Hongchang International (HCIL) 10-Q 14 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 14, 2015
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Entity Registrant Name	PACIFIC WEBWORKS INC
Entity Central Index Key	1,086,303
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,015
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 ($)	Jun. 30, 2015	Dec. 31, 2014
CURRENT ASSETS
Cash and cash equivalents	$ 363,562	$ 609,313
Receivables
Trade, less allowance for doubtful receivables of $0 in 2014 and $0 in 2015	1,896,689	1,081,286
Prepaid expenses and other current assets	18,691	56,635
Inventory	15,522	20,289
Total current assets	2,294,464	1,767,523
PROPERTY AND EQUIPMENT, NET	10,683	13,995
Restricted cash	189,011	300,208
Security deposit	4,825	4,825
Deferred Expenses	16,690	60,972
Goodwill	1,946,253	1,946,253
Total Assets	4,461,926	4,093,776
CURRENT LIABILITIES
Accounts payable	87,083	50,528
Accrued liabilities	$ 434,764	149,487
Notes payable, current portion		24,601
Deferred revenue	$ 52,029	169,229
Total current liabilities	573,876	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	(14,231,379)	(14,419,498)
Total stockholders' equity	3,888,050	3,699,931
Total liabilities and stockholders' equity	$ 4,461,926	$ 4,093,776

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
CONSOLIDATED BALANCE SHEETS [Abstract]
Trade receivables, allowance for doubtful receivables	$ 0	$ 0
Common stock, par value per share	$ 0.001	$ 0.001
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 OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenues
Hosting, gateway and maintenance fees	$ 2,365,571	$ 930,250	$ 3,875,400	$ 1,336,226
Product sales	53,466	72,461	82,496	142,649
Revenues	2,419,037	1,002,711	3,957,896	1,478,875
Cost of sales	1,190,265	605,778	2,506,805	845,780
Gross profit	1,228,772	396,933	1,451,091	633,095
Selling expenses	33,368	79,377	85,432	161,797
Research and development	53,083	59,155	107,546	114,089
General and administrative	517,463	401,295	1,066,253	765,699
Depreciation and amortization	1,656	1,065	3,312	2,130
Total operating expenses	605,570	540,892	1,262,543	1,043,715
Income (loss) from operations	623,202	(143,959)	188,548	(410,620)
Other income (expense)
Interest income (expense), net	(191)	3,050	(429)	6,082
Total other income (expense)	(191)	3,050	(429)	6,082
Income (loss) before income taxes	623,011	(140,909)	188,119	(404,538)
Income tax expense		4		4
Net Income (loss)	$ 623,011	$ (140,913)	$ 188,119	$ (404,542)
LOSS PER SHARE
Basic	$ 0.01	$ 0	$ 0	$ (0.01)
Diluted	$ 0.01	$ 0	$ 0	$ (0.01)
Weighted-average common shares outstanding
Basic	49,713,895	49,713,895	49,713,895	49,713,895
Fully Diluted	49,713,895	49,713,895	49,713,895	49,713,895

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash Flows From Operating Activities
Net loss	$ 188,119	$ (404,542)
Adjustments to reconcile net loss to net cash used for operating activities
Depreciation and amortization	3,312	2,130
Changes in assets and liabilities
Receivables	(815,403)	(385,551)
Restricted cash	111,197	(49,993)
Prepaid expenses and other assets	82,226	(200,780)
Inventory	$ 4,767	(16,010)
Interest receivable		(6,285)
Accounts payable and accrued liabilities	$ 321,832	162,367
Deferred revenue	(117,200)	321,151
Net cash used for operating activities	$ (221,150)	$ (577,513)
Cash Flows From Investing Activities
Net cash provided by (used for) investing activities
Cash Flows From Financing Activities
Cash paid on notes payable	$ (24,601)	$ (25,642)
Net cash used for financing activities	(24,601)	(25,642)
Net increase (decrease) in cash and cash equivalents	(245,751)	(603,155)
Cash and cash equivalents at beginning of period	609,313	1,928,821
Cash and cash equivalents at end of period	363,562	1,325,666
Supplemental disclosures of cash flow information:
Cash paid for interest	$ 540	$ 620

BASIS OF FINANCIAL STATEMENT PR

BASIS OF FINANCIAL STATEMENT PRESENTATION	6 Months Ended
	Jun. 30, 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, 20 1 4 Annual Report on Form 10-K. Operating res ults for the six month period ending June 30, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 201 5 . Reclassifications Certain prior period balances have been reclassified to conform to current period presentation.

NOTES PAYABLE

NOTES PAYABLE	6 Months Ended
	Jun. 30, 2015
NOTES PAYABLE [Abstract]
NOTES PAYABLE	NOTE 2 – NOTE S PAYABLE On August 28, 2013 the Company entered into a $ 42,738 The financing agreement carries a 5.24 10 4,377 During the three month period ended June 30, 2014, the Company made principal payments of $ 12,821 310 For the six month period ended June 30, 2014, the Company made principal payments of $ 25,642 620 The note has been paid in full. On September 2, 2014 the C ompany entered into a $ 44,281 financing agreement for payment of its business insurance. The financing agreement carries a 5.24 9 ayments of $ 5,028 . As of December 31, 2014, the balance was $ 24,601 June 30, 2015 , the Company made principal payments of $ 9,840 216 . For the six month period ended June 30, 2015, the Company made principal payments of $ 24,601 540 June 30, 2015, the note had been paid in full.

NOTES RECEIVABLE

NOTES RECEIVABLE	6 Months Ended
	Jun. 30, 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 On August 15, 2011, Headlamp Ventures established a revolving line of credit facility and issued an initial $ 400,000 3.00

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Jun. 30, 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 4,300 4,425 4,550 4,700 4,825 4,825

LITIGATION MATTERS

LITIGATION MATTERS	6 Months Ended
	Jun. 30, 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 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. 546,798 15 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 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 de nied 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	6 Months Ended
	Jun. 30, 2015
SEGMENT REPORTING [Abstract]
SEGMENT REPORTING	NOTE 6 – SEGMENT REPORTING Three Months Ended Three Months Ended June 30 , 201 4 a June 3 0 , 2015 a Business Unit Revenues, net Net income (loss) Revenues, net Net income (loss) Pacific Web Works $ 20,719 $ (335,570 ) $ - $ (286,143 ) IntelliPay 113,585 99,345 83,974 69,795 Headlamp Ventures 72,461 10,458 53,466 19,389 TradeWorks 820 683 600 576 Thrifty Seeker - (124 ) - (150 ) Promontory Marketing - (45 ) - (60 ) World Commerce Network - 3,160 - - Dynamic WebTools 795,126 81,180 2,280,997 819,604 Total $ 1,002,711 $ (140,913 ) $ 2,419,037 $ 623,011 a Amounts include all intercompany receivables, payables, revenues and expenses prior to elimination for c onsolidation. Six Months Ended Six Months Ended June 30, 2014 a June 30, 2015 a Business Unit Revenues, net Net income (loss) Revenues, net Net income (loss) Pacific Web Works $ 45,927 $ (736,821 ) $ - $ (652,929 ) IntelliPay 236,983 202,865 174,065 143,413 Headlamp Ventures 142,629 2,390 82,496 18,733 TradeWorks 1,720 1,583 1,270 1,246 Thrifty Seeker 20 (255 ) - (299 ) Promontory Marketing - (90 ) - (115 ) World Commerce Network - 6,285 - (6 ) Dynamic WebTools 1,051,596 119,501 3,700,065 678,076 Total $ 1,478,875 $ (404,542 ) $ 3,957,896 $ 188,119 a Amounts include all intercompany receivables, payables, revenues and expenses prior to elimination for consolidation.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	6 Months Ended
	Jun. 30, 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 the following reportable subsequent events: In the Headlamp Ventures, LLC, action against Marc Dider the Court granted the motion described in note 5 for summary judgment in the amount of $ 546,798 July 14, 2015 15

SEGMENT REPORTING (Tables)

SEGMENT REPORTING (Tables)	6 Months Ended
	Jun. 30, 2015
SEGMENT REPORTING [Abstract]
Summary of Business Unit Information	Three Months Ended Three Months Ended June 30 , 201 4 a June 3 0 , 2015 a Business Unit Revenues, net Net income (loss) Revenues, net Net income (loss) Pacific Web Works $ 20,719 $ (335,570 ) $ - $ (286,143 ) IntelliPay 113,585 99,345 83,974 69,795 Headlamp Ventures 72,461 10,458 53,466 19,389 TradeWorks 820 683 600 576 Thrifty Seeker - (124 ) - (150 ) Promontory Marketing - (45 ) - (60 ) World Commerce Network - 3,160 - - Dynamic WebTools 795,126 81,180 2,280,997 819,604 Total $ 1,002,711 $ (140,913 ) $ 2,419,037 $ 623,011 a Amounts include all intercompany receivables, payables, revenues and expenses prior to elimination for c onsolidation. Six Months Ended Six Months Ended June 30, 2014 a June 30, 2015 a Business Unit Revenues, net Net income (loss) Revenues, net Net income (loss) Pacific Web Works $ 45,927 $ (736,821 ) $ - $ (652,929 ) IntelliPay 236,983 202,865 174,065 143,413 Headlamp Ventures 142,629 2,390 82,496 18,733 TradeWorks 1,720 1,583 1,270 1,246 Thrifty Seeker 20 (255 ) - (299 ) Promontory Marketing - (90 ) - (115 ) World Commerce Network - 6,285 - (6 ) Dynamic WebTools 1,051,596 119,501 3,700,065 678,076 Total $ 1,478,875 $ (404,542 ) $ 3,957,896 $ 188,119 a Amounts include all intercompany receivables, payables, revenues and expenses prior to elimination for consolidation.

NOTES PAYABLE (Details)

NOTES PAYABLE (Details) - USD ($)	Sep. 02, 2014	Aug. 28, 2013	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
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		$ 25,642
Interest payment				$ 310		$ 620
September 2, 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			$ 9,840		$ 24,601
Interest payment			$ 216		$ 540
Notes payable							$ 24,601

NOTES RECEIVABLE (Details)

NOTES RECEIVABLE (Details) - USD ($)	Aug. 15, 2011	Aug. 03, 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 ($)	6 Months Ended
	Jun. 30, 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	May 31, 2018

LITIGATION MATTERS (Details)

LITIGATION MATTERS (Details) - USD ($)	Jul. 14, 2015	Jun. 30, 2015
LITIGATION MATTERS [Abstract]
Settlement expense		$ 400,000
Damages sought		$ 300,000
Subsequent Event [Member]
Subsequent Event [Line Items]
Judgement amount	$ 546,798
Judgement interest rate	15.00%

SEGMENT REPORTING (Schedule of

SEGMENT REPORTING (Schedule of Segment Reporting By Business Unit) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Segment Reporting Information [Line Items]
Revenues, net	$ 2,419,037	$ 1,002,711	$ 3,957,896	$ 1,478,875
Net income (loss)	623,011	(140,913)	$ 188,119	(404,542)
Pacific Web Works [Member]
Segment Reporting Information [Line Items]
Revenues, net		20,719		45,927
Net income (loss)	(286,143)	(335,570)	$ (652,929)	(736,821)
IntelliPay [Member]
Segment Reporting Information [Line Items]
Revenues, net	83,974	113,585	174,065	236,983
Net income (loss)	69,795	99,345	143,413	202,865
Headlamp Ventures [Member]
Segment Reporting Information [Line Items]
Revenues, net	53,466	72,461	82,496	142,629
Net income (loss)	19,389	10,458	18,733	2,390
Trade Works [Member]
Segment Reporting Information [Line Items]
Revenues, net	600	820	1,270	1,720
Net income (loss)	$ 576	$ 683	$ 1,246	1,583
Thrifty Seeker [Member]
Segment Reporting Information [Line Items]
Revenues, net				20
Net income (loss)	$ (150)	$ (124)	$ (299)	$ (255)
Promontory Marketing [Member]
Segment Reporting Information [Line Items]
Revenues, net
Net income (loss)	$ (60)	$ (45)	$ (115)	$ (90)
World Commerce Network [Member]
Segment Reporting Information [Line Items]
Revenues, net
Net income (loss)		$ 3,160	$ (6)	$ 6,285
Dynamic WebTools [Member]
Segment Reporting Information [Line Items]
Revenues, net	$ 2,280,997	795,126	3,700,065	1,051,596
Net income (loss)	$ 819,604	$ 81,180	$ 678,076	$ 119,501

SUBSEQUENT EVENTS (Details)

SUBSEQUENT EVENTS (Details) - Jul. 14, 2015 - Subsequent Event [Member] - USD ($)	Total
Subsequent Event [Line Items]
Judgement amount	$ 546,798
Judgement interest rate	15.00%