INTELLINETICS, INC. - Quarter Report: 2011 September (Form 10-Q)

UNITED STATES

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011

[ ]

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: 000-31671

GLOBALWISE INVESTMENTS, INC.

(Exact name of registrant as specified in its charter)

Nevada

(State or other jurisdiction of incorporation or organization)

87-0613716

(I.R.S. Employer Identification No.)

2157 S. Lincoln Street, Salt Lake City, Utah

(Address of principal executive offices)

84106

(Zip Code)

(801) 323-2395

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has 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 (§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 [ ]

Non-accelerated filer [ ]

Accelerated filed [ ]

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 [X] No [ ]

The number of shares outstanding of the registrant’s common stock as October 27, 2011 was 1,139,000.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Balance Sheets

Condensed Statements of Operations

Condensed Statements of Cash Flows

Notes to the Unaudited Condensed Financial Statements

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Item 4. Controls and Procedures

PART II – OTHER INFORMATION

Item 6. Exhibits

Signatures

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GLOBALWISE INVESTMENTS, INC.

(A Development Stage Company)

Financial Statements

September 30, 2011

Globalwise Investments, Inc.

(A Development Stage Company)

Condensed Balance Sheets

(Unaudited)



		September 30, 2011		December 31, 2010
ASSETS
CURRENT ASSETS
Cash	$	1,321	$	1,318
Total current assets		1,321		1,318

TOTAL ASSETS	$	1,321	$	1,318

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	0	$	31,270
Advances		0		36,000
Loans		71,995		0
Accrued interest		4,325		0
Total current liabilities		76,320		67,270
Total liabilities		76,320		67,270
STOCKHOLDERS' EQUITY
Common stock, $.001 par value; 50,000,000 shares authorized; 1,139,000 shares issued and outstanding		1,139		1,139
Additional paid in capital		35,205		35,205
Deficit accumulated during the development stage		(111,343)		(102,296)
Total stockholders' equity		(74,999)		(65,952)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,321	$	1,318

The accompanying notes are an integral part of these financial statements

Globalwise Investments, Inc.

(A Development Stage Company)

Condensed Statements of Operations

(Unaudited)



		For the three months ended September 30, 2011		For the three months ended September 30, 2010		For the nine months ended September 30, 2011		For the nine months ended September 30, 2010		From Inception on October 3, 1997 to September 30, 2011

Revenues	$	0	$	0	$	0	$	0	$	0

Expenses
General and administrative		1,252		967		4,722		5,018		107,018
Total expenses		1,252		967		4,722		5,018		107,018

Operating loss		(1,252)		(967)		(4,722)		(5,018)		(107,018)

Other Income (expense)
Interest expense		(1,440)		0		(4,325)		0		(4,325)
Total income (expense)		(1,440)		0		(4,325)		0		(4,325)

Loss from operations before income taxes		(2,692)		(967)		(9,047)		(5,018)		(111,343)

Income taxes		0		0		0		0		0

Net loss	$	(2,692)	$	(967)	$	(9,047)	$	(5,018)	$	(111,343)

Basic and diluted net loss per share	$	(0.00)	$	(0.00)	$	(0.01)	$	(0.00)

Weighted average shares outstanding		1,139,000		1,139,000		1,139,000		1,139,000

The accompanying notes are an integral part of these financial statements

Globalwise Investments, Inc.

(A Development Stage Company)

Condensed Statements of Cash Flows

(Unaudited)



		For the nine months ended September 30, 2011		For the nine months ended September 30, 2010		From Inception on October 3, 1997 to September 30, 2011

Cash Flows from Operating Activities
Net loss	$	(9,047)	$	(5,018)	$	(111,343)
Adjustments to reconcile net loss to cash provided (used) by operating activities:
Capital contributions - expenses		0		0		6,550
Changes in assets and liabilities:
Increase in inventory		0		0		(21,744)
Increase (decrease) in accounts payable and accrued expenses		(275)		1,400		39,594
Increase in accrued interest		4,325		0		4,325
Net cash provided (used) by operating activities		(4,997)		(3,618)		(82,618)

Cash Flows from Investing Activities
Purchase of equipment		0		0		(20,530)
Loss of cash in spin-off		0		0		(1,531)
Net cash used by investing activities		0		0		(22,061)

Cash Flows from Financing Activities
Proceeds from stock issuance		0		0		65,000
Proceeds from advances and loans		5,000		7,000		41,000
Net cash provided by financing activities		5,000		7,000		106,000

Increase (decrease) in cash		3		3,382		1,321

Cash and cash equivalents, beginning of period		1,318		305		0

Cash and cash equivalents, end of period	$	1,321	$	3,687	$	1,321

Supplemental Cash Flow Information:
Cash paid for interest	$	0	$	0	$	0
Cash paid for income taxes	$	0	$	0	$	0

Non-Cash Investing and Financing Activities
Converted accounts payable and advances into loans	$	66,995	$	0	$	66,995
Issuance of stock in settlement of debt	$	0	$	0	$	8,000

The accompanying notes are an integral part of these financial statements

Globalwise Investments, Inc.

(A Development Stage Company)

Notes to the Unaudited Condensed Financial Statements

September 30, 2011

NOTE 1 – Condensed Financial Statements

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows as of and for the period ended September 30, 2011 and for all periods presented have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2010 audited financial statements as reported in its Form 10-K. The results of operations for the period ended September 30, 2011 are not necessarily indicative of the operating results for the full year ended December 31, 2011.

NOTE 2 – Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has current liabilities in excess of current assets, has incurred losses since inception, has negative cash flows from operations, and has no revenue-generating activities. Its activities have been limited for the past several years and it is dependent upon financing to continue operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. It is management’s plan to acquire or merge with other operating companies.

In this report references to “Globalwise,” “the Company,” “we,” “us,” and “our” refer to Globalwise Investments, Inc.

FORWARD LOOKING STATEMENTS

The Securities and Exchange Commission (“SEC”) encourages reporting companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions. This report contains these types of statements. Words such as “may,” “expect,” “intend,” “believe,” “anticipate,” “estimate,” “project,” or “continue” or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

We are a development stage company that has not recorded revenues for the past two fiscal years. At September 30, 2011 we had $1,321 in cash and total liabilities of $76,320. We are dependent upon financing to continue basic operations. Management intends to rely upon advances or loans from management, significant stockholders or third parties to meet our cash requirements, but we have not entered into written agreements guaranteeing funds and, therefore, no one is obligated to provide funds to us in the future. These factors raise doubt as to our ability to continue as a going concern. Our plan is to combine with an operating company to generate revenue.

As of the date of this report, our management is evaluating a potential business combination, but we have not entered into any definitive agreements related to this transaction as of the filing date of this report. We anticipate that the evaluation of this business opportunity will be complex and extremely risky. We expect that our due diligence will encompass, among other things, meetings with the target business’s incumbent management and inspection of its facilities, as necessary, as well as a review of financial and other information which is made available to our management. This due diligence review may be conducted either by our management or by unaffiliated third parties we may engage. Our limited funds and the lack of full-time management will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of a target business before we consummate a business combination, if any.

Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks. Also, any business combination or transaction will likely result in a significant issuance of shares and substantial dilution to present stockholders of the Company.

Our management believes that there are numerous firms seeking the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the

like through the issuance of securities. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

Management anticipates that the struggling global economy will restrict the number of business opportunities available to us and will restrict the cash available for such transactions. There can be no assurance in the current economy that we will be able to acquire an interest in an operating company.

If we obtain a business opportunity, then it may be necessary to raise additional capital. We anticipate that we will sell our common stock to raise this additional capital. We expect that we would issue such stock pursuant to exemptions to the registration requirements provided by federal and state securities laws. The purchasers and manner of issuance will be determined according to our financial needs and the available exemptions to the registration requirements of the Securities Act of 1933. We do not currently intend to make a public offering of our stock. We also note that if we issue more shares of our common stock, then our stockholders may experience dilution in the value per share of their common stock.

Liquidity and Capital Resources

We have not recorded revenues from operations since inception and we have not established an ongoing source of revenue sufficient to cover our operating costs. We have relied upon advances of $5,000 from third parties during the nine month period ended September 30, 2011 (“2011 nine month period”) to finance our operations. We intend to obtain capital from management, significant stockholders and/or third parties to cover minimal operations; however, there is no assurance that additional funding will be available. Our ability to continue as a going concern during the long term is dependent upon our ability to find a suitable business opportunity and acquire or enter into a merger with such company. The type of business opportunity with which we acquire or merge will affect our profitability for the long term.

During the next 12 months we anticipate incurring additional costs related to the filing of Exchange Act reports. We believe we will be able to meet these costs through funds provided by management, significant stockholders and/or third parties. We may also rely on the issuance of our common stock in lieu of cash to convert debt or pay for expenses or services.

Results of Operations

We had no revenues during the 2011 and 2010 three and nine month periods ended September 30. General and administrative expense decreased from $5,018 for the 2010 nine month period to $4,722 for the 2011 nine month period. General and administrative expense increased from $967 for the 2010 third quarter to $1,252 for the 2011 third quarter primarily due to increased expenses related to filing XBRL files with our prior periodic report. The increased periodic filing costs will likely continue in the short term. We recorded interest expense of $4,325 in the 2011 nine month period and $1,440 in the 2011 third quarter due to the conversion of a portion of our current liabilities to loans in 2011. The increase in interest expense and periodic report filing costs increased our net loss for the 2011 periods as compared to the 2010 periods

Obligations

At December 31, 2010 we recorded $66,995 in current liabilities for services received, as well as cash advances received from unrelated parties. Management intended to issue common stock to convert the amount owed to these third parties; however, it was subsequently determined that it was not in the best interests of all parties to issue stock for the advances and, therefore, the parties agreed that these liabilities would be treated as loans effective January 1, 2011. The loans are non-collateralized, carry interest at 8% and are due on demand.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC. This information is accumulated to allow our management to make timely decisions regarding required disclosure. Our President, who serves as our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report and he determined that our disclosure controls and procedures were ineffective due to a control deficiency. During the period we did not have additional personnel to allow segregation of duties to ensure the completeness or accuracy of our information. Due to the size and operations of the Company we are unable to remediate this deficiency until we acquire or merge with another company.

Changes to Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Management conducted an evaluation of our internal control over financial reporting and determined that there were no changes made in our internal control over financial reporting during the third quarter of our 2011 fiscal year that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 6. EXHIBITS

Part I Exhibits


No.	Description
31.1	Principal Executive Officer Certification
31.2	Principal Financial Officer Certification
32.1	Section 1350 Certification

Part II Exhibits


No.	Description
3(i)	Articles of Incorporation, as amended (Incorporated by reference to exhibit 3.1 to Form 10-QSB, filed October 11, 2001)
3(i)(a)	Certificate of Correction, effective May 22, 2007 (Incorporated by reference to exhibit 3.1 to Form 8-K, filed June 17, 2007)
3(ii)	Bylaws of Globalwise (Incorporated by reference to exhibit 3.3 to Form 10-SB, filed October 2, 2000)
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Label Linkbase Document
101.PRE	XBRL Taxonomy Presentation Linkbase Document

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.

Date: October 31, 2011

GLOBALWISE INVESTMENTS, INC.

By /s/Donald R. Mayer__________________

Donald R. Mayer

President and Director

Principal Financial Officer