TaoWeave, Inc 10-Q for FY2021 Q2

TaoWeave, Inc. (TWAV)

10-Q 2021-08-11 For: 2021-06-30

Added on April 06, 2026

About this 10-Q

TaoWeave, Inc filed this 10-Q on August 11, 2021, covering the quarter ended June 30, 2021 (FY2021 Q2).

Headline figures

Quarter ended June 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.05M; down 27.2% from $2.82M a year earlier
Net loss: $2.25M; compared with a net loss of $3.39M a year earlier
Diluted EPS: -$0.08; compared with -$0.65 a year earlier

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


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


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements		1
	Condensed Consolidated Balance Sheets at June 30, 2021 (unaudited) and December 31, 2020	1
	Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020	3
	Unaudited Condensed Consolidated Statement of Stockholders’ Equity for the three and six months ended June 30, 2021 and 2020	4
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020	6
	Notes to unaudited Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3. Quantitative and Qualitative Disclosures About Market Risk		30
Item 4. Controls and Procedures		30

PART II - OTHER INFORMATION
Item 1. Legal Proceedings		31
Item 1A. Risk Factors		31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		31
Item 3. Defaults Upon Senior Securities		31
Item 4. Mine Safety Disclosures		31
Item 5. Other Information		31
Item 6. Exhibits		32
Signatures		33


	June 30, 2021		December 31, 2020
	(Unaudited)
ASSETS
Current assets:
Cash	$	13,033	$	5,058
Current portion of restricted cash	61		158
Accounts receivable, net	953		3,166
Inventory	2,125		920
Prepaid expenses and other current assets	1,393		691
Total current assets	17,565		9,993
Property and equipment, net	307		573
Goodwill	7,367		7,367
Intangibles, net	8,946		10,140
Operating lease - right of use asset, net	653		903
Other assets	99		167
Total assets	$	34,937	$	29,143
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	—	$	2,014
Accounts payable	518		313
Accrued expenses and other current liabilities	1,420		1,201
Current portion of deferred revenue	894		1,217
Current portion of operating lease liabilities	734		830



Total current liabilities	3,566		5,575
Long-term liabilities:

Long-term debt, net of current portion	2,417		403
Operating lease liabilities, net of current portion	249		602
Deferred revenue, net of current portion	400		506

Total long-term liabilities	3,066		1,511
Total liabilities	6,632		7,086
Commitments and contingencies (see Note 12)
Stockholders’ equity:
Preferred stock Series A-2, convertible; $.0001 par value; $7,500 stated value; 7,500 shares authorized, zero and 45 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	—		—


Preferred stock Series D, convertible; $.0001 par value; $28.50 stated value; 1,750,000 shares authorized, zero and 1,697,958 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	—		—
Preferred stock Series E, convertible; $.0001 par value; $28.50 stated value; 175,000 shares authorized, zero and 131,579 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	—		—


Common stock, $.0001 par value; 150,000,000 shares authorized; 30,729,331 shares issued and 30,616,048 outstanding at June 30, 2021 and 7,861,912 shares issued and 7,748,629 outstanding at December 31, 2020	3		1
Treasury stock, 113,283 shares of common stock at June 30, 2021 and December 31, 2020	(181)		(181)
Additional paid-in capital	227,017		215,092
Accumulated deficit	(198,534)		(192,855)
Total stockholder's equity	28,305		22,057
Total liabilities and stockholders’ equity	$	34,937	$	29,143


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Revenue	$	2,049	$	2,816	$	3,967	$	8,144
Cost of revenue (exclusive of depreciation and amortization)	1,249		1,683		2,539		4,072
Gross profit	800		1,133		1,428		4,072

Operating expenses:
Research and development	599		988		1,291		2,315
Sales and marketing	572		834		1,099		2,040
General and administrative	1,383		1,815		3,450		3,842
Impairment charges	17		—		48		550
Depreciation and amortization	707		796		1,429		1,612
Total operating expenses	3,278		4,433		7,317		10,359
Loss from operations	(2,478)		(3,300)		(5,889)		(6,287)
Interest and other expense, net	9		76		14		220
Other income	(227)		—		(227)		—
Foreign exchange loss (gain)	(14)		9		3		7
Interest and other (income) expense, net	(232)		85		(210)		227
Loss before income taxes	(2,246)		(3,385)		(5,679)		(6,514)
Income tax expense	—		—		—		—
Net loss	(2,246)		(3,385)		(5,679)		(6,514)
Preferred stock dividends	—		4		1		8
Undeclared dividends	—		—		366		—
Induced conversion of Series A-2 Preferred Stock	—		—		300		—
Net loss attributable to common stockholders	$	(2,246)	$	(3,389)	$	(6,346)	$	(6,522)

Net loss attributable to common stockholders per share:
Basic and diluted net loss per share	$	(0.08)	$	(0.65)	$	(0.29)	$	(1.25)


Weighted-average number of shares of common stock:
Basic and diluted	26,644		5,240		22,250		5,222


	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 December 31, 2020	45	$	—		1,697,958	$	—	131,579	$	—	7,861,912	$	1	113,283	$	(181)	$	215,092	$	(192,855)	$	22,057
Net loss	—	—			—	—		—	—		—	—		—	—		—		(3,433)		(3,433)
Stock-based compensation	—	—			—	—		—	—		—	—		—	—		33		—		33
Conversion of Series A-2 Preferred Stock, including dividend accrual	(45)	—			—	—		—	—		84,292	—		—	—		—		—		—
Conversion of Series D and E Preferred Stock	—	—			(1,697,022)	—		(131,579)	—		18,762,119	2		—	—		(2)		—		—
Issuance of stock for services	—	—			—	—		—	—		21,008	—		—	—		274		—		274
Forfeitures of restricted stock	—	—			(81)	—		—	—		—	—		—	—		—		—		—

Series D Preferred shares to pay withholding taxes	—	—			(855)	—		—	—		—	—		—	—		—		—		—
Balance at March 31, 2021	—	—			—	—		—	—		26,729,331	3		113,283	(181)		215,397		(196,288)		18,931
Net loss	—	—			—	—		—	—		—	—		—	—		—		(2,246)		(2,246)

Issuance of stock from financing, net of issuance costs	—	—			—	—		—	—		4,000,000	—		—	—		11,504		—		11,504

Issuance of stock for services	—	—			—	—		—	—		—	—		—	—		116		—		116





Balance at June 30, 2021	—	$	—		—	$	—	—	$	—	30,729,331	$	3	113,283	$	(181)	$	227,017	$	(198,534)	$	28,305


	Series A-2 Preferred Stock			Series C Preferred Stock			Series D Preferred Stock			Series E Preferred Stock			Common Stock			Treasury Stock
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Total
Balance at December 31, 2019	32	$	—	475	$	—	1,734,901	$	—	131,579	$	—	5,266,828	$	1	105,285	$	(165)	$	207,383	$	(185,434)	$	21,785
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(3,129)		(3,129)
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		—	—		32		—		32
Forfeitures of restricted stock	—	—		—	—		(14,441)	—		—	—		—	—		—	—		—		—		—
Preferred stock conversion	—	—		(150)	—		—	—		—	—		50,000	—		—	—		—		—		—
Issuance of preferred stock for accrued dividends	13	—		—	—		—	—		—	—		—	—		—	—		98		—		98
Preferred stock dividends	—	—		—	—		—	—		—	—		—	—		—	—		(4)		—		(4)
Purchase of treasury stock	—	—		—	—		—	—		—	—		—	—		—	(7)		—		—		(7)
Balance at March 31, 2020	45	—		325	—		1,720,460	—		131,579	—		5,316,828	1		105,285	(172)		207,509		(188,563)		18,775
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(3,385)		(3,385)
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		—	—		29		—		29
Forfeitures of restricted stock	—	—		—	—		(17,364)	—		—	—		—	—		—	—		—		—		—

Issuance of stock on vested restricted stock units	—	—		—	—		—	—		—	—		23,334	—		—	—		—		—		—
Preferred stock dividends	—	—		—	—		—	—		—	—		—	—		—	—		(4)		—		(4)
Issuance of preferred stock for accrued dividends	—	—		—	—		—	—		—	—		—	—		—	—		1				1
Purchase of treasury stock	—	—		—	—		—	—		—	—		—	—		7,998	(9)		—		—		(9)
Balance at June 30, 2020	45	$	—	325	$	—	1,703,096	$	—	131,579	$	—	5,340,162	$	1	113,283	$	(181)	$	207,535	$	(191,948)	$	15,407


	Six Months Ended June 30,
	2021		2020
Cash flows from operating activities:
Net loss	$	(5,679)	$	(6,514)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,429		1,612
Bad debt expense	449		34
Amortization of debt discount	—		45
Amortization of right of use asset	250		595

Loss on disposal of equipment	—		15
Stock-based compensation	33		61
Common stock issued for services	390		—
Loss on foreign currency remeasurement	3		(12)

Gain on extinguishment of liability	(227)		—
Impairment charges - property and equipment	48		9
Impairment charges - goodwill	—		541
Changes in operating assets and liabilities:
Accounts receivable	1,764		1,149
Inventory	(1,205)		473
Prepaid expenses and other current assets	(702)		47
Other assets	7		(28)
Accounts payable	205		(3)
Accrued expenses and other current liabilities	408		(493)
Deferred revenue	(429)		238
Lease liabilities	(414)		(626)
Net cash used in operating activities	(3,670)		(2,857)
Cash flows from investing activities:
Purchases of property and equipment	(17)		(5)
Net cash used in investing activities	(17)		(5)
Cash flows from financing activities:
Proceeds from stock issuance, net of issuance costs	11,504		—
Proceeds from PPP Loan	—		2,417
Purchase of treasury stock	—		(16)
Net cash provided by in financing activities	11,504		2,401
Increase (decrease) in cash and restricted cash	7,817		(461)
Cash and restricted cash at beginning of period	5,277		4,602
Cash and restricted cash at end of period	$	13,094	$	4,141

Supplemental disclosures of cash flow information:

Reconciliation of cash and restricted cash
Cash	$	13,033	$	4,141
Restricted cash	$	61	$	—
Total cash and restricted cash	$	13,094	$	4,141

Cash paid during the period for interest	$	2	$	96
Non-cash investing and financing activities:
Issuance of preferred stock in exchange for accrued dividends	—		99
Accrued preferred stock dividends	1		8
Inducement to convert Series A-2 Preferred Stock to common	300		—
Common stock issued for conversion of Preferred Stock	3		—


Goodwill	Oblong (formerly Glowpoint)		Oblong Industries		Total
Balance December 31, 2019	$	541	$	7,367	$	7,908
Impairment charges	(541)		—		(541)

Balance December 31, 2020	—		7,367		7,367


Balance June 30, 2021	$	—	$	7,367	$	7,367


	As of June 30, 2021						As of December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Oblong (formerly Glowpoint)
Affiliate network	$	994	$	(769)	$	225	$	994	$	(735)	$	259

Oblong Industries
Developed technology	$	10,060	$	(3,528)	$	6,532	$	10,060	$	(2,520)	$	7,540
Trade names	2,410		(422)		1,988		2,410		(302)		2,108
Distributor relationships	310		(109)		201		310		(77)		233
Subtotal	12,780		(4,059)		8,721		12,780		(2,899)		9,881
Total	$	13,774	$	(4,828)	$	8,946	$	13,774	$	(3,634)	$	10,140


Oblong (formerly Glowpoint)
Affiliate network			12 years


Oblong Industries
Developed technology			5 years
Trade names			10 years
Distributor relationships			5 years


Remainder of 2021	$	1,194
2022	2,385
2023	2,378
2024	1,844
2025	241
Thereafter	904
Total	$	8,946


	June 30,		December 31,
	2021		2020

Accrued compensation costs	$	592	$	411
Accrued professional fees	359		236
Accrued taxes and regulatory fees	172		137
Customer deposits	136		127
Other accrued expenses and liabilities	161		286

Accrued dividends on Series A-2 Preferred Stock	—		4
Accrued expenses and other current liabilities	$	1,420	$	1,201


	Outstanding
	Number of Warrants (in thousands)	Weighted Average Exercise Price
Warrants outstanding and exercisable, December 31, 2019	72	0.01
Granted	1,147	4.85
Exercised	(72)	0.01


Warrants outstanding and exercisable, December 31, 2020	1,147	$	4.85
Granted	4,000	4.30



Warrants outstanding and exercisable, June 30, 2021	5,147	$	4.42


			Six Months Ended June 30, 2021
Risk free interest rate			0.47%
Expected maturity			3 years
Expected volatility			1.36

Expected dividend yields			—
Weighted average grant date market value per share			$3.25


	Outstanding			Exercisable
	Number of Options	Weighted Average Exercise Price		Number of Options	Weighted Average Exercise Price
Options outstanding, December 31, 2019	215,345	$	12.27	215,345	$	12.27


Expired	(107,845)	4.92		—	—

Options outstanding, December 31, 2020	107,500	$	19.64	107,500	$	19.64
Granted	300,000	3.25		—	—



Options outstanding, June 30, 2021	407,500	$	7.57	107,500	$	19.64


	Outstanding				Exercisable
Range of price	Number of Options	Weighted Average Remaining Contractual Life (In Years)	Weighted Average Exercise Price		Number of Options	Weighted Average Exercise Price
$0.00 – $10.00	302,500	9.93	$	3.30	2,500	$	9.00
$10.01 – $20.00	97,500	1.56	19.32		97,500	19.32
$20.01 – $30.00	2,500	0.94	21.80		2,500	21.80
$30.01 – $40.00	5,000	0.70	30.20		5,000	30.20

	407,500	7.76	$	7.57	107,500	$	19.64


	Shares	Value
Treasury Shares as of December 31, 2019	105	$	(165)
Purchases to cover stock compensation taxes	8	$	(16)

Treasury Shares as of December 31, 2020	113	$	(181)


Treasury Shares as of June 30, 2021	113	$	(181)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Research and development	$	—	$	14	$	17	$	28
Sales, general and administrative	$	—	$	15	$	16	$	27
	$	—	$	29	$	33	$	55


	Three Months Ended June 30, 2021
	Oblong (formerly Glowpoint)			Oblong Industries			Corporate		Total
Revenue	$	1,078		$	971		$	—	$	2,049
Cost of revenues	739			510			—		1,249
Gross profit	$	339		$	461		$	—	$	800
Gross profit %	31		%	47		%			39		%

Allocated operating expenses	$	82		$	1,796		$	—	$	1,878
Unallocated operating expenses	$	—		$	—		1,400		1,400
Total operating expenses	$	82		$	1,796		$	1,400	$	3,278

Income (loss) from operations	$	257		$	(1,335)		$	(1,400)	$	(2,478)
Interest and other expense (income), net	9			(241)			—		(232)
Net income (loss) before tax	$	248		$	(1,094)		$	(1,400)	$	(2,246)
Income tax	$	—		$	—		$	—	$	—
Net income (loss)	$	248		$	(1,094)		$	(1,400)	$	(2,246)


	Three Months Ended June 30, 2020
	Oblong (formerly Glowpoint)			Oblong Industries			Corporate		Total
Revenue	$	1,373		$	1,443		$	—	$	2,816
Cost of revenues	898			785			—		1,683
Gross profit	$	475		$	658		$	—	$	1,133
Gross profit %	35		%	46		%			40		%

Allocated operating expenses	$	1,063		$	2,574		$	—	$	3,637
Unallocated operating expenses	—			—			796		796
Total operating expenses	$	1,063		$	2,574		$	796	$	4,433

Loss from operations	$	(588)		$	(1,916)		$	(796)	$	(3,300)
Interest and other expense, net	7			78			—		85
Net loss before taxes	$	(595)		$	(1,994)		$	(796)	$	(3,385)
Income tax	$	—		$	—		$	—	$	—
Net loss	$	(595)		$	(1,994)		$	(796)	$	(3,385)


	Six Months Ended June 30, 2020
	Oblong (formerly Glowpoint)			Oblong Industries			Corporate		Total
Revenue	$	3,417		$	4,727		$	—	$	8,144
Cost of revenues	2,055			2,017			—		4,072
Gross profit	$	1,362		$	2,710		$	—	$	4,072
Gross profit %	40		%	57		%			50		%

Allocated operating expenses	$	2,212		$	5,985		$	—	$	8,197
Unallocated operating expenses	—			—			2,162		2,162
Total operating expenses	$	2,212		$	5,985		$	2,162	$	10,359

Loss from operations	$	(850)		$	(3,275)		$	(2,162)	$	(6,287)
Interest and other expense, net	7			220			—		227
Net loss before tax	$	(857)		$	(3,495)		$	(2,162)	$	(6,514)
Income tax	—			—			—		—
Net loss	(857)			(3,495)			$	(2,162)	$	(6,514)


	Three Months Ended June 30,
	2021		% of Revenue		2020		% of Revenue
Revenue: Oblong (formerly Glowpoint)
Video collaboration services	$	230	11	%	$	428	15	%
Network services	830		41	%	891		32	%
Professional and other services	18		1	%	54		2	%
Total Oblong revenue	$	1,078	53	%	$	1,373	49	%

Revenue: Oblong Industries
Visual collaboration product offerings	$	942	46	%	923		33	%
Professional services	—		—	%	228		8	%
Licensing	29		1	%	292		10	%
Total Oblong Industries revenue	$	971	47	%	1,443		51	%
Total revenue	$	2,049	100	%	$	2,816	100	%


		As of June 30,
		2021		2020
	Segment	% of Accounts Receivable		% of Accounts Receivable
Customer A	Oblong (formerly Glowpoint)	22	%	32	%
Customer B	Oblong (formerly Glowpoint)	13	%	10	%
Customer C	Oblong Industries	—	%	12	%


		June 30, 2021
Assets
	Operating lease, right-of-use asset, net	$	653

Liabilities
	Current portion of operating lease liabilities	$	734
	Operating lease liabilities, net of current portion	249
	Total operating lease liabilities	$	983


Remaining Lease Payments

Remainder of 2021	$	442
2022	508
2023	116
Total lease payments	$	1,066
Effect of discounting	(83)
Total lease liability	$	983


Exhibit Number						Description
31.1*						Rule 13a—14(a)/15d—14(a) Certification of the Chief Executive Officer.
31.2*						Rule 13a—14(a)/15d—14(a) Certification of the Chief Financial Officer.
32.1**						Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer.
101.INS						XBRL Instance Document
101.SCH						XBRL Taxonomy Extension Schema
101.CAL						XBRL Taxonomy Extension Calculation Linkbase
101.DEF						XBRL Taxonomy Extension Definition Linkbase
101.LAB						XBRL Taxonomy Extension Label Linkbase
101.PRE						XBRL Taxonomy Extension Presentation Linkbase


	OBLONG, INC.

August 11, 2021	By:	/s/ Peter Holst
		Peter Holst
		Chief Executive Officer
		(Principal Executive Officer)


August 11, 2021	By:	/s/ David Clark
		David Clark
		Chief Financial Officer
		(Principal Financial and Accounting Officer)