Glowpoint Announces Third Quarter 2013 Results

Glowpoint Completes Transformational Debt Refinancing and Preferred Stock Exchange to Simplify Capital Structure and Improve Long-Term Liquidity

News provided by

Glowpoint, Inc.

Nov 06, 2013, 04:28 ET

DENVER, Nov. 6, 2013 /PRNewswire/ -- Glowpoint, Inc. (NYSE MKT: GLOW), a leading provider of cloud-based video collaboration services, today announced financial results for the third quarter ended September 30, 2013.

Financial Highlights:

Revenue increased 27 percent year over year to $8.3 million in the third quarter of 2013 from $6.6 million in the third quarter of 2012. This increase is attributable to the third quarter 2013 revenue contribution from the October 2012 acquisition of Affinity VideoNet.
Adjusted EBITDA (as defined below and reconciled to GAAP in the attached schedule) was $1.2 million in the third quarter of 2013, compared with $0.6 million for the same period last year and $1.2 million for the second quarter of 2013.
Loss from operations was $0.1 million in the third quarter of 2013, compared with $0.6 million for the same period last year.
Net cash provided by operating activities was $0.5 million for the third quarter of 2013. The Company paid down $0.5 million on its line of credit during the quarter, resulting in no outstanding balance at the end of the third quarter.
The Company ended the third quarter with $2.1 million of cash compared with $2.2 million at the end of 2012, while paying down $0.8 million on its line of credit during the nine months ended September 30, 2013.
During the third and fourth quarters, the Company retired all outstanding shares of Series B-1 preferred stock in exchange for common stock, which retired a total of $10.2 million of liquidation preference and eliminated any future dividends related to the exchanged shares of preferred stock.
In October 2013, the Company refinanced its debt facilities by securing a new credit facility consisting of a term loan commitment of $11.0 million and a line of credit up to $2.0 million. At closing, the Company borrowed $9.0 million on the term loan and $0.2 million on the revolver, and used the proceeds of such borrowings to repay existing term loans of $8.5 million in addition to the payment of facility fees and expenses.

"Adjusted EBITDA of $1.2 million for the third quarter more than doubled from the third quarter of last year and slightly improved from the second quarter of 2013," stated David Clark, CFO of Glowpoint. "We generated $1.8 million of cash flow from operations and paid down $0.8 million on our revolver to $0 during the first nine months of 2013, while ending the quarter with $2.1 million in cash. We were very pleased to complete the preferred stock exchange and debt refinancing as these transactions simplify our capital structure and provide us with greater liquidity and financial flexibility."

"We've made great strides this year in capital restructuring, organizational and personnel enhancements, and re-positioning our services for the next wave of video collaboration. I'm pleased with the progress we've made through this phase of the journey. We're producing tangible results, strengthening our balance sheet, and gradually showing improvement in our core services. Moving forward, we'll continue to focus on implementing changes needed to support our transformation, enhancing the leadership team, and creating new services with a sustainable goal to increase value for customers as well as for our shareholders," said Peter Holst, President and CEO of Glowpoint.

The results of our operations and financial condition for the three and nine months ended September 30, 2013 and 2012, are more fully discussed in our Form 10-Q for the quarter ended September 30, 2013, filed with the Securities and Exchange Commission on November 6, 2013. Investors are encouraged to carefully review the Form 10-Q for the quarter ended September 30, 2013, for a complete analysis of our results from operations and financial condition.

Teleconference

Glowpoint will host a conference call at 4:30 p.m. EST today to discuss the financial results for the third quarter of 2013, along with updates on the business. To view the webcast, please visit: https://glowpoint.webcasts.com. To participate in the teleconference, callers may dial the toll-free number +1 877-485-3103 (U.S. callers only) or +1 201-689-8890 (from outside the U.S.). For those unable to participate during the live call, a recording of the call will be archived for viewing two hours following the call at www.glowpoint.com/investor-relations.

Supporting Link:

Glowpoint Investor Information

About Glowpoint

Glowpoint, Inc. (NYSE MKT: GLOW) provides video collaboration, network, and support services to large enterprises and mid-sized companies to support their unified communications (UC) strategies and business goals. More than 600 organizations in 96 countries rely on our unmatched experience, business-class support, and cloud-based services to collaborate with colleagues, business partners, and customers more effectively. To learn more, please visit www.glowpoint.com.

Non-GAAP Financial Information

Adjusted EBITDA is defined as net income (loss) before depreciation, amortization, interest expense, interest income, taxes, stock-based compensation, asset impairment charges, acquisition costs and severance. Adjusted EBITDA is a non-GAAP financial measure and is not intended to replace operating income, net income, cash flow or other measures of financial performance reported in accordance with generally accepted accounting principles. Rather, Adjusted EBITDA is an important measure used by management to assess the operating performance of the company. Adjusted EBITDA as defined here may not be comparable to similarly titled measures reported by other companies due to differences in accounting policies. Additionally, Adjusted EBITDA as defined here does not have the same meaning as EBITDA as defined in our Securities and Exchange Commission filings prior to this date. A reconciliation of Adjusted EBITDA to net income (loss) is shown in the attached schedules.

Forward-Looking and Cautionary Statements

Forward-looking statements in this press release regarding our liquidity, financial flexibility, creation of new services, increasing value for our shareholders, and all other statements that are not historical facts are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements 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 communications services; the non-exclusive and terminable-at-will nature of sales agreements; rapid technological change affecting demand for our services; competition from other video communication 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. We make no representation or warranty that the information contained herein is complete and accurate; we have no duty to correct or update any information.

INVESTOR CONTACT:

Investor Relations

Glowpoint, Inc.

+1 973-855-3411

[email protected]

www.glowpoint.com


GLOWPOINT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value) (Unaudited)
	September 30,	December 31,
	2013	2012
ASSETS
Current assets:
Cash	$ 2,051	$ 2,218
Accounts receivable, net (including related party amounts of $26 and $32, respectively)	3,905	4,047
Prepaid expenses and other current assets	591	897
Total current assets	6,547	7,162
Property and equipment, net	3,155	4,256
Goodwill	9,825	9,900
Intangibles, net	6,316	7,256
Other assets	778	742
Total assets	$ 26,621	$ 29,316

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$ 917	$ 1,397
Current portion of capital lease	263	240
Accounts payable (including related party amounts of $13 and $13, respectively)	2,475	2,384
Accrued expenses (including related party amounts of $6 and $15, respectively)	1,913	1,672
Accrued dividends	25	-
Accrued sales taxes and regulatory fees	618	398
Customer deposits	163	205
Deferred revenue	122	155
Total current liabilities	6,496	6,451
Noncurrent liabilities:
Capital lease, less current portion	62	231
Long term debt, net of current portion	9,052	9,631
Total noncurrent liabilities	9,114	9,862
Total liabilities	15,610	16,313

Commitments and contingencies

Stockholders' equity:
Preferred stock Series B-1, non-convertible; $.0001 par value	$ 500	$ 10,000
Preferred stock Series A-2, convertible; $.0001 par value	167	167
Common stock, $.0001 par value	3	3
Additional paid-in capital	176,675	166,481
Accumulated deficit	(166,334)	(163,648)
Total stockholders' equity	11,011	13,003
Total liabilities and stockholders' equity	$ 26,621	$ 29,316



GLOWPOINT, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS and GAAP to Non-GAAP Reconciliation (In thousands, except per share data) (Unaudited)

	Nine Months Ended		Three Months Ended
	September 30,		September 30,
	2013	2012	2013	2012

Managed Services Combined	$ 14,955	$ 9,705	$ 4,821	$ 3,204
Network services	9,144	9,168	3,055	2,998
Professional and other services	1,454	1,234	437	359
Total revenue	25,553	20,107	8,313	6,561

Network and infrastructure	6,261	6,297	2,153	2,076
Global managed services	9,101	5,262	2,958	1,801
Sales and marketing	2,934	2,954	868	1,090
General and administrative	6,544	4,384	1,746	1,732
Depreciation and amortization	2,151	1,301	693	436
Total operating expenses	26,991	20,198	8,418	7,135

Income (loss) from operations	(1,438)	(91)	(105)	(574)
Interest/Financing	1,248	76	446	18
Income (loss) before provision for income taxes	$ (2,686)	$ (167)	$ (551)	$ (592)

Provision for income taxes	-	5	-	-
Net income (loss)	$ (2,686)	$ (172)	$ (551)	$ (592)

Preferred stock dividends	25	-	(185)	-
Net income (loss) attributable to common stockholders	$ (2,711)	$ (172)	$ (366)	$ (592)

Net income (loss) per share:
Basic net income (loss) per share	$ (0.09)	$ (0.01)	$ (0.01)	$ (0.02)
Diluted net income (loss) per share	$ (0.09)	$ (0.01)	$ (0.01)	$ (0.02)

Weighted average number of common shares:
Basic	29,094	24,441	31,692	24,556
Diluted	29,094	24,441	31,692	24,556

ADJUSTED EBITDA - GAAP to Non GAAP Reconciliation
Net income (loss) before provision for income taxes	$ (2,686)	$ (167)	$ (551)	$ (592)

Interest/Financing	1,248	76	446	18
Depreciation and amortization	2,151	1,301	693	436
Stock-based compensation	861	448	171	229
Severance	696	-	289	-
Acquisition costs	278	480	40	480
Asset impairment	680	-	141
Adjusted EBITDA	$ 3,228	$ 2,138	$ 1,229	$ 571



GLOWPOINT, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)

							Nine Months Ended
							September 30,
							2013	2012
Cash flows from Operating Activities:
	Net income (loss)						$ (2,686)	$ (172)
	Adjustments to reconcile net income (loss) to net cash provided by (used in)
		operating activities:
			Depreciation and amortization				2,151	1,301
			Amortization of deferred financing costs				242	33
			Amortization of debt discount				108	-
			Bad debt expense				104	122
			Loss on disposal of equipment				680	12
			Stock-based compensation				861	448
			Increase (decrease) attributable to changes in assets
				and liabilities:
					Accounts receivable		39	(498)
					Other current assets		306	(37)
					Other assets		(278)	(22)
					Accounts payable		91	(21)
					Customer deposits		(42)	25
					Accrued expenses, sales taxes and regulatory fees		269	(352)
					Deferred revenue		(33)	(82)
						Net cash provided by (used in) continuing operating activities	1,812	757
						Net cash (used in) provided by discontinuing operating activities	-	(50)
						Net cash provided by operating activities	1,812	707

Cash flows from Investing Activities:
	Proceeds from sale of equipment						2	11
	Purchases of property and equipment						(753)	(547)
						Net cash used in investing activities	(751)	(536)

Cash flows from Financing Activities:
	Proceeds from exercise of stock options						-	7
	Payments related to preferred stock exchange						(106)	-
	Principal payments for capital lease						(185)	(147)
	Payments related to debt issuance						(157)	(199)
	Proceeds from revolving loan facility						(780)	-
						Net cash used in financing activities	(1,228)	(339)

Increase (decrease) in cash							(167)	(168)

Cash at beginning of period							2,218	1,818

Cash at end of period							$ 2,051	$ 1,650