Item 1. Security and Issuer

 

The securities to which this Schedule 13D (the “Schedule”) relates are shares of common stock, par value $0.001 per share (the “Common Stock”), of Net Talk.Com, Inc. (the “Issuer”). The address of the Issuer’s principal executive offices is 1080 NW 163rd Drive, Miami Gardens, Florida 33169.

 

Item 2. Identity and Background

 

(a)

The name of the reporting person is Vicis Capital, LLC (“Vicis”). All 116,859,612 shares reported on this Schedule are held directly by Vicis Capital Master Fund (the “Fund”), for which Vicis acts as investment advisor. Vicis may be deemed to beneficially own such 116,859,612 shares within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended, by virtue of the voting and dispositive power over such shares granted by the Fund to Vicis.

 

(b)

The address of Vicis is 445 Park Avenue, Suite 1043, New York, NY 10022.

 

(c)

Vicis is an investment adviser registered under the Investment Advisers Act of 1940, as amended, that provides investment advisory services to the Fund.

 

(d)

Vicis has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) during the last five years.

 

(e)

Vicis has not, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

 

(f)

Vicis Capital, LLC is a limited liability company organized under the laws of the state of Delaware.

 

 

 

Name	Occupation
Shad Stastney	Member and Chief Operating Officer
John Succo	Member and Chief Investment Officer
Sky Lucas	Member and Head of Global Convertible Arbitrage

 

The business address of each of the Insiders is 445 Park Avenue, Suite 1043, New York, NY 10022. To Vicis’s knowledge, each of the Insiders is a United States citizen, and none of the Insiders has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). On September 18, 2013, without admitting or denying the findings of the Securities and Exchange Commission (the “SEC”), Shad Stastney consented to the entry of an administrative order (the “Order”) by the SEC instituting administrative and cease-and-desist proceedings pursuant to Sections 203(f) and 203(k) of the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and Section 9(b) of the Investment Company Act of 1940, as amended.  The order, entitled In the Matter of Shadron L. Stastney, resolved issues relating to a failure to disclose a material conflict of interest to the trustee of the Fund and the engagement in an undisclosed principal transaction with the Fund.  In conjunction with the Order, Mr. Stastney agreed to cease and desist from committing or causing any violations and any future violations of Sections 206(2) and 206(3) of the Advisers Act, to be barred from association with any investment adviser, broker, dealer, municipal securities dealer, or transfer agent and prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter, with the right to apply for reentry after eighteen months (except that he may continue to remain associated with Vicis as a managing member solely for the purpose of engaging in activities and taking actions that are reasonably necessary to wind down the Fund, subject to the oversight of an independent monitor paid for by Mr. Stastney), and pay disgorgement of $2,033,710.46, prejudgment interest of $501,385.06, and a civil monetary penalty of $375,000. To Vicis’s knowledge, no other Insider has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

 

Item 3. Source and Amount of Funds or Other Consideration

 

The Fund previously acquired from the Issuer (1) 500 shares of the Issuer’s 12% Series A Convertible Preferred Stock (the “Series A Preferred Stock”) convertible into 20,000,000 shares of Common Stock; (2) Series D Common Stock Purchase Warrants to purchase an aggregate of 36,800,000 shares of Common Stock at an exercise price of $0.50 (the “Series D Warrants”); and (3) certain 12% Senior Secured Convertible Debentures in the aggregate principal amount of $4,998,773 and convertible into 19,995,092 shares of Common Stock (the "Senior Secured Convertible Debentures"). The Certificate of Designation (the “Certificate of Designation”) designating the Series A Preferred Stock contained certain conversion caps that prevented the Fund from converting the Series A Convertible Preferred Stock into Common Stock by the holder if such conversion would result in the holder thereof owning greater than 4.99% of the Common Stock, subject to waiver by the holder upon 61 days’ notice to the Issuer; each of the Series D Warrants and Senior Secured Convertible Debentures contained similar conversion caps.

 

As part of a series of transactions closing on June 30, 2011, the Issuer amended and restated its Certificate of Designation for the Series A Preferred Stock and amended and restated each of the Series D Warrants to, among other changes, remove all conversion caps contained in the Certificate of Designation and the Series D Warrants, respectively. As a result of such amendments and restatements, the Fund is eligible to immediately convert, without limitation, any or all shares of such Series A Preferred Stock held by it into shares of Common Stock in accordance with the terms contained in the Certificate of Designation and to immediately exercise, without limitation, any or all of the Series D Warrants into shares of Common Stock, but has not so converted or exercised, as the case may be, any of the Series A Preferred Stock or Series D Warrants as of the date hereof. As a result of these amendments and restatements, Fund is deemed to beneficially own all 20,000,000 shares of Common Stock underlying the Series A Preferred Stock and all 36,800,000 shares of Common Stock underlying the Series D Warrants.

 

As part of a series of transactions closing on June 30, 2011, at the request of the Issuer, the Fund converted the Senior Secured Convertible Debentures into 19,995,092 shares of Common Stock at a conversion price of $0.25 per share subject to and upon waiver by the Issuer of all ownership caps contained in the Senior Secured Convertible Debentures. As additional consideration for the Fund agreeing to effect such conversion, the Issuer issued to the Fund a Series E Warrant to purchase up to an aggregate of 1,000,000 shares of Common Stock at an initial exercise price of $0.50 per share (a “Series E Warrant” and together with the other
Series E Warrants issued to the Fund, the “Series E Warrants”).

 

As part of a series of transactions closing on June 30, 2011, in conjunction with the issuance by the Issuer to the Fund of a certain 12% Senior Secured Debenture in the principal amount of $5,266,130 (which Debenture is presently due December 31, 2013), the Fund acquired a Series E Warrant to purchase up to an aggregate of 21,064,520 shares of Common Stock from the Issuer. On August 16, 2011, the Fund acquired an additional Series E Warrant to purchase up to an aggregate of 8,000,000 shares of Common Stock from the Issuer. On September 30, 2011, the Fund acquired an additional Series E Warrant to purchase up to an aggregate of 10,000,000 shares of Common Stock from the Issuer.

 

On June 30, 2012, the Fund granted the Issuer an option (the “Option”) to redeem all, but not less than all, of the Issuer’s securities held by Vicis for an exercise price of $16,000,000 less the sum of (a) total principal and accrued interest paid by the Issuer on the current outstanding debentures, (b) the first $1,000,000 of principal paid by the Issuer on any future debentures, if any, and (c) accrued interest paid by the Issuer on the first $1,000,000 of principal on any future debentures. . The Option is first exercisable on the date on which all principal of, and accrued interest on, debentures of the Issuer held by Vicis are paid in full and expires on December 31, 2013.

 

As a result the above transactions, when the shares of Common Stock acquired by the Fund upon conversion of the Senior Secured Convertible Debentures are aggregated with the shares of Common Stock underlying the Series A Preferred Stock, the Series D Warrants, and the Series E Warrants, Vicis may be deemed to beneficially own 116,859,612 shares of Common Stock.

 

Item 4. Purpose of Transaction.

 

Vicis, on behalf of the Fund, acquired the shares of Common Stock, the Series A Preferred Stock, the Series D Warrants, and the Series E Warrants of the Issuer for investment purposes in the ordinary course of its business pursuant to specified investment objectives of the Fund.

 

 

On May 28, 2012, Mr. Shad Stastney was appointed to the Issuer's board of directors. On June 6, 2013, Mr. Stastney resigned from the Issuer’s board of directors.

 

Vicis and representatives of Vicis and the Fund have had discussions with senior management of the Issuer and may in the future have such discussions concerning ways in which the Issuer could maximize shareholder value.

 

As permitted by law, Vicis may purchase additional shares of Common Stock or other securities convertible, exchangeable or exercisable into Common Stock or dispose of any or all of such securities from time to time in the open market, in privately negotiated transactions, or otherwise, on behalf of the Fund, depending upon future evaluation of the Issuer and upon other developments, including general economic and stock market conditions.

 

Except as set forth in Item 3 (including without limitation with respect to the Option) and this Item 4, Vicis has no present plan or proposal that relates to or would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D of the Act, but will continue to review this position based upon further developments.

 

Item 5. Interest in Securities of the Issuer

 

(a)

All 116,859,612 shares reported on this Schedule are held directly by Vicis Capital Master Fund, for which Vicis Capital, LLC acts as investment advisor. Vicis Capital, LLC may be deemed to beneficially own such 116,859,612 shares within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended, by virtue of the voting and dispositive power over such shares granted by Vicis Capital Master Fund to Vicis Capital, LLC. The voting and dispositive power granted to Vicis Capital, LLC by Vicis Capital Master Fund may be revoked by the Fund upon 90 days’ prior written notice at the end of any one-year term of the investment advisory agreement by and between the trustee of the Fund and Vicis. Vicis Capital, LLC disclaims beneficial ownership of any shares reported on this Schedule.

 

The foregoing 116,859,612 shares of Common Stock represent approximately 74.4% of the Issuer’s outstanding Common Stock (based upon 60,251,355 shares of Common Stock outstanding at September 4, 2013, as reported by the Issuer in its Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2012).

 

(b)

For information on voting and dispositive power with respect to the above-listed shares, see Items 7-10 of the Cover Pages.

 

	(c)	Except as disclosed in Item 3 of this Schedule, Vicis has not effected any transaction in the Common Stock in the past 60 days.
	(d)	Not applicable.
	(e)	Not applicable.

 

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

 

The information set forth in Items 3 and 4 is hereby incorporated by reference in this Item 6.

 

Item 7. Material to Be Filed as Exhibits

 

Exhibit 99.1

Securities Option Agreement dated as of June 30, 2012 by and between Vicis Capital Master Fund and Net Talk.com, Inc. (incorporated herein by reference to Exhibit 10.2 to Form 8-K filed by the Issuer on July 25, 2012).