GlobalWise Investments, Inc.

Columbus, Ohio

www.GlobalWiseInvestments.com

614-388-8909

Contact@GlobalWiseInvestments.com

 

Mission Investor Relations

Atlanta, Georgia

http://www.MissionIR.com

404-941-8975

Investors@MissionIR.com

 

 

Exhibit 99.1

 

 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, August 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:

 

oTotal 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;
oGross 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;
oGross profit margin increased to 67% compared to 16% in the first quarter and 63% in the year-ago second quarter;
oTotal operating expenses decreased by 69% to $680,062 compared to $1,148,905 million in the first quarter; up from $421,636 in the year-ago second quarter;
oLoss 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;
oNet 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.

 

 
-2-

 

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, IntellivueTM, 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 

 

 
-3-

  

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 

 

 
-4-

  

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