unilava_10q-16003.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10−Q

(Mark One)

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

For the quarterly period ended: March 31, 2014

o	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: 000-25108

UNILAVA CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Wyoming		80-0568736
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

71 Stevenson Street, Suite 430

San Francisco, CA 9410

(Address of principal executive offices, Zip Code)

(415) 321-3490

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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 o

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 o No o

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	o	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares outstanding of each of the issuer’s classes of common stock, as of May 14, 2014 is as follows:

Class of Securities		Shares Outstanding
Common stock, no par value		100,051,107

Quarterly Report on Form 10-Q

Three Months Ended March 31, 2014

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

		Page(s)
Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	28

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 3.	Defaults Upon Senior Securities	28

Item 4.	(Removed and Reserved)	28

Item 5.	Other Information	28

Item 6.	Exhibits	29

	Signatures	30

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

The accompanying consolidated condensed balance sheet of Unilava Corporation at March 31, 2014, the consolidated condensed statements of operations and comprehensive loss for the three months ended March 31, 2014 and 2013 and the consolidated condensed statements of cash flows for the three months ended March 31, 2014 and 2013, have been prepared by the Company's management, in conformity with principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.

UNILAVA CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013

Financial Statements		Page(s)

	Condensed Consolidated Balance Sheets (Unaudited)	4

	Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)	5

	Condensed Consolidated Statements of Cash Flows (Unaudited)	6

	Notes to Consolidated Financial Statements (Unaudited)	7-18

Unilava Corporation and Subsidiaries
Condensed Consolidated Balance Sheets

	March 31,			December 31,
	2014			2013
ASSETS
CURRENT ASSETS
Cash	$	-		$	-
Certificates of deposit		28,159			28,151
Accounts receivable, net		258,561			294,150
Other current assets		333			(24	)

Total current assets		287,053			322,276

Fixed assets, net		1,397,833			1,418,832
Goodwill		767,873			767,873
Other assets		76,958			76,959

TOTAL ASSETS	$	2,529,717		$	2,585,941

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Bank overdraft	$	242,056		$	191,446
Accounts payable and accrued expenses		4,390,840			4,129,314
Accounts payable and accrued expenses - related party		215,014			224,142
Deferred rent - current		18,924			18,666
Line of credit		1,651,633			1,651,633
Notes payable		2,024,332			2,099,332
Notes payable - related party		901,969			949,226

TOTAL CURRENT LIABILITIES		9,444,768			9,263,760

Deferred rent - non current		-			-
TOTAL LIABILITIES		9,444,768			9,263,760

STOCKHOLDERS' DEFICIT
Preferred stock, no par value 5,000,000 shares authorized; issued and outstanding 0 and 0 outstanding at March 31, 2014 and December 31, 2013, respectively.		-			-

Common stock, no par value 120,000,000 shares authorized; issued but not outstanding 100,052,888 and 100,052,888, respectively; issued and outstanding 100,051,107 and 100,051,107 at March 31, 2014 and December 31, 2013, respectively.		1,519,074			1,519,074
Common stock payable		-			-
Treasury stock, 1,781 and 1,781 shares at March 31, 2014 and December 31, 2013, respectively		-			-
Accumulated deficit		(8,353,587	)		(8,123,937	)
Accumulated other comprehensive loss
(Foreign translation adjustment)		(66,221	)		(66,191	)

STOCKHOLDERS' DEFICIT OF UNILAVA		(6,900,734	)		(6,671,054	)
Non-controlling interest		(14,317	)		(6,765	)

TOTAL STOCKHOLDERS' DEFICIT		(6,915,051	)		(6,677,818	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	2,529,717		$	2,585,941

SEE ACCOMPANYING NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.

Unilava Corporation and Subsidiaries
Condensed Consolidated Statements of Operations


	For the three months ended
	March 31,
	2014			2013
Revenue	$	544,057		$	763,896
Cost of revenue		367,723			412,650
Gross profit		176,334			351,246

Costs and Expenses
Salaries and payroll taxes		176,639			270,533
Selling, general & administrative		176,035			419,678
Depreciation		20,990			33,899
Total costs and expenses		373,664			724,110

Loss from operations		(197,330	)		(372,864	)

Other Income (Expense)
Interest income		10			20
Other income		6			1
Interest expense		(39,889	)		(73,309	)
Total other income (expense)		(39,873	)		(73,288	)

Loss before non-controlling interest		(237,203	)		(446,151	)
Net loss allocable to non-controlling interest		7,552			17,871
Net loss	$	(229,651	)	$	(428,281	)

Comprehensive loss:
Foreign currency translation adjustment		(30	)		(2,100	)
Total comprehensive loss	$	(229,681	)	$	(430,381	)


Net loss per common share:
Basic	$	(0.00	)	$	(0.00	)
Weighted average common shares outstanding:
Basic		100,051,107			100,051,107

SEE ACCOMPANYING NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.

Unilava Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows

	For the three months ended
	March 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(229,651	)	$	(428,281	)
Adjustments to reconcile net loss
to net cash used in operating activities:
Shares to be issued for services		-			-
Depreciation and amortization		20,990			32,617
Change in deferred rent		258			(14,200	)
Net loss allocated to non-controlling interest		(7,552	)		(17,871	)
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Accounts receivable		35,589			2,040
Other current assets		(357	)		(147	)
Other assets		-			17
Accounts payable and accrued expenses		261,534			333,150
Accounts payable and accrued expenses - related party		(9,127	)		-

CASH USED IN OPERATING ACTIVITIES		71,684			(92,675	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Interest earned on certificates of deposit		(8	)		(8	)
Purchase of furniture and equipment		-			(5,212	)

CASH USED IN INVESTING ACTIVITIES		(8	)		(5,220	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft		50,610			(111	)
Proceeds from notes payable		60,000			-
Repayment of notes payable		(135,000	)		(58,595	)
Proceeds from line of credit		-			-
Proceeds from related party notes payable		-			158,701
Repayment of related party notes payable		(47,257	)		-

CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(71,647	)		99,995

EFFECT OF EXCHANGE RATE CHANGES ON CASH		(29	)		(2,100	)
Net DECREASE IN CASH		(0	)		-
CASH, beginning of period		-			-
CASH, end of period	$	(0	)	$	-

Supplemental disclosure of non-cash investing and financing activities:
Interest paid	$	-		$	-
Taxes paid	$	-		$	-

SEE ACCOMPANYING NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.

UNILAVA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2014

Note 1 - Organization

Unilava Corporation, a Wyoming corporation, was formerly known as IWI Holding Limited (“IWI”), and was engaged in the international jewelry business through a US subsidiary. IWI went public via an initial public offering in 1994, and disposed of the subsidiary on December 31, 2007. On September 21, 2009, IWI entered into an Agreement pursuant to which IWI acquired all of the outstanding shares of Telava Networks, Inc., a Nevada corporation (“TelavaNV”), in exchange for 55 million shares of common stock. In addition, preferred stock of IWI which had been issued in 1994 totaling 3,644,880 shares were converted into 45 million shares of common stock. In connection with the closing of the acquisition, the TelavaNV management was appointed as the members of IWI management, the name of IWI was changed to Unilava, Corporation (“Unilava or the “Company””) and the corporation was reincorporated from the British Virgin Islands to Wyoming via Articles of Continuation.

The Company consists of several subsidiaries which make up the consolidated financial statements. The parent company is Unilava Corporation which is a holding company for the operating subsidiaries. Local Area Yellow Pages has significant operating revenue. Telava Wireless has significant assets. Local Info Pages has overseas operations in Korea. Telava Acquisitions is insignificant to the Company financial position and operating results. Telava Mobile has minimal assets and operations. IBFA has significant assets, liabilities and revenue.

TelavaNV, a privately owned company, was incorporated in Nevada on July 23, 2003 as Local Area Yellow Pages to provide advertising and directory listings for small and medium sized businesses on its internet website in a “Yellow Pages” format. The Company provides those services to its subscribers for a monthly fee. These services are provided primarily to small and medium sized businesses throughout the United States. On July 10, 2007, Local Area Yellow Pages amended its Articles of Incorporation to change the name of the corporation to Telava Networks, Inc. (“TelavaNV”) for the purpose of launching its network to provide the next generation fixed and mobile WiMAX broad band solutions to small and medium businesses, public safety organizations, and others in various markets through its network. TelavaNV continues its Yellow Pages operations while, at the same time, expanding its WiMAX network. During the three months ended March 31, 2012, nearly 21% of the Company’s revenues have been generated by its Yellow Pages business.

On January 19, 2006, TelavaNV formed Local Info Pages, Inc. (“LIP”), headquartered in Seoul, South Korea, as a wholly owned subsidiary of TelavaNV. LIP is one of the leading direct marketing and business service companies in Korea. LIP connects advertisers to targeted audiences through its network advertising products and services. On January 3, 2007, the Company acquired a website which brings value to the Company because of its large customer base which enables the Company to target and market its products to those customers. Another division of LIP is the second largest coupon company in South Korea which enables advertisers to directly reach consumers with branded media products, coupons and other advertisements. Many consumers depend on the Company to deliver the best values in town via direct and online coupons. For advertisers, LIP offers business advertising solutions by enabling them to sell their products and services in person, online or through the mail.

On May 17, 2006, TelavaNV formed Telava Wireless, Inc. (“Telava Wireless”) as a subsidiary for the purpose of entering the mobile WiMAX broad band solutions market. On November 6, 2006, the Company acquired 40 microwave towers in exchange for 25% of Telava Wireless.

On September 11, 2007, TelavaNV formed Telava Acquisitions, Inc. as a wholly owned subsidiary for the purpose of acquiring other related businesses.

On January 16, 2008, Telava Acquisitions, Inc. (“Telava”) a Delaware corporation and IBFA Acquisition Company, LLC (“IBFA”) a Michigan corporation and James Grabowski and Casimir Wojciechowski (the “Members”) entered into a Membership Interest Purchase Agreement (“MIPA”) whereby Telava agreed to purchase (the “Acquisition”) 100% of IBFA member interests from the Members for a purchase price of $2,250,000 subject to certain conditions such as a Management Agreement described below. An initial $1,750,000 was paid in fiscal year 2008 with $500,000 deferred and payable at the rate of $25,000 to $50,000 per month based on a specific calculation. During 2009, the Company paid $272,750 of deferred payments. The remaining $227,750 was subject to “True-up” provisions as of the effective date of the Acquisition on January 11, 2009 (See discussion below). Upon final settlement, The Company received concessions totaling $177,578 and made final payments totaling $95,172. Payment made related to the organization totaled $2,117,922. The cost of acquisition totaling $1,835,873 has been entirely allocated to Goodwill which represents the overall cost of acquisition in excess of the fair value of tangible assets and identifiable intangible assets.

UNILAVA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2014

Note 1 – Organization (Continued)

On November 12, 2008, TelavaNV formed Telava Mobile, Inc. (“TM”) as a 80% majority-owned subsidiary for the purpose of entering the mobile services businesses offering prepaid mobile calling cards and unlimited mobile services throughout the United States of America.

Note 2 – Going Concern

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplate continuation of the Company as a going concern. The Company has recently sustained operating losses and has an accumulated deficit of $8,353,587 at March 31, 2014. In addition, the Company has negative working capital of $9,157,715 at March 31, 2014.

The Company has and will continue to use significant capital to grow and acquire market share. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management is proposing to raise any necessary additional funds not provided by operations through loans or through sales of their common stock. There is no assurance that the Company will be successful in raising this additional capital or in achieving profitable operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

Note 3 - Summary of Significant Accounting Policies

Basis of Presentation

The unaudited consolidated financial statements include the accounts of Unilava Corporation and its subsidiaries, Telava Networks, Inc. (100% owned), Telava Acqusitions, Inc. (100% owned), Telava Wireless, Inc. (75% owned), Telava Mobile, Inc. (80% owned), Local Info Pages, Inc. (100% owned Korea-based entity) and IBFA Acqusitions LLC (100% owned) which are 100% consolidated in the financial statements as adjusted for various minority interests. All material intercompany accounts and transactions have been eliminated. All significant intercompany transactions and balances are eliminated on consolidation.

The accompanying unaudited consolidated financial statements as of March 31, 2014 and for the three month periods ended March 31, 2014 and 2013 have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission’s rules and regulations. In the opinion of management, these unaudited consolidated interim financial statements include all adjustments and disclosures considered necessary to a fair statement of the results for the interim periods presented. All adjustments are of a normal recurring nature. The results of operations for the three months ended March 31, 2014 are not necessarily indicative of the results for the full fiscal year ending December 31, 2014.

You should read this discussion in conjunction with the consolidated financial statements, accompanying notes and management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2013.

UNILAVA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2014

Note 3 - Summary of Significant Accounting Policies (Continued)

Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures , requires disclosing fair value to the extent practicable for financial instruments that are recognized or unrecognized in the balance sheet. Fair value of financial instruments is the amount at which the instruments could be exchanged in a current transaction between willing parties. The Company considers the carrying amounts of cash, restricted cash, accounts receivable, related party and other receivables, accounts payable, notes payable, related party and other payables, customer deposits, and short term loans approximate their fair values because of the short period of time between the origination of such instruments and their expected realization. The Company considers the carrying amount of long term bank loans to approximate their fair values based on the interest rates of the instruments and the current market rate of interest.

Level 1 The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.

Level 2 FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.

Level 3 If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.

Foreign Currency Adjustments

The financial position and results of operations of the Company’s foreign subsidiary, LIP, is measured using the foreign subsidiary’s local currency as the functional currency. Revenues and expenses of the subsidiary have been translated into U.S. dollars at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheet date. The resulting translation gain and loss adjustments are recorded as a separate component of stockholders’ equity, unless there is a sale or complete liquidation of the underlying foreign investments.

Cash and Cash Equivalents

This includes all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. The Company has a restricted cash balance of $28,159 and $28,151 on March 31, 2014 and December 31, 2013, respectively, which is comprised of Certificates of Deposit. The restricted cash is held in certificates of deposit at various banking institutions. The Company is expected to maintain the amounts in the certificates of deposit per agreements with certain vendors.

Accounts Receivable

Accounts receivable are reported at the customers' outstanding balances less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable. The Company evaluates receivables on a regular basis for potential reserve.

UNILAVA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2014

Note 3 - Summary of Significant Accounting Policies (Continued)

Fixed Assets

Fixed assets are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income.

The Company depreciates its fixed assets on a straight line basis at the following rates:

Microwave towers	25 years
Computer equipment	5 years
Furniture and equipment	7 years
Software	3 years
Leasehold improvements	5 years

Long-lived Assets

Accounting for the Impairment or Disposal of Long-Lived Assets requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may not be recovered. The Company assesses recoverability of the carrying value of an asset by estimating the fair value of the asset. If the fair value is less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value. The Company has never recognized an impairment charge.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets arising from an acquisition of a business are periodically assessed for impairment rather than amortized on a straight-line basis. Accordingly, the Company annually reviews the carrying value of this goodwill and other intangible assets to determine whether impairment, as measured by fair market value, may exist. Specifically, goodwill and other intangible asset impairment is determined using a two-step process. The first step of the goodwill and other intangible asset impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount. If the fair value of a reporting unit exceeds its carrying amount, then the goodwill and other intangible assets of the reporting unit are not considered to be impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The second step of the impairment test compares the implied fair value of the reporting unit's goodwill and other intangible assets with their carrying amount. If the carrying amount of the reporting unit's goodwill and other intangible assets exceeds their implied fair value, then an impairment loss is recognized in an amount equal to that excess.

Goodwill consisted of $767,873 as of March 31, 2014 and December 31, 2013, respectively, as a result of the IBFA purchase as disclosed in the Company’s December 31, 2010 Form 10-K.

Accounting for Share-Based Compensation

The Company records stock based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued,

UNILAVA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2014

Note 3 - Summary of Significant Accounting Policies (Continued)

Accounting for Share-Based Compensation (Continued)

whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.

Revenue Recognition

Telava NV and LIP : The Company’s revenue is generated by customer subscriptions of directory and advertising services. Revenue is billed and recognized monthly for services subscribed in that specific month. The Company utilizes outside billing companies to transmit billing data, much of which is forwarded to Local Exchange Carriers (“LEC’s”) that provide local telephone service.

LEC Billing : When a customer subscribes to the Company’s service, an electronic customer file is created which is the basis for the billing. The Company submits gross billings electronically to third party billing aggregators. These billing aggregators compile and format electronic customer files and forward the billing records to the appropriate LEC’s. The billing for our service flows through to monthly bills of the individual LEC customers. The LEC’s collect the Company’s billing and remit amounts to the billing aggregators, which in turn remit funds to the Company. The following are significant accounting estimates and assumptions used in the revenue recognition process with respect to these billings.

Customer refunds : The Company’s customer refund policy allows the customer to request a refund if they are not satisfied with the service within the first 30 days of the subscription. The Company accrues for refunds based on historical experience of refunds as a percentage of new billings in that 30-day period. Customer refunds historically have been insignificant and therefore there is no reserve against gross revenue.

Non-paying customers : There are customers who may not pay the fee for our services even though the Company believes they are valid subscribers. Included in cost of services is an accrual for estimated non-paying customers that are recorded at the time of billing.

Dilution : The Company recognizes revenue during the month for which the service is provided based on net billings accepted by the billing aggregators and recognizes revenue only for accepted records. However, subsequent to this acceptance, there are instances in the LEC billing process where a customer cannot be billed due to changes in telephone numbers, telephone carriers, data synchronization issues, etc. These amounts that ultimately cannot be billed, as well as certain minor billing adjustments by the LEC’s, are commonly referred to as “dilution.” Such unbillable accounts and chargebacks are estimated at the time of billing and charged against net revenues.

Fees : Both the billing aggregator and the LEC charge processing fees. Additionally, the LEC charges fees for responding to billing inquiries by its customers, processing refunds, and other customer-related services. Such fees are estimated at the time of billing and charged to cost of services.

Revenue for billings to certain customers are billed directly by the Company and not through the LEC’s, is recognized based on estimated future collections. The Company continuously reviews this estimate for reasonableness based on its collection experience.

Telava Wireless : Leasing revenue for towers are recognized on a monthly basis based on the terms and conditions of the lease agreements.

LIP : Printing revenue for coupon books are recognized as services are performed.

UNILAVA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2014

Note 3 - Summary of Significant Accounting Policies (Continued)

Revenue Recognition (Continued)

IBFA: Wireless services and wireline voice and data communication services. Revenue is recognized at the time of delivery of the products or services, and the collectibility is reasonably assured. The Group assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent.

Service revenue includes the value of all telecommunications services provided, net of free usage allocations and discounts. Revenue is recognized when earned, and are net of the share of other foreign and local carriers and content providers, if any, under existing correspondence and interconnection and settlement agreements.

Revenue is stated at amounts billed or invoiced and accrued to subscribers or other carriers and content providers, taking into consideration the bill cycle cut-off (for postpaid subscribers), and charges against preloaded airtime value (for prepaid subscribers), and excludes value-added tax (VAT) and overseas communication tax.

Advertising Costs

The Company incurs advertising costs that are not considered direct response advertising and are expensed when incurred. For the three months ended March 31, 2014 and 2013, the Company incurred approximately $17 and $22 in marketing and advertising expense.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on differences between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax provisions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods.

Also included is guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

UNILAVA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2014

Note 3 - Summary of Significant Accounting Policies (Continued)

Earnings Per Common Share

The Company reports both basic and diluted earnings per share. Basic earnings per share are calculated using the weighted average number of common shares outstanding in the period. Diluted earnings per share includes potentially dilutive securities such as outstanding options and warrants using the “treasury stock” method and convertible securities using the “if-converted” method. For the years ended December 31, 2013 and 2012, there were no potential common equivalent shares used in the calculation of dilutive weighted average common shares outstanding as the effect would be anti-dilutive because of the net loss.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Significant estimates made in connection with the accompanying financial statements include the estimate of dilution and fees associated with LEC billings and the estimated reserve for doubtful accounts receivable.

Other Comprehensive Income (Loss)

Comprehensive income/(loss) consists of net income and other gains and losses affecting stockholders’ equity that, under generally accepted accounting principles are excluded from net income. For the Company, such items consist solely of foreign currency translation gains and losses.

Recent Accounting Pronouncements

The Company has evaluated the recent accounting pronouncements through March 31, 2014 and believes that none of them will have a material effect on the Company’s financial statements.

Concentrations of Credit Risk

The Company has maintained balances in excess of federally insured limits from time to time during the fiscal year. Management periodically reviews the adequacy and strength of the financial institutions and deems this to be an acceptable risk.

For the three months ended March 31, 2014 and 2013, approximately 7.83% and 20.26% of the Company's net sales were made to customers outside the United States.

Reclassification

Certain reclassifications have been made to prior years’ financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or accumulated deficit.

Note 4 – Accounts Receivable

The Company provides billing information to a third party billing company for the majority of its monthly billings. Billings submitted are “filtered” by this billing company and the LEC’s. Net accepted billings are recognized as revenue and accounts receivable. The billing company remits payments to the Company on the basis of cash ultimately received from the LEC’s by

UNILAVA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2014

Note 4 – Accounts Receivable (Continued)

the billing company. The billing company and LEC’s charge fees for services, which are netted against the gross accounts receivable balance. The billing companies also apply holdbacks to the remittance for potentially uncollectible accounts. These dilution amounts will vary due to numerous factors and the Company may not be certain as to the actual amounts of dilution on any specific billing submittal until several months after that submittal. The Company estimates the amount of these charges and holdbacks based on historical experience and subsequent information received from the billing companies. The Company also estimates uncollectible account balances and provides an allowance for such estimates. As of December 31, 2013 and 2012, the amount reserved for uncollectible account balances is $726, respectively.

The billing companies retain certain holdbacks that may not be collected by the Company for a period extending beyond one year. The balances are charged to bad debt expense. However, when true-up balances occur with the LEC after six to eighteen months, the money received will be classified as revenue to offset current bad debt expenses.

The Company experiences significant dilution of its gross billings by the billing company. The Company negotiates collections with the billing companies on the basis of the contracted terms and historical experience. The Company’s cash flow may be affected by holdbacks, fees, and other matters, which are determined by the LEC’s and the billing company. The Company processes its billings through the primary billing company.

Note 5 – Fixed Assets

Property and equipment consisted of the following at March 31, 2014 and December 31, 2013:

	March 31, 2014			December 31, 2013
Microwave towers	$	1,949,019		$	1,949,019

Computer equipment		232,863			232,863

Furniture & equipment		114,104			114,227

Software		35,858			35,858

Tenant improvements		197,615			186,949
		2,529,459			2,518,916
Accumulated depreciation		(1,131,625	)		(1,100,084	)

Fixed assets, net	$	1,397,834		$	1,418,832

Depreciation expense for the three months ended March 31, 2014 and 2013 was $20,990 and $33,899, respectively.

UNILAVA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2014

Note 6 – Line of Credit and Notes Payable

As of March 31, 2014, the amount, maturity date and term of each of our loans were as follows:

Lender	Principal Amount		Interest Rate		Maturity Date
Thermo Credit LLC	$	1,651,632	17.00	%	January 17, 2011
AHAP		40,000	Various		Upon Demand
Brilliant Capital		916,421	8.00	%	Upon Demand
InfoCity, LLC and Others		1,067,911	8.00	%	Upon Demand
Dr. Dicken Yung (related party)		231,611	0.00	%	Upon Demand
Baldwin Yung (related party)		328,700	0.00	%	Upon Demand
Boaz Yung (related party)		1,125	0.00	%	Upon Demand
Cherie Yung (related party)		340,533	0.00	%	Upon Demand
	$	4,577,933

As of December 31, 2013, the amount, maturity date and term of each of our loans were as follows:

Lender	Principal Amount		Interest Rate		Maturity Date
Thermo Credit LLC	$	1,651,632	17.00	%	January 17, 2011
AHAP		40,000	Various		Upon Demand
Brilliant Capital		916,421	8.00	%	Upon Demand
InfoCity, LLC and Others		1,142,911	8.00	%	Upon Demand
Dr. Dicken Yung (related party)		256,431	0.00	%	Upon Demand
Baldwin Yung (related party)		337,700	0.00	%	Upon Demand
Boaz Yung (related party)		1,125	0.00	%	Upon Demand
Cherie Yung (related party)		353,970	0.00	%	Upon Demand
	$	4,700,190

We have a $2,000,000 revolving line of credit with the Thermo Credit LLC, pursuant to a credit agreement, dated July 17, 2010, between the Company and the bank. This revolving line of credit is guaranteed/secured by the all of the assets of the Company including cash, accounts receivable and fixed assets (See Note 4 Accounts Receivable and Note 5 Fixed Assets). The credit agreement had certain debt covenants that the Company did not comply with during the quarters ended September 30, 2013 and 2012. The first covenant was that the Company must maintain a ratio of cash flow to scheduled principal payments plus all accrued interest payments on funded debt of not less than 1 to 1 as of the end of each fiscal quarter. The second covenant was that the Company must maintain a tangible net worth of not less than $0 as of the last day of each fiscal quarter. The credit agreement terminated on January 17, 2011, the line is in default and as such cash proceeds from the Company’s receivables and sale of assets have been directed to serve as collateral. (See Note 12, Subsequent Events).

Note 7 – Stockholders’ Equity (Deficit)

Preferred Stock

The Company has authorized 5,000,000 shares of no par value preferred stock available for issuance. No shares of preferred stock are outstanding as of March 31, 2014 and December 31, 2013. Commensurate with the merger, the Company converted the former IWI Holdings outstanding Preferred Stock of 3,664,880 shares into 45,000,000 shares of common stock.

UNILAVA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2014

Note 7 – Stockholders’ Equity (Deficit) (Continued)

Common Stock

The authorized common stock is 120,000,000 shares at no par value. As of March 31, 2014 and December 31, 2013, the Company had 100,052,888 and 100,052,888 shares of common stock issued but not outstanding, respectively. The Company had 100,051,107 and 100,051,107 shares of common stock issued and outstanding, as of March 31, 2014 and December 31, 2013, respectively. As of March 31, 2014 and December 31, 2013, the Company had 1,781 and 1,781 shares of treasury stock.

Note 8 – Segment Reporting

Our segments are various subsidiaries that offer different products and services over various technology platforms and are managed accordingly. We analyze our various operating segments based on segment income before income taxes. The customers and assets of our reportable segments are predominantly in the United States. We have four reportable segments: (1) Advertising Solutions, (2) Wireless, (3) Wireline, and (4) Other.

The Advertising Solutions segment includes the operations of Telava Networks, Inc. (100% owned) and Local Info Pages, Inc. (100% owned Korea-based entity).

The Wireless segment includes the operations of Telava Wireless, Inc. (75% owned) and Telava Mobile, Inc. (80% owned).

The Wireline segment includes the operations of IBFA Acquisitions (100% owned).

The Other segment includes results from all corporate operations.

In the following tables, we show how our segment results are reconciled to our consolidated results reported in accordance with GAAP. The Advertising Solutions, Wireless and Wireline and Other columns represent the segment results of each such operating segment. The consolidation and elimination column adds in those line items that we manage on a consolidated basis only. This column also eliminates any intercompany transactions included in each segment’s results. In the Segment assets line item, we have eliminated the value of our investments in our fully consolidated subsidiaries and the intercompany financing assets as these have no impact to the segments’ operations.

For the three months ended March 31, 2014

	Advertising Solutions			Wireless			Wireline		Other			Elimination			Consolidated
Revenue from external customers	$	12,653		$	199,265		$	332,139	$	-		$	-		$	544,057
Cost of revenue		-			172,787			194,936		-			-			367,723
Gross profit		12,653			26,478			137,203		-			-			176,334

Operations and support expenses		204,768			12,032			134,239		1,635			-			352,674
Depreciation and amortization		1,296			19,323			371		-			-			20,990

Total segment operating expenses		206,065			31,355			134,610		1,635			-			373,665

Segment operating income		(193,412	)		(4,877	)		2,593		(1.635	)		-			(197,331	)

Total other income (expense)		(23,589	)		(16,294	)		9		-			-			(39,874	)

Net loss allocable to minority interest		-			7,552			-		-			-			7,552

Segment income before income taxes	$	(217,001	)	$	(13,619	)	$	2,602	$	(1,635	)	$	-		$	(229,653	)

Segment assets	$	1,580,185		$	1,447,517		$	367,338	$	682,000		$	(1,547,322	)	$	2,529,718

UNILAVA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2014

Note 7 – Stockholders’ Equity (Deficit) (Continued)

For the three months ended March 31, 2013:

	Advertising Solutions			Wireless			Wireline		Other			Elimination			Consolidated
Revenue from external customers	$	172,299		$	160,555		$	431,042	$	-		$	-		$	763,896
Cost of revenue		4,372			175,391			232,886		-			-			412,650
Gross profit		167,927			(14,837	)		198,155		-			-			351,246

Operations and support expenses		500,452			23,136			163,595		3,028			-			690,211
Depreciation and amortization		14,205			19,323			371		-			-			33,899

Total segment operating expenses		514,657			42,458			163,967		3,028			-			724,110

Segment operating income		(346,730	)		(57,295	)		34,189		(3,028	)		-			(372,864	)

Total other income (expense)		(48,118	)		(16,159	)		17		-			-			(64,261	)

Net loss allocable to minority interest		-			17,871			-		-			-			17,871

Segment income before income taxes	$	(394,848	)	$	(55,582	)	$	34,206	$	(3,028	)	$	-		$	(419,253	)

Segment assets	$	2,066,110		$	1,536,567		$	347,992	$	682,000		$	(1,998,655	)	$	2,634,015

Note 9 –Commitments

A portion of our facilities are under operating leases that expire at various dates through 2014. Rent expense was $30,408 and $157,140 for the three months ended March 31, 2014 and 2013, respectively.

Minimum rental commitments under all non-cancelable leases with an initial term in excess of one year were as follows as of March 31, 2014:

Year Payable	Amount
2014		$	216,635
2015			27,910
2016 and Thereafter			7,910
Total		$	252,455

Note 10 – Litigation

As of March 31, 2014, we had no material pending legal proceedings, except for the following.

Vermont Attorney General Investigation Against Local Area Yellow Pages (“LAYP”)

The Vermont Attorney General has an active investigation into the business practices of LAYP focusing on whether certain notices and a three day right to cancel were provided to customers. The Vermont Attorney General has proposed to settle if, LAYP will agree to issue a full refund to all Vermont customers whose telephone bills were charged and a payment of $10,000 in civil penalties and injunctive relief. The amount for the full refund to all Vermont customers is estimated approximately $65,000. The suit was filed in the Superior Court of Vermont.

Illinois Agricultural Association v. IBFA Acquisition Co. LLC (“IBFA”) and Telava Acquisitions, LLC

The Illinois Agricultural Association (IAA) claims that IBFA and Telava Acquisitions, LLC has past due referral fees in the amount of approximately $95,000. We have denied the allegations and are defending our position in arbitration. The matter is in the discovery stage and a hearing has been set for June 2011. The suit was filed with the American Arbitration Association – Commercial Dispute Unit of Illinois. On September 8, 2011, the AAA granted the award to IAA in the amount of $118,971 in full settlement of the case.

UNILAVA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2014

Note 10 – Litigation (Continued)

Chen v. Unilava Corporation, et al.

In June 2010, Chris Chen, former Executive Vice President of Sales, filed a lawsuit against Unilava Corporation and Local Area Yellow Pages, Inc. (“LAYP”) Mr. Chen seeks $49,613 in unpaid wages, $12,000 in statutory waiting time penalties and 4,300,000 shares of common stock or the fair market value of the common stock and attorneys’ fees. In July 2010, Unilava and LAYP filed a cross-complaint seeking compensatory damages of no less than $3,000,000, punitive damages and attorneys’ fees. The Court has ordered the parties to participate in mediation and they are in the process of selecting a mediator. In September, both parties entered into an agreement to settle the case with prejudice. Unilava Corporation and LAYP had to pay damages of approximately $50,000. The company recorded an unpaid balance of $11,111 as of December 31, 2012.

Note 11 – Related Party Transactions

McLane v. Unilava Corporation, et al.

In February 2011, Caron McLane, former employee, filed a lawsuit against Unilava Corporation and Local Area Yellow Pages, Inc. (“LAYP”) and claims that she was wrongly terminated by the company. Ms. McLane seeks for damages for the wrongly termination claims. The company intends to vigorously defend the case and does not intend to settle the case with Ms. McLane.

As of March 31, 2014, Dicken Yung, Chairman, had a loan balance of $231,611 and $31,859 as outstanding accounts payable which is still owed by the Company. The amounts are due on demand and bear no interest. During the three months ended March 31, 2014, the Company repaid $24,820. As of March 31, 2014 and 2013, the balance owed was $231,611 and $267,763, respectively.

As of March 31, 2014, Baldwin Yung, CEO, had a loan balance of $328,700 and $58,949 as outstanding accounts payable which is still owed by the Company. The amounts are due on demand and bear no interest. During the three months ended March 31, 2014, the Company repaid $9,000. As of March 31, 2014 and 2013, the balance owed was $328,700 and $382,000, respectively.

As of March 31, 2014, Boaz Yung, EVP, had a loan balance of $1,125 and $12,593 as outstanding accounts payable which is still owed by the Company. The amounts are due on demand and bear no interest. As of March 31, 2014 and 2013, the balance owed was $1,125 and $1,125.

As of March 31, 2014, Cherie Yung, Director, had a loan balance of $321,755 and $130,083, as outstanding accounts payable which is still owed by the Company. During the three months ended March 31, 2014, the Company repaid $13,337. As of March 31, 2014 and 2013, the balance owed was $321,755 and $280,300, respectively.

There were no other related party transactions in 2014.

Note 12 – Subsequent Events

The Company has an outstanding line of credit facility with Thermo Credit LLC (“Thermo Credit”) which is currently in default.

The Company signed a Memorandum of Understanding on December 7, 2009 to acquire an 80% interest in China Dragon Telecom Limited ("China Dragon Telecom") and its affiliates based in Hong Kong, China. The negotiations and execution of definitive agreements, regulatory approval and the performance of other customary conditions is expected to be completed in end-2012 due to additional audit procedures that are needed to issue the audited financials of China Dragon Telecom. As of March 31, 2014, China Dragon Telecom was still being audited by an accounting firm.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Special Note Regarding Forward Looking Statements

Statements contained herein include “forward-looking statements” within the meaning of such term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described in the section captioned “Risk Factors” below. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements include, among other things, statements relating to:

	·	our anticipated growth strategies and our ability to manage the expansion of our business operations effectively;
	·	our dependence on the growth of our target market in the areas in which we do business; and
	·	our ability to maintain or increase our market share in the competitive markets in which we do business.

Also, forward-looking statements represent our estimates and assumptions only as of the date hereof. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

Use of Terms

Except as otherwise indicated by the context, references herein to “Unilava,” “we,” “us,” “our,” “our Company,” or “the Company” are to the combined business of Unilava Corporation, a Wyoming corporation, and its consolidated subsidiaries, Telava Networks, Inc. (100% owned), Telava Acqusitions, Inc. (100% owned), Telava Wireless, Inc. (75% owned), Telava Mobile, Inc. (80% owned), Local Info Pages, Inc. (100% owned Korea-based entity) and IBFA Acqusitions LLC (100% owned) which are 100% consolidated in the financial statements as adjusted for various minority interests. In addition, unless the context otherwise requires:

	·	“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
	·	“IBFA” refers to IBFA Acquisitions LLC, a Michigan limited liability company and wholly owned subsidiary of the Company;
	·	“LIP” refers to Local Info Pages, Inc., a Korean corporation and wholly owned subsidiary of Telava Networks;
	·	“SEC” refers to the Securities and Exchange Commission;
	·	“Securities Act” refers to the Securities Act of 1933, as amended;
	·	“Telava Acquisitions” refers to Telava Acquisitions, Inc., a Delaware corporation and wholly owned subsidiary of the Company;
	·	“Telava Networks” refers to Telava Networks, Inc., a Nevada corporation and wholly owned subsidiary of the Company;
	·	“Telava Mobile” refers to Telava Mobile, Inc., a Delaware corporation and 80% owned subsidiary of the Company;
	·	“Telava Wireless” refers to Telava Wireless, Inc., a Wyoming corporation and 75% owned subsidiary of Telava Networks; and
	·	“U.S. dollars,” “dollars” and “$” refer to the legal currency of the United States.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

Overview of Our Business

Unilava Corporation, a Wyoming corporation, was formerly known as IWI Holding Limited (“IWI”), and was engaged in the international jewelry business through a US subsidiary. IWI went public via an initial public offering in 1994, and disposed of the subsidiary on December 31, 2007. On September 21, 2009, IWI entered into an Agreement pursuant to which IWI acquired all of the outstanding shares of Telava Networks, Inc., a Nevada corporation (“Telava Networks”), in exchange for 55 million shares of stock. In addition, certain preferred stock of IWI which had been issued in 1994 for 3,644,880 was converted into 45 million shares of common stock. In connection with the closing of the acquisition, the Telava management was appointed as the members of IWI management, the name of IWI was changed to Unilava Corporation (“Unilava” or the “Company”) and the corporation was reincorporated from the British Virgin Islands to Wyoming via Articles of Continuation.

Unilava, with its operations primarily conducted by its subsidiaries, provides a variety of communications services, products, and equipment that address the needs of small and medium sized enterprise businesses and consumers under the Unilava corporate brand which includes our retail brands consisting of TelavaTM, CountryconnectTM, TelavaTM Mobile, Local Area Yellow Pages, Ttoore, Counia, and Nationwide Roadside Assistance. We are licensed to provide long distance services in 41 States and local phone services in 11 States. Through our carrier-grade microwave wireless broadband infrastructure and broadband Internet access partners, we offer mobile and high-definition IP-hosted voice services to residential, small and medium enterprises. We deliver small business a comprehensive and integrated suite of fee-based online and mobile advertising and web services. Headquartered in San Francisco, we have regional offices in Chicago, Seoul, Hong Kong, and Beijing.

Our goal is to become a leading provider of communications services in the United States and the world. We offer our services and products to consumers, businesses, and other providers in the U.S. and worldwide. The services and products that we offer vary by market, and include: wireless communications, local exchange services, long-distance services, data/broadband and Internet services, video services telecommunications equipment, wholesale services and directory advertising and publishing. We group our operating subsidiaries as follows, corresponding to our operating segments for financial reporting purposes:

	·	Wireless subsidiaries provide both wireless voice and data communications services across the U.S. and, through agreements, in a substantial number of foreign countries;
	·	Wireline subsidiaries provide primarily landline voice and data communication services, high-speed broadband and voice services;
	·	Advertising solutions subsidiaries publish Local Area Yellow Pages directories and sell directory advertising and Internet-based advertising and local search; and

The following summarizes certain key financial information for the fiscal quarter ended March 31, 2014.

Total Sales: Total Sales were $544,057 for the three months ended March 31, 2014, a decrease of $219,839, or 29%, from $763,896 for the same period last year.

Gross Profit and Margin: Gross profit was $176,334 for the three months ended March 31, 2014, a decrease of $174,912, or 32%, from $351,246 for the same period last year. Gross margin was 32% for the three months ended March 31, 2014, as compared to 46% for the same period last year.

Net Loss: Net loss was $229,651 for the three months ended March 31, 2014, a decrease of $200,700, or approximately 42%, from $428,281 for the same period of last year.

Basic net income per share: Basic net loss per share was approximately $0.00 for the three months ended March 31, 2014, as compared to approximately $0.00 for the same period last year.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

Results of Operations

Comparison of Three Months Ended March 31, 2014 and 2013

The following table shows key components of our results of operations during the three months ended March 31, 2014 and 2013, in both dollars and as a percentage of our total sales.

U.S. dollars, except percentages	Three Months Ended March 31, 2014						Three Months Ended March 31, 2013
				Percent of						Percent of
	Dollars			Total Sales			Dollars			Total Sales
Total sales	$	544,057			100	%	$	763,896			100	%
Cost of sales		367,723			68	%		412,650			54	%
Gross profit		176,334			32	%		351,246			46	%

Salaries and payroll		176,639			32	%		270,533			35	%
Depreciation and amortization		20,990			4	%		33,899			4	%
Selling, general and administrative expenses		176,035			32	%		419,678			55	%
Income (loss) from operations		(197,330	)		(36)	%		(372,864	)		(49)	%

Other income (expense)		(39,889	)		(7)	%		(73,288	)		(10)	%
Loss before non-controlling interest		(237,203	)		(44)	%		(446,152	)		(58)	%
Net loss allocable to non-controlling interest		7,552			1	%		17,871	)		2	%
Net loss	$	(229,651	)		(42)	%	$	(428,281	)		(56)	%

Total Sales . Our total sales decreased 29% to $544,057 in the three months ended March 31, 2014 from $763,896 in the same period last year, primarily as a result of a decrease in sales in our online advertising business and attrition of customer base of a subsidiary.

Cost of sales . Our cost of sales decreased 11% to $367,723 in the three months ended March 31, 2014, from $412,650 in the same period last year, mainly due to a proportional decrease in our sales associated with our marketing campaign and training costs for our underperforming marketing centers during the 2013 period.

Gross profit and gross profit margin . Our gross profit decreased 50% to $176,334 in the three months ended March 31, 2014, from $176,334 in the same period last year. The gross profit margin (gross profit as a percentage of total sales) was 32% for the three months ended March 31, 2014 and 46% for the three months ended March 31, 2013. The decrease in the gross profit margin was primarily due to a decrease in overall sales.

Salaries and payroll. Our salaries and payroll expenses decreased 35% to $176,639 in the three months ended March 31, 2014 from $270,533 in the same period last year, mainly due to a continued reduction in personnel and related payroll expenses during the 2014 period.

Selling, general and administrative expenses. Our selling, general and administrative expenses decreased 58% to $176,035 in the three months ended March 31, 2014, from $419,678 in the same period last year, mainly due to an active management of our administrative costs to eliminate unnecessary expenses in connection with our operations.

Other income and expenses. Interest expense decreased 46% to $39,889 in the three months ended March 31, 2014, from $419,678 in the same period in 2013, primarily due to an decrease in loan interest associated with the Thermo Credit LLC loan.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

Comparison of Three Months Ended March 31, 2014 and 2013 - continued

Income taxes. Income taxes remained flat at zero dollars in the three months ended March 31, 2014 from the same period in 2013, mainly due to recurring losses.

Net loss. As a result of the foregoing reasons, net loss decreased 46% to $226,951 in the three months ended March 31, 2014, from $428,281 in the same period last year.

Segment Data

Net (loss) for the advertising solutions segment decreased 45% to $(217,001) in the three months ended March 31, 2014, from $(394,848) in the same period last year, mainly due to an increase in our operations support areas, less efforts in direct marketing and higher attrition ratio.

Total assets for the advertising solutions segment decreased 24% to $1,580,185 as of March 31, 2014 from $2,066,110 as of March 31, 2013, mainly due to decrease in receivables from intercompany accounts.

Net (loss) for the wireless segment decreased 75% to $(13,619) in the three months ended March 31, 2013, from net loss of $(55,582) in the same period last year, mainly due to increases in costs associated with the increased sales.

Total assets for the wireless segment decreased 6% to $1,447,517 as of March 31, 2014, from $1,536,567 as of March 31, 2013, mainly due to amortization on tower assets.

Net income for the wireline segment decreased 92% to $2,602 in the three months ended March 31, 2014, from $34,206 in the same period last year, mainly due to a decrease in marketing of wireless marketing and operating costs.

Total assets for the wireline segment increased 6% to $367,338 as of March 31, 2014, from $347,992 as of March 31, 2013, mainly due to capital assets purchased for the Companies new offices and leasehold improvements.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

Liquidity and Capital Resources

As of March 31, 2014, we had cash and cash equivalents of approximately $28,159. The following table provides a summary of our net cash flows from operating, investing, and financing activities. To date, we have financed our operations primarily through net cash flow from operations, augmented by short-term bank and personal borrowings and equity contributions by our shareholders.

U.S. Dollars	Three Months Ended March 31,
	2014			2013
Net cash provided by (used in) operating activities	$	71,684		$	(92,675	)
Net cash provided by (used in) investing activities		(8	)		(5,220	)
Net cash provided by (used in) financing activities		(71,647	)		99,995
Net increase in cash and cash equivalents	$	--		$	--

Operating Activities

Net cash provided by/ (used in) operating activities was $71,684 in the three months ended March 31, 2014, compared with $(92,675) used in operating activities in the same period last year. Net loss after adjustment for noncash items was $215,955 in the three months ended March 31, 2014. This decrease was primarily due to increased operating and legal costs of underperforming subsidiaries.

Investing Activities

Net cash used in investing activities in the three months ended March 31, 2014 was $8, compared with $5,220 used in investing activities in the same period last year. The decrease was mainly due to purchases of equipment in the previous years period.

Financing Activities

Net cash provided by/ (used in) financing activities in the three months ended March 31, 2014 was $(71,647), compared with $99,995 of net cash provided by financing activities in the same period in 2013. The decrease in net cash provided by financing activities was mainly due to cash proceeds from unrelated third-party loans and proceeds from related party loans offset by a repayment of the related party loans.

Capital Expenditures

Our capital expenditures for the three months ended March 31, 2014 and 2013 were none and $5,212, respectively. As of March 31, 2014, we had cash and cash equivalents of $28,159, primarily consisting of demand deposits.

To date, we have financed our operations primarily through cash flows from operations, augmented by short-term bank and personal loans and unrelated third-party loans. We believe that our cash on hand and cash flow from operations will meet a portion of our present cash needs and we will require additional cash resources, including loans, to meet our expected capital expenditures and working capital requirements for the next 12 months. We may, however, in the future, require additional cash resources due to changed business conditions, implementation of our strategy to expand our marketing efforts and increase brand awareness, or acquisitions we may decide to pursue. If our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

Loan Commitments

As of March 31, 2014, the amount, maturity date and term of each of our loans were as follows:

Lender	Principal Amount		Interest Rate			Maturity Date
Thermo Credit LLC	$	1,651,632		17.00	%	January 17, 2011
AHAP		40,000	Various			Upon Demand
Brilliant Capital		916,421		8.00	%	Upon Demand
InfoCity, LLC and Others		1,067,911		8.00	%	Upon Demand
Dr. Dicken Yung (related party)		231,611		0.00	%	Upon Demand
Baldwin Yung (related party)		328,700		0.00	%	Upon Demand
Boaz Yung (related party)		1,125		0.00	%	Upon Demand
Cherie Yung (related party)		340,533		0.00	%	Upon Demand
	$	4,577,933

We have a $2,000,000 revolving line of credit with the Thermo Credit LLC, pursuant to a credit agreement, dated July 17, 2010, between the Company and the bank. This revolving line of credit is guaranteed/secured by the all of the assets of the Company including cash, accounts receivable and fixed assets. The credit agreement had certain debt covenants that the Company did not comply with during the year ended December 31, 2012 and the quarter ended June 30, 2013. The first covenant was that the Company must maintain a ratio of cash flow to scheduled principal payments plus all accrued interest payments on funded debt of not less than 1-to-1 as of the end of each fiscal quarter. The second covenant was that the Company must maintain a tangible net worth of not less than $0 as of the last day of each fiscal quarter. The credit agreement terminated on January 17, 2011 and the Company is renegotiating the terms with the lender. Although the line of credit is currently in default status, the Company believes that a plan or an amendment of the facility can be negotiated.

Inflation

Inflation and changing prices have not had a material effect on our business, and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor price changes in the economies and industries in which we operate and continually maintain effective cost controls in operations.

Off Balance Sheet Arrangements

We do not have 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, sales or expenses, results of operations, liquidity or capital expenditures, or capital resources that are material to an investment in our securities.

Seasonality

Our operating results and operating cash flows historically have not been subject to dramatic seasonal variations, although there is an increase in advertising and selling expenses when we begin sales of new products or services. New market opportunities or new product and new service introductions could change any perceived patterns, seasonal or operational.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates, and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements.

Basis of Consolidation and Presentation. The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). In the opinion of management, the accompanying balance sheets, and statements of operations, and cash flows and include all adjustments, consisting only of normal recurring items, considered necessary to give a fair presentation of operating results for the periods presented. All material intercompany transactions and balances have been eliminated in consolidation.

Business Combinations. The Company adopted the accounting pronouncements relating to business combinations (primarily contained in ASC Topic 805 "Business Combinations"), including assets acquired and liabilities assumed arising from contingencies. These pronouncements established principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree as well as provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. In addition, these pronouncements eliminate the distinction between contractual and non-contractual contingencies, including the initial recognition and measurement criteria and require an acquirer to develop a systematic and rational basis for subsequently measuring and accounting for acquired contingencies depending on their nature. Our adoption of these pronouncements will have an impact on the manner in which we account for any future acquisitions.

Use of estimates. The preparation of consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

Allowance for doubtful accounts. The Company reduces gross trade accounts receivable by an allowance for doubtful accounts. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in the Company's existing accounts receivable. The Company reviews its allowance for doubtful accounts on a regular basis and all past due balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Impairment of long-lived assets. The Company reviews the carrying amount of its long-lived assets, including intangibles, for impairment, each reporting period. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is considered not recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flow. For periods ended September 30, 2013 and December 31, 2012, the Company determined no impairment charges were necessary.

Property, plant and equipment, net. Property and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets. Any gain or loss arising on the sale or disposal of the asset is included in the income statement in the period the item is sold or otherwise disposed. Maintenance and repairs of property and equipment are charged to operations when incurred.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

Recent Accounting Pronouncements

The Company has evaluated the recent accounting pronouncements through March 2014 and believes that none of them will have a material effect on the Company’s financial statements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We have a $2,000,000 revolving line of credit with the Thermo Credit LLC, pursuant to a credit agreement, dated July 17, 2010, between the Company and the bank. This revolving line of credit is guaranteed/secured by the all of the assets of the Company including cash, accounts receivable and fixed assets. The credit agreement had certain debt covenants that the Company did not comply with during the quarters ended March 31, 2014 and 2013. The first covenant was that the Company must maintain a ratio of cash flow to scheduled principal payments plus all accrued interest payments on funded debt of not less than 1 to 1 as of the end of each fiscal quarter. The second covenant was that the Company must maintain a tangible net worth of not less than $0 as of the last day of each fiscal quarter. The credit agreement terminated on January 17, 2011, the line is in default and as such cash proceeds from the Company’s receivables and sale of assets have been directed to serve as collateral.

ITEM 4.

CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(e), our management has carried out an evaluation, with the participation and under the supervision of our Chief Executive Officer and Chief Financial Officer, Mr. Baldwin Yung, of the effectiveness of the design and operation of our disclosure controls and procedures, as of March 31, 2014. Based upon, and as of the date of this evaluation, Mr. Yung, determined that, for the reasons disclosed below, as of March 31, 2014, and as of the date of this Report, our disclosure controls and procedures were not effective.

ITEM 4.

CONTROLS AND PROCEDURES - continued

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as based on framework established in Internal Control Integrated Framework issued by the committee of Sponsoring Organizations of the Treadway Commission (COSO) as of March 31, 2014. During our management’s review of our internal control over financial reporting as of March 31, 2014, our management identified the following material weaknesses in the company’s internal control over financial reporting:

Management’s ability to override procedures

Insufficient quarterly and annual financial closing procedures

Insufficient cutoff for recording revenue

Insufficient cutoff for recording payables

It is Management’s opinion that the above weaknesses exist due to the small size of operating staff and the current phase of operations. In an effort to remediate the identified material weakness and enhance our internal controls, we have initiated, or plan to initiate, the following measures:

We plan to increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us.

We will create a senior position to focus on financial reporting and standardizing and documenting our accounting procedures with the goal of increasing the effectiveness of the internal controls in preventing and detecting misstatements of accounting information.

We anticipate the costs of implementing these remediation initiatives will be approximately $50,000 to $100,000 a year in increased salaries and $50,000 to $100,000 a year in increased legal and accounting expenses. We anticipate that these initiatives will be at least partially, if not fully, implemented before the end of 2014. We also plan to test our updated controls and remediate our deficiencies by December 31, 2014.

Changes in Internal Control Over Financial Reporting

During the quarter ended March 31, 2014, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm our business. Below are legal proceedings or claims that we believe will not have a material adverse affect on our business, financial condition or operating results;

Vermont Attorney General Investigation Against Local Area Yellow Pages (“LAYP”)

The Vermont Attorney General has an active investigation into the business practices of LAYP focusing on whether certain notices and a three day right to cancel were provided to customers. The Vermont Attorney General has proposed to settle if, LAYP will agree to issue a full refund to all Vermont customers whose telephone bills were charged and a payment of $10,000 in civil penalties and injunctive relief. The amount for the full refund to all Vermont customers is estimated at approximately $65,000. The suit was filed in the Superior Court of Vermont.

Illinois Agricultural Association v. IBFA Acquisition Co. LLC (“IBFA”) and Telava Acquisitions, LLC

The Illinois Agricultural Association (IAA) claimed that IBFA and Telava Acquisitions, LLC had past due referral fees in the amount of approximately $95,000. We denied the allegations and defended our position in arbitration. The matter was in the discovery stage and a hearing was set for June 2011. The suit was filed with the American Arbitration Association – Commercial Dispute Unit of Illinois. On September 8, 2011, the AAA granted the award to IAA in the amount of $118,971.11 in full settlement of the case.

Chen v. Unilava Corporation, et al.

In June 2010, Chris Chen, former Executive Vice President of Sales, filed a lawsuit against Unilava Corporation and Local Area Yellow Pages, Inc. (“LAYP”) Mr. Chen seeks $49,613 in unpaid wages, $12,000 in statutory waiting time penalties and 4,300,000 shares of common stock or the fair market value of the common stock and attorneys’ fees. In July 2010, Unilava and LAYP filed a cross-complaint seeking compensatory damages of no less than $3,000,000, punitive damages and attorneys’ fees. The Court has ordered the parties to participate in mediation. In September 2011, both parties entered into an agreement to settle the case for $50,000 with prejudice.

McLane v. Unilava Corporation, et al.

ITEM 1.

RISK FACTORS.

Investors are directed to the “Risk Factors” section of our Annual Report on Form 10-K with the SEC on April 16, 2013. There have been no material changes to the risk factors disclosed therein.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5.

OTHER INFORMATION.

We have no information to disclose that was required to be in a report on Form 8-K during the period covered by this report, but was not reported. There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors.

ITEM 6.

EXHIBITS.

The following exhibits are filed as part of this report or incorporated by reference:

Exhibit No.	Description
31.1	Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certifications of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certifications of Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	XBRL Instance Document

101.SCH	XBRL Taxonomy Extension Schema

101.CAL	XBRL Taxonomy Extension Calculation Linkbase

101.DEF	XBRL Taxonomy Extension Definition Linkbase

101.LAB	XBRL Taxonomy Extension Label Linkbase

101.PRE	XBRL Extension Presentation Linkbase

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 15, 2014	UNILAVA CORPORATION


	By:	/s/ Baldwin Yung
		Baldwin Yung, Chief Executive Officer and Chief Financial Officer (Principal Executive, Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit No.	Description
31.1	Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certifications of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certifications of Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	XBRL Instance Document

101.SCH	XBRL Taxonomy Extension Schema

101.CAL	XBRL Taxonomy Extension Calculation Linkbase

101.DEF	XBRL Taxonomy Extension Definition Linkbase

101.LAB	XBRL Taxonomy Extension Label Linkbase

101.PRE	XBRL Extension Presentation Linkbase

1.	I have reviewed this quarterly report on Form 10-Q of Unilava Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this 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 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 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 the registrant’s board of directors (or persons performing the equivalent functions):

	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.

1.	I have reviewed this quarterly report on Form 10-Q of Unilava Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this 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 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 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 the registrant’s board of directors (or persons performing the equivalent functions):

	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

3. Summary of Significant Accounting Policies (Details)	3 Months Ended
3. Summary of Significant Accounting Policies (Details)	Mar. 31, 2014
MicrowaveTowers [Member]
Depreciation Period	25 years
ComputerEquipment [Member]
Depreciation Period	5 years
FurnitureAndEquipmentMember
Depreciation Period	7 years
Software [Member]
Depreciation Period	3 years
LeaseholdImprovements [Member]
Depreciation Period	5 years

5. Fixed Assets (Details Narrative) (USD $)	3 Months Ended
5. Fixed Assets (Details Narrative) (USD $)	Mar. 31, 2014	Mar. 31, 2013
Fixed Assets Details Narrative
Depreciation expense	$ 20,990	$ 33,899

5. Fixed Assets (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Fixed assets, Gross	$ 2,529,459	$ 2,518,916
Accumulated depreciation	(1,131,625)	(1,100,084)
Fixed assets, net	1,397,833	1,418,832
MicrowaveTowers [Member]
Fixed assets, Gross	1,949,019	1,949,019
ComputerEquipment [Member]
Fixed assets, Gross	232,863	232,863
Furniture and equipment
Fixed assets, Gross	114,104	114,227
Software [Member]
Fixed assets, Gross	35,858	35,858
TenantImprovements [Member]
Fixed assets, Gross	$ 197,615	$ 186,949

9. Commitments (Details) (USD $)	Mar. 31, 2014
Commitments Details
2014	$ 216,635
2015	27,910
2016 and Thereafter	7,910
Total	$ 252,455

6. Line of Credit and Notes Payable (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Principal Amount	$ 4,577,933	$ 353,970
Interest Rate		0.00%
Maturity Date		Upon Demand
ThermoCreditLlc [Member]
Principal Amount	1,651,632	1,651,632
Interest Rate	17.00%	17.00%
Maturity Date	January 17, 2011	January 17, 2011
Ahap [Member]
Principal Amount	40,000	40,000
Maturity Date	Upon Demand	Upon Demand
Interest Rate	Various	Various
BrilliantCapital [Member]
Principal Amount	916,421	916,421
Interest Rate	8.00%	8.00%
Maturity Date	Upon Demand	Upon Demand
InfoCityLlcAndOthers [Member]
Principal Amount	1,067,911	1,142,911
Interest Rate	8.00%	8.00%
Maturity Date	Upon Demand	Upon Demand
DickenYung [Member]
Principal Amount	231,611
Interest Rate	0.00%
Maturity Date	Upon Demand
BaldwinYung [Member]
Principal Amount	328,700	256,431
Interest Rate	0.00%	0.00%
Maturity Date	Upon Demand	Upon Demand
BoazYung [Member]
Principal Amount	1,125	337,700
Interest Rate	0.00%	0.00%
Maturity Date	Upon Demand	Upon Demand
CherieYung Member]
Principal Amount	$ 340,533	$ 1,125
Interest Rate	0.00%	0.00%
Maturity Date	Upon Demand	Upon Demand

7. Stockholders Equity (Deficit) (Details Narrative)	Mar. 31, 2014	Dec. 31, 2013
Stockholders Equity Deficit Details Narrative
Preferred stock Outstanding	0	0
Common stock issued	100,052,888	100,052,888
Common Stock Outstanding	100,051,107	100,051,107
Treasury Stock	1,781	1,781

8. Segment Reporting (Details) (USD $)	3 Months Ended
8. Segment Reporting (Details) (USD $)	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Revenue from external customers	$ 544,057	$ 763,896
Cost of revenue	367,723	412,650
Gross profit	176,334	351,246
Depreciation and amortization	20,990	32,617
Total segment operating expenses	373,664	724,110
Segment operating income	(197,330)	(372,864)
Total other income (expense)	(39,873)	(73,288)
Net loss allocable to minority interest	(7,552)	(17,871)
Segment income before income taxes	(229,651)	(428,281)
Segment assets	2,529,717		2,585,941
AdvertisingSolutions [Member]
Revenue from external customers	12,653	172,299
Cost of revenue		4,372
Gross profit	12,653	167,927
Operations and support expenses	204,768	500,452
Depreciation and amortization	1,296	14,205
Total segment operating expenses	206,065	514,657
Segment operating income	(193,412)	(346,730)
Total other income (expense)	(23,589)	(48,118)
Net loss allocable to minority interest
Segment income before income taxes	(217,001)	(394,848)
Segment assets	1,580,185	2,066,110
Wireless [Member]
Revenue from external customers	199,265	160,555
Cost of revenue	172,787	175,391
Gross profit	26,478	(14,837)
Operations and support expenses	12,032	23,136
Depreciation and amortization	19,323	19,323
Total segment operating expenses	31,355	42,458
Segment operating income	(4,877)	(57,295)
Total other income (expense)	(16,294)	(16,159)
Net loss allocable to minority interest	7,552	17,871
Segment income before income taxes	(13,619)	(55,582)
Segment assets	1,447,517	1,536,567
Wireline [Member]
Revenue from external customers	332,139	431,042
Cost of revenue	194,936	232,886
Gross profit	137,203	198,155
Operations and support expenses	134,239	163,595
Depreciation and amortization	371	371
Total segment operating expenses	134,610	163,967
Segment operating income	2,593	34,189
Total other income (expense)	9	17
Net loss allocable to minority interest
Segment income before income taxes	2,602	34,206
Segment assets	367,338	347,992
Other1Member
Revenue from external customers
Cost of revenue
Gross profit
Operations and support expenses	1,635	3,028
Depreciation and amortization
Total segment operating expenses	1,635	3,028
Segment operating income	(1,635)	(3,028)
Total other income (expense)
Net loss allocable to minority interest
Segment income before income taxes	(1,635)	(3,028)
Segment assets	682,000	682,000
Elimination [Member]
Revenue from external customers
Cost of revenue
Gross profit
Operations and support expenses
Depreciation and amortization
Total segment operating expenses
Segment operating income
Total other income (expense)
Net loss allocable to minority interest
Segment income before income taxes
Segment assets	(1,547,322)	(1,998,655)
Consolidated
Revenue from external customers	544,057	763,896
Cost of revenue	367,723	412,650
Gross profit	176,334	351,246
Operations and support expenses	352,674	690,211
Depreciation and amortization	20,990	33,899
Total segment operating expenses	373,665	724,110
Segment operating income	(197,331)	(372,864)
Total other income (expense)	(39,874)	(64,261)
Net loss allocable to minority interest	7,552	17,871
Segment income before income taxes	(229,653)	(419,253)
Segment assets	$ 2,529,718	$ 2,634,015

CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)	Mar. 31, 2014	Dec. 31, 2013
ASSETS
Cash
Certificates of deposit	28,159	28,151
Accounts receivable, net	258,561	294,150
Other current assets	333	(24)
Total current assets	287,053	322,276
Fixed assets, net	1,397,833	1,418,832
Goodwill	767,873	767,873
Other assets	76,958	76,959
TOTAL ASSETS	2,529,717	2,585,941
LIABILITIES AND STOCKHOLDERS' DEFICIT
Bank overdraft	242,056	191,446
Accounts payable and accrued expenses	4,390,840	4,129,314
Accounts payable and accrued expenses - related party	215,014	224,142
Deferred rent - current	18,924	18,666
Line of credit	1,651,633	1,651,633
Notes payable	2,024,332	2,099,332
Notes payable - related party	901,969	949,226
TOTAL CURRENT LIABILITIES	9,444,768	9,263,760
Deferred rent - non current
TOTAL LIABILITIES	9,444,768	9,263,760
STOCKHOLDERS' DEFICIT
Preferred stock, no par value 5,000,000 shares authorized; issued and outstanding 0 and 0 outstanding at March 31, 2014 and December 31, 2013, respectively.
Common stock, no par value 120,000,000 shares authorized; issued but not outstanding 100,052,888 and 100,052,888, respectively; issued and outstanding 100,051,107 and 100,051,107 at March 31, 2014 and December 31, 2013, respectively.	1,519,074	1,519,074
Common stock payable
Treasury stock, 1,781 and 1,781 shares at March 31, 2014 and December 31, 2013, respectively
Accumulated deficit	(8,353,587)	(8,123,937)
Accumulated other comprehensive loss (Foreign translation adjustment)	(66,221)	(66,191)
STOCKHOLDERS' DEFICIT OF UNILAVA	(6,900,734)	(6,671,054)
Non-controlling interest	(14,317)	(6,765)
TOTAL STOCKHOLDERS' DEFICIT	(6,915,051)	(6,677,818)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 2,529,717	$ 2,585,941

2. Going Concern (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Going Concern Details
Accumulated deficit	$ (8,353,587)	$ (8,123,937)
Working capital	$ (9,157,715)

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
STOCKHOLDERS DEFICIT
Preferred stock No par value	$ 0.00	$ 0.00
Preferred stock shares authorized	5,000,000	5,000,000
Preferred stock shares issued	0	0
Preferred stock shares outstanding	0	0
Common stock No par value	$ 0.00	$ 0.00
Common stock shares authorized	120,000,000	120,000,000
Common stock shares issued	100,052,888	100,052,888
Common stock shares outstanding	100,051,107	100,051,107
Treasury stock	1,781	1,781

Document and Entity Information	3 Months Ended
Document and Entity Information	Mar. 31, 2014	May 14, 2014
Document And Entity Information
Entity Registrant Name	Unilava Corp
Entity Central Index Key	0000923168
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer	No
Is Entity a Voluntary Filer	No
Is Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		100,051,107
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2014

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Income Statement [Abstract]
Revenue	$ 544,057	$ 763,896
Cost of revenue	367,723	412,650
Gross profit	176,334	351,246
Costs and Expenses
Salaries and payroll taxes	176,639	270,533
Selling, general & administrative	176,035	419,678
Depreciation	20,990	33,899
Total costs and expenses	373,664	724,110
Loss from operations	(197,330)	(372,864)
Other Income (Expense)
Interest income	10	20
Other income	6	1
Interest expense	(39,889)	(73,309)
Total other income (expense)	(39,873)	(73,288)
Loss before non-controlling interest	(237,203)	(446,151)
Net loss allocable to non-controlling interest	7,552	17,871
Net loss	(229,651)	(428,281)
Comprehensive loss:
Foreign currency translation adjustment	(30)	(2,100)
Total comprehensive loss	$ (229,681)	$ (430,381)
Net loss per common share:
Basic	$ 0.00	$ 0.00
Weighted average common shares outstanding:
Basic	100,051,107	100,051,107

9. Commitments (Details Narrative) (USD $)	3 Months Ended
9. Commitments (Details Narrative) (USD $)	Mar. 31, 2014	Mar. 31, 2013
Commitments Details Narrative
Rent expense	$ 30,408	$ 157,140

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (229,651)	$ (428,281)
Adjustments to reconcile net loss to net cash used in operating activities:
Shares to be issued for services
Depreciation and amortization	20,990	32,617
Change in deferred rent	258	(14,200)
Net loss allocated to non-controlling interest	(7,552)	(17,871)
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Accounts receivable	35,589	2,040
Other current assets	(357)	(147)
Other assets		17
Accounts payable and accrued expenses	261,534	333,150
Accounts payable and accrued expenses - related party	(9,127)
CASH USED IN OPERATING ACTIVITIES	71,684	(92,675)
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest earned on certificates of deposit	(8)	(8)
Purchase of furniture and equipment		(5,212)
CASH USED IN INVESTING ACTIVITIES	(8)	(5,220)
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft	50,610	(111)
Proceeds from notes payable	60,000
Repayment of notes payable	(135,000)	(58,595)
Proceeds from line of credit
Proceeds from related party notes payable		158,701
Repayment of related party notes payable	(47,257)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	(71,647)	99,995
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(29)	(2,100)
NET DECREASE IN CASH	0
CASH, beginning of period
CASH, end of period
Supplemental disclosure of non-cash investing and financing activities:
Interest paid
Taxes paid

4. Accounts Receivable (Details Narrative) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Accounts Receivable Details Narrative
Amount reserved for uncollectible account balances	$ 726	$ 726