UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, ~~2021.~~2022.

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number: 001-35376

OBLONG, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware			77-0312442
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

25587 Conifer Road, Suite 105-231, Conifer, CO 80433

(Address of Principal Executive Offices, including Zip Code)

(303) 640-3838

(Registrant’s Telephone Number, including Area Code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

OBLG

Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐			Accelerated filer ☐
Non-accelerated filer ☒			Smaller reporting company ☒
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock as of August ~~10, 2021~~8, 2022 was ~~30,616,048.~~30,816,048.

OBLONG, INC.

Index


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements		1
	Condensed Consolidated Balance Sheets at June 30, ~~2021~~2022 (unaudited) and December 31, ~~2020~~2021	1
	Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021	32
	Unaudited Condensed Consolidated Statement of Stockholders’ Equity for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021	43
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, ~~2021~~2022 and ~~2020~~2021	65
	Notes to unaudited Condensed Consolidated Financial Statements	76
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		2319
Item 3. Quantitative and Qualitative Disclosures About Market Risk		3026
Item 4. Controls and Procedures		3026

PART II - OTHER INFORMATION
Item 1. Legal Proceedings		3126
Item 1A. Risk Factors		3126
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		3127
Item 3. Defaults Upon Senior Securities		3128
Item 4. Mine Safety Disclosures		3128
Item 5. Other Information		3128
Item 6. Exhibits		3229
Signatures		3330

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q (this “Report”) contains statements that are considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and its rules and regulations (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, and its rules and regulations (the “Exchange Act”). These forward-looking statements include, but are not limited to, statements about the plans, objectives, expectations and intentions of Oblong, Inc. (“Oblong” or “we” or “us” or the “Company”). All statements other than statements of current or historical fact contained in this Report, including statements regarding Oblong’s future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” and similar expressions, as they relate to Oblong, are intended to identify forward-looking statements. These statements are based on Oblong’s current plans, and Oblong’s actual future activities and results of operations may be materially different from those set forth in the forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. Any or all of the forward-looking statements in this Report may turn out to be inaccurate. Oblong has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. The forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and assumptions. There are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including our plans, objectives, expectations and intentions and other factors that are discussedunder the section entitled “Part I. Item 1A. Risk Factors” and in our consolidated financial statements and the footnotes thereto for the fiscal year ended December 31, ~~2020,~~2021, each included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 filed with the Securities and Exchange Commission (the “SEC”) on March ~~30, 2021, as well as under “Part II. Item 1A. Risk Factors” in this Report.~~29, 2022. Oblong undertakes no obligation to publicly revise these forward-looking statements to reflect events occurring after the date hereof. All subsequent written and oral forward-looking statements attributable to Oblong or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this Report. Forward-looking statements in this Report include, among other things: our ~~ability to meet commercial commitments; our~~ expectations and estimates relating to customer attrition, sales cycles, future revenues, expenses, capital expenditures and cash flows; our ability to develop and launch new product offerings; evolution of our customer solutions and our service platforms; our ability to fund operations and continue as a going concern; expectations regarding adjustments to our cost of revenue and other operating expenses; our ability to finance investments in product development and sales and marketing; our ability to raise capital through sales of additional equity or debt securities and/or loans from financial institutions; ~~our beliefs about employee relations;~~ statements relating to market need, evolution of our solutions and our service platforms; our ~~beliefs about the service offerings~~expected insurance coverage on our second quarter 2022 casualty loss; and effectiveness of our ~~competitors~~disclosure controls and our ability to differentiate Oblong’s services; adequacy of our internal controls; statements regarding our information systems and our ability to protect and prevent security breaches; expectations relating to additional patent protection; and beliefs about the strength of our intellectual property, including patents. For additional information regarding known material factors that could cause our actual results to differ materially from our projected results, please see “Part II. Item 1A. Risk Factors” in this Report.procedures. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those summarized below:

•the continued impact of the coronavirus pandemic on our business, including its impact on our customers and other business partners, our ability to conduct operations in the ordinary course, and our ability to obtain capital financing important to our ability to continue as a going concern;

•our ability to continue as a going concern;

•our ability to raise capital in one or more debt and/or equity offerings in order to fund operations or any growth initiatives;

•customer acceptance and demand for our video collaboration services and network applications;

•our ability to launch new products and offerings and to sell our solutions;

•our ability to compete effectively in the video collaboration services and network services businesses;

•the ongoing performance and success of our Managed Services business;

•our ability to maintain and protect our proprietary rights;

•potential future impairment charges related to goodwill and intangible assets;

•our ability to withstand industry consolidation;

•our ability to adapt to changes in industry structure and market conditions;

•actions by our competitors, including price reductions for their competitive services;

•the quality and reliability of our products and services;

•the prices for our products and ~~services;~~services and changes to our pricing model;

•the success of our sales and marketing approach and efforts and our ability to grow revenue;

•customer renewal and retention rates;

•risks related to the concentration of our customers and the degree to which our sales, now or in the future, depend on certain large client relationships;

•~~customer acquisition~~increases in material, labor or other manufacturing-related costs;

•changes in our go-to-market cost structure;

•~~actions by~~inventory management and our ~~competitors, including price reductions for their competitive services;~~reliance on our supply chain;

•our ability to attract and retain highly skilled personnel;

•our reliance on open-source software and technology;

•potential federal and state regulatory actions;

•our ability to innovate technologically, and, in particular, our ability to develop next generation Oblong technology;

•our ability to satisfy the standards for continued listing of our common stock on the Nasdaq Capital Market;

•changes in our capital structure and/or stockholder mix;

•the costs, disruption, and diversion of management’s attention associated with campaigns commenced by activist investors; and

•our management’s ability to execute its plans, strategies and objectives for future operations.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OBLONG, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value, stated value, and shares)


		June 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash	Cash	$	13,033	$	5,058	Cash	$	5,107	$	8,939
Current portion of restricted cash		61		158
Restricted cash						Restricted cash	—		61
Accounts receivable, net	Accounts receivable, net	953		3,166		Accounts receivable, net	491		849
Inventory	Inventory	2,125		920		Inventory	1,078		1,821
Prepaid expenses and other current assets	Prepaid expenses and other current assets	1,393		691		Prepaid expenses and other current assets	1,150		1,081
Total current assets	Total current assets	17,565		9,993		Total current assets	7,826		12,751
Property and equipment, net	Property and equipment, net	307		573		Property and equipment, net	75		159
Goodwill	Goodwill	7,367		7,367		Goodwill	—		7,367
Intangibles, net	Intangibles, net	8,946		10,140		Intangibles, net	6,402		7,562
Operating lease - right of use asset, net	Operating lease - right of use asset, net	653		903		Operating lease - right of use asset, net	245		659
Other assets	Other assets	99		167		Other assets	22		109
Total assets	Total assets	$	34,937	$	29,143	Total assets	$	14,570	$	28,607
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Current portion of long-term debt		$	0	$	2,014

Accounts payable	Accounts payable	518		313		Accounts payable	325		259
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	1,420		1,201		Accrued expenses and other current liabilities	976		959
Current portion of deferred revenue	Current portion of deferred revenue	894		1,217		Current portion of deferred revenue	686		783
Current portion of operating lease liabilities	Current portion of operating lease liabilities	734		830		Current portion of operating lease liabilities	378		492

Total current liabilities	Total current liabilities	3,566		5,575		Total current liabilities	2,365		2,493
Long-term liabilities:	Long-term liabilities:					Long-term liabilities:

Long-term debt, net of current portion		2,417		403

Operating lease liabilities, net of current portion	Operating lease liabilities, net of current portion	249		602		Operating lease liabilities, net of current portion	68		236
Deferred revenue, net of current portion	Deferred revenue, net of current portion	400		506		Deferred revenue, net of current portion	213		381

Total long-term liabilities	Total long-term liabilities	3,066		1,511		Total long-term liabilities	281		617
Total liabilities	Total liabilities	6,632		7,086		Total liabilities	2,646		3,110
Commitments and contingencies (see Note 12)		0		0
Commitments and contingencies (see Note 11)						Commitments and contingencies (see Note 11)	0		0
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock Series A-2, convertible; $.0001 par value; $7,500 stated value; 7,500 shares authorized, 0 and 45 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		0		0

Preferred stock Series D, convertible; $.0001 par value; $28.50 stated value; 1,750,000 shares authorized, 0 and 1,697,958 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		0		0
Preferred stock Series E, convertible; $.0001 par value; $28.50 stated value; 175,000 shares authorized, 0 and 131,579 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		0		0

Common stock, $.0001 par value; 150,000,000 shares authorized; 30,929,331 shares issued and 30,816,048 outstanding at June 30, 2022 and December 31, 2021						Common stock, $.0001 par value; 150,000,000 shares authorized; 30,929,331 shares issued and 30,816,048 outstanding at June 30, 2022 and December 31, 2021	3		3
Treasury stock, 113,283 shares of common stock at June 30, 2022 and December 31, 2021						Treasury stock, 113,283 shares of common stock at June 30, 2022 and December 31, 2021	(181)		(181)
Additional paid-in capital						Additional paid-in capital	227,580		227,581
Accumulated deficit						Accumulated deficit	(215,478)		(201,906)
Total stockholder's equity						Total stockholder's equity	11,924		25,497
Total liabilities and stockholders’ equity						Total liabilities and stockholders’ equity	$	14,570	$	28,607

See accompanying notes to condensed consolidated financial statements.

-1-

Common stock, $.0001 par value; 150,000,000 shares authorized; 30,729,331 shares issued and 30,616,048 outstanding at June 30, 2021 and 7,861,912 shares issued and 7,748,629 outstanding at December 31, 2020 3 1
Treasury stock, 113,283 shares of common stock at June 30, 2021 and December 31, 2020 (181) (181)
Additional paid-in capital 227,017 215,092
Accumulated deficit (198,534) (192,855)
Total stockholder's equity 28,305 22,057
Total liabilities and stockholders’ equity $ 34,937 $ 29,143

~~See accompanying notes to condensed consolidated financial statements.~~

~~-2-~~

OBLONG, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
		June 30,				June 30,					June 30,				June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenue	Revenue	$	2,049	$	2,816	$	3,967	$	8,144	Revenue	$	1,333	$	2,049	$	2,865	$	3,967
Cost of revenue (exclusive of depreciation and amortization)		1,249		1,683		2,539		4,072
Cost of revenue (exclusive of depreciation and amortization and casualty loss)										Cost of revenue (exclusive of depreciation and amortization and casualty loss)	926		1,249		1,959		2,539
Gross profit	Gross profit	800		1,133		1,428		4,072		Gross profit	407		800		906		1,428

Operating expenses:	Operating expenses:									Operating expenses:
Research and development	Research and development	599		988		1,291		2,315		Research and development	398		599		1,402		1,291
Sales and marketing	Sales and marketing	572		834		1,099		2,040		Sales and marketing	317		572		879		1,099
General and administrative	General and administrative	1,383		1,815		3,450		3,842		General and administrative	1,185		1,383		2,875		3,450
Impairment charges	Impairment charges	17		0		48		550		Impairment charges	6,408		17		7,546		48
Casualty loss										Casualty loss	533		—		533		—
Depreciation and amortization	Depreciation and amortization	707		796		1,429		1,612		Depreciation and amortization	599		707		1,226		1,429
Total operating expenses	Total operating expenses	3,278		4,433		7,317		10,359		Total operating expenses	9,440		3,278		14,461		7,317
Loss from operations	Loss from operations	(2,478)		(3,300)		(5,889)		(6,287)		Loss from operations	(9,033)		(2,478)		(13,555)		(5,889)
Interest and other expense, net		9		76		14		220
Other income		(227)		0		(227)		0
Foreign exchange loss (gain)		(14)		9		3		7
Interest and other (income) expense, net		(232)		85		(210)		227

Interest and other expense (income), net										Interest and other expense (income), net	—		(232)		6		(210)
Loss before income taxes	Loss before income taxes	(2,246)		(3,385)		(5,679)		(6,514)		Loss before income taxes	(9,033)		(2,246)		(13,561)		(5,679)
Income tax expense	Income tax expense	0		0		0		0		Income tax expense	—		—		11		—
Net loss	Net loss	(2,246)		(3,385)		(5,679)		(6,514)		Net loss	(9,033)		(2,246)		(13,572)		(5,679)
Preferred stock dividends	Preferred stock dividends	0		4		1		8		Preferred stock dividends	—		—		—		1
Undeclared dividends	Undeclared dividends	0		0		366		0		Undeclared dividends	—		—		—		366
Induced conversion of Series A-2 Preferred Stock	Induced conversion of Series A-2 Preferred Stock	0		0		300		0		Induced conversion of Series A-2 Preferred Stock	—		—		—		300

Net loss attributable to common stockholders	Net loss attributable to common stockholders	$	(2,246)	$	(3,389)	$	(6,346)	$	(6,522)	Net loss attributable to common stockholders	$	(9,033)	$	(2,246)	$	(13,572)	$	(6,346)

Net loss attributable to common stockholders per share:	Net loss attributable to common stockholders per share:									Net loss attributable to common stockholders per share:
Basic and diluted net loss per share	Basic and diluted net loss per share	$	(0.08)	$	(0.65)	$	(0.29)	$	(1.25)	Basic and diluted net loss per share	$	(0.29)	$	(0.08)	$	(0.44)	$	(0.29)

Weighted-average number of shares of common stock:	Weighted-average number of shares of common stock:									Weighted-average number of shares of common stock:
Basic and diluted	Basic and diluted	26,644		5,240		22,250		5,222		Basic and diluted	30,816		26,644		30,816		22,250

See accompanying notes to condensed consolidated financial statements.

-2-

OBLONG, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Three and Six Months Ended June 30, 2022

(In thousands, except shares)

(Unaudited)


	Common Stock			Treasury Stock
	Shares	Amount		Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Total
Balance at December 31, 2021	30,929,331	$	3	113,283	$	(181)	$	227,581	$	(201,906)	$	25,497
Net loss	—	—		—	—		—		(4,539)		(4,539)
Stock-based compensation	—	—		—	—		52		—		52
Forfeiture of unvested stock options	—	—		—	—		(84)		—		(84)
Balance at March 31, 2022	30,929,331	3		113,283	(181)		227,549		(206,445)		20,926
Net loss	—	—		—	—		—		(9,033)		(9,033)
Stock-based compensation	—	—		—	—		31		—		31

Balance at June 30, 2022	30,929,331	$	3	113,283	$	(181)	$	227,580	$	(215,478)	$	11,924

See accompanying notes to condensed consolidated financial statements.

-3-

OBLONG, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Three and Six Months Ended June 30, 2021

(In thousands, except shares)

(Unaudited)

Series A-2 Preferred Stock Series D Preferred Stock Series E Preferred Stock Common Stock Treasury Stock
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Additional Paid-In Capital Accumulated Deficit Total
Balance at December 31, 2020 45 $ 0 1,697,958 $ 0 131,579 $ 0 7,861,912 $ 1 113,283 $ (181) $ 215,092 $ (192,855) $ 22,057
Net loss — — — — — — — — — — — (3,433) (3,433)
Stock-based compensation — — — — — — — — — — 33 — 33
Conversion of Series A-2 Preferred Stock, including dividend accrual (45) — — — — — 84,292 — — — — — —
Conversion of Series D and E Preferred Stock — — (1,697,022) — (131,579) — 18,762,119 2 — — (2) — 0
Issuance of stock for services — — — — — — 21,008 — — — 274 — 274
Forfeitures of restricted stock — — (81) — — — — — — — — — —
Series D Preferred shares to pay withholding taxes — — (855) — — — — — — — — — —
Balance at March 31, 2021 0 0 0 0 0 0 26,729,331 3 113,283 (181) 215,397 (196,288) 18,931
Net loss — — — — — — — — — — — (2,246) (2,246)
Issuance of stock from financing, net of issuance costs — — — — — — 4,000,000 — — — 11,504 — 11,504
Issuance of stock for services — — — — — — — — — — 116 — 116
Balance at June 30, 2021 0 $ 0 0 $ 0 0 $ 0 30,729,331 $ 3 113,283 $ (181) $ 227,017 $ (198,534) $ 28,305


	Series A-2 Preferred Stock			Series D Preferred Stock	Series E Preferred Stock			Common Stock			Treasury Stock
	Shares	Amount			Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Total
Balance at Balance at December 31, 2020	45	$	—		1,697,958	$	—	131,579	$	—	7,861,912	$	1	113,283	$	(181)	$	215,092	$	(192,855)	$	22,057
Net loss	—	—			—	—		—	—		—	—		—	—		—		(3,433)		(3,433)
Stock-based compensation	—	—			—	—		—	—		—	—		—	—		33		—		33
Conversion of Series A-2 Preferred Stock, including dividend accrual	(45)	—			—	—		—	—		84,292	—		—	—		—		—		—
Conversion of Series D and E Preferred Stock	—	—			(1,697,022)	—		(131,579)	—		18,762,119	2		—	—		(2)		—		—
Issuance of stock for services	—	—			—	—		—	—		21,008	—		—	—		274		—		274
Forfeitures of restricted stock	—	—			(81)	—		—	—		—	—		—	—		—		—		—

Series D Preferred shares to pay withholding taxes	—	—			(855)	—		—	—		—	—		—	—		—		—		—
Balance at March 31, 2021	—	—			—	—		—	—		26,729,331	3		113,283	(181)		215,397		(196,288)		18,931
Net loss	—	—			—	—		—	—		—	—		—	—		—		(2,246)		(2,246)
Issuance of stock from financing, net of issuance costs	—	—			—	—		—	—		4,000,000	—		—	—		11,504		—		11,504
Issuance of stock for services	—	—			—	—		—	—		—	—		—	—		116		—		116







Balance at June 30, 2021	—	$	—		—	$	—	—	$	—	30,729,331	$	3	113,283	$	(181)	$	227,017	$	(198,534)	$	28,305

See accompanying notes to condensed consolidated financial statements.

-4-

~~OBLONG, INC.~~

~~CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY~~

~~Three and Six Months Ended June 30, 2020~~

~~(In thousands, except shares)~~

~~(Unaudited)~~

Series A-2 Preferred Stock Series C Preferred Stock Series D Preferred Stock Series E Preferred Stock Common Stock Treasury Stock
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Additional Paid-In Capital Accumulated Deficit Total
Balance at December 31, 2019 32 $ 0 475 $ 0 1,734,901 $ 0 131,579 $ 0 5,266,828 $ 1 105,285 $ (165) $ 207,383 $ (185,434) $ 21,785
Net loss — — — — — — — — — — — — — (3,129) (3,129)
Stock-based compensation — — — — — — — — — — — — 32 — 32
Forfeitures of restricted stock — — — — (14,441) — — — — — — — — — —
Preferred stock conversion — — (150) — — — — — 50,000 — — — — — —
Issuance of preferred stock for accrued dividends 13 — — — — — — — — — — — 98 — 98
Preferred stock dividends — — — — — — — — — — — — (4) — (4)
Purchase of treasury stock — — — — — — — — — — — (7) — — (7)
Balance at March 31, 2020 45 0 325 0 1,720,460 0 131,579 0 5,316,828 1 105,285 (172) 207,509 (188,563) 18,775
Net loss — — — — — — — — — — — — — (3,385) (3,385)
Stock-based compensation — — — — — — — — — — — — 29 — 29
Forfeitures of restricted stock — — — — (17,364) — — — — — — — — — —
Issuance of stock on vested restricted stock units — — — — — — — — 23,334 — — — — — —
Preferred stock dividends — — — — — — — — — — — — (4) — (4)
Issuance of preferred stock for accrued dividends — — — — — — — — — — — — 1 1
Purchase of treasury stock — — — — — — — — — — 7,998 (9) — — (9)
Balance at June 30, 2020 45 $ 0 325 $ 0 1,703,096 $ 0 131,579 $ 0 5,340,162 $ 1 113,283 $ (181) $ 207,535 $ (191,948) $ 15,407

~~See accompanying notes to condensed consolidated financial statements.~~

~~-5-~~

OBLONG, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


		Six Months Ended June 30,					Six Months Ended June 30,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net loss	Net loss	$	(5,679)	$	(6,514)	Net loss	$	(13,572)	$	(5,679)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	1,429		1,612		Depreciation and amortization	1,226		1,429
Bad debt expense	Bad debt expense	449		34		Bad debt expense	125		449
Amortization of debt discount		0		45
Amortization of right of use asset		250		595

Loss on disposal of equipment		0		15
Stock-based compensation	Stock-based compensation	33		61		Stock-based compensation	83		33
Common stock issued for services		390		0
Stock-based expense for services						Stock-based expense for services	—		390
Forfeiture of unvested stock options						Forfeiture of unvested stock options	(84)		—
Gain on extinguishment of liability						Gain on extinguishment of liability	—		(227)
Casualty loss on inventory						Casualty loss on inventory	533		—
Loss on foreign currency remeasurement	Loss on foreign currency remeasurement	3		(12)		Loss on foreign currency remeasurement	—		3

Gain on extinguishment of liability		(227)		0
Impairment charges - property and equipment	Impairment charges - property and equipment	48		9		Impairment charges - property and equipment	—		48
Impairment charges - right of use asset						Impairment charges - right of use asset	179		—
Impairment charges - goodwill	Impairment charges - goodwill	0		541		Impairment charges - goodwill	7,367		—
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	1,764		1,149		Accounts receivable	233		1,764
Inventory	Inventory	(1,205)		473		Inventory	210		(1,205)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(702)		47		Prepaid expenses and other current assets	(69)		(702)
Right of use asset						Right of use asset	235		250
Other assets	Other assets	7		(28)		Other assets	87		7
Accounts payable	Accounts payable	205		(3)		Accounts payable	66		205
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	408		(493)		Accrued expenses and other current liabilities	17		408
Deferred revenue	Deferred revenue	(429)		238		Deferred revenue	(265)		(429)
Lease liabilities	Lease liabilities	(414)		(626)		Lease liabilities	(282)		(414)
Net cash used in operating activities	Net cash used in operating activities	(3,670)		(2,857)		Net cash used in operating activities	(3,911)		(3,670)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchases of property and equipment	Purchases of property and equipment	(17)		(5)		Purchases of property and equipment	(11)		(17)
Net cash used in investing activities		(17)		(5)
Proceeds from sale of equipment						Proceeds from sale of equipment	29		—
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	18		(17)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from stock issuance, net of issuance costs	Proceeds from stock issuance, net of issuance costs	11,504		0		Proceeds from stock issuance, net of issuance costs	—		11,504
Proceeds from PPP Loan		0		2,417
Purchase of treasury stock		0		(16)
Net cash provided by in financing activities		11,504		2,401
Increase (decrease) in cash and restricted cash		7,817		(461)

Net cash provided by financing activities						Net cash provided by financing activities	—		11,504
(Decrease) increase in cash and restricted cash						(Decrease) increase in cash and restricted cash	(3,893)		7,817
Cash and restricted cash at beginning of period	Cash and restricted cash at beginning of period	5,277		4,602		Cash and restricted cash at beginning of period	9,000		5,277
Cash and restricted cash at end of period	Cash and restricted cash at end of period	$	13,094	$	4,141	Cash and restricted cash at end of period	$	5,107	$	13,094

Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:

Reconciliation of cash and restricted cash	Reconciliation of cash and restricted cash					Reconciliation of cash and restricted cash
Cash	Cash	$	13,033	$	4,141	Cash	$	5,107	$	13,033
Restricted cash	Restricted cash	$	61	$	0	Restricted cash	—		61
Total cash and restricted cash	Total cash and restricted cash	$	13,094	$	4,141	Total cash and restricted cash	$	5,107	$	13,094

Cash paid during the period for interest	Cash paid during the period for interest	$	2	$	96	Cash paid during the period for interest	$	6	$	2
Non-cash investing and financing activities:	Non-cash investing and financing activities:					Non-cash investing and financing activities:
Issuance of preferred stock in exchange for accrued dividends		0		99
Accrued preferred stock dividends	Accrued preferred stock dividends	1		8		Accrued preferred stock dividends	$	—	$	1
Inducement to convert Series A-2 Preferred Stock to common	Inducement to convert Series A-2 Preferred Stock to common	300		0		Inducement to convert Series A-2 Preferred Stock to common	$	—	$	300
Common stock issued for conversion of Preferred Stock	Common stock issued for conversion of Preferred Stock	3		0		Common stock issued for conversion of Preferred Stock	$	—	$	3

See accompanying notes to condensed consolidated financial statements.

~~-6-~~-5-

OBLONG, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2021~~2022

(Unaudited)

Note 1 - Business Description and Significant Accounting Policies

Business Description

Oblong, Inc. (“Oblong” or “we” or “us” or the “Company”) was formed as a Delaware corporation in May 2000 and is a provider of patented multi-stream collaboration technologies and managed services for video collaboration and network applications. Prior to March 6, 2020, Oblong, Inc. was named Glowpoint, Inc. (“Glowpoint”). On March 6, 2020, Glowpoint changed its name to Oblong, Inc.

Basis of Presentation

The Company's fiscal year ends on December 31 of each calendar year. The accompanying interim condensed consolidated financial statements are unaudited and have been prepared on substantially the same basis as our annual consolidated financial statements for the fiscal year ended December 31, ~~2020.~~2021. In the opinion of the Company's management, these interim condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.

The December 31, ~~2020~~2021 year-end condensed consolidated balance sheet data in this document was derived from audited consolidated financial statements. These condensed consolidated financial statements and notes included in this quarterly report on Form 10-Q dodoes not include all disclosures required by U.S. generally accepted accounting principles and should be read in conjunction with the Company's audited consolidated financial statements as of and for the year ended December 31, ~~2020~~2021 and notes thereto included in the Company's fiscal ~~2020~~2021 Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March ~~30, 2021~~29, 2022 (the ~~“2020~~“2021 10-K”).

The results of operations and cash flows for the interim periods included in these condensed consolidated financial statements are not necessarily indicative of the results to be expected for any future period or the entire fiscal year.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Oblong and our 100%-owned subsidiaries, (i) GP Communications, LLC (“GP Communications”), whose business function is to provide interstate telecommunications services for regulatory purposes, (ii) Oblong Industries, and (iii) ~~the following subsidiaries~~Oblong Europe Limited, a subsidiary of Oblong ~~Industries: Oblong Industries Europe, S.L. and Oblong Europe Limited.~~Industries. All inter-company balances and transactions have been eliminated in consolidation. The U.S. Dollar is the functional currency for all subsidiaries.

Segments

The Company currently operates in 2 segments: 1)(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 ~~which includes~~surrounding managed services for video collaboration and network ~~applications, and 2) the Oblong Industries business, which includes products and services for visual collaboration technologies.~~solutions. See Note 1110 - Segment Reporting for further discussion.

Use of Estimates

Preparation of the ~~condensed~~ consolidated financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from the estimates made. We continually evaluate estimates used in the preparation of our consolidated financial statements for reasonableness. Appropriate

-6-

adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. The significant areas of estimation include

~~-7-~~

determining the allowance for doubtful accounts, the estimated lives and recoverability of property and equipment and intangible assets, the inputs used in the valuation of goodwill and intangible assets in connection with our impairment tests, and the inputs used in the fair value of equity based ~~awards as well as the values ascribed to assets acquired and liabilities assumed in the business combination.~~awards.

Significant Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements are disclosed in our ~~2020~~2021 10-K, and there have been no changes to the Company’s significant accounting policies during the six months ended June 30, ~~2021.~~

~~Property and Equipment~~

~~Property and equipment are stated at cost and are depreciated over the estimated useful lives of the related assets, which range from~~ ~~three~~ to ten years. Leasehold improvements are amortized over the shorter of either the asset’s useful life or the related lease term. Depreciation is computed on the straight-line method for financial reporting purposes. During the three and six months ended June 30, 2021, the Company recorded asset impairment charges on property and equipment of $17,000 and $48,000, respectively, for the discontinued use of, or disposal of, property and equipment. These charges are included in “Impairment Charges” on our condensed consolidated statement of operations.2022.

Recently Issued Accounting Pronouncements

In June 2016 the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13 as amended, “Financial Instruments - Credit Losses (Topic 326).” Topic 326 introduces an impairment model that is based on expected credit losses, rather than incurred losses, to estimate credit losses on certain types of financial instruments (e.g. accounts receivable, loans and held-to-maturity securities), including certain off-balance sheet financial instruments (e.g., loan commitments). The expected credit losses should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the contractual term. Financial instruments with similar risk characteristics may be grouped together when estimating expected credit losses. Topic 326 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company ~~is currently evaluating~~has evaluated the impact the new guidance will have on its consolidated financial ~~statements.~~statements, and does not expect the impact to be material.

In May 2021, the FASB issued ASU 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The FASB is issuing this update to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity classified written call options (for example, warrants) that remain equity classified after modification or exchange. ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring after the effective date of the amendments. The Company ~~does~~has adopted this standard, effective January 1, 2022, and it did not ~~expect this update to~~ have a material ~~effect~~affect on ~~its consolidated~~our financial statements.

Casualty Loss

During the three months ended June 30, 2022, the Company discovered that $533,000 of inventory was stolen from the Company’s warehouse in City of Industry, California. This theft has been recorded as a casualty loss of $533,000 during the three and six months ended June 30, 2022 on the Company’s condensed consolidated Statements of Operations. The theft is being investigated further by the Los Angeles, CA Sheriff’s Department and a claim has been filed with the Company’s insurance company. We are seeking to recover the majority of the loss through our insurance policies and we will offset the casualty loss with the recognition of a gain of any proceeds should we subsequently receive them from our insurance company. No assurances can be provided that we will be successful in recovering any or all of the casualty loss.

Note 2 - Liquidity and Going Concern Uncertainty

As of June 30, ~~2021,~~2022, we had ~~$13,033,000 of unrestricted~~$5,107,000 in cash ~~obligations of $2,417,000 under the Paycheck Protection Program loan (the “PPP Loan”),~~ and working capital of ~~$13,999,000. In July 2021, the PPP Loan was entirely forgiven.~~$5,461,000. For the six months ended June 30, ~~2021,~~2022, we incurred a net loss of ~~$5,679,000~~$13,572,000 and used ~~$3,670,000~~$3,911,000 of net cash in operating activities. ~~See further discussion of the PPP Loan in~~ ~~Note 6 - Debt~~.

~~-8-~~

continue to invest in product development and sales and marketing expenses with the goal of growing the Company’s revenue in the future. The Company believes that, based on ~~the Company’s~~its current projection of revenue, expenses, capital expenditures, and cash flows, it will not have sufficient resources to fund its operations for the next twelve months following the filing of this Report. We believe additional capital will be required to fund operations and provide growth capital including 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. 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

-7-

could have a material adverse effect on the Company. The factors discussed above raise substantial doubt as to our ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that might result from these uncertainties.

~~See~~ ~~Note 12 - Commitments and Contingencies~~ ~~to our condensed consolidated financial statements for discussion regarding certain additional factors that could impact the Company’s liquidity in the future.~~

Note 3 - Goodwill

As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, goodwill was zero and $7,367,000, ~~comprised of amounts~~respectively, recorded in connection with the October 1, 2019 ~~Acquisition~~acquisition of Oblong ~~Industries.~~Industries (our Collaboration Products reporting unit).

We test goodwill for impairment on an annual basis on September 30 of each year, or more frequently if events occur or circumstances change indicating that the fair value of the goodwill may be below its carrying amount. ~~The Company operates 2~~To determine the fair value of the reporting ~~segments, Oblong (formerly Glowpoint)~~unit for the goodwill impairment test, we use a weighted average of the discounted cash flow method and ~~Oblong Industries. In March 2020, we~~market-based method.

We considered the ~~novel Coronavirus (COVID-19) pandemic and resulting declines~~sustained decline in ~~certain of the Company’s revenue~~our stock price to be a triggering event for an interim goodwill impairment test, ~~for~~as of both ~~reporting units. To determine~~March 31, 2022 and June 30, 2022, and we recorded impairment charges against the ~~fair~~carrying value of ~~each reporting unit, as~~Goodwill of ~~March 31, 2020 for the goodwill impairment tests, we used a weighted average of the discounted cash flow method~~$6,229,000 and a market-based method (comparing the Company’s equity and analyzing multiples of revenue for comparable companies). For the Oblong Industries reporting unit, the fair value of the reporting unit exceeded its carrying amount, therefore 0 impairment charge was recorded. For the Oblong (formerly Glowpoint) reporting unit, we recorded an impairment charge on goodwill of $541,000$7,367,000 for the three and six months ended ~~March 31, 2020~~June 30, 2022, respectively, as the carrying amount of the Collaboration Products reporting unit exceeded its fair value on the test ~~date. This charge is~~dates. These charges are recognized as ~~an impairment charge~~“Impairment Charges” on our condensed consolidated ~~statements~~Statements of ~~operations. There were no such triggering events during the three and six months ended~~Operations. Following these impairment charges, our goodwill value was reduced to zero as of June 30, ~~2021, therefore, no impairment charges were recorded.~~

~~The activity in goodwill during the six months ended June 30, 2021 and the year ended December 31, 2020 is shown in the following table (in thousands):~~

Goodwill Oblong (formerly Glowpoint) Oblong Industries Total
Balance December 31, 2019 $ 541 $ 7,367 $ 7,908
Impairment charges (541) 0 (541)
Balance December 31, 2020 0 7,367 7,367
Balance June 30, 2021 $ 0 $ 7,367 $ 7,367

In the event we experience future declines in our revenue, cash flows and/or stock price, this may give rise to a triggering event that may require the Company to record additional impairment charges on goodwill in the future.2022.

~~-9-~~

Note 4 - Intangible Assets

The following table presents the components of net intangible assets for our Collaboration Products reporting segment (in thousands):


		As of June 30, 2021						As of December 31, 2020							As of June 30, 2022						As of December 31, 2021
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Lives
Oblong (formerly Glowpoint)
Affiliate network		$	994	$	(769)	$	225	$	994	$	(735)	$	259

Oblong Industries

Developed technology	Developed technology	$	10,060	$	(3,528)	$	6,532	$	10,060	$	(2,520)	$	7,540	Developed technology	$	10,060	$	(5,544)	$	4,516	$	10,060	$	(4,537)	$	5,523	5 years
Trade names	Trade names	2,410		(422)		1,988		2,410		(302)		2,108		Trade names	2,410		(663)		1,747		2,410		(542)		1,868		10 years
Distributor relationships	Distributor relationships	310		(109)		201		310		(77)		233		Distributor relationships	310		(171)		139		310		(139)		171		5 years
Subtotal		12,780		(4,059)		8,721		12,780		(2,899)		9,881

Total	Total	$	13,774	$	(4,828)	$	8,946	$	13,774	$	(3,634)	$	10,140	Total	$	12,780	$	(6,378)	$	6,402	$	12,780	$	(5,218)	$	7,562

At each reporting period, we determine if there was a triggering event that may result in an impairment of our intangible assets. During the three and six months ended ~~March 31, 2021,~~June 30, 2022, we considered the ~~decline~~declines in revenue for ~~Oblong Industries~~the Collaboration Products reporting segment to be a triggering event for ~~a recoverability~~an impairment test of intangible assets for this reporting unit. Based on the corresponding recoverability ~~test~~tests of ~~Oblong Industries’~~the intangible assets for this reporting unit, we determined no impairment changes were required for the three ~~months ended March 31, 2021. During the three~~and six months ended June 30, ~~2021, we did not identify a triggering event, therefore no impairment charges were required for~~2022. The recoverability test consisted of comparing the ~~three months ended June 30, 2021.~~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. Intangible assets with finite lives are amortized using the straight-line method over the estimated economic lives of the assets, which range from five years to ~~twelve~~ten years in accordance with ASC Topic 350.

~~The weighted average economic lives for the components of intangible assets are as follows:~~


~~Oblong (formerly Glowpoint)~~
~~Affiliate network~~			~~12 years~~


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

Related amortization expense was ~~$597,000, $1,194,000,~~$580,000, $1,160,000, $613,000, and $1,224,000 for the three and six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

-8-

Amortization expense for each of the next five succeeding years will be as follows (in thousands):


Remainder of 2021		$	1,194
2022		2,385

Remainder of 2022				Remainder of 2022	$	1,158
2023	2023	2,378		2023	2,309
2024	2024	1,844		2024	1,791
2025	2025	241		2025	241
2026				2026	241
Thereafter	Thereafter	904		Thereafter	662
Total	Total	$	8,946	Total	$	6,402

~~-10-~~

Note 5 - Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

June 30, December 31,
2021 2020
Accrued compensation costs $ 592 $ 411
Accrued professional fees 359 236
Accrued taxes and regulatory fees 172 137
Customer deposits 136 127
Other accrued expenses and liabilities 161 286
Accrued dividends on Series A-2 Preferred Stock 0 4
Accrued expenses and other current liabilities $ 1,420 $ 1,201


	June 30,		December 31,
	2022		2021

Accrued compensation costs	$	677	$	551
Accrued professional fees	77		69
Accrued taxes and regulatory fees	84		92
Customer deposits	115		145
Other accrued expenses and liabilities	23		102


Accrued expenses and other liabilities	$	976	$	959

Note 6 - ~~Debt~~Leases

~~Debt consisted~~We lease 3 facilities in Los Angeles, California and 1 facility in Austin, Texas, each providing office space. We also lease a facility in City of Industry, California, providing warehouse space. These leases expire between 2022 and 2024. During the six months ended June 30, 2022, we exited leases in Boston, Massachusetts and Dallas, Texas. We currently occupy the warehouse space in City of Industry, and the office facility in Austin, Texas, and we have a sublease in place for one of the ~~following (in thousands):~~

June 30, December 31,
2021 2020
PPP Loan Principal $ 2,417 $ 2,417
Less: current maturities 0 2,014
Long-term obligations, net of current maturities $ 2,417 $ 403
Los Angeles office spaces. With the exception of these spaces described above, we currently operate out of remote employment sites with a remote office located at 25587 Conifer Road, Suite 105-231, Conifer, Colorado 80433.

~~Paycheck Protection Program Loan~~

~~On April 10, 2020 (the “Origination Date”), the Company received $2,417,000 in aggregate loan~~Lease expenses, including common charges and net of sublet proceeds, (the “PPP Loan”) from MidFirst Bank (the “Lender”) pursuant to the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The PPP Loan is evidenced by a Promissory Note (the “Note”), dated April 10, 2020, by and between the Company and the Lender. Subject to the terms of the Note, the PPP Loan bears interest at a fixed rate of one percent (1.0%) per annum. Payments of principal and interest are deferred for the ~~first~~three and six months ~~following the Origination Date. The PPP Loan is unsecured~~ended June 30, 2022 and ~~guaranteed by the U.S. Small Business Administration (the “SBA”).~~2021 were $76,000, $145,000, $92,000, and $167,000, respectively.

The ~~PPP~~following provides ~~for forgiveness of up~~balance sheet information related to the full amount borrowed as long as the Company uses the loan proceeds during the 24-week period following disbursement for eligible purposes as described in the CARES Act and related guidance. In May 2021, the Company submitted an application to the Lender for full forgiveness of the PPP Loan and,leases as of June 30, 2022 and December 31, 2021 ~~the application was under review by the SBA. On July 28, 2021, the Company received notice that the PPP Loan had been forgiven in its entirety.~~(in thousands):



		June 30, 2022		December 31, 2021
Assets
	Operating lease, right-of-use asset, net	$	245	$	659

Liabilities
	Current portion of operating lease liabilities	$	378	$	492
	Operating lease liabilities, net of current portion	68		236
	Total operating lease liabilities	$	446	$	728

-9-

During the three and six months ended June 30, 2022 and 2021, payments of ~~December 31, 2020,~~$125,000, $298,000, $218,000, and $451,000 were made on leases, respectively. The following table summarizes the ~~Company accounted for~~future undiscounted cash payments ~~that are due within 12~~reconciled to the lease liability (in thousands):


Remaining Lease Payments
2022	$	221
2023	225
2024	17
Total lease payments	463
Effect of discounting	(17)
Total lease liability	$	446

During the six months ended June 30, 2022, we did not enter into any new leases, we exited our Boston, MA and our Dallas, TX leases upon expiration, and we vacated two of the ~~balance sheet date as current liabilities~~properties in Los Angeles. The properties we vacated are under leases until May 2023 and ~~payments due thereafter as non-current liabilities. As of June 30, 2021,~~management does not expect to be able to sublet the properties given the limited time remaining ~~principal balance~~ on the ~~Note was $2,417,000 and $27,000 of interest has been accrued. As no payments will be made on the PPP Loan,~~leases. Therefore, due to not utilizing the ~~forgiveness notice received on July 28, 2021, we~~asset, management believes that the right-of-use assets attached to these leases have ~~classified the entire balance as long term as~~lost their value. An impairment charge of ~~June 30, 2021. Since the PPP Loan~~$179,000 was ~~forgiven in its entirety (including the principal balance and accrued interest), the Company will recognize other income as of the date of forgiveness,~~recorded for these assets during the three months ended ~~September~~June 30, 2022. During the year ended December 31, 2021, we entered into 1 new operating lease, modified 1 operating lease, and terminated 2 operating leases. The following table provides a reconciliation of activity for our right-of-use (“ROU”) assets and lease liabilities (in thousands):


	Right-of-Use Asset		Operating Lease Liability
Balance at December 31, 2020	$	903	$	1,432
Additions	60		60
Terminations and Modifications	192		156
Amortization and Payments	(496)		(920)

Balance at December 31, 2021	$	659	$	728


Amortization and Payments	(235)		(282)
Impairment Charges	(179)		—
Balance at June 30, 2022	$	245	$	446

The ROU assets and lease liabilities are recorded on the ~~extinguishment~~Company’s condensed consolidated Balance Sheets as of ~~the PPP Loan.~~June 30, 2022 and December 31, 2021.

Note 7 - Capital Stock

Common Stock

~~On February 1, 2021, the Company, acting pursuant to authorization from its Board of Directors, determined to voluntarily withdraw the listing of the~~The Company’s common stock, par value $0.0001 per share (the “Common Stock”), ~~from the NYSE American Stock Exchange (the “NYSE American”) and transfer such listing to~~is listed on The Nasdaq Capital Market (“Nasdaq”)~~. The Company’s listing and trading of its Common Stock on the NYSE American ended at market close on February 11, 2021, and~~

~~-11-~~

~~trading began on Nasdaq at market open on February 12, 2021, and is continuing to trade~~, under the ticker symbol “OBLG”. As of June 30, ~~2021,~~2022, we had 150,000,000 shares of our Common Stock authorized, with ~~30,729,331~~30,929,331 and ~~30,616,048~~30,816,048 shares of issued and outstanding, respectively.

~~During the six months ended June 30, 2021 and 2020, 18,846,411 and 50,000 shares of the Company’s Common stock were issued in relation to preferred stock conversions, respectively.~~

~~Issuance for Professional Service Fees~~

~~On December 10, 2020, the~~The Company ~~issued 50,000~~did not issue any shares of Common Stock ~~as payment for services, with a fair value equal to $348,000, related to a financial advisory agreement entered into on December 1, 2020.~~

On January 21, 2021, the Company issued 21,008 shares of Common Stock as payment for services, with a fair value equal to $100,000, related to a financial advisory agreement entered into on January 15, 2021.

~~During~~during the three and six months ended June 30, 2021, the Company expensed $116,000 and $390,000, respectfully, as professional service fees included as a component of general and administrative expense in the accompanying condensed consolidated statements of operations.2022.

~~Issuance Pursuant to Prospectus dated January 15, 2021~~

On June 30, 2021, the Company closed on a concurrent public offering of 4,000,000 shares of Common Stock, Series A Warrants to purchase 1,000,000 shares of the Company’s Common Stock at an exercise price of $4.00 per share, and private placement of Series B Warrants to purchase 3,000,000 shares of common stock at an exercise price of $4.40 per share for gross proceeds of $12,400,000. Issuance costs for this transaction were $896,000, resulting in net proceeds of $11,504,000.

~~Warrants~~

On October 21, 2020, the Company issued warrants to purchase up to 521,500 shares of Common Stock pursuant to a securities purchase agreement with certain accredited investors. The Warrants have a term of 2 years, are initially exercisable at $4.08 per share and are subject to cashless exercise if, at the time of exercise, the Warrant Shares are not subject to an effective resale registration statement. The Warrants are also subject to adjustment in the event of (i) stock splits and dividends, (ii) subsequent rights offerings, (iii) pro-rata distributions, and (iv) certain fundamental transactions, including but not limited to the sale of the Company, business combinations, and reorganizations. The Warrants do not have any price protection or price reset provisions with respect to future issuances of securities. The fair value of the Warrants was recorded to additional paid-in capital during the year ended December 31, 2020. As of June 30, 2021, 0 warrants had been exercised.

On December 6, 2020, the Company issued warrants to purchase up to 625,000 shares of Common Stock pursuant to a securities purchase agreement with certain accredited investors. The Warrants have a term of 2 years, are initially exercisable at $5.49 per share and are subject to cashless exercise if, at the time of exercise, the Warrant Shares are not subject to an effective resale registration statement. The Warrants are also subject to adjustment in the event of (i) stock splits and dividends, (ii) subsequent rights offerings, (iii) pro-rata distributions, and (iv) certain fundamental transactions, including but not limited to the sale of the Company, business combinations, and reorganizations. The Warrants do not have any price protection or price reset provisions with respect to future issuances of securities. The fair value of the Warrants was recorded to additional paid-in capital during the year ended December 31, 2020. As of June 30, 2021, 0 warrants had been exercised.

On June 30, 2021, the Company issued Series A Warrants to purchase up to 1,000,000 shares of Common Stock, and Series B Warrants to purchase up to 3,000,000 shares of Common Stock, pursuant to a securities purchase agreement with certain accredited investors. The Series A Warrants have a term of 6 months and are initially exercisable at $4.00 per share. The Series B Warrants have a term of 3 years, commencing six months and one day from the date of issuance, and are initially exercisable at $4.40 per share. All of the warrants are subject to cashless exercise if, at the time of exercise, the Warrant Shares are not subject to an effective resale registration statement. The Warrants are also subject to adjustment in the event of (i) stock splits and dividends, (ii) subsequent rights offerings, (iii) pro-rata distributions, and (iv) certain fundamental transactions, including but not limited to the sale of the Company, business combinations, and reorganizations. The Warrants do not have any price protection or price reset provisions with respect to future issuances of securities. The fair value of the Series A and B Warrants was recorded to additional paid-in capital during the six months ended June 30, 2021. As of June 30, 2021, 0 warrants had been exercised.

~~-12-~~-10-

Warrants

Warrants outstanding as of June 30, 2022 are as follows:


Issue Date	Warrants Issued	Exercise Price		Expiration Date
October 21, 2020	521,500	$	4.08	October 22, 2022
December 6, 2020	625,000	5.49		December 7, 2022
June 30, 2021 - Series A(1)	1,000,000	4.00		January 4, 2023
June 30, 2021 - Series B	3,000,000	4.40		June 30, 2024
	5,146,500
(1) Series A Warrants shown as amended on December 31, 2021

Warrant activity for the year ended December 31, 2021 is presented below. There was no warrant activity for the three or six months ended June 30, ~~2021 and the year ended December 31, 2020 is presented below.~~2022.


		Outstanding
		Number of Warrants (in thousands)	Weighted Average Exercise Price
Warrants outstanding and exercisable, December 31, 2019		72	0.01
Granted		1,147	4.85
Exercised		(72)	0.01
						Outstanding
						Number of Warrants (in thousands)	Weighted Average Exercise Price
Warrants outstanding and exercisable, December 31, 2020	Warrants outstanding and exercisable, December 31, 2020	1,147	$	4.85	Warrants outstanding and exercisable, December 31, 2020	1,146,500	$	4.85
Granted	Granted	4,000	4.30		Granted	4,000,000	4.30

Warrants outstanding and exercisable, June 30, 2021		5,147	$	4.42
Warrants outstanding and exercisable, December 31, 2021					Warrants outstanding and exercisable, December 31, 2021	5,146,500	4.42

Warrants outstanding and exercisable, June 30, 2022					Warrants outstanding and exercisable, June 30, 2022	5,146,500	$	4.42

Treasury Shares

The Company maintains ~~Treasury Stock~~treasury stock for the Common Stock shares bought back by the Company when withholding shares to cover taxes on ~~stock compensation transactions. The following table shows the activity for Treasury Stock during the year ended December 31, 2020 (in thousands).~~transactions related to equity awards. There were no treasury stock transactions during the six months ended June 30, ~~2021.~~

Shares Value
Treasury Shares as of December 31, 2019 105 $ (165)
Purchases to cover stock compensation taxes 8 $ (16)
Treasury Shares as of December 31, 2020 113 $ (181)
Treasury Shares as of June 30, 2021 113 $ (181)

~~Note 8 - Preferred Stock~~

Our Certificate of Incorporation authorizes the issuance of up to 5,000,000 shares of preferred stock. As of June 30, 2021, we had 1,941,250 designated shares of preferred stock and 0 shares of preferred stock issued and outstanding. As of December 31, 2020, we had 1,829,582 shares of preferred stock outstanding.

~~Series A-2 Preferred Stock~~

As of December 31, 2020, there were 45 shares of Series A-2 Preferred Stock issued and outstanding. Each share of Series A-2 Preferred Stock had a stated value of $7,500 per share (the “A-2 Stated Value”), a liquidation preference equal to the Series A-2 Stated Value, and was convertible at the holder’s election into common stock at a conversion price per share of $16.11. Therefore, each share of Series A-2 Preferred Stock was convertible into 466 shares of common stock, for an aggregate of 20,954 shares of common stock.

The Series A-2 Preferred Stock was senior to all outstanding classes of the Company’s equity and was entitled to cumulative dividends at a rate of 5.0% per annum. As of December 31, 2020, the Company had recorded $4,000 in accrued dividends on the accompanying condensed consolidated Balance Sheets related to the Series A-2 Preferred Stock outstanding. During the six months ended June 30, 2021, an additional $1,000 dividend was recorded.

On January 28, 2021, the Company entered into an agreement with the holder of the Series A-2 Preferred Stock to convert the stated value of all outstanding shares of the Series A-2 Preferred Stock, 45 shares, into 84,292 shares of the Company’s common stock, at a negotiated conversion price of $4.00 per share, after taking into consideration accrued and unpaid dividends. The incremental cost of inducing the conversion was approximately $300,000 and was treated similar to a preferred dividend, increasing the net loss attributable to common stockholders.

~~Series D and E Preferred Stock~~

In connection with the Oblong Industries acquisition, on October 1, 2019 (the “Closing Date”), the Company issued an aggregate of 1,686,659 shares of Series D Preferred Stock and an aggregate of 49,967 restricted shares of Series D Preferred

~~-13-~~

~~Stock (“Restricted Series D Preferred Stock”), the latter of which were subject to vesting over a two-year period following the closing date of the acquisition.~~

Pursuant to the terms of the Series D Certificate of Designations, each share of Series D Preferred Stock was entitled to receive an annual dividend equal to 6.0% of its then-existing Accrued Value per annum, commencing on the first anniversary of the issuance of the Series D Preferred Stock (or October 1, 2020). Prior to the first anniversary of the issuance of the Series D Preferred Stock no dividends accrued on such stock. Dividends were cumulative and accrued daily in arrears. The accrued value of the Series D Preferred Stock was increased by the amount of such dividends from October 1, 2020 through the date of conversion as described below.

~~During~~2022 or the year ended December 31, 2020, 28,618 shares of Restricted Series D Preferred Stock were forfeited and 8,325 shares of Series D Preferred Stock were surrendered to cover the taxes on vesting shares. During the three and six months ended June 30, 2021, 81 shares of Restricted Series D Preferred Stock were forfeited and 855 shares of Series D Preferred Stock were surrendered to cover the taxes on vesting shares.

On October 1, 2019, Oblong entered into a Series E Preferred Stock Purchase Agreement relating to the offer and sale by the Company of up to 131,579 shares of its Series E Preferred Stock at a price of $28.50 per share. The Company sold a total of 131,579 shares of Series E Preferred Stock for net proceeds of approximately $3,750,000. The 131,579 shares of Series E Preferred Stock had an aggregate accrued value of $3,750,000 and upon their conversion would convert at a conversion price of $2.85 per share into 1,315,790 common shares.

Pursuant to the terms of the Series E Certificate of Designations, each share of Series E Preferred Stock was entitled to receive an annual dividend equal to 6.0% of its then-existing Accrued Value per annum, commencing on the first anniversary of the issuance of the Series E Preferred Stock (or October 1, 2019 or December 18, 2019, as applicable). Prior to the first anniversary of the issuance of the Series E Preferred Stock no dividends accrued on such stock. Dividends were cumulative and accrue daily in arrears. The accrued value of the Series E Preferred Stock was increased by the amount of such dividends from October 1, 2020 through the date of conversion as described below.

The terms of the Company’s Series D and Series E Preferred Stock provided that such shares were automatically convertible into a number of shares of the Company’s Common Stock equal to the accrued value of the preferred shares (initially $28.50), plus any accrued dividends thereon, divided by the conversion price (initially $2.85 per share, subject to specified adjustments) upon the completion of both (i) approval of such conversion by the Company’s stockholders entitled to vote thereon (which occurred on December 19, 2019); and (ii) the receipt of all required authorizations and approval of a new listing application for the Company following the Company’s October 2019 acquisition of Oblong Industries, Inc. from the NYSE American or any such other exchange upon which the Company’s securities are then listed for trading. The Company determined that this conversion condition was completed in its entirety, and the Series D and E Preferred Stock automatically converted to shares of Common Stock pursuant to their terms, effective upon the commencement of trading of the Company’s Common Stock on Nasdaq as described above, on February 12, 2021.

As of the date of conversion, the Company had 1,697,022 shares of Series D Preferred Stock and 131,579 shares of Series E Preferred Stock outstanding, respectively. The outstanding shares of Series D and Series E Preferred stock were converted into 17,416,939 and 1,345,180 shares of Common Stock, respectively, after taking into consideration all accrued and unpaid dividends.

~~Following the conversion of the Series A-2, Series D, and Series E Preferred Stock, the Company no longer has shares of Preferred Stock issued and outstanding.~~

Note 98 - Stock Based Compensation

2019 Equity Incentive Plan

On December 19, 2019, the Oblong, Inc. 2019 Equity Incentive Plan (the “2019 Plan”) was approved by the Company’s stockholders at the Company’s 2019 Annual Meeting of Stockholders. The 2019 Plan is an omnibus equity incentive plan pursuant to which the Company may grant equity and cash incentive awards to certain key service providers of the Company and its subsidiaries. As of June 30, ~~2021,~~2022, the share pool available for new grants under the 2019 Plan is ~~2,713,500.~~2,663,500.

Stock Options

~~-14-~~

OnFor the six months ended June 28, 2021, the Company granted 300,000 stock options to certain employees. These options have a term of 10 years, vest equally over 3 years, upon the anniversary of the grant date, and have an exercise price of $3.25 per share. Using the Black-Scholes option pricing model, the options were determined to have a fair value of $745,000 which will be expensed ratably over the vesting term. NaN30, 2022 no stock options were granted, ~~during~~50,000 stock options vested, 7,500 vested stock options expired and 150,000 unvested stock options were forfeited. In accordance with the ~~year~~2019 Plan, these cancelled unvested options were added back into the share pool. For the six months ended ~~December 31, 2020. The fair value of each~~June 30, 2021, 300,000 stock ~~option granted was estimated using the following weighted average assumptions:~~


			~~Six Months Ended June 30, 2021~~
~~Risk free interest rate~~			~~0.47%~~
~~Expected maturity~~			~~3 years~~
~~Expected volatility~~			~~1.36~~

~~Expected dividend yields~~			0
~~Weighted average grant date market value per share~~			~~$3.25~~

options were granted.

A summary of stock options ~~activity~~granted, expired, and forfeited under our plans, and options outstanding as of, and changes made during, the six months ended June 30, ~~2021~~2022 and the year ended December 31, ~~2020~~2021 is presented below:

Outstanding Exercisable
Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price
Options outstanding, December 31, 2019 215,345 $ 12.27 215,345 $ 12.27
Expired (107,845) 4.92 — —
Options outstanding, December 31, 2020 107,500 $ 19.64 107,500 $ 19.64
Granted 300,000 3.25 — —
Options outstanding, June 30, 2021 407,500 $ 7.57 107,500 $ 19.64

-11-


	Outstanding			Exercisable
	Number of Options	Weighted Average Exercise Price		Number of Options	Weighted Average Exercise Price
Options outstanding and exercisable, December 31, 2020	107,500	$	19.64	107,500	$	19.64
Granted	300,000	3.25		—	—



Options outstanding and exercisable, December 31, 2021	407,500	7.57		107,500	19.64


Vested	—	—		50,000	3.25
Expired	(7,500)	27.40		(7,500)	27.40
Forfeited	(150,000)	3.25		—	—
Options outstanding and exercisable, June 30, 2022	250,000	$	9.57	150,000	$	12.98

Additional information as of June 30, ~~2021~~2022 is as follows:

Outstanding Exercisable
Range of price Number
of Options Weighted
Average
Remaining
Contractual
Life (In Years) Weighted
Average
Exercise
Price Number
of Options Weighted
Average
Exercise
Price
$0.00 – $10.00 302,500 9.93 $ 3.30 2,500 $ 9.00
$10.01 – $20.00 97,500 1.56 19.32 97,500 19.32
$20.01 – $30.00 2,500 0.94 21.80 2,500 21.80
$30.01 – $40.00 5,000 0.70 30.20 5,000 30.20
407,500 7.76 $ 7.57 107,500 $ 19.64


	Outstanding				Exercisable
Range of price	Number of Options	Weighted Average Remaining Contractual Life (In Years)	Weighted Average Exercise Price		Number of Options	Weighted Average Exercise Price
$0.00 – $10.00	152,500	8.88	$	3.34	52,500	$	1.20
$10.01 – $20.00	97,500	0.56	19.32		97,500	19.32



	250,000	5.63	$	9.57	150,000	$	12.98

The intrinsic value of vested options, unvested options and exercised options were 0tnot significant for all periods presented. ~~There was 0~~Net stock compensation expense, related to stock options, for the ~~three and~~ six months ended June 30, ~~2021~~2022 was a negative $1,000 made up of $83,000 in expense and ~~2020, and $745,000~~$84,000 in forfeiture credits. No stock compensation expense, related to stock options, was recorded for the six months ended June 30, 2021. The remaining as unrecognized stock-based compensation expense for options as of June 30, ~~2021.~~

2022 is $247,000, which will be recognized over a weighted average period of 2.00 years.

Restricted Stock Awards

As of June 30, ~~2021~~2022 and ~~2020,~~2021, there were 627 unvested restricted stock awards outstanding, with a weighted average grant date price of $15.80. The awards were issued in 2014 and vest over the lesser of ten years, a change in control, or separation from the company. Due to the variability of the vesting, the expense was amortized over an average service period of five ~~years;~~years, therefore, there is 0no unrecognized stock-based compensation expense for restricted stock awards ~~for the three and six months ended~~as of June 30, ~~2021 or 2020.~~2022.

~~-15-~~

Restricted Stock Units

As of June 30, ~~2021~~2022 and ~~2020,~~2021, there were 0no unvested restricted stock units (“RSUs”) ~~outstanding and~~outstanding. As of June 30, 2022, 28,904 vested RSUs remain outstanding as shares of common stock have not yet been delivered for these units in accordance with the terms of the RSUs.

There was 0no stock compensation expense ~~for~~related to RSUs for the three and six months ended June 30, ~~2021,~~2022 and ~~there was 0 and $6,000 stock compensation expense for RSUs for the three and six months ended June 30, 2020, respectively, which was included in general and administrative expense.~~2021. There was 0no remaining unrecognized stock-based compensation expense for RSUs ~~at June 30, 2021.~~

~~Restricted Series D Preferred Stock~~

In connection with the acquisition of Oblong Industries in 2019, all options to purchase shares of Oblong Industries’ common stock held by existing employees of Oblong Industries were canceled and exchanged for an aggregate of 49,967 shares of Restricted Series D Preferred Stock, which were subject to vesting over a two-year period following the closing date. This vesting period and compensation expense were accelerated, in February 2021, when the Restricted Series D shares were converted to shares of Common Stock. Refer to ~~Note 8 - Preferred Stock~~ ~~for discussion on the conversion of the Series D Restricted Preferred Stock.~~

~~Stock-based compensation expense relating to Restricted Series D Preferred Stock is allocated~~ as ~~follows (in thousands):~~

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Research and development $ 0 $ 14 $ 17 $ 28
Sales, general and administrative $ 0 $ 15 $ 16 $ 27
$ 0 $ 29 $ 33 $ 55

During the six months ended June 30, 2021 81 shares of Restricted Series D Preferred Stock were forfeited. During the three and six months ended June 30, 2020, 17,364 and 31,805 shares of Restricted Series D Preferred Stock were forfeited, respectively. As of June 30, ~~2021, 0 shares of Restricted Series D Preferred Stock remain outstanding and there was 0 remaining unrecognized stock compensation expense.~~2022.

Note 109 - Net Loss Per Share

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. The weighted-average number of shares of common stock outstanding does 0tnot include any potentially dilutive securities or unvested restricted stock. Unvested restricted stock, although classified as issued and outstanding at June 30, ~~2021~~2022 and ~~2020,~~2021, is considered contingently returnable until the restrictions lapse and will not be included in the basic net loss per share calculation until the shares are vested. Unvested restricted stock does not

-12-

contain non-forfeitable rights to dividends and dividend equivalents. Unvested RSUs are not included in calculations of basic net loss per share, as they are not considered issued and outstanding at time of grant.

Diluted net loss per share is computed by giving effect to all potential shares of common stock, including stock options, preferred stock, RSUs, and unvested restricted stock, to the extent they are dilutive. For the three and six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, all such common stock equivalents have been excluded from diluted net loss per share as the effect to net loss per share would be anti-dilutive (due to the net loss).

The following table sets forth the computation of the Company’s basic and diluted net loss per share (in thousands, except per share data):

~~-16-~~


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Numerator:	Numerator:									Numerator:
Net loss	Net loss	$	(2,246)	$	(3,385)	$	(5,679)	$	(6,514)	Net loss	$	(9,033)	$	(2,246)	$	(13,572)	$	(5,679)
Less: preferred stock dividends	Less: preferred stock dividends	0		(4)		(1)		(8)		Less: preferred stock dividends	—		—		—		(1)
Less: undeclared dividends	Less: undeclared dividends	0		0		$	(366)	$	0	Less: undeclared dividends	—		—		—		(366)
Less: loss on induced conversion of Series A-2 Preferred Stock	Less: loss on induced conversion of Series A-2 Preferred Stock	0		0		$	(300)	$	0	Less: loss on induced conversion of Series A-2 Preferred Stock	—		—		—		(300)

Net loss attributable to common stockholders	Net loss attributable to common stockholders	$	(2,246)	$	(3,389)	$	(6,346)	$	(6,522)	Net loss attributable to common stockholders	$	(9,033)	$	(2,246)	$	(13,572)	$	(6,346)
Denominator:	Denominator:									Denominator:
Weighted-average number of shares of common stock for diluted net loss per share		26,644		5,240		22,250		5,222
Weighted-average number of shares of common stock										Weighted-average number of shares of common stock	30,816		26,644		30,816		22,250
Basic and diluted net loss per share										Basic and diluted net loss per share	$	(0.29)	$	(0.08)	$	(0.44)	$	(0.29)

Basic and diluted net loss per share		$	(0.08)	$	(0.65)	$	(0.29)	$	(1.25)

The following table represents the potential shares that were excluded from the computation of weighted-average number of shares of common stock in computing the diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect (due to the net loss):

Six Months Ended
June 30,
2021 2020
Outstanding stock options 407,500 215,345
Unvested restricted stock awards 627 627
Shares of common stock issuable upon conversion of Series A-2 preferred stock 0 15,545
Shares of common stock issuable upon conversion of Series C preferred stock 0 108,333
Shares of common stock issuable upon conversion of Series D preferred stock 0 17,030,960
Shares of common stock issuable upon conversion of Series E preferred stock 0 1,315,790
Warrants 5,146,500 72,394


	Three and Six Months Ended June 30,
	2022	2021
Unvested restricted stock awards	627	627

Outstanding stock options	250,000	407,500
Warrants	5,146,500	5,146,500

Note 1110 - Segment Reporting

The Company currently operates in 2 segments: (1) “Managed Services”, which represents the Oblong ~~(formerly~~(former Glowpoint) business ~~which includes~~surrounding managed services for video collaboration and network applications; and (2) “Collaboration Products” which represents the Oblong Industries business ~~which includes products and services for visual collaboration technologies.~~surrounding our Mezzanine™ product offerings.

Certain information concerning the Company’s segments for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 is presented in the following tables (in thousands):

~~-17-~~-13-


		Three Months Ended June 30, 2021												Three Months Ended June 30, 2022
		Oblong (formerly Glowpoint)			Oblong Industries			Corporate		Total				Managed Services			Collaboration Products			Corporate		Total
Revenue	Revenue	$	1,078		$	971		$	0	$	2,049		Revenue	$	810		$	523		$	—	$	1,333
Cost of revenues	Cost of revenues	739			510			0		1,249			Cost of revenues	525			401			—		926
Gross profit	Gross profit	$	339		$	461		$	0	$	800		Gross profit	$	285		$	122		$	—	$	407
Gross profit %	Gross profit %	31		%	47		%			39		%	Gross profit %	35		%	23		%			31		%

Allocated operating expenses	Allocated operating expenses	$	82		$	1,796		$	0	$	1,878		Allocated operating expenses	$	1		$	8,254		$	—	$	8,255
Unallocated operating expenses	Unallocated operating expenses	$	0		$	0		1,400		1,400			Unallocated operating expenses	—			—			1,185		1,185
Total operating expenses	Total operating expenses	$	82		$	1,796		$	1,400	$	3,278		Total operating expenses	$	1		$	8,254		$	1,185	$	9,440

Income (loss) from operations	Income (loss) from operations	$	257		$	(1,335)		$	(1,400)	$	(2,478)		Income (loss) from operations	$	284		$	(8,132)		$	(1,185)	$	(9,033)
Interest and other expense (income), net		9			(241)			0		(232)
Interest and other expense, net													Interest and other expense, net	—			—			—		—
Net income (loss) before tax	Net income (loss) before tax	$	248		$	(1,094)		$	(1,400)	$	(2,246)		Net income (loss) before tax	$	284		$	(8,132)		$	(1,185)	$	(9,033)
Income tax		$	0		$	0		$	0	$	0
Income tax expense													Income tax expense	(1)			1			—		—
Net income (loss)	Net income (loss)	$	248		$	(1,094)		$	(1,400)	$	(2,246)		Net income (loss)	$	285		$	(8,133)		$	(1,185)	$	(9,033)


		Six Months Ended June 30, 2021												Six Months Ended June 30, 2022
		Oblong (formerly Glowpoint)			Oblong Industries			Corporate		Total				Managed Services			Collaboration Products			Corporate		Total
Revenue	Revenue	$	2,273		$	1,694		$	0	$	3,967		Revenue	$	1,776		$	1,089		$	—	$	2,865
Cost of revenues	Cost of revenues	1,572			967			0		2,539			Cost of revenues	1,170			789			—		1,959
Gross profit	Gross profit	$	701		$	727		$	0	$	1,428		Gross profit	$	606		$	300		$	—	$	906
Gross profit %	Gross profit %	31		%	43		%			36		%	Gross profit %	34		%	28		%			32		%

Allocated operating expenses	Allocated operating expenses	$	193		$	3,626		$	0	$	3,819		Allocated operating expenses	$	57		$	11,529		$	—	$	11,586
Unallocated operating expenses	Unallocated operating expenses	0			0			3,498		3,498			Unallocated operating expenses	0			0			2,875		2,875
Total operating expenses	Total operating expenses	$	193		$	3,626		$	3,498	$	7,317		Total operating expenses	$	57		$	11,529		$	2,875	$	14,461

Income (loss) from operations	Income (loss) from operations	$	508		$	(2,899)		$	(3,498)	$	(5,889)		Income (loss) from operations	$	549		$	(11,229)		$	(2,875)	$	(13,555)
Interest and other expense (income), net		14			(224)			0		(210)
Interest and other expense, net													Interest and other expense, net	6			—			—		6
Net income (loss) before tax	Net income (loss) before tax	$	494		$	(2,675)		$	(3,498)	$	(5,679)		Net income (loss) before tax	$	543		$	(11,229)		$	(2,875)	$	(13,561)
Income tax		$	0		$	0		$	0	$	0
Income tax expense													Income tax expense	8			3			—		11
Net income (loss)	Net income (loss)	$	494		$	(2,675)		$	(3,498)	$	(5,679)		Net income (loss)	$	535		$	(11,232)		$	(2,875)	$	(13,572)

~~-18-~~-14-


		Three Months Ended June 30, 2020												Three Months Ended June 30, 2021
		Oblong (formerly Glowpoint)			Oblong Industries			Corporate		Total				Managed Services			Collaboration Products			Corporate		Total
Revenue	Revenue	$	1,373		$	1,443		$	0	$	2,816		Revenue	$	1,078		$	971		$	—	$	2,049
Cost of revenues	Cost of revenues	898			785			0		1,683			Cost of revenues	739			510			—		1,249
Gross profit	Gross profit	$	475		$	658		$	0	$	1,133		Gross profit	$	339		$	461		$	—	$	800
Gross profit %	Gross profit %	35		%	46		%			40		%	Gross profit %	31		%	47		%			39		%

Allocated operating expenses	Allocated operating expenses	$	1,063		$	2,574		$	0	$	3,637		Allocated operating expenses	$	82		$	1,796		$	—	$	1,878
Unallocated operating expenses	Unallocated operating expenses	0			0			796		796			Unallocated operating expenses	—			—			1,400		1,400
Total operating expenses	Total operating expenses	$	1,063		$	2,574		$	796	$	4,433		Total operating expenses	$	82		$	1,796		$	1,400	$	3,278

Loss from operations		$	(588)		$	(1,916)		$	(796)	$	(3,300)
Income (loss) from operations													Income (loss) from operations	$	257		$	(1,335)		$	(1,400)	$	(2,478)
Interest and other expense, net	Interest and other expense, net	7			78			0		85			Interest and other expense, net	9			(241)			—		(232)
Net loss before taxes		$	(595)		$	(1,994)		$	(796)	$	(3,385)
Income tax		$	0		$	0		$	0	$	0
Net loss		$	(595)		$	(1,994)		$	(796)	$	(3,385)
Income (loss) before income taxes													Income (loss) before income taxes	$	248		$	(1,094)		$	(1,400)	$	(2,246)
Income tax expense													Income tax expense	—			—			—		—
Net income (loss)													Net income (loss)	$	248		$	(1,094)		$	(1,400)	$	(2,246)


		Six Months Ended June 30, 2020												Six Months Ended June 30, 2021
		Oblong (formerly Glowpoint)			Oblong Industries			Corporate		Total				Managed Services			Collaboration Products			Corporate		Total
Revenue	Revenue	$	3,417		$	4,727		$	0	$	8,144		Revenue	$	2,273		$	1,694		$	—	$	3,967
Cost of revenues	Cost of revenues	2,055			2,017			0		4,072			Cost of revenues	1,572			967			—		2,539
Gross profit	Gross profit	$	1,362		$	2,710		$	0	$	4,072		Gross profit	$	701		$	727		$	—	$	1,428
Gross profit %	Gross profit %	40		%	57		%			50		%	Gross profit %	31		%	43		%			36		%

Allocated operating expenses	Allocated operating expenses	$	2,212		$	5,985		$	0	$	8,197		Allocated operating expenses	$	193		$	3,626		$	—	$	3,819
Unallocated operating expenses	Unallocated operating expenses	0			0			2,162		2,162			Unallocated operating expenses	—			—			3,498		3,498
Total operating expenses	Total operating expenses	$	2,212		$	5,985		$	2,162	$	10,359		Total operating expenses	$	193		$	3,626		$	3,498	$	7,317

Loss from operations		$	(850)		$	(3,275)		$	(2,162)	$	(6,287)
Income (loss) from operations													Income (loss) from operations	$	508		$	(2,899)		$	(3,498)	$	(5,889)
Interest and other expense, net	Interest and other expense, net	7			220			0		227			Interest and other expense, net	14			(224)			—		(210)
Net loss before tax		$	(857)		$	(3,495)		$	(2,162)	$	(6,514)
Income tax		0			0			0		0
Net loss		(857)			(3,495)			$	(2,162)	$	(6,514)
Net income (loss) before tax													Net income (loss) before tax	$	494		$	(2,675)		$	(3,498)	$	(5,679)
Income tax expense													Income tax expense	—			—			—		—
Net income (loss)													Net income (loss)	$	494		$	(2,675)		$	(3,498)	$	(5,679)

Unallocated operating expenses in Corporate include costs for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 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.

For the three and six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, there was no material revenue attributable to any individual foreign country. ~~Approximately 1% of foreign revenue is billed in foreign currency and foreign currency gains and losses are not material.~~

-15-

Revenue by geographic area is allocated as follows (in thousands):

~~-19-~~


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Domestic	Domestic	$	1,227	$	1,854	$	2,242	$	5,456	Domestic	$	705	$	1,227	$	1,546	$	2,242
Foreign	Foreign	822		962		1,725		2,688		Foreign	628		822		1,319		1,725
		$	2,049	$	2,816	$	3,967	$	8,144		$	1,333	$	2,049	$	2,865	$	3,967

Disaggregated information for the Company’s revenue has been recognized in the accompanying condensed consolidated ~~statements~~Statements of ~~operations~~Operations and is presented below according to contract type (in thousands):


		Three Months Ended June 30,									Three Months Ended June 30,
		2021		% of Revenue		2020		% of Revenue			2022		% of Revenue		2021		% of Revenue
Revenue: Oblong (formerly Glowpoint)
Revenue: Managed Services										Revenue: Managed Services
Video collaboration services	Video collaboration services	$	230	11	%	$	428	15	%	Video collaboration services	$	79	6	%	$	230	11	%
Network services	Network services	830		41	%	891		32	%	Network services	723		54	%	830		41	%
Professional and other services	Professional and other services	18		1	%	54		2	%	Professional and other services	8		1	%	18		1	%
Total Oblong revenue		$	1,078	53	%	$	1,373	49	%
Total Managed Services revenue										Total Managed Services revenue	$	810	61	%	$	1,078	53	%

Revenue: Oblong Industries
Revenue: Collaboration Products										Revenue: Collaboration Products
Visual collaboration product offerings	Visual collaboration product offerings	$	942	46	%	923		33	%	Visual collaboration product offerings	$	520	39	%	$	942	46	%
Professional services		0		0	%	228		8	%

Licensing	Licensing	29		1	%	292		10	%	Licensing	3		—	%	29		1	%
Total Oblong Industries revenue		$	971	47	%	1,443		51	%
Total Collaboration Products revenue										Total Collaboration Products revenue	523		39	%	971		47	%
Total revenue	Total revenue	$	2,049	100	%	$	2,816	100	%	Total revenue	$	1,333	100	%	$	2,049	100	%


		Six Months Ended June 30,									Six Months Ended June 30,
		2021		% of Revenue		2020		% of Revenue			2022		% of Revenue		2021		% of Revenue
Revenue: Oblong (formerly Glowpoint)
Revenue: Managed Services										Revenue: Managed Services
Video collaboration services	Video collaboration services	$	521	13	%	$	1,473	18	%	Video collaboration services	$	195	7	%	$	521	23	%
Network services	Network services	1,711		43	%	1,816		22	%	Network services	1,544		54	%	1,711		75	%
Professional and other services	Professional and other services	41		1	%	128		2	%	Professional and other services	37		1	%	41		2	%
Total Oblong revenue		$	2,273	57	%	$	3,417	42	%
Total Managed Services revenue										Total Managed Services revenue	$	1,776	62	%	$	2,273	57	%

Revenue: Oblong Industries
Revenue: Collaboration Products										Revenue: Collaboration Products
Visual collaboration product offerings	Visual collaboration product offerings	$	1,635	41	%	3,245		40	%	Visual collaboration product offerings	$	1,082	38	%	$	1,635	80	%
Professional services		0		0	%	898		11	%

Licensing	Licensing	59		1	%	584		7	%	Licensing	7		—	%	59		3	%
Total Oblong Industries revenue		$	1,694	42.71	%	4,727		58	%
Total Collaboration Products revenue										Total Collaboration Products revenue	1,089		38	%	1,694		43	%
Total revenue	Total revenue	$	3,967	100	%	$	8,144	100	%	Total revenue	$	2,865	100	%	$	3,967	100	%

The Company considers a significant customer to be one that comprises more than 10% of the Company’s consolidated revenues or accounts receivable. 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.

-16-

Concentration of revenues was as follows:

~~-20-~~


			Three Months Ended June 30,						Three Months Ended June 30,
			2021		2020				2022		2021
		Segment	% of Revenue		% of Revenue			Segment	% of Revenue		% of Revenue
Customer A	Customer A	Oblong (formerly Glowpoint)	32	%	23	%	Customer A	Managed Services	48	%	32	%
Customer B	Customer B	Oblong Industries	0	%	20	%	Customer B	Collaboration Products	11	%	5	%


		Six Months Ended June 30,
		2022		2021
	Segment	% of Revenue		% of Revenue
Customer A	Managed Services	46	%	34	%

Six Months Ended June 30,
2021 2020
Segment % of Revenue % of Revenue
Customer A Oblong (formerly Glowpoint) 34 % 15 %
Customer B Oblong Industries 0 % 21 %

Concentration of accounts receivable was as follows:

As of June 30,
2021 2020
Segment % of Accounts Receivable % of Accounts Receivable
Customer A Oblong (formerly Glowpoint) 22 % 32 %
Customer B Oblong (formerly Glowpoint) 13 % 10 %
Customer C Oblong Industries 0 % 12 %


		As of June 30, 2022
		2022		2021
	Segment	% of Accounts Receivable		% of Accounts Receivable
Customer A	Managed Services	42	%	22	%
Customer B	Managed Services	7	%	13	%
Customer C	Collaboration Products	10	%	—	%

Note 1211 - Commitments and Contingencies

~~Operating Leases~~

~~We currently lease 3 facilities~~From time to time, we are subject to various legal proceedings arising in ~~Los Angeles, California, 1 facility in Boston, Massachusetts, and 1 facility in Dallas, Texas, all providing office space. We also lease space in City~~the ordinary course of ~~Industry, California, providing warehouse space. These leases expire between 2022 and 2023. During 2020,~~business, including proceedings for which we exited leases in Herndon, Virginia; Atlanta, Georgia; Houston, Texas; London, England, and a warehouse space in Los Angeles, California. In February 2021, we exited an office space lease in Los Altos, California, when the Company elected to not renew the lease. In June 2021, we entered into a settlement agreement with the landlord of our Munich, Germany office space, to exit the lease early in exchange for €125,000. At the timehave insurance coverage. As of the settlement, the remaining liability was €316,000, resulting in a gain of €191,000 ($227,000), which is recorded as other income on the condensed consolidated statement of operations. We currently occupy 2 of the facilities in Los Angeles and the warehouse space in City of Industry;date hereof, we have subleases in place for the third Los Angeles property, the Dallas property, and the Boston property. Lease expenses, net of common charges and sublet proceeds, for the three and six months ended June 30, 2021 and 2020 were $92,000, $167,000, $301,000, and $647,000, respectively.

The Company primarily leases facilities for office and data center space under non-cancellable operating leases for its U.S. and international locations that expire at various dates through 2023. For leases with a term greater than 12 months, the Company recognizes a right-of-use asset and a lease liability based on the present value of lease payments over the lease term. Variable lease payments are not ~~included in the lease payments~~party to ~~measure the lease liability and are expensed as incurred. The Company’s leases~~any legal proceedings that we currently believe will have ~~remaining terms~~a material adverse effect on our business, financial position, results of ~~one~~ ~~to three years and some of the leases include a Company option to extend the lease term for less than twelve months to five years,~~operations or more, which if reasonably certain to exercise, the Company includes in the determination of lease payments. The lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As the Company's leases do not provide a readily determinable implicit rate, the Company uses the incremental borrowing rate at lease commencement, which was determined using a portfolio approach, based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. Operating lease expense is recognized on a straight-line basis over the lease term.

~~-21-~~

Leases with an initial term of 12 months or less are not recognized on the balance sheet and the expense for these short-term leases is recognized on a straight-line basis over the lease term. Common area maintenance fees (or CAMs) and other charges related to these leases continue to be expensed as incurred.

~~The following provides balance sheet information related to leases as of June 30, 2021 (in thousands):~~


		~~June 30, 2021~~
~~Assets~~
	~~Operating lease, right-of-use asset, net~~	$	~~653~~

~~Liabilities~~
	~~Current portion of operating lease liabilities~~	$	~~734~~
	~~Operating lease liabilities, net of current portion~~	~~249~~
	~~Total operating lease liabilities~~	$	~~983~~

~~The following table summarizes the future undiscounted cash payments reconciled to the lease liability (in thousands):~~

Remaining Lease Payments
Remainder of 2021 $ 442
2022 508
2023 116
Total lease payments $ 1,066
Effect of discounting (83)
Total lease liability $ 983
liquidity.

COVID-19

On March 11, 2020, the World Health Organization announced that infections of the novel Coronavirus (COVID-19) had become pandemic, and on March 13, 2020, the U.S. President announced a National Emergency relating to the disease. There ~~is a possibility of~~has been continued widespread infection in the United States and abroad, ~~with~~as COVID-19 has had, and continues to have, a significant impact around the ~~potential~~world, prompting governments and businesses to take unprecedented measures in response. Such measures have included restrictions on travel and business operations, temporary closures of businesses, hybrid operations of businesses and for ~~catastrophic impact. National, state~~workers, and ~~local authorities have required or recommended social distancing and imposed or are considering~~ quarantine and ~~isolation measures on large portions of~~shelter-in-place orders. Some businesses have imposed vaccine mandates and many businesses are experiencing labor shortages. These factors have also impacted the ~~population, including mandatory business closures.~~supply chain, leading to significant delays and shortages. These measures, while intended to protect human life, ~~are expected to~~ have had serious adverse impacts on domestic and foreign ~~economies of uncertain~~economies. The severity and ~~duration. Some economists~~duration of such impacts are ~~predicting~~uncertain as new variants of the ~~United States~~COVID-19 virus emerge and a resulting surge in diagnosed cases may ~~soon enter a recession.~~be seen. The sweeping nature of the coronavirus pandemic makes it extremely difficult to predict how the Company’s business and operations will be affected in the longer run. The COVID-19 pandemic has materially affected our revenue and results of operations for 2020, 2021, and the ~~three and~~ six months ended June 30, ~~2021,~~2022. The decreases in our revenue are primarily attributable to the effects of the global pandemic on our channel partners and customers as ~~we experienced~~they evaluate how and when to re-open their commercial real estate footprints. The Company’s results reflect the challenges due to long and unpredictable sales cycles, delays in customer retrofit budgets, project starts, and supply delayed orders in our distribution channels as a direct result of customer implementation schedules shifting due to the ~~ongoing~~ COVID-19 pandemic. The ~~extent~~COVID-19 pandemic in particular has, and may continue to ~~which~~have, a significant economic and business impact on our Company. During 2020, 2021, and the ~~coronavirus~~first half of 2022, we have seen a continuing weakness in revenue as our customers across all sectors delayed order placements in reaction to the ongoing impacts ~~our future results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity~~ of the ~~coronavirus~~COVID-19 pandemic that caused our customers to suspend or postpone real estate retrofit projects due to budget and occupancy uncertainties. We continue to monitor the impact of the COVID-19 pandemic on our customers, suppliers and logistics providers, and to evaluate governmental actions being taken to ~~contain~~curtail and respond to the ~~coronavirus or treat its~~spread of the virus. The significance and duration of the ongoing impact ~~among others. Moreover, the coronavirus outbreak has begun to have indeterminable~~on us is still uncertain. Material adverse effects of the COVID-19 pandemic on ~~general commercial activity~~market drivers, our customers, suppliers or logistics providers could significantly impact our operating results. We will continue to actively follow, assess and analyze the ~~world economy,~~ongoing

-17-

impact of the COVID-19 pandemic and adjust our organizational structure, strategies, plans and processes to respond. Because the situation continues to evolve, we cannot reasonably estimate the ultimate impact to our business, ~~and~~ results of operations, ~~could be adversely affected to~~cash flows and financial position that the ~~extent that this coronavirus or any other epidemic harms the global economy generally and/or the markets in which we operate specifically. Any~~COVID-19 pandemic may have. Continuation of the ~~foregoing factors, or other cascading effects of the coronavirus~~COVID-19 pandemic ~~that are not currently foreseeable,~~and government actions in response thereto could ~~materially increase~~cause further disruptions to our ~~costs, negatively impact our revenues and damage the Company’s results of~~ operations and ~~its~~the operations of our customers, suppliers and logistics partners and could significantly adversely affect our near-term and long-term revenues, earnings, liquidity position, possibly to a significant degree. The duration of any such impacts cannot be predicted. Uncertainties resulting from COVID-19 may result in additional customers delaying budget expenditures or re-allocating resources, which would result in a decrease in orders from these customers. Any such decrease in orders from these customers could cause a material adverse effect on our revenues and ~~financial results and our ability to generate positive~~ cash flows.

~~NOTE 13 - Subsequent Events~~

~~On July 28, 2021, the Company received notice from the Lender of our PPP Loan (discussed in~~ ~~Note 6 - Debt~~),that the PPP Loan had been forgiven in its entirety on July 26, 2021. In accordance with ASC 470, since the PPP Loan was forgiven, the Company will recognize other income as of the date of forgiveness, during the three months ended September 30, 2021, for the extinguishment of the debt and accrued interest.

~~-22-~~-18-

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

~~Oblong, Inc. (“Oblong” or “we” or “us” or the “Company”) was formed as~~We are a ~~Delaware corporation in May 2000~~provider of patented multi-stream collaboration products and prior to March 6, 2020, was named Glowpoint, Inc. (“Glowpoint”). On October 1, 2019, the Company closed an acquisition of all of the outstanding equity interests of Oblong Industries, Inc., a privately held Delaware corporation founded in 2006. Pursuant to the merger Agreement Oblong Industries became a wholly owned subsidiary of the Company. On March 6, 2020, Glowpoint changed its name to Oblong, Inc. In this Report, we use the terms “Oblong” or “we” or “us” or the “Company” to refer to (i) Oblong (formerly Glowpoint),managed services for ~~periods prior to the closing of the merger~~video collaboration and (ii) the “Company” of Oblong, Inc. (formerly Glowpoint) and Oblong Industries for periods after the closing of the merger. For purposes of segment reporting, we refer to the Oblong (formerly Glowpoint) business as “Glowpoint” herein, and to the Oblong Industries business as “Oblong Industries” herein.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.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. 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™ substantially enhances day-to-day virtual meetings with technology that accelerates decision making, improves communication, and increases productivity. Mezzanine™ scales up to support the most immersive and commanding innovation centers; across to link labs, conference spaces, and situation rooms; and down for the smallest work groups. Mezzanine’s digital collaboration platform can be sold as delivered systems in various configurations for small teams to total immersion experiences. The family includes the 200 Series (two display screen), 300 Series (three screen), and 600 Series (six screen). We ~~believe there is a substantial market opportunity for Oblong Industries’ product offerings~~also sell maintenance and ~~services, and we are in the process of transforming our offerings~~support contracts related to meet the evolving needs of our customers. As part of the transformation of our business, we are evolving certain aspects of our model by designing and developing software to include subscription-based offerings. Mezzanine™.

Historically, ~~our technology~~customers have used Mezzanine™ products ~~and services have been developed and consumed~~ in conventional commercial real estate spaces such as conference rooms. As discussed below, sales of our ~~core collaboration products evolve, we~~Mezzanine product have been adversely affected by commercial response to the COVID-19 pandemic. We expect to ~~add more contemporary software features along~~continue to invest in product development and sales and marketing expenses with ~~expanded accessibility beyond commercial spaces through both hybrid and SaaS offerings delivered~~the goal of growing the Company’s revenue in the ~~cloud.~~future. These initiatives will require significant investment in technology and product development and sales and marketing. We believe additional capital will be required to fund these investments and our operations.

Managed Services for Video Collaboration

~~Oblong’s (formerly Glowpoint) business has experienced revenue declines~~

We provide a range of managed services for video collaboration, from automated to orchestrated, to simplify the user experience in ~~recent years which we expect~~an effort to ~~continue.~~drive adoption of video collaboration throughout our customers’ enterprise. We ~~currently expect to continue operating the Oblong (formerly Glowpoint) business~~deliver our services through a hybrid service platform or as ~~part~~a service layer on top of our ~~Company, however,~~customers’ video infrastructure. We provide our customers with i) managed videoconferencing, where we ~~plan~~set up and manage customer videoconferences and ii) remote service management, where we provide 24/7 support and management of customer video environments.

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 ~~seek opportunities in~~our customers on a subscription basis. Our network services business carries variable costs associated with the ~~future to divest some or all~~purchasing and reselling of ~~Oblong’s (formerly Glowpoint) business.~~this connectivity.

Oblong’s Results of Operations

Three Months Ended June 30, ~~2021~~2022 (the “~~2021~~2022 Second Quarter”) compared to the Three Months Ended June 30, ~~2020~~2021 (the ~~“2020~~“2021 Second Quarter”)

Segment Reporting

The Company currently operates in two segments: 1)(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 ~~which mainly consists of~~surrounding managed services for video collaboration and network ~~applications and 2) the Oblong Industries business, which consists of products and services for visual collaboration technologies.~~solutions. Certain information concerning the Company’s segments for the three months ended June 30, 2022 is presented in the following table (in thousands):

-19-


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

Allocated operating expenses	$	1		$	8,254		$	—	$	8,255
Unallocated operating expenses	—			—			1,185		1,185
Total operating expenses	$	1		$	8,254		$	1,185	$	9,440

Income (loss) from operations	$	284		$	(8,132)		$	(1,185)	$	(9,033)
Interest and other expense, net	—			—			—		—
Net income (loss) before tax	$	284		$	(8,132)		$	(1,185)	$	(9,033)
Income tax expense	(1)			1			—		—
Net income (loss)	$	285		$	(8,133)		$	(1,185)	$	(9,033)

Unallocated operating expenses in Corporate include costs during the 2022Second Quarter 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.

Revenue. Total revenue decreased 35% in the 2022 Second Quarter compared to the 2021 Second Quarter. The following table summarizes the changes in components of our revenue (in thousands), and the significant changes in revenue are discussed in more detail below.


	Three Months Ended June 30,
	2022		% of Revenue		2021		% of Revenue
Revenue: Managed Services
Video collaboration services	$	79	6	%	$	230	11	%
Network services	723		54	%	830		41	%
Professional and other services	8		1	%	18		1	%
Total Managed Services revenue	$	810	61	%	$	1,078	53	%

Revenue: Collaboration Products
Visual collaboration product offerings	$	520	39	%	$	1,635	46	%
Licensing	3		—	%	59		1	%
Total Collaboration Products revenue	$	523	39	%	$	971	47	%
Total revenue	$	1,333	100	%	$	2,049	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 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.

-20-

•We expect revenue declines in our Managed Services segment will continue in the future.

Collaboration Products

•The decrease in revenue for visual collaboration product offerings is primarily attributable to the effects of the COVID-19 pandemic on our existing and target customers as they evaluate how and when to re-open their conventional office and conference facility footprints, as Mezzanine™ products are currently used in conventional spaces such as conference rooms. The Company’s results reflect the challenges due to long and unpredictable sales cycles, delays in customer retrofit budgets, project starts, and supply delayed orders in our distribution channels as a direct result of customer implementation schedules shifting due to the COVID-19 pandemic. The COVID-19 pandemic in particular has, and may continue to have, a significant economic and business impact on our Company. During 2020, 2021 and ~~2020~~the first half of 2022, we saw a weakness in revenue as our prospective customers across all sectors delayed order placements in reaction to the ongoing impacts of the pandemic that caused our customers to suspend or postpone real estate retrofit projects due to budget and occupancy uncertainties. We continue to monitor the impact of the pandemic on our customers, suppliers and logistics providers, and evaluate governmental actions being taken to curtail and respond to the spread of the virus. The significance and duration of the ongoing impact on us is still uncertain. Material adverse effects of the COVID-19 pandemic on market drivers, our customers, suppliers or logistics providers may be expected to continue to significantly impact our operating results. We will continue to actively follow, assess and analyze the ongoing impact of the pandemic and adjust our organizational structure, strategies, plans and processes to respond. Because the situation continues to evolve, we cannot reasonably estimate the ultimate impact to our business, results of operations, cash flows and financial position that the pandemic may have. Continuation of thepandemic and government actions in response thereto could cause further disruptions to our operations and the operations of our customers, suppliers and logistics partners and may be expected to continue to significantly adversely affect our near-term and long-term revenues, earnings, liquidity and cash flows.

Cost of Revenue (exclusive of depreciation and amortization and casualty loss). Cost of revenue, exclusive of depreciation and amortization and casualty 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 by segment is presented in the following table (in thousands):


	Three Months Ended June 30,
	2022		2021
Cost of Revenue
Managed Services	$	525	$	739
Collaboration Products	401		510
Total cost of revenue	$	926	$	1,249

The decrease in cost of revenue is mainly attributable to lower costs associated with the decrease in revenue during the same period. The Company’s gross profit as a percentage of revenue was 31% in the 2022 Second Quarter compared to 39% in the 2021 Second Quarter.

-21-

Operating expenses are presented in the following table (in thousands):


	Three Months Ended June 30,
	2022		2021		$ Change		% Change
Operating expenses:
Research and development	$	398	$	599	$	(201)	(34)	%
Sales and marketing	317		572		(255)		(45)	%
General and administrative	1,185		1,383		(198)		(14)	%
Impairment charges	6,408		17		6,391		37594	%
Casualty loss	533		—		533		100	%
Depreciation and amortization	599		707		(108)		(15)	%
Total operating expenses	$	9,440	$	3,278	$	6,162	188	%

Research and Development. Research and development expenses include internal and external costs related to developing new product offerings as well as features and enhancements to our existing product offerings. The decrease in research and development expenses for the 2022 Second Quarter compared to the 2021 Second Quarter is primarily attributable to lower personnel costs due to reduced headcount, partially offset by a $66,000 increase in consulting and outsourced labor costs between these periods.

Sales and Marketing Expenses. The decrease in sales and marketing expenses for 2022 Second Quarter compared to the 2021 Second Quarter is mainly attributable to the lower personnel costs due to reduced headcount and lower marketing costs.

Impairment Charges. The impairment charges in the 2022 Second Quarter are mainly attributable to impairment charges on goodwill for our Collaboration Products reporting unit, and the impairment in the 2021 Second Quarter was attributable to impairment charges on property and equipment no longer in service. Future declines of our revenue, cash flows and/or stock price may give rise to a triggering event that may require the Company to record impairment charges in the future related to our intangible assets and other long-lived assets.

Casualty Loss. During the second quarter of 2022, the Company discovered that $533,000 of inventory was stolen from the Company’s warehouse in City of Industry, California. This theft has been recorded as a casualty loss of $533,000 during the three and six months ended June 30, 2022 on the Company’s condensed consolidated Statements of Operations. The theft is being investigated further by the Los Angeles, CA Sheriff’s Department and a claim has been filed with the Company’s insurance company. We are seeking to recover the majority of the loss through our insurance policies and we will offset the casualty loss with the recognition of a gain of any proceeds should we subsequently receive them from our insurance company. No assurances can be provided that we will be successful in recovering any or all of the casualty loss.

Depreciation and Amortization. The decrease in depreciation and amortization expenses for the 2022 Second Quarter compared to the 2021 Second Quarter is mainly attributable to the disposition and impairment of certain assets during the second half of 2021 and the first half of 2022, as well as a decrease in depreciation as certain assets became fully depreciated.

Loss from Operations. The increase in the Company’s loss from operations for the 2022 Second Quarter compared to the 2021 Second Quarter is mainly attributable to lower revenue and gross profit and higher operating expenses as addressed above.

-22-

Six Months Ended June 30, 2022 compared to the Six Months Ended June 30, 2021

Segment Reporting

Certain information concerning the Company’s two segments for the six months ended June 30, 2022 is presented in the following table (in thousands):

~~-23-~~

Three Months Ended June 30, 2021
Oblong (formerly Glowpoint) Oblong Industries Corporate Total
Revenue $ 1,078 $ 971 $ — $ 2,049
Cost of revenues 739 510 — 1,249
  Gross profit $ 339 $ 461 $ — $ 800
  Gross profit % 31 % 47 % 39 %
Allocated operating expenses $ 82 $ 1,796 $ — $ 1,878
Unallocated operating expenses $ — $ — 1,400 1,400
  Total operating expenses $ 82 $ 1,796 $ 1,400 $ 3,278
Income (loss) from operations $ 257 $ (1,335) $ (1,400) $ (2,478)
Interest and other expense (income), net 9 (241) $ — (232)
Net income (loss) before tax $ 248 $ (1,094) $ (1,400) $ (2,246)
Income tax $ — $ — $ — $ —
Net income (loss) $ 248 $ (1,094) $ (1,400) $ (2,246)


		Three Months Ended June 30, 2020												Six Months Ended June 30, 2022
		Oblong (formerly Glowpoint)			Oblong Industries			Corporate		Total				Managed Services			Collaboration Products			Corporate		Total
Revenue	Revenue	$	1,373		$	1,443		$	—	$	2,816		Revenue	$	1,776		$	1,089		$	—	$	2,865
Cost of revenues	Cost of revenues	898			785			—		1,683			Cost of revenues	1,170			789			—		1,959
Gross profit	Gross profit	$	475		$	658		$	—	$	1,133		Gross profit	$	606		$	300		$	—	$	906
Gross profit %	Gross profit %	35		%	46		%			40		%	Gross profit %	34		%	28		%			32		%

Allocated operating expenses	Allocated operating expenses	$	1,063		$	2,574		$	—	$	3,637		Allocated operating expenses	$	57		$	11,529		$	—	$	11,586
Unallocated operating expenses	Unallocated operating expenses	$	—		$	—		796		796			Unallocated operating expenses							2,875		2,875
Total operating expenses	Total operating expenses	$	1,063		$	2,574		$	796	$	4,433		Total operating expenses	$	57		$	11,529		$	2,875	$	14,461

Loss from operations		$	(588)		$	(1,916)		$	(796)	$	(3,300)
Income (loss) from operations													Income (loss) from operations	$	549		$	(11,229)		$	(2,875)	$	(13,555)
Interest and other expense, net	Interest and other expense, net	7			78			$	—	85			Interest and other expense, net	6			—			—		6
Net loss before taxes		$	(595)		$	(1,994)		$	(796)	$	(3,385)
Income tax		$	—		$	—		$	—	$	—
Net loss		$	(595)		$	(1,994)		$	(796)	$	(3,385)
Net income (loss) before tax													Net income (loss) before tax	$	543		$	(11,229)		$	(2,875)	$	(13,561)
Income tax expense													Income tax expense	8			3			—		11
Net income (loss)													Net income (loss)	$	535		$	(11,232)		$	(2,875)	$	(13,572)

Unallocated operating expenses in Corporate include costs during the first half of 2022 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.

Revenue. Total revenue decreased ~~$767,000 (or 27%) to $2,049,000~~28% in the ~~2021 Second Quarter from $2,816,000 in~~first half of 2022 compared to the ~~2020 Second Quarter.~~first half of 2021. The following table summarizes the changes in components of our revenue (in thousands), and the significant changes in revenue are discussed in more detail below.


	Six Months Ended June 30,
	2022		% of Revenue		2021		% of Revenue
Revenue: Managed Services
Video collaboration services	$	195	7	%	$	521	23	%
Network services	1,544		54	%	1,711		75	%
Professional and other services	37		1	%	41		2	%
Total Managed Services revenue	$	1,776	62	%	$	2,273	57	%

Revenue: Collaboration Products
Visual collaboration product offerings	$	1,082	38	%	$	1,635	80	%

Licensing	$	7	—	%	$	59	3	%
Total Collaboration Products revenue	$	1,089	38	%	$	1,694	43	%
Total revenue	$	2,865	100	%	$	3,967	100	%

~~-24-~~-23-

Three Months Ended June 30,
2021 % of Revenue 2020 % of Revenue
Revenue: Oblong (formerly Glowpoint)
Video collaboration services $ 230 11 % $ 428 15 %
Network services 830 41 % 891 32 %
Professional and other services 18 1 % 54 2 %
Total Oblong revenue $ 1,078 53 % $ 1,373 49 %
Revenue: Oblong Industries
Visual collaboration product offerings $ 942 46 % $ 923 33 %
Professional services — — % $ 228 8 %
Licensing 29 1 % $ 292 10 %
Total Oblong Industries revenue $ 971 47 % $ 1,443 51 %
Total revenue $ 2,049 100 % $ 2,816 100 %

~~Oblong (formerly Glowpoint)~~Managed Services

•~~Revenue for managed services~~The decrease in revenue for video collaboration services ~~decreased $198,000 (or 46%) to $230,000 in the 2021 Second Quarter from $428,000 in the 2020 Second Quarter. This decrease~~ is mainly attributable to lower revenue from existing customers (either from reductions in price or level of services) and loss of customers to competition.

•~~Revenue~~The decrease in revenue for network services ~~decreased $61,000 (or 7%) to $830,000 in the 2021 Second Quarter from $891,000 in the 2020 Second Quarter. This decrease~~ 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.

•~~Revenue for professional and other services decreased $36,000 (or 67%) to $18,000~~We expect revenue declines in ~~the 2021 Second Quarter from $54,000 in the 2020 Second Quarter. This decrease is mainly attributable to lower resale of video equipment.~~

~~Oblong Industries~~

•~~Revenue for visual collaboration product offerings increased $19,000 or (2%) to $942,000 in the 2021 Second Quarter from $923,000 in the 2020 Second Quarter.~~

•~~Revenue for professional services decreased 100.0% in the 2021 Second Quarter from $228,000 in the 2020 Second Quarter. A former customer terminated~~ our professional services effective April 30, 2020 due to COVID-19. Our professional services revenue for the 2020 Second Quarter was primarily attributable to this customer. We do not expect to generate revenue from professional services in 2021 andManaged Services segment will continue in the future.

Collaboration Products

•~~Revenue for licensing decreased $263,000 (or 90.1%) to $29,000~~The decrease in ~~the 2021 Second Quarter from $292,000 in the 2020 Second Quarter. A former customer terminated the licensing of our technology effective December 31, 2020. Our licensing~~ revenue for ~~the 2020 Second Quarter was~~visual collaboration product offerings is primarily attributable to ~~this customer.~~the effects of the COVID-19 pandemic on our existing and target customers as they evaluate how and when to re-open their conventional office and conference facility footprints, as Mezzanine™ products are currently used in conventional spaces such as conference rooms, as discussed above in - Oblong’s Results of Operations - Three Months Ended June 30, 2022 (the “2022 Second Quarter”) compared to the Three Months Ended June 30, 2021 (the “2021 Second Quarter”).

Cost of Revenue (exclusive of depreciation and ~~amortization)~~amortization and casualty loss). Cost of revenue, exclusive of depreciation and amortization and casualty 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 by segment is presented in the following table (in thousands):

~~-25-~~


		Three Months Ended June 30,					Six Months Ended June 30,
		2021		2020			2022		2021
Cost of Revenue	Cost of Revenue					Cost of Revenue
Oblong (formerly Glowpoint)		$	739	$	898
Oblong Industries		510		785
Managed Services						Managed Services	$	1,170	$	1,572
Collaboration Products						Collaboration Products	789		967
Total cost of revenue	Total cost of revenue	$	1,249	$	1,683	Total cost of revenue	$	1,959	$	2,539

~~Cost of revenue decreased to $1,249,000 in the 2021 Second Quarter from $1,683,000 in the 2020 Second Quarter. This~~The decrease in cost of revenue is mainly attributable to lower costs associated with the decrease in revenue between the 2021 Second Quarter and the 2020 Second Quarter and the Employee Retention Credit (“ERC”) of $141,000 which reduced labor costs in cost of revenue for the 2021 Second Quarter. The Company recorded the full amount of the ERC for both the first and second quarters of 2021 in the 2021 Second Quarter due to the uncertainty of the ERC that existed during the ~~first quarter of 2021.~~same period. The Company’s gross profit as a percentage of revenue ~~decreased to 39%~~was 32% for the first half of 2022, and 36% for the first half of 2021.

Operating expenses are presented in the ~~2021 Second Quarter as compared to 40% in the 2020 Second Quarter.~~following table (in thousands):


	Six Months Ended June 30, 2022
	2022		2021		$ Change		% Change
Operating expenses:
Research and development	$	1,402	$	1,291	$	111	9	%
Sales and marketing	879		1,099		(220)		(20)	%
General and administrative	2,875		3,450		(575)		(17)	%
Impairment charges	7,546		48		7,498		15621	%
Casualty loss	533		—		533		100	%
Depreciation and amortization	1,226		1,429		(203)		(14)	%
Total operating expenses	$	14,461	$	7,317	$	(7,666)	130	%

Research and Development. Research and development expenses include internal and external costs related to developing new ~~service~~product offerings ~~and~~as well as features and enhancements to our existing ~~services. Research~~product offerings. The increase in research and development expenses ~~decreased~~for the first half of 2022 compared to ~~$599,000 in~~ the first half of 2021 ~~Second Quarter from $988,000 in the 2020 Second Quarter. This decrease~~ is primarily attributable to a ~~reduction~~$300,000

-24-

increase in ~~headcount from 2020 Second Quarter to Second Quarter 2021~~consulting and ~~recognition of the ERC of $192,000 which reduced~~outsourced labor costs ~~in research and development for Second Quarter 2021.~~between these periods, partially offset by lower personnel costs due to reduced headcount.

Sales and Marketing Expenses. ~~Sales and marketing expenses decreased to $572,000 in the 2021 Second Quarter from $834,000 in the 2020 Second Quarter. This~~The decrease is primarily attributable to a reduction in headcount from Second Quarter 2020 to Second Quarter 2021, a reduction in lease expense as we closed several office locations in 2020 and 2021, and recognition of the ERC of $109,000 which reduced labor costs in sales and marketing expenses for ~~Second Quarter 2021.~~the first half of 2022 compared to the first half of 2021 is mainly attributable to lower personnel costs due to reduced headcount and lower marketing costs.

General and Administrative Expenses. General and administrative expenses include direct corporate expenses and costs of personnel in the various corporate support categories, including executive, finance and accounting, legal, human resources and information technology. ~~General and administrative expenses decreased to $1,383,000 in the 2021 Second Quarter from $1,815,000 in the 2020 Second Quarter. This~~The decrease ~~is primarily attributable to a reduction in headcount from Second Quarter 2020 to Second Quarter 2021 and recognition of the ERC of $191,000 which reduced labor costs~~ in general and administrative ~~labor~~expenses for ~~Second Quarter 2021.~~the first half of 2022 compared to the first half of 2021 is mainly attributable to decreases of $390,000 in stock-based expense for professional service fees and $324,000 in bad debt expense, partially offset by an increase in personnel expenses, primarily attributable to receiving an Employee Retention Credit (“ERC”) during the first half of 2021 and not during the first half of 2022.

Impairment Charges. InThe impairment charges in the first half of 2022 are primarily attributable to impairment charges on goodwill for our Collaboration Products reporting unit and the impairment of the right-of-use assets associated with two of our Los Angeles, CA leases. The impairment charge in the first half of 2021 ~~Second Quarter we recorded $17,000 of~~was attributable to impairment ~~expense related to~~charges on property and equipment no longer in service. ~~There were no~~Future declines of our revenue, cash flows and/or stock price may give rise to a triggering event that may require the Company to record impairment charges in the ~~2020 Second Quarter.~~future related to our intangible assets and other long-lived assets.

Casualty Loss. During the second quarter of 2022, the Company discovered that $533,000 of inventory was stolen from the Company’s warehouse. This theft has been recorded as a casualty loss of $533,000 during the three and six months ended June 30, 2022 on the Company’s condensed consolidated Statements of Operations. The theft is being investigated further by the Los Angeles, CA Sheriff’s Department and a claim has been filed with the Company’s insurance company. We are seeking to recover the majority of the loss through our insurance policies and we will offset the casualty loss with the recognition of a gain of any proceeds should we subsequently receive them from our insurance company. No assurances can be provided that we will be successful in recovering any or all of the casualty loss.

Depreciation and Amortization ~~Expenses~~. ~~Depreciation~~The decrease in depreciation and amortization expenses ~~decreased~~for the first half of 2022 compared to ~~$707,000 in~~ the first half of 2021 ~~Second Quarter from $796,000 in the 2020 Second Quarter. This decrease~~ is mainly attributable to the disposition and impairment of certain assets ~~in 2020~~during the second half of 2021 and the first half of 2022 as well as a decrease in depreciation as certain assets became fully depreciated.

Loss from Operations. The ~~Company recorded a~~increase in the Company’s loss from operations for the first half of $2,478,000 in the 2021 Second Quarter as compared to a loss from operations of $3,300,000 in the 2020 Second Quarter. This decrease in our loss from operations from the 2020 Second Quarter to the 2021 Second Quarter is mainly attributable to lower operating expenses as addressed above, partially offset by lower gross profit.

~~Six Months EndedJune 30, 2021~~2022 compared to the ~~Six Months Ended June 30, 2020~~

~~Segment Reporting~~

~~The Company currently operates in two segments: 1) the Oblong (formerly Glowpoint) business, which mainly consists~~first half of managed services for video collaboration and network applications and 2) the Oblong Industries business, which consists of products and services for visual collaboration technologies. Certain information concerning the Company’s segments for the six months ended June 30, 2021 ~~and 2020 is presented in the following table (in thousands):~~

~~-26-~~

Six Months Ended June 30, 2021
Oblong (formerly Glowpoint) Oblong Industries Corporate Total
Revenue $ 2,273 $ 1,694 $ — $ 3,967
Cost of revenues 1,572 967 — 2,539
Gross profit $ 701 $ 727 $ — $ 1,428
Gross profit % 31 % 43 % 36 %
Allocated operating expenses $ 193 $ 3,626 $ — $ 3,819
Unallocated operating expenses $ 3,498 $ 3,498
Total operating expenses $ 193 $ 3,626 $ 3,498 $ 7,317
Income (loss) from operations $ 508 $ (2,899) $ (3,498) $ (5,889)
Interest and other expense (income), net $ 14 $ (224) $ — $ (210)
Net income (loss) before tax $ 494 $ (2,675) $ (3,498) $ (5,679)
Income tax $ — $ — $ — $ —
Net income (loss) $ 494 $ (2,675) $ (3,498) $ (5,679)

Six Months Ended June 30, 2020
Oblong (formerly Glowpoint) Oblong Industries Corporate Total
Revenue $ 3,417 $ 4,727 $ — $ 8,144
Cost of revenues 2,055 2,017 — 4,072
Gross profit $ 1,362 $ 2,710 $ — $ 4,072
Gross profit % 40 % 57 % 50 %
Allocated operating expenses $ 2,212 $ 5,985 $ — $ 8,197
Unallocated operating expenses — — 2,162 2,162
Total operating expenses $ 2,212 $ 5,985 $ 2,162 $ 10,359
Loss from operations $ (850) $ (3,275) $ (2,162) $ (6,287)
Interest and other expense, net 7 220 — 227
Net loss before tax $ (857) $ (3,495) $ (2,162) $ (6,514)
Income tax — — — —
Net loss (857) (3,495) $ (2,162) $ (6,514)

Unallocated operating expenses 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.

~~Revenue.~~ ~~Total revenue decreased $4,177,000 (or 51%) to $3,967,000 in the Six Months Ended June 30, 2021 from $8,144,000 in the Six Months EndedJune 30, 2020. The following table summarizes the changes in components of our revenue (in thousands), and the significant changes in revenue are discussed in more detail below.~~

~~-27-~~

Six Months Ended June 30,
2021 % of Revenue 2020 % of Revenue
Revenue: Oblong (formerly Glowpoint)
Video collaboration services $ 521 13 % $ 1,473 18 %
Network services 1,711 43 % 1,816 22 %
Professional and other services 41 1 % 128 2 %
Total Glowpoint revenue $ 2,273 57 % $ 3,417 42 %
Revenue: Oblong Industries
Visual collaboration product offerings $ 1,635 41 % $ 3,245 40 %
Professional services — — % 898 11 %
Licensing 59 1 % 584 7 %
Total Oblong Industries revenue $ 1,694 43 % $ 4,727 58 %
Total revenue $ 3,967 100 % $ 8,144 100 %

~~Oblong (formerly Glowpoint)~~

•~~Revenue for managed services for video collaboration services decreased $952,000 (or 65%) to $521,000 in the Six Months Ended June 30, 2021 from $1,473,000 in the Six Months EndedJune 30, 2020. This decrease~~ is mainly attributable to lower revenue ~~from existing customers (either from reductions in price or level of services)~~ and ~~loss of customers to competition.~~

•~~Revenue for network services decreased $105,000 (or 6%) to $1,711,000 in the Six Months Ended June 30, 2021 from $1,816,000 in the Six Months EndedJune 30, 2020.~~This decrease 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.

•~~Revenue for professional and other services decreased $87,000 (or 68%) to $41,000 in the Six Months Ended June 30, 2021 from $128,000 in the Six Months EndedJune 30, 2020. This decrease is mainly attributable to lower resale of video equipment.~~

~~Oblong Industries~~

•~~Revenue for visual collaboration product offerings decreased $1,610,000 or (50%) to $1,635,000 in the Six Months Ended June 30, 2021 from $3,245,000 in the Six Months EndedJune 30, 2020. This decrease is primarily attributable to delayed orders in our distribution channels as a direct result of customer implementation schedules shifting due to the COVID-19 pandemic.~~

•~~Revenue for professional services decreased 100% in the Six Months Ended June 30, 2021 from $898,000 in the Six Months EndedJune 30, 2020. A former customer terminated our professional services effective April 30, 2020 due to COVID-19. Our professional services revenue for the Six Months EndedJune 30, 2020 was primarily attributable to this customer. We do not expect to generate revenue from professional services in 2021 and in the future.~~

•~~Revenue for licensing decreased $525,000 (or 90%) to $59,000 in the Six Months Ended June 30, 2021 from $584,000 in the Six Months EndedJune 30, 2020. A former customer terminated the licensing of our technology effective December 31, 2020. Our licensing revenue for the Six Months EndedJune 30, 2020 was primarily attributable to this customer.~~

~~Cost of Revenue (exclusive of depreciation and amortization).~~ Cost of revenue, exclusive of depreciation and amortization, 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 by segment is presented in the following table (in thousands):

~~-28-~~

Six Months Ended June 30,
2021 2020
Cost of Revenue
Oblong (formerly Glowpoint) $ 1,572 $ 2,055
Oblong Industries $ 967 $ 2,017
Total cost of revenue $ 2,539 $ 4,072

~~Cost of revenue decreased to $2,539,000 in the Six Months Ended June 30, 2021 from $4,072,000 in the Six Months EndedJune 30, 2020. This decrease in cost of revenue is mainly attributable to lower costs associated with the decrease in revenue between the Six Months Ended June 30, 2021 and the Six Months EndedJune 30, 2020 and the ERC of $141,000 attributable to cost of revenue labor for the Six Months Ended June 30, 2021. The Company’s~~ gross profit ~~as a percentage of revenue decreased to 36% in the 2021 period as compared to 50% in the 2020 period, mainly due to decreases in revenue with~~and higher ~~margins.~~

~~Research and Development~~. Research and development expenses include internal and external costs related to developing new service offerings and features and enhancements to our existing services. Research and development expenses decreased to $1,291,000 in the Six Months Ended June 30, 2021 from $2,315,000 in the Six Months EndedJune 30, 2020. This decrease is primarily attributable to a reduction in headcount from the 2020 period to the 2021 period and the ERC of $193,000 attributable to research and development labor for the Six Months Ended June 30, 2021.

~~Sales and Marketing Expenses. Sales and marketing expenses decreased to $1,099,000 in the Six Months Ended June 30, 2021 from $2,040,000 in the Six Months Ended~~June 30, 2020. This decrease is primarily attributable to a reduction in headcount from the 2020 period to the 2021 period, a reduction in lease expense as we closed several office locations in 2020, and the ERC of $109,000 attributable to sales and marketing labor for the Six Months Ended June 30, 2021.

~~General and Administrative Expenses~~. General and administrative expenses include direct corporate expenses and costs of personnel in the various corporate support categories, including executive, finance and accounting, legal, human resources and information technology. General and administrative expenses decreased to $3,450,000 in the Six Months Ended June 30, 2021 from $3,842,000 in the Six Months EndedJune 30, 2020. This decrease is primarily attributable to a reduction in headcount from the 2020 period to the 2021 period and the ERC of $191,000 attributable to general and administrative labor for the Six Months Ended June 30, 2021.

~~Impairment Charges.~~ ~~Impairment charges in the Six Months Ended June 30, 2021 were $48,000 as compared to $550,000 in the Six Months Ended~~June 30, 2020. The impairment charges in the 2021 period are attributable to impairment charges on property and equipment no longer in service, and the impairment in the 2020 period was attributable to impairment charges on the Oblong (formerly Glowpoint) goodwill.

~~Depreciation and Amortization Expenses. Depreciation and amortization expenses decreased to $1,429,000 in the Six Months Ended June 30, 2021 from $1,612,000 in the Six Months EndedJune 30, 2020. This decrease is mainly attributable to the disposition and impairment of certain assets in 2020 as well as a decrease in depreciation as certain assets became fully depreciated.~~

~~Loss from Operations.~~ ~~The Company recorded a loss from operations of $5,889,000 in the Six Months Ended June 30, 2021 as compared to a loss from operations of $6,287,000 in the Six Months EndedJune 30, 2020. This decrease in our loss from operations from the 2020 period to the 2021 period is mainly attributable to lower~~ operating expenses as ~~discussed above, partially offset by lower gross profit.~~addressed above.

Off-Balance Sheet Arrangements

As of June 30, ~~2021,~~2022, we had no off-balance sheet arrangements.

Inflation

Management does not believe inflation had a significant effect on the condensed consolidated financial statements for the periods presented.

~~-29-~~

Critical Accounting Policies

There have been no changes to our critical accounting policies during the six months ended June 30, ~~2021.~~2022. Critical accounting policies and the significant estimates made in accordance with such policies are regularly discussed with our Audit Committee. Those policies are discussed under “Critical Accounting Policies” in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in our condensed consolidated financial statements and the footnotes thereto, each included in our ~~2020 10-K.~~Annual Report on Form 10-K for the fiscal year ended December, 31, 2021, filed with the SEC on March 29, 2022 (the “2021 Annual Report”).

Liquidity and Capital Resources

As of June 30, ~~2021,~~2022, we had ~~$13,033,000 of~~$5,107,000 in cash ~~obligations of $2,417,000 under the Paycheck Protection Program loan, (the “PPP Loan”)~~ and working capital of ~~$13,999,000. In July 2021, the PPP Loan was entirely forgiven.~~$5,461,000. For the six months ended June 30, ~~2021,~~2022, we incurred a net loss of ~~$5,679,000~~$13,572,000 and used ~~$3,670,000~~$3,911,000 of net cash in operating activities.

On June 30, 2021, the Company closed on a concurrent public offering of 4,000,000 shares of the Company’s Common Stock, warrants to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $4.00 per share (the “Series A Warrants”), and private placement of warrants to purchase 3,000,000 shares of common stock at an exercise price of $4.40 per share (the “Series B Warrants”) for gross proceeds of $12,400,000. The Common Stock and Series A Warrants were offered and sold pursuant to the prospectus supplement dated June 28, 2021 and accompanying base prospectus dated January 15, 2021, relating to the Company’s existing shelf registration statement on Form S-3 (333-252145) that was declared effective by the Securities and Exchange Commission on January 21, 2021. Both offerings were conducted pursuant to a securities purchase agreement (the “Purchase Agreement”), dated June 28, 2021, between the Company and the purchasers party thereto. The Purchase Agreement includes customary representations, warranties and covenants by the Company and obligates the Company to indemnify each purchaser named therein and certain related parties for certain losses, including those resulting from a breach of any of the representations, warranties, covenants or agreements made by the Company in the Purchase Agreement. Issuance costs for this transaction were $896,000, resulting in net proceeds of $11,504,000.

-25-

Our capital requirements in the future will continue to depend on numerous factors, including the timing and amount of revenue for the Company, customer renewal rates and the timing of collection of outstanding accounts receivable, in each case particularly as it relates to the Company’s major customers, the expense to deliver services, expense for sales and marketing, expense for research and development, and capital expenditures, and the cost involved in protecting intellectual property rights. While our acquisition of Oblong Industries provides additional revenues to the Company, the cost to further develop and commercialize Oblong Industries’ product offerings is expected to exceed its revenues for the foreseeable future.expenditures. We expect to continue to invest in product development and sales and marketing expenses with the goal of growing the Company’s revenue in the future. The Company believes that, based on ~~the Company’s~~its current projection of revenue, expenses, capital expenditures, and cash flows, it will not have sufficient resources to fund its operations for the next twelve months following the filing of this Report. We believe additional capital will be required to fund operations and provide growth capital including 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. 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. The factors discussed above raise substantial doubt as to our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from these uncertainties.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by the rules and regulations of the SEC, we are not required to provide this information.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, ~~2021.~~2022. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, ~~2021,~~2022, the Company’s disclosure controls and

~~-30-~~

procedures are effective to ensure that information required to be disclosed by the Company in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms and are designed to ensure that information required to be disclosed by the Company in the reports we file or submit under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

No change in our internal control over financial reporting occurred during the fiscal quarter ended June 30, ~~2021~~2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are subject to various legal proceedings arising in the ordinary course of business, including proceedings for which we have insurance coverage. As 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.

ITEM 1A. RISK FACTORS

A description of the risks associated with our business, financial conditions and results of operations is set forth ~~under~~in “Part I.Item 1A. Risk Factors” of our 2021 Annual Report. Except as set forth below, there have been no material changes to these risks during the ~~heading “Updating Risk Factors” in our Current Report on Form 8-K filed~~six months ended June ~~28, 2021 (the “Current Report”).~~30, 2022. The risks described in the ~~Current~~2021 Annual Report are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

-26-

We may incur non-cash impairment charges for our right-of-use and intangible assets which would negatively impact our operating results. The failure to use the full value of our right-of-use assets, such as that which occurred in the second quarter of 2022, could result in significant impairment charges which could have an adverse effect on our results of operations.

The Company assesses the impairment of purchased intangible 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. 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. As a result of declines in revenue for the Collaboration Products reporting segment, we concluded that a triggering event had occurred and conducted impairment testing of our intangible assets during the six months ended June 30, 2022. Based on the corresponding recoverability tests of the intangible assets for the Collaboration Products reporting unit, we determined that no impairment changes were required for the six months ended June 30, 2022. The recoverability test consisted of comparing the estimated undiscounted cash flows expected to be generated by those assets to the respective carrying amounts.

The fair value determinations underlying the quantitative aspect of our impairment testing require considerable judgment and are sensitive to changes in underlying assumptions, estimates and market factors. Estimating the fair value of our intangible assets requires us to make assumptions and estimates regarding our future plans, as well as industry, economic and regulatory conditions. If current expectations are not met, or if market factors outside of our control change significantly, then our intangible assets might become impaired in the future, adversely affecting our operating results. The carrying amounts of our intangible assets are susceptible to impairment risk if there are unfavorable changes in such assumptions, estimates, and market factors. To the extent that we experience future declines in revenue, business conditions deteriorate, or key assumptions and estimates differ significantly from our management’s expectations, it may be necessary to recognize an impairment charge in the future.

Cyber-attacks, data breaches or malware or a breach of our physical security systems may disrupt our business operations, result in the loss of critical and confidential information, harm our operating results and financial condition, and damage our reputation; and cyber-attacks or data breaches on our customers’ networks, or in cloud-based services provided by or enabled by us, could result in claims of liability against us, damage our reputation or otherwise harm our business. In the ordinary course of providing video communications services, we transmit sensitive and proprietary information of our customers. We are dependent on the proper function, availability and security of our information systems, including without limitation those systems utilized in our operations. We have undertaken measures to protect the safety and security of our inventory and of our information systems and the data maintained within those systems, and on an annual basis, we test the adequacy of our security measures. Despite our implementation of security measures, there can be no assurance our safety and security measures will detect and prevent security breaches in a timely manner or otherwise prevent damage or interruption of our systems and operations or inventory theft. The 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 breaches, malware, and similar disruptions from unauthorized access or tampering by malicious actors or inadvertent error. Any such event could compromise our products, services and networks or those of our customers, and the proprietary information stored on our systems or those of our customers could be improperly accessed, processed, disclosed, lost or stolen, which could subject us to liability to our customers, suppliers, business partners and others, give rise to legal/regulatory action, and could have a material adverse effect on our business, operating results and financial condition and may cause damage to our reputation. A security breach at any one of our physical facilities, such as that occurred in the second quarter of 2022, could result in a significant loss of inventory, or increase expenses relating to the resolution and future prevention of similar thefts, any of which could have an adverse effect on our business, financial condition and results of operations. Efforts to limit the ability of malicious actors to disrupt the operations of the Internet or undermine our own security efforts may be costly to implement and meet with resistance and may not be successful. Breaches of security in our customers’ networks, or in cloud-based services provided by or enabled by us, regardless of whether the breach is attributable to a vulnerability in our products or services, could result in claims of liability against us, damage our reputation, or otherwise harm our business.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities by the Company

There have been no unregistered sales of securities by the Company during the period covered by this Report that have not been previously reported in a Current Report on Form 8-K.

-27-

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

~~-31-~~-28-

ITEM 6. EXHIBITS


Exhibit Number						Description
31.1*						Rule 13a—14(a)/15d—14(a) Certification of the Chief Executive Officer.
31.2*						Rule 13a—14(a)/15d—14(a) Certification of the Chief Financial Officer.
32.1**						Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer.
101.INS						XBRL Instance Document
101.SCH						XBRL Taxonomy Extension Schema
101.CAL						XBRL Taxonomy Extension Calculation Linkbase
101.DEF						XBRL Taxonomy Extension Definition Linkbase
101.LAB						XBRL Taxonomy Extension Label Linkbase
101.PRE						XBRL Taxonomy Extension Presentation Linkbase

* Filed herewith.

** Furnished herewith.

~~-32-~~-29-

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	OBLONG, INC.

August ~~11, 2021~~10, 2022	By:	/s/ Peter Holst
		Peter Holst
		Chief Executive Officer
		(Principal Executive Officer)


August ~~11, 2021~~10, 2022	By:	/s/ David Clark
		David Clark
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

~~-33-~~-30-


	Series A-2 Preferred Stock			Series C Preferred Stock			Series D Preferred Stock			Series E Preferred Stock			Common Stock			Treasury Stock
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Total
Balance at December 31, 2019	32	$	0	475	$	0	1,734,901	$	0	131,579	$	0	5,266,828	$	1	105,285	$	(165)	$	207,383	$	(185,434)	$	21,785
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(3,129)		(3,129)
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		—	—		32		—		32
Forfeitures of restricted stock	—	—		—	—		(14,441)	—		—	—		—	—		—	—		—		—		—
Preferred stock conversion	—	—		(150)	—		—	—		—	—		50,000	—		—	—		—		—		—
Issuance of preferred stock for accrued dividends	13	—		—	—		—	—		—	—		—	—		—	—		98		—		98
Preferred stock dividends	—	—		—	—		—	—		—	—		—	—		—	—		(4)		—		(4)
Purchase of treasury stock	—	—		—	—		—	—		—	—		—	—		—	(7)		—		—		(7)
Balance at March 31, 2020	45	0		325	0		1,720,460	0		131,579	0		5,316,828	1		105,285	(172)		207,509		(188,563)		18,775
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(3,385)		(3,385)
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		—	—		29		—		29
Forfeitures of restricted stock	—	—		—	—		(17,364)	—		—	—		—	—		—	—		—		—		—

Issuance of stock on vested restricted stock units	—	—		—	—		—	—		—	—		23,334	—		—	—		—		—		—
Preferred stock dividends	—	—		—	—		—	—		—	—		—	—		—	—		(4)		—		(4)
Issuance of preferred stock for accrued dividends	—	—		—	—		—	—		—	—		—	—		—	—		1				1
Purchase of treasury stock	—	—		—	—		—	—		—	—		—	—		7,998	(9)		—		—		(9)
Balance at June 30, 2020	45	$	0	325	$	0	1,703,096	$	0	131,579	$	0	5,340,162	$	1	113,283	$	(181)	$	207,535	$	(191,948)	$	15,407


	Shares	Value
Treasury Shares as of December 31, 2019	105	$	(165)
Purchases to cover stock compensation taxes	8	$	(16)

Treasury Shares as of December 31, 2020	113	$	(181)


Treasury Shares as of June 30, 2021	113	$	(181)


		As of June 30,
		2021		2020
	Segment	% of Accounts Receivable		% of Accounts Receivable
Customer A	Oblong (formerly Glowpoint)	22	%	32	%
Customer B	Oblong (formerly Glowpoint)	13	%	10	%
Customer C	Oblong Industries	0	%	12	%