Hongchang International (HCIL) 10-Q 16 Nov 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 13, 2015
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 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	Q3
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 ($)	Sep. 30, 2015	Dec. 31, 2014
CURRENT ASSETS
Cash and cash equivalents	$ 242,936	$ 609,313
Receivables
Trade, less allowance for doubtful receivables of $0 in 2014 and $0 in 2015	1,932,787	1,081,286
Prepaid expenses and other current assets	89,854	56,635
Inventory	18,549	20,289
Total current assets	2,284,126	1,767,523
PROPERTY AND EQUIPMENT, NET	9,027	13,995
Restricted cash	479,164	300,208
Security deposit	4,825	4,825
Deferred Expenses	148,212	60,972
Goodwill	1,946,253	1,946,253
Total Assets	4,871,607	4,093,776
CURRENT LIABILITIES
Accounts payable	57,155	50,528
Accrued liabilities	704,086	149,487
Notes payable, current portion	70,374	24,601
Deferred revenue	500,735	169,229
Total current liabilities	1,332,350	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	(14,580,172)	(14,419,498)
Total stockholders' equity	3,539,257	3,699,931
Total liabilities and stockholders' equity	$ 4,871,607	$ 4,093,776

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 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		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenues
Hosting, gateway and maintenance fees	$ 302,112	$ 3,891,307	$ 4,177,512	$ 5,227,532
Product sales	37,942	62,849	120,439	205,498
Revenues	340,054	3,954,156	4,297,951	5,433,030
Cost of sales	280,191	3,193,384	2,786,996	4,039,164
Gross profit	59,863	760,772	1,510,955	1,393,866
Selling expenses	38,632	54,188	124,063	215,985
Research and development	53,652	52,232	161,198	166,319
General and administrative	314,547	376,860	1,380,800	1,142,559
Depreciation and amortization	1,656	1,065	4,968	3,196
Total operating expenses	408,487	484,345	1,671,029	1,528,059
Income (Loss) from operations	(348,624)	276,427	(160,074)	(134,193)
Other income (expense)
Interest income (expense), net	(171)	3,150	(600)	9,232
Total other income (expense)	(171)	3,150	(600)	9,232
Income (Loss) before income taxes	$ (348,795)	279,577	$ (160,674)	(124,961)
Income tax expense				4
Net Income (loss)	$ (348,795)	$ 279,577	$ (160,674)	$ (124,965)
INCOME (LOSS) PER SHARE
Basic	$ (0.01)	$ 0.01	$ 0	$ 0
Diluted	$ (0.01)	$ 0.01	$ 0	$ 0
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 ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash Flows From Operating Activities
Net loss	$ (160,674)	$ (124,965)
Adjustments to reconcile net loss to net cash used for operating activities
Depreciation and amortization	4,968	3,196
Changes in assets and liabilities
Receivables	(851,501)	(1,827,617)
Restricted cash	(178,956)	(353,647)
Prepaid expenses and other assets	(120,459)	(106,484)
Inventory	$ 1,740	(5,684)
Interest receivable		30,093
Accounts payable and accrued liabilities	$ 561,226	55,265
Deferred revenue	331,506	934,637
Net cash used for operating activities	$ (412,150)	(1,395,206)
Cash Flows From Investing Activities
Proceeds from notes receivable		60,578
Net cash provided by investing activities		60,578
Cash Flows From Financing Activities
Proceeds from notes payable	$ 77,411	44,281
Cash paid on notes payable	(31,638)	(30,563)
Net cash provided by financing activities	45,773	13,718
Net increase (decrease) in cash and cash equivalents	(366,377)	(1,320,910)
Cash and cash equivalents at beginning of period	609,313	1,928,821
Cash and cash equivalents at end of period	242,936	607,911
Supplemental disclosures of cash flow information:
Cash paid for interest	$ 740	$ 728
Cash paid for income taxes

BASIS OF FINANCIAL STATEMENT PR

BASIS OF FINANCIAL STATEMENT PRESENTATION	9 Months Ended
	Sep. 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 nine month period ending September 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	9 Months Ended
	Sep. 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 September 30, 2014, the Company made principal payments of $ 12,821 310 For the nine month period ended September 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 . September 30, 2015 , the Company made principal payments of $ 0 0 . For the nine month period ended September 30, 2015, the Company made principal payments of $ 24,601 540 he note had been paid in full. On August 26, 2015 the Company entered into a $ 77,411 5.65 11 7,237 7,037 200 7,037 200

NOTES RECEIVABLE

NOTES RECEIVABLE	9 Months Ended
	Sep. 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	9 Months Ended
	Sep. 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	9 Months Ended
	Sep. 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 August 4, 2015 filed a Chapter 7 Bankruptcy case. 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	9 Months Ended
	Sep. 30, 2015
SEGMENT REPORTING [Abstract]
SEGMENT REPORTING	NOTE 6 – SEGMENT REPORTING Three Months Ended Three Months Ended September 30 , 201 4 a September 3 0 , 2015 a Business Unit Revenues, net Net income (loss) Revenues, net Net income (loss) Pacific Web Works $ 19,050 $ (295,836 ) $ - $ (308,825 ) IntelliPay 117,234 98,267 92,217 78,555 Headlamp Ventures 62,849 5,695 37,942 10,009 TradeWorks 770 770 580 262 Thrifty Seeker - (149 ) - (149 ) Promontory Marketing - (45 ) - (60 ) World Commerce Network - 3,045 - - Dynamic WebTools 3,754,253 467,830 209,315 (128,587 ) Total $ 3,954,156 $ 279,577 $ 340,054 $ (348,795 ) a Amounts include all intercompany receivables, payables, revenues and expenses prior to elimination for c onsolidation. Nine Months Ended Nine Months Ended September 30, 2014 a September 30, 2015 a Business Unit Revenues, net Net income (loss) Revenues, net Net income (loss) Pacific Web Works $ 64,977 $ (1,032,657 ) $ - $ (961,754 ) IntelliPay 354,216 301,131 266,282 221,968 Headlamp Ventures 205,478 8,085 120,439 28,742 TradeWorks 2,490 2,353 1,850 1,508 Thrifty Seeker 20 (404 ) - (448 ) Promontory Marketing - (134 ) - (176 ) World Commerce Network - 9,330 - (6 ) Dynamic WebTools 4,805,849 587,331 3,909,380 549,492 Total $ 5,433,030 $ (124,965 ) $ 4,297,951 $ (160,674 ) a Amounts include all intercompany receivables, payables, revenues and expenses prior to elimination for consolidation.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	9 Months Ended
	Sep. 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 no reportable subsequent events.

SEGMENT REPORTING (Tables)

SEGMENT REPORTING (Tables)	9 Months Ended
	Sep. 30, 2015
SEGMENT REPORTING [Abstract]
Summary of Business Unit Information	Three Months Ended Three Months Ended September 30 , 201 4 a September 3 0 , 2015 a Business Unit Revenues, net Net income (loss) Revenues, net Net income (loss) Pacific Web Works $ 19,050 $ (295,836 ) $ - $ (308,825 ) IntelliPay 117,234 98,267 92,217 78,555 Headlamp Ventures 62,849 5,695 37,942 10,009 TradeWorks 770 770 580 262 Thrifty Seeker - (149 ) - (149 ) Promontory Marketing - (45 ) - (60 ) World Commerce Network - 3,045 - - Dynamic WebTools 3,754,253 467,830 209,315 (128,587 ) Total $ 3,954,156 $ 279,577 $ 340,054 $ (348,795 ) a Amounts include all intercompany receivables, payables, revenues and expenses prior to elimination for c onsolidation. Nine Months Ended Nine Months Ended September 30, 2014 a September 30, 2015 a Business Unit Revenues, net Net income (loss) Revenues, net Net income (loss) Pacific Web Works $ 64,977 $ (1,032,657 ) $ - $ (961,754 ) IntelliPay 354,216 301,131 266,282 221,968 Headlamp Ventures 205,478 8,085 120,439 28,742 TradeWorks 2,490 2,353 1,850 1,508 Thrifty Seeker 20 (404 ) - (448 ) Promontory Marketing - (134 ) - (176 ) World Commerce Network - 9,330 - (6 ) Dynamic WebTools 4,805,849 587,331 3,909,380 549,492 Total $ 5,433,030 $ (124,965 ) $ 4,297,951 $ (160,674 ) a Amounts include all intercompany receivables, payables, revenues and expenses prior to elimination for consolidation.

NOTES PAYABLE (Details)

NOTES PAYABLE (Details) - USD ($)	Aug. 26, 2015	Sep. 02, 2014	Aug. 28, 2013	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 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				$ 0		$ 24,601
Interest payment				0		540
August 26, 2015, Financing Agreement [Member]
Debt Instrument [Line Items]
Principal amount	$ 77,411
Annual rate	5.65%
Debt Instrument, Term	11 months
Monthly payments	$ 7,237
Principal payment				7,037		7,037
Interest payment				$ 200		$ 200

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 ($)	9 Months Ended
	Sep. 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	Nov. 15, 2013	Sep. 06, 2013
LITIGATION MATTERS [Abstract]
Settlement expense			$ 400,000
Judgement interest rate	15.00%
Judgement amount	$ 546,798
Damages sought		$ 300,000

SEGMENT REPORTING (Schedule of

SEGMENT REPORTING (Schedule of Segment Reporting By Business Unit) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Segment Reporting Information [Line Items]
Revenues, net	$ 340,054	$ 3,954,156	$ 4,297,951	$ 5,433,030
Net income (loss)	$ (348,795)	279,577	$ (160,674)	(124,965)
Pacific Web Works [Member]
Segment Reporting Information [Line Items]
Revenues, net		19,050		64,977
Net income (loss)	$ (308,825)	(295,836)	$ (961,754)	(1,032,657)
IntelliPay [Member]
Segment Reporting Information [Line Items]
Revenues, net	92,217	117,234	266,282	354,216
Net income (loss)	78,555	98,267	221,968	301,131
Headlamp Ventures [Member]
Segment Reporting Information [Line Items]
Revenues, net	37,942	62,849	120,439	205,478
Net income (loss)	10,009	5,695	28,742	8,085
Trade Works [Member]
Segment Reporting Information [Line Items]
Revenues, net	580	770	1,850	2,490
Net income (loss)	$ 262	$ 770	$ 1,508	2,353
Thrifty Seeker [Member]
Segment Reporting Information [Line Items]
Revenues, net				20
Net income (loss)	$ (149)	$ (149)	$ (448)	$ (404)
Promontory Marketing [Member]
Segment Reporting Information [Line Items]
Revenues, net
Net income (loss)	$ (60)	$ (45)	$ (176)	$ (134)
World Commerce Network [Member]
Segment Reporting Information [Line Items]
Revenues, net
Net income (loss)		$ 3,045	$ (6)	$ 9,330
Dynamic WebTools [Member]
Segment Reporting Information [Line Items]
Revenues, net	$ 209,315	3,754,253	3,909,380	4,805,849
Net income (loss)	$ (128,587)	$ 467,830	$ 549,492	$ 587,331