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Common and Preferred Stock Transactions
9 Months Ended
Sep. 30, 2018
Equity [Abstract]  
Common and Preferred Stock Transactions

Note 5. Common and Preferred Stock Transactions

 

On July 25, 2018, Taladin executed an amendment to a pledge agreement (the “Amended Pledge Agreement”) with a third party lender. Under the original pledge agreement, Taladin pledged 20,000,000 shares (the “Taladin Pledged Shares”) of the Company’s common stock to the lender to secure obligations under the Taladin Pledged Notes, as also amended. Under the terms of the Amended Pledge Agreement, in lieu of selling the Taladin Pledged Shares pursuant to the original terms of the pledge agreement, Taladin and the lender agreed that Taladin, or a party acting on Taladin’s behalf, had the right to purchase a total of 10,000,000 shares of the Taladin Pledged Shares from Taladin at a purchase price of $0.015 per share over a certain period of time. The Company made $150,000 in payments to the lender and all rights to the 10,000,000 shares of the Pledged Stock have been retained by Taladin.

 

During the nine months ended September 30, 2018, the Company issued promissory notes to third party lenders in the aggregate principal amount of $470,000 for loans made by these lenders in the same amount to the Company. These notes bear interest at 10% per annum and are due within 90 days of the date the respective note was issued and on demand. In connection with the loans, the Company issued 1-year to 3-year warrants to purchase an aggregate total of 2,700,000 shares of VCSY common stock at a purchase price of $0.10-$0.20 per share to certain third party lenders.

 

During the nine months ended September 30, 2018, the Company issued an additional 2,500,000 VCSY common shares at a fair market value of $33,000 and an additional 300,000 Ploinks common shares at a fair market value of $92,850 to certain third party purchasers of 600,000 shares of VHS Series A Preferred Stock from a member of Lakeshore. These additional shares were issued to facilitate the execution of the 2017 Lakeshore Loan Amendment which resulted in the cure of any existing defaults under the Loan Agreement and the Note, as well as the release by Lakeshore of the security interests in the SiteFlash assets and the assets of SnAPPnet and Priority Time, when VHS did not meet performance standards. The company recorded the combined fair value of $125,850 as non-operating penalties in other income (expense) for the six months ended June 30, 2018.

 

During the nine months ended September 30, 2018, the Company extended the term of certain warrants to purchase an aggregate total of 225,000 shares of VCSY common stock at a purchase price of $0.10 and $0.20 per share for an additional 1-year period to third party subscribers who purchased an aggregate total of 750 shares of VCSY Series A Preferred Convertible Stock in the aggregate amount of $150,000.

 

During the nine months ended September 30, 2018, the Company extended the term of certain warrants to purchase a total of 12,100,000 shares of VCSY common stock (at $0.10 per share) for an additional 1-year period and granted a total of 320,199 shares of the common stock of Ploinks, Inc. to third party lenders in connection with certain extensions of convertible debentures in the aggregate principal amount of $1,210,000 that were issued from 2015 through 2017. The due dates for all these convertible debentures were extended until October 1, 2018. The incremental change in the fair value of the extended warrants was immaterial and did not change the conclusion of the debt modification.

 

During the nine months ended September 30, 2018, 570,000 shares of VCSY common stock issued to employees of the Company vested.

 

During the nine months ended September 30, 2018, warrants to purchase 1,000,000 shares of VCSY common stock at a purchase price of $0.10 per share expired.

 

During the nine months ended September 30, 2018, 289,998 shares of the common stock of Ploinks, Inc. issued under restricted stock agreements to consultants and employees of the Company and a subsidiary of the Company vested.

 

Stock compensation expense for the amortization of restricted stock awards was $33,127 for the nine months ended September 30, 2018. As of September 30, 2018, there were 5,490,000 shares of unvested stock compensation awards to employees and 15,500,000 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.

 

For additional transactions after September 30, 2018 concerning stock transactions, please see “Subsequent Events” in Note 9.