SOURCE: GlobalWise Investments, Inc.

GlobalWise Investments, Inc.

August 14, 2012 16:13 ET

GlobalWise Reports Second Quarter 2012 Financial Results

-- Achieves Record Revenue Growth of 146% Over Prior Quarter --

-- Gross Profit Improved to $597,123 --

-- Gross Profit Margin Increased to 67% --

-- Cloud-Based ECM Software and Highly Successful Channel Partner Program Become Catalysts for Unprecedented Growth --

COLUMBUS, OH--(Marketwire - Aug 14, 2012) - GlobalWise Investments, Inc. (OTCBB: GWIV) (OTCQB: GWIV) (www.GlobalWiseInvestments.com) and its wholly owned subsidiary Intellinetics, Inc., an enterprise content management ("ECM") software development, sales and marketing company serving both public and private sector clients, today announce financial results for the second quarter ended June 30, 2012.

Financial Highlights for the Second Quarter 2012:

  • Total revenue increased by 146% to $887,285 compared to $360,328 in the first quarter, and an increase of 52% compared to $582,051 in the year-ago second quarter;
  • Gross profit improved to $597,123, a 959% increase over the first quarter of $56,381, and a 64% increase compared to $364,661 in the year-ago second quarter;
  • Gross profit margin increased to 67% compared to 16% in the first quarter and 63% in the year-ago second quarter;
  • Total operating expenses decreased by 69% to $680,062 compared to $1,148,905 in the first quarter; up from $421,636 in the year-ago second quarter;
  • Loss from operations decreased by 1,217% to ($82,939) compared to ($1,092,524) in the first quarter; up from ($56,975) in the year-ago second quarter;
  • Net loss decreased by 639% to ($155,250) compared to ($1,147,873) in the first quarter; up from ($93,039) in the year-ago second quarter.

The Company's operating expenses in the second quarter reflect additional costs associated with being a public company and strategic investments in human talent, technology and process assets that we believe help establish a solid foundation for profitable geometric growth in its subscriber base and revenue. Combined, these investments drive cost and cycle time out of the marketing, sales and order fulfillment processes. As a result, GlobalWise is better positioned to be able to harvest demand from captive markets with little additional operating cost and expects expenses to remain relatively stable at current levels as revenue continues to increase.

"GlobalWise's dynamic approach to the ECM software market is taking hold in 2012," stated William J. "BJ" Santiago, CEO of GlobalWise. "Two important changes have occurred in the past 18 months that are becoming the catalysts for our extraordinary growth. First, the advancement of our ECM software to a cloud-delivery model reduces our cost of service delivery and time to installation. Second, moving from a domestic direct-sales model to an international Channel Partner strategy has dramatically increased our ability to sell our software to a greater number of clients in a lower-cost manner. Our second-quarter revenue growth of 146% vs. the prior quarter and 52% growth year-over-year is a direct, tangible result of these developments. Simply put, we're now selling more software faster and have reduced our average sales cycle from a historic 18 - 24 months to 3 - 6 months."

Since the beginning of 2012, the Company has signed eight new Channel Partners with several potential new partners pending. In 2011, 14 new Channel Partners were signed. The increase in sales capacity is driving significant and consistent revenue growth, and the trend is expected to continue throughout 2012 and beyond. 

Fiscal Year 2012 Guidance:

Based upon the Company's current sales funnel and recent Channel Partner activity, GlobalWise currently expects to exceed $3.3 million in annual revenue in 2012 vs. $1.7 million in 2011. Management anticipates exiting 2012 at an annualized revenue run rate for 2013 in excess of $5.0 million, as existing Channel Partners increase their sales and marketing efforts and new Channel Partners are added. GlobalWise expects to be increasingly well positioned for growth and profitability in future periods as projected revenues increase, operating expenses continue to decline as a percentage of revenue, and the cost of continuing as a public company normalizes.

"Our sales funnel is growing steadily with qualified clients through our Channel Partner eco-system," added Mr. Santiago. "The Channel Partners need a cloud-based ECM solution to complement their product strategy and increase the number of value added services provided to clients. We strategically choose partners who sell enterprise software, consulting services or office equipment focused around document management. We can quickly train them on our template based ECM software and/or how to integrate the software into their existing business application software or hardware products. This new sales strategy allows us to focus on what we do best - software engineering, support and cloud services delivery - and allows our partners to do what they do best - demand generation for industry leading business software solutions."

About GlobalWise Investments, Inc.

GlobalWise Investments, Inc., via its wholly owned subsidiary Intellinetics, Inc., is a Columbus, Ohio based Enterprise Content Management (ECM) pioneer with industry-leading software that delivers cloud ECM based solutions on-demand. The Company's flagship platform, Intellivue, represents a new industry benchmark and game-changing solution by enabling clients to access and manage the content of every scanned document, file, spreadsheet, email, photo, audio file or video tape - virtually anything that can be digitized - in their enterprise from any PC, laptop, tablet or smartphone from anywhere in the world. 

For additional information, please visit the Company's corporate website: www.GlobalWiseInvestments.com

This press release may contain "forward-looking statements." Expressions of future goals and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. These forward-looking statements may include, without limitation, statements about our market opportunity, strategies, competition, expected activities and expenditures as we pursue our business plan. Although we believe that the expectations reflected in any forward-looking statements are reasonable, we cannot predict the effect that market conditions, customer acceptance of products, regulatory issues, competitive factors, or other business circumstances and factors described in our filings with the Securities and Exchange Commission may have on our results. The company undertakes no obligation to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this press release.

Financial Tables Follow

   
GLOBALWISE INVESTMENTS, INC. and SUBSIDIARY  
Condensed Consolidated Statements of Operations  
(Unaudited)  
                         
    For the Three Months
Ended June 30,
    For the Six Months
Ended June 30,
 
    2012     2011     2012     2011  
                                 
Revenues:                                
  Sale of software licenses without modification   $ 34,939     $ 19,925     $ 56,678     $ 36,800  
  Sale of software licenses with substantive modification     393,403       227,979       413,395       242,764  
  Software as a service     24,596       37,910       53,637       69,327  
  Software maintenance services     195,857       160,209       373,308       314,242  
  Consulting services     238,490       136,028       350,595       158,044  
                                   
    Total revenues     887,285       582,051       1,247,613       821,177  
                                 
Cost of revenues:                                
  Sale of software licenses without modification     14,627       5,084       31,832       9,451  
  Sale of software licenses with substantive modification     109,229       121,052       262,855       229,490  
  Software as a service     7,364       6,930       13,894       13,516  
  Software maintenance services     36,404       29,449       61,284       52,172  
  Consulting services     122,538       54,875       224,244       116,904  
                                   
    Total cost of revenues     290,162       217,390       594,109       421,533  
                                 
Gross profit     597,123       364,661       653,504       399,644  
                                 
Operating expenses:                                
  General and administrative     348,976       278,773       1,169,198       501,631  
  Sales and marketing     323,439       132,524       645,333       266,925  
  Depreciation     7,647       10,339       14,437       21,133  
                                   
    Total operating expenses     680,062       421,636       1,828,968       789,689  
                                 
Loss from operations     (82,939 )     (56,975 )     (1,175,464 )     (390,045 )
                                 
Interest expense, net     (72,311 )     (36,064 )     (127,659 )     (74,099 )
                                 
                                 
Net loss   $ (155,250 )   $ (93,039 )   $ (1,303,123 )   $ (464,144 )
                                 
Basic and deiluted net loss per share:   $ -     $ -     $ (0.04 )   $ (0.02 )
                                 
Weighted average number of common shares outstanding - basic and diluted     32,590,850       22,757,100       31,589,531       22,757,100  
             
   
GLOBALWISE INVESTMENTS, INC.  
Condensed Consolidated Balance Sheets  
             
ASSETS  
    Unaudited        
    June 30,     December 31,  
    2012     2011  
                 
Current assets:                
  Cash   $ 17,366     $ 140,271  
  Accounts receivable, net     400,168       335,453  
  Prepaid expenses and other current assets     44,835       18,398  
                   
    Total current assets     462,369       494,122  
                 
Property and equipment, net     72,112       32,771  
Other assets     41,400       46,404  
                 
    Total assets   $ 575,881     $ 573,297  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT  
                 
Current liabilities:                
  Accounts payable and accrued expenses   $ 999,909     $ 389,080  
  Accrued expenses, related parties     17,494       -  
  Deferred revenues     745,975       964,043  
  Notes payable - current     1,417,203       747,778  
  Notes payable - related party - current     300,000       -  
    Total current liabilities     3,480,581       2,100,901  
                 
Long-term liabilities:                
  Deferred compensation     234,107       215,011  
  Notes payable - net of current portion     1,385,029       1,528,915  
  Notes payable - related party     276,707       262,707  
  Deferred interest expense     34,564       17,063  
  Other long-term liabilities - related parties     171,575       157,859  
                   
    Total long-term liabilities     2,101,982       2,181,555  
                 
    Total liabilities other than shares     5,582,563       4,282,456  
Shares subject to mandatory redemption             111,235  
                 
    Total liabilities     5,582,563       4,393,691  
                 
Commitments and contingencies                
Excess of liabilities over assets (deficit)     -       (3,820,394 )
    Total liabilities and excess of liabilities over assets (deficit)     5,582,563       573,297  
Stockholders' deficit:                
  Common stock, $0.001 par value, 50,000,000 shares authorized; 32,590,850 shares issued and outstanding at March 31, 2012     32,591       -  
  Additional paid-in capital (deficit)     (52,975 )     -  
  Accumulated deficit     (4,986,298 )     -  
    Total stockholders' deficit     (5,006,682 )     -  
    Total liabilities and excess of liabilities over assets (deficit) and stockholders' deficit   $ 575,881     $ 573,297  
                     

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