TaoWeave, Inc 10-Q for FY2022 Q3

TaoWeave, Inc. (TWAV)

10-Q 2022-11-10 For: 2022-09-30

Added on April 06, 2026

About this 10-Q

TaoWeave, Inc filed this 10-Q on November 10, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.19M; down 34.1% from $1.8M a year earlier
Net loss: $7.15M; compared with a net loss of $662K a year earlier
Diluted EPS: -$0.23; compared with -$0.02 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 September 30, 2022 (unaudited) and December 31, 2021	1
	Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021	2
	Unaudited Condensed Consolidated Statement of Stockholders’ Equity for the three and nine months ended September 30, 2022 and 2021	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 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		18
Item 3. Quantitative and Qualitative Disclosures About Market Risk		25
Item 4. Controls and Procedures		25

PART II - OTHER INFORMATION
Item 1. Legal Proceedings		25
Item 1A. Risk Factors		25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		26
Item 3. Defaults Upon Senior Securities		26
Item 4. Mine Safety Disclosures		26
Item 5. Other Information		26
Item 6. Exhibits		27
Signatures		28


	September 30, 2022		December 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash	$	4,143	$	8,939
Restricted cash	—		61
Accounts receivable, net	357		849
Inventory	1,027		1,821
Prepaid expenses and other current assets	868		1,081
Total current assets	6,395		12,751
Property and equipment, net	25		159
Goodwill	—		7,367
Intangibles, net	690		7,562
Operating lease - right of use asset, net	201		659
Other assets	53		109
Total assets	$	7,364	$	28,607
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:

Accounts payable	$	401	$	259
Accrued expenses and other current liabilities	1,088		959
Current portion of deferred revenue	571		783
Current portion of operating lease liabilities	306		492



Total current liabilities	2,366		2,493
Long-term liabilities:


Operating lease liabilities, net of current portion	43		236
Deferred revenue, net of current portion	152		381

Total long-term liabilities	195		617
Total liabilities	2,561		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 September 30, 2022 and December 31, 2021	3		3
Treasury stock, 113,283 shares of common stock at September 30, 2022 and December 31, 2021	(181)		(181)
Additional paid-in capital	227,611		227,581
Accumulated deficit	(222,630)		(201,906)
Total stockholders' equity	4,803		25,497
Total liabilities and stockholders’ equity	$	7,364	$	28,607


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Revenue	$	1,185	$	1,799	$	4,050	$	5,766
Cost of revenue (exclusive of depreciation and amortization and casualty loss)	841		1,228		2,800		3,767
Gross profit	344		571		1,250		1,999

Operating expenses:
Research and development	232		693		1,634		1,984
Sales and marketing	282		438		1,161		1,537
General and administrative	1,229		1,628		4,104		5,078
Impairment charges	5,169		254		12,715		302
Casualty loss	—		—		533		—
Depreciation and amortization	592		669		1,818		2,098
Total operating expenses	7,504		3,682		21,965		10,999
Loss from operations	(7,160)		(3,111)		(20,715)		(9,000)



Interest and other expense (income), net	(5)		(2,449)		1		(2,659)
Loss before income taxes	(7,155)		(662)		(20,716)		(6,341)
Income tax expense (benefit)	(3)		—		8		—
Net loss	(7,152)		(662)		(20,724)		(6,341)
Preferred stock dividends	—		—		—		1
Undeclared dividends	—		—		—		366
Induced conversion of Series A-2 Preferred Stock	—		—		—		300

Net loss attributable to common stockholders	$	(7,152)	$	(662)	$	(20,724)	$	(7,008)

Net loss attributable to common stockholders per share:
Basic and diluted net loss per share	$	(0.23)	$	(0.02)	$	(0.67)	$	(0.28)


Weighted-average number of shares of common stock:
Basic and diluted	30,816		30,739		30,816		25,121


	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 unvested stock options	—	—		—	—		(84)		—		(84)
Balance at March 31, 2022	30,929,331	3		113,283	(181)		227,549		(206,445)		20,926
Net loss	—	—		—	—		—		(9,033)		(9,033)
Stock-based compensation	—	—		—	—		31		—		31

Balance at June 30, 2022	30,929,331	3		113,283	(181)		227,580		(215,478)		11,924
Net loss	—	—		—	—		—		(7,152)		(7,152)
Stock-based compensation	—	—		—	—		31		—		31

Balance at September 30, 2022	30,929,331	$	3	113,283	$	(181)	$	227,611	$	(222,630)	$	4,803


	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	—	—			—	—		—	—		—	—		—	—		—		(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
Net loss	—	—			—	—		—	—		—	—		—	—		—		(662)		(662)
Stock-based compensation	—	—			—	—		—	—		—	—		—	—		502		—		502


Issuance of stock on vested restricted stock units	—	—			—	—		—	—		200	—		—	—		—		—		—




Balance at September 30, 2021	—	$	—		—	$	—	—	$	—	30,929,331	$	3	113,283	$	(181)	$	227,519	$	(199,196)	$	28,145


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net loss	$	(20,724)	$	(6,341)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,818		2,098
Bad debt expense	114		280
Stock-based compensation	114		535
Stock-based expense for services	—		390
Forfeiture of unvested stock options	(84)		—
Gain on extinguishment of liabilities	—		(2,675)
Casualty loss on inventory	533		—

Impairment charges - property and equipment	37		98
Impairment charges - intangible assets	5,132		207
Impairment charges - right of use asset	179		—
Impairment charges - goodwill	7,367		—
Changes in operating assets and liabilities:
Accounts receivable	378		1,610
Inventory	261		(936)
Prepaid expenses and other current assets	213		(751)
Right of use asset	290		372
Other assets	56		15
Accounts payable	142		225
Accrued expenses and other current liabilities	129		11
Deferred revenue	(441)		(355)
Lease liabilities	(390)		(739)
Net cash used in operating activities	(4,876)		(5,956)
Cash flows from investing activities:
Purchases of property and equipment	(11)		(30)
Proceeds from sale of equipment	30		—
Net cash provided by (used in) investing activities	19		(30)
Cash flows from financing activities:
Proceeds from stock issuance, net of issuance costs	—		11,504

Net cash provided by financing activities	—		11,504
(Decrease) increase in cash and restricted cash	(4,857)		5,518
Cash and restricted cash at beginning of period	9,000		5,277
Cash and restricted cash at end of period	$	4,143	$	10,795

Supplemental disclosures of cash flow information:

Reconciliation of cash and restricted cash
Cash	$	4,143	$	10,734
Restricted cash	—		61
Total cash and restricted cash	$	4,143	$	10,795

Cash paid during the period for interest	$	7	$	2
Non-cash investing and financing activities:
Accrued preferred stock dividends	$	—	$	1
Inducement to convert Series A-2 Preferred Stock to common	$	—	$	300
Common stock issued for conversion of Preferred Stock	$	—	$	3
Lease liability and right of use asset	$	11	$	—


	As of September 30, 2022								As of December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Impairment Charges		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount




Developed technology	$	10,060	$	(6,049)	$	(3,525)	$	486	$	10,060	$	(4,537)	$	5,523
Trade names	2,410		(723)		(1,483)		204		2,410		(542)		1,868
Distributor relationships	310		(186)		(124)		—		310		(139)		171

Total	$	12,780	$	(6,958)	$	(5,132)	$	690	$	12,780	$	(5,218)	$	7,562


	September 30,		December 31,
	2022		2021

Accrued compensation costs	$	780	$	551
Accrued professional fees	—		69
Accrued taxes and regulatory fees	80		92
Customer deposits	120		145
Other accrued expenses and liabilities	108		102


Accrued expenses and other liabilities	$	1,088	$	959


Remaining Lease Payments
2022	$	110
2023	225
2024	17
Total lease payments	352
Effect of discounting	(3)
Total lease liability	$	349


	Right-of-Use Asset		Operating Lease Liabilities
Balance at December 31, 2020	$	903	$	1,432
Additions	60		60
Terminations and Modifications	192		156
Amortization and Payments	(496)		(920)

Balance at December 31, 2021	$	659	$	728
Additions	11		11

Amortization and Payments	(290)		(390)
Impairment Charges	(179)		—
Balance at September 30, 2022	$	201	$	349


Issue Date	Warrants Issued	Exercise Price		Expiration Date
October 21, 2020	521,500	$	4.08	April 22, 2023
December 6, 2020	625,000	5.49		June 7, 2023
June 30, 2021 - Series A(1)	1,000,000	4.00		January 4, 2023
June 30, 2021 - Series B	3,000,000	4.40		June 30, 2024
	5,146,500
(1) Series A Warrants shown as amended on December 31, 2021


	Outstanding
	Number of Warrants (in thousands)	Weighted Average Exercise Price
Warrants outstanding and exercisable, December 31, 2020	1,146,500	$	4.85
Granted	4,000,000	4.30



Warrants outstanding and exercisable, December 31, 2021	5,146,500	4.42




Warrants outstanding and exercisable, September 30, 2022	5,146,500	$	4.42


	Outstanding			Exercisable
	Number of Options	Weighted Average Exercise Price		Number of Options	Weighted Average Exercise Price
Options outstanding and exercisable, December 31, 2020	107,500	$	19.64	107,500	$	19.64
Granted	300,000	3.25		—	—



Options outstanding and exercisable, December 31, 2021	407,500	7.57		107,500	19.64


Vested	—	—		50,000	3.25
Expired	(7,500)	27.40		(7,500)	27.40
Forfeited	(150,000)	3.25		—	—
Options outstanding and exercisable, September 30, 2022	250,000	$	9.57	150,000	$	12.98


	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	152,500	8.63	$	3.34	52,500	$	1.20
$10.01 – $20.00	97,500	0.31	19.32		97,500	19.32



	250,000	5.38	$	9.57	150,000	$	12.98


	Three Months Ended September 30,
	2022		% of Revenue		2021		% of Revenue
Revenue: Managed Services
Video collaboration services	$	69	6	%	$	179	10	%
Network services	716		60	%	813		45	%
Professional and other services	12		1	%	14		1	%
Total Managed Services revenue	$	797	67	%	$	1,006	56	%

Revenue: Collaboration Products
Visual collaboration product offerings	$	385	33	%	$	771	43	%

Licensing	3		—	%	22		1	%
Total Collaboration Products revenue	388		33	%	793		44	%
Total revenue	$	1,185	100	%	$	1,799	100	%


	Nine Months Ended September 30,
	2022		% of Revenue		2021		% of Revenue
Revenue: Managed Services
Video collaboration services	$	264	7	%	$	700	21	%
Network services	2,260		56	%	2,524		77	%
Professional and other services	49		1	%	55		2	%
Total Managed Services revenue	$	2,573	64	%	$	3,279	57	%

Revenue: Collaboration Products
Visual collaboration product offerings	$	1,467	36	%	$	2,406	42	%

Licensing	10		—	%	81		1	%
Total Collaboration Products revenue	1,477		36	%	2,487		43	%
Total revenue	$	4,050	100	%	$	5,766	100	%


	Three Months Ended September 30,
	2022		% of Revenue		2021		% of Revenue
Revenue: Managed Services
Video collaboration services	$	69	6	%	$	179	10	%
Network services	716		60	%	813		45	%
Professional and other services	12		1	%	14		1	%
Total Managed Services revenue	$	797	67	%	$	1,006	56	%

Revenue: Collaboration Products
Visual collaboration product offerings	$	385	33	%	$	771	43	%
Licensing	3		—	%	22		1	%
Total Collaboration Products revenue	388		33	%	793		44	%
Total revenue	$	1,185	100	%	$	1,799	100	%


	Three and Nine Months Ended September 30,
	2022	2021
Unvested restricted stock awards	627	627

Outstanding stock options	250,000	407,500
Warrants	5,146,500	5,146,500


	Three Months Ended September 30, 2022
	Managed Services			Collaboration Products			Corporate		Total
Revenue	$	797		$	388		$	—	$	1,185
Cost of revenues	552			289			—		841
Gross profit	$	245		$	99		$	—	$	344
Gross profit %	31		%	26		%			29		%

Allocated operating expenses	$	—		$	6,275		$	—	$	6,275
Unallocated operating expenses	—			—			1,229		1,229
Total operating expenses	$	—		$	6,275		$	1,229	$	7,504

Income (loss) from operations	$	245		$	(6,176)		$	(1,229)	$	(7,160)
Interest and other expense (income), net	1			(6)			—		(5)
Net income (loss) before tax	246			(6,170)			(1,229)		(7,155)
Income tax benefit	—			(3)			—		(3)
Net income (loss)	$	246		$	(6,167)		$	(1,229)	$	(7,152)


	Nine Months Ended September 30, 2022
	Managed Services			Collaboration Products			Corporate		Total
Revenue	$	2,573		$	1,477		$	—	$	4,050
Cost of revenues	1,722			1,078			—		2,800
Gross profit	$	851		$	399		$	—	$	1,250
Gross profit %	33		%	27		%			31		%

Allocated operating expenses	$	57		$	17,804		$	—	$	17,861
Unallocated operating expenses	—			—			4,104		4,104
Total operating expenses	$	57		$	17,804		$	4,104	$	21,965

Income (loss) from operations	$	794		$	(17,405)		$	(4,104)	$	(20,715)
Interest and other expense (income), net	7			(6)			—		1
Net income (loss) before tax	787			(17,399)			(4,104)		(20,716)
Income tax expense	8			—			—		8
Net income (loss)	$	779		$	(17,399)		$	(4,104)	$	(20,724)


	Three Months Ended September 30, 2021
	Managed Services			Collaboration Products			Corporate		Total
Revenue	$	1,006		$	793		$	—	$	1,799
Cost of revenues	721			507			—		1,228
Gross profit	$	285		$	286		$	—	$	571
Gross profit %	28		%	36		%			32		%

Allocated operating expenses	$	337		$	1,717		$	—	$	2,054
Unallocated operating expenses	—			—			1,628		1,628
Total operating expenses	$	337		$	1,717		$	1,628	$	3,682

Loss from operations	$	(52)		$	(1,431)		$	(1,628)	$	(3,111)
Interest and other expense (income), net	2			(3)			(2,448)		(2,449)
Income (loss) before income taxes	(54)			(1,428)			820		(662)
Income tax expense	—			—			—		—
Net income (loss)	$	(54)		$	(1,428)		$	820	$	(662)


	Nine Months Ended September 30, 2021
	Managed Services			Collaboration Products			Corporate		Total
Revenue	$	3,279		$	2,487		$	—	$	5,766
Cost of revenues	2,293			1,474			—		3,767
Gross profit	$	986		$	1,013		$	—	$	1,999
Gross profit %	30		%	41		%			35		%

Allocated operating expenses	$	527		$	5,394		$	—	$	5,921
Unallocated operating expenses	—			—			5,078		5,078
Total operating expenses	$	527		$	5,394		$	5,078	$	10,999

Income (loss) from operations	$	459		$	(4,381)		$	(5,078)	$	(9,000)
Interest and other expense (income), net	16			(227)			(2,448)		(2,659)
Net income (loss) before tax	443			(4,154)			(2,630)		(6,341)
Income tax expense	—			—			—		—
Net income (loss)	$	443		$	(4,154)		$	(2,630)	$	(6,341)


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.

November 10, 2022	By:	/s/ Peter Holst
		Peter Holst
		Chief Executive Officer
		(Principal Executive Officer)


November 10, 2022	By:	/s/ David Clark
		David Clark
		Chief Financial Officer
		(Principal Financial and Accounting Officer)