EX-99.1 11 exhibit99-1.htm EXHIBIT 99.1 exhibit99-1.htm
Exhibit 99.1
 
Contact:
Jonathan Brust
Glowpoint, Inc.
(312) 235-3888, ext. 2052
jbrust@glowpoint.com
www.glowpoint.com

 
Glowpoint Reports Fourth Quarter and Fiscal Year 2009 Results
Anticipates Continued Growth in Revenue and Contribution Margin in 2010

HILLSIDE, N.J. March 31, 2010 – Glowpoint, Inc. (OTCBB: GLOW), a carrier-grade provider of managed services for telepresence and video conferencing, today announced financial results for the fourth quarter and year ended December 31, 2009, which included record annualized monthly recurring revenue and positive operating income.

Core revenue was $6.34 million for the quarter, an increase of 14.3% from the comparable period last year. Total annual revenue was $26.5 million versus $24.5 million in 2008. This included non-core revenue of $1.3 million in 2009 which decreased from $2.6 million in 2008. Excluding non-core revenue, which is expected to be eliminated by the end of 2010, total core revenue grew from $21.9 million in 2008 to $25.2 million in 2009, a 14.8% increase. The Company anticipates that its 2010 core revenue growth rate will exceed 20% in 2010. These increases are primarily attributable to the growth of the Company’s VNOC managed service and Telepresence interExchange Network (TEN) service offerings. In addition, the Company expects that its contribution margin will continue to improve throughout the year driven by the continued reduction of our network and infrastructure expenses and global managed service costs as a percentage of sales.

Key highlights for the fourth quarter of 2009 include:
 
·  
Managed Video Services Revenue: Increased by $0.7 million, currently representing 14% of quarterly revenues as compared to 4% in the previous period
 
·  
Core Revenues: Increased 14.3% to $6.34 million for the quarter from $5.54 million in the comparable quarter for 2008
 
·  
Lowered Operating Expenses: Excluding income from the one-time reversal of the sales tax accrual, quarterly operating expenses dropped 8.3% to $6.94 million in 2009, from $7.57 million for the same period in 2008, while total quarterly revenues increased.
 
·  
Settlements in Sales Taxes and Regulatory Fees: Reduced accrual for sales taxes by $3.3 million, from $4.4 million as of last quarter, to $1.1 million to reflect settlements with taxing authorities and amounts that management believes can be reasonably estimated
 
·  
Elimination of “Going Concern”: With the financing announced by the Company yesterday, together with its cash flow projections and current results, the Company eliminated its “going concern” opinion that has been included since its 2006 financial statements.
 
·  
New Financial Statement Format: Provides greater visibility into our operations as we execute on our strategy to increase our focus on being a leading provider of managed video services and hosted cloud-based services for video applications
 
-1-

 
“The $3 million financing and improvements in our capital structure, which we announced yesterday, provide the Company with capital needed to take advantage of the growing managed video services market,” said Glowpoint Co-CEO David W. Robinson. "We’ve made a significant amount of progress and feel the Company is in a great position to achieve continued positive operating results.”

“The video communications market continues its transformation into a critical component within the unified communications space,” said Glowpoint President and Co-CEO Joseph Laezza. “Now is the time for Glowpoint to focus on our long term growth and profitability through strategic alliances and product development initiatives, while growing our internal sales and marketing efforts. We are extremely well positioned to capitalize on Glowpoint’s leadership in the expanding market for managed video as an integral and driving force behind the growth of unified communications.”

Conference and Webcast

Glowpoint will host a conference call at 4:30 pm (EDT) today to discuss the results and field questions from investors. Interested participants should call (877) 407-1869. International participants should call (201) 689-8044.

This call is being audio webcast by TalkPoint and can be accessed at Glowpoint’s website at http://www.glowpoint.com or by linking directly to http://video.webcasts.com/events/glow001/34263. Institutional investors can also access the call via Thomson Reuters’ password-protected event management site, StreetEvents: http://www.streetevents.com.

A recording of the webcast will be available beginning March 31, 2010, and will remain archived for one year following the event. To listen to the archived audio webcast, visit www.glowpoint.com or go directly to http://video.webcasts.com/events/glow001/34263.
 
Links
 
·  
Glowpoint's Investor Information
·  
Glowpoint on Twitter
 
About Glowpoint

Glowpoint, Inc. (OTCBB: GLOW) provides carrier-grade, managed telepresence and video communications services. Glowpoint's suite of robust telepresence and video conferencing solutions empowers enterprises to communicate with each other over disparate networks and technology platforms. Glowpoint supports thousands of video communications systems in more than 35 countries with its 24/7 video management services. Glowpoint also powers major broadcasters, Fortune 500 companies, as well as global carriers and video equipment manufacturers – and their customers – worldwide. To learn more, visit http://www.glowpoint.com.

The statements contained herein, other than historical information, are or may be deemed to be forward-looking statements and involve factors, risks, and uncertainties that may cause actual results in future periods to differ materially from such statements. These factors, risks, and uncertainties include market acceptance and availability of new video communication services; the nonexclusive and terminable-at-will nature of sales agent agreements; rapid technological change affecting demand for our services; competition from other video communications service providers; and the availability of sufficient financial resources to enable us to expand our operations, as well as other risks detailed from time to time in our filings with the Securities and Exchange Commission.


 
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 GLOWPOINT, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and shares)
   
December 31,
 
ASSETS
 
2009
   
2008
 
Current assets:
           
Cash
  $ 587     $ 1,227  
Accounts receivable, net of allowance for doubtful accounts of $262 and $301, respectively
    3,323       3,090  
Prepaid expenses and other current assets
    291       294  
Total current assets
    4,201       4,611  
Property and equipment, net
    2,682       2,533  
Other assets
    31       33  
Total assets
  $ 6,914     $ 7,177  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
               
Current liabilities:
               
Accounts payable
  $ 3,232     $ 2,367  
Accrued expenses
    879       842  
Accrued sales taxes and regulatory fees
    888       4,535  
Customer deposits
    308       606  
Deferred revenue
    259       325  
Current portion of capital lease
          161  
Total current liabilities
    5,566       8,836  
                 
Long term liabilities:
               
Accrued sales taxes and regulatory fees, less current portion
    195        
Senior Secured Notes, net of discount of $240
          1,482  
Capital lease, less current portion
          72  
Total long term liabilities
    195       1,554  
Total liabilities
    5,761       10,390  
                 
Commitments and contingencies
               
                 
Stockholders’ equity (deficit):
               
Preferred stock, $.0001 par value; 7,500 shares authorized and convertible; 4,509 and 3,790 shares issued and outstanding recorded at fair value (liquidation value of $33,815 and $28,423), respectively (see Note 12 for information related to Insider Purchasers – related parties)
    14,275       11,574  
Common stock, $.0001 par value; 150,000,000 shares authorized; 66,531,087 and 48,374,954 shares issued; 64,966,196 and 46,810,063 shares outstanding, respectively
    7       5  
Additional paid-in capital
    150,659       172,000  
Accumulated deficit
    (162,405 )     (185,409 )
      2,536       (1,830 )
Less: Treasury stock, 1,564,891 shares at cost
    (1,383 )     (1,383 )
Total stockholders’ equity (deficit)
    1,153       (3,213 )
Total liabilities and stockholders’ equity (deficit)
  $ 6,914     $ 7,177  

 
-3-

 

GLOWPOINT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share data)
 
   
Year Ended December 31,
 
   
2009
   
2008
 
Revenue
  $ 26,540     $ 24,537  
                 
Operating expenses:
               
Network and infrastructure
    11,838       12,762  
Global managed services
    7,476       5,849  
Sales and marketing
    3,193       3,382  
General and administrative
    4,465       4,662  
Depreciation and amortization
    1,056       1,261  
Sales taxes and regulatory fees
    (2,500 )     (172 )
Total operating expenses
    25,528       27,744  
Income (loss) from operations
    1,012       (3,207 )
                 
Interest and other expense (income):
               
Interest (income) expense, net, including $0 and $141 of expense, respectively, for Insider Purchasers
    (543 )     4,517  
Amortization of deferred financing costs, including $46 for Insider Purchasers
          448  
Loss on extinguishment of debt, including $0 and $99, respectively, for Insider Purchasers
    254       1,816  
Increase (decrease) in fair value of derivative financial instruments’ liability, including $0 and $86, respectively, for Insider Purchasers
    1,848       (2,673 )
Total interest and other expense, net
    1,559       4,108  
Net loss
    (547 )     (7,315 )
(Loss) gain on redemption of preferred stock
    (64 )     2,419  
Net loss attributable to common stockholders
  $ (611 )   $ (4,896 )
                 
Net loss attributable to common stockholders per share:
               
Basic and diluted
  $ (0.01 )   $ (0.11 )
                 
Weighted average number of common shares:
               
Basic and diluted
    52,938       45,477  
 
See accompanying notes to consolidated financial statements.
 
-4-

 

GLOWPOINT, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
Years Ended December 31, 2009 and 2008
(In thousands)

                   
Series A-2
     
         
Additional
       
(Note A)
     
   
Common Stock
   
Paid In
 
Accumulated
   
Preferred Stock
 
Treasury Stock
       
   
Shares
 
Amount
   
Capital
 
Deficit
   
Shares
   
Amount
 
Shares
 
Amount
   
Total
 
Balance at January 1, 2008
    47,630   $ 5     $ 162,300   $ (178,094 )       $     1,565   $ (1,383 )   $ (17,172 )
Stock-based compensation  - restricted stock
    745  
      394                             394  
Stock-based compensation  - stock options
              353                             353  
Warrants issued in connection with the 2008 Private Placements
              4,853                             4,853  
Series A Convertible Preferred Stock issued in connection with the 2008 Private Placements
                      4       11,574               11,574  
Gain on redemption of Series C preferred stock
              2,419                             2,419  
Costs related to 2008 private placements
              (538 )                           (538 )
Gain on elimination of derivative liabilities
              2,219                             2,219  
Net loss for the year
                  (7,315 )                       (7,315 )
Balance at December 31, 2008
    48,375   $ 5     $ 172,000   $ (185,409 )   4     $ 11,574     1,565   $ (1,383 )   $ (3,213 )
Cumulative effect of reclassification of warrants (ASC Topic 815)
              (26,173 )   23,551                         (2,622 )
Balance at January 1, 2009, as adjusted
    48,375     5       145,827     (161,858 )   4       11,574     1,565     (1,383 )     (5,835 )
Stock-based compensation  - restricted stock
    735  
`—
      277                             277  
Stock-based compensation  - stock options
              279                             279  
Loss on redemption of Series A  Preferred Stock
              (1,999 )             1,999                
August 2009 Warrant Exchange
    17,372     2       (2 )                            
Exercise of stock options
    49           17                             17  
Series A-1 Preferred Stock issued in connection with the 2009 Private Placement
                      1       2,637               2,637  
Elimination of derivative liabilities
              4,751                             4,751  
Gain on redemption of Series A-1  Preferred Stock
              1,935               (1,935 )              
Costs related to 2009 Private Placement, warrant and Preferred Stock exchange
              (426 )                           (426 )
Net loss for the year
                  (547 )                       (547 )
Balance at December 31, 2009
    66,531   $ 7     $ 150,659   $ (162,405 )   5     $ 14,275     1,565   $ (1,383 )   $ 1,153  

Note A – In March 2009 the shares of Series A Preferred Stock outstanding at December 31, 2008 were exchanged for an equal number of shares of newly-created Series A-1 Convertible Preferred Stock (“Series A-1 Preferred Stock”).  In August 2009 the shares of Series A-1 Preferred Stock then outstanding were exchanged for an equal number of shares of newly-created Series A-2 Convertible Preferred Stock (“Series A-2 Preferred Stock”).

See accompanying notes to consolidated financial statements.
 
-5-

 

GLOWPOINT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
   
Year Ended December 31,
 
   
2009
   
2008
 
Cash flows from operating activities:
           
Net loss
  $ (547 )   $ (7,315 )
Adjustments to reconcile net loss to net cash used in operating activities:
               
Depreciation and amortization
    1,056       1,261  
Bad debt expense
    258       257  
Loss on extinguishment of debt
    254       1,816  
Amortization of deferred financing costs
          448  
Accretion of discount on Senior Secured Notes
    23       2,732  
Loss on disposal of equipment
    8       77  
Expense recognized for the decrease in the estimated fair value of derivative financial instruments’ liability
    1,848       (2,673 )
Stock-based compensation
    556       568  
Increase (decrease) in cash attributable to changes in assets and liabilities:
               
Accounts receivable .
    (491 )     (801 )
Prepaid expenses and other current assets
    3       54  
Other assets
    2       (5 )
Accounts payable
    865       793  
Accrued expenses
    105       1,112  
Accrued sales taxes and regulatory fees .
    (3,452 )     524  
Customer deposits
    (298 )     (107 )
Deferred revenue
    (66 )     (5 )
Net cash provided by (used in) operating activities .
    124       (1,264 )
                 
Cash flows from investing activities:
               
Purchases of property and equipment
    (1,213 )     (1,179 )
Net cash used in investing activities
    (1,213 )     (1,179 )
                 
Cash flows from financing activities:
               
Proceeds from preferred stock offering, including $0 and $13 from Insider Purchaser, respectively
    1,800       1,825  
Proceeds from exercise of stock options
    17        
Principal payments for capital lease
    (234 )     (125 )
Purchase of Senior Secured Notes
    (750 )      
Costs related to private placements and preferred stock and warrant exchange
    (384 )     (342 )
Net cash provided by financing activities
    449       1,358  
Decrease in cash
    (640 )     (1,085 )
Cash at beginning of year
    1,227       2,312  
Cash at end of year
  $ 587     $ 1,227  
                 
Supplement disclosures of cash flow information:
               
    Cash paid during the year for interest
  $ 80     $ 100  

See accompanying notes to consolidated financial statements.
 
-6-

 

   
Year Ended December 31,
 
   
2009
   
2008
 
Non-cash investing and financing:
           
Exchange of Senior Secured Notes for Series A-1 Preferred Stock
  $ 1,076     $  
Exchange of Senior Secured Notes for Series A Preferred Stock
          10,802  
Redemption of Series C Preferred Stock
          4,330  
Gain on elimination of derivative liability
          2,219  
Additional Senior Secured Notes issued as payment for interest including $0 and $48 for Insider Purchasers, respectively
    55       1,459  
Costs related to private placements incurred by issuance of placement agent warrants
    42       196