For the fiscal year ended December
31, 2018
|
Commission File Number
1-13471
|
INSIGNIA
SYSTEMS, INC.
|
(Exact name of registrant as
specified in its charter)
|
Minnesota
|
41-1656308
|
(State or other jurisdiction of
incorporation or organization)
|
(IRS Employer Identification
No.)
|
8799 Brooklyn
Blvd., Minneapolis, MN 55445
|
(Address of principal executive
offices; zip code)
|
(763)
392-6200
|
(Registrant’s telephone
number, including area code)
|
Title of each
class:
|
Name of each exchange on which
registered:
|
Common Stock, $.01 par
value
|
The Nasdaq Stock
Market
|
PART
I.
|
Page
|
|
1
|
||
5
|
||
8
|
||
8
|
||
8
|
||
8
|
||
|
|
|
PART
II.
|
|
|
9
|
||
10
|
||
10
|
||
14
|
||
15
|
||
34
|
||
34
|
||
34
|
||
|
|
|
PART
III.
|
|
|
35
|
||
36
|
||
36
|
||
36
|
||
36
|
||
|
|
|
PART
IV.
|
|
|
37
|
||
38
|
||
39
|
|
Total Number
of Shares
Repurchased
|
Average
Price Paid
Per Share
|
Total Number of
Shares Purchased As
Part of Publicly
Announced Plans
or Programs
|
Approximate Dollar
Value of Shares That
May Yet Be Purchased
under the Plans
or Programs
|
October
1-31, 2018
|
18,272(a)
|
$1.77
|
14,768
|
$2,710,384
|
November
1-30, 2018
|
1,750
|
1.79
|
1,750
|
$2,707,252
|
December
1-31, 2018
|
-
|
-
|
-
|
$2,707,252
|
For the Years Ended December 31
|
2018
|
2017
|
Net
sales
|
100.0%
|
100.0%
|
Cost
of sales
|
62.2
|
68.2
|
Gross
profit
|
37.8
|
31.8
|
Operating
expenses:
|
|
|
Selling
|
10.3
|
13.4
|
Marketing
|
8.0
|
6.5
|
General
and administrative
|
14.0
|
15.3
|
Total
operating expenses
|
32.3
|
35.2
|
Operating
income (loss)
|
5.5
|
(3.4)
|
Other
income
|
0.2
|
0.0
|
Income
(loss) before taxes
|
5.7
|
(3.4)
|
Income
tax expense (benefit)
|
1.5
|
(1.0)
|
Net
income (loss)
|
4.2%
|
(2.4)%
|
16
|
|
|
|
17
|
|
|
|
18
|
|
|
|
19
|
|
|
|
20
|
|
|
|
21
|
Insignia Systems, Inc.
|
||
BALANCE SHEETS
|
||
|
|
|
As of December 31
|
2018
|
2017
|
ASSETS
|
|
|
Current Assets:
|
|
|
Cash
and cash equivalents
|
$10,160,000
|
$4,695,000
|
Accounts
receivable, net
|
8,763,000
|
11,864,000
|
Inventories
|
353,000
|
301,000
|
Income
tax receivable
|
127,000
|
360,000
|
Prepaid
expenses and other
|
306,000
|
415,000
|
Total
Current Assets
|
19,709,000
|
17,635,000
|
|
|
|
Other Assets:
|
|
|
Property
and equipment, net
|
3,268,000
|
2,670,000
|
Other,
net
|
976,000
|
1,383,000
|
|
|
|
Total Assets
|
$23,953,000
|
$21,688,000
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
Current Liabilities:
|
|
|
Accounts
payable:
|
|
|
Other
|
3,334,000
|
3,232,000
|
Accrued
liabilities:
|
|
|
Compensation
|
2,021,000
|
1,531,000
|
Other
|
701,000
|
667,000
|
Deferred
revenue
|
302,000
|
372,000
|
Total
Current Liabilities
|
6,358,000
|
5,802,000
|
|
|
|
Long-Term Liabilities:
|
|
|
Deferred
tax liabilities
|
504,000
|
245,000
|
Accrued
income taxes
|
613,000
|
581,000
|
Deferred
rent
|
158,000
|
219,000
|
Total
Long-Term Liabilities
|
1,275,000
|
1,045,000
|
|
|
|
Commitments and Contingencies
|
—
|
—
|
|
|
|
Shareholders' Equity:
|
|
|
Common
stock, par value $.01:
|
|
|
Authorized
shares - 40,000,000
|
|
|
Issued
and outstanding shares - 11,840,000 in 2018 and 11,914,000 in
2017
|
118,000
|
119,000
|
Additional
paid-in capital
|
15,442,000
|
15,361,000
|
Retained
earnings (Accumulated deficit)
|
760,000
|
(639,000)
|
Total
Shareholders' Equity
|
16,320,000
|
14,841,000
|
|
|
|
Total Liabilities and Shareholders' Equity
|
$23,953,000
|
$21,688,000
|
|
|
|
See accompanying notes to financial statements.
|
Insignia Systems, Inc.
|
||
STATEMENTS OF OPERATIONS
|
||
|
|
|
Year Ended December 31
|
2018
|
2017
|
Services
revenues
|
$31,623,000
|
$24,911,000
|
Products
revenues
|
1,613,000
|
1,519,000
|
Total
Net Sales
|
33,236,000
|
26,430,000
|
|
|
|
Cost
of services
|
19,467,000
|
16,935,000
|
Cost
of goods sold
|
1,208,000
|
1,094,000
|
Total
Cost of Sales
|
20,675,000
|
18,029,000
|
Gross
Profit
|
12,561,000
|
8,401,000
|
|
|
|
Operating Expenses:
|
|
|
Selling
|
3,429,000
|
3,539,000
|
Marketing
|
2,674,000
|
1,716,000
|
General
and administrative
|
4,626,000
|
4,054,000
|
Total
Operating Expenses
|
10,729,000
|
9,309,000
|
Operating
Income (Loss)
|
1,832,000
|
(908,000)
|
|
|
|
Other
income (loss)
|
51,000
|
(1,000)
|
Income
(Loss) Before Taxes
|
1,883,000
|
(909,000)
|
|
|
|
Income
tax expense (benefit)
|
484,000
|
(270,000)
|
Net
Income (Loss)
|
$1,399,000
|
$(639,000)
|
|
|
|
Net
income (loss) per share:
|
|
|
Basic
|
$0.12
|
$(0.06)
|
Diluted
|
$0.12
|
$(0.06)
|
|
|
|
Shares
used in calculation of net income (loss) per share:
|
|
|
Basic
|
11,776,000
|
11,717,000
|
Diluted
|
12,007,000
|
11,717,000
|
|
|
|
See accompanying notes to financial statements.
|
Insignia Systems, Inc.
|
|||||
STATEMENTS OF SHAREHOLDERS'
EQUITY
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Additional
|
Retained Earnings
|
|
|
StockShares
|
Amount
|
Paid-InCapital
|
(Accumulated Deficit)
|
Total
|
Balance at January 1, 2017
|
11,761,000
|
$118,000
|
$14,991,000
|
$-
|
$15,109,000
|
Repurchase of
common stock upon vesting of restricted stock awards and vesting of
restricted stock units, net
|
21,000
|
-
|
(16,000)
|
-
|
(16,000)
|
Value of
stock-based compensation
|
72,000
|
1,000
|
386,000
|
-
|
387,000
|
Restricted
stock award issuance
|
60,000
|
-
|
-
|
-
|
-
|
Net
loss
|
-
|
-
|
-
|
(639,000)
|
(639,000)
|
|
|
|
|
|
|
Balance at December 31, 2017
|
11,914,000
|
$119,000
|
$15,361,000
|
$(639,000)
|
$14,841,000
|
Issuance of
common stock, net
|
49,000
|
1,000
|
48,000
|
-
|
49,000
|
Repurchase of
common stock, net
|
(164,000)
|
(2,000)
|
(296,000)
|
-
|
(298,000)
|
Repurchase of
common stock upon vesting of restricted stock awards and vesting of
restricted stock units, net
|
(22,000)
|
-
|
(81,000)
|
-
|
(81,000)
|
Value of
stock-based compensation
|
-
|
-
|
410,000
|
-
|
410,000
|
Restricted
stock award issuance
|
63,000
|
-
|
-
|
-
|
-
|
Net
income
|
-
|
-
|
-
|
1,399,000
|
1,399,000
|
Balance at December 31, 2018
|
11,840,000
|
$118,000
|
$15,442,000
|
$760,000
|
$16,320,000
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial
statements.
|
Insignia Systems, Inc.
|
||
STATEMENTS OF CASH FLOWS
|
||
|
|
|
|
|
|
Year Ended December 31
|
2018
|
2017
|
Operating activities:
|
|
|
Net
income (loss)
|
$1,399,000
|
$(639,000)
|
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
Depreciation
and amortization
|
1,167,000
|
1,348,000
|
Changes
in allowance for doubtful accounts
|
(191,000)
|
72,000
|
Deferred
income tax expense
|
259,000
|
40,000
|
Stock-based
compensation
|
410,000
|
387,000
|
Gain
on sale of property and equipment
|
(35,000)
|
-
|
Changes
in operating assets and liabilities:
|
|
|
Accounts
receivable
|
3,292,000
|
(2,057,000)
|
Inventories
|
(52,000)
|
24,000
|
Income
tax receivable
|
233,000
|
415,000
|
Prepaid
expenses and other
|
109,000
|
274,000
|
Accounts
payable
|
95,000
|
697,000
|
Accrued
liabilities and deferred rent
|
463,000
|
882,000
|
Accrued
income taxes
|
32,000
|
27,000
|
Deferred
revenue
|
(70,000)
|
310,000
|
Net
cash provided by operating activities
|
7,111,000
|
1,780,000
|
|
|
|
Investing activities:
|
|
|
Purchases
of property and equipment
|
(1,337,000)
|
(1,159,000)
|
Proceeds
from sale of property and equipment
|
35,000
|
-
|
Net
cash used in investing activities
|
(1,302,000)
|
(1,159,000)
|
|
|
|
Financing activities:
|
|
|
Cash
dividends paid ($0.70 per share)
|
(14,000)
|
(8,177,000)
|
Proceeds
from issuance of common stock, net
|
49,000
|
-
|
Repurchase
of common stock upon vesting of restricted stock awards and vesting
of restricted stock units
|
(81,000)
|
(16,000)
|
Repurchase
of common stock, net
|
(298,000)
|
-
|
Net
cash used in financing activities
|
(344,000)
|
(8,193,000)
|
|
|
|
Increase
(decrease) in cash and cash equivalents
|
5,465,000
|
(7,572,000)
|
|
|
|
Cash
and cash equivalents at beginning of year
|
4,695,000
|
12,267,000
|
Cash
and cash equivalents at end of year
|
$10,160,000
|
$4,695,000
|
|
|
|
Supplemental disclosures for cash flow information:
|
|
|
Cash
refunded during the year for income taxes
|
$(39,000)
|
$(743,000)
|
|
|
|
Non-cash investing and financing activities:
|
|
|
Cash
dividends declared included in accounts payable
|
$42,000
|
$56,000
|
Purchases
of property and equipment included in accounts payable
|
$60,000
|
$39,000
|
|
|
|
See accompanying notes to financial statements.
|
December 31
|
2018
|
2017
|
Beginning
balance
|
$213,000
|
$141,000
|
Bad
debt provision
|
6,000
|
72,000
|
Accounts
written-off
|
(197,000)
|
-
|
Ending
balance
|
$22,000
|
$213,000
|
December 31
|
2018
|
2017
|
Raw
materials
|
$80,000
|
$68,000
|
Work-in-process
|
12,000
|
10,000
|
Finished
goods
|
261,000
|
223,000
|
|
$353,000
|
$301,000
|
Production
tooling, machinery and equipment
|
1 - 6
years
|
Office
furniture and fixtures
|
3
years
|
Computer
equipment and software
|
3 - 5
years
|
Year ended December 31
|
2018
|
2017
|
Denominator
for basic net income (loss) per share - weighted average
shares
|
11,776,000
|
11,717,000
|
Effect
of dilutive securities:
|
|
|
Stock
options, restricted stock units and restricted stock
awards
|
231,000
|
-
|
Denominator
for diluted net income (loss) per share - weighted average
shares
|
12,007,000
|
11,717,000
|
|
Year ended December 31, 2018
|
||
|
Services Revenues
|
Products Revenue
|
Total Revenue
|
Timing of revenue recognition:
|
|
|
|
Products
and services transferred over time
|
$28,598,000
|
—
|
$28,598,000
|
Products
and services transferred at a point in time
|
$3,025,000
|
$1,613,000
|
$4,638,000
|
Total
|
$31,623,000
|
$1,613,000
|
$33,236,000
|
Balance
at December 31, 2017
|
$372,000
|
Reclassification
of beginning deferred revenue to revenue, as a result of
performance obligations satisfied
|
( 372,000)
|
Cash
received in advance and not recognized as revenue
|
302,000
|
Balance
at December 31, 2018
|
$302,000
|
|
2018
|
2017
|
Gross
cost
|
$4,000,000
|
$4,000,000
|
Accumulated
amortization
|
(3,083,000)
|
(2,683,000)
|
Net
carrying amount
|
$917,000
|
$1,317,000
|
Year ended December 31
|
2018
|
2017
|
Property and Equipment:
|
|
|
Production
tooling, machinery and equipment
|
$3,694,000
|
$4,003,000
|
Office
furniture and fixtures
|
385,000
|
325,000
|
Computer
equipment and software
|
2,743,000
|
2,680,000
|
Leasehold
improvements
|
577,000
|
577,000
|
Construction
in-progress
|
1,179,000
|
206,000
|
|
8,578,000
|
7,791,000
|
Accumulated
depreciation and amortization
|
(5,310,000)
|
(5,121,000)
|
Net
Property and Equipment
|
$3,268,000
|
$2,670,000
|
2019
|
$217,000
|
2020
|
222,000
|
2021
|
57,000
|
2019
|
$2,907,000
|
2020
|
2,614,000
|
2021
|
1,871,000
|
2022
|
525,000
|
2023
|
279,000
|
Year ended December 31
|
2018
|
2017
|
Cost
of sales
|
$11,000
|
$52,000
|
Selling
|
102,000
|
75,000
|
Marketing
|
71,000
|
51,000
|
General
and administrative
|
226,000
|
209,000
|
|
$410,000
|
$387,000
|
|
2018
|
2017
|
Stock Options:
|
|
|
Expected
life (years)
|
6.5
|
2.0
|
Expected
volatility
|
51%
|
46%
|
Dividend
yield
|
0%
|
0%
|
Risk-free
interest rate
|
2.8%
|
1.0%
|
|
2018
|
2017
|
Stock Purchase Plan Options:
|
|
|
Expected
life (years)
|
1.0
|
1.0
|
Expected
volatility
|
66%
|
51%
|
Dividend
yield
|
0%
|
0%
|
Risk-free
interest rate
|
1.8%
|
0.9%
|
|
Plan Shares Available for Grant
|
Plan Options Outstanding
|
Weighted Average Exercise Price Per Share
|
Aggregate
Intrinsic Value
|
Balance
at January 1, 2017
|
501,622
|
419,162
|
$3.18
|
|
Shares
reserved
|
—
|
—
|
|
|
Options
granted for modification
|
( 61,814)
|
150,474
|
|
|
Stock
awards granted
|
( 72,115)
|
—
|
|
|
Restricted
stock units and awards granted
|
( 203,424)
|
—
|
|
|
Stock
options granted
|
—
|
—
|
|
|
Stock
options exercised
|
—
|
—
|
|
|
Cancelled
or forfeited - 2013 Plan options
|
103,349
|
( 103,349)
|
2.20
|
|
Cancelled
or forfeited - 2013 Plan
restricted stock and restricted stock units
|
29,382
|
—
|
2.01
|
|
Cancelled
or forfeited - 2003 Plan options
|
—
|
( 99,941)
|
2.20
|
|
|
|
|
|
|
Balance
at December 31, 2017
|
297,000
|
366,346
|
2.41
|
|
|
|
|
|
|
Shares
reserved
|
900,000
|
—
|
|
|
Restricted
stock units and awards granted - 2013 Plan
|
( 178,000)
|
—
|
|
|
Restricted
stock units and awards granted - 2018 Plan
|
( 165,667)
|
—
|
|
|
Stock
options granted - 2018 Plan
|
( 119,515)
|
119,515
|
1.95
|
|
Stock
options exercised
|
—
|
( 2,276)
|
1.18
|
$705
|
Cancelled
or forfeited - 2013 Plan options
|
51,230
|
( 51,230)
|
2.17
|
|
Cancelled
or forfeited - 2013 Plan
restricted stock and restricted stock units
|
39,884
|
—
|
1.22
|
|
Cancelled
or forfeited - 2003 Plan options
|
—
|
( 59,428)
|
2.09
|
|
|
|
|
|
|
Balance
at December 31, 2018
|
824,932
|
372,927
|
2.36
|
|
December
31, 2018
|
253,412
|
December
31, 2017
|
366,346
|
|
Options Outstanding
|
Options Exercisable
|
|||
Ranges of Exercise Prices
|
Number Outstanding
|
Weighted Average Remaining Contractual Life
|
Weighted Average Exercise Price Per Share
|
Number Exercisable
|
Weighted Average Exercise Price Per Share
|
$1.18 - $2.04
|
179,620
|
7.73 years
|
$1.77
|
60,105
|
$1.40
|
$2.05 - $3.09
|
144,125
|
3.43 years
|
2.52
|
144,125
|
2.52
|
$4.02
|
49,182
|
1.4 years
|
4.02
|
49,182
|
4.02
|
|
372,927
|
5.23 years
|
$2.36
|
253,412
|
$2.55
|
|
Number of Shares
|
Weighted average
grant date fair value
|
Unvested
shares at January 1, 2017
|
204,875
|
$2.16
|
Granted
|
203,424
|
1.12
|
Vested
|
(56,438)
|
1.05
|
Forfeited
or surrendered
|
(29,382)
|
2.01
|
Unvested
shares at December 31, 2017
|
322,479
|
$1.69
|
Granted
|
343,667
|
1.86
|
Vested
|
(132,940)
|
1.47
|
Forfeited
or surrendered
|
(39,884)
|
1.22
|
Unvested
shares at December 31, 2018
|
493,322
|
$1.90
|
Year Ended December 31
|
2018
|
2017
|
Current
taxes - Federal
|
$177,000
|
$(316,000)
|
Current
taxes - State
|
48,000
|
6,000
|
Deferred
taxes - Federal
|
227,000
|
(23,000)
|
Deferred
taxes - State
|
32,000
|
63,000
|
|
|
|
Income
tax expense (benefit)
|
$484,000
|
$(270,000)
|
Year Ended December 31
|
2018
|
2017
|
Federal
statutory rate
|
21.0%
|
(34.0)%
|
|
|
|
Stock-based
awards
|
0.6
|
7.0
|
State
taxes
|
2.8
|
(1.5)
|
Other
permanent differences
|
0.7
|
1.8
|
Impact
of uncertain tax positions
|
1.7
|
3.0
|
Valuation
allowance
|
(1.6)
|
8.5
|
Tax
rate change
|
0.0
|
(14.7)
|
Other
|
0.5
|
0.2
|
|
|
|
Effective
federal income tax rate
|
25.7%
|
(29.7)%
|
As of December 31
|
2018
|
2017
|
Deferred tax assets
|
|
|
Accrued
expenses
|
$129,000
|
$183,000
|
Inventory
reserve
|
3,000
|
42,000
|
Stock-based
awards
|
78,000
|
52,000
|
Reserve
for bad debts
|
5,000
|
50,000
|
Net
operating loss and credit carryforwards
|
39,000
|
61,000
|
Other
|
23,000
|
25,000
|
Valuation
allowance
|
(79,000)
|
(108,000)
|
|
|
|
Total
deferred tax assets
|
$198,000
|
$305,000
|
|
|
|
Deferred tax liabilities
|
|
|
Depreciation
|
$(635,000)
|
$(465,000)
|
Prepaid
expenses
|
(67,000)
|
(85,000)
|
|
|
|
Total
deferred tax liabilities
|
(702,000)
|
(550,000)
|
|
|
|
Net
deferred income tax liabilities
|
$(504,000)
|
$(245,000)
|
Balance
at January 1, 2017
|
$554,000
|
Increases
due to interest
|
27,000
|
Balance
at December 31, 2017
|
581,000
|
Increases
due to interest and state tax
|
32,000
|
Balance
at December 31, 2018
|
$613,000
|
Year Ended December 31, 2018
|
1st Quarter
|
2nd Quarter
|
3rd Quarter
|
4th Quarter
|
Net
sales
|
$7,419,000
|
$8,245,000
|
$9,455,000
|
$8,117,000
|
Gross
profit
|
2,746,000
|
3,005,000
|
3,563,000
|
3,247,000
|
Net
income
|
164,000
|
184,000
|
645,000
|
406,000
|
Net
income per share:
|
|
|
|
|
Basic
|
$0.01
|
$0.02
|
$0.05
|
$0.04
|
Diluted
|
$0.01
|
$0.02
|
$0.05
|
$0.04
|
Year Ended December 31, 2017
|
1st Quarter
|
2nd Quarter
|
3rd Quarter
|
4th Quarter
|
Net
sales
|
$4,767,000
|
$5,849,000
|
$7,723,000
|
$8,091,000
|
Gross
profit
|
629,000
|
1,498,000
|
2,743,000
|
3,531,000
|
Net
income (loss)
|
(1,191,000)
|
(534,000)
|
451,000
|
635,000
|
Net
income (loss) per share:
|
|
|
|
|
Basic
|
$(0.10)
|
$(0.05)
|
$0.04
|
$0.05
|
Diluted
|
$(0.10)
|
$(0.05)
|
$0.04
|
$0.05
|
Name
|
|
Age
|
|
Position
|
Kristine
A. Glancy
|
|
41
|
|
President,
Chief Executive Officer and Secretary
|
Jeffrey
A. Jagerson
|
|
52
|
|
Vice
President of Finance, Chief Financial Officer and
Treasurer
|
Exhibit
Number
|
|
Description
|
|
Incorporated by Reference To
|
|
|
|
|
|
|
Composite
Articles of Incorporation of Registrant, as amended through July
31, 2008
|
|
Exhibit
3.1 of the Registrant’s Annual Report on Form 10-K for the
year ended December 31, 2015
|
|
|
|
|
|
|
|
Composite
stated Bylaws of Registrant, as amended through December 5,
2015
|
|
Exhibit
3.2 of the Registrant’s Annual Report on Form 10-K for the
year ended December 31, 2015
|
|
|
|
|
|
|
*10.1
|
|
2003
Incentive Stock Option Plan, as amended
|
|
Exhibit
10.1 of the Registrant’s Form 8-K filed December 2,
2016
|
|
|
|
|
|
*10.2
|
|
Form of
Incentive Stock Option Agreement under 2003 Incentive Stock Option
Plan
|
|
Exhibit
10.1 of the Registrant’s Form 8-K filed January 16,
2013
|
|
|
|
|
|
*10.3
|
|
2013
Omnibus Stock and Incentive Plan, as amended
|
|
Exhibit
10.2 of the Registrant’s Form 8-K filed December 2,
2016
|
|
|
|
|
|
*10.4
|
|
Form of
Incentive Stock Option Agreement under 2013 Omnibus Stock and
Incentive Plan
|
|
Exhibit
10.1 of the Registrant’s Form 8-K filed August 23,
2013
|
|
|
|
|
|
*10.5
|
|
Form of
Non-Qualified Stock Option Agreement for Non-Employee Directors
under 2013 Omnibus Stock and Incentive Plan
|
|
Exhibit
10.2 of the Registrant’s Form 8-K filed August 23,
2013
|
|
|
|
|
|
*10.6
|
|
Form of
Stock Grant Agreement for Non-Employee Directors under 2013 Omnibus
Stock and Incentive Plan
|
|
Exhibit
10.1 of the Registrant’s Form 8-K filed December 16,
2013
|
|
|
|
|
|
*10.7
|
|
Form of
Restricted Stock Unit Agreement for Employees under 2013 Omnibus
Stock and Incentive Plan
|
|
Exhibit
10.1 of the Registrant’s Form 8-K filed May 28,
2014
|
|
|
|
|
|
*10.8
|
|
Form of
Restricted Stock Award Agreement for Employees under the 2013
Omnibus Stock and Incentive Plan
|
|
Exhibit
10.1 of the Registrant’s Form 10-Q for the quarterly period
ended September 30, 2017
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
Incorporated By
Reference To
|
*10.9
|
|
2018
Equity Incentive Plan
|
|
Exhibit
99.1 of the Registrant’s Registration Statement on Form S-8,
Reg. No. 333-226670
|
|
|
|
|
|
|
Form of
Non-Qualified Stock Option Agreement under 2018 Equity Incentive
Plan
|
|
Exhibit
10.1 of the Registrant’s Form 8-K filed August 14,
2018
|
|
|
|
|
|
|
|
Form of
Restricted Stock Unit Agreement under 2018 Equity Incentive
Plan
|
|
Exhibit
10.2 of the Registrant’s Form 8-K filed August 14,
2018
|
|
|
|
|
|
|
|
Employee
Stock Purchase Plan, as amended
|
|
Exhibit
99.2 of the Registrant’s Registration Statement on Form S-8,
Reg. No. 333-226670
|
|
|
|
|
|
|
*10.13
|
|
Deferred
Compensation Plan for Directors
|
|
Exhibit
10.1 of the Registrant’s Form 10-Q for the quarterly period
ended March 31, 2018
|
|
|
|
|
|
|
Employment
Agreement with Kristine Glancy dated April 8, 2016
|
|
Exhibit
10.1 of the Registrant’s Form 8-K filed April 13,
2016
|
|
|
|
|
|
|
|
Change
in Control Severance Agreement with Kristine Glancy dated April 8,
2016
|
|
Exhibit
10.2 of the Registrant’s Form 8-K filed April 13,
2016
|
|
|
|
|
|
|
|
Employment
Agreement with Jeffrey Jagerson dated July 17, 2017
|
|
Exhibit
10.1 of the Registrant’s Form 8-K filed June 30,
2017
|
|
|
|
|
|
|
|
Change
in Control Agreement with Jeffrey Jagerson dated July 17,
2017
|
|
Exhibit
10.2 of the Registrant’s Form 8-K filed June 30,
2017
|
|
|
|
|
|
|
|
Industrial/Warehouse
Lease Agreement with James Campbell Company LLC dated September 14,
2015
|
|
Exhibit
10.1 of the Registrant’s Form 10-Q for the quarterly period
ended September 30, 2015
|
|
|
|
|
|
|
|
Exclusive
Agreement for Sale and Implementation of Specified Signs with Price
approved June 6, 2011
|
|
Exhibit
10.2 of the Registrant’s Form 10-Q for the quarterly period
ended June 30, 2011
|
|
|
|
|
|
|
|
Settlement
Agreement and Release with News America Marketing In-Store, LLC,
dated February 9, 2011, including exhibits
|
|
Exhibit
10.1 of the Registrant’s Form 10-Q/A for the quarterly period
ended March 31, 2011
|
|
|
|
|
|
|
|
Retail
Access and Distribution Agreement with Valassis Sales and Marketing
Services, Inc. dated February 21, 2014
|
|
Exhibit
10.1 of the Registrant’s Form 10-Q for the quarterly period
ended March 31, 2014
|
|
|
|
|
|
|
|
Registration
and Standstill Agreement with Sardar Biglari, The Lion Fund II,
L.P. and Biglari Capital Corp. dated November 9, 2017
|
|
Exhibit
10.1 of the Registrant’s Form 8-K dated November 13,
2017
|
|
|
|
|
|
|
|
Cooperation
Agreement with Nick Swenson, Air T, and Groveland Capital LLC,
dated May 17, 2018
|
|
Exhibit
10.1 of the Registrant’s Form 8-K filed May 18,
2018
|
|
|
|
|
|
|
+23.1
|
|
Consent
of Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
+24.1
|
|
Powers
of Attorney
|
|
|
|
|
|
|
|
+31.1
|
|
Certification
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes Oxley Act of 2002
|
|
|
|
|
|
|
|
+31.2
|
|
Certification
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes Oxley Act of 2002
|
|
|
|
|
|
|
|
++32
|
|
Section
1350 Certifications
|
|
|
|
|
|
|
|
+101.1
|
|
The
following materials from Insignia Systems, Inc.’s Annual
Report on Form 10-K for the year ending December 31, 2018 are filed
herewith, formatted in XBRL (Extensible Business
Reporting
Language):
(i) Balance Sheets, (ii) Statements of Operations, (iii) Statements
of Shareholders’ Equity (iv) Statements of Cash Flows, and
(v) Notes to Financial Statements
|
|
|
|
Insignia Systems,
Inc.
|
|
|
|
|
|
|
Dated: March 7,
2019
|
By:
|
/s/
Kristine A.
Glancy
|
|
|
|
Kristine A. Glancy |
|
|
|
President and Chief Executive Officer |
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Kristine A. Glancy
|
|
President,
Chief Executive Officer, Secretary and Director
|
|
March
7, 2019
|
Kristine A.
Glancy
|
|
(principal
executive officer)
|
|
|
|
|
|
|
|
/s/
Jeffrey A. Jagerson
|
|
Vice
President of Finance, Chief Financial Officer and
Treasurer
|
|
March
7, 2019
|
Jeffrey A.
Jagerson
|
|
(principal
financial and accounting officer)
|
|
|
|
|
|
|
|
*
|
|
Chairman
of the Board, Director
|
|
March
7, 2019
|
Jacob J.
Berning
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
March
7, 2019
|
Suzanne
L. Clarridge
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
March
7, 2019
|
Loren
A. Unterseher
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
March
7, 2019
|
Rachael
B. Vegas
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
March
7, 2019
|
Steven
R. Zenz
|
|
|
|
|
|
|
||
|
|
|
|
|
By:
|
/s/ Kristine A.
Glancy
|
|
|
|
Kristine A. Glancy |
|
|
|
|
|
|
/s/
Jacob J. Berning
|
|
Jacob
J. Berning
|
|
|
|
|
|
/s/ Suzanne L.
Clarridge
|
|
Suzanne
L. Clarridge
|
|
|
|
|
|
/s/ Loren A.
Unterseher
|
|
Loren
A. Unterseher
|
|
|
|
|
|
/s/ Rachael B.
Vegas
|
|
Rachael
B. Vegas
|
|
|
|
|
|
/s/ Steven R.
Zenz
|
|
Steven
R. Zenz
|
Dated: March
7, 2019
|
/s/
Kristine A. Glancy
|
|
|
Kristine
A. Glancy
|
|
|
President
and Chief Executive Officer
|
|
|
(principal
executive officer)
|
|
|
|
|
Dated: March
7, 2019
|
/s/
Jeffrey A. Jagerson
|
|
|
Jeffrey
A. Jagerson
|
|
|
Vice
President of Finance and Chief Financial Officer
|
|
|
(principal
accounting and financial officer)
|
|
|
|
|
Dated: March
7, 2019
|
/s/
Kristine A. Glancy
|
|
|
Kristine
A. Glancy
|
|
|
President
and Chief Executive Officer
|
|
|
(principal
executive officer)
|
|
|
|
|
|
|
|
Dated: March
7, 2019
|
/s/
Jeffrey A. Jagerson
|
|
|
Jeffrey
A. Jagerson
|
|
|
Vice
President of Finance and Chief Financial Officer
|
|
|
(principal
accounting and financial officer)
|
|
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Mar. 01, 2019 |
Jun. 30, 2018 |
|
Document and Entity Information | |||
Entity Registrant Name | INSIGNIA SYSTEMS INC/MN | ||
Entity Central Index Key | 0000875355 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 12,570,000 | ||
Entity Common Stock, Shares Outstanding | 11,947,485 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY |
BALANCE SHEETS (Parenthetical) - $ / shares |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 11,840,000 | 11,914,000 |
Common stock, shares outstanding | 11,840,000 | 11,914,000 |
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Services revenues | $ 31,623,000 | $ 24,911,000 |
Products revenues | 1,613,000 | 1,519,000 |
Total Net Sales | 33,236,000 | 26,430,000 |
Cost of services | 19,467,000 | 16,935,000 |
Cost of goods sold | 1,208,000 | 1,094,000 |
Total Cost of Sales | 20,675,000 | 18,029,000 |
Gross Profit | 12,561,000 | 8,401,000 |
Operating Expenses: | ||
Selling | 3,429,000 | 3,539,000 |
Marketing | 2,674,000 | 1,716,000 |
General and administrative | 4,626,000 | 4,054,000 |
Total Operating Expenses | 10,729,000 | 9,309,000 |
Operating Income (Loss) | 1,832,000 | (908,000) |
Other income (loss) | 51,000 | (1,000) |
Income (Loss) Before Taxes | 1,883,000 | (909,000) |
Income tax expense (benefit) | 484,000 | (270,000) |
Net Income (Loss) | $ 1,399,000 | $ (639,000) |
Net loss per share: | ||
Basic | $ 0.12 | $ (0.06) |
Diluted | $ 0.12 | $ (0.06) |
Shares used in calculation of net loss per share: | ||
Basic | 11,776,000 | 11,717,000 |
Diluted | 12,007,000 | 11,717,000 |
Summary of Significant Accounting Policies |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies |
Description of Business. Insignia Systems, Inc. (the “Company”) markets in-store advertising products, programs and services to retailers and consumer packaged goods manufacturers. The Company operates in a single reportable segment. The Company’s primary products include the Insignia Point-of-Purchase Services (POPS®), and other retailer approved promotional services, in-store marketing solutions, and custom adhesive and non-adhesive signage materials directly to our retail customers.
Revenue Recognition. The Company recognizes revenue from its In-Store Signage Solutions ratably over the period of service. The Company recognizes revenue related to equipment and sign card sales at the time the products are shipped to customers. Revenue associated with maintenance agreements is recognized ratably over the life of the contract. Revenue from innovation initiatives or other retailer approved promotional services and sign solutions is recognized with a mix of over-time and point in time recognition dependent on type of service performed. Revenue that has been billed and not yet earned is reflected as deferred revenue on the balance sheet. We account for taxes collected for customers on a net basis.
Cash and Cash Equivalents. The Company considers all highly liquid investments with an original maturity date of three months or less to be cash equivalents. Cash equivalents are stated at cost, which approximates fair value. At December 31, 2018 and 2017, $9,393,000 and $4,846,000 was invested in an insured sweep account, respectively. The balances in cash accounts, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. Amounts held in checking accounts and in insured cash sweep accounts during the years ended December 31, 2018 and 2017 were fully insured under the Federal Deposit Insurance Corporation.
Fair Value of Financial Measurements. Fair value is defined as the exit price, or the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants as of the measurement date. Accounting Standards Codification (“ASC”) 820-10 also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability, developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect management’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances.
The hierarchy is divided into three levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The Company records certain financial assets and liabilities at their carrying amounts that approximate fair value, based on their short-term nature. These financial assets and liabilities included cash and cash equivalents, accounts receivable and accounts payable.
Accounts Receivable. The majority of the Company’s accounts receivable is due from companies in the consumer-packaged goods industry. Credit is extended based on evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are due within 30-150 days and are stated at amounts due from customers, net of an allowance for doubtful accounts. Accounts receivable outstanding longer than the contractual payment terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. The Company writes-off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts.
Changes in the Company’s allowance for doubtful accounts are as follows:
Inventories. Inventories are primarily comprised of sign cards, hardware and roll stock. Inventory is valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method, and consists of the following:
Property and Equipment. Property and equipment is recorded at cost. Significant additions or improvements extending asset lives are capitalized, while repairs and maintenance are charged to expense when incurred. Internally developed software is capitalized upon completion of preliminary project stage and when it is probable the project will be completed. Expenditures are capitalized for all development activities, while expenditures related to planning, training, and maintenance are expensed. Depreciation is provided in amounts sufficient to relate the cost of assets to operations over their estimated useful lives. The straight-line method of depreciation is used for financial reporting purposes and accelerated methods are used for tax purposes. Estimated useful lives of the assets are as follows:
Leasehold improvements are amortized over the shorter of the remaining term of the lease or estimated life of the asset. Internally developed software is amortized over the estimated life of the asset, which is five years.
Impairment of Long-Lived Assets. The Company records impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. Impaired assets are then recorded at their estimated fair value. There were no material impairment losses during the years ended December 31, 2018 and 2017.
Income Taxes. Income taxes are accounted for under the liability method. Deferred income taxes are provided for temporary differences between the financial reporting and tax basis of assets and liabilities. Deferred taxes are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or the entire deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of the enactment. It is the Company’s policy to provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense (benefit).
Stock-Based Compensation. The Company measures and recognizes compensation expense for all stock-based awards at fair value. Restricted stock units and awards are valued at the closing market price of the Company’s stock on the date of the grant. The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options and employee stock purchase plan rights. The determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as by assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.
The expected lives of the options and employee stock purchase plan rights are based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected term at grant date. Volatility is based on historical and expected future volatility of the Company’s stock. The Company has not historically issued any dividends beyond one-time dividends declared in 2011 and 2016 and does not expect to in the future. Forfeitures are estimated at the time of the grant and revised, if necessary, in subsequent periods if actual forfeitures differ from estimates.
Advertising Costs. Advertising costs are charged to operations as incurred. Advertising expenses were approximately $207,000 and $59,000 during the years ended December 31, 2018 and 2017, respectively.
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 dilutive effects of stock options and restricted stock units and awards. Diluted net income (loss) per share gives effect to all diluted potential common shares outstanding during the year.
Weighted average common shares outstanding for the years ended December 31, 2018 and 2017 were as follows:
Options to purchase approximately 284,000 shares of common stock outstanding for the year ended December 31, 2018 were not included in the computation of common stock equivalents because their exercise prices were higher than the average fair market value of the common shares during the year. Restricted stock units of approximately 45,000 shares for the year ended December 31, 2018 are antidilutive due to the amount of weighted-average unrecognized compensation related to these grants. Due to the net loss incurred during the year ended December 31, 2017, all stock awards were anti-dilutive for this period.
Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.
Recently Adopted Accounting Pronouncement. Effective January 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09 Revenue from Contracts with Customers (“Topic 606”). Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition,” and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The adoption of ASU 2014-09, using the modified retrospective approach, had no significant impact on the Company’s results of operations, cash flows, or financial position. Revenue continues to be recognized for In-Store Signage Solutions ratably over the period of service, which is typically a two-week display cycle, and for sign card sales, at the time the products are shipped to customers. Additional information and disclosures required by this new standard are contained in Note 2, “Revenue.”
Recently Issued Accounting Pronouncement. In February 2016, the FASB issued ASU 2016-02, Leases, under which lessees will recognize most leases on the balance sheet. The Company will adopt this ASU for its annual and interim periods beginning January 1, 2019, and elected not to restate comparative periods in transition. The Company performed a review of the requirements of the new guidance and identified which of its leases will be within the scope of ASU 2016-02. The Company completed its adoption plan which included a review of lease contracts, applying the new standard to the lease contracts and comparing the results to our current accounting. As part of this plan, the Company determined no significant changes were necessary to processes and internal controls to capture new data and address changes in financial reporting. Effective for our quarter ending March 31, 2019, the Company will revise its lease accounting policy disclosures to reflect the requirements of ASU 2016-02. The Company estimates the impact of the adoption will be an increase of approximately $305,000 to both assets and liabilities on the balance sheet, with no net impact to the statements of operations or cash flows. The Company also expects additional qualitative and quantitative disclosures will be required upon adoption.
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Revenue Recognition |
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Revenue Recognition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Under Topic 606, revenue is measured based on consideration specified in the contract with a customer, adjusted for any applicable estimates of variable consideration and other factors affecting the transaction price, including noncash consideration, consideration paid or payable to a customer and significant financing components. Revenue from all customers is recognized when a performance obligation is satisfied by transferring control of a distinct good or service to a customer, as further described below under “Performance Obligations.”
Taxes collected from customers and remitted to governmental authorities are excluded from revenue on the net basis of accounting.
The Company includes shipping and handling fees in revenues. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of goods sold.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The following is a description of our performance obligations included in our primary revenue streams and the timing or method of revenue recognition for each:
In-Store Signage Solution Services. Our primary source of revenue is from executing in-store advertising solutions and services primarily to CPG manufacturers. We provide a service of displaying promotional signs in close proximity to the manufacturer’s product in participating stores, which we maintain in two-to-four-week cycle increments.
Each of the individual activities under our services, including production activities, are inputs to an integrated sign display service. Customers receive and consume the benefits from the promotional displays over the duration of the contracted display cycle. Additionally, the display of the signs does not have an alternative use to us and we have an enforceable right to payment for services performed to date. As a result, we recognize the transaction price for our POPSign service performance obligations as revenue over time. Given the nature of our performance obligations is to provide a display service over the duration of a specified period or periods, we recognize revenue on a straight-line basis over the display service period as it best reflects the timing of transfer of our POPSign services.
Other Service Revenues. The Company also supplies CPG manufacturers with other retailer approved promotional services and sign solutions. These services are more customized than the POPS solutions program, consisting of variable durations and variable specifications. Due to the variable nature of these services, revenue recognition is a mix of amortized and point in time recognition.
Products. We also sell custom adhesive and non-adhesive signage materials directly to our customers. Each such product is a distinct performance obligation. Revenue is recognized at a point in time upon shipment, when control of the goods transfers to the customer.
Disaggregation of Revenue
In the following table, revenue is disaggregated by major revenue stream and timing of revenue recognition.
Contract Costs
Sales commissions that are paid to internal or external sales representatives are eligible for capitalization as they are incremental costs that would not have been incurred without entering into a specific sales arrangement and are recoverable through the expected margin on the transaction. The Company is applying the practical expedient in Accounting Standards Codification 340-40-25-4 that allows the incremental costs of obtaining a contract to be recorded as an expense when incurred when the amortization period of the asset that would have otherwise been recognized is one year or less. These costs are included in selling expenses.
Deferred Revenue
Significant changes in deferred revenue during the period are as follows:
Transaction Price Allocated to Remaining Performance Obligations
The Company applies the practical expedient in paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less, which reflect the majority of our performance obligations. This practical expedient is being applied to arrangements for certain incomplete services and unshipped custom signage materials. Of those contracts with an expected duration of greater than one year, we estimate that revenue of $1,984,000 related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2018 will be recognized in fiscal 2020 or beyond.
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Selling Arrangement |
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Selling Arrangement | In 2011, the Company paid News America Marketing In-Store, LLC (News America) $4,000,000 in exchange for a 10-year arrangement to sell signs with price into News America’s network of retailers as News America’s exclusive agent. The $4,000,000 is being amortized over the 10-year term of the arrangement. Amortization expense was $400,000 for each of the years ended December 31, 2018 and 2017 based on straight-line amortization over the term of the arrangement and is recorded within cost of services in the Company’s statement of operations. Amortization expense is expected to be $600,000 in 2019, $262,000 in 2020 and $55,000 in the year ending December 31, 2021, respectively. The acceleration of amortization in 2019 is based on the anticipated recovery period over the remaining term of the contract due to the loss of a significant retailer. The net carrying amount of the selling arrangement is recorded within other assets on the Company’s balance sheet. A summary of the carrying amount of this selling arrangement is as follows as of December 31:
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Retail Access and Distribution Agreement |
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Retail Access and Distribution Agreement | |
Retail Access and Distribution Agreement | On February 21, 2014, the Company and Valassis Sales and Marketing Services, Inc. (“Valassis”) entered into the Retail Access and Distribution Agreement (the “New Valassis Agreement”) that replaced all prior agreements. As a result of this new agreement, Valassis was no longer a reseller of the Company’s services and the Company regained access to all CPG manufacturers for the sale of in-store signage. The net amount paid to Valassis by the Company was $250,000, which was being amortized over the original term of the New Valassis Agreement, which was approximately four years. As of December 31, 2017, this agreement has been fully amortized. Amortization expense related to this agreement was approximately $64,000 during the year ended December 31, 2017. |
Property and Equipment |
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Property and Equipment | Property and equipment consists of the following at December 31:
Depreciation expense for the years ended December 31, 2018 and 2017 was $761,000 and $868,000, respectively.
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Commitments and Contingencies |
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Commitments and Contingencies | Operating Leases. The Company’s lease for its headquarters is through March 31, 2021. Rent expense under this lease, excluding operating costs, was approximately $150,000 for the years ended December 31, 2018 and December 31, 2017.
The Company’s lease agreement for additional office space was entered into in April 2018, which is a 12-month lease agreement. Rent expense under this lease was approximately $34,000 for the year ended December 31, 2018.
Minimum future lease obligations under the Company’s headquarters lease, excluding operating costs, are approximately as follows for the years ending December 31:
Retailer Agreements. The Company has contracts in the normal course of business with various retailers, some of which provide for fixed or store-based payments rather than sign placement-based payments resulting in minimum commitments each year in order to maintain the agreements. During the years ended December 31, 2018 and 2017, the Company incurred $4,846,000 and $5,203,000 of costs related to fixed and store-based payments, respectively. The amounts are recorded in cost of services in the Company’s statements of operations.
Aggregate commitment amounts under agreements with retailers are approximately as follows for the years ending December 31:
On an ongoing basis the Company negotiates renewals of various agreements with retailers, retailer contracts generally have terms of one to three years. To the extent contracts with existing retailers are renewed the annual commitment amounts for 2019 and thereafter are expected to be in excess of the amounts above.
Legal. The Company is subject to various legal matters in the normal course of business. The outcome of these matters is not expected to have a material effect on the Company’s financial position or results of operations.
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Shareholders' Equity |
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Shareholders' Equity | Stock-Based Compensation. The Company’s stock-based compensation plans are administered by the Compensation Committee of the Board of Directors, which, subject to approval by the Board of Directors, selects persons to receive awards and determines the number of shares subject to each award and the terms, conditions, performance measures and other provisions of the award.
The following table summarizes the stock-based compensation expense that was recognized in the Company’s statements of operations and comprehensive loss for the years ended December 31, 2018 and 2017:
The Company uses the Black-Scholes option pricing model to estimate fair value of stock-based awards with the following weighted average assumptions:
The Company uses the graded attribution method to recognize expense for unvested stock-based awards. The amount of stock-based compensation recognized during a period is based on the value of the awards that are ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company re-evaluates the forfeiture rate annually and adjusts it as necessary.
Stock Options, Restricted Stock, Restricted Stock Units, and Other Stock-Based Compensation Awards. The Company maintains the 2003 Incentive Stock Option Plan (the “2003 Plan”), the 2013 Omnibus Stock and Incentive Plan (the “2013 Plan”) and the 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan replaced the 2013 Plan upon its ratification by shareholders in July 2018. The 2013 Plan had replaced the 2003 Plan upon its ratification by shareholders in 2013. Awards granted under the 2003 Plan and 2013 Plan will remain in effect until they are exercised or expire according to their terms.
Under the terms of the 2018 Plan, the number of shares of our common stock that may be the subject of awards and issued under the 2018 Plan was initially 900,000 plus any shares remaining available for future grants under the 2013 Plan on the effective date of the 2018 Plan. Since August 2018, all equity awards have been made under the 2018 Plan.
Under the terms of the 2018 Plan, the Company may grant awards in a variety of instruments including stock options, restricted stock and restricted stock units to employees, consultants and directors generally at an exercise price at or above 100% of fair market value at the close of business on the date of grant. Stock options expire 10 years after the date of grant and generally vest over three years. The Company issues new shares of common stock upon grant of restricted stock, when stock options are exercised, and when restricted stock units are vested and/or settled.
On November 28, 2016, our Board of Directors amended the 2003 Plan and the 2013 Plan to permit equitable adjustments to outstanding awards in the event of an extraordinary cash dividend. On March 28, 2017, the Board of Directors approved the modification of all outstanding stock option awards to provide option holders with substantially equivalent economic value after the effect of the dividend. The modification resulted in the issuance of options to purchase 150,476 additional shares. Total stock-based compensation expense for the modifications was approximately $79,000, which was recorded during the 12 months ended December 31, 2017.
The following table summarizes activity under the 2003, 2013 and 2018 Plans:
The number of options exercisable under the Plans was:
The following table summarizes information about the stock options outstanding at December 31, 2018:
Options outstanding under the Plans expire at various dates during the period from May 2019 through August 2028. Options outstanding at December 31, 2018 had an aggregate intrinsic value of $12,779. Options exercisable at December 31, 2018 had a weighted average remaining life of 3.15 years and an aggregate intrinsic value of $12,779. The weighted average grant-date fair value of options granted during the year ended December 31, 2018 was $1.04. No options were granted in 2017.
During the year ended December 31, 2018, the Company issued 297,515 restricted stock units under the 2013 Plan and the 2018 Plan. The shares underlying the awards were assigned a weighted average value of $1.84 per share, which was the closing price of our common stock on the date of grants. These awards are scheduled to vest over three years or four years with the first vesting at the end of year two. During the year ended December 31, 2017, the Company issued 143,424 restricted stock units under the 2013 Plan. The shares underlying the awards made in 2017 were assigned weighted average values of $1.13 per share based on the closing price of our common stock on the applicable dates of grant and are scheduled to vest over two years.
During the year ended December 31, 2018, no restricted stock was issued. During the year ended December 31, 2017, the Company issued 60,000 shares of restricted stock under the 2013 Plan. The shares underlying the awards were assigned a value of $1.09 per share, which was the closing price of our common stock on the date of grant and are scheduled to vest over the two years.
During July 2018, non-employee members of the Board of Directors received restricted stock grants totaling 46,152 shares pursuant to the 2018 Plan. The shares underlying the awards were assigned a value of $1.95 per share, which was the closing price of our common stock on the date of grants, for a total value of $90,000, and are scheduled to vest the day immediately preceding the date of the next annual shareholder meeting. During June 2017, non-employee members of the Board of Directors received grants totaling 72,115 fully vested shares of common stock pursuant to the 2013 Plan. The shares were assigned a value of $1.04 per share, based on the closing price on the grant date, for a total value of $75,000, which is included in stock-based compensation expense for the year ended December 31, 2018.
Restricted stock and restricted stock unit transactions during the years ended December 31, 2018 and 2017 are summarized as follows:
As of December 31, 2018, there was approximately $107,000 of total unrecognized compensation costs related to outstanding stock options, which is expected to be recognized over a weighted average period of 3.61 years.
As of December 31, 2018, there was approximately $549,000 of total unrecognized compensation costs related to restricted stock and restricted stock units, which is expected to be recognized over a weighted average period of 1.89 years.
Employee Stock Purchase Plan. The Company has an Employee Stock Purchase Plan (the “ESPP”) that enables employees to contribute up to 10% of their base compensation toward the purchase of the Company’s common stock at 85% of its market value on the first or last day of the year. As of the most recent amendment and restatement of the ESPP approved by shareholders on July 20, 2018, 300,000 shares were added to the total pool of shares available under the ESPP. During the year ended December 31, 2018, employees purchased 107,341 shares under the ESPP. During the year ended December 31, 2017, employees purchased 48,320 shares under the ESPP. At December 31, 2018, 278,380 shares were reserved for future employee purchases of common stock under the ESPP. For the years ended December 31, 2018 and 2017, the Company recognized $58,000 and $29,000, respectively, of stock-based compensation expense related to the ESPP.
Share Repurchase Programs. On April 5, 2018, the Board authorized the repurchase of up to $3,000,000 of the Company’s common stock on or before March 31, 2020. The plan allowed the repurchases to be made in open market or privately negotiated transactions. The plan did not obligate the Company to repurchase any particular number of shares and may be suspended at any time at the Company’s discretion.
For the year ended December 31, 2018, the Company repurchased approximately 164,000 shares at a total cost of approximately $298,000.
Dividends. We have not historically paid dividends, other than one-time dividends declared in 2011 and 2016. On November 28, 2016, the Board declared a one-time special dividend of $0.70 per share to shareholders of record as of December 16, 2016, paid on January 6, 2017. Outside of these special dividends, the Board of Directors intends to retain earnings for use in the Company’s business and does not anticipate paying cash dividends in the foreseeable future. |
Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income tax expense (benefit) consists of the following:
The actual tax expense (benefit) attributable to income (loss) before taxes differs from the expected tax expense (benefit) computed by applying the U.S. federal corporate income tax rate of 21% for 2018 or 34% for 2017 as follows:
Components of resulting noncurrent deferred tax assets (liabilities) are as follows:
The Company evaluates all significant available positive and negative evidence, including the existence of losses in prior years and its forecast of future taxable income, in assessing the need for a valuation allowance. The underlying assumptions the Company uses in forecasting future taxable income require significant judgment and take into account the Company’s recent performance. The change in the valuation allowance for the years ended December 31, 2018 and 2017 was $(29,000) and $77,000, respectively. The valuation allowance as of December 31, 2018 and 2017 was the result of certain capital losses, state income tax credits, and state net operating losses carried forward which the Company does not believe are more likely than not to be realized.
The Company has recorded a liability of $613,000 and $581,000 for uncertain tax positions taken in tax returns in previous years as of December 31, 2018 and 2017, respectively. This liability is reflected as accrued income taxes on the Company’s balance sheets. The Company files income tax returns in the United States and numerous state and local tax jurisdictions. Tax years 2015 and forward are open for examination and assessment by the Internal Revenue Service. With limited exceptions, tax years prior to 2015 are no longer open in major state and local tax jurisdictions. The Company does not anticipate that the total unrecognized tax benefits will change significantly prior to December 31, 2019.
A reconciliation of the beginning and ending amount of the liability for uncertain tax positions is as follows:
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Employee Benefit Plans |
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Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | The Company sponsors a Retirement Profit Sharing and Savings Plan under Section 401(k) of the Internal Revenue Code. The plan allows employees to defer up to 50% of their wages, subject to Federal limitations, on a pre-tax basis through contributions to the plan. During the years ended December 31, 2018 and 2017, the Company made matching contributions of $68,000 and $58,000, respectively.
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Concentrations |
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Dec. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
Concentrations | Major Customers. During the year ended December 31, 2018, two customers accounted for 24% and 20% of the Company’s total net sales. At December 31, 2018, two customers represented 31% and 16% of the Company’s total accounts receivable. During the year ended December 31, 2017, one customer accounted for 26% of the Company’s total net sales. At December 31, 2017, three customers represented 29%, 12% and 11% of the Company’s total accounts receivable.
Although there are a number of customers that the Company sells to, the loss of a major customer could adversely affect operating results. Additionally, the loss of a major retailer from the Company’s retail network could adversely affect operating results.
Export Sales. Export sales accounted for less than 1% of total net sales during the years ended December 31, 2018 and 2017.
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Quarterly Financial Data |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Data | Quarterly data for the years ended December 31, 2018 and 2017 was as follows:
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Summary of Significant Accounting Policies (Policies) |
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Description of Business | Description of Business. Insignia Systems, Inc. (the “Company”) markets in-store advertising products, programs and services to retailers and consumer packaged goods manufacturers. The Company operates in a single reportable segment. The Company’s primary products include the Insignia Point-of-Purchase Services (POPS®), and other retailer approved promotional services, in-store marketing solutions, and custom adhesive and non-adhesive signage materials directly to our retail customers. |
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Revenue Recognition | Revenue Recognition. The Company recognizes revenue from its In-Store Signage Solutions ratably over the period of service. The Company recognizes revenue related to equipment and sign card sales at the time the products are shipped to customers. Revenue associated with maintenance agreements is recognized ratably over the life of the contract. Revenue from innovation initiatives or other retailer approved promotional services and sign solutions is recognized with a mix of over-time and point in time recognition dependent on type of service performed. Revenue that has been billed and not yet earned is reflected as deferred revenue on the balance sheet. We account for taxes collected for customers on a net basis.
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Cash and Cash Equivalents | Cash and Cash Equivalents. The Company considers all highly liquid investments with an original maturity date of three months or less to be cash equivalents. Cash equivalents are stated at cost, which approximates fair value. At December 31, 2018 and 2017, $9,393,000 and $4,846,000 was invested in an insured sweep account, respectively. The balances in cash accounts, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. Amounts held in checking accounts and in insured cash sweep accounts during the years ended December 31, 2018 and 2017 were fully insured under the Federal Deposit Insurance Corporation.
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Fair Value of Financial Measurements | Fair Value of Financial Measurements. Fair value is defined as the exit price, or the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants as of the measurement date. Accounting Standards Codification (“ASC”) 820-10 also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability, developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect management’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances.
The hierarchy is divided into three levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The Company records certain financial assets and liabilities at their carrying amounts that approximate fair value, based on their short-term nature. These financial assets and liabilities included cash and cash equivalents, accounts receivable and accounts payable.
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Accounts Receivable | Accounts Receivable. The majority of the Company’s accounts receivable is due from companies in the consumer-packaged goods industry. Credit is extended based on evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are due within 30-150 days and are stated at amounts due from customers, net of an allowance for doubtful accounts. Accounts receivable outstanding longer than the contractual payment terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. The Company writes-off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts.
Changes in the Company’s allowance for doubtful accounts are as follows:
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Inventories | Inventories. Inventories are primarily comprised of sign cards, hardware and roll stock. Inventory is valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method, and consists of the following:
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Property and Equipment | Property and Equipment. Property and equipment is recorded at cost. Significant additions or improvements extending asset lives are capitalized, while repairs and maintenance are charged to expense when incurred. Internally developed software is capitalized upon completion of preliminary project stage and when it is probable the project will be completed. Expenditures are capitalized for all development activities, while expenditures related to planning, training, and maintenance are expensed. Depreciation is provided in amounts sufficient to relate the cost of assets to operations over their estimated useful lives. The straight-line method of depreciation is used for financial reporting purposes and accelerated methods are used for tax purposes. Estimated useful lives of the assets are as follows:
Leasehold improvements are amortized over the shorter of the remaining term of the lease or estimated life of the asset. Internally developed software is amortized over the estimated life of the asset, which is five years.
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Impairment of Long-Lived Assets | Impairment of Long-Lived Assets. The Company records impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. Impaired assets are then recorded at their estimated fair value. There were no material impairment losses during the years ended December 31, 2018 and 2017.
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Income Taxes | Income Taxes. Income taxes are accounted for under the liability method. Deferred income taxes are provided for temporary differences between the financial reporting and tax basis of assets and liabilities. Deferred taxes are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or the entire deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of the enactment. It is the Company’s policy to provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense (benefit).
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Stock-Based Compensation | Stock-Based Compensation. The Company measures and recognizes compensation expense for all stock-based awards at fair value. Restricted stock units and awards are valued at the closing market price of the Company’s stock on the date of the grant. The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options and employee stock purchase plan rights. The determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as by assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.
The expected lives of the options and employee stock purchase plan rights are based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected term at grant date. Volatility is based on historical and expected future volatility of the Company’s stock. The Company has not historically issued any dividends beyond one-time dividends declared in 2011 and 2016 and does not expect to in the future. Forfeitures are estimated at the time of the grant and revised, if necessary, in subsequent periods if actual forfeitures differ from estimates.
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Advertising Costs | Advertising Costs. Advertising costs are charged to operations as incurred. Advertising expenses were approximately $207,000 and $59,000 during the years ended December 31, 2018 and 2017, respectively.
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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 dilutive effects of stock options and restricted stock units and awards. Diluted net income (loss) per share gives effect to all diluted potential common shares outstanding during the year.
Weighted average common shares outstanding for the years ended December 31, 2018 and 2017 were as follows:
Options to purchase approximately 284,000 shares of common stock outstanding for the year ended December 31, 2018 were not included in the computation of common stock equivalents because their exercise prices were higher than the average fair market value of the common shares during the year. Restricted stock units of approximately 45,000 shares for the year ended December 31, 2018 are antidilutive due to the amount of weighted-average unrecognized compensation related to these grants. Due to the net loss incurred during the year ended December 31, 2017, all stock awards were anti-dilutive for this period.
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Use of Estimates | Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.
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Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncement. Effective January 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09 Revenue from Contracts with Customers (“Topic 606”). Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition,” and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The adoption of ASU 2014-09, using the modified retrospective approach, had no significant impact on the Company’s results of operations, cash flows, or financial position. Revenue continues to be recognized for In-Store Signage Solutions ratably over the period of service, which is typically a two-week display cycle, and for sign card sales, at the time the products are shipped to customers. Additional information and disclosures required by this new standard are contained in Note 2, “Revenue.”
Recently Issued Accounting Pronouncement. In February 2016, the FASB issued ASU 2016-02, Leases, under which lessees will recognize most leases on the balance sheet. The Company will adopt this ASU for its annual and interim periods beginning January 1, 2019, and elected not to restate comparative periods in transition. The Company performed a review of the requirements of the new guidance and identified which of its leases will be within the scope of ASU 2016-02. The Company completed its adoption plan which included a review of lease contracts, applying the new standard to the lease contracts and comparing the results to our current accounting. As part of this plan, the Company determined no significant changes were necessary to processes and internal controls to capture new data and address changes in financial reporting. Effective for our quarter ending March 31, 2019, the Company will revise its lease accounting policy disclosures to reflect the requirements of ASU 2016-02. The Company estimates the impact of the adoption will be an increase of approximately $305,000 to both assets and liabilities on the balance sheet, with no net impact to the statements of operations or cash flows. The Company also expects additional qualitative and quantitative disclosures will be required upon adoption. |
Summary of Significant Accounting Policies (Tables) |
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Allowance For Doubtful Accounts |
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Schedule Of Inventories |
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Schedule Of Estimated Useful Lives |
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Schedule Of Weighted Average Common Shares Outstanding |
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Revenue Recognition (Tables) |
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Revenue Recognition Tables Abstract | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue |
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Schedule of Changes in Deferred Revenue |
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Selling Arrangement (Tables) |
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Summary of the Carrying Amount of the Selling Arrangement |
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Property and Equipment (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment |
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Commitments and Contingencies (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||
Schedule of Minimum Future Lease Obligations |
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Schedule of Aggregate Commitment Amounts |
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Shareholders' Equity (Tables) |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock-Based Compensation Expense |
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Schedule of Weighted Average Assumptions |
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Summary of Activity Under Stock Option Plans |
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Schedule Of The Number Of Options Exercisable |
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Summary Of Information About Stock Options Outstanding |
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Summary of Restricted Stock and Restricted Stock Units |
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Income Taxes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Income Tax Benefit |
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Reconciliation Of Effective Income Tax Rate Percentage |
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Schedule of Resulting Noncurrent Deferred Tax Assets (Liabilities) |
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Reconciliation of the Liability for Uncertain Tax Positions |
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Quarterly Financial Data (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Quarterly Financial Data |
|
Summary of Significant Accounting Policies (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Accounting Policies [Abstract] | ||
Beginning balance | $ 213,000 | $ 141,000 |
Bad debt provision | 6,000 | 72,000 |
Accounts written-off | (197,000) | 0 |
Ending balance | $ 22,000 | $ 213,000 |
Summary of Significant Accounting Policies (Details 1) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Accounting Policies [Abstract] | ||
Raw materials | $ 80,000 | $ 68,000 |
Work-in-process | 12,000 | 10,000 |
Finished goods | 261,000 | 223,000 |
Inventories | $ 353,000 | $ 301,000 |
Summary of Significant Accounting Policies (Details 2) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Tools Dies And Molds [Member] | Minimum [Member] | |
Estimated Useful lives | 1 year |
Tools Dies And Molds [Member] | Maximum [Member] | |
Estimated Useful lives | 6 years |
Furniture And Fixtures [Member] | |
Estimated Useful lives | 3 years |
Computer Equipment and Software [Member] | Minimum [Member] | |
Estimated Useful lives | 3 years |
Computer Equipment and Software [Member] | Maximum [Member] | |
Estimated Useful lives | 5 years |
Summary of Significant Accounting Policies (Details 3) - shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Accounting Policies [Abstract] | ||
Denominator for basic net loss per share - weighted average shares | 11,776,000 | 11,717,000 |
Effect of dilutive securities: Stock options, restricted stock and restricted stock units | 231,000 | 0 |
Denominator for diluted net loss per share - weighted average shares | 12,007,000 | 11,717,000 |
Summary of Significant Accounting Policies (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Accounting Policies [Abstract] | ||
Insured cash sweep account | $ 9,393,000 | $ 4,846,000 |
Advertising expense | $ 207,000 | $ 59,000 |
Revenue Recognition (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Services revenues | $ 31,623,000 | $ 24,911,000 | ||||||||
Products revenues | 1,613,000 | 1,519,000 | ||||||||
Total Net Sales | $ 8,117,000 | $ 9,455,000 | $ 8,245,000 | $ 7,419,000 | $ 8,091,000 | $ 7,723,000 | $ 5,849,000 | $ 4,767,000 | 33,236,000 | $ 26,430,000 |
Products and services transferred over time | ||||||||||
Services revenues | 28,598,000 | |||||||||
Products revenues | 0 | |||||||||
Total Net Sales | 28,598,000 | |||||||||
Products and services transferred at a point in time | ||||||||||
Services revenues | 3,025,000 | |||||||||
Products revenues | 1,613,000 | |||||||||
Total Net Sales | $ 4,638,000 |
Revenue Recognition (Details 1) |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Revenue Recognition Details Abstract | |
Deferred revenue, beginning | $ 372,000 |
Reclassification of beginning deferred revenue to revenue, as a result of performance obligations satisfied | (372,000) |
Cash received in advance and not recognized as revenue | 302,000 |
Deferred revenue, ending | $ 302,000 |
Revenue Recognition (Details Narrative) |
Dec. 31, 2018
USD ($)
|
---|---|
Revenue Recognition Details Narrative Abstract | |
Performance obligation revenue to be recognized in 2020 or beyond | $ 1,984,000 |
Selling Arrangement (Details) - Customer Contracts [Member] - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Gross cost | $ 4,000,000 | $ 4,000,000 |
Accumulated amortization | (3,083,000) | (2,683,000) |
Net carrying amount | $ 917,000 | $ 1,317,000 |
Selling Arrangement (Details Narrative) - Customer Contracts [Member] - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2011 |
|
Payment for arrangement to sell signs | $ 4,000,000 | ||
Term of arrangement | 10 years | ||
Amortization expense | $ 400,000 | $ 400,000 | |
2019 | 600,000 | ||
2020 | 262,000 | ||
2021 | $ 55,000 |
Retail Access and Distribution Agreement (Details Narrative) |
12 Months Ended |
---|---|
Dec. 31, 2017
USD ($)
| |
Valassis Sales And Marketing Services Inc [Member] | |
Marketing and Service Agreement Amortization expense | $ 64,000 |
Property and Equipment (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | $ 8,578,000 | $ 7,791,000 |
Accumulated depreciation and amortization | (5,310,000) | (5,121,000) |
Net property and equipment | 3,268,000 | 2,670,000 |
Machinery And Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 3,694,000 | 4,003,000 |
Furniture And Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 385,000 | 325,000 |
Computer Equipment and Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 2,743,000 | 2,680,000 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 577,000 | 577,000 |
Construction In Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | $ 1,179,000 | $ 206,000 |
Property and Equipment (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Property And Equipment | ||
Depreciation expense | $ 761,000 | $ 868,000 |
Commitments and Contingencies (Details) |
Dec. 31, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 217,000 |
2020 | 222,000 |
2021 | $ 57,000 |
Commitments and Contingencies (Details 1) |
Dec. 31, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 2,907,000 |
2020 | 2,614,000 |
2021 | 1,871,000 |
2022 | 525,000 |
2023 | $ 279,000 |
Commitments and Contingencies (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 150,000 | $ 150,000 |
Additional rent expense | 34,000 | |
Fixed and store-based payments | $ 4,846,000 | $ 5,203,000 |
Shareholders' Equity (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Stock-based compensation expense | $ 410,000 | $ 387,000 |
Cost Of Sales [Member] | ||
Stock-based compensation expense | 11,000 | 52,000 |
Selling Expenses [Member] | ||
Stock-based compensation expense | 102,000 | 75,000 |
Marketing Expenses [Member] | ||
Stock-based compensation expense | 71,000 | 51,000 |
General And Administrative Expense [Member] | ||
Stock-based compensation expense | $ 226,000 | $ 209,000 |
Shareholders' Equity (Details 1) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Employee Stock Option [Member] | ||
Expected life | 6 years 6 months | 2 years |
Expected volatility | 51.00% | 46.00% |
Dividend yield | 0.00% | 0.00% |
Risk-free interest rate | 2.80% | 1.00% |
Employee Stock [Member] | ||
Expected life | 1 year | 1 year |
Expected volatility | 66.00% | 51.00% |
Dividend yield | 0.00% | 0.00% |
Risk-free interest rate | 1.80% | 0.90% |
Shareholders' Equity (Details 3) - shares |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Stockholders' Equity Note [Abstract] | ||
Number Exercisable (in shares) | 253,412 | 366,346 |
Shareholders' Equity (Details 5) - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Stockholders' Equity Note [Abstract] | ||
Outstanding at the beginning of the period (in shares) | 322,479 | 204,875 |
Granted (in shares) | 343,667 | 203,424 |
Vested ( in shares) | (132,940) | (56,438) |
Forfeited or surrendered (in shares) | (39,884) | (29,382) |
Outstanding at the end of the period (in shares) | 493,322 | 322,479 |
Beginning balance fair value (in dollars per share) | $ 1.69 | $ 2.16 |
Granted (in dollars per share) | 1.86 | 1.12 |
Vested (in dollars per share) | 1.47 | 1.05 |
Forfeited or surrendered (in dollars per share) | 1.22 | 2.01 |
Ending balance fair value (in dollars per share) | $ 1.90 | $ 1.69 |
Income Taxes (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Current taxes - Federal | $ 177,000 | $ (316,000) |
Current taxes - State | 48,000 | 6,000 |
Deferred taxes - Federal | 227,000 | (23,000) |
Deferred taxes - State | 32,000 | 63,000 |
Income tax expense (benefit) | $ 484,000 | $ (270,000) |
Income Taxes (Details 1) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Federal statutory rate | 21.00% | (34.00%) |
Stock based awards | 0.60% | 7.00% |
State taxes | 2.80% | (1.50%) |
Other permanent differences | 0.70% | 1.80% |
Impact of uncertain tax positions | 1.70% | 3.00% |
Valuation allowance | (1.60%) | 8.50% |
Tax rate change | 0.00% | (14.70%) |
Other | 0.50% | 0.20% |
Effective federal income tax rate | 25.70% | (29.70%) |
Income Taxes (Details 2) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred Tax Assets: | ||
Accrued expenses | $ 129,000 | $ 183,000 |
Inventory reserve | 3,000 | 42,000 |
Stock-based awards | 78,000 | 52,000 |
Reserve for bad debts | 5,000 | 50,000 |
Net operating loss and credit carryforwards | 39,000 | 61,000 |
Other | 23,000 | 25,000 |
Valuation allowance | (79,000) | (108,000) |
Total deferred tax assets | 198,000 | 305,000 |
Deferred Tax Liabilities: | ||
Depreciation | (635,000) | (465,000) |
Prepaid expenses | (67,000) | (85,000) |
Total deferred tax liabilities | (702,000) | (550,000) |
Net deferred income tax liabilities | $ (504,000) | $ (245,000) |
Income Taxes (Details 3) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Balance at the beginning of the period | $ 581,000 | $ 554,000 |
Increases due to interest and state tax | 32,000 | 27,000 |
Balance at the end of the period | $ 613,000 | $ 581,000 |
Income Taxes (Details Narrative) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Change in the valuation allowance | $ (29,000) | $ 77,000 | |
Accrued income taxes | $ 613,000 | $ 581,000 | $ 554,000 |
Employee Benefit Plans (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Retirement Benefits [Abstract] | ||
Employee contribution percentage | 50.00% | 50.00% |
Matching employer contribution | $ 68,000 | $ 58,000 |
Concentrations (Details Narrative) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Export sales of net sales | 1.00% | 1.00% |
Sales Revenue Net [Member] | Customer One [Member] | ||
Customer's percentage of net sales | 24.00% | 26.00% |
Sales Revenue Net [Member] | Customer Two [Member] | ||
Customer's percentage of net sales | 20.00% | |
Accounts Receivable [Member] | Customer One [Member] | ||
Customer's percentage of net sales | 31.00% | 29.00% |
Accounts Receivable [Member] | Customer Two [Member] | ||
Customer's percentage of net sales | 16.00% | 12.00% |
Accounts Receivable [Member] | Customer Three [Member] | ||
Customer's percentage of net sales | 11.00% |
Quarterly Financial Data (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Quarterly Financial Information Disclosure [Abstract] | ||||||||||
Net sales | $ 8,117,000 | $ 9,455,000 | $ 8,245,000 | $ 7,419,000 | $ 8,091,000 | $ 7,723,000 | $ 5,849,000 | $ 4,767,000 | $ 33,236,000 | $ 26,430,000 |
Gross profit | 3,247,000 | 3,563,000 | 3,005,000 | 2,746,000 | 3,531,000 | 2,743,000 | 1,498,000 | 629,000 | 12,561,000 | 8,401,000 |
Net income (loss) | $ 406,000 | $ 645,000 | $ 184,000 | $ 164,000 | $ 635,000 | $ 451,000 | $ (534,000) | $ (1,191,000) | $ 1,399,000 | $ (639,000) |
Net income (loss) per share: | ||||||||||
Basic | $ .04 | $ .05 | $ .02 | $ .01 | $ 0.05 | $ 0.04 | $ (0.05) | $ (0.10) | $ 0.12 | $ (0.06) |
Diluted | $ 0.04 | $ 0.05 | $ 0.02 | $ 0.01 | $ 0.05 | $ 0.04 | $ (0.05) | $ (0.10) | $ 0.12 | $ (0.06) |
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