Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 12, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | Cornerworld Corp | |
Entity Central Index Key | 1,338,242 | |
Document Type | 10-Q | |
Trading Symbol | CWRL | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 4,655,338 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash | $ 4,074 | $ 1,268 |
Accounts receivable, net | 3,376 | 1,265 |
Prepaid expenses and other current assets | $ 10,769 | 9,969 |
Assets of discontinued operations | 31,555 | |
TOTAL ASSETS | $ 18,219 | 44,057 |
Current liabilities: | ||
Accounts payable | 176,577 | 145,249 |
Accrued expenses | 341,815 | 338,936 |
Notes payable related parties | 338,958 | 338,958 |
Deferred revenue | $ 1,563 | 499 |
Liabilities of discontinued operations | 9,378 | |
Total liabilities | $ 858,913 | $ 833,020 |
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; 4,655,338 shares issued and outstanding, at March 31, 2016 and December 31, 2015, respectively | $ 162,937 | $ 162,937 |
Additional paid-in capital | 7,774,006 | 11,812,349 |
Accumulated deficit | (8,777,637) | (12,764,249) |
Total stockholders' deficit | (840,694) | (788,963) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 18,219 | $ 44,057 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 250,000,000 | 250,000,000 |
Common stock, issued | 4,655,338 | 4,655,338 |
Common stock, outstanding | 4,655,338 | 4,655,338 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement [Abstract] | ||
Sales, net | $ 59,302 | $ 235,843 |
Costs of goods sold | 11,203 | 92,003 |
Gross profit | 48,099 | 143,840 |
Expenses: | ||
Selling, general and administrative expenses | 70,924 | 127,700 |
Operating income (loss) | (22,825) | 16,140 |
Other income (expense), net: | ||
Interest expense | $ (8,102) | (6,779) |
Other income (expense), net | (200) | |
Total other expense, net | $ (8,102) | (6,979) |
Income (loss) from continuing operations before income taxes | $ (30,927) | $ 9,161 |
Income taxes | ||
Income (loss) from continuing operations | $ (30,927) | $ 9,161 |
Income (loss) from discontinued operations, net of tax | 95,316 | |
Net income (loss) | $ (30,927) | $ 104,477 |
Basic and diluted earnings loss per share from continuing operations (in dollars per share) | $ (0.01) | $ 0 |
Basic and diluted earnings per share from discontinued operations (in dollars per share) | 0 | 0.02 |
Basic and diluted earnings (loss) per share (in dollars per share) | $ (0.01) | $ 0.02 |
Basic and diluted weighted average number shares outstanding (in shares) | 4,655,338 | 4,655,338 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Stockholders' Deficit (unaudited) - 3 months ended Mar. 31, 2016 - USD ($) | Common Shares [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at beginning at Dec. 31, 2015 | $ 162,937 | $ 11,812,349 | $ (12,764,249) | $ (788,963) |
Balance at beginning (in shares) at Dec. 31, 2015 | 4,655,338 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Equity of spun-off subsidiaries | (4,039,714) | $ (4,017,539) | 22,175 | |
Stock-based compensation expense | $ 1,371 | 1,371 | ||
Net loss | $ (30,927) | (30,927) | ||
Balance at end at Mar. 31, 2016 | $ 162,937 | $ 7,774,006 | $ (8,777,637) | $ (840,694) |
Balance at end (in shares) at Mar. 31, 2016 | 4,655,338 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash Flows from Operating Activities | ||
Net income (loss) | $ (30,927) | $ 104,477 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | ||
Provision for doubtful accounts | 17,137 | 18,276 |
Stock-based compensation | 1,371 | 1,371 |
Changes in operating assets and liabilities, net of acquisitions and divestitures: | ||
Accounts receivable | (19,248) | (42,145) |
Prepaid expenses and other current assets | (800) | 8,300 |
Accounts payable | 31,328 | 4,567 |
Accrued expenses | 2,879 | (14,235) |
Deferred revenue | 1,064 | (75,687) |
Changes in assets and liabilities of discontinued operations | 22,177 | (87,019) |
Net cash provided by (used in) operating activities | 24,981 | $ (82,095) |
Cash Flows from Investing Activities | ||
Equity in spun-off subsidiary | (22,175) | |
Net cash used in financing activities | (22,175) | |
Net change in cash | 2,806 | $ (82,095) |
Cash at beginning of period | 1,268 | 94,857 |
Cash at end of period | $ 4,074 | $ 12,762 |
Cash paid for: | ||
Interest | ||
Income taxes |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [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 March 31, 2016 and for the three month period ended March 31, 2016 and 2015 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 March 31, 2016 is not necessarily indicative of the results that may be expected for the entire fiscal year. The accompanying Unaudited Interim Condensed Consolidated Financial Statements have been prepared in accordance with the regulations for interim financial information of the Securities and Exchange Commission (the SEC). Accordingly, they do not include all of the disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited accompanying statements of financial condition and related interim statements of operations, cash flows, and stockholders deficit include all adjustments (which consist only of normal and recurring adjustments) considered necessary for a fair presentation in conformity with U.S. GAAP. These Unaudited Interim Condensed Consolidated Financial Statements should be read in conjunction with the CornerWorld consolidated financial statements as of and for the year ended December 31, 2015, as filed with the SEC on Form 10-K. Organization The Company was incorporated in the State of Nevada, on November 9, 2004. Effective May 1, 2007, the Company changed its name to CornerWorld Corporation. The Company provides certain marketing services through its operating subsidiary Enversa Companies LLC, a Texas limited liability company (Enversa). CornerWorld is the sole member of Enversa. Enversa is a technology-oriented direct response marketing company. Enversa provides domain hosting, domain leasing, programmatic re-targeting and website management services on a recurring monthly basis. The Companys year-end is December 31 st Spinoff On August 13, 2015, the Companys Board of Directors formally approved a plan whereby the Company was authorized to split its telecommunications services segment, Woodland Holdings Corporation (Woodland) and Woodlands wholly owned subsidiaries, in their entirety, into a separate reporting entity. On October 14, 2015, the US Securities and Exchange Commission (the SEC) formally informed the Company that the Woodlands registration statement had become effective, clearing the way for the spin-off. Finally, on December 31, 2015, the Companys Board of Directors spun-off Woodland to CornerWorlds shareholders of record as of December 31, 2015 (the Record Date). CornerWorld shareholders, as of the Record Date, received shares in Woodland equal to their pro-rata ownership percentage of CornerWorld. For every share owned by the Companys shareholders as of the Record Date, those same shareholders were issued 1 share of Woodlands common stock. The Company previously provided telecommunications services, including telephony and internet services, through Woodlands wholly owned subsidiaries Phone Services and More, L.L.C., doing business as Visitatel (PSM) and T 2 2 2 2 2 Common Stock Reverse Split On November 6, 2015, the Company effectuated a one-for-thirty-five reverse stock split to shareholders of record as of November 6, 2015. Share and per share information have been retroactively adjusted to reflect the reverse stock split due to the fact that the reverse stock split took place after the close of the reporting period. Prospective Merger On February 29, 2016, CornerWorld executed a merger agreement with Deportes Media, LLC (the Merger Agreement). Pursuant to the Merger Agreement, the Merger Agreement itself was non-binding until such time as Deportes Media, LLC (Deportes) was able to secure approval for the Merger Agreement from no less than 75% of its shareholders. On March 18, 2016, Deportes reported to CornerWorld that it had, in fact, obtained the approval of the Merger Agreement from more than 75% of its shareholders and that, accordingly, the Merger Agreement had become binding. Pursuant to the Merger Agreement, CornerWorld is not contractually obligated to close the Merger Agreement, until such time as Deportes has completed certain Conditions to Close, as described in more detail below. If CornerWorld and Deportes close the Merger Agreement, Deportes shareholders will be entitled to receive 27.32 shares of CornerWorld common stock for each share of Deportes common stock. If CornerWorld closes the Merger Agreement, a total of approximately 13.7 million shares will be outstanding with an implied price of $1.32 per share and existing CornerWorld shareholders would own approximately 33.9% of the combined Company. CornerWorld can terminate the Merger Agreement, at its sole option, if Deportes fails to perform any of the Conditions to Close as further defined below. Conditions to Close include, but are not limited to, the following: Deportes must acquire certain radio towers in certain markets, Deportes current debt holders must convert their debt to equity and Deportes must acquire the ESPN Deportes New York affiliate, WEPN AM-1050. Should Deportes fail to meet all the Conditions to Close, CornerWorld will be entitled to receive a break-up fee equivalent to 10% of Deportes then outstanding common shares. CornerWorld, at its sole discretion, may close the Merger Agreement without Deportes completing the Conditions to Close. However, CornerWorld will only receive the 10% break-up fee if CornerWorld terminates the Merger Agreement as a result of Deportes failure to execute any one of the Conditions to Close after May 31, 2016. Should Deportes fail to execute the Conditions to Close and CornerWorld does not close the transaction by September 30, 2016, the Merger Agreement will terminate of its own accord and CornerWorld will be entitled to the a breakup fee equivalent to 10% of Deportes then outstanding common shares. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
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 Companys condensed consolidated financial statements. The condensed consolidated financial statements and notes are representations of the Companys management who is responsible for their integrity and objectivity. These accounting policies conform to US GAAP and have been consistently applied in the preparation of the financial statements. The financial statements are stated in United States of America dollars. Receivables Accounts receivable include uncollateralized customer obligations due under normal trade terms requiring payment within 30-60 days from invoice date. Payments of accounts receivable are allocated to the specific invoices identified on the customers remittance advice or, if unspecified, are applied to the earliest unpaid invoices. The carrying amount of accounts receivable is reduced by a valuation allowance for doubtful accounts that reflects managements best estimate of the amounts that will not be collected based on historical collection trends. The allowance for doubtful accounts was $3,741 and $3,741 as of March 31, 2016 and December 31, 2015, respectively. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management include, among others, the realizability of accounts receivable, recoverability of property and equipment and valuation of stock-based compensation and deferred tax assets. Actual results could differ from these estimates. Fair Value of Financial Instruments Accounting Standards Codification (ASC) No. 850 requires disclosure of fair value information about financial instruments when it is practicable to estimate that value. The carrying amount of the Companys cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and notes payable approximate their estimated fair values due to their short-term maturities. Unless otherwise noted, it is managements 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 services 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. 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 ASC requires a company to assess the recoverability of its long-lived assets whenever events and circumstances indicate the carrying value of an asset or asset group may not be recoverable from estimated future cash flows expected to result from its use and eventual disposition. The Companys only long-lived assets are a property and equipment which have been fully depreciated. 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 Companys 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 Companys stock price as well as a number of subjective assumptions. These variables include, but are not limited to, the Companys 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 Companys 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 Companys 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 Companys options. Although the fair value of the Companys 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. Concentration of credit risk Credit is extended based on an evaluation of the customers financial condition, and the Company does not require collateral. Write-offs of accounts receivable have historically been nominal. Approximately 74.9% and 49.6% of total revenue was derived from the Companys largest customer during the three month periods ended March 31, 2016 and 2015, respectively. Reclassifications Certain prior year accounts have been reclassified to conform to the current years presentation. |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | 3. Discontinued Operations As previously noted, on August 13, 2015, the Companys Board of Directors formally approved a plan whereby the Company was authorized to split Woodlands and its wholly owned subsidiaries, in their entirety, into a separate reporting entity. On October 14, 2015, the SEC formally informed the Company that the Woodlands registration statement had become effective. Finally, on December 31, 2015, the Company Board of Directors spun-off Woodland to CornerWorlds shareholders of record as of the Record Date. As a result of the Spin-Off, Woodlands operations, along with those of its wholly owned subsidiaries, have been reported as discontinued operations in these consolidated financial statements. The following is a summary of the operating results of our discontinued operations: For the Three Months Ended March 31, 2016 2015 Sales, net $ $ 69,806 Income (loss) from discontinued operations before income taxes 95,316 Income taxes Net income from discontinued operations $ $ 95,316 The following is a summary of assets and liabilities of discontinued operations as of March 31, 2016 and December 31, 2015: March 31, 2016 December 31, 2015 Assets: Current assets $ $ 31,555 Assets of discontinued operations held for sale 31,555 Liabilities Accounts payable and accrued expenses 9,378 $ $ 9,378 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Debt | 4. Debt As of March 31, 2016 December 31, 2015 Note payable to CEO (the Senior Note); the Senior Note matures July 31, 2016. At March 31, 2016, the interest rate was 6.25%. This note is collateralized by all assets of the Company. See also Note 7, Related Party Transactions. $ 338,958 $ 338,958 Total debt $ 338,958 $ 338,958 The Senior Note contains no restrictive covenants or events of default other than non-payment. On December 31, 2014, the Company did not make its regularly scheduled payment totaling $12,746 which constituted an event of default. Mr. Beck did not call default but there can be no assurance that, as the Companys senior secured lender, he will not do so. It is anticipated that the Company will amend the Senior Note at some future point but there can be no assurance that we will be successful in amending the terms of the Senior Note. Should we be unsuccessful in executing an amendment or an extension, Mr. Beck, as the senior secured lender, could move to seize the underlying collateral which would have a material adverse effect on the Companys ability to continue as a going concern. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 5. Commitments and Contingencies Litigation The Company is occasionally involved in other litigation matters relating to claims arising from the ordinary course of business. The Companys management believes that there are no claims or actions pending or threatened against the Company, the ultimate disposition of which would have a material adverse effect on our business, results of operations and financial condition. |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Compensation | 6. Stock-Based Compensation Incentive Stock Plan On August 17, 2007, the Companys board of directors adopted and implemented the Companys 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 Companys 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 5 years from the grant date. The Company issued no options pursuant to this plan during the three month period ended March 31, 2016. Stock Compensation Plan On August 17, 2007, the Companys board of directors adopted and implemented the Companys 2007 Stock Compensation Plan. The total number of shares of the Companys 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 Companys 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 Companys discretion at the time of grant. The Company issued no stock options pursuant to this plan during the three month period ended March 31, 2016. A summary of the shares reserved for grant and awards available for grant under each Stock Plan is as follows: March 31, 2016 Shares Reserved for Grant Awards Available for Grant Incentive Stock Plan 4,000,000 3,999,858 Stock Compensation Plan 4,000,000 3,953,575 8,000,000 7,953,433 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 Companys 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 Companys stock price. The expected term of options granted subsequent to the adoption ASC 718 is derived using the simplified method as defined in the SECs 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 March 31, 2016 2015 Expected term (in years) Expected volatility % % Risk-free interest rate % % Dividend yield % % A summary of activity under the Stock Plans and changes during the three month period ended March 31, 2016 is presented below: Weighted-Average Shares Exercise Price Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at December 31, 2015 46,567 $ 3.84 3.20 $ Issued Cancelled/forfeited Outstanding at March 31, 2016 45,567 $ 3.84 2.95 $ Options expected to vest 45,567 $ 3.84 2.95 $ Options exercisable at end of period 24,426 $ 4.15 2.84 $ For the three month period ended March 31, 2016 and 2015, the Company recognized $1,371 and $1,371 of stock-based compensation expense, respectively. As of March 31, 2016 there was $6,825 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 2.95 weighted average years. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 7. Related Party Transactions On March 30, 2011, the Company entered into a subordinated $389,942 promissory note (the Senior Note) with Scott N. Beck, the Companys Chief Executive Officer. Interest on the outstanding principal amount under the Senior Note is payable at the Companys discretion at a rate of 6.25% per annum and monthly principal payments totaling $12,746 were due beginning December 31, 2014. On December 31, 2014, the Company did not make its regularly scheduled payment totaling $12,746 to Mr. Beck which constituted an event of default under the Senior Note. Mr. Beck did not call default but there can be no assurance that, as the Companys Senior Lender, he will not do so. It is anticipated that the Company will amend the Senior Note at some future point but there can be no assurance that we will be successful in amending the terms of the Senior Note. Should we be unsuccessful in executing an amendment or an extension, Mr. Beck, as the senior lender, could move to seize the underlying collateral which would have a material adverse effect on the Companys ability to continue as a going concern. The Company recorded interest of $8,102 and $6,779 on this facility during the three month period ended March 31, 2016 and 2015, respectively. The balance of this note totaled $338,958 at March 31, 2016. The Company was party to a lease agreement with 13101 Preston Road, LP pursuant to which it leases office space for its corporate headquarters. The lease expired on January 31, 2016. The limited partners of 13101 Preston Road, LP are trusts controlled by the family of the Companys Chief Executive Officer. The Company paid $2,500 and $7,500 in rent during the three month periods ended March 31, 2016 and 2015, respectively. As of March 31, 2016, the Company had recorded a liability of $17,500 for unpaid rent on its office space. The Company provides accounting, human resources and certain IT services to an entity controlled by the family of the Companys Chief Executive Officer for $5,000 per month. The Company received $15,000 from this entity during each of the three month periods ended March 31, 2016 and 2015. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 8. Subsequent Events There were no events that took place subsequent to March 31, 2016 up through the date of the filing of these financial statements that had a material impact on these financial statements. |
Summary of Significant Accoun15
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Receivables | Receivables Accounts receivable include uncollateralized customer obligations due under normal trade terms requiring payment within 30-60 days from invoice date. Payments of accounts receivable are allocated to the specific invoices identified on the customers remittance advice or, if unspecified, are applied to the earliest unpaid invoices. The carrying amount of accounts receivable is reduced by a valuation allowance for doubtful accounts that reflects managements best estimate of the amounts that will not be collected based on historical collection trends. The allowance for doubtful accounts was $3,741 and $3,741 as of March 31, 2016 and December 31, 2015, respectively. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management include, among others, the realizability of accounts receivable, recoverability of property and equipment and valuation of stock-based compensation and deferred tax assets. Actual results could differ from these estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Accounting Standards Codification (ASC) No. 850 requires disclosure of fair value information about financial instruments when it is practicable to estimate that value. The carrying amount of the Companys cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and notes payable approximate their estimated fair values due to their short-term maturities. Unless otherwise noted, it is managements 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 services 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. |
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 ASC requires a company to assess the recoverability of its long-lived assets whenever events and circumstances indicate the carrying value of an asset or asset group may not be recoverable from estimated future cash flows expected to result from its use and eventual disposition. The Companys only long-lived assets are a property and equipment which have been fully depreciated. |
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 Companys 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 Companys stock price as well as a number of subjective assumptions. These variables include, but are not limited to, the Companys 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 Companys 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 Companys 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 Companys options. Although the fair value of the Companys 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. |
Concentration of credit risk | Concentration of credit risk Credit is extended based on an evaluation of the customers financial condition, and the Company does not require collateral. Write-offs of accounts receivable have historically been nominal. Approximately 74.9% and 49.6% of total revenue was derived from the Companys largest customer during the three month periods ended March 31, 2016 and 2015, respectively. |
Reclassifications | Reclassifications Certain prior year accounts have been reclassified to conform to the current years presentation. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of the operating results of our discontinued operations | The following is a summary of the operating results of our discontinued operations: For the Three Months Ended March 31, 2016 2015 Sales, net $ $ 69,806 Income (loss) from discontinued operations before income taxes 95,316 Income taxes Net income from discontinued operations $ $ 95,316 |
Schedule of assets and liabilities held for sale | The following is a summary of assets and liabilities of discontinued operations as of March 31, 2016 and December 31, 2015: March 31, 2016 December 31, 2015 Assets: Current assets $ $ 31,555 Assets of discontinued operations held for sale 31,555 Liabilities Accounts payable and accrued expenses 9,378 $ $ 9,378 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | As of March 31, 2016 December 31, 2015 Note payable to CEO (the Senior Note); the Senior Note matures July 31, 2016. At March 31, 2016, the interest rate was 6.25%. This note is collateralized by all assets of the Company. See also Note 7, Related Party Transactions. $ 338,958 $ 338,958 Total debt $ 338,958 $ 338,958 |
Stock Based Compensation Plans
Stock Based Compensation Plans (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of shares reserved for grant and awards available for grant | A summary of the shares reserved for grant and awards available for grant under each Stock Plan is as follows: March 31, 2016 Shares Reserved for Grant Awards Available for Grant Incentive Stock Plan 4,000,000 3,999,858 Stock Compensation Plan 4,000,000 3,953,575 8,000,000 7,953,433 |
Schedule of weighted-average assumptions | The fair value of options granted was estimated using the following weighted-average assumptions: For the three month periods ended March 31, 2016 2015 Expected term (in years) Expected volatility % % Risk-free interest rate % % Dividend yield % % |
Schedule of stock plan activity | A summary of activity under the Stock Plans and changes during the three month period ended March 31, 2016 is presented below: Weighted-Average Shares Exercise Price Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at December 31, 2015 46,567 $ 3.84 3.20 $ Issued Cancelled/forfeited Outstanding at March 31, 2016 45,567 $ 3.84 2.95 $ Options expected to vest 45,567 $ 3.84 2.95 $ Options exercisable at end of period 24,426 $ 4.15 2.84 $ |
Basis of Presentation (Details
Basis of Presentation (Details Narrative) - USD ($) | Mar. 18, 2016 | Feb. 29, 2016 | Nov. 06, 2015 |
Description of reverse stock split | One-for-thirty-five | ||
Merger Agreement [Member] | Deportes Media, LLC [Member] | |||
Description of approval percent from shareholder | M ore than 75% of its shareholders. | Less than 75% of its shareholders. | |
Description of shares issuable | R eceive 27.32 shares of CornerWorld common stock for each share of Deportes common stock. | ||
Value of shares outstanding | $ 13,700,000 | ||
Share price (in dollars per share) | $ 1.32 | ||
Percentage of ownership | 33.90% | ||
Percent of breakup fee to outstanding shares | 10.00% |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Allowance for doubtful accounts | $ 3,741 | $ 3,741 | |
Customer Concentration Risk [Member] | Revenue [Member] | |||
Percentage of concentration risk | 74.90% | 49.60% |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Net income from discontinued operations | $ 95,316 | |
Woodland Holdings Corporation [Member] | ||
Sales, net | 69,806 | |
Income (loss) from discontinued operations before income taxes | $ 95,316 | |
Income taxes | ||
Net income from discontinued operations | $ 95,316 |
Discontinued Operations (Deta22
Discontinued Operations (Details 1) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Assets: | ||
Current assets | $ 31,555 | |
Assets of discontinued operations held for sale | 31,555 | |
Liabilities | ||
Accounts payable and accrued expenses | 9,378 | |
Liabilities of discontinued operations held for sale | $ 9,378 |
Debt (Details Narrative)
Debt (Details Narrative) | Dec. 31, 2014USD ($) |
Notes Payable [Member] | Scott N. Beck [Member] | |
Debt instrument, default payment | $ 12,746 |
Debt (Details)
Debt (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Total debt | $ 338,958 | $ 338,958 |
Notes Payable [Member] | Scott N. Beck [Member] | ||
Total debt | $ 338,958 | $ 338,958 |
Debt instrument, maturity date | Jul. 31, 2016 | |
Debt instrument, interest rate | 6.25% |
Stock Based Compensation (Detai
Stock Based Compensation (Detail Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Stock-based compensation expense | $ 1,371 | $ 1,371 |
Unrecognized compensation cost, net of forfeitures | $ 6,825 | |
Unrecognized compensation cost, weighted-average recognition period | 2 years 11 months 12 days | |
2007 Stock Compensation Plan [Member] | ||
Number of shares authorized | 4,000,000 | |
2007 Stock Compensation Plan [Member] | Maximum [Member] | ||
Vesting period | 5 years | |
Award term | 10 years | |
2007 Stock Compensation Plan [Member] | Minimum [Member] | ||
Award term | 5 years | |
2007 Incentive Stock Plan [Member] | ||
Number of shares authorized | 4,000,000 | |
Options expiration period | 5 years | |
2007 Incentive Stock Plan [Member] | Maximum [Member] | ||
Vesting period | 5 years | |
2007 Incentive Stock Plan [Member] | Minimum [Member] | ||
Percentage of shares that vest annually | 20.00% |
Stock Based Compensation (Det26
Stock Based Compensation (Details) | Mar. 31, 2016shares |
Shares Reserved for Grant | 8,000,000 |
Awards Available for Grant | 7,953,433 |
2007 Incentive Stock Plan [Member] | |
Shares Reserved for Grant | 4,000,000 |
Awards Available for Grant | 3,999,858 |
2007 Stock Compensation Plan [Member] | |
Shares Reserved for Grant | 4,000,000 |
Awards Available for Grant | 3,953,575 |
Stock Based Compensation (Det27
Stock Based Compensation (Details 1) - 2007 Stock Compensation Plan [Member] | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Expected term (in years) | 0 years | 0 years |
Expected volatility | ||
Risk-free interest rate | ||
Dividend yield |
Stock Based Compensation (Det28
Stock Based Compensation (Details 2) - 2007 Stock Compensation Plan [Member] | 3 Months Ended |
Mar. 31, 2016USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Outstanding, beginning | shares | 46,567 |
Issued | shares | |
Cancelled/forfeited | shares | |
Outstanding, ending | shares | 45,567 |
Options expected to vest | shares | 45,567 |
Options exercisable at end of period | shares | 24,426 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Outstanding, beginning | $ / shares | $ 3.84 |
Issued | $ / shares | |
Cancelled/forfeited | $ / shares | |
Outstanding, ending | $ / shares | $ 3.84 |
Options expected to vest | $ / shares | 3.84 |
Options exercisable at end of period | $ / shares | $ 4.15 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Weighted Average Remaining Contractual Term [Roll Forward] | |
Outstanding, beginning | 3 years 2 months 12 days |
Outstanding, ending | 2 years 11 months 12 days |
Options expected to vest | 2 years 11 months 12 days |
Options exercisable at end of period | 2 years 10 months 2 days |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Aggregate Intrinsic Value [Roll Forward] | |
Outstanding, beginning | $ | |
Issued | $ | |
Outstanding, ending | $ | |
Options expected to vest | $ | |
Options exercisable at end of period | $ |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 30, 2011 | |
Scott N. Beck [Member] | ||||
Service revenue, monthly amount | $ 5,000 | |||
Scott N. Beck [Member] | Notes Payable [Member] | ||||
Debt instrument, face amount | $ 389,942 | |||
Debt instrument, interest rate | 6.25% | |||
Periodic installments amount | $ 12,746 | |||
Debt instrument, frequency of principal payment | Monthly | |||
Debt instrument, due date | Dec. 31, 2014 | |||
Debt instrument, default payment | $ 12,746 | |||
Interest expense | $ 8,102 | $ 6,779 | ||
Notes payable, related parties | $ 338,958 | |||
13101 Preston Road, LP [Member] | ||||
Lease expiration date | Jan. 31, 2016 | |||
Rental expense | $ 2,500 | 7,500 | ||
Unpaid rent | 17,500 | |||
Entity Controlled by CEO's Family [Member] | ||||
Revenue from related parties | $ 15,000 | $ 15,000 |