10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

[  ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission file number: 000-26731

PACIFIC WEBWORKS, INC.

(Exact name of registrant as specified in its charter)

Nevada                                                                                    (State or other jurisdiction of incorporation or organization)	87-0627910                                       (I.R.S. Employer Identification No.)
230 West 400 South, 1st Floor, Salt Lake City, Utah (Address of principal executive offices)	84101        (Zip Code)

(801) 578-9020

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  [X]   No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [X]   No [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ] Non-accelerated filer [  ] Accelerated filer [  ] Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [   ]   No [X]

The number of shares outstanding of the registrant’s common stock as of November 13, 2015 was 49,713,895.

1

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

2

Consolidated Balance Sheets

3

Consolidated Statements of Operations

4

Consolidated Statements of Cash Flows

5

Notes to the Consolidated Financial Statements

6

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

10

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

15

Item 4.  Controls and Procedures

15

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

16

Item 1A.  Risk Factors

16

Item 6.  Exhibits

21

Signatures

22

PART I – FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

The financial information set forth below with respect to our consolidated balance sheets as of September 30, 2015 and our consolidated statements of operations and cash flows for the three and nine month periods ended September 30, 2015 and 2014 are unaudited.  This financial information, in the opinion of management, includes all adjustments consisting of normal recurring entries necessary for the fair presentation of such data.  The results of operations for the three and nine month periods ended September 30, 2014 are not necessarily indicative of results to be expected for any subsequent period.  

2

PACIFIC WEBWORKS, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

Pacific WebWorks, Inc.
CONSOLIDATED BALANCE SHEETS
				December 31,		September 30,
				2014		2015
						(Unaudited)
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	609,313	$	242,936
	Receivables
	Trade, less allowance for doubtful receivables      of $0 in 2014 and $0 in 2015			1,081,286		1,932,787
	Prepaid expenses and other current assets			56,635		89,854
	Inventory			20,289		18,549
		Total current assets		1,767,523		2,284,126
PROPERTY AND EQUIPMENT, NET				13,995		9,027
	Restricted cash			300,208		479,164
	Security deposit			4,825		4,825
	Deferred Expenses			60,972		148,212
	Goodwill			1,946,253		1,946,253
		Total Assets	$	4,093,776	$	4,871,607
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
	Accounts payable		$	50,528	$	57,155
	Accrued liabilities			149,487		704,086
	Notes payable, current portion			24,601		70,374
	Deferred revenue			169,229		500,735
		Total current liabilities		393,845		1,332,350
STOCKHOLDERS' EQUITY
	Common stock - par value $0.001; authorized 50,000,000; issued and
	outstanding 49,713,895 and  49,713,895, respectively			49,714		49,714
	Additional paid-in capital			18,069,715		18,069,715
	Accumulated deficit			(14,419,498)		(14,580,172)
		Total stockholders' equity		3,699,931		3,539,257
		Total liabilities and stockholders' equity	$	4,093,776	$	4,871,607

The accompanying notes are an integral part of these consolidated financial statements.

3

Pacific WebWorks, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
				NINE MONTHS ENDED SEP 30, 2014		NINE MONTHS ENDED SEP 30, 2015		THREE MONTHS ENDED SEP 30, 2014		THREE MONTHS ENDED SEP 30, 2015
Revenues
	Hosting, gateway and maintenance fees		$	5,227,532	$	4,177,512	$	3,891,307	$	302,112
	Product sales			205,498		120,439		62,849		37,942
				5,433,030		4,297,951		3,954,156		340,054
Cost of sales				4,039,164		2,786,996		3,193,384		280,191
	Gross profit			1,393,866		1,510,955		760,772		59,863
Selling expenses				215,985		124,063		54,188		38,632
Research and development				166,319		161,198		52,232		53,652
General and administrative				1,142,559		1,380,800		376,860		314,547
Depreciation and amortization				3,196		4,968		1,065		1,656
	Total operating expenses			1,528,059		1,671,029		484,345		408,487
	Income (Loss) from operations			(134,193)		(160,074)		276,427		(348,624)
Other income (expense)
	Interest income (expense), net			9,232		(600)		3,150		(171)
	Total other income (expense)			9,232		(600)		3,150		(171)
	Income (Loss) before income taxes			(124,961)		(160,674)		279,577		(348,795)
Income tax expense				4		-				-
		Net Income (loss)	$	(124,965)	$	(160,674)	$	279,577	$	(348,795)
INCOME (LOSS) PER SHARE
	Basic		$	(0.00)	$	0.00	$	0.01	$	(0.01)
	Diluted		$	(0.00)	$	0.00	$	0.01	$	(0.01)
Weighted-average common shares outstanding
	Basic			49,713,895		49,713,895		49,713,895		49,713,895
	Fully Diluted			49,713,895		49,713,895		49,713,895		49,713,895

The accompanying notes are an integral part of these consolidated financial statements.

4

Pacific WebWorks, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
				NINE MONTHS ENDED SEP 30, 2014		NINE MONTHS ENDED SEP 30, 2015
Cash Flows From Operating Activities
	Net loss		$	(124,965)	$	(160,674)
	Adjustments to reconcile net loss to net     cash used for operating activities
		Depreciation and amortization		3,196		4,968
	Changes in assets and liabilities
		Receivables		(1,827,617)		(851,501)
		Restricted cash		(353,647)		(178,956)
		Prepaid expenses and other assets		(106,484)		(120,459)
		Inventory		(5,684)		1,740
		Interest receivable		30,093		-
		Accounts payable and accrued liabilities		55,265		561,226
		Deferred revenue		934,637		331,506
		Net cash used for operating activities		(1,395,206)		(412,150)
Cash Flows From Investing Activities
	Proceeds from notes receivable			60,578		-
	Net cash provided by investing activities			60,578		-
Cash Flows From Financing Activities
	Proceeds from notes payable			44,281		77,411
	Cash paid on notes payable			(30,563)		(31,638)
	Net cash provided by financing activities			13,718		45,773
	Net increase (decrease) in cash and cash equivalents			(1,320,910)		(366,377)
	Cash and cash equivalents at beginning of period			1,928,821		609,313
	Cash and cash equivalents at end of period		$	607,911	$	242,936
Supplemental disclosures of cash flow information:
	Cash paid for interest		$	728	$	740
	Cash paid for income taxes		$	-	$	-

The accompanying notes are an integral part of these consolidated financial statements.

5

PACIFIC WEBWORKS, INC. & SUBSIDIARIES

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

 (Unaudited)

NOTE 1 – BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the U. S. Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations.  The information furnished in the interim condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements.  Although management believes the disclosures and information presented adequately ensure that the information is not misleading, it is suggested that these interim consolidated financial statements be read in conjunction with the Company’s audited financial statements and notes thereto included in its December 31, 2014 Annual Report on Form 10-K.  Operating results for the nine month period ending September 30, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015.

Reclassifications

Certain prior period balances have been reclassified to conform to current period presentation.

NOTE 2 – NOTES PAYABLE

On August 28, 2013 the Company entered into a $42,738 financing agreement for payment of its business insurance.  The financing agreement carries a 5.24% annual rate of interest and requires the Company to make 10 monthly payments of $4,377.  During the three month period ended September 30, 2014, the Company made principal payments of $12,821 and interest of $310.  For the nine month period ended September 30, 2014, the Company made principal payments of $25,642 and interest of $620.The note has been paid in full.

On September 2, 2014 the Company entered into a $44,281 financing agreement for payment of its business insurance.  The financing agreement carries a 5.24% annual rate of interest and requires the Company to make 9 monthly payments of $5,028. During the three month period ended September 30, 2015, the Company made principal payments of $0 and interest of $0.  For the nine month period ended September 30, 2015, the Company made principal payments of $24,601 and interest of $540. The note had been paid in full.

On August 26, 2015 the Company entered into a $77,411 financing agreement for payment of its business insurance.  The financing agreement carries a 5.65% annual rate of interest and requires the Company to make 11 monthly payments of $7,237. During the three month period ended September 30, 2015, the Company made principal payments of $7,037 and interest of $200.  For the nine month period ended September 30, 2015, the Company made principal payments of $7,037 and interest of $200.

NOTE 3 – NOTES RECEIVABLE

On August 3, 2011, the Company, through its World Commerce Network, LLC subsidiary, issued a $250,000 promissory note to Bryan Development, LLC, a Utah limited liability company, for use as working capital in its business investment activities.  On December 31, 2012, the maturity date of the promissory note was extended to December 31, 2013, on December 31, 2013, the maturity date of the promissory note was extended to June 30, 2014 and on June 30, 2014 the maturity date of the

6

PACIFIC WEBWORKS, INC. & SUBSIDIARIES

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

 (Unaudited)

NOTE 3 – NOTES RECEIVABLE (CONTINUED)

promissory note was extended to August 31, 2015. As of December 31, 2014, the promissory note was repaid in full.

On August 15, 2011, Headlamp Ventures established a revolving line of credit facility and issued an initial $400,000 promissory note to Grupo Zapata Arce, a division of Metales y Minerales S.A. De C.V., a corporation organized under the laws of Mexico, for use in its iron ore exporting business.  Interest is charged on amounts outstanding in the form of a fee of $3.00 per metric ton of iron ore purchased with proceeds of the note.  On September 20, 2011, Grupo Zapata Arce Division Metales y Minerals S.A. de C.V., LLC was added as a party to the revolving line of credit and promissory note originally established on August 15, 2011 for Grupo Zapata Arce.  Grupo Zapata Arce is positioned in an industry experiencing resurgent demand that is especially driven by emerging markets around the world. However, as of August 31, 2013 Grupo Zapata Arce is in default under the promissory note and Headlamp Ventures has initiated legal action to collect the amount due.  (See Note 5 – Litigation Matters, below.)

NOTE 4 – COMMITMENTS & CONTINGENCIES

During the year ended December 31, 2013, the Company entered into a lease agreement for commercial office space.  The lease runs through May 31, 2018 and provides for monthly payments of $4,300 in year one, $4,425 in year two, $4,550 in year three, $4,700 in year four and $4,825 in year five. A security deposit in the amount of $4,825 was required upon lease execution.

NOTE 5 – LITIGATION MATTERS

On September 6, 2013, our subsidiary, Headlamp Ventures, LLC, filed a complaint against Marc Didier in the Third District Court Salt Lake County State of Utah.  The complaint alleges that Headlamp Ventures loaned Grupo Zapata Arce (“Zapata”) $400,000 and Mr. Didier guaranteed the Loan Agreement and Note.  Zapata failed to repay the loan by the due date of August 31, 2013 and is in default.  Pursuant to the Guaranty and Security Agreement, Mr. Didier is obligated for all amounts due and owing.  Headlamp Ventures seeks repayment of the loan amount, plus interest, attorneys’ fees and punitive damages. In June, 2015, the Company filed a motion for Summary Judgment and on July 14, 2015, the Court granted that motion in the amount of $546,798.  The judgment bears interest at a rate of 15% per annum until paid in full. On August 4, 2015, Mr. Didier filed a Chapter 7 Bankruptcy case.

On November 15, 2013 Pacific WebWorks, Inc. was served a summons by the Third Judicial District Court in and for Salt Lake County, State of Utah.  The plaintiffs, Allen Stutelberg, Harold Schmunk and Michael Greer, filed a derivative action alleging Pacific WebWorks, Inc. and five former and current members of the board of directors, officers and/or employees of the Company committed corporate waste, breached fiduciary duties and committed civil conspiracy resulting in mismanagement of the Company’s assets and affairs and usurpation of corporate opportunities.  The plaintiffs seek general and punitive damages in excess of $300,000 for each of the five causes of action to be proven at a jury trial.  The Company retained legal counsel to vigorously defend against these allegations.  The Company’s counsel filed an answer to the summons and filed a motion to disqualify plaintiff’s attorney due to a conflict of interest.  The Company’s motion to disqualify plaintiff’s attorney was granted in July 2014.  In October 2014 the Company filed a motion to disqualify the remainder of the law firm

7

PACIFIC WEBWORKS, INC. & SUBSIDIARIES

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

 (Unaudited)

NOTE 5 – LITIGATION MATTERS (CONTINUED)

representing the plaintiffs in this matter. On March 12, 2015, the Court denied this motion.  The Company subsequently filed for interlocutory appeal and on April 30, 2015, the Utah Court of Appeals denied this petition.

We are involved in various other disputes and claims arising in the normal course of our business.  In the opinion of management, any resulting litigation from these disputes and claims will not have a material effect on our financial position and results of operations.

NOTE 6 – SEGMENT REPORTING

	Three Months Ended		Three Months Ended
	September 30, 2014a		September 30, 2015a
Business Unit	Revenues, net	Net income (loss)	Revenues, net	Net income (loss)
Pacific Web Works	$        19,050	$   (295,836)	$                 -	$    (308,825)
IntelliPay	117,234	98,267	92,217	78,555
Headlamp Ventures	62,849	5,695	37,942	10,009
TradeWorks	770	770	580	262
Thrifty Seeker	-	(149)	-	(149)
Promontory Marketing	-	(45)	-	(60)
World Commerce Network	-	3,045	-	-
Dynamic WebTools	3,754,253	467,830	209,315	(128,587)
Total	$    3,954,156	$       279,577	$      340,054	$    (348,795)

^aAmounts include all intercompany receivables, payables, revenues and expenses prior to elimination

for consolidation.

	Nine Months Ended		Nine Months Ended
	September 30, 2014a		September 30, 2015a
Business Unit	Revenues, net	Net income (loss)	Revenues, net	Net income (loss)
Pacific Web Works	$        64,977	$ (1,032,657)	$        -	$    (961,754)
IntelliPay	354,216	301,131	266,282	221,968
Headlamp Ventures	205,478	8,085	120,439	28,742
TradeWorks	2,490	2,353	1,850	1,508
Thrifty Seeker	20	(404)	-	(448)
Promontory Marketing	-	(134)	-	(176)
World Commerce Network	-	9,330	-	(6)
Dynamic WebTools	4,805,849	587,331	3,909,380	549,492
Total	$   5,433,030	$    (124,965)	$   4,297,951	$    (160,674)

^aAmounts include all intercompany receivables, payables, revenues and expenses prior to elimination

for consolidation.

8

PACIFIC WEBWORKS, INC. & SUBSIDIARIES

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

 (Unaudited)

NOTE 7 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events in accordance with the provisions of ASC 855 and has identified no reportable subsequent events.

9

In this report references to “Pacific WebWorks,” “we,” “us,” “our” and “the Company” refer to Pacific WebWorks, Inc. and its subsidiaries.

FORWARD LOOKING STATEMENTS

The U. S. Securities and Exchange Commission (“SEC”) encourages reporting companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions.  This report contains these types of statements.  Words such as “may,” “expect,” “believe,” “anticipate,” “estimate,” “project,” or “continue” or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements.  You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report.  All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

Pacific WebWorks enjoyed dramatic growth during 2009 and this growth was related largely to the upgrading of our marketing channels and the migration of our marketing towards a greater emphasis on the viability of our software products as a revenue generating tool, including the ability to use our tools in connection with the major retail sites.  However, due to legal matters that the Company encountered in 2010, 2011 and 2012, Management determined that it was prudent to stop marketing the Company’s products while the legal matters were addressed.  This resulted in a significant decline in our revenues.  Consistent with that reduction in revenues, management took steps to reduce our overhead expense.  

During the nine month period ended September 30, 2015 the Company primarily focused our operations on marketing the Company’s Internet technology products and service.  As announced, the Company has developed alternative means to market our Visual WebTools™ product while at the same time expanding its Internet technology suite and establishing an international framework for marketing its products.

Over the last few years we trimmed our staffing significantly and identified and hired the personnel necessary to address our legal and reporting issues and move the business forward.  One of our goals has been to find synergistic opportunities that help to diversify the Company’s operations.  We formed Headlamp Ventures, LLC and activated World Commerce Network, LLC and funded these subsidiaries for the purpose of seeking out investment opportunities in other businesses.  As of September 30, 2015, the Company, directly or through our subsidiaries, has invested an aggregate of $712,780 in other businesses and has been issued an aggregate of $3,450,000 in notes receivable by other businesses, $3,050,000 of which has been repaid as of September 30, 2015 (See “Liquidity and Capital Resources,” below).

Competition throughout the Internet software industry continues to intensify.  In particular, competition for the small office/home office business is intensifying with greater attention being directed to this market from a larger variety of product and service providers using new and more aggressive means to market to this industry.  We believe Pacific WebWorks has great potential in the marketplace, but we constantly need more capital and greater processing resources.  We also have the challenge of identifying and effectively implementing our products into new product distribution channels, responding to economic changes generally, continuing to gain marketplace acceptance and we must address shifting public appetites for technology products.  These challenges could pose a threat to our success.  

10

Liquidity and Capital Resources

We have relied primarily on revenues and loans to fund operations for the past two years.  We expect to generate positive cash flows through further development of our business and distribution channels and investments in other businesses.  We plan to address only the liabilities of our operating subsidiaries with our current cash balances and cash inflows.  Of course cash outflows can exceed monthly cash inflows based on timing differences between marketing campaigns and sales and returns on investment.

Maintaining sufficient merchant account processing capabilities will continue to be a factor in our overall performance as an Internet application service provider.  We work diligently with our existing merchant account providers and continually search for new merchant account providers in order to manage this risk.  On occasion we encounter a situation where we have a backlog of billing that cannot be processed until sufficient merchant processing is obtained.  The Company currently has $1,887,343 in overdue billing that is on hold until we secure additional merchant processing.  We expect to obtain merchant processing that will enable us to bring the Company’s billing current in the next 30 to 90 days.

If we are able to maintain sufficient merchant account processing capabilities, then we believe that we will be able to sustain our operations with existing cash and assets and future cash flows during the next twelve to twenty-four months and possibly beyond.  Should we need to raise money in the future we believe funding may be obtained through additional debt arrangements in addition to our internally generated cash flows.  However, if we are unable to obtain additional funds on acceptable terms, then we might be forced to delay or abandon some or all of our product development, marketing or business plans, and growth could be slowed, which may result in declines in our operating results and common stock market price.  

Commitments and Contingencies

Current Liabilities:  Our total current liabilities at September 30, 2015 included accounts payable and accrued liabilities.  Accounts payable of $57,155 were related to operating costs such as marketing and advertising expenses and professional fees.  Our accrued liabilities of $704,086 were primarily the result of payroll related liabilities, a disputed payable from the past, and accrued merchant fees, offset by estimated refunds and receivables.

Also included in current liabilities at September 30, 2015 is $500,735 in deferred revenue primarily related to hosting services.

On June 13, 2013, the Company entered into a lease agreement for commercial office space.  The lease runs through May 31, 2018 and provides for monthly payments of $4,300 in year one, $4,425 in year two, $4,550 in year three, $4,700 in year four and $4,825 in year five.  A security deposit in the amount of $4,825 was required upon lease execution.

On September 2, 2014 the Company entered into a $44,281 financing agreement for payment of its business insurance.  The financing agreement carries a 5.24% annual rate of interest and requires the Company to make 9 monthly payments of $5,028. During the three month period ended September 30, 2015, the Company made principal payments of $0 and interest of $0.  For the nine month period ended September 30, 2015, the Company made principal payments of $24,601 and interest of $540. The note had been paid in full by June 30, 2015.

On August 26, 2015 the Company entered into a $77,411 financing agreement for payment of its business insurance.  The financing agreement carries a 5.65% annual rate of interest and requires the Company to make 11 monthly payments of $7,237. During the three month period ended September 30, 2015, the Company made principal payments of $7,037 and interest of $200.  For the nine month period ended September 30, 2015, the Company made principal payments of $7,037 and interest of $200.

11

Results of Operations

The following discussions are based on the consolidated financial statements of Pacific WebWorks and its subsidiaries for the three and nine month periods ended September 30, 2015 and 2014.  The following charts are a summary of our financial statements for those periods and should be read in conjunction with the financial statements, and notes thereto, included in this report at Part I, Item 1, above.

SUMMARY BALANCE SHEET COMPARISON
	Year ended Dec. 31, 2014	Nine month period ended September 30, 2015
Cash and cash equivalents	$       609,313	$          242,936
Total current assets	1,767,523	2,284,126
Total assets	4,093,776	4,871,607
Total current liabilities	393,845	1,332,350
Total liabilities	393,845	1,332,350
Accumulated deficit	(14,419,498)	(14,580,172)
Total stockholders’ equity	$    3,699,931	$         3,539,257

Total assets increased at September 30, 2015 as compared to December 31, 2014 primarily as a result of increased receivables.  At September 30, 2015 total liabilities increased compared to the 2014 year end primarily as a result of accrued merchant fees and deferred revenue. Our accumulated deficit increased at September 30, 2015 as a result of posting net loss for the nine month period ended September 30, 2015.

SUMMARY OPERATING RESULTS
	Three month period ended September 30,		Nine month period ended September 30,
	2014	2015	2014	2015
Revenues, net	$  3,954,156	$      340,054	$  5,433,030	$   4,297,951
Cost of sales	3,193,384	280,191	4,039,164	2,786,996
Gross profit	760,772	59,863	1,393,866	1,510,955
Total operating expenses	484,345	408,487	1,528,059	1,671,029
Income (loss) from operations	276,427	(348,624)	(134,193)	(160,074)
Total other income (expense)	3,150	(171)	9,232	(600)
Income tax benefit (expense)	-	-	(4)	-
Net income (loss)	279,577	(348,795)	(124,965)	(160,674)
Earnings per share - basic	$          0.01	$          (0.01)	$        (0.00)	$           0.00

12

We receive revenue for hosting, gateway, and maintenance fees, software access and licensing fees and product sales. Revenues from up-front fees are deferred and recognized over the period in which services are performed, ranging from one month to one year.  Fees for the set-up of merchant accounts are deferred and recognized as services are completed (which is generally two months).  Revenues from monthly hosting, maintenance, transaction and processing fees are recorded when earned.  Operating lease revenues for merchant accounts and software are recorded when earned.  Revenues for product sales are recorded when order fulfillment is complete.

Our net revenues decreased for the 2015 nine month period and for the three month period ending September, 30 2015 compared to the 2014 interim periods as a result of the Company curtailing the marketing expense for its Internet technology products and service.  The Company has focused on expanding its infrastructure and technology suite and management believes that continued focus on the Company’s technology business can result in revenue increases.

Cost of sales includes costs related to fulfillment, marketing, merchant fees, certain royalties and commissions, and amortization of purchased customer portfolios.  Cost of sales as a percentage of net revenues increased to 82.39% of net revenues for the 2015 third quarter as compared to 80.76% of net revenues for the 2014 third quarter and decreased to 64.84% of net revenues for the 2015 nine month period compared to 74.34% of net revenues for the 2014 nine month period.  The increase in the 2015 third quarter was due to a reduction in revenues.  The decrease in the 2015 nine month period was due to fewer commissions paid directly related to new customer acquisition.  Management anticipates that cost of sales will increase as a percentage of sales as the Company pays commissions for new customer acquisitions and merchant fees to process sales.

General and administrative expenses include personnel expenses for executive, finance, and internal support personnel.  In addition, general and administrative expenses include fees for bad debt costs, professional legal and accounting services, insurance, office space and utilities, banking fees, internet fees and other overhead-related costs.  General and administrative expenses decreased for the 2015 third quarter compared to the 2014 third quarter due to a reduction chargeback expenses, but increased for the 2015 nine month period compared to the 2014 nine month period due to an increase in chargeback expenses.

Total operating expenses decreased for the 2015 third quarter compared to the 2014 third quarter due to a reduction in selling expenses and general and administrative expenses, but increased for the 2015 nine month period compared to the 2014 nine month period primarily due to the increase in general and administrative expenses.

Total other income decreased for the 2015 interim periods compared to the 2014 interim periods due to a decrease in interest income.

As a result of the above changes in our operations, we recorded a net loss for the 2015 third quarter and 2015 nine month period and net income for the 2014 third quarter and a net loss for the 2014 nine month period.

Off-balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.  Estimates of particular significance in our financial statements include trade receivables and collections, goodwill, contingent liabilities, and valuing stock option compensation.

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Trade receivables and collections - We apply a range of collection techniques to manage delinquent accounts. Management reviews accounts receivable monthly and records an estimate of receivables determined to be uncollectible due to allowance for doubtful accounts and bad debt.  Accounts receivable and the corresponding allowance for doubtful accounts are reviewed for collectability by management quarterly and uncollectible accounts receivable are written off.

Revenue Recognition - The Company recognizes revenue in accordance with the Securities and Exchange Commission, Staff Accounting Bulletin (SAB) No. 101, “Revenue Recognition in Financial Statements” and its revisions in SAB No. 104.  SAB 101 and 104 clarify application of generally accepted accounting principles related to revenue transactions.

We receive revenue for hosting, gateway, and maintenance fees, software access and licensing fees and product sales. Revenues from up-front fees are deferred and recognized over the period in which services are performed, ranging from one month to one year.  Fees for the set-up of merchant accounts are deferred and recognized as services are completed (which is generally two months).  Revenues from monthly hosting, maintenance, transaction and processing fees are recorded when earned. Operating lease revenues for merchant accounts and software are recorded when earned.  Revenues for product sales are recorded when order fulfillment is complete.

The Company recognizes revenues when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery of products and services has occurred, (3) the fee is fixed or determinable and (4) collectibility is reasonably assured.

Goodwill - Goodwill related to Intellipay is assessed annually for impairment by comparing the fair value of Intellipay to its carrying amount, including goodwill.  In testing for a potential impairment of goodwill, the estimated fair value of Intellipay is compared with book value, including goodwill.  If the estimated fair value exceeds book value, goodwill is considered not to be impaired and no additional steps are necessary.  If, however, the fair value of Intellipay is less than book value, then an impairment loss is recognized equal to the excess of book value to estimated fair value. The impairment test for 2014 resulted in an estimated fair value in excess of the book value of goodwill and no impairment was required.

The estimate of implied fair value of goodwill may require independent valuations of certain internally generated and unrecognized intangible assets such as our paying monthly gateway portfolio, software and technology and trademarks.  If the carrying amount of our goodwill exceeds the implied fair value of that goodwill, an impairment loss would be recognized in an amount equal to the excess.  The fair value of Intellipay is estimated using both cash flow information from internal budgets and multiples of revenue.  In the event that an impairment indicator arises prior to our annual impairment test of goodwill, we will provide a full test relative to the indicator in the period that the indicator is present.  

Contingent liabilities - Material estimates for contingent liabilities include approximately $0 for our operating companies.  From a liquidity standpoint, any settlement or judgment received by the Company from pending or threatened litigation may have a direct effect on our cash balances at September 30, 2015.  Management believes that all amounts estimated and recorded as contingent liabilities approximate the amount of liabilities that could be owed to parties in the form of settlement or in a judgment.  Any settlements that might occur below amounts accrued would result in a favorable impact to our earnings and working capital.

Fair Value Measurements - We adopted ASC Topic 820 (originally issued as SFAS 157, “Fair Value Measurements”) as of January 1, 2008 for financial instruments measured at fair value on a recurring basis.  ASC Topic 820 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.  Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  ASC Topic 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to

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unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  These tiers include:

·

Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

·

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

·

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Fair Value of Other Financial Instruments - The carrying amounts of our accounts receivable, accounts payable and accrued liabilities approximate their fair values due to their immediate or short-term maturities.  The aggregate carrying amount of the notes payable approximates fair value as the individual notes bear interest at market interest rates and there hasn’t been a significant change in our operations and risk profile.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed with the SEC pursuant to the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC.  This information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.  Our Chief Executive Officer, who is also our Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report.  Based on that evaluation, he concluded that our disclosure controls and procedures were effective for the quarter ended September 30, 2015.

Changes to Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting

(as defined in Rule 13a-15(f) under the Exchange Act).  Management conducted an evaluation of the effectiveness of our internal control over financial reporting and determined that there were no changes made in our internal control over financial reporting during the quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

On September 6, 2013, our subsidiary, Headlamp Ventures, LLC, filed a complaint against Marc Didier in the Third District Court Salt Lake County State of Utah.  The complaint alleges that Headlamp Ventures loaned Grupo Zapata Arce (“Zapata”) $400,000 and Mr. Didier guaranteed the Loan Agreement and Note.  Zapata failed to repay the loan by the due date of August 31, 2013 and is in default.  Pursuant to the Guaranty and Security Agreement, Mr. Didier is obligated for all amounts due and owing.  Headlamp Ventures seeks repayment of the loan amount, plus interest, attorneys’ fees and punitive damages. In June, 2015, the Company filed a motion for Summary Judgment and on July 14, 2015, the Court granted that motion in the amount of $546,798.  The judgment bears interest at a rate of 15% per annum until paid in full. On August 4, 2015, Mr. Didier filed a Chapter 7 Bankruptcy case.

On November 15, 2013 Pacific WebWorks, Inc. was served a summons by the Third Judicial District Court in and for Salt Lake County, State of Utah.  The plaintiffs, Allen Stutelberg, Harold Schmunk and Michael Greer, filed a derivative action alleging Pacific WebWorks, Inc. and five former and current members of the board of directors, officers and/or employees of the Company committed corporate waste, breached fiduciary duties and committed civil conspiracy resulting in mismanagement of the Company’s assets and affairs and usurpation of corporate opportunities.  The plaintiffs seek general and punitive damages in excess of $300,000 for each of the five causes of action to be proven at a jury trial.  The Company retained legal counsel to vigorously defend against these allegations.  The Company’s counsel filed an answer to the summons and filed a motion to disqualify plaintiff’s attorney due to a conflict of interest.  The Company’s motion to disqualify plaintiff’s attorney was granted in July 2014.  In October 2014 the Company filed a motion to disqualify the remainder of the law firm representing the plaintiffs in this matter. On March 12, 2015, the Court denied this motion.  The Company subsequently filed for interlocutory appeal and on April 30, 2015, the Utah Court of Appeals denied this petition.

We are involved in various other disputes and claims arising in the normal course of our business.  In the opinion of management, any resulting litigation from these disputes and claims will not have a material effect on our financial position and results of operations.

ITEM 1A.  RISK FACTORS

Factors Affecting Future Performance

We may experience difficulty maintaining sufficient credit card processing capabilities to keep up with our transaction volume.

We rely upon our credit card merchant accounts to collect our monthly hosting payments and many of the limitations imposed upon us by the credit card associations, in the opinion of management, are unreasonable and unnecessarily confining.  In the past, these merchant account limitations have forced management to restrict our business growth and this restriction of growth continues to impact our earnings in a negative manner.  On occasion we encounter a situation where we have a backlog of billing that cannot be processed until sufficient merchant processing is obtained.  The Company currently has $1,887,343 in overdue billing that is on hold until we secure additional merchant processing.  We expect to obtain merchant processing that will enable us to bring the Company’s billing current in the next 30 to 90 days.

We may pursue investments in, or acquisitions of, complementary service product lines, technologies or business opportunity through our subsidiaries which may interfere with our operations and negatively affect our financial position.

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We intend to expand our services and product offerings and anticipate evaluating potential acquisitions of or investments in businesses, services, products, or technologies.  These investments or acquisitions may result in the incurrence of debt and contingent liabilities, goodwill impairment charges and amortization of expenses related to other intangible assets.  In addition, acquisitions and investments involve numerous risks, including difficulties in the assimilation of the operations, technologies, services, and products of acquired companies; the diversion of management’s attention from other business concerns; risks of entering markets in which we have no or limited direct prior experience; and, the potential loss of key employees of an acquired company.  As of the date of this filing, other than those items detailed herein, we have no present commitment or agreement with respect to any material acquisition of other businesses, services, products, or technologies.

We cannot be assured that the subsidiaries will be able to identify only business opportunities which will ultimately prove to be beneficial to the Company and our stockholders.  

Our subsidiaries’ search for business opportunities to invest in and this search will not be limited to any particular geographical area or industry.  Our subsidiaries’ management has unrestricted discretion in seeking a business opportunity, subject to the availability of such opportunities, economic conditions and other factors.  Business opportunity participation is governed by the parent company management and board of directors.  In addition, the selection of a business opportunity in which to participate is complex and extremely risky and will be made by the subsidiary’s management in the exercise of its business judgment.  We cannot be assured that the subsidiaries will be able to identify only business opportunities which will ultimately prove to be beneficial to the Company and our stockholders.  

Our expansion into international markets exposes our business to risks related to those economies which may result in loss of revenues.

We are selling our technology in the international markets and as a result, our future revenues may be affected by the economies of these countries.  Our international operations are subject to a number of risks, such as, longer payment cycles, unexpected changes in regulatory environments, potentially adverse recessionary environments and economies outside the United States, and possible political and economic instability.  

We must update our products and services and may experience increased costs and delays which could reduce operating profit.

The electronic commerce, web hosting and merchant processing markets in which we compete are characterized by technological change, new product introductions, evolving industry standards and changing customer needs.  In order to remain competitive, we may be required to engage in a number of research and development projects, which carries the risks associated with any research and development effort, including cost overruns, delays in delivery and performance problems.  Any delay in the delivery of new products or services could render them less desirable by our customers, or possibly even obsolete.  Any performance problem with a new product or service may require significant funds to correct the problem.  As a result of these factors, our research and development efforts could result in increased costs that could reduce our operating profit, a loss of revenue if promised new products are not timely delivered to our customers, or a loss of revenue or possible claims for damages if new products and services do not perform as anticipated.

We are dependent upon license renewal which cannot be assured to occur.

We derive revenues from user licenses and license renewals on a month-to-month arrangement.  We also intend to increase the brand recognition of our products among users through these types of relationships.  If a substantial number of our customers were to decline to renew their contracts for any reason, then we could experience a substantial drop in revenues. Our success in establishing our products as a recognized brand name and achieving their acceptance in the market will depend in part on our ability to continually engineer and deliver new product technologies and superior customer service, so that customers renew their licenses month to month.

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We may need additional external capital and may be unable to raise it.

Our success will depend upon our ability to generate future cash flows and, if needed in the future, the ability to access equity capital markets and borrow on terms that are financially advantageous to us.  Also, we may not be able to obtain additional funds on acceptable terms.  If we are unable to obtain additional capital, then we may not have sufficient working capital to develop products, finance acquisitions, or pursue business opportunities.  If we borrow funds, then we could be forced to use a large portion of our cash reserves to repay principal and interest on those funds.  If we issue our securities for capital, then the interests of investors and shareholders could be diluted.

We are subject to intense competition from large and small companies that limits our ability to obtain market share and may force our prices down.

We face competition in the overall Internet software market, as well as in the business opportunity market.  Our ability to earn significant revenues from our Visual WebTools™ or IntelliPay payment system will depend in part on their acceptance by a substantial number of online businesses.  Broad acceptance of our products and services and their use in large numbers is critical to our success because a large portion of our revenues are derived from one-time and recurring fees we charge to customers buying our products and services.  Our success in obtaining market share will depend upon our ability to build name brand recognition and to provide cost-effective products and services to our customers.  We have developed our products to meet the needs of small businesses and we believe the generality of our competitors’ services may be inadequately addressing the small business owner’s needs. We expect competition to persist, increase, and intensify in the future as the markets for our products and services continue to develop and as additional competitors enter our market.  In addition, many of our current or potential competitors have broad distribution channels that they may use to bundle competing products directly to end-users or purchasers.  If these competitors were to bundle competing products for their customers, it could adversely affect our ability to obtain market share and may force our prices down.

We may be unable to achieve market acceptance because technological standards for payment processing are not established.

One obstacle to widespread market acceptance for the IntelliPay payment system is that widely adopted technological standards for accepting and processing payments over the Internet have not yet emerged.  As a result, merchants and financial institutions have been slow to select which service to use.  Until one or more dominant standards emerge, we must design, develop, test, introduce and support new services to meet changing customer needs and respond to other technological developments.  To be successful, we must obtain widespread acceptance of our technologies, or modify our products and services to meet whatever industry standards do ultimately develop. It is not certain that we will be able to do either.

We depend upon our proprietary rights, none of which can be completely safeguarded against infringement.

Our ability to compete effectively will depend, in part, upon our ability to protect our proprietary source codes for Visual WebTools™ and the IntelliPay payment system through a combination of licenses and trade secrets.  These agreements and procedures may not effectively prevent disclosure of our confidential information and may not provide us with an adequate remedy in the event of unauthorized disclosure of such information.  Intellectual property rights, by their nature, are uncertain and involve complex legal and factual questions.  We rely upon trade secrets with respect to our source code and functionalities and other unpatented proprietary information in our product development activities.  We seek to protect trade secrets and proprietary knowledge in part through confidentiality agreements with our employees, resellers, and collaborators.

If employees or collaborators develop products independently that may be applicable to our products under development, disputes may arise about ownership of proprietary rights to those products or services.  Protracted and costly litigation could be necessary to enforce and determine the scope of our proprietary rights and it would be impossible to predict whether litigation might be successful.

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We rely in part on third party technology licenses which we cannot guarantee will be available to us in the future.

We rely on certain technology which we license from third parties, including software which is integrated with internally developed software and used in our software to perform key functions.  Our inability to maintain any of these technology licenses could result in delays in distribution of our services or increased costs of our products and services.  We cannot be assured that third party technology licenses will continue to be available to us on commercially reasonable terms, or at all.

We may experience software defects which may damage customer relations.

Despite rigorous testing, our software may nevertheless contain undetected bugs, errors or experience failures when introduced, or when the volume of services provided increases.  Any material errors could damage the reputation of our service or software, as well as damage our customer relations. We have detected errors, defects, and bugs in the past and have corrected them as quickly as possible.  Correcting any defects or bugs we may discover in the future may require us to make significant expenditures of capital and other resources.  We believe that we follow industry-standard practices relating to the identification and resolution of errors, defects, or bugs encountered in the development of new software and in the enhancement of existing features in our products.  As of the date of this filing we have not experienced any material adverse effect by reason of an error, defect, or bug.

We may experience breakdowns in our hosting services, infrastructure or payment processing systems, which may expose us to liabilities and cause customers to abandon our products and services.

We would be unable to deliver our payment processing services or hosting services if our system infrastructures break down or are otherwise interrupted.  Events that could cause system interruptions are:

*

fire

*

earthquake,

*

power loss,

*

terrorist attacks,

*

harmful software programs,

*

telecommunications failure, and

*

unauthorized entry or other events.

Although we regularly back up data from operations, and take other measures to protect against loss of data, there is still some risk of such losses.  Despite the security measures we maintain, our infrastructure may be vulnerable to computer viruses, hackers, rouge employees or similar sources of disruption.  Any problem of this nature could result in significant liability to customers or financial institutions and also may deter potential customers from using our services.  We attempt to limit this sort of liability through back-up systems, contractual provisions, insurance and other security measures.  However, we cannot be assured that these contractual limitations on liability would be enforceable, or that our insurance coverage would be adequate to cover any liabilities we might sustain.

Also, a breach of our e-commerce security measures could reduce demand for our services.  The e-commerce industry is intensely focused on the need for Internet security, particularly with respect to the transmission and storage of confidential personal and financial data.  Any compromise or elimination of our security could erode customer confidence in our systems and could result in lower demand for our services or possible litigation.

We may not be able to adapt as the Internet market changes, including changing marketing strategies and the associated risks.

Our failure to respond in a timely manner to changing market conditions or client requirements could have a material adverse effect on our business, prospects, financial condition, and results of operations.  The Internet is characterized by:

*

rapid technological change;

*

changes in advertiser and user requirements and preferences;

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*

frequent new product and service introductions embodying new technologies; and

*

the emergence of new industry standards and practices that could render our existing service offerings, technology, and hardware and software infrastructure obsolete.

In order to compete successfully in the future, we must:

*

enhance our existing products and develop new services and technology that address the increasingly sophisticated and varied needs of our prospective or current customers;

*

license, develop or acquire technologies useful in our business on a timely basis;

*

respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis; and

*

continue to find acceptable means through which to market our products.

Our industry is experiencing increased legal actions related to Internet marketing strategies and our financial condition may be at risk due to such legal actions.

We experienced increased legal actions from 2009 until 2012 related to our marketing strategies and these legal actions required our cash flows to be directed to our legal defense.  Our marketing strategies had relied upon resellers and affiliate marketers and these third parties may lack sufficient knowledge regarding proper marketing activities.  As a result, we were included in litigation alleging violations of consumer protection and federal RICO laws, fraud and use of deceptive trade practices.  We have settled these legal actions; however, we may be subject to similar litigation in the future that may increase our cost of doing business.  

Regulation of the Internet and Internet-based services may decrease the demand for our services and/or increase our cost of doing business.

Due to the increasing popularity and use of the Internet and online services, federal, state, local, and foreign governments may adopt laws and regulations, or amend existing laws and regulations, with respect to the Internet and other online services.  These laws and regulations may affect issues such as user privacy, pricing, content, taxation, copyrights, distribution, and quality of products and services.  Any new legislation could hinder the growth in use of the Internet generally or in our industry and could impose additional burdens on companies conducting business online, which could, in turn, decrease the demand for our services and increase our cost of doing business. The laws governing the Internet remain largely unsettled, even in areas where legislation has been enacted.  It may take years to determine whether and how existing laws, such as those governing intellectual property, privacy, libel, and taxation, apply to the Internet.  In addition, the growth and development of the market for electronic commerce may prompt calls for more stringent consumer protection laws, both in the United States and abroad, that may impose additional burdens on companies conducting business via the Internet.

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ITEM 6.  EXHIBITS

Part I Exhibits
No.	Description
31.1	Chief Executive Officer Certification
31.2	Principal Financial Officer Certification
32.1	Section 1350 Certification
Part II Exhibits
No.	Description
3(i)	Articles of Incorporation, as amended (Incorporated by reference to exhibit No. 3.1 for Form 10-Q filed November 13, 2001)
3(ii)	Amended Bylaws of Pacific WebWorks, Inc. (Incorporated by reference to exhibit No. 3.2 for Form 10, as amended, file No. 0-26731, filed July 16, 1999.)
10.1	Employment agreement between Pacific WebWorks and K. Lance Bell, dated November 29, 2012 (Incorporated by reference to exhibit 10.4 to Form 10-K filed April 1, 2013)
10.2	Lease Agreement between Pacific WebWorks, Inc. and DSI, dated June 13, 2013 (Incorporated by reference to exhibit 10.2 to Form 10-Q, filed August 14, 2013)
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Label Linkbase Document
101.PRE	XBRL Taxonomy Presentation Linkbase Document

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:  November 16, 2015	PACIFIC WEBWORKS, INC. By:  /s/ K. Lance Bell         K. Lance Bell         President, Chief Executive Officer,         Principal Financial Officer, Treasurer         and Chairman of the Board
Date:  November 16, 2015	By:   /s/ Tanner J Purser          Tanner J Purser          Secretary, Controller

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EX-31

Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, K. Lance Bell, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Pacific WebWorks, Inc.;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statement made, in light of the circumstances under which statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 16, 2015
/s/ K. Lance Bell K. Lance Bell Chief Executive Officer

EX-31

Exhibit 31.2

PRINCIPAL FINANCIAL OFFICER CERTIFICATION

I, K. Lance Bell, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Pacific WebWorks, Inc.;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statement made, in light of the circumstances under which statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 16, 2015
/s/ K. Lance Bell K. Lance Bell Principal Financial Officer

EX-32

Exhibit 32.1

PACIFIC WEBWORKS, INC.

CERTIFICATION OF PERIODIC REPORT

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

18 U.S.C. Section 1350

The undersigned executive officer of Pacific WebWorks, Inc. certifies pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

a.

the quarterly report on Form 10-Q of Pacific WebWorks, Inc. for the quarter ended September 30, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

b.

the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Pacific WebWorks, Inc.

Date:  November 16, 2015
/s/ K. Lance Bell K. Lance Bell Chief Executive Officer Principal Financial Officer

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2015

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 4– COMMITMENTS & CONTINGENCIES

During the year ended December 31, 2013, the Company entered into a lease agreement for commercial office space. The lease runs through May 31, 2018 and provides for monthly payments of $4,300 in year one, $4,425 in year two, $4,550 in year three, $4,700 in year four and $4,825 in year five. A security deposit in the amount of $4,825 was required upon lease execution.

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NOTES RECEIVABLE

9 Months Ended

Sep. 30, 2015

NOTES RECEIVABLE [Abstract]

NOTES RECEIVABLE

NOTE 3 – NOTES RECEIVABLE

On August 3, 2011, the Company, through its World Commerce Network, LLC subsidiary, issued a $250,000 promissory note to Bryan Development, LLC, a Utah limited liability company, for use as working capital in its business investment activities. On December 31, 2012, the maturity date of the promissory note was extended to December 31, 2013, on December 31, 2013, the maturity date of the promissory note was extended to June 30, 2014 and on June 30, 2014 the maturity date of the promissory note was extended to August 31, 2015. As of December 31, 2014, the promissory note was repaid in full.

On August 15, 2011, Headlamp Ventures established a revolving line of credit facility and issued an initial $400,000 promissory note to Grupo Zapata Arce, a division of Metales y Minerales S.A. De C.V., a corporation organized under the laws of Mexico, for use in its iron ore exporting business. Interest is charged on amounts outstanding in the form of a fee of $3.00 per metric ton of iron ore purchased with proceeds of the note. On September 20, 2011, Grupo Zapata Arce Division Metales y Minerals S.A. de C.V., LLC was added as a party to the revolving line of credit and promissory note originally established on August 15, 2011 for Grupo Zapata Arce. Grupo Zapata Arce is positioned in an industry experiencing resurgent demand that is especially driven by emerging markets around the world. However, as of August 31, 2013 Grupo Zapata Arce is in default under the promissory note and Headlamp Ventures has initiated legal action to collect the amount due.  (See Note 6 – Litigation Matters, below.)

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CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2015	Dec. 31, 2014
CURRENT ASSETS
Cash and cash equivalents	$ 242,936	$ 609,313
Receivables
Trade, less allowance for doubtful receivables of $0 in 2014 and $0 in 2015	1,932,787	1,081,286
Prepaid expenses and other current assets	89,854	56,635
Inventory	18,549	20,289
Total current assets	2,284,126	1,767,523
PROPERTY AND EQUIPMENT, NET	9,027	13,995
Restricted cash	479,164	300,208
Security deposit	4,825	4,825
Deferred Expenses	148,212	60,972
Goodwill	1,946,253	1,946,253
Total Assets	4,871,607	4,093,776
CURRENT LIABILITIES
Accounts payable	57,155	50,528
Accrued liabilities	704,086	149,487
Notes payable, current portion	70,374	24,601
Deferred revenue	500,735	169,229
Total current liabilities	1,332,350	393,845
STOCKHOLDERS' EQUITY
Common stock - par value $0.001; authorized 50,000,000; issued and outstanding 49,713,895 and 49,713,895, respectively	49,714	49,714
Additional paid-in capital	18,069,715	18,069,715
Accumulated deficit	(14,580,172)	(14,419,498)
Total stockholders' equity	3,539,257	3,699,931
Total liabilities and stockholders' equity	$ 4,871,607	$ 4,093,776

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BASIS OF FINANCIAL STATEMENT PRESENTATION

9 Months Ended

Sep. 30, 2015

BASIS OF FINANCIAL STATEMENT PRESENTATION [Abstract]

BASIS OF FINANCIAL STATEMENT PRESENTATION

 NOTE 1 – BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented adequately ensure that the information is not misleading, it is suggested that these interim consolidated financial statements be read in conjunction with the Company's audited financial statements and notes thereto included in its December 31, 2014 Annual Report on Form 10-K. Operating results for the nine month period ending September 30, 2015are not necessarily indicative of the results to be expected for the year ending December 31, 2015.

Reclassifications

Certain prior period balances have been reclassified to conform to current period presentation.

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NOTES PAYABLE

9 Months Ended

Sep. 30, 2015

NOTES PAYABLE [Abstract]

NOTES PAYABLE

NOTE 2 – NOTES PAYABLE

On August 28, 2013 the Company entered into a $42,738 financing agreement for payment of its business insurance. The financing agreement carries a 5.24% annual rate of interest and requires the Company to make 10 monthly payments of $4,377. During the three month period ended September 30, 2014, the Company made principal payments of $12,821 and interest of $310.  For the nine month period ended September 30, 2014, the Company made principal payments of $25,642 and interest of $620. The note has been paid in full.

On September 2, 2014 the Company entered into a $44,281 financing agreement for payment of its business insurance. The financing agreement carries a 5.24% annual rate of interest and requires the Company to make 9 monthly payments of $5,028.  During the three month period ended September 30, 2015, the Company made principal payments of $0 and interest of $0.For the nine month period ended September 30, 2015, the Company made principal payments of $24,601 and interest of $540. The note had been paid in full.

On August 26, 2015 the Company entered into a $77,411 financing agreement for payment of its business insurance.The financing agreement carries a 5.65% annual rate of interest and requires the Company to make 11 monthly payments of $7,237. During the three month period ended September 30, 2015, the Company made principal payments of $7,037 and interest of $200.For the nine month period ended September 30, 2015, the Company made principal payments of $7,037 and interest of $200.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
CONSOLIDATED BALANCE SHEETS [Abstract]
Trade receivables, allowance for doubtful receivables	$ 0	$ 0
Common stock, par value per share	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	49,713,895	49,713,895
Common stock, shares outstanding	49,713,895	49,713,895

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LITIGATION MATTERS (Details) - USD ($)	Jul. 14, 2015	Nov. 15, 2013	Sep. 06, 2013
LITIGATION MATTERS [Abstract]
Settlement expense			$ 400,000
Judgement interest rate	15.00%
Judgement amount	$ 546,798
Damages sought		$ 300,000

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 13, 2015
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015
Entity Registrant Name	PACIFIC WEBWORKS INC
Entity Central Index Key	0001086303
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2015
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Common Stock, Shares Outstanding		49,713,895

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

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenues
Hosting, gateway and maintenance fees	$ 302,112	$ 3,891,307	$ 4,177,512	$ 5,227,532
Product sales	37,942	62,849	120,439	205,498
Revenues	340,054	3,954,156	4,297,951	5,433,030
Cost of sales	280,191	3,193,384	2,786,996	4,039,164
Gross profit	59,863	760,772	1,510,955	1,393,866
Selling expenses	38,632	54,188	124,063	215,985
Research and development	53,652	52,232	161,198	166,319
General and administrative	314,547	376,860	1,380,800	1,142,559
Depreciation and amortization	1,656	1,065	4,968	3,196
Total operating expenses	408,487	484,345	1,671,029	1,528,059
Income (Loss) from operations	(348,624)	276,427	(160,074)	(134,193)
Other income (expense)
Interest income (expense), net	(171)	3,150	(600)	9,232
Total other income (expense)	(171)	3,150	(600)	9,232
Income (Loss) before income taxes	$ (348,795)	279,577	$ (160,674)	(124,961)
Income tax expense				4
Net Income (loss)	$ (348,795)	$ 279,577	$ (160,674)	$ (124,965)
INCOME (LOSS) PER SHARE
Basic	$ (0.01)	$ 0.01	$ 0.00	$ 0.00
Diluted	$ (0.01)	$ 0.01	$ 0.00	$ 0.00
Weighted-average common shares outstanding
Basic	49,713,895	49,713,895	49,713,895	49,713,895
Fully Diluted	49,713,895	49,713,895	49,713,895	49,713,895

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2015

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

NOTE 7 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events in accordance with the provisions of ASC 855 and has identified no reportable subsequent events.

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SEGMENT REPORTING

9 Months Ended

Sep. 30, 2015

SEGMENT REPORTING [Abstract]

SEGMENT REPORTING

NOTE 6 – SEGMENT REPORTING

	Three Months Ended					Three Months Ended
	September 30, 2014a					September 30, 2015a
Business Unit	Revenues, net		Net income (loss)			Revenues, net		Net income (loss)
Pacific Web Works	$	19,050	$	(295,836	)	$	-	$	(308,825	)
IntelliPay		117,234		98,267			92,217		78,555
Headlamp Ventures		62,849		5,695			37,942		10,009
TradeWorks		770		770			580		262
Thrifty Seeker		-		(149	)		-		(149	)
Promontory Marketing		-		(45	)		-		(60	)
World Commerce Network		-		3,045			-		-
Dynamic WebTools		3,754,253		467,830			209,315		(128,587	)
Total	$	3,954,156	$	279,577		$	340,054	$	(348,795	)

aAmounts include all intercompany receivables, payables, revenues and expenses prior to elimination

for consolidation.

	Nine Months Ended					Nine Months Ended
	September 30, 2014a					September 30, 2015a
Business Unit	Revenues, net		Net income (loss)			Revenues, net		Net income (loss)
Pacific Web Works	$	64,977	$	(1,032,657	)	$	-	$	(961,754	)
IntelliPay		354,216		301,131			266,282		221,968
Headlamp Ventures		205,478		8,085			120,439		28,742
TradeWorks		2,490		2,353			1,850		1,508
Thrifty Seeker		20		(404	)		-		(448	)
Promontory Marketing		-		(134	)		-		(176	)
World Commerce Network		-		9,330			-		(6	)
Dynamic WebTools		4,805,849		587,331			3,909,380		549,492
Total	$	5,433,030	$	(124,965	)	$	4,297,951	$	(160,674	)

aAmounts include all intercompany receivables, payables, revenues and expenses prior to elimination

for consolidation.

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NOTES RECEIVABLE (Details) - USD ($)	Aug. 15, 2011	Aug. 03, 2011
Bryan Development, LLC [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable		$ 250,000
Grupo Zapata Arce [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable	$ 400,000
Fee per metric ton of iron ore purchased with proceeds of the note	$ 3.00

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SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2015

SEGMENT REPORTING [Abstract]

Summary of Business Unit Information

	Three Months Ended					Three Months Ended
	September 30, 2014a					September 30, 2015a
Business Unit	Revenues, net		Net income (loss)			Revenues, net		Net income (loss)
Pacific Web Works	$	19,050	$	(295,836	)	$	-	$	(308,825	)
IntelliPay		117,234		98,267			92,217		78,555
Headlamp Ventures		62,849		5,695			37,942		10,009
TradeWorks		770		770			580		262
Thrifty Seeker		-		(149	)		-		(149	)
Promontory Marketing		-		(45	)		-		(60	)
World Commerce Network		-		3,045			-		-
Dynamic WebTools		3,754,253		467,830			209,315		(128,587	)
Total	$	3,954,156	$	279,577		$	340,054	$	(348,795	)

aAmounts include all intercompany receivables, payables, revenues and expenses prior to elimination

for consolidation.

	Nine Months Ended					Nine Months Ended
	September 30, 2014a					September 30, 2015a
Business Unit	Revenues, net		Net income (loss)			Revenues, net		Net income (loss)
Pacific Web Works	$	64,977	$	(1,032,657	)	$	-	$	(961,754	)
IntelliPay		354,216		301,131			266,282		221,968
Headlamp Ventures		205,478		8,085			120,439		28,742
TradeWorks		2,490		2,353			1,850		1,508
Thrifty Seeker		20		(404	)		-		(448	)
Promontory Marketing		-		(134	)		-		(176	)
World Commerce Network		-		9,330			-		(6	)
Dynamic WebTools		4,805,849		587,331			3,909,380		549,492
Total	$	5,433,030	$	(124,965	)	$	4,297,951	$	(160,674	)

aAmounts include all intercompany receivables, payables, revenues and expenses prior to elimination

for consolidation.

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NOTES PAYABLE (Details) - USD ($)				3 Months Ended		9 Months Ended
	Aug. 26, 2015	Sep. 02, 2014	Aug. 28, 2013	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
August 28, 2013, Financing Agreement [Member]
Debt Instrument [Line Items]
Principal amount			$ 42,738
Annual rate			5.24%
Debt Instrument, Term			10 months
Monthly payments			$ 4,377
Principal payment					$ 12,821		$ 25,642
Interest payment					$ 310		$ 620
September 2, 2014 Financial Agreement [Member]
Debt Instrument [Line Items]
Principal amount		$ 44,281
Annual rate		5.24%
Debt Instrument, Term		9 months
Monthly payments		$ 5,028
Principal payment				$ 0		$ 24,601
Interest payment				0		540
August 26, 2015, Financing Agreement [Member]
Debt Instrument [Line Items]
Principal amount	$ 77,411
Annual rate	5.65%
Debt Instrument, Term	11 months
Monthly payments	$ 7,237
Principal payment				7,037		7,037
Interest payment				$ 200		$ 200

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($)	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Monthly lease obligation
Year one	$ 4,300
Year two	4,425
Year three	4,550
Year four	4,700
Year five	4,825
Security deposit	$ 4,825	$ 4,825
Lease expiration period	May 31, 2018

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash Flows From Operating Activities
Net loss	$ (160,674)	$ (124,965)
Adjustments to reconcile net loss to net cash used for operating activities
Depreciation and amortization	4,968	3,196
Changes in assets and liabilities
Receivables	(851,501)	(1,827,617)
Restricted cash	(178,956)	(353,647)
Prepaid expenses and other assets	(120,459)	(106,484)
Inventory	$ 1,740	(5,684)
Interest receivable		30,093
Accounts payable and accrued liabilities	$ 561,226	55,265
Deferred revenue	331,506	934,637
Net cash used for operating activities	$ (412,150)	(1,395,206)
Cash Flows From Investing Activities
Proceeds from notes receivable		60,578
Net cash provided by investing activities		60,578
Cash Flows From Financing Activities
Proceeds from notes payable	$ 77,411	44,281
Cash paid on notes payable	(31,638)	(30,563)
Net cash provided by financing activities	45,773	13,718
Net increase (decrease) in cash and cash equivalents	(366,377)	(1,320,910)
Cash and cash equivalents at beginning of period	609,313	1,928,821
Cash and cash equivalents at end of period	242,936	607,911
Supplemental disclosures of cash flow information:
Cash paid for interest	$ 740	$ 728
Cash paid for income taxes

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LITIGATION MATTERS

9 Months Ended

Sep. 30, 2015

LITIGATION MATTERS [Abstract]

LITIGATION MATTERS

NOTE 5 – LITIGATION MATTERS

On September 6, 2013 our subsidiary, Headlamp Ventures, LLC, filed a complaint against Marc Didier in the Third District Court Salt Lake County State of Utah. The complaint alleges that Headlamp Ventures loaned Grupo Zapata Arce (“Zapata”) $400,000 and Mr. Didier guaranteed the Loan Agreement and Note. Zapata failed to repaythe loan by the due date of August 31, 2013 and is in default. Pursuant to the Guaranty and Security Agreement, Mr. Didier is obligated for all amounts due and owing. Headlamp Ventures seeks repayment of the loan amount, plus interest, attorneys' fees and punitive damages. In June, 2015, the Company filed a motion for Summary Judgment and on July 14, 2015, the Court granted that motion in the amount of $546,798.The judgment bears interest at a rate of 15% per annum until paid in full. On August 4, 2015, Mr. Didier filed a Chapter 7 Bankruptcy case.

On November 15, 2013 Pacific WebWorks, Inc. was served a summons by the Third Judicial District Court in and for Salt Lake County, State ofUtah. The plaintiffs, Allen Stutelberg, Harold Schmunk and Michael Greer, filed a derivative action alleging Pacific WebWorks, Inc. and five former and current members of the board of directors, officers and/or employees of the Company committed corporate waste, breached fiduciary duties and committed civil conspiracy resulting in mismanagement of the Company's assets and affairs and usurpation of corporate opportunities. The plaintiffs seek general and punitive damages in excess of $300,000 for each of the five causes of action to be proven at a jury trial.  The Company retained legal counsel to vigorously defend against these allegations. The Company's counsel filed an answer to the summons and filed a motion to disqualify plaintiff's attorney due to a conflict of interest. The Company's motion to disqualify plaintiff's attorney was granted in July 2014. In October 2014 the Company filed a motion to disqualify the remainder of the law firm representing the plaintiffs in this matter. On March 12, 2015, the Court denied this motion. The Company subsequently filed for interlocutory appeal and on April 30, 2015, the Utah Court of Appeals denied this petition.

We are involved in various other disputes and claims arising in the normal course of our business. In the opinion of management, any resulting litigation from these disputes and claims will not have a material effect on our financial position and results of operations.