-----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, Rbrx4VunaeAQ4oIG9eTskd5pgSXRwkZFq/9WfZa0SeKQUiHr4bJVXRAk3IcbEaar KPxisE49OZs6mcQ8j+yKTw== 0000897101-97-001114.txt : 19971031 0000897101-97-001114.hdr.sgml : 19971031 ACCESSION NUMBER: 0000897101-97-001114 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971030 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: SEC FILE NUMBER: 001-13471 FILM NUMBER: 97703749 BUSINESS ADDRESS: STREET 1: 10801 RED CIRCLE DR CITY: MINNETONKA STATE: MN ZIP: 55343 BUSINESS PHONE: 6129308200 MAIL ADDRESS: STREET 1: 10801 RED CIRCLE DRIVE 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: September 30, 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 Par Value -- 6,860,080 shares as of October 30, 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 -- September 30, 1997 and December 31, 1996 Statements of Operations -- Three months ended September 30, 1997 and 1996; Nine months ended September 30, 1997 and 1996. Statements of Cash Flows -- Nine months ended September 30, 1997 and 1996 Notes to Financial Statements -- September 30, 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
September 30, December 31, ASSETS 1997 1996 - ------------------------------------------------------ ------------- ----------- (UNAUDITED) (NOTE) CURRENT ASSETS: Cash and cash equivalents $ (155,703) $ 448,668 Marketable securities 1,071,023 149,427 Accounts receivable - net of $174,057 allowance 3,523,531 2,644,851 Inventories 1,781,286 2,015,963 Prepaid expenses 657,761 215,562 ----------- ----------- TOTAL CURRENT ASSETS 6,877,898 5,474,471 PROPERTY AND EQUIPMENT: Production tooling, machinery and equipment 1,891,519 1,862,311 Office furniture and fixtures 361,350 364,119 Computer equipment 938,151 780,675 Leasehold improvements 312,420 312,420 ----------- ----------- 3,503,440 3,319,525 Accumulated depreciation and amortization (2,772,811) (2,368,221) ----------- ----------- TOTAL PROPERTY AND EQUIPMENT 730,629 951,304 INTANGIBLES 539,187 539,187 Accumulated amortization (539,187) (539,187) ----------- ----------- -- -- ----------- ----------- TOTAL ASSETS $ 7,608,527 $ 6,425,775 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 636,761 $ 682,161 Accrued compensation and benefits 238,985 229,019 Accrued expenses 78,621 93,534 Other 99,978 191,077 Line of credit 271,013 673,281 Current portion of lease 169,443 93,391 ----------- ----------- TOTAL CURRENT LIABILITIES 1,494,801 1,962,463 LONG-TERM DEBT 228,580 289,326 STOCKHOLDERS' EQUITY: Common stock, par value $.01; authorized--20,000,000 shares; issued and outstanding June 30, 1997--6,860,080 shares; December 31, 1996--5,403,858 shares 68,577 54,039 Additional paid-in capital 13,083,563 10,102,397 Unearned compensation (3,516) (7,313) Accumulated deficit (7,263,478) (5,975,137) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 5,885,146 4,173,986 ----------- ----------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 7,608,527 $ 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 Nine Months Ended September 30 September 30 --------------------------- ----------------------------- 1997 1996 1997 1996 ----------- ----------- ------------ ------------ NET SALES $ 2,778,771 $ 3,543,712 $ 11,132,669 $ 11,161,668 Cost of Sales 1,501438 1,653,563 5,258,293 5,303,904 ----------- ----------- ------------ ------------ GROSS PROFIT 1,277,333 1,890,149 5,874,376 5,857,764 OPERATING EXPENSES: POPS Program 320,607 -- 679,459 -- Sales 1,147,682 1,125,614 3,576,135 3,200,218 Marketing 371,125 363,508 1,139,743 1,278,037 Product Development 139,757 128,486 375,859 356,311 General & Administrative 500,862 466,513 1,410,009 1,404,261 ----------- ----------- ------------ ------------ TOTAL OPERATING EXPENSES 2,480,033 2,084,121 7,181,205 6,238,827 ----------- ----------- ------------ ------------ OPERATING INCOME (LOSS) (1,202,700) (193,972) (1,306,829) (381,063) OTHER INCOME (EXPENSE): Interest Income 20,476 14,105 75,037 38,095 Interest Expense (12,686) (17,477) (38,091) (44,803) Other Income (Expense) 200 1,792 (15,329) 12,97 ----------- ----------- ------------ ------------ PRE-TAX INCOME (LOSS) (1,194,710) (195,552) (1,285,212) (374,792) Provision for Income Tax -- 500 3,129 4,578 ----------- ----------- ------------ ------------ NET INCOME (LOSS) $(1,194,710) $ (196,052) $ (1,288,341) $ (379,370) =========== =========== ============ ============ Net Income (Loss) per share $ (0.17) $ (0.04) $ (0.19) $ (0.07) =========== =========== ============ ============ Weighted average shares and share equivalents outstanding 6,860,080 5,403,858 6,775,062 5,403,544 =========== =========== ============ ============
INSIGNIA SYSTEMS, INC. STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30 ------------------------- 1997 1996 ----------- --------- OPERATING ACTIVITIES: Net income (loss) $(1,288,341) $(379,370) Non-cash expenses included in income (loss): Depreciation and amortization 404,590 397,310 Provision for bad debt expense 59,500 51,000 Amortization of unearned compensation 3,767 6,609 Changes in operating assets & liabilities: Accounts receivable (938,180) (188,747) Inventories 234,677 45,904 Prepaids and other (443,847) (159,365) Accounts payable (45,400) (80,071) Accrued compensation and benefits 9,966 (78,651) Other accrued expenses (36,547) 40,278 ----------- --------- NET CASH USED IN OPERATING ACTIVITIES (2,039,815) (345,103) INVESTING ACTIVITIES: Purchases of property and equipment (183,915) (266,743) Purchase of marketable securities (919,948) -- ----------- --------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (1,103,863) (266,743) FINANCING ACTIVITIES: Proceeds from issuance of Common Stock 2,995,734 46,709 Principal payments under long-term debt agreement (54,159) (162,574) Proceeds from credit line (402,268) 100,000 ----------- --------- CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 2,539,307 (15,865) ----------- --------- INCREASE (DECREASE) IN CASH & EQUIVALENTS (604,371) (627,711) Cash and equivalents at beginning of period 448,668 583,613 ----------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ (155,703) $ (44,098) =========== =========
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 nine month period ended September 30, 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 (Third Quarter and Nine Months Ended September 30, 1997) RESULTS OF OPERATIONS NET SALES. The Company's net sales for the third quarter ended September 30, 1997 were $2,779,000, an decrease of 22% compared to net sales of $3,544,000 for the third quarter of 1996. For the nine months ended September 30, 1997, net sales were $11,133,000, a decrease of .3% compared to net sales of $11,162,000 for the first nine months of 1996. Revenue from the sale of the Impulse(R) and SIGNright(TM) systems decreased over the first nine months of 1997. The sale of sign cards used with the Impulse and SIGNright systems also decreased over the first nine months of 1997. Sales of Stylus(R) our PC-based sign and label software and related supplies decreased substantially in the third quarter. GROSS PROFIT. The Company's gross profit for the third quarter of 1997 decreased 32% to $1,278,000, compared to $1,890,000 for the third quarter of 1996. Gross profit for the first nine months of 1997 increased 11% to $5,874,000, compared to $5,858,000 for the first nine months of 1996. The decrease in gross profit for the third quarter is primarily due to the overall decrease in net sales. Gross profit as a percentage of net sales was 41.0% for the third quarter of 1997, compared to 53.3% for the third quarter of 1996 and was 52.1% for the first nine months of 1997, compared to 52.5% for the first nine months of 1996. OPERATING EXPENSES. Operating expenses increased 19% in the third quarter of 1997 compared to the third quarter of 1996 and increased 15% for the first nine months of 1997 compared to the first nine months of 1996. Sales expenses increased 2% in the third quarter of 1997 compared to the third quarter of 1996, and increased 12% for the first nine months of 1997 compared to the first nine months of 1996. The increase reflects fixed sales expenses being a larger percentage of total sales expenses. Marketing expenses increased 2% in the third quarter of 1997 compared to the third quarter of 1996, but decreased 11% for the first nine months of 1997 compared to the first nine months of 1996. Product development expenses increased 9% and 6%, respectively. General and administrative expenses increased 7% and 1%, respectively. The Company incurred no POPS program operating expenses in 1996. The POPS program operating expenses for the third quarter of 1997 was $320,000 and for the nine months ended September 30, 1997 was $679,000. The Company expects that its operating expenses for the fourth quarter of 1997 will be comparable to the third quarter of 1997. Operating expenses as a percentage of net sales were 89% in the third quarter of 1997 and 65% for the first nine months of 1997, compared to 59% for the third quarter of 1996 and 56% for the first nine months of 1996. For the fourth quarter of 1997, the Company expects its operating expenses as a percentage of net sales to increase compared to the fourth quarter of 1996 as a result of the POPS program expenses, but to decrease compared to the third quarter of 1997 as net sales are expected to increase. NET INCOME OR LOSS. The Company had a net loss of $(1,195,000), or $(.17) per share for the third quarter of 1997, compared to a net loss of $(196,000), or $(04) per share for the third quarter of 1996. For the first nine months of 1997, the net loss was $(1,288,000), or $(.19) per share compared to a net loss of $(379,000), or $(.07) per share for the first nine months of 1996. The net loss for the third quarter of 1997 and the increase in the net loss for the first nine months of 1997 compared to the first nine months of 1996 resulted primarily from significantly lower SIGNright and Stylus software sales and somewhat lower sign card sales. LIQUIDITY AND CAPITAL RESOURCES At September 30, 1997, working capital was $5,383,000 compared to $4,087,000 at December 31, 1996. Cash, cash equivalents and marketable securities increased $318,000 from $598,000 at December 31, 1996 to $915,000 at September 30, 1997, due to the increase in additional paid-in capital of $2,996,000 reduced by the net loss of $(1,288,000) and the increase in accounts receivable of $938,000. Accounts receivable increased $938,000 during the first nine months of 1997 due to an increase in extended payment terms offered to certain customers. Inventories decreased $235,000 as the company reduced its inventory levels. The Company expects inventory levels to grow as sales volume increases. Accounts receivable balances should decrease as customers pay off the extended payment terms. 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 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. Insignia Systems, Inc. Dated: October 30, 1997 ------------------------------------ (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 September 30, 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 Nine Months Ended September 30 September 30 --------------------------- --------------------------- 1997 1996 1997 1996 ----------- ----------- ----------- ----------- PRIMARY: Average shares outstanding 6,860,080 5,403,858 6,775,062 5,403,544 Net effective of dilutive stock options--based on treasury stock method using average market price 0 0 0 0 ----------- ----------- ----------- ----------- TOTAL 6,860,080 5,403,858 6,775,062 5,403,544 =========== =========== =========== =========== Net Income (Loss) $(1,194,710) $ (196,052) $ 1,288,341) $ (379,370) =========== =========== =========== =========== Net Income (Loss) per share $ (0.19) $ 0.04) $ (0.18) $ (0.07) =========== =========== =========== =========== FULLY DILUTED: Average shares outstanding 6,860,080 5,403,858 6,775,062 5,403,544 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 6,860,080 5403,858 6,775,062 5,403,544 =========== =========== =========== =========== Net Income (Loss) $(1,194,710) $ (196,052) $(1,288,341) $ (379,370) =========== =========== =========== =========== Net Income (Loss) per share $ (0.19) $ (0.04) $ (0.18) $ (0.07) =========== =========== =========== ===========
EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1997 JUL-01-1997 SEP-30-1997 (155,703) 1,071,023 3,523,531 0 1,781,286 6,877,898 3,503,440 2,772,811 7,608,527 1,223,788 0 0 0 13,152,140 0 7,608,527 2,778,771 0 1,501,438 0 2,480,033 0 12,686 (1,194,710) 0 0 0 0 0 (1,194,710) (.18) (.18)
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