Exhibit 99.1
Contact: |
| Jonathan Brust |
| Glowpoint, Inc. |
| (312) 235-3888, ext. 2052 |
| jbrust@glowpoint.com |
| www.glowpoint.com |
Glowpoint Reports Fourth Quarter and Fiscal Year 2009 Results
Anticipates Continued Growth in Revenue and Contribution Margin in 2010
HILLSIDE, N.J. March 31, 2010 – Glowpoint, Inc. (OTCBB: GLOW), a carrier-grade provider of managed services for telepresence and video conferencing, today announced financial results for the fourth quarter and year ended December 31, 2009, which included record annualized monthly recurring revenue and positive operating income.
Core revenue was $6.34 million for the quarter, an increase of 14.3% from the comparable period last year. Total annual revenue was $26.5 million versus $24.5 million in 2008. This included non-core revenue of $1.3 million in 2009 which decreased from $2.6 million in 2008. Excluding non-core revenue, which is expected to be eliminated by the end of 2010, total core revenue grew from $21.9 million in 2008 to $25.2 million in 2009, a 14.8% increase. The Company anticipates that its 2010 core revenue growth rate will exceed 20% in 2010. These increases are primarily attributable to the growth of the Company’s VNOC managed service and Telepresence interExchange Network (TEN) service offerings. In addition, the Company expects that its contribution margin will continue to improve throughout the year driven by the continued reduction of our network and infrastructure expenses and global managed service costs as a percentage of sales.
Key highlights for the fourth quarter of 2009 include:
| · | Managed Video Services Revenue: Increased by $0.7 million, currently representing 14% of quarterly revenues as compared to 4% in the previous period |
| · | Core Revenues: Increased 14.3% to $6.34 million for the quarter from $5.54 million in the comparable quarter for 2008 |
| · | Lowered Operating Expenses: Excluding income from the one-time reversal of the sales tax accrual, quarterly operating expenses dropped 8.3% to $6.94 million in 2009, from $7.57 million for the same period in 2008, while total quarterly revenues increased. |
| · | Settlements in Sales Taxes and Regulatory Fees: Reduced accrual for sales taxes by $3.3 million, from $4.4 million as of last quarter, to $1.1 million to reflect settlements with taxing authorities and amounts that management believes can be reasonably estimated |
| · | Elimination of “Going Concern”: With the financing announced by the Company yesterday, together with its cash flow projections and current results, the Company eliminated its “going concern” opinion that has been included since its 2006 financial statements. |
| · | New Financial Statement Format: Provides greater visibility into our operations as we execute on our strategy to increase our focus on being a leading provider of managed video services and hosted cloud-based services for video applications |
“The $3 million financing and improvements in our capital structure, which we announced yesterday, provide the Company with capital needed to take advantage of the growing managed video services market,” said Glowpoint Co-CEO David W. Robinson. "We’ve made a significant amount of progress and feel the Company is in a great position to achieve continued positive operating results.”
“The video communications market continues its transformation into a critical component within the unified communications space,” said Glowpoint President and Co-CEO Joseph Laezza. “Now is the time for Glowpoint to focus on our long term growth and profitability through strategic alliances and product development initiatives, while growing our internal sales and marketing efforts. We are extremely well positioned to capitalize on Glowpoint’s leadership in the expanding market for managed video as an integral and driving force behind the growth of unified communications.”
Conference and Webcast
Glowpoint will host a conference call at 4:30 pm (EDT) today to discuss the results and field questions from investors. Interested participants should call (877) 407-1869. International participants should call (201) 689-8044.
This call is being audio webcast by TalkPoint and can be accessed at Glowpoint’s website at http://www.glowpoint.com or by linking directly to http://video.webcasts.com/events/glow001/34263. Institutional investors can also access the call via Thomson Reuters’ password-protected event management site, StreetEvents: http://www.streetevents.com.
A recording of the webcast will be available beginning March 31, 2010, and will remain archived for one year following the event. To listen to the archived audio webcast, visit www.glowpoint.com or go directly to http://video.webcasts.com/events/glow001/34263.
Links
| · | Glowpoint's Investor Information |
About Glowpoint
Glowpoint, Inc. (OTCBB: GLOW) provides carrier-grade, managed telepresence and video communications services. Glowpoint's suite of robust telepresence and video conferencing solutions empowers enterprises to communicate with each other over disparate networks and technology platforms. Glowpoint supports thousands of video communications systems in more than 35 countries with its 24/7 video management services. Glowpoint also powers major broadcasters, Fortune 500 companies, as well as global carriers and video equipment manufacturers – and their customers – worldwide. To learn more, visit http://www.glowpoint.com.
The statements contained herein, other than historical information, are or may be deemed to be forward-looking statements and involve factors, risks, and uncertainties that may cause actual results in future periods to differ materially from such statements. These factors, risks, and uncertainties include market acceptance and availability of new video communication services; the nonexclusive and terminable-at-will nature of sales agent agreements; rapid technological change affecting demand for our services; competition from other video communications service providers; and the availability of sufficient financial resources to enable us to expand our operations, as well as other risks detailed from time to time in our filings with the Securities and Exchange Commission.
GLOWPOINT, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and shares)
| | | | |
| ASSETS | | | | | | |
| Current assets: | | | | | | |
Cash | | $ | 587 | | | $ | 1,227 | |
| Accounts receivable, net of allowance for doubtful accounts of $262 and $301, respectively | | | 3,323 | | | | 3,090 | |
Prepaid expenses and other current assets | | | 291 | | | | 294 | |
Total current assets | | | 4,201 | | | | 4,611 | |
Property and equipment, net | | | 2,682 | | | | 2,533 | |
Other assets | | | 31 | | | | 33 | |
Total assets | | $ | 6,914 | | | $ | 7,177 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | | | | | | | | |
| Current liabilities: | | | | | | | | |
Accounts payable | | $ | 3,232 | | | $ | 2,367 | |
Accrued expenses | | | 879 | | | | 842 | |
Accrued sales taxes and regulatory fees | | | 888 | | | | 4,535 | |
Customer deposits | | | 308 | | | | 606 | |
Deferred revenue | | | 259 | | | | 325 | |
Current portion of capital lease | | | — | | | | 161 | |
Total current liabilities | | | 5,566 | | | | 8,836 | |
| | | | | | | | | |
| Long term liabilities: | | | | | | | | |
| Accrued sales taxes and regulatory fees, less current portion | | | 195 | | | | — | |
| Senior Secured Notes, net of discount of $240 | | | — | | | | 1,482 | |
Capital lease, less current portion | | | — | | | | 72 | |
Total long term liabilities | | | 195 | | | | 1,554 | |
Total liabilities | | | 5,761 | | | | 10,390 | |
| | | | | | | | | |
| Commitments and contingencies | | | | | | | | |
| | | | | | | | | |
| Stockholders’ equity (deficit): | | | | | | | | |
| Preferred stock, $.0001 par value; 7,500 shares authorized and convertible; 4,509 and 3,790 shares issued and outstanding recorded at fair value (liquidation value of $33,815 and $28,423), respectively (see Note 12 for information related to Insider Purchasers – related parties) | | | 14,275 | | | | 11,574 | |
| Common stock, $.0001 par value; 150,000,000 shares authorized; 66,531,087 and 48,374,954 shares issued; 64,966,196 and 46,810,063 shares outstanding, respectively | | | 7 | | | | 5 | |
Additional paid-in capital | | | 150,659 | | | | 172,000 | |
Accumulated deficit | | | (162,405 | ) | | | (185,409 | ) |
| | | | 2,536 | | | | (1,830 | ) |
Less: Treasury stock, 1,564,891 shares at cost | | | (1,383 | ) | | | (1,383 | ) |
Total stockholders’ equity (deficit) | | | 1,153 | | | | (3,213 | ) |
| Total liabilities and stockholders’ equity (deficit) | | $ | 6,914 | | | $ | 7,177 | |
GLOWPOINT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| | | | |
| | | | | | | |
Revenue | | $ | 26,540 | | | $ | 24,537 | |
| | | | | | | | | |
| Operating expenses: | | | | | | | | |
Network and infrastructure | | | 11,838 | | | | 12,762 | |
Global managed services | | | 7,476 | | | | 5,849 | |
Sales and marketing | | | 3,193 | | | | 3,382 | |
General and administrative | | | 4,465 | | | | 4,662 | |
Depreciation and amortization | | | 1,056 | | | | 1,261 | |
Sales taxes and regulatory fees | | | (2,500 | ) | | | (172 | ) |
Total operating expenses | | | 25,528 | | | | 27,744 | |
Income (loss) from operations | | | 1,012 | | | | (3,207 | ) |
| | | | | | | | | |
| Interest and other expense (income): | | | | | | | | |
| Interest (income) expense, net, including $0 and $141 of expense, respectively, for Insider Purchasers | | | (543 | ) | | | 4,517 | |
| Amortization of deferred financing costs, including $46 for Insider Purchasers | | | — | | | | 448 | |
| Loss on extinguishment of debt, including $0 and $99, respectively, for Insider Purchasers | | | 254 | | | | 1,816 | |
| Increase (decrease) in fair value of derivative financial instruments’ liability, including $0 and $86, respectively, for Insider Purchasers | | | 1,848 | | | | (2,673 | ) |
Total interest and other expense, net | | | 1,559 | | | | 4,108 | |
Net loss | | | (547 | ) | | | (7,315 | ) |
(Loss) gain on redemption of preferred stock | | | (64 | ) | | | 2,419 | |
| Net loss attributable to common stockholders | | $ | (611 | ) | | $ | (4,896 | ) |
| | | | | | | | | |
| Net loss attributable to common stockholders per share: | | | | | | | | |
Basic and diluted | | $ | (0.01 | ) | | $ | (0.11 | ) |
| | | | | | | | | |
| Weighted average number of common shares: | | | | | | | | |
Basic and diluted | | | 52,938 | | | | 45,477 | |
See accompanying notes to consolidated financial statements.
GLOWPOINT, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
Years Ended December 31, 2009 and 2008
(In thousands)
| | | | | | | | | | | Series A-2 | | | |
| | | | | | Additional | | | | | (Note A) | | | |
| | | | | | Paid In | | Accumulated | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at January 1, 2008 | | | 47,630 | | $ | 5 | | | $ | 162,300 | | $ | (178,094 | ) | | — | | | $ | — | | | 1,565 | | $ | (1,383 | ) | | $ | (17,172 | ) |
| Stock-based compensation - restricted stock | | | 745 | | — | | | | 394 | | | — | | | — | | | | — | | | — | | | — | | | | 394 | |
| Stock-based compensation - stock options | | | — | | | — | | | | 353 | | | — | | | — | | | | — | | | — | | | — | | | | 353 | |
| Warrants issued in connection with the 2008 Private Placements | | | — | | | — | | | | 4,853 | | | — | | | — | | | | — | | | — | | | — | | | | 4,853 | |
| Series A Convertible Preferred Stock issued in connection with the 2008 Private Placements | | | — | | | — | | | | — | | | — | | | 4 | | | | 11,574 | | | — | | | — | | | | 11,574 | |
| Gain on redemption of Series C preferred stock | | | — | | | — | | | | 2,419 | | | — | | | — | | | | — | | | — | | | — | | | | 2,419 | |
| Costs related to 2008 private placements | | | — | | | — | | | | (538 | ) | | — | | | — | | | | — | | | — | | | — | | | | (538 | ) |
| Gain on elimination of derivative liabilities | | | — | | | — | | | | 2,219 | | | — | | | — | | | | — | | | — | | | — | | | | 2,219 | |
| Net loss for the year | | | — | | | — | | | | — | | | (7,315 | ) | | — | | | | — | | | — | | | — | | | | (7,315 | ) |
| Balance at December 31, 2008 | | | 48,375 | | $ | 5 | | | $ | 172,000 | | $ | (185,409 | ) | | 4 | | | $ | 11,574 | | | 1,565 | | $ | (1,383 | ) | | $ | (3,213 | ) |
| Cumulative effect of reclassification of warrants (ASC Topic 815) | | | — | | | — | | | | (26,173 | ) | | 23,551 | | | — | | | | — | | | — | | | — | | | | (2,622 | ) |
| Balance at January 1, 2009, as adjusted | | | 48,375 | | | 5 | | | | 145,827 | | | (161,858 | ) | | 4 | | | | 11,574 | | | 1,565 | | | (1,383 | ) | | | (5,835 | ) |
| Stock-based compensation - restricted stock | | | 735 | | `— | | | | 277 | | | — | | | — | | | | — | | | — | | | — | | | | 277 | |
| Stock-based compensation - stock options | | | — | | | — | | | | 279 | | | — | | | — | | | | — | | | — | | | — | | | | 279 | |
| Loss on redemption of Series A Preferred Stock | | | — | | | — | | | | (1,999 | ) | | — | | | — | | | | 1,999 | | | — | | | — | | | | — | |
| August 2009 Warrant Exchange | | | 17,372 | | | 2 | | | | (2 | ) | | — | | | — | | | | — | | | — | | | — | | | | — | |
| Exercise of stock options | | | 49 | | | — | | | | 17 | | | — | | | — | | | | — | | | — | | | — | | | | 17 | |
| Series A-1 Preferred Stock issued in connection with the 2009 Private Placement | | | — | | | — | | | | — | | | — | | | 1 | | | | 2,637 | | | — | | | — | | | | 2,637 | |
| Elimination of derivative liabilities | | | — | | | — | | | | 4,751 | | | — | | | — | | | | — | | | — | | | — | | | | 4,751 | |
| Gain on redemption of Series A-1 Preferred Stock | | | — | | | — | | | | 1,935 | | | — | | | — | | | | (1,935 | ) | | — | | | — | | | | — | |
| Costs related to 2009 Private Placement, warrant and Preferred Stock exchange | | | — | | | — | | | | (426 | ) | | — | | | — | | | | — | | | — | | | — | | | | (426 | ) |
| Net loss for the year | | | — | | | — | | | | — | | | (547 | ) | | — | | | | — | | | — | | | — | | | | (547 | ) |
| Balance at December 31, 2009 | | | 66,531 | | $ | 7 | | | $ | 150,659 | | $ | (162,405 | ) | | 5 | | | $ | 14,275 | | | 1,565 | | $ | (1,383 | ) | | $ | 1,153 | |
Note A – In March 2009 the shares of Series A Preferred Stock outstanding at December 31, 2008 were exchanged for an equal number of shares of newly-created Series A-1 Convertible Preferred Stock (“Series A-1 Preferred Stock”). In August 2009 the shares of Series A-1 Preferred Stock then outstanding were exchanged for an equal number of shares of newly-created Series A-2 Convertible Preferred Stock (“Series A-2 Preferred Stock”).
See accompanying notes to consolidated financial statements.
GLOWPOINT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| | | | |
| | | | | | | |
| Cash flows from operating activities: | | | | | | |
Net loss | | $ | (547 | ) | | $ | (7,315 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
Depreciation and amortization | | | 1,056 | | | | 1,261 | |
Bad debt expense | | | 258 | | | | 257 | |
Loss on extinguishment of debt | | | 254 | | | | 1,816 | |
Amortization of deferred financing costs | | | — | | | | 448 | |
| Accretion of discount on Senior Secured Notes | | | 23 | | | | 2,732 | |
Loss on disposal of equipment | | | 8 | | | | 77 | |
| Expense recognized for the decrease in the estimated fair value of derivative financial instruments’ liability | | | 1,848 | | | | (2,673 | ) |
Stock-based compensation | | | 556 | | | | 568 | |
| Increase (decrease) in cash attributable to changes in assets and liabilities: | | | | | | | | |
| Accounts receivable . | | | (491 | ) | | | (801 | ) |
| Prepaid expenses and other current assets | | | 3 | | | | 54 | |
Other assets | | | 2 | | | | (5 | ) |
Accounts payable | | | 865 | | | | 793 | |
Accrued expenses | | | 105 | | | | 1,112 | |
| Accrued sales taxes and regulatory fees . | | | (3,452 | ) | | | 524 | |
Customer deposits | | | (298 | ) | | | (107 | ) |
Deferred revenue | | | (66 | ) | | | (5 | ) |
| Net cash provided by (used in) operating activities . | | | 124 | | | | (1,264 | ) |
| | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | |
Purchases of property and equipment | | | (1,213 | ) | | | (1,179 | ) |
Net cash used in investing activities | | | (1,213 | ) | | | (1,179 | ) |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| Proceeds from preferred stock offering, including $0 and $13 from Insider Purchaser, respectively | | | 1,800 | | | | 1,825 | |
Proceeds from exercise of stock options | | | 17 | | | | — | |
Principal payments for capital lease | | | (234 | ) | | | (125 | ) |
Purchase of Senior Secured Notes | | | (750 | ) | | | — | |
| Costs related to private placements and preferred stock and warrant exchange | | | (384 | ) | | | (342 | ) |
Net cash provided by financing activities | | | 449 | | | | 1,358 | |
Decrease in cash | | | (640 | ) | | | (1,085 | ) |
Cash at beginning of year | | | 1,227 | | | | 2,312 | |
Cash at end of year | | $ | 587 | | | $ | 1,227 | |
| | | | | | | | | |
| Supplement disclosures of cash flow information: | | | | | | | | |
Cash paid during the year for interest | | $ | 80 | | | $ | 100 | |
See accompanying notes to consolidated financial statements.
| | | | |
| | | | | | | |
| Non-cash investing and financing: | | | | | | |
| Exchange of Senior Secured Notes for Series A-1 Preferred Stock | | $ | 1,076 | | | $ | — | |
| Exchange of Senior Secured Notes for Series A Preferred Stock | | | — | | | | 10,802 | |
Redemption of Series C Preferred Stock | | | — | | | | 4,330 | |
Gain on elimination of derivative liability | | | — | | | | 2,219 | |
| Additional Senior Secured Notes issued as payment for interest including $0 and $48 for Insider Purchasers, respectively | | | 55 | | | | 1,459 | |
| Costs related to private placements incurred by issuance of placement agent warrants | | | 42 | | | | 196 | |
| | | | | | | | | |
