TaoWeave, Inc 10-Q for FY2023 Q2

TaoWeave, Inc. (TWAV)

10-Q 2023-08-10 For: 2023-06-30

Added on April 06, 2026

About this 10-Q

TaoWeave, Inc filed this 10-Q on August 10, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).

Headline figures

Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $956K; down 28.3% from $1.33M a year earlier
Net loss: $1.05M; compared with a net loss of $9.03M a year earlier
Diluted EPS: -$0.78; compared with -$4.37 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, 2023 (unaudited) and December 31, 2022	1
	Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022	2
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022	5
	Notes to unaudited Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
Item 3. Quantitative and Qualitative Disclosures About Market Risk		28
Item 4. Controls and Procedures		29

PART II - OTHER INFORMATION
Item 1. Legal Proceedings		29
Item 1A. Risk Factors		29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		29
Item 3. Defaults Upon Senior Securities		29
Item 4. Mine Safety Disclosures		29
Item 5. Other Information		29
Item 6. Exhibits		30
Signatures		32


	June 30, 2023		December 31, 2022
	(Unaudited)
ASSETS
Current assets:
Cash	$	6,872	$	3,085

Accounts receivable, net	244		415
Inventory, net	402		723
Prepaid expenses and other current assets	836		649
Total current assets	8,354		4,872
Property and equipment, net	—		3

Intangibles, net	432		604
Operating lease - right of use asset, net	65		142
Other assets	22		40
Total assets	$	8,873	$	5,661
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	136	$	184
Accrued expenses and other current liabilities	763		1,074
Current portion of deferred revenue	234		436
Current portion of operating lease liabilities	68		219
Total current liabilities	1,201		1,913
Long-term liabilities:
Operating lease liabilities, net of current portion	—		17
Deferred revenue, net of current portion	57		114


Total liabilities	1,258		2,044
Commitments and contingencies (see Note 11)
Stockholders’ equity:
Preferred stock Series F, convertible; $.0001 par value; $6,375,000 stated value; 42,000 shares authorized, 6,375 and zero shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	—		—
Common stock, $.0001 par value; 150,000,000 shares authorized; 2,736,481 shares issued and 2,728,928 outstanding at June 30, 2023 and 2,070,861 shares issued and 2,063,308 shares outstanding at December 31, 2022	—		—
Treasury stock, 7,553 shares of common stock	(181)		(181)
Additional paid-in capital	233,911		227,645
Accumulated deficit	(226,115)		(223,847)
Total stockholders' equity	7,615		3,617
Total liabilities and stockholders’ equity	$	8,873	$	5,661


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Revenue	$	956	$	1,333	$	1,994	$	2,865
Cost of revenue (exclusive of depreciation and amortization and casualty loss)	834		926		1,596		1,959
Gross profit	122		407		398		906

Operating expenses (gains):
Research and development	5		398		11		1,402
Sales and marketing	(58)		317		160		879
General and administrative	1,577		1,185		2,746		2,875
Impairment charges	2		6,408		2		7,546
Casualty loss, net of insurance proceeds	(400)		533		(400)		533
Depreciation and amortization	87		599		173		1,226
Total operating expenses	1,213		9,440		2,692		14,461
Loss from operations	(1,091)		(9,033)		(2,294)		(13,555)
Interest and other expense, net	6		—		11		6
Other income	(48)		—		(75)		—

Interest and other (income) expense, net	(42)		—		(64)		6
Loss before income taxes	(1,049)		(9,033)		(2,230)		(13,561)
Income tax expense	—		—		38		11
Net loss	(1,049)		(9,033)		(2,268)		(13,572)
Preferred stock dividends	149		—		149		—

Induced conversion of warrants	751		—		751		—
Warrant Modification	—		—		25		—
Net loss attributable to common stockholders	$	(1,949)	$	(9,033)	$	(3,193)	$	(13,572)

Net loss attributable to common stockholders per share:
Basic and diluted net loss per share	$	(0.78)	$	(4.37)	$	(1.40)	$	(6.57)


Weighted-average number of shares of common stock:
Basic and diluted	2,487		2,065		2,277		2,065


	Series F Preferred Stock			Common Stock			Treasury Stock
	Shares	Amount		Shares	Amount		Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Total
Balance at December 31, 2022	—	$	—	2,070,861	$	—	7,553	$	(181)	$	227,645	$	(223,847)	$	3,617
Net loss	—	—		—	—		—	—		—		(1,219)		(1,219)
Stock-based compensation	—	—		—	—		—	—		31		—		31
Proceeds from private placement, net of fees and amounts held in escrow	6,550	—		—	—		—	—		1,473		—		1,473
Balance at March 31, 2023	6,550	—		2,070,861	—		7,553	(181)		229,149		(225,066)		3,902
Net loss	—	—		—	—		—	—		—		(1,049)		(1,049)
Stock-based compensation	—	—		179,535	—		—	—		411		—		411
Warrant exercise, net of fees	—	—		339,498	—		—	—		534		—		534
Release of escrow from March 2023 private placement	—	—		—	—		—	—		4,000		—		4,000
Fees associated with Series F Preferred Stock issuance	—	—		—	—		—	—		(38)		—		(38)
Conversions of Series F Preferred Stock	(175)	—		146,587	—		—	—		4		—		4
Series F Preferred Stock dividends	—	—		—	—		—	—		(149)		—		(149)
Balance at June 30, 2023	6,375	$	—	2,736,481	$	—	7,553	$	(181)	$	233,911	$	(226,115)	$	7,615


	Six Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net loss	$	(2,268)	$	(13,572)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	173		1,226
Bad debt (recovery) expense	(32)		125
Non-cash lease expense from right-of-use asset	77		235
Stock-based compensation	442		83

Forfeiture of unvested stock options	—		(84)

Casualty loss, net of insurance proceeds	(400)		533

Impairment charges - property and equipment	2		—

Impairment charges - right of use asset	—		179
Impairment charges - goodwill	—		7,367
Changes in operating assets and liabilities:
Accounts receivable	203		233
Inventory	321		210
Prepaid expenses and other current assets	213		(69)
Other assets	18		87
Accounts payable	(48)		66
Accrued expenses and other current liabilities	(456)		17
Deferred revenue	(259)		(265)
Lease liabilities	(168)		(282)
Net cash used in operating activities	(2,182)		(3,911)
Cash flows from investing activities:
Purchases of property and equipment	—		(11)
Proceeds from sale of equipment	—		29
Net cash provided by investing activities	—		18
Cash flows from financing activities:
Proceeds from private placement, net of issuance costs	5,435		—
Net proceeds from exercise of common stock warrants	534		—

Net cash provided by financing activities	5,969		—
Increase (decrease) in cash	3,787		(3,893)
Cash at beginning of period	3,085		9,000
Cash at end of period	$	6,872	$	5,107

Supplemental disclosures of cash flow information:






Cash paid during the period for interest	$	9	$	6
Cash paid for income taxes	$	31	$	—
Non-cash investing and financing activities:
Preferred stock dividends	$	149	$	—
Warrant modification	$	25	$	—
Common stock issued for conversion of Preferred Stock	$	4	$	—
Induced exercise of common stock warrants	$	751	$	—


	As of June 30, 2023						As of December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount




Developed technology	$	486	$	(182)	$	304	$	486	$	(61)	$	425
Trade names	204		(76)		128		204		(25)		179

Total	$	690	$	(258)	$	432	$	690	$	(86)	$	604


	June 30,		December 31,
	2023		2022

Compensation costs	$	201	$	707
Customer deposits	167		128
Professional fees	—		57
Taxes and regulatory fees	41		59
Other accrued expenses and liabilities	15		14
Rent expense	194		109
Accrued preferred stock dividends	145		—
Accrued expenses and other liabilities	$	763	$	1,074


Remaining Lease Payments
2023	$	52
2024	17
Total lease payments	69
Effect of discounting	(1)
Total lease liability	$	68


	Right-of-Use Asset		Operating Lease Liabilities
Balance at December 31, 2021	$	659	$	728
Additions	11		11

Non-cash lease expense and payments	(349)		(503)
Impairment charges	(179)		—
Balance at December 31, 2022	142		236
Additions	—		—
Terminations and modifications	$	—	$	—
Non-cash lease expense and payments	(77)		(168)
Impairment charges	—		—
Balance at June 30, 2023	$	65	$	68


Issued Shares as of December 31, 2021						2,070,861
Issued Shares as of December 31, 2022						2,070,861

Issuances from Preferred Stock conversions						146,587
Issuances related to warrant exercises						339,498
Issuances related to stock compensation						179,535


Issued Shares as of June 30, 2023						2,736,481
Less Treasury Shares:						7,553
Outstanding Shares as of June 30, 2023						2,728,928


Issue Date	Warrants Outstanding	Exercise Price		Expiration Date


June 28, 2021	250	$	60.00	January 4, 2024
June 28, 2021	750	66.00		December 31, 2024
March 31, 2023	4,136,846	$	1.71	September 30, 2028

	4,137,846


	Outstanding			Exercisable
	Number of Warrants	Weighted Average Exercise Price		Number of Warrants	Weighted Average Exercise Price
Warrants outstanding and exercisable, December 31, 2021	343,099	$	66.34	343,101	$	66.34




Warrants outstanding and exercisable, December 31, 2022	343,099	66.34		343,101	$	66.34
Granted	4,136,846	1.71		—	$	—
Exercised	(339,498)	1.71		(339,500)	$	1.71
Expired	(2,601)	76.93		(2,601)	$	76.93

Warrants outstanding and exercisable, June 30, 2023	4,137,846	$	1.73	1,000	$	64.50


	Three Months Ended June 30,				Six Months Ended June 30,
Stock Based Compensation	2023		2022		2023		2022
Options	$	31	$	31	$	62	$	(1)

RSU	$	380	$	—	$	380	$	—


Total	$	411	$	31	$	442	$	(1)


	Three Months Ended June 30,
	2023		% of Revenue		2022		% of Revenue
Revenue: Managed Services
Video collaboration services	$	46	5	%	$	79	5	%
Network services	583		61	%	723		54	%
Professional and other services	11		1	%	8		1	%
Total Managed Services revenue	$	640	67	%	$	810	61	%

Revenue: Collaboration Products
Visual collaboration product offerings	$	316	33	%	$	520	39	%

Licensing	—		—	%	3		—	%
Total Collaboration Products revenue	316		33	%	523		39	%
Total revenue	$	956	100	%	$	1,333	100	%


	Six Months Ended June 30,
	2023		% of Revenue		2022		% of Revenue
Revenue: Managed Services
Video collaboration services	$	110	6	%	$	195	7	%
Network services	1,201		60	%	1,544		54	%
Professional and other services	19		1	%	37		1	%
Total Managed Services revenue	$	1,330	67	%	$	1,776	62	%

Revenue: Collaboration Products
Visual collaboration product offerings	$	664	33	%	$	1,082	38	%
Professional services	—		—	%	—		—	%
Licensing	—		—	%	7		—	%
Total Collaboration Products revenue	664		33	%	1,089		38	%
Total revenue	$	1,994	100	%	$	2,865	100	%


	Three Months Ended June 30,
	2023		% of Revenue		2022		% of Revenue
Revenue: Managed Services
Video collaboration services	$	46	5	%	$	79	5	%
Network services	583		61	%	723		54	%
Professional and other services	11		1	%	8		1	%
Total Managed Services revenue	$	640	67	%	$	810	61	%

Revenue: Collaboration Products
Visual collaboration product offerings	$	316	33	%	$	520	39	%
Licensing	—		—	%	3		—	%
Total Collaboration Products revenue	316		33	%	523		39	%
Total revenue	$	956	100	%	$	1,333	100	%


	Outstanding			Exercisable
	Number of Options	Weighted Average Exercise Price		Number of Options	Weighted Average Exercise Price
Options outstanding and exercisable, December 31, 2021	27,169	$	113.63	7,169	$	—


Vested	—	—		3,332	48.75
Expired	(501)	410.18		(501)	410.18
Forfeited	(10,000)	48.75		—	—
Options outstanding and exercisable, December 31, 2022	16,668	143.63		10,000	206.85


Vested	—	—		3,336	48.75
Expired	(6,668)	285.89		(6,668)	285.89

Options outstanding and exercisable, June 30, 2023	10,000	$	48.75	6,668	$	48.75


	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 – $100.00	10,000	8.00	$	48.75	6,668	$	48.75


	As of June 30,
	2023	2022
Unvested restricted stock awards	—	42

Outstanding stock options	10,000	16,835
Common stock issuable upon conversion of Series F Preferred Stock	3,733,098	—
Common stock issuable upon conversion of Series F Preferred Warrants	19,152,047	—
Common stock issuable upon conversion of Common Stock warrants	4,137,846	343,101


	Three Months Ended June 30, 2023
	Managed Services			Collaboration Products			Corporate		Total
Revenue	$	640		$	316		$	—	$	956
Cost of revenues	430			404			—		834
Gross profit (loss)	$	210		$	(88)		$	—	$	122
Gross profit (loss)%	33		%	(28)		%			13		%

Allocated operating expenses (gains)	$	3		$	(376)		$	—	$	(373)
Unallocated operating expenses	—			—			1,586		1,586
Total operating expenses (gains)	$	3		$	(376)		$	1,586	$	1,213

Income (loss) from operations	$	207		$	288		$	(1,586)	$	(1,091)
Interest and other income, net	(37)			(5)			—		(42)
Net income (loss) before tax	244			293			(1,586)		(1,049)
Income tax expense	—			—			—		—
Net income (loss)	$	244		$	293		$	(1,586)	$	(1,049)


	Three Months Ended June 30, 2022
	Managed Services			Collaboration Products			Corporate		Total
Revenue	$	810		$	523		$	—	$	1,333
Cost of revenues	525			401			—		926
Gross profit	$	285		$	122		$	—	$	407
Gross profit %	35		%	23		%			31		%

Allocated operating expenses	$	1		$	8,404		$	—	$	8,405
Unallocated operating expenses	—			—			1,035		1,035
Total operating expenses	$	1		$	8,404		$	1,035	$	9,440

Income (loss) from operations	$	284		$	(8,282)		$	(1,035)	$	(9,033)
Interest and other expense, net	—			—			—		—
Income (loss) before income taxes	284			(8,282)			(1,035)		(9,033)
Income tax expense (benefit)	(1)			1			—		—
Net income (loss)	$	285		$	(8,283)		$	(1,035)	$	(9,033)


	Six Months Ended June 30, 2023
	Managed Services			Collaboration Products			Corporate		Total
Revenue	$	1,330		$	664		$	—	$	1,994
Cost of revenues	890			706			—		1,596
Gross profit (loss)	$	440		$	(42)		$	—	$	398
Gross profit (loss)%	33		%	(6)		%			20		%

Allocated operating expenses (gains)	$	3		$	(90)		$	—	$	(87)
Unallocated operating expenses	—			—			2,779		2,779
Total operating expenses (gains)	$	3		$	(90)		$	2,779	$	2,692

Income (loss) from operations	$	437		$	48		$	(2,779)	$	(2,294)
Interest and other income, net	(34)			(30)			—		(64)
Net income (loss) before tax	471			78			(2,779)		(2,230)
Income tax expense	7			31			—		38
Net income (loss)	$	464		$	47		$	(2,779)	$	(2,268)


	Six Months Ended June 30, 2022
	Managed Services			Collaboration Products			Corporate		Total
Revenue	$	1,776		$	1,089		$	—	$	2,865
Cost of revenues	1,170			789			—		1,959
Gross profit	$	606		$	300		$	—	$	906
Gross profit %	34		%	28		%			32		%

Allocated operating expenses	$	57		$	11,679		$	—	$	11,736
Unallocated operating expenses	—			—			2,725		2,725
Total operating expenses	$	57		$	11,679		$	2,725	$	14,461

Income (loss) from operations	$	549		$	(11,379)		$	(2,725)	$	(13,555)
Interest and other expense, net	6			—			—		6
Net income (loss) before tax	543			(11,379)			(2,725)		(13,561)
Income tax expense	8			3			—		11
Net income (loss)	$	535		$	(11,382)		$	(2,725)	$	(13,572)


Exhibit Number						Description
3.1						Amended and Restated Certificate of Incorporation, as amended (filed as Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q, filed with the SEC on May 10, 2023, and incorporated herein by reference).
4.1						Form of Amendment to Series A Warrants (filed as Exhibit 4.1 to the Registrants Current Report on Form 8-K, filed with the SEC on January 3, 2023, and incorporated herein by reference).
4.2						Certificate of Designations, Preferences and Rights of Series D Preferred Stock (filed as Exhibit 4.6 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 24, 2007, and incorporated herein by reference).
4.3						Certificate of Designations, Preferences and Rights of Series A-2 Preferred Stock of the Registrant (filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 11, 2009, and incorporated herein by reference).
4.4						Certificate of Designations, Preferences and Rights of Perpetual Series B Preferred Stock of the Registrant (filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 30, 2010, and incorporated herein by reference).
4.5						Certificate of Designations, Preferences and Rights of Perpetual Series B-1 Preferred Stock of the Registrant (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 9, 2011, and incorporated herein by reference).
4.6						Certificate of Designations of Rights, Powers, Preferences, Privileges and Restrictions of the 0% Series B Convertible Preferred Stock (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 14, 2017, and incorporated herein by reference).
4.7						Certificate of Designations of Rights, Powers, Preferences, Privileges and Restrictions of the 0% Series C Convertible Preferred Stock (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 25, 2018, and incorporated herein by reference).
4.8						Certificate of Designations of the 6.0% Series D Convertible Preferred Stock (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 7, 2019, and incorporated herein by reference).
4.9						Certificate of Designations of the 6.0% Series E Convertible Preferred Stock (filed as Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 7, 2019, and incorporated herein by reference).
4.10						Certificate of Designations of the 9.0% Series F Convertible Preferred Stock (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 3, 2023, and incorporated herein by reference).
4.11						Form of Common Warrant (filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 3, 2023, and incorporated herein by reference).
4.12						Form of Preferred Warrant (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 3, 2023, and incorporated herein by reference).
4.13						Form of Exchange Warrant (filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 5, 2023, and incorporated herein by reference.
10.1						Securities Purchase Agreement, dated March 31, 2023 (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 3, 2023, and incorporated herein by reference).
10.2						Registration Rights Agreement, dated March 31, 2023 (filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 3, 2023, and incorporated herein by reference).
10.3						Engagement Letter, dated March 30, 2023 (filed as Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 3, 2023, and incorporated herein by reference).
10.4						Form of Warrant Repricing Letter, dated April 18, 2023 (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 24, 2023, and incorporated herein by reference).
10.5						Exchange Agreement, dated as of of June 30, 2023, between Oblong, Inc. and Foundry Venture Capital 2007, L.P. and Foundry Group Select Fund, L.P. (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 5, 2023, 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


	OBLONG, INC.

August 10, 2023	By:	/s/ Peter Holst
		Peter Holst
		Chief Executive Officer
		(Principal Executive Officer)


August 10, 2023	By:	/s/ David Clark
		David Clark
		Chief Financial Officer
		(Principal Financial and Accounting Officer)