EXHIBIT 99.1
NEWS ANNOUNCEMENT | For Immediate Release | |
Contacts: | ||
Media/Analyst Contact: | Investor Contact: | |
Terry Frechette, Topaz Partners | Cormac Glynn, CEOCast | |
781-388-7900, Ext 216 | 212-732-4300 | |
tfrechette@topazpartners.com | cglynn@ceocast.com |
GlowPoint Reports Fourth Quarter and Year-end 2003 Results
Company Initiatives Drive 50% Improvement in Gross Margins from Third Quarter
With Solid Revenue Growth
HILLSIDE, N.J., March 2, 2004 – Glowpoint, Inc. (NASDAQ:GLOW), the nation’s first and leading carrier-grade, IP-based video communications service provider, today announced financial results from continuing operations for the fourth quarter and year-end for the period ended December 31, 2003.
Summary Financial Results From Continuing Operations
(in thousands, except per share data)
Three Months Ended December 31, | Twelve Months Ended December 31, (2) | ||||||||||||
2003 | 2002 | 2003 | 2002 | ||||||||||
Net revenue | $ | 2,828 | $ | 1,716 | $ | 10,311 | $ | 5,599 | |||||
Gross margin | 153 | (265 | ) | 249 | 2 | ||||||||
Net loss (1) | $ | (5,259 | ) | $ | (47,304 | ) | $ | (22,439 | ) | $ | (58,565 | ) | |
Net loss per share, basic & diluted | $ | (0.18 | ) | $ | (1.63 | ) | $ | (0.76 | ) | $ | (2.03 | ) | |
EBITDA (2) | $ | (2,489 | ) | $ | (2,256 | ) | $ | (6,752 | ) | $ | (6,237 | ) |
(1) | Net Loss includes discontinued AV and VS operations |
(2) | Earnings before interest, taxes, depreciation and amortization (EBITDA) is considered a non-GAAP financial measure, but is provided to more clearly present the financial results that management uses to evaluate its business. Reconciliation of this non-GAAP financial measure to the most directly comparable financial measure reported in accordance with GAAP is presented in a separate section at the end of this press release. Investors should not consider this measure in isolation or as a substitute for operating income or any other measure for determining GlowPoint’s operating performance or liquidity that is calculated in accordance with GAAP. |
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For the three months ended December 31, 2003, total revenue increased 65% to $2.8 million from $1.7 million in the three months ended December 31, 2002. Subscription and related revenue for the 2003 period rose 126% to* $2.1 million from $943,000 in the year-ago fourth quarter and 14% from the 2003 third quarter level of $1.9 million. Non-subscription revenue related to bridging, events and other one-time fees fell 10% to $695,000 from $773,000 in the year-ago fourth quarter, and was down 2% from the 2003 third quarter level of $712,000, reflecting holiday seasonality.
“Our fourth quarter demonstrates tangible results from our focus on our core subscription video communications business,” said David C. Trachtenberg, Chief Executive Officer and President of GlowPoint. “Revenue grew 10% sequentially, with December breaking the $1 million mark for the first time. Significantly, we generated new subscriber growth and lowered the cost of revenues, through operating improvements made over the quarter. Gross margins in the fourth quarter improved to 5.4%, from 3.6% in the third quarter. Variable gross margins also improved from 50.3% in the third quarter to 51%.”
Operating expenses for the three months ended December 31, 2003 rose to $4.4 million from $2.8 million in the three months ended December 31, 2002 and $3.1 million in the 2003 third quarter. The 2003 fourth quarter operating expenses include $637,000 of non-cash expense, in connection with the issuance of restricted stock and warrants as compensation and for financing and consulting activities; and $432,000 in severance and other one-time expenses. Excluding these items, operating expenses as a percentage of revenue were 119% in the 2003 fourth quarter, a 27% improvement from the 163% level in the 2002 fourth quarter and a 1% improvement from the 121% level in the 2003 third quarter.
Trachtenberg continued, “Our new product strategy designed to drive long term profitable growth was launched including a simpler pricing plan and annual contract, which has been well received. GlowPoint’s Q4 product realignment was designed to drive higher average variable gross margins for each new billable location on GlowPoint and more predictable revenue streams. The impact to our results should be increasingly evident in 2004 as the new products take hold in our distribution channels.”
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The following chart summarizes operating highlights of GlowPoint’s core subscription business:
Q4 2003 | Q4 2002 | Y/Y % Change | Q3 2003 | Q/Q % Change | ||||||||||||||
Billable Subscriber Locations (1) | 1,149 | 522 | 120 | % | 989 | 16 | % | |||||||||||
Average Billable Subscriber Locations (2) | 1,087 | 410 | 165 | % | 932 | 17 | % | |||||||||||
Subscription and Related Revenue (in 000s) | $ | 2,132 | $ | 943 | 126 | % | $ | 1,869 | 14 | % | ||||||||
Non-Subscription Revenue (in 000s) | $ | 695 | $ | 773 | (10 | %) | $ | 712 | (2 | %) | ||||||||
Total Revenue (in 000s) | $ | 2,827 | $ | 1,716 | 65 | % | $ | 2,581 | 10 | % | ||||||||
Average Monthly Subscription Revenue Per Location (3) | $ | 654 | $ | 766 | (15 | %) | $ | 668 | (2 | %) | ||||||||
Number of Customers | 271 | 153 | 77 | % | 246 | 10 | % | |||||||||||
Billable Subscriber Locations per Customer (4) | 4.24 | 3.41 | 24 | % | 4.02 | 5 | % | |||||||||||
Subscriber Location Backlog (5) | 91 | 307 | (70 | %) | 246 | (63 | %) | |||||||||||
Gross Margin | 5.4 | % | (15.4 | %) | NA | 3.6 | % | 50 | % | |||||||||
Variable Gross Margin (6) | 51.0 | % | 41.7 | % | 22 | % | 50.3 | % | 1 | % | ||||||||
(1) | Total number subscriber locations that were generating revenue for the Company, as of the last day in each period. Multiple endpoints or circuits can be linked to a billable subscriber location. |
(2) | Calculated as a weighted average number of billable subscriber locations, based on the number of days a location was on the network during each respective period. |
(3) | Calculated as subscription and related revenue divided by average billable subscriber locations, divided by three, then multiplied by 1,000. |
(4) | Calculated as billable subscriber locations divided by the number of customers |
(5) | Represents the Company’s estimate of billable subscriber locations under contract but not yet generating revenue for the Company, at the end of the periods shown. This estimate assumes no material changes that would precipitate a customer from canceling a contract. The Company can give no assurance as to whether these contracts will be executed. While the Company may, from time to time, issue updated guidance with respect to its subscriber location backlog, it assumes no obligation to do so. |
(6) | Calculated by dividing revenues less variable costs of revenue by revenue. |
Subsequent to the end of the fourth quarter, the Company raised gross proceeds of $13.7 million through a private placement of its common stock and warrants with private investors. The proceeds are expected to be used for sales and marketing initiatives and have strengthened the balance sheet, giving customers, distributors and vendors confidence in the future of the Company. With the completion of the private placement, GlowPoint terminated its line of credit with JP Morgan Chase. The Company also converted $4.89 million from debt to preferred stock subsequent to the end of the quarter. The conversion leaves the Company debt free, other than customary payables.
“We believe the recent capital-raising activities and improvements to our balance sheet significantly improve GlowPoint’s operating flexibility and ability to accelerate growth,” Trachtenberg concluded. “With new products, new distribution partners and a healthy balance sheet, we are positioned to achieve the monthly run-rate necessary for the Company to break even from an operating perspective by the end of 2004.”
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The Company will hold a conference call later today to discuss these results. The call will take place from 5:00 p.m. to 6:00 p.m. EST. Mr. Trachtenberg, Christopher Zigmont, Chief Financial Officer and Mike Brandofino, Chief Technology Officer will host the call. Interested participants should call (800) 901-5213 or (617) 786-2962 and use pass code 92265231. There will be a playback available until March 16, 2004. To listen to the playback, please call (617) 801-6888 and use pass code 38929154.
This call is being webcast by CCBN and can be accessed at GlowPoint’s website at www.glowpoint.com. The webcast will also be distributed over CCBN’s Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN’s individual investor center at www.companyboardroom.com or by visiting any of the investor sites in CCBN’s Individual Investor Network such as America Online’s Personal Finance Channel, Fidelity Investments(R) (Fidelity.com) and others. Institutional investors can access the call via CCBN’s password protected event management site, StreetEvents (www.streetevents.com). An online archive of the broadcast will be available through these websites through 11:59 p.m. Tuesday, March 16, 2004.
About GlowPoint
Glowpoint, Inc. (NASDAQ: GLOW) is the nation’s first and leading carrier-grade, IP-based video communications service provider. GlowPoint is a member of the Cisco Powered Network Program, and operates a video communications service featuring broadcast quality images with telephone-like reliability, features and ease-of-use. The GlowPoint network spans three continents. Our service carries over 8,000 video calls per month through the United States, Canada, Europe, South America and Asia. Since our network was built in 2000, GlowPoint has carried over 12.5 million video conferencing minutes in video calls. GlowPoint is headquartered in Hillside, New Jersey. To learn more about GlowPoint, visit us at www.GlowPoint.com.
# # #
The statements contained herein, other than historical information, are or may be deemed to be forward-looking statements and involve factors, risks and uncertainties that may cause actual results in future periods to differ materially from such statements. These factors, risks and uncertainties include market acceptance and availability of new video communication services; the nonexclusive and terminable-at-will nature of sales agent agreements; rapid technological change affecting demand for the Company’s services; competition from other video communications service providers; and the availability of sufficient financial resources to enable the Company to expand its operations, as well as other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission.
GLOWPOINT, SCHEDULEPOINT PARTNERPOINT, CUSTOMERPOINT and GLOWPOINT WEBCASTING are service marks of Glowpoint, Inc. All other marks are trademarks or service marks of their respective owners.
# # #
Glowpoint, Inc.
Consolidated Statements of Operations
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||
Net revenues | $ | 2,827,781 | $ | 1,715,745 | $ | 10,310,744 | $ | 5,599,216 | ||||
Cost of revenues | 2,674,690 | 1,980,731 | 10,061,881 | 5,596,802 | ||||||||
Gross margin | 153,091 | (264,986 | ) | 248,863 | 2,415 | |||||||
Operating expenses | ||||||||||||
Research and development | 327,245 | 289,615 | 1,261,485 | 1,024,060 | ||||||||
Selling | 1,800,202 | 869,279 | 5,493,905 | 3,830,489 | ||||||||
General and administrative | 2,312,453 | 1,640,501 | 6,372,677 | 5,103,373 | ||||||||
Restructuring | — | — | — | 260,000 | ||||||||
Impairment losses on long-lived assets | — | — | 1,379,415 | — | ||||||||
Total operating expenses | 4,439,900 | 2,799,395 | 14,507,482 | 10,217,922 | ||||||||
Loss from continuing operations | (4,286,809 | ) | (3,064,381 | ) | (14,258,619 | ) | (10,215,507 | ) | ||||
Other (income) expense | ||||||||||||
Amortization of deferred financing costs | 236,579 | 16,224 | 376,596 | 122,680 | ||||||||
Interest income | (316 | ) | (3,599 | ) | (7,000 | ) | (71,644 | ) | ||||
Interest expense | 82,980 | 249,616 | 1,026,469 | 431,792 | ||||||||
Amortization of discount on subordinated debentures | 497,337 | 39,360 | 1,987,550 | 39,360 | ||||||||
Total other expenses, net | 816,580 | 301,601 | 3,383,615 | 522,188 | ||||||||
Net loss from continuing operations | (5,103,389 | ) | (3,365,982 | ) | (17,642,234 | ) | (10,737,695 | ) | ||||
Loss from discontinued AV operations | — | (858,635 | ) | (1,173,067 | ) | (2,696,223 | ) | |||||
Loss from discontinued VS operations | (155,961 | ) | (42,943,395 | ) | (3,623,637 | ) | (44,844,385 | ) | ||||
Loss from discontinued Voice operations | — | (135,541 | ) | — | (286,880 | ) | ||||||
Gain on sale of discontinued Voice operation | — | — | — | — | ||||||||
Net loss attributable to common stockholders | $ | (5,259,350 | ) | $ | (47,303,553 | ) | $ | (22,438,938 | ) | $ | (58,565,183 | ) |
Net loss from continuing operations per share: | ||||||||||||
Basic and diluted | $ | (0.17 | ) | $ | (0.12 | ) | $ | (0.60 | ) | $ | (0.37 | ) |
Loss from discontinued operations per share: | ||||||||||||
Basic and diluted | $ | (0.01 | ) | $ | (1.51 | ) | $ | (0.16 | ) | $ | (1.66 | ) |
Net loss attributable to common stockholders per share: | ||||||||||||
Basic and diluted | $ | (0.18 | ) | $ | (1.63 | ) | $ | (0.76 | ) | $ | (2.03 | ) |
Weighted average number of diluted common shares | ||||||||||||
Basic and diluted | 29,863,736 | 28,971,551 | 29,455,644 | 28,792,217 | ||||||||
Glowpoint, Inc.
Consolidated Balance Sheets
December 31, 2003 | December 31, 2002 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 4,520,085 | $ | 2,762,215 | ||
Accounts receivable – net | 2,305,552 | 1,277,891 | ||||
Assets of discontinued AV operations | — | 807,067 | ||||
Assets of discontinued VSB operations | — | 41,314,701 | ||||
Other current assets | 1,439,978 | 727,262 | ||||
Total current assets | 8,265,615 | 46,889,136 | ||||
Furniture, equipment and leasehold improvements – net | 13,024,055 | 11,512,415 | ||||
Goodwill – net | 2,547,862 | 2,547,862 | ||||
Other assets | 149,574 | 552,251 | ||||
Total assets | $ | 23,987,106 | $ | 61,501,664 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 2,368,484 | $ | 1,055,427 | ||
Accrued expenses | 998,450 | 681,369 | ||||
Liabilities of discontinued VSB operations | — | 17,333,120 | ||||
Current portion of capital lease obligations | 131,182 | — | ||||
Total current liabilities | 3,498,116 | 19,069,916 | ||||
Noncurrent liabilities: | ||||||
Bank loan payable | — | 5,845,516 | ||||
Capital lease obligations, less current portion | 34,972 | — | ||||
Total noncurrent liabilities | 34,972 | 5,845,516 | ||||
Total liabilities | 3,533,088 | 24,915,432 | ||||
Commitments and contingencies | ||||||
Subordinated debentures | 4,888,000 | 4,888,000 | ||||
Discount on subordinated debentures | (3,149,805 | ) | (4,888,000 | ) | ||
Subordinated debentures, net | 1,738,195 | — | ||||
Stockholders’ Equity: | ||||||
Preferred stock, $.0001 par value; | ||||||
5,000,000 shares authorized, 0 shares issued and outstanding | ||||||
Common stock, $.0001 par value; 100,000,000 authorized; | ||||||
30,554,993 and 29,931,660 shares outstanding, respectively | 2,992 | 2,893 | ||||
Treasury stock, 39,891 shares at cost | (239,742 | ) | (239,742 | ) | ||
Additional paid-in capital | 135,700,804 | 131,132,374 | ||||
Accumulated deficit | (116,748,231 | ) | (94,309,293 | ) | ||
Total stockholders’ equity | 18,715,823 | 36,586,232 | ||||
Total liabilities and stockholders’ equity | $ | 23,987,106 | $ | 61,501,664 | ||
Glowpoint, Inc.
Consolidated Statements of Cash Flows
Twelve Months Ended December 31, | ||||||
2003 | 2002 | |||||
Cash flows from Operating Activities: | ||||||
Net loss | $ | (22,438,938 | ) | $ | (58,565,183 | ) |
Adjustments to reconcile net loss to net cash provided (used) by operating activities: | ||||||
Depreciation and amortization | 5,449,595 | 5,023,835 | ||||
Amortization of deferred financing costs | 376,596 | 122,680 | ||||
Amortization of discount on subordinated debentures | 1,987,550 | — | ||||
Non cash compensation | 1,321,649 | 675,057 | ||||
Impairment losses on goodwill | — | 40,012,114 | ||||
Impairment losses on long-lived assets | 1,379,415 | 1,357,806 | ||||
Discontinued operations | 2,028,042 | — | ||||
Loss on disposal of equipment | — | 28,305 | ||||
Increase (decrease) in cash attributable to changes in assets and liabilities, net of effects of acquisitions: | ||||||
Accounts receivable | (1,027,661 | ) | 10,029,925 | |||
Inventory | — | (2,401,306 | ) | |||
Net assets of discontinued AV operations | 807,067 | (807,067 | ) | |||
Net assets of discontinued VS operations | 6,761,095 | — | ||||
Other current assets | (2,147,440 | ) | (3,689,790 | ) | ||
Other assets | 52,151 | (90,329 | ) | |||
Accounts payable | (1,360,383 | ) | (3,247,953 | ) | ||
Accrued expenses | 317,080 | (1,009,341 | ) | |||
Deferred revenue | — | (27,009 | ) | |||
Other current liabilities | — | (1,465,049 | ) | |||
Net cash used by operating activities | (6,494,182 | ) | (14,053,305 | ) | ||
Cash flows from Investing Activities: | ||||||
Purchases of furniture, equipment and leasehold improvements | (2,399,297 | ) | (4,745,933 | ) | ||
Proceeds from sale of furniture, equipment and leasehold improvements | — | 15,000 | ||||
Proceeds from sale of discontinued VS operation | 16,233,312 | — | ||||
Net cash provided (used) by investing activities | 13,834,015 | (4,730,933 | ) | |||
Cash flows from Financing Activities: | ||||||
Proceeds from common stock offering | — | 20,257,961 | ||||
Proceeds (costs) of issuance of subordinated debentures | (249,355 | ) | 4,571,921 | |||
Exercise of warrants and options, net | 630,935 | 371,494 | ||||
Proceeds from bank loans | 75,545,455 | 78,894,947 | ||||
Payments on bank loans | (81,390,971 | ) | (83,677,513 | ) | ||
Deferred financing costs | (26,070 | ) | (505,074 | ) | ||
Payments on capital lease obligations | (91,957 | ) | (56,734 | ) | ||
Net cash provided (used) by financing activities | (5,581,963 | ) | 19,857,002 | |||
Increase (decrease) in cash and cash equivalents | 1,757,870 | 1,072,764 | ||||
Cash and cash equivalents at beginning of period | 2,762,215 | 1,689,451 | ||||
Cash and cash equivalents at end of period | $ | 4,520,085 | $ | 2,762,215 | ||
Supplemental disclosures of cash flow information: | ||||||
Cash paid during the period for: | ||||||
Interest | $ | 227,103 | $ | 182,176 | ||
Taxes | $ | — | $ | — | ||
Non-cash financing and investing activities:
Equipment with costs totaling $258,110 was acquired under capital lease arrangements during the nine months ended September 30, 2003.
Wire One Technologies, Inc.
EBITDA Reconciliation
(Unaudited)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||
Net loss from continuing operations | $ | (5,103,389 | ) | $ | (3,365,982 | ) | $ | (17,642,234 | ) | $ | (10,737,695 | ) |
Depreciation and amortization | 1,232,188 | 402,997 | 5,449,595 | 3,342,493 | ||||||||
Amortization of deferred financing costs | 236,579 | 16,224 | 376,596 | 122,680 | ||||||||
Amortization of discount on subordinated debentures | 497,337 | — | 1,987,550 | — | ||||||||
Non cash compensation | 648,113 | 444,648 | 1,321,649 | 675,057 | ||||||||
Impairment losses on fixed assets | — | — | 1,379,415 | — | ||||||||
Interest expense, net | — | 246,017 | 374,865 | 360,148 | ||||||||
EBITDA from continuing operations | (2,489,172 | ) | (2,256,096 | ) | (6,752,564 | ) | (6,237,317 | ) | ||||
EBITDA loss from discontinued AV operations | — | (858,635 | ) | (1,173,067 | ) | (2,696,223 | ) | |||||
EBITDA gain/loss from discontinued VS operations | (80,044 | ) | (42,133,725 | ) | (603,459 | ) | (43,163,043 | ) | ||||
EBITDA loss from discontinued Voice operations | — | (135,541 | ) | — | (286,880 | ) | ||||||
Total EBITDA | $ | (2,569,216 | ) | $ | (45,383,997 | ) | $ | (8,529,090 | ) | $ | (52,383,463 | ) |
Wire One Technologies, Inc.
Summary Income Statement of Discontinued AV Operation
(Unaudited)
Three Months Ended Dec 31, | Twelve Months Ended Dec 31, | |||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||
Net Revenues | $ | — | $ | 3,500,000 | $ | 3,873,822 | $ | 17,260,642 | ||||
Cost of revenues | — | 3,323,286 | 3,856,476 | 15,205,653 | ||||||||
Gross margin | — | 176,714 | 17,346 | 2,054,989 | ||||||||
Operating expenses | ||||||||||||
Selling | — | 963,146 | 1,128,392 | 4,455,730 | ||||||||
General and administrative | — | 72,203 | 62,021 | 295,482 | ||||||||
Total operating expenses | — | 1,035,349 | 1,190,413 | 4,751,212 | ||||||||
Loss from discontinued operations | $ | — | $ | (858,635 | ) | $ | (1,173,067 | ) | $ | (2,696,223 | ) | |
Wire One Technologies, Inc.
Summary Income Statement of Discontinued VS Operation
(Unaudited)
Three Months Ended Dec 31, | Twelve Months Ended Dec 31, | |||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||
Net revenues | $ | — | $ | 18,288,283 | $ | 40,253,589 | $ | 77,148,861 | ||||
Cost of revenues | — | 14,246,869 | 30,445,864 | 56,024,472 | ||||||||
Gross margin | — | 4,041,414 | 9,807,725 | 21,124,389 | ||||||||
Operating expenses | ||||||||||||
Selling | 28,371 | 4,564,945 | 9,780,680 | 20,843,450 | ||||||||
General and administrative | 127,590 | 1,049,944 | 3,650,682 | 3,055,404 | ||||||||
Restructuring | — | — | — | 700,000 | ||||||||
Impairment losses on goodwill | — | 40,012,114 | — | 40,012,114 | ||||||||
Impairment losses on long-lived assets | — | 1,357,806 | — | 1,357,806 | ||||||||
Total operating expenses | 155,961 | 46,984,809 | 13,431,362 | 65,968,774 | ||||||||
Loss from discontinued operations | $ | (155,961 | ) | $ | (42,943,395 | ) | $ | (3,623,637 | ) | $ | (44,844,385 | ) |