securities & exchange commission edgar...

SECURITIES & EXCHANGE COMMISSION EDGAR FILING

GLOWPOINT, INC.

Form: 8-K/A

Date Filed: 2019-12-18

Corporate Issuer CIK: 746210

© Copyright 2019, Issuer Direct Corporation. All Right Reserved. Distribution of this document is strictly prohibited, subject to the terms of use.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 1, 2019

GLOWPOINT, INC.

(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction ofIncorporation or organization)

001-35376(Commission File Number)

77-0312442(IRS Employer

Identification No.)

999 18th Street, Suite 1350SDenver, Colorado 80202

(Address of principal executive offices, zip code)

(303) 640-3838(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the followingprovisions:

▪ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)▪ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a‑12)▪ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))▪ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which

registered

Common Stock, par value $0.0001 pershare GLOW NYSE American

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (ß 230.405 of this chapter) orRule 12b-2 of the Securities Exchange Act of 1934 (ß 240.12b-2 of this chapter). Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.

Explanatory Note

As previously disclosed, on October 1, 2019 (the "Closing Date"), Glowpoint, Inc., a Delaware corporation (the "Company' or "Glowpoint"),closed its previously announced acquisition of Oblong Industries, Inc., a Delaware corporation ("Oblong" and, such transaction, the "Acquisition").The Acquisition was consummated through the merger of Glowpoint Merger Sub II, Inc., a Delaware corporation and wholly-owned subsidiary ofGlowpoint (the "Merger Sub"), with and into Oblong on the Closing Date, with Oblong continuing as the surviving corporation and as a wholly-owned subsidiary of Glowpoint, all as more fully described in the Company’s Current Report on Form 8-K filed with the Securities and ExchangeCommission on October 7, 2019 (the "Original 8-K").

This Amendment No. 1 to the Original 8-K is being filed solely to include the financial statements and other information required by Items9.01(a) and (b) of Form 8-K, which were excluded from the Original 8-K in reliance on paragraph (a)(4) of Item 9.01 of Form 8-K. Except for theforegoing, this Amendment No. 1 to the Original 8-K does not modify or update any other disclosure contained in the Original 8-K.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

The audited financial statements of Oblong as of December 31, 2018 and for the years then ended, and the notes related thereto, isattached hereto as Exhibit 99.2, and is incorporated herein by reference. The audited financial statements of Oblong as of December 31, 2017 and2016 and for the years then ended, and the notes related thereto, are attached hereto as Exhibit 99.3, and are incorporated herein by reference.

The unaudited financial statements of Oblong as of September 30, 2019 and for the nine month periods ended September 30, 2019 and2018, and the notes related thereto, are attached hereto as Exhibit 99.4 and are incorporated herein by reference.

(b) Pro Forma Financial Information.

The unaudited pro forma condensed combined financial statements of the Company and Oblong as of September 30, 2019 and for thenine month period then ended, and for the year ended December 31, 2018, and the notes related thereto, are attached hereto as Exhibit 99.5 andare incorporated herein by reference.

(c) Exhibits.

Exhibit No. Description23.1 Consent of BDO USA, LLP, Independent Auditors.23.2 Consent of Holthouse, Carlin & Van Trigt LLP, Independent Auditors.99.2 Audited financial statements of Oblong Industries, Inc. as of December 31, 2018 and for the year then

ended, and the notes related thereto.99.3 Audited financial statements of Oblong Industries, Inc. as of December 31, 2017 and 2016 and for the

years then ended, and the notes related thereto.99.4 Unaudited financial statements of Oblong Industries, Inc. as of September 30, 2019, and for the nine

month periods ended September 30, 2019 and 2018, and the notes related thereto.99.5 Unaudited pro forma condensed combined financial statements of Glowpoint, Inc. and Oblong Industries,

Inc. as of September 30, 2019 and for the nine month period then ended, and for the year endedDecember 31, 2018, and the notes related thereto.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalfby the undersigned hereunto duly authorized.

GLOWPOINT, INC.

Date: December 17, 2019 By: /s/ David Clark Name: David ClarkTitle: Chief Financial Officer

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Tel: 310-557-0300Fax: 310-557-1777www.bdo.com

515 Flower Street47th FloorLos Angeles CA 90071

Consent of Independent Registered Public Accounting Firm

Glowpoint, Inc.Denver, Colorado

We hereby consent to the inclusion in the Form 8-K of our reissued report dated June 30, 2019 and December 17, 2019 as to the first paragraph of Note 8,relating to the consolidated financial statements of Oblong Industries, Inc. and Subsidiaries (collectively, "Oblong" or the "Company"), which comprise theconsolidated balance sheet as of December 31, 2018 and the related consolidated statements of operations and comprehensive loss, changes in stockholders’equity, and cash flows for the year then ended, and the related notes to the consolidated financial statements.

/s/ BDO USA, LLPLos Angeles, California

December 17, 2019


Consent of Independent Auditor

We consent to the incorporation by reference in the Current Report on Form 8-K/A of Glowpoint, Inc. of our report dated June 30, 2018 (except for the firstparagraph in Note 8 and Note 12, as to which the date is December 17, 2019), with respect to the consolidated financial statements of Oblong Industries, Inc. asof and for the years ended December 31, 2017 and 2016, included in this Current Report on Exhibit 99.3.

/s/ Holthouse, Carlin &Van Tright, LLP

Encino, CaliforniaDecember 17, 2019


Exhibit 99.2

Oblong Industries, Inc. and Subsidiaries

Consolidated Financial StatementsYear Ended December 31, 2018



Contents

Independent Auditor’s Report 3-4

Consolidated Financial Statements

Consolidated Balance Sheet as of December 31, 2018 6

Consolidated Statement of Operations and Comprehensive Lossfor the Year Ended December 31, 2018 7

Consolidated Statement of Convertible Preferred Stock and Stockholders’ Deficitfor the Year Ended December 31, 2018 8

Consolidated Statement of Cash Flowsfor the Year Ended December 31, 2018 9

Notes to Consolidated Financial Statements 10-29

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Independent Auditor’s Report

Board of Directors and Stockholders ofOblong Industries, Inc.:

We have audited the accompanying consolidated financial statements of Oblong Industries, Inc. and subsidiaries (collectively, the “Company”),which comprise the consolidated balance sheet as of December 31, 2018, and the related consolidated statements of operations andcomprehensive loss, changes in convertible preferred stock and stockholders’ deficit, and cash flows for the year then ended, and the relatednotes to the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accountingprinciples generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal controlrelevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraudor error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits inaccordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. Theprocedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financialstatements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’spreparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express nosuch opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accountingestimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements as of December 31, 2018 and the year then ended present fairly, in all material respects, theconsolidated financial position of Oblong Industries, Inc. and subsidiaries as of December 31, 2018, and the results of their operations and theircash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

3


Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Asdiscussed in Note 2 to the consolidated financial statements, the Company has incurred recurring losses from operations that raise substantialdoubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. Theconsolidated financial statements do not include any adjustments that might result from the outcome of uncertainty. Our opinion is not modifiedwith respect to that matter.

Los Angeles, CaliforniaJune 30, 2019, and December 17, 2019 as to the first paragraph of Note 8

4


Exhibit 99.2

Consolidated Financial Statements

5



Consolidated Balance Sheet

December 31, 2018

Assets Current assets

Cash, cash equivalents and restricted cash $ 8,647,940

Accounts receivable 2,229,622

Prepaid expenses and other current assets 805,280

Inventory 1,868,153

Total current assets 13,550,995

Property and equipment, net 1,800,078

Intangible assets, net 4,448,196

Other assets 260,844

Total Assets $ 20,060,113

Liabilities, Convertible Preferred Stock, and Stockholders’ Equity Current liabilities

Accounts payable $ 550,425

Accrued expenses and other current liabilities 942,474

Customer deposits 433,199

Current portion of deferred revenue 2,652,249

Current portion of deferred rent 45,605

Current portion of debt 655,875

Total current liabilities 5,279,827

Deferred revenue, net current portion 715,854

Deferred rent, net current portion 171,625

Long-term debt 4,591,125

Other long-term liabilities 3,363

Total liabilities 10,761,794

Commitments and Contingencies (Note 6) Convertible Preferred Stock

Convertible preferred stock 71,755,175

Stockholders’ equity Common stock 2,731

Additional paid-in capital 43,607,483

Accumulated deficit (105,673,080)

Accumulated other comprehensive loss (393,990)

Total stockholders’ deficit (62,456,856)

Total Liabilities, Convertible Preferred Stock, and Stockholders’ Equity $ 20,060,113

See accompanying notes to consolidated financial statements.

6



Consolidated Statement of Operations and Comprehensive Loss

Year ended December 31, 2018 Net Revenues $ 17,249,458 Cost of Revenues 4,499,818 Gross Profit 12,749,640 Operating Expenses

Research and development 9,211,973General and administrative 7,146,762Sales and marketing 12,470,067Depreciation and amortization 1,330,010Loss on impairment of intangible assets 330,917

Total Operating Expenses 30,489,729 Loss from Operations (17,740,089) Other Expenses (Income)

Interest expense, net 129,165Other expense (income), net (15,547)

Total Other Expenses, Net 113,618 Net Loss (17,853,707) Foreign Currency Translation Loss (76,068) Comprehensive Loss $ (17,929,775)


7



Consolidated Statement of Convertible Preferred Stock and Stockholders’ Equity

8



Consolidated Statement of Cash Flows

Year ended December 31, 2018

Cash Flows from Operating Activities

Net loss $ (17,853,707)

Adjustments to reconcile net loss to cash used in operating activities: Depreciation and amortization 1,463,260

Inventory write-off 559,587

Amortization of deferred financing costs 90,737

Stock-based compensation 225,795

Loss on disposal of property and equipment 16,249

Impairment of intangible assets 330,917

Property and equipment expensed to cost of revenues and operating expenses 122,258

Change in operating assets and liabilities: Accounts receivable 6,081,553

Prepaid expenses and other current assets (389,556)

Inventory (398,326)

Other assets 28,331

Accounts payable (658,962)

Accrued expenses and other current liabilities (526,010)

Deferred revenue (4,304,237)


Deferred rent (36,722)


Net cash used in operating activities (15,205,543)

Cash Flows from Investing Activities

Purchase of property and equipment (200,689)

Intangible asset costs (264,338)

Net cash used in investing activities (465,027)

Cash Flows from Financing Activities

Proceeds from sale of preferred stock and common stock warrants 9,480,952

Proceeds from exercise of stock options and warrants 7,299

Borrowings from revolving line of credit 3,026,639

Borrowings on term loan 2,484,259

Payments on revolving line of credit (3,026,639)

Payments on term loan (2,287,037)

Net cash provided by financing activities 9,685,473

Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash (51,466)

Net Decrease in Cash, cash equivalents and restricted cash (6,036,563)

Cash, Cash Equivalents and Restricted Cash, beginning of year (revised) 14,684,503

Cash, Cash Equivalents and Restricted Cash, end of year $ 8,647,940

Supplemental Disclosures of Cash Flow Information

Cash paid during the year for interest $ 207,219

Cash paid during the year for income taxes 23,236

Non-Cash Investing and Financing Activities

Transfer of inventory to property and equipment $ 204,473

Conversion of preferred stock to common stock 38,538,597


9



Notes to Consolidated Financial Statements

1. Organization and Nature OfBusiness

Oblong Industries, Inc. (“Oblong”) was incorporated in the state of Delaware on July 31, 2006. Oblong’s wholly-owned subsidiaries consist ofOblong Industries Europe S.L.U. (“Euroblong”) and Oblong Europe Ltd (“Oblong UK”) (collectively, the “Company”). Euroblong was incorporated inSpain on March 12, 2007 and Oblong UK was incorporated in England on February 6, 2014. On January 27, 2017, Oblong UK established thebranch entity, Oblong Europe Ltd. (German Branch) (“Oblong German Branch”).

The Company’s core platform is g-speak™ and Mezzanine™ is its flagship product built on this platform. Mezzanine offers advanced collaborationfor conference room technology, which amplifies sales presentations, enhances group collaboration, and makes work sessions more productive.The Company offers g-speak development licenses to larger enterprise customers. Oblong is headquartered in Los Angeles, California with asales and development office in Boston, Massachusetts; regional sales offices in Los Altos, California; New York City, New York; WashingtonD.C.; Chicago, Illinois; Houston and Dallas, Texas; and Atlanta, Georgia. The Euroblong office is in Barcelona, Spain and focuses on mobileresearch and development, while the Oblong UK and Oblong German Branch offices are in London, England and Munich, Germany, respectively,and focus on sales and marketing in the European region.

2. Summary of Significant AccountingPolicies

Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assetsand the satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $105,673,080 and net losses of$17,853,707 as of and for the year ended December 31, 2018. Cash used in operating activities amounted to $15,205,543 for the year endedDecember 31, 2018. In addition, as disclosed in Note 6, the Company’s revolving line of credit with a financial institution matures in October 2019.These conditions raise substantial doubt as to the Company’s ability to continue to operate as a going concern.

Since inception, the Company has financed its business activities through the issuance of equity instruments and debt. The Company is subject tovarious risks and uncertainties frequently encountered by newly formed companies. Such risks and uncertainties include, but are not limited to,undeveloped technology, its limited operating history, dependence on key personnel, and management of rapid growth. To address these risks,the Company must, among other things, successfully develop its customer base; successfully execute its business and marketing strategy;successfully develop its technology; provide superior customer service; and attract, retain, and motivate qualified personnel.

Based on the Company’s projected cash flows and operating results for 2019, management does not believe it has sufficient cash resources tofund operations and meet its obligations as they become due for the next twelve months. Management has no further funding commitments fromcurrent investors and is in active pursuit of finding new investors or potential acquirers. As a result, there is substantial doubt the Company will beable to raise adequate funds, get acquired, or achieve and sustain profitability or positive cash flows from its operations.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Oblong and its wholly-owned subsidiaries Euroblong and Oblong UK,and branch entity, Oblong German Branch. All significant intercompany balances and transactions have been eliminated upon consolidation.

Accounting Method

The Company maintains its accounting records on an accrual method in conformity with accounting principles generally accepted in the UnitedStates of America (“US GAAP”).

Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated financialstatements, and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates andassumptions include the valuation of certain accrued expenses, which have been prepared on the basis of the most current and best availableinformation. However, actual results from the resolution of such estimates and assumptions may vary from those used in the preparation of theconsolidated financial statements.

Revenue Recognition

As required by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition, theCompany recognizes revenue when persuasive evidence of an arrangement exists, service has been rendered, the sales price is fixed ordeterminable, and collection is probable. Amounts billed in excess of revenue recognized are included in deferred revenue. Customer depositsrepresent payments received by the Company from customers for which revenue recognition criteria have not been met.

The Company’s products are systems that consist of hardware and software that function together to deliver the system’s essential functionality.The Company sells the systems as a complete package and does not sell the hardware and software separately. The Company also sellsmaintenance and support contracts and license agreements. The Company has determined that its systems and service contracts have value to acustomer on a standalone basis; therefore, revenue from each item should be recognized separately.

The Company establishes the relative selling price of each deliverable based on estimated selling price. The Company recognizes productrevenue from its systems upon shipment, installation revenue upon completed installation and revenue from maintenance contracts and licenseagreements ratably over the applicable periods, ranging from 12 to 36 months. Professional service contracts are billed based on time andmaterials at the contract rate as the services are rendered.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include all cash balances and highly liquid investments, such as money market funds, with original maturities of threemonths or less from the date of purchase. Restricted cash are cash and cash equivalents that are restricted as to withdrawal or use under theterms of certain contractual agreements.

11




The Company used a bank guarantee in place of a cash deposit for the lease of the sales office in Munich, Germany. The bank guarantee wascollateralized by a restricted cash bank account.

As of December 31, 2018, the Company had a restricted cash balance of $93,150.

In November 2016, the FASB issued Accounting Standards Update ("ASU") 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash(“ASU 2016-18). ASU 2016-18 provides guidance on how restricted cash must be presented on the consolidated statement of cash flows. ASU2016-18 requires that consolidated statement of cash flows show the change during the period of the total cash, cash equivalents and restrictedcash. Private companies are required to apply the guidance in ASU 2016-18 to fiscal years beginning after December 15, 2018, with earlyadoption permitted. The Company has early adopted this guidance, and restricted cash is included in cash, cash equivalents and restricted cashon the accompanying consolidated balance sheet as of December 31, 2018 and the consolidated statement of cash flows for the year endedDecember 31, 2018.

Fair Value Measurements

The Company accounts for the fair value of its financial instruments in accordance with FASB ASC Topic 820, Fair Value Measurements andDisclosures (“ASC 820”). Non-recurring, nonfinancial assets and liabilities are also accounted for under the provisions of ASC 820.

ASC 820 defines fair value, establishes a framework for measuring fair value under US GAAP and enhances disclosures about fair valuemeasurements. Fair value is defined under ASC 820 as the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants on the measurement date.

Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use ofunobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are consideredobservable and the last unobservable, that may be used to measure fair value.

The Company’s management used the following methods and assumptions to estimate the fair value of its financial instruments:

Level 1 – Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities in marketsthat are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of assets orliabilities.

Level 3 – Pricing inputs that are unobservable, supported by little or no market activity and that are significant to the fair value of the assets orliabilities, as described below.

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The Company has money market funds, which are stated at fair value based on Level 1 inputs at each reporting period.

December 31, 2018 Level 1 Level 2 Level 3 Total

Money market funds $ 8,390,865 $ - $ - $ 8,390,865

Accounts Receivable

Accounts receivables are receivables from customers carried at their estimated collectible amounts. Credit is generally extended on a short-termbasis; thus, accounts receivables do not bear interest. The Company extends credit based upon past credit history and an evaluation of thecustomers’ financial condition. Generally, collateral is not required. Accounts receivables are periodically evaluated and charged against anallowance account, if deemed to be uncollectible. The Company believes the accounts receivable balances outstanding as of December 31, 2018are fully collectible; therefore, no allowance has been recorded.

Stock-based Compensation

The Company accounts for stock-based compensation in accordance with FASB ASC Topic 718, Compensation – Stock Compensation, whichrequires all share-based payments to employees and non-employees, including grants of employee stock options, to be recognized in theconsolidated statements of operations and comprehensive loss based on the fair value of those awards calculated ratably over the requisiteservice period using an option valuation model on the grant date.

Financial Instruments and Concentrations of Business and Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit and business risk consist of cash, cash equivalents andrestricted cash, marketable securities, accounts receivable and accounts payable.

The Company maintains cash, cash equivalents and restricted cash balances that at times exceed amounts insured by the Federal DepositInsurance Corporation. The Company has not experienced any losses in these accounts and believes it is not exposed to any significant creditrisk in this area.

The Company’s customer concentrations expose it to credit risks such as collectability and business risks such as sales concentration. TheCompany grants credit in the normal course of business to customers in the United States and other world-wide locations. The Companyperiodically performs credit analysis and monitors the financial condition of its customers to reduce credit risk. On a case-by-case basis, theCompany requires deposits from customers who are unable to verify acceptable credit standards.

For the year ended December 31, 2018, two customers accounted for approximately 44% of total net revenues. Amounts outstanding from thesetwo customers accounted for approximately 44% of total accounts receivable as of December 31, 2018.

The Company’s supplier concentrations expose it to business risks, which the Company mitigates by attempting to diversify its supply chain. Therewas no supplier concentration for the year ended December 31, 2018.

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Inventory

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11requires that inventory be measured at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinarycourse of business, less reasonably predictable costs of completion, disposal, and transportation. This eliminates the need to determine andconsider replacement cost or net realizable value less an approximately normal profit margin when measuring inventory. ASU 2015-11 is effectivefor private entities for annual reporting periods beginning after December 15, 2016. The Company adopted this standard prospectively for the yearended December 31, 2017. The adoption did not have a material impact on the Company’s consolidated financial position or results of operations.

Inventory consists primarily of equipment, including cameras, tracking hardware, computer equipment, display equipment, and mounts, and wasstated at the lower of cost or net realizable value, determined using average cost. The Company uses the average cost costing method forinventory. The Company periodically performs analyses to identify any obsolete or slow-moving inventory. The obsolete or slow-moving inventoryreserved and disposed of totaled $159,577 for the years ended December 31, 2018. There was no additional inventory reserve balance as ofDecember 31, 2018. The Company periodically performs cycle counts, which may result in inventory write-offs. Write-offs are also due to excessand obsolete inventory identified as part of the analysis performed annually. The total inventory written-off and disposed of totaled $400,010 forthe years ended December 31, 2018.

Deferred Financing Costs

Deferred financing costs represent fees incurred in connection with financing transactions. These fees are capitalized and amortized to interestexpense over the terms of the related financing agreements using a method that approximates the effective interest method. FASB ASU 2015-03,Interest-Imputation of Interest (Subtopic 835-30) requires that deferred financing costs are presented, net of accumulated amortization, as anasset for amounts relating to revolving lines of credit, and as direct deductions from the face amounts of all other related long-term debt.

Deferred financing costs related to long-term debt amounted to $285,363, net of accumulated amortization of $90,737 as of December 31, 2018.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are calculated usingthe straight-line method over the estimated useful lives of the related assets, which range from two to seven years. Leasehold improvements areamortized using the straight-line method over the shorter of their estimated useful lives or the term of the related lease.

Betterments, renewals and extraordinary repairs that materially extend the useful life of the asset are capitalized; other repairs and maintenancecharges are expensed as incurred. The cost and related accumulated depreciation and amortization applicable to assets retired are removed fromthe accounts, and the gain or loss on disposition, if any, is recognized in the consolidated statement of operations and comprehensive loss for thatperiod. The costs of replacement parts and supplies are charged to expense as they are used. Maintenance costs are expensed as incurred.

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Intangible Assets

Intangible assets are stated at cost, net of accumulated amortization and consist primarily of patents. Intangible assets with definite useful livesare amortized using the straight-line method over the useful lives.

The Company has applications for patents, which consist of technology, know-how, information, and intellectual property relevant to gestural anddynamic spatial-visual human machine interface. As of December 31, 2018, 78 patents have been granted.

It is the belief of the Company that the remaining patent submissions will be approved; however, amortization of the patents will not occur untilapproval has been granted. Should a patent be denied or it become likely that a patent application will not be granted, the patent will beconsidered abandoned and the associated costs will be expensed as an impairment. For the year ended December 31, 2018, the Companyexpensed $330,917 of patent costs for abandoned patents (see Note 4).

Impairment of Long-lived Assets

The Company is subject to the provisions of FASB ASC Topic 360, Property, Plant and Equipment – Impairment or Disposal of Long-lived Assets,which requires impairment losses to be recorded on long-lived assets with definite lives when indicators of impairment are present and theundiscounted cash flows estimated to be generated by those assets are less than the carrying amount of the assets. In such cases, the carryingvalue of assets to be held and used are adjusted to their estimated fair value and assets held for sale are adjusted to their estimated fair value lessselling expenses. Other than the patents costs that were abandoned (see Note 4), no impairment losses were recognized for the year endedDecember 31, 2018.

Indefinite lived intangible assets are tested for impairment using a qualitative approach by first assessing qualitative factors to determine whetherit is more-likely-than-not that the fair value of an indefinite lived intangible asset is impaired as a basis for determining whether it is necessary toperform quantitative impairment testing. The Company’s indefinite-lived intangible assets consist of trade marks with a carrying value of $69,952at December 31, 2018. The results of the qualitative analysis of the Company’s indefinite lived intangible assets, indicated that the fair value of theindefinite lived intangible assets exceeded their carrying value. The Company foregoes a qualitative assessment and tests indefinite-livedintangible assets for impairment when it concludes that it is more-likely-than-not there may be an impairment. If needed, the annual or interimquantitative test of the recovery of indefinite-lived intangible assets involve a comparison of the estimate fair value of the indefinite-lived assets toits carrying value. If the estimated fair value of the indefinite-lived assets exceeds its carrying value, the indefinite-lived intangible assets are notimpaired. If the carrying value of the indefinite-lived assets exceeds the estimated fair value, an impairment loss equal to the excess is recorded.

Research and Development Expenses

Research and development costs are expensed as incurred and consist primarily of costs associated with the development and testing of theCompany’s products. Research and development expenses include the cost of certain personnel and benefits, consultants, facility costs, suppliesand other direct and allocated indirect expenses incurred to support the Company’s research and development programs. Research anddevelopment expenses totaled $9,211,973 for the year ended December 31, 2018.

Shipping and Handling Costs

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The Company has included shipping and handling costs of $73,503 in cost of revenues and $200,415 in general and administrative expenses forthe year ended December 31, 2018 on the accompanying consolidated statements of operations and comprehensive loss. Shipping and handlingcosts billed to customers are included in revenues.

Advertising

Advertising costs are expensed as incurred. Total advertising expenses of $2,119,277 are included in sales and marketing expense on theaccompanying consolidated statements of operations and comprehensive loss for the year ended December 31, 2018.

Sales Taxes

The Company accounts for sales taxes in accordance with FASB ASC Subtopic 605-45, Revenue Recognition – Principal Agent Considerations,which provides that the presentation of taxes assessed by a governmental authority that are directly imposed on revenue-producing transactions(e.g. sales, use, and excise taxes) between a seller and a customer on either a gross basis (included in revenues and costs) or on a net basis(excluded from revenues) is an accounting policy decision that should be disclosed. In addition, for any such taxes that are reported on a grossbasis, the amounts of those taxes should be disclosed in the consolidated financial statements for each period for which a statement of operationsand comprehensive loss is presented if those amounts are significant. The Company records sales taxes on a net basis.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with FASB ASC Topic 740, Income Taxes (“ASC740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidatedfinancial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax creditcarryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which thosetemporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates isrecognized in income in the period that includes the enactment date.

Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

The Company follows the provisions of uncertain tax positions as addressed in FASB ASC Subtopic 740-10, Income Taxes. The Company did notrecognize a liability for unrecognized tax benefits. Management estimates the tax positions as of December 31, 2018 for which the ultimatedeductibility is highly certain but for which there is uncertainty about the timing of such deductibility is immaterial to the consolidated financialstatements. The Company recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. No such interestor penalties were recognized during the periods presented. The Company had no accruals for interest and penalties as of December 31, 2018.

With few exceptions, the Company is subject to examination by United States federal tax authorities for returns filed for the prior three years andby foreign and state tax authorities for returns filed for the prior four years.

Leases

The Company’s leases are accounted for under the provisions of FASB ASC Topic 840, Leases, which require that leases be evaluated andclassified as operating or capital leases for financial reporting purposes. Costs for

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operating leases that include incentives such as payment escalations or rent abatements are recognized on a straight-line basis over the term ofthe lease.

Additionally, inducements received from lessors are treated as a reduction of costs over the term of the agreement. Costs for capital leases arecapitalized at the present value of the future minimum lease payments, less any taxes and fees, with the corresponding obligation recorded inliabilities. Capital leases are amortized in accordance with property and equipment policies, and the corresponding obligations are reduced aslease payments are made. As of December 31, 2018, the Company had no capital leases.

Comprehensive Income and Foreign Currency Translation

Comprehensive income is defined as the change in equity during a period from transactions and other events from non-owner sources.Comprehensive income is the total of net income and other comprehensive income, which includes foreign currency translation adjustments. Thefunctional currencies of the Company’s foreign operations are the reported local currencies. Translation adjustments result from translating theCompany’s foreign subsidiaries’ financial statements into United States dollars. Assets and liabilities of the Company’s foreign subsidiaries aretranslated into United States dollars using the exchange rate in effect at the consolidated balance sheet dates. Equity is translated at the historicalrate of the transaction.

Revenues and expenses are translated using average exchange rates for each month during the fiscal year. The Company considersintercompany balances as long-term investments in nature as they do not expect repayment, and therefore, translates the transactions at thehistorical rate. The resulting translation losses are recorded as a component of accumulated other comprehensive loss in stockholders’ equity.The cumulative foreign currency translation adjustment totaled $393,990 as of December 31, 2018. Foreign currency translation gains (losses)were $(76,068) during 2018 and are reported on the consolidated statement of operations and comprehensive loss.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee torecord a ROU asset and a lease liability, measured on a discounted basis, on the consolidated balance sheets for all leases with terms greaterthan 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in theconsolidated statements of operations and comprehensive loss. A modified retrospective transition approach is required for capital and operatingleases existing at the date of adoption, with certain practical expedients available. The Company is currently in the process of evaluating thepotential impact of this new guidance, which is effective for the Company beginning on January 1, 2020.

On May 28, 2014, the FASB issued Accounting Standards Update Topic 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers.ASU 2014-09 supersedes existing revenue recognition guidance, including ASC 605-35. ASU 2014-09 outlines a single set of comprehensiveprinciples for recognizing revenue under US GAAP. Among other things, it requires companies to identify contractual performance obligations anddetermine whether revenue should be recognized at a point in time or over time. These concepts, as well as other aspects of ASU 2014-09, maychange the method and/or timing of revenue recognition for certain of the Company contracts. ASU 2014-09 will be effective for privately heldcompanies for annual reporting periods beginning after December 15, 2018 and may be applied either retrospectively or through the use of amodified-retrospective method. Management is currently evaluating both methods of adoption as well as the effect ASU 2014-09 will have on theCompany’s consolidated financial position, results of operations and cash flows.

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In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and CashPayments (“ASU 2016-15”), which provides clarification regarding how certain cash receipts and cash payment are presented and classified in thestatement of cash flows. This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. Thisupdate is effective for nonpublic companies for annual and interim periods beginning after December 15, 2018, which will require the Company toadopt these provisions in the first quarter of fiscal 2019 using a retrospective approach. Early adoption is permitted. The Company is currentlyevaluating the effect of this ASU on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’sAccounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this ASU alignthe requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements forcapitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-usesoftware). The amendments in this ASU require an entity (customer) in a hosting arrangement that is a service to (1) determine whichimplementation costs to capitalize as an asset related to the service contract and which costs to expense; (2) expense the capitalizedimplementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement; (3) apply the existingimpairment guidance to the capitalized implementation costs as if the costs were long-lived assets; (4) present the expense related to thecapitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element (service) of thearrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments madefor fees associated with the hosting arrangements; and (5) present the capitalized implementation costs in the statement of financial position in thesame line item that a prepayment for the fees of the associated hosting arrangement would be presented. ASU 2018-15 is effective for nonpubliccompanies for annual periods beginning after December 15, 2020. The Company is currently evaluating the effect of this ASU on our consolidatedfinancial statements and related disclosures.

3. Revision of Previously Issued Financial Statements for Correction of ImmaterialError

The Company determined that its holdings of certain money market funds with a financial institution were erroneously classified as marketablesecurities on its balance sheet as of 2017 and instead should have been included in cash and cash equivalents. Cash, cash equivalents andrestricted cash, beginning of year (December 31, 2017) in the accompanying consolidated statement of cash flows has been adjusted for theeffects of this revision.

The following table illustrates the effect this revision :

December 31, 2017

Oblong Industries, Inc. Consolidated Balance SheetAs previously

reported Adjustment As revised

Cash, cash equivalents and restricted cash $ 631,331 $ 14,053,172 $ 14,684,503 Marketable Securities 14,053,172 (14,053,172) —

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4. Property andEquipment

Property and equipment consists of the following:

December 31, 2018

Computer equipment $ 5,226,067

Furniture and fixtures 305,169

Leasehold improvements 989,927

Tooling 170,742

6,691,905

Less: accumulated depreciation and amortization (4,891,827)

Property and equipment, net $ 1,800,078

For the year ended December 31, 2018, depreciation and amortization expense related to property and equipment totaled $1,026,131, of which$973,899 and $52,232 were included in operating expenses and cost of revenues, respectively.

5. IntangibleAssets

Identifiable intangible assets consist of the following:

December 31, 2018 Gross Carrying

Amount Useful Life In

Years Accumulated Amortization Impairment Net Carrying

Amount

Patent cost $ 4,713,750 10 - 20 $ (608,199 ) $ (330,917 ) $ 3,774,634 Trademarks 69,952 Indefinite - - 69,952 Certification costs 340,798 3 (184,700 ) - 156,098 Software systems 711,602 5 (264,090 ) - 447,512

Total $ 5,836,102 $ (1,056,989 ) $ (330,917 ) $ 4,448,196

The gross carrying amount of patent costs consist of the following:

December 31, 2018

Granted patents $ 3,045,438

Pending patents 1,337,395

Abandoned patents 330,917

Total $ 4,713,750

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For the year ended December 31, 2018, amortization expense related to identifiable intangible assets totaled $437,129, of which $356,112 and$81,017 were included in operating expenses and cost of revenues, respectively.

Future amortization expense for intangibles subject to amortization are as follows:

Years ending December 31, Amount

2019 $ 461,854

2020 414,708

2021 387,208

2022 247,454

2023 226,903

Thereafter 1,302,722

Total $ 3,040,849

6. Long-term Debt

The Company is party to a loan and security agreement with a financial institution consisting of a term loan (the “Term Loan”) and revolving line ofcredit (the “Revolver”). The loan and security agreement is collateralized by substantially all of the Company’s assets, not including the intellectualproperty consisting of copyrights, trademarks and patents. In October 2018, the Company modified the Term Loan with the Sixth Amendment toAmended and Restated Loan and Security Agreement (“Sixth Amendment”). The Term Loan decreased to $5,247,000 and the Revolverdecreased to $1,500,000. The financial covenants were revised to exclude any requirements related to the Company’s quick ratio. The financialcovenants require the Company to maintain minimum bookings pre-determined and satisfactory to the bank. The Term loan matures inSeptember 2021 and the Revolver matures in October 2019. The Term Loan and Revolver bear interest at the Wall Street Journal prime rate plus0.375% (5.875% as of December 31, 2018).

The borrowings available under the Revolver were $1,500,000 as of December 31, 2018. The Revolver consists of interest-only payments,payable in arrears, and principal is due in full at maturity. There was no outstanding balance on the Revolver as of December 31, 2018.

The Term Loan consist of interest-only payments through September 30, 2019 followed by twenty-seven equal monthly payments of principal, plusmonthly payments of accrued interest through maturity. The outstanding balance on the Term Loan was $5,247,000 as of December 31, 2018.

The Sixth Amendment included a final payment related to the Term Loan over and above the principal balance due at maturity in the amount of$262,350. The Company recorded these loan costs on the consolidated balance sheets and is amortizing the costs as interest expense over theamended terms of the loans to recognize the effective interest rate related to the loans.

The Company was in compliance with the minimum booking as of December 31, 2018, but was not in compliance with the minimum booking fromOctober to November during the year ended December 31, 2018.

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Future maturities of the Term Loan are as follows:

Years ending December 31, Amount

2019 $ 655,875

2020 2,623,500

2021 1,967,625

Total $ 5,247,000

7. Commitments and OtherContingencies

Lease Commitments

The Company leases its facilities under non-cancellable operating lease agreements that expire on various dates through May 2023. In addition,the Company has facility leases that provide for rent adjustment increases. The accompanying consolidated statements of operations andcomprehensive loss reflect rent expense on a straight-line basis over the term of the leases.

The differences between rent expense recorded and the amount paid are credited or charged to deferred rent, which were included in theaccompanying consolidated balance sheets. Under these agreements, net rent expense was $1,457,082 for the year ended December 31, 2018.Total deferred rent as of December 31, 2018 was $217,230.

The approximate aggregate future minimum lease commitments for these leases are as follows:

Years ending December 31, Cash Payments Straight-line

Rent Expense Deferred

Rent

2019 $ 1,452,304 $ 1,427,912 $ 24,392 2020 1,332,544 1,260,122 72,422 2021 1,157,501 1,089,273 68,228 2022 589,312 545,004 44,308 Thereafter 196,915 189,035 7,880

Total $ 4,728,576 $ 4,511,346 $ 217,230

Litigation

The Company is subject to certain legal proceedings and claims that arise in the normal course of business. Based on the advice of legal counsel,management believes that no actions or claims depart from customary litigation or claims incidental to the business or the subsidiaries and that theresolution of all such litigation or claims will not have a material adverse effect on the Company’s consolidated financial position, results ofoperations and cash flows.

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8. Convertible PreferredStock

Convertible Preferred Stock

The convertible preferred stock described below has been classified outside of stockholders' equity to comply with Regulation S-X because theshares contain certain redemption features that are not solely within the control of the Company.

In September 2018, the Company and its investors agreed to enter into an agreement to sell and issue Series E convertible preferred stock(“Series E”) with a par value of $.0001 and warrants to purchase common stock. To facilitate this sale, the Company amended and restated itscertificate of incorporation to increase the authorized shares to 65,000,000 of common stock at par value of $.0001 and to decrease the authorizedshares to 23,007,000 of preferred stock at par value of $.0001 designated as 19,757,000 as Series D, and 3,250,000 as Series E. The Companyhad authorized to sell 3,039,514 shares of Series E convertible stock, and issued 2,899,266 shares, which are outstanding as of December 31,2018. The 2,899,266 share of Series E preferred stock were sold along with 2,899,266 common stock purchase warrants, exercisable for $0.01per share, for cash proceeds of $9,480,952, net of issuance costs of $57,633. The $9,480,952 of net cash proceeds was allocated to the Series Epreferred stock and the common stock warrants, as an increase to additional paid in capital, based on the relative fair value of the Series Epreferred stock and common stock warrants. The fair value of the Series E preferred stock and common stock warrants was based on a third-partyvaluation. The liquidation preference on Series E is $9,538,585 as of December 31, 2018.

In September 2018, the Company and its investors approved the conversion of all of its outstanding shares of Series A convertible preferred stock,Series B convertible preferred stock, and Series C convertible preferred stock, totaling 15,380,339 preferred stock into 15,506,592 common stock(the “Conversion”). Prior to the Conversion, the Company had 6,596,516 Series A convertible preferred stock issued and outstanding, 6,114,632Series B convertible preferred stock issued and outstanding, and 2,669,191 Series C convertible preferred stock issued and outstanding. Series Aand C outstanding preferred stock were converted using a 1:1 ratio. Series B outstanding preferred stock using a 1.0206 ratio.

As of December 31, 2018, the Company had authorized 19,757,000 shares of Series D convertible preferred stock (“Series D”) with a par value of$0.0001. The Company issued no shares of Series D during 2018. The Company had 19,756,834 shares of Series D issued and outstanding as ofDecember 31, 2018. The liquidation preference on Series D is $64,999,984 as of December 31, 2018.

Following the Conversion, holders of Series D and Series E (collectively “Post-Conversion Series Preferred"), in preference to the holders ofcommon stock, are entitled to receive cash dividends at the annual rate of $0.2632 per share. The dividends are payable only when and ifdeclared by the Board of Directors and are non-cumulative. No dividends were paid in 2018 and 2017.

Conversion Rights

Each share of Post-Conversion Series Preferred is convertible into shares of common stock at the option of the holder at any time after the date ofissuance. The number of shares of common stock into which a holder of Post-Conversion Series Preferred can convert is obtained by multiplyingthe conversion rate that is in effect by the number of shares of Post-Conversion Series Preferred being converted. The conversion rate isdetermined by dividing the original issue price by the applicable conversion price (initially the original issue price, as adjusted for certain dilutiveevents).

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Under the terms, each share of Post-Conversion Series Preferred will be automatically converted into shares of common stock (based on the theneffective Post-Conversion Series Preferred conversion price) immediately upon closing of a firm underwritten public offering pursuant to aneffective registration statement on Form S-1 or SB-2 under the Securities Act of 1933, as amended, covering the offer and sale of common stockfor the account of the Company in which the per share price to the public is at least $6.92 and the gross cash proceeds to the Company (beforeunderwriting discounts, commissions, and fees) are at least $30,000,000 or if there is an affirmative election of the holders of the majority of theoutstanding shares of Post-Conversion Series Preferred on an as-converted basis.

Liquidation Rights

In accordance with the certificate of incorporation, upon any liquidation, dissolution, change in control, or winding up of the Company (“LiquidatingEvent”), the holders of Series E are entitled to be paid out of the assets of the Company legally available for distribution an amount per share ofPost-Conversion Series Preferred equal to the original issue price plus all declared and unpaid dividends on the Series E, before any distributionor payment is made to the holders of any Series D or common stock.

If after the liquidation preference there are assets remaining, the assets will be distributed to the Series D before any distribution or payment ismade to the holders of common stock.

If after the liquidation preference there are assets remaining, the assets will be distributed ratably amongst the common stock. Post-ConversionSeries Preferred will be deemed converted to common stock upon a Liquidating Event if the holder would receive a greater amount than if theyhad not been converted. If the Company has insufficient assets upon the Liquidating Event to make payment in full to all holders of Post-Conversion Series Preferred their liquidation preference, then such assets (or consideration) will be distributed among the holders of Post-Conversion Series Preferred ratably in proportion to the full amounts to which they would otherwise be respectively entitled. Any transaction orseries of transactions that meets the definition of a Liquidating Event may be waived as a Liquidating Event by a majority vote of the Post-Conversion Series Preferred holders.

Voting Rights

Post-Conversion Series Preferred holders are entitled to the number of votes equal to the number of common shares the preferred shares isconvertible into. So long as at least 2,500,000 shares of Post-Conversion Series Preferred remain outstanding, the vote or written consent of theholders of a majority of the outstanding Post-Conversion Series Preferred, respectively, shall be necessary for defined significant events.

9. Stockholders’ Equity

Common Stock

As of December 31, 2018, the Company had authorized 65,000,000 shares of common stock with a par value of $0.0001. During 2018, theCompany issued 7,916 shares of common stock, through the exercise of stock options. In 2018, the holders of the Company’s Series A, B and Cconvertible preferred stock converted all outstanding shares, consisting of 15,380,339 shares of preferred stock, into 15,506,592 shares ofcommon stock. The Company had 27,304,479 of common stock shares issued and outstanding as of December 31, 2018.

Stock Options

On January 22, 2007, the Company adopted the 2007 Stock Plan (the “Plan”) under which the Company is authorized to grant incentive and non-qualified stock option awards to employees, directors, consultants, and affiliates of the Company. The Plan provides both for the direct award orsale of shares and for the grant of options

23




to purchase shares. The Company is authorized to grant up to 5,405,376 shares of stock awards. The option price and vesting terms aredetermined by the Board of Directors of the Company and evidenced in the award agreement extended to the employee. The options grantedgenerally vest over a period of one to four years and terminate ten years from the grant date. As of December 31, 2018, $294,749 remained to beexpensed over the requisite service period, which approximates the vesting period and the forfeiture rate has been estimated at 10%. During theyear ended December 31, 2018, the Company recognized $225,795 in stock-based compensation expense.

The following presents the activity for options outstanding:

Incentive

Stock Options Non-QualifiedStock Options

Weighted AverageExercise Price

December 31, 2017 3,838,140 78,833 $ 0.82 Granted 316,500 100,000 0.97 Exercised (7,916 ) - 0.25 Forfeited/canceled (570,526 ) (23,833 ) 0.90

December 31, 2018 3,576,198 155,000 $ 0.82

The following table presents the composition of options outstanding and exercisable as of December 31, 2018:

Options Outstanding Options Exercisable

Range of Exercise Prices Number Price* Life* Number Price*

$0.13 - $ 0.13 - - $ 0.13 $0.16 - 0.16 - - 0.16 $0.21 185,000 0.21 2.04 185,000 0.21 $0.30 155,000 0.30 2.98 155,000 0.30 $0.71 409,000 0.71 4.08 409,000 0.71 $0.80 667,303 0.80 4.80 667,303 0.80 $0.84 810,315 0.84 6.48 721,347 0.84 $0.90 653,160 0.90 7.44 419,641 0.90 $0.93 392,500 0.93 8.29 168,349 0.93 $0.94 69,000 0.94 6.80 55,715 0.94 $0.97 992,195 0.97 9.27 24,393 0.97

December 31, 2018 4,333,473 $ 0.82 6.63 2,805,748 $ 0.76

* Price and Life reflect the weighted average exercise price and weighted average remaining contractual life, respectively.

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The fair value of each option grant was estimated on the grant date using the Black-Scholes option pricing model with the following weighted-average assumptions:


Approximate risk-free rate 2.56 – 2.96 %Average expected life 6.25 yearsDividend yield 0 %Volatility 55 – 62 %Fair value of common stock $0.78 - $0.98 Estimated fair value of options granted $0.43 - $0.58 Estimated forfeiture rate 10 %

Warrants In 2008 through 2013, and 2018, the Company issued warrants to a bank and stockholders. The following presents activity for warrantsfor the years ended December 31, 2018:

Series A

Warrants Series B

Warrants Common Stock

Warrants

January 1, 2018 - 43,731 807,110 Granted - - 2,899,266 Exercised - - - Forfeited/canceled - - -

December 31, 2018 - 43,731 3,706,376

In connection with the Series E preferred stock purchase, common stock warrants were issued to stockholders on September 25, 2018 in theamount of 2,899,266 shares, with an exercise price of $0.01 per share. The common stock warrants are set to expire on September 25, 2025.

10. Income Taxes

The provision (benefit) for income taxes is as follows:

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Current:

Federal $ - State 17,174 Foreign (7,125 )

10,049 Deferred:

Federal (3,431,230 )State (7,573,379 )Foreign -

(11,004,609 )Less: change in valuation allowance 11,004,609

Total $ 10,049

The provision for income taxes of $10,049 for the year ended December 31, 2018 is included in “Other expenses, net” on the accompanyingconsolidated statement of operations and comprehensive loss.

The reconciliation of income taxes calculated at the U.S. federal tax statutory rate to the Company’s effective tax rate is set forth below:


U.S. federal statutory rate 21.00 %State income tax, net of federal benefit (1.70 )%Change in valuation allowance (19.24 )%Other (0.12 )%Federal rate change 0.00%

Effective income tax rate (0.06 )%

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities were as follows as of December31:

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As of December 31, 2018

Deferred tax assets:

Net operating loss carry forwards $ 32,464,517

Tax credit carryforwards 2,949,393

Accruals and reserves 981,396

Others 280,614

Total gross deferred tax assets 36,675,920

Deferred tax liabilities:

State income taxes (1,433,898 )Depreciation and amortization (1,012,776 )Total gross deferred tax liabilities (2,446,674 )

Less: valuation allowance (34,229,246 )

Total $ -

The Company’s ability to utilize net operating loss carryforwards may be limited in the event of an ownership change as defined in the InternalRevenue Code. As of December 31, 2018, the Company had net operating loss carryforwards for federal and state income tax purposes of$98,969,930 and $140,067,968, respectively. If not utilized, the federal and state net operating losses will begin to expire in 2028. In addition, theCompany has research and development (“R&D”) credits for federal and state income tax purposes of $2,160,260 and $1,638,253, respectively.The federal R&D credits, if not utilized, will begin to expire in 2027. The California R&D credits can be carried forward indefinitely. The Companyalso has a carryover of California Enterprise Zone and New Job credits totaling $100,508, which will expire beginning in 2019.

Significant management judgement is required in determining the provision for income taxes and in particular, any valuation allowance recordedagainst the Company’s deferred tax assets. The Company has evaluated the positive and negative evidence bearing upon the realizability of itsdeferred tax assets. Based on the Company’s history of operating losses, the Company has concluded that it is more likely than not that the benefitof its deferred tax assets will not be realized. The Company’s effective income tax rate differs from the statutory federal income tax rate due to thechange in valuation allowance.

The Company’s subsidiaries, Oblong Europe, Ltd. and Oblong Industries Europe, S.L.U. are subject to foreign income tax in Germany, Spain, andUnited Kingdom. The amount of such foreign current income tax benefit incurred amounted to ($7,125) for 2018.

Internal Revenue Code section 382 places a limitation (the “Section 382 Limitation”) on the amount of taxable income that can be offset by netoperating loss carryforwards after a change in control of a loss corporation. Generally, after a change in control, a loss corporation cannot deductoperating loss carryovers in excess of the Section 382 limitation. The Company has not performed an analysis to determine if a limitation appliesand whether the limitation would cause the net operating losses to expire unutilized.

On December 22, 2017, H.R.1, also known as the Tax Cuts and Jobs Act (the “Tax Reform Act”), was enacted into law. The Tax Reform Actmakes broad and complex changes to the U.S. tax code, including, but not limited to, (i) reducing the U.S. federal statutory tax rate from 35% to21%; (ii) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries (the “Transition Tax”); (iii)generally

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eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (iv) requiring a current inclusion in U.S. federal taxable income ofcertain earnings of controlled foreign corporations; (v) eliminating the corporate alternative minimum tax (AMT) and changing how existing AMTcredits can be realized; (vi) creating the base erosion anti-abuse tax (BEAT), a new minimum tax; (vii) creating a new limitation on deductibleinterest expense, and (viii) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning afterDecember 31, 2017. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) which provides guidance on accounting for the taxeffects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date forcompanies to complete the accounting under ASC 740, Income Taxes (“ASC 740”) for the year ended December 31, 2017. In accordance withSAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. TheCompany has finished their analysis as of the measurement period closing of December 22, 2018 after application of law changes were reviewedby the Company. There were no subsequent adjustments as the conclusions remained the same.

As of December 31, 2018, the Company has unrecognized tax benefit of $949,628. There were no accrued interest and penalties during the yearended December 2018. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months.

The Company is subject to taxation in various jurisdictions, including federal, state and foreign. The Company’s federal and state income taxreturns are generally not subject to examination by taxing authorities for years before 2014 for federal purposes and 2013 for state purposes. Theexceptions to this are the net operating loss carryovers and R&D credit carryovers. These amounts are subject to audit for a period of three yearsafter utilization for federal purposes and four years after utilization for state purposes.

11. Profit SharingPlan

The Company sponsors a 401(k) Plan (the “Plan”) for all eligible employees. All full-time employees are eligible to participate in the Plan duringtheir first payroll period. The Company contributions to the Plan are at the sole discretion of the Company’s Board of Directors. Employees mayelect to have a portion of their compensation deferred and contributed to their 401(k) accounts. Vesting and the allocation of Companycontributions to the eligible employee accounts are determined in accordance with the terms of the Plan. Matching contributions werediscontinued in September 2012. There were no Company contributions for the year ended December 31, 2018.

12. SubsequentEvents

The Company has evaluated subsequent events that have occurred from January 1, 2019 through the date of the independent auditor’s report,which is the date that the consolidated financial statements were available to be issued, and determined that there were no subsequent events ortransactions that required recognition or disclosure in the consolidated financial statements, except as disclosed below.

On June 19, 2019, the Company executed the Seventh Amendment (see Note 5). The Seventh Amendment terminated the Revolver and waivedthe breach of the Minimum Bookings financial covenant in both October and November for the year ended December 31, 2018. Additionally, theSeventh Amendment set forth a replaced the financial covenant of Minimum Bookings measured on a trailing six-month bases with the followingdebt covenants:

• By no later than July 31, 2019, the Company shall deliver to Bank evidence satisfactory to Bank that the Company has receivedeither

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◦ a fully executed term sheet for the sale and issuance of equity securities to investors, and on terms and conditions, satisfactory toBank, to result in net cash proceeds of at least $20,000,000 (the “Equity Option”), or

◦ a letter of intent for the sale of all or substantially all of the Company’s assets or all of the equity interests in the Company on terms andconditions, and with an acquirer, satisfactory to Bank (the “Acquisition Option”)

• The Acquisition Option or the Equity Raise shall be consummated (and receive such net cash proceeds thereof) by no later thanSeptember 15, 2019.

In the event the Company elects the Equity Option, a new Minimum Bookings covenant satisfactory to Bank shall be established by no later thanSeptember 30, 2019.

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Exhibit 99.3

Oblong Industries, Inc.CONSOLIDATED FINANCIAL STATEMENTS

ANDINDEPENDENT AUDITOR’S REPORT

December 31, 2017 AND 2016


Exhibit 99.3

Oblong Industries, Inc.TABLE OF CONTENTS

Page No.

Independent Auditor’s Report 1-2 Consolidated Financial Statements: Consolidated Balance Sheets 3Consolidated Statements of Operations and Comprehensive Loss 4Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit 5Consolidated Statements of Cash Flows 6Notes to Consolidated Financial Statements 7 - 28


Exhibit 99.3

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors and Stockholdersof Oblong Industries, Inc.:

We have audited the accompanying consolidated financial statements of Oblong Industries, Inc. and subsidiaries (collectively, the "Company"), which comprisethe consolidated balance sheets as of December 31, 2017 and 2016, and the related consolidated statements of operations and comprehensive loss, changes inconvertible preferred stock and stockholders’ deficit, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principlesgenerally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation andfair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditingstandards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assuranceabout whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The proceduresselected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether dueto fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of theconsolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinionon the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of theconsolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Oblong Industries, Inc. andsubsidiaries as of December 31, 2017 and 2016, and the results of their operations and their cash flows for the years then ended in accordance with accountingprinciples generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2to the consolidated financial statements, the Company has incurred


Exhibit 99.3

recurring losses from operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters arealso described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of uncertainty. Our opinion isnot modified with respect to that matter.

Restatement of Previously Issued Consolidated Financial Statements

As described in Note 11 to the consolidated financial statements, the Company has restated its consolidated balance sheets as of December 31, 2017 and 2016and the related consolidated statements of cash flows for the years then ended. Our opinion is not modified with respect to that matter.

/s/ Holthouse Carlin & Van Trigt LLP

Encino, CaliforniaJune 28, 2018(except for the first paragraph in Note 8 and Note 12, as towhich the date is December 17, 2019)


Exhibit 99.3

Oblong Industries, Inc.CONSOLIDATED BALANCE SHEETS

As Restated As Restated

AS OF DECEMBER 31, 2017 2016

ASSETS Current assets:

Cash, cash equivalents and restricted cash $ 14,684,503 $ 38,787,513

Accounts receivable 8,311,175 5,181,496

Note receivable, net (see Note 3) — —

Prepaid expenses and other current assets 855,494 1,095,333

Inventory 2,233,888 2,434,105

Total current assets 26,085,060 47,498,447

Property and equipment, net 2,574,175 2,392,721

Intangible assets, net 4,951,904 4,435,548

Other assets 357,198 648,930

Total assets $ 33,968,337 $ 54,975,646

LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' DEFICIT Current liabilities:

Accounts payable $ 1,209,369 $ 1,287,810

Accrued expenses and other current liabilities 1,837,216 1,954,366

Customer deposits 412,888 674,595

Current portion of deferred revenue 6,144,134 3,275,893

Current portion of deferred rent 36,722 35,628

Current portion of long-term debt 2,744,444 1,372,222

Total current liabilities 12,384,773 8,600,514

Deferred revenue, net current portion 1,528,206 3,079,078

Deferred rent, net current portion 217,230 141,773

Long-term debt 2,058,334 5,065,967

Other long-term liabilities 265,746 296,693

Total liabilities 16,454,289 17,184,025

Commitments and contingencies Convertible preferred stock:

Convertible preferred stock 103,490,937 103,490,937

Stockholders' deficit: Common stock 1,179 1,172

Additional paid-in capital 2,159,227 1,789,721

Accumulated deficit (87,819,373) (67,133,114)

Accumulated other comprehensive loss (317,922) (357,095)

Total stockholders' deficit (85,976,889) (65,699,316)

Total liabilities, convertible preferred stock, and stockholders' deficit $ 33,968,337 $ 54,975,646

See accompanying notes to consolidated financial statements (as revised, see note 12).


Exhibit 99.3

Oblong Industries, Inc.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE YEARS ENDED DECEMBER 31, 2017 2016

Revenues $ 22,283,271 $ 25,082,930Cost of revenues 7,304,646 8,476,696

Gross profit 14,978,625 16,606,234

Operating expenses:

Research and development 9,759,225 9,224,185General and administrative 8,200,014 6,883,007Sales and marketing 15,360,166 13,238,318Depreciation and amortization 1,610,485 1,224,946Loss on impairment of intangible assets 382,062 536,674

Total operating expenses 35,311,952 31,107,130

Loss from operations (20,333,327) (14,500,896)

Other expenses:

Interest expense, net 207,041 382,001Other expenses, net 145,891 66,604

Total other expenses, net 352,932 448,605

Net loss (20,686,259) (14,949,501) Foreign currency translation gain (loss) 39,173 (16,368)

Comprehensive loss $ (20,647,086) (14,965,869)



Exhibit 99.3

Oblong Industries, Inc.CONSOLIDATED STATEMENT OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT


Exhibit 99.3

Oblong Industries, Inc.CONSOLIDATED STATEMENTS OF CASH FLOWS

As Restated As Restated

FOR THE YEARS ENDED DECEMBER 31, 2017 2016

Cash flows from operating activities:

Net loss $ (20,686,259) $ (14,949,501)

Adjustments to reconcile net loss to cash used in operating activities:

Depreciation and amortization 1,745,325 1,231,201

Inventory write-off 368,540 154,120

Amortization of deferred financing costs 137,167 132,563

Stock-based compensation 357,107 349,282

Loss on disposal of property and equipment 2,536 12,536

Impairment of intangible assets 382,062 536,674

Property and equipment expensed to cost of sales and operating expenses 90,739 —

Non-cash settlement of note receivable — (1,350,000)

Change in operating assets and liabilities:

Accounts receivable (3,129,679) 184,951

Prepaid expenses and other current assets 256,463 (715,372)

Inventory (1,183,415) (1,567,652)

Other assets 154,565 (112,567)

Accounts payable (78,442) (1,010,021)

Accrued expenses and other current liabilities 27,532 624,844

Deferred revenue 642,773 2,902,831

Customer deposits 261,708 (374,040)

Deferred rent 76,551 29,748

Other long-term liabilities (23,114) (2,441)

Net cash used in operating activities (20,597,841) (13,922,844)

Cash flows from investing activities:

Purchase of property and equipment (612,535) (952,367)

Intangible asset costs (1,272,378) (843,430)

Cash used in investing activities (1,884,913) (1,795,797)

Cash flows from financing activities:

Proceeds from exercise of stock options and warrants 12,406 29,344

Proceeds from sale of preferred stock — 49,969,256

Borrowings from revolving line of credit 4,805,712 8,641,943

Borrowings on term loan — 462,229

Payments on revolving line of credit (5,068,901) (8,598,045)

Payments on term loan (1,372,222) (1,481,481)

Net cash provided by (used in) financing activities (1,623,005) 49,023,246

Effect of foreign currency exchange rates on cash 2,749 (13,291)

Net increase (decrease) in cash, cash equivalents and restricted cash (24,103,010) 33,291,314

Cash, cash equivalents and restricted cash, beginning of year 38,787,513 5,496,199

Cash, cash equivalents and restricted cash, end of year $ 14,684,503 $ 38,787,513

Supplemental disclosures of cash flow information:

Cash paid during the year for interest $ 247,045 $ 244,292

Cash paid during the year for income taxes $ 34,078 $ 62,873

Non-cash investing and financing activities:

Transfer of inventory to property and equipment $ 1,015,093 $ 412,436

Patents purchased through credit $ — $ 364,230

Conversion of term loans and revolver to new loan facility $ — $ 5,712,770

See accompanying notes to consolidated financial statements (as revised, see note 12).


Exhibit 99.3

Oblong Industries, Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2017 AND 2016

1. ORGANIZATION AND NATURE OF BUSINESS

Oblong Industries, Inc. ("Oblong") was incorporated in the state of Delaware on July 31, 2006. Oblong’s wholly-owned subsidiaries consistof Oblong Industries Europe S.L.U. ("Euroblong") and Oblong Europe Ltd ("Oblong UK") (collectively, the "Company'). Euroblong wasincorporated in Spain on March 12, 2007 and Oblong UK was incorporated in England on February 6, 2014. On January 27, 2017, OblongUK established the branch entity, Oblong Europe Ltd. (German Branch) ("Oblong German Branch").

The Company's core platform is g-speak™ and Mezzanine™ is its flagship product built on this platform. Mezzanine offers advancedcollaboration for conference room technology, which amplifies sales presentations, enhances group collaboration, and makes worksessions more productive. The Company offers g-speak development licenses to larger enterprise customers. Oblong is headquartered inLos Angeles, California with a sales and development office in Boston, Massachusetts; regional sales offices in Los Altos, California; NewYork City, New York; Washington D.C.; Chicago, Illinois; Houston and Dallas, Texas; and Atlanta, Georgia. The Euroblong office is inBarcelona, Spain and focuses on mobile research and development, while the Oblong UK and Oblong German Branch offices are inLondon, England and Munch, Germany, respectively, and focus on sales and marketing in the European region.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization ofassets and the satisfaction of liabilities in the normal course of business. The Company had net losses of $20,686,259 and $14,949,501 forthe years ended December 31, 2017 and 2016, respectively, and accumulated deficits of $87,819,373 and $67,133,114, as of December31, 2017 and 2016, respectively. Cash used in operating activities amounted to $20,597,841 and $13,922,844 for the years endedDecember 31, 2017 and 2016, respectively.

Since inception, the Company has financed its business activities through the issuance of equity instruments. The Company expects toobtain funding through additional private equity placement offerings until it achieves a positive cash flow from operations. The Company issubject to various risks and uncertainties frequently encountered by newly formed companies. Such risks and uncertainties include, but arenot limited to, undeveloped technology, its limited operating history, dependence on key personnel, and management of rapid growth. Toaddress these risks, the Company must, among other things, successfully develop its customer base; successfully execute its businessand marketing strategy; successfully develop its technology; provide superior customer service; and attract, retain, and motivate qualifiedpersonnel. Additionally, the Company may be required to obtain additional debt and/or equity financing prior to achieving positive cashflows.

Based on the Company’s projected cash flows and operating results for 2017, management believes it has sufficient cash resources tofund operations and meet its obligations as they become due for the next twelve months. However, there can be no assurance theCompany will be able to raise adequate funds, achieve or sustain profitability or positive cash flows from its operations.


Exhibit 99.3

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.


The accompanying consolidated financial statements include the accounts of Oblong and its wholly-owned subsidiaries Euroblong andOblong UK, and branch entity, Oblong German Branch. All significant intercompany balances and transactions have been eliminated uponconsolidation.

Accounting Method

The Company maintains its accounting records on an accrual method in conformity with accounting principles generally accepted in theUnited States of America ("US GAAP").

Reclassifications

Certain prior period amounts have been reclassified to conform with the current year presentation.

During 2017, the Company modified the classification of expenses related to the installation departments from sales and marketing togeneral and administrative, as the Company determined that the role of the department is more operational by providing install and supportfor internal systems in sales offices, install and support during trade shows, and support for existing customer systems. This resulted in areclassification of $1,259,745 from sales and marketing to general and administrative.

During 2017, the Company modified the classification of salary expenses for time spent on custom solution professional services and oninstallation of product from research and development and general and administrative, respectively, to cost of revenues, as the Companydetermined that these expenses are direct costs of the related revenues. This resulted in a reclassification of $1,621,336 and $291,750from research and development and general and administrative, respectively, to cost of revenues.

The above reclassifications have been made to the 2016 consolidated statement of operations and comprehensive loss balances toconform with the current year presentation, resulting in a $1,913,086 increase in cost of revenues, $1,621,336 decrease in research anddevelopment, $967,995 increase in general and administrative and $1,259,745 decrease in sales and marketing.

The Company reclassified the loss on impairment of intangible assets from other expenses to operating expenses on the 2016consolidated statement of operations and comprehensive loss to conform with the current year presentation.

The Company reclassified the current portion of the term loan in 2016 from long-term debt to current portion of long-term debt to conformwith the current year presentation (see Note 6).

The Company reclassified payments received from customers in advance of revenue recognition from current portion of deferred revenueto customer deposits. The balance of customer deposits was $412,888 and $674,595 for the years ended December 31, 2017 and 2016,respectively.

Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of theconsolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant itemssubject to such estimates and assumptions include the valuation of certain accrued expenses, which have been prepared on the basis ofthe


Exhibit 99.3

most current and best available information. However, actual results from the resolution of such estimates and assumptions may vary fromthose used in the preparation of the consolidated financial statements.

Revenue Recognition

As required by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 605, RevenueRecognition, the Company recognizes revenue when persuasive evidence of an arrangement exists, service has been rendered, the salesprice is fixed or determinable, and collection is probable. Amounts billed in excess of revenue recognized are included in deferredrevenue. Customer deposits represent payments received by the Company from customers for which revenue recognition criteria have notbeen met.

The Company's products are systems that consist of hardware and software that function together to deliver the system's essentialfunctionality. The Company sells the systems as a complete package and does not sell the hardware and software separately. TheCompany also sells maintenance and support contracts and license agreements. The Company has determined that its systems andservice contracts have value to a customer on a standalone basis; therefore, revenue from each item should be recognized separately.

The Company establishes the relative selling price of each deliverable based on estimated selling price. The Company recognizes productrevenue from its systems upon shipment, installation revenue upon completed installation and revenue from maintenance contracts andlicense agreements ratably over the applicable periods, ranging from 12 to 36 months. Professional service contracts are billed based ontime and materials at the contract rate as the services are rendered.


Cash and cash equivalents include all cash balances and highly liquid investments, such as money market funds, with original maturitiesof three months or less from the date of purchase. Restricted cash are cash and cash equivalents that are restricted as to withdrawal oruse under the terms of certain contractual agreements.

The Company used a bank guarantee in place of a cash deposit for the lease of the sales office in Munich, Germany. The bank guaranteewas collateralized by a restricted cash bank account. As of December 31, 2017, the Company had a restricted cash balance of $93,148.The Company had no restricted cash as of December 31, 2016.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash ("ASU 2016-18"). ASU 2016-18 provides guidance on how restricted cash must be presented on the consolidated statement of cash flows. ASU 2016-18 requires thatconsolidated statement of cash flows show the change during the period of the total cash, cash equivalents and restricted cash. Privatecompanies are required to apply the guidance in ASU 2016-18 to fiscal years beginning after December 15, 2018, with early adoptionpermitted. The Company has early adopted this guidance, and restricted cash is included in cash, cash equivalents and restricted cash onthe accompanying consolidated balance sheet as of December 31, 2017 and the consolidated statement of cash flows for the year endedDecember 31, 2017.


The Company accounts for the fair value of its financial instruments in accordance with FASB ASC Topic 820, Fair Value Measurementsand Disclosures ("ASC 820"). Non-recurring, nonfinancial assets and liabilities are also accounted for under the provisions of ASC 820.

ASC 820 defines fair value, establishes a framework for measuring fair value under US GAAP and enhances disclosures about fair valuemeasurements. Fair value is defined under ASC 820 as the price that would be


Exhibit 99.3

received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.



• Level 1 - Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at themeasurement date.

• Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets orliabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data forsubstantially the full term of assets or liabilities.

• Level 3 - Pricing inputs that are unobservable, supported by little or no market activity and that are significant to the fair value of theassets or liabilities, as described below.

The Company's money market funds, which are classified as cash and cash equivalents, are stated at fair value based on Level 1 inputs ateach reporting period.

As of December 31, 2017 Level 1 Level 2 Level 3 Total

Money market funds $ 14,053,172 $ — $ — $ 14,053,172

As of December 31, 2016 Level 1 Level 2 Level 3 Total


Accounts Receivable

Accounts receivable are stated at the amounts due from customers, net of an allowance for doubtful accounts. At the time the accountsreceivable are originated, the Company considers a reserve for doubtful accounts based on the creditworthiness of the customer. Theallowance for uncollectible amounts is continually reviewed and adjusted to maintain the allowance at a level considered adequate to coverfuture losses. The allowance is management's best estimate of uncollectible amounts and is determined based on a combination ofhistorical performance and current economic conditions tracked by the Company on an ongoing basis. The losses ultimately incurred coulddiffer materially in the near term from the amounts estimated in determining the allowance. The Company believes the accounts receivablebalances outstanding as of December 31, 2017 and 2016 are fully collectible; therefore, no allowance has been recorded.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with FASB ASC Topic 718, Compensation - Stock Compensation,which requires all share-based payments to employees and non-employees, including grants of employee stock options, to be recognizedin the consolidated statements of operations and comprehensive loss based on the fair value of those awards calculated using an optionvaluation model on the grant date.

Financial Instruments and Concentrations of Business and Credit Risk


Exhibit 99.3

Financial instruments that potentially subject the Company to concentrations of credit and business risk consist of cash, cash equivalentsand restricted cash, accounts receivable and accounts payable.

The Company maintains cash, cash equivalents and restricted cash balances that at times exceed amounts insured by the Federal DepositInsurance Corporation. The Company has not experienced any losses in these accounts and believes it is not exposed to any significantcredit risk in this area.

The Company’s customer concentrations expose it to credit risks such as collectability and business risks such as sales concentration. TheCompany grants credit in the normal course of business to customers in the United States and other world-wide locations. The Companyperiodically performs credit analysis and monitors the financial condition of its customers to reduce credit risk. On a case-by-case basis,the Company requires deposits from customers who are unable to verify acceptable credit standards.

For the year ended December 31, 2017, two customers accounted for 49% of total net revenues. Amounts outstanding from these twocustomers accounted for 47% of total accounts receivable as of December 31, 2017. For the year ended December 31, 2016, onecustomer accounted for 50% of total net revenues. Amounts outstanding from this one customer accounted for 63% of total accountsreceivable as of December 31, 2016.

The Company’s supplier concentrations expose it to business risks, which the Company mitigates by attempting to diversify its supplychain. There was no supplier concentration for the year ended December 31, 2017. For the year ended December 31, 2016, one vendoraccounted for 15% of total purchases. Amounts outstanding to this vendor accounted for 19% of total accounts payable as of December31, 2016.

Inventory

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory ("ASU 2015-11"). ASU2015-11 requires that inventory be measured at the lower of cost or net realizable value. Net realizable value is the estimated selling pricein the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This eliminates the needto determine and consider replacement cost or net realizable value less an approximately normal profit margin when measuring inventory.ASU 2015-11 is effective for private entities for annual reporting periods beginning after December 15, 2016. The Company adopted thisstandard prospectively for the year ended December 31, 2017. The adoption did not have a material impact on the Company’sconsolidated financial position or results of operations.

As part of the implementation to a new accounting software system (NetSuite), the Company elected to change its inventory valuationmethod to the average cost costing method as of the go-live date of February 1, 2017. In prior years, inventory was valued using the first-in, first-out ("FIFO") method. The Company determined the average cost costing method of inventory valuation is preferable because (1)the costs of the Company’s inventories have remained fairly consistent during the past several years, which substantially negated thefinancial reporting benefits of the FIFO method to provide results in the valuation of inventories at more current costs on the consolidatedbalance sheets, and (2) the change conforms to a single cost for all of the Company’s inventory items when transferring data into the newaccounting software system. The total financial impact of the change in inventory valuation method is immaterial (less than 0.5% totalinventory value) to the overall consolidated financial statements.

Inventory consists primarily of equipment, including cameras, tracking hardware, computer equipment, display equipment, and mounts, andwas stated at the lower of cost or net realizable value, determined using average cost. The Company periodically performs analysis toidentify any obsolete or slow-moving inventory. The obsolete or slow-moving inventory reserved and disposed of totaled $292,139 and$27,175, respectively, for the years ended December 31, 2017 and 2016. There was no additional inventory reserve balance as ofDecember 31, 2017 and 2016. The Company periodically performs cycle counts, which may result in inventory write-offs. The totalinventory written-off and disposed of totaled $368,540 and $154,120 for the years ended December 31, 2017 and 2016.


Exhibit 99.3


Deferred financing costs represent fees incurred in connection with financing transactions. These fees are capitalized and amortized tointerest expense over the terms of the related financing agreements using a method that approximates the effective interest method. FASBASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30) requires that deferred financing costs are presented, net of accumulatedamortization, as an asset for amounts relating to revolving lines of credit, and as direct deductions from the face amounts of all otherrelated long-term debt.

Deferred financing costs, net of accumulated amortization, related to long-term debt is included in other assets on the accompanyingconsolidated balance sheets, which is not in conformity with US GAAP, however, the Company believes that this departure from US GAAPdoes not have a material impact on the fair presentation of the financial position of the Company. Deferred financing costs related to long-term debt amounted to $124,688 and $261,854, net of accumulated amortization of $137,167 and $132,563, as of December 31, 2017 and2016, respectively.


Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are calculatedusing the straight-line method over the estimated useful lives of the related assets, which range from two to seven years. Leaseholdimprovements are amortized using the straight-line method over the shorter of their estimated useful lives or the term of the related lease.

Betterments, renewals and extraordinary repairs that materially extend the useful life of the asset are capitalized; other repairs andmaintenance charges are expensed as incurred. The cost and related accumulated depreciation and amortization applicable to assetsretired are removed from the accounts, and the gain or loss on disposition, if any, is recognized in the consolidated statement of operationsand comprehensive loss for that period. The costs of replacement parts and supplies are charged to expense as they are used.Maintenance costs are expensed as incurred.

Intangible assets

Intangible assets are stated at cost, net of accumulated amortization and consist primarily of patents. Intangible assets with definite usefullives are amortized using the straight-line method over the useful lives.

The Company has applications for patents, which consist of technology, know-how, information, and intellectual property relevant togestural and dynamic spatial-visual human machine interface. As of December 31, 2017, 59 patents have been granted.

It is the belief of the Company that the remaining patent submissions will be approved; however, amortization of the patents will not occuruntil approval has been granted. Should a patent be denied or it become likely that a patent application will not be granted, the patent willbe considered abandoned and the associated costs will be expensed as impairment. For the years ended December 31, 2017 and 2016,the Company expensed $382,062 and $536,674, respectively, of patent costs for abandoned patents (see Note 5).


The Company is subject to the provisions of FASB ASC Topic 360, Property, Plant and Equipment - Impairment or Disposal of Long LivedAssets, which requires impairment losses to be recorded on long-lived assets when indicators of impairment are present and theundiscounted cash flows estimated to be generated by those assets are less than the carrying amount of the assets. In such cases, thecarrying value of assets to be held and used are adjusted to their estimated fair value and assets held for sale are adjusted to theirestimated fair value less


Exhibit 99.3

selling expenses. Other than the patents costs that were abandoned (see Note 5), no impairment losses were recognized for the yearsended December 31, 2017 and 2016.


Research and development costs are expensed as incurred and consist primarily of costs associated with the development and testing ofthe Company’s products. Research and development expenses include the cost of certain personnel and benefits, consultants, facilitycosts, supplies and other direct and allocated indirect expenses incurred to support the Company’s research and development programs.Research and development expenses totaled $9,759,225 and $9,224,185 for the years ended December 31, 2017 and 2016, respectively.

Shipping and Handling Costs

The Company has included shipping and handling costs of $186,530 and $173,497 in cost of revenues and $226,168 and $147,231 ingeneral and administrative expenses for the years ended December 31, 2017 and 2016, respectively, on the accompanying consolidatedstatements of operations and comprehensive loss. Shipping and handling costs billed to customers are included in revenues.

Advertising

Advertising costs are expensed as incurred. Total advertising expenses of $2,901,817 and $1,798,039 are included in sales and marketingexpense on the accompanying consolidated statements of operations and comprehensive loss for the years ended December 31, 2017and 2016, respectively.

Sales Taxes

The Company accounts for sales taxes in accordance with FASB ASC Subtopic 605-45, Revenue Recognition - Principal AgentConsiderations, which provides that the presentation of taxes assessed by a governmental authority that are directly imposed on revenue-producing transactions (e.g. sales, use, and excise taxes) between a seller and a customer on either a gross basis (included in revenuesand costs) or on a net basis (excluded from revenues) is an accounting policy decision that should be disclosed. In addition, for any suchtaxes that are reported on a gross basis, the amounts of those taxes should be disclosed in the consolidated financial statements for eachperiod for which a statement of operations and comprehensive loss is presented if those amounts are significant. The Company recordssales taxes on a net basis.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with FASB ASC Topic 740, Income Taxes("ASC 740"). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between theconsolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss andtax credit carryforwards.



The Company follows the provisions of uncertain tax positions as addressed in FASB ASC Subtopic 740-10, Income Taxes. The Companydid not recognize a liability for unrecognized tax benefits. Management estimates the tax positions as of December 31, 2017 and 2016 forwhich the ultimate deductibility is highly certain but


Exhibit 99.3

for which there is uncertainty about the timing of such deductibility is immaterial to the consolidated financial statements. The Companyrecognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. No such interest or penalties wererecognized during the periods presented. The Company had no accruals for interest and penalties as of December 31, 2017 and 2016.

With few exceptions, the Company is subject to examination by United States federal tax authorities for returns filed for the prior threeyears and by foreign and state tax authorities for returns filed for the prior four years.

Leases

The Company’s leases are accounted for under the provisions of FASB ASC Topic 840, Leases, which require that leases be evaluatedand classified as operating or capital leases for financial reporting purposes. Costs for operating leases that include incentives such aspayment escalations or rent abatements are recognized on a straight-line basis over the term of the lease.

Additionally, inducements received from lessors are treated as a reduction of costs over the term of the agreement. Costs for capital leasesare capitalized at the present value of the future minimum lease payments, less any taxes and fees, with the corresponding obligationrecorded in liabilities. Capital leases are amortized in accordance with property and equipment policies, and the corresponding obligationsare reduced as lease payments are made. As of December 31, 2017 and 2016, the Company had no capital leases.

Comprehensive Income and Foreign Currency Translation

Comprehensive income is defined as the change in equity during a period from transactions and other events from non-owner sources.Comprehensive income is the total of net income and other comprehensive income, which includes foreign currency translationadjustments. The functional currencies of the Company's foreign operations are the reported local currencies. Translation adjustmentsresult from translating the Company's foreign subsidiaries’ financial statements into United States dollars. Assets and liabilities of theCompany's foreign subsidiaries are translated into United States dollars using the exchange rate in effect at the consolidated balancesheet dates. Equity is translated at the historical rate of the transaction.

Revenues and expenses are translated using average exchange rates for each month during the fiscal year. The Company considersintercompany balances as long-term investments in nature as they do not expect repayment, and therefore, translates the transactions atthe historical rate. The resulting translation losses are recorded as a component of accumulated other comprehensive loss in stockholders'equity. The cumulative foreign currency translation adjustment totaled $317,922 and $357,095, as of December 31, 2017 and 2016,respectively. Foreign currency translation gains (losses) were $39,173 and $(16,368) during 2017 and 2016, respectively, and are reportedon the consolidated statements of operations and comprehensive loss.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases. The new standard establishes a right-of-use ("ROU") model that requires alessee to record a ROU asset and a lease liability, measured on a discounted basis, on the consolidated balance sheets for all leases withterms greater than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expenserecognition in the consolidated statements of operations and comprehensive loss. A modified retrospective transition approach is requiredfor capital and operating leases existing at the date of adoption, with certain practical expedients available. The Company is currently in theprocess of evaluating the potential impact of this new guidance, which is effective for the Company beginning on January 1, 2020.

On May 28, 2014, the FASB issued Accounting Standards Update Topic 2014-09 ("ASU 2014-09"), Revenue from Contracts withCustomers. ASU 2014-09 supersedes existing revenue recognition guidance, including ASC 605-35. ASU 2014-09 outlines a single set ofcomprehensive principles for recognizing revenue under


Exhibit 99.3

US GAAP. Among other things, it requires companies to identify contractual performance obligations and determine whether revenueshould be recognized at a point in time or over time. These concepts, as well as other aspects of ASU 2014-09, may change the methodand/or timing of revenue recognition for certain of the Company contracts. ASU 2014-09 will be effective for privately held companies forannual reporting periods beginning after December 15, 2018 and may be applied either retrospectively or through the use of a modified-retrospective method. Management is currently evaluating both methods of adoption as well as the effect ASU 2014-09 will have on theCompany’s consolidated financial position, results of operations and cash flows.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, to simplify several aspects of the accounting for share-based payment award transactions, includingaccounting for income tax consequences, classification of awards either equity or liability, and classification on the consolidated statementof cash flows. FASB ASU 2016-09 also simplifies the accounting for private entities such that private entities can (1) apply a practicalexpedient to estimate the expected term for all awards with performance or service conditions that have certain characteristics; and (2)make a one-time election to switch from measuring all liability-classified awards at fair value to measuring them at intrinsic value. FASBASU 2016-09 is effective for private entities for annual periods beginning after December 15, 2017, with early adoption permitted. TheCompany is currently evaluating methods of adoption as well as the impact that adoption of this guidance will have on its consolidatedfinancial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting, toprovide guidance on determining which changes to the terms and conditions of equity-based payment awards require an entity to applymodification accounting under FASB ASC 718. FASB ASU 2017-09 is effective for all entities for years beginning after December 15,2017, with early adoption being permitted. The Company is currently evaluating methods of adoption as well as the impact that adoption ofthis guidance will have on its consolidated financial statements.

3. NOTE RECEIVABLE

Intellectual Property Purchase

In 2013, the Company ("Seller") entered into an agreement with a technology company ("Buyer") to sell the rights, title and interests, otherthan the patent rights, in software code for geospatial visualization, analysis, and collaboration tool for synthesis of data from manysources. A $6,000,000 Secured Promissory Note was negotiated, in addition to issuance of 5% of total outstanding shares of Class Acommon stock of the Buyer which equated to 527,000 shares. The Senior Secured Promissory Note ("Note") had an initial payment inOctober 2013 and annual payments scheduled from October 2015 through October 2018. Based on qualitative analysis of the Buyer’s business in the development stage and quantitative analysis of the Buyer’s financial condition,the Company considered the collectability of the Note as reasonably uncertain. As a result, the Company recognized revenue from thisagreement upon cash collection and recorded an allowance for the entire balance of the Note at each year-end. Based on the samequalitative and quantitative analysis the fair market value of the Buyer’s common stock was deemed to be zero and was not recorded in theCompany’s consolidated financial statements.

In 2015, the Company recognized the collected amount of $750,000 as revenue when received.

In March 2016, the Buyer and the Seller agreed to modify the terms of the Note as follows:

• The Buyer executed an Amended and Restated Senior Secured Promissory Note ("Amended Note") in the amount of $1,180,331plus accrued interest. The payments for the Amended Note were to be made in three payments as follows:


Exhibit 99.3

◦ Initial Payment: $250,000 on March 26, 2016.

◦ Second Payment: $375,000 on or prior to November 1, 2016.

◦ Third Payment: $625,000 on or prior to November 1, 2017.

• The Buyer assigned to the Seller 1.5 million shares of Oblong common stock, which was retired by the Board of Directors and notheld as Treasury Stock. The Seller assigned back to the Buyer 527,000 shares of Class A common stock of the Buyer.

The Company performed another quantitative and qualitative analysis of the Buyer’s financial condition and determined revenue related tothe Amended Note should be recognized as amounts are received. As a result, the transactions from the amended agreement wererecorded as follows:

• The amounts of $250,000 and $375,000 were recognized as revenue when received in March and September 2016,respectively.

• The assignment and cancellation of the 1.5 million shares of the Seller’s common stock received by the Seller was recognized asrevenue based on the fair value of the common stock at $0.90 per share at the time of the transaction.

• There was no transaction recorded by the Seller for the assignment of the Buyer’s Class A common stock because the fair value ofthe shares was zero on the Seller records.

In October 2017, the Buyer communicated to the Seller the inability to make the payment of $625,000 on November 1, 2017. The Buyerand the Seller negotiated a settlement that was finalized in March 2018 (see Note 11).

As of December 31, 2017 and 2016, the net receivable balance of the Amended Note was zero, as the Company deemed collectability asreasonably uncertain.

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

As of December 31, 2017 2016

Computer equipment $ 5,373,928 $ 6,913,807Furniture and fixtures 293,357 212,392Leasehold improvements 952,069 1,508,913Tooling 125,433 93,235

6,744,787 8,728,347Less: accumulated depreciation and amortization (4,170,612) (6,335,626)

Property and equipment, net $ 2,574,175 $ 2,392,721


Exhibit 99.3

During the implementation of a new accounting software system (NetSuite), the Company elected to not transfer the accounting recordsand balances of fully depreciated assets, totaling approximately $3,400,000, as of the go-live date of February 1, 2017.

For the year ended December 31, 2017, depreciation and amortization expense related to property and equipment totaled $1,371,365, ofwhich $1,333,953 and $37,412 were included in operating expenses and cost of revenues, respectively. For the year ended December 31,2016, depreciation and amortization expense related to property and equipment totaled $1,133,686 and was included in operatingexpenses.

5. INTANGIBLE ASSETS

Identifiable intangible assets consist of the following:

As ofDecember 31, 2017

GrossCarryingAmount

Useful Life InYears

AccumulatedAmortization

AccumulatedImpairment

Net CarryingAmount

Patent costs $ 5,472,749 10 - 20 $ (394,409) $ (918,737) $ 4,159,603Trademarks 69,952 Indefinite N/A — 69,952Certification costs 236,198 3 (103,683) — 132,515Software systems 711,602 5 (121,768) — 589,834

Total $ 6,490,501 $ (619,860) $ (918,737) $ 4,951,904

The gross carrying amount of patent costs consist of the following:

As of December 31, 2017 Amount

Granted patents $ 2,308,805Pending patents 2,245,207Abandoned patents 918,737

Total $ 5,472,749

Identifiable intangible assets are as follows:

As ofDecember 31, 2016

GrossCarryingAmount

Useful Life InYears

AccumulatedAmortization

AccumulatedImpairment

Net CarryingAmount

Patent costs $ 5,035,578 10 - 20 $ (239,646) $ (536,674) $ 4,259,258Trademarks 69,952 Indefinite N/A — 69,952Certification costs 112,593 3 (6,255) — 106,338

Total $ 5,218,123 $ (245,901) $ (536,674) $ 4,435,548

For the year ended December 31, 2017, amortization expense related to identifiable intangible assets totaled $373,960, of which $276,532and $97,428 were included in operating expenses and cost of revenues, respectively. For the year ended December 31, 2016,amortization expense related to identifiable intangible assets totaled $97,515 and was included in operating expenses.

Future amortization expense on granted patents are as follows:


Exhibit 99.3

For the Years Ending December 31: Amount

2018 $ 169,7132019 169,7132020 169,7132021 169,7132022 169,713Thereafter 1,065,833

Total $ 1,914,398

6. LONG-TERM DEBT

In January 2014, the Company entered into a loan and security agreement with a financial institution, consisting of a term loan (the "TermLoan") with an original principal balance of $5,000,000 and a $5,000,000 revolving line of credit (the "Revolver"). The Revolver is subject toa borrowing base of 80% of eligible accounts receivable, plus the lesser of 50% of the value of the Company’s inventory or $500,000. Theloan and security agreement is collateralized by substantially all of the assets, not including the intellectual property consisting ofcopyrights, trademarks and patents. The Term Loan matures in July 2018 and the Revolver matures in September 2019. The Term Loanand Revolver bear interest at the Wall Street Journal prime rate plus 0.375% (4.875% and 4.125% as of December 31, 2017 and 2016,respectively).

Pursuant to the First Amendment to Amended and Restated Loan and Security Agreement executed in July 2016, the Term Loanincreased to $6,175,000 and the Revolver increased to $10,000,000. Pursuant to the Default Waiver and Second Amendment to theAmended and Restated Loan and Security Agreement ("Second Amendment") executed in June 2017, the financial covenants wererevised to require the Company to maintain 75% of purchase order contracts compared to an annual published business plan that will bemeasured on a trailing 6-month basis, rather than trailing 12-month basis. Further, the Company’s adjusted quick ratio shall be no lessthan 1.10. Pursuant to the Default Waiver and Third Amendment to Amended and Restated Loan and Security Agreement ("ThirdAmendment") executed in December 2017, the Revolver decreased to $7,500,000 and the annual business plan to measure against 75%of purchase order contracts on a trailing 6-month basis for the financial covenant was revised.

The borrowings available under the Revolver were $7,139,589 and $5,265,459 as of December 31, 2017 and 2016, respectively. TheRevolver consists of interest-only payments, payable in arrears, and principal is due in full at maturity. As of December 31, 2016, theoutstanding balance on the Revolver was $263,189. There was no outstanding balance on the Revolver as of December 31, 2017.

The Term Loan consisted of interest-only payments through June 31, 2017 followed by twenty-seven equal monthly payments of principal,plus monthly payments of accrued interest through maturity. The outstanding balance on the Term Loan was $4,802,778 and $6,175,000as of December 31, 2017 and 2016.

The Second Amendment included a final payment related to the Term Loan over and above the principal balance due at maturity in theamount of $216,125. The Company recorded these loan costs on the consolidated balance sheets and is amortizing the costs as interestexpense over the amended terms of the loans to recognize the effective interest rate related to the loans.

The Company was in compliance with the quick ratio covenant as of December 31, 2017 but was not in compliance with the minimumbooking from January to March and July to November during the year ended December 31, 2017. The Company was in compliance withthe quick ratio covenant as of December 31, 2016 but was not in compliance with the minimum bookings from November to Decemberduring the year ended December 31, 2016. The lender waived default pursuant to the Third and Second Amendment, respectively.


Exhibit 99.3

Future maturities of the Term Loan are as follows:

Years Ending December 31: Amount

2018 $ 2,744,4442019 2,058,334

Total $ 4,802,778

7. CONTRACTS AND OTHERCONTINGENCIES

Lease Commitments

The Company leases its facilities under non-cancellable operating lease agreements that expire on various dates through May 2023. Inaddition, the Company has facility leases that provide for rent adjustment increases. The accompanying consolidated statements ofoperations and comprehensive loss reflect rent expense on a straight-line basis over the term of the leases.

The differences between rent expense recorded and the amount paid are credited or charged to deferred rent, which were included in theaccompanying consolidated balance sheets. Under these agreements, net rent expense was $1,425,151 and $976,121 for the yearsended December 31, 2017 and 2016, respectively. Total deferred rent as of December 31, 2017 and 2016 was $253,952 and $177,401,respectively.


Years Ending December 31:

Cash Payments

Straight-line RentExpense

Deferred Rent

2018 $ 1,502,436 $ 1,465,714 $ 36,7222019 1,469,914 1,424,309 45,6052020 1,247,835 1,181,359 66,4762021 1,049,244 988,978 60,2662022 450,339 413,336 37,003Thereafter 115,668 107,788 7,880

Totals $ 5,835,436 $ 5,581,484 $ 253,952

In 2017 and 2016, the Company received $109,142 and $84,736, respectively, for reimbursement of tenant improvements from thelandlord for lease facilities. The amount of this reimbursement was included with deferred rent and is amortized as a rent reduction over theterm of the lease.

Purchase Commitments

In 2016, the Company entered into inventory purchase commitments with two vendors for future orders over the next twelve months. As aresult, the Company committed to minimum purchases of $1,753,202. In 2017, the purchase commitment was amended. Correspondingly,the minimum purchase commitment increased to $1,757,370 and the commitment was extended through December 2018. Of the$1,757,370 committed, $395,786 remains outstanding as of December 31, 2017.

Litigation

The Company is subject to certain legal proceedings and claims that arise in the normal course of business. Based on the advice of legalcounsel, management believes that no actions or claims depart from customary litigation or claims incidental to the business or thesubsidiaries and that the resolution of all such litigation


Exhibit 99.3

or claims will not have a material adverse effect on the Company’s consolidated financial position, results of operations and cash flows.

8. CONVERTIBLE PREFERREDSTOCK

The convertible preferred stock described below has been classified outside of stockholders' equity to comply with Regulation S-Xbecause the shares contain certain redemption features that are not solely within the control of the Company.

In May 2016, the Company and its investors amended the Series D Purchase Agreement dated February 3, 2015 to extend the periodduring which additional Series D convertible preferred stock could be issued, through July 31, 2016. In May 2016, the Company issued anadditional 4,559,269 shares of Series D at $3.29.

In July 2016, the Company and its investors agreed to amend the Series D Stock Purchase Agreement whereby the Company could sellup to 15,300,000, shares before September 30, 2016. To facilitate this amendment, the Company amended and restated the certificate ofincorporation to increase the authorized shares to 50,000,000 shares of common stock at par value of $0.0001 and 32,150,000 shares ofpreferred stock with par value of $0.0001 designated as 6,800,000 as Series A; 7,300,000 as Series B; 2,750,000 as Series C; and15,300,000 as Series D. In July 2016, the Company issued an additional 4,559,269 shares of Series D at $3.29.

In September 2016, the Company and its investors agreed to amend the Series D Stock Purchase Agreement whereby the Companycould sell up to 19,800,000 shares before September 30, 2016. To facilitate this amendment, the Company amended and restated thecertificate of incorporation to increase the authorized shares to 54,500,000 shares of common stock at par value of $0.0001 and36,650,000 shares of preferred stock with par value of $0.0001 designated as 6,800,000 as Series A; 7,300,000 as Series B; 2,750,000 asSeries C; and 19,800,000 as Series D. In September 2016, the Company issued an additional 6,079,027 shares of Series D at $3.29.

The Series D shares issued in 2016 were recorded net of issuance costs of $30,728. The Company issued no shares of Series D during2017. The liquidation preference on Series D is $64,999,984 as of December 31, 2017 and 2016.

As of December 31, 2017, the Company had authorized 2,750,000 shares of Series C convertible preferred stock ("Series C") with a parvalue of $0.0001. The Company issued no shares of Series C during 2017 and 2016. The Company had 2,669,191 shares of Series Cissued and outstanding as of December 31, 2017 and 2016, of which 1,453,386 shares were a result of a conversion of notes payable andaccrued interest in previous years. The liquidation preference on Series C is $8,781,638 as of December 31, 2017 and 2016.

As of December 31, 2017, the Company had authorized 7,300,000 shares of Series B convertible preferred stock ("Series B") with a parvalue of $0.0001. During 2017 and 2016, the Company issued no shares of Series B. The Company had 6,114,632 shares issued andoutstanding as of December 31, 2017 and 2016. The liquidation preference on Series B is $21,156,627 as of December 31, 2017 and2016.

As of December 31, 2017, the Company had authorized 6,800,000 shares of Series A convertible preferred stock ("Series A") with a parvalue of $0.0001. During 2017 and 2016, the Company issued no shares of Series A. The Company had 6,596,516 shares issued andoutstanding as of December 31, 2017 and 2016. The liquidation preference on Series A is $8,752,813 as of December 31, 2017 and 2016.

The rights associated with Series A, Series B, Series C and Series D (collectively "Series Preferred") are as follows:

Dividend Rights


Exhibit 99.3

Holders of Series A, Series B, Series C and Series D, in preference to the holders of common stock, are entitled to receive cash dividendsat the annual rate of $0.1064, $0.2768, $0.2632, and $0.2632 per share, respectively. The dividends are payable only when and ifdeclared by the Board of Directors and are non-cumulative. No dividends were paid in 2017 and 2016.

Conversion Rights

Each share of Series Preferred is convertible into shares of common stock at the option of the holder at any time after the date of issuance.The number of shares of common stock into which a holder of Series Preferred can convert is obtained by multiplying the conversion ratethat is in effect by the number of shares of Series Preferred being converted. The conversion rate is determined by dividing the originalissue price by the applicable conversion price (initially the original issue price, as adjusted for certain dilutive events). As a result ofantidilution adjustments afforded by Series B, in connection with the issuance of shares of Series C and Series D, as of December 31,2016, the conversion price of the Series B had been adjusted from $3.46 to $3.39. As a result, its conversion rate into shares of CommonStock is approximately 1.0206 as of December 31, 2017.

Under the terms, each share of Series Preferred will be automatically converted into shares of common stock (based on the then effectiveSeries Preferred conversion price) immediately upon closing of a firm underwritten public offering pursuant to an effective registrationstatement on Form S-1 or SB-2 under the Securities Act of 1933, as amended, covering the offer and sale of common stock for theaccount of the Company in which the per share price to the public is at least $6.92 and the gross cash proceeds to the Company (beforeunderwriting discounts, commissions, and fees) are at least $30,000,000 or if there is an affirmative election of the holders of the majority ofthe outstanding shares of Series Preferred on an as-converted basis.

To affect the automatic conversion of the Series B, the affirmative election of the holders of the majority of the outstanding shares of SeriesB, voting as a separate class, is also required. Similarly, to affect the automatic conversion of the Series C, the affirmative election of theholders of the majority of the outstanding shares of Series C, voting as a separate class, is required. Furthermore, to affect the automaticconversion of the Series D, the affirmative election of the holders of the majority of the outstanding shares of Series D, voting as a separateclass, is required.

Liquidation Rights

In accordance with the certificate of incorporation, upon any liquidation, dissolution, change in control, or winding up of the Company("Liquidating Event"), the holders of Series Preferred are entitled to be paid out of the assets of the Company legally available fordistribution an amount per share of Series Preferred equal to the original issue price plus all declared and unpaid dividends on the SeriesPreferred, before any distribution or payment is made to the holders of any common stock.

If after the liquidation preference there are assets remaining, the assets will be distributed ratably amongst the common stock, Series Aholders, and Series D holders, on an as-converted to common stock basis. Series Preferred will be deemed converted to common stockupon a Liquidating Event if the holder would receive a greater amount than if they had not been converted. If the Company has insufficientassets upon the Liquidating Event to make payment in full to all holders of Series Preferred their liquidation preference, then such assets(or consideration) will be distributed among the holders of Series Preferred ratably in proportion to the full amounts to which they wouldotherwise be respectively entitled. Any transaction or series of transactions that meets the definition of a Liquidating Event may be waivedas a Liquidating Event by a majority vote of the Series Preferred holders.

Voting Rights


Exhibit 99.3

Series Preferred holders are entitled to the number of votes equal to the number of common shares the preferred shares is convertible into.So long as at least 2,500,000 shares of Series Preferred remain outstanding, 1,000,000 shares of Series B remain outstanding, 1,000,000shares of Series C remain outstanding or 1,000,000 shares of Series D remain outstanding, the vote or written consent of the holders of amajority of the outstanding Series Preferred, Series B, Series C, or Series D, respectively, shall be necessary for defined significant events.

9. STOCKHOLDERS’ EQUITY

Common Stock

As of December 31, 2017, the Company had authorized 54,500,000 shares of common stock with a par value of $0.0001. During 2017 and2016, the Company issued 69,125 and 34,709 shares of common stock, respectively, through the exercise of stock options. In 2016, theCompany issued 646,275 shares of common stock related to the exercise of warrants. In March 2016, the Company re-acquired 1,500,000shares of common stock related to a contract renegotiation, which shares were subsequently retired by the Company in May 2016 (seeNote 3). The Company had 11,783,971 and 11,720,846, respectively, of common stock shares issued and outstanding as of December 31,2017 and 2016.

Stock Options

On January 22, 2007, the Company adopted the 2007 Stock Plan (the "Plan") under which the Company is authorized to grant incentiveand non-qualified stock option awards to employees, directors, consultants, and affiliates of the Company. The Plan provides both for thedirect award or sale of shares and for the grant of options to purchase shares. The Company is authorized to grant up to 5,405,376 sharesof stock awards. The option price and vesting terms are determined by the Board of Directors of the Company and evidenced in the awardagreement extended to the employee. The options granted generally vest over a period of one to four years and terminate ten years fromthe grant date. As of December 31, 2017 and 2016, $559,703 and $704,715, respectively, remained to be expensed over the vestingperiod and the forfeiture rate has been estimated at 10%. During the years ended December 31, 2017 and 2016, the Company recognized$357,107 and $349,282, respectively, in stock-based compensation expense.


Weighted

Incentive Non-Qualified Average

Stock Stock ExerciseAs of December 31, 2017 Options Options Price

December 31, 2015 3,500,333 125,000 $ 0.77 Granted 560,250 — $ 0.93 Exercised (34,709) — $ 0.66 Forfeited/canceled (153,791) (70,000) $ 0.55

December 31, 2016 3,872,083 55,000 $ 0.77 Granted 631,195 23,833 $ 0.97 Exercised (69,125) — $ 0.25 Forfeited/canceled (596,013) — $ 0.75

December 31, 2017 3,838,140 78,833 $ 0.81

The following table presents the composition of options outstanding and exercisable as of December 31, 2017:


Exhibit 99.3

Options Outstanding Options Exercisable

Range of Exercise Prices Number Price* Life* Number Price*

$0.13 — $ 0.13 — — $ 0.13$0.16 — $ 0.16 — — $ 0.16$0.21 185,000 $ 0.21 2.04 185,000 $ 0.21$0.30 155,000 $ 0.30 2.98 155,000 $ 0.30$0.71 409,000 $ 0.71 4.08 409,000 $ 0.71$0.80 667,303 $ 0.80 4.80 667,303 $ 0.80$0.84 810,315 $ 0.84 6.48 721,347 $ 0.84$0.90 653,160 $ 0.90 7.44 419,641 $ 0.90$0.93 392,500 $ 0.93 8.29 168,349 $ 0.93$0.94 69,000 $ 0.94 6.80 55,715 $ 0.94$0.97 575,695 $ 0.97 9.28 15,066 $ 0.97

December 31, 2017 3,916,973 $ 0.81 6.35 2,796,421 $ 0.76

* Price and Life reflect the weighted average exercise price and weighted average remaining contractual life, respectively.

The fair value of each option grant was estimated on the grant date using the Black-Scholes option pricing model with the followingweighted-average assumptions:

For the years ended December 31, 2017 2016

Approximate risk-free rate 1.84 - 2.33% 1.84 - 2.14%Average expected life 6 years 6 yearsDividend yield 0% 0%Volatility 62% 62%Fair value of common stock $0.83 - $0.97 $0.79 - $0.93Estimated fair value of options granted $0.58 - $0.66 $0.64 - $0.66Estimated forfeiture rate 10% 10%

Warrants In 2008 through 2013, the Company issued warrants to a bank and stockholders. The following presents activity for warrants:

For the years endedDecember 31, 2017 and 2016

Series AWarrants

Series BWarrants

CommonStock

Warrants

December 31, 2015 — 43,731 1,453,385 Granted — — — Exercised — — (646,275) Forfeited/canceled — — —

December 31, 2016 — 43,731 807,110 Granted — — — Exercised — — — Forfeited/canceled — — —

December 31, 2017 — 43,731 807,110


Exhibit 99.3

10. INCOME TAXES

The provision (benefit) for income taxes is as follows:


Current:

Federal $ — $ — State 5,006 — Foreign 96,708 —

101,714 —

Deferred:

Federal 3,035,393 (4,452,330) State (150,834) (1,986,746) Foreign — —

2,884,559 (6,439,076)Less: change in valuation allowance (2,884,559) 6,439,076

— —

Total $ 101,714 $ —

The provision for income taxes of $101,714 for the year ended December 31, 2017 is included in other expenses, net on the accompanyingconsolidated statement of operations and comprehensive loss.

The reconciliation of income taxes calculated at the U.S. federal tax statutory rate to the Company’s effective tax rate is set forth below:


U.S. federal statutory rate 34.00% 34.00%State income tax, net of federal benefit 3.43% 4.43%Change in valuation allowance 14.03% (43.25%)Other (2.74%) 4.82%Federal rate change (48.72%) 0.00%

Effective income tax rate 0.00% 0.00%

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities were as follows as ofDecember 31:


Deferred tax assets:

Net operating loss carry forwards $ 19,958,052 $ 23,916,514 Income tax credits 3,007,357 2,560,882 Others 2,344,495 3,247,819

Total gross deferred tax assets 25,309,904 29,725,215

Deferred tax liabilities:

State income taxes (1,151,908) (1,810,332) Property and equipment 147,988 (66,622) Intangible assets (1,081,346) (1,739,066)

Total gross deferred tax liabilities (2,085,266) (3,616,020)

Less: valuation allowance (23,224,638) (26,109,195)

Total $ — $ —


Exhibit 99.3

The Company’s ability to utilize net operating loss carryforwards may be limited in the event of an ownership change as defined in theInternal Revenue Code. As of December 31, 2017 and 2016, the Company had net operating loss carryforwards for federal and stateincome tax purposes of $77,269,251 and $59,086,048, respectively. If not utilized, the federal and state net operating losses will begin toexpire in 2028. In addition, the Company has research and development ("R&D") credits for federal and state income tax purposes of$1,573,336 and $1,172,653, respectively. The federal R&D credits, if not utilized, will begin to expire in 2027. The California R&D creditscan be carried forward indefinitely. The Company also has a carryover of California Enterprise Zone and New Job credits totaling$147,676, which will expire beginning in 2018.

Based on pretax losses sustained by the Company and uncertainty of realizing future income, a valuation allowance was recorded againstthe net deferred tax assets. The Company’s effective income tax rate differs from the statutory federal income tax rate due to the change invaluation allowance.

The Company’s subsidiaries, Oblong Europe, Ltd. and Oblong Industries Europe, S.L.U. are subject to foreign income tax in Germany,Spain, and United Kingdom. The amount of such foreign current income tax expense incurred amounted to $96,708 for 2017.

On December 22, 2017, H.R.1, also known as the Tax Cuts and Jobs Act (the "Tax Reform Act"), was enacted into law. The Tax ReformAct makes broad and complex changes to the U.S. tax code, including, but not limited to, (i) reducing the U.S. federal statutory tax ratefrom 35% to 21%; (ii) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries (the"Transition Tax"); (iii) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (iv) requiring a currentinclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (v) eliminating the corporate alternativeminimum tax (AMT) and changing how existing AMT credits can be realized; (vi) creating the base erosion anti-abuse tax (BEAT), a newminimum tax; (vii) creating a new limitation on deductible interest expense, and (viii) changing rules related to uses and limitations of netoperating loss carryforwards created in tax years beginning after December 31, 2017. As a result of the Tax Reform Act, the Companyrecorded an income tax benefit of $10,018,768 before the valuation allowance due to a remeasurement of deferred tax assets and liabilitiesusing the income tax rate applicable for future periods in which they are expected to reverse.

11. Profit Sharing Plan

The Company sponsors a 401(k) Plan (the "Plan") for all eligible employees. All full-time employees are eligible to participate in the Planduring their first payroll period. The Company contributions to the Plan are at the sole discretion of the Company’s Board of Directors.Employees may elect to have a portion of their compensation deferred and contributed to their 401(k) accounts. Vesting and the allocationof Company contributions to the eligible employee accounts are determined in accordance with the terms of the Plan. Matchingcontributions were discontinued in September 2012. There were no contributions for the years ended December 31, 2017 and 2016.

12. Restatement of Previously Issued Financial Statements

The Company has restated its previously issued consolidated balance sheets as of December 31, 2017 and 2016 and the relatedconsolidated statements of cash flows for the years ended. The Company determined that its holdings of certain money market funds witha financial institution were erroneously classified as marketable securities on its consolidated balance sheets as of December 31, 2017 and2016, and instead should have been included in cash, cash equivalents and restricted cash. Cash, cash equivalents and restricted cash,beginning of year (December 31, 2017 and December 31, 2016), in the accompanying consolidated statements of cash flows have beenadjusted for the effects of this revision.


Exhibit 99.3

As Previously AsOblong Industries, Inc. Consolidate Balance Sheet Reported Adjustment Restated

December 31, 2017

Cash, cash equivalents, and restricted cash $ 631,331 $ 14,053,172 $ 14,684,503 Marketable securities $ 14,053,172 $ (14,053,172) $ —

December 31, 2016

Cash, cash equivalents, and restricted cash $ 32,584 $ 38,754,929 $ 38,787,513 Marketable securities $ 38,754,929 $ (38,754,929) $ —

13. SUBSEQUENT EVENTS

The Company has evaluated subsequent events that have occurred from January 1, 2018 through the date of the independent auditor’sreport, which is the date that the consolidated financial statements were available to be issued, and determined that there were nosubsequent events or transactions that required recognition or disclosure in the consolidated financial statements, except as disclosedbelow.

On March 12, 2018, the Company executed a Debt Discharge Agreement with the Buyer (see Note 3). The Buyer and the Companyagreed to the following terms and conditions, as set forth in the Debt Discharge Agreement:

• Buyer shall pay the Company $310,547 no later than March 15, 2018 via wire transfer, which the Company shall accept in fullsatisfaction of the indebtedness and any and all other obligations, deeming the Amended Note discharged.

On March 12, 2018, the Company received $310,547 from the Buyer and deemed the Amended Note and all other obligations discharged.


Exhibit 99.4

OBLONG INDUSTRIES, INC.

As of September 30, 2019, and for the Nine Months Ended

September 30, 2019 and 2018 (Unaudited)

1


Exhibit 99.4


September 30, 2019 and 2018

Table of Contents

PageFinancial Statements

Balance Sheet 3

Statements of Income 4

Statement of Convertible Preferred Stock and Stockholders' Deficit 5-6

Statements of Cash Flows 7

Notes to Financial Statements 8-20

2


Exhibit 99.4

Oblong Industries, Inc.CONSOLIDATED BALANCE SHEET

September 30, 2019

(Unaudited)

ASSETS Current assets:

Cash, cash equivalents and restricted cash $ 2,193,891

Accounts receivable 1,962,264

Prepaid expenses and other current assets 571,189

Inventory 1,618,118

Total current assets 6,345,462

Property and equipment, net 1,221,294

Intangible assets, net 3,595,117

Other assets 215,873

Total assets $ 11,377,746

LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' EQUITY Current liabilities:

Accounts payable $ 296,018

Accrued expenses and other current liabilities 1,024,365


Current portion of deferred revenue 2,951,977

Current portion of deferred rent 62,157

Notes payable 3,000,000

Current portion of long-term debt 2,627,462

Total current liabilities 10,052,061

Deferred rent, net current portion 139,260

Long-term debt 2,619,538


Total liabilities 12,904,520

Convertible preferred stock:

Convertible preferred stock 71,755,175

Stockholders' deficit: Common stock 2,735

Additional paid-in capital 43,863,065

Accumulated deficit (116,715,472)

Retained Earnings (432,277)

Total stockholders' deficit (73,281,949)

Total liabilities, convertible preferred stock, and stockholders' deficit $ 11,377,746

The accompanying notes are an integral part of these financial statements

3


Exhibit 99.4

Oblong Industries, Inc.CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 2018

(Unaudited) (Unaudited)

Net Revenues $ 12,757,891 $ 13,267,053Cost of revenues 2,719,024 3,017,507

Gross profit 10,038,867 10,249,546

Operating expenses:

Research and development 6,321,182 6,917,877General and administrative 5,623,661 5,425,866Sales and marketing 7,585,375 9,409,313Depreciation and amortization 852,272 1,016,782Loss on impairment of intangible assets 426,785 136,894

Total operating expenses 20,809,275 22,906,732

Loss from operations (10,770,408) (12,657,186)

Other expenses:

Interest expense, net 260,334 51,703Other expenses, net 11,650 27,996

Total other expenses, net 271,984 79,699

Net loss (11,042,392) (12,736,885) Foreign currency translation loss (38,287) (55,822)

Comprehensive loss $ (11,080,679) (12,792,707)


4


Exhibit 99.4

Oblong Industries, Inc.CONSOLIDATED STATEMENT OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (Unaudited)

Series D Convertible Series E Convertible Total

Convertible Additional Accumulated Other Total

FOR THE NINE MONTHS ENDED Preferred Stock Preferred Stock Preferred Stock Common Stock Paid-in Accumulated Comprehensive Stockholders'

SEPTEMBER 30, 2019 Shares Amount Shares Amount Amount Shares Amount Capital Deficit Loss Deficit

Balance at January 1, 2019 19,756,834 $ 64,941,548 2,899,266 $ 6,813,627 $ 71,755,175 27,304,479 $ 2,731 $ 43,607,483 $ (105,673,080) $ (393,990) $ (62,456,856)

Stock options exercised — — — — — 35,219 4 17,630 — — 17,634

Stock-based compensation — — — — — — — 237,952 — — 237,952

Foreign currency translation loss — — — — — — — — — (38,287) (38,287)

Net loss — — — — — — — — (11,042,392) — (11,042,392)

Balance at September 30, 2019 19,756,834 $ 64,941,548 2,899,266 $ 6,813,627 $ 71,755,175 27,339,698 $ 2,735 $ 43,863,065 $ (116,715,472) $ (432,277) $ (73,281,949)


5


Exhibit 99.4

Oblong Industries, Inc.CONSOLIDATED STATEMENT OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (Unaudited)

6


Exhibit 99.4

Oblong Industries, Inc.CONSOLIDATED STATEMENT OF CASH FLOWS

Nine Months Ended September 30,

2019 2018

(Unaudited) (Unaudited)

Cash flows from operating activities

Net loss $ (11,042,392) $ (12,736,885)

Adjustments to reconcile net loss to cash used in operating activities

Depreciation and amortization 1,027,670 1,074,118

Inventory write-off 187,650 120,521

Amortization of deferred financing costs 112,961 62,563

Stock-based compensation 237,952 201,735

Loss on disposal of property, plant, and equipment 9,438 6,647

Impairment of intangibles assets 426,785 254,594

Changes in operating assets and liabilities:

Accounts receivable 267,358 6,497,283

Prepaid expenses and other current assets 234,091 118,194

Inventory 62,385 (114,744)

Other assets 44,971 94,756

Accounts payable (254,407) (658,768)

Accrued expenses 81,891 (974,479)

Deferred revenue (416,126) (3,187,917)

Customer deposits (343,117) (35,432)

Deferred rent (15,813) (27,542)

Other long-term liabilities (22,663) (147,245)

Net cash used in operating activities (9,401,366) (9,452,601)

Cash flows from investing activities

Purchase of property and equipment (60,025) (192,199)

Intangible asset costs 27,994 (193,798)

Net cash used/provided by investing activities (32,031) (385,997)

Cash flows from financing activities

Proceeds from exercise of options 17,634 7,299

Borrowing from revolving line of credit — 2,750,065

Borrowing from promissory notes 3,000,000 —

Payments on revolving line of credit — (2,750,065)

Payments on term loan — (2,058,333)

Proceeds from sale of preferred stock — 9,028,199

Net cash provided by financing activities 3,017,634 6,977,165

Effect of foreign currency on cash (38,286) (55,822)

Net decrease in cash (6,454,049) (2,917,255)

Cash, cash equivalents, and restricted cash, beginning of period 8,647,940 14,684,503

Cash, cash equivalents, and restricted cash, end of period $ 2,193,891 $ 11,767,248


7


Exhibit 99.4


Notes to Financial StatementsInformation as of September 30, 2019 and for the Nine Months Ended

September 30, 2019 and 2018 is unaudited

Note 1 - Description of Business and Summary of Significant Accounting Policies

Nature of Operations

Oblong Industries, Inc. ("Oblong") was incorporated in the state of Delaware on July 31, 2006. Oblong’s wholly owned subsidiaries consist ofOblong Industries Europe S.L.U. ("Euroblong") and Oblong Europe Ltd ("Oblong UK") (collectively, the "Company"). Euroblong was incorporatedin Spain on March 12, 2007 and Oblong UK was incorporated in England on February 6, 2014. On January 27, 2017, Oblong UK established thebranch entity, Oblong Europe Ltd. (German Branch) ("Oblong German Branch").

The Company’s core platform is g-speak™ and Mezzanine™ is its flagship product built on this platform. Mezzanine offers advanced collaborationfor conference room technology, which amplifies sales presentations, enhances group collaboration, and makes work sessions more productive.The Company offers g-speak development licenses to larger enterprise customers. Oblong is headquartered in Los Angeles, California with asales and development office in Boston, Massachusetts; regional sales offices in Los Altos, California; New York City, New York; WashingtonD.C.; Chicago, Illinois; Houston and Dallas, Texas; and Atlanta, Georgia. The Euroblong office is in Barcelona, Spain and focuses on mobileresearch and development, while the Oblong UK and Oblong German Branch offices are in London, England and Munich, Germany, respectively,and focus on sales and marketing in the European region.

Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assetsand the satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $116,715,472 as of September 30,2019, and net losses of $11,042,392 for the nine months ended September 30, 2019. Cash used in operating activities amounted to $9,401,366for the nine months ended September 30, 2019. These conditions raise substantial doubt as to the Company’s ability to continue to operate as agoing concern.

Since inception, the Company has financed its business activities through the issuance of equity instruments and debt. The Company is subject tovarious risks and uncertainties frequently encountered by newly formed companies. Such risks and uncertainties include, but are not limited to,undeveloped technology, its limited operating history, dependence on key personnel, and management of rapid growth. To address these risks,the Company must, among other things, successfully develop its customer base; successfully execute its business and marketing strategy;successfully develop its technology; provide superior customer service; and attract, retain, and motivate qualified personnel.

Based on the Company's projected cash flows and operating results for 2019, management does not believe it has sufficient cash resources tofund operations and meet its obligations as they become due for the next twelve months. Management has no further funding commitments fromcurrent investors and is in active pursuit of finding new investors or potential acquirers. As a result, there is substantial doubt the Company will beable to raise adequate funds, get acquired, or achieve and sustain profitability of positive cash flows from its operations. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

8


Exhibit 99.4

Interim Financial Statements

In the opinion of the Company's management, the accompanying unaudited consolidated financial statements of the Company contain alladjustments (consisting of only normal recurring adjustments) necessary to present fairly its financial position as of September 30, 2019 and theresults of its operations and its cash flows for the nine months ended September 30, 2019 and 2018. These interim financial statements arecondensed and therefore do not include all of the information and footnotes required by generally accepted accounting principles in the UnitedStates of America ("GAAP"). The actual results for the nine months ended September 30, 2019 are not necessarily indicative of the results thatcan be expected for the year ended December 31, 2019.

Accounting Method

The Company maintains its accounting records on an accrual method in conformity with accounting principles generally accepted in the UnitedStates of America ("US GAAP").


The accompanying consolidated financial statements include the accounts of Oblong and its wholly-owned subsidiaries Euroblong and Oblong UK,and branch entity, Oblong German Branch. All significant intercompany balances and transactions have been eliminated upon consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated financialstatements, and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates andassumptions include the valuation of certain accrued expenses, which have been prepared on the basis of the most current and best availableinformation. However, actual results from the resolution of such estimates and assumptions may vary from those used in the preparation of theconsolidated financial statements.


Cash and cash equivalents include all cash balances and highly liquid investments, such as money market funds, with original maturities of threemonths or less from the date of purchase. Restricted cash are cash and cash equivalents that are restricted as to withdrawal or use under theterms of certain contractual agreements.

The Company used a bank guarantee in place of a cash deposit for the lease of the sales office in Munich, Germany. The bank guarantee wascollateralized by a restricted cash bank account of $93,150, which was included in cash, cash equivalents and restricted cash. The Company has credit cards issued through the Company's bank. In September 2019, The Company was required to provide cash collateralequal to the credit limits on all open credit cards. All credit cards were closed and canceled as of September 30, 2019.

As of September 30, 2019, the Company's cash balance included restricted cash balance of $328,350.

In November 2016, the FASB issued Accounting Standards Update ("ASU") 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash("ASU 2016-18"). ASU 2016-18 provides guidance on how restricted cash must be presented on the consolidated statement of cash flows. ASU2016-18 requires that consolidated statement of cash flows show the change during the period of the total cash, cash equivalents and restrictedcash. Private companies are required to apply the guidance in ASU 2016-18 to fiscal years beginning after December 15, 2018, with earlyadoption permitted.

9


Exhibit 99.4

The Company has early adopted this guidance, and restricted cash is included in cash, cash equivalents and restricted cash on the accompanyingconsolidated balance sheet as of September 30, 2019.


The Company accounts for the fair value of its financial instruments in accordance with FASB ASC Topic 820, Fair Value Measurements andDisclosures ("ASC 820"). Non-recurring, nonfinancial assets and liabilities are also accounted for under the provisions of ASC 820.

ASC 820 defines fair value, establishes a framework for measuring fair value under US GAAP and enhances disclosures about fair valuemeasurements. Fair value is defined under ASC 820 as the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants on the measurement date.



Level 1 - Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities in marketsthat are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of assets orliabilities.

Level 3 - Pricing inputs that are unobservable, supported by little or no market activity and that are significant to the fair value of the assets orliabilities, as described below.

As of September 30, 2019 Level 1 Level 2 Level 3 Total


Accounts Receivable

Accounts receivables are receivables from customers carried at their estimated collectible amounts. Credit is generally extended on a short-termbasis; thus, accounts receivables do not bear interest. The Company extends credit based upon past credit history and an evaluation of thecustomers’ financial condition. Generally, collateral is not required. Accounts receivables are periodically evaluated and charged against anallowance account, if deemed to be uncollectible. The Company believes the accounts receivable balances outstanding as of September 30, 2019are fully collectible; therefore, no allowance has been recorded.

Inventories

Inventory consists primarily of equipment, including cameras, tracking hardware, computer equipment, display equipment, and mounts. Inventorywas stated at the lower of cost or net realizable value, determined using average cost. The Company uses the average cost costing method forinventory. The Company periodically performs analysis to identify any obsolete or slow-moving inventory. The obsolete or slow-moving inventoryreserved and disposed of totaled $182,903 at September 30, 2019. There were no additional inventory reserve balances as of September 30,2019. The Company periodically performs cycle counts, which may result in inventory write-offs. Write-offs are also due to excess and obsoleteinventory identified as part of the analysis performed annually.

10


Exhibit 99.4


Deferred financing costs represent fees incurred in connection with financing transactions. These fees are capitalized and amortized to interestexpense over the terms of the related financing agreements using a method that approximates the effective interest method. FASB ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30) requires that deferred financing costs are presented, net of accumulated amortization, as anasset for amounts relating to revolving lines of credit, and as direct deductions from the face amounts of all other related long-term debt.

Deferred financing costs related to long-term debt amounted to $172,401, as of September 30, 2019, which is recorded in other long-termliabilities.


Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are calculated usingthe straight-line method over the estimated useful lives of the related assets, which range from two to seven years. Leasehold improvements areamortized using the straight-line method over the shorter of their estimated useful lives or the term of the related lease.

Betterments, renewals and extraordinary repairs that materially extend the useful life of the asset are capitalized; other repairs and maintenancecharges are expensed as incurred. The cost and related accumulated depreciation and amortization applicable to assets retired are removed fromthe accounts, and the gain or loss on disposition, if any, is recognized in the consolidated statement of operations and comprehensive loss for thatperiod. The costs of replacement parts and supplies are charged to expense as they are used. Maintenance costs are expensed as incurred.

Intangible Assets

Intangible assets are stated at cost, net of accumulated amortization and consist primarily of patents. Intangible assets with definite useful livesare amortized using the straight-line method over the useful lives.

The Company has applications for patents, which consist of technology, know-how, information, and intellectual property relevant to gestural anddynamic spatial-visual human machine interface. As of September 30, 2019, 80 patents have been granted.

It is the belief of the Company that the remaining patent submissions will be approved; however, amortization of the patents will not occur untilapproval has been granted. Should a patent be denied, or it becomes likely that a patent application will not be granted, the patent will beconsidered abandoned and the associated costs will be expensed as an impairment. For the period ended September 30, 2019, the Companyexpensed $426,785 of patent costs for abandoned patents.


The Company is subject to the provisions of FASB ASC Topic 360, Property, Plant and Equipment - Impairment or Disposal of Long-lived Assets,which requires impairment losses to be recorded on long-lived assets with definite lives when indicators of impairment are present and theundiscounted cash flows estimated to be generated by those assets are less than the carrying amount of the assets. In such cases, the carryingvalue of assets to be held and used are adjusted to their estimated fair value and assets held for sale are adjusted to their estimated fair value lessselling expenses. Other than the patents costs that were abandoned, no impairment losses were recognized for the period ended September 30,2019.

Indefinite lived intangible assets are tested for impairment using a qualitative approach by first assessing qualitative factors to determine whetherit is more-likely-than-not that the fair value of an indefinite lived intangible asset is impaired as a basis for determining whether it is necessary toperform quantitative impairment testing. The Company’s

11


Exhibit 99.4

indefinite-lived intangible assets consist of trade marks with a carrying value of $69,952 at September 30, 2019. The results of the qualitativeanalysis of the Company’s indefinite lived intangible assets, indicated that the fair value of the indefinite lived intangible assets exceeded theircarrying value. The Company foregoes a qualitative assessment and tests indefinite-lived intangible assets for impairment when it concludes thatit is more-likely-than-not there may be an impairment. If needed, the annual or interim quantitative test of the recovery of indefinite-lived intangibleassets involve a comparison of the estimate fair value of the indefinite-lived assets to its carrying value. If the estimated fair value of the indefinite-lived assets exceeds its carrying value, the indefinite-lived intangible assets are not impaired. If the carrying value of the indefinite-lived assetsexceeds the estimated fair value, an impairment loss equal to the excess is recorded.

Revenue Recognition

As required by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 605, Revenue Recognition, theCompany recognizes revenue when persuasive evidence of an arrangement exists, service has been rendered, the sales price is fixed ordeterminable, and collection is probable. Amounts billed in excess of revenue recognized are included in deferred revenue. Customer depositsrepresent payments received by the Company from customers for which revenue recognition criteria have not been met.

The Company's products are systems that consist of hardware and software that function together to deliver the system's essential functionality.The Company sells the systems as a complete package and does not sell the hardware and software separately. The Company also sellsmaintenance and support contracts and license agreements. The Company has determined that its systems and service contracts have value to acustomer on a standalone basis; therefore, revenue from each item should be recognized separately.

The Company establishes the relative selling price of each deliverable based on estimated selling price. The Company recognizes productrevenue from its systems upon shipment, installation revenue upon completed installation and revenue from maintenance contracts and licenseagreements ratably over the applicable periods, ranging from 12 to 36 months. Professional service contracts are billed based on time andmaterials at the contract rate as the services are rendered.

Advertising Costs

The Company expenses advertising costs as incurred. Advertising expense for the nine months ended September 30, 2019 and 2018 was$745,386 and $1,602,242, respectively.


Research and development costs are expensed as incurred and consist primarily of costs associated with the development and testing of theCompany’s products. Research and development expenses include the cost of certain personnel and benefits, consultants, facility costs, suppliesand other direct and allocated indirect expenses incurred to support the Company’s research and development programs. Research anddevelopment expense for the nine months ended September 30, 2019 and 2018 was $6,321,182 and $6,917,877, respectively.

Sales Taxes

The Company accounts for sales taxes in accordance with FASB ASC Subtopic 605-45, Revenue Recognition - Principal Agent Considerations,which provides that the presentation of taxes assessed by a governmental authority that are directly imposed on revenue-producing transactions(e.g. sales, use, and excise taxes) between a seller and a customer on either a gross basis (included in revenues and costs) or on a net basis(excluded from revenues) is an accounting policy decision that should be disclosed. In addition, for any such taxes that are reported on a grossbasis, the amounts of those taxes should be disclosed in the consolidated financial statements for each period for which a statement of operationsand comprehensive loss is presented if those amounts are significant. The Company records sales taxes on a net basis.

12


Exhibit 99.4

Income Taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with FASB ASC Topic 740, Income Taxes ("ASC740"). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidatedfinancial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax creditcarryforwards.



The Company follows the provisions of uncertain tax positions as addressed in FASB ASC Subtopic 740-10, Income Taxes. The Company did notrecognize a liability for unrecognized tax benefits. Management estimates the tax positions as of September 30, 2019 for which the ultimatedeductibility is highly certain but for which there is uncertainty about the timing of such deductibility is immaterial to the consolidated financialstatements. The Company recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. No such interestor penalties were recognized during the periods presented. The Company had no accruals for interest and penalties in the financial statements forthe nine months ended September 30, 2019.

With few exceptions, the Company is subject to examination by United States federal tax authorities for returns filed for the prior three years andby foreign and state tax authorities for returns filed for the prior four years.

Stock-Based Compensation

The Company accounts for stock-based transactions using a fair-value-based method. Accordingly, compensation cost for stock is recognized ona straight-line basis over the requisite service (vesting) period for the entire award.

Litigation

The Company is subject to certain legal proceedings and claims that arise in the normal course of business. Based on the advice of legal counsel,management believes that no actions or claims depart from customary litigation or claims incidental to the business or the subsidiaries and that theresolution of all such litigation or claims will not have a material adverse effect on the Company’s consolidated financial position, results ofoperations and cash flows.

Financial Instruments and Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit and business risk consist of cash, cash equivalents andrestricted cash, marketable securities, accounts receivable and accounts payable.

The Company maintains cash, cash equivalents and restricted cash balances that at times exceed amounts insured by the Federal DepositInsurance Corporation. The Company has not experienced any losses in these accounts and believes it is not exposed to any significant creditrisk in this area.

The Company’s customer concentrations expose it to credit risks such as collectability and business risks such as sales concentration. TheCompany grants credit in the normal course of business to customers in the United States and other world-wide locations. The Companyperiodically performs credit analysis and monitors the financial condition of its customers to reduce credit risk. On a case-by-case basis, theCompany requires deposits from customers who are unable to verify acceptable credit standards.

13


Exhibit 99.4

During the nine months ended September 30, 2019, two customers accounted for 37% of total net revenues, and for the same period in 2018, twocustomers accounted 42% of total net revenues. At September 30, 2019, two customers accounted for 32% of total accounts receivable.

The Company’s supplier concentrations expose it to business risks, which the Company mitigates by attempting to diversify its supply chain. Therewas no supplier concentration for the period ended September 30, 2019.

Note 2 - Balance Sheet Disclosures

Property and equipment, net consisted of the following:

September 30,

2019

Computer Equipment $ 5,131,985Furniture and fixtures 301,401Leasehold Improvements 926,955Tooling 170,741

6,531,082Less accumulated depreciation and amortization 5,309,788

$ 1,221,294

Depreciation and amortization expense for the nine months ended September 30, 2019 was $629,372 of which $586,686 and $42,686 wereincluded in operating expenses and cost of revenues, respectively. Depreciation and amortization expense for the nine months ended September30, 2018 was $790,586 of which $752,582 and $38,004 were included in operating expenses and cost of revenues, respectively.

Note 3 - Comprehensive Income and Foreign Currency Translation

Comprehensive income is defined as the change in equity during a period from transactions and other events from non-owner sources.Comprehensive income is the total of net income and other comprehensive income, which includes foreign currency translation adjustments. Thefunctional currencies of the Company's foreign operations are the reported local currencies. Translation adjustments result from translating theCompany's foreign subsidiaries’ financial statements into United States dollars. Assets and liabilities of the Company's foreign subsidiaries aretranslated into United States dollars using the exchange rate in effect at the consolidated balance sheet dates. Equity is translated at the historicalrate of the transaction.

Revenues and expenses are translated using average exchange rates for each month during the fiscal year. The Company considersintercompany balances as long-term investments in nature as they do not expect repayment, and therefore, translates the transactions at thehistorical rate. The resulting translation losses are recorded as a component of accumulated other comprehensive loss in stockholders' equity.The cumulative foreign currency translation adjustment totaled $432,277 as of September 30, 2019. Foreign currency translation gains (losses)were ($38,287) and ($55,822) as of September 30, 2019 and 2018, respectively, and are reported on the consolidated statements of operationsand comprehensive loss.

Note 4 - Employee Benefit Plan

14


Exhibit 99.4

The Company maintains a Section 401(k) plan (the "Plan"). Eligible employees may make voluntary contributions to the Plan. In addition, theCompany may, at its discretion, make matching contributions to the Plan. For the nine months ended September 30, 2019 and 2018, the Companymade no matching contributions.

Note 5 - Convertible Preferred Stock

Convertible Preferred Stock

The convertible preferred stock described below has been classified outside of stockholders' equity to comply with Regulation S-X because theshares contain certain redemption features that are not solely within the control of the Company.

In September 2018, the Company and its investors agreed to enter into an agreement to sell and issue Series E convertible preferred stock("Series E") with a par value of $.0001 and warrants to purchase common stock. To facilitate this sale, the Company amended and restated itscertificate of incorporation to increase the authorized shares to 65,000,000 of common stock at par value of $.0001 and to decrease the authorizedshares to 23,007,000 of preferred stock at par value of $.0001 designated as 19,757,000 as Series D, and 3,250,000 as Series E. The Companyhad authorized to sell 3,039,514 shares of Series E convertible stock, and issued 2,899,266 shares, which are outstanding as of September 30,2019. The 2,899,266 share of Series E preferred stock were sold along with 2,899,266 common stock purchase warrants, exercisable for $0.01per share, for cash proceeds of $9,480,952, net of issuance costs of $57,633. The $9,480,952 of net cash proceeds was allocated to the Series Epreferred stock and the common stock warrants, as an increase to additional paid in capital, based on the relative fair value of the Series Epreferred stock and common stock warrants. The fair value of the Series E preferred stock and common stock warrants was based on a third-partyvaluation. The liquidation preference on Series E is $9,538,585 as of September 30, 2019. In September 2018, the Company and its investors approved the conversion of all of its outstanding shares of Series A convertible preferred stock,Series B convertible preferred stock, and Series C convertible preferred stock, totaling 15,380,339 preferred stock into 15,506,592 common stock(the "Conversion"). Prior to the Conversion, the Company had 6,596,516 Series A convertible preferred stock issued and outstanding, 6,114,632Series B convertible preferred stock issued and outstanding, and 2,669,191 Series C convertible preferred stock issued and outstanding. Series Aand C outstanding preferred stock were converted using a 1:1 ratio. Series B outstanding preferred stock using a 1.0206 ratio.

As of September 30, 2019, the Company had authorized 19,757,000 shares of Series D convertible preferred stock ("Series D") with a par valueof $0.0001. The Company issued no shares of Series D during the nine months ended September 30, 2019. The Company had 19,756,834shares of Series D issued and outstanding as of September 30, 2019. The liquidation preference on Series D is $64,999,984 as of September 30,2019.

Following the Conversion, holders of Series D and Series E (collectively "Post-Conversion Series Preferred"), in preference to the holders ofcommon stock, are entitled to receive cash dividends at the annual rate of $0.2632 per share. The dividends are payable only when and ifdeclared by the Board of Directors and are non-cumulative. No dividends were paid in the nine months ended September 30, 2019.

Conversion Rights

Each share of Post-Conversion Series Preferred is convertible into shares of common stock at the option of the holder at any time after the date ofissuance. The number of shares of common stock into which a holder of Post-Conversion Series Preferred can convert is obtained by multiplyingthe conversion rate that is in effect by the number of shares of Post-Conversion Series Preferred being converted. The conversion rate isdetermined by dividing the original issue price by the applicable conversion price (initially the original issue price, as adjusted for certain dilutiveevents).

15


Exhibit 99.4

Under the terms, each share of Post-Conversion Series Preferred will be automatically converted into shares of common stock (based on the theneffective Post-Conversion Series Preferred conversion price) immediately upon closing of a firm underwritten public offering pursuant to aneffective registration statement on Form S-1 or SB-2 under the Securities Act of 1933, as amended, covering the offer and sale of common stockfor the account of the Company in which the per share price to the public is at least $6.92 and the gross cash proceeds to the Company (beforeunderwriting discounts, commissions, and fees) are at least $30,000,000 or if there is an affirmative election of the holders of the majority of theoutstanding shares of Post-Conversion Series Preferred on an as-converted basis.

Liquidation Rights

In accordance with the certificate of incorporation, upon any liquidation, dissolution, change in control, or winding up of the Company ("LiquidatingEvent"), the holders of Series E are entitled to be paid out of the assets of the Company legally available for distribution an amount per share ofPost-Conversion Series Preferred equal to the original issue price plus all declared and unpaid dividends on the Series E, before any distributionor payment is made to the holders of any Series D or common stock.

If after the liquidation preference there are assets remaining, the assets will be distributed to the Series D before any distribution or payment ismade to the holders of common stock.

If after the liquidation preference there are assets remaining, the assets will be distributed ratably amongst the common stock. Post-ConversionSeries Preferred will be deemed converted to common stock upon a Liquidating Event if the holder would receive a greater amount than if theyhad not been converted. If the Company has insufficient assets upon the Liquidating Event to make payment in full to all holders of Post-Conversion Series Preferred their liquidation preference, then such assets (or consideration) will be distributed among the holders of Post-Conversion Series Preferred ratably in proportion to the full amounts to which they would otherwise be respectively entitled. Any transaction orseries of transactions that meets the definition of a Liquidating Event may be waived as a Liquidating Event by a majority vote of the Post-Conversion Series Preferred holders.

Voting Rights

Post-Conversion Series Preferred holders are entitled to the number of votes equal to the number of common shares the preferred shares isconvertible into. So long as at least 2,500,000 shares of Post-Conversion Series Preferred remain outstanding, the vote or written consent of theholders of a majority of the outstanding Post-Conversion Series Preferred, respectively, shall be necessary for defined significant events.

Note 6 - Stockholders' Equity

Common Stock

As of September 30, 2019, the Company had authorized 65,000,000 shares of common stock with a par value of $0.0001. During the nine-monthended September 30, 2019, the Company issued 35,219 shares of common stock, through the exercise of stock options. The Company had27,339,698 of common stock shares issued and outstanding as of September 30, 2019.

Stock Options

On January 22, 2007, the Company adopted the 2007 Stock Plan (the "Plan") under which the Company is authorized to grant incentive and non-qualified stock option awards to employees, directors, consultants, and affiliates of the Company. The Plan provides both for the direct award orsale of shares and for the grant of options to purchase shares. The Company is authorized to grant up to 5,405,376 shares of stock awards. Theoption price and vesting terms are determined by the Board of Directors of the Company and evidenced in the award agreement extended to theemployee. The options granted generally vest over a period of one to four years and terminate ten years from the grant date.

16


Exhibit 99.4

During the nine months ended September 30, 2019, the Company recognized $237,952 in stock-based compensation expense.


Incentive Non-Qualified Weighted Average Stock Options Stock Options Exercise Price

December 31, 2018 3,576,198 155,000 $ 0.82

Granted 930,300 62,500 0.74Exercised (35,219) 0.21Forfeited/canceled (347,901) (5,000) 0.97

September 30, 2019 4,123,378 212,500 $ 0.79

The fair value of each option grant was estimated on the grant date using the Black-Scholes option pricing model with the following weighted-average assumptions:

Nine months ended September 30, 2019

Approximate risk-free rate 2.56 - 2.96%Average expected life 6.25 yearsDividend yield 0 %Volatility 55 - 62 %Fair value of common stock $0.78 - $0.98 Estimated fair value of options granted $0.43 - $0.58 Estimated forfeiture rate 10 %

Note 7 - Operating Lease Commitments

The Company leases its facilities under non-cancelable operating lease agreements that expire on various dates through May 2023. In addition,the Company has facility leases that provide for rent adjustment increases. The accompanying consolidated statements of operations andcomprehensive loss reflect rent expense on a straight-line basis over the term of the leases.

The differences between rent expense recorded and the amount paid are credited or charged to deferred rent, which were included in theaccompanying consolidated balance sheets. Under these agreements, net rent expense for the nine months ended September 30, 2019 and 2018was $1,089,371 and $1,264,788 respectively. Total deferred rent as of September 30, 2019 and 2018 was $201,417 and 226,410, respectively.


17


Exhibit 99.4

Year Ending Straight-Line December 31, Cash Payments Rent Expense Deferred Rent

2019 366,449 357,870 8,5792020 1,290,795 1,218,375 72,4202021 1,095,442 1,027,216 68,2262022 508,064 463,756 44,308Thereafter 115,672 107,788 7,884

3,376,422 3,175,005 201,417

Note 8 - Debt

Term Loan

The Company is party to a loan and security agreement with a financial institution consisting of a term loan (the "Term Loan") and revolving line ofcredit (the "Revolver"). The loan and security agreement is collateralized by substantially all of the Company’s assets, not including the intellectualproperty consisting of copyrights, trademarks and patents. The outstanding balance on the Term Loan was $5,247,000 as of September 30, 2019.There was no outstanding balance on the Revolver as of September 30, 2019. As further discussed in Note 8, on October 1, 2019, in connectionwith the closing of the merger transaction on such date, Glowpoint and Oblong, as borrowers, and Silicon Valley Bank ("SVB"), as lender,executed a Second Amended and Restated Loan and Security Agreement (the "Loan Agreement"), which amended and restated, in its entirety,the Amended and Restated Loan and Security Agreement by and between Oblong and SVB.

Promissory Notes

During the nine months ended September 30, 2019, the Company received net proceeds of $3,000,000 from the issuance of promissory notes tocertain existing shareholders of the Company. The promissory notes carried an annual interest rate of 2.13%, and principal and interest were dueand payable 12 months from the issuance date of the promissory notes. Although the terms of these promissory notes were not originallyconvertible into stock, on October 1, 2019, in connection with the merger with Glowpoint, Inc., the full amount of these promissory notes wereconverted to preferred stock of Oblong and then converted to Glowpoint Merger Preferred Stock (see further discussion in Note 9).

Note 9 - Subsequent Events

The Company has evaluated subsequent events that have occurred from September 30, 2019 through December 17, 2019, which is the date thatthe consolidated financial statements were available to be issued, and determined that there were no subsequent events or transactions thatrequired recognition or disclosure in the consolidated financial statements, except as disclosed below.

On October 1, 2019, the Company completed a merger with Glowpoint, Inc. (NYSE American: GLOW), a managed service provider of videocollaboration and network applications. In connection with the merger:

• Glowpoint’s board of directors will consist of five members after completion of the Merger, of which four members will be appointed by themembers of Glowpoint’s board existing prior to closing and one member will be appointed by the members of Oblong’s board existing priorto closing;

• i) the common and preferred stock of Oblong issued and outstanding immediately prior to the Effective Time (as defined in the MergerAgreement) of the Merger were converted into the right to receive an aggregate of

18


Exhibit 99.4

approximately 1.68 million shares of Glowpoint’s 6.0% Series D Convertible Preferred Stock, par value $0.0001 per share ("MergerPreferred Stock"); ii) at the Effective Time, Glowpoint will assume all then-outstanding options to purchase shares of Oblong’s commonstock ("Oblong Options") held by previously terminated employees of Oblong, which Oblong Options will be deemed to constitute optionsto acquire shares of Glowpoint’s Common Stock, par value $0.0001 per share ("Common Stock"); and (iii) any Oblong Options held bycurrent employees of Oblong will be canceled in exchange for restricted shares.

SVB Loan Agreement and Warrant

On October 1, 2019, in connection with the Closing of the Merger on such date, Glowpoint and Oblong, as borrowers, and Silicon Valley Bank("SVB"), as lender, executed a Second Amended and Restated Loan and Security Agreement (the "Loan Agreement"), which amended andrestated, in its entirety, the Amended and Restated Loan and Security Agreement by and between Oblong and SVB. The Loan Agreementprovides for a term loan facility of approximately $5.2 million (the "Loan"), all of which is currently outstanding. The Loan Agreement provides thatinterest-only payments will be due through March 31, 2020, after which equal monthly principal and interest payments will be made to fully repaythe loan by September 1, 2021. The Loan accrues interest at a rate equal to the Prime Rate (as defined in the Loan Agreement) plus 200 basispoints (for a total of 7.00% as of October 1, 2019).

19


Exhibit 99.5

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

On October 1, 2019 (the "Closing Date"), Glowpoint, Inc., a Delaware corporation (the "Company" or "Glowpoint"), closed its previously announced acquisition of

Oblong Industries, Inc., a Delaware corporation ("Oblong" and, such transaction, the "Acquisition"). The Acquisition was consummated through the merger of

Glowpoint Merger Sub II, Inc., a Delaware corporation and wholly-owned subsidiary of Glowpoint (the "Merger Sub"), with and into Oblong on the Closing Date,

with Oblong continuing as the surviving corporation and as a wholly-owned subsidiary of Glowpoint. On the Closing Date, (i) the shares of common and preferred

stock of Oblong issued and outstanding immediately prior to the effective time of the Acquisition were converted into an aggregate of 1,686,659 shares of

Glowpoint’s 6.0% Series D Convertible Preferred Stock, par value $0.0001 per share (the "Series D Preferred Stock"); (ii) all options to purchase shares of

Oblong’s common stock held by previously terminated employees of Oblong were assumed by Glowpoint and deemed, in the aggregate, to constitute options to

acquire a total of 107,845 shares of Glowpoint’s common stock, par value $0.0001 per share ("common stock"), at a volume weighted average exercise price of

$4.92 per Glowpoint share and a remaining exercise period of one year; and (iii) all options to purchase shares of Oblong’s common stock held by current

employees of Oblong were cancelled and exchanged for an aggregate of 49,967 restricted shares of Series D Preferred Stock ("Restricted Series D Preferred

Stock"), which are subject to vesting over a two-year period following the Closing Date. The Series D Preferred Stock (including shares of Restricted Series D

Preferred Stock) will automatically convert into an aggregate of 17,366,260 shares of Glowpoint’s common stock upon approval of such conversion by

Glowpoint’s stockholders and receipt of NYSE American approval of the listing of the combined company’s common stock on such exchange. Following their

conversion to common stock, shares of Restricted Series D Preferred Stock will remain subject to their vesting conditions.

On October 1, 2019, Glowpoint entered into a Series E Preferred Stock Purchase Agreement (the "Purchase Agreement") with the investors party thereto, who,

prior to the closing of the Acquisition, were stockholders of Oblong (the "Purchasers"), relating to the offer and sale by Glowpoint in a private placement (the

"Offering") of up to 131,579 shares of its 6.0% Series E Convertible Preferred Stock, par value $0.0001 per share (the "Series E Preferred Stock"), at a price of

$28.50 per share. At an initial closing on October 1, 2019, Glowpoint sold, and the Purchasers purchased, 88,070 shares of Series E Preferred Stock for gross

proceeds of approximately $2.51 million (the "Series E Financing"). Glowpoint did not pay any commissions or discounts in connection with the Offering. The

Series E Preferred Stock will automatically convert into shares of Glowpoint’s common stock, on a one-for-10 basis, upon approval of such conversion by

Glowpoint’s stockholders and receipt of NYSE American approval of the listing of the combined company’s common stock on such exchange.

The terms of the Acquisition, Series D Preferred Stock and Series E Preferred Stock have been previously disclosed in the Company's Current Reports on Form

8-K filed with the Securities and Exchange Commission ("SEC") on September 16, 2019 and October 7, 2019. The Company had no prior material relationship

with any of the parties to the transaction.

The following unaudited pro forma condensed combined consolidated financial statements have been developed by applying pro forma adjustments to the

historical condensed consolidated financial statements of Glowpoint and Oblong. The unaudited pro forma condensed combined consolidated statements of

operations for the year ended December 31, 2018 and the nine months ended September 30, 2019 give effect to the Acquisition and the Series E Financing as

if they had occurred on January 1, 2018.


Exhibit 99.5

The unaudited pro forma condensed combined consolidated balance sheet as of September 30, 2019 gives effect to the Acquisition and the Series E Financing

as if they occurred on September 30, 2019. All pro forma adjustments and underlying assumptions are described more fully in the notes to the unaudited pro

forma condensed combined consolidated financial statements.

The pro forma information presented is for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would

have been realized if the Acquisition and the Series E Financing were completed on the dates indicated, nor is it indicative of future operating results or financial

position. The pro forma adjustments are based upon available information and certain assumptions that the management of Glowpoint believes to be reasonable.

Since the Acquisition has only recently been completed, the estimates and assumptions regarding the Acquisition are preliminary. The final purchase price

allocation will be based on a formal valuation analysis of the assets acquired and liabilities assumed at closing and may result in differences in the estimates

used in these pro forma condensed combined consolidated financial statements, and those differences could be material. Furthermore, the ability of Glowpoint to

integrate Oblong and realize the benefits of the Acquisition remains subject to a number of risks and uncertainties.

The unaudited pro forma condensed combined consolidated financial statements do not include the effects of:

• non-recurring income statement impacts arising directly as a result of the Acquisition;

• any operating efficiencies or cost savings;

• other post-Acquisition selling, general and administrative costs;

• savings as a result of planned restructuring actions to be taken; or

• acquisition and integration expenses;

You should read this information in conjunction with the:

• accompanying notes to the unaudited pro forma condensed combined consolidated financial statements;

• audited historical consolidated financial statements of Glowpoint as of and for the year ended December 31, 2018, included in the Company's Form 10-K

filed with the SEC on March 8, 2019;

• unaudited historical condensed consolidated financial statements of Glowpoint as of and for the nine months ended September 30, 2019, included in the

Company's Form 10-Q filed with the SEC on November 14, 2019;

• audited historical financial statements of Oblong as of and for the year ended December 31, 2018 and unaudited historical financial statements of

Oblong as of and for the nine months ended September 30, 2019, included as Exhibits 99.2 and 99.4 to this Current Report on Form 8-K.


Exhibit 99.5

Glowpoint, Inc.

Unaudited Pro Forma Condensed Combined Consolidated Balance Sheet

September 30, 2019

(in thousands)

Historical Pro Forma Pro Forma

Glowpoint Oblong Adjustments Combined

ASSETS (Note 3) Current assets: Cash and cash equivalents $ 1,271 $ 2,194 $ 2,510 $ 5,975 Accounts receivable, net 1,089 1,962 — 3,051 Inventory — 1,618 — 1,618 Prepaid expenses and other current assets 376 572 848 1,796

TOTAL CURRENT ASSETS 2,736 6,346 3,358 12,440

Property and equipment, net 359 1,221 — 1,580 Goodwill 2,342 — 3,149 5,491 Intangible assets, net 404 3,595 9,791 13,790 Other assets 37 216 4,333 4,586

TOTAL ASSETS $ 5,878 $ 11,378 $ 20,631 $ 37,887

LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 424 $ 296 $ 300 $ 1,020 Accrued expenses and other liabilities 744 1,177 1,554 3,475 Deferred revenue — 2,952 (1,650) 1,302 Current portion of long-term debt — 2,627 (72) 2,555 Promissory notes payable — 3,000 (3,000) —

TOTAL CURRENT LIABILITIES 1,168 10,052 (2,868) 8,352

Long-term debt, net of current portion — 2,620 — 2,620 Other long-term liabilities — 233 2,779 3,012

TOTAL NONCURRENT LIABILITIES — 2,853 2,779 5,632

CONVERTIBLE PREFERRED STOCK — 71,755 (71,755) —

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) 4,710 (73,282) 92,476 23,904

TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK ANDSTOCKHOLDERS’ EQUITY $ 5,878 $ (11,378) $ 20,631 $ 37,887

See accompanying notes to unaudited pro forma condensed combined consolidated financial statements


Exhibit 99.5

Glowpoint, Inc.

Unaudited Pro Forma Condensed Combined Consolidated Statement of Operations

Year Ended December 31, 2018

(in thousands, except per share amounts)



Revenue $ 12,557 $ 17,249 $ — $ 29,806 Operating expenses: Expenses 13,449 33,329 250 (a) 47,028 Impairment charges 5,093 331 — 5,424 Depreciation and amortization 755 1,330 1,958 (c) 4,043

Total operating expenses 19,297 34,990 2,208 56,495

Loss from operations (6,740) (17,741) (2,208) (26,689) Interest and other expense, net (415) (113) (97) (d) (625)

Loss before income taxes (7,155) (17,854) (2,305) (27,314)

Income tax expense (13) — — (13)

Net Loss $ (7,168) (17,854) $ (2,305) $ (27,327)

Preferred stock dividends (12) — — (12)

Net loss attributable to common stockholders $ (7,180) $ (17,854) $ (2,305) $ (27,339)

Net Loss per share:

Basic and diluted net loss per share $ (1.50) (f) $ (5.70)

Weighted average number of common shares:

Basic and diluted 4,795 4,795



Exhibit 99.5

Glowpoint, Inc.

Unaudited Pro Forma Condensed Combined Consolidated Statement of Operations

Nine Months Ended September 30, 2019

(in thousands, except per share amounts)



Revenue $ 7,403 $ 12,757 $ 0 $ 20,160 Operating expenses: Expenses 8,581 22,248 187 (b) (465) (b) 30,551 Impairment charges 473 427 0 900 Depreciation and amortization 461 852 1,469 (c) 2,782

Total operating expenses 9,515 23,527 1,191 34,233

Loss from operations (2,112) (10,770) (1,191) (14,073) Interest and other expense, net (1) (272) (73) (d) (346)

Net Loss $ (2,113) $ (11,042) $ (1,264) $ (14,419)

Preferred stock dividends (23) 0 (2,276) (e) (2,299)

Net loss attributable to common stockholders $ (2,136) $ (11,042) $ (3,540) $ (16,718)

Net Loss per share attributable to common stockholders:

Basic and diluted net loss per share $ (0.41) (f) $ (3.22)

Weighted average number of common shares:

Basic and diluted 5,184 5,184



Exhibit 99.5

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

NOTE 1: BASIS OF PRESENTATION

As more fully discussed in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission ("SEC") on October 7, 2019, on

October 1, 2019 (the "Closing Date"), Glowpoint, Inc., a Delaware corporation (the "Company" or "Glowpoint"), closed its previously announced acquisition of

Oblong Industries, Inc., a Delaware corporation ("Oblong" and, such transaction, the "Acquisition"). The Acquisition was consummated through the merger of

Glowpoint Merger Sub II, Inc., a Delaware corporation and wholly-owned subsidiary of Glowpoint (the "Merger Sub"), with and into Oblong on the Closing Date,

with Oblong continuing as the surviving corporation and as a wholly-owned subsidiary of Glowpoint. On the Closing Date, (i) the common and preferred stock of

Oblong issued and outstanding immediately prior to the effective time of the Acquisition were converted into an aggregate of 1,686,659 shares of Glowpoint’s

6.0% Series D Convertible Preferred Stock, par value $0.0001 per share (the "Series D Preferred Stock"); (ii) all options to purchase shares of Oblong’s common

stock held by previously terminated employees of Oblong were assumed by Glowpoint and deemed, in the aggregate, to constitute options to acquire a total of

107,845 shares of Glowpoint’s common stock, par value $0.0001 per share ("common stock"), at a volume weighted average exercise price of $4.92 per share

and a remaining exercise period of one year; and (iii) all options to purchase shares of Oblong’s common stock held by current employees of Oblong were

canceled and exchanged for an aggregate of 49,967 restricted shares of Series D Preferred Stock ("Restricted Series D Preferred Stock"), which are subject to

vesting over a two-year period following the Closing Date. The Series D Preferred Stock (including shares of Restricted Series D Preferred Stock) will

automatically convert into an aggregate of 17,366,260 shares of Glowpoint’s common stock upon approval of such conversion by Glowpoint’s stockholders and

receipt of NYSE American approval of the listing of the combined company’s common stock on such exchange. Following their conversion to common stock,

shares of Restricted Series D Preferred Stock will remain subject to their vesting conditions.

The Acquisition will be accounted for in accordance with FASB Accounting Standards Codification Topic 805 "Business Combinations" ("ASC 805"), which

requires an allocation of the purchase price of an acquired entity to the assets acquired and liabilities assumed based on their estimated fair values at the date of

acquisition. The final purchase price allocation will be based on a formal valuation analysis of Oblong's assets and liabilities as of the date the Acquisition was

consummated.

On October 1, 2019, Glowpoint entered into a Series E Preferred Stock Purchase Agreement (the "Purchase Agreement") with the investors party thereto, who,

prior to the closing of the Acquisition, were stockholders of Oblong (the "Purchasers"), relating to the offer and sale by Glowpoint in a private placement (the

"Offering") of up to 131,579 shares of its 6.0% Series E Convertible Preferred Stock, par value $0.0001 per share (the "Series E Preferred Stock"), at a price of

$28.50 per share. At an initial closing on October 1, 2019, Glowpoint sold, and the Purchasers purchased, 88,070 shares of Series E Preferred Stock for gross

proceeds of approximately $2.51 million (the "Series E Financing"). Glowpoint did not pay any commissions or discounts in connection with the Offering. The

Series E Preferred Stock will automatically convert into shares of Glowpoint’s common stock, on a one-for-10 basis, upon approval of such conversion by

Glowpoint’s stockholders and receipt of NYSE American approval of the listing of the combined company’s common stock on such exchange.

The unaudited pro forma condensed combined financial statements have been developed by applying pro forma adjustments to the historical condensed

consolidated financial statements of Glowpoint and Oblong. The unaudited pro forma condensed combined


Exhibit 99.5

statement of operations for the year ended December 31, 2018 and nine months ended September 30, 2019 gives effect to the Acquisition and the Series E

Financing as if they had occurred on January 1, 2018. The unaudited pro forma condensed combined balance sheet as of September 30, 2019 gives effect to

the Acquisition and the Series E Financing as if they occurred on September 30, 2019.

NOTE 2: PRELIMINARY PURCHASE PRICE AND ALLOCATION OF THE ACQUISITION

Since the Acquisition has only recently been completed, the estimates and assumptions regarding the Acquisition are preliminary. The final purchase price

allocation will be based on a formal valuation analysis of the assets acquired and liabilities assumed at closing and may result in differences in the estimates

used in these pro forma condensed combined financial statements, and those differences could be material.

Pursuant to ASC 805, the purchase price of $16,912,000 was measured as the fair value of the consideration exchanged in the Acquisition as follows:

Series D Preferred Stock $ 16,867,000 Value of stock options issued 45,000

Total $ 16,912,000

• Since the Series D Preferred Stock has no active market, the value of the Series D Preferred Stock was estimated based on the number of shares of

common stock into which the Series D Preferred Stock will automatically convert (or approximately 16,867,000) upon approval of such conversion by

Glowpoint’s stockholders and receipt of NYSE American approval of the listing of the combined company’s common stock on such exchange, multiplied

by $1.00 per share, which was the closing price of Glowpoint's common stock as traded on the NYSE American on the Closing Date.

• The value of common stock options issued was equal to the Black Scholes value of 107,845 common stock options issued to former employees of

Oblong, and was included in consideration as no future service was required.

The purchase price was allocated to Oblong's net tangible and intangible assets based on their estimated fair values as of the Closing Date, October 1, 2019.

The pro forma allocation of the purchase price to the assets acquired, the liabilities assumed and goodwill recognized is as follows ($ in thousands):


Exhibit 99.5

Cash and cash equivalents $ 2,194 Accounts receivable 1,962 Inventory 1,618 Prepaid expenses and other current assets 1,420 Property, plant, and equipment 1,221 Intangible assets 13,386 Other assets 4,549 Term loan, net (5,247) Accounts payable (296) Accrued expenses and other liabilities (2,731) Deferred revenue (1,302) Other long-term liabilities (3,012)

Net assets acquired 13,762 Goodwill 3,149

Purchase price $ 16,912

In accordance with ASC 805, goodwill, if any, is recognized as the excess of the purchase price over the estimated fair value of net assets acquired. Based on

the Company's preliminary estimates, the $16,912,000 purchase price exceeded the estimated fair value of the net assets acquired, resulting in goodwill of

$3,149,000.

Due to the nature and limitations of these preliminary calculations differences between the estimated fair values used in these pro forma calculations and those

estimated under a formal valuation are expected to occur and those differences could be material.

NOTE 3: PRO FORMA ADJUSTMENTS

The unaudited pro forma condensed combined financial statements reflect the pro forma adjustments of the Acquisition and the Series E Financing as described

in Note 3. Pursuant to the acquisition method of accounting, the total purchase price, as measured in Note 2, has been preliminarily allocated to the assets

acquired and liabilities assumed based on their respective estimated fair values. There were no payable or receivable balances or revenue transactions between

Glowpoint and Oblong as of and for the nine months ended September 30, 2019.

A reasonable allocation of fees paid to attorneys and accountants that are involved with completing the Acquisition and has been made to acquisition-related

costs. Based on this allocation and information specific to each aspect of the Acquisition, $465,000 of costs incurred before the Closing Date associated with

legal and other third-party costs in connection with the Acquisition were expensed as acquisition-related costs. An adjustment has been made to the unaudited

pro forma condensed combined consolidated statement of operations for the nine months ended September 30, 2019 to eliminate such costs as they are non-

recurring.

The unaudited pro forma condensed combined statement of operations does not include costs that may result from integration activities. Glowpoint has not

identified any Acquisition contingencies where the related asset, liability, or impairment is probable and the amount of the asset, liability or impairment can be

reasonably estimated. Prior to the end of the purchase price allocation period, not to exceed one year from the acquisition date, if information becomes available

that would indicate it is probable that such events have occurred and the amounts can be reasonably estimated, such items will be included in the purchase

price allocation.


Exhibit 99.5

The pro forma condensed combined provision for income taxes does not necessarily reflect the amounts that would have resulted had Glowpoint and Oblong

filed consolidated income tax returns for the periods presented.


Exhibit 99.5

ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET

The pro forma adjustments included in the unaudited pro forma condensed combined balance sheet related to the Acquisition and Series E Financing as of

October 1, 2019 are as follows (in thousands):

Increase / (Decrease) In:Series E

Financing (1)Adjustment toFair Value (2) SVB Warrant (3)

Acquisition-related costs (4)

Promissory NotesPayable (5)

ConvertiblePreferred Stock

(6) Net Adjustment

Cash and Cash Equivalents $ 2,510 $ 2,510

Customer Relationships $ 9,791 $ 9,791

Goodwill $ 3,149 $ 3,149

Prepaid expenses and other currentassets $ 848 $ 848

Other assets $ 4,333 $ 4,333

Accounts payable $ 300 $ 300

Accrued expenses and other liabilities $ (1,554) $ (1,554)

Deferred Revenue $ 1,650 $ 1,650

Other long-term liabilities $ (2,779) $ (2,779)

Term Loan $ (72) $ (0.072)

Promissory Notes Payable $ (3,000) $ (3)

Convertible preferred stock $ (71,755) $ (71,755)

Stockholders' Equity $ 2,510 $ 15,439 $ 72 $ (300) $ 3,000 $ 71,755 $ 92,476

(1) Series E Financing - See Note 1. The proceeds of the Series E Financing were received on the Closing Date and are reflected as an adjustment to the

pro forma condensed combined balance sheet as of September 30, 2019.

(2) Adjustments to fair value - The assets acquired and liabilities assumed of Oblong have been adjusted to their estimated fair values as of the acquisition

date. Those adjustments are as follows:

Intangible assets - The historical value of Oblong’s identifiable intangible assets was $3,595,000 and had an estimated fair value of $13,386,000 at the

acquisition date. Accordingly, a pro forma adjustment to gross assets of $9,791,000 has been provided. Identifiable intangible assets acquired included

primarily customer relationships and patents. The estimated useful lives for the intangible assets are determined based on the expected benefit period of

the Oblong assets and historical experience with similar assets. The Company expects to amortize the estimated fair value of these assets based on the

straight-line method. Valuations of the Company’s intangible assets are expected to be finalized no later than one year from the date of acquisition. Any

value assigned to these assets will represent a reclassification from the goodwill asset recorded in our preliminary purchase price allocation as outlined

in the table in Note 2. Any reclassification recorded could result in further adjustments to pro forma combined financial statements, including but not

limited to adjustments to amortization expense, deferred tax liabilities and income tax expense. The preliminary estimated fair value and related

amortization periods for the intangible assets is as follows ($ in thousands):


Exhibit 99.5

Estimated Value ofIntangible Asset

Acquired Estimated Average

Useful Lives

Customer relationships $ 9,791 5 years Patents and other intangibles $ 3,595 3 - 5 years Total intangible assets $ 13,386

Goodwill - $3,149,000 of goodwill as calculated in Note 2 has been provided for purposes of the combined pro forma financial statements, resulting in a

net increase in goodwill for this amount.

Prepaid expenses and other current assets - This pro forma adjustment reflects the recording of $848,000 related to the capitalization of sales

commissions upon Oblong’s adoption of ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)".

Other assets - This pro forma adjustment reflects the recording of: a) right-of-use assets of $4,333,000 upon Oblong’s adoption of ASU 2016-02,

"Leases (Topic 842)" Topic 842.

Accrued expenses and other liabilities - This pro forma adjustment reflects the recording of short-term lease liabilities of $1,554,000 upon Oblong’s

adoption of Topic 842.

Deferred revenue - This pro forma adjustment reflects a reduction of $1,650,000 to reflect the fair value of deferred revenue as of the acquisition date.

Other long-term liabilities - This pro forma adjustment reflects the recording of long-term lease liabilities of $2,779,000 upon Oblong’s adoption of Topic

842.

Oblong equity - Oblong's historical stockholders’ deficit balance of ($73,282,000) was eliminated as a result of the Acquisition.

(3) SVB Warrant - On the Closing Date, Glowpoint and Oblong, as borrowers, and Silicon Valley Bank ("SVB"), as lender, executed a Second Amended and

Restated Loan and Security Agreement (the "Loan Agreement"), which amended and restated, in its entirety, the Amended and Restated Loan and

Security Agreement by and between Oblong and SVB. The Loan Agreement provides for a term loan facility of approximately $5.2 million (the "Loan"),

all of which was outstanding as of September 30, 2019. In connection with its execution of the Loan Agreement, Glowpoint also issued a warrant to SVB

that entitles SVB to purchase 72,394 shares of Glowpoint’s Common Stock at an exercise price of $0.01 per share (the "SVB Warrant"). The SVB

Warrant has a ten (10) year term. The fair value of the SVB Warrant ($72,000) has been reflected as an adjustment to the unaudited pro forma

condensed consolidated balance sheet as of September 30, 2019 to record a discount to the Loan.

(4) Acquisition-related costs - In connection with the Acquisition, the Company and Oblong incurred approximately $300,000 of legal and other third party

cash acquisition-related costs subsequent to the Closing Date. Such costs are


Exhibit 99.5

reflected as an adjustment to the unaudited pro forma condensed consolidated balance sheet as of September 30, 2019 to record such costs in

accounts payable and decrease stockholders’ equity.

(5) Promissory notes payable - This pro forma adjustment reflects the settlement of Oblong’s promissory notes payable that were recorded on the

historical Oblong balance sheet as of September 30, 2019. On the Closing Date, these notes payable were converted to shares of Oblong preferred

stock; which were then converted into the Series D Preferred Stock. Therefore, these promissory notes payable were not an assumed liability by

Glowpoint as of the Closing Date. Since the promissory notes were issued during the three months ended September 30, 2019, interest expense on the

promissory notes was $0 for the year ended December 31, 2018 and not material for the nine months ended September 30, 2019, and therefore no pro

forma adjustments were warranted.

(6) Convertible preferred stock - This pro forma adjustment reflects the elimination of Oblong's convertible preferred stock recorded on the historical

Oblong balance sheet as of September 30, 2019 as the common and preferred stock of Oblong issued and outstanding immediately prior to the effective

time of the Acquisition were converted into an aggregate of 1,686,659 shares of Glowpoint's 6.0% Series D Convertible Preferred Stock.


Exhibit 99.5

ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF OPERATIONS

The pro forma adjustments included in the unaudited pro forma condensed combined statement of operations related to the Acquisition and Series E Financing

for the year ended December 31, 2018 and nine months ended September 30, 2019 are as follows:

(a)Stock-based compensation expense - all Oblong Options (whether or not vested) held by current employees of Oblong were canceled and exchanged for

an aggregate of approximately 49,967 restricted shares of Series D Preferred Stock ("Restricted Series D Preferred Stock"). Such shares of Restricted Series

D Preferred Stock are subject to vesting over a two-year period following Closing, with twenty-five percent (25%) of such shares (the "Cliff Vesting Shares")

vesting on the first anniversary of the Closing (the "Cliff Vesting Date") and the remaining seventy-five percent (75%) of such shares vesting in ratable

monthly installments thereafter, subject to the holder’s continued employment through each such vesting date; provided, however, that in the event such

holder’s employment is terminated prior to the Cliff Vesting Date without Cause (as defined in the Amendment), such holder shall remain eligible to vest in the

Cliff Vesting Shares on the Cliff Vesting Date. The Restricted Series D Preferred Stock will automatically convert into 499,670 shares of Glowpoint’s restricted

common stock upon approval of such conversion by Glowpoint’s stockholders and receipt of NYSE American approval of the listing of the combined

company’s common stock on such exchange. The pro forma stock-based compensation expense adjustments related to the Restricted Series D Preferred

Stock were $250,000 and $187,000 for the year ended December 31, 2018 and for the nine months ended September 30, 2019, respectively.

(b)Acquisition-related costs - A reasonable allocation of fees paid to attorneys and accountants that are involved with completing the Acquisition and has been

made to acquisition-related costs. Based on this allocation and information specific to each aspect of the Acquisition, $465,000 of costs incurred before the

Closing Date associated with legal and other third-party costs in connection with the Acquisition were expensed as acquisition-related costs. An adjustment

has been made to the unaudited pro forma condensed consolidated income statement for the nine months ended September 30, 2019 to eliminate such

costs as they are non-recurring.

(c)Amortization of intangible assets - Pro forma adjustments of $1,958,000 and $1,469,000 have been provided for the incremental amortization of intangible

assets for the year ended December 31, 2018 and nine months ended September 30, 2019, respectively, associated with the stepped-up value of intangible

assets and the stated useful lives of the assets as of January 1, 2018. This incremental amortization expense is in addition to amortization expense recorded

in Oblong’s statement of operations of $437,000 and $345,000 for the year ended December 31, 2018 and the nine months ended September 30, 2019,

respectively.

(d)Interest costs - Pro forma adjustments of $97,000 and $73,000 for the year ended December 31, 2018 and nine months ended September 30, 2019,

respectively, have been provided for additional interest expense related to: a) the incremental accretion of interest costs related to the value of the SVB

Warrant ($38,000 and $28,000) and b) the increase in the interest rate of the SVB term loan that became effective October 1, 2019 ($59,000 and $45,000).


Exhibit 99.5

(e)Preferred stock dividends - A pro forma adjustment of $2,276,000 for the nine months ended September 30, 2019 has been provided for the 6.0%

dividends on the total accrued value of the Series D and Series E Preferred Stock. No pro forma adjustment has been recorded for the year ended December

31, 2018 as no dividends accrued prior to the first anniversary of the issuance of the Series D and Series E Preferred Stock.

(f) Net Loss Per Share is calculated by dividing net loss per share by the weighted average number of shares of common shares outstanding during the

period. On April 17, 2019, Glowpoint filed an amendment to its certificate of incorporation that effected a one-for-ten reverse stock split of Glowpoint's issued

and outstanding shares of common stock. All shares of common stock, as well as the per share exercise or conversion price and the number of shares

issuable upon the exercise or conversion of all outstanding options and other convertible or exchangeable securities, including issued and outstanding shares

of the Company’s convertible preferred stock, presented herein have been retroactively adjusted to give effect to this reverse stock split. Diluted net loss per

share is computed by giving effect to all potential shares of common stock, including stock options, restricted stock and preferred stock (including the Series D

Preferred Stock and the Series E Preferred Stock) to the extent they are dilutive. For the periods presented all such common stock equivalents have been

excluded from diluted net loss per share as the effect to net loss per share would be anti-dilutive (due to the net loss). Pro forma earnings per share has been

determined as if the Acquisition had occurred on January 1, 2018 by applying the effect of the pro forma adjustments to historical operating results and the

historic basic and diluted shares outstanding of Glowpoint.


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