-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lu004QecqY/chnsYccLUjYZJoRiHkLyWC50ief29VU+jsIy9d6WvkZKS8w+ZYPEZ rgJTmbatGCNVEKHXUaQUUA== 0000897101-96-000577.txt : 19960819 0000897101-96-000577.hdr.sgml : 19960819 ACCESSION NUMBER: 0000897101-96-000577 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960802 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INSIGNIA SYSTEMS INC/MN CENTRAL INDEX KEY: 0000875355 STANDARD INDUSTRIAL CLASSIFICATION: 5040 IRS NUMBER: 411656308 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19380 FILM NUMBER: 96603336 BUSINESS ADDRESS: STREET 1: 10801 RED CIRCLE DRIVE CITY: MINNETONKA STATE: MN ZIP: 55343 BUSINESS PHONE: 6129308200 MAIL ADDRESS: STREET 2: 10801 RED CIRCLE DRIVE CITY: MINNETONKA STATE: MN ZIP: 55343 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the period ended: June 30, 1996 Commission File Number: 0-19380 INSIGNIA SYSTEMS, INC. (Exact name of registrant as specified in its charter) Minnesota 41-1656308 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10801 Red Circle Drive, Minnetonka, Minnesota 55343 (Address of principal executive offices) (Zip Code) (612) 930-8200 (Registrant's telephone number, including area code) Not applicable (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registration (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. __X__ Yes ______ No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Common Stock, $.01 Par Value -- 5,403,858 shares as of August 1, 1996. Total number of pages: 12 Exhibit index is on page: 11 INDEX REGISTRANT COMPANY AND SUBSIDIARIES PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Balance Sheets -- June 30, 1996 and December 31, 1995 Statements of Operations -- Three months ended June 30, 1996 and 1995; Six months ended June 30, 1996 and 1995. Statements of Cash Flows -- Six months ended June 30, 1996 and 1995 Notes to Financial Statements -- June 30, 1996 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURES Part I. Financial Information Item 1. Financial Statements
INSIGNIA SYSTEMS, INC. BALANCE SHEETS June 30, December 31, ASSETS 1996 1995 ------------ ------------ (UNAUDITED) (NOTE) CURRENT ASSETS: Cash and cash equivalents $ 621,771 $ 583,613 Marketable securities 394,556 503,906 Accounts receivable - net of $94,434 allowance 2,543,065 2,235,374 Inventories 1,750,440 2,027,566 Prepaid expenses 198,229 331,618 ------------ ------------ TOTAL CURRENT ASSETS 5,508,061 5,682,077 PROPERTY AND EQUIPMENT: Production tooling, machinery and equipment 2,227,294 2,107,719 Office furniture and fixtures 363,075 363,075 Computer equipment 738,681 710,573 Leasehold improvements 312,420 312,420 ------------ ------------ 3,641,470 3,493,787 Accumulated depreciation and amortization (2,611,318) (2,344,271) ------------ ------------ TOTAL PROPERTY AND EQUIPMENT 1,030,152 1,149,516 INTANGIBLES 539,187 539,187 Accumulated amortization (539,187) (539,187) ------------ ------------ -- -- ------------ ------------ TOTAL ASSETS $ 6,538,213 $ 6,831,593 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 504,359 $ 784,051 Accrued compensation and benefits 173,675 222,702 Accrued expenses 139,412 114,562 Other 209,258 125,373 Current portion of lease 88,832 84,497 ------------ ------------ TOTAL CURRENT LIABILITIES 1,115,536 1,331,185 LONG-TERM DEBT 437,190 382,717 STOCKHOLDERS' EQUITY: Common stock, par value $.01; authorized--20,000,000 shares; issued and outstanding June 30, 1996-- 5,403,858 shares; December 31, 1995--5,361,006 shares 54,039 53,610 Additional paid-in capital 10,102,397 10,056,117 Unearned compensation (11,719) (16,125) Accumulated deficit (5,159,230) (4,975,911) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 4,985,487 5,117,691 ------------ ------------ TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 6,538,213 $ 6,831,593 ============ ============
Note: The balance sheet at December 31, 1995 has been derived from the audited financial statements at that date. See Notes to Financial Statements.
INSIGNIA SYSTEMS, INC. STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Six Months Ended June 30 June 30 -------------------------- -------------------------- 1996 1995 1996 1995 ----------- ----------- ----------- ----------- NET SALES $ 3,818,139 $ 4,356,656 $ 7,617,956 $ 8,643,606 Cost of Sales 1,882,728 2,174,166 3,650,341 4,064,848 ----------- ----------- ----------- ----------- GROSS PROFIT 1,935,411 2,182,490 3,967,615 4,578,758 OPERATING EXPENSES: Sales 1,047,382 1,457,390 2,074,604 2,848,000 Marketing 395,330 664,309 914,529 1,381,110 Product Development 116,308 130,708 227,825 268,803 General & Administrative 465,655 585,905 937,748 1,194,990 ----------- ----------- ----------- ----------- TOTAL OPERATING EXPENSES 2,024,675 2,838,312 4,154,706 5,692,903 ----------- ----------- ----------- ----------- OPERATING INCOME (LOSS) (89,264) (655,822) (187,091) (1,114,145) OTHER INCOME (EXPENSE): Interest Income 10,883 13,830 23,990 29,020 Interest Expense (13,717) 0 (27,326) 0 Other Income (Expense) 3,767 744 11,187 751 ----------- ----------- ----------- ----------- PRE-TAX INCOME (LOSS) (88,331) (641,248) (179,240) (1,084,374) Provision for Income Tax 500 0 4,078 0 ----------- ----------- ----------- ----------- NET INCOME (LOSS) $ (88,831) $ (641,248) $ (183,318) $(1,084,374) =========== =========== =========== =========== Net Income (Loss) per share $ (0.02) $ (0.12) $ (0.03) $ (0.20) =========== =========== =========== =========== Weighted average shares and share equivalents outstanding 5,403,858 5,361,006 5,403,384 5,358,811 =========== =========== =========== ===========
INSIGNIA SYSTEMS, INC. STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30 -------------------------- 1996 1995 ----------- ----------- OPERATING ACTIVITIES: Net income (loss) $ (183,318) $(1,084,374) Non-cash expenses included in income (loss): Depreciation and amortization 267,047 327,652 Provision for bad debt expense 25,500 31,500 Amortization of unearned compensation 4,406 10,032 Changes in operating assets & liabilities: Accounts receivable (333,191) (311,573) Inventories 277,126 (266,962) Prepaids and other 242,739 43,147 Accounts payable (279,692) 149,702 Accrued compensation and benefits (49,027) (57,713) Other accrued expenses 108,735 98,036 ----------- ----------- NET CASH USED IN OPERATING ACTIVITIES 80,325 (1,060,553) INVESTING ACTIVITIES: Purchases of property and equipment (147,683) (176,444) Purchase of marketable securities 0 (517,239) Maturity of marketable securities 0 1,036,923 ----------- ----------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (147,683) 343,240 FINANCING ACTIVITIES: Proceeds from issuance of Common Stock 46,709 125,377 Principal payments under long-term debt agreement (41,192) 0 Proceeds from credit line 100,000 0 ----------- ----------- CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 105,517 125,377 ----------- ----------- INCREASE (DECREASE) IN CASH & EQUIVALENTS 38,159 (591,936) Cash and equivalents at beginning of period 583,613 933,855 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 621,772 $ 341,919 =========== ===========
INSIGNIA SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE A -- BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six month period ended June 30, 1996 are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. For further information, refer to the financial statements and footnotes thereto for the year ended December 31, 1995. NOTE B -- INVENTORIES Inventories consist primarily of Finished Goods on site. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Second Quarter and Six Months Ended June 30, 1996) RESULTS OF OPERATIONS NET SALES. The Company's net sales for the second quarter ended June 30, 1996 were $3,818,000, a decrease of 13% compared to net sales of $4,357,000 for the second quarter of 1995. For the six months ended June 30, 1996, net sales were $7,618,000, a decrease of 12% compared to net sales of $8,644,000 for the first half of 1995. Revenue from the sale of the Impulse Retail System was relatively flat for the first half of 1996. The sale of sign cards used with the Impulse Retail System also remained relatively flat. Sales of Stylus(R) our PC-based sign and label software and related supplies increased substantially in the second quarter. GROSS PROFIT. The Company's gross profit for the second quarter of 1996 decreased 12% to $1,935,000, compared to $2,182,000 for the second quarter of 1995. Gross profit for the first six months of 1996 decreased 13% to $3,968,000, compared to $4,579,000 for the first half of 1995. The decrease in gross profit for the second quarter and six months of 1996 is due to increases in product costs, a reduction in the selling price of the Impulse system and a change in product mix. Gross profit as a percentage of net sales was 50.7% for the second quarter of 1996, compared to 50.1% for the second quarter of 1995 and was 52.1% for the first six months of 1996, compared to 53.0% for the first half of 1995. OPERATING EXPENSES. Operating expenses decreased 29% in the second quarter of 1996 compared to the second quarter of 1995 and decreased 27% for the first six months of 1996 compared to the first half of 1995. Sales expenses decreased 28% and 27%, respectively. The decrease reflects lower commissions due to lower sales. Marketing expenses decreased 40% and 34%, respectively, product development expenses decreased 11% and 15%, respectively, and general and administrative expenses decreased 21% and 22%, respectively. Although these expense reductions were the result of the expense reduction effort instituted during the third quarter of 1995, the Company expects that its operating expenses will continue to remain flat, except for sales commissions which will increase as sales increase. Operating expenses as a percentage of net sales were 53% in the second quarter of 1996 and 55% for the first six months of 1996, compared to 65% for the second quarter of 1995 and 66% for the first half of 1995. The decrease as a percentage of net sales in 1996 was the result of the expense reduction effort. The Company expects its operating expenses as a percentage of net sales to decrease as sales increase faster than expenses. NET INCOME OR LOSS. The Company had a net loss of $89,000, or $.02 per share for the second quarter of 1996, compared to a net loss of $641,000, or $.12 per share for the second quarter of 1995. For the first six months of 1996, the net loss was $183,000, or $.03 per share compared to a net loss of $1,084,000, or $.20 per share for the first half of 1995. The decrease in net loss for the first half of 1996 was the result of the expense reduction effort and operating expenses being reduced substantially while net sales remain relatively flat. The net loss for the second quarter of 1996 was due to flat sales of the Impulse system. LIQUIDITY AND CAPITAL RESOURCES At June 30, 1996, working capital was $4,393,000 compared to $4,154,000 at December 31, 1995. Cash, cash equivalents and marketable securities decreased $71,000 from $1,088,000 at December 31, 1995 to $1,016,000 at June 30, 1996, primarily due to the net loss. Accounts receivable increased $333,000 during the first six months of 1996 due to an increase in extended payment terms offered to certain customers. Inventories decreased $277,000 as the company reduced its inventory levels. Accounts payable decreased $280,000 as the Company reduced its payable balances. The Company expects accounts receivable and inventory levels to grow as sales volume increases. Although the loss from the first half of 1996 did not substantially reduce the Company's working capital further, the Company believes that it should continue to conserve its cash resources. Therefore, during the second quarter of 1996, the Company borrowed $100,000 from its line of credit. The Company believes that its current cash position, cash flow from operations, and access to capital resources, including the present line of credit, will be sufficient to fund current business operations and anticipated growth for the foreseeable future. Part II. Other Information Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders The Company held its Annual Meeting of Shareholders on May 9, 1996. The shareholders present or by proxy voted to elect G. L. Hoffman, Erwin A. Kelen, Gordon F. Stofer, and Frank D. Trestman as directors with each director receiving the following votes: WITHHOLD FOR AUTHORITY --- --------- G. L. Hoffman 4,964,677 21,250 Erwin A. Kelen 4,973,540 12,387 Gordon F. Stofer 4,973,540 12,387 Frank D. Trestman 4,973,540 12,387 The shareholders present or by proxy voted to amend the Company's Stock Plan to increase by 300,000 shares the number of shares available under the Plan with 3,072,958 votes for, 299,487 votes against, 20,000 votes abstaining and no broker non-votes. The shareholders present or by proxy voted to approve the appointment of Ernst & Young LLP as independent auditors with 4,953,427 votes for, and 28,000 votes against, 4,400 votes abstaining and no broker non-votes. Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits See Exhibit Index on page following signature. (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter covered by this Form 10-Q. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: August 1, 1996 Insignia Systems, Inc. (Registrant) /s/ G. L. Hoffman G. L. Hoffman President /s/ John R. Whisnant John R. Whisnant Vice President of Finance SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 EXHIBIT INDEX TO FORM 10-Q For the quarter ended Commission File No.: 0-19380 June 30, 1996 - - -------------------------------------------------------------------------------- INSIGNIA SYSTEMS, INC. - - -------------------------------------------------------------------------------- Page Number in Sequential Numbering of All Pages Exhibit Including Exhibits 11 Statement re computation of earnings per share.....................12 27 Financial Data Schedule EX-11 2 COMPUTATION OF EARNINGS PER SHARE Exhibit 11
INSIGNIA SYSTEMS, INC. COMPUTATION OF EARNINGS PER SHARE Three Months Ended Six Months Ended June 30 June 30 -------------------------- -------------------------- 1996 1995 1996 1995 ----------- ----------- ----------- ----------- PRIMARY: Average shares outstanding 5,403,858 5,361,006 5,403,384 5,358,811 Net effective of dilutive stock options--based on treasury stock method using average market price 0 0 0 0 ----------- ----------- ----------- ----------- TOTAL 5,403,858 5,361,006 5,403,384 5,358,811 =========== =========== =========== =========== Net Income (Loss) $ (88,831) $ (641,247) $ (183,318) $(1,084,374) =========== =========== =========== =========== Net Income (Loss) per share $ (0.02) $ (0.12) $ (0.03) $ (0.20) =========== =========== =========== =========== FULLY DILUTED: Average shares outstanding 5,403,858 5,361,006 5,403,384 5,358,811 Net effect of dilutive stock options--based on treasury stock method using ending market price, if higher than average market price 0 0 0 0 ----------- ----------- ----------- ----------- TOTAL 5,403,858 5,361,006 5,403,384 5,358,811 =========== =========== =========== =========== Net Income (Loss) $ (88,831) $ (641,247) $ (183,318) $(1,084,374) =========== =========== =========== =========== Net Income (Loss) per share $ (0.02) $ (0.12) $ (0.03) $ (0.20) =========== =========== =========== ===========
EX-27 3 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1996 JUN-30-1996 621,771 394,556 2,637,499 (94,434) 1,750,440 5,508,061 3,641,470 2,611,318 6,538,213 1,115,536 0 0 0 54,309 6,484,174 6,538,213 3,818,139 3,832,789 1,882,728 2,024,635 0 0 (13,717) (88,331) 500 0 0 0 0 (88,831) (0.02) (0.02)
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