
Going Concern | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | Note 2. Going Concern The accompanying unaudited consolidated financial statements for the three months ended March 31, 2016 and 2015 have been prepared assuming that we will continue as a going concern, and accordingly realize our assets and satisfy our liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not purport to represent realizable or settlement values. As of March 31, 2016, we had negative working capital of approximately $18.5 million and defaulted on substantially all of our debt obligations. These conditions raise substantial doubt about our ability to continue as a going concern. Our management is continuing its efforts to attempt to secure funds through equity and/or debt instruments for our operations, expansion and possible acquisitions, mergers, joint ventures, and/or other business combinations. The Company will require additional funds to pay down its liabilities, as well as finance its expansion plans consistent with anticipated changes in operations and infrastructure. However, there can be no assurance that the Company will be able to secure additional funds and that if such funds are available, whether the terms or conditions would be acceptable to the Company and whether the Company will be able to turn into a profitable position and generate positive operating cash flow. The consolidated financial statements contain no adjustment for the outcome of this uncertainty. |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2016 | |
Notes Payable [Abstract] | |
Notes Payable | Note 3. Notes Payable The following table reflects our third party debt activity, including our convertible debt, for the three months ended March 31, 2016: December 31, 2015 $ 5,397,020 Payments of third party notes (62,190 ) Debt discounts due valuation of derivative liabilities (302,473 ) Amortization of debt discounts 85,742 Effect of currency exchange 125 March 31, 2016 5,118,224 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. 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 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. The Lakeshore note is currently in default and the Company is currently in discussions with Lakeshore to resolve all outstanding issues, including the reconciliation payment due on January 15, 2016. During the three months ended March 31, 2016, the Company, through its subsidiary, paid dividends to Lakeshore of $32,500. |
Derivative Liabilities and Fair
Derivative Liabilities and Fair Value Measurements | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liabilities and Fair Value Measurements | Note 4. Derivative Liabilities and Fair Value Measurements Derivative liabilities During 2016, certain notes issued by the Company became convertible and qualified as derivative liabilities under ASC 815. In addition, the outstanding common stock warrants associated with the notes became tainted and were required to be accounted for as derivative liabilities under ASC 815. As of March 31, 2016, the aggregate fair value of the outstanding derivative liabilities was $326,223. For the three months ended March 31, 2016, the net gain on the change in fair value of derivative liabilities was $28,712. The Company estimated the fair value of the derivative liabilities using the Black-Scholes option pricing model and the following key assumptions during 2016: 2016 Expected dividends 0% Expected terms (years) 0.39 - 2.91 Volatility 119% - 131% Risk-free rate 0.39% - 0.98% 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 March 31, 2016 and December 31, 2015: Fair value measurements on a recurring basis Level 1 Level 2 Level 3 As of March 31, 2016: Liabilities Derivative liabilities convertible debt $ - $ - $ 326,223 As of December 31, 2015: Liabilities None $ - $ - $ - 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 Company uses Level 3 inputs to estimate the fair value of its derivative liabilities. The below table presents the change in the fair value of the derivative liabilities during the three months ended March 31, 2016: Fair value as of December 31, 2015 $ - Additions recognized as debt discounts 302,473 Additions reclassified from equity 52,462 Loss on change in fair value of derivatives (28,712 ) Fair value as of March 31, 2016 $ 326,223 |
Common and Preferred Stock Tran
Common and Preferred Stock Transactions | 3 Months Ended |
Mar. 31, 2016 | |
Equity [Abstract] | |
Common and Preferred Stock | Note 5. Common and Preferred Stock Transactions In January 2016, the Company granted 2,000,000 unregistered shares of its common stock with the Rule 144 restrictive legend 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 Company granted 100,000 unregistered shares of the Companys common stock with the Rule 144 restrictive legend to a consultant of the Company and its subsidiaries pursuant to a restricted stock agreement with the Company. In March 2016, the Company cancelled 1,000,000 unregistered shares of its common stock issued during 2015 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. The cancellation resulted in the reversal of forbearance fees expense of $28,900 during the three months ended March 31, 2016. In March 2016, the Company issued 10,000,000 shares of the Companys common stock 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. During the three months ended March 31, 2016, 450,000 VCSY common shares issued under restricted stock agreements to consultants and employees of the Company vested. During the three months ended March 31, 2016, the Company issued 750,000 shares of the Companys common stock with the Rule 144 restrictive legend to an employee of a subsidiary of the Company (at a fair market value of $15,675), pursuant to a restricted stock agreement under which the shares vest in equal installments over a 30-month period. During the three months ended March 31, 2016, the Stock compensation expense for the amortization of restricted stock awards was $12,295 for the three months ended March 31, 2016. As of March 31, 2016, there were 2,350,000 shares of unvested stock compensation awards to employees and 15,100,000 shares of unvested stock compensation awards to non-employees. We have evaluated our convertible cumulative preferred stock under the guidance set out in FASB ASC 470-20 and accordingly classified these shares as temporary equity in the consolidated balance sheets. Option and warrant activities during the three months ended March 31, 2016 is summarized as follows: Incentive Stock Non-Statutory Warrants Weighted Outstanding at December 31, 2015 - - 6,800,000 $ .091 Options/Warrants granted - - - - Options/Warrants exercised - - - - Options/Warrants expired/cancelled - - - - Outstanding at March 31, 2016 - - 6,800,000 $ .091 The weighted average remaining life of the outstanding warrants as of March 31, 2016 was 2.49. The intrinsic value of the exercisable warrants as of March 31, 2016 was $0. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 6. Related Party Transactions The following table reflects our related party debt activity, including our convertible debt, for the three months ended March 31, 2016: December 31, 2015 $ 417,445 Amortization of debt discounts 5,171 March 31, 2016 $ 422,616 As of March 31, 2016 and December 31, 2015, the Company had accounts payable to employees for unreimbursed expenses and related party contractors in an aggregate amount of $123,371 and $108,379, respectively. The payables are unsecured, non-interest bearing and due on demand. |
Legal Proceedings
Legal Proceedings | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | Note 7. Legal Proceedings We are involved in the following ongoing legal matters: On December 31, 2011, the Company and InfiniTek corporation (InfiniTek) entered into a settlement agreement to dismiss an action filed by the Company against InfiniTek in the Texas State District Court in Fort Worth, Texas, for breach of contract and other claims, a counter claim filed by InfiniTek against the Company for non-payment of amounts claimed the Company owed to InfiniTek, and an action filed by InfiniTek against the Company in California Superior Court in Riverside, California seeking damages for breach of contract and lost profit. Pursuant to the terms of the settlement agreement, Vertical agreed to pay InfiniTek $82,500 in three equal installments with the last payment due by or before August 5, 2012. Upon full payment, InfiniTek shall transfer and assign ownership of the NAVPath software developed by InfiniTek for use with NOW Solutions emPath® software application and Microsoft Dynamics NAV (formerly Navision) business solution platform. The amounts in dispute were included in our accounts payable and accrued liabilities and have been adjusted to the settlement amount of $82,500 at December 31, 2011. The Company has made $37,500 in payments due under the settlement agreement as of the date of this Report and each party is alleging the other party is in breach of the settlement agreement. We 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. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 8. Subsequent Events In April 2016, the Company and a third party noteholder entered into an agreement under which the Company issued 5,000,000 shares of the Companys common stock with the Rule 144 restrictive legend in lieu of $130,000 in principal owed to the noteholder under a note payable issued by NOW Solutions with a principal amount of $213,139. The fair market value of the shares was $92,500. In May 2016, the Company and William Mills agreed to issue 5,000,000 shares of the Companys common stock with the Rule 144 restrictive legend in lieu of $100,000 of fees accrued for services rendered by Mr. Mills as a Director and Secretary of the Company. The fair market value of the shares was $100,000. William Mills is a partner of Parker Mills and the Secretary and a Director of the Company. In May 2016, the Company and a third party entered into an agreement under which the Company issued 1,500,000 shares of the Companys common stock with the Rule 144 restrictive legend in lieu of paying $35,969 in fees, expenses, and interest owed to the third party for services rendered to the Company and its subsidiaries. The fair market value of the shares issued was $37,500. During the period that runs from April 1, 2016 through May 16, 2016, the Company issued convertible debentures in the aggregate principal amount of $285,000 to 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 debentures 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 respective 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 2,850,000 shares of common stock of the Company with the Rule 144 restrictive legend and 3-year warrants under which the lenders may purchase in aggregate a total of 2,850,000 unregistered shares of common stock of the Company at a purchase price of $0.10 per share. During the period that runs from April 1, 2016 through May 16, 2016, $34,000 of principal and interest under a convertible note issued in the principal amount of $80,000 was converted into 2,464,092 unrestricted common shares of the company. |
Organization, Basis of Presen15
Organization, Basis of Presentation and Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Earnings per share | Earnings per share Basic earnings per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of shares of the Companys common stock outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if our share-based awards and convertible securities were exercised or converted into common stock. The dilutive effect of our share-based awards is computed using the treasury stock method, which assumes all share-based awards are exercised and the hypothetical proceeds from exercise are used to purchase common stock at the average market price during the period. The incremental shares (difference between shares assumed to be issued versus purchased), to the extent they would have been dilutive, are included in the denominator of the diluted EPS calculation. The dilutive effect of our convertible preferred stock and convertible debentures is computed using the if-converted method, which assumes conversion at the beginning of the year. For the three months ended March 31, 2016 and 2015, common stock equivalents related to the convertible debentures, convertible debt and preferred stock and stock derivative liability were not included in the calculation of the diluted earnings per share as their effect would be anti-dilutive. |
Reclassifications | Reclassifications Certain reclassifications have been made to the prior periods to conform to the current period presentation. |
Capitalized Software Costs | Capitalized Software Costs Software costs incurred internally in creating computer software products are expensed until technological feasibility has been established upon completion of a detailed program design. Thereafter, all software development costs are capitalized until the point that the product is ready for sale, and are subsequently reported at the lower of unamortized cost or net realizable value. The Company considers annual amortization of capitalized software costs based on the ratio of current year revenues by product to the total estimated revenues by the product, subject to an annual minimum based on straight-line amortization over the products estimated economic useful life, not to exceed five years. The Company periodically reviews capitalized software costs for impairment where the fair value is less than the carrying value. During the three months ended March 31, 2016 and 2015, the Company capitalized an aggregate of $143,927 and $142,253 respectively, related to software development. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements The Company does not expect the adoption of any recently issued accounting pronouncements to have a material impact on the Companys financial position, operations or cash flows. |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
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 three months ended March 31, 2016: December 31, 2015 $ 5,397,020 Payments of third party notes (62,190 ) Debt discounts due valuation of derivative liabilities (302,473 ) Amortization of debt discounts 85,742 Effect of currency exchange 125 March 31, 2016 5,118,224 |
Derivative Liabilities and Fa17
Derivative Liabilities and Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair value of the derivative liabilities using the Black-Scholes option pricing model | The Company estimated the fair value of the derivative liabilities using the Black-Scholes option pricing model and the following key assumptions during 2016: 2016 Expected dividends 0% Expected terms (years) 0.39 - 2.91 Volatility 119% - 131% Risk-free rate 0.39% - 0.98% |
Schedule of derivative liabilities at fair value | The following table provides a summary of the fair value of our derivative liabilities as of March 31, 2016 and December 31, 2015: Fair value measurements on a recurring basis Level 1 Level 2 Level 3 As of March 31, 2016: Liabilities Derivative liabilities convertible debt $ - $ - $ 326,223 As of December 31, 2015: Liabilities None $ - $ - $ - |
Schedule of change in the fair value of the derivative liabilities | The below table presents the change in the fair value of the derivative liabilities during the three months ended March 31, 2016: Fair value as of December 31, 2015 $ - Additions recognized as debt discounts 302,473 Additions reclassified from equity 52,462 Loss on change in fair value of derivatives (28,712 ) Fair value as of March 31, 2016 $ 326,223 |
Common and Preferred Stock Tr18
Common and Preferred Stock Transactions (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Equity [Abstract] | |
Schedule of option and warrant activities | Option and warrant activities during the three months ended March 31, 2016 is summarized as follows: Incentive Stock Non-Statutory Warrants Weighted Outstanding at December 31, 2015 - - 6,800,000 $ .091 Options/Warrants granted - - - - Options/Warrants exercised - - - - Options/Warrants expired/cancelled - - - - Outstanding at March 31, 2016 - - 6,800,000 $ .091 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of related party transactions | The following table reflects our related party debt activity, including our convertible debt, for the three months ended March 31, 2016: December 31, 2015 $ 417,445 Amortization of debt discounts 5,171 March 31, 2016 $ 422,616 |
Organization, Basis of Presen20
Organization, Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Computer Software [Member] | ||
Capitalized software development costs | $ 143,927 | $ 142,253 |
Computer Software [Member] | Maximum [Member] | ||
Useful life | 5 years | |
NOW Solutions [Member] | ||
Percentage of ownership | 75.00% | |
SnAPPnet, Inc [Member] | ||
Percentage of ownership | 80.00% | |
Priority Time Systems, Inc. [Member] | ||
Percentage of ownership | 70.00% | |
Ploinks, Inc [Member] | ||
Percentage of ownership | 93.00% | |
Government Internet Systems, Inc [Member] | ||
Percentage of ownership | 84.50% |
Going Concern (Details Narrativ
Going Concern (Details Narrative) | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Negative working capital | $ 18,500,000 |
Notes Payable (Details)
Notes Payable (Details) | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Notes Payable [Abstract] | |
Balance, beginning | $ 5,397,020 |
Payments of third party notes | (62,190) |
Debt discounts due valuation of derivative liabilities | (302,473) |
Amortization of debt discounts | 85,742 |
Effect of currency exchange | 125 |
Balance, end | $ 5,118,224 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Jul. 31, 2015 | Jan. 09, 2013 | Jan. 31, 2016 | Aug. 31, 2015 | Jul. 31, 2015 | Mar. 31, 2016 | Dec. 31, 2014 |
11% Secured Lakeshore Note Due 2022-01-31 [Member] | |||||||
Notes payable | $ 1,759,150 | ||||||
Debt frequency of periodic payments | Monthly | Monthly | |||||
Debt periodic payment | $ 24,232 | $ 2,500 | |||||
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 | $ 32,500 | ||||||
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 2022-01-31 [Member] | Stage First Collateral [Member] | |||||||
Principal payment collateral | $ 290,000 | ||||||
11% Secured Lakeshore Note Due 2022-01-31 [Member] | Stage Second Collateral [Member] | |||||||
Principal payment collateral | 590,000 | ||||||
11% Secured Lakeshore Note Due 2022-01-31 [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 2022-01-31 [Member] | |||||||
Percentage of royalty on annual gross revenues | 6.00% | ||||||
Threshold annual gross revenues | $ 5,000,000 | ||||||
Percentage of ownership interest in principal payment | 25.00% | ||||||
Weekly advance periodic payment | $ 2,500 | ||||||
Attorney fees | 40,000 | ||||||
Payments to employees and former consultant | 80,000 | ||||||
SiteFlash [Member] | 11% Secured Lakeshore Note Due 2022-01-31 [Member] | |||||||
Percentage of net claim proceeds | 5.00% | ||||||
Priority Time Systems, Inc. [Member] | |||||||
Percentage of ownership | 70.00% | ||||||
Priority Time Systems, Inc. [Member] | 11% Secured Lakeshore Note Due 2022-01-31 [Member] | Lakeshore Investments Llc [Member] | |||||||
Income (loss) attributable to noncontrolling interest | $ 391,920 | ||||||
Percentage of ownership | 90.00% | ||||||
Percentage of ownership transferred | 20.00% | ||||||
SnAPPnet, Inc [Member] | |||||||
Percentage of ownership | 80.00% | ||||||
SnAPPnet, Inc [Member] | 11% Secured Lakeshore Note Due 2022-01-31 [Member] | Lakeshore Investments Llc [Member] | |||||||
Income (loss) attributable to noncontrolling interest | $ 99,210 | ||||||
Percentage of ownership | 100.00% | ||||||
Percentage of ownership transferred | 20.00% | ||||||
Ploinks, Inc [Member] | |||||||
Percentage of ownership | 93.00% | ||||||
Ploinks, Inc [Member] | 11% Secured Lakeshore Note Due 2022-01-31 [Member] | |||||||
Number of shares issued for forbearance | 2,000,000 | 3,000,000 |
Derivative Liabilities and Fa24
Derivative Liabilities and Fair Value Measurements (Details) | 3 Months Ended |
Mar. 31, 2016 | |
Expected dividends | 0.00% |
Minimum [Member] | |
Expected terms (years) | 4 months 21 days |
Volatility | 119.00% |
Risk-free rate | 0.39% |
Maximum [Member] | |
Expected terms (years) | 2 years 11 months 28 days |
Volatility | 131.00% |
Risk-free rate | 0.98% |
Derivative Liabilities and Fa25
Derivative Liabilities and Fair Value Measurements (Details 1) - Stock Derivative [Member] | Mar. 31, 2016USD ($) |
Level 1 [Member] | |
Liabilities | |
Derivative liabilities - convertible debt | |
Level 2 [Member] | |
Liabilities | |
Derivative liabilities - convertible debt | |
Level 3 [Member] | |
Liabilities | |
Derivative liabilities - convertible debt | $ 326,223 |
Derivative Liabilities and Fa26
Derivative Liabilities and Fair Value Measurements (Details 2) | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |
Fair value, beginning | |
Additions recognized as debt discounts | $ 302,473 |
Additions reclassified from equity | 52,462 |
Loss on change in fair value of derivatives | (28,712) |
Fair value as of March 31, 2016 | $ 326,223 |
Derivative Liabilities and Fa27
Derivative Liabilities and Fair Value Measurements (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivative liabilities | $ 326,223 | |
Gain on derivative liability | $ 28,712 | $ (78,680) |
Common and Preferred Stock Tr28
Common and Preferred Stock Transactions (Details) | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options And Warrants, Outstanding, Weighted Average Exercise Price [Abstract] | |
Outstanding at beginning | $ / shares | $ 0.091 |
Options/Warrants granted | $ / shares | |
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 | 6,800,000 |
Options/Warrants granted | |
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 Tr29
Common and Preferred Stock Transactions (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Jan. 31, 2016 | Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Value of shares issued for services | $ 44,000 | |||
Cancellation of shares issued for loan forbearance | $ (28,900) | |||
Number of shares held in treasury | 40,000,000 | 30,000,000 | ||
Forfeited restricted stock award compensation | $ (1,145) | |||
Amortization of restricted stock awards | $ 12,295 | |||
Weighted average remaining life of the outstanding warrants | 2 years 5 months 27 days | |||
Intrinsic value of the exercisable warrants | $ 0 | |||
Restricted Stock [Member] | ||||
Amortization of restricted stock awards | $ 12,295 | |||
Consultant [Member] | ||||
Vesting period | 3 years | |||
Employees [Member] | Restricted Stock [Member] | ||||
Number of shares non vested | 2,350,000 | |||
Non Employees [Member] | Restricted Stock [Member] | ||||
Number of shares non vested | 15,100,000 | |||
Restricted Stock Agreements [Member] | Employees And Consultant [Member] | ||||
Number of shares issued during the period | 450,000 | |||
Unregistered Common Stock [Member] | Employees [Member] | ||||
Number of shares cancelled | 200,000 | |||
Number of shares issued during the period | 750,000 | |||
Value of shares issued during the period | $ 15,675 | |||
Vesting period | 30 months | |||
Forfeited restricted stock award compensation | $ (1,145) | |||
Unregistered Common Stock [Member] | Consulting Agreement [Member] | Consultant [Member] | ||||
Number of shares issued for services | 2,000,000 | 100,000 | ||
Value of shares issued for services | $ 44,000 | |||
Unregistered Common Stock [Member] | Restricted Performance Stock Agreements [Member] | Consultant [Member] | ||||
Number of share that may be issued for services | 15,000,000 | |||
Ploinks, Inc [Member] | ||||
Number of shares issued during the period | 10,000,000 | |||
Number of shares received in exchange | 5,000,000 | |||
Ploinks, Inc [Member] | Consulting Agreement [Member] | Consultant [Member] | ||||
Number of shares issued for services | 200,000 | |||
Ploinks, Inc [Member] | Restricted Performance Stock Agreements [Member] | Consultant [Member] | ||||
Number of share that may be issued for services | 1,500,000 | |||
NOW Solutions [Member] | Unregistered Common Stock [Member] | Third Party Lender [Member] | ||||
Number of shares cancelled | 1,000,000 | |||
Amount of payment made monthly | $ 22,000 | |||
Amount of penalty for a default of obligation under a debt | 10,000 | |||
Cancellation of shares issued for loan forbearance | 28,900 | |||
Debt face amount | $ 715,000 |
Related Party Transactions (Det
Related Party Transactions (Details) | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Related Party Transactions [Abstract] | |
Balance beginning | $ 417,445 |
Amortization of debt discounts | 5,171 |
Balance ending | $ 422,616 |
Related Party Transactions (D31
Related Party Transactions (Details Narrative) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Related Party Transactions [Abstract] | ||
Accounts payable to related party | $ 123,371 | $ 108,379 |
Legal Proceedings (Details Narr
Legal Proceedings (Details Narrative) - USD ($) | Jul. 15, 2015 | Jun. 15, 2015 | Feb. 04, 2014 | Aug. 05, 2012 | Jun. 30, 2015 | Mar. 31, 2016 | Dec. 31, 2011 |
Loss Contingencies [Line Items] | |||||||
Repayment of debt | $ 62,190 | ||||||
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 | 10,000,000 | |||||
Number of shares issued for forbearance | 10,000,000 | ||||||
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 | ||||||
Principal amount | $ 275,000 | ||||||
Repayment of debt | $ 265,000 | $ 100,000 | |||||
Fair value of stock issued | $ 408,000 | 250,000 | |||||
Extinguishment loss | $ 150,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 4 Months Ended |
May. 31, 2016 | May. 16, 2016 | Mar. 31, 2016 | Apr. 30, 2016 | |
Subsequent Event [Line Items] | ||||
Repayment of debt | $ 62,190 | |||
Exercise price (in dollars per shares) | $ 0 | |||
Subsequent Event [Member] | Mr. William Mills [Member] | ||||
Subsequent Event [Line Items] | ||||
Number of shares issued in lieu for payment | 5,000,000 | |||
Fair value of stock issued in lieu for payment | $ 87,500 | |||
Fees accrued for services rendered | $ 100,000 | |||
Subsequent Event [Member] | Third Party Noteholder [Member] | ||||
Subsequent Event [Line Items] | ||||
Number of shares issued in lieu for payment | 1,500,000 | |||
Fair value of stock issued in lieu for payment | $ 37,500 | |||
Fees accrued for services rendered | $ 35,969 | |||
Subsequent Event [Member] | Third Party Noteholder [Member] | NOW Solutions [Member] | ||||
Subsequent Event [Line Items] | ||||
Number of shares issued in lieu for payment | 5,000,000 | |||
Fair value of stock issued in lieu for payment | $ 92,500 | |||
Principal amount | 213,139 | |||
Repayment of debt | $ 130,000 | |||
Subsequent Event [Member] | 10% Convertible Debentures [Member] | Third Party Lender [Member] | ||||
Subsequent Event [Line Items] | ||||
Number of shares issued in connection with the loan | 2,850,000 | |||
Principal amount | $ 285,000 | |||
Vesting term | 1 year | |||
Conversion per share | $ 0.03 | |||
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. | |||
Principal and interest payment | $ 34,000 | |||
Number of shares converted into common shares | 2,464,092 | |||
Subsequent Event [Member] | 10% Convertible Debentures [Member] | Third Party Lender [Member] | Warrant [Member] | ||||
Subsequent Event [Line Items] | ||||
Warrant term | 3 years | |||
Subsequent Event [Member] | 10% Convertible Debentures [Member] | Third Party Lender [Member] | Warrant [Member] | Unregistered Common Stock [Member] | ||||
Subsequent Event [Line Items] | ||||
Warrant oustanding | 2,850,000 | |||
Exercise price (in dollars per shares) | $ 0.10 | |||
Subsequent Event [Member] | Convertible Debentures [Member] | Third Party Lender [Member] | ||||
Subsequent Event [Line Items] | ||||
Principal and interest payment | $ 80,000 |