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Summary Of Significant Accounting Policies (Policy)
9 Months Ended
Sep. 30, 2012
Summary Of Significant Accounting Policies [Abstract]  
Description Of Business

Description of Business.  Insignia Systems, Inc. (the “Company”) markets in-store advertising products, programs and services to consumer packaged goods manufacturers (customers) and retailers. The Company has been in business since 1990. The Company’s products and services include the Insignia POPSign® program, thermal sign card supplies for the Company’s Impulse system, Stylus software and laser printable cardstock and label supplies. Since 1998, the Company has focused on providing in-store services through the Insignia Point-of-Purchase Services (Insignia POPS®) in-store advertising program.

Basis Of Presentation

Basis of Presentation.  Financial statements for the interim periods included herein are unaudited; however, they contain all adjustments, including normal recurring accruals, which in the opinion of management, are necessary to present fairly the financial position of the Company at September 30, 2012, its results of operations for the three and nine months ended September 30, 2012 and 2011, and its cash flows for the nine months ended September 30, 2012 and 2011. Results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.

The financial statements do not include certain footnote disclosures and financial information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America and, therefore, should be read in conjunction with the financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.

The Summary of Significant Accounting Policies in the Company’s 2011 Annual Report on Form 10-K describes the Company’s accounting policies.

Inventories

 

Inventories.  Inventories are primarily comprised of parts and supplies for Impulse machines, sign cards, and rollstock.  Inventory is valued at the lower of cost or market using the first-in, first-out (FIFO) method, and consists of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

 

 

2012

 

 

2011

Raw materials

$

82,000 

 

$

74,000 

Work-in-process

 

4,000 

 

 

12,000 

Finished goods

 

253,000 

 

 

235,000 

 

$

339,000 

 

$

321,000 

 

 

 

Property And Equipment

Property and Equipment.  Property and equipment consists of the following: 

 

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

 

 

2012

 

 

2011

Property and Equipment:

 

 

 

 

 

Production tooling, machinery and equipment

$

3,916,000 

 

$

3,908,000 

Office furniture and fixtures

 

260,000 

 

 

260,000 

Computer equipment and software

 

1,029,000 

 

 

1,008,000 

Web site

 

38,000 

 

 

38,000 

Leasehold improvements

 

616,000 

 

 

595,000 

 

 

5,859,000 

 

 

5,809,000 

Accumulated depreciation and amortization

 

(3,600,000)

 

 

(3,050,000)

Net Property and Equipment

$

2,259,000 

 

$

2,759,000 

 

Depreciation.  Depreciation expense was $183,000 and $550,000 in the three and nine months ended September 30, 2012, respectively, and $88,000 and $261,000 in the three and nine months ended September 30, 2011, respectively.

Stock-Based Compensation

Stock-Based Compensation.  The Company measures and recognizes compensation expense for all stock-based awards at fair value using the Black-Scholes option pricing model to determine the weighted average fair value of options and employee stock purchase plan rights. The Company recognizes stock-based compensation expense on a straight-line method over the requisite service period of the award. 

There were 364,000 stock option awards granted during the nine months ended September 30, 2012, and the Company estimated the fair value of these awards using the following weighted average assumptions: expected life of 4.0 years, expected volatility of 73%, dividend yield of 0% and risk-free interest rate of .59%. Total stock-based compensation expense recorded for the three and nine months ended September 30, 2012, was $39,000 and $289,000, respectively, and for the three and nine months ended September 30, 2011 was $172,000 and $545,000, respectively. 

There were no stock option exercises in the three and nine months ended September 30, 2012. Total option exercises in the three and nine months ended September 30, 2011 were 18,000 and 1,635,000, respectively, for which the Company received proceeds of $40,000 and $2,976,000.

Dividends Paid

 

Dividends Paid.  On February 22, 2011, after receipt of a settlement payment in the Company’s antitrust and false advertising lawsuit with News America Marketing In-Store, LLC (“News America”), the Board of Directors approved a special $2.00 per common share dividend totaling $31,335,000, which was paid on May 2, 2011.  Prior to May 2, 2011, the Company had never paid a dividend, and no dividends have been paid since that time.

Net Income (Loss) Per Share

 

Net Income (Loss) Per Share.  Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average shares outstanding and excludes any potential dilutive effects of stock options. Diluted net income (loss) per share gives effect to all diluted potential common shares outstanding during the period.

Options to purchase approximately 1,236,000 shares of common stock with a weighted average exercise price of $3.97 were outstanding at September 30, 2012 and were not included in the computation of common stock equivalents for the three months ended September 30, 2012 because their exercise prices were higher than the average fair market value of the common shares during the reporting period.  Due to the net loss incurred during the nine months ended September 30, 2012 and the three months ended September 30, 2011, all stock options were anti-dilutive for those periods. Options to purchase approximately 646,000 shares of common stock with a  weighted average exercise price of $6.54 were outstanding at September 30, 2011 and were not included in the computation of common stock equivalents for the nine months ended September 30, 2011 because their exercise prices were higher than the average fair market value of the common shares during the reporting period. 

 

Weighted average common shares outstanding for the three and nine months ended September 30, 2012 and 2011 were as follows:

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30

 

September 30

 

2012

2011

 

2012

2011

Denominator for basic net income (loss)
    per share - weighted average shares

13,602,000 
15,121,000 

 

13,605,000 
15,551,000 

 

 

 

 

 

 

Effect of dilutive securities:

 

 

 

 

 

Stock options

1,000 

 -

 

 -

400,000 

 

 

 

 

 

 

Denominator for diluted net income (loss)
    per share - weighted average shares

13,603,000 
15,121,000 

 

13,605,000 
15,951,000