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Glowpoint Reports Third Quarter 2010 Results
Nov 11, 2010 (03:11 PM EST)


Growth in Managed Services Drives 11% Increase in Revenues

HILLSIDE, N.J., Nov. 11, 2010 /PRNewswire-FirstCall/ -- Glowpoint, Inc. (OTC Bulletin Board: GLOW), a global provider of managed services for telepresence and video conferencing, today announced financial results for the third quarter ended September 30, 2010.

Total revenues for the third quarter increased by 11% to $6.9 million, and 8.6% to $20.5 million, year-to-date, as compared to the same periods in 2009.  Recurring subscription revenues for the three and nine month periods increased 6.5% to $5.4 million and 7.0% to $15.8 million, respectively, as compared to the same periods in 2009.  Usage and event-based revenues for the three and nine month periods increased 29.8% to $1.6 million and 14.3% to $4.7 million, respectively, as compared to the same periods in 2009.  These results exclude discontinued operations associated with non- core Integrated Services Digital Network (ISDN) resale revenues reported in the quarter.

Beginning in this quarter the Company will also include in its financial results a non-GAAP measurement of Adjusted EBITDA (as defined) in order to enhance the overall understanding of our financial performance.  For the three and nine month periods ended September 30, 2010, Adjusted EBITDA (as defined) was $(307,000) and $(852,000), respectively.  (Note that these results include severance related charges of $398,000 and $523,000, respectively, for such periods.)  Net loss for the three and nine month periods ended September 30, 2010 was $0.8 million and $2.2 million, respectively.

Based on the current level of business activity, the Company expects that its revenue and Adjusted EBITDA (as defined) will grow at an accelerated rate into 2011, with revenue from VNOC managed services accounting for the largest component of this growth.  

Highlights

  • Increased Revenues: Driven by continued growth in managed video services, revenue increases of 11.0% and 8.6% were achieved in the quarter and nine month period, respectively, as compared to the same periods in 2009.
  • Adjusted EBITDA: The Company's Adjusted EBITDA (as defined) improved on a sequential quarterly basis.  
  • New Global Strategic Partnerships: Glowpoint continues to expand its global partnerships as highlighted in three recent announcements with Equinix, Broadsoft, and Acme Packet.  These partnerships are a key part of the strategy for Glowpoint as video communications continue to become a part of unified communications.
  • Continued Investments in Product Development and Sales and Operating Efficiencies: The Company's investments in sales, marketing, product development, and operations are anticipated to drive continued growth and improved operating margins in the coming quarters. The Company launched its automated Notify™ service along with various cloud-based applications, which highlights its Open Video™ strategy to expand services on a global basis to the business community.

"Our focus continues to be on investing in product initiatives, sales and marketing, strategic partnerships, and operating efficiencies, and we look forward to seeing continued returns on these investments on a quarterly basis," said Joe Laezza, Glowpoint's president and chief executive officer.  "We are making significant progress in our strategy to get the Company aligned with the right global partners and drive profitability based on accelerated growth and operating leverage."

Ed Heinen, Glowpoint's chief financial officer and executive vice president of finance, further commented, "We are well capitalized and have solid operating momentum, and I am confident that we have sustainable profitability in our sights."

Teleconference

As reported, Glowpoint will host a conference call at 4:30 p.m. EST today to discuss the financial results of the three and nine months ended September 30, 2010, and to review plans for the remainder of 2010.  To listen and participate, please visit: http://www.glowpoint.com/about/investors.asp.

Supporting Resources


About Glowpoint

Glowpoint, Inc. (OTCBB: GLOW) provides carrier-grade, managed telepresence and video communications services that are accessible via its cloud-based, hosted infrastructure and open architecture applications. 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 53 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.

Non-GAAP Financial Information

Adjusted EBITDA is defined as net income or loss before depreciation, amortization, interest expense, interest income, sales taxes and regulatory fee expense or benefit, loss on extinguishment of debt, changes in fair value of derivative financial instruments and stock-based compensation, in accordance with our revolving credit facility with Silicon Valley Bank.   Adjusted EBITDA is not intended to replace operating income (loss), net income (loss), 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 and is the basis for one of the Silicon Valley Bank covenants.   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 SEC filings prior to this date.  A reconciliation of Adjusted EBITDA to net loss is shown below.

Forward Looking Statements

This partial discussion of the statements of financial condition and operations of the Company should be read in conjunction with the consolidated financial statements and related notes contained in the Company's annual report on Form 10-K for the year ended December 31, 2009 as filed with the Securities and Exchange Commission on March 31, 2010.

Various remarks about the Company's future expectations, plans and prospects constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Such remarks are valid only as of today, and the Company disclaims any obligation to update this information.  Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission.


INVESTOR RELATIONS CONTACT:


Jonathan Brust


Glowpoint, Inc.


+1 312-235-3888, ext. 2052


jbrust@glowpoint.com


www.glowpoint.com



GLOWPOINT, INC.

GAAP to Non-GAAP Reconciliation

(In thousands, except per share amounts)

(Unaudited)



Nine Months Ended

September 30,

Three Months Ended

September 30,


2010

2009

2010

2009

Net loss

$  (2,216)

$  (3,158)

$   (844)

$  (1,079)

Depreciation and amortization

812

790

270

253

Amortization of financing costs

18

16

Interest expense

89

273

35

60

Sales taxes and regulatory fees

(377)

(199)

EBITDA

(1,297)

(2,472)

(523)

(965)

Stock-based compensation

445

438

216

116

Loss on extinguishment of debt

254

Increase in fair value of derivative financial





   instruments' liability

1,848

1,157

Adjusted EBITDA

$     (852)

$      68

$   (307)

$       308














GLOWPOINT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and shares)



September 30,
2010

December 31,
2009

ASSETS

(Unaudited)


Current assets:



Cash and cash equivalents

$          1,516

$             587

Accounts receivable, net of allowance for doubtful accounts of



   $324 and $227, respectively

3,424

3,063

Net current assets of discontinued operations

169

257

Receivable from sale of Series B Preferred Stock

1,000

Prepaid expenses and other current assets

488

291

Total current assets

6,597

4,198

Property and equipment, net

2,840

2,682

Other assets

99

31

Total assets

$          9,536

$          6,911




LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:



Accounts payable

$          3,014

$          3,207

Accrued expenses

1,327

901

Accrued sales taxes and regulatory fees

882

888

Revolving loan facility

750

Customer deposits

256

308

Deferred revenue

224

259

Total current liabilities

6,453

5,563

Long term liabilities:



Accrued sales taxes and regulatory fees, less current portion

195

Total long term liabilities

195

Total liabilities

6,453

5,758




Commitments and contingencies



Stockholders' equity:



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



   $100,000 stated value; 100 shares authorized and



   100 and 0 shares issued and outstanding at September 30, 2010



   and December 31, 2009, respectively, liquidation value of $10,000

10,000

Preferred stock Series A-2, convertible; $.0001 par value; $7,500 stated value;



   7,500 shares authorized and 1,097 and 4,509 shares issued and



   outstanding at September 30, 2010 and December 31, 2009



   recorded at fair value, respectively (liquidation value of $8,226 and $33,815,



   respectively) (see Note 9 for information related to Insider Purchasers)

3,473

14,275

Common stock, $.0001 par value;150,000,000 shares authorized; 84,639,416



   and 66,531,087 shares issued at September 30, 2010 and



   December 31, 2009, respectively; 84,639,416 and 64,966,196 shares



   outstanding, at September 30, 2010 and December 31, 2009, respectively

8

7

Additional paid-in capital

154,223

150,659

Accumulated deficit

(164,621)

(162,405)


3,083

2,536

Less: Treasury stock, 0 and 1,564,891 shares at cost

(1,383)

Total stockholders' equity

3,083

1,153

Total liabilities and stockholders' equity

$          9,536

$          6,911







GLOWPOINT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)



Nine Months Ended

September 30,

Three Months Ended

September 30,


2010

2009

2010

2009

Revenue

$    20,541

$      18,921

$      6,944

$      6,255






Operating expenses:





Network and Infrastructure

8,768

8,218

2,896

2,719

Global managed services

6,203

5,530

2,049

1,782

Sales and marketing

3,187

2,412

1,086

710

General and administrative

3,860

3,418

1,504

918

Depreciation and amortization

812

790

270

253

Sales taxes and regulatory fees

(377)

(199)

Total operating expenses

22,830

19,991

7,805

6,183

(Loss) income from operations

(2,289)

(1,070)

(861)

72






Interest and other expense:





Interest expense

89

273

35

60

Increase in fair value of derivative financial





   instruments' liability, including $51 and





   $31, respectively, for Insider Purchasers

1,848

1,157

Loss on extinguishment of debt

254

Amortization of financing costs

18

16

Total interest and other expense

107

2,375

51

1,217

Net loss from continuing operations

(2,396)

(3,445)

(912)

(1,145)

Income from discontinued operations

180

287

68

66

Net loss

(2,216)

(3,158)

(844)

(1,079)

(Loss) Gain on redemption of preferred stock

(934)

(64)

(156)

1,935

Net (loss) income attributable to common stockholders

$     (3,150)

$     (3,222)

$     (1,000)

$         856






Net (loss) income attributable to common





     stockholders per share:










Continuing operations

$        (0.04)

$        (0.07)

$       (0.01)

$        0.02

Discontinued operations

$          0.00

$         0.00

$        0.00

$        0.00

Basic net (loss) income per share

$        (0.04)

$        (0.07)

$       (0.01)

$        0.02






Continuing operations

$        (0.04)

$       (0.07)

$       (0.01)

$        0.01

Discontinued operations

$          0.00

$        0.00

$        0.00

$        0.00

Diluted net (loss) income per share

$        (0.04)

$       (0.07)

$       (0.01)

$        0.01






Weighted average number of common shares:





Basic

74,519

49,273

79,562

55,861

Diluted

74,519

49,273

79,562

102,901









GLOWPOINT, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Nine Months Ended September 30, 2010

(In thousands except shares of Series B Preferred Stock)

(Unaudited)



Series B

Series A-2


Additional




Preferred Stock

Preferred Stock

Common Stock

Paid In

Accumulated

Treasury Stock



Shares

Amount

Shares

Amount

Shares

Amount

Capital

Deficit

Shares

Amount

Total

Balance at January 1, 2010

$        —

5

$14,275

66,531

$      7

$ 150,659

$ (162,405)

1,565

$(1,383)

$  1,153

Net loss

(2,216)

(2,216)

Stock-based compensation  - stock options

194

194

Stock-based compensation  - restricted stock

1,462

251

251

2010 Preferred Stock  Exchange

60

6,000

(2)

(5,066)

(934)

Warrants issued in connection  with 2010 Private Placement

443

443

Conversion of Preferred Stock

(2)

(5,736)

18,119

1

5,735

Cashless exercise of warrants

66

Exercise of stock options

26

8

8

Sale of Series B Preferred Stock

40

4,000

4,000

Cancellation of treasury stock

(1,565)

(1,383)

(1,565)

1,383

Costs related to 2010 Private Placements

(750)

(750)

Balance at September 30, 2010

100

$10,000

1

$  3,473

84,639

$      8

$ 154,223

$ (164,621)

$      —

$  3,083















GLOWPOINT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



Nine Months Ended
September 30,


2010

2009

Cash flows from Operating Activities:



Net loss

$         (2,216)

$    (3,158)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:



Depreciation and amortization

812

790

Amortization of deferred financing costs

18

Other expense recognized for the increase in the estimated fair value of the



  derivative financial instruments

1,848

Bad debt expense

345

185

Accretion of discount on Senior Secured Notes

23

(Gain) Loss on disposal of equipment

(11)

8

Loss on extinguishment of debt

254

Stock-based compensation

445

438

Increase (decrease) attributable to changes in assets and liabilities:



Accounts receivable

(706)

(16)

Prepaid expenses and other current assets

(197)

(109)

Other assets

(86)

2

Accounts payable

(193)

505

Customer deposits

(52)

(134)

Accrued expenses, sales taxes and regulatory fees

225

(232)

Deferred revenue

(35)

(68)

Net cash (used in) provided by operating activities – continuing operations

(1,651)

336

Net cash provided by operating activities - discontinued operations

88

9

Net cash (used in) provided by operating activities

(1,563)

345




Cash flows from Investing Activities:



Purchases of property and equipment

(959)

(1,004)

Net cash used in investing activities

(959)

(1,004)




Cash flows from Financing Activities:



Proceeds from preferred stock offering

4,000

1,800

Receivable from sale of Series A Preferred Stock

(1,000)

Proceeds from exercise of stock options

8

8

Proceeds from revolving loan facility, net

750

Principal payments for capital lease

(118)

Purchase of Senior Secured Notes

(750)

Costs related to private placement

(307)

(384)

Net cash provided by financing activities

3,451

556

Increase (decrease) in cash and cash equivalents

929

(103)

Cash and cash equivalents at beginning of period

587

1,227

Cash and cash equivalents at end of period

$           1,516

$     1,124




Supplement disclosures of cash flow information:



Cash paid during the period for



   Interest

$                89

$         108

Non-cash investing and financing activities:



Costs related to private placement incurred by issuance of placement agent warrants

$             443

$        142

Exchange of Senior Secured Notes for Series A-1 Preferred Stock

1,076

Additional Senior Secured Notes issued as payment for interest

55




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SOURCE Glowpoint, Inc.