Oblong, Inc. (“Oblong” or “we” or “us” or the “Company”) was formed as a Delaware corporation in May 2000. We are a provider of patented multi-stream collaboration products and managed services for network solutions and video collaboration.

The Consolidated Financial Statements include the accounts of Oblong and our 100%-owned subsidiaries (i) GP Communications, LLC (“GP Communications”), whose business function is to provide interstate telecommunications services for regulatory purposes, and (ii) Oblong Industries, Inc. All inter-company balances and transactions have been eliminated in consolidation. The U.S. Dollar is the functional currency for all subsidiaries.

Effective October 1, 2019, the former businesses of Glowpoint (now Oblong, Inc.) and Oblong Industries have been managed separately and involve different products and services. Accordingly, the Company currently operates in two segments for purposes of segment reporting: (1) “Collaboration Products,” which represents the Oblong Industries business surrounding our Mezzanine™ product offerings, and (2) “Managed Services,” which represents the Oblong (formerly Glowpoint), business surrounding managed services for video collaboration and network solutions. See Note 9 - Segment Reporting for further discussion.

Preparation of the Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from the estimates made. We continually evaluate estimates used in the preparation of our Consolidated Financial Statements for reasonableness. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. The significant areas of estimation include determining the estimated credit losses and the inputs used in the fair value of equity-based awards.

As of December 31, 2024, and 2023, our total cash balances of $4,965,000 and $5,990,000, respectively, were available; however, of this balance, $500,000 was held in short-term certificates of deposit with MidFirst bank for both years. The Company considers highly liquid investments with original maturities of three months or less to be cash equivalents.

Accounts receivable are customer obligations due under normal trade terms. The Company sells its Managed Services to end-users and its Collaboration Products to both resell partners and end-users. The Company extends credit to its customers based on their creditworthiness and historical data and performs ongoing credit evaluations of our customers’ financial condition. The Company maintains an allowance for estimated credit losses related to accounts receivable for future expected bad debt resulting from the inability or unwillingness of our customers to make required payments. We estimate our allowance for estimated credit losses based on relevant information such as historical experience, current economic conditions, and future expectations of specifically identified customer balances. This allowance is adjusted as appropriate to reflect current conditions. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. We do not obtain collateral from our customers to secure accounts receivable.

The company recorded bad debt expense of $2,000 for our Collaboration Products segment during the year ended December 31, 2024, and a recovery of bad debt of $52,000 for our Collaboration Products segment during the year ended December 31, 2023. As of December 31, 2024, the Company's analysis resulted in no reserve for credit losses remaining on the Consolidated Balance Sheet.

Inventory consists of finished goods. It was determined using average costs and stated at the lower of cost or net realizable value. The Company periodically performs analyses to identify obsolete or slow-moving inventory. As of December 31, 2024, the Company had fully reserved its inventory, and the net inventory balance was zero.

As of December 31, 2024, and 2023, consolidated prepaid expenses and other current assets were $118,000 and $243,000, respectively. These consisted primarily of corporate insurance, software licenses, and, in 2023, customer deposits. The 51% year-over-year decrease was primarily due to reductions in prepaid software licenses and customer deposits and the timing of cash outflows for the final payroll of the year.

The Company considers its cash and cash equivalents, accounts receivable, accounts payable, and lease obligations to meet the definition of financial instruments. The carrying amount of cash and cash equivalents, accounts receivable, and accounts payable approximated their fair value due to the short maturities of these instruments. The carrying amounts of our lease obligations approximated their fair values, which were based on borrowing rates that were available to the Company for loans with similar terms, collateral, and maturity.

The Company measures fair value as required by Accounting Standards Codification (“ASC”) Topic 820“Fair Value Measurements and Disclosures” (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework, gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. ASC Topic 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

This hierarchy requires the Company to use observable market data when available and to minimize the use of unobservable inputs when determining fair value.

The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606.

The Company recognizes revenue using the five-step model as prescribed by Topic 606:

The Company’s managed videoconferencing services are offered to our customers on either a usage basis or on a subscription. Our network services are offered to our customers on a subscription basis. Revenue for these services is generally recognized on a monthly basis as services are performed. Revenue related to professional services is recognized at the time the services are performed. The costs associated with obtaining a customer contract were previously expensed in the period they were incurred. Under Topic 606, these payments are deferred on our consolidated balance sheets and amortized over the expected life of the customer contract. As of December 31, 2024, and 2023, there was no deferred revenue related to Managed Services. As of December 31, 2022, the deferred revenue balance for Managed services was $1,000. During the year ended December 31, 2023, the Company recorded $1,000 of revenue that was included in deferred revenue as of December 31, 2022.

The Company’s visual collaboration products are composed of hardware and embedded software sold as a complete package and generally include installation and maintenance services. Revenue for hardware and software is recognized upon shipment to the customer. Installation revenue is recognized upon completion of installation, which also triggers the beginning of recognition of revenue for maintenance services, which range from one to three years. Revenue is recognized over time for maintenance services. Licensing agreements are for the Company’s core technology platform, g-speak, and are generally one year in length. Revenue for these services is recognized ratably over the service period. Deferred revenue for Collaboration Products, as of December 31, 2024, 2023, and 2022, totaled $36,000, $158,000, and $549,000, respectively, as certain performance obligations were not satisfied as of this date. During the year ended December 31, 2024, the Company recorded $132,000 of revenue that was included in deferred revenue as of December 31, 2023. During the year ended December 31, 2023, the Company recorded $435,000 of revenue that was included in deferred revenue as of December 31, 2022.

Consolidated revenue recorded over time for the years ended December 31, 2024, and 2023 was $156,000 and $516,000, respectively. Revenue recorded at a period in time for the years ended December 31, 2024, and 2023 was $2,222,000 and $3,294,000, respectively.

The Company disaggregates its revenue by geographic region. See Note 9 - Segment Reporting for more information.

We recognize taxes billed to customers in revenue and taxes remitted to taxing authorities in our cost of revenue. For the years ended December 31, 2024, and 2023, we included taxes of $68,000 and $95,000, respectively, in revenue and $74,000 and $101,000, respectively, in cost of revenue.

Property and equipment are accounted for in accordance with ASC Topic 360 “Property, Plant, and Equipment” (“ASC Topic 360”), stated at cost, and are depreciated using the straight-line method over the estimated economic lives of the assets, which range from three to ten years. Leasehold improvements are amortized over the shorter of either the asset’s useful life or the related lease term. Depreciation is computed on the straight-line method for financial reporting purposes. Property and equipment assets, net of accumulated depreciation, totaled zero as of December 31, 2024, and 2023.

Intangible assets are accounted for in accordance with ASC Topic 350 “Intangibles - Goodwill and Other” (“ASC Topic 350”), and intangible assets with finite lives are amortized using the straight-line method over the estimated economic lives of the assets, which initially ranged from five to twelve years. Intangible assets, net of accumulated amortization, totaled zero as of December 31, 2024, and 2023.

Right-of-use assets are accounted for in accordance with ASC Topic 842 “Leases” (“ASC Topic 842”) and are amortized to yield a straight-line rent expense over the estimated life of the lease. Right-of-use assets, net related to our Collaboration Products segment, totaled zero and $17,000, as of December 31, 2024, and 2023, respectively.

The Company has primarily leased facilities for office and warehouse space under non-cancellable operating leases for its U.S. locations and accounts for these leases in accordance with ASC-842. Operating lease right-of-use assets and liabilities are recognized on the commencement date based on the present value of lease payments over the expected lease term. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Since our lease arrangements do not provide an implicit rate, we use our estimated incremental borrowing rate for the expected remaining lease term on the commencement date in determining the present value of future lease payments.

The Company assesses the impairment of our long-lived assets subject to amortization when events and circumstances indicate that the carrying value of the assets might not be recoverable. The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgments related primarily to the future profitability and/or future value of the assets. Changes in the Company’s strategic plan and/or other-than-temporary changes in market conditions could significantly impact these judgments and could require adjustments to recorded asset balances. Long-lived assets are evaluated for impairment whenever an event or change in circumstances has occurred that could have a significant adverse effect on the fair value of long-lived assets.

During the year ended December 31, 2023, we considered the declines in revenue for the Collaboration Products reporting segment and the decline in the Company’s market capitalization to be triggering events for an impairment test of our long-lived and intangible assets for this reporting unit. Based on the corresponding recoverability tests of the asset group for this reporting unit, it was determined that the carrying value exceeded the gross cash flows of the asset group. The recoverability tests consisted of comparing the estimated undiscounted cash flows expected to be generated by those assets to the respective carrying amounts and involved significant judgments and assumptions related primarily to the future revenue and profitability of the assets.

For the year ended December 31, 2023, the Company disposed of property and equipment assets related to our Managed Services segment with a net value of $3,000. As a result, no property and equipment assets were reported on our Consolidated Balance Sheets as of December 31, 2024, and 2023.

For the year ended December 31, 2023, the Company recorded impairment charges of $259,000 on purchased intangible assets related to our Collaboration Products segment. As a result of these impairment charges, no intangible assets were reported on our Consolidated Balance Sheets as of December 31, 2024, and 2023.

Operating leases are accounted for in accordance with ASC Topic 842 “ Leases” (“ASC Topic 842”), and the liabilities are amortized using a straight-line method over the estimated life of the lease. As of December 31, 2023, the remaining operating lease liability related to our Collaboration Products segment was $17,000, and as of December 31, 2024, the Company was no longer party to any long-term operating leases.

Operating lease expense is recognized on a straight-line basis over the lease term. Variable lease payments are not included in the lease payments to measure the lease liability and are expensed as incurred. For leases that include a Company option to extend the lease term that the Company is reasonably certain to exercise, the Company includes the extension in determining lease payments.

Leases with an initial term of 12 months or less are not recognized on the balance sheet. The expense for these short-term leases is recognized on a straight-line basis over the lease term. Common area maintenance fees (CAMs) and other lease-related charges are expensed as incurred. The Company currently holds a month-to-month lease on warehouse space in Denver, Colorado, related to our Collaboration Products segment, which it considers short-term.

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and trade accounts receivable. We place our cash needed for operations in commercial checking accounts, and the majority of our cash is held in a money market fund. Commercial bank balances may, from time to time, exceed federal insurance limits. Deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”) in an amount up to $250,000 for any depositor; any deposit in excess of this insured amount could be lost.

We use the asset and liability method to determine our income tax expense or benefit. Deferred tax assets and liabilities are computed based on temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that are expected to be in effect when the differences are expected to be recovered or settled. Any resulting net deferred tax assets are evaluated for recoverability, and accordingly, a valuation allowance is provided when it is more likely than not that all or some portion of the deferred tax asset will not be realized.

Stock-based awards have been accounted for as required by ASC Topic 718 “Compensation – Stock Compensation” (“ASC Topic 718”). Under ASC Topic 718, stock-based awards are valued at fair value on the date of grant, and that fair value is recognized over the requisite service period. The Company accounts for forfeitures when they occur.

Research and development expenses include internal and external costs related to developing new service offerings, features, and enhancements to our existing product offerings.

Purchases and sales of treasury stock are accounted for using the cost method. Under this method, shares acquired are recorded at the acquisition price directly to the treasury stock account. Upon sale, the treasury stock account is reduced by the original acquisition price of the shares, and any difference is recorded in additional paid-in capital on a first-in-first-out basis. The Company does not recognize a gain or loss to income from the purchase and sale of treasury stock.

In June 2022, the Company discovered that $533,000 of inventory related to our Collaboration Products segment was stolen from the Company’s warehouse in the City of Industry, California. During 2022 and 2023, we received recovery payments from our insurance policies of $50,000 and $400,000, respectively, resulting in a net casualty loss of $483,000 on our Consolidated Statements of Operations for the year ended December 31, 2022, and a casualty gain of $400,000 on our Consolidated Statements of Operations for the year ended December 31, 2023. We do not expect any further recovery of the loss.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic280): Improvements to Reportable Segment Disclosures. The new guidance is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective retrospectively for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company has adopted ASU 2023-07 as of December 31, 2024, and has prepared this annual report on Form 10-K with the appropriate disclosures. Many disclosures have been enhanced for both 2023 and 2024.

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Tax Disclosures (Topic 740), to enhance the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information. This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of adopting this new accounting guidance on its Consolidated Financial Statements.

In March 2024, the FASB issued ASU 2024-01, Compensation-Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards, which provides illustrative guidance to help entities determine whether profits interest and similar awards should be accounted for as share-based payment arrangements within the scope of FASB ASC Topic 718, Compensation-Stock Compensation. These amendments are effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. The Company does not currently issue profit interests or similar rewards and believes these amendments will not have a material impact on the Company’s consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024- 03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220- 40) Disaggregation of Income Statement Expenses, which requires public business entities to disclose additional information about certain expenses in the notes to the financial statements.

This guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact of adopting this new accounting guidance on its Consolidated Financial Statements.