glow-20220331

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2022.

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number: 001-35376

OBLONG, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware			77-0312442
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

25587 Conifer Road, Suite 105-231, Conifer, CO 80433

(Address of Principal Executive Offices, including Zip Code)

(303) 640-3838

(Registrant’s Telephone Number, including Area Code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

OBLG

Nasdaq Capital Market

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐			Accelerated filer ☐
Non-accelerated filer ☒			Smaller reporting company ☒
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock as of May 10, 2022 was 30,816,048.

OBLONG, INC.

Index


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements		1
	Condensed Consolidated Balance Sheets at March 31, 2022 (unaudited) and December 31, 2021	1
	Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021	2
	Unaudited Condensed Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2022 and 2021	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021	5
	Notes to unaudited Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3. Quantitative and Qualitative Disclosures About Market Risk		20
Item 4. Controls and Procedures		20

PART II - OTHER INFORMATION
Item 1. Legal Proceedings		20
Item 1A. Risk Factors		21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		21
Item 3. Defaults Upon Senior Securities		21
Item 4. Mine Safety Disclosures		21
Item 5. Other Information		21
Item 6. Exhibits		22
Signatures		23

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q (this “Report”) contains statements that are considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and its rules and regulations (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, and its rules and regulations (the “Exchange Act”). These forward-looking statements include, but are not limited to, statements about the plans, objectives, expectations and intentions of Oblong, Inc. (“Oblong” or “we” or “us” or the “Company”). All statements other than statements of current or historical fact contained in this Report, including statements regarding Oblong’s future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” and similar expressions, as they relate to Oblong, are intended to identify forward-looking statements. These statements are based on Oblong’s current plans, and Oblong’s actual future activities and results of operations may be materially different from those set forth in the forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. Any or all of the forward-looking statements in this Report may turn out to be inaccurate. Oblong has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. The forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and assumptions. There are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including our plans, objectives, expectations and intentions and other factors that are discussed under the section entitled “Part I. Item 1A. Risk Factors” and in our consolidated financial statements and the footnotes thereto for the fiscal year ended December 31, 2021, each included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) on March 29, 2022. Oblong undertakes no obligation to publicly revise these forward-looking statements to reflect events occurring after the date hereof. All subsequent written and oral forward-looking statements attributable to Oblong or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this Report. Forward-looking statements in this Report include, among other things: our ability to meet commercial commitments; our expectations and estimates relating to customer attrition, sales cycles, future revenues, expenses, capital expenditures and cash flows; our ability to launch new product offerings; our expectations relating to the launch of our new subscription-based software offerings; our ability to launch new product offerings; evolution of our customer solutions and our service platforms; our ability to fund operations and continue as a going concern; expectations regarding adjustments to our cost of revenue and other operating expenses; our ability to finance investments in product development and sales and marketing; our ability to raise capital through sales of additional equity or debt securities and/or loans from financial institutions; statements relating to market need, evolution of our solutions and our service platforms; and effectiveness of our disclosure controls and procedures. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those summarized below:

•the continued impact of the coronavirus pandemic on our business, including its impact on our customers and other business partners, our ability to conduct operations in the ordinary course, and our ability to obtain capital financing important to our ability to continue as a going concern;

•our ability to continue as a going concern;

•our ability to raise capital in one or more debt and/or equity offerings in order to fund operations or any growth initiatives;

•customer acceptance and demand for our video collaboration services and network applications;

•our ability to launch new products and offerings and to sell our solutions;

•our ability to successfully transition to a subscription-based business model and potential future business model changes;

•our ability to compete effectively in the video collaboration services and network services businesses;

•the ongoing performance and success of our Managed Services business;

•our ability to maintain and protect our proprietary rights;

•potential future impairment charges related to goodwill and intangible assets;

•our ability to withstand industry consolidation;

•our ability to adapt to changes in industry structure and market conditions;

•actions by our competitors, including price reductions for their competitive services;

•the quality and reliability of our products and services;

•the prices for our products and services and changes to our pricing model;

•the success of our sales and marketing approach and efforts, particularly as it relates to subscription based sales;

•customer renewal and retention rates;

•risks related to the concentration of our customers and the degree to which our sales, now or in the future, depend on certain large client relationships;

•increases in material, labor or other manufacturing-related costs;

•changes in our go-to-market cost structure;

•inventory management and our reliance on our supply chain;

•our ability to attract and retain highly skilled personnel;

•our reliance on open-source software and technology;

•potential federal and state regulatory actions;

•our ability to innovate technologically, and, in particular, our ability to develop next generation Oblong technology;

•our ability to satisfy the standards for continued listing of our common stock on the Nasdaq Capital Market;

•changes in our capital structure and/or stockholder mix;

•the costs, disruption, and diversion of management’s attention associated with campaigns commenced by activist investors; and

•our management’s ability to execute its plans, strategies and objectives for future operations.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OBLONG, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value, stated value, and shares)


	March 31, 2022		December 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash	$	6,525	$	8,939
Restricted cash	61		61
Accounts receivable, net	555		849
Inventory	1,718		1,821
Prepaid expenses and other current assets	1,441		1,081
Total current assets	10,300		12,751
Property and equipment, net	122		159
Goodwill	6,229		7,367
Intangibles, net	6,982		7,562
Operating lease - right of use asset, net	532		659
Other assets	64		109
Total assets	$	24,229	$	28,607
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:

Accounts payable	553		259
Accrued expenses and other current liabilities	1,147		959
Current portion of deferred revenue	736		783
Current portion of operating lease liabilities	395		492



Total current liabilities	2,831		2,493
Long-term liabilities:


Operating lease liabilities, net of current portion	170		236
Deferred revenue, net of current portion	302		381

Total long-term liabilities	472		617
Total liabilities	3,303		3,110
Commitments and contingencies (see Note 11)
Stockholders’ equity:





Common stock, $.0001 par value; 150,000,000 shares authorized; 30,929,331 shares issued and 30,816,048 outstanding at March 31, 2022 and December 31, 2021	3		3
Treasury stock, 113,283 shares of common stock at March 31, 2022 and December 31, 2021	(181)		(181)
Additional paid-in capital	227,549		227,581
Accumulated deficit	(206,445)		(201,906)
Total stockholder's equity	20,926		25,497
Total liabilities and stockholders’ equity	$	24,229	$	28,607

See accompanying notes to condensed consolidated financial statements.

-1-

OBLONG, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended
	March 31,
		2022		2021
Revenue		$	1,532	$	1,918
Cost of revenue (exclusive of depreciation and amortization)		1,033		1,290
Gross profit		499		628

Operating expenses:
Research and development		1,004		692
Sales and marketing		562		527
General and administrative		1,690		2,067
Impairment charges		1,138		31
Depreciation and amortization		627		722
Total operating expenses		5,021		4,039
Loss from operations		(4,522)		(3,411)



Interest and other expense, net		6		22
Loss before income taxes		(4,528)		(3,433)
Income tax expense		11		—
Net loss		(4,539)		(3,433)
Preferred stock dividends		—		1
Undeclared dividends		—		366
Induced conversion of Series A-2 Preferred Stock		—		300

Net loss attributable to common stockholders		$	(4,539)	$	(4,100)

Net loss attributable to common stockholders per share:
Basic and diluted net loss per share		$	(0.15)	$	(0.23)


Weighted-average number of shares of common stock:
Basic and diluted		30,816		17,756

See accompanying notes to condensed consolidated financial statements.

-2-

OBLONG, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Three Months Ended March 31, 2022

(In thousands, except shares)

(Unaudited)


	Common Stock			Treasury Stock
	Shares	Amount		Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Total
Balance at December 31, 2021	30,929,331	$	3	113,283	$	(181)	$	227,581	$	(201,906)	$	25,497
Net loss	—	—		—	—		—		(4,539)		(4,539)
Stock-based compensation	—	—		—	—		52		—		52
Forfeiture of vested stock options	—	—		—	$	—	$	(84)	$	—	$	(84)
Balance at March 31, 2022	30,929,331	$	3	113,283	$	(181)	$	227,549	$	(206,445)	$	20,926

See accompanying notes to condensed consolidated financial statements.

-3-

OBLONG, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Three Months Ended March 31, 2021

(In thousands, except shares)

(Unaudited)


	Series A-2 Preferred Stock			Series D Preferred Stock	Series E Preferred Stock			Common Stock			Treasury Stock
	Shares	Amount			Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Total
Balance at Balance at December 31, 2020	45	$	—		1,697,958	$	—	131,579	$	—	7,861,912	$	1	113,283	$	(181)	$	215,092	$	(192,855)	$	22,057
Net loss	—	—

SEC Form 10-Q filed by Oblong Inc.