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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



|[X] | QUARTERLY REPORT UNDER SECTION 13 OR
 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended
October 31, 2008



|[   ] | TRANSITION REPORT UNDER SECTION 13 OR
 15(d) OF THE EXCHANGE ACT
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For the transition period from _______________ to _______________



Commission File Number: 000-30794



GLOBAL INNOVATION CORP.

|Delaware                                 | 20-5268517                          
|---------------------------------------- | ------------------------------------
|(State of incorporation)                 | (I.R.S. Employer Identification No.)
|                                         |                                     
|901 Hensley Lane                         | 75098                               
|Wylie, Texas                             | (Zip Code)                          
|(Address of principal executive offices) |                                     
|                                         |                                     

Issuer's telephone number: (214) 291-1427

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [    ]

Check whether the issuer is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes [   ]   No [X]

At
December 12, 2008 there were 10,179,337 shares
of the issuer's common shares outstanding.





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|GENERAL INDEX
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|ITEM 1.      
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|ITEM 2.      
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|ITEM 3.      
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|ITEM 4.      
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|ITEM 1.      
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|ITEM 5.      
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|ITEM 6.      
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|SIGNATURES   



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|GLOBAL INNOVATION CORP. AND SUBSIDIARIES                                                         
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|Condensed Consolidated Balance Sheet                                                             
|(Unaudited)                                                                                      
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|Current assets:                                                                                  
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|Property and equipment, net                                                                      
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|Other assets:                                                                                    
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|LIABILITIES AND STOCKHOLDERS' EQUITY                                                             
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|Current liabilities:                                                                             
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|Long-term liabilities:                                                                           
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|Stockholders' equity:                                                                            
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|The accompanying notes are an integral part of these condensed consolidated financial statements.



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|GLOBAL INNOVATION CORP. AND SUBSIDIARIES                                                                 
|---------------------------------------------------------------------------------------------------------
|Condensed Consolidated Statements of Operations                                                          
|(Unaudited)                                                                                              
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|Net sales                                                                                                
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|Cost of sales (including $220,078 and $193,025, respectively
to related party)                           
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|Gross profit                                                                                             
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|Expenses:                                                                                                
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|Income from operations                                                                                   
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|Other expense, net (including interest expense to related party
of $85,867 and $85,267, respectively)    
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|Income before provision for income taxes                                                                 
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|Provision for income taxes                                                                               
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|Net income                                                                                               
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|Other comprehensive loss:                                                                                
|Unrealized loss on interest rate swap derivative, net of tax benefit
of $16,356 and $35,839, respectively
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|Comprehensive income                                                                                     
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|Net income per share                                                                                     
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|Weighted average common shares outstanding                                                               
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|The accompanying notes are an integral part of these condensed consolidated financial statements.        



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|GLOBAL INNOVATION CORP. AND SUBSIDIARIES                                                         
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|Condensed Consolidated Statements of Cash Flows                                                  
|(Unaudited)                                                                                      
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|Cash flows from operating activities:                                                            
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|Cash flows from investing activities:                                                            
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|Cash flows from financing activities:                                                            
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|Net increase in cash                                                                             
|Cash, beginning of period                                                                        
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|Cash, end of period                                                                              
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|Supplementary disclosure of cash flow information:                                               
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|Non-cash financing activities:                                                                   
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|The accompanying notes are an integral part of these condensed consolidated financial statements.



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Global Innovation Corp. and SubsidiariesNotes to Interim Condensed Consolidated Financial StatementsOctober 31, 2008(Unaudited)



NOTE 1 - BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements have been prepared by Global Innovation Corp. and its subsidiaries (the "Company" or "GIC"), pursuant to the rules and regulations of the Securities and Exchange Commission and reflect all adjustments consisting of normal recurring entries, which, in the opinion of the Company, are necessary to present fairly the results for the interim periods.  Results of operations for the periods presented are not necessarily indicative of the results to be expected for the year ending July 31, 2009.

These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's annual report on Form 10-K for the year ended July 31, 2008, filed on October 22, 2008.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Inventory

Inventory consists of finished goods, work in process and raw materials and is priced at lower of cost or market (determined product by product based on management's knowledge of current market conditions and existing sales levels).  Cost of raw materials is determined on a weighted average basis; cost of work in process and finished goods is determined using specific identification.  A valuation allowance is established and adjusted periodically to provide for estimated obsolescence based upon the aging of inventory and market trends. The allowance for obsolescence at October 31, 2008 was $396,830.  At October 31, 2008, net inventory consisted of $1,473,210 in raw materials, $1,004,773 in work in process, and $2,071,876 in finished goods.

Revenue Recognition

The Company generates revenue from custom built printed circuit boards, made to order using engineering and designs provided by the customer.  All orders are manufactured to specific industry standards.  The Company recognizes revenues when persuasive evidence of a sales arrangement exists, the sales terms are fixed and determinable, title and risk of loss have transferred, and collectibility is reasonably assured, generally when products are shipped to the customer.

The Company does not give rebates to any of its customers.  The Company does not have customer acceptance provisions; the Company does, however, provide customers a limited right of return for defective products.  All orders are manufactured to specific industry standards and are electrically tested to insure compliance with such standards prior to shipment.

Derivative Financial Instruments

The Company uses derivatives only to hedge against changes in interest rates related to debt, as opposed to their use for trading purposes.  SFAS No.133, Accounting for Derivative Instruments and Hedging Activities, requires that derivatives be recorded on the balance sheet at fair value.  The fair value of swap contracts is determined based on the difference between the derivative's fixed contract price and the underlying market price at the determination date and is confirmed by counterparts to the derivative.

Realized and unrealized gains and losses on derivatives that are not designated as hedges, as well as on the ineffective portion of hedge derivatives, are recorded as a derivative fair value gain or loss in the income statement.  Unrealized gains and losses on effective cash flow hedge derivatives, as well as any deferred gain or loss realized upon early termination of effective hedge derivatives, are recorded as a component of accumulated other comprehensive income (loss).  When the hedged transaction occurs, the realized gain or loss, as well as any deferred gain or loss, on the hedge derivative is transferred from accumulated other comprehensive income (loss) to earnings.  Realized gains and losses on interest rate hedge derivatives are recognized as a component of interest expense and settlements of derivatives are included in cash flows from operating activities.

To designate a derivative as a cash flow hedge, at the hedge's inception management documents its assessment that the derivative will be highly effective in offsetting expected changes in cash flows from the item hedged.  This assessment is generally based on the most recent relevant historical correlation between the derivative and the item hedged.  The ineffective portion of the hedge is calculated as the difference between the change in fair value of the derivative and the estimated change in cash flows from the item hedged.  If, during the derivative's term, management determines the hedge is no longer highly effective, hedge accounting is prospectively discontinued and any remaining unrealized gains or losses on the effective portion of the derivative are reclassified to earnings when the underlying transaction occurs.  If it is determined that the designated hedge transaction is not likely to occur, any unrealized gains or losses are recognized immediately in the income statement as a derivative fair value gain or loss.

Earnings Per Share

Basic earnings per share is computed using the weighted average number of common shares outstanding during the period.  Diluted earnings per share is computed using the weighted average number of common and, if dilutive, potential common shares outstanding during the period.  Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and the conversion of the Company's notes payable for all periods presented.



Common shares issuable upon conversion of convertible notes payable to related parties were excluded from the calculation of diluted earnings per share for the three months ended October 31, 2008 because the effect of the conversion is antidilutive.  Warrants to purchase a total of 21,267 shares of common stock were excluded from the calculation of diluted earnings per share because the exercise prices were greater than the average market prices and the effect would be antidilutive.



NOTE 3 - CONCENTRATIONS OF RISK

At October 31, 2008, two customers accounted for approximately 29% of the total accounts receivable.  For the three months ended October 31, 2008 and 2007 respectively, these customers accounted for approximately 26% and 36% of net sales respectively.

NOTE 4 - INCOME TAXES

Significant temporary differences used in the computation of deferred tax assets and liabilities at October 31, 2008 and July 31, 2008 are as follows:



|                                             |                                           |   | October 31, |   | July 31,   
|-------------------------------------------- | ----------------------------------------- | - | ----------- | - | -----------
|                                             |                                           |   | 2008        |   | 2008       
|                                             |                                           |   |             |   |            
|Deferred tax asset, current                  |                                           |   |             |  
|                                             | Allowance for bad debts and sales returns | $ | 44,565      | $ | 62,655     
|                                             | Accrued bonus                             |   | 21,000      |   | 13,135     
|                                             | Accrued vacation                          |   | 111,808     |   | 106,360    
|                                             | Accrued interest                          |   | 9,837       |   | 38,715     
|                                             | Interest rate swap liability              |   | 126,901     |   | 110,535    
|                                             | Accrued legal                             |   | 49,980      |   | 49,980     
|                                             | Reserve for obsolescence                  |   | 138,890     |   | 138,890    
|                                             |                                           |   |             |   |            
|                                             |                                           | $ | 502,981     | $ | 520,270    
|                                             |                                           |   |             |   |            
|                                             |                                           |   |             |   |            
|Deferred tax assets (liabilities), long-term |                                           |   |             |  
|                                             | Depreciation of property and equipment    | $ | 140,858     | $ | 137,939    
|                                             | Net operating loss carry forward          |   | 2,409,029   |   | 2,449,145  
|                                             | Valuation allowance                       |   | (1,606,697) |   | (1,646,813)
|                                             | Customer base                             |   | (752,544)   |   | (798,619)  
|                                             |                                           |   |             |   |            
|                                             |                                           | $ | 190,646     | $ | 141,652    
|                                             |                                           |   |             |   |            

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent upon the existence of, or generation of, taxable income in the periods in which those temporary differences are deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.  Based upon historical taxable income and projections of future taxable income over the periods in which the deferred tax assets are deductible, management does not believe that further valuation allowances are necessary as of October 31, 2008.

At October 31, 2008, the Company had tax net operating loss carry forwards ("NOLs") of approximately $7.2 million that begin to expire in 2018.  The utilization of these NOLs is limited due to a change in ownership of a majority of the outstanding shares of the Company in November 2004. During the three months ended October 31, 2008, the Company utilized NOLs totaling $117,990, resulting in a decrease in the valuation allowance in the amount of $40,116.  The decrease to the valuation allowance was recorded as an adjustment to goodwill as the allowance was originally recorded in connection with a business combination.

NOTE 5 - LINE OF CREDIT

The Company has a $3 million line of credit agreement ("LOC") with a bank which is due on demand, bears interest at the LIBOR plus 2.25% (6.30% at October 31, 2008) and a fee of 1⁄2 of 1% of the unused balance. The LOC matures August 13, 2009.  The LOC is subject to certain financial and other covenants and is collateralized by all of the Company's accounts receivable and inventory.



At October 31, 2008, the outstanding balance under the LOC was $608,300, and the Company was in compliance with all its covenants.



NOTE 6 - NOTES PAYABLE

Notes payable consists of the following at October 31, 2008:



|Note payable to financial institution payable in monthly 
Installments of $33,333 plus  interest at Libor + 1.75%, matures
August 15, 2011. (1)                            | $ | 1,133,333  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -----------
|                                                                                                                                                                           |   |            
|Note payable to financial institution payable in monthly 
Installments of $22,916 plus interest at Libor + 1.75%, remaining
balance of $3,575,000 due August 15, 2013.	(1) |   | 4,904,167  
|                                                                                                                                                                           |   |            
|Note payable to financial institution payable in monthly 
Installments of $38,524 plus  interest at 7.75%, matures
October 31, 2012. (1)                                   |   | 1,887,688  
|                                                                                                                                                                           |   |            
|Capital lease payable to vendor                                                                                                                                            |   | 166,491    
|                                                                                                                                                                           |   |            
|Note payable to financing institution unsecured, matures March  1, 2009.                                                                                                   |   | 82,568     
|                                                                                                                                                                           |   |            
|Other                                                                                                                                                                      |   | 17,535     
|                                                                                                                                                                           |   |            
|                                                                                                                                                                           |   | 8,191,782  
|Less current maturities of long-term debt                                                                                                                                  |   | (1,321,532)
|                                                                                                                                                                           |   |            
|Total long-term debt, less current maturities                                                                                                                              | $ | 6,870,250  
|                                                                                                                                                                           |   |            

(1)  These notes are financed with our senior lender and collectively are secured by substantially all of the assets of the Company and are cross collateralized with the line of credit discussed in note 5.



Interest Rate Swap

In connection with the real estate loan, on August 23, 2006, the Company entered into an interest rate swap transaction with Amegy Bank.  The notational amount of the swap is $5.5 million subject to amortization and the term runs concurrent with the real estate note maturing in seven years.  The fixed rate applicable to this transaction is 7.25%.  The Company recorded the fair value of the arrangement as an interest rate risk management liability in the amount of $373,239 at October 31, 2008.  The change in this amount during the three months ended October 31, 2008 and 2007, net of a tax benefit in the amounts of $31,750 and $61,023 respectively, has been recorded as other comprehensive loss.

NOTE 7 - NOTES PAYABLE TO RELATED PARTY

On November 24, 2004 the Company issued convertible promissory notes in the principal amounts of $1 million and $3.2 million (collectively, the "Notes") to Brad Jacoby ("Jacoby"), the Company's CEO and majority shareholder, in conjunction with the Merger between Best Circuit Boards, Inc. ("BCB" and Integrated Performance Systems, Inc. ("IPS").  The Notes bore interest at 8% and were convertible into common stock at any time at a conversion price of $3.75 per share.  Interest on the $1 million note was payable semi-annually and the principal balance was due November 30, 2007.  Interest on the $3.2 million note was payable monthly and the principal was originally due February 28, 2005, and later extended to July 31, 2005.  The Notes were secured by 1) all assets of the Company and BCB, subordinated to Amegy Bank, 2) the outstanding stock of BCB and 3) the Company common stock owned by Ron Allen, the previous CEO of IPS.  On October 28, 2005 both the Notes were refinanced and combined into a single note (the "New Note") bearing interest at 8% payable semi-annually, with the principal due September 30, 2008.  The New Note is convertible under the same terms and secured by the same assets as the Notes.  On September 5, 2008, the Company extended the maturity date of the $4.2 million related party debt to March 31, 2010.



NOTE 8 - RELATED PARTY TRANSACTIONS

The Company leases its assembly facility and part of a facility used for equipment storage from an entity majority owned by Mr. Jacoby and his wife.  For the quarters ended October 31, 2008 and 2007, the Company incurred lease expense totaling $36,000 and $36,000, respectively, related to these operating leases.  The term of the lease for the assembly facility is ten years. The storage facility was leased in 2006 and is month to month.

The Company contracts the machining of parts from Chogie Manufacturing, an entity owned by the spouses of our CEO and COO.  The Company incurred expense of $187,318 and $160,265 for the quarters ended October 31, 2008 and 2007 respectively, for these services.

The Company incurred interest expense on the $4,200,000 related party note in the amount of $85,867 and $85,267 for the quarters ended October 31, 2008 and 2007, respectively.

As of October 31, 2008, there were 20,000 outstanding warrants to purchase common stock held by certain employees.   These warrants have an exercise price of $18.75 per share and expire November 5, 2009.

As of October 31, 2008, there were 1,267 outstanding warrants to purchase common stock held by debt holders.  These warrants have an exercise price of $37.50 per share and expire February 8, 2011.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

Litigation

We are a party to the various legal proceedings noted below.  While we currently believe that the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material adverse effect on our financial position or overall trends in results of operations, litigation is subject to inherent uncertainties.  If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on (1) our net income in the period in which the ruling occurs and (2) our business and financial condition.

Gehan Properties II, Ltd. v. Integrated Performance Systems, Inc. f/k/a ESOP, Inc., PC Dynamics of Texas, Inc., North Texas PC Dynamics, Inc., Performance Interconnect Corp., W.I. Technology Holding, Inc., Performance Interconnect Corp. of North Texas, Inc., and D. Ronald Allen, Individually; Cause No. 03-12216-G; Pending in the 95th Judicial District Court, Dallas County, Texas.



On September 18, 2008, the Company settled the Gehan litigation in the amount of $500,000.  The $500,000 settlement was accrued at July 31, 2008 and $250,000 remains accrued as of October 31, 2008. A payment of $250,000 was paid October 3, 2008 and another payment of $250,000 is due April 3, 2009.



Integrated Performance  Systems, Inc. and Best Circuit Boards, Inc. v. D. Ronald Allen, China Voice Holding Corp., China Voice Corp., Integrated Performance Business Services Corp., Associates Funding Group, Inc., B C & Q Corp., CMLP Group, Ltd., Landmark Lakes Ltd., Southern Cross Realty Corporation, Touchstone Enterprises, Inc., Winterstone Management, Inc., Syspower Corporation, and Custer Company, Inc.; Cause No. 05-12164-F; Pending in the 116th Judicial District Court, Dallas County, Texas.



On December 5, 2005 the Company sued D. Ronald Allen and several entities affiliated with Allen.  The Company asserts claims against Allen for, among other things, fraud, breach of contract arising out of the agreement for the Merger.  The Company also seeks indemnity for liquidated and other as-yet unliquidated claims for potential indemnifiable costs.  The Company asserts claims for constructive trusts against the entity defendants regarding the Company's Common Stock held by those entities as of the date of the closing of the Merger Agreement.  The case has been abated pending resolution of the Gehan Properties lawsuit described above.



Anna Stock, Permanent Dependent Administrator for the Estate of Dennis R. Ranzou, Deceased v. Integrated Performance Systems, Inc, Sundial Development Corp., and Global Innovation Corp.; Cause No. 340,914; Pending in the Probate Court No. 1 of Harris County, Texas



On May 23, 2007 the plaintiff sued the Company and another entity asserting claims for breach of contract for failure to pay a promissory note dated April 2, 2002 in the principal amount of $210,000 plus interest.  The current principals of the Company had no knowledge of any such note and the same was not disclosed prior to Best Circuit Boards, Inc.'s November 2004 Merger with Integrated Performance Systems, Inc.  The plaintiff recently made a settlement demand in the amount of $147,000.  The parties are in the process of documenting the settlement.  The Company has recorded $147,000 to accrued legal expense.



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

Forward Looking Statements

This report may contain "Forward Looking Statements" which are our expectations, plans and projections, including statements concerning expected income and expenses and the adequacy of our sources of cash to finance current and future operations.  These expectations, plans and projections may or may not materialize and are subject to various risks and uncertainties.  Factors which could cause actual results to materially differ from our expectations include the following: general economic conditions and growth in the high tech industry; competitive factors and pricing pressures; changes in product mix; the timely development and acceptance of new products; the effects of the contingencies described herein; the availability of capital; loss of key suppliers, significant customers or key management personnel; payment defaults by our customers; changes in our business strategy or development plans; and the risks described from time to time in our other filings with the Securities and Exchange Commission ("SEC"). When used in this report, the words "may," "will," "believe," "expect," "project," "anticipate," "estimate," "continue," "intend" and similar expressions are intended to identify forward-looking statements.  These forward-looking statements speak only as of the date of this report, and we have based our forward-looking statements on our current assumptions and expectations about future events.  We have expressed our assumptions and expectations in good faith, and we believe there is a reasonable basis for them.  However, we cannot assure you that our assumptions and expectations will prove to be accurate.  We expressly disclaim any obligation or undertaking to release publicly any updates or change in our expectations or any change in events, conditions or circumstances on which any such statement may be based, except as may be otherwise required by the securities laws.

Overview

Global Innovation Corp. (the "Company" or "GIC") is a Delaware corporation, doing business through its subsidiary Best Circuit Boards, Inc. On November 9, 2006 we reincorporated in Delaware by merging into GIC with GIC continuing as the surviving corporation.

The Company was a New York corporation originally incorporated on November 29, 1990 under the name "ESPO's, Inc."  On April 4, 2001 we changed our name to Integrated Performance Systems, Inc. ("IPS").

On November 24, 2004 a wholly owned subsidiary of the Company merged with Best Circuit Boards, Inc., d/b/a Lone Star Circuits ("Lone Star Circuits" or "LSC"), and LSC became a wholly owned subsidiary of the Company.  Brad Jacoby ("Jacoby"), the beneficial owner of LSC, acquired a controlling interest in the Company. The transaction was accounted for as a reverse merger (the transaction being referred to in this Annual Report as the "Merger").  This means the Merger was treated as if LSC acquired the Company and, consequently, the historical financial statements of LSC became the historical financial statements of the Company for all periods presented.

The following discussion provides information to assist in the understanding of our financial condition and results of operations for the three months ended October 31, 2008 and 2007.  It should be read in conjunction with the financial information for the year ended July 31, 2008, appearing in the Company's annual Form 10-K filed on October 22, 2008.

Results of Operations

Revenues.  Net sales increased to $9,367,803 for the three months ended October 31, 2008 from $8,439,772 for the same period in 2007, a net increase of $928,031 or 11%.  The increase is due primarily to a large one-time order from a new customer.

Gross Profit.  Gross profit for the three months ended October 31, 2008 was $1,944,266 compared to $1,789,845 for the same period in 2007, an increase of $240,421 or 11%.  Gross margin remained 21% for the three months ended October 31, 2008 compared to the previous year.  The increase in gross profit is a result of the increase in revenue while maintaining the same gross profit percentage.

Selling, general and administrative expenses.  Selling, general and administrative ("SG&A") expenses consist primarily of direct charges for sales, promotion and marketing, as well as the cost of executive, administrative and accounting personnel, and related expenses and professional fees.  SG&A expense increased to $1,363,944 for the three months ended October 31, 2008 from $1,195,151 for the same period in 2007, an increase of $168,793 or 14%.  The increase is primarily related to increased selling expenses such as additional staff and commissions.

Amortization of Customer Base.  The customer base was recorded as a result of the Merger with Best Circuit Boards, Inc. on November 24, 2004 and amortization was $135,512 during the three months ended October 31, 2008 and 2007.

Other Income (Expense), Net.  Other income (expense), net, includes interest expense on notes payable and notes payable to related parties offset by interest earned on cash balances.  Other income (expense), net, increased to ($241,047) from ($236,615) for the three months ended October 31, 2008 and 2007, respectively.  The increase in net expense during the three months ended October 31, 2008 is primarily due to less interest earned on the cash balances.

Income Tax Provision.  The income tax provision decreased to $93,563 for the three months ended October 31, 2008, from $120,989 for the same period in the prior year. The decrease in the provision is due primarily to the reduced deferred tax expense component of the provision.

Liquidity and Capital Resources

We have generally financed our business from cash generated by operations and borrowings.  Our principal uses of cash have been to fund working capital, meet debt service requirements, and fund capital expenditures. We expect that these uses will continue to be the principal demands on our cash in the future.

For the period ended October 31, 2008, we have current assets in excess of current liabilities.  We believe that cash provided by operations along with funds available under our line of credit (see "Indebtedness and guarantees" below) will be sufficient to fund our working capital needs, finance capital expenditures and service our debt for the next twelve months and beyond.  Capital expenditures planned for the next twelve months consist of normal equipment purchases necessary to maintain current operating capacity and technological competence, and replace equipment that may have reached the end of its useful life.  During the current fiscal quarter, our capital expenditures included manufacturing equipment and engineering software systems that will allow us to improve the throughput and quality level of the technology required to keep up with the complex products our customers design.  We have historically also been able to obtain financing for equipment acquisitions under operating leases with provisions for installment purchases at the end of the lease terms.  We anticipate that we will continue to be able to obtain this type of financing for future equipment needs.

Cash flows from operations.  Net cash of $413,767 provided by operations during the three months ended October 31, 2008 consisted of $630,634 provided by net income as adjusted from non-cash items offset by $216,867 used by working capital.  This compares to net cash provided by operations of $474,750 during the same period in the prior year, which consisted of $461,498 provided by net income as adjusted from non-cash items and $13,252 provided by working capital.

Cash used for investing activities.  Net cash of $184,110 used in investing activities during the three months ended October 31, 2008 consisted of purchases of equipment.  Net cash of $17,747 used for investing activities during the same period in the prior year consisted of purchases of equipment and software systems.

Cash flows from financing activities.  Net cash used by financing activities during the three months ended October 31, 2008 was $135,336 and consisted of new borrowing on LOC of $250,000 offset by payments of $385,336 on long-term debt.  Net cash used by financing activities was $72,857 during the same period in the prior year and included net new borrowings of $172,703 offset by net payments of $245,560 on long-term debt.

Indebtedness and guarantees.  We have a $3 million line of credit (the "LOC") described in Note 5 of our financial statements set forth in Part I, Item 1 above.

We issued $4.2 million in convertible promissory notes to Brad Jacoby in conjunction with the Merger in November 2004.  These notes were refinanced on October 28, 2008, and now bear 8% interest payable semiannually, with the principal due March 31, 2010.

On August 18, 2006, the Company entered into a credit facility with Amegy Bank of Texas, headquartered in Houston, Texas, for a $2 million five-year term loan, coupled with a $3 million line of credit (LOC) and a $5.5 million real estate loan.  The real estate loan allowed the Company to purchase its Wylie manufacturing facility and accompanying property for $6.3 million.  The Rowlett operating facility is currently being leased from a related party under a 10-year agreement (see also Note 8).  The note terms are 1 year, 5 years and 7 years for the LOC, equipment and real estate loans, respectively.  The loans bear interest at LIBOR+1.5-2.25% and are collateralize by various Company assets.

On August 14, 2007, the Company entered into an additional equipment note with Amegy Bank for $2,311,455.  The note term is 5 years and 2 months, bears interest at 7.75% and is collateralized by substantially all Company assets.

We expect that cash generated from operations will be sufficient to fund payments on our indebtedness as it becomes due, or that we will be able to refinance the debt under similar terms.

ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

None

ITEM 4.     CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.  Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has reviewed and evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of the end of the period covered by this report.  Management has concluded that our disclosure controls and procedures are effective in ensuring that material information is timely communicated to appropriate management personnel, including the Chief Executive Officer and Chief Financial Officer, to enable such personnel to evaluate information and determine the information required to be included in our periodic SEC reports.

Annual report on internal control over financial reporting.  Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).   Our management has performed an assessment of the design and effectiveness of our internal control over financial reporting as of July 31, 2008. In making its assessment of internal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework.  We have identified several material weaknesses.



The Company lacks key corporate governance requirements such as having only one board member that is also the CEO, no independent board members, no audit committee or financial expert and no independent whistleblower number.  The Company does not have any current plans to remediate these weaknesses.



The Company also has material weaknesses in its internal control environment including a limited number of information technology ("IT") personnel, IT security controls, IT infrastructure and limited global system access controls.  Management is in the process of updating and improving the overall IT infrastructure and is reviewing various solutions to implement for remediation of these weaknesses.



Process level controls for inventory, income taxes and financial reporting have been identified as material weaknesses.  There is not currently an effective perpetual inventory and costing system in place.  The Company is in the process of implementing a new perpetual inventory and costing system that will improve the controls related to accounting for inventory and cost of goods sold.  Management expects the implementation should be complete prior to the fiscal year ending July 31, 2009.  The Company has limited in-house expertise in the area of accounting for income taxes.  Due to the limited knowledge in-house, the Company is required to use outside services qualified to address this weakness.



As a result of these control weaknesses the Company is lacking internal control over its financial reporting.  Based on our assessment through October 31, 2008, management concluded that, as of October 31, 2008, our internal control over financial reporting is not effective.   Management is reviewing the quarterly financial reporting processes and expects to have improved processes in place prior to the fiscal year ending July 31, 2009.

Changes in internal control over financial reporting.  Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated whether any change in our internal control over financial reporting occurred during the last fiscal quarter.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that there have not been any changes in internal controls that have occurred during the last fiscal quarter that would materially affect our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

Gehan Properties II, Ltd. v. Integrated Performance Systems, Inc. f/k/a ESOP, Inc., PC Dynamics of Texas, Inc., North Texas PC Dynamics, Inc., Performance Interconnect Corp., W.I. Technology Holding, Inc., Performance Interconnect Corp. of North Texas, Inc., and D. Ronald Allen, Individually; Cause No. 03-12216-G; Pending in the 95th Judicial District Court, Dallas County, Texas.



On September 18, 2008, the Company settled the Gehan litigation in the amount of $500,000.  A payment of $250,000 was paid October 3, 2008 and another payment of $250,000 is due April 3, 2009.



Integrated Performance  Systems, Inc. and Best Circuit Boards, Inc. v. D. Ronald Allen, China Voice Holding Corp., China Voice Corp., Integrated Performance Business Services Corp., Associates Funding Group, Inc., B C & Q Corp., CMLP Group, Ltd., Landmark Lakes Ltd., Southern Cross Realty Corporation, Touchstone Enterprises, Inc., Winterstone Management, Inc., Syspower Corporation, and Custer Company, Inc.; Cause No. 05-12164-F; Pending in the 116th Judicial District Court, Dallas County, Texas.



On December 5, 2005 the Company sued D. Ronald Allen and several entities affiliated with Allen.  The Company asserts claims against Allen for, among other things, fraud, breach of contract arising out of the agreement for the Merger.  The Company also seeks indemnity for liquidated and other as-yet unliquidated claims for potential indemnifiable costs.  The Company asserts claims for constructive trusts against the entity defendants regarding the Company's Common Stock held by those entities as of the date of the closing of the Merger Agreement.  The case has been abated pending resolution of the Gehan Properties lawsuit described above.



Anna Stock, Permanent Dependent Administrator for the Estate of Dennis R. Ranzou, Deceased v. Integrated Performance Systems, Inc, Sundial Development Corp., and Global Innovation Corp.; Cause No. 340,914; Pending in the Probate Court No. 1 of Harris County, Texas



On May 23, 2007 the plaintiff sued the Company and another entity asserting claims for breach of contract for failure to pay a promissory note dated April 2, 2002 in the principal amount of $210,000.00 plus interest.  The current principals of the Company had no knowledge of any such note and the same was not disclosed prior to Best Circuit Boards, Inc.'s November 2004 Merger with Integrated Performance Systems, Inc.  The plaintiff recently made a settlement demand in the amount of $147,000.  The parties are in the process of documenting the settlement.  The Company has recorded $147,000 to accrued legal expense.

ITEM 5.     OTHER INFORMATION

Our Common Stock is traded over-the-counter on the OTC Bulletin Board® (OTCBB) under the symbol "GINV.OB".  The annual report on Form 10-K was filed on October 22, 2008.

ITEM 6.     EXHIBITS

|ExhibitNumber | Description of Exhibit                                                                                                                                                                                                                                                                    
|------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              |                                                                                                                                                                                                                                                                                           
|2.1*          | Agreement and Plan of Merger by and among Integrated Performance Systems, Inc. & Best Circuit Boards, Inc. (d/b/a Lone Star Circuits) dated October 22, 2004 (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed October 28, 2004).                                   
|              |                                                                                                                                                                                                                                                                                           
|2.2*          | First Addendum to the Agreement and Plan of Merger between Integrated Performance Systems, Inc. and Best Circuit Boards, Inc. dated November 24, 2004 (filed as Exhibit 2.2 to the Company's Current Report on Form 8-K filed December 1, 2004).                                          
|              |                                                                                                                                                                                                                                                                                           
|2.3*          | Closing Document between the Company and Best Circuit Boards, Inc. dated November 24, 2004 (filed as Exhibit 2.3 to the Company's Quarterly Report on Form 10-QSB filed April 27, 2005).                                                                                                  
|              |                                                                                                                                                                                                                                                                                           
|3.1*          | Articles of Incorporation and Company Bylaws of Global Innovation Corp. dated November 9, 2006 (filed as Exhibit 3 to the Company's report on Form 8-K filed November 14, 2006).                                                                                                          
|              |                                                                                                                                                                                                                                                                                           
|10.1*         | Amended and Restated Secured Promissory Note in the principal amount of $4,200,000 dated October 28, 2005 between the Company and Best Circuit Boards, Inc. and Brad Jacoby and payable to Brad Jacoby (filed as Exhibit 10.3 to the Company's report on Form 8-K filed November 18, 2005)
|              |                                                                                                                                                                                                                                                                                           
|10.2*         | Stock Escrow and Security Agreement between Ron Allen, the Company, Brad Jacoby and Best Circuit Boards, Inc. dated September 16, 2004 (filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-QSB filed October 20, 2004).                                                   
|              |                                                                                                                                                                                                                                                                                           
|10.3*         | Addendum to Stock Escrow and Security Agreement between Ron Allen, the Company, Brad Jacoby and Best Circuit Boards, Inc. dated November 24, 2004 (filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-QSB filed April 27, 2005).                                          
|              |                                                                                                                                                                                                                                                                                           
|10.4*         | Employment Agreement dated November 30, 2004 by and between the Company and Brad Jacoby (filed as Exhibit 10.5 to the Company's Quarterly Report on Form 10-QSB filed April 27, 2005).                                                                                                    
|              |                                                                                                                                                                                                                                                                                           
|10.5*         | Employment Agreement dated November 30, 2004 by and between the Company and Brad Peters (filed as Exhibit 10.6 to the Company's Quarterly Report on Form 10-QSB filed April 27, 2005).                                                                                                    
|              |                                                                                                                                                                                                                                                                                           
|10.6*         | Employment Agreement dated November 30, 2004 by and between the Company and Brent Nolan (filed as Exhibit 10.7 to the Company's Quarterly Report on Form 10-QSB filed April 27, 2005).                                                                                                    
|              |                                                                                                                                                                                                                                                                                           
|10.7*         | Employment Agreement dated November 30, 2004 by and between the Company and James B. Nolan (filed as Exhibit 10.8 to the Company's Quarterly Report on Form 10-QSB filed April 27, 2005).                                                                                                 
|              |                                                                                                                                                                                                                                                                                           
|10.8*         | Lease of Personal Property dated March 21, 2005 by and between Best Circuit Boards, Inc. dba Lone Star Circuits and M&I First National Leasing Corp. (filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-QSB filed June 13, 2005).                                        
|              |                                                                                                                                                                                                                                                                                           
|10.9*         | Amended and Restated Jacoby Loan Agreement (filed as Exhibit 10.1 to the Company's Form 8-K, filed November 17, 2006).                                                                                                                                                                    
|              |                                                                                                                                                                                                                                                                                           
|10.10*        | Amended and Restated Jacoby Promissory Note (filed as Exhibit 10.2 to the Company's Form 8-K, filed November 17, 2006).                                                                                                                                                                   
|              |                                                                                                                                                                                                                                                                                           
|10.11*        | Amended and Restated Jacoby Security Agreement - Best Circuit Boards, Inc (filed as Exhibit 10.3 to the Company's Form 8-K, filed November 17, 2006).                                                                                                                                     
|              |                                                                                                                                                                                                                                                                                           
|10.12*        | Amended and Restated Jacoby Security Agreement - Global Innovation Corp. (filed as Exhibit 10.4 to the Company's Form 8-K, filed November 17, 2006).                                                                                                                                      
|              |                                                                                                                                                                                                                                                                                           
|10.13*        | Interest rate swap agreement by and between Best Circuit Boards, Inc. and Amegy Bank (filed as Exhibit 10.7 to the Company's Form 8-K, filed August 24, 2006).                                                                                                                            
|              |                                                                                                                                                                                                                                                                                           
|10.14*        | Real Estate Promissory Note in the principal amount of $5,500,000 by and between Best Circuit Boards, Inc., Global Innovation Corp. and Amegy Bank N.A. dated August 18, 2006 (filed as Exhibit 10.6 to the Company's Form 8-K filed August 24, 2006)                                     
|              |                                                                                                                                                                                                                                                                                           
|10.15         | Equipment Promissory Note in the principal amount of $2,000,000 by and between Best Circuit Boards, Inc., Global Innovation Corp. and Amegy Bank N.A. dated August 18, 2006 (filed as Exhibit 10.4 to the Company's Form 8-K filed August 24, 2006).                                      
|              |                                                                                                                                                                                                                                                                                           
|10.16*        | Third Amendment to Loan Agreement by and among Best Circuit Boards, Inc., Global Innovation Corp., and Amegy Bank N.A. dated May 31, 2007.                                                                                                                                                
|              |                                                                                                                                                                                                                                                                                           
|10.17*        | Additional Equipment Promissory Note by and between Best Circuit Boards, Inc., Global Innovation Corp., and Amegy Bank N.A. in the amount of $2,650,000, dated May 31, 2007.                                                                                                              
|              |                                                                                                                                                                                                                                                                                           
|10.18*        | Amended and Restated Subordination Agreement by and between Best Circuit Boards, Inc., Global Innovation Corp, Brad Jacoby and Amegy Bank N.A. dated May 31, 2007.                                                                                                                        
|              |                                                                                                                                                                                                                                                                                           
|10.19*        | Revolving Credit Promissory Note by and between Best Circuit Boards, Inc., Global Innovation Corp. and Amegy Bank N.A. in the amount of $3,000,000 dated August 14, 2007.                                                                                                                 
|              |                                                                                                                                                                                                                                                                                           
|10.20*        | Revolving Credit Promissory Note by and between Best Circuit Boards, Inc., Global Innovation Corp. and Amegy Bank N.A. in the amount of $3,000,000 dated August 23, 2008. (filed as Exhibit 10.20 to the Company's Form 10-KSB filed October 22, 2008).                                   
|              |                                                                                                                                                                                                                                                                                           
|21*           | Subsidiaries of the Company. (filed as Exhibit 21 to the Company's Form 10-KSB as filed January 5, 2006).                                                                                                                                                                                 
|              |                                                                                                                                                                                                                                                                                           
|31.1**        | Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                      
|              |                                                                                                                                                                                                                                                                                           
|31.2**        | Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                      
|              |                                                                                                                                                                                                                                                                                           
|32**          | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                           

*     Incorporated herein by reference to the respective filings identified above.

**     Filed herewith.

SIGNATURE

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|                        | GLOBAL INNOVATION CORP.                                       
|----------------------- | --------------------------------------------------------------
|                        | (Registrant)                                                  
|                        |                                                               
|                        |                                                               
|Date: December 15, 2008 | By:                                                           
|                        |                                                               
|                        | Brad J. Peters                                                
|                        | Vice President and Chief Financial Officer                    
|                        | (Principal Financial Officer and Principal Accounting Officer)