-----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, D/ekbTac7oajEDpPN2ZjlR6bef+JkBvXvLFfdLO/afd2OdN7MRldpGWnNuz0X8D8 HSp5oU/MpDT1M1dgD6wcSg== 0000897101-97-000520.txt : 19970512 0000897101-97-000520.hdr.sgml : 19970512 ACCESSION NUMBER: 0000897101-97-000520 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970509 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INSIGNIA SYSTEMS INC/MN CENTRAL INDEX KEY: 0000875355 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PROFESSIONAL & COMMERCIAL EQUIPMENT & SUPPLIES [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: 97598778 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: March 31, 1997 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 Per Value -- 6,860,081 shares as of May 6, 1997. 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 -- March 31, 1997 and December 31, 1996 Statements of Operations -- Three months ended March 31, 1997 and 1996 Statements of Cash Flows -- Three months ended March 31, 1997 and 1996 Notes to Financial Statements -- March 31, 1997 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 March 31, December 31, ASSETS 1997 1996 - ----------------------------------------------------------------- ------------ ------------ (UNAUDITED) (NOTE) CURRENT ASSETS: Cash and cash equivalents $ 2,147,375 $ 448,668 Marketable securities 150,410 149,427 Accounts receivable - net of $147,440 allowance 3,012,497 2,644,851 Inventories 1,674,831 2,015,963 Prepaid expenses 784,933 215,562 ------------ ------------ TOTAL CURRENT ASSETS 7,770,046 5,474,471 PROPERTY AND EQUIPMENT: Production tooling, machinery and equipment 1,873,618 1,862,311 Office furniture and fixtures 364,119 364,119 Computer equipment 865,492 780,675 Leasehold improvements 312,420 312,420 ------------ ------------ 3,415,649 3,319,525 Accumulated depreciation and amortization (2,513,587) (2,368,221) ------------ ------------ TOTAL PROPERTY AND EQUIPMENT 902,062 951,304 INTANGIBLES 539,187 539,187 Accumulated amortization (539,187) (539,187) ------------ ------------ -- -- ------------ ------------ TOTAL ASSETS $ 8,672,108 $ 6,425,775 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 555,804 $ 682,161 Accrued compensation and benefits 180,719 229,019 Accrued expenses 136,751 93,534 Other 95,532 191,077 Line of credit -- 673,281 Current portion of lease 233,678 93,391 ------------ ------------ TOTAL CURRENT LIABILITIES 1,202,484 1,962,463 LONG-TERM DEBT 279,706 289,326 STOCKHOLDERS' EQUITY: Common stock, par value $.01; authorized--20,000,000 shares; issued and outstanding March 31, 1997--6,860,080 shares; December 31, 1996--5,403,858 shares 68,577 54,039 Additional paid-in capital 13,101,117 10,102,397 Unearned compensation (6,046) (7,313) Accumulated deficit (5,973,730) (5,975,137) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 7,189,918 4,173,986 ------------ ------------ TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 8,672,108 $ 6,425,775 ============ ============ Note: The balance sheet at December 31, 1996 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 March 31 -------------------------------- 1997 1996 ----------- ----------- NET SALES $ 4,155,566 $ 3,799,817 Cost of Sales 1,869,829 1,767,613 ----------- ----------- GROSS PROFIT 2,285,737 2,032,204 OPERATING EXPENSES: Insignia POPS Program 168,924 -- Sales 1,151,363 1,027,222 Marketing 425,557 519,199 Product Development 107,946 111,517 General and Administrative 415,787 472,093 ----------- ----------- TOTAL OPERATING EXPENSES 2,269,577 2,130,031 ----------- ----------- OPERATING INCOME (LOSS) 16,160 (97,827) Other Income (Expense): Interest Income 26,056 13,107 Interest Expense (15,109) (13,609) Other Income (Expense) (24,071) 7,402 ----------- ----------- PRE-TAX INCOME (LOSS) 3,036 (90,909) Provision For Income Tax 1,629 3,578 ----------- ----------- NET INCOME (LOSS) $ 1,407 $ (95,965) =========== =========== Net income (loss) per share $ 0.00 $ (0.02) =========== =========== Weighted average shares and share equivalents outstanding 6,586,956 5,403,382 =========== ===========
INSIGNIA SYSTEMS, INC. STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31 -------------------------------- 1997 1996 ----------- ----------- OPERATING ACTIVITIES: Net income (loss) $ 1,407 $ (94,487) Non-cash expenses included in income (loss): Depreciation and amortization 145,366 135,145 Provision for bad debt expense 17,000 17,000 Amortization of unearned compensation 1,267 2,203 Changes in operating assets and liabilities: Accounts receivable (384,646) (114,363) Inventories 341,132 (172,728) Prepaids and other (570,354) 80,362 Accounts payable (126,357) 159,073 Accrued compensation and benefits (48,300) (57,731) Other liabilities 42,601 9,992 Other accrued expenses 59,237 6,356 ----------- ----------- NET CASH USED IN OPERATING ACTIVITIES (521,647) (29,178) INVESTING ACTIVITIES: Purchases of property and equipment (96,124) (115,369) NET CASH PROVIDED BY (USED IN) ___________ ___________ INVESTING ACTIVITIES (96,124) (115,369) FINANCING ACTIVITIES: Proceeds from issuance of Common Stock 3,013,288 46,709 Principle payments under long-term debt agreement (7,479) (20,338) Proceeds from credit line (673,281) -- ----------- ----------- CASH PROVIDED BY FINANCING ACTIVITIES 2,322,528 26,371 ----------- ----------- DECREASE IN CASH AND EQUIVALENTS 1,714,757 (118,176) Cash and cash equivalents at beginning of period 448,668 583,613 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,163,425 $ 465,437 =========== ===========
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 three month period ended March 31, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. For further information, refer to the financial statements and footnotes thereto for the year ended December 31, 1996. 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 (First Quarter Ended March 31, 1997) RESULTS OF OPERATIONS NET SALES. The Company's net sales for the first quarter ended March 31, 1997 were $4,156,000, an increase of 9%, compared to net sales of $3,800,000 for the first quarter of 1996. Sales increased primarily due to an increase in the Stylus software sales. Revenue from the SIGNright machines was only 56% of sales from the Impulse machine for the first quarter of 1996. This is due primarily due to the continued introductory phase of the SIGNright machine. Sign card sales were relatively flat compared to sign card sales for the first quarter of 1996. Printing sales were substantially higher for the first quarter of 1997 compared to the first quarter of 1996. GROSS PROFIT. The Company's gross profit for the first quarter of 1997 increased 12% to $2,286,000, compared to $2,032,000 for the first quarter of 1996. Gross profit as a percentage of net sales was 55% the first quarter of 1996, compared to 53.5% for the first quarter of 1996. The increase in gross profit from 1996 of $254,000 and as a percentage of net sales was due to the higher proportion of sales of Stylus software which has a much higher margin than other products. OPERATING EXPENSES. Operating expenses increased 7% in the first quarter of 1997 compared to the first quarter of 1996. Sales expenses increased 12%. The increase reflects higher commissions due to higher sales. Marketing expenses decreased 19%, product development expenses decreased 3%, and general and administrative expenses decreased 12%, all as a result of the continued expense reduction effort instituted during the second 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 55% in the first quarter of 1997, compared to 56% in the first quarter of 1996. NET INCOME (LOSS). The Company had a net income of $1,407, or $0.00 per share for the first quarter of 1997, compared to a net loss of $(94,000), or $(.02) per share for the first quarter of 1996. The net income for the first quarter of 1997 was the due primarily to higher Stylus sales with high margins offset by lower machine sales with lower margins. LIQUIDITY AND CAPITAL RESOURCES At March 31, 1997, working capital was $6,568,000, compared to $3,512,000 at December 31, 1996. Cash, cash equivalents and marketable securities increased $1,700,000 to $2,298,000 at March 31, 1997, primarily due to the decrease in inventories and proceeds received from the issuance of common stock, offset by an increase in accounts receivable, an increase in prepaids and other, and a decrease in accounts payable. The $570,000 increase to prepaids was due primarily to prepayments made for future inventory to be shipped. Accounts receivable increased $385,000 during the first quarter due to strong quarter-end sales. Accounts payable decreased $126,000, as inventory levels were decreased during the later part of the quarter. The Company anticipates that its working capital needs will continue to increase due to the expected growth in the business. However, as a result of the issuance of additional common stock during the first quarter of 1997, the Company believes that it will have sufficient capital resources to fund its current business operations and anticipated growth for the foreseeable future. Part II. Other Information Item 1. Legal Proceedings None. Item 2. Changes in Securities On January 17, 1997, the Company issued 1,376,020 shares of common stock in a private placement. These shares were sold for $2.125 per share and the Company received $2,924,040 as a result of the issuance of these shares of common stock. In addition, the Company issued to the purchasers of these shares warrants for the purchase of 688,011 shares of common stock which have an exercise price of $2.125 per share and expire on January 17, 2000. There were no underwriters or placement agents involved in this issuance and no commissions were paid. The shares and warrants were issued to a limited number of persons who purchased these securities as an investment for his, her or its own account and not with a view to a distribution. Based on these facts the Company relied upon the exemption provided by Section 4(c) of the Securities Act of 1933, as amended. Item 3. Defaults upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. 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: May 9, 1997 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 March 31, 1997 - -------------------------------------------------------------------------------- INSIGNIA SYSTEMS, INC. - -------------------------------------------------------------------------------- Page Number in Sequential Numbering of All Pages Exhibit Including Exhibits 11 Statement re computation of earnings per share.......................12 EX-11 2 COMPUTATION OF EARNINGS PER SHARE Exhibit 11
INSIGNIA SYSTEMS, INC. COMPUTATION OF EARNINGS PER SHARE Three Months Ended March 31 1997 1996 ----------- ----------- PRIMARY: Average shares outstanding 6,586,956 5,403,382 Net effect of dilutive stock options--based on treasury stock method using average market price -- -- ----------- ----------- TOTAL 6,586,956 5,403,382 =========== =========== Net Income (Loss) $ 1,407 $ (94,487) =========== =========== Net Income (Loss) per share $ 0.00 $ (0.02) =========== =========== FULLY DILUTED: Average shares outstanding 6,586,956 5,403,382 Net effect of dilutive stock options--based on treasury stock method using ending market price, if higher than average market price -- -- ----------- ----------- TOTAL 6,586,956 5,403,382 =========== =========== Net Income (Loss) $ 1,407 $ (94,487) =========== =========== Net Income (Loss) per share $ 0.00 $ (0.02) =========== ===========
EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 2,147,375 150,410 3,012,497 0 1,674,831 7,770,046 902,062 (2,513,587) 8,672,108 1,202,484 0 0 0 68,577 0 8,672,108 4,155,566 4,155,566 1,869,829 1,869,829 2,269,577 0 (15,109) 3,036 1,629 0 0 0 0 1,407 0.00 0.00
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