TaoWeave, Inc.

Note1 - Business Description and Significant Accounting Policies

Business Description

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

Principles of Consolidation

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

Segments

Effective* October 1, 2019,the former businesses of Glowpoint (now Oblong, Inc.) and Oblong Industries have been managed separately and involve different products and services. Accordingly, the Company currently operates intwo segments for purposes of segment reporting: (1) “Collaboration Products,” which represents the Oblong Industries business surrounding our Mezzanine™ product offerings, and (2) “Managed Services,” which represents the Oblong (formerly Glowpoint), business surrounding managed services for video collaboration and network solutions. See**Note9* - Segment Reporting** for further discussion.

Use of Estimates

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

Cash and Cash Equivalents

As of* December 31, 2024,and2023*, our total cash balances of $4,965,000 and $5,990,000, respectively, were available; however, of this balance, $500,000 was held in short-term certificates of deposit with MidFirst bank for both years. The Company considers highly liquid investments with original maturities ofthree months or less to be cash equivalents.

Accounts Receivable and Provision for Estimated Credit Losses

Accounts receivable are customer obligations due under normal trade terms. The Company sells its Managed Services to end-users and its Collaboration Products to both resell partners and end-users. The Company extends credit to its customers based on their creditworthiness and historical data and performs ongoing credit evaluations of our customers’ financial condition. The Company maintains an allowance for estimated credit losses related to accounts receivable for future expected bad debt resulting from the inability or unwillingness of our customers to make required payments. We estimate our allowance for estimated credit losses based on relevant information such as historical experience, current economic conditions, and future expectations of specifically identified customer balances. This allowance is adjusted as appropriate to reflect current conditions. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. We donot obtain collateral from our customers to secure accounts receivable.

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Net accounts receivable consisted of the following:

The company recorded bad debt expense of $2,000 for our Collaboration Products segment during the year ended* December 31, 2024*, and a recovery of bad debt of $52,000 for our Collaboration Products segment during the year ended* December 31, 2023*. As of* December 31, 2024*, the Company's analysis resulted inno reserve for credit losses remaining on the Consolidated Balance Sheet.

Inventory

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

Prepaid Expenses

As of* December 31, 2024,and2023*, consolidated prepaid expenses and other current assets were $118,000 and $243,000, respectively. These consisted primarily of corporate insurance, software licenses, and, in2023, customer deposits. The51% year-over-year decrease was primarily due to reductions in prepaid software licenses and customer deposits and the timing of cash outflows for the final payroll of the year.

Fair Value of Financial Instruments

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

The Company measures fair value as required by Accounting Standards Codification (“ASC”) Topic820“*Fair Value Measurements and Disclosures” (“ASC Topic820”). ASC Topic820* defines fair value, establishes a framework, gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. ASC Topic820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists athree-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

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

Revenue Recognition

The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic606.

The Company recognizes revenue using thefive-step model as prescribed by Topic606:

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The Company’s managed videoconferencing services are offered to our customers on either a usage basis or on a subscription. Our network services are offered to our customers on a subscription basis. Revenue for these services is generally recognized on a monthly basis as services are performed. Revenue related to professional services is recognized at the time the services are performed. The costs associated with obtaining a customer contract were previously expensed in the period they were incurred. Under Topic606, these payments are deferred on our consolidated balance sheets and amortized over the expected life of the customer contract. As of* December 31, 2024*, and2023, there wasno deferred revenue related to Managed Services. As of* December 31, 2022*, the deferred revenue balance for Managed services was $1,000. During the year ended* December 31, 2023*, the Company recorded $1,000 of revenue that was included in deferred revenue as of* December 31, 2022*.

The Company’s visual collaboration products are composed of hardware and embedded software sold as a complete package and generally include installation and maintenance services. Revenue for hardware and software is recognized upon shipment to the customer. Installation revenue is recognized upon completion of installation, which also triggers the beginning of recognition of revenue for maintenance services, which range fromone tothree years. Revenue is recognized over time for maintenance services. Licensing agreements are for the Company’s core technology platform, g-speak, and are generallyone year in length. Revenue for these services is recognized ratably over the service period. Deferred revenue for Collaboration Products, as of* December 31, 2024*,2023, and2022, totaled $36,000, $158,000, and $549,000, respectively, as certain performance obligations werenot satisfied as of this date. During the year ended* December 31, 2024*, the Company recorded $132,000 of revenue that was included in deferred revenue as of* December 31, 2023*. During the year ended* December 31, 2023*, the Company recorded $435,000 of revenue that was included in deferred revenue as of* December 31, 2022*.

Consolidated revenue recorded over time for the years ended* December 31, 2024,and2023* was $156,000 and $516,000, respectively. Revenue recorded at a period in time for the years ended* December 31, 2024,and2023* was $2,222,000 and $3,294,000, respectively.

The Company disaggregates its revenue by geographic region. SeeNote9 - Segment Reporting for more information.

Taxes Billed to Customers and Remitted to Taxing Authorities

We recognize taxes billed to customers in revenue and taxes remitted to taxing authorities in our cost of revenue. For the years ended* December 31, 2024,and2023*, we included taxes of $68,000 and $95,000, respectively, in revenue and $74,000 and $101,000, respectively, in cost of revenue.

Long-Lived Assets, Goodwill, and Intangible Assets

Property and Equipment

Property and equipment are accounted for in accordance with ASC Topic360 “Property, Plant, and Equipment”* (“ASC Topic360”), stated at cost, and are depreciated using the straight-line method over the estimated economic lives of the assets, which range from three toten years. Leasehold improvements are amortized over the shorter of either the asset’s useful life or the related lease term. Depreciation is computed on the straight-line method for financial reporting purposes. Property and equipment assets, net of accumulated depreciation, totaled zero as of December 31, 2024,and2023*.

Intangible Assets

Intangible assets are accounted for in accordance with ASC Topic350 “Intangibles - Goodwill and Other”* (“ASC Topic350”), and intangible assets with finite lives are amortized using the straight-line method over the estimated economic lives of the assets, which initially ranged from five totwelve years. Intangible assets, net of accumulated amortization, totaled zero as of December 31, 2024,and2023*.

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Operating Lease Right-of-use-assets

Right-of-use assets are accounted for in accordance with ASC Topic842 “Leases” (“ASC Topic842”) and are amortized to yield a straight-line rent expense over the estimated life of the lease. Right-of-use assets, net related to our Collaboration Products segment, totaled zero and $17,000, as of* December 31, 2024,and2023*, respectively.

The Company has primarily leased facilities for office and warehouse space under non-cancellable operating leases for its U.S. locations and accounts for these leases in accordance with ASC-842. Operating lease right-of-use assets and liabilities are recognized on the commencement date based on the present value of lease payments over the expected lease term. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Since our lease arrangements donot provide an implicit rate, we use our estimated incremental borrowing rate for the expected remaining lease term on the commencement date in determining the present value of future lease payments.

Impairment

The Company assesses the impairment of our long-lived assets subject to amortization when events and circumstances indicate that the carrying value of the assets mightnot be recoverable. The determination of related estimated useful lives and whether ornot these assets are impaired involves significant judgments related primarily to the future profitability and/or future value of the assets. Changes in the Company’s strategic plan and/or other-than-temporary changes in market conditions could significantly impact these judgments and could require adjustments to recorded asset balances. Long-lived assets are evaluated for impairment whenever an event or change in circumstances has occurred that could have a significant adverse effect on the fair value of long-lived assets.

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

For the year ended* December 31, 2023*, the Company disposed of property and equipment assets related to our Managed Services segment with a net value of $3,000. As a result, no property and equipment assets were reported on our Consolidated Balance Sheets as of* December 31, 2024,and2023*.

For the year ended* December 31, 2023*, the Company recorded impairment charges of $259,000 on purchased intangible assets related to our Collaboration Products segment. As a result of these impairment charges, no intangible assets were reported on our Consolidated Balance Sheets as of* December 31, 2024,and2023*.

Operating Leases

Operating leases are accounted for in accordance with ASC Topic842 “Leases” (“ASC Topic842”), and the liabilities are amortized using a straight-line method over the estimated life of the lease. As of* December 31, 2023*, the remaining operating lease liability related to our Collaboration Products segment was $17,000, and as of* December 31, 2024*, the Company wasno longer party to any long-term operating leases.

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Operating lease expense is recognized on a straight-line basis over the lease term. Variable lease payments arenot included in the lease payments to measure the lease liability and are expensed as incurred. For leases that include a Company option to extend the lease term that the Company is reasonably certain to exercise, the Company includes the extension in determining lease payments.

Leases with an initial term of12 months or less arenot recognized on the balance sheet. The expense for these short-term leases is recognized on a straight-line basis over the lease term. Common area maintenance fees (CAMs) and other lease-related charges are expensed as incurred. The Company currently holds a month-to-month lease on warehouse space in Denver, Colorado, related to our Collaboration Products segment, which it considers short-term.

Concentration of Credit Risk

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

Income Taxes

We use the asset and liability method to determine our income tax expense or benefit. Deferred tax assets and liabilities are computed based on temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that are expected to be in effect when the differences are expected to be recovered or settled. Any resulting net deferred tax assets are evaluated for recoverability, and accordingly, a valuation allowance is provided when it is more likely thannot that all or some portion of the deferred tax asset willnot be realized.

Stock-based Compensation

Stock-based awards have been accounted for as required by ASC Topic718 “Compensation–* Stock Compensation*” (“ASC Topic718”). Under ASC Topic718, stock-based awards are valued at fair value on the date of grant, and that fair value is recognized over the requisite service period. The Company accounts for forfeitures when they occur.

Research and Development

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

Treasury Stock

Purchases and sales of treasury stock are accounted for using the cost method. Under this method, shares acquired are recorded at the acquisition price directly to the treasury stock account. Upon sale, the treasury stock account is reduced by the original acquisition price of the shares, and any difference is recorded in additional paid-in capital on afirst-in-first-out basis. The Company doesnot recognize a gain or loss to income from the purchase and sale of treasury stock.

Casualty Loss

In* June 2022,the Company discovered that $533,000 of inventory related to our Collaboration Products segment was stolen from the Company’s warehouse in the City of Industry, California. During2022* and2023, we received recovery payments from our insurance policies of $50,000 and $400,000, respectively, resulting in a net casualty loss of $483,000 on our Consolidated Statements of Operations for the year ended* December 31, 2022,and a casualty gain of $400,000 on our Consolidated Statements of Operations for the year ended December 31, 2023*. We donot expect any further recovery of the loss.

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Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In* November 2023,the FASB issued ASUNo.* 2023-07, Segment Reporting (Topic280): Improvements to Reportable Segment Disclosures. The new guidance is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective retrospectively for fiscal years beginning after* December 15, 2023,and interim periods within fiscal years beginning after December 15, 2024.The Company has adopted ASU2023*-07 as of* December 31, 2024,and has prepared this annual report on Form10*-K with the appropriate disclosures. Many disclosures have been enhanced for both2023 and2024.

Recently Issued Accounting Pronouncements

In* December 2023,the FASB issued ASUNo.* 2023-09, Improvements to Tax Disclosures (Topic740*), to enhance the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information. This guidance is effective for fiscal years beginning after December 15, 2024,*with early adoption permitted. The Company is evaluating the impact of adopting this new accounting guidance on its Consolidated Financial Statements.

In* March 2024,the FASB issued ASU2024*-01, Compensation-Stock Compensation (Topic718): Scope Application of Profits Interest and Similar Awards, which provides illustrative guidance to help entities determine whether profits interest and similar awards should be accounted for as share-based payment arrangements within the scope of FASB ASC Topic718, Compensation-Stock Compensation. These amendments are effective for annual periods beginning after* December 15, 2024,and interim periods within those annual periods. The Company doesnot* currently issue profit interests or similar rewards and believes these amendments willnot have a material impact on the Company’s consolidated financial statements.

In* November 2024,the FASB issued ASUNo.* 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures(Subtopic220-40) Disaggregation of Income Statement Expenses, which requires public business entities to disclose additional information about certain expenses in the notes to the financial statements.

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

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Note2 - Liquidity

As of* December 31, 2024*, we had $4,965,000 of available cash and cash equivalents, inclusive of $500,000 held in short-term certificates of deposit and $3,997,000 of working capital. For the years ended* December 31, 2024,and2023*, we incurred net losses of $4,043,000 and $4,384,000, respectively, and net cash used in operating activities was $3,406,200 and $2,993,000, respectively.

There wasno cash flow activity related to investing activities for the years ended* December 31, 2024,and2023*.

Net cash provided by financing activities for the year ended* December 31, 2024*, was attributable to net proceeds of $1,478,000 related to the exercise of Series F Preferred Stock warrants, and net proceeds of $903,000 related to the exercise of Common Stock warrants. Net cash provided by financing activities for the year ended* December 31, 2023*, was attributable to a private placement resulting in net proceeds of $5,364,000 and exercises of Common Stock warrants resulting in net proceeds of $534,000 (seeNote5 - Capital StockandNote6 - Preferred Stockto our Consolidated Financial Statements).

Future Capital Requirements

We believe that our existing cash and cash equivalents will be sufficient to fund our operations and meet our working capital requirements into mid-2026. We believe additional capital will be required in the long term to fund operations and provide growth capital, including potential strategic alternatives and investments in technology, product development, and sales and marketing. To access capital to fund operations or provide growth capital, we will need to raise capital from the exercise of outstanding common and/or preferred warrants, and/or inone or more debt and/or equity offerings. There can beno assurance that we will be successful in raising the necessary capital or that any such offering will be on terms acceptable to the Company. If we are unable to raise additional capital that* may*be needed on terms acceptable to us, it could have a material adverse effect on the Company.

Note3 - Inventory

Net inventory waszero and $239,000 as of* December 31, 2024,and2023*, respectively. Inventory (gross) was $882,000 and $930,000 as of* December 31, 2024,and2023*, respectively, and consisted of equipment related to our Mezzanine™ product offerings, including cameras, tracking hardware, computer equipment, display equipment, and amounts related to our Collaboration Products segment. Inventory consists of finished goods, as determined using average costs, and was stated at the lower of cost or net realizable value.

As of* December 31, 2024,and2023*, reserves for obsolete or slow-moving inventory were recorded at $882,000 and $691,000, respectively. Inventory is shown net of the obsolescence reserve on our Consolidated Balance Sheets. The reserve adjustment recorded to the cost of revenue was a net increase of $191,000 and $342,000 for the years ended* December 31, 2024,and2023*, respectively. The following table summarizes our inventory reserve activity (in thousands):

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Note4 - Accrued Expenses and Other Current Liabilities

Consolidated accrued expenses and other current liabilities were $1,131,000 and $1,038,000 as of* December 31, 2024,and2023*, respectively, consisting primarily of compensation, taxes and fees, and rent expenses. The 9% year-over-year increase was primarily due to increases in tax and accrued compensation.

Our consolidated balances for the years ended* December 31, 2024,and2023* consisted of the following (in thousands):

As of* December 31, 2024,and2023*, respectively, our Managed Services segment had accrued expenses and other current liabilities of $18,000 and $19,000, respectively. These expenses consisted primarily of taxes and regulatory fees. The 5% year-over-year decrease was primarily related to a reduction in regulatory fees.

As of* December 31, 2024,and2023*, respectively, accrued expenses and other current liabilities for our Collaboration Products segment were $252,000 and $320,000, respectively. These amounts primarily consist of rent expenses and customer deposits. The 21% year-over-year decrease was related to reductions in both of these categories.

Unallocated accrued expenses were $861,000 and $699,000 as of* December 31, 2024,and2023*, respectively. For2024, unallocated accrued expenses consisted primarily of compensation expenses, professional service expenses, and corporate franchise taxes. For2023, unallocated accrued expenses consisted primarily of compensation expenses and accrued dividends on our Series F Preferred Stock. The 23% year-over-year increase is primarily related primarily to an increase in corporate taxes and compensation expenses, partially offset by a reduction in accrued dividends.

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Note5 - Capital Stock

Common Stock

The Company’s common stock, par value $0.0001 per share (the “Common Stock”), is listed on the Nasdaq Capital Market (“Nasdaq”). As of* December 31, 2024*, we had 150,000,000 shares of Common Stock authorized, with 1,144,926 and 1,144,737 shares issued and outstanding, respectively.

On* August 23, 2024,the Company effected a1*-for-40 reverse stock split (the "Reverse Split") for its Common Stock. All Common Stock share and per share data throughout these Consolidated Financial Statements have been retroactively adjusted to reflect the Reverse Split. The Company's shares of Common Stock began trading on a split-adjusted basis at the commencement of trading on* August 26, 2024.Upon effectiveness, every 40 shares of Common Stock were converted into1* share of Common Stock. The number of authorized shares and the par value of each share remained unchanged.No fractional shares were issued as a result of the Reverse Split, and any fractional shares that would have otherwise resulted from the Reverse Split were rounded up to the nearest whole share.

During the years ended* December 31, 2024,and2023*,282,314 and 8,490 shares of the Company's Common Stock were issued, respectively, related to the exercise of 282,314 and 8,490 warrants, respectively. Details related to these exercises are below.

During the years ended* December 31, 2024,and2023*,288,968 and 352,624 shares of the Company's Common Stock were issued, respectively, related to the conversion of 3,033 and 4,620 shares of Series F Preferred Stock, plus accrued dividends, respectively.See Note6 - Preferred Stock for further details.

During the year ended* December 31, 2023*,4,490 shares of the Company's Common Stock were issued related to stock-based compensation.No shares were issued in relation to stock-based compensation during the year ended* December 31, 2024*. SeeNote7 - Stock-Based Compensation for further detail.

Common Stock activity for the years ended* December 31, 2024,and2023* is presented below.

Common Stock Warrants

On* March30,* 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which we issued and sold, in a private placement (the “Private Placement”) (i)6,550 shares of our newly designated Series F Preferred Stock, $0.0001 par value per share (the “Series F Preferred Stock”), (ii) preferred warrants (the “Preferred Warrants”) to acquire 32,750 shares of Series F Preferred Stock, and (iii) common warrants (“Common Warrants” and with the Preferred Warrants the “Investor Warrants”) to acquire up to 95,764 shares of Common Stock. Please refer toNote6 - Preferred Stock**** **for further discussion on the Series F Preferred Stock and Preferred Warrants.

In connection with the Private Placement, pursuant to an engagement letter dated* March**30,* 2023 (the "Engagement Letter"), between the Company and Dawson James Securities, Inc. (the “Placement Agent”), the Company agreed to (i) pay the Placement Agent a cash fee equal to 8% of the aggregate gross proceeds raised in the Private Placement, and (ii) grant to the Placement Agent warrants (the “Placement Agent Warrants”) to purchase shares of Common Stock.

On* March**31,* 2023, the Company issued the Common Warrants and the Placement Agent Warrants to purchase an aggregate of 103,427 shares of the Company’s Common Stock. The Common Warrants and Placement Agent Warrants have a term of5 years, commencingsix months andone day from the date of issuance, and were initially exercisable for $68.40 per share. The exercise price is subject to customary adjustments for stock splits, stock dividends, stock combination, recapitalization, or other similar transactions involving the Common Stock, and subject to price-based adjustment on a full ratchet basis in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable exercise price for the Common Warrants (subject to certain exceptions). The Common Warrants and Placement Agent Warrants are exercisable for cash, provided that if there isno effective registration statement available permitting the resale of the common shares, they* may*be exercised on a cashless basis. Exercise of the Common Warrants and Placement Agent Warrants is subject to certain limitations, including a 4.99% beneficial ownership limitation.

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On* October 6, 2023,the Company and the Investors holding a majority of the outstanding shares of the Preferred Stock agreed to waive any and all provisions, terms, covenants, and obligations in the Certificate of Designations or Common Warrants to the extent such provisions permit the conversion or exercise of the Preferred Stock and the Common Warrants, respectively, to occur at a price below $11.17 (the "Waiver"). Notwithstanding anything to the contrary in the Certificate of Designations, each of the “Alternate Conversion Price” and the “Floor Price” as set forth in the Certificate of Designations shall inno* event be less than $11.17 (as adjusted for stock splits, stock dividends, stock combinations, recapitalization, and similar events). On* September 13, 2024,the Company and the Investors agreed to delete Section2* of the Waiver, removing the minimum price restriction on the exercise of Common Warrants.

During the year ended* December 31, 2024*,24,104 Common Warrants were issued in accordance with the exercise provisions of the Preferred Warrants.See Note6 - Preferred Stock for additional detail on the exercises of the Preferred Warrants. These Common Warrants were exercisable at an initial exercise price of $68.40 and have a term offive years.

Pursuant to Sections2(a) and2(c) of the Common Warrants (the "Make-whole Provision"), as a result of the Reverse Split, the exercise price of the Common Warrants and Placement Agent Warrants were adjusted to $3.41 per share, and the number of Common Warrant shares that* may*be purchased upon exercise of the Common Warrants and the Placement Agent Warrants were increased proportionately so that after the exercise price adjustment the aggregate exercise price payable hereunder for the adjusted number of Common Warrant Shares was the same as the aggregate exercise price in effect immediately prior to the exercise price adjustment. These adjustments resulted in an aggregate of 2,401,047 Common Warrants and 153,470 Placement Agent Warrants remaining outstanding following the Reverse Split. The additional warrants created by the Make-whole Provision resulted in an aggregate deemed dividend of $8,974,000, which will reduce the net income available to common shareholders. Details of the Make-whole Provision transactions are presented below:

(1) Original exercise price based on the March 30, 2023 Purchase Agreement.

(2) Adjusted by the Reverse Split.

(3) Based on the original aggregate exercise price divided by the Make Whole Provision exercise price.

(4) Calculated by dividing (x) the sum of the dollar volume-weighted average price of the Company's Common Stock for each of the five lowest trading days during the sixteen trading days after the Reverse Split by (y) five.

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During the year ended* December 31, 2024*,282,314 Common Warrants were exercised at a price of $3.41 per share for shares of Common Stock. The Company received gross and net proceeds of $964,000 and $903,000, respectively. Subsequent to* December 31, 2024*, an additional 10,000 Common Warrants were exercised at a price of $3.41 per share for 10,000 shares of Common Stock. The Company received gross and net proceeds of $34,000 and $31,000, respectively.

One of our directors, Jonathan Schechter, is currently a partner at The Special Equities Group, a division of Dawson James Securities, Inc. (the Placement Agent described above). In* March 2023,prior to Mr. Schechter's appointment to our board in May 2023and pursuant to our Engagement Letter. During the year ended December 31, 2024*, pursuant to the terms of the Placement Agent Agreement, we paid the Placement Agent a cash fee equal to 8% of the aggregate gross proceeds raised from the exercise of the 282,314 Common Stock Warrants. The fee was $77,000. Mr. Schechter didnot receive any of the fees paid.

Warrants outstanding as of* December 31, 2024*, are as follows:

Warrant activity for the years ended* December 31, 2024,and2023* is presented below:

Treasury Shares

The Company maintains Treasury Stock for the Common Stock shares bought back by the Company when they withhold shares to cover taxes on stock compensation transactions. There wereno treasury stock transactions during the years ended* December 31, 2024,and2023*, and the treasury shares outstanding were 189 as of* December 31, 2024,and2023*.

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Note6 - Preferred Stock

Our Certificate of Incorporation authorizes the issuance of up to 5,000,000 shares of preferred stock. As of* December 31, 2024,and2023*, we had 1,983,250 designated shares of preferred stock and 545 and 1,930 shares of preferred stock issued and outstanding, respectively.

Series F Preferred Stock

The terms of the Series F Preferred Stock are as set forth in the Certificate of Designations of Series F Preferred Stock of Oblong, Inc. (the “Certificate of Designations”), which was filed and became effective with the Secretary of State of the State of Delaware on* March31,* 2023. The Private Placement closed on* March31,* 2023, in exchange for gross and net proceeds of $6,386,000 and $5,364,000, respectively. The financing fees associated with the Purchase Agreement were $1,022,000.

The Series F Preferred Shares are convertible into fully paid and non-assessable shares of the Company’s Common Stock at the election of the holder at any time at an initial conversion price of $68.40 (the “Conversion Price”). The holders of the Series F Preferred Shares* mayalso elect to convert their shares at an alternative conversion price equal to the lower of (i)80% of the applicable Conversion Price as in effect on the date of the conversion, (ii)80% of the closing price on the trading day immediately preceding the delivery of the conversion notice, and (iii) the greater of (a) the Floor Price (as defined in the Certificate of Designations) and (b) the quotient of (x) the sum of thefive* lowest Closing Bid Prices (as defined in the Certificate of Designations) for trading days in the30 consecutive trading day period ending and including the trading day immediately preceding the delivery of the applicable Conversion Notice, divided by (y) five. The Conversion Price is subject to customary adjustments for stock splits, stock dividends, stock combination recapitalization, or other similar transactions involving the Common Stock and subject to price-based adjustment on a full ratchet basis in the event of any issuances of our common stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable Conversion Price (subject to certain exceptions).

On* October 6, 2023,the Company and Investors holding a majority of the outstanding shares of the Preferred Stock agreed to waive any and all provisions, terms, covenants, and obligations in the Certificate of Designations to the extent such provisions permit the conversion or exercise of the Preferred Stock to occur at a price below $11.17. Notwithstanding anything to the contrary in the Certificate of Designations, each of the “Alternate Conversion Price” and the “Floor Price” as set forth in the Certificate of Designations shall inno* event be less than $11.17 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations, and similar events).

Under the Certificate of Designations, the Series F Preferred Shares have an initial stated value of $1,000 per share (the “Stated Value”). The holders of the Series F Preferred Shares are entitled to dividends of 9% per annum, which will be payable in arrears quarterly. Accrued dividends* maybe paid, at our option, in cash and ifnot* paid, shall increase the stated value of the Series F Preferred Shares. Upon the occurrence and during the continuance of a Triggering Event (as defined in the Certificate of Designations), the Series F Preferred Shares will accrue dividends at the rate of 20% per annum (the “Default Rate”). The Series F Preferred Shares haveno voting rights, other than with respect to certain matters affecting the rights of the Series F Preferred Shares. On matters with respect to which the holders of the Series F Preferred Shares have a right to vote, holders of the Preferred Shares will have voting rights on an as-converted basis.

Our ability to settle conversions is subject to certain limitations set forth in the Certificate of Designations. Further, the Certificate of Designations contains a certain beneficial ownership limitation after giving effect to the issuance of shares of common stock issuable upon conversion of the Series F Preferred Shares.

The Certificate of Designations includes certain Triggering Events (as defined in the Certificate of Designations), including, among other things, (i) the failure to file and maintain an effective registration statement covering the sale of the holder’s securities registrable pursuant to the Registration Rights Agreement, (ii) the failure to pay any amounts due to the holders of the Series F Preferred Shares when due, and (iii) if Peter Holst ceases to be the chief executive officer of the Company other than because of his death, and a qualified replacement, reasonably acceptable to a majority of the holders of the Series F Preferred Shares, isnot appointed withinthirty (30) business days. In connection with a Triggering Event, the Default Rate is triggered. We are subject to certain affirmative and negative covenants regarding the incurrence of indebtedness, acquisition transactions, the existence of liens, the repayment of indebtedness, the payment of cash in respect of dividends (other than dividends pursuant to the Certificate of Designations), maintenance of properties and the transfer of assets, among other matters.

During the years ended* December 31, 2024,and2023*,3,033 and 4,620 shares of Series F Preferred Stock, respectively, plus accrued dividends, were converted to 288,968 and 352,624 shares of the Company’s common stock, respectively. There were 545 and 1,930 shares of Series F Preferred Stock outstanding, respectively, and accrued dividends of $29,000 and $136,000 as of* December 31, 2024,and2023*, respectively. Series F Preferred Stock transactions are summarized in the table below:

-F-17-

Series F Preferred Stock Warrants

The Preferred Warrants are exercisable for Series F Preferred Shares at an exercise price of $975. The exercise price is subject to customary adjustments for stock splits, stock dividends, stock combination recapitalization, or other similar transactions involving the Common Stock. The Preferred Warrants expire three years from the date of issuance and are exercisable for cash. For each Preferred Warrant exercised, the Investors shall receive Common Warrants to purchase a number of shares of Common Stock equal to 100% of the number of shares of Common Stock the Investors would receive if the Series F Preferred Shares issuable upon exercise of such Warrant were converted at the applicable Conversion Price. The fair value of the Preferred Warrants was recorded within additional paid-in capital upon issuance.

During the year ended* December 31, 2024*,1,648 Preferred Warrants were exercised at a price of $975 per share. The Company received gross and net proceeds of $1,607,000 and $1,478,000, respectively. In accordance with the exercise provisions of the Preferred Stock,24,104 Common Warrants were issued during the year ended* December 31, 2024*.See Note5 - Capital Stock for further discussion of the Common Warrants. As of* December 31, 2024*,31,102 Preferred Warrants remained outstanding.

As discussed inNote5 - Capital Stock,one of our directors is currently a partner at The Special Equities Group ("SEG"), a division of Dawson James Securities, Inc. During the year ended* December 31, 2024*, pursuant to the terms of the Placement Agent Agreement, we paid the Placement Agent a cash fee equal to 8% of the aggregate gross proceeds raised from the exercise of the 1,648 Common Stock Warrants. The fee was $129,000. Mr. Schechter didnot receive any of the fees paid.

Note7 - Stock-Based Compensation

2019 Equity Incentive Plan

On* December**19,* 2019, the Oblong, Inc.2019 Equity Incentive Plan (the*“2019* Plan”) was approved by the Company’s stockholders at the Company’s2019 Annual Meeting of Stockholders. The2019 Plan is an omnibus equity incentive plan pursuant to which the Company* maygrant equity and cash incentive awards to certain key service providers of the Company and its subsidiaries. As of December 31, 2024,and2023*, there wereno remaining shares in the share pool available for new grants under the2019 Plan.

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A summary of stock compensation expense by category, for the years ended* December 31, 2024,and2023*, is as follows (in thousands):

A summary of stock compensation by department, for the years ended* December 31, 2024,and2023* is as follows (in thousands):

Stock Options

During the year ended* December 31, 2024*, no stock options were granted,84 stock options were vested, and 250 vested stock options expired. During the year ended* December 31, 2023*, no stock options were granted,83 stock options were vested, and 167 vested stock options expired. As of* December 31, 2024*, there wereno stock options outstanding.

-F-19-

A summary of stock options expired and forfeited under our plans and options outstanding as of, and changes made during, the years ended* December 31, 2024,and2023* is presented below (in thousands except weighted-average exercise price):

The intrinsic value of vested and unvested options wasnot significant for all periods presented. Stock compensation expense related to stock options for the year ended* December 31, 2024*, was $62,000, recorded as a component of General and Administrative expenses. Stock compensation expense related to stock options for the year ended* December 31, 2023*, was $124,000. As of* December 31, 2024*, there wasno remaining unrecognized stock-based compensation expense for options.

Restricted Stock

As of* December 31, 2024,and2023*, there wereno outstanding restricted stock awards ("RSAs") or restricted stock units (“RSUs,” collectively "Restricted Stock"). There wasno Restricted Stock activity or expense for the year ended* December 31, 2024*. During the year ended* December 31, 2023*, in relation to the departure of certain board members,2 RSAs became fully vested. The2 RSAs, along with 49 previously vested RSUs, were delivered in shares of the Company's Common Stock in accordance with the terms of the agreements. This Restricted Stock was issued in2014 and had been fully expensed, so there wasno stock compensation expense related to Restricted Stock for the year ended* December 31, 2023*. During the year ended* December 31, 2023*,4,440 RSUs were granted to certain board members. These RSUs vested immediately upon issuance, and the stock compensation related to RSUs for the year ended* December 31, 2023*, was $380,000, which was included in general and administrative expenses on our Consolidated Statements of Operations.

-F-20-

Note8 - Net Loss Per Share

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. The weighted average number of shares of common stock outstanding doesnot include any potentially dilutive securities or any unvested restricted shares of common stock. Vested RSUs (for which shares of common stock havenot yet been delivered) are included in the calculations of basic net loss per share. Unvested RSUs arenot included in calculations of basic net loss per share, as they arenot considered issued and outstanding at the time of grant.

Diluted net loss per share is computed by giving effect to all potential shares of common stock, including warrants, stock options, RSUs, and unvested restricted stock awards, to the extent they are dilutive. For the year ended* December 31, 2024*, all such common stock equivalents have been excluded from diluted net loss per share as the effect on net loss per share would be anti-dilutive (due to the net losses).

The following table sets forth the computation of the Company’s basic and diluted net loss per share (in thousands, except per share data):

The following table represents the potential shares that were excluded from the computation of the weighted average number of shares of common stock in computing the diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect:

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Note9 - Segment Reporting

The Company currently operates intwo segments for purposes of segment reporting: (1) “Collaboration Products,” which represents the Oblong Industries business surrounding our Mezzanine™ product offerings, and (2) “Managed Services,” which represents the Oblong (formerly Glowpoint), business surrounding managed services for network solutions and video collaboration.

In2024, the Company adopted ASU2023-07. ASU2023-07 created certain additional disclosure requirements, including, among other requirements, disclosure of the Company’s Significant Segment Expenses (“SSEs”) regularly provided to the Company’s Chief Operating Decision Maker (“CODM”) included within each reported measure of segment profit or loss, a required disclosure for other segment items and a narrative description of such items, a disclosure of the title and the position of the CODM and a narrative disclosure describing how the CODM uses the reported segment profit or loss measures to assess segment performance and allocate resources.

The CODM for both segments for each of the years ended* December 31, 2024,and2023* was Pete Holst, the Company's President and Chief Executive Officer. As part of the adoption of ASU2023-07, management reviewed the information provided to the CODM and updated the presentation of such information, including SSEs, to better align with the requirements of ASU2023-07. Certain prior period segment information has been recast in order to conform with current-period presentation requirements, including the allocation methodology of bad debt expense, labor and labor-related costs, and certain other segment items to segments.

Certain information concerning the Company’s segments for the years ended* December 31, 2024,and2023* is presented in the following tables (in thousands):

-F-22-

The Company’s SSEs for each segment include direct labor costs and segment-based management expenses (collectively, “labor and labor related”), costs to purchase, store, and ship inventory, and inventory impairments (inventory and inventory related), circuit and network cost of revenue, other non-inventory cost of revenue, research and development costs, and bad debt expense, as these are specific costs regularly provided to the CODM and used to evaluate segment performance. For the year ended* December 31, 2023*, we also included amortization and impairment of intangible assets, and insurance proceeds received from a casualty gain. Other segment items include expenses recorded within cost of revenue and operating expenses, which arenot regularly provided to the CODM. The CODM evaluates segment profit each period against historical results, factoring in macroeconomic factors such as the cost of labor and supplies, to assess segment performance.

-F-23-

-F-24-

For the years ended* December 31, 2024,and2023*,no material revenue was attributable to any individual foreign country. Approximately 1% of foreign revenue is billed in foreign currency, and foreign currency gains and losses arenot material. Revenue by geographic area is allocated as follows (in thousands):

The Company considers a significant customer to beone that comprises more than10% of its consolidated revenues or accounts receivable. Losing or reducing sales or anticipated sales to our most significant customer or several of our smaller customers could have a material adverse effect on our business, financial condition, and results of operations.

Concentration of consolidated revenues was as follows:

Concentration of consolidated accounts receivable was as follows:

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Note10 - Commitments and Contingencies

From time to time, we are subject to various legal proceedings arising in the ordinary course of business, including proceedings for which we have insurance coverage. As of the date hereof, we arenot a party to any legal proceedings that we currently believe will have a material adverse effect on our business, financial position, results of operations, or liquidity.

Note11 - Income Taxes

The following table sets forth pretax book loss (in thousands):

The following table sets forth income before taxes and the income tax expense for the years ended* December 31, 2024,and2023* (in thousands):

-F-26-

Our effective tax rate differs from the statutory federal tax rate for the years ended* December 31, 2024,and2023*, as shown in the following table (in thousands):

The tax effect of the temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of* December 31, 2024,and2023* is presented below (in thousands):

The ending balances of the deferred tax asset have been fully reserved, reflecting the uncertainties as to the realizability evidenced by the Company’s historical results. The change in the valuation allowance for the year ended* December 31, 2024*, is an increase of $1,026,000. The change in the valuation allowance for the year ended* December 31, 2023*, was a decrease of $112,000.

-F-27-

We and our subsidiary file federal and state tax returns on a consolidated basis. On* October 1, 2019,Oblong, Inc. acquired the stock of Oblong Industries Inc., resulting in Oblong Industries Inc.'s shareholders owning75%* of Oblong, Inc. Therefore, an “ownership change” occurred on this date (as defined under Section382 of the Internal Revenue Code of1986, as amended), which places an annual limitation on the utilization of the net operating loss (“NOL”) carryforwards accumulated before the ownership change. If additional ownership changes have occurred or do occur in the future, the use of the net operating loss carryforwards and the research and development credit could be subject to further limitation. As a result of this annual limitation and the limited carryforward life of the accumulated NOLs, we determined that the2019 ownership change resulted in the permanent loss of approximately $30,880,000 of federal NOL carryforwards. State NOL carryforwards were limited in a similar fashion.

The Company had federal net operating loss carryforwards of $143,636,000 on* December 31, 2024*. Of this amount, $75,224,000 will expire in various amounts from2025 through2037. As of* December 31, 2024*, the Company also has various state net operating loss carryforwards of an estimated $106,323,000. The determination of the state net operating loss carryforwards is dependent upon apportionment percentages and state laws that can change, from year to year and impact the amount of such carryforwards. The Company has Research and Development credits of $2,154,000 at* December 31, 2024*. The Research and Development credits begin to expire at the end of2026.

There wereno significant matters determined to be unrecognized tax benefits taken or expected to be taken in a tax return, in accordance with ASC Topic740 “Income Taxes” (“ASC740”), which clarifies the accounting for uncertainty in income taxes recognized in the financial statements, that have been recorded on the Company’s Consolidated Financial Statements for the years ended* December 31, 2024,and2023*. The Company doesnot anticipate a material change to unrecognized tax benefits in the nexttwelve months.

Additionally, ASC740 provides guidance on the recognition of interest and penalties related to unrecognized tax benefits. There wereno interest or penalties related to income taxes that have been accrued or recognized as of and for the years ended* December 31, 2024,and2023*.

The Internal Revenue Service* maygenerally access additional income tax for the lastthree* years. This would generally prevent the Service from opening an examination for years ended on or before* December 31, 2021.However, there are exceptions that can extend the statute of limitations tosix* years and, in some cases, prevent it from ever expiring.

Note12 -401(k) Plan

We have adopted a retirement plan under Section401(k) of the Internal Revenue Code. The401(k) plan covers substantially all employees who meet minimum age and service requirements. Company contributions to the401(k) plan for the years ended* December 31, 2024,and2023* were $58,000 and $64,000, respectively.

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