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Liquidity and Going Concern Uncertainty | 3 Months Ended
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Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Liquidity and Going Concern Uncertainty | Note 2 - Liquidity and Going Concern Uncertainty As of March 31, 2023, we had $3,714,000 in cash and working capital of $3,335,000. For the three months ended March 31, 2023, we incurred a net loss of $1,219,000 and used $844,000 of net cash in operating activities. Equity Private Placement On March 30, 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 transaction (the “Private Placement”), (i) 6,550 shares (the “Preferred Shares”) of our newly designated Series F convertible preferred stock, $0.0001 par value per share (the “Series F Preferred Stock”), initially convertible into up to 3,830,409 shares of our Common Stock, (ii) preferred warrants (“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 3,830,413 shares of Common Stock. The terms of the Series F Preferred Stock are as set forward 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 March 31, 2023. The Private Placement closed on March 31, 2023. Please see the discussion in Note 6 - Capital Stock for further details on the Common Warrants and Note 7 - Preferred Stock for further discussion on the Series F Preferred Stock and Preferred Warrants. The aggregate gross proceeds of the Private Placement are expected to be $6,386,000. All of the Preferred Shares and Investor Warrants were issued at the Closing, but part of the purchase price equivalent to $4,000,000 was placed into an escrow account with American Stock Transfer & Trust Company (the “Escrow”), to be released upon our obtaining stockholder approval permitting the issuance of more than 19.99% of our outstanding shares of Common Stock at less than the Minimum Price (as defined under the Nasdaq Rules) in accordance with Nasdaq listing standards and as otherwise may be required (the “Stockholder Approval”). The Company expects to use the net proceeds from the Private Placement and the proceeds, if any, from the exercise of the Investor Warrants for general corporate purposes and potential strategic alternatives. We have not, nor has anyone on our behalf, initiated any substantive discussions directly or indirectly with any strategic alternatives partner. In connection to 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 306,433 shares of Common Stock at an initial exercise price of $1.71 per share. Additionally, we agreed to reimburse the Placement Agent for certain expenses incurred in connection with the Private Placement and to pay certain contingent fees upon the occurrence of specified future events. Please see the discussion in Note 6 - Capital Stock for further details on the Placement Agent Warrants. Future Capital Requirements and Going Concern Our capital requirements in the future will continue to depend on numerous factors, including the potential release of the Escrow, the amount of revenue the Company is able to generate, customer renewal rates and the timing of collection of outstanding accounts receivable, in each case particularly as it relates to the Company’s major customers, the expense to deliver services, expense for sales and marketing, and expense for research and development. The Company believes that, in the event the Escrow is not released, based on its current projection of revenue, expenses, and cash flows, it will not have sufficient resources to fund its operations for the next twelve months following the filing of this Report. We believe additional capital will be required to fund operations and provide growth capital including 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 in one or more debt and/or equity offerings. There can be no assurance that we will be successful in raising 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. The factors discussed above raise substantial doubt as to our ability to continue as a going concern. The accompanying Condensed Consolidated Financial Statements do not include any adjustments that might result from these uncertainties.

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- Definition The entire disclosure when substantial doubt is raised about the ability to continue as a going concern. Includes, but is not limited to, principal conditions or events that raised substantial doubt about the ability to continue as a going concern, management's evaluation of the significance of those conditions or events in relation to the ability to meet its obligations, and management's plans that alleviated or are intended to mitigate the conditions or events that raise substantial doubt about the ability to continue as a going concern. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 40 -URI https://asc.fasb.org/subtopic&trid=51888271 + Details
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