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TMCNet:  IGLUE, INC. - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations.

[November 14, 2012]

IGLUE, INC. - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations.

(Edgar Glimpses Via Acquire Media NewsEdge) This quarterly report on Form 10-Q and other reports filed by iGlue, Inc. (the "Company") from time to time with the SEC contain or may contain forward-looking statements and information that are (collectively, the "Filings") based upon beliefs of, and information currently available to, the Company's management as well as estimates and assumptions made by Company's management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the Filings, the words "anticipate," "believe," "estimate," "expect," "future," "intend," "plan," or the negative of these terms and similar expressions as they relate to the Company or the Company's management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks contained in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011, filed with the SEC, relating to the Company's industry, the Company's operations and results of operations, and any businesses that the Company may acquire. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.


Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management's judgment in its application.

There are also areas in which management's judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.

Plan of Operation Our Company has developed an internet semantic search and content organizer application called iGlue. iGlue makes sense of search results based on context by using automatic annotation of web pages with the entities present in iGlue's proprietary semantic database. iGlue extracts information from the annotated page and stores it, thereby automatically expanding the iGlue database.

iGlue functions by determining the specific meaning a given phrase uses. For example, "Smith" may refer to a profession or a given name, "JFK" may mean the president, the airport, or the space center. iGlue works by disambiguating between these different connotations and assigning the correct meaning to the word automatically. The iGlue system then displays relevant information such as facts, pictures, videos, geographic locations, related links, products, and advertisements about the word or entity within an appealing compact pop up window containing multimedia enhancements.

As of September 30, 2012, the Company has completed development of iGlue and has released its first version to the general public. We are now focusing on international expansion and growth of our product.

Over the next twelve months we plan to implement an international marketing campaign aimed at raising iGlue's user base, increase our employee numbers for further development work, launch a mobile version of iGlue on the iPad and open a new sales and marketing office in the United States. We intend to launch the administrator interface of our advertising system and increase the size of our semantic database to 500 million entities while adding four (4) more languages including Spanish, Russian, German and French.

23 -------------------------------------------------------------------------------- Results of Operations For the Three Months Ended September 30, 2012 Compared to the Three Months Ended September 30, 2011 For the For the September 19, Three Three 2007 Months Months (inception) Ended Ended through September September September 30, 30, 2012 30, 2011 2012 Net sales $ - $ - $ - Gross profit $ - $ - $ - General and administrative expenses $ 547,559 $ 27,128 $ 6,385,893 Loss from operations $ 705,613 $ 115,872 $ 8,376,730 Interest Expenses and Exchange Gains $ 22,413 $ 310 $ 107,235 Net loss $ 728,026 $ 116,182 $ 8,483,965 Revenue For the three months ended September 30, 2012 and 2011, the Company had no revenues.

Research and development For the three months ended September 30, 2012, research and development expenses were $158,054, as compared to $88,744 for the three months ended September 30, 2011. The increase of $69,310 in research and development expenses is attributable to the stock based payments made to software development specialists engaged in the project.

General, selling and administrative expenses For the three months ended September 30, 2012, general, selling and administrative expenses were $547,559, as compared to $27,128 for the three months ended September 30, 2011. The increase in general, selling and administrative expenses is attributable to the stock based payment to employees.

Loss of Operations Loss from operations for the three months ended September 30, 2012 and 2011, was $705,613 and $115,872, respectively. Cash used in operating activities for the three months ended September 30, 2012 and 2011 was primarily for legal and professional fees.

Net Loss The net loss for the three months ended September 30, 2012 and 2011, was $728,026 and $116,182, respectively.

24 -------------------------------------------------------------------------------- For the Nine Months Ended September 30, 2012 Compared to the Nine Months Ended September 30, 2011 For the Nine For the Nine September 19, Months Months 2007 Ended Ended (inception) September September through 30, 2012 30, 2011 June 30, 2012 Net sales $ - $ - $ - Gross profit $ - $ - $ - General and administrative expenses $ 6,003,842 $ 57,343 $ 6,385,893 Loss from operations $ 6,888,000 $ 371,272 $ 8,376,730 Interest Expenses and Exchange Gains $ 67,606 $ 359 $ 107,235 Net loss $ 6,955,606 $ 371,631 $ 8,483,965 Revenue For the nine months ended September 30, 2012 and 2011, the Company had no revenues.

Research and development For the nine months ended September 30, 2012, research and development expenses were $884,158, as compared to $313,929 for the nine months ended September 30, 2011. The increase of $570,229 in research and development expenses is attributable to the stock based payments made to software development specialists engaged in the project.

General, selling and administrative expenses For the nine months ended September 30, 2012, general, selling and administrative expenses were $6,003,842, as compared to $57,343 for the nine months ended September 30, 2011. The increase in general, selling and administrative expenses is attributable to the stock based payment to employees.

Loss of Operations Loss from operations for the nine months ended September 30, 2012 and 2011, was $6,888,000 and $371,272, respectively. Cash used in operating activities for the nine months ended September 30, 2012 and 2011 was primarily for legal and professional fees.

Net Loss The net loss for the nine months ended September 30, 2012 and 2011, was $6,955,606 and $371,631, respectively.

Liquidity and Capital Resources The following table summarizes total current assets, liabilities and working capital at September 30, 2012 and December 31, 2011.

September 30, 2012 December 31, 2011 Current Assets $ 33,574 $ 68,547 Current Liabilities $ 924,020 $ 818,475 Working Capital Deficit $ (890,446) $ (749,928) 25 -------------------------------------------------------------------------------- At September 30, 2012, we had a working capital deficit of $(890,446), as compared to a working capital deficit of $(749,928) at December 31, 2011, a decrease of $140,518. The decrease in working capital deficit is primarily related to an increase in funds from private placements in order to fund operating activities.

Net cash obtained through all financing activities for the nine months ended September 30, 2012 and 2011, was $138,899 and $183,036, respectively. Cash obtained through financing activities for the three months ended September 30, 2012 and 2011 were nil.

On the Company's Annual Report on Form 10-K, filed on March 20, 2012, our auditors have expressed their substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our management has no formal plan in place to address this concern but considers that we will be able to obtain additional funds by equity financing and/or related party advances; however there is no assurance of additional funding being available.

The Company expects its current resources to be insufficient for a period of approximately 12 months unless additional financing is received. Management has determined that additional capital will be required in the form of equity or debt securities. In addition, if we cannot raise additional short term capital we will be forced to continue to further accrue liabilities due to our limited cash reserves. There are no assurances that management will be able to raise capital on terms acceptable to the Company. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our business, financial condition and operating results. If we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock. If adequate funds are not available to us when needed on satisfactory terms, we may be required to cease operating or otherwise modify our business strategy.

Critical Accounting Policies We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements require the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Our management periodically evaluates the estimates and judgments made. Management bases its estimates and judgments on historical experience and on various factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates as a result of different assumptions or conditions.

The methods, estimates, and judgment we use in applying our most critical accounting policies have a significant impact on the results we report in our financial statements. The SEC has defined "critical accounting policies" as those accounting policies that are most important to the portrayal of our financial condition and results, and require us to make our most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based upon this definition, our most critical estimates relate to the fair value of warrant liabilities. We also have other key accounting estimates and policies, but we believe that these other policies either do not generally require us to make estimates and judgments that are as difficult or as subjective, or it is less likely that they would have a material impact on our reported results of operations for a given period. For additional information see Note 2, "Summary of Significant Accounting Policies" in the notes to our reviewed financial statements appearing elsewhere in this report.

Although we believe that our estimates and assumptions are reasonable, they are based upon information presently available, and actual results may differ significantly from these estimates.

Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements.

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