Vertical Computer Systems Inc. (OTCPK:VCSY) announced a private placement of a secured 10 year promissory note with Lakeshore Investment LLC for gross proceeds of $1,759,150 on January 9, 2013. The promissory note will bear an interest rate of 11% per annum and will be payable in equal monthly installments of $24,232 until January 31, 2022. As part of the transaction, the company agreed to make principal payments toward the note of $90,000 by January 31, 2013, which is secured by 10% of the company's ownership interest in Priority Time Systems, Inc. and $600,000 by February 28, 2013, which is secured by 20% of the company's ownership interest in its subsidiary. As additional consideration for the loan, the company granted a 5% interest in net claim proceeds less any attorney's fees and direct costs from any litigation or settlement proceeds related to the SiteFlash technology. In addition, until the note is paid in full, Now Solutions, Inc. agreed to pay a Lakeshore royalty of 5% of its annual gross revenues in excess of $5,000,000 up to a maximum of $1,759,150.

On January 9, 2013, Vertical Computer Systems Inc. closed the transaction.