TaoWeave, Inc 10-Q for FY2022 Q1

TaoWeave, Inc. (TWAV)

10-Q 2022-05-11 For: 2022-03-31

Added on April 06, 2026

About this 10-Q

TaoWeave, Inc filed this 10-Q on May 11, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.53M; down 20.1% from $1.92M a year earlier
Net loss: $4.54M; compared with a net loss of $3.43M a year earlier
Diluted EPS: -$0.15; compared with -$0.23 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 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


	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


	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


	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


	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


	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities:
Net loss	$	(4,539)	$	(3,433)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	627		722
Bad debt expense	111		240
Stock-based compensation	52		33
Stock-based expense for services	—		274
Forfeiture of unvested stock options	(84)		—
Loss on foreign currency remeasurement	—		4
Impairment charges - property and equipment	—		31
Impairment charges - goodwill	1,138		—
Changes in operating assets and liabilities:
Accounts receivable	183		1,147
Inventory	103		(574)
Prepaid expenses and other current assets	(360)		(456)
Right of use asset	127		130
Other assets	45		(7)
Accounts payable	294		766
Accrued expenses and other current liabilities	188		332
Deferred revenue	(126)		(232)
Lease liabilities	(163)		(212)
Net cash used in operating activities	(2,404)		(1,235)
Cash flows from investing activities:
Purchases of property and equipment	(11)		(17)
Proceeds from sale of equipment	1		—
Net cash used in investing activities	(10)		(17)




Decrease in cash and restricted cash	(2,414)		(1,252)
Cash and restricted cash at beginning of period	9,000		5,277
Cash and restricted cash at end of period	$	6,586	$	4,025

Supplemental disclosures of cash flow information:

Reconciliation of cash and restricted cash
Cash	$	6,525	$	3,964
Restricted cash	61		61
Total cash and restricted cash	$	6,586	$	4,025


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


	As of March 31, 2022						As of December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Lives




Developed technology	$	10,060	$	(5,040)	$	5,020	$	10,060	$	(4,537)	$	5,523	5 years
Trade names	2,410		(603)		1,807		2,410		(542)		1,868		10 years
Distributor relationships	310		(155)		155		310		(139)		171		5 years

Total	$	12,780	$	(5,798)	$	6,982	$	12,780	$	(5,218)	$	7,562



Remainder of 2022	$	1,737
2023	2,309
2024	1,792
2025	241
2026	241
Thereafter	662
Total	$	6,982


	March 31,		December 31,
	2022		2021

Accrued compensation costs	$	608	$	551
Accrued professional fees	182		69
Accrued taxes and regulatory fees	84		92
Customer deposits	115		145
Other accrued expenses and liabilities	158		102


Accrued expenses and other liabilities	$	1,147	$	959


Remaining Lease Payments
2022	$	346
2023	225
2024	17
Total lease payments	588
Effect of discounting	(23)
Total lease liability	$	565


	Right-of-Use Asset		Operating Lease Liability
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


Amortization and Payments	(127)		(163)

Balance at March 31, 2022	$	532	$	565


Issue Date	Warrants Issued	Exercise Price		Expiration Date
October 21, 2020	521,500	$	4.08	October 22, 2022
December 6, 2020	625,000	5.49		December 7, 2022
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, March 31, 2022	5,146,500	$	4.42


	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	9.13	$	3.34	2,500	$	1.20
$10.01 – $20.00	97,500	0.81	19.32		97,500	19.32
$20.01 – $30.00	2,500	0.19	21.80		2,500	21.80


	252,500	5.83	$	9.69	102,500	$	19.13


	Three Months Ended March 31,
	2022		% of Revenue		2021		% of Revenue
Revenue: Managed Services
Video collaboration services	$	116	7	%	$	291	15	%
Network services	821		54	%	881		46	%
Professional and other services	29		2	%	23		1	%
Total Managed Services revenue	$	966	63	%	$	1,195	62	%

Revenue: Collaboration Products
Visual collaboration product offerings	$	562	37	%	$	693	36	%

Licensing	4		—	%	30		2	%
Total Collaboration Products revenue	566		37	%	723		38	%
Total revenue	$	1,532	100	%	$	1,918	100	%


	Three Months Ended March 31,
	2022		% of Revenue		2021		% of Revenue
Revenue: Managed Services
Video collaboration services	$	116	7	%	$	291	15	%
Network services	821		54	%	881		46	%
Professional and other services	29		2	%	23		1	%
Total Managed Services revenue	$	966	63	%	$	1,195	62	%

Revenue: Collaboration Products
Visual collaboration product offerings	$	562	37	%	$	693	36	%
Licensing	4		—	%	30		2	%
Total Collaboration Products revenue	$	566	37	%	$	723	38	%
Total revenue	$	1,532	100	%	$	1,918	100	%


	OBLONG, INC.

May 11, 2022	By:	/s/ Peter Holst
		Peter Holst
		Chief Executive Officer
		(Principal Executive Officer)


	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


Expired	(5,000)	30.20		(5,000)	30.20
Forfeited	(150,000)	3.25		—	—
Options outstanding and exercisable, March 31, 2022	252,500	$	9.69	102,500	$	19.13


	Three Months Ended March 31, 2022
	Managed Services			Collaboration Products			Corporate		Total
Revenue	$	966		$	566		$	—	$	1,532
Cost of revenues	645			388			—		1,033
Gross profit	$	321		$	178		$	—	$	499
Gross profit %	33		%	31		%			33		%

Allocated operating expenses	$	56		$	3,275		$	—	$	3,331
Unallocated operating expenses	—			—			1,690		1,690
Total operating expenses	$	56		$	3,275		$	1,690	$	5,021

Income (loss) from operations	$	265		$	(3,097)		$	(1,690)	$	(4,522)
Interest and other expense, net	6			—			—		6
Net income (loss) before tax	$	259		$	(3,097)		$	(1,690)	$	(4,528)
Income tax expense	9			2			—		11
Net income (loss)	$	250		$	(3,099)		$	(1,690)	$	(4,539)


	Three Months Ended March 31, 2021
	Managed Services			Collaboration Products			Corporate		Total
Revenue	$	1,195		$	723		$	—	$	1,918
Cost of revenues	833			457			—		1,290
Gross profit	$	362		$	266		$	—	$	628
Gross profit %	30		%	37		%			33		%

Allocated operating expenses	$	110		$	1,831		$	—	$	1,941
Unallocated operating expenses	—			—			2,098		2,098
Total operating expenses	$	110		$	1,831		$	2,098	$	4,039

Income (loss) from operations	$	252		$	(1,565)		$	(2,098)	$	(3,411)
Interest and other expense, net	5			17			—		22
Income (loss) before income taxes	$	247		$	(1,582)		$	(2,098)	$	(3,433)
Income tax expense	—			—			—		—
Net income (loss)	$	247		$	(1,582)		$	(2,098)	$	(3,433)


Exhibit Number						Description
10.1						Form of Amendment to Series A Warrants (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 3,2022, and incorporated herein by reference).
10.2						Separation Agreement dated March 4, 2022, between the Company and Pete Hawkes (filed as Exhibit 10.1 to the Registrants Current Report on Form 8-K filed with the SEC on March 8, 2022 and incorporated herein by reference).
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


May 11, 2022	By:	/s/ David Clark
		David Clark
		Chief Financial Officer
		(Principal Financial and Accounting Officer)