TaoWeave, Inc 10-Q for FY2021 Q3

TaoWeave, Inc. (TWAV)

10-Q 2021-11-10 For: 2021-09-30

Added on April 06, 2026

About this 10-Q

TaoWeave, Inc filed this 10-Q on November 10, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

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

Revenue: $1.8M; down 44.9% from $3.27M a year earlier
Net loss: $662K; compared with a net loss of $2.09M a year earlier
Diluted EPS: -$0.02; compared with -$0.40 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, 2021 (unaudited) and December 31, 2020	1
	Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020	3
	Unaudited Condensed Consolidated Statement of Stockholders’ Equity for the three and nine months ended September 30, 2021 and 2020	4
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 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


	September 30, 2021		December 31, 2020
	(Unaudited)
ASSETS
Current assets:
Cash	$	10,734	$	5,058
Restricted cash	61		158
Accounts receivable, net	1,276		3,166
Inventory	1,856		920
Prepaid expenses and other current assets	1,442		691
Total current assets	15,369		9,993
Property and equipment, net	198		573
Goodwill	7,367		7,367
Intangibles, net	8,142		10,140
Operating lease - right of use asset, net	531		903
Other assets	91		167
Total assets	$	31,698	$	29,143
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	—	$	2,014
Accounts payable	538		313
Accrued expenses and other current liabilities	990		1,201
Current portion of deferred revenue	956		1,217
Current portion of operating lease liabilities	475		830



Total current liabilities	2,959		5,575
Long-term liabilities:

Long-term debt, net of current portion	—		403
Operating lease liabilities, net of current portion	182		602
Deferred revenue, net of current portion	412		506

Total long-term liabilities	594		1,511
Total liabilities	3,553		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 September 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 September 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 September 30, 2021 and December 31, 2020, respectively	—		—


Common stock, $.0001 par value; 150,000,000 shares authorized; 30,929,331 shares issued and 30,816,048 outstanding at September 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 September 30, 2021 and December 31, 2020	(181)		(181)
Additional paid-in capital	227,519		215,092
Accumulated deficit	(199,196)		(192,855)
Total stockholder's equity	28,145		22,057
Total liabilities and stockholders’ equity	$	31,698	$	29,143


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Revenue	$	1,799	$	3,266	$	5,766	$	11,410
Cost of revenue (exclusive of depreciation and amortization)	1,228		1,612		3,767		5,684
Gross profit	571		1,654		1,999		5,726

Operating expenses:
Research and development	693		747		1,984		3,062
Sales and marketing	438		668		1,537		2,708
General and administrative	1,628		1,332		5,078		5,173
Impairment charges	254		117		302		667
Depreciation and amortization	669		780		2,098		2,392
Total operating expenses	3,682		3,644		10,999		14,002
Loss from operations	(3,111)		(1,990)		(9,000)		(8,276)
Interest and other expense, net	2		95		16		322
Other income	(3)		—		(227)		—
Gain on extinguishment of debt	(2,448)		—		(2,448)		—

Interest and other (income) expense, net	(2,449)		95		(2,659)		322
Loss before income taxes	(662)		(2,085)		(6,341)		(8,598)
Income tax expense	—		—		—		—
Net loss	(662)		(2,085)		(6,341)		(8,598)
Preferred stock dividends	—		4		1		12
Undeclared dividends	—		—		366		—
Induced conversion of Series A-2 Preferred Stock	—		—		300		—
Net loss attributable to common stockholders	$	(662)	$	(2,089)	$	(7,008)	$	(8,610)

Net loss attributable to common stockholders per share:
Basic and diluted net loss per share	$	(0.02)	$	(0.40)	$	(0.28)	$	(1.64)


Weighted-average number of shares of common stock:
Basic and diluted	30,739		5,257		25,121		5,237


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


Issuance of stock on vested restricted stock units	—	—			—	—		—	—		200,000	—		—	—		—		—		—




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


	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
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(2,085)		(2,085)
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		—	—		27		—		27

Preferred stock conversion	—	—		(75)	—		—	—		—	—		25,000	—		—	—		—		—		—

Forfeiture of restricted stock	—	—		—	—		(1,086)	—		—	—		(9,321)	—		—	—		—		—		—
Preferred stock dividends	—	—		—	—		—	—		—	—		—	—		—	—		(4)		—		(4)

Balance at September 30, 2020	45	$	—	250	$	—	1,702,010	$	—	131,579	$	—	5,355,841	$	1	113,283	$	(181)	$	207,558	$	(194,033)	$	13,345


	Nine Months Ended September 30,
	2021		2020
Cash flows from operating activities:
Net loss	$	(6,341)	$	(8,598)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	2,098		2,392
Bad debt expense	280		14
Amortization of debt discount	—		53
Amortization of right of use asset	372		834


Stock-based compensation	535		89
Stock-based expense for services	390		—


Gain on extinguishment of lease liability	(227)		—
Gain on extinguishment of debt	(2,448)		—
Impairment charges - property and equipment	98		126
Impairment charges - intangible assets	207		—
Impairment charges - goodwill	—		541
Changes in operating assets and liabilities:
Accounts receivable	1,610		322
Inventory	(936)		689
Prepaid expenses and other current assets	(751)		240
Other assets	15		(32)
Accounts payable	225		15
Accrued expenses and other current liabilities	11		(184)
Deferred revenue	(355)		72
Lease liabilities	(739)		(895)
Other liabilities	—		(3)
Net cash used in operating activities	(5,956)		(4,325)
Cash flows from investing activities:
Purchases of property and equipment	(30)		(8)
Net cash used in investing activities	(30)		(8)
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 financing activities	11,504		2,401
Increase (decrease) in cash and restricted cash	5,518		(1,932)
Cash and restricted cash at beginning of period	5,277		4,602
Cash and restricted cash at end of period	$	10,795	$	2,670

Supplemental disclosures of cash flow information:

Reconciliation of cash and restricted cash
Cash	$	10,734	$	2,670
Restricted cash	$	61	$	—
Total cash and restricted cash	$	10,795	$	2,670

Cash paid during the period for interest	$	3	$	159
Non-cash investing and financing activities:
Issuance of preferred stock in exchange for accrued dividends	$	—	$	99
Accrued preferred stock dividends	1		12
Inducement to convert Series A-2 Preferred Stock to common	300		—
Common stock issued for conversion of preferred stock	3		—


	As of September 30, 2021								As of December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Impairment		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Oblong (formerly Glowpoint)
Affiliate network	$	994	$	(787)	$	(207)	$	—	$	994	$	(735)	$	259



Oblong Industries
Developed technology	$	10,060	$	(4,032)	$	—	$	6,028	$	10,060	$	(2,520)	$	7,540
Trade names	2,410		(482)		$	—	1,928		2,410		(302)		2,108
Distributor relationships	310		(124)		$	—	186		310		(77)		233
Subtotal	12,780		(4,638)		$	—	8,142		12,780		(2,899)		9,881
Total	$	13,774	$	(5,425)	$	(207)	$	8,142	$	13,774	$	(3,634)	$	10,140






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


Remainder of 2021	$	580
2022	2,316
2023	2,309
2024	1,792
2025	241
Thereafter	904
Total	$	8,142


	September 30,		December 31,
	2021		2020

Accrued compensation costs	$	421	$	411
Accrued professional fees	208		236
Accrued taxes and regulatory fees	172		137
Customer deposits	51		127
Other accrued expenses and liabilities	138		286

Accrued dividends on Series A-2 Preferred Stock	—		4
Accrued expenses and other current liabilities	$	990	$	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, September 30, 2021	5,147	$	4.42


	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 September 30, 2021	113	$	(181)


			June 28, 2021
Risk free interest rate			0.47%
Expected maturity			3 years
Expected volatility			136%

Expected dividend yields			—
Weighted average grant date fair value per share			$2.48


	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, September 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	9.68	$	3.30	2,500	$	9.00
$10.01 – $20.00	97,500	1.31	19.32		97,500	19.32
$20.01 – $30.00	2,500	0.68	21.80		2,500	21.80
$30.01 – $40.00	5,000	0.45	30.20		5,000	30.20

	407,500	7.51	$	7.57	107,500	$	19.64


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Research and development	$	—	$	11	$	17	$	39
Sales, general and administrative	$	—	$	17	$	16	$	44
	$	—	$	28	$	33	$	83


	Three Months Ended September 30, 2021
	Oblong (formerly Glowpoint)			Oblong Industries			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)
Net income (loss) before tax	$	(54)		$	(1,428)		$	820	$	(662)
Income tax	$	—		$	—		$	—	$	—
Net income (loss)	$	(54)		$	(1,428)		$	820	$	(662)


	Nine Months Ended September 30, 2021
	Oblong (formerly Glowpoint)			Oblong Industries			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	$	—		$	—		$	—	$	—
Net income (loss)	$	443		$	(4,154)		$	(2,630)	$	(6,341)


	Three Months Ended September 30, 2020
	Oblong (formerly Glowpoint)			Oblong Industries			Corporate		Total
Revenue	$	1,324		$	1,942		$	—	$	3,266
Cost of revenues	893			719			—		1,612
Gross profit	$	431		$	1,223		$	—	$	1,654
Gross profit %	33		%	63		%			51		%

Allocated operating expenses	$	1,187		$	1,477		$	—	$	2,664
Unallocated operating expenses	—			—			980		980
Total operating expenses	$	1,187		$	1,477		$	980	$	3,644

Loss from operations	$	(756)		$	(254)		$	(980)	$	(1,990)
Interest and other expense, net	5			90			—		95
Net loss before taxes	$	(761)		$	(344)		$	(980)	$	(2,085)
Income tax	$	—		$	—		$	—	$	—
Net loss	$	(761)		$	(344)		$	(980)	$	(2,085)


	Nine Months Ended September 30, 2020
	Oblong (formerly Glowpoint)			Oblong Industries			Corporate		Total
Revenue	$	4,741		$	6,669		$	—	$	11,410
Cost of revenues	2,948			2,736			—		5,684
Gross profit	$	1,793		$	3,933		$	—	$	5,726
Gross profit %	38		%	59		%			50		%

Allocated operating expenses	$	3,398		$	7,545		$	—	$	10,943
Unallocated operating expenses	—			—			3,059		3,059
Total operating expenses	$	3,398		$	7,545		$	3,059	$	14,002

Loss from operations	$	(1,605)		$	(3,612)		$	(3,059)	$	(8,276)
Interest and other expense, net	12			310			—		322
Net loss before tax	$	(1,617)		$	(3,922)		$	(3,059)	$	(8,598)
Income tax	—			—			—		—
Net loss	(1,617)			(3,922)			$	(3,059)	$	(8,598)


	Three Months Ended September 30,
	2021		% of Revenue		2020		% of Revenue
Revenue: Oblong (formerly Glowpoint)
Video collaboration services	$	179	10	%	$	249	8	%
Network services	813		45	%	1,028		31	%
Professional and other services	14		1	%	47		1	%
Total Oblong (formerly Glowpoint) revenue	$	1,006	56	%	$	1,324	40	%

Revenue: Oblong Industries
Visual collaboration product offerings	$	771	43	%	1,686		52	%

Licensing	22		1	%	256		8	%
Total Oblong Industries revenue	$	793	44	%	1,942		60	%
Total revenue	$	1,799	100	%	$	3,266	100	%


		As of September 30,
		2021		2020
	Segment	% of Accounts Receivable		% of Accounts Receivable
Customer A	Oblong (formerly Glowpoint)	17	%	20	%
Customer B	Oblong (formerly Glowpoint)	—	%	15	%
Customer C	Oblong Industries	12	%	—	%
Customer D	Oblong Industries	11	%	—	%


		September 30, 2021
Assets
	Operating lease, right-of-use asset, net	$	531

Liabilities
	Current portion of operating lease liabilities	$	475
	Operating lease liabilities, net of current portion	182
	Total operating lease liabilities	$	657


Remaining Lease Payments

Remainder of 2021	$	189
2022	379
2023	116
Total lease payments	$	684
Effect of discounting	(27)
Total operating lease liabilities	$	657


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


November 10, 2021	By:	/s/ David Clark
		David Clark
		Chief Financial Officer
		(Principal Financial and Accounting Officer)