Oblong, Inc. (NYSE American: OBLG) ("Oblong" or the "Company"),
the award-winning maker of multi-stream collaboration solutions,
today provided preliminary financial results for the fourth quarter
and year ended December 31, 2019. All 2019 figures in this release
are approximate due to the preliminary nature of the
announcement.
“The merger with Oblong Industries, completed on October 1,
2019, was a milestone achievement for the company, providing us
with a unique and differentiated solution in the rapidly growing
virtual collaboration market,” said Peter Holst, Chairman & CEO
of Oblong. “While the effects of CoViD-19 have had significant
impact on distribution channels and revenue, our products and
services remain exceedingly well positioned when our partners and
customers gradually return to the workplace. With recent product
updates and more efficient pricing models now in place, our sales
pipeline, particularly through Cisco and its vast partner
ecosystem, continues to grow as buyers look beyond conventional
collaboration tools for faster decision-making.”
“Prior to the COVID-19 outbreak we had a record backlog of
opportunities in our pipeline for our Mezzanine offering,” added
Mr. Holst. “Over the last 45 days, hundreds of millions of
employees have suddenly made basic video collaboration part of
their everyday work routine from home resulting in unprecedented
expansion of the overall market. While the entire world gradually
navigates back to a ‘new normal’, we believe organizations will
adapt and seek solutions beyond the ‘basics’ that optimize decision
making across home and office locations. In the coming weeks and
months ahead, traditional methods of conducting commerce will
change, travel will be significantly reduced, and teams will look
to optimize engagement with all stakeholders. Communication tools
that offer engaging and more efficient routes to decision making
will be the next frontier beyond contemporary video and web
collaboration and Oblong’s technologies are uniquely positioned to
deliver on that promise.”
Preliminary and Unaudited Financial
Results
Background
On October 1, 2019, the Company closed the merger of Oblong,
Inc. (formerly named Glowpoint, Inc.) and Oblong Industries, Inc.
(the “Merger”). The Company’s preliminary expected consolidated
financial results for the year ended December 31, 2019 included
herein only reflect Oblong Industries’ financial results for the
fourth quarter of 2019 since the acquisition closed on October 1,
2019. As reported in the Company’s Form 8-K filed with the
Securities and Exchange Commission (“SEC”) on March 30, 2020, the
Company expects to file its Annual Report on Form 10-K for the year
ended December 31, 2019 (the “2019 Annual Report”) with the SEC no
later than May 14, 2020. The preliminary fourth quarter and full
year 2019 figures provided in this press release are unaudited and
subject to revision. Final results for the fourth quarter and year
ended December 31, 2019 will be provided in a press release
substantially concurrently with the 2019 Annual Report. Investors
are encouraged to carefully review such press release and the 2019
Annual Report when such documents are made available for a complete
analysis of the Company’s results from operations and financial
condition.
Preliminary and Unaudited Fourth
Quarter 2019 Financial Results
The Company expects to report the following financial results
for the fourth quarter of 2019:
- Revenue of approximately $5.4 million in the fourth quarter of
2019 compared to $2.9 million in the fourth quarter of 2018.
Approximately $3.2 million of the expected fourth quarter 2019
revenue was related to Oblong Industries, with no contribution from
Oblong Industries in the fourth quarter of 2018.
- Gross margin of approximately 53% for the fourth quarter of
2019 compared to 40% for the fourth quarter of 2018.
- Net loss of approximately $5.6 million in the fourth quarter of
2019, compared to a net loss of $2.7 million in the fourth quarter
of 2018.
- Adjusted EBITDA (“AEBITDA”) loss of approximately $2.3 million
compared to an AEBITDA loss of $0.04 million in the fourth quarter
of 2018. AEBITDA is a non-GAAP financial measure. See “Non-GAAP
Financial Information” below for additional information regarding
this non-GAAP financial measure and for a reconciliation of net
loss to this non-GAAP financial measure.
Preliminary and Unaudited Full-Year
2019 Financial Results
The Company expects to report the following financial results
for the year ended December 31, 2019:
- Revenue of approximately $12.8 million for full-year 2019
compared to $12.6 million for full-year 2018. Approximately $3.2
million of the expected full-year 2019 revenue was related to
Oblong Industries, with no contribution from Oblong Industries in
2018.
- Pro forma revenue of approximately $25.6 million for full-year
2019 compared to $29.8 million for full-year 2018. Unaudited pro
forma revenue was determined by giving effect to the Merger as if
it had occurred on January 1, 2018. These pro forma results are
based on historical results of operations without any adjustments,
but are illustrative only and not necessarily indicative of what
the results would have been had Oblong operated Oblong Industries
since January 1, 2018.
- Net loss of approximately $7.7 million for full-year 2019,
compared to a net loss of $7.2 million for full-year 2018.
- AEBITDA loss of approximately $3.0 million for full-year 2019
compared to AEBITDA of $0.2 million for full-year 2018. AEBITDA is
a non-GAAP financial measure. See “Non-GAAP Financial Information”
below.
- Cash and cash equivalents of approximately $4.5 million as of
December 31, 2019.
Recent Developments
Effect of COVID-19 on Company Sales
On March 11, 2020, the World Health Organization announced that
infections of the novel Coronavirus (COVID-19) had become pandemic,
and on March 13, the U.S. President announced a National Emergency
relating to the disease. There is a possibility of continued
widespread infection in the United States and abroad, with the
potential for catastrophic impact. The sweeping nature of the
coronavirus pandemic makes it extremely difficult to predict how
the Company’s business and operations will be affected in the
longer run, but we expect that it may materially affect our
business, financial condition and results of operations. Further,
our current and potential customers will likely be required to
allocate resources and adjust budgets to accommodate potential
contingencies related to the effects of the coronavirus and
measures required to be put in place to prevent and contain
contamination of the virus. These uncertainties may result in such
customers delaying budget expenditures or re-allocating resources,
which would result in a decrease in revenue from these customers.
Notably, an existing major customer of the Company suspended
certain professional services we provide to this customer effective
April 30, 2020 due to COVID-19. These services accounted for $0.7
million, or 13%, of the Company’s preliminary and unaudited revenue
of $5.4 million in the fourth quarter of 2019. These services were
not related to the Company’s Mezzanine product and service
offering. It is uncertain whether this customer will resume these
services later in 2020 or in the future.
Liquidity and Capital Resources Update
The Company’s preliminary and unaudited cash and cash
equivalents was approximately $2.0 million as of March 31, 2020. To
preserve the Company’s liquidity position, we have recently taken a
number of measures:
- The Company has undertaken cost reduction initiatives during
2020, including reductions in headcount, leased office space and
other infrastructure costs.
- The Company applied for a loan in April 2020 under the Paycheck
Protection Program (the “PPP”) established by section 1102 of the
Coronavirus Aid, Relief, and Economic Security Act (the CARES Act).
On April 10, 2020, the Company’s loan application was approved and
funded in the amount of approximately $2.4 million (the “PPP
Loan”). The Company believes a certain portion of the PPP Loan will
ultimately be forgiven under the terms of the Paycheck Protection
Program. The amount of forgiveness of the PPP Loan is determined
based on qualifying payroll costs, rent and utilities incurred by
the Company during the 8-week period subsequent to the funding date
of the PPP Loan. There is no guarantee that the Company will
receive forgiveness for any fixed amount of any loan principal
received by the Company. For the amount of the PPP Loan not
forgiven, the PPP Loan carries a fixed annual interest rate of 1.0%
and monthly interest payments are deferred for six months. The
maturity date for repayment of the principal balance of the PPP
Loan is April 10, 2022 (the “Maturity Date”). The Company’s lender
for the PPP Loan has the right to determine the amortization
schedule of principal payments between November 10, 2020 and the
Maturity Date (such amortization schedule has not yet been
determined).
- The Company and Silicon Valley Bank have verbally agreed to
defer certain payments due under the Company’s Second Amended and
Restated Loan and Security Agreement with Silicon Valley Bank
(“SVB” and the “SVB Loan Agreement”). The SVB Loan Agreement
required interest only payments through March 31, 2020 and monthly
principal payments of $291,500 from April 1, 2020 to September 1,
2021 (the “Maturity Date”). SVB has verbally agreed to defer the
monthly principal payments due on April 1, 2020 and May 1, 2020 and
a prior deferral fee payment of $100,000 due on April 1, 2020 to
June 1, 2020 or later. The Company and SVB are currently in
negotiations to restructure the SVB Loan Agreement to extend the
interest only payment period and the Maturity Date. However, there
can be no assurance that the Company and SVB will agree on a
restructuring of the SVB Loan Agreement.
- The Company requires additional capital to fund operations
through the next twelve months following the filing of the 2019
Annual Report and to provide growth capital including investments
in technology, product development and sales and marketing. Given
the economic effect of the recent coronavirus outbreak there can be
no assurance that we will be successful in raising necessary
capital or that any such offering will be on terms acceptable to
the Company.
Non-GAAP Financial Information
Adjusted EBITDA (“AEBITDA”), a non-GAAP financial measure, is
defined as net loss before depreciation and amortization,
stock-based compensation, impairment charges, severance, merger
expenses and interest and other expense, net. AEBITDA is not
intended to replace operating loss, net loss, cash flow or other
measures of financial performance reported in accordance with
generally accepted accounting principles (GAAP). Rather, AEBITDA is
an important measure used by management to assess the operating
performance of the Company and to compare such performance between
periods. AEBITDA as defined here may not be comparable to similarly
titled measures reported by other companies due to differences in
accounting policies. Therefore, AEBITDA should be considered in
conjunction with net loss and other performance measures prepared
in accordance with GAAP, such as operating loss or cash flow
provided by (used in) operating activities, and should not be
considered in isolation or as a substitute for GAAP measures, such
as net loss, operating loss or any other GAAP measure of liquidity
or financial performance. A GAAP to non-GAAP reconciliation of net
loss to AEBITDA (loss) is shown below.
$ in millions Three Months EndedDecember 31, 2019 Three Months
EndedDecember 31, 2018 Year EndedDecember 31, 2019 Year
EndedDecember 31, 2018 Net loss
$ (5.6
)
$ (2.7
)
$ (7.7
)
$ (7.2
)
Depreciation & amortization
0.9
0.2
1.3
0.8
Interest and other expense, net
0.2
-
0.2
0.4
Impairment charges
1.8
1.9
2.3
5.1
Merger expenses
0.2
0.5
0.6
0.7
Severance
0.2
-
0.2
-
Stock-based compensation
0.0
0.1
0.1
0.4
AEBITDA (loss)
$ (2.3
)
$ 0.0
$ (3.0
)
$ 0.2
About Oblong, Inc.
Oblong’s innovative and patented technologies change the way
people work, create, and communicate. With roots in more than two
decades of research at the MIT Media Lab, Oblong's flagship product
Mezzanine™ is the technology platform that defines the next era of
computing: simultaneous multi-user, multi-screen, multi-device,
multi-location for dynamic and immersive visual collaboration.
Oblong supplies Mezzanine systems to Fortune 500 enterprise
customers and reseller partners. Learn more at www.oblong.com, and
connect via Twitter, Facebook, LinkedIn, and Instagram.
Forward looking and cautionary statements
The preliminary financial results for the fourth quarter and
full year 2019 presented herein represent the most current
information available to management and reflect estimates and
assumptions. The company’s actual results may differ materially
from these preliminary results due to the completion of the
company’s financial closing procedures, final adjustments and other
developments that may arise between the date of this press release
and the time that financial results for the fourth quarter and full
year 2019 are finalized. The foregoing preliminary financial
results have not been compiled or examined by our independent
registered public accounting firm nor have our independent
registered public accounting firm performed any procedures with
respect to this information or expressed any opinion or any form of
assurance of such information. These preliminary financial results
should not be viewed as a substitute for full financial statements
prepared in accordance with U.S. GAAP or as a measure of
performance. In addition, these preliminary financial results are
not necessarily indicative of the results to be achieved for any
future period. This press release and any oral statements made
regarding the subject of this release contain forward-looking
statements as defined under Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended, and are made under the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. All
statements, other than statements of historical facts, that address
activities that Oblong assumes, plans, expects, believes, intends,
projects, estimates or anticipates (and other similar expressions)
will, should or may occur in the future are forward-looking
statements. Oblong’s actual results may differ materially from its
expectations, estimates and projections, and consequently you
should not rely on these forward-looking statements as predictions
of future events. Without limiting the generality of the foregoing,
forward-looking statements contained in this press release include
statements relating to (i) the continued impact of the COVID-19
pandemic on the Company’s operations, (ii) potential forgiveness of
any portion of the PPP Loan, (iii) the Company’s ability to
negotiate an amendment to the SVB Loan Agreement, (iv) the
availability of sufficient capital resources to fund the Company’s
operations for the next 12 months following the date of this
release, including through cost reduction initiatives or additional
financing sources, (v) the Company’s potential future growth and
financial performance, and (vi) the success of its products and
services. The forward-looking statements are based on management’s
current belief, based on currently available information, as to the
outcome and timing of future events, and involve factors, risks,
and uncertainties that may cause actual results in future periods
to differ materially from such statements. A list and description
of these and other risk factors can be found in the Company’s
Annual Report on Form 10-K for the year ending December 31, 2018
and in other filings made by the Company with the SEC from time to
time, including the Company’s Quarterly Report on Form 10-Q for the
three and nine months ended September 30, 2019 and the Company’s
Current Report on Form 8-K filed with the SEC on March 30, 2020.
Any of these factors could cause Oblong’s actual results and plans
to differ materially from those in the forward-looking statements.
Therefore, the Company can give no assurance that its future
results will be as estimated. The Company does not intend to, and
disclaims any obligation to, correct, update or revise any
information contained herein.
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version on businesswire.com: https://www.businesswire.com/news/home/20200416005939/en/
Investor Relations Contact: Brett Maas Hayden IR, LLC
brett@haydenir.com 646-536-7331
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