Glowpoint Announces 2013 Results

DENVER, March 6, 2014 /PRNewswire/ -- Glowpoint, Inc. (NYSE MKT: GLOW), a leading provider of video collaboration services and network solutions, today announced financial results for the year ended December 31, 2013.

Financial Highlights:

  • Revenue increased 15 percent to $33.5 million for 2013 from $29.1 million for 2012. This increase is attributable to revenue contribution for the full year 2013 from the acquisition of Affinity VideoNet in October 2012.
  • Adjusted EBITDA (a non-GAAP financial measure defined below and reconciled to GAAP in the attached schedule) increased 43 percent to $4.4 million for 2013 from $3.1 million for 2012.   
  • Net cash provided by operating activities increased to $2.3 million for 2013 as compared to $0.8 million for 2012.
  • During the second half of 2013, the Company simplified its capital structure by exchanging all outstanding shares of Series B-1 preferred stock into common stock, which eliminated a total of $10.2 million of liquidation preference on the exchanged preferred stock and eliminated future annual dividends of $600,000 that would have commenced accruing in 2014.
  • During the fourth quarter of 2013, the Company refinanced its debt facilities to improve near-term liquidity and provide additional borrowing capacity for strategic growth plans.  
    • The Company secured a new credit facility from Main Street Capital Corporation ("Main Street") consisting of a 5-year term loan commitment of $11.0 million and a 2-year revolving line of credit of up to $2.0 million. As of December 31, 2013, the Company had outstanding borrowings of $9.0 million on the term loan and $0.3 million on the revolver. During 2013, and in connection with entry into the Main Street credit facility, the Company repaid borrowings of $8.5 million on former term loans and $0.8 million on the former revolver that existed as of December 31, 2012.
    • The Company reduced the principal amount on the seller promissory note issued in connection with the Affinity acquisition by $0.2 million to $1.9 million and extended the maturity date from December 31, 2014, to January 4, 2016.
    • The Company's former debt obligations would have required minimum near-term principal payments of $3.6 million in 2014 and $3.0 million in 2015.  Principal payments in 2014 and 2015 under the Main Street credit facility and the amended seller note are based on a percentage of excess cash flow generated by the Company and the achievement of certain EBITDA levels. The Company expects to make principal payments of $950,000 on its debt obligations in 2014.  See the Company's 2013 Form 10-K for a full discussion of our debt obligations as of December 31, 2013.
  • During 2013, GPI Investment Holdings LLC ("GPI") acquired a significant portion of the Company's outstanding common stock from other stockholders. GPI owned approximately 43 percent of the Company's common stock as of December 31, 2013. GPI is an investment vehicle affiliated with Main Street and the Pessin family who provide more than 40 years of experience investing in, and successfully assisting, micro- and small-cap companies.  

"We made significant progress in 2013 on several fronts, including capital restructuring, integration of the Affinity acquisition, growth in Adjusted EBITDA, re-shaping our management team, and shifting our service offerings to meet customers' transforming video collaboration needs," said Peter Holst, CEO and president of Glowpoint. "Videoconferencing is a very dynamic market as customers move from hardware-based solutions to virtualized delivery of the technology. Moving forward, our goal is to transform Glowpoint into a service platform to deliver a rapidly growing ecosystem of video, voice, and data collaboration applications to our partners and customers. We believe very strongly in the long-term market opportunity and have taken the requisite steps in 2013 to enable significant platform enhancements in 2014. The core elements of our 2014 plan are as follows:

  • More than $2 million of investments in core infrastructure, information systems, and our next generation IT service management platform to not only enhance the current customer experience but broaden the scope of features around it. We expect to fund these investments from the positive cash flow from operations the Company projects to generate in 2014.
  • Continued investments in personnel and training. The majority of the management team has only recently joined Glowpoint during the past three-to-six months. With time and an aggressive effort to add experienced personnel in critical areas such as product development, operations, and sales, we believe our focus talent acquisition will yield results.
  • Cost-of-service delivery. We believe our development efforts and commitment toward automating key elements of the supply chain will yield higher degrees of operating leverage as the year progresses, resulting in improved gross margins and Adjusted EBITDA performance.
  • Mergers and Acquisitions. With a vastly improved capital structure, enhanced product pipeline, and a fully funded capital expenditure plan, our intent is to seek out acquisitions that either add to, or expand, our current service portfolio. We have established strong relationships with our capital sources and look to leverage their substantial financial capacity to create shareholder value."

Mr. Holst continued, "On a pro forma basis, assuming the Affinity acquisition occurred on January 1, 2012, our revenue declined 9.8 percent from 2012 to 2013, primarily driven by pricing pressure on certain managed services and technology shifts. While we continue to believe those risk factors remain ever-present in the industry as a whole, we are projecting 2014 revenue to be essentially level with 2013 while improving Adjusted EBITDA performance by approximately 10 percent."

The results of our operations and financial condition for the years ended December 31, 2013 and 2012 are more fully discussed in our Annual Report on Form 10-K for 2013, filed with the Securities and Exchange Commission on March 6, 2014. Investors are encouraged to carefully review the 2013 Form 10-K 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 2013, in addition to updates regarding 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) 407-1869 (U.S. callers only) or +1 (201) 689-8044 (from outside the U.S.). For those unable to participate in the live call, a recording of the call will be archived for viewing two hours after the call at www.glowpoint.com/investor-relations.

Supporting Link:

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 1,000 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 certain  of our prior Securities and Exchange Commission filings that contain separate reconciliations of EBITDA to net income (loss). 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 anticipated liquidity and borrowing capacity, financial flexibility, expected 2014 principal payments relating to our debt obligations, expectations regarding revenue, and growth in gross margin and Adjusted EBITDA, plans to make investments in personnel and capital expenditures to improve our core infrastructure and service offerings, plans to seek acquisition opportunities, 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 and we have no duty to correct or update any information contained herein.

INVESTOR CONTACT:
Investor Relations
Glowpoint, Inc.
+1 973-855-3411
investorrelations@glowpoint.com
www.glowpoint.com

 

GLOWPOINT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)



 December 31, 


December 31,


2013


2012

ASSETS




Current assets:




   Cash

$         2,294


$           2,218

   Accounts receivable, net

4,077


4,047

   Prepaid expenses and other current assets

404


897

             Total current assets

6,775


7,162

Property and equipment, net

2,867


4,256

Goodwill

9,825


9,900

Intangibles, net

5,998


7,256

Other assets

421


742

             Total assets

$       25,886


$         29,316





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




   Current portion of long-term debt

$            950


$           1,397

   Current portion of capital lease

217


240

   Accounts payable

1,885


2,384

   Accrued expenses and other liabilities

2,277


2,032

   Accrued dividends

20


-

   Accrued sales taxes and regulatory fees

590


398

             Total current liabilities

5,939


6,451

Long term liabilities:




   Capital lease, less current portion

43


231

   Long term debt, net of current portion

10,235


9,631

             Total long term liabilities

10,278


9,862

             Total liabilities

16,217


16,313





Commitments and contingencies








Stockholders' equity:




   Preferred stock Series B-1, non-convertible; $.0001 par value

$                 -


$         10,000

   Preferred stock Series A-2, convertible; $.0001 par value

167


167

   Common stock, $.0001 par value

4


3

   Additional paid-in capital

177,357


166,481

   Accumulated deficit

(167,859)


(163,648)

             Total stockholders' equity

9,669


13,003

             Total liabilities and stockholders' equity

$       25,886


$         29,316

 

 

GLOWPOINT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

and GAAP to Non-GAAP Reconciliation
(In thousands, except per share data)

(Unaudited)




 Year Ended 


 Three Months Ended 



 December 31, 


 December 31, 



2013


2012


2013


2012










Video collaboration services


$   19,612


$   14,932


$     4,658


$     5,227

Network services


12,048


12,366


2,903


3,198

Professional and other services 


1,794


1,772


340


538

Total revenue


33,454


29,070


7,901


8,963










Cost of revenue (exclusive of depreciation and amortization)


19,504


16,044


4,603


5,179

Research and development


662


946


201


252

Sales and marketing


3,812


4,180


878


1,226

General and administrative


8,058


6,411


1,514


2,027

Depreciation and amortization


2,860


2,085


709


784

Total operating expenses


34,896


29,666


7,905


9,468










Loss from operations


(1,442)


(596)


(4)


(505)

Interest and other expense, net


2,799


574


1,551


498

Loss before income taxes


$    (4,241)


$    (1,170)


$    (1,555)


$    (1,003)










Income tax benefit


(30)


(2,221)


(30)


(2,226)

Net income (loss)


$    (4,211)


$     1,051


$    (1,525)


$     1,223










Preferred stock dividends


20


-


(5)


-

Net income (loss) attributable to common stockholders

$    (4,231)


$     1,051


$    (1,520)


$     1,223










Net income (loss) attributable to common stockholders per share:







        Basic net income (loss) per share


$      (0.14)


$       0.04


$      (0.04)


$       0.04

        Diluted net income (loss) per share


$      (0.14)


$       0.04


$      (0.04)


$       0.04










Weighted average number of common shares:









        Basic


30,525


25,254


34,759


27,593

        Diluted


30,525


26,656


34,759


29,095










ADJUSTED EBITDA - GAAP to Non GAAP Reconciliation 








Net income (loss)


$    (4,211)


$     1,051


$    (1,525)


$     1,223










Income tax benefit


(30)


(2,221)


(30)


(2,226)

Depreciation and amortization


2,860


2,085


709


784

Interest and other expense, net


2,799


574


1,551


498

Stock-based compensation


1,203


678


342


230

Severance


860


48


164


48

Acquisition costs


259


857


(19)


377

Asset impairment


680


17


-


17

Adjusted EBITDA


$     4,420


$     3,089


$     1,192


$        951

 

 

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

(Unaudited)










 Year Ended 









 December 31, 









2013


2012

Cash flows from Operating Activities:






Net income (loss)


$ (4,211)


$ 1,051


Adjustments to reconcile net income (loss) to net cash provided by







operating activities:








Depreciation and amortization


2,860


2,085




Bad debt expense


149


84




Amortization of deferred financing costs


976


122




Amortization of debt discount


727


31




Loss on impairment/disposal of assets


680


17




Stock-based compensation


1,203


678




Shares issued in connection with acquisition


-


104




Deferred tax benefit


-


(2,221)




Gain on debt forgiveness


(103)


-




Increase (decrease) attributable to changes in assets









and liabilities:










 Accounts receivable 


(179)


(410)






 Prepaid expenses and other current assets 


493


(316)






 Other assets 


214


22






 Accounts payable 


(499)


31






 Accrued expenses and other liabilities 


(78)


(14)






 Accrued sales taxes and regulatory fees 


68


(393)







 Net cash provided by operating activities - continuing operations 


2,300


871







 Net cash used in operating activities - discontinued operations 


-


(50)







 Net cash provided by operating activities 


2,300


821












Cash flows from Investing Activities:






 Proceeds from sale of equipment 


2


11


 Cash paid for acquisition costs, net of acquired cash 


(46)


(7,562)


 Purchases of property and equipment  


(856)


(740)







 Net cash used in investing activities 


(900)


(8,291)












Cash flows from Financing Activities:






Proceeds from exercise of stock options


-


12


Payments related to preferred stock exchange


(289)


-


Principal payments for capital lease


(251)


(205)


Proceeds from new credit facility, net of expenses of $322


8,978


-


Repayment of former debt obligations and expenses of $482


(9,762)


-


Proceeds from former debt obligations, net of expenses of $467


-


8,063







 Net cash provided by (used in) financing activities 


(1,324)


7,870












Increase in cash 


76


400

Cash at beginning of year


2,218


1,818

Cash at end of year


$  2,294


$ 2,218

 

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SOURCE Glowpoint, Inc.



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