UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q/A

(Mark One)


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

	For the Quarterly Period Ended July 31, 2009

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: 333-128614

CORNERWORLD CORPORATION
(Exact name of registrant as specified in its charter)


Nevada		98-0441869
(State of incorporation)		(I.R.S. Employer Identification No.)

12404 Park Central Drive, Suite 400
Dallas, Texas 75251
(Address of principal executive offices)

(214) 224-1000
(Issuer’s telephone number including area code)

Indicate by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____

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

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

Large accelerated filer ___ Accelerated filer ____ Non-accelerated filer ____ Smaller reporting company X

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

The number of shares outstanding of the registrant’s common stock, $0.001 par value per share, as of September 9, 2009 was 95,768,317.

Explanatory Note

The purpose for this Amendment No. 1 (“Amendment No. 1”) to the quarterly report on Form 10-Q for the fiscal quarter ended July 31, 2009 filed by CornerWorld Corporation (the “Company”) on September 14, 2009 (the “Original Filing”) is to restate the financial statements to consolidate the results of an entity that management concluded, because the Company controlled the entity but did not own it, met the definition of a Variable Interest Entity pursuant to the Financial Accounting Standard Board’s Financial Interpretation 46R. In addition, the Company has reclassified a debt payment to interest expense and reversed stock compensation expense related to warrants which had been misclassified as stock options. The revisions necessary for such restatement are reflected in Items 1 and 2 of Part I. However, for the reader’s convenience, the Company has restated the entire quarterly report.

Other than as directly related to the restatements described above, the disclosures in this Amendment No. 1 continue to describe conditions as of the date of the Original Filing, and the disclosures contained herein have not been updated to reflect events, results or developments that have occurred after the Original Filing, or to modify or update those disclosures affected by subsequent events. Among other things, forward-looking statements made in the Original Filing have not been revised to reflect events, results or developments that have occurred or facts that have become known to us after the date of the Original Filing, and such forward looking statements should be read in their historical context. This Amendment No. 1 should be read in conjunction with the Company’s filings made with the SEC subsequent to the Original Filing, including any amendments to those filings.

As a result of this Amendment No. 1, the certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002, filed as exhibits to the Original Filing have been revised, re-executed and re-filed as of the date of this Amendment No. 1.

The effects of the restatement of the financial statements for the fiscal quarter ended July 31, 2009 were as follows:


	Three Months Ended July 31, 2009

Statement of Operations	Previously Reported			Effect of Restatement			As Restated
Sales	$	2,862,564		$	52,091		$	2,914,655
Cost of sales		856,621			85,235			941,856
Selling general and administrative		1,061,998			(16,927	)		1,045,071
Loss before income tax		(334,555	)		(69,651	)		(404,206	)
Net loss	$	(334,555	)		(69,651	)	$	(404,206	)
Basic and diluted loss per common share	$	(0.00	)	$	(0.01	)	$	(0.01	)



	As of July 31, 2009

Balance Sheet	Previously Reported			Effect of Restatement			As Restated

Cash	$	134,545		$	12,145		$	146,690
Accounts receivable		2,080,537			(1,747	)		2,078,790
Other current assets		450,103			1,651			451,754
Total current assets		2,665,185			12,049			2,677,234
Goodwill		1,760,687			(70,508	)		1,690,179
Other assets		131,851			(102,535	)		29,316
Total assets		16,905,536			(160,994	)		16,744,542
Accounts payable		2,790,231			(136,327	)		2,653,904
Accrued liabilities		601,410			19,652			621,062
Notes payable – related parties		1,661,667			300,000			1,961,667
Total current liabilities		6,712,617			183,325			6,895,942
Long term debt		8,410,765			(246,566	)		8,164,199
Total liabilities		17,148,382			(63,241	)		17,085,141
Additional paid-in capital		7,563,603			(28,102	)		7,535,501
Retained earnings (deficit)		(7,902,217	)		(69,651	)		(7,971,868	)
Stockholders’ equity		(242,846	)		(97,753	)		(340,599	)
Total liabilities and stockholders’ equity	$	16,905,536		$	(160,994	)	$	16,744,542


	Three Months Ended July 31, 2009

Cash Flow Statement	Previously Reported			Effect of Restatement			As Restated

Net income (loss)	$	(334,555	)	$	(69,651	)	$	(404,206	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Stock-based compensation		74,985			(28,102	)		46,883
Accounts receivable		(407,326	)		(1,747	)		(405,579	)
Prepaid expenses and other current assets		255,127			(1,651	)		253,476
Intangibles and other assets		(110,070	)		(102,535	)		(7,535	)
Goodwill		(118,938	)		(70,508	)		(48,430	)
Accounts payable		191,504			(136,327	)		55,177
Accrued expenses		366,405			19,652			386,057
Net cash provided by operating activities		177,040			(41,289	)		135,751
Payments on related party notes payable		(540,901	)		53,434			(487,467	)
Net cash used in financing activities		(615,801	)		53,434			(562,367	)
Net change in cash		(467,198	)		12,145			(455,053	)
Cash		134,545			12,145			146,690

CORNERWORLD CORPORATION

INDEX


Item Number		Page

	PART I. FINANCIAL INFORMATION

1	Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets as of July 31, 2009 and April 30, 2009	1
	Condensed Consolidated Statements of Operations for the Three Months Ended July 31, 2009 and 2008	2
	Condensed Consolidated Statement of changes in stockholders’ equity for the Three Months Ended July 31, 2009	3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended July 31, 2009 and 2008	4
	Notes to Condensed Consolidated Financial Statements	5
2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
3	Quantitative and Qualitative Disclosure about Market Risk	20
4T	Controls and Procedures	20

	PART II. OTHER INFORMATION

1	Legal Proceedings	21
1A	Risk Factors	21
2	Unregistered Sales of Equity Securities and Use of Proceeds	21
3	Defaults Upon Senior Securities	21
4	Submission of Matters to a Vote of Security Holders	21
5	Other Information	21
6	Exhibits	21

	Signatures	22

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CornerWorld Corporation
Condensed Consolidated Balance Sheets


	July 31, 2009			April 30, 2009

Assets	(unaudited) (As Restated)			(audited)
Current assets:
Cash	$	146,690		$	601,743
Accounts receivable, net		2,078,790			1,688,211
Prepaid expenses and other current assets		451,754			705,230

Total current assets		2,677,234			2,995,184

Property and equipment, net		1,397,148			1,545,451
Goodwill		1,690,179			1,641,749
Patent		10,255,697			10,645,154
Intangibles, net		694,968			777,776
Other assets		29,316			21,781

TOTAL ASSETS	$	16,744,542		$	17,627,095


Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	2,653,904		$	2,598,727
Accrued expenses		621,062			235,005
Line of credit		340,000			385,000
Notes payable, current portion		—			30,000
Notes payable related parties, current portion		1,961,667			2,113,333
Deferred revenue		296,667			235,000
Other current liabilities		1,022,642			1,488,406

Total current liabilities		6,895,942			7,085,471
Long-term liabilities:
Notes payable related parties, net of current portion		8,164,199			8,500,000
Other liabilities		2,025,000			2,025,000

Total liabilities		17,085,141			17,610,471

Commitments and Contingencies

Stockholders’ equity (deficit:
Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock, $0.001 par value, 250,000,000 shares authorized; 95,768,317 and 64,318,317 shares issued and outstanding, at July 31, 2009 and April 30, 2009, respectively		95,768			64,318
Additional paid-in capital		7,535,501			7,519,968
Retained earnings (accumulated deficit)		(7,971,868	)		(7,567,662	)

Total stockholders’ equity (deficit)		(340,599	)		16,624

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	16,744,542		$	17,627,095

See Notes to Condensed Consolidated Financial Statements.

CornerWorld Corporation
Condensed Consolidated Statements of Operations
(unaudited)


	For the Three Months Ended July 31,

	2009			2008


	(As Restated)
Sales, net	$	2,914,655		$	—


Costs of goods sold		941,856			—


Gross profit		1,972,799			—

Expenses:
Selling, general and administrative expenses		1,045,071			115,560
Depreciation and amortization		649,005			—

Total Operating expenses		1,694,076			115,560

Operating income (loss)		278,723			(115,560	)


Other income (expense), net:
Interest expense		(672,596	)		—
Other income (expense), net		(10,333	)		7,989

Total other expense, net		(682,929	)		7,989

Loss before income taxes		(404,206	)		(107,571	)
Income taxes		—			—

Net loss	$	(404,206	)	$	(107,571	)


Basic and diluted loss per share	$	(0.01	)	$	Nil


Basic and diluted weighted average number shares outstanding		67,053,100			58,498,752

See Notes to Condensed Consolidated Financial Statements.

CornerWorld Corporation
Condensed Consolidated Statements of Stockholders’ Equity
(unaudited)


	Common Shares

	Shares		Amount		Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Equity

Balance, April 30, 2009		64,318,317	$	64,318	$	7,519,968		$	(7,567,662	)	$	16,624
Exercise of warrants associated with Woodland acquisition		31,450,000		31,450		(31,350	)		—			100
Stock-based compensation expense		—		—		46,883			—			46,883
Net loss, as restated		—		—		—			(404,206	)		(404,206	)

Balance, July 31, 2009, as restated		95,768,317	$	95,768	$	7,535,501		$	(7,971,868	)	$	(340,599	)

See Notes to Condensed Consolidated Financial Statements.

CornerWorld Corporation
Condensed Consolidated Statements of Cash Flows
(unaudited)


	For the Three Months ended July 31,

	2009			2008
Cash Flows from Operating Activities	(As Restated)
Net income (loss)	$	(404,206	)	$	(107,571	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		649,005			25,526
Provision for doubtful accounts		15,000			—
Stock-based compensation		46,883			29,120
Changes in operating assets and liabilities, net of acquisitions and divestitures:
Accounts receivable		(405,579	)		—
Prepaid expenses and other current assets		253,476			(5,066	)
Goodwill		(48,430	)		—
Other assets		(7,535	)		—
Accounts payable		55,177			78,012
Accrued expenses		386,057			(57,120	)
Deferred revenue		61,667			—
Other liabilities		(465,764	)		—

Net cash provided by (used in) operating activities		135,751			(37,099	)

Cash Flows from Investing Activities
Purchases of property and equipment		(28,437	)		—
Capitalized software development		—			(9,000	)

Net cash used in investing activities		(28,437	)		(9,000	)

Cash Flows from Financing Activities
Proceeds from notes payable		—			20,000
Proceeds from exercise of warrants		100			—
Principal payments on related party notes payable		(487,467	)		—
Payments on related party line of credit		(45,000	)		—
Principal payments on debt		(30,000	)		—

Net cash provided by (used in) financing activities		(562,367	)		20,000

Net increase (decrease) in cash		(455,053	)		(26,099	)
Cash at beginning of period		601,743			45,164

Cash at end of period	$	146,690		$	19,065

Cash paid for:
Interest	$	339,000		$	449
Income taxes	$	—		$	—

See Notes to Condensed Consolidated Financial Statements.

CornerWorld Corporation
Notes to Condensed Consolidated Financial Statements July 31, 2009
(unaudited)

1. Basis of Presentation

Interim Unaudited Condensed Consolidated Financial Statements

The unaudited interim condensed consolidated financial statements as of July 31, 2009 and for the three months ended July 31, 2009 and 2008 contained in this Quarterly Report (collectively, the Unaudited Interim Condensed Consolidated Financial Statements) were prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for all periods presented. The results of operations for the three month period ended July 31, 2009 is not necessarily indicative of the results that may be expected for the entire fiscal year.

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the regulations for interim financial information of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited accompanying statements of financial condition and related interim statements of operations, cash flows, and stockholders’ equity include all adjustments (which consist only of normal and recurring adjustments) considered necessary for a fair presentation in conformity with U.S. GAAP. These Unaudited Interim Condensed Consolidated Financial Statements should be read in conjunction with the CornerWorld Corporation consolidated financial statements as of and for the year ended April 30, 2009, as filed with the SEC on Form 10-K.

First Quarter Restatement

During the three months ended July 31, 2009, CornerWorld Corporation (the “Company”, “Cornerworld”, “we”, “our” or “us”) did not consolidate a division that the company does not own, Phone Services and More DBA Visitatel (“PSM”). The Company has since concluded that PSM met the definition of a Variable Interest Entity (“VIE”) pursuant to the Financial Accounting Standards Board (“FASB”) Financial Interpretation (“FIN”) 46R. The Company has not yet finalized the acquisition of PSM but has funded PSM’s operating losses to date. The Company concluded that, despite the fact that the Company does not own PSM, the aforementioned factors demonstrate that PSM qualifies as a VIE and should be consolidated in the Company’s financial statements.

In addition, the Company concluded that a first quarter payment, previously classified as a reduction of principal debt, should have been classified as interest. This payment totaled $53,434 and the Company reclassified the amount to interest expense. See also Note 5 to the unaudited condensed consolidated financial statements, Debt, for further information regarding this correction.

Finally, the Company also reversed $28,102 of stock compensation expense. These expenses related to warrants, issued in 2007, which had been misclassified as stock options. The Company has reversed the expense and has reclassified the securities to warrants; see also Note 7, to the unaudited condensed consolidated financial statements, Stock-Based Compensation, for further information regarding this correction.

The following tables summarize the accounts that have been restated as a result of such adjustments:


	Three Months Ended July 31, 2009

Statement of Operations	Previously Reported			Effect of Restatement			As Restated
Sales	$	2,862,564		$	52,091		$	2,914,655
Cost of sales		856,621			85,235			941,856
Selling general and administrative		1,061,998			(16,927	)		1,045,071
Loss before income tax		(334,555	)		(69,651	)		(404,206	)
Net loss	$	(334,555	)		(69,651	)	$	(404,206	)
Basic and diluted loss per common share	$	0.00		$	(0.01	)	$	(0.01	)

CornerWorld Corporation
Notes to the Unaudited Condensed Consolidated Financial Statements – (Continued)



	As of July 31, 2009

Balance Sheet	Previously Reported			Effect of Restatement			As Restated


Cash	$	134,545		$	12,145		$	146,690
Accounts receivable		2,080,537			(1,747	)		2,078,790
Other current assets		450,103			1,651			451,754
Total current assets		2,665,185			12,049			2,677,234
Goodwill		1,760,687			(70,508	)		1,690,179
Other assets		131,851			(102,535	)		29,316
Total assets		16,905,536			(160,994	)		16,744,542
Accounts payable		2,790,231			(136,327	)		2,653,904
Accrued liabilities		601,410			19,652			621,062
Notes payable – related parties		1,661,667			300,000			1,961,667
Total current liabilities		6,712,617			183,325			6,895,942
Long term debt		8,410,765			(246,566	)		8,164,199
Total liabilities		17,148,382			(63,241	)		17,085,141
Additional paid-in capital		7,563,603			(28,102	)		7,535,501
Retained earnings (deficit)		(7,902,217	)		(69,651	)		(7,971,868	)
Stockholders’ equity		(242,846	)		(97,753	)		(340,599	)
Total liabilities and stockholders’ equity	$	16,905,536		$	(160,994	)	$	16,744,542


	Three Months Ended July 31, 2009

Cash Flow Statement	Previously Reported			Effect of Restatement			As Restated

Net income (loss)	$	(334,555	)	$	(69,651	)	$	(404,206	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

Stock-based compensation		74,985			(28,102	)		46,883
Accounts receivable		(407,326	)		(1,747	)		(405,579	)
Prepaid expenses and other current assets		255,127			(1,651	)		253,476
Intangibles and other assets		(110,070	)		(102,535	)		(7,535	)
Goodwill		(118,938	)		(70,508	)		(48,430	)
Accounts payable		191,504			(136,327	)		55,177
Accrued expenses		366,405			19,652			386,057
Net cash provided by operating activities		177,040			(41,289	)		135,751
Payments on related party notes payable		(540,901	)		53,434			(487,467	)
Net cash used in financing activities		(615,801	)		53,434			(562,367	)
Net change in cash		(467,198	)		12,145			(455,053	)
Cash		134,545			12,145			146,690

Organization

The Company was incorporated in the State of Nevada, on November 9, 2004 as Olympic Weddings International, Inc. Effective May 1, 2007, we changed our name to Cornerworld Corporation.

Cornerworld, Inc. was formed under the laws of the state of Delaware on October 7, 2003 and remained inactive until September 1, 2006. Cornerworld Inc. is an Interactive Media Company with a focus in direct marketing that leverages its proprietary lead generation engine to garner qualified leads (consumers) for Fortune 1000 advertisers across social networking websites, niche based websites, its own burgeoning music portal and offline venues.

CornerWorld Corporation
Notes to the Unaudited Condensed Consolidated Financial Statements – (Continued)

The Company entered into a Share Exchange Agreement and Plan of Merger (the “Agreement”) with Enversa Companies LLC, a Texas limited liability company (“Enversa”), Leadstream LLC, a Texas limited liability company (“Leadstream”), and the holders of the membership interests of Leadstream on August 27, 2008. Pursuant to the Agreement, on August 27, 2008, Leadstream merged with and into Enversa (the “Merger”), of which Cornerworld is the sole member. Enversa was the surviving company in the merger and, as such, acquired all right, title and interest in and to all real estate and other property of Leadstream and became responsible for all liabilities and obligations of Leadstream and Enversa. Until the Merger on August 27, 2008, the Company was in the development stage and had not realized any revenues from its operations. See also Note 3, Acquisitions, for more detail.

Enversa, a subsidiary of Cornerworld, is a technology-oriented direct response marketing company. Using its proprietary technology, Enversa identifies qualified leads for advertisers thereby connecting them with potential consumers. Enversa utilizes a pay-for-performance pricing model which is very appealing to clients because it insures that they are billed solely for campaign performance.

The Company operates several ad networks and a proprietary request for proposal (RFP) technology that highlights promotional offers from a variety of corporate clients.

On February 23, 2009, Cornerworld completed its acquisition (the “Woodland Acquisition”) of all of the issued and outstanding equity interests of each of Woodland Wireless Solutions, Ltd. (“Woodland Wireless”), West Michigan Co-Location Services, L.L.C. (“WMCLS”) and T2 TV, L.L.C. (“T2 TV”), and forty voting member units of S Squared, LLC, doing business in the state of Michigan as “Ranger Wireless LLC” (“Ranger”), through its newly-formed wholly-owned subsidiary, Woodland Holdings Corp. (“Woodland Holdings”), pursuant to the terms of a Stock Purchase Agreement, dated February 23, 2009 (the “Effective Date”), by and among Woodland Holdings, Cornerworld, Ned B. Timmer and HCC Foundation (“HCC Foundation”). Immediately following the Woodland Acquisition, the forty voting member units of Ranger that were purchased by Woodland Holdings were contributed to Woodland Wireless and all other issued and outstanding voting member units of Ranger remained held by Woodland Wireless.

As a result, Ranger became a wholly-owned subsidiary of Woodland Wireless. In addition, pursuant to a Unit Purchase Agreement (the “Unit Purchase Agreement”) entered into on the Effective Date among Woodland Holdings, Phone Services and More, L.L.C., doing business as Visitatel (“PSM”), T2 Communications, L.L.C. (“T2 Communications”) and Ned B. Timmer, Woodland Holdings agreed to purchase all of the outstanding voting member units of each of PSM and T2 Communications, for an aggregate purchase price of $300,000. Final consummation of the transactions contemplated by the Unit Purchase Agreement remains subject to certain regulatory approvals.

Woodland Wireless, Ranger, WMCLS and PSM are collectively referred to herein as the “Ranger Wireless Group”. T2 Communications and T2 TV are collectively referred to herein as the “T2 Group”. See also Note 3, Acquisitions, for more detail.

RANGER® is a shortcode application service provider to the wireless industry. The core service offered is 611 Roaming Service™, a patented application providing seamless means for connecting wireless subscribers to reach their home providers customer service call center while roaming on another provider’s network. Calls are sent to RANGER® for treatment from nearly 40 wireless providers throughout North America. On an annual basis, RANGER® processes approximately 14 million calls with an infrastructure capable of handling millions more. RANGER® also manages an online portal which allows carriers access to their monthly statements and reporting on call volume to and from their company.

As a provider of Internet Protocol Television (IPTV), Internet and VoIP services, T² Communications delivers leading-edge technology to residential and business customers in Michigan. Offerings include: phone lines, Internet connections, 275 all-digital television stations, colocation, long distance and toll-free services. T² is a Competitive Local Exchange Carrier (CLEC) that manages its own Fiber to the Premise (FTTP) network with a 10 gigabit backbone and up to 1 gigabit per second connections to end users.

PSM holds an FCC 214 License as a wholesale long distance service provider to the carrier community and large commercial users of transport minutes. Serving service providers, WMCLS offers telecommunications equipment storage and leasing.

The Company’s year-end is April 30^th.

CornerWorld Corporation
Notes to the Unaudited Condensed Consolidated Financial Statements – (Continued)

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of CornerWorld, its wholly owned subsidiaries and joint ventures as well as all entities deemed to qualify as VIE’s. All significant intercompany transactions and balances have been eliminated in consolidation.

2. Summary of Significant Accounting Policies

This summary of significant accounting policies is presented to assist in understanding the Company’s condensed consolidated financial statements. The condensed consolidated financial statements and notes are representations of the Company’s management who is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles (“GAAP”) in the United States of America and have been consistently applied in the preparation of the financial statements. The financial statements are stated in United States of America dollars.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management include, among others, the realizability of accounts receivable, recoverability of property and equipment, intangibles and goodwill and valuation of stock-based compensation and deferred tax assets. Actual results could differ from these estimates.

Fair Value of Financial Instruments

Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 107 (“SFAS 107”), “Disclosures about Fair Value of Financial Instruments.” SFAS 107 requires disclosure of fair value information about financial instruments when it is practicable to estimate that value. The carrying amount of the Company’s cash and cash equivalents, accounts receivable, accounts receivable-related party, accounts payable, accounts payable-related party, accrued liabilities, and notes payable approximate their estimated fair values due to their short-term maturities.

Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial statements.

Organizational and Start-up Costs

Until August 27, 2008, Cornerworld Corporation was in the development stage. Costs of start-up activities, including organization costs, were expensed as incurred in accordance with SOP 98-5.

Revenue Recognition

The Company recognizes revenue in accordance with Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition in Financial Statements,” as revised by SAB 104. As such, the Company recognizes revenue when persuasive evidence of an arrangement exists, title transfer has occurred, the price is fixed or readily determinable and collectibility is probable. Sales are recorded net of sales discounts.

At Enversa, revenue is recognized along with the related cost of revenue as leads are delivered. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. Amounts billed to clients in advance of delivery of leads are classified under current liabilities as deferred revenue.

For Woodland, the majority of revenue is derived from month-to-month, bundled service contracts for the phone, television and internet services used by each customer. Revenue is recognized as the services are provided.

CornerWorld Corporation
Notes to the Unaudited Condensed Consolidated Financial Statements – (Continued)

Income Taxes

The Company accounts for income tax in accordance with the Statement of Financial Accounting Standards (“SFAS”) No. 109 “Accounting for Income Taxes”. SFAS No. 109 requires the use of the asset and liability method of accounting of income taxes. Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Long-Lived Assets

The Company accounts for its long-lived assets in accordance with Statement of Financial Accounting Standards 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). The Company’s primary long-lived assets are website development costs, Goodwill, a patent, identifiable intangible assets and property and equipment. SFAS 144 requires a company to assess the recoverability of its long-lived assets whenever events and circumstances indicate the carrying value of an asset or asset group may not be recoverable from estimated future cash flows expected to result from its use and eventual disposition. Additionally, the standard requires expected future operating losses from discontinued operations to be displayed in discontinued operations in the period(s) in which the losses are incurred, rather than as of the measurement date. No impairment charges have been recorded as of April 30, 2009. Although management believes that there is no impairment in the carrying value of its website development, the Company has not yet recognized any revenue for this asset, and uncertainties exist with respect to future revenue, if any. Therefore, a contingency exists with respect to this matter, the ultimate resolution of which cannot be determined. Management does not believe the Goodwill, patent and identifiable intangible assets associated with it recent acquisitions are impaired. No impairment charges have been recorded as of July 31, 2009.

Stock-Based Compensation

The Company accounts for awards made under its two stock-based compensation plans pursuant to the fair value provisions of Statement of Financial Accounting Standards No. 123(R) Share-Based Payment (SFAS 123R). SFAS 123R requires the recognition of stock-based compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. SFAS 123R requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The Company accounts for stock-based compensation in accordance with SFAS No. 123R and estimates their fair value based on using the Black-Scholes option pricing model.

The Company’s determination of fair value of share-based payment awards is made as of their respective dates of grant using that option pricing model and is affected by the Company’s stock price as well as a number of subjective assumptions. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards and actual and projected employee stock option exercise behavior. The expected term of options granted is derived from historical data on employee exercises and post-vesting employment termination behavior. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the pricing term of the grant effective as of the date of the grant. The expected volatility is based on the historical volatility of the Company’s stock price. These factors could change in the future, affecting the determination of stock-based compensation expense in future periods. The Black-Scholes option pricing model was developed for use in estimating the value of traded options that have no vesting or hedging restrictions and are fully transferable. Because the Company’s options have certain characteristics that are significantly different from traded options, the existing valuation models may not provide an accurate measure of the fair value of the Company’s options. Although the fair value of the Company’s options is determined in accordance with SFAS 123R using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. The calculated compensation cost is recognized on a straight-line basis over the vesting period of the options. See also Note 9 Stock Based Compensation, for more details.

Recent Accounting Pronouncements

There were various accounting standards and interpretations issued during 2009 and 2008, none of which are expected to have a material impact on the Company’s consolidated financial position, operations, or cash flows.

CornerWorld Corporation
Notes to the Unaudited Condensed Consolidated Financial Statements – (Continued)

Reclassifications

Certain prior year accounts have been reclassified to conform to the current year’s presentation.

3. Acquisitions

Acquisition of Leadstream

On August 27, 2008, Leadstream LLC merged with and into Enversa. The results of Leadstream’s operations have been included in the consolidated financial statements since that date. This business combination was accounted for as a purchase of Leadstream by Cornerworld Corporation in accordance with Statement of Financial Accounting Standards No. 141R, Business Combinations (“SFAS 141R”). The aggregate purchase price was $1,662,000 which was comprised of $1,500,000 in promissory notes, and 3,600,000 shares of common stock valued at $162,000. Because the Company’s common stock is so thinly traded, the value of the 3,600,000 common shares issued was determined based on the Company’s estimated enterprise value as of August 27, 2008.

The following table summarizes the carrying values of the assets acquired and liabilities assumed at the date of acquisition.


	At August 27, 2008

Current assets	$	724,704
Property, plant and equipment		25,698
Intangible assets		1,000,000

Total assets acquired		1,750,402
Total liabilities assumed		643,388

Net assets acquired	$	1,107,014

The $1,000,000 of intangible assets relates to customer lists that have an expected useful life of three years. The excess of the purchase price over the tangible net assets and identifiable intangible assets was allocated to Goodwill. Accordingly, the Company recorded $554,987 in Goodwill as a result of the Enversa acquisition.

Woodland Acquisition

On February 23, 2009, Cornerworld completed the Woodland Acquisition. The results of Woodland’s operations have been included in the consolidated financial statements since that date. This business combination was accounted for as a purchase in accordance with SFAS 141R. The aggregate purchase price was $13,696,300 which was comprised of $1,900,000 in cash, a $3,100,000 Secured Debenture, a $4,200,000 Purchase Money Note, an earn-out of $2,700,000, $300,000 in payables subject to obtaining certain regulatory approvals, $1,383,800 for warrants to purchase 31,450,000 shares of the Company’s common stock and 2,500,000 shares of the Company’s common stock valued at $112,500. In addition, the Company capitalized fees totaling $513,000 associated with the issuance of the debt raised to pay the $1,900,000 cash consideration to the Woodland seller. Due to the fact that Company’s common stock is so thinly traded, the value of the common shares and warrants issued was determined based on the Company’s estimated enterprise value as of February 23, 2009.

The following table summarizes the carrying values of the assets acquired and liabilities assumed at the date of acquisition.


	February 23, 2009

Current assets	$	882,647
Property, plant and equipment		1,492,356
Intangible assets		10,904,792

Total assets acquired		13,279,795
Total liabilities assumed		670,258

Net assets acquired	$	12,609,537

CornerWorld Corporation
Notes to the Unaudited Condensed Consolidated Financial Statements – (Continued)

The $10,904,792 patent is being amortized over its expected useful life of seven years. The excess of the purchase price over the tangible net assets and identifiable intangible assets was allocated to Goodwill. Accordingly, the Company recorded $1,086,763 in Goodwill as a result of the Woodland acquisition. In accordance with the Stock Purchase Agreement, during the three months ended July 31, 2009, the Company adjusted the purchase price by recording an additional $48,430 of Goodwill which was in the form of the return of acquisition date cash to Woodland’s previous owner. In addition, during the three months ended July 31, 2009, the Company reduced Goodwill by $70,508 to reflect the impact of the consolidation of PSM. The Woodland purchase price is expected to be finalized after the Company completes its assessment of the fair values of the fixed assets acquired in this acquisition.

Pro Forma Summary Financial Data

The following un-audited condensed pro forma summary financial data for the three months ended July 31, 2008 presents our pro forma condensed financial information as if we had completed the acquisitions of Leadstream and Enversa at the beginning of the prior fiscal year:


Revenue	$	2,263,949
Income from operations		366,575
Net income	$	54,100


Basic and diluted loss per share	$	0.00

Weighted average shares outstanding		95,768,317

4. Intangible Assets

Intangible Assets

Identifiable intangibles acquired in connection with business acquisitions accounted for under the purchase method are recorded at their respective fair values. The Company is amortizing the identifiable intangibles over their estimated useful lives, ranging from three to seven years. Intangibles consist of the following:


	July 31, 2009			April 30, 2009			Estimated Useful Life (Years)

Patent	$	10,904,792		$	10,904,792			7
Customer list		1,000,000			1,000,000			3

		11,904,792			11,904,792
Accumulated amortization		(954,127	)		(481,862	)

	$	10,950,665		$	11,422,930

Amortization expense related to identifiable intangible assets totaled $472,265 and $0 for the three months ended July 31, 2009 and 2008, respectively.

CornerWorld Corporation
Notes to the Unaudited Condensed Consolidated Financial Statements – (Continued)

5. Debt


	July 31, 2009			April 30, 2009

Line of Credit
Revolving line of credit with a related party up to $500,000 at an interest rate of 8% per annum. Interest payable monthly; line matures February 22, 2010. See also note 10, Related Party Transactions.	$	340,000		$	385,000

Long-term Debt
Note payable to Internet University; payments due quarterly based on the achievement of certain cash flow targets. At July 31, 2009 the interest rate was 4.58%.	$	1,464,199		$	1,500,000
Note payable to IU Investments, LLC, due March 15, 2010. At July 31, 2009 the interest rate was 16.0%.		1,320,000			1,755,000
Purchase Money Note Payable, due February 23, 2012. At July 31, 2009 the interest rate was 12.0%. See also note 10, Related Party Transactions.		4,200,000			4,200,000
Secured Debenture, due February 23, 2012. At July 31, 2009 the interest rate was 12.0%. See also note 12, Related Party Transactions.		3,100,000			3,100,000
Various notes payable to related parties, due February 17, 2010. At July 31, 2009 the interest rate was 10%. See also note 10, Related Party Transactions.		41,667			58,333
Note payable due February 17, 2010. At July 31, 2009 the interest rate was 10%.		—			30,000

Total debt		10,125,866			10,643,333
Less current portion of long-term debt		(1,961,667	)		(2,143,333	)

Non-current portion of long-term debt	$	8,164,199		$	8,500,000

The notes are collateralized by 100% of the assets of all companies and the notes themselves are all cross-defaulted.

6. Commitments and Contingencies

Woodland Earnout

As detailed in Note 1, on February 23, 2009, Cornerworld completed the Woodland Acquisition. Among other consideration tendered, the Company accrued an earn-out payable to Mr. Ned Timmer, the Woodland seller, totaling $2,700,000. The earn-out was computed based on an estimated $675,000 payable to Mr. Timmer annually over each of the next 4 fiscal years and assumes Woodland achieves certain operating results. Actual payouts could differ from this estimate.

T-2 Group Accrual

As detailed in Note 1, on February 23, 2009, Cornerworld completed the Woodland Acquisition. As part of the Unit Purchase Agreement, the Company agreed to acquire certain operating assets and liabilities of the T-2 Group after receiving regulatory approval for the purchase of these assets. The Company has accrued $300,000 pursuant to the Unit Purchase Agreement for this contingency.

CornerWorld Corporation
Notes to the Unaudited Condensed Consolidated Financial Statements – (Continued)

7. Stock-Based Compensation

Incentive Stock Plan

On August 17, 2007, the Company’s board of directors adopted and implemented the Company’s 2007 Incentive Stock Plan. Under the Incentive Stock Plan, the Company is authorized to issue 4,000,000 shares of its common stock to the Company’s directors, officers, employees, advisors or consultants.

Any Incentive Stock Option granted to an employee of the Company shall become exercisable over a period of no longer than 5 years, and no less than 20% of the shares covered thereby shall become exercisable annually. 20% of shares vest annually beginning on the first anniversary of the grant. The options expire 10 years from the grant date.

The Company issued no stock options pursuant to this plan during the three months ended July 31, 2009.

Stock Compensation Plan

On August 17, 2007, the Company’s board of directors adopted and implemented the Company’s 2007 Stock Compensation Plan. The total number of shares of the Company’s common stock which may be purchased or granted directly by Options, Stock Awards or Warrants under the Compensation Plan shall not exceed 4,000,000 shares of the Company’s common stock.

Awards granted to a participant of the Company shall become exercisable over a period of no longer than 5 years, and may vest as determined at the Company’s discretion at the time of grant.

The Company issued no stock options pursuant to this plan during the three months ended July 31, 2009.

A summary of the shares reserved for grant and awards available for grant under each Stock Plan is as follows:


	July 31, 2009

		Shares Reserved for Grant	Awards Available for Grant

Incentive Stock Plan		4,000,000	2,506,000
Stock Compensation Plan		4,000,000	2,480,000

		8,000,000	4,986,000

The Company issues awards to employees, qualified consultants and directors that generally vest over time based solely on continued employment or service during the related vesting period and are exercisable over a five to ten year service period. Options are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant.

The fair value of each stock-based award is estimated on the grant date using the Black-Scholes option-pricing model. Expected volatilities are based on the historical volatility of the Company’s stock price. The expected term of options granted subsequent to the adoption of SFAS No. 123(R) is derived using the simplified method as defined in the SEC’s SAB No. 107, Implementation of FASB 123R. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury interest rates in effect at the time of grant. The fair value of options granted was estimated using the following weighted-average assumptions:

CornerWorld Corporation
Notes to the Unaudited Condensed Consolidated Financial Statements – (Continued)


	For the three month periods Ended July 31

		2009	2008

Expected term (in years)		—	5.0
Expected volatility		—	68.0%
Risk-free interest rate		—	4.3%
Dividend yield		—	0.0%

A summary of activity under the Stock Plans and changes during the period ended July 31, 2009 is presented below:


				Weighted-Average
	Shares			Exercise Price		Remaining Contractual Term(Years)		Aggregate Intrinsic Value

Outstanding at May 1, 2009		2,694,000		$	0.67		4.25	$	0.00
Reclassified to warrants **		(320,000	)		1.20
Cancelled/forfeited		—			—
Exercised		—			—

Outstanding at July 31, 2009		2,374,000		$	0.67		4.25	$	0.00

Options vested and expected to vest*		537,461		$	0.93		3.67	$	0.00

Options exercisable at end of period		537,461		$	0.93		3.67	$	0.00


	*	Due to the Company’s limited operating history, no estimate for forfeitures has been made in these financial
		statements as there has been no turnover of employees to whom options were granted.
	**	Upon review of the instruments, the Company reclassified these options to warrants.

As of July 31, 2009 and 2008, the Company recognized $46,883 and $29,120 of stock-based compensation expense, respectively. As of July 31, 2009 there was $1,103,590 of total unrecognized compensation cost, net of forfeitures, related to unvested employee and director stock option compensation arrangements. That cost is expected to be recognized on a straight-line basis over the next 4.0 weighted average years.

CornerWorld Corporation
Notes to the Unaudited Condensed Consolidated Financial Statements – (Continued)

8. Business Segments

The following table summarizes selected financial information for each operating segment:


Three Months Ended July 31, 2009	Direct Marketing Services		Communications Services		On-line Media Networks			Consolidated

Revenue	$	982,196	$	1,932,459	$	—		$	2,914,655
Income (loss) from continuing operations before tax		9,303		304,418		(717,927	)		(404,206	)
Net (loss) income		9,303		304,418		(717,927	)		(404,206	)
Total assets		2,018,354		13,066,951		1,659,237			16,744,542
Intangibles		694,968		10,255,697		—			10,950,665
Goodwill		—		1,135,193		554,986			1,690,179
Depreciation and amortization		86,934		535,712		26,359			649,005


Three Months Ended July 31, 2008	Direct Marketing Services		Communications Services		On-line Media Networks			Consolidated

Revenue	$	—	$	—	$	—		$	—
Income (loss) from continuing operations before tax		—		—		(107,571	)		(107,571	)
Net (loss) income		—		—		(107,751	)		(107,751	)
Total assets		—		—		260,734			260,734
Intangibles		—		—		—			—
Goodwill		—		—		—			—
Depreciation and amortization		—		—		—			—

There were no intersegment sales. All of the Company’s business activities are conducted within the United States geographic boundaries.

9. Related Party Transactions

Enversa receives administrative support from Internet University, Inc., which was one of the three former members of Leadstream. Included in such administrative support are human resources, accounting, IT and facilities services.

On August 27, 2008, Enversa entered into a $500,000 line of credit with Internet University which was originally intended to expire on February 23, 2009. On February 23, 2009, Enversa and Internet University entered into an amendment to the line of credit, which extended the maturity date until February 22, 2010 and provided a schedule for payments. The line of credit bears interest at 8.00% per annum and is secured by a second priority security interest in Cornerworld’s membership interests in Enversa, a first priority security interest in all of Enversa’s assets and in all products, proceeds, revenues, distributions, dividends, stock dividends, securities and other property, rights and interests that Cornerworld and Enversa receives or is at any time entitled to receive. There was an outstanding balance of $340,000 under the line of credit at July 31, 2009.

As previously noted, on February 23, 2009, the Company completed the Woodland Acquisition. Pursuant to the acquisition, the Company issued debt and equity securities to Mr. Ned Timmer who became a member of the Board of Directors and the President of the Company’s Woodland division. Mr. Timmer is the holder of the Company’s $4,200,000 secured debenture as well as a holder of the Company’s $3,100,000 purchase money note. The Company recognized and paid interest expenses to Mr. Timmer totaling approximately $219,000 on these two facilities during the three month period ended July 31, 2009.

CornerWorld Corporation
Notes to the Unaudited Condensed Consolidated Financial Statements – (Continued)

As part of the Enversa acquisition, the Company borrowed $1,500,000 from Internet University, Inc. A member of the Company’s Board of Director as well as one of the selling partners of Enversa is the president of Internet University, Inc. The Company paid $35,801 of principal on this note and recorded interest of $78,828 on this facility during the three month period ended July 31, 2009.

As part of the Woodland Acquisition, the Company borrowed $1,900,000 from IU Investments LLC. A member of the Company’s Board of Director as well as one of the selling partners of Enversa is an employee of the parent of IU Investments LLC. The Company paid $435,000 of principal on this note and recorded interest of $219,000 on this facility during the three month period ended July 31, 2009.

RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-Q/A

This Form 10-Q/A contains certain forward-looking statements within the meaning of the Private Bank Securities Litigation Reform Act of 1995. All statements other than statements of historical fact made in this report are forward looking. These statements include the plans and objectives of management for future operations. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Form 10-Q/A will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. Furthermore, except as required by law, we do not undertake any obligation to update forward-looking statements made herein.

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

Overview

CornerWorld Corporation (hereinafter referred to as “Cornerworld,” the “Company,” “we,” “our,” or “us”) is a marketing and technology services company building services for the increased accessibility of content across mobile, television and Internet platforms. Our key asset is a patented 611 Roaming Service™ from RANGER Wireless Solutions®, which generates revenue by processing over 14 million calls per year from wireless customers and seamlessly connecting them to their service provider.

Quarter ended July 31, 2009 Highlights:


	•	We initiated negotiations with a lender to begin the process of refinancing a portion of our debt and to increase our lines of credit.

	•	We completed the integration of our two acquisitions via centralization of the accounting, treasury and human resources functions.

	•	We began to leverage the benefits of our centralized accounting platform.

Service Offerings

The Company’s business consists of three integrated service offerings: (i) direct marketing services, (ii) communication services and (iii) on-line media networks. See also Note 9 of the Notes to the Unaudited Condensed Consolidated Financial Statements – Business Segments for additional segment information.

Critical Accounting Policies

In preparing our unaudited condensed consolidated financial statements, we make estimates, assumptions and judgments that can have a significant effect on our revenues, income from operations, and net income, as well as on the value of certain assets on our condensed consolidated balance sheets. We believe that there are several accounting policies that are critical to an understanding of our historical and future performance as these policies affect the reported amounts of revenues, expenses, and significant estimates and judgments applied by management. While there are a number of accounting policies, methods and estimates affecting our financial statements, areas that are particularly significant include allowance for doubtful accounts, recoverability of long-lived assets (including goodwill), revenue recognition, and stock-based compensation. See Note 2 – Summary of Significant Accounting Policies – of the Notes to the unaudited condensed consolidated financial statements included in this report for further discussion of our accounting policies.

Organizational and Start-up Costs

Until August 27, 2008, CornerWorld was in the development stage. Costs of start-up activities, including organizations costs, were expensed as incurred in accordance with SOP 98-5.

Revenue Recognition

Income Taxes

Long-Lived Assets

Stock-Based Compensation

Recent Accounting Pronouncements

Results of Operations

Comparison of the three months ended July 31, 2009 to the three months ended July 31, 2008

Direct marketing services

Our direct marketing services segment consists of our recently acquired Enversa division. As previously noted, Enversa was acquired on August 27, 2008 and this report only includes operating data for that segment for the three months ended July 31, 2009. Accordingly, presentation of an analysis of current years’ results versus prior year operating results would be misleading. Please see Note 3 Acquisitions, in the attached Notes to the unaudited condensed consolidated financial statements for pro-forma financial data for the three months ended July 31, 2008 with respect to this segment.

Communications services

Our communications services segment consists of everything acquired in the Woodland Acquisition. As previously noted, we closed the Woodland Acquisition on February 23, 2009 and this report only includes operating data for that segment only since that date. Accordingly, presentation of an analysis of current years’ results versus prior year operating results would be misleading. Please see Note 3 Acquisitions, in the attached financial statements for pro-forma financial data with respect to this segment.

On-line media networks

Our online media networks segment consists of the CornerWorld, Inc. division as well as expenses generated from our corporate group.

Revenues, Cost of Sales and Gross profit:

Our on-line media networks segment had no revenue or gross profit for the quarter ended July 31, 2009 or for the quarter ended July 31, 2008. These results are consistent with the fact that this segment continues to be a development stage entity and we are in the process of building our infrastructure.

Selling, General and Administrative (as restated)

Selling, general and administrative (“SG&A”) costs totaled $263,331 for the quarter ended July 31, 2009 versus $115,560 for the corresponding period in the prior year. The increase of $147,771 is primarily due to the fact that we continued to develop our operations. SG&A expenses for this segment also include all costs associated with corporate overhead, including accounting, legal, corporate governance and other related costs involved in being a publicly traded company.

Liquidity and Capital Resources (as restated)

As of July 31, 2009, we had a working capital deficit of approximately $4,218,708 and cash of $146,690. Our working capital deficit is primarily related to the short-term nature of selected tranches of the debt we issued to finance our acquisitions. Though we expect that we will refinance a substantial portion of these short-term obligations, there can be no guarantee that we will do so, We believe the cash flows from our existing operations will be adequate to manage our debt commitments should we be unsuccessful in refinancing our short-term obligations.

Our investing activity for the three months ended July 31, 2009, consisted primarily of 28,437 of capital expenditures.

We presently have a $500,000 line of credit with Internet University, Inc., at July 31, 2009, we had approximately $340,000 outstanding under this credit line, but we no longer have access to the unused portion of this line. We have been making payments as prescribed pursuant to the line of credit agreement. We have no other bank financing or other external sources of liquidity. Due to our brief operating history as a start-up company, our operations have not historically been a source of liquidity. This was the first quarter the Company’s operations generated positive operating cash flow and we expect that trend to continue.

We will need to obtain additional capital in order to expand our operations. We are currently investigating other financial alternatives, including additional equity and/or debt financing. In order to obtain capital, we may need to sell additional shares of our common stock or borrow funds from private lenders. However, there can be no assurance that any additional financing will become available to us, and if available, that such financing will be on terms acceptable to us.

Off-balance sheet arrangements

We have not entered into any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We had no of variable rate debt outstanding at July 31, 2009. Accordingly, we had no exposure to interest rate variations.

Item 4T. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in its reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

The Company’s management, with the participation of its principal executive officer who at that time was also its chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) as of July 31, 2009. Based on that evaluation, the Company’s chief executive / principal financial officer concluded that, as of that date, the Company’s disclosure controls and procedures, were not effective at a reasonable assurance level, due to the identification of a material weakness related to a shortage of resources in the accounting department.

Management’s Remediation Plan

Management determined that a material weakness existed due to a lack of an adequate number of personnel in the accounting department. Management is in the process of remediating the material weakness identified by hiring a sufficient number of resources to aid in the timeliness of the financial statement close process leading to the correct preparation, review, presentation of and disclosures in our consolidated statements. The Company has hired temporary contractors to help perform certain accounting functions, until management can employ a more permanent solution. We cannot assure you that, as circumstances change, any additional material weakness will not be identified.

Changes in Internal Control over Financial Reporting

Except as noted above, there were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II
OTHER INFORMATION

Item 1. Legal Proceedings

None.

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

The Company issued 31,450,000 shares of its common stock during the three months ended July 31, 2009 pursuant to the exercise on July 23, 2009 of a warrant issued to Ned Timmer in connection with the Woodland Acquistion. The proceeds from this exercise totaled $100. Since the transaction was not a public offering within the meaning of Section 4(2) of the Securities Act, the issuance was deemed exempt from registration.

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other information

None

Item 6. Exhibits

The following exhibits are filed as part of this report:


Exhibit Numbers	Description	Method of Filing

31.1	Rule 13a-14(a) Certification by our chief executive officer	(1)
31.2	Rule 13a-14(a) Certification by our chief financial officer	(1)
32.1	Section 1350 Certification by our chief executive officer	(1)
32.2	Section 1350 Certification by our chief financial officer	(1)



(1)	Filed herewith.

Signatures

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


	CORNERWORLD CORPORATION

	Registrant

July 27, 2010	/s/ V. Chase McCrea III

	V. Chase McCrea III
	Chief Financial Officer