Hongchang International (HCIL) 10-Q 15 May 15 2015 Q1 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	3 Months Ended
	Mar. 31, 2015	15-May-15
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	FALSE
Document Period End Date	31-Mar-15
Entity Registrant Name	PACIFIC WEBWORKS INC
Entity Central Index Key	1086303
Current Fiscal Year End Date	-19
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2015
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Common Stock, Shares Outstanding		49,713,895

CONSOLIDATED_BALANCE_SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)	Mar. 31, 2015	Dec. 31, 2014
CURRENT ASSETS
Cash and cash equivalents	$276,633	$609,313
Receivables
Trade, less allowance for doubtful receivables of $0 in 2014 and $0 in 2015	1,201,862	1,081,286
Prepaid expenses and other current assets	37,514	56,635
Inventory	14,743	20,289
Total current assets	1,530,752	1,767,523
PROPERTY AND EQUIPMENT, NET	12,339	13,995
Restricted cash	241,059	300,208
Security deposit	4,825	4,825
Deferred Expenses	260,919	60,972
Goodwill	1,946,253	1,946,253
Total Assets	3,996,147	4,093,776
CURRENT LIABILITIES
Accounts payable	220,030	50,528
Accrued liabilities	153,064	149,487
Notes payable, current portion	9,840	24,601
Deferred revenue	348,174	169,229
Total current liabilities	731,108	393,845
STOCKHOLDERS' EQUITY
Common stock - par value $0.001; authorized 50,000,000; issued and outstanding 49,713,895 and 49,713,895, respectively	49,714	49,714
Additional paid-in capital	18,069,715	18,069,715
Accumulated deficit	-14,854,390	-14,419,498
Total stockholders' equity	3,265,039	3,699,931
Total liabilities and stockholders' equity	$3,996,147	$4,093,776

CONSOLIDATED_BALANCE_SHEETS_Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2015	Dec. 31, 2014
CONSOLIDATED BALANCE SHEETS [Abstract]
Trade receivables, allowance for doubtful receivables	$0	$0
Common stock, par value per share	$0.00	$0.00
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	49,713,895	49,713,895
Common stock, shares outstanding	49,713,895	49,713,895

CONSOLIDATED_STATEMENTS_OF_OPE

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Revenues
Hosting, gateway and maintenance fees	$1,509,829	$405,976
Product sales	29,030	70,188
Revenues	1,538,859	476,164
Cost of sales	1,316,540	240,003
Gross profit	222,319	236,161
Selling expenses	52,064	82,420
Research and development	54,463	54,933
General and administrative	548,790	364,404
Depreciation and amortization	1,656	1,065
Total operating expenses	656,973	502,822
Loss from operations	-434,654	-266,661
Other income (expense)
Interest income (expense), net	-238	3,032
Total other income (expense)	-238	3,032
Loss before income taxes	-434,892	-263,629
Income tax expense
Net loss	($434,892)	($263,629)
LOSS PER SHARE
Basic	($0.01)	($0.01)
Diluted	($0.01)	($0.01)
Weighted-average common shares outstanding
Basic	49,713,895	49,713,895
Fully Diluted	49,713,895	49,713,895

CONSOLIDATED_STATEMENTS_OF_CAS

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash Flows From Operating Activities
Net loss	($434,892)	($263,629)
Adjustments to reconcile net loss to net cash used for operating activities
Depreciation and amortization	1,656	1,065
Changes in assets and liabilities
Receivables	-120,576	8,907
Restricted cash	59,149	-21,416
Prepaid expenses and other assets	-180,826	22,988
Inventory	5,546	-39,879
Interest receivable		-3,125
Accounts payable and accrued liabilities	173,079	163
Deferred revenue	178,945	-13,821
Net cash used for operating activities	-317,919	-308,747
Cash Flows From Investing Activities
Net cash used for investing activities
Cash Flows From Financing Activities
Cash paid on notes payable	-14,761	-12,822
Net cash used for financing activities	-14,761	-12,822
Net decrease in cash and cash equivalents	-332,680	-321,569
Cash and cash equivalents at beginning of period	609,313	1,928,821
Cash and cash equivalents at end of period	276,633	1,607,252
Supplemental disclosures of cash flow information:
Cash paid for interest	324	310
Cash paid for income taxes

BASIS_OF_FINANCIAL_STATEMENT_P

BASIS OF FINANCIAL STATEMENT PRESENTATION	3 Months Ended
	Mar. 31, 2015
BASIS OF FINANCIAL STATEMENT PRESENTATION [Abstract]
BASIS OF FINANCIAL STATEMENT PRESENTATION	NOTE 1 – BASIS OF FINANCIAL STATEMENT PRESENTATION
	The accompanying unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented adequately ensure that the information is not misleading, it is suggested that these interim consolidated financial statements be read in conjunction with the Company's audited financial statements and notes thereto included in its December 31, 2014 Annual Report on Form 10-K. Operating results for the three month period ending March 31, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015.
	Reclassifications
	Certain prior period balances have been reclassified to conform to current period presentation.

NOTES_PAYABLE

NOTES PAYABLE	3 Months Ended
	Mar. 31, 2015
NOTES PAYABLE [Abstract]
NOTES PAYABLE	NOTE 2 – NOTES PAYABLE
	On August 28, 2013 the Company entered into a $42,738 financing agreement for payment of its business insurance.  The financing agreement carries a 5.24% annual rate of interest and requires the Company to make 10 monthly payments of $4,377.  During the three month period ended March 31, 2014, the Company made principal payments of $12,821 and interest of $310.
	On September 2, 2014 the Company entered into a $44,281 financing agreement for payment of its business insurance. The financing agreement carries a 5.24% annual rate of interest and requires the Company to make 9 monthly payments of $5,028. During the three month period ended March 31, 2015, the Company made principal payments of $14,761 and interest of $324.

NOTES_RECEIVABLE

NOTES RECEIVABLE	3 Months Ended
	Mar. 31, 2015
NOTES RECEIVABLE [Abstract]
NOTES RECEIVABLE	NOTE 3 – NOTES RECEIVABLE
	On August 3, 2011, the Company, through its World Commerce Network, LLC subsidiary, issued a $250,000 promissory note to Bryan Development, LLC, a Utah limited liability company, for use as working capital in its business investment activities. On December 31, 2012, the maturity date of the promissory note was extended to December 31, 2013, on December 31, 2013, the maturity date of the promissory note was extended to June 30, 2014 and on June 30, 2014 the maturity date of the promissory note was extended to August 31, 2015. As of December 31, 2014, the promissory note was repaid in full.
	On August 15, 2011, Headlamp Ventures established a revolving line of credit facility and issued an initial $400,000 promissory note to Grupo Zapata Arce, a division of Metales y Minerales S.A. De C.V., a corporation organized under the laws of Mexico, for use in its iron ore exporting business. Interest is charged on amounts outstanding in the form of a fee of $3.00 per metric ton of iron ore purchased with proceeds of the note. On September 20, 2011, Grupo Zapata Arce Division Metales y Minerals S.A. de C.V., LLC was added as a party to the revolving line of credit and promissory note originally established on August 15, 2011 for Grupo Zapata Arce. Grupo Zapata Arce is positioned in an industry experiencing resurgent demand that is especially driven by emerging markets around the world. However, as of August 31, 2013 Grupo Zapata Arce is in default under the promissory note and Headlamp Ventures has initiated legal action to collect the amount due.  (See Note 6 – Litigation Matters, below.)

COMMITMENTS_AND_CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	3 Months Ended
	Mar. 31, 2015
COMMITMENTS AND CONTINGENCIES [Abstract]
COMMITMENTS AND CONTINGENCIES	NOTE 4 – COMMITMENTS & CONTINGENCIES
	During the year ended December 31, 2013, the Company entered into a lease agreement for commercial office space. The lease runs through May 31, 2018 and provides for monthly payments of $4,300 in year one, $4,425 in year two, $4,550 in year three, $4,700 in year four and $4,825 in year five. A security deposit in the amount of $4,825 was required upon lease execution.

LITIGATION_MATTERS

LITIGATION MATTERS	3 Months Ended
	Mar. 31, 2015
LITIGATION MATTERS [Abstract]
LITIGATION MATTERS	NOTE 5 – LITIGATION MATTERS
	On September 6, 2013 our subsidiary, Headlamp Ventures, LLC, filed a complaint against Marc Didier in the Third District Court Salt Lake County State of Utah. The complaint alleges that Headlamp Ventures loaned Grupo Zapata Arce (“Zapata”) $400,000 and Mr. Didier guaranteed the Loan Agreement and Note. Zapata failed to repay the loan by the due date of August 31, 2013 and is in default. Pursuant to the Guaranty and Security Agreement, Mr. Didier is obligated for all amounts due and owing. Headlamp Ventures seeks repayment of the loan amount, plus interest, attorneys' fees and punitive damages.
	On November 15, 2013 Pacific WebWorks, Inc. was served a summons by the Third Judicial District Court in and for Salt Lake County, State of Utah. The plaintiffs, Allen Stutelberg, Harold Schmunk and Michael Greer, filed a derivative action alleging Pacific WebWorks, Inc. and five former and current members of the board of directors, officers and/or employees of the Company committed corporate waste, breached fiduciary duties and committed civil conspiracy resulting in mismanagement of the Company's assets and affairs and usurpation of corporate opportunities. The plaintiffs seek general and punitive damages in excess of $300,000 for each of the five causes of action to be proven at a jury trial.  The Company retained legal counsel to vigorously defend against these allegations. The Company's counsel filed an answer to the summons and filed a motion to disqualify plaintiff's attorney due to a conflict of interest. The Company's motion to disqualify plaintiff's attorney was granted in July 2014. In October 2014 the Company filed a motion to disqualify the remainder of the law firm representing the plaintiffs in this matter. On March 12, 2015, the Court denied this motion. The Company subsequently filed for interlocutory appeal and on April 30, 2015, the Utah Court of Appeals denied this petition.
	We are involved in various other disputes and claims arising in the normal course of our business. In the opinion of management, any resulting litigation from these disputes and claims will not have a material effect on our financial position and results of operations.

SEGMENT_REPORTING

SEGMENT REPORTING	3 Months Ended
	Mar. 31, 2015
SEGMENT REPORTING [Abstract]
SEGMENT REPORTING	NOTE 6 – SEGMENT REPORTING
		Three Months Ended					Three Months Ended
		March 31, 2014a					March 31, 2015a
	Business Unit	Revenues,		Net income			Revenues,		Net income
		net		(loss)			net		(loss)
	Pacific Web Works	$	25,208	$	(401,252	)	$	-	$	(366,786	)
	IntelliPay		123,398		103,520			90,091		73,618
	Headlamp Ventures		70,168		(8,068	)		29,030		(656	)
	TradeWorks		900		900			670		670
	Thrifty Seeker		20		(130	)		-		(149	)
	Promontory Marketing		-		(45	)		-		(55	)
	World Commerce Network		-		3,125			-		(6	)
	Dynamic WebTools		256,470		38,321			1,419,068		(141,528	)
	Total	$	476,164	$	(263,629	)	$	1,538,859	$	(434,892	)
	aAmounts include all intercompany receivables, payables, revenues and expenses prior to elimination for consolidation.

SUBSEQUENT_EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Mar. 31, 2015
SUBSEQUENT EVENTS [Abstract]
SUBSEQUENT EVENTS	NOTE 7 – SUBSEQUENT EVENTS
	The Company has evaluated subsequent events in accordance with the provisions of ASC 855 and has identified no reportable subsequent events.

SEGMENT_REPORTING_Tables

SEGMENT REPORTING (Tables)	3 Months Ended
	Mar. 31, 2015
SEGMENT REPORTING [Abstract]
Summary of Business Unit Information		Three Months Ended					Three Months Ended
		March 31, 2014a					March 31, 2015a
	Business Unit	Revenues,		Net income			Revenues,		Net income
		net		(loss)			net		(loss)
	Pacific Web Works	$	25,208	$	(401,252	)	$	-	$	(366,786	)
	IntelliPay		123,398		103,520			90,091		73,618
	Headlamp Ventures		70,168		(8,068	)		29,030		(656	)
	TradeWorks		900		900			670		670
	Thrifty Seeker		20		(130	)		-		(149	)
	Promontory Marketing		-		(45	)		-		(55	)
	World Commerce Network		-		3,125			-		(6	)
	Dynamic WebTools		256,470		38,321			1,419,068		(141,528	)
	Total	$	476,164	$	(263,629	)	$	1,538,859	$	(434,892	)
	aAmounts include all intercompany receivables, payables, revenues and expenses prior to elimination for consolidation.

NOTES_PAYABLE_Details

NOTES PAYABLE (Details) (USD $)	0 Months Ended	3 Months Ended	0 Months Ended	3 Months Ended
	Aug. 28, 2013	Mar. 31, 2014	Sep. 02, 2014	Mar. 31, 2015
August 28, 2013, Financing Agreement [Member]
Debt Instrument [Line Items]
Principal amount	$42,738
Annual rate	5.24%
Debt Instrument, Term	10 months
Monthly payments	4,377
Principal payment		12,821
Interest payment		310
September Second 2014 Financial Agreement [Member]
Debt Instrument [Line Items]
Principal amount			44,281
Annual rate			5.24%
Debt Instrument, Term			9 months
Monthly payments			5,028
Principal payment				14,761
Interest payment				$324

NOTES_RECEIVABLE_Details

NOTES RECEIVABLE (Details) (USD $)	Aug. 03, 2011	Aug. 15, 2011
Bryan Development, LLC [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable	$250,000
Grupo Zapata Arce [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable		400,000
Fee per metric ton of iron ore purchased with proceeds of the note		$3

COMMITMENTS_AND_CONTINGENCIES_

COMMITMENTS AND CONTINGENCIES (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Monthly lease obligation
Year one	$4,300
Year two	4,425
Year three	4,550
Year four	4,700
Year five	4,825
Security deposit	$4,825	$4,825
Lease expiration period	31-May-18

LITIGATION_MATTERS_Details

LITIGATION MATTERS (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
LITIGATION MATTERS [Abstract]
Settlement expense	$400,000
Damages sought	$300,000

SEGMENT_REPORTING_Schedule_of_

SEGMENT REPORTING (Schedule of Segment Reporting By Business Unit) (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Segment Reporting Information [Line Items]
Revenues, net	$1,538,859	$476,164
Net income (loss)	-434,892	-263,629
Pacific Web Works [Member]
Segment Reporting Information [Line Items]
Revenues, net		25,208
Net income (loss)	-366,786	-401,252
IntelliPay [Member]
Segment Reporting Information [Line Items]
Revenues, net	90,091	123,398
Net income (loss)	73,618	103,520
Headlamp Ventures [Member]
Segment Reporting Information [Line Items]
Revenues, net	29,030	70,168
Net income (loss)	-656	-8,068
Trade Works [Member]
Segment Reporting Information [Line Items]
Revenues, net	670	900
Net income (loss)	670	900
Thrifty Seeker [Member]
Segment Reporting Information [Line Items]
Revenues, net		20
Net income (loss)	-149	-130
Promontory Marketing [Member]
Segment Reporting Information [Line Items]
Revenues, net
Net income (loss)	-55	-45
World Commerce Network [Member]
Segment Reporting Information [Line Items]
Revenues, net
Net income (loss)	-6	3,125
Dynamic WebTools [Member]
Segment Reporting Information [Line Items]
Revenues, net	1,419,068	256,470
Net income (loss)	($141,528)	$38,321