Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 12, 2015 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2015 | |
Entity Registrant Name | Cornerworld Corp | |
Entity Central Index Key | 1,338,242 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 162,937,110 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash | $ 88,097 | $ 70,746 |
Accounts receivable, net | 33,692 | 37,313 |
Prepaid expenses and other current assets | $ 7,472 | 65,132 |
Assets of discontinued operations | 4,788 | |
Total current assets | $ 129,261 | 177,979 |
Property and equipment, net | 2,677 | |
Other assets | 7 | |
TOTAL ASSETS | $ 129,261 | 180,663 |
Current liabilities: | ||
Accounts payable | 178,827 | 217,726 |
Accrued expenses | 339,143 | 311,977 |
Notes payable related parties | $ 242,174 | 152,952 |
Lease payable, current portion | 2,662 | |
Deferred revenue | 75,687 | |
Other current liabilities | 9,266 | |
Liabilities of discontinued operations | 29,534 | |
Total current liabilities | $ 760,144 | 799,804 |
Long-term liabilities: | ||
Notes payable related parties, net of current portion | 96,784 | 186,006 |
Total liabilities | $ 856,928 | $ 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 June 30, 2015 and December 31, 2014, respectively | $ 162,937 | $ 162,937 |
Additional paid-in capital | 11,809,607 | 11,806,865 |
Accumulated deficit | (12,700,211) | (12,774,949) |
Total stockholders' equity (deficit) | (727,667) | (805,147) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 129,261 | $ 180,663 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2015 | Dec. 31, 2014 |
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
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 | $ 0.001 | $ 0.001 |
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 Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Condensed Consolidated Statements of Operations [Abstract] | ||||
Sales, net | $ 114,555 | $ 178,085 | $ 381,019 | $ 432,914 |
Costs of goods sold | 48,887 | 101,660 | 147,413 | 234,505 |
Gross profit | 65,668 | 76,425 | 233,606 | 198,409 |
Expenses: | ||||
Selling, general and administrative expenses | $ 88,445 | 444,876 | 159,617 | 772,617 |
Depreciation | 2,679 | 907 | 11,454 | |
Total Operating expenses | $ 88,445 | 447,555 | 160,524 | 784,071 |
Operating income (loss) | (22,777) | (371,130) | 73,082 | (585,662) |
Other income (expense), net: | ||||
Interest expense | $ (6,962) | $ (6,795) | (13,741) | (13,306) |
Other income (expense), net | (380) | (3,313) | ||
Total other expense, net | $ (6,962) | $ (6,795) | (14,121) | (16,619) |
Income (loss) from continuing operations before income taxes | $ (29,739) | $ (377,925) | $ 58,961 | $ (602,281) |
Income taxes | ||||
Income (loss) from continuing operations | $ (29,739) | $ (377,925) | $ 58,961 | $ (602,281) |
Income from discontinued operations, net of tax | $ (4,543) | $ 15,777 | $ (13,380) | |
Gain from discontinued operations, net of tax | ||||
Net loss | $ (29,739) | $ (382,468) | $ 74,738 | $ (615,661) |
Basic earnings (loss) per share from continuing operations | $ 0 | $ 0 | $ 0 | $ 0 |
Basic earnings per share from discontinued operations | 0 | 0 | 0 | 0 |
Basic earnings (loss) per share | 0 | 0 | 0 | 0 |
Diluted loss per share from continuing operations | 0 | 0 | 0 | 0 |
Diluted earnings per share from discontinued operations | 0 | 0 | 0 | 0 |
Diluted earnings (loss) per share | $ 0 | $ 0 | $ 0 | $ 0 |
Basic weighted average number shares outstanding | 162,937,110 | 162,937,110 | 162,937,110 | 160,805,759 |
Diluted weighted average number shares outstanding | 162,937,110 | 162,937,110 | 162,937,110 | 160,805,759 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Stockholders' Equity (Deficit) - 6 months ended Jun. 30, 2015 - 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 | 2,742 | $ 2,742 | ||
Net loss | 74,738 | $ 74,738 | ||
Balance at Jun. 30, 2015 | $ (727,667) | $ 162,937 | $ 11,809,607 | $ (12,700,211) |
Balance, shares at Jun. 30, 2015 | 162,937,110 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash Flows from Operating Activities | ||
Net income (loss) | $ 74,738 | $ (615,661) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities | ||
Depreciation | 907 | 11,454 |
Provision for doubtful accounts | 15,105 | 50,875 |
Stock-based compensation | 2,742 | 5,765 |
Changes in operating assets and liabilities, net of acquisitions and divestitures: | ||
Accounts receivable | (11,484) | 34,172 |
Prepaid expenses and other current assets | 57,660 | $ 74,596 |
Other assets | 7 | |
Accounts payable | (38,899) | $ 54,843 |
Accrued expenses | 27,166 | (53,633) |
Deferred revenue | (75,687) | $ 1,905 |
Other liabilities | (9,266) | |
Changes in assets and liabilities of discontinued operations | (24,746) | $ 17,565 |
Net cash provided by (used in) operating activities | $ 18,243 | (418,119) |
Cash Flows from Investing Activities | ||
Purchases of property and equipment | (2,597) | |
Net cash used in investing activities | (2,597) | |
Cash Flows from Financing Activities | ||
Payments on capital leases | $ (892) | $ (2,571) |
Principal payments on related party notes payable | ||
Principal payments on notes payable | ||
Net cash used in financing activities | $ (892) | $ (2,571) |
Net increase (decrease) in cash | 17,351 | (423,287) |
Cash at beginning of period | 70,746 | 857,954 |
Cash at end of period | $ 88,097 | $ 434,667 |
Cash paid for: | ||
Interest | ||
Income taxes |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 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 June 30, 2015 and for the three month and six month periods ended June 30, 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 and six month periods ended June 30, 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 Corporation (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's offerings include: phone lines, Internet connections, long distance and toll-free services. T2 Communications is a Competitive Local Exchange Carrier (CLEC) that generates revenues via the sale of long-distance minutes to its customers. T2 also generates commissions from its carrier partners related to the provision of long-distance minutes to its customers. .PSM, also a CLEC, is a wholesale long distance service provider to the carrier community and large commercial users of minutes. PSM generates revenues via earning commissions from serving as a broker for services provided by T2. T2 and PSM's CELC licenses permit them to operate in the lucrative telecommunications industry but their respective business models do not require any significant investments in property plant and equipment due to the fact that they are able to outsource all switching and technology needs to third parties. On March 31, 2015, the Company sold T2's Michigan-based customers as well as all of T2's Michigan 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 31 st Spinoff On August 13, 2015, the Company's Board of Directors formally approved a plan whereby the Company will split Woodland Holdings, its telecommunications services segment, in its entirety, into a separate reporting entity. Assuming the spin-off is successful, current CornerWorld shareholders of record as of September 30, 2015 (the Record Date) will receive shares in Woodland Holdings in their pro-rata ownership percentage of CornerWorld. For every share owned by the Company's shareholders as of the Record Date, those same shareholders will be issued 1 share of the Woodland Holdings' common stock. Absent any comments from the SEC, the Registration Statement will become effective on or about October 13, 2015 after which point Woodland Holdings' shares are expected to be free-trading on the OTCXB exchange. As previously disclosed, 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. The LOI expired of its own accord on June 30, 2015 and it has not been renewed and, at this time, the Company has broken off all merger discussions with the other entity. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 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 $ 35,473 80,790 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 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 49.3 48.3 45.5 49.0 Reclassifications Certain prior year accounts have been reclassified to conform to the current year's presentation. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 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 The following is a summary of the operating results of our discontinued operations: For the Three Months Ended June 30, For the Six Months 2015 2014 2015 2014 Sales, net $ $ 25,056 $ 39,185 $ 49,626 Income (loss) from discontinued operations before income taxes (4,543 ) 15,777 (13,380 ) Income taxes Net income (loss) from discontinued operations $ $ (4,543 ) $ 15,777 $ (13,380 ) |
Debt
Debt | 6 Months Ended |
Jun. 30, 2015 | |
Debt [Abstract] | |
Debt | 4. Debt As of June 30, December 31, Long-term Debt Note payable to CEO; the note matures July 31, 2016. At June 30, 2015, the interest rate was 6.25 338,958 338,958 Total debt 338,958 338,958 Less current portion of long-term debt (242,174 ) (152,952 ) Non-current portion of long-term debt $ 96,784 $ 186,006 The note payable, due to the Company's CEO, contains no restrictive covenants or events of default other than non-payment. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 5. Commitments and Contingencies Litigation The Company is occasionally involved in other litigation matters relating to claims arising from the ordinary course of business. The Company's management believes that there are no claims or actions pending or threatened against the Company, the ultimate disposition of which would have a material adverse effect on our business, results of operations and financial condition. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2015 | |
Stock-Based Compensation [Abstract] | |
Stock-Based Compensation | 6. 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 Any Incentive Stock Option granted to an employee of the Company shall become exercisable over a period of no longer than 5 years 20 % 20 % 5 years The Company issued no options pursuant to this plan during the three and six month periods ended June 30, 2015. Stock Compensation Plan On August 17, 2007, the Company's board of directors adopted and implemented the Company's 2007 Stock 4,000,000 shares Awards granted to a participant of the Company shall become exercisable over a period of no longer than 5 years The Company issued no stock options pursuant to this plan during the three and six month periods ended June 30, 2015. A summary of the shares reserved for grant and awards available for grant under each Stock Plan is as follows: June 30, 2015 Shares Reserved Awards Available Incentive Stock Plan 4,000,000 3,795,000 Stock Compensation Plan 4,000,000 2,375,000 8,000,000 6,170,000 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 ten 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 June 30 For the six month periods 2015 2014 2015 2014 Expected term (in years) 5.0 5.0 Expected volatility % 125 % % 125 % Risk-free interest rate % 1.6 % % 1.5 % Dividend yield % 0.00 % % 0.00 % A summary of activity under the Stock Plans and changes during the three month period ended June 30, 2015 is presented below: Weighted-Average Shares Exercise Remaining Aggregate Outstanding at December 31, 2014 3,550,000 $ 0.13 3.94 $ Issued Cancelled/forfeited (1,720,000 ) 0.13 Outstanding at June 30, 2015 1,830,000 $ 0.12 3.33 $ Options expected to vest 1,830,000 $ 0.12 3.33 $ Options exercisable at end of period 667,500 $ 0.15 2.46 $ For the six month periods ended June 30, 2015 and 2014, the Company recognized $ 2,742 5,765 $ 10,363 3.33 weighted |
Business Segments
Business Segments | 6 Months Ended |
Jun. 30, 2015 | |
Business Segments [Abstract] | |
Business Segments | 7 . Business Segments Our business consists primarily of two Marketing Communications Corporate Consolidated Three Months Ended June 30, 2015 Revenue $ 102,264 $ 12,291 $ $ 114,555 Income (loss) from continuing operations before tax 23,982 ) 19,158 (72,879 ) (29,739 ) Net income (loss) 23,982 ) 19,158 (72,879 ) (29,739 ) Total assets 22,274 52,646 54,341 129,261 Depreciation Marketing Communications Corporate Consolidated Three Months Ended June 30, 2014 Revenue $ 155,338 $ 22,747 $ $ 178,085 Loss from continuing operations before tax (34,518 ) (43,408 ) (299,999 ) (377,925 ) Net loss (34,518 ) (47,951 ) (299,999 ) (382,468 ) Total assets 133,765 92,063 356,439 582,267 Depreciation 2,678 1 2,679 Marketing Communications Corporate Consolidated Six Months Ended June 30, 2015 Revenue $ 338,107 $ 42,912 $ $ 381,019 Income (loss) from continuing operations before tax 112,765 98,701 (152,505 ) 58,961 Net income (loss) 112,765 114,478 (152,505 ) 74,738 Total assets 22,274 52,646 54,341 129,261 Depreciation 907 907 Marketing Communications Corporate Consolidated Six Months Ended June 30, 2014 Revenue $ 363,866 $ 69,048 $ $ 432,914 Loss from continuing operations before tax (24,037 ) (43,704 ) (534,540 ) (602,281 ) Net loss (24,037 ) (57,084 ) (534,540 ) (615,661 ) Total assets 133,765 92,063 356,439 582,267 Depreciation 5,355 6,099 11,454 There were no intersegment |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 8. Related Party Transactions On March 30, 2011, the Company entered into a subordinated $ 389,942 6.25 12,746 12,746 6,962 6,795 13,741 13,306 338,958 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 $ 15,000 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 15,000 $ 30,000 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | 9. Subsequent Events Subsequent to the date of the issuance of these statements, there were no occurrences that had a material impact on the financial statements. |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Policy) | 6 Months Ended |
Jun. 30, 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 $ 35,473 80,790 |
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 |
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 49.3 48.3 45.5 49.0 |
Reclassifications | Reclassifications Certain prior year accounts have been reclassified to conform to the current year's presentation. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations [Abstract] | |
Summary of the operating results of our discontinued operations | For the Three Months Ended June 30, For the Six Months 2015 2014 2015 2014 Sales, net $ $ 25,056 $ 39,185 $ 49,626 Income (loss) from discontinued operations before income taxes (4,543 ) 15,777 (13,380 ) Income taxes Net income (loss) from discontinued operations $ $ (4,543 ) $ 15,777 $ (13,380 ) |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Debt [Abstract] | |
Schedule of Long-term Debt | As of June 30, December 31, Long-term Debt Note payable to CEO; the note matures July 31, 2016. At June 30, 2015, the interest rate was 6.25 338,958 338,958 Total debt 338,958 338,958 Less current portion of long-term debt (242,174 ) (152,952 ) Non-current portion of long-term debt $ 96,784 $ 186,006 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Stock-Based Compensation [Abstract] | |
Schedule of Shares Reserved for Grant and Awards Available for Grant | June 30, 2015 Shares Reserved Awards Available Incentive Stock Plan 4,000,000 3,795,000 Stock Compensation Plan 4,000,000 2,375,000 8,000,000 6,170,000 |
Schedule of Weighted-Average Assumptions | For the three month periods Ended June 30 For the six month periods 2015 2014 2015 2014 Expected term (in years) 5.0 5.0 Expected volatility % 125 % % 125 % Risk-free interest rate % 1.6 % % 1.5 % Dividend yield % 0.00 % % 0.00 % |
Schedule of Stock Plan Activity | Weighted-Average Shares Exercise Remaining Aggregate Outstanding at December 31, 2014 3,550,000 $ 0.13 3.94 $ Issued Cancelled/forfeited (1,720,000 ) 0.13 Outstanding at June 30, 2015 1,830,000 $ 0.12 3.33 $ Options expected to vest 1,830,000 $ 0.12 3.33 $ Options exercisable at end of period 667,500 $ 0.15 2.46 $ |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Business Segments [Abstract] | |
Schedule of Financial Data by Reporting Segment | Marketing Communications Corporate Consolidated Three Months Ended June 30, 2015 Revenue $ 102,264 $ 12,291 $ $ 114,555 Income (loss) from continuing operations before tax 23,982 ) 19,158 (72,879 ) (29,739 ) Net income (loss) 23,982 ) 19,158 (72,879 ) (29,739 ) Total assets 22,274 52,646 54,341 129,261 Depreciation Marketing Communications Corporate Consolidated Three Months Ended June 30, 2014 Revenue $ 155,338 $ 22,747 $ $ 178,085 Loss from continuing operations before tax (34,518 ) (43,408 ) (299,999 ) (377,925 ) Net loss (34,518 ) (47,951 ) (299,999 ) (382,468 ) Total assets 133,765 92,063 356,439 582,267 Depreciation 2,678 1 2,679 Marketing Communications Corporate Consolidated Six Months Ended June 30, 2015 Revenue $ 338,107 $ 42,912 $ $ 381,019 Income (loss) from continuing operations before tax 112,765 98,701 (152,505 ) 58,961 Net income (loss) 112,765 114,478 (152,505 ) 74,738 Total assets 22,274 52,646 54,341 129,261 Depreciation 907 907 Marketing Communications Corporate Consolidated Six Months Ended June 30, 2014 Revenue $ 363,866 $ 69,048 $ $ 432,914 Loss from continuing operations before tax (24,037 ) (43,704 ) (534,540 ) (602,281 ) Net loss (24,037 ) (57,084 ) (534,540 ) (615,661 ) Total assets 133,765 92,063 356,439 582,267 Depreciation 5,355 6,099 11,454 |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Mar. 04, 2014 | |
Summary of Significant Accounting Policies [Abstract] | ||||||
Allowance for doubtful accounts | $ 35,473 | $ 35,473 | $ 80,790 | |||
Property and equipment | ||||||
Value of patent issued | $ 0 | |||||
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Percentage of total revenue from largest customer | 49.30% | 48.30% | 45.50% | 49.00% |
Discontinued Operations (Narrat
Discontinued Operations (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 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 | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Discontinued Operations [Abstract] | ||||
Sales, net | $ 25,056 | $ 39,185 | $ 49,626 | |
Income (loss) from discontinued operations before income taxes | $ (4,543) | $ 15,777 | $ (13,380) | |
Income taxes | ||||
Net income (loss) from discontinued operations | $ (4,543) | $ 15,777 | $ (13,380) |
Debt (Details)
Debt (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | ||
Total debt | $ 338,958 | $ 338,958 |
Less current portion of long-term debt | (242,174) | (152,952) |
Non-current portion of long-term debt | 96,784 | 186,006 |
Scott Beck, Chairman and Chief Executive Officer [Member] | ||
Debt Instrument [Line Items] | ||
Total debt | $ 338,958 | $ 338,958 |
Maturity date | Jul. 31, 2016 | |
Interest rate | 6.25% |
Stock-Based Compensation (Narra
Stock-Based Compensation (Narrative) (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Issued | ||
Stock-based compensation | $ 2,742 | $ 5,765 |
Unrecognized compensation cost related to stock options | $ 10,363 | |
Unrecognized compensation cost, weighted-average recognition period, years | 3 years 3 months 29 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 |
Stock-Based Compensation (Sched
Stock-Based Compensation (Schedule of Shares Reserved) (Details) | Jun. 30, 2015shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares Reserved for Grant | 8,000,000 |
Awards Available for Grant | 6,170,000 |
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 | 3,795,000 |
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 |
Stock-Based Compensation (Sch27
Stock-Based Compensation (Schedule of Assumptions) (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Stock-Based Compensation [Abstract] | ||||
Expected term (in years) | 5 years | 5 years | ||
Expected volatility | 125.00% | 125.00% | ||
Risk-free interest rate | 1.60% | 1.50% | ||
Dividend yield | 0.00% | 0.00% |
Stock-Based Compensation (Sch28
Stock-Based Compensation (Schedule of Stock Plan Activity) (Details) - USD ($) None in scaling factor is -9223372036854775296 | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Shares | ||
Outstanding, beginning | 3,550,000 | |
Issued | ||
Cancelled/forfeited | (1,720,000) | |
Outstanding, ending | 1,830,000 | 3,550,000 |
Options expected to vest | 1,830,000 | |
Options exercisable at end of period | 667,500 | |
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 | $ 0.15 | |
Remaining Contractual Term | ||
Remaining contractual term, options issued | ||
Remaining contractual term, options outstanding | 3 years 3 months 29 days | 3 years 11 months 8 days |
Remaining contractual term, options expected to vest | 3 years 3 months 29 days | |
Remaining contractual term, options exercisable at end of period | 2 years 5 months 16 days | |
Aggregate Intrinsic Value | ||
Outstanding, beginning | ||
Issued | ||
Outstanding, ending | ||
Options expected to vest | ||
Options exercisable at end of period |
Business Segments (Details)
Business Segments (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)segments | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Segment Reporting Information [Line Items] | |||||
Number of business segments | segments | 2 | ||||
Revenue | $ 114,555 | $ 178,085 | $ 381,019 | $ 432,914 | |
Income (loss) from continuing operations before tax | (29,739) | (377,925) | 58,961 | (602,281) | |
Net income (loss) | (29,739) | (382,468) | 74,738 | (615,661) | |
Total assets | $ 129,261 | 582,267 | 129,261 | 582,267 | $ 180,663 |
Depreciation and amortization | 2,679 | 907 | 11,454 | ||
Marketing Services [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | $ 102,264 | 155,338 | 338,107 | 363,866 | |
Income (loss) from continuing operations before tax | 23,982 | (34,518) | 112,765 | (24,037) | |
Net income (loss) | 23,982 | (34,518) | 112,765 | (24,037) | |
Total assets | $ 22,274 | $ 133,765 | $ 22,274 | $ 133,765 | |
Depreciation and amortization | |||||
Communications Services [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | $ 12,291 | $ 22,747 | $ 42,912 | $ 69,048 | |
Income (loss) from continuing operations before tax | 19,158 | (43,408) | 98,701 | (43,704) | |
Net income (loss) | 19,158 | (47,951) | 114,478 | (57,084) | |
Total assets | $ 52,646 | 92,063 | 52,646 | 92,063 | |
Depreciation and amortization | $ 2,678 | $ 907 | $ 5,355 | ||
Corporate Overhead [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | |||||
Income (loss) from continuing operations before tax | $ (72,879) | $ (299,999) | $ (152,505) | $ (534,540) | |
Net income (loss) | (72,879) | (299,999) | (152,505) | (534,540) | |
Total assets | $ 54,341 | 356,439 | $ 54,341 | 356,439 | |
Depreciation and amortization | $ 1 | $ 6,099 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 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% | 6.25% | |||
Periodic installments amount | $ 12,746 | ||||
Periodic payments, frequency | Monthly | ||||
Installments payments start date | Dec. 31, 2014 | ||||
Interest expense | $ 6,962 | $ 6,795 | $ 13,741 | $ 13,306 | |
Notes payable, related parties | 338,958 | 338,958 | |||
13101 Preston Road, LP [Member] | |||||
Related Party Transaction [Line Items] | |||||
Rental expense | 7,500 | 7,500 | 15,000 | 15,000 | |
Entity Controlled by CEO's Family [Member] | |||||
Related Party Transaction [Line Items] | |||||
Service revenue, monthly amount | 5,000 | 5,000 | |||
Revenue from accounting, human resources, and IT services | $ 15,000 | $ 15,000 | $ 30,000 | $ 30,000 |