-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FjydcIJjl56aJb+J0PdKt8VCiCk7zOZomJEcuanBMlMbNJ17Jof0wTeB2+XKO6uj jUdUFGPv+smjjZ8t1Gw7Xw== 0000897101-01-500174.txt : 20010424 0000897101-01-500174.hdr.sgml : 20010424 ACCESSION NUMBER: 0000897101-01-500174 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010420 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INSIGNIA SYSTEMS INC/MN CENTRAL INDEX KEY: 0000875355 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PROFESSIONAL & COMMERCIAL EQUIPMENT & SUPPLIES [5040] IRS NUMBER: 411656308 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13471 FILM NUMBER: 1607568 BUSINESS ADDRESS: STREET 1: 5025 CHESHIRE LANE NORTH CITY: PLYMOUTH STATE: MN ZIP: 55446 BUSINESS PHONE: 7633926200 MAIL ADDRESS: STREET 1: 5025 CHESHIRE LANE NORTH CITY: PLYMOUTH STATE: MN ZIP: 55346 10-Q 1 isi011011_10q.txt INSIGNIA SYSTEMS, INC. FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the period ended: March 31, 2001 ----------------------------------------------------------- Commission File Number: 0-19380 --------------------------------------------------------- INSIGNIA SYSTEMS, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Minnesota 41-1656308 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5025 Cheshire Lane North, Plymouth, Minnesota 55446 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (763) 392-6200 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registration (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. _X_ Yes ___ No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Common Stock, $.01 Per Value -- 10,379,106 shares as of April 16, 2001. Total number of pages: 7 Page 1 of 7 INDEX REGISTRANT COMPANY AND SUBSIDIARIES PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Balance Sheets -- March 31, 2001 and December 31, 2000 Statements of Operations -- Three months ended March 31, 2001 and 2000 Statements of Cash Flows -- Three months ended March 31, 2001 and 2000 Notes to Financial Statements -- March 31, 2001 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition SIGNATURES Page 2 of 7 Part I. Financial Information Item 1. Financial Statements INSIGNIA SYSTEMS, INC. BALANCE SHEETS
March 31, December 31, ASSETS 2001 2000 - ------------------------------------------------------------------ ------------ ------------ (UNAUDITED) (NOTE) CURRENT ASSETS: Cash and cash equivalents $ 1,474,816 1,106,160 Marketable securities 160,000 160,000 Accounts receivable - net of $152,470 allowance 3,143,032 2,089,786 Inventories 1,273,132 1,242,402 Prepaid expenses and other 90,414 216,792 ------------ ------------ TOTAL CURRENT ASSETS 6,141,394 4,815,140 PROPERTY AND EQUIPMENT: Production tooling, machinery and equipment 1,726,576 1,713,240 Office furniture and fixtures 208,113 201,457 Computer equipment 438,858 399,447 Leasehold improvements 184,141 178,796 ------------ ------------ 2,557,688 2,492,940 Accumulated depreciation and amortization (2,282,871) (2,242,887) ------------ ------------ TOTAL PROPERTY AND EQUIPMENT 274,817 250,053 ------------ ------------ TOTAL ASSETS $ 6,416,211 $ 5,065,193 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES: Line of credit $ 439,795 $ 602,852 Accounts payable 1,691,110 988,707 Accrued compensation and benefits 246,085 439,795 Accrued expenses 107,269 149,800 Deferred revenue 713,470 186,367 Other 75,019 85,440 ------------ ------------ TOTAL CURRENT LIABILITIES 3,272,748 2,452,961 STOCKHOLDERS' EQUITY: Common stock, par value $.01; authorized--20,000,000 shares; issued and outstanding March 31, 2001--10,379,106 shares; December 31, 2000--10,287,371 shares 103,791 102,874 Additional paid-in capital 17,750,511 17,524,200 Unearned compensation (6,712) (9,588) Accumulated deficit (14,704,127) (15,005,254) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 3,143,463 2,612,232 ------------ ------------ TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 6,416,211 $ 5,065,193 ============ ============
Note: The balance sheet at December 31, 2000 has been derived from the audited financial statements at that date. See Notes to Financial Statements. Page 3 of 7 INSIGNIA SYSTEMS, INC. STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31 ----------------------------- 2001 2000 ------------ ------------ NET SALES $ 5,147,500 $ 2,878,226 Cost of Sales 2,218,553 1,304,977 ------------ ------------ GROSS PROFIT 2,928,967 1,573,249 OPERATING EXPENSES: Sales 1,656,943 1,099,878 Marketing 428,444 269,865 General and Administrative 536,893 441,783 ------------ ------------ TOTAL OPERATING EXPENSES 2,622,280 1,811,526 ------------ ------------ OPERATING INCOME (LOSS) 306,687 (238,277) Other Income (Expense): Interest Income 18,016 17,999 Interest Expense (19,185) (32,107) Other Income (Expense) 684 (921) ------------ ------------ PRE-TAX INCOME (LOSS) 306,202 (253,306) Provision For Income Tax 5,075 500 ------------ ------------ NET INCOME (LOSS) $ 301,127 $ (253,806) ============ ============ Basic Earnings Per Share $ 0.03 $ (0.03) ============ ============ Diluted Earnings Per Share $ 0.03 $ (0.03) ============ ============ Shares used in calculation of earnings per share: Basic 10,362,771 9,502,646 ============ ============ Diluted 11,651,449 9,502,646 ============ ============
Page 4 of 7 INSIGNIA SYSTEMS, INC. STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31 --------------------------- 2001 2000 ----------- ----------- OPERATING ACTIVITIES: Net income (loss) $ 301,127 $ (253,806) Non-cash expenses included in income (loss): Depreciation and amortization 39,984 41,143 Provision for bad debt expense 45,000 25,000 Amortization of unearned compensation 2,876 4,794 Changes in operating assets and liabilities: Accounts receivable (1,098,246) (403,682) Inventories (30,730) 83,954 Prepaids and other 126,378 (68,669) Accounts payable 702,403 228,990 Accrued compensation and benefits (193,710) (45,928) Deferred revenue 527,103 121,678 Other accrued expenses (52,952) (91,511) ----------- ----------- NET CASH USED IN OPERATING ACTIVITIES 369,232 (358,037) INVESTING ACTIVITIES: (Purchase) Sale of property and equipment (64,748) (24,672) (Purchase) Sale of marketable securities 0 456,480 ----------- ----------- NET CASH PROVIDED BY INVESTING ACTIVITIES (64,748) 431,808 FINANCING ACTIVITIES: Proceeds from issuance of Common Stock 227,228 399,271 Principal payments under long-term debt agreement 0 (30,098) Proceeds from credit line (163,057) (163,832) ----------- ----------- CASH PROVIDED BY FINANCING ACTIVITIES 64,171 205,341 ----------- ----------- INCREASE (DECREASE) IN CASH AND EQUIVALENTS 368,656 279,112 Cash and cash equivalents at beginning of period 1,106,160 64,091 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,474,816 $ 343,203 =========== ===========
Page 5 of 7 INSIGNIA SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE A -- BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001. For further information, refer to the financial statements and footnotes thereto for the year ended December 31, 2000. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (First Quarter Ended March 31, 2001) RESULTS OF OPERATIONS NET SALES. The Company's net sales for the first quarter ended March 31, 2001 were $5,148,000, an increase of 79%, compared to net sales of $2,878,000 for the first quarter of 2000. Revenue from the Insignia POPS program was $3,777,000 in the first quarter of 2001, compared to $1,099,000 in the first quarter of 2000. As of March 31, 2001 the Company had approximately 6,867 stores under contract of which 6,678 stores are on-line for the POPS program. The Company anticipates substantial growth in the POPS program revenue area as additional stores are put on-line and additional retailers decide to join the POPS program. Sign card sales decreased 31% from $1,030,000 in the first quarter of 2000 to $708,000 in the first quarter of 2001. Printing sales increased 4% from $361,000 in the first quarter of 2000 to $3,777,000 in the first quarter of 2001. Stylus software sales and maintenance decreased 23% from $167,000 in the first quarter of 2000 to $128,000 in the first quarter of 2001. Machine, maintenance and accessories sales decreased 41% from $205,000 in the first quarter of 2000 to $120,000 in the first quarter of 2001. GROSS PROFIT. The Company's gross profit for the first quarter of 2001 increased 86% to $2,929,000, compared to $1,573,000 for the first quarter of 2000. Gross profit as a percentage of net sales was 57% in the first quarter of 2001, compared to 55% for the first quarter of 2000. The increase in gross profit in 2001 was due to a higher proportion of sales of POPS program sales which has a higher margin than most of the Company's other products. Page 6 of 7 OPERATING EXPENSES. Operating expenses increased 45% in the first quarter of 2001 from $1,812,000 to $2,622,000. Sales expenses increased 51% from $1,100,000 to $1,657,000. This increase reflects additional POPS program salaries and commissions incurred in the sales area during the first quarter of 2001. Marketing expenses increased 59% from $270,000 to $428,000. This increase reflects the additional POPS program promotional efforts during the first quarter of 2001. General and Administrative expenses increased 21% from $442,000 to $537,000. This increase reflects an increase in rent, legal expenses, employee benefit costs and investor relation expenses. NET INCOME (LOSS). The Company had a net income of $301,000, or $0.03 per share for the first quarter of 2001, compared to a net loss of $(254,000), or $(0.03) per share for the first quarter of 2000. The net income for the first quarter of 2001 was the due primarily to the increase in revenues in the POPS program. LIQUIDITY AND CAPITAL RESOURCES At March 31, 2001, working capital was $2,869,000, compared to $2,362,000 at December 31, 2000. Cash and cash equivalents increased $369,000 to $1,106,000 at March 31, 2001, primarily due to the net income plus proceeds from the issuance of common stock, an increase in accrued expenses and accounts payable, offset by an increase in accounts receivable. The Company anticipates that its working capital needs will continue to increase due to the expected growth in the POPS program business. However, the Company has a $2 million line of credit agreement with a finance corporation against which $440,000 was outstanding as of March 31, 2001, and the Company believes that it will have sufficient capital resources to finance its current business operations and anticipated growth for the foreseeable future. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: April 17, 2001 Insignia Systems, Inc. ------------------------------------------ (Registrant) /s/ Gary L. Vars -------------------------------------- Gary L. Vars Chairman, Executive Vice President and General Manager /s/ Scott F. Drill -------------------------------------- Scott F. Drill President and CEO /s/ John R. Whisnant -------------------------------------- John R. Whisnant Vice President of Finance and CFO Page 7 of 7 -----END PRIVACY-ENHANCED MESSAGE-----