SOURCE: GlobalWise Investments, Inc.

GlobalWise Investments, Inc.

November 15, 2012 16:19 ET

GlobalWise Reports Third Quarter 2012 Financial Results and Provides Revised Fiscal 2012 Guidance

-- Achieves 15% Revenue Growth and 23% Increase in Gross Profit Over the Year-Ago Third Quarter

-- Achieves 36% Revenue Growth and 43% Increase in Gross Profit Over the Year-Ago Nine Month Period Ended September 30, 2011

COLUMBUS, OH--(Marketwire - Nov 15, 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 third quarter and nine months ended September 30, 2012.

Financial Highlights for the Third Quarter ended September 30, 2012:

  • Total revenue increased by 15% to $711,737 compared to $617,026 in the year-ago third quarter;
  • Gross profit improved to $484,205, a 23% increase over the year-ago third quarter of $395,104;
  • Gross profit margin increased to 68% compared to 64% in the year-ago third quarter;
  • Operating expenses, excluding non-recurring and non-cash expenses totaling $206,800, increased to $682,976 from $438,821 in the year-ago third quarter; and
  • Adjusted EBITDA (as defined below) for the third quarter was ($192,034) compared to ($34,569) in the year-ago third quarter.

Financial Highlights for the Nine Months ended September 30, 2012:

  • Total revenue increased 36% to $1,959,350 compared to $1,438,203 in the year-ago nine month period;
  • Gross profit improved by 43% to $1,137,709 compared to $794,748 in the year-ago nine month period;
  • Gross profit margin increased to 58% compared to 55% in the year-ago nine month period;
  • Operating expenses, excluding non-recurring and non-cash expenses totaling $987,800, increased to $1,730,945 compared to $1,228,510 in the year-ago nine month period; and
  • Adjusted EBITDA (as defined below) for the nine months ended September 30, 2012, was ($572,062) compared to ($403,481) in the year-ago nine month period.

"Excluding non-recurring and non-cash charges, our operating expenses were materially unchanged in the third quarter 2012 vs. the second quarter 2012 at around $680,000," stated William J. "BJ" Santiago, CEO of GlobalWise. "We expect operating expenses to remain relatively stable at current levels as revenue increases. We're seeing a continued increase in channel partner sales activity and are currently on track to achieve steady revenue growth in the fourth quarter."

Revised Fiscal Year 2012 Guidance:

Based upon the Company's current sales funnel and recent Channel Partner activity, GlobalWise currently expects annual revenue in 2012 to be in the range of $2.8 million to $3.3 million.

Non-GAAP Financial Measure:

In addition to presenting financial results in accordance with generally accepted accounting principles, or GAAP, this earnings release also presents adjusted earnings before interest, taxes, depreciation and amortization, share based payments and expenses that management believes will not recur in future periods, including certain acquisition-related expenses ("Adjusted EBITDA"). Adjusted EBITDA is calculated by deducting operating and other expenses from gross profit and excluding amounts related to interest expense, income tax expense or benefit, depreciation expense, amortization expense, non-cash share-based payments, acquisition-related expenses and any gain or loss on disposal of assets. This non-GAAP financial measure is intended to provide investors with additional insight into our ongoing operating performance. This non-GAAP financial measure should be considered in conjunction with, but not as a substitute for, the financial information presented in accordance with GAAP.

A reconciliation of the Company's GAAP Net (Loss) for the quarters and nine months ended September 30, 2011 and 2012 to its non-GAAP Adjusted EBITDA for the same periods is provided below:

               
    For the Three Months Ended September 30,     For the Nine Months Ended September 30,  
    2012     2011     2012     2011  
                                 
Net Loss     (492,607 )     (91,749 )     (1,795,731 )     (555,893 )
Depreciation     6,737       9,148       21,174       30,281  
Interest Expense, net     87,036       48,032       214,695       122,131  
Non-Recurring, Non-Cash Compensation included in SG&A     206,800       -       206,800       -  
Non-Recurring Public Transaction Related Expenses included in SG&A     -       -       781,000       -  
  Adjusted EBITDA   $ (192,034 )   $ (34,569 )   $ (572,062 )   $ (403,481 )
                                 

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  
       
    For the Three Months Ended September 30,     For the Nine Months Ended September 30,  
    2012     2011     2012     2011  
                                 
Revenues:                                
  Sale of software licenses without professional services   $ 84,134     $ 60,844     $ 140,812     $ 97,644  
  Sale of software licenses with professional services     307,167       308,447       720,562       551,211  
  Software as a service     25,425       41,575       79,062       110,902  
  Software maintenance services     201,539       148,238       574,848       462,480  
  Consulting services     93,472       57,922       444,066       215,966  
                                   
    Total revenues     711,737       617,026       1,959,350       1,438,203  
                                 
Cost of revenues:                                
    Sale of software licenses without professional services     8,271       3,810       40,103       13,261  
    Sale of software licenses with professional services     109,229       124,894       372,084       354,384  
    Software as a service     7,478       7,057       21,372       20,573  
    Software maintenance services     34,719       29,757       96,003       81,929  
    Consulting services     67,836       56,404       292,080       173,308  
                                   
      Total cost of revenues     227,532       221,922       821,641       643,455  
                                 
Gross profit     484,205       395,104       1,137,709       794,748  
                                 
Operating expenses:                                
    General and administrative     589,403       229,445       1,758,602       731,079  
    Sales and marketing     293,636       200,228       938,969       467,150  
    Depreciation     6,737       9,148       21,174       30,281  
                                   
      Total operating expenses     889,776       438,821       2,718,745       1,228,510  
                                 
Loss from operations     (405,571 )     (43,717 )     (1,581,036 )     (433,762 )
                                 
Other income (expense)                                
                                 
  Interest expense, net     (87,036 )     (48,032 )     (214,695 )     (122,131 )
                                 
                                 
Net Loss   $ (492,607 )   $ (91,749 )   $ (1,795,731 )   $ (555,893 )
                                 
Basic and diluted net loss per share   $ (0.01 )   $ (0.00 )   $ (0.06 )   $ (0.02 )
                                 
Weighted average number of common shares outstanding - basic and diluted     33,022,913       22,757,100       32,082,486       22,757,100  
                                 
Adjusted EBITDA:                                
Net Loss     (492,607 )     (91,749 )     (1,795,731 )     (555,893 )
Depreciation     6,737       9,148       21,174       30,281  
Interest Expense, net     87,036       48,032       214,695       122,131  
Non-Recurring, Non-Cash Compensation included in SG&A     206,800       -       206,800       -  
Non-Recurring Public Transaction Related Expenses included in SG&A     -       -       781,000       -  
  Adjusted EBITDA   $ (192,034 )   $ (34,569 )   $ (572,062 )   $ (403,481 )
             
             
GLOBALWISE INVESTMENTS, INC.  
Condensed Consolidated Balance Sheets  
             
ASSETS  
   
    (Unaudited)        
    September 30,     December 31,  
    2012     2011  
                 
Current assets:                
  Cash   $ 21,205     $ 140,271  
  Accounts receivable, net     281,206       335,453  
  Prepaid expenses and other current assets     51,246       18,398  
    Total current assets     353,657       494,122  
                 
Property and equipment, net     65,375       32,771  
Other assets     39,318       46,404  
                 
    Total assets   $ 458,350     $ 573,297  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT  
                 
Current liabilities:                
  Accounts payable and accrued expenses   $ 1,024,984     $ 389,080  
  Accrued expenses, related parties     30,405       -  
  Deferred revenues     586,009       964,043  
  Derivative liability     -       -  
  Convertible notes payable, net of discount     97,500       -  
  Notes payable - current     1,446,310       747,778  
  Notes payable - related party - current     370,000       -  
    Total current liabilities     3,555,208       2,100,901  
                 
Long-term liabilities:                
  Deferred compensation     245,357       215,011  
  Notes payable - net of current portion     1,304,650       1,528,915  
  Notes payable - related party - net of current portion     276,707       262,707  
  Deferred interest expense     39,564       17,063  
  Other long-term liabilities - related parties     169,964       157,859  
                   
    Total long-term liabilities     2,036,242       2,181,555  
                     
    Total liabilities other than shares     5,591,450       4,282,456  
Shares subject to mandatory redemption     -       111,235  
                 
    Total liabilities     5,591,450       4,393,691  
                 
Commitments and contingencies                
Excess of liabilities over assets (deficit)     -       (3,820,394 )
    Total liabilities and excess of liabilities over assets (deficit)     5,591,450       573,297  
Stockholders' deficit:                
  Common stock, $0.001 par value, 50,000,000 shares authorized; 33,022,913 shares issued and outstanding at September 30, 2012     33,023       -  
  Additional paid-in capital     312,783       -  
  Accumulated deficit     (5,478,906 )     -  
    Total stockholders' deficit     (5,133,100 )     -  
    Total liabilities and excess of liabilities over assets (deficit) and stockholders' deficit   $ 458,350     $ 573,297  
                 

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