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What changed in TaoWeave, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of TaoWeave, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+232 added−263 removedSource: 10-K (2025-03-18) vs 10-K (2024-03-19)

Top changes in TaoWeave, Inc.'s 2024 10-K

232 paragraphs added · 263 removed · 198 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

29 edited+8 added−14 removed17 unchanged
Biggest changeOur services support all standard video signaling protocols, including SIP, H.323 and Integrated Services Digital Network (“ISDN”) using infrastructure from a variety of manufacturers.
Biggest changeOur services support all standard video signaling protocols, including SIP, H.323, and Integrated Services Digital Network (“ISDN”), using infrastructure from a variety of manufacturers. Research and Development During the years ended December 31, 2024, and 2023, the Company incurred research and development expenses of $155,000 and $20,000, respectively, related to developing features and enhancements to our Mezzanine™ product offerings.
Connect teams and get everyone on the same page. Meeting participants share the same visual workspace so they can perform like they are in the same room. Everyone in every location can add content and steer the conversation, increasing opportunity and motivation to participate. • Connect with Ease.
Connect teams and get everyone on the same page. Meeting participants share the same visual workspace so they can perform like they are in the same room. Everyone in every location can add content and steer the conversation, increasing the opportunity and motivation to participate. • Connect with Ease.
Managed Services for Video Collaboration We provide a range of managed services for video collaboration, from automated to orchestrated, to simplify the user experience in an effort to drive adoption of video collaboration throughout our customers’ enterprise. We deliver our services through a hybrid service platform or as a service layer on top of our customers’ video infrastructure.
Managed Services for Video Collaboration We provide a range of managed services for video collaboration, from automated to orchestrated, to simplify the user experience in an effort to drive the adoption of video collaboration throughout our customers’ enterprise. We deliver our services through a hybrid service platform or as a service layer on top of our customers’ video infrastructure.
Certain features of our current Mezzanine™ product offerings compete in the communication and collaboration technologies market with products offered by Cisco WebEx, Zoom, LogMeIn, GoToMeeting, along with bundled productivity solutions providers who offer limited content sharing capabilities such as Microsoft Teams, and Google G Suite.
Certain features of our current Mezzanine™ product offerings compete in the communication and collaboration technologies market with products offered by Cisco WebEx, Zoom, LogMeIn, and GoToMeeting, along with bundled productivity solutions providers who offer limited content-sharing capabilities such as Microsoft Teams and Google G Suite.
With the technology advancements over the past few years, including browser-based and mobile video, the options for video collaboration solutions and services are greater than ever before. With respect to our managed services for network, we primarily compete with telecommunications carriers, including British Telecom, AT&T, Verizon and Telus.
With the technology advancements over the past few years, including browser-based and mobile video, the options for video collaboration solutions and services are greater than ever before. With respect to our managed services for the network, we primarily compete with telecommunications carriers, including British Telecom, AT&T, Verizon, and Telus.
Our customers use the platform to solve big data problems, to collaborate more effectively, and to go from viewing pixels on a single screen to interacting with pixels on every screen. Videoconferencing has traditionally presented challenges for the user by presenting a complex maze of systems and networks that must be navigated and closely managed.
Our customers use the platform to solve big data problems, collaborate more effectively, and go from viewing pixels on a single screen to interacting with pixels on every screen. Videoconferencing has traditionally presented challenges for the user by presenting a complex maze of systems and networks that must be navigated and closely managed.
The Exchange Act requires us to file periodic reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). The SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements and other information that we file electronically with the SEC.
The Act requires us to file periodic reports, proxy statements, and other information with the Securities and Exchange Commission (“SEC”). The SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information that we file electronically with the SEC.
Share up to 10 connected devices including laptops, in-room PCs, and digital media players. Upload images and slides to present and explore content alongside live video streams. -3- • Capture Ideas Instantly. Save snapshots of on-screen content to make sure good ideas don’t get lost. Annotate content in the Mezzanine ™ app and share thoughts with others.
Share up to 10 connected devices, including laptops, in-room PCs, and digital media players. Upload images and slides to present and explore content alongside live video streams. • Capture Ideas Instantly. Save snapshots of on-screen content to make sure good ideas don’t get lost. Annotate content in the Mezzanine™ app and share thoughts with others.
Item 1. Business Overview We are a provider of patented multi-stream collaboration products and managed services for video collaboration and network solutions. Mezzanine™ Product Offerings Our flagship product is called Mezzanine™ , a family of turn-key products that enable dynamic and immersive visual collaboration across multi-users, multi-screens, multi-devices, and multi-locations .
Item 1. Business Overview We are a provider of patented multi-stream collaboration products and managed services for network solutions and video collaboration. Mezzanine ™ Product Offerings Our product is called Mezzanine™, a family of turn-key products that enable dynamic and immersive visual collaboration across multi-users, multi-screens, multi-devices, and multi-locations.
Our competitors offer services similar to ours both on a bundled and unbundled basis, creating a highly competitive environment with pressure on pricing of such services. Revenue attributable to our managed services described above has declined in recent years primarily due to loss of customers to competition.
Our competitors offer services similar to ours both on a bundled and unbundled basis, creating a highly competitive environment with pressure on the pricing of such services. Revenue attributable to our managed services described above has declined in recent years primarily due to the loss of customers to competition.
However, it's important to note that while we are committed to this strategic review process, there is no guaranteed outcome. The process of identifying and executing on the right strategic alternative, whether it be a merger, sale, or business combination, is complex and uncertain.
However, it's important to note that while we are committed to this strategic review process, there is no guaranteed outcome. The process of identifying and executing the right strategic alternative, whether it be a merger, sale, or business combination, is complex and uncertain.
These include the possibility of a business combination, where we might merge with or be acquired by another company; a -6- reverse merger, where a private company merges with us to become public without going through the traditional initial public offering process; or outright sale of the company.
These include the possibility of a business combination, where we might merge with or be acquired by another company; a reverse merger, where a private company merges with us to become public without going through the traditional initial public offering process; or outright sale of the company.
We expect this trend to continue in the future for our managed services business. Intellectual Property The core technology platform for Mezzanine™ is called g-speak. It enables applications to be developed that run across multiple screens and multiple devices.
We expect this trend to continue in the future for our managed services business. Intellectual Property G-speak is the core technology platform for Mezzanine™. It enables applications to be developed that run across multiple screens and devices.
We offer our customers the following networking solutions that can be tailored to each customer’s needs: • Cloud Connect: Video ™ : A llows our customers to outsource the management of their video traffic to us and provides the customer’s office locations with a secure, dedicated video network connection to the Oblong Cloud for video communications. • Cloud Connect: Converge ™ : Provides customized Multiprotocol Label Switching (“MPLS”) solutions for customers who require a converged network.
We offer our customers the following networking solutions that can be tailored to each customer’s needs: • Cloud Connect: Video ™ : Allows our customers to outsource the management of their video traffic to us and provides the customer’s office locations with a secure, dedicated video network connection to the Oblong Cloud for video communications. • Cloud Connect: Converge ™ : Provides customized Multiprotocol Label Switching (“MPLS”) solutions for customers who require a converged network.
We provide our customers with the following services to meet their videoconferencing needs: • Managed Videoconferencing is a “high-touch” concierge-based offering where we set up and manage customer videoconferences. Our managed videoconferencing services are offered to our customers on either a usage basis or on -4- a monthly subscription.
We provide our customers with the following services to meet their videoconferencing needs: • Managed Videoconferencing is a “high-touch” concierge-based offering where we set up and manage customer videoconferences and webcasts. Our managed videoconferencing services are offered to our customers on either a usage basis or on a monthly subscription.
We fully manage and prioritize traffic to ensure that video and other business critical applications run smoothly. • Cloud Connect: Cross Connect ™ : A llows the customer to leverage their existing carrier for the extension of a Layer 2 private line to our data center.
We fully manage and prioritize traffic to ensure that video and other business-critical applications run smoothly. • Cloud Connect: Cross Connect ™ : Allows the customer to leverage their existing carrier for the extension of a Layer 2 private line to our data center.
Pursuant to the Merger Agreement, among other things, Oblong Industries became a wholly owned subsidiary of the Company (the “Merger”). On March 6, 2020, Glowpoint changed its name to Oblong, Inc. Available Information We are subject to the reporting requirements of the Exchange Act.
Pursuant to the Merger Agreement, among other things, Oblong Industries became a wholly owned subsidiary of the Company (the “Merger”). On March 6, 2020, Glowpoint changed its name to Oblong, Inc. Available Information We are subject to the Exchange Act's reporting requirements.
Mezzanine™ allows m ultiple people to share, control and arrange content simultaneously, from any location, enabling all participants to see the same content in its entirety at the same time in identical formats, resulting in dramatic enhancements to both in-room and virtual videoconference presentations. Applications include video telepresence, laptop and application sharing, whiteboard sharing and slides.
Mezzanine™ allows multiple people to share, control, and arrange content simultaneously from any location, enabling all participants to see the same content in its entirety at the same time in identical formats, resulting in dramatic enhancements to both in-room and virtual videoconference presentations. Applications include video telepresence, laptop and application sharing, whiteboard sharing, and slides.
In our quest to find the right partners or acquisition targets, we are particularly focused on ventures that have demonstrated their ability to innovate and capture early-stage interest of their target markets, indicating a clear path to scalability and a substantial market presence.
In our quest to find the right partners or acquisition targets, we are particularly focused on ventures that have demonstrated their ability to innovate and capture the early-stage interest of their target markets. These ventures indicate a clear path to scalability and a substantial market presence.
Mezzanine ™ works seamlessly with existing video conferencing and collaboration solutions so teams can join meetings with the tools they use every day. Integration with Cisco and Polycom systems simplify connecting rooms with voice, video, and content. • Orchestrate Content . Place content anywhere in the room from anywhere in the room with Mezzanine ™ ’s award-winning wands.
Mezzanine™ works seamlessly with existing video conferencing and collaboration solutions so teams can join meetings with the tools they use every day. Integration with Cisco and Polycom systems simplifies connecting rooms with voice, video, and content. • Orchestrate Content . Place content anywhere in the room from anywhere in the room with Mezzanine's™ award-winning wands.
Spatial input allows content to be spread across screens, spanning different walls, scalable to an arbitrary number of displays and interaction with our proprietary wand device. Mezzanine™ s ubstantially enhances day-to-day virtual meetings with technology that accelerates decision making, improves communication, and increases productivity.
Spatial input allows content to be spread across screens, spanning different walls, scalable to an arbitrary number of displays, and interact with our proprietary wand device. Mezzanine™ substantially enhances day-to-day virtual meetings with technology that accelerates decision-making, improves communication, and increases productivity.
You may review these documents on our website at www.oblong.com by accessing the investor relations section. Our website and the information contained on or connected to our website is not incorporated by reference herein, and our web address is included as an inactive textual reference only.
You may review these documents on our website at www.oblong.com by accessing the investor relations section. Our website and the information contained on or connected to our website are not incorporated by reference herein, and our web address is included as an inactive textual reference only. -6- Table of Contents
Employees As of December 31, 2023, we had 21 total employees including 17 full-time employees. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants.
Employees As of December 31, 2024, we had 7 total full-time employees. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and new employees, advisors, and consultants.
We offer, on a monthly subscription basis, three tiers of Remote Service Management options, ranging from remote proactive automated monitoring to end-to-end management to complement the needs of IT support organizations (including 24x7 support desk, incident/problem/change management, site certifications, and service level agreements).
We offer, on a monthly subscription basis, three tiers of Remote Service Management options, ranging from remote proactive automated monitoring to end-to-end management to complement the needs of IT support organizations (including 24x7 support desk, incident/problem/change management, site certifications, and service level agreements). Sales and Marketing We sell globally through direct customer sales and channel partners.
We are committed to diversity and inclusion as well as equitable pay within our workforce. In addition, the health and safety of our employees, customers and communities are of primary concern to us. Strategy In recent years, our Company has faced significant challenges, leading to declining revenues for both our Mezzanine™ product offerings and our Managed Services.
In addition, the health and safety of our employees, customers, and communities are of primary concern to us. -5- Table of Contents Strategy In recent years, our Company has faced significant challenges, leading to declining revenues for both our Mezzanine™ product offerings and our Managed Services.
Managed Services for Network We provide our customers with network solutions that ensure reliable, high-quality and secure traffic of video, data and internet. Network services are offered to our customers on a subscription basis. Our network services business carries variable costs associated with the purchasing and reselling of this connectivity.
Network services are offered to our customers on a subscription basis. Our network services business carries variable costs associated with the purchasing and reselling of this connectivity.
A significant portion of our products and services are sold through our distribution channels, and the remainder is sold through direct sales. Our distribution channels include systems integrators, channel partners, other resellers, and distributors. Sales to these service providers have been characterized by large and sporadic purchases, in addition to longer sales cycles.
Customers The majority of our revenue for the years ended December 31, 2024, and 2023 was generated from direct sales, with the remainder sold through distribution channels. These channels include systems integrators, channel partners, other resellers, and distributors. Sales to these service providers have been characterized by large and sporadic purchases and longer sales cycles.
The family includes the 200 Series (two display screen), 300 Series (three screen), and 600 Series (six screen). We also sell maintenance and support contracts related to Mezzanine™. Historically, customers have used Mezzanine™ products in traditional office and operating center environments such as conference rooms or other presentation spaces.
Gestural interaction makes it easy to move and highlight content to focus the attention of the team. Historically, customers have generally used Mezzanine™ products in traditional office and operating center environments such as conference rooms or other presentation spaces.
Historically, we have seen fluctuations in our gross margins based on changes in the balance of our distribution channels. Major customers are defined as direct customers or channel partners that account for more than 10% of the Company’s total consolidated revenue.
Historically, we have seen fluctuations in our gross margins based on changes in the balance of our distribution channels. A significant portion of our revenue is generated from a limited number of customers. For the years ended December 31, 2024, and 2023, one major customer accounted for 84.9% and 55.9% of the Company’s total consolidated revenue, respectively.
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As discussed below, sales of our Mezzanine™ products have been adversely affected by commercial response to the COVID-19 pandemic and its aftermath. Like many technology companies in recent months, we will continue to monitor and manage our costs relative to demand with the goal of growing the Company’s revenue in the future.
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The family includes the 200 Series (two display screen), 300 Series (three screen), and 600 Series (six screen). We also sell maintenance and support contracts related to Mezzanine™. Key capabilities and features of Mezzanine™ include: • Share Work With Others. Easily present work by plugging in or sharing wirelessly with the Mezzanine™ app.
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To the extent we believe new investments in product development, marketing, or sales are warranted as a result of changes in market demand, we believe additional capital will be required to fund those efforts and our ongoing operations.
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As discussed below, revenue declines for our Mezzanine™ products are primarily due to lower demand, largely a consequence of the commercial reactions to the COVID-19 pandemic and its prolonged effects. We believe the COVID-19 pandemic fundamentally altered the way businesses consider the use of physical office spaces and, consequently, the demand for technologies that enable in-person collaboration within these spaces.
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Today, ideation and content collaboration are gaining growing importance in both physical and virtual meeting environments to support collective brainstorming and expedite decision making. Visualization of ideas can happen more naturally when people expand the collaborative canvas from sharing a single content stream among many participants to empowering an entire team, such as through our Mezzanine™ multi-stream solutions.
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Our analysis indicates that the reduced demand for our Mezzanine™ products, particularly in the aftermath of COVID-19 , reflects a broader reassessment among our customers regarding the necessity and investment in collaboration solutions tailored for traditional office environments. Continuation of this trend could cause further declines in our revenue for this business.
Removed
While historically focused on in-room collaboration, the need for next-generation virtual collaboration solutions is on the rise, attributed to the confluence of several key trends that influence the way individuals collaborate. Key capabilities and features of Mezzanine ™ include: • Share Work With Others. Easily present work by plugging in or sharing wirelessly with the Mezzanine™ app.
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Although we cannot presently quantify the future financial impacts of this trend, such impacts will likely continue to have a material adverse impact on the Company’s consolidated financial condition, results of operations, and cash flows. -3- Table of Contents Managed Services for Network We provide our customers with network solutions that ensure reliable, high-quality, and secure traffic of video, data, and internet.
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Gestural interaction makes it easy to move and highlight content to focus the attention of the team.
Added
To preserve capital, the Company significantly reduced its investments in sales and marketing during the last several years. For the years ended December 31, 2024, and 2023, sales and marketing expenses were $181,000 and $309,000, respectively.
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We believe key drivers for demand include: • rapid growth of cloud-based unified communications (UC) services adoption and continuously increasing collaborative intensity in workplaces; • accelerating demand for low-cost video conferencing options such as USB conference room cameras and audio/video soundbars; • rising appetite among end-user organizations for content sharing as well as content collaboration capabilities including ideation, annotation, illustration, and coediting; • convergence of audio, video and content collaboration (as opposed to siloed applications and platforms) to improve employee productivity; • significant growth in the number of huddle rooms and flexible meeting spaces worldwide; • preference for Bring Your Own Device (BYOD) screen share in meeting spaces; and • growing number of distributed and remote workers.
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The composition of our significant customers will vary from period to period, and we expect that most of our revenue will continue, for the foreseeable future, to come from a relatively small number of customers.
Removed
Today’s knowledge workers are seeking optimal meeting spaces both in and out of the office that foster creativity, agility, innovation, and engagement. The trend towards ad-hoc and small group meetings has led to the creation of the huddle room concept, where workers can meet in a disruption-free setting.
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Consequently, our financial results may fluctuate significantly from period to period based on the actions of one or more significant customers. -4- Table of Contents Competition The market for communication and collaboration technology services is competitive and rapidly changing.
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However, it is estimated that a small percentage of these spaces are truly ‘full spectrum’ collaboration enabled. Further, the penetration of stand-alone content sharing applications is significantly less than video penetration in large and huddle-sized meeting rooms.
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We are committed to diversity and inclusion as well as equitable pay within our workforce.
Removed
We believe as businesses continue to reopen from the COVID-19 pandemic there will be demand for higher forms of engagement that combines robust video conferencing with enhanced content sharing as users adapt to more flexible workplace alternatives. This combination focuses on allaying customer apprehension with regards to how to cost-effectively pursue an expanded collaboration strategy without replacing their existing investments.
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Sales and Marketing We use a variety of marketing, sales, and support activities to generate and cultivate ongoing customer demand for our product offerings and managed services. We have limited sales and marketing resources and we currently have a small sales team. We sell globally through both direct customer sales and channel partners.
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Customers We have a diverse customer base including Fortune 1000 companies, along with small and medium enterprises across a wide range of industries including aerospace, consulting, executive search, broadcast media, legal, insurance, technology, financial services, education, healthcare, real estate, retail, construction, hospitality, and government, among others. We seek to establish and maintain long-term relationships with our customers.
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Many factors influence the collaboration requirements of our customers. These include the size of the organization, number and types of technology systems, geographic location, and business applications deployed throughout the customer’s network. Our customer base is not limited to any specific industry, geography, or market segment.
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For the years ended December 31, 2023, and 2022, one major customer accounted for approximately 56% and 47% of the Company’s total consolidated revenue, respectively. -5- Competition The market for communication and collaboration technology services is competitive and rapidly changing.
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Research and Development The Company incurred research and development expenses during the years ended December 31, 2023 and 2022 of $0.02 million and $1.7 million, respectively, related to the development of features and enhancements to our Mezzanine ™ product offerings. During late 2022, we ceased the majority of R&D activities as a cost savings measure.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

117 edited+9 added−24 removed159 unchanged
Biggest changeThe issuance of the securities in the March 2023 private placement significantly diluted the ownership interest of the existing holders of our common stock, and the market price of our common stock has declined significantly as a result of sales of such securities into the public market by the private placement investors and subsequent investors or the perception that such sales may occur.
Biggest changeWhile the sale of shares to the public might increase the trading volume of our common stock and, thus, the liquidity of our stockholders’ investments, the resulting increase in the number of shares available for public sale could drive the price of our common stock down, reducing the value of our stockholders’ investments and perhaps hindering our ability to raise additional funds in the future. -19- Table of Contents The issuance of the securities in the March 2023 private placement significantly diluted the ownership interest of the existing holders of our common stock, and the market price of our common stock has declined significantly as a result of sales of such securities into the public market by the private placement investors and subsequent investors or the perception that such sales may occur.
We may not be able to achieve revenue growth or profitability or generate positive cash flow on a quarterly or annual basis in the future. If we do not achieve profitability in the future, the value of our common stock may be adversely impacted, and we could have difficulty obtaining capital to continue our operations.
In the future, we may not be able to achieve revenue growth or profitability or generate positive cash flow on a quarterly or annual basis. If we do not achieve profitability in the future, the value of our common stock may be adversely impacted, and we could have difficulty obtaining capital to continue our operations.
Our capital requirements in the future will continue to depend on numerous factors, including the timing and amount of revenue, customer renewal rates and the timing of collection of outstanding accounts receivable, in each case particularly as it relates to our major customers, the expense to deliver services, expense for sales and marketing, expense for research and development, capital expenditures, and the cost involved in protecting intellectual property rights.
Our capital requirements in the future will continue to depend on numerous factors, including the timing and amount of revenue, customer renewal rates, and the timing of collection of outstanding accounts receivable, in each case particularly as it relates to our major customers, the expense to deliver services, the expense for sales and marketing, the expense for research and development, capital expenditures, and the cost involved in protecting intellectual property rights.
Any future delays in product development and introduction, or product introductions that do not meet broad market acceptance, or unsuccessful launches of new product lines could result in: • loss of or delay in revenue and loss of market share; • negative publicity and damage to our reputation and brand; • a decline in the average selling price of our products; and • adverse reactions in our sales channels.
Any future delays in product development and introduction, product introductions that do not meet broad market acceptance, or unsuccessful launches of new product lines could result in: • loss of or delay in revenue and loss of market share; • negative publicity and damage to our reputation and brand; • a decline in the average selling price of our products; and • adverse reactions in our sales channels.
Furthermore, we may not execute successfully on our vision or strategy because of challenges with regard to product planning and timing, technical hurdles that we fail to overcome in a timely fashion, or a lack of appropriate resources, such as those that led to us ceasing the majority of research and development activities during late 2022 as a cost savings measure, and significant capital could be required to resume research and development activities.
Furthermore, we may not execute successfully on our vision or strategy successfully because of challenges with regard to product planning and timing, technical hurdles that we fail to overcome in a timely fashion, or a lack of appropriate resources, such as those that led to us ceasing the majority of research and development activities during late 2022 as a cost savings measure, and significant capital could be required to resume research and development activities.
In response to changes in industry and market conditions, we may be required to strategically realign our resources and to consider restructuring, disposing of or otherwise exiting businesses.
In response to changes in industry and market conditions, we may be required to strategically realign our resources and consider restructuring, disposing of, or otherwise exiting businesses.
Furthermore, a disruption to our operations or business may cause employee morale and productivity to suffer and may result in unwanted employee attrition. Such disruptions require substantial management time and attention and may divert management from other important work or result in a failure to meet operational targets.
Furthermore, disruption to our operations or business may cause employee morale and productivity to suffer and may result in unwanted employee attrition. Such disruptions require substantial management time and attention and may divert management from other important work or result in a failure to meet operational targets.
This could lead to more variability in our operating results and could have a material adverse effect on our business, operating results and financial condition. Furthermore, particularly in the service provider market, rapid consolidation will lead to fewer customers, with the effect that loss of a major customer could have a material impact on results.
This could lead to more variability in our operating results and could have a material adverse effect on our business, operating results, and financial condition. Furthermore, particularly in the service provider market, rapid consolidation will lead to fewer customers, with the effect that the loss of a major customer could have a material impact on results.
The loss of or a reduction in sales or anticipated sales to our most significant or several of our smaller customers could have a material adverse effect on our business, financial condition, and results of operations. Any system failures or interruptions may cause loss of customers.
The loss of or a reduction in sales or anticipated sales to our most significant or several of our smaller customers could have a material adverse effect on our business, financial condition, and results of operations. Any system failures or interruptions may cause a loss of customers.
The loss of the right to use this third-party software may increase our expenses or impact the provisioning of our services. The failure of this third-party software could materially impact the performance of our services and may cause material harm to our business or results of operations. We depend upon our network providers and facilities infrastructure.
The loss of the right to use this third-party software may increase our expenses or impact the provisioning of our services. The failure of this third-party software could materially impact the performance of our services and may cause material harm to our business or the results of operations. We depend upon our network providers and facilities infrastructure.
For example, in the past, many of our Service Providers’ customers have been materially and adversely affected by slowdowns in the general economy, by overcapacity, by changes in the Service Providers’ market, by regulatory developments, and by constraints on capital availability, resulting in business failures and substantial reductions in spending and expansion plans.
For example, in the past, many of our Service Providers’ customers have been materially and adversely affected by slowdowns in the general economy, overcapacity, changes in the Service Providers’ market, regulatory developments, and constraints on capital availability, resulting in business failures and substantial reductions in spending and expansion plans.
Distributors stock inventory and typically sell to systems integrators, channel partners, and other resellers. We refer to sales through distributors as two-tier system of sales to the end customer. If sales through indirect channels increase, this may lead to greater difficulty in forecasting the mix of our products and, to a degree, the timing of orders from our customers.
Distributors stock inventory and typically sell to systems integrators, channel partners, and other resellers. We refer to sales through distributors as a two-tier system of sales to the end customer. If sales through indirect channels increase, this may lead to greater difficulty in forecasting the mix of our products and, to a degree, the timing of orders from our customers.
We rely on other companies to supply some components of our Mezzanine ™ products and of our network infrastructure and the means to access our network. Certain products and services that we resell and certain components that we require are available only from limited sources.
We rely on other companies to supply some components of our Mezzanine™ products of our network infrastructure and the means to access our network. Certain products and services that we resell and certain components that we require are available only from limited sources.
Acquisitions involve numerous risks, including the following: • Difficulties in integrating the operations, systems, technologies, products and personnel of the acquired companies, particularly companies with large and widespread operations and/or complex products; • Diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations resulting from acquisitions; • Potential difficulties in completing projects associated with in-process research and development intangibles; • Difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions; • Initial dependence on unfamiliar supply chains or relatively small supply partners; • Insufficient revenue to offset increased expenses associated with acquisitions; and • The potential loss of key employees, customers, distributors, vendors and other business partners of the companies we acquire following and continuing after announcement of acquisition plans.
Acquisitions involve numerous risks, including the following: • Difficulties in integrating the operations, systems, technologies, products, and personnel of the acquired companies, particularly companies with large and widespread operations and/or complex products; • Diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations resulting from acquisitions; • Potential difficulties in completing projects associated with in-process research and development intangibles; • Difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions; • Initial dependence on unfamiliar supply chains or relatively small supply partners; • Insufficient revenue to offset increased expenses associated with acquisitions; and • The potential loss of key employees, customers, distributors, vendors, and other business partners of the companies we acquire following and continuing after the announcement of acquisition plans.
Moreover, imposition of such taxes on our services going forward will effectively increase the cost of such services to our customers and may adversely affect our ability to retain existing customers or to gain new customers in the areas in which such taxes are imposed.
Moreover, the imposition of such taxes on our services going forward will effectively increase the cost of such services to our customers and may adversely affect our ability to retain existing customers or to gain new customers in the areas in which such taxes are imposed.
The products and services we sell to customers inevitably contain vulnerabilities or critical security defects which have not been remedied and cannot be disclosed without compromising security. We may also make prioritization decisions in determining which vulnerabilities or security defects to fix, and the timing of these fixes, which could result in an exploit that compromises security.
The products and services we sell to customers inevitably contain vulnerabilities or critical security defects that have not been remedied and cannot be disclosed without compromising security. We may also make prioritization decisions in determining which vulnerabilities or security defects to fix and the timing of these fixes, which could result in an exploit that compromises security.
Regardless of the merit of these claims, they can be time-consuming, result in costly litigation, and where claims are made by customers, resistance even to unmeritorious claims could damage customer relationships.
Regardless of the merit of these claims, they can be time-consuming and result in costly litigation, and where claims are made by customers, resistance even to unmeritorious claims could damage customer relationships.
In addition, some open-source licenses appear to be permissive in that internal use of the open source software is allowed, but prohibit commercial uses, or treat provision of cloud services as triggering the requirement to make proprietary software publicly available.
In addition, some open-source licenses appear to be permissive in that internal use of the open-source software is allowed but prohibit commercial uses or treat the provision of cloud services as triggering the requirement to make proprietary software publicly available.
Additionally, recently, securities of certain companies have experienced significant and extreme volatility in stock price due short sellers of shares of common stock, known as a “short squeeze.” These short squeezes have caused extreme volatility in those companies and in the market and have led to the price per share of those companies to trade at a significantly inflated rate that is disconnected from the underlying value of the company.
Additionally, recently, securities of certain companies have experienced significant and extreme volatility in stock price due to short sellers of shares of common stock, known as a “short squeeze.” These short squeezes have caused extreme volatility in those companies and in the market and have led to the price per share of those companies to trade at a significantly inflated rate that is disconnected from the underlying value of the company.
Many investors who have purchased shares in those companies at an inflated rate face the risk of losing a significant portion of their original investment as the price per share has declined steadily as interest in those stocks have abated.
Many investors who have purchased shares in those companies at an inflated rate face the risk of losing a significant portion of their original investment as the price per share has declined steadily as interest in those stocks has abated.
The market price for our common stock may be influenced by many factors, including the following: • conversions of Series F Preferred Stock into common stock and the subsequent sales of common stock; • investor reaction to our business strategy; • the success of competitive products or technologies; • our ability to comply with the continued listing standards of the Nasdaq Capital Market; • regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our products; • variations in our financial results or those of companies that are perceived to be similar to us; • our ability or inability to raise additional capital and the terms on which we raise it; • declines in the market prices of stocks generally; • trading volume of our common stock; • conversions of Series F Preferred Stock into common stock and the subsequent sales of common stock; • sales of our common stock by us or our stockholders; • general economic, industry and market conditions; -20- • the transformation of our business to deliver more software and subscriptions offerings where revenue is recognized over time; • fluctuations in demand for our products and services, especially with respect to distributors and partners, in part due to changes in the global economic environment; • the introduction and market acceptance of new technologies and products, and our success in new evolving markets, and in emerging technologies, as well as the adoption of new standards; • the ability of our customers, channel partners, contract manufacturers and suppliers to obtain financing or to fund capital expenditures, especially during a period of global credit market disruption or in the event of customer, channel partner, contract manufacturer or supplier financial problem; • the overall movement toward industry consolidation among both our competitors and our customers; • changes in sales and implementation cycles for our products and reduced visibility into our customers’ spending plans and associated revenue; • the timing, size and mix of orders from customers; • manufacturing and customer lead times; • how well we execute on our strategy and operating plans and the impact of changes in our business model that could result in significant restructuring charges; • our ability to achieve targeted cost reductions; • benefits anticipated from our investments; • changes in tax law or accounting rules, or interpretations thereof; • actual events, circumstances, outcomes and amounts differing from judgments, assumptions and estimates used in determining the values of certain assets (including the amounts of related valuation allowances), liabilities, and other items reflected in our Consolidated Financial Statements; • other events or factors, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues including health epidemics or pandemics, such as the outbreak of COVID-19, and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather and climate conditions, whether occurring in the United States or elsewhere, could disrupt our operations, disrupt the operations of our suppliers or result in political or economic instability; and • the failure of any bank and the resulting economic uncertainty caused by such failures.
The market price for our common stock may be influenced by many factors, including the following: • conversions of Series F Preferred Stock into common stock and the subsequent sales of common stock; • investor reaction to our business strategy; • the success of competitive products or technologies; • our ability to comply with the continued listing standards of the Nasdaq Capital Market; • regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our products; • variations in our financial results or those of companies that are perceived to be similar to us; • our ability or inability to raise additional capital and the terms on which we raise it; • declines in the market prices of stocks generally; • the trading volume of our common stock; • conversions of Series F Preferred Stock into common stock and the subsequent sales of common stock; • sales of our common stock by us or our stockholders; • general economic, industry, and market conditions; • the transformation of our business to deliver more software and subscription offerings where revenue is recognized over time; • fluctuations in demand for our products and services, especially with respect to distributors and partners, in part due to changes in the global economic environment; • the introduction and market acceptance of new technologies and products, and our success in new evolving markets and in emerging technologies, as well as the adoption of new standards; • the ability of our customers, channel partners, contract manufacturers, and suppliers to obtain financing or to fund capital expenditures, especially during a period of global credit market disruption or in the event of a customer, channel partner, contract manufacturer, or supplier financial problem; • the overall movement toward industry consolidation among both our competitors and our customers; • changes in sales and implementation cycles for our products and reduced visibility into our customers’ spending plans and associated revenue; • the timing, size, and mix of orders from customers; • manufacturing and customer lead times; • how well we execute our strategy and operating plans and the impact of changes in our business model that could result in significant restructuring charges; • our ability to achieve targeted cost reductions; • benefits anticipated from our investments; • changes in tax law or accounting rules, or interpretations thereof; • actual events, circumstances, outcomes, and amounts differing from judgments, assumptions, and estimates used in determining the values of certain assets (including the amounts of related valuation allowances), liabilities, and other items reflected in our Consolidated Financial Statements; • other events or factors, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues including health epidemics or pandemics, such as the outbreak of COVID-19, and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather and climate conditions, whether occurring in the United States or elsewhere, could disrupt our operations, disrupt the operations of our suppliers or result in political or economic instability; and • the failure of any bank and the resulting economic uncertainty caused by such failures.
Additionally, our level of product gross margins could decline in future periods due to adverse impacts from other factors including: • Changes in customer, geographic or product mix, including mix of configurations within each product group; • Introduction of new products, including products with price-performance advantages, and new business models including the transformation of our business to deliver more software and subscription offerings; • Our ability to reduce production costs; • Entry into new markets or growth in lower margin markets, including markets with different pricing and cost structures, through acquisitions or internal development; • Sales discounts; • Increases in material, labor or other manufacturing-related costs, which could be significant especially during periods of supply constraints such as those impacting the market for memory components; • Excess inventory, inventory holding charges and obsolescence charges; • Changes in shipment volume; • The timing of revenue recognition and revenue deferrals; • Increased cost (including those caused by tariffs), loss of cost savings or dilution of savings due to changes in component pricing or charges incurred due to inventory holding periods if parts ordering does not correctly anticipate product demand or if the financial health of either contract manufacturers or suppliers deteriorates; • Lower than expected benefits from value engineering; • Increased price competition; • Changes in distribution channels; • Increased warranty or royalty costs; • Increased amortization of purchased intangible assets; and • Our success in executing on our strategy and operating plans.
Additionally, our level of product gross margins could decline in future periods due to adverse impacts from other factors, including: • Changes in customer, geographic, or product mix, including a mix of configurations within each product group; • Introduction of new products, including products with price-performance advantages, and new business models, including the transformation of our business to deliver more software and subscription offerings; • Our ability to reduce production costs; • Entry into new markets or growth in lower margin markets, including markets with different pricing and cost structures, through acquisitions or internal development; • Sales discounts; • Increases in material, labor, or other manufacturing-related costs, which could be significant, especially during periods of supply constraints such as those impacting the market for memory components; • Excess inventory, inventory holding charges, and obsolescence charges; • Changes in shipment volume; • The timing of revenue recognition and revenue deferrals; • Increased cost (including those caused by tariffs), loss of cost savings or dilution of savings due to changes in component pricing or charges incurred due to inventory holding periods if parts ordering does not correctly anticipate product demand or if the financial health of either contract manufacturers or suppliers deteriorates; • Lower than expected benefits from value engineering; • Increased price competition; • Changes in distribution channels; • Increased warranty or royalty costs; • Increased amortization of purchased intangible assets; and • Our success in executing our strategy and operating plans.
In addition, Nasdaq Listing Rule 5810(c)(3)(A)(iv) states that any listed company that fails to meet Listing Rule 5810(c)(3)(A) after effecting one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one, then the company will not be eligible for an automatic 180-day grace compliance period and the Nasdaq Listing Qualifications Department is obligated to immediately issue a delisting determination.
In addition, Nasdaq Listing Rule 5810(c)(3)(A)(iv) states that any listed company that fails to meet Listing Rule 5810(c)(3)(A) after effecting one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one will not be eligible for an automatic 180-day grace compliance period and the Nasdaq Listing Qualifications Department is obligated to immediately issue a delisting determination.
An adverse outcome as a defendant in any such litigation may result in impacts to the Company including, but not limited to: -18- • Payment of substantial damages; • Diversion of technical and management personnel; • Cessation of the use, development, or sale of services that infringe upon patented intellectual property; • Entrance into license agreements; and • Expending significant resources to develop or acquire a non-infringing technology.
An adverse outcome as a defendant in any such litigation may result in impacts to the Company including, but not limited to: • Payment of substantial damages; • Diversion of technical and management personnel; • Cessation of the use, development, or sale of services that infringe upon patented intellectual property; • Entrance into license agreements; and • Expending significant resources to develop or acquire a non-infringing technology.
Our common stock is presently subject to these regulations, which impose additional sales -21- practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with a net worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse).
Our common stock is presently subject to these regulations, which impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with a net worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse).
To operate more efficiently and control costs, we have undertaken cost-savings initiatives, which have included a cessation of R&D activities, workforce reductions and other cost reduction initiatives. If we do not successfully manage our current cost-savings activities, our expected efficiencies, benefits and cost savings might be delayed or not realized, and our operations and business could be disrupted.
To operate more efficiently and control costs, we have undertaken cost-saving initiatives, which have included a cessation of R&D activities, workforce reductions, and other cost-reduction initiatives. If we do not successfully manage our current cost-saving activities, our expected efficiencies, benefits, and cost savings might be delayed or not realized, and our operations and business could be disrupted.
Acquisitions may also cause us to: • Issue common stock that would dilute our current shareholders’ percentage ownership; • Use a substantial portion of our cash resources, or incur debt; • Significantly increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition; • Assume liabilities; • Record goodwill and intangible assets that are subject to impairment testing on a regular basis and potential periodic impairment charges’ • Incur amortization expenses related to certain intangible assets; • Incur tax expenses related to the effect of acquisitions on our legal structure; • Reduce the utilization of, and the timing of utilization, of the federal and state net operating loss carryforwards; • Incur large write-offs and restructuring and other related expenses; or • Become subject to intellectual property or other litigation.
Acquisitions may also cause us to: • Issue common stock that would dilute our current shareholders’ percentage ownership; • Use a substantial portion of our cash resources or incur debt; • Significantly increase our interest expense, leverage, and debt service requirements if we incur additional debt to pay for an acquisition; • Assume liabilities; • Record goodwill and intangible assets that are subject to impairment testing on a regular basis and potential periodic impairment charges • Incur amortization expenses related to certain intangible assets; • Incur tax expenses related to the effect of acquisitions on our legal structure; • Reduce the utilization of, and the timing of utilization, of the federal and state net operating loss carryforwards; • Incur large write-offs and restructuring and other related expenses; or • Become subject to intellectual property or other litigation.
While Nasdaq rules do not impose a specific limit on the number of times a listed company may effect a reverse stock split to maintain or regain compliance with Listing Rule 5810(c)(3)(A), Nasdaq has stated that a series of reverse stock splits may -23- undermine investor confidence in securities listed on Nasdaq.
While Nasdaq rules do not impose a specific limit on the number of times a listed company may effect a reverse stock split to maintain or regain compliance with Listing Rule 5810(c)(3)(A), Nasdaq has stated that a series of reverse stock splits may undermine investor confidence in securities listed on Nasdaq.
A customer may take actions that affect the Company for reasons that we cannot anticipate or control, such as reasons related to the customer’s financial condition, changes in the customer’s business strategy or operations, changes in technology and the introduction of alternative competing products, or as the result of the perceived quality or cost-effectiveness of our products.
A customer may take actions that affect the Company for reasons that we cannot anticipate or control, such as reasons related to the customer’s financial condition, changes in the customer’s business strategy or operations, changes in technology, and the introduction of alternative competing products, or as the result of the perceived quality or cost-effectiveness of our products or services.
We may also become subject to tax audits or similar procedures in states where we already pay -16- sales and use taxes. The assessment of taxes, interest, and penalties as a result of audits, litigation, or otherwise could be materially adverse to our current and future results of operations and financial condition.
We may also become subject to tax audits or similar procedures in states where we already pay sales and use taxes. The assessment of taxes, interest, and penalties as a result of audits, litigation, or otherwise could be materially adverse to our current and future results of operations and financial condition.
Factors that cause fluctuation in our results of operations include lack of revenue growth or declines in revenue and declines in gross margins and increases in operating expenses. Accordingly, it is possible that in one or more future quarters our operating results will be adversely affected and fall below the expectations of securities analysts and investors.
Factors that cause fluctuation in our results of operations include a lack of revenue growth or declines in revenue, declines in gross margins, and increases in operating expenses. Accordingly, it is possible that in one or more future quarters, our operating results will be adversely affected and fall below the expectations of securities analysts and investors.
Companies -11- that are strategic alliance partners in some areas of our business may acquire or form alliances with our competitors, thereby reducing their business with us. We believe that industry consolidation may result in stronger competitors that are better able to compete as sole-source vendors for customers.
Companies that are strategic alliance partners in some areas of our business may acquire or form alliances with our competitors, thereby reducing their business with us. We believe that industry consolidation may result in stronger competitors that are better able to compete as sole-source vendors for customers.
Systems integrators and channel partners typically sell directly to end users and often provide -13- system installation, technical support, professional services, and other support services in addition to network equipment sales. Systems integrators also typically integrate our products into an overall solution, and a number of service providers are also systems integrators.
Systems integrators and channel partners typically sell directly to end users and often provide system installation, technical support, professional services, and other support services in addition to network equipment sales. Systems integrators also typically integrate our products into an overall solution, and a number of service providers are also systems integrators.
Certain significant components of our solutions incorporate or are based upon open-source software, and we may incorporate open-source software into other solutions in the future. Such open-source software is generally licensed under open-source licenses, including, for example, the GNU General Public -19- License, the GNU Lesser General Public License, "Apache-style" licenses, "BSD-style" licenses and other open-source licenses.
Certain significant components of our solutions incorporate or are based upon open-source software, and we may incorporate open-source software into other solutions in the future. Such open-source software is generally licensed under open-source licenses, including, for example, the GNU General Public License, the GNU Lesser General Public License, "Apache-style" licenses, "BSD-style" licenses, and other open-source licenses.
Specifically, our Managed Services revenue has suffered due to a -7- significant loss of customers and a decrease in demand for our offerings. This downturn can be attributed to the fiercely competitive landscape of our industry, where we face intense pressure to lower prices to remain competitive.
Specifically, our Managed Services revenue has suffered due to a significant loss of customers and a decrease in demand for our offerings. This downturn can be attributed to the fiercely competitive landscape of our industry, where we face intense pressure to lower prices to remain competitive.
Vulnerabilities and critical security defects, prioritization errors in remedying vulnerabilities or security defects, failure of third-party providers to remedy vulnerabilities or security defects, or customers not deploying security releases or deciding not to -17- upgrade products, services or solutions could result in claims of liability against us, damage our reputation or otherwise harm our business.
Vulnerabilities and critical security defects, prioritization errors in remedying vulnerabilities or security defects, failure of third-party providers to remedy vulnerabilities or security defects, or customers not deploying security releases or deciding not to upgrade products, services, or solutions could result in claims of liability against us, damage our reputation or otherwise harm our business.
In such event, it would become more difficult to dispose of, or obtain accurate price quotations for, our Common Stock, and there would likely be a reduction in our coverage by security analysts and the news media, which could cause the price of our Common Stock to decline further.
In such an event, it would become more difficult to dispose of or obtain accurate price quotations for our Common Stock, and there would likely be a reduction in our coverage by security analysts and the news media, which could cause the price of our Common Stock to decline further.
There can be no assurance that we will successfully identify new product and services opportunities, develop and bring new products and services to market in a timely manner, or achieve market acceptance of our products and services or that products, services and technologies developed by others will not render our products, services or technologies obsolete or noncompetitive.
There can be no assurance that we will successfully identify new product and service opportunities, develop and bring new products and services to market in a timely manner, or achieve market acceptance of our products and services or that products, services, and technologies developed by others will not render our products, services or technologies obsolete or noncompetitive.
Penny stock regulations may impose certain restrictions on the marketability of our securities. The SEC has adopted regulations which generally define a “penny stock” to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions.
Penny stock regulations may impose certain restrictions on the marketability of our securities. The SEC has adopted regulations that generally define a “penny stock” to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions.
We cannot assure you that we will have sufficient funds available to invest in sales and marketing and continued product development in order to achieve revenue growth. We have a history of substantial net operating losses and we may incur future net losses. We reported substantial net losses in recent years.
We cannot assure you that we will have sufficient funds available to invest in sales and marketing and product development in order to achieve revenue growth. We have a history of substantial net operating losses and may incur future losses. We reported substantial net losses in recent years.
Our future success will depend in large part upon our ability to identify demand trends in the markets in which we operate, and to quickly develop or acquire, and build and sell products that satisfy these demands in a cost-effective manner.
Our future success will depend in large part upon our ability to identify demand trends in the markets in which we operate and to quickly develop, acquire, build, and sell products that satisfy these demands in a cost-effective manner.
Additionally, the laws of some foreign countries may not protect our proprietary rights to the same extent as do the laws of the United States. The outcome of any actions taken in these foreign countries may be different than if such actions were determined under the laws of the United States.
Additionally, the laws of some foreign countries may not protect our proprietary rights to the same extent as the laws of the United States. The outcome of any actions taken in these foreign countries may be different than if such actions were determined under the laws of the United States.
As a result of one or more of these factors, we may increase our hiring in -14- geographic areas outside the United States, which could subject us to additional geopolitical and exchange rate risk.
As a result of one or more of these factors, we may increase our hiring in geographic areas outside the United States, which could subject us to additional geopolitical and exchange rate risk.
Failure to manage and successfully integrate acquisitions could materially harm our business and operating results. Prior acquisitions have resulted in a wide range of outcomes, from successful introduction of new products and technologies to a failure to do so.
Failure to manage and successfully integrate acquisitions could materially harm our business and operating results. Prior acquisitions have resulted in a wide range of outcomes, from the successful introduction of new products and technologies to a failure to do so.
Although certain industry analysts project significant growth for this market, their projections may not be realized. Our future growth depends on broad acceptance and adoption of collaboration technologies and services.
Although certain industry analysts project significant growth for this market, their projections may not be realized. Our future growth depends on the broad acceptance and adoption of collaboration technologies and services.
We operate in a highly competitive, quickly changing environment, and our future success depends on our ability to develop or acquire, and introduce, new products that achieve broad market acceptance.
We operate in a highly competitive, quickly changing environment, and our future success depends on our ability to develop, acquire, and introduce new products that achieve broad market acceptance.
While our common stock has recently experienced increased trading volume, we cannot ensure that this level of trading volume will continue, or that the increased trading volumes will lessen the historic volatility in the price for our common stock.
While our common stock has recently experienced increased trading volume, we cannot ensure that this level of trading volume will continue or that the increased trading volumes will lessen the historic volatility in the price of our common stock.
In the event that we are unable to establish compliance, or again become non-compliant, with Rule 5550(a)(2) or other continued listing requirements of Nasdaq and cannot re-establish compliance within the required timeframe, our Common Stock could be delisted from The Nasdaq Capital Market, which could have a material adverse effect on our financial condition and which may cause the value of our Common Stock to decline.
In the event that we again become non-compliant with Rule 5550(a)(2) or other continued listing requirements of Nasdaq and cannot re-establish compliance within the required timeframe, our Common Stock could be delisted from The Nasdaq Capital Market, which could have a material adverse effect on our financial condition and which may cause the value of our Common Stock to decline.
Vendors of services, like us, are typically held responsible by taxing authorities for the collection and payment of any applicable sales taxes and federal fees. If one or more taxing authorities determines that taxes should have, but have not, been paid with respect to our services, we may be liable for past taxes in addition to taxes going forward.
Vendors of services, like us, are typically held responsible by taxing authorities for the collection and payment of any applicable sales taxes and federal fees. If one or more taxing authorities determine that taxes should have, but have not, been paid with respect to our services, we may be liable for past taxes in addition to taxes going forward.
T he products and services we sell to customers, and our servers, data centers and the cloud-based solutions on which our data, and data of our customers, suppliers and business partners are stored, are vulnerable to improper functioning, cyber-attacks, data incidents, malware, and similar disruptions from unauthorized access or tampering by malicious actors or inadvertent error.
The products and services we sell to customers, and our servers, data centers, and the cloud-based solutions on which our data, and the data of our customers, suppliers, and business partners are stored, are vulnerable to improper functioning, cyber-attacks, data incidents, malware, and similar disruptions from unauthorized access or tampering by malicious actors or inadvertent error.
To the extent that we raise additional capital by issuing equity securities, the terms of such an issuance may cause more significant dilution to our -22- stockholders’ ownership, and the terms of any new equity securities may have preferences over the combined organization’s common stock. Any debt financing we enter into may involve covenants that restrict our operations.
To the extent that we raise additional capital by issuing equity securities, the terms of such issuance may cause more significant dilution to our stockholders’ ownership, and the terms of any new equity securities may have preferences over the combined organization’s common stock. Any debt financing we enter into may involve covenants that restrict our operations.
The Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023 have been prepared assuming that the Company will continue as a going concern. We have experienced declines in revenue in recent fiscal years and we have incurred net losses.
The Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2024, have been prepared assuming that the Company will continue as a going concern. We have experienced revenue declines in recent fiscal years and incurred net losses.
We will also need to respond effectively to new product announcements by our competitors by quickly introducing competitive products. -8- In addition, we may not be able to successfully manage integration of any new product lines with our existing products. Selling new product lines in new markets will require our management to explore different strategies in order to be successful.
We will also need to respond effectively to new product announcements by our competitors by quickly introducing competitive products. In addition, we may not be able to successfully manage the integration of any new product lines with our existing products. Selling new product lines in new markets will require our management to explore different strategies in order to be successful.
Our business activities will require additional financing that might not be obtainable on acceptable terms, if at all, which could have a material adverse effect on our financial condition, liquidity and our ability to operate as a going concern in the future.
Our business activities will require additional financing that might not be obtainable on acceptable terms, if at all. This could have a material adverse effect on our financial condition, liquidity, and ability to operate as a going concern in the future.
Our competitors offer services similar both on a bundled and unbundled basis, creating a highly competitive environment with pressure on pricing of such services. Barriers to entry are relatively low, and new ventures to create products that do or could compete with our products are regularly formed.
Our competitors offer similar services on a bundled and unbundled basis, creating a highly competitive environment with pressure on the pricing of such services. Barriers to entry are relatively low, and new ventures to create products that do or could compete with our products are regularly formed.
Our success depends on our ability to recruit and retain adequate engineering talent. The market for our products and services are characterized by rapidly changing technology. The pressure to innovate and stay ahead of our competitors requires an investment in talent. Specifically, competing successfully in this market depends on our ability to recruit and retain adequate engineering talent.
Our success depends on our ability to recruit and retain adequate engineering talent. The market for our products and services is characterized by rapidly changing technology. The pressure to innovate and stay ahead of our competitors requires an investment in talent. Specifically, competing successfully in this market depends on our ability to recruit and retain adequate engineering talent.
Customers also need to test security releases before they can be deployed which can delay implementation. In addition, we rely on third-party providers of software and cloud-based service, and we cannot control the rate at which they remedy vulnerabilities.
Customers also need to test security releases before they can be deployed, which can delay implementation. In addition, we rely on third-party providers of software and cloud-based services, and we cannot control the rate at which they remedy vulnerabilities.
Revenue growth and increase in the market share of our current product offerings depends on successful adoption of our Mezzanine ™ product offerings with our channel partners, which requires sufficient sales, marketing, and product development funding. Our goal is to grow revenue from an increase in adoption of our product offerings.
Revenue growth and an increase in the market share of our current product offerings depend on the successful adoption of our Mezzanine ™ product offerings with our channel partners, which requires sufficient sales, marketing, and product development funding. Our goal is to grow revenue from an increase in adoption of our product offerings.
Any future disposition of assets and business could have material and adverse effect on business, financial conditions, and operations, if not consummated in a timely manner. As part of our corporate strategy, our management considers and evaluates opportunities involving dispositions of assets and business.
Any future disposition of assets and business could have material and adverse effects on business, financial conditions, and operations if not consummated in a timely manner. As part of our corporate strategy, our management considers and evaluates opportunities involving dispositions of assets and business.
Historically, we have seen fluctuations in our gross margins based on changes in the balance of our distribution channels. There can be no assurance that changes in the balance of our distribution model in future periods would not have an adverse effect on our gross margins and profitability.
Historically, we have seen fluctuations in our gross margins based on changes in the balance of our distribution channels. There can be no assurance that changes in the balance of our distribution model in future periods will not have an adverse effect on our gross margins and profitability.
These provisions could also make it difficult for stockholders to elect directors that are not nominated by the current members of the board of directors or take other corporate actions, including effecting changes in the Company’s management.
These provisions could also make it difficult for stockholders to elect directors who are not nominated by the current members of the board of directors or take other corporate actions, including effecting changes in the Company’s management.
The collaboration industry is highly competitive and includes large, well-financed participants. Some of our competitors compete across many of our product lines, while others are primarily focused in a specific product area.
The collaboration industry is highly competitive and includes large, well-financed participants. Some of our competitors compete across many of our product lines, while others are primarily focused on a specific product area.
Our analysis indicates that the reduced demand for our Mezzanine™ products, particularly in the aftermath of COVID-19, reflects a broader reassessment among our customers regarding the necessity and investment in collaboration solutions tailored for traditional office environments. Should this trend of reevaluation and reduced demand continue, it poses a significant risk of further revenue decline for our Company.
Our analysis indicates that the reduced demand for our Mezzanine™ products, particularly in the aftermath of COVID-19, reflects a broader reassessment among our customers regarding the necessity and investment in collaboration solutions tailored for traditional office environments. Should this trend of reevaluation and reduced demand continue, our company faces a significant risk of further revenue decline.
In addition, vendors may be under pressure to allocate product to certain customers for business, regulatory or political reasons, and/or demand changes in agreed pricing as a condition of supply.
In addition, vendors may be under pressure to allocate products to certain customers for business, regulatory, or political reasons and/or demand changes in agreed pricing as a condition of supply.
We also seek to protect our proprietary intellectual property, including intellectual property that may not be patented or patentable, in part by confidentiality agreements. We cannot ensure that these agreements will not be breached, that we will have adequate remedies for any breach or that such persons will not assert rights to intellectual property arising out of these relationships.
We also seek to protect our proprietary intellectual property, including intellectual property that may not be patented or patentable, in part through confidentiality agreements. However, we cannot ensure that these agreements will not be breached, that we will have adequate remedies for any breach, or that such persons will not assert rights to intellectual property arising out of these relationships.
If we were unable to access all or a significant portion of the amounts we have deposited at financial institutions for any extended period of time, we may not be able to pay our operational expenses or make other payments until we are able to move our funds to accounts at one or more other financial institutions, which process could cause a temporary delay in making payments to our vendors and employees and cause other operational challenges.
If we are unable to access all or a significant portion of the amounts we have deposited at financial institutions for any extended period of time, we may not be able to pay our operational expenses or make other payments until we are able to move our funds to accounts at one or more other financial institutions, which process could cause a temporary delay in making payments to our vendors and employees and cause other operational challenges. -21- Table of Contents
If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition, and results of operations.
If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “ 1940 Act ” ), applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition, and results of operations.
There can be no guarantee that our stock price will remain at current prices or that future sales of our common stock will not be at prices lower than those sold to investors. Throughout much of our corporate history, our common stock has been thinly traded, and therefore has therefore been susceptible to wide price swings.
There can be no guarantee that our stock price will remain at current prices or that future sales of our common stock will not be at prices lower than those sold to investors. -18- Table of Contents Throughout much of our corporate history, our common stock has been thinly traded, and therefore has therefore been susceptible to wide price swings.
Supply chain issues, including financial problems of contract manufacturers or component suppliers, or a shortage of adequate component supply or manufacturing capacity that increase our costs or cause a delay in our ability to fulfill orders, could have an adverse impact on our business and operating results, and our failure to estimate customer demand properly may result in excess or obsolete component supply, which could adversely affect our gross margins.
Supply chain issues, including financial problems of contract manufacturers or component suppliers or a shortage of adequate component supply or manufacturing capacity that increases our costs or causes a delay in our ability to fulfill orders, could have an adverse impact on our business and operating results, and our failure to estimate customer demand properly may result in excess or obsolete component supply, which could adversely affect our gross margins.
These provisions include: • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on its board of directors; • the requirement that a special meeting of stockholders may be called only by the chairman of our board of directors or a majority of our board of directors, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; • the ability of our board of directors, by majority vote, to amend the Company’s amended and restated bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the amended and restated bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company.
These provisions include: • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death, or removal of a director, which prevents stockholders from being able to fill vacancies on its board of directors; • the requirement that a special meeting of stockholders may be called only by the chairman of our board of directors or a majority of our board of directors, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; • the ability of our board of directors, by majority vote, to amend the Company’s amended and restated bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the amended and restated bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company. -20- Table of Contents We could fail to satisfy the standards to maintain our listing on a stock exchange.
If we are required to collect and pay back taxes and the associated interest and penalties, and if our customers fail or refuse to reimburse us for all or a portion of these amounts, we will have incurred unplanned expenses that may be substantial.
If we are required to collect and pay back taxes and the associated interest and penalties, and if our customers fail or refuse to reimburse us for all or a portion of these amounts, we will incur unplanned expenses that may be substantial.
Although in certain instances our supply agreements allow us the option to cancel, reschedule and adjust our requirements based on our business needs prior to firm orders being placed, our loss contingencies may include liabilities for contracts that we cannot cancel with contract manufacturers and suppliers. -10- We may be unable to realize intended efficiencies and benefits from our ongoing cost-savings initiatives, and which may adversely affect our results of operations, financial condition, or our business.
Although, in certain instances, our supply agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed, our loss contingencies may include liabilities for contracts that we cannot cancel with contract manufacturers and suppliers. -9- Table of Contents We may be unable to realize intended efficiencies and benefits from our ongoing cost-saving initiatives, which may adversely affect our results of operations, financial condition, or our business.
In addition, if we are unable to successfully introduce or acquire new products with higher gross margins, or if we are unable to improve the margins on our existing product lines, our revenue and overall gross margin will likely decline. Product quality problems could lead to reduced revenue, gross margins and higher net losses.
In addition, if we are unable to successfully introduce or acquire new products with higher gross margins or if we are unable to improve the margins on our existing product lines, our revenue and overall gross margin will likely decline. -8- Table of Contents Product quality problems could lead to reduced revenue, gross margins, and higher net losses.
In addition, we depend on our Service Providers globally to comply with applicable regulatory requirements. To the extent that they fail to do so, that could have a material adverse effect on our business, operating results, and financial condition. Inventory management relating to our sales to our two-tier distribution channel is complex, and excess inventory may harm our gross margins.
In addition, we depend on our Service Providers globally to comply with applicable regulatory requirements. To the extent that they fail to do so, that could have a material adverse effect on our business, operating results, and financial condition. Inventory management relating to our sales to our two-tier distribution channel is complex.
Termination of services in our existing agreements typically require a minimum of 30 days’ notice and are subject to early termination penalties equal to the amount of accrued and unpaid charges including the remaining term length multiplied by any fixed monthly fees.
Termination of services in our existing agreements typically requires a minimum of 30 days’ notice and is subject to early termination penalties equal to the amount of accrued and unpaid charges, including the remaining term length multiplied by any fixed monthly fees.
If our customers were to experience losses due to a failure of a depository institution to return their deposits, it could expose us to an increased risk of nonpayment under our contracts with them. In addition, our customers may seek to renegotiate the terms of current agreements or renewals.
If our customers were to experience losses due to a failure of a depository institution to return their deposits, it could expose us to an increased risk of nonpayment under our contracts with them. In addition, our customers may seek to renegotiate the terms of current agreements or renewals, and/or our customers may choose not to renew our services.
For the year ended December 31, 2023, one major customer accounted for 56% of the Company’s total consolidated revenue. The composition of our significant customers will vary from period-to-period, and we expect that most of our revenue will continue, for the foreseeable future, to come from a relatively small number of customers.
For the year ended December 31, 2024, one major customer accounted for 84.9% of the Company’s total consolidated revenue. The composition of our significant customers will vary from period to period, and we expect that most of our revenue will continue, for the foreseeable future, to come from a relatively small number of customers.
We may not be able to diversify sources in a timely manner, which could harm our ability to deliver products to customers and seriously impact present and future sales. -15- We have made and may continue to make acquisitions that could disrupt our operations and harm our operating results.
We may not be able to diversify sources in a timely manner, which could harm our ability to deliver products to customers and seriously impact present and future sales. -13- Table of Contents We have made and may continue to make acquisitions that could disrupt our operations and harm our operating results.
We could fail to satisfy the standards to maintain our listing on a stock exchange. Our Common Stock is listed on The Nasdaq Capital Market. In order to maintain that listing, we must satisfy minimum financial and other continued listing requirements and standards.
Our Common Stock is listed on The Nasdaq Capital Market. In order to maintain that listing, we must satisfy minimum financial and other continued listing requirements and standards.
If we do not adequately ensure our freedom to use certain technology, we may have to pay others for rights to use their intellectual property, pay damages for infringement or misappropriation and/or be enjoined from using such intellectual property.
If we do not adequately ensure our freedom to use certain technologies, we may have to pay others for the right to use their intellectual property, pay damages for infringement or misappropriation, and/or be enjoined from using such intellectual property.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have developed an incident management process designed to coordinate the activities to prepare to respond and recover from cybersecurity incidents, which include processes to triage, assess severity, investigate, escalate, contain, and remediate an incident, as well as to comply with potentially applicable legal obligations and mitigate any reputational damage. -24- Our business strategy, results of operations, and financial condition have not been materially affected as a result of previously identified cybersecurity incidents, but we cannot provide assurance that they will not be materially affected in the future by such risks or any future material incidents.
Biggest changeWe have developed an incident management process designed to coordinate the activities to prepare to respond and recover from cybersecurity incidents, which include processes to triage, assess severity, investigate, escalate, contain, and remediate an incident, as well as to comply with potentially applicable legal obligations and mitigate any reputational damage.
We monitor and evaluate our cybersecurity posture and performance on an ongoing basis through regular network scans, system audits, and assessing intelligence feeds. The results of these assessments are used to improve our security posture through remediation efforts.
We monitor and evaluate our cybersecurity posture and performance on an ongoing basis through regular network scans, system audits, and intelligence feeds. The results of these assessments are used to improve our security posture through remediation efforts.
The Audit Committee oversees the processes over internal controls and financial reporting that includes controls and procedures that are designed to ensure that significant cybersecurity incidents are communicated to both senior management and the Audit Committee.
The Audit Committee oversees the processes over internal controls and financial reporting, including controls and procedures that are designed to ensure that significant cybersecurity incidents are communicated to both senior management and the Audit Committee.
We leverage technical safeguards intended to protect the Company’s information systems from cybersecurity threats, including firewalls, threat monitoring, intrusion prevention and detection systems, anti-malware, access controls, privilege management, network segmentation, asset and end point management, and ongoing system security assessments. We oversee third-party service providers by conducting vendor diligence and reviews on a regular basis.
We leverage technical safeguards intended to protect the Company’s information systems from cybersecurity threats, including firewalls, threat monitoring, intrusion prevention and detection systems, anti-malware, access controls, privilege management, asset and endpoint management, and ongoing system security assessments. We oversee third -party service providers by conducting vendor diligence and reviews on a regular basis.
For more information on our cybersecurity-related risks, see “Item 1A, Risk Factors” in this Annual Report. Governance Oblong’s IT team is responsible for assessing and managing cybersecurity risks and has a depth of experience focused on increasing the organization's resilience to security threats and stays current on new developments through monitoring of the cybersecurity landscape.
For more information on our cybersecurity-related risks, see “Item 1A, Risk Factors” in this Annual Report. Governance Oblong’s Director of IT is responsible for assessing and managing cybersecurity risks. It has extensive experience focused on increasing the organization's resilience to security threats and staying current on new developments by monitoring the cybersecurity landscape.
Oblong’s IT environment is monitored for potential security threats and security events are investigated and acted on to minimize potential risk to the environment. Oblong’s Audit Committee engages in oversight of Oblong's cybersecurity risks and receives regular updates from management on technology and security updates and Oblong’s assessment of cybersecurity threats and mitigation plans.
The team monitors Oblong’s IT environment for potential security threats, investigating and acting on security events to minimize potential risks to the environment. Oblong’s Audit Committee engages in oversight of Oblong's cybersecurity risks and receives regular updates from management on technology and security updates and Oblong’s assessment of cybersecurity threats and mitigation plans.
Added
Our business strategy, results of operations, and financial condition have not been materially affected as a result of previously identified cybersecurity incidents, but we cannot provide assurance that they will not be materially affected in the future by such risks or any future material incidents.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe are currently in the process of securing a warehouse facility in, or around, Denver, CO. During the interim, our inventory is being stored in a secured third party location. With the exception of warehouse space described above, we currently operate out of remote employment sites with a remote office located at 110 16th Street, Suite 1400-1024, Denver, CO 80202.
Biggest changeItem 2. Properties We currently lease warehouse space in a facility in Denver, CO, to store our inventory. With the exception of the warehouse space just described, we currently operate out of remote employment sites with a remote office located at 110 16th Street, Suite 1400-1024, Denver, CO 80202.
Removed
Item 2. Properties As of December 31, 2023, we leased a facility in City of Industry, California, providing warehouse space. This lease expired in February 2024. During 2023, and through the date of this filing, we exited the City of Industry, CA lease as well as leases in Austin, TX and Los Angeles, CA.
Removed
For additional information regarding our obligations under leases, see Note 8 - Operating Lease Liabilities and Right-of-Use Assets to the Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAs of the date hereof, we are not party to any legal proceedings that we currently believe will have a material adverse effect on our business, financial position, results of operations or liquidity.
Biggest changeAs of the date hereof, we are not a party to any legal proceedings that we currently believe will have a material adverse effect on our business, financial position, results of operations, or liquidity.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of March 8, 2024, there were 147 holders of record of our common stock. Equiniti is the transfer agent and registrar of our common stock. Dividends Our board of directors has never declared or paid any cash dividends on our common stock and does not expect to do so for the foreseeable future.
Biggest changeDividends Our board of directors has never declared or paid cash dividends on our common stock and does not expect to do so for the foreseeable future. We intend to retain any earnings to finance the growth and development of our business.
We currently intend to retain any earnings to finance the growth and development of our business. Our -25- board of directors will make any future determination of the payment of dividends based upon conditions then existing, including our earnings, financial condition and capital requirements, as well as such economic and other conditions as our board of directors may deem relevant.
Our board of directors will make any future determination of the payment of dividends based on conditions then existing, including our earnings, financial condition, and capital requirements, as well as such economic and other conditions as our board of directors may deem relevant.
Market Information The Company’s common stock trades on the Nasdaq Capital Market under the symbol “OBLG.” On March 8, 2024, the closing sale price of our common stock was $0.16 per share as reported on the Nasdaq Capital Market, and 16,684,571 shares of our common stock were issued and outstanding.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. Market Information The Company’s common stock trades on the Nasdaq Capital Market under the symbol “OBLG.” As reported on the Nasdaq Capital Market, the closing sale price of our common stock was $3.35 per share on March 14, 2025.
Removed
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Added
As of March 14, 2025, 1,154,926 shares of our common stock were issued and outstanding. As of March 14, 2025, there were 183 holders of record of our common stock. Equiniti is the transfer agent and registrar of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table summarizes the changes in components of our revenue, and the significant changes in revenue are discussed in more detail below (in thousands): Year Ended December 31, 2023 % of Revenue 2022 % of Revenue Revenue: Managed Services Video collaboration services $ 183 5 % $ 334 6 % Network services 2,301 60 % 2,954 54 % Professional and other services 34 1 % 60 1 % Total Managed Services revenue $ 2,518 66 % $ 3,348 61 % Revenue: Collaboration Products Visual collaboration product offerings $ 1,291 34 % $ 2,114 39 % Licensing 1 — % $ 14 — % Total Collaboration Products revenue $ 1,292 34 % $ 2,128 39 % Total consolidated revenue $ 3,810 100 % $ 5,476 100 % Managed Services • The year over year decrease in revenue for video collaboration services is mainly attributable to lower revenue from existing customers (either from reductions in price or level of services) and loss of customers to competition. -28- • The year over year decrease in revenue for network services is mainly attributable to net attrition of customers and lower demand for our services given the competitive environment and pressure on pricing that exists in the network services business. • We expect revenue declines in our Managed Services segment will continue in the future.
Biggest changeThe following table summarizes the changes in components of our revenue, and the significant changes in revenue are discussed in more detail below (in thousands): Year Ended December 31, 2024 % of Revenue 2023 % of Revenue Revenue: Managed Services Network services $ 1,990 84 % $ 2,301 60 % Video collaboration 56 2 % 183 5 % Professional and other services 16 1 % 34 1 % Total Managed Services revenue $ 2,062 87 % $ 2,518 66 % Revenue: Collaboration Products Visual collaboration product offerings $ 316 13 % $ 1,291 34 % Licensing — 0 % 1 0 % Total Collaboration Products revenue $ 316 13 % $ 1,292 34 % Total consolidated revenue $ 2,378 100 % $ 3,810 100 % Managed Services • The decrease in revenue for video collaboration services is mainly attributable to lower revenue from existing customers (either from reductions in price or level of services) and loss of customers to competition. • The decrease in revenue for network services is mainly attributable to the net attrition of customers and lower demand for our services, given the competitive environment and pressure on pricing that exists in the network services business. • For the year ended December 31, 2024, one customer made up 97.9% of Managed Services revenue.
The discussion of results, causes and trends should not be construed to imply any conclusion that such results or trends will necessarily continue in the future. Business We are a provider of patented multi-stream collaboration products and managed services for video collaboration and network solutions.
The discussion of results, causes, and trends should not be construed to imply any conclusion that such results or trends will necessarily continue in the future. Business We are a provider of patented multi-stream collaboration products and managed services for network solutions and video collaboration.
Managed Services for Video Collaboration We provide a range of managed services for video collaboration, from automated to orchestrated, to simplify the user experience in an effort to drive adoption of video collaboration throughout our customers’ enterprise. We deliver our services through a hybrid service platform or as a service layer on top of our customers’ video infrastructure.
Managed Services for Video Collaboration We provide a range of managed services for video collaboration, from automated to orchestrated, to simplify the user experience in an effort to drive the adoption of video collaboration throughout our customers’ enterprise. We deliver our services through a hybrid service platform or as a service layer on top of our customers’ video infrastructure.
The family includes the 200 Series (two display screen), 300 Series (three screen), and 600 Series (six screen). We also sell maintenance and support contracts related to Mezzanine™. Historically, customers have used Mezzanine™ products in traditional office and operating center environments such as conference rooms or other presentation spaces.
The family includes the 200 Series (two display screen), 300 Series (three screen), and 600 Series (six screen). We also sell maintenance and support contracts related to Mezzanine™. Historically, customers have generally used Mezzanine™ products in traditional office and operating center environments such as conference rooms or other presentation spaces.
General and administrative expenses include direct corporate expenses related to costs of personnel in the various corporate support categories, including executive, legal, finance and accounting, human resources and information technology.
General and administrative expenses include primarily direct corporate expenses related to costs of personnel in the various corporate support categories, including executive, legal, finance and accounting, human resources and information technology.
Cost of revenue, exclusive of depreciation and amortization and casualty (gain)/loss, includes all internal and external costs related to the delivery of revenue. Cost of revenue also includes taxes which have been billed to customers.
Cost of revenue, exclusive of depreciation, amortization, and casualty gain, includes all internal and external costs related to the delivery of revenue. Cost of revenue also includes taxes which have been billed to customers.
Mezzanine™ allows m ultiple people to share, control and arrange content simultaneously, from any location, enabling all participants to see the same content in its entirety at the same time in identical formats, resulting in dramatic enhancements to both in-room and virtual videoconference presentations. Applications include video telepresence, laptop and application sharing, whiteboard sharing and slides.
Mezzanine™ allows multiple people to share, control, and arrange content simultaneously from any location, enabling all participants to see the same content in its entirety at the same time in identical formats, resulting in dramatic enhancements to both in-room and virtual videoconference presentations. Applications include video telepresence, laptop and application sharing, whiteboard sharing, and slides.
Our analysis indicates that the reduced demand for our Mezzanine™ products, particularly in the aftermath of COVID-19, reflects a broader reassessment among our customers regarding the necessity and investment in collaboration solutions tailored for traditional office environments. Cost of Revenue (exclusive of depreciation and amortization).
Our analysis indicates that the reduced demand for our Mezzanine™ products, particularly in the aftermath of COVID-19, reflects a broader reassessment among our customers regarding the necessity and investment in collaboration solutions tailored for traditional office environments. -26- Table of Contents Cost of Revenue (exclusive of depreciation and amortization).
Results of Operations Year Ended December 31, 2023 (“2023”) versus Year Ended December 31, 2022 (“2022”) Segment Reporting The Company currently operates in two segments for purposes of segment reporting: (1) “Collaboration Products,” which represents the Oblong Industries business surrounding our Mezzanine™ product offerings and (2) “Managed Services,” which represents the Oblong (formerly Glowpoint) business surrounding managed services for video collaboration and network solutions.
Results of Operations Year Ended December 31, 2024 ( “ 2024 ” ) versus Year Ended December 31, 2023 ( “ 2023 ” ) Segment Reporting The Company currently operates in two segments for purposes of segment reporting: (1) “Collaboration Products,” which represents the Oblong Industries business surrounding our Mezzanine™ product offerings, and (2) “Managed Services,” which represents the Oblong (formerly Glowpoint) business surrounding managed services for network solutions and video collaboration.
Spatial input allows content to be spread across screens, spanning different walls, scalable to an arbitrary number of displays and interaction with our proprietary wand device. Mezzanine™ s ubstantially enhances day-to-day virtual meetings with technology that accelerates decision making, improves communication, and increases productivity.
Spatial input allows content to be spread across screens, spanning different walls, scalable to an arbitrary number of displays, and interact with our proprietary wand device. Mezzanine™ substantially enhances day-to-day virtual meetings with technology that accelerates decision-making, improves communication, and increases productivity.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our consolidated balance sheets as of December 31, 2023 and 2022, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the years ended December 31, 2023 and 2022, and the related notes attached thereto.
Management ’ s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our consolidated balance sheets as of December 31, 2024, and 2023, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years ended December 31, 2024, and 2023, and the related notes attached thereto.
Revenue for these services is recognized ratably over the service period. Deferred revenue, as of December 31, 2023, totaled $158,000 as certain performance obligations were not satisfied as of this date. During the year ended December 31, 2023, the Company recorded $435,000 of revenue that was included in deferred revenue as of December 31, 2022.
Revenue for these services is recognized ratably over the service period. Deferred revenue, as of December 31, 2024, totaled $36,000 as certain performance obligations were not satisfied as of this date. During the year ended December 31, 2024, the Company recorded $132,000 of revenue that was included in deferred revenue as of December 31, 2023.
During the year ended December 31, 2022, the Company recorded $776,000 of revenue that was included in deferred revenue as of December 31, 2021. Revenue recorded over time for the years ended December 31, 2023 and 2022 was $516,000 and $970,000, respectively.
During the year ended December 31, 2023, the Company recorded $435,000 of revenue that was included in deferred revenue as of December 31, 2022. Revenue recorded over time for the years ended December 31, 2024, and 2023 was $156,000 and $516,000, respectively.
Revenue related to professional services is recognized at the time the services are performed. The costs associated with obtaining a customer contract are deferred on our consolidated balance sheet and amortized over the expected life of the customer contract. There was no deferred revenue related to Managed Services as of December 31, 2023.
The costs associated with obtaining a customer contract are deferred on our consolidated balance sheet and amortized over the expected life of the customer contract. There was no deferred revenue related to Managed Services as of December 31, 2024, or December 31, 2023.
The Company’s gross profit as a percentage of revenue was 24% in 2023 compared to 28% in 2022. This decrease in gross profit was primarily due to the decline in gross profit percentage for our Collaboration Products segment. The gross profit as a percentage of revenue for our Collaboration Products segment was 5% in 2023 compared to 22% in 2022.
The Company’s consolidated gross profit as a percentage of revenue was 14% in 2024 compared to 24% in 2023. This decrease was primarily due to the decline in the gross profit percentage for our Collaboration Products segment.
Off-Balance Sheet Arrangements As of December 31, 2023 and 2022, we had no off-balance sheet arrangements. -32- Recent Accounting Pronouncements See the sections titled “Summary of Significant Accounting Policies-Recently adopted accounting pronouncements” and “Recent accounting pronouncements not yet adopted” in Note 1 - Business Description and Significant Accounting Policies to our Consolidated Financial Statements for more information.
Recent Accounting Pronouncements See the sections titled “Summary of Significant Accounting Policies-Recently adopted accounting pronouncements” and “Recent accounting pronouncements not yet adopted” in Note 1 - Business Description and Significant Accounting Policies to our Consolidated Financial Statements for more information.
The Company recognizes revenue using the five-step model as prescribed by Topic 606: • Identification of the contract, or contracts, with a customer; • Identification of the distinct performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when or as the Company satisfies a performance obligation.
The Company recognizes revenue using the five-step model as prescribed by Topic 606: • Identification of the contract, or contracts, with a customer; • Identification of the distinct performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when or as the Company satisfies a performance obligation. -29- Table of Contents The Company’s managed videoconferencing services are offered to our customers on either a usage basis or on a subscription basis.
The Company’s managed videoconferencing services are offered to our customers on either a usage basis or on a subscription basis. Our network services are offered to our customers on a subscription basis. Revenue for these services is generally recognized on a monthly basis as services are performed.
Our network services are offered to our customers on a subscription basis. Revenue for these services is generally recognized on a monthly basis as services are performed. Revenue related to professional services is recognized at the time the services are performed.
There was no cash flow activity related to investing activities for 2023. Net cash provided by financing activities for 2023 was attributable to a private placement resulting in net proceeds of $5,364,000 and warrant exercises resulting in net proceeds of $534,000 (see Note 9 - Capital Stock and Note 10 - Preferred Stock to our Consolidated Financial Statements).
Net cash provided by financing activities for 2024 was $2,381,000 attributable to the exercise of warrants, and the net cash provided by financing activities for 2023 was $5,898,000 attributable to a private placement resulting in net proceeds of $5,364,000 and warrant exercises resulting in net proceeds of (see Note 5 - Capital Stock and Note 6 - Preferred Stock to our Consolidated Financial Statements).
The Company’s visual collaboration products are composed of hardware and embedded software sold as a complete package, and generally include installation and maintenance services. Revenue for hardware and software is recognized upon shipment to the customer.
During the year ended December 31, 2023, the Company recorded $1,000 of revenue that was included in deferred revenue as of December 31, 2022. The Company’s visual collaboration products are composed of hardware and embedded software sold as a complete package and generally include installation and maintenance services. Revenue for hardware and software is recognized upon shipment to the customer.
We provide our customers with i) managed videoconferencing, where we set up and manage customer videoconferences and ii) remote service management, where we provide 24/7 support and management of customer video environments. -26- Managed Services for Network We provide our customers with network solutions that ensure reliable, high-quality and secure traffic of video, data and internet.
We provide our customers with i) managed videoconferencing, where we set up and manage customer videoconferencing, and ii) remote service management, where we provide 24/7 support and management of customer video environments.
In June 2022, the Company discovered that $533,000 of inventory was stolen from the Company’s warehouse in City of Industry, California. During 2022 and 2023, we received recovery payments from our insurance policies of $50,000 and $400,000, respectively, resulting in a net casualty loss of $483,000 in 2022 and a casualty gain of $400,000 in 2023.
In June 2022, the Company discovered that $533,000 of inventory related to our Collaboration Products segment had been stolen from its warehouse in the City of Industry, California. During 2023, we received recovery payments from our insurance policies of $400,000, resulting in a casualty gain of $400,000 in 2023. We do not expect any further recovery of the loss.
The year over year decrease in the Company’s loss from operations is mainly attributable to the reduction in impairment charges and other operating expenses as addressed above. Interest and Other Income, Net . Interest and other income, net in 2023 and 2022 was primarily comprised of interest income related to our cash accounts, partially offset by interest expense.
Depreciation and Amortization . The year-over-year decrease in depreciation and amortization expenses is attributable to the disposition and impairment of certain assets during 2023. Loss from Operations. The year-over-year decrease in the Company’s loss from operations is mainly attributable to the reduction in impairment charges and other operating expenses, as addressed above. Interest and Other Income, Net .
Income Tax Benefit. We recorded income tax expense of $27,000 in 2023 and income tax benefit of $7,000 in 2022 (see Note 15 - Income Taxes to our Consolidated Financial Statements). Liquidity and Capital Resources As of December 31, 2023, we had $5,990,000 of cash and cash equivalents, and $5,498,000 of working capital.
We recorded an income tax expense of $10,000 in 2024, compared to $27,000 in 2023 (see Note 11 - Income Taxes to our Consolidated Financial Statements). -28- Table of Contents Liquidity and Capital Resources As of December 31, 2024, we had $4,965,000 of cash and cash equivalents and $3,997,000 of working capital.
The Company currently operates in two segments: (1) “Collaboration Products,” which represents the business surrounding our Mezzanine™ product offerings, and (2) “Managed Services,” which represents the business surrounding managed services for video collaboration and network solutions.
The Company currently operates in two segments: (1) “Collaboration Products,” which represents the business surrounding our Mezzanine™ product offerings, and (2) “Managed Services,” which represents the business surrounding managed services for network solutions and video collaboration. -23- Table of Contents Mezzanine ™ Product Offerings Our product is called Mezzanine™, a family of turn-key products that enable dynamic and immersive visual collaboration across multi-users, multi-screens, multi-devices, and multi-locations.
Revenue recorded at a period in time for the years ended December 31, 2023 and 2022 was $3,294,000 and $4,506,000, respectively.
Revenue recorded at a period in time for the years ended December 31, 2024, and 2023 was $2,222,000 and $3,294,000, respectively. Off-Balance Sheet Arrangements As of December 31, 2024, and 2023, we had no off-balance sheet arrangements.
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. If we are unable to raise additional capital that may be needed on terms acceptable to us, it could have a material adverse effect on the Company.
We have been able to raise capital in the past to maintain liquidity, but there can be no assurance that we will be successful in raising the necessary capital or that any such offering will be on terms acceptable to the Company.
We believe the pandemic has fundamentally altered the way businesses consider the use of physical office spaces and, consequently, the demand for technologies that enable in-person collaboration within these spaces.
The year-over-year decrease in revenue for our Collaboration Products business is due to lower demand, largely a consequence of the workplace reactions to the COVID-19 pandemic and its prolonged effects. We believe the pandemic has fundamentally altered the way businesses consider the use of physical office spaces and, consequently, the demand for technologies that enable in-person collaboration within these spaces.
For the years ended December 31, 2023 and 2022, we incurred net losses of $4,384,000 and $21,941,000, respectively, and net cash used in operating activities was $2,993,000 and $5,934,000, respectively. Net cash provided by investing activities for 2022 was $19,000, primarily related to the sale of property and equipment.
For the years ended December 31, 2024, and 2023, we incurred net losses of $4,043,000 and $4,384,000, respectively, and net cash used in operating activities was $3,406,200 and $2,993,000, respectively.
We believe additional capital will be required, in the long-term, to fund operations and provide growth capital including potential strategic alternatives and investments in technology, product development and sales and marketing. To access capital to fund operations or provide growth capital, we will need to raise capital in one or more debt and/or equity offerings.
Future Capital Requirements We believe that our existing cash and cash equivalents will be sufficient to fund our operations and meet our working capital requirements into mid-2026. We believe additional capital will be required in the long term to fund operations and provide growth capital, including potential strategic alternatives and investments in technology, product development, and sales and marketing.
Cost of revenue by segment is presented in the following table (in thousands): Year Ended December 31, 2023 2022 Cost of Revenue Managed Services $ 1,671 $ 2,273 Collaboration Products 1,228 1,657 Total cost of revenue $ 2,899 $ 3,930 The year over year decrease in cost of revenue is mainly attributable to lower costs associated with the decrease in revenue during the same period.
Cost of revenue by segment is presented in the following table (in thousands): Year Ended December 31, 2024 2023 Cost of Revenue Managed Services $ 1,337 $ 1,671 Collaboration Products 710 1,228 Total cost of revenue $ 2,047 $ 2,899 Managed Services The cost of revenue for our Managed Services segment remained steady year over year.
Our significant accounting policies are described in Note 1 - Business Description and Significant Accounting Policies to our Consolidated Financial Statements attached hereto. We believe the following critical accounting policies involve the most significant judgments and estimates used in the preparation of our Consolidated Financial Statements.
Critical Accounting Policies We prepare our Consolidated Financial Statements in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Our significant accounting policies are described in Note 1 - Business Description and Significant Accounting Policies to our Consolidated Financial Statements attached hereto.
The year over year decrease in sales and marketing expenses for 2023 compared to 2022 is primarily attributable to lower personnel costs due to reduced headcount and reduced marketing expenses year over year. General and Administrative .
There were no research and development costs for our Managed Services segment for 2024 or 2023. Sales and Marketing . The year-over-year decrease in sales and marketing expenses for our Collaboration Products segment in 2024 compared to 2023 is primarily attributable to lower personnel costs due to reduced headcount and reduced office expenses year-over-year related to leases exited during 2023.
Research and development expenses include internal and external costs related to developing features and enhancements to our existing product offerings.
Research and development expenses include internal and external costs related to developing features and enhancements to our existing product offerings for our Collaboration Products segment. The year-over-year increase in research and development expenses for 2024 compared to 2023 is primarily attributable to the development of features and enhancements to our Mezzanine™ product offerings.
Operating expenses are presented in the following table (in thousands): Year Ended December 31, 2023 2022 $ Change % Change Operating expenses (gains): Research and development $ 20 $ 1,699 $ (1,679) (99) % Sales and marketing 309 1,431 (1,122) (78) % General and administrative 4,870 5,278 (408) (8) % Impairment charges 262 12,740 (12,478) (98) % Casualty (gain) loss, net (400) 483 (883) 100 % Depreciation and amortization 345 1,903 (1,558) (82) % Total operating expenses $ 5,406 $ 23,534 $ (18,128) (77) % Research and Development .
Operating expenses are presented in the following table (in thousands): Year Ended December 31, 2024 2023 $ Change % Change Operating expenses (gain): Research and development $ 155 $ 20 $ 135 675 % Sales and marketing 181 309 (128 ) (41 )% General and administrative 4,197 4,870 (673 ) (14 )% Impairment charges — 262 (262 ) (100 )% Casualty recovery — (400 ) 400 (100 )% Depreciation and amortization — 345 (345 ) (100 )% Total operating expenses $ 4,533 $ 5,406 $ (873 ) (16 )% -27- Table of Contents Research and Development .
Revenue Recognition The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606.
We believe the following critical accounting policies involve the most significant judgments and estimates used in the preparation of our Consolidated Financial Statements. Revenue Recognition The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606.
Collaboration Products • Customers generally use our Mezzanine™ products in traditional office and operating center environments such as conference rooms or other presentation spaces. The year over year decrease in revenue for our Collaboration Products business is due to lower demand, largely a consequence of the work-place reactions to the COVID-19 pandemic and its prolonged effects.
For the year ended December 31, 2023, this same customer made up 84.6% of Managed Services revenue. Collaboration Products • Customers generally use our Mezzanine™ products in traditional office and operating center environments such as conference rooms or other presentation spaces.
See Note 14 - Commitments and Contingencies to our Consolidated Financial Statements for discussion regarding certain additional factors that could impact the Company’s liquidity in the future. -30- Critical Accounting Policies We prepare our Consolidated Financial Statements in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).
If we are unable to raise additional capital that may be needed on terms acceptable to us, it could have a material adverse effect on the Company. See Note 10 - Commitments and Contingencies to our Consolidated Financial Statements for discussion regarding certain additional factors that could impact the Company’s liquidity in the future.
The year over year decrease in general and administrative expenses in 2023 compared to 2022 is mainly attributable to decreases of $344,000 in software license expense, and a $170,000 reduction to bad debt expense. Impairment Charges . The impairment charges in 2023 are primarily attributable to impairment charges of $259,000 related to intangible assets.
The year-over-year decrease in general and administrative expenses in 2024 compared to 2023 is mainly attributable to decreases in personnel costs due to reduced headcount, reduced office expenses related to leases exited in 2023, and reduced stock compensation expense. These reductions were partially offset by $59,000 in severance costs in 2024. Impairment Charges .
Unallocated assets consist of unrestricted cash. Revenue. Total revenue decreased 30.4% for the year ended December 31, 2023 compared to the year ended December 31, 2022.
(7) Unallocated assets in Corporate include cash, prepaid expenses, and accruals that are corporate in nature and don't apply to a single segment. -25- Table of Contents Revenue. Total revenue decreased 37.6% for the year ended December 31, 2024, compared to the year ended December 31, 2023.
For the year ended December 31, 2023, the Company recorded impairment charges of $259,000 on purchased intangible assets. See Note 6 - Intangible Assets and Goodwill for further discussion. The Company recorded impairment Charges of $5,133,000 to purchased intangible assets for the year ended December 31, 2022.
There were no impairment charges recorded for the year ended December 31, 2024. The impairment charges in 2023 are attributable to impairment charges of $259,000 related to intangible assets in our Collaboration Products segment and related to the disposal of property for our Managed Services segment. Casualty Gain.
Removed
Mezzanine™ Product Offerings Our flagship product is called Mezzanine™ , a family of turn-key products that enable dynamic and immersive visual collaboration across multi-users, multi-screens, multi-devices, and multi-locations (see further description of Mezzanine™ in Part I, Item 1).
Added
As discussed below, revenue declines for our Mezzanine™ products are primarily due to lower demand, largely a consequence of the commercial reactions to the COVID-19 pandemic and its prolonged effects. We believe the COVID-19 pandemic fundamentally altered the way businesses consider the use of physical office spaces and, consequently, the demand for technologies that enable in-person collaboration within these spaces.
Removed
As discussed below, sales of our Mezzanine product have been adversely affected by commercial response to the COVID-19 pandemic and its aftermath. Like many technology companies in recent months, we will continue to monitor and manage our costs relative to demand with the goal of growing the Company’s revenue in the future.
Added
Our analysis indicates that the reduced demand for our Mezzanine™ products, particularly in the aftermath of COVID-19 , reflects a broader reassessment among our customers regarding the necessity and investment in collaboration solutions tailored for traditional office environments. Continuation of this trend could cause further declines in our revenue for this business.
Removed
To the extent we believe new investments in product development, marketing, or sales are warranted as a result of changes in market demand, we believe additional capital will be required to fund those efforts and our ongoing operations.
Added
Although we cannot presently quantify the future financial impacts of this trend, such impacts will likely continue to have a material adverse impact on the Company’s consolidated financial condition, results of operations, and cash flows. Managed Services for Network We provide our customers with network solutions that ensure reliable, high-quality, and secure traffic of video, data, and internet.
Removed
Certain information concerning the Company’s segments for the years ended December 31, 2023 and 2022, is presented in the following table (in thousands): Year Ended December 31, 2023 Managed Services Collaboration Products Corporate Total Revenue $ 2,518 $ 1,292 $ — $ 3,810 Cost of revenues 1,671 1,228 — 2,899 Gross profit $ 847 $ 64 $ — $ 911 Gross profit % 34 % 5 % — % 24 % Allocated operating expenses $ 3 $ 481 $ — $ 484 Unallocated operating expenses — — 4,922 4,922 Total operating expenses $ 3 $ 481 $ 4,922 $ 5,406 Income (loss) from operations $ 844 $ (417) $ (4,922) $ (4,495) Interest and other income, net — — (138) (138) Income (loss) before income taxes $ 844 $ (417) $ (4,784) $ (4,357) Income tax expense $ 11 $ 16 $ — $ 27 Net income (loss) $ 833 $ (433) $ (4,784) $ (4,384) Year Ended December 31, 2023 Total assets $ 367 $ 568 $ 5,990 $ 6,925 -27- Year Ended December 31, 2022 Managed Services Collaboration Products Corporate Total Revenue $ 3,348 $ 2,128 $ — $ 5,476 Cost of revenues 2,273 1,657 — 3,930 Gross profit $ 1,075 $ 471 $ — $ 1,546 Gross profit % 32 % 22 % — % 28 % Allocated operating expenses $ 19 $ 18,355 $ — $ 18,374 Unallocated operating expenses — — 5,160 5,160 Total operating expenses $ 19 $ 18,355 $ 5,160 $ 23,534 Income (loss) from operations $ 1,056 $ (17,884) $ (5,160) $ (21,988) Interest and other (income) expense, net 12 (52) — (40) Income (loss) before income taxes $ 1,044 $ (17,832) $ (5,160) $ (21,948) Income tax benefit $ (4) $ (3) $ (7) Net income (loss) $ 1,048 $ (17,829) $ (5,160) $ (21,941) Year Ended December 31, 2022 Total assets $ 752 $ 1,824 $ 3,085 $ 5,661 Unallocated operating expenses in Corporate include costs that are not specific to a particular segment but are general to the group; included are expenses incurred for administrative and accounting staff, general liability and other insurance, professional fees and other similar corporate expenses.
Added
In 2024, we adopted Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.
Removed
This decrease was mainly attributable to an increase in our inventory obsolescence reserve as a percentage of sales in 2023 vs. 2022.
Added
As part of our adoption of ASU 2023-07 and the Chief Operating Decision Maker’s evaluation of segment performance for the year ended December 31, 2024, we updated certain segment information in 2024 and recast certain prior period segment information from 2023 in order to conform with our current period segment presentation. -24- Table of Contents The following table summarizes the key income statement components that we use to evaluate our financial performance on a consolidated and reportable segment basis for the years ended December 31, 2024, and 2023 (in thousands): For the Years Ended December 31, 2024 2023 % Change Revenue Managed Services $ 2,062 $ 2,518 (18 )% Collaboration Products 316 1,292 (76 )% Consolidated $ 2,378 $ 3,810 (38 )% Cost of revenues Managed Services $ 1,337 $ 1,671 (20 )% Collaboration Products 710 1,228 (42 )% Consolidated $ 2,047 $ 2,899 (29 )% Gross Margin Managed Services 35 % 34 % 5 % Collaboration Products (125 )% 5 % (2,617 )% Consolidated 14 % 24 % (42 )% Operating expenses Managed Services (1) $ - $ 3 (100 )% Collaboration Products (2) 341 486 (30 )% Corporate (3) 4,192 4,917 (15 )% Consolidated $ 4,533 $ 5,406 (16 )% Other income (expense), net (4) Managed Services $ (1 ) $ (10 ) 90 % Collaboration Products 16 (18 ) 189 % Corporate 154 166 (7 )% Consolidated 169 138 22 % Net loss before taxes (4,033 ) (4,357 ) (7 )% Income tax expense 10 27 (63 )% Net loss $ (4,043 ) $ (4,384 ) (8 )% As of December 31, 2024 2023 % Change Total assets Managed Services (5) $ 422 $ 613 (31 )% Collaboration Products (6) 285 822 (65 )% Corporate (7) 4,568 5,490 (17 )% Consolidated $ 5,275 $ 6,925 (24 )% (1) There were no operating expenses related to our Managed Service segment in 2024.
Removed
The year over year decrease in research and development expenses for 2023 compared to 2022 is primarily attributable to the ceasing of the majority of R&D activities during late 2022, which resulted in lower personnel costs due to reduced headcount and a reduction in consulting and outsourced labor costs between these periods. -29- Sales and Marketing .
Added
In 2023, the operating expenses for the Managed Services were primarily related to a loss on the sale of property. (2) Operating expenses related to our Collaboration Products Segment include research and development, sales and marketing, bad debt, impairment, and other miscellaneous expenses. In 2023, operating expenses also included a bad debt recovery of $52,000.
Removed
The impairment charges in 2022 are attributable to impairment charges of $7,367,000 related to goodwill, impairment charges of $5,133,000 related to intangible assets, impairment charges of $59,000 related to property and equipment, and impairment charges of $179,000 related to right-of-use assets associated with two of our Los Angeles, CA leases. Casualty Loss (Gain), net.
Added
(3) Corporate operating expenses include costs that are not specific to a particular segment but are general to the group. These include expenses for administrative, information technology, and accounting staff, general liability and other insurance, professional fees, and similar corporate expenses. (4) Other income (expense) for our segments includes interest expense and non-operating income.
Removed
We do not expect any further recovery of the loss. Depreciation and Amortization . The year over year decrease in depreciation and amortization expenses in 2023 compared to 2022 is attributable to the disposition and impairment of certain assets during 2022 and 2023. Loss from Operations.
Added
Corporate other income includes interest income on our cash and cash equivalents. (5) Managed Services assets include cash equivalents, accounts receivable, and prepaid expenses, which are primarily current. (6) Collaboration Products' assets include cash equivalents, accounts receivable, prepaid expenses, and inventory, which are primarily current.
Removed
There was no cash flow related to financing activities for 2022. Future Capital Requirements We believe that our existing cash and cash equivalents will be sufficient to fund our operations and meet our working capital requirements for at least the next 12 months from the filing date of this Report with the SEC.
Added
In 2024, the cost of revenue was 65% of its revenue, compared to 66% in 2023. Collaboration Products As a percentage of sales, the cost of revenue for the Collaboration Products segment was 225% in 2024, compared to 95% in 2023.
Removed
During the year ended December 31, 2023, the Company recorded $1,000 of revenue that was included in deferred revenue as of December 31, 2022. During the year ended December 31, 2022, the Company recorded $7,000 of revenue that was included in deferred revenue as of December 31, 2021.
Added
The year-over-year increase in the cost of revenue for our Collaborations Products segment is primarily related to the larger relative charges related to obsolete inventory.
Removed
Long-Lived Assets and Intangible Assets Intangible Assets Intangible assets are accounted for in accordance with ASC Topic 350 “ Intangibles - Goodwill and Other” (“ASC Topic 350”), and intangible assets with finite lives are amortized using the straight-line method over the estimated economic lives of the assets, which initially ranged from five to twelve years.
Added
During the year ended December 31, 2023, the Company recorded charges related to obsolete inventory of $239,000 and inventory disposals of $103,000, compared to charges related to obsolete inventory of $191,000, partially offset by severance costs of $30,000 for the year ended December 31, 2024.
Removed
Intangible assets, net of accumulated amortization totaled zero and $604,000 as of December 31, 2023 and 2022, respectively. -31- Operating Lease Right-of-use-assets Right-of-use Assets are accounted for in accordance with ASC Topic 842 “Leases” (“ASC Topic 842”), and are amortized using a straight-line method over the estimated life of the lease.
Added
As of December 31, 2024, the Company has recorded a full reserve against our inventory on hand, resulting in zero net inventory. Consolidated The year-over-year decrease in the cost of revenue is mainly due to lower costs associated with the revenue decrease during the same period and reduced personnel expenses related to cost-cutting measures.
Removed
Right-of-use assets, net totaled $17,000 and $142,000, as of December 31, 2023 and 2022, respectively. During 2022 and 2023, the Company leased facilities for office space and a warehouse under non-cancellable operating leases for its U.S. locations, and accounts for these leases in accordance with ASC-842.
Added
This reduction was partially offset by severance costs of $16,000 for 2024. There were no sales and marketing expenses for our Managed Services segment for 2024 or 2023. General and Administrative .
Removed
Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the expected lease term. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.
Added
Interest and other income, net in 2024 and 2023, primarily comprised of interest income related to our cash accounts. Income Tax Expense.
Removed
Since our lease arrangements do not provide an implicit rate, we use our estimated incremental borrowing rate for the expected remaining lease term at commencement date in determining the present value of future lease payments.
Added
During the year ended December 31, 2024, the Company received net proceeds of $2,381,000 from the exercise of common and preferred warrants. To access capital to fund operations or provide growth capital, we will need to raise capital from the exercise of outstanding common and/or preferred warrants, and/or in one or more debt and/or equity offerings.
Removed
Impairment The Company assesses the impairment of our long-lived assets subject to amortization when events and circumstances indicate that the carrying value of the assets might not be recoverable. The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgments, related primarily to the future profitability and/or future value of the assets.
Removed
Changes in the Company’s strategic plan and/or other-than-temporary changes in market conditions could significantly impact these judgments and could require adjustments to recorded asset balances. Long-lived assets are evaluated for impairment whenever an event or change in circumstances has occurred that could have a significant adverse effect on the fair value of long-lived assets.
Removed
During the year ended December 31, 2023, we considered the declines in revenue for the Collaboration Products reporting segment and the decline in the Company’s market capitalization to be triggering events for an impairment test of our long-lived and intangible assets for this reporting unit.
Removed
Based on the corresponding recoverability tests of the asset group for this reporting unit, it was determined that the carrying value exceeded the gross cash flows of the asset group.
Removed
The recoverability tests consisted of comparing the estimated undiscounted cash flows expected to be generated by those assets to the respective carrying amounts, and involves significant judgements and assumptions, related primarily to the future revenue and profitability of the assets. During the year ended December 31, 2022, the Company recorded impairment charges of $61,000 on property and equipment assets.
Removed
We tested goodwill for impairment on an annual basis, on September 30 th of each year, unless events occurred or circumstances changed indicating that the fair value of the goodwill may be below its carrying amount.
Removed
During the year ended December 31, 2022, we considered the sustained decline in our stock price to be a triggering event for an interim goodwill impairment test, as of both March 31, 2022 and June 30, 2022.
Removed
To determine the fair value of the reporting unit for the goodwill impairment test, we used a weighted average of the discounted cash flow method and market-based method. During the year ended December 31, 2022, we recorded impairment charges of $7,367,000 against goodwill, reducing the goodwill on our Consolidated Balance Sheets to zero.
Removed
Right-of-use assets are tested for impairment using guidance from ASC Topic 360. For the year ended December 31, 2023, did not record any impairment charges on right-of-use-assets. The Company recorded aggregate impairment charges of $179,000 on two right-of-use assets for the year ended December 31, 2022.

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