Glowpoint Announces 2013 Results

DENVER, March 6, 2014

Financial Highlights:

• Revenue increased 15 percent to $33.5 million for 2013 from $29.1 million for 2012. This increase is attributable to revenue contribution for the full year 2013 from the acquisition of Affinity VideoNet in October 2012.
• Adjusted EBITDA (a non-GAAP financial measure defined below and reconciled to GAAP in the attached schedule) increased 43 percent to $4.4 million for 2013 from $3.1 million for 2012.   
• Net cash provided by operating activities increased to $2.3 million for 2013 as compared to $0.8 million for 2012.
• During the second half of 2013, the Company simplified its capital structure by exchanging all outstanding shares of Series B-1 preferred stock into common stock, which eliminated a total of $10.2 million of liquidation preference on the exchanged preferred stock and eliminated future annual dividends of $600,000 that would have commenced accruing in 2014.
• During the fourth quarter of 2013, the Company refinanced its debt facilities to improve near-term liquidity and provide additional borrowing capacity for strategic growth plans.  
  • The Company secured a new credit facility from Main Street Capital Corporation ("Main Street") consisting of a 5-year term loan commitment of $11.0 million and a 2-year revolving line of credit of up to $2.0 million. As of December 31, 2013, the Company had outstanding borrowings of $9.0 million on the term loan and $0.3 million on the revolver. During 2013, and in connection with entry into the Main Street credit facility, the Company repaid borrowings of $8.5 million on former term loans and $0.8 million on the former revolver that existed as of December 31, 2012.
  • The Company reduced the principal amount on the seller promissory note issued in connection with the Affinity acquisition by $0.2 million to $1.9 million and extended the maturity date from December 31, 2014, to January 4, 2016.
  • The Company's former debt obligations would have required minimum near-term principal payments of $3.6 million in 2014 and $3.0 million in 2015.  Principal payments in 2014 and 2015 under the Main Street credit facility and the amended seller note are based on a percentage of excess cash flow generated by the Company and the achievement of certain EBITDA levels. The Company expects to make principal payments of $950,000 on its debt obligations in 2014.  See the Company's 2013 Form 10-K for a full discussion of our debt obligations as of December 31, 2013.
• During 2013, GPI Investment Holdings LLC ("GPI") acquired a significant portion of the Company's outstanding common stock from other stockholders. GPI owned approximately 43 percent of the Company's common stock as of December 31, 2013. GPI is an investment vehicle affiliated with Main Street and the Pessin family who provide more than 40 years of experience investing in, and successfully assisting, micro- and small-cap companies.  

"We made significant progress in 2013 on several fronts, including capital restructuring, integration of the Affinity acquisition, growth in Adjusted EBITDA, re-shaping our management team, and shifting our service offerings to meet customers' transforming video collaboration needs," said Peter Holst, CEO and president of Glowpoint. "Videoconferencing is a very dynamic market as customers move from hardware-based solutions to virtualized delivery of the technology. Moving forward, our goal is to transform Glowpoint into a service platform to deliver a rapidly growing ecosystem of video, voice, and data collaboration applications to our partners and customers. We believe very strongly in the long-term market opportunity and have taken the requisite steps in 2013 to enable significant platform enhancements in 2014. The core elements of our 2014 plan are as follows:

• More than $2 million of investments in core infrastructure, information systems, and our next generation IT service management platform to not only enhance the current customer experience but broaden the scope of features around it. We expect to fund these investments from the positive cash flow from operations the Company projects to generate in 2014.
• Continued investments in personnel and training. The majority of the management team has only recently joined Glowpoint during the past three-to-six months. With time and an aggressive effort to add experienced personnel in critical areas such as product development, operations, and sales, we believe our focus talent acquisition will yield results.
• Cost-of-service delivery. We believe our development efforts and commitment toward automating key elements of the supply chain will yield higher degrees of operating leverage as the year progresses, resulting in improved gross margins and Adjusted EBITDA performance.
• Mergers and Acquisitions. With a vastly improved capital structure, enhanced product pipeline, and a fully funded capital expenditure plan, our intent is to seek out acquisitions that either add to, or expand, our current service portfolio. We have established strong relationships with our capital sources and look to leverage their substantial financial capacity to create shareholder value."

Mr. Holst continued, "On a pro forma basis, assuming the Affinity acquisition occurred on January 1, 2012, our revenue declined 9.8 percent from 2012 to 2013, primarily driven by pricing pressure on certain managed services and technology shifts. While we continue to believe those risk factors remain ever-present in the industry as a whole, we are projecting 2014 revenue to be essentially level with 2013 while improving Adjusted EBITDA performance by approximately 10 percent."

The results of our operations and financial condition for the years ended December 31, 2013 and 2012 are more fully discussed in our Annual Report on Form 10-K for 2013, filed with the Securities and Exchange Commission on March 6, 2014. Investors are encouraged to carefully review the 2013 Form 10-K for a complete analysis of our results from operations and financial condition.

Teleconference

Glowpoint will host a conference call at 4:30 p.m. EST today to discuss the financial results for 2013, in addition to updates regarding the business. To view the webcast, please visit: https://glowpoint.webcasts.com. To participate in the teleconference, callers may dial the toll-free number +1 (877) 407-1869 (U.S. callers only) or +1 (201) 689-8044 (from outside the U.S.). For those unable to participate in the live call, a recording of the call will be archived for viewing two hours after the call at www.glowpoint.com/investor-relations.