Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 13-May-15 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 | |
Entity Registrant Name | Cornerworld Corp | |
Entity Central Index Key | 1338242 | |
Current Fiscal Year End Date | -19 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 162,937,110 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash | $38,764 | $70,746 |
Accounts receivable, net | 66,400 | 37,313 |
Prepaid expenses and other current assets | 18,341 | 65,132 |
Assets of discontinued operations | 19,721 | 4,788 |
Total current assets | 143,226 | 177,979 |
Property and equipment, net | 2,677 | |
Other assets | 1 | 7 |
TOTAL ASSETS | 143,227 | 180,663 |
Current liabilities: | ||
Accounts payable | 187,605 | 217,726 |
Accrued expenses | 302,729 | 311,977 |
Notes payable related parties | 203,936 | 152,952 |
Lease payable, current portion | 2,662 | |
Deferred revenue | 75,687 | |
Other current liabilities | 9,266 | |
Liabilities of discontinued operations | 13,234 | 29,534 |
Total current liabilities | 707,504 | 799,804 |
Long-term liabilities: | ||
Notes payable related parties, net of current portion | 135,022 | 186,006 |
Total liabilities | 842,526 | 985,810 |
Commitments and Contingencies | ||
Stockholders' equity (deficit): | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding | ||
Common stock, $0.001 par value, 250,000,000 shares authorized; 162,937,110 shares issued and outstanding, at March 31, 2015 and December 31, 2014, respectively | 162,937 | 162,937 |
Additional paid-in capital | 11,808,236 | 11,806,865 |
Accumulated deficit | -12,670,472 | -12,774,949 |
Total stockholders' equity (deficit) | -699,299 | -805,147 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $143,227 | $180,663 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Preferred stock, par value per share | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value per share | $0.00 | $0.00 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 162,937,110 | 162,937,110 |
Common stock, shares outstanding | 162,937,110 | 162,937,110 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Condensed Consolidated Statements of Operations [Abstract] | ||
Sales, net | $266,464 | $254,829 |
Costs of goods sold | 98,526 | 132,845 |
Gross profit | 167,938 | 121,984 |
Expenses: | ||
Selling, general and administrative expenses | 71,172 | 327,741 |
Depreciation and amortization | 907 | 8,775 |
Total operating expenses | 72,079 | 336,516 |
Operating income (loss) | 95,859 | -214,532 |
Other income (expense), net: | ||
Interest expense | -6,779 | -6,511 |
Other income (expense), net | -380 | -3,313 |
Total other expense, net | -7,159 | -9,824 |
Income (loss) from continuing operations before income taxes | 88,700 | -224,356 |
Income taxes | ||
Income (loss) from continuing operations | 88,700 | -224,356 |
Income (loss) from discontinued operations, net of tax | 15,777 | -8,837 |
Gain from discontinued operations, net of tax | ||
Net income (loss) | $104,477 | ($233,193) |
Basic and diluted earnings loss per share from continuing operations | $0 | $0 |
Basic and diluted earnings per share from discontinued operations | $0 | $0 |
Basic and diluted earnings (loss) per share | $0 | $0 |
Basic and diluted weighted average number shares outstanding | 162,937,110 | 158,650,726 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Stockholders' Equity (Deficit) (USD $) | Total | Common Shares [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] |
Balance at Dec. 31, 2014 | ($805,147) | $162,937 | $11,806,865 | ($12,774,949) |
Balance, shares at Dec. 31, 2014 | 162,937,110 | |||
Stock-based compensation expense | 1,371 | 1,371 | ||
Net income | 104,477 | 104,477 | ||
Balance at Mar. 31, 2015 | ($699,299) | $162,937 | $11,808,236 | ($12,670,472) |
Balance, shares at Mar. 31, 2015 | 162,937,110 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Cash Flows from Operating Activities | ||
Net income (loss) | $104,477 | ($233,193) |
Adjustments to reconcile net income (loss) to net cash used in operating activities | ||
Depreciation and amortization | 907 | 8,775 |
Provision for doubtful accounts | 18,276 | 10,874 |
Stock-based compensation | 1,371 | 3,765 |
Changes in operating assets and liabilities, net of acquisitions and divestitures: | ||
Accounts receivable | -47,363 | 25,307 |
Prepaid expenses and other current assets | 46,791 | 60,510 |
Other assets | 6 | -2 |
Accounts payable | -30,121 | -60,588 |
Accrued expenses | -9,248 | 13,849 |
Deferred revenue | -75,687 | -35,828 |
Other current liabilities | -9,266 | |
Changes in assets and liabilities of discontinued operations | -31,233 | -8,398 |
Net cash used in operating activities | -31,090 | -214,929 |
Cash Flows from Financing Activities | ||
Payments on capital leases | -892 | -2,571 |
Net cash used in financing activities | -892 | -2,571 |
Net decrease in cash | -31,982 | -217,500 |
Cash at beginning of period | 70,746 | 857,954 |
Cash at end of period | 38,764 | 640,454 |
Cash paid for: | ||
Interest | ||
Income taxes |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2015 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | 1. Basis of Presentation |
Interim Unaudited Condensed Consolidated Financial Statements | |
The unaudited interim condensed consolidated financial statements of CornerWorld Corporation (“CornerWorld” or the “Company”) as of March 31, 2015 and for the three month periods ended March 31, 2015 and 2014 contained in this Quarterly Report (collectively, the “Unaudited Interim Condensed Consolidated Financial Statements”) were prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for all periods presented. The results of operations for the three month period ended March 31, 2015 are not necessarily indicative of the results that may be expected for the entire fiscal year. | |
The accompanying Unaudited Interim Condensed Consolidated Financial Statements have been prepared in accordance with the regulations for interim financial information of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited accompanying statements of financial condition and related interim statements of operations, cash flows, and stockholders' deficit include all adjustments (which consist only of normal and recurring adjustments) considered necessary for a fair presentation in conformity with U.S. GAAP. These Unaudited Interim Condensed Consolidated Financial Statements should be read in conjunction with the CornerWorld consolidated financial statements as of and for the year ended December 31, 2014, as filed with the SEC on Form 10-K. | |
Organization | |
The Company was incorporated in the State of Nevada, on November 9, 2004. Effective May 1, 2007, the Company changed its name to CornerWorld Corporation. | |
The Company provides certain marketing services through its operating subsidiary Enversa Companies LLC, a Texas limited liability company (“Enversa”). CornerWorld is the sole member of Enversa. Enversa is a technology-oriented direct response marketing company. Enversa identifies qualified leads for advertisers thereby connecting them with potential consumers. Enversa utilizes a pay-for-performance pricing model which is appealing to clients because it ensures that they are billed solely for campaign performance. Enversa also provides search engine optimization services (“SEO”), domain leasing and website management services on a recurring monthly basis. | |
The Company provides telecommunications services, including telephony and internet services, through its wholly-owned subsidiary, Woodland Holdings Corp. (“Woodland Holdings”) who provides such services through its wholly owned subsidiaries Phone Services and More, L.L.C., doing business as Visitatel (“PSM”) and T2 Communications, L.L.C. (“T2”). As a provider of Internet and VoIP services, T2 delivers leading-edge technology to business customers in Michigan and Texas. Offerings include: phone lines, Internet connections, long distance and toll-free services. T2 Communications is a Competitive Local Exchange Carrier (CLEC). PSM, also a CLEC, holds an FCC 214 License as a wholesale long distance service provider to the carrier community and large commercial users of transport minutes. | |
On March 31, 2015, the Company sold T2's Michigan-based customers as well as T2's network operations and contracts to an unrelated third party. See also Note 3, Discontinued Operations, for more information here. | |
The Company's year-end is December 31st. | |
Spinoff | |
On November 5, 2014, the Company announced that it had signed a non-binding letter of intent (the “LOI”) to merge its interests with another entity. As discussions surrounding the LOI progressed, the Company determined that the most efficient way to effectuate the merger would be to spin-off all of the Company's operations into Woodland. Accordingly, on March 17, 2015, Woodland filed a Registration Statement on Form 10 with the SEC. Absent any comments from the SEC, the Registration Statement will become effective on or about May 17, 2015. As of the date of this filing, no additional discussions surrounding the LOI have taken place and the Company has yet to enter into a formal merger agreement with the previously referenced entity. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies |
This summary of significant accounting policies is presented to assist in understanding the Company's condensed consolidated financial statements. The condensed consolidated financial statements and notes are representations of the Company's management who is responsible for their integrity and objectivity. These accounting policies conform to US GAAP and have been consistently applied in the preparation of the financial statements. The financial statements are stated in United States of America dollars. | |
Receivables | |
Accounts receivable include uncollateralized customer obligations due under normal trade terms requiring payment within 30-60 days from invoice date. Payments of accounts receivable are allocated to the specific invoices identified on the customer's remittance advice or, if unspecified, are applied to the earliest unpaid invoices. | |
The carrying amount of accounts receivable is reduced by a valuation allowance for doubtful accounts that reflects management's best estimate of the amounts that will not be collected based on historical collection trends. The allowance for doubtful accounts was $30,318 and $80,790 as of March 31, 2015 and December 31, 2014, respectively. | |
Use of Estimates | |
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management include, among others, the realizability of accounts receivable, recoverability of property and equipment and valuation of stock-based compensation and deferred tax assets. Actual results could differ from these estimates. | |
Fair Value of Financial Instruments | |
Accounting Standards Codification (“ASC”) No. 850 requires disclosure of fair value information about financial instruments when it is practicable to estimate that value. The carrying amount of the Company's cash and cash equivalents, accounts receivable, accounts receivable-related party, accounts payable, accounts payable-related party, accrued liabilities, and notes payable approximate their estimated fair values due to their short-term maturities. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial statements. | |
Revenue Recognition | |
The Company recognizes revenue in accordance with Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition in Financial Statements,” as revised by SAB 104. As such, the Company recognizes revenue when persuasive evidence of an arrangement exists, title transfer has occurred, the price is fixed or readily determinable and collectibility is probable. Sales are recorded net of sales discounts. | |
At Enversa, revenue is recognized along with the related cost of revenue as leads are delivered. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. Amounts billed to clients in advance of delivery of leads are classified under current liabilities as deferred revenue. Revenue is also recognized monthly as SEO services are provided or in the form of revenues from domain leases. For T2 Communications, the majority of revenue is derived from month-to-month, bundled service contracts for the phone and internet services used by each customer. Revenue is recognized as the services are provided. | |
Income Taxes | |
The Company accounts for income tax in accordance with ASC No. 740 which requires the use of the asset and liability method of accounting of income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. | |
Long-Lived Assets | |
The Company accounts for its long-lived assets in accordance with the ASC. The Company's only long-lived assets are a patent and property and equipment. The ASC requires a company to assess the recoverability of its long-lived assets whenever events and circumstances indicate the carrying value of an asset or asset group may not be recoverable from estimated future cash flows expected to result from its use and eventual disposition. The patent, which was issued on March 4, 2014, is currently being valued at its net realizable value of $0. Management does not believe that its fixed assets are impaired. No impairment charges have been recorded as of March 31, 2015. | |
Stock-Based Compensation | |
The Company accounts for awards made under its two stock-based compensation plans pursuant to the fair value provisions of ASC No. 718. ASC No. 718 requires the recognition of stock-based compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. ASC No. 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The Company accounts for stock-based compensation in accordance with ASC No. 718 and estimates its fair value based on using the Black-Scholes option pricing model. The Company's determination of fair value of share-based payment awards is made as of their respective dates of grant using that option pricing model and is affected by the Company's stock price as well as a number of subjective assumptions. These variables include, but are not limited to, the Company's expected stock price volatility over the term of the awards and actual and projected employee stock option exercise behavior. The expected term of options granted is derived from historical data on employee exercises and post-vesting employment termination behavior. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the pricing term of the grant effective as of the date of the grant. The expected volatility is based on the historical volatility of the Company's stock price. These factors could change in the future, affecting the determination of stock-based compensation expense in future periods. The Black-Scholes option pricing model was developed for use in estimating the value of traded options that have no vesting or hedging restrictions and are fully transferable. Because the Company's options have certain characteristics that are significantly different from traded options, the existing valuation models may not provide an accurate measure of the fair value of the Company's options. Although the fair value of the Company's options is determined in accordance with ASC No. 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. The calculated compensation cost is recognized on a straight-line basis over the vesting period of the options. See also Note 5 Stock Based Compensation, for more details. | |
Concentration of credit risk | |
Credit is extended based on an evaluation of the customer's financial condition, and the Company does not require collateral. Write-offs of accounts receivable have historically been nominal. Approximately 43.9% and 49.5% of total revenue was derived from the Company's largest customer during the three month periods ended March 31, 2015 and 2014, respectively. | |
Reclassifications | |
Certain prior year accounts have been reclassified to conform to the current year's presentation. | |
Discontinued_Operations
Discontinued Operations | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Discontinued Operations [Abstract] | ||||||||
Discontinued Operations | 3. Discontinued Operations | |||||||
On March 31, 2015, the Company signed an agreement whereby it completed the sale of T2's Michigan based operations on for $15,000 in cash plus a working capital adjustment to be determined at a future date; the Company retained T2 itself as well as T2's Texas CLEC license among other Texas based T2 operations. There was no gain recognized on the disposal as the Company had incurred losses on T2's Michigan operations since its original acquisition on February 23, 2009. The decision to sell T2's Michigan operations eliminated the Company's presence in Michigan altogether and enables the Company to focus solely on its more profitable lines of business, located in Texas. T2's Michigan operations, previously reported within the Communications Services segment, have been reclassified as discontinued operations in our unaudited Condensed Consolidated Financial Statements for the operations up to the date of sale for the three month periods ended March 31, 2015 and 2014. In addition, all accounts receivable, accounts payable and accrued liabilities, as a result of the divestiture, have been reclassified as discontinued operations. | ||||||||
The following is a summary of the operating results of our discontinued operations: | ||||||||
For the Three Months | ||||||||
Ended March 31, | ||||||||
2015 | 2014 | |||||||
Sales, net | $ | 39,185 | $ | 24,570 | ||||
Income (loss) from discontinued operations before income taxes | 15,777 | (8,837 | ) | |||||
Income taxes | — | — | ||||||
Net income (loss) from discontinued operations | $ | 15,777 | $ | (8,837 | ) | |||
The following is a summary of assets and liabilities held for sale as of March 31, 2015: | ||||||||
31-Mar-15 | ||||||||
Assets: | ||||||||
Current assets | $ | 19,721 | ||||||
Assets of discontinued operations held for sale | 19,721 | |||||||
Liabilities | ||||||||
Accounts payable and accrued expenses | 13,234 | |||||||
$ | 13,234 | |||||||
Debt
Debt | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Debt [Abstract] | ||||||||
Debt | 4. Debt | |||||||
As of | ||||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
Long-term Debt | ||||||||
Note payable to CEO; the note matures July 31, 2016. At March 31, 2015, the interest rate was 6.25%. This note is collateralized by all assets of the Company. See also note 8, Related Party Transactions. | 338,958 | 338,958 | ||||||
Total debt | 338,958 | 338,958 | ||||||
Less current portion of long-term debt | (203,936 | ) | (152,952 | ) | ||||
Non-current portion of long-term debt | $ | 135,022 | $ | 186,006 | ||||
The note payable, due to the Company's CEO, contains no restrictive covenants or events of default other than non-payment. | ||||||||
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Stock-Based Compensation [Abstract] | ||||||||||||||
Stock-Based Compensation | 5. Stock-Based Compensation | |||||||||||||
Incentive Stock Plan | ||||||||||||||
On August 17, 2007, the Company's board of directors adopted and implemented the Company's 2007 Incentive Stock Plan. Under the Incentive Stock Plan, the Company is authorized to issue 4,000,000 shares of its common stock to the Company's directors, officers, employees, advisors or consultants. | ||||||||||||||
Any Incentive Stock Option granted to an employee of the Company shall become exercisable over a period of no longer than 5 years, and no less than 20% of the shares covered thereby shall become exercisable annually. 20% of shares vest annually beginning on the first anniversary of the grant. The options expire 5 years from the grant date. | ||||||||||||||
The Company issued no options pursuant to this plan during the three month period ended March 31, 2015. | ||||||||||||||
Stock Compensation Plan | ||||||||||||||
On August 17, 2007, the Company's board of directors adopted and implemented the Company's 2007 Stock Compensation Plan. The total number of shares of the Company's common stock which may be purchased or granted directly by Options, Stock Awards or Warrants under the Compensation Plan shall not exceed 4,000,000 shares of the Company's common stock. | ||||||||||||||
Awards granted to a participant of the Company shall become exercisable over a period of no longer than 5 years, and may vest as determined at the Company's discretion at the time of grant. | ||||||||||||||
The Company issued no stock options pursuant to this plan during the three month period ended March 31, 2015. | ||||||||||||||
A summary of the shares reserved for grant and awards available for grant under each Stock Plan is as follows: | ||||||||||||||
31-Mar-15 | ||||||||||||||
Shares Reserved | Awards Available | |||||||||||||
for Grant | for Grant | |||||||||||||
Incentive Stock Plan | 4,000,000 | 3,745,000 | ||||||||||||
Stock Compensation Plan | 4,000,000 | 2,375,000 | ||||||||||||
8,000,000 | 6,120,000 | |||||||||||||
The Company issues awards to employees, qualified consultants and directors that generally vest over time based solely on continued employment or service during the related vesting period and are exercisable over a five to ten year service period. Options are generally granted with an exercise price equal to the market price of the Company's stock at the date of grant. | ||||||||||||||
The fair value of each stock-based award is estimated on the grant date using the Black-Scholes option-pricing model. Expected volatilities are based on the historical volatility of the Company's stock price. The expected term of options granted subsequent to the adoption ASC 718 is derived using the simplified method as defined in the SEC's SAB No. 107. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury interest rates in effect at the time of grant. The fair value of options granted was estimated using the following weighted-average assumptions: | ||||||||||||||
For the three month periods | ||||||||||||||
Ended March 31 | ||||||||||||||
2015 | 2014 | |||||||||||||
Expected term (in years) | — | 5 | ||||||||||||
Expected volatility | — | % | 125 | % | ||||||||||
Risk-free interest rate | — | % | 1.5 | % | ||||||||||
Dividend yield | — | % | 0 | % | ||||||||||
A summary of activity under the Stock Plans and changes during the three month period ended March 31, 2015 is presented below: | ||||||||||||||
Weighted-Average | ||||||||||||||
Shares | Exercise | Remaining | Aggregate | |||||||||||
Price | Contractual | Intrinsic | ||||||||||||
Term (Years) | Value | |||||||||||||
Outstanding at December 31, 2014 | 3,550,000 | $ | 0.13 | 3.94 | $ | 20,000 | ||||||||
Issued | — | — | — | — | ||||||||||
Cancelled/forfeited | (1,670,000 | ) | 0.13 | |||||||||||
Outstanding at March 31, 2015 | 1,880,000 | $ | 0.12 | 3.51 | $ | — | ||||||||
Options expected to vest | 1,880,000 | $ | 0.12 | 3.51 | $ | — | ||||||||
Options exercisable at end of period | 717,500 | $ | 0.16 | 2.57 | $ | — | ||||||||
For the three month periods ended March 31, 2015 and 2014, the Company recognized $1,371 and $3,765 of stock-based compensation expense, respectively. As of March 31, 2015 there was $11,781 of total unrecognized compensation cost, net of forfeitures, related to unvested employee and director stock option compensation arrangements. That cost is expected to be recognized on a straight-line basis over the next 3.51 weighted average years. | ||||||||||||||
Business_Segments
Business Segments | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Business Segments [Abstract] | ||||||||||||||
Business Segments | 6. Business Segments | |||||||||||||
Our business consists primarily of two integrated business segments: (i) marketing services and (ii) communications services. Our corporate administrative functions are tracked separately and the associated costs are not pushed down to the operating segments. The following table summarizes selected financial information for each operating segment: | ||||||||||||||
Marketing | Communications | Corporate | Consolidated | |||||||||||
Services | Services | Overhead | ||||||||||||
Three Months Ended March 31, 2015 | ||||||||||||||
Revenue | $ | 235,843 | $ | 30,621 | $ | — | $ | 266,464 | ||||||
Income (loss) from continuing operations before tax | 88,783 | 79,543 | (79,626 | ) | 88,700 | |||||||||
Net (loss) income | 88,783 | 95,320 | (79,626 | ) | 104,477 | |||||||||
Total assets | 38,675 | 53,504 | 51,048 | 143,227 | ||||||||||
Depreciation and amortization | — | 907 | — | 907 | ||||||||||
Marketing | Communications | Corporate | Consolidated | |||||||||||
Services | Services | Overhead | ||||||||||||
Three Months Ended March 31, 2014 | ||||||||||||||
Revenue | $ | 208,528 | $ | 46,301 | $ | — | $ | 254,829 | ||||||
Income (loss) from continuing operations before tax | 10,481 | (295 | ) | (234,542 | ) | (224,356 | ) | |||||||
Net (loss) income | 10,481 | (9,132 | ) | (234,542 | ) | (233,193 | ) | |||||||
Total assets | 121,065 | 133,287 | 599,988 | 854,340 | ||||||||||
Depreciation and amortization | — | 2,677 | 6,098 | 8,775 | ||||||||||
There were no intersegment sales. All of the Company's business activities are conducted within the United States geographic boundaries. | ||||||||||||||
Related_Party_Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 7. Related Party Transactions |
On March 30, 2011, the Company entered into a subordinated $389,942 promissory note (the “Senior Note”) with Scott N. Beck, the Company's Chief Executive Officer. Interest on the outstanding principal amount under the Senior Note is payable at the Company's discretion at a rate of 6.25% per annum and monthly principal payments totaling $12,746 were due beginning December 31, 2014. On December 31, 2014, the Company did not make its regularly scheduled payment totaling $12,746 to Scott N. Beck, the Company's Chief Executive Officer and the holder of the Senior Note, which constituted an event of default under the Senior Note. Mr. Beck did not call default but there can be no assurance that, as the Company's Senior Lender, he will not do so. It is anticipated that the Company will amend the Senior Note at some future point but there can be no assurance that we will be successful in amending the terms of the Senior Note. Should we be unsuccessful in executing an amendment or an extension, Mr. Beck, as the senior lender, could move to seize the underlying collateral which would have a material adverse effect on the Company's ability to continue as a going concern. The Company recorded interest of $6,779 and $6,370 on this facility during the three month periods ended March 31, 2015 and 2014, respectively. The balance of this note totaled $338,958 at March 31, 2015. | |
The Company is party to a lease agreement with 13101 Preston Road, LP pursuant to which it leases office space for its corporate headquarters. The limited partners of 13101 Preston Road, LP are trusts controlled by the family of the Company's Chief Executive Officer. The Company paid $7,500 and $7,500 in rent during the three month periods ended March 31, 2015 and 2014, respectively. | |
In addition, the Company provides accounting, human resources and certain IT services to an entity controlled by the family of the Company's Chief Executive Officer for $5,000 per month. The Company received $15,000 from this entity during each of the three month periods ended March 31, 2015 and 2014. | |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | 8. Subsequent Events |
Subsequent to the date of the issuance of these statements, the largest client of our marketing services segment advised us that they were going to cease participating in their largest campaign; their other services remain unchanged at this time but there can be no assurances that they will continue to maintain any services going forward; Our largest client represented approximately 43.9% of our revenue for the three months ended March 31, 2015. Aside from the aforementioned, there were no occurrences that had a material impact on the financial statements. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policy) | 3 Months Ended |
Mar. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
Receivables | Receivables |
Accounts receivable include uncollateralized customer obligations due under normal trade terms requiring payment within 30-60 days from invoice date. Payments of accounts receivable are allocated to the specific invoices identified on the customer's remittance advice or, if unspecified, are applied to the earliest unpaid invoices. | |
The carrying amount of accounts receivable is reduced by a valuation allowance for doubtful accounts that reflects management's best estimate of the amounts that will not be collected based on historical collection trends. The allowance for doubtful accounts was $30,318 and $80,790 as of March 31, 2015 and December 31, 2014, respectively. | |
Use of Estimates | Use of Estimates |
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management include, among others, the realizability of accounts receivable, recoverability of property and equipment and valuation of stock-based compensation and deferred tax assets. Actual results could differ from these estimates. | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments |
Accounting Standards Codification (“ASC”) No. 850 requires disclosure of fair value information about financial instruments when it is practicable to estimate that value. The carrying amount of the Company's cash and cash equivalents, accounts receivable, accounts receivable-related party, accounts payable, accounts payable-related party, accrued liabilities, and notes payable approximate their estimated fair values due to their short-term maturities. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial statements. | |
Revenue Recognition | Revenue Recognition |
The Company recognizes revenue in accordance with Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition in Financial Statements,” as revised by SAB 104. As such, the Company recognizes revenue when persuasive evidence of an arrangement exists, title transfer has occurred, the price is fixed or readily determinable and collectibility is probable. Sales are recorded net of sales discounts. | |
At Enversa, revenue is recognized along with the related cost of revenue as leads are delivered. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. Amounts billed to clients in advance of delivery of leads are classified under current liabilities as deferred revenue. Revenue is also recognized monthly as SEO services are provided or in the form of revenues from domain leases. For T2 Communications, the majority of revenue is derived from month-to-month, bundled service contracts for the phone and internet services used by each customer. Revenue is recognized as the services are provided. | |
Income Taxes | Income Taxes |
The Company accounts for income tax in accordance with ASC No. 740 which requires the use of the asset and liability method of accounting of income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. | |
Long-Lived Assets | Long-Lived Assets |
The Company accounts for its long-lived assets in accordance with the ASC. The Company's only long-lived assets are a patent and property and equipment. The ASC requires a company to assess the recoverability of its long-lived assets whenever events and circumstances indicate the carrying value of an asset or asset group may not be recoverable from estimated future cash flows expected to result from its use and eventual disposition. The patent, which was issued on March 4, 2014, is currently being valued at its net realizable value of $0. Management does not believe that its fixed assets are impaired. No impairment charges have been recorded as of March 31, 2015. | |
Stock-Based Compensation | Stock-Based Compensation |
The Company accounts for awards made under its two stock-based compensation plans pursuant to the fair value provisions of ASC No. 718. ASC No. 718 requires the recognition of stock-based compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. ASC No. 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The Company accounts for stock-based compensation in accordance with ASC No. 718 and estimates its fair value based on using the Black-Scholes option pricing model. The Company's determination of fair value of share-based payment awards is made as of their respective dates of grant using that option pricing model and is affected by the Company's stock price as well as a number of subjective assumptions. These variables include, but are not limited to, the Company's expected stock price volatility over the term of the awards and actual and projected employee stock option exercise behavior. The expected term of options granted is derived from historical data on employee exercises and post-vesting employment termination behavior. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the pricing term of the grant effective as of the date of the grant. The expected volatility is based on the historical volatility of the Company's stock price. These factors could change in the future, affecting the determination of stock-based compensation expense in future periods. The Black-Scholes option pricing model was developed for use in estimating the value of traded options that have no vesting or hedging restrictions and are fully transferable. Because the Company's options have certain characteristics that are significantly different from traded options, the existing valuation models may not provide an accurate measure of the fair value of the Company's options. Although the fair value of the Company's options is determined in accordance with ASC No. 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. The calculated compensation cost is recognized on a straight-line basis over the vesting period of the options. See also Note 5 Stock Based Compensation, for more details. | |
Concentration of credit risk | Concentration of credit risk |
Credit is extended based on an evaluation of the customer's financial condition, and the Company does not require collateral. Write-offs of accounts receivable have historically been nominal. Approximately 43.9% and 49.5% of total revenue was derived from the Company's largest customer during the three month periods ended March 31, 2015 and 2014, respectively. | |
Reclassifications | Reclassifications |
Certain prior year accounts have been reclassified to conform to the current year's presentation. | |
Discontinued_Operations_Tables
Discontinued Operations (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Discontinued Operations [Abstract] | ||||||||
Summary of the operating results of our discontinued operations | ||||||||
For the Three Months | ||||||||
Ended March 31, | ||||||||
2015 | 2014 | |||||||
Sales, net | $ | 39,185 | $ | 24,570 | ||||
Income (loss) from discontinued operations before income taxes | 15,777 | (8,837 | ) | |||||
Income taxes | — | — | ||||||
Net income (loss) from discontinued operations | $ | 15,777 | $ | (8,837 | ) | |||
Summary of assets and liabilities held for sale | ||||||||
31-Mar-15 | ||||||||
Assets: | ||||||||
Current assets | $ | 19,721 | ||||||
Assets of discontinued operations held for sale | 19,721 | |||||||
Liabilities | ||||||||
Accounts payable and accrued expenses | 13,234 | |||||||
$ | 13,234 |
Debt_Tables
Debt (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Debt [Abstract] | ||||||||
Schedule of Long-term Debt | ||||||||
As of | ||||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
Long-term Debt | ||||||||
Note payable to CEO; the note matures July 31, 2016. At March 31, 2015, the interest rate was 6.25%. This note is collateralized by all assets of the Company. See also note 8, Related Party Transactions. | 338,958 | 338,958 | ||||||
Total debt | 338,958 | 338,958 | ||||||
Less current portion of long-term debt | (203,936 | ) | (152,952 | ) | ||||
Non-current portion of long-term debt | $ | 135,022 | $ | 186,006 |
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Stock-Based Compensation [Abstract] | ||||||||||||||
Schedule of Shares Reserved for Grant and Awards Available for Grant | ||||||||||||||
31-Mar-15 | ||||||||||||||
Shares Reserved | Awards Available | |||||||||||||
for Grant | for Grant | |||||||||||||
Incentive Stock Plan | 4,000,000 | 3,745,000 | ||||||||||||
Stock Compensation Plan | 4,000,000 | 2,375,000 | ||||||||||||
8,000,000 | 6,120,000 | |||||||||||||
Schedule of Weighted-Average Assumptions | ||||||||||||||
For the three month periods | ||||||||||||||
Ended March 31 | ||||||||||||||
2015 | 2014 | |||||||||||||
Expected term (in years) | — | 5 | ||||||||||||
Expected volatility | — | % | 125 | % | ||||||||||
Risk-free interest rate | — | % | 1.5 | % | ||||||||||
Dividend yield | — | % | 0 | % | ||||||||||
Schedule of Stock Plan Activity | ||||||||||||||
Weighted-Average | ||||||||||||||
Shares | Exercise | Remaining | Aggregate | |||||||||||
Price | Contractual | Intrinsic | ||||||||||||
Term (Years) | Value | |||||||||||||
Outstanding at December 31, 2014 | 3,550,000 | $ | 0.13 | 3.94 | $ | 20,000 | ||||||||
Issued | — | — | — | — | ||||||||||
Cancelled/forfeited | (1,670,000 | ) | 0.13 | |||||||||||
Outstanding at March 31, 2015 | 1,880,000 | $ | 0.12 | 3.51 | $ | — | ||||||||
Options expected to vest | 1,880,000 | $ | 0.12 | 3.51 | $ | — | ||||||||
Options exercisable at end of period | 717,500 | $ | 0.16 | 2.57 | $ | — | ||||||||
Business_Segments_Tables
Business Segments (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Business Segments [Abstract] | ||||||||||||||
Schedule of Financial Data by Reporting Segment | ||||||||||||||
Marketing | Communications | Corporate | Consolidated | |||||||||||
Services | Services | Overhead | ||||||||||||
Three Months Ended March 31, 2015 | ||||||||||||||
Revenue | $ | 235,843 | $ | 30,621 | $ | — | $ | 266,464 | ||||||
Income (loss) from continuing operations before tax | 88,783 | 79,543 | (79,626 | ) | 88,700 | |||||||||
Net (loss) income | 88,783 | 95,320 | (79,626 | ) | 104,477 | |||||||||
Total assets | 38,675 | 53,504 | 51,048 | 143,227 | ||||||||||
Depreciation and amortization | — | 907 | — | 907 | ||||||||||
Marketing | Communications | Corporate | Consolidated | |||||||||||
Services | Services | Overhead | ||||||||||||
Three Months Ended March 31, 2014 | ||||||||||||||
Revenue | $ | 208,528 | $ | 46,301 | $ | — | $ | 254,829 | ||||||
Income (loss) from continuing operations before tax | 10,481 | (295 | ) | (234,542 | ) | (224,356 | ) | |||||||
Net (loss) income | 10,481 | (9,132 | ) | (234,542 | ) | (233,193 | ) | |||||||
Total assets | 121,065 | 133,287 | 599,988 | 854,340 | ||||||||||
Depreciation and amortization | — | 2,677 | 6,098 | 8,775 |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details) (USD $) | 3 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Mar. 04, 2014 | |
Summary of Significant Accounting Policies [Abstract] | ||||
Allowance for doubtful accounts | 30,318 | $80,790 | ||
Value of patent issued | $0 | |||
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | ||||
Concentration Risk [Line Items] | ||||
Percentage of total revenue from largest customer | 43.90% | 49.50% |
Discontinued_Operations_Narrat
Discontinued Operations (Narrative) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Discontinued Operations [Abstract] | ||
Proceeds from sale of business | $15,000 | |
Gain from discontinued operations, net of tax |
Discontinued_Operations_Summar
Discontinued Operations (Summary of Operating Results of Our Discontinued Operations) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Discontinued Operations [Abstract] | ||
Sales, net | $39,185 | $24,570 |
Income (loss) from discontinued operations before income taxes | 15,777 | -8,837 |
Income taxes | ||
Net income (loss) from discontinued operations | $15,777 | ($8,837) |
Discontinued_Operations_Summar1
Discontinued Operations (Summary of Assets and Liabilities Held For Sale) (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Assets: | ||
Current assets | $19,721 | $4,788 |
Assets of discontinued operations held for sale | 19,721 | |
Liabilities | ||
Accounts payable and accrued expenses | 13,234 | |
Liabilities of discontinued operations held for sale | $13,234 |
Debt_Details
Debt (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | ||
Total debt | $338,958 | $338,958 |
Less current portion of long-term debt | -203,936 | -152,952 |
Non-current portion of long-term debt | 135,022 | 186,006 |
Scott Beck, Chairman and Chief Executive Officer [Member] | ||
Debt Instrument [Line Items] | ||
Total debt | $338,958 | $338,958 |
Maturity date | 31-Jul-16 | |
Interest rate | 6.25% |
StockBased_Compensation_Narrat
Stock-Based Compensation (Narrative) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Issued | ||
Stock-based compensation | $1,371 | $3,765 |
Unrecognized compensation cost related to stock options | $11,781 | |
Unrecognized compensation cost, weighted-average recognition period, years | 3 years 6 months 4 days | |
Incentive Stock Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized | 4,000,000 | |
Options expiration period | 5 years | |
Incentive Stock Plan [Member] | Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Percentage of shares that vest annually | 20.00% | |
Incentive Stock Plan [Member] | Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 5 years | |
Stock Compensation Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized | 4,000,000 | |
Stock Compensation Plan [Member] | Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award term length | 5 years | |
Stock Compensation Plan [Member] | Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 5 years | |
Award term length | 10 years |
StockBased_Compensation_Schedu
Stock-Based Compensation (Schedule of Shares Reserved) (Details) | Mar. 31, 2015 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares Reserved for Grant | 8,000,000 |
Awards Available for Grant | 6,120,000 |
Incentive Stock Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares Reserved for Grant | 4,000,000 |
Awards Available for Grant | 3,745,000 |
Stock Compensation Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares Reserved for Grant | 4,000,000 |
Awards Available for Grant | 2,375,000 |
StockBased_Compensation_Schedu1
Stock-Based Compensation (Schedule of Assumptions) (Details) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Stock-Based Compensation [Abstract] | ||
Expected term (in years) | 5 years | |
Expected volatility | 125.00% | |
Risk-free interest rate | 1.50% | |
Dividend yield | 0.00% |
StockBased_Compensation_Schedu2
Stock-Based Compensation (Schedule of Stock Plan Activity) (Details) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Shares | ||
Outstanding, beginning | 3,550,000 | |
Issued | ||
Cancelled/forfeited | -1,670,000 | |
Outstanding, ending | 1,880,000 | 3,550,000 |
Options expected to vest | 1,880,000 | |
Options exercisable at end of period | 717,500 | |
Exercise Price | ||
Outstanding, beginning | $0.13 | |
Issued | ||
Cancelled/forfeited | $0.13 | |
Outstanding, ending | $0.12 | $0.13 |
Options expected to vest | $0.12 | |
Options exercisable at end of period | $0.16 | |
Remaining Contractual Term | ||
Remaining contractual term, options issued | ||
Remaining contractual term, options outstanding | 3 years 6 months 4 days | 3 years 11 months 8 days |
Remaining contractual term, options expected to vest | 3 years 6 months 4 days | |
Remaining contractual term, options exercisable at end of period | 2 years 6 months 25 days | |
Aggregate Intrinsic Value | ||
Outstanding, beginning | $20,000 | |
Issued | ||
Outstanding, ending | 20,000 | |
Options expected to vest | ||
Options exercisable at end of period |
Business_Segments_Details
Business Segments (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
segments | |||
Segment Reporting Information [Line Items] | |||
Number of business segments | 2 | ||
Revenue | $266,464 | $254,829 | |
Income (loss) from continuing operations before tax | 88,700 | -224,356 | |
Net income (loss) | 104,477 | -233,193 | |
Total assets | 143,227 | 854,340 | 180,663 |
Depreciation and amortization | 907 | 8,775 | |
Marketing Services [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | 235,843 | 208,528 | |
Income (loss) from continuing operations before tax | 88,783 | 10,481 | |
Net income (loss) | 88,783 | 10,481 | |
Total assets | 38,675 | 121,065 | |
Depreciation and amortization | |||
Communications Services [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | 30,621 | 46,301 | |
Income (loss) from continuing operations before tax | 79,543 | -295 | |
Net income (loss) | 95,320 | -9,132 | |
Total assets | 53,504 | 133,287 | |
Depreciation and amortization | 907 | 2,677 | |
Corporate Overhead [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | |||
Income (loss) from continuing operations before tax | -79,626 | -234,542 | |
Net income (loss) | -79,626 | -234,542 | |
Total assets | 51,048 | 599,988 | |
Depreciation and amortization | $6,098 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 30, 2011 | |
Scott Beck, Chairman and Chief Executive Officer [Member] | |||
Related Party Transaction [Line Items] | |||
Debt instrument, face amount | $389,942 | ||
Interest rate | 6.25% | ||
Periodic installments amount | 12,746 | ||
Periodic payments, frequency | Monthly | ||
Installments payments start date | 31-Dec-14 | ||
Interest expense | 6,779 | 6,370 | |
Notes payable, related parties | 338,958 | ||
13101 Preston Road, LP [Member] | |||
Related Party Transaction [Line Items] | |||
Rental expense | 7,500 | 7,500 | |
Entity Controlled by CEO's Family [Member] | |||
Related Party Transaction [Line Items] | |||
Service revenue, monthly amount | 5,000 | ||
Revenue from accounting, human resources, and IT services | $15,000 | $15,000 |
Subsequent_Events_Details
Subsequent Events (Details) (Customer Concentration Risk [Member], Sales Revenue, Net [Member]) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | ||
Subsequent Event [Line Items] | ||
Percentage of total revenue from largest customer | 43.90% | 49.50% |