10-Q

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 July 31, 2012
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.)

13101 Preston Road, Suite 100
Dallas, Texas 75240
(Address of principal executive offices)

(888) 837-3910

(Registrant’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 S-T (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 the definitions of “large accelerated filer”, “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 10, 2012 was 147,547,607.

CORNERWORLD CORPORATION

INDEX

Item Number		Page
	PART I. FINANCIAL INFORMATION
1	Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets as of July 31, 2012 and April 30, 2012	1
	Condensed Consolidated Statements of Operations for the Three Months Ended July 31, 2012 and 2011	2
	Condensed Consolidated Statement of changes in stockholders’ deficit for the Three Months Ended July 31, 2012	3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended July 31, 2012 and 2011	4
	Notes to Condensed Consolidated Financial Statements	5
2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
3	Quantitative and Qualitative Disclosures about Market Risk	17
4	Controls and Procedures	17
	PART II. OTHER INFORMATION
1	Legal Proceedings	18
1A	Risk Factors	18
2	Unregistered Sales of Equity Securities and Use of Proceeds	18
3	Defaults Upon Senior Securities	18
4	Mine Safety Disclosures	18
5	Other Information	18
6	Exhibits	18
	Signatures	18

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CornerWorld Corporation

Condensed Consolidated Balance Sheets

	July 31, 2012			April 30, 2012
	(unaudited)			(audited)
Assets
Current assets:
Cash	$	356,882		$	890,415
Accounts receivable (net of allowance for doubtful accounts of $172,777 and $118,597 at July 31, 2012 and April 30, 2012, respectively)		1,220,964			1,070,293
Prepaid expenses and other current assets		105,766			132,036
Total current assets		1,683,612			2,092,744
Property and equipment, net		133,377			154,673
Goodwill		2,136,836			2,136,836
Patent		5,582,213			5,971,670
Other assets		28,031			28,729
TOTAL ASSETS	$	9,564,069		$	10,384,652
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	1,572,580		$	1,894,043
Accrued expenses		772,305			708,874
Notes payable, current portion, net of unamortized discount of $340,761 and $340,303 at July 31, 2012 and April 30, 2012, respectively		1,650,761			1,196,013
Notes payable related parties, current portion, net of unamortized discount of $101,796 and $161,685 at July 31, 2012 and April 30, 2012, respectively		1,068,942			1,627,524
Lease payable, current portion		10,704			10,704
Deferred revenue		302,585			385,146
Total current liabilities		5,377,877			5,822,304
Long-term liabilities:
Notes payable, net of current portion, net of unamortized discount of $447,387 and $530,268 at July 31, 2012 and April 30, 2012, respectively		3,392,407			4,249,731
Notes payable related parties, net of current portion, net of unamortized discount of $1,782 and $7,045 at July 31, 2012 and April 30, 2012, respectively		2,793,552			2,225,041
Lease payable, net of current portion		16,557			18,988
Other liabilities		782,369			754,091
Total liabilities		12,362,762			13,070,155
Commitments and Contingencies
Stockholders’ 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; 147,547,607 shares issued and outstanding, at July 31, 2012 and April 30, 2012		147,547			147,547
Additional paid-in capital		10,206,233			10,164,724
Accumulated deficit		(13,152,473	)		(12,997,774	)
Total stockholders’ deficit		(2,798,693	)		(2,685,503	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	9,564,069		$	10,384,652

See Notes to Condensed Consolidated Financial Statements.

- 1 -

CornerWorld Corporation

Condensed Consolidated Statements of Operations

(unaudited)

	For the Three Months Ended July 31,
	2012			2011
Sales, net	$	2,175,067		$	2,941,673
Costs of goods sold		424,976			851,497
Gross profit		1,750,091			2,090,176
Expenses:
Selling, general and administrative expenses		981,942			1,336,011
Depreciation and amortization		410,752			577,251
Total Operating expenses		1,392,694			1,913,262
Operating income		357,397			176,914
Other income (expense), net:
Interest expense		(511,996	)		(695,982	)
Other income (expense), net		(100	)		(2,592	)
Total other income (expense), net		(512,096	)		(698,574	)
Income (loss) before income taxes		(154,699	)		(521,660	)
Income taxes		—			—
Net loss	$	(154,699	)	$	(521,660	)
Basic and diluted earnings (loss) per share	$	(0.00	)	$	(0.00	)
Basic and diluted weighted average number shares outstanding		147,547,607			146,972,901

See Notes to Condensed Consolidated Financial Statements.

- 2 -

CornerWorld Corporation

Condensed Consolidated Statements of Stockholders’ Deficit

(unaudited)

	Common Shares
	Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Deficit
Balance, April 30, 2012		147,547,607	$	147,547	$	10,164,724	$	(12,997,774	)	$	(2,685,503	)
Stock-based compensation expense		—		—		41,509		—			41,509
Net income		—		—		—		(154,699	)		(154,699	)
Balance, July 31, 2012		147,547,607	$	147,547	$	10,206,233	$	(13,152,473	)	$	(2,798,693	)

See Notes to Condensed Consolidated Financial Statements.

- 3 -

CornerWorld Corporation

Condensed Consolidated Statements of Cash Flows

(unaudited)

	For the Three Months Ended July 31,
	2012			2011
Cash Flows from Operating Activities
Net income (loss)	$	(154,699	)	$	(521,660	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization		410,752			577,251
Amortization of loan discount		147,352			255,217
Provision for doubtful accounts		76,908			34,371
Stock-based compensation		41,509			37,446
Changes in operating assets and liabilities, net of acquisitions and divestitures:
Accounts receivable		(227,579	)		243,323
Prepaid expenses and other current assets		26,270			(78,537	)
Other assets		698			(263	)
Accounts payable		(311,462	)		(630,621	)
Accrued expenses		63,431			97,829
Deferred revenue		(82,561	)		(130,481	)
Other liabilities		28,279			32,446
Net cash provided by operating activities		18,898			(83,679	)
Cash Flows from Investing Activities
Purchases of property and equipment		—			(13,101	)
Net cash used in investing activities		—			(13,101	)
Cash Flows from Financing Activities
Fees paid for debt issuance		—			(62,500	)
Payments on capital lease		(2,431	)		—
Principal payments on related party notes payable		(65,000	)		(204,984	)
Principal payments on debt		(485,000	)		(125,000	)
Net cash used in financing activities		(552,431	)		(392,484	)
Net increase (decrease) in cash		(533,533	)		(489,264	)
Cash at beginning of period		890,415			934,250
Cash at end of period	$	356,882		$	444,986
Cash paid for:
Interest	$	224,207		$	372,810
Income taxes	$	—		$	—

See Notes to Condensed Consolidated Financial Statements.

- 4 -

CornerWorld Corporation

Notes to Condensed Consolidated Financial Statements

July 31, 2012

(unaudited)

1. Basis of Presentation

Interim Unaudited Condensed Consolidated Financial Statements

The unaudited interim condensed consolidated financial statements of CornerWorld Corporation (“CornerWorld” or the “Company”) as of July 31, 2012 and for the three months ended July 31, 2012 and 2011 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, 2012 are not necessarily indicative of the results that may be expected for the entire fiscal year.

The accompanying Unaudited Interim Condensed Consolidated Financial Statements have been prepared in accordance with the regulations for interim financial information of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited accompanying statements of financial condition and related interim statements of operations, cash flows, and stockholders’ deficit include all adjustments (which consist only of normal and recurring adjustments) considered necessary for a fair presentation in conformity with U.S. GAAP. These Unaudited Interim Condensed Consolidated Financial Statements should be read in conjunction with the CornerWorld consolidated financial statements as of and for the year ended April 30, 2012, as filed with the SEC on Form 10-K.

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.

The Company provides certain marketing services through its Enversa Companies LLC, a Texas limited liability company (“Enversa”) operating subsidiary.   CornerWorld is the sole member of Enversa.   Enversa 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 ensures that they are billed solely for campaign performance. Enversa also operates several ad networks and a proprietary request for proposal (RFP) technology that highlights promotional offers from a variety of corporate clients.    Enversa also provides search engine optimization services (“SEO”), domain leasing and website management services on a recurring monthly basis to over 300 customers.

The Company provides telecommunications services through its wholly-owned subsidiary, Woodland Holdings Corp. (“Woodland Holdings”).  Woodland Holdings is the owner of S Squared, LLC, doing business in the state of Michigan as “Ranger Wireless LLC” (“Ranger”).   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.

Woodland Holdings also provides telephony and internet services through its subsidiaries Phone Services and More, L.L.C., doing business as Visitatel (“PSM”) and T2 Communications, L.L.C. (“T2 Communications”).  As a provider of Internet Protocol Television (IPTV), Internet and VoIP services, T2 Communications delivers leading-edge technology to business customers in Michigan. Offerings include: phone lines, Internet connections, long distance and toll-free services. T2 Communications is a Competitive Local Exchange Carrier (CLEC).  PSM holds an FCC 214 License as a wholesale long distance service provider to the carrier community and large commercial users of transport minutes.

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

- 5 -

CornerWorld Corporation

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

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company, 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 US GAAP and have been consistently applied in the preparation of the financial statements. The financial statements are stated in United States of America dollars.

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

Accounting Standards Codification (“ASC”) No. 850 requires disclosure of fair value information about financial instruments when it is practicable to estimate that value. The carrying amount of the Company’s cash and cash equivalents, accounts receivable, accounts receivable-related party, accounts payable, accounts payable-related party, accrued liabilities, and notes payable approximate their estimated fair values due to their short-term maturities.

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

Revenue Recognition

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

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

At Ranger, revenue is recognized monthly as telecommunications services, such as minutes and calls, among other things, are provided to customers. For T2 Communication, the majority of revenue is derived from month-to-month, bundled service contracts for the phone and internet services used by each customer. Revenue is recognized as the services are provided.

Income Taxes

The Company accounts for income tax in accordance with ASC No. 740 which requires the use of the asset and liability method of accounting of income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

- 6 -

CornerWorld Corporation

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

Long-Lived Assets

The Company accounts for its long-lived assets in accordance with the ASC. The Company’s primary long-lived assets are website development costs, Goodwill, a patent, identifiable intangible assets and property and equipment. The ASC requires a company to assess the recoverability of its long-lived assets whenever events and circumstances indicate the carrying value of an asset or asset group may not be recoverable from estimated future cash flows expected to result from its use and eventual disposition. Management does not believe the Goodwill, patent and identifiable intangible assets associated with its recent acquisitions are impaired. No impairment charges have been recorded as of July 31, 2012.

Stock-Based Compensation

The Company accounts for awards made under its two stock-based compensation plans pursuant to the fair value provisions of ASC No. 718. ASC No. 718 requires the recognition of stock-based compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. ASC No. 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The Company accounts for stock-based compensation in accordance with ASC No. 718 and estimates its fair value based on using the Black-Scholes option pricing model. The Company’s determination of fair value of share-based payment awards is made as of their respective dates of grant using that option pricing model and is affected by the Company’s stock price as well as a number of subjective assumptions. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards and actual and projected employee stock option exercise behavior. The expected term of options granted is derived from historical data on employee exercises and post-vesting employment termination behavior. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the pricing term of the grant effective as of the date of the grant. The expected volatility is based on the historical volatility of the Company’s stock price. These factors could change in the future, affecting the determination of stock-based compensation expense in future periods. The Black-Scholes option pricing model was developed for use in estimating the value of traded options that have no vesting or hedging restrictions and are fully transferable. Because the Company’s options have certain characteristics that are significantly different from traded options, the existing valuation models may not provide an accurate measure of the fair value of the Company’s options. Although the fair value of the Company’s options is determined in accordance with ASC No. 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. The calculated compensation cost is recognized on a straight-line basis over the vesting period of the options. See also Note 6 Stock Based Compensation, for more details.

Reclassifications

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

3. 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, 2012			April 30, 2012			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		(6,322,579	)		(5,933,122	)
	$	5,582,213		$	5,971,670

Amortization expense related to identifiable intangible assets totaled $389,457 and $472,791 for the three months ended July 31, 2012 and 2011, respectively.

- 7 -

CornerWorld Corporation

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

4. Debt

	As of
	July 31, 2012			April 30, 2012
Long-term Debt
Notes payable to Emerald Crest Capital (the “Senior Lender”); the notes mature March 31, 2015. The interest rate was floating at LIBOR plus 12%; the note’s floor utilizes a minimum LIBOR of 3%. At July 31, 2012 the total rate was 15%. These notes are collateralized by all assets of the Company.	$	4,375,000		$	4,500,000
Note payable IU Holdings, LP; the note matures February 28, 2015.  At July 31, 2012, the interest rate was 10%. This note is collateralized by all assets of the Company save for the Ranger patent. See also note 8, Related Party Transactions.		1,500,000			1,500,000
Note payable to IU Investments, LLC, due March 31, 2016. At July 31, 2012, the interest rate was 10%. These notes are collateralized by all assets of the Company save for the Ranger patent. See also note 8, Related Party Transactions.		527,915			527,915
Notes payable to Internet University and the other selling members of Enversa; the notes mature March 31, 2016.  At July 31, 2012 the interest rate was 10.0%. These notes are collateralized by all assets of the Company save for the Ranger patent. See also note 8, Related Party Transactions.		1,364,199			1,364,199
Note payable to Internet University; the note matures February 28, 2013.  At July 31, 2012, the interest rate was 10%. This note is collateralized by all assets of the Company save for the Ranger patent. See also note 8, Related Party Transactions.		235,000			300,000
Note payable to Ned B. Timmer; the note matures April 30, 2016.  At July 31, 2011, the interest rate was 10%. This note is collateralized by all assets of Woodland Holdings, Corporation, including the Ranger patent.		1,440,000			1,800,000
Note payable to CEO; the note matures July 31, 2015.  At July 31, 2012, the interest rate was 10%. This note is collateralized by all assets of the Company save for the Ranger patent. See also note 8, Related Party Transactions.		338,958			338,958
Note payable to Kelly Larabee Morlan; the note matures December 31, 2013.  At July 31, 2012, the interest rate was 10%. This note is not collateralized.		16,316			16,316
Total debt		9,797,388			10,347,388
Less current portion of long-term debt		(2,277,146	)		(3,325,525	)
Non-current portion of long-term debt	$	7,520,242		$	7,021,863

On March 29, 2011, the Company also entered into a warrant purchase agreement with the Senior Lender.  Pursuant to the Purchase Agreement, the Company issued the Senior Lender a common stock purchase warrant (the “Warrant”), pursuant to which the Senior Lender may purchase up to 8,762,008 shares of the Company’s common stock for an aggregate price of $100.  The warrant has a 5 year term and contains certain put and call provisions.  The Warrant is not exercisable prior to March 30, 2014.  Using the Black-Scholes model, the original value of the warrant issued to the Senior Lender was less than the net present value of the minimum $1,000,000 cash value of the warrants. Therefore, the net present value of $1,000,000, totaling $642,899 was recorded as a loan discount, which is being amortized to earnings as additional interest expense over the remaining term of the loan.  The warrant is revalued at each reporting date, and adjusted to earnings. In addition, other loan fees of $717,569 were incurred from the issuance of 75,104,584 shares of the Company’s stock, $512,750 was paid or accrued, and $52,467 was incurred from the grant of additional warrants during March 2011. These fees are being amortized to earnings as additional interest over the remaining term of the loans. The unamortized balance of these deferred costs was $891,950 and $1,039,302 at July 31 and April 30, 2012, respectively, and is reflected as a loan discount to the outstanding balance of $9,797,388 at July 31, 2012.

The note payable to the Senior Lender includes certain restrictive covenants with respect to the Company’s earnings, leverage and accounts payable. As of July 31, 2012, the Company believes that it is in compliance with all restrictive covenants.

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

- 8 -

CornerWorld Corporation

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

5. Commitments and Contingencies

Litigation

The Company is occasionally involved in litigation matters relating to claims arising from the ordinary course of business. The Company’s management believes that there are no claims or actions pending or threatened against the Company, the ultimate disposition of which would have a material adverse effect on our business, results of operations and financial condition.

6. Stock-Based Compensation

Incentive Stock Plan

On August 17, 2007, the Company’s board of directors adopted and implemented the Company’s 2007 Incentive Stock Plan. Under the Incentive Stock Plan, the Company is authorized to issue 4,000,000 shares 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, 2012.

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, 2012.

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

	July 31, 2012
		Shares Reserved for Grant	Awards Available for Grant
Incentive Stock Plan		4,000,000	2,105,000
Stock Compensation Plan		4,000,000	3,075,000
		8,000,000	5,180,000

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.

- 9 -

CornerWorld Corporation

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

The fair value of each stock-based award is estimated on the grant date using the Black-Scholes option-pricing model. Expected volatilities are based on the historical volatility of the Company’s stock price. The expected term of options granted subsequent to the adoption ASC 718 is derived using the simplified method as defined in the SEC’s SAB No. 107. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury interest rates in effect at the time of grant. The fair value of options granted was estimated using the following weighted-average assumptions:

	For the three month periods ended July 31,
		2012	2011
Expected term (in years)		—	5.0
Expected volatility		—	67.8%
Risk-free interest rate		—	2.1%
Dividend yield		—	0.0%

A summary of activity under the Stock Plans and changes during the period ended July 31, 2012 is presented below:

				Weighted-Average
	Shares			Exercise Price		Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at May 1, 2012		2,910,000		$	0.35		3.12	$	44,600
Issued		—			—		—		—
Cancelled/forfeited		(90,000	)		0.20
Exercised		—			—
Outstanding at July 31, 2012		2,820,000		$	0.35		2.51	$	—
Options vested and expected to vest*		2,750,000		$	0.35		2.51	$	—
Options exercisable at end of period		1,836,250		$	0.40		1.89	$	—

* 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.

As of July 31, 2012 and 2011, the Company recognized $41,509 and $37,446 of stock-based compensation expense, respectively. As of July 31, 2012 there was $267,259 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 2.51 weighted average years.

- 10 -

CornerWorld Corporation

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

7. Business Segments

Our business consists primarily of two integrated business segments: (i) marketing services and (ii) communications services. Our corporate administrative functions are tracked separately and the associated costs are not pushed down to the operating segments. The following table summarizes selected financial information for each operating segment:

Three Months Ended July 31, 2012	Marketing Services		Communications Services		Corporate			Consolidated
Revenue	$	665,794	$	1,509,273	$	—		$	2,175,067
Income (loss) from continuing operations before tax		163,135		483,740		(801,574	)		(154,699	)
Net (loss) income		163,135		483,740		(801,574	)		(154,699	)
Total assets		397,371		8,453,534		713,164			9,564,069
Intangibles		—		5,582,213		—			5,582,213
Goodwill		—		1,581,850		554,986			2,136,836
Depreciation and amortization		1,546		396,751		12,455			410,752

Three Months Ended July 31, 2011	Marketing Services		Communications Services		Corporate			Consolidated
Revenue	$	1,469,573	$	1,472,100	$	—		$	2,941,673
Income (loss) from continuing operations before tax		28,638		298,485		(848,783	)		(521,660	)
Net (loss) income		28,638		298,485		(848,783	)		(521,660	)
Total assets		1,137,897		10,033,765		685,062			11,856,724
Intangibles		27,770		7,140,041		—			7,167,811
Goodwill		—		1,581,850		554,986			2,136,836
Depreciation and amortization		84,697		476,380		16,174			577,251

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

8. Related Party Transactions

On August 27, 2008 the Company entered into promissory notes (collectively the “Tier 4 Junior Notes”) totaling $1,500,000 with Internet University, Inc., Marc Blumberg and Marc Pickren.   Mr. Blumberg is a member of the Company’s Board of Director as well as the president of Internet University, Inc. and Mr. Pickren is the President of the Company.   The Company recorded interest of $34,863 and $52,294 on these facilities during the three month periods ended July 31, 2012 and 2011, respectively.  The balance of the Tier 4 Junior Notes totaled $1,364,199 at July 31, 2012.

On February 23, 2009, the Company entered into a promissory note (the “Tier 3 Junior Note”) totaling $1,900,000 with IU Investments, LLC (“IUI”). IUI is an entity owned by the parents of the Company’s Chief Executive Officer.  Interest is payable at the Company’s discretion at a rate of 10% per annum.   The Company recorded interest of $13,491 and $14,892 on this facility during the three month periods ended July 31, 2012 and 2011, respectively.   The balance of this note totaled $527,915 at July 31, 2012.

- 11 -

CornerWorld Corporation

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

On March 30, 2011, the Company entered into a subordinated $1.5 million promissory note (the “Tier 2 Junior Note”) with IU Holdings, LP (“IUH”). Interest on the outstanding principal amount under the Tier 2 Junior Note is payable at the Company’s discretion at a rate of 10% per annum.  As additional consideration to induce IUH to enter into the Tier 2 Junior Note, the Company issued to IUH, 48,414,132 shares of CornerWorld Corporation Common stock. IUH is a partnership whose limited partners include the parents of the Company’s Chief Executive Officer.  Steve Toback, the uncle of the Company’s Chief Executive Officer, serves as the manager of IU Holdings, GP, LLC which is the general partner of IUH.  The Company recorded approximately $37,808 and $45,370 in interest on this facility, during the three month periods ended July 31, 2012 and 2011, respectively.  The balance of this note totaled $1,500,000 at July 31, 2012.

On March 30, 2011, the Company entered into a subordinated $400,000 promissory note (the “Tier 5 Junior Note”) with Internet University.   Interest on the outstanding principal amount under the Tier 5 Junior Note is payable at the Company’s discretion at a rate of 10% per annum.  As additional consideration to induce Internet University to enter into the Tier 5 Junior Note, the Company issued to Internet University, 12,910,435 shares of CornerWorld Corporation Common stock.  The Company recorded interest of $7,142 and $13,233 on this facility during the three month periods ended July 31, 2012 and 2011, respectively.  The balance of this note totaled $235,000 at July 31, 2012.

On March 30, 2011, the Company entered into a subordinated $389,942 promissory note (the “Tier 7 Junior Note”) with Scott N. Beck, the Company’s Chief Executive Officer.   Interest on the outstanding principal amount under the Tier 7 Junior Note is payable at the Company’s discretion at a rate of 10% per annum.  As additional consideration to induce Mr. Beck to enter into this Promissory Note, the Company issued Mr. Beck 12,585,802 shares of CornerWorld Corporation Common stock.  The Tier 7 Junior Note consists primarily of prior accounts payable.  The Company recorded interest of $8,544 and $9,186 on this facility during the three month periods ended July 31, 2012 and 2011, respectively.  The balance of this note totaled $338,958 at July 31, 20112.

The Company is party to a lease agreement with 13101 Preston Road, LP. pursuant to which it leases office space for its corporate headquarters.  The limited partners of 13101 Preston Road, LP are trusts created by the father of the Company’s Chief Executive Officer. The Company paid $38,472 and $50,761 in rent during the three month periods ended July 31, 2012 and 2011, respectively.  

In addition, the Company provides accounting, human resources and certain IT services to an entity controlled by the family of the Company’s Chief Executive Officer for $5,000 per month.  The Company received $15,000 from this entity during the three month period ended July 31, 2012.

- 12 -

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.

Three Months ended July 31, 2012 Highlights:

· We paid down $550,000 in principal on our outstanding debt.

· After removal of non-cash amortization of loan discounts (interest expense) totaling $147,352, depreciation & amortization and stock-based compensation expense totaling $410,752 and $41,509, respectively, the Company’s pro-forma profit for the three months ended July 31, 2012 would have totaled approximately $444,914. See the table that follows for more details. The Company expects to generate positive operating cash flows for the fiscal year ending April 30, 2013.

We define “Adjusted Net Income¹” as net loss after removal of non-cash charges including amortization of loan discounts (interest expense), depreciation, amortization of intangibles and stock-based compensation. Management believes pro-forma net income provides useful additional information concerning the Company’s potential profitability. However, Adjusted Net Income is not a measure of financial performance under Generally Accepted Accounting Principles (“GAAP”). Accordingly, Adjusted Net Income should not be considered an alternative to net income as an indicator of operating performance. The table that follows provides a reconciliation between GAAP net income and Adjusted Net Income.

___________________________

¹ This measure presented may not be comparable to similarly titled measures reported by other companies.

Reconciliation between GAAP Net Income and Adjusted Net Income:

	For the three month period ended July 31, 2012			Per share data
Net loss	$	(154,699	)	$	0.00
Non-cash charges:
Amortization of loan discounts (interest)		147,352			0.00
Stock-based compensation		41,509			0.00
Depreciation and amortization		410,752			0.00
Total non-cash charges		599,613			0.00
Pro-forma net income	$	444,914		$	0.00
Weighted average common shares outstanding:
Basic and diluted		147,547,607			147,547,607

Service Offerings

Our business consists primarily of two integrated business segments: (i) marketing services and (ii) communications services. Our corporate administrative functions are tracked separately and the associated costs are not pushed down to the operating segments. See also Note 7 of the Notes to the Unaudited Condensed Consolidated Financial Statements – Business Segments for additional segment information.

- 13 -

Critical Accounting Policies and Estimates

Use of Estimates and Critical Accounting Policies

In preparing our condensed consolidated unaudited financial statements, we make estimates, assumptions and judgments that can have a significant effect on our revenues, income (loss) from operations, and net income (loss), as well as on the value of certain assets on our consolidated balance sheet. 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, impairment of long-lived assets (including goodwill), revenue recognition and stock-based compensation. In addition, please refer to Note 2 of the Notes to the Unaudited Condenses Consolidated Financial Statements for further discussion of our accounting policies.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. The allowance for doubtful accounts is based on an estimate of buckets of customer accounts receivable, stratified by age, that, historically, have proven to be uncollectible; in addition, in certain cases, the allowance estimate is supplemented by specific identification of larger customer accounts and our best estimate of the likelihood of potential loss, taking into account such factors as the financial condition and payment history of major customers. We evaluate the collectibility of our receivables at least quarterly. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. The differences could be material and could significantly impact cash flows from operating activities.

Impairment of Long-Lived Assets

The Company’s management assesses the recoverability of its long-lived assets by determining whether the depreciation and amortization of long-lived assets over their remaining lives can be recovered through projected undiscounted future cash flows. The amount of long-lived asset impairment is measured based on fair value and is charged to operations in the period in which long-lived asset impairment is determined by management.

Goodwill

Goodwill represents the excess of acquisition cost over the net assets acquired in a business combination. Management reviews, on an annual basis, the carrying value of goodwill in order to determine whether impairment has occurred. Impairment is based on several factors including the Company’s projection of future undiscounted operating cash flows. If an impairment of the carrying value were to be indicated by this review, the Company would adjust the carrying value of goodwill to its estimated fair value.

Income Taxes

The Company accounts for income tax in accordance with ASC No. 740 which requires the use of the asset and liability method of accounting of income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Revenue Recognition

It is the Company’s policy that revenue from product sales or services will be recognized in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition” (“SAB No. 104”), which superseded Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” (“SAB No. 101”). SAB No. 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. 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. The Company will defer any revenue for which the product was not delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

- 14 -

Stock-Based Compensation

The Company accounts for awards made under its two stock-based compensation plans pursuant to the fair value provisions of ASC No. 718. ASC No. 718 requires the recognition of stock-based compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. ASC No. 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The Company accounts for stock-based compensation in accordance with ASC No. 718 and estimates its fair value based on using the Black-Scholes option valuation model.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. This model also requires the input of highly subjective assumptions including:

(a)	The expected volatility of our common stock price, which we determine based on comparable companies;
(b)	Expected dividends (which do not apply, as we do not anticipate issuing dividends);
(c)	Expected life of the award, which is estimated based on the historical award exercise behavior of our employees; and
(d)	The risk-free interest rate which we determine based on the yield of a U.S. Treasury bond whose maturity period equals the options expected term.

These factors could change in the future, affecting the determination of stock-based compensation expense in future periods. In the future, we may elect to use different assumptions under the Black-Scholes valuation model or a different valuation model, which could result in a significantly different impact on our net income or loss.

The Company’s determination of fair value of share-based payment awards is made as of their respective dates of grant using the Black Scholes option valuation model. Because the Company’s options have certain characteristics that are significantly different from traded options, the Black Scholes option valuation model may not provide an accurate measure of the fair value of the Company’s options. Although the fair value of the Company’s options is determined in accordance with ASC No. 718, 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 6 – Stock Based Compensation of the Notes to the Unaudited Condensed Consolidated Financial Statements for additional information regarding our accounting policies for stock-based compensation.

Recent Accounting Pronouncements

There were various accounting standards and interpretations issued during the three months ended July 31, 2012, none of which are expected to have a material impact on the Company’s consolidated financial position, operations, or cash flows.

Results of Operations

Comparison of the three months ended July 31, 2012 to the three months ended July 31, 2011

Marketing services

Our marketing services segment consists of our Enversa division.

Revenues and Gross profit:

Our marketing services segment had revenues totaling $665,794 for the three month period ended July 31, 2012 as compared to $1,469,573 for the three month period ended July 31, 2011. This decrease is due to a general reduction in the market for lead generation services in the for-profit education institution vertical as well as the loss of a significant enterprise client during the second half of the fiscal year ended April 30, 2012. That client generated significant revenues for our marketing services segment during the three month period ended July 31, 2011.

Similarly, gross profit at our direct marketing segment decreased for the three months ended July 31, 2012 to $422,192 from $831,323 for the three month period ended July 31, 2011. Gross profit as a percentage of revenue increased from 63.3% to 42.0% due to an increase in sales of higher margin search engine optimization and site lease services.

- 15 -

Selling, General and Administrative

Selling, general and administrative (“SG&A”) expenses totaled $257,511 for the three months ended July 31, 2012 as compared to $715,002 for the corresponding period in the prior year. The decrease of $457,491 is primarily due to decreases in headcount, rent and utilities associated with cost cutting measures resulting from the loss of a large customer.  In addition, we reallocated salaries of certain personnel to corporate due to the fact that their contributions were to Company overall and were not simply limited to the marketing services segment.

Net Income

Net income totaled $163,135 for the three months ended July 31, 2012 as compared to net income of $28,638 for the corresponding period in the prior year. The net income improvement is primarily due to cost reductions enacted in our marketing services segment as well as reallocation of certain salaries to the corporate segment.

Communications services

Our communications services segment consists of our Woodland Holdings division.

Revenues and Gross profit:

Our communications services segment had revenues totaling $1,509,273 for the three month period ended July 31, 2012 as compared to $1,472,100 for the three month period ended July 31, 2011. This increase is primarily due to the fact that the Company experienced an increase in roaming revenues due to the complexities of new smart phones being purchased by consumers.

For the same reasons, gross profit increased for the three months ended July 31, 2012 to $1,327,899 from $1,258,853 for the three month period ended July 31, 2011. Gross profit as a percentage of revenue improved to 88.0% during the three months ended July 31, 2012 as compared to 85.5% during the corresponding period in the prior year.  The margin improvement was primarily due to a credit we received from the carrier who provides our network infrastructure.

Selling, General and Administrative

SG&A expenses totaled $129,525 for the three month period ended July 31, 2012 as compared to $126,949 for the three month period ended July 31, 2011. There was no significant difference in the SG&A expenses for these periods.

Net Income

Net income totaled $483,740 for the three months ended July 31, 2012 as compared to net income of $298,485 for the corresponding period in the prior year. The increase of $185,255 is primarily due to the improvement in revenues plus a decrease in interest expenses resulting from our paydown of $550,000 in debt.  

Corporate

Selling, General and Administrative

SG&A costs totaled $594,906 for the quarter ended July 31, 2012 versus $494,060 for the corresponding period in the prior year. The increase of $100,846 is primarily due to the fact that we reallocated certain employees' salaries to corporate effective May 1, 2012.

Liquidity and Capital Resources

As of July 31, 2012, we have a working capital deficit of approximately $3.6 million and cash of $356,882. Our working capital deficit is primarily related to certain large accounts payable associated with our 2009 acquisitions through Woodland Holdings as well as the short-term nature of selected tranches of the debt we issued in March 2011 when we recapitalized the Company. We believe the cash flows from our existing operations will be adequate to manage our debt commitments and we have good relationships with the vendors associated with the large accounts payable who we continue to pay with excess cash flow. Management expects that its current cash and operational cash flow will be sufficient to meet our liquidity needs for the next year.

We had no investing activity for the three month period ended July 31, 2012.

- 16 -

We have no other bank financing or other external sources of liquidity. We source all of our liquidity through our operations.  We expect that trend to continue.

We will most likely need to obtain additional capital in order to further 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

Not applicable.

Item 4. 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 (the “Exchange Act”), 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 and its chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) or 15d-15(e)) as of July 31, 2012. Based on that evaluation, the Company’s chief executive officer and chief financial officer concluded that, as of that date, the Company’s disclosure controls and procedures, were not effective at a reasonable assurance level.

Management’s Remediation Plan

Management determined that a material weakness existed due to an inability to appropriately segregate duties in the accounting department due to a lack of the number of personnel in the accounting department. The Company has hired a chief financial officer and has replaced selected accounting personnel with more seasoned professionals, including additional certified public accountants, to help perform certain accounting and financial functions. In addition, management has included additional reviews and controls to mitigate the size of the accounting department and the overlap of responsibilities.  Management believes the foregoing efforts will effectively remediate this material weakness but the Company can give no assurance that the additional controls will be effective. As the Company continues to evaluate and work to improve its internal control over financial reporting, management may determine to take additional measures to address control deficiencies or determine to modify the remediation plan described above. We cannot assure you that, as circumstances change, any additional material weakness will not be identified.

Changes in Internal Control over Financial Reporting

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.

- 17 -

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Not applicable.

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

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	(2)
32.2	Section 1350 Certification by our chief financial officer	(2)
101	Interactive Data Files of Financial Statements and Notes.	(3)

__________

(1)	Filed herewith.
(2)	Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of Regulation S-K under the Exchange Act.
(3)	Furnished (and not filed) herewith pursuant to Regulation S-T under the Exchange Act.

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
September 14, 2012	/s/ V. Chase McCrea III
	V. Chase McCrea III
	Chief Financial Officer

- 18 -

EX-31

Exhibit 31.1

CERTIFICATION

I, Scott N. Beck, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CornerWorld 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

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

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

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

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of 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.

/s/ Scott N. Beck

Scott N. Beck

Chief Executive Officer

Dated: September 14, 2012

EX-31

Exhibit 31.2

CERTIFICATION

I, V. Chase McCrea III, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CornerWorld 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

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

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

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

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of 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.

/s/ V. Chase McCrea III

V. Chase McCrea III

Chief Financial Officer

Dated: September 14, 2012

EX-32

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, Scott N. Beck, hereby certifies, for purposes of section 1350 of chapter 63 of title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as the Chief Executive Officer of CornerWorld Corporation (the “Company”) that, to his knowledge, the Quarterly Report of the Company on Form 10-Q for the period ended July 31, 2012, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company. A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

/s/ Scott N. Beck

Scott N. Beck

Chief Executive Officer

Dated: September 14, 2012

EX-32

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, V. Chase McCrea III, hereby certifies, for purposes of section 1350 of chapter 63 of title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as the Chief Financial Officer of CornerWorld Corporation (the “Company”) that, to his knowledge, the Quarterly Report of the Company on Form 10-Q for the period ended July 31, 2012, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company. A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

/s/ V. Chase McCrea III

V. Chase McCrea III

Chief Financial Officer

Dated: September 14, 2012

XML

Stock-Based Compensation (Schedule of Shares Reserved) (Details)	Jul. 31, 2012	Aug. 17, 2007
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares Reserved for Grant	8,000,000
Awards Available for Grant	5,180,000
Incentive Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares Reserved for Grant	4,000,000	4,000,000
Awards Available for Grant	2,105,000
Stock Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares Reserved for Grant	4,000,000	4,000,000
Awards Available for Grant	3,075,000

XML

Intangible Assets

3 Months Ended

Jul. 31, 2012

Intangible Assets [Abstract]

Intangible Assets

3. 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, 2012			April 30, 2012			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		(6,322,579	)		(5,933,122	)
	$	5,582,213		$	5,971,670

Amortization expense related to identifiable intangible assets totaled $389,457 and $472,791 for the three months ended July 31, 2012 and 2011, respectively.

XML

Related Party Transactions (Details) (USD $)	1 Months Ended	3 Months Ended			3 Months Ended				3 Months Ended				0 Months Ended	3 Months Ended			0 Months Ended	3 Months Ended			0 Months Ended	3 Months Ended			3 Months Ended
	Mar. 31, 2011	Jul. 31, 2012	Jul. 31, 2011	Apr. 30, 2012	Jul. 31, 2012 Internet University and Other Selling Members of Enversa [Member]	Jul. 31, 2011 Internet University and Other Selling Members of Enversa [Member]	Apr. 30, 2012 Internet University and Other Selling Members of Enversa [Member]	Aug. 27, 2008 Internet University and Other Selling Members of Enversa [Member]	Jul. 31, 2012 IU Investments, LLC [Member]	Jul. 31, 2011 IU Investments, LLC [Member]	Apr. 30, 2012 IU Investments, LLC [Member]	Feb. 23, 2009 IU Investments, LLC [Member]	Mar. 30, 2011 IU Holdings, LP [Member]	Jul. 31, 2012 IU Holdings, LP [Member]	Jul. 31, 2011 IU Holdings, LP [Member]	Apr. 30, 2012 IU Holdings, LP [Member]	Mar. 30, 2011 Internet University [Member]	Jul. 31, 2012 Internet University [Member]	Jul. 31, 2011 Internet University [Member]	Apr. 30, 2012 Internet University [Member]	Mar. 30, 2011 CEO [Member]	Jul. 31, 2012 CEO [Member]	Jul. 31, 2011 CEO [Member]	Apr. 30, 2012 CEO [Member]	Jul. 31, 2012 13101 Preston Road, LP [Member]	Jul. 31, 2011 13101 Preston Road, LP [Member]	Jul. 31, 2012 Entity Controlled by CEO's Family [Member]
Related Party Transaction [Line Items]
Debt issued								$ 1,500,000				$ 1,900,000	$ 1,500,000				$ 400,000				$ 389,942
Interest rate									10.00%					10.00%				10.00%				10.00%
Interest expense		511,996	695,982		34,863	52,294			13,491	14,892				37,808	45,370			7,142	13,233			8,544	9,186
Long-term debt		9,797,388		10,347,388	1,364,199		1,364,199		527,915		527,915			1,500,000		1,500,000		235,000		300,000		338,958		338,958
Shares issued	75,104,584												48,414,132				12,910,435				12,585,802
Lease agreement, rent expense																									38,472	50,761
Service revenue, monthly amount																											5,000
Revenue from accounting, human resources, and IT services																											$ 15,000

XML

Business Segments (Details) (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011	Apr. 30, 2012
Segment Reporting Information [Line Items]
Revenue	$ 2,175,067	$ 2,941,673
Income (loss) from continuing operations before tax	(154,699)	(521,660)
Net (loss) income	(154,699)	(521,660)
Total assets	9,564,069	11,856,724	10,384,652
Intangibles	5,582,213	7,167,811	5,971,670
Goodwill	2,136,836	2,136,836	2,136,836
Depreciation and amortization	410,752	577,251
Marketing Services [Member]
Segment Reporting Information [Line Items]
Revenue	665,794	1,469,573
Income (loss) from continuing operations before tax	163,135	28,638
Net (loss) income	163,135	28,638
Total assets	397,371	1,137,897
Intangibles		27,770
Goodwill
Depreciation and amortization	1,546	84,697
Communications Services [Member]
Segment Reporting Information [Line Items]
Revenue	1,509,273	1,472,100
Income (loss) from continuing operations before tax	483,740	298,485
Net (loss) income	483,740	298,485
Total assets	8,453,534	10,033,765
Intangibles	5,582,213	7,140,041
Goodwill	1,581,850	1,581,850
Depreciation and amortization	396,751	476,380
Corporate [Member]
Segment Reporting Information [Line Items]
Revenue
Income (loss) from continuing operations before tax	(801,574)	(848,783)
Net (loss) income	(801,574)	(848,783)
Total assets	713,164	685,062
Intangibles
Goodwill	554,986	554,986
Depreciation and amortization	$ 12,455	$ 16,174

XML

Summary of Significant Accounting Policies

3 Months Ended

Jul. 31, 2012

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

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

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

Accounting Standards Codification ("ASC") No. 850 requires disclosure of fair value information about financial instruments when it is practicable to estimate that value. The carrying amount of the Company's cash and cash equivalents, accounts receivable, accounts receivable-related party, accounts payable, accounts payable-related party, accrued liabilities, and notes payable approximate their estimated fair values due to their short-term maturities.

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

Revenue Recognition

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

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

At Ranger, revenue is recognized monthly as telecommunications services, such as minutes and calls, among other things, are provided to customers. For T2 Communication, the majority of revenue is derived from month-to-month, bundled service contracts for the phone and internet services used by each customer. Revenue is recognized as the services are provided.

Income Taxes

The Company accounts for income tax in accordance with ASC No. 740 which requires the use of the asset and liability method of accounting of income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Long-Lived Assets

The Company accounts for its long-lived assets in accordance with the ASC. The Company's primary long-lived assets are website development costs, Goodwill, a patent, identifiable intangible assets and property and equipment. The ASC requires a company to assess the recoverability of its long-lived assets whenever events and circumstances indicate the carrying value of an asset or asset group may not be recoverable from estimated future cash flows expected to result from its use and eventual disposition. Management does not believe the Goodwill, patent and identifiable intangible assets associated with its recent acquisitions are impaired. No impairment charges have been recorded as of July 31, 2012.

Stock-Based Compensation

The Company accounts for awards made under its two stock-based compensation plans pursuant to the fair value provisions of ASC No. 718. ASC No. 718 requires the recognition of stock-based compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. ASC No. 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The Company accounts for stock-based compensation in accordance with ASC No. 718 and estimates its fair value based on using the Black-Scholes option pricing model. The Company's determination of fair value of share-based payment awards is made as of their respective dates of grant using that option pricing model and is affected by the Company's stock price as well as a number of subjective assumptions. These variables include, but are not limited to, the Company's expected stock price volatility over the term of the awards and actual and projected employee stock option exercise behavior. The expected term of options granted is derived from historical data on employee exercises and post-vesting employment termination behavior. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the pricing term of the grant effective as of the date of the grant. The expected volatility is based on the historical volatility of the Company's stock price. These factors could change in the future, affecting the determination of stock-based compensation expense in future periods. The Black-Scholes option pricing model was developed for use in estimating the value of traded options that have no vesting or hedging restrictions and are fully transferable. Because the Company's options have certain characteristics that are significantly different from traded options, the existing valuation models may not provide an accurate measure of the fair value of the Company's options. Although the fair value of the Company's options is determined in accordance with ASC No. 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. The calculated compensation cost is recognized on a straight-line basis over the vesting period of the options. See also Note 6 Stock Based Compensation, for more details.

Reclassifications

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

XML

Condensed Consolidated Balance Sheets (USD $)	Jul. 31, 2012	Apr. 30, 2012
Current assets:
Cash	$ 356,882	$ 890,415
Accounts receivable (net of allowance for doubtful accounts of $172,777 and $118,597 at July 31, 2012 and April 30, 2012, respectively)	1,220,964	1,070,293
Prepaid expenses and other current assets	105,766	132,036
Total current assets	1,683,612	2,092,744
Property and equipment, net	133,377	154,673
Goodwill	2,136,836	2,136,836
Patent	5,582,213	5,971,670
Other assets	28,031	28,729
TOTAL ASSETS	9,564,069	10,384,652
Current liabilities:
Accounts payable	1,572,580	1,894,043
Accrued expenses	772,305	708,874
Notes payable, current portion, net of unamortized discount of $340,761 and $340,303 at July 31, 2012 and April 30, 2012, respectively	1,650,761	1,196,013
Notes payable related parties, current portion, net of unamortized discount of $101,796 and $161,685 at July 31, 2012 and April 30, 2012, respectively	1,068,942	1,627,524
Lease payable, current portion	10,704	10,704
Deferred revenue	302,585	385,146
Total current liabilities	5,377,877	5,822,304
Long-term liabilities:
Notes payable, net of current portion, net of unamortized discount of $447,387 and $530,268 at July 31, 2012 and April 30, 2012, respectively	3,392,407	4,249,731
Notes payable related parties, net of current portion, net of unamortized discount of $1,782 and $7,045 at July 31, 2012 and April 30, 2012, respectively	2,793,552	2,225,041
Lease payable, net of current portion	16,557	18,988
Other liabilities	782,369	754,091
Total liabilities	12,362,762	13,070,155
Commitments and Contingencies
Stockholders' 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; 147, 547,607 shares issued and outstanding, at July 31, 2012 and April 30, 2012	147,547	147,547
Additional paid-in capital	10,206,233	10,164,724
Accumulated deficit	(13,152,473)	(12,997,774)
Total stockholders' deficit	(2,798,693)	(2,685,503)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 9,564,069	$ 10,384,652

XML

Condensed Consolidated Statements of Cash Flows (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011
Cash Flows from Operating Activities
Net (loss) income	$ (154,699)	$ (521,660)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	410,752	577,251
Amortization of loan discount	147,352	255,217
Provision for doubtful accounts	76,908	34,371
Stock-based compensation	41,509	37,446
Changes in operating assets and liabilities, net of acquisitions and divestitures:
Accounts receivable	(227,579)	243,323
Prepaid expenses and other current assets	26,270	(78,537)
Other assets	698	(263)
Accounts payable	(311,462)	(630,621)
Accrued expenses	63,431	97,829
Deferred revenue	(82,561)	(130,481)
Other liabilities	28,279	32,446
Net cash provided by operating activities	18,898	(83,679)
Cash Flows from Investing Activities
Purchases of property and equipment		(13,101)
Net cash used in investing activities		(13,101)
Cash Flows from Financing Activities
Fees paid for debt issuance		(62,500)
Payments on capital lease	(2,431)
Principal payments on related party notes payable	(65,000)	(204,984)
Principal payments on debt	(485,000)	(125,000)
Net cash used in financing activities	(552,431)	(392,484)
Net increase (decrease) in cash	(533,533)	(489,264)
Cash at beginning of period	890,415	934,250
Cash at end of period	356,882	444,986
Cash paid for:
Interest	(224,207)	372,810
Income taxes

XML

Debt (Schedule of Long-term Debt) (Details) (USD $)	3 Months Ended
	Jul. 31, 2012	Apr. 30, 2012
Debt Instrument [Line Items]
Total debt	$ 9,797,388	$ 10,347,388
Less current portion of long-term debt	(2,277,146)	(3,325,525)
Non-current portion of long-term debt	7,520,242	7,021,863
Emerald Crest Capital [Member]
Debt Instrument [Line Items]
Total debt	4,375,000	4,500,000
Maturity date	Mar. 31, 2015
LIBOR spread	12.00%
Minimum LIBOR rate	3.00%
Interest rate at end of period	15.00%
IU Holdings, LP [Member]
Debt Instrument [Line Items]
Total debt	1,500,000	1,500,000
Maturity date	Feb. 28, 2015
Interest rate at end of period	10.00%
IU Investments, LLC [Member]
Debt Instrument [Line Items]
Total debt	527,915	527,915
Maturity date	Mar. 31, 2016
Interest rate at end of period	10.00%
Internet University and Other Selling Members of Enversa [Member]
Debt Instrument [Line Items]
Total debt	1,364,199	1,364,199
Maturity date	Mar. 31, 2016
Interest rate at end of period	10.00%
Internet University [Member]
Debt Instrument [Line Items]
Total debt	235,000	300,000
Maturity date	Feb. 28, 2013
Interest rate at end of period	10.00%
Ned B. Timmer [Member]
Debt Instrument [Line Items]
Total debt	1,440,000	1,800,000
Maturity date	Apr. 30, 2016
Interest rate at end of period	10.00%
CEO [Member]
Debt Instrument [Line Items]
Total debt	338,958	338,958
Maturity date	Jul. 31, 2015
Interest rate at end of period	10.00%
Kelly Larabee Morlan [Member]
Debt Instrument [Line Items]
Total debt	$ 16,316	$ 16,316
Maturity date	Dec. 31, 2013
Interest rate at end of period	10.00%

XML

Stock-Based Compensation (Narrative) (Details) (USD $)	3 Months Ended							0 Months Ended			0 Months Ended
	Jul. 31, 2012	Jul. 31, 2011	Jul. 31, 2012 Minimum [Member]	Jul. 31, 2012 Maximum [Member]	Jul. 31, 2012 Incentive Stock Plan [Member]	Aug. 17, 2007 Incentive Stock Plan [Member]	Aug. 17, 2007 Incentive Stock Plan [Member] Minimum [Member]	Aug. 17, 2007 Incentive Stock Plan [Member] Maximum [Member]	Jul. 31, 2012 Stock Compensation Plan [Member]	Aug. 17, 2007 Stock Compensation Plan [Member]	Aug. 17, 2007 Stock Compensation Plan [Member] Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized	8,000,000				4,000,000	4,000,000			4,000,000	4,000,000
Vesting period, years			5	10				5			5
Percentage of shares that vest annually						20.00%	20.00%
Award term length						10 years
Stock-based compensation	$ 41,509	$ 37,446
Unrecognized compensation cost, net of forfeitures	$ 267,259
Unrecognized compensation cost, weighted-average recognition period, years	2.51

XML

Basis of Presentation

3 Months Ended

Jul. 31, 2012

Basis of Presentation [Abstract]

Basis of Presentation

1. Basis of Presentation

Interim Unaudited Condensed Consolidated Financial Statements

The unaudited interim condensed consolidated financial statements of CornerWorld Corporation ("CornerWorld" or the "Company") as of July 31, 2012 and for the three months ended July 31, 2012 and 2011 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, 2012 are not necessarily indicative of the results that may be expected for the entire fiscal year.

The accompanying Unaudited Interim Condensed Consolidated Financial Statements have been prepared in accordance with the regulations for interim financial information of the Securities and Exchange Commission (the "SEC"). Accordingly, they do not include all of the disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited accompanying statements of financial condition and related interim statements of operations, cash flows, and stockholders' deficit include all adjustments (which consist only of normal and recurring adjustments) considered necessary for a fair presentation in conformity with U.S. GAAP. These Unaudited Interim Condensed Consolidated Financial Statements should be read in conjunction with the CornerWorld consolidated financial statements as of and for the year ended April 30, 2012, as filed with the SEC on Form 10-K.

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.

The Company provides certain marketing services through its Enversa Companies LLC, a Texas limited liability company ("Enversa") operating subsidiary. CornerWorld is the sole member of Enversa. Enversa 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 ensures that they are billed solely for campaign performance. Enversa also operates several ad networks and a proprietary request for proposal (RFP) technology that highlights promotional offers from a variety of corporate clients. Enversa also provides search engine optimization services ("SEO"), domain leasing and website management services on a recurring monthly basis to over 300 customers.

The Company provides telecommunications services through its wholly-owned subsidiary, Woodland Holdings Corp. ("Woodland Holdings"). Woodland Holdings is the owner of S Squared, LLC, doing business in the state of Michigan as "Ranger Wireless LLC" ("Ranger"). 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.

Woodland Holdings also provides telephony and internet services through its subsidiaries Phone Services and More, L.L.C., doing business as Visitatel ("PSM") and T2 Communications, L.L.C. ("T2 Communications"). As a provider of Internet Protocol Television (IPTV), Internet and VoIP services, T2 Communications delivers leading-edge technology to business customers in Michigan. Offerings include: phone lines, Internet connections, long distance and toll-free services. T2 Communications is a Competitive Local Exchange Carrier (CLEC). PSM holds an FCC 214 License as a wholesale long distance service provider to the carrier community and large commercial users of transport minutes.

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

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company, 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.

XML

Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Jul. 31, 2012	Apr. 30, 2012
Accounts receivable, allowance for doubtful accounts	$ 172,777	$ 118,597
Preferred stock, par value per share	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value per share	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	147,547,607	147,547,607
Common stock, shares outstanding	147,547,607	147,547,607
Current Notes Payable [Member]
Notes payable, unamortized discount	340,761	340,303
Current Notes Payable, Related Parties [Member]
Notes payable, unamortized discount	101,796	161,685
Long-Term Notes Payable [Member]
Notes payable, unamortized discount	447,387	530,268
Long-Term Notes Payable, Related Parties [Member]
Notes payable, unamortized discount	$ 1,782	$ 7,045

XML

Debt (Tables)

3 Months Ended

Jul. 31, 2012

Debt [Abstract]

Schedule of Long-term Debt

	As of
	July 31, 2012			April 30, 2012
Long-term Debt
Notes payable to Emerald Crest Capital (the "Senior Lender"); the notes mature March 31, 2015. The interest rate was floating at LIBOR plus 12%; the note's floor utilizes a minimum LIBOR of 3%. At July 31, 2012 the total rate was 15%. These notes are collateralized by all assets of the Company.	$	4,375,000		$	4,500,000
Note payable IU Holdings, LP; the note matures February 28, 2015. At July 31, 2012, the interest rate was 10%. This note is collateralized by all assets of the Company save for the Ranger patent. See also note 8, Related Party Transactions.		1,500,000			1,500,000
Note payable to IU Investments, LLC, due March 31, 2016. At July 31, 2012, the interest rate was 10%. These notes are collateralized by all assets of the Company save for the Ranger patent. See also note 8, Related Party Transactions.		527,915			527,915
Notes payable to Internet University and the other selling members of Enversa; the notes mature March 31, 2016. At July 31, 2012 the interest rate was 10.0%. These notes are collateralized by all assets of the Company save for the Ranger patent. See also note 8, Related Party Transactions.		1,364,199			1,364,199
Note payable to Internet University; the note matures February 28, 2013. At July 31, 2012, the interest rate was 10%. This note is collateralized by all assets of the Company save for the Ranger patent. See also note 8, Related Party Transactions.		235,000			300,000
Note payable to Ned B. Timmer; the note matures April 30, 2016. At July 31, 2011, the interest rate was 10%. This note is collateralized by all assets of Woodland Holdings, Corporation, including the Ranger patent.		1,440,000			1,800,000
Note payable to CEO; the note matures July 31, 2015. At July 31, 2012, the interest rate was 10%. This note is collateralized by all assets of the Company save for the Ranger patent. See also note 8, Related Party Transactions.		338,958			338,958
Note payable to Kelly Larabee Morlan; the note matures December 31, 2013. At July 31, 2012, the interest rate was 10%. This note is not collateralized.		16,316			16,316
Total debt		9,797,388			10,347,388
Less current portion of long-term debt		(2,277,146	)		(3,325,525	)
Non-current portion of long-term debt	$	7,520,242		$	7,021,863

XML

Document and Entity Information	3 Months Ended
	Jul. 31, 2012	Sep. 10, 2012
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jul. 31, 2012
Entity Registrant Name	Cornerworld Corp
Entity Central Index Key	0001338242
Current Fiscal Year End Date	--04-30
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		147,547,607

XML

Stock-Based Compensation (Tables)

3 Months Ended

Jul. 31, 2012

Stock-Based Compensation [Abstract]

Schedule of Shares Reserved

	July 31, 2012
		Shares Reserved for Grant	Awards Available for Grant
Incentive Stock Plan		4,000,000	2,105,000
Stock Compensation Plan		4,000,000	3,075,000
		8,000,000	5,180,000

Schedule of Assumptions

	For the three month periods ended July 31,
		2012	2011
Expected term (in years)		-	5.0
Expected volatility		-	67.8%
Risk-free interest rate		-	2.1%
Dividend yield		-	0.0%

Schedule of Stock Plan Activity

				Weighted-Average
	Shares			Exercise Price		Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at May 1, 2012		2,910,000		$	0.35		3.12	$	44,600
Issued		-			-		-		-
Cancelled/forfeited		(90,000	)		0.20
Exercised		-			-
Outstanding at July 31, 2012		2,820,000		$	0.35		2.51	$	-
Options vested and expected to vest*		2,750,000		$	0.35		2.51	$	-
Options exercisable at end of period		1,836,250		$	0.40		1.89	$	-

* 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.

XML

Condensed Consolidated Statements of Operations (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011
Condensed Consolidated Statements of Operations [Abstract]
Sales, net	$ 2,175,067	$ 2,941,673
Costs of goods sold	424,976	851,497
Gross profit	1,750,091	2,090,176
Expenses:
Selling, general and administrative expenses	981,942	1,336,011
Depreciation and amortization	410,752	577,251
Total Operating expenses	1,392,694	1,913,262
Operating income	357,397	176,914
Other income (expense), net:
Interest expense	(511,996)	(695,982)
Other income (expense), net	(100)	(2,592)
Total other income (expense), net	(512,096)	(698,574)
Income (loss) before income taxes	(154,699)	(521,660)
Income taxes
Net loss	$ (154,699)	$ (521,660)
Basic and diluted earnings (loss) per share	$ 0.0	$ 0.0
Basic and diluted weighted average number shares outstanding	147,547,607	146,972,901

XML

Stock-Based Compensation

3 Months Ended

Jul. 31, 2012

Stock-Based Compensation [Abstract]

Stock-Based Compensation

6. Stock-Based Compensation

Incentive Stock Plan

On August 17, 2007, the Company's board of directors adopted and implemented the Company's 2007 Incentive Stock Plan. Under the Incentive Stock Plan, the Company is authorized to issue 4,000,000 shares 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, 2012.

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, 2012.

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

	July 31, 2012
		Shares Reserved for Grant	Awards Available for Grant
Incentive Stock Plan		4,000,000	2,105,000
Stock Compensation Plan		4,000,000	3,075,000
		8,000,000	5,180,000

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

The fair value of each stock-based award is estimated on the grant date using the Black-Scholes option-pricing model. Expected volatilities are based on the historical volatility of the Company's stock price. The expected term of options granted subsequent to the adoption ASC 718 is derived using the simplified method as defined in the SEC's SAB No. 107. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury interest rates in effect at the time of grant. The fair value of options granted was estimated using the following weighted-average assumptions:

	For the three month periods ended July 31,
		2012	2011
Expected term (in years)		-	5.0
Expected volatility		-	67.8%
Risk-free interest rate		-	2.1%
Dividend yield		-	0.0%

A summary of activity under the Stock Plans and changes during the period ended July 31, 2012 is presented below:

				Weighted-Average
	Shares			Exercise Price		Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at May 1, 2012		2,910,000		$	0.35		3.12	$	44,600
Issued		-			-		-		-
Cancelled/forfeited		(90,000	)		0.20
Exercised		-			-
Outstanding at July 31, 2012		2,820,000		$	0.35		2.51	$	-
Options vested and expected to vest*		2,750,000		$	0.35		2.51	$	-
Options exercisable at end of period		1,836,250		$	0.40		1.89	$	-

* 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.

As of July 31, 2012 and 2011, the Company recognized $41,509 and $37,446 of stock-based compensation expense, respectively. As of July 31, 2012 there was $267,259 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 2.51 weighted average years.

XML

Commitments and Contingencies

3 Months Ended

Jul. 31, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

5. Commitments and Contingencies

Litigation

The Company is occasionally involved in litigation matters relating to claims arising from the ordinary course of business. The Company's management believes that there are no claims or actions pending or threatened against the Company, the ultimate disposition of which would have a material adverse effect on our business, results of operations and financial condition.

XML

Debt (Narrative) (Details) (USD $)	1 Months Ended			0 Months Ended
	Mar. 31, 2011	Jul. 31, 2012	Apr. 30, 2012	Mar. 29, 2011 Emerald Crest Capital [Member]	Jul. 31, 2012 Emerald Crest Capital [Member]	Apr. 30, 2012 Emerald Crest Capital [Member]	Jul. 31, 2012 Long-term Debt [Member]	Apr. 30, 2012 Long-term Debt [Member]
Debt Instrument [Line Items]
Common stock puchase warrant, shares authorized				8,762,008
Common stock purchase warrant, price per share				$ 100.0
Common stock purchase warrant, term				5 years
Common stock purchase warrant, exercise date				Mar. 30, 2014
Debt issued				$ 1,000,000
Notes payable, unamortized discount				642,899			891,950	1,039,302
Loan processing fees	717,569
Shares issued	75,104,584
Debt issuance costs	512,750
Grant of additional warrants, expense recognized	52,467
Long-term debt		$ 9,797,388	$ 10,347,388		$ 4,375,000	$ 4,500,000
Percent of assets collateralized		100.00%

XML

Business Segments (Tables)

3 Months Ended

Jul. 31, 2012

Business Segments [Abstract]

Schedule of Financial Data by Reporting Segment

Three Months Ended July 31, 2012	Marketing Services		Communications Services		Corporate			Consolidated
Revenue	$	665,794	$	1,509,273	$	-		$	2,175,067
Income (loss) from continuing operations before tax		163,135		483,740		(801,574	)		(154,699	)
Net (loss) income		163,135		483,740		(801,574	)		(154,699	)
Total assets		397,371		8,453,534		713,164			9,564,069
Intangibles		-		5,582,213		-			5,582,213
Goodwill		-		1,581,850		554,986			2,136,836
Depreciation and amortization		1,546		396,751		12,455			410,752

Three Months Ended July 31, 2011	Marketing Services		Communications Services		Corporate			Consolidated
Revenue	$	1,469,573	$	1,472,100	$	-		$	2,941,673
Income (loss) from continuing operations before tax		28,638		298,485		(848,783	)		(521,660	)
Net (loss) income		28,638		298,485		(848,783	)		(521,660	)
Total assets		1,137,897		10,033,765		685,062			11,856,724
Intangibles		27,770		7,140,041		-			7,167,811
Goodwill		-		1,581,850		554,986			2,136,836
Depreciation and amortization		84,697		476,380		16,174			577,251

XML

Summary of Significant Accounting Policies (Policy)

3 Months Ended

Jul. 31, 2012

Summary of Significant Accounting Policies [Abstract]

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management include, among others, the realizability of accounts receivable, recoverability of property and equipment, 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

Fair Value of Financial Instruments

Accounting Standards Codification ("ASC") No. 850 requires disclosure of fair value information about financial instruments when it is practicable to estimate that value. The carrying amount of the Company's cash and cash equivalents, accounts receivable, accounts receivable-related party, accounts payable, accounts payable-related party, accrued liabilities, and notes payable approximate their estimated fair values due to their short-term maturities.

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

Revenue Recognition

Revenue Recognition

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

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

At Ranger, revenue is recognized monthly as telecommunications services, such as minutes and calls, among other things, are provided to customers. For T2 Communication, the majority of revenue is derived from month-to-month, bundled service contracts for the phone and internet services used by each customer. Revenue is recognized as the services are provided.

Income Taxes

Income Taxes

The Company accounts for income tax in accordance with ASC No. 740 which requires the use of the asset and liability method of accounting of income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Long-Lived Assets

Long-Lived Assets

The Company accounts for its long-lived assets in accordance with the ASC. The Company's primary long-lived assets are website development costs, Goodwill, a patent, identifiable intangible assets and property and equipment. The ASC requires a company to assess the recoverability of its long-lived assets whenever events and circumstances indicate the carrying value of an asset or asset group may not be recoverable from estimated future cash flows expected to result from its use and eventual disposition. Management does not believe the Goodwill, patent and identifiable intangible assets associated with its recent acquisitions are impaired. No impairment charges have been recorded as of July 31, 2012.

Stock-Based Compensation

Stock-Based Compensation

The Company accounts for awards made under its two stock-based compensation plans pursuant to the fair value provisions of ASC No. 718. ASC No. 718 requires the recognition of stock-based compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. ASC No. 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The Company accounts for stock-based compensation in accordance with ASC No. 718 and estimates its fair value based on using the Black-Scholes option pricing model. The Company's determination of fair value of share-based payment awards is made as of their respective dates of grant using that option pricing model and is affected by the Company's stock price as well as a number of subjective assumptions. These variables include, but are not limited to, the Company's expected stock price volatility over the term of the awards and actual and projected employee stock option exercise behavior. The expected term of options granted is derived from historical data on employee exercises and post-vesting employment termination behavior. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the pricing term of the grant effective as of the date of the grant. The expected volatility is based on the historical volatility of the Company's stock price. These factors could change in the future, affecting the determination of stock-based compensation expense in future periods. The Black-Scholes option pricing model was developed for use in estimating the value of traded options that have no vesting or hedging restrictions and are fully transferable. Because the Company's options have certain characteristics that are significantly different from traded options, the existing valuation models may not provide an accurate measure of the fair value of the Company's options. Although the fair value of the Company's options is determined in accordance with ASC No. 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. The calculated compensation cost is recognized on a straight-line basis over the vesting period of the options. See also Note 6 Stock Based Compensation, for more details.

Reclassifications

Reclassifications

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

XML

Business Segments

3 Months Ended

Jul. 31, 2012

Business Segments [Abstract]

Business Segments

7. Business Segments

Our business consists primarily of two integrated business segments: (i) marketing services and (ii) communications services. Our corporate administrative functions are tracked separately and the associated costs are not pushed down to the operating segments. The following table summarizes selected financial information for each operating segment:

Three Months Ended July 31, 2012	Marketing Services		Communications Services		Corporate			Consolidated
Revenue	$	665,794	$	1,509,273	$	-		$	2,175,067
Income (loss) from continuing operations before tax		163,135		483,740		(801,574	)		(154,699	)
Net (loss) income		163,135		483,740		(801,574	)		(154,699	)
Total assets		397,371		8,453,534		713,164			9,564,069
Intangibles		-		5,582,213		-			5,582,213
Goodwill		-		1,581,850		554,986			2,136,836
Depreciation and amortization		1,546		396,751		12,455			410,752

Three Months Ended July 31, 2011	Marketing Services		Communications Services		Corporate			Consolidated
Revenue	$	1,469,573	$	1,472,100	$	-		$	2,941,673
Income (loss) from continuing operations before tax		28,638		298,485		(848,783	)		(521,660	)
Net (loss) income		28,638		298,485		(848,783	)		(521,660	)
Total assets		1,137,897		10,033,765		685,062			11,856,724
Intangibles		27,770		7,140,041		-			7,167,811
Goodwill		-		1,581,850		554,986			2,136,836
Depreciation and amortization		84,697		476,380		16,174			577,251

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

XML

Related Party Transactions

3 Months Ended

Jul. 31, 2012

Related Party Transactions [Abstract]

Related Party Transactions

8. Related Party Transactions

On August 27, 2008 the Company entered into promissory notes (collectively the "Tier 4 Junior Notes") totaling $1,500,000 with Internet University, Inc., Marc Blumberg and Marc Pickren. Mr. Blumberg is a member of the Company's Board of Director as well as the president of Internet University, Inc. and Mr. Pickren is the President of the Company. The Company recorded interest of $34,863 and $52,294 on these facilities during the three month periods ended July 31, 2012 and 2011, respectively. The balance of the Tier 4 Junior Notes totaled $1,364,199 at July 31, 2012.

On February 23, 2009, the Company entered into a promissory note (the "Tier 3 Junior Note") totaling $1,900,000 with IU Investments, LLC ("IUI"). IUI is an entity owned by the parents of the Company's Chief Executive Officer. Interest is payable at the Company's discretion at a rate of 10% per annum. The Company recorded interest of $13,491 and $14,892 on this facility during the three month periods ended July 31, 2012 and 2011, respectively. The balance of this note totaled $527,915 at July 31, 2012.

On March 30, 2011, the Company entered into a subordinated $1.5 million promissory note (the "Tier 2 Junior Note") with IU Holdings, LP ("IUH"). Interest on the outstanding principal amount under the Tier 2 Junior Note is payable at the Company's discretion at a rate of 10% per annum. As additional consideration to induce IUH to enter into the Tier 2 Junior Note, the Company issued to IUH, 48,414,132 shares of CornerWorld Corporation Common stock. IUH is a partnership whose limited partners include the parents of the Company's Chief Executive Officer. Steve Toback, the uncle of the Company's Chief Executive Officer, serves as the manager of IU Holdings, GP, LLC which is the general partner of IUH. The Company recorded approximately $37,808 and $45,370 in interest on this facility, during the three month periods ended July 31, 2012 and 2011, respectively. The balance of this note totaled $1,500,000 at July 31, 2012.

On March 30, 2011, the Company entered into a subordinated $400,000 promissory note (the "Tier 5 Junior Note") with Internet University. Interest on the outstanding principal amount under the Tier 5 Junior Note is payable at the Company's discretion at a rate of 10% per annum. As additional consideration to induce Internet University to enter into the Tier 5 Junior Note, the Company issued to Internet University, 12,910,435 shares of CornerWorld Corporation Common stock. The Company recorded interest of $7,142 and $13,233 on this facility during the three month periods ended July 31, 2012 and 2011, respectively. The balance of this note totaled $235,000 at July 31, 2012.

On March 30, 2011, the Company entered into a subordinated $389,942 promissory note (the "Tier 7 Junior Note") with Scott N. Beck, the Company's Chief Executive Officer. Interest on the outstanding principal amount under the Tier 7 Junior Note is payable at the Company's discretion at a rate of 10% per annum. As additional consideration to induce Mr. Beck to enter into this Promissory Note, the Company issued Mr. Beck 12,585,802 shares of CornerWorld Corporation Common stock. The Tier 7 Junior Note consists primarily of prior accounts payable. The Company recorded interest of $8,544 and $9,186 on this facility during the three month periods ended July 31, 2012 and 2011, respectively. The balance of this note totaled $338,958 at July 31, 20112.

The Company is party to a lease agreement with 13101 Preston Road, LP. pursuant to which it leases office space for its corporate headquarters. The limited partners of 13101 Preston Road, LP are trusts created by the father of the Company's Chief Executive Officer. The Company paid $38,472 and $50,761 in rent during the three month periods ended July 31, 2012 and 2011, respectively.

In addition, the Company provides accounting, human resources and certain IT services to an entity controlled by the family of the Company's Chief Executive Officer for $5,000 per month. The Company received $15,000 from this entity during the three month period ended July 31, 2012.

XML

Intangible Assets (Tables)

3 Months Ended

Jul. 31, 2012

Intangible Assets [Abstract]

Schedule of Intangible Assets

	July 31, 2012			April 30, 2012			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		(6,322,579	)		(5,933,122	)
	$	5,582,213		$	5,971,670

XML

Intangible Assets (Details) (USD $)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011	Apr. 30, 2012
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 11,904,792		$ 11,904,792
Accumulated amortization	(6,322,579)		(5,933,122)
Intangible assets net, total	5,582,213	7,167,811	5,971,670
Amortization expense	389,457	472,791
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	10,904,792		10,904,792
Estimated Useful Life (Years)	7
Customer Lists [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 1,000,000		$ 1,000,000
Estimated Useful Life (Years)	3

XML

Stock-Based Compensation (Schedule of Assumptions) (Details)	3 Months Ended
	Jul. 31, 2012	Jul. 31, 2011
Stock-Based Compensation [Abstract]
Expected term (in years)	0	5
Expected volatility	0.00%	67.80%
Risk-free interest rate	0.00%	2.10%
Dividend yield	0.00%	0.00%

XML

Condensed Consolidated Statements of Stockholders' Deficit (USD $)	Total	Common Shares [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]
Balance at Apr. 30, 2012	$ (2,685,503)	$ 147,547	$ 10,164,724	$ (12,997,774)
Balance, shares at Apr. 30, 2012		147,547,607
Stock-based compensation expense	41,509		41,509
Cash-less exercise of stock options and warrants, shares (NOT USED THIS QUARTER)
Net (loss) income	(154,699)			(154,699)
Balance at Jul. 31, 2012	$ (2,798,693)	$ 147,547	$ 10,206,233	$ (13,152,473)
Balance, shares at Jul. 31, 2012		147,547,607

XML

Debt

3 Months Ended

Jul. 31, 2012

Debt [Abstract]

Debt

4. Debt

	As of
	July 31, 2012			April 30, 2012
Long-term Debt
Notes payable to Emerald Crest Capital (the "Senior Lender"); the notes mature March 31, 2015. The interest rate was floating at LIBOR plus 12%; the note's floor utilizes a minimum LIBOR of 3%. At July 31, 2012 the total rate was 15%. These notes are collateralized by all assets of the Company.	$	4,375,000		$	4,500,000
Note payable IU Holdings, LP; the note matures February 28, 2015. At July 31, 2012, the interest rate was 10%. This note is collateralized by all assets of the Company save for the Ranger patent. See also note 8, Related Party Transactions.		1,500,000			1,500,000
Note payable to IU Investments, LLC, due March 31, 2016. At July 31, 2012, the interest rate was 10%. These notes are collateralized by all assets of the Company save for the Ranger patent. See also note 8, Related Party Transactions.		527,915			527,915
Notes payable to Internet University and the other selling members of Enversa; the notes mature March 31, 2016. At July 31, 2012 the interest rate was 10.0%. These notes are collateralized by all assets of the Company save for the Ranger patent. See also note 8, Related Party Transactions.		1,364,199			1,364,199
Note payable to Internet University; the note matures February 28, 2013. At July 31, 2012, the interest rate was 10%. This note is collateralized by all assets of the Company save for the Ranger patent. See also note 8, Related Party Transactions.		235,000			300,000
Note payable to Ned B. Timmer; the note matures April 30, 2016. At July 31, 2011, the interest rate was 10%. This note is collateralized by all assets of Woodland Holdings, Corporation, including the Ranger patent.		1,440,000			1,800,000
Note payable to CEO; the note matures July 31, 2015. At July 31, 2012, the interest rate was 10%. This note is collateralized by all assets of the Company save for the Ranger patent. See also note 8, Related Party Transactions.		338,958			338,958
Note payable to Kelly Larabee Morlan; the note matures December 31, 2013. At July 31, 2012, the interest rate was 10%. This note is not collateralized.		16,316			16,316
Total debt		9,797,388			10,347,388
Less current portion of long-term debt		(2,277,146	)		(3,325,525	)
Non-current portion of long-term debt	$	7,520,242		$	7,021,863

On March 29, 2011, the Company also entered into a warrant purchase agreement with the Senior Lender. Pursuant to the Purchase Agreement, the Company issued the Senior Lender a common stock purchase warrant (the "Warrant"), pursuant to which the Senior Lender may purchase up to 8,762,008 shares of the Company's common stock for an aggregate price of $100. The warrant has a 5 year term and contains certain put and call provisions. The Warrant is not exercisable prior to March 30, 2014. Using the Black-Scholes model, the original value of the warrant issued to the Senior Lender was less than the net present value of the minimum $1,000,000 cash value of the warrants. Therefore, the net present value of $1,000,000, totaling $642,899 was recorded as a loan discount, which is being amortized to earnings as additional interest expense over the remaining term of the loan. The warrant is revalued at each reporting date, and adjusted to earnings. In addition, other loan fees of $717,569 were incurred from the issuance of 75,104,584 shares of the Company's stock, $512,750 was paid or accrued, and $52,467 was incurred from the grant of additional warrants during March 2011. These fees are being amortized to earnings as additional interest over the remaining term of the loans. The unamortized balance of these deferred costs was $891,950 and $1,039,302 at July 31 and April 30, 2012, respectively, and is reflected as a loan discount to the outstanding balance of $9,797,388 at July 31, 2012.

The note payable to the Senior Lender includes certain restrictive covenants with respect to the Company's earnings, leverage and accounts payable. As of July 31, 2012, the Company believes that it is in compliance with all restrictive covenants.

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

XML

Stock-Based Compensation (Schedule of Stock Plan Activity) (Details) (USD $)	3 Months Ended
	Jul. 31, 2012
Shares
Outstanding at May 1, 2012	2,910,000
Issued
Cancelled/forfeited	(90,000)
Exercised
Outstanding at July 31, 2012	2,820,000
Options vested and expected to vest	2,750,000	[1]
Options exercisable at end of period	1,836,250
Exercise Price
Outstanding at May 1, 2012	$ 0.35
Issued	$ 0.0
Cancelled/forfeited	$ 0.2
Exercised	$ 0.0
Outstanding at July 31, 2012	$ 0.35
Options vested and expected to vest	$ 0.35	[1]
Options exercisable at end of period	$ 0.4
Remaining Contractual Term (Years)
Outstanding at May 1, 2012	3.12
Issued	0
Outstanding at July 31, 2012	2.51
Options vested and expected to vest	2.51	[1]
Options exercisable at end of period	1.89
Aggregate Intrinsic Value
Outstanding at May 1, 2012	$ 44,600
Issued
Outstanding at July 31, 2012
Options vested and expected to vest		[1]
Options exercisable at end of period

[1] 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.

XML

Basis of Presentation (Details)	Jul. 31, 2012
Basis of Presentation [Abstract]
Number of customers	300
Number of suppliers	40
Approximate number of calls processed	14,000,000